Rookie Podcast 107: 10 Income Streams on 1 Property by “Land Hacking” w/ Kai Andrew

Rookie Podcast 107: 10 Income Streams on 1 Property by “Land Hacking” w/ Kai Andrew

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We have lots of fun phrases in the real estate community, phrases like house hacking, live in flipping, and BRRRRing. Now, we may have one new phrase to add…land hacking. Kai Andrew describes land hacking as extracting as many income streams as possible from one piece of property. That means having the main house for long-term rentals, a small ADU for short-term rentals, a glamping tent in the back, and potentially some farmland being rented out as well.

Only someone as creative as Kai could come up with this sort of strategy. In fact, Kai started out house hacking for his first real estate investment at the age of 21. He rented out to family members and friends before he saved up enough cash to start buying short-term rental properties around his local area of Portland, Oregon.

As his short-term rental portfolio began to grow, Kai started investing in more “unique” opportunities, like shipping container homes, glamping, or A-frame builds. He also set up criteria that he terms “the golden triangle” for all his unique experiences. These unique homes have helped him grow his portfolio, his profits, and take home a sizable amount of equity between his 12 doors.

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Ashley:
This is Real Estate Rookie, episode number 107.

Kai:
You needed a substantial down payment to get into a home, and so especially when it’s an investment property, sometimes 20% to 40%. This was our way to get into properties and to utilize and leverage on the cashflows from short-term rentals without actually having purchased them.

Ashley:
My name is Ashley Kehr, and I’m here with my co-host, Tony Robinson, and we are getting even closer to the BiggerPockets Conference.

Tony:
I am super, super excited to finally get in person with all of the Rookie listeners and just meet and shake hands and talk real estate for what? Three whole days, so it’s going to be a fantastic time.

Ashley:
Yeah, I can’t wait just to talk real estate nonstop for three days.

Tony:
Yeah, so it’ll be a good time.

Ashley:
You guys send Tony and I and message, or reach out to us, if you guys are going to be joining us at the BiggerPockets Conference, we can’t wait to see you guys. There are so many cool things planned in the evenings and tons of great sessions throughout the day, so we really look forward to having you guys there. But today, we are talking, Tony’s jam here, we are talking short term rentals with Kai. Tony, what was your favorite takeaway?

Tony:
Kai’s got so many like golden nuggets throughout this episode. Kai is a YouTuber. He’s a real estate investor, and he’s just got like a really, really, I think articulate way of doing business. He articulates that really well, but he talks about how he got started with like house hacking back in 2008 and how he built major wealth through that whole process. He talks about rental arbitrage and how he used that to get started in the world of short-term rental investing. And he talked about land hacking, which is something I hadn’t really heard of before, but it’s a new strategy that has my head spinning right now. Just so many good nuggets dropped in this episode.

Ashley:
Yeah. He does a great job of putting out points for rookie investors to take away too, like building up security if you’re afraid, how to get around that obstacle, and different things like that, and just getting started in general. He also talks about growing up in his childhood and having a poor dad, as in sense of financially not getting it as in the Rich Dad Poor Dad book. So, a just really great episode. Tony and I are still excited about just all the good content he gave us and has given you guys.

Tony:
You guys got to listen to the end, because right before we wrap up, Kai goes into this mindset piece, and that is just like golden, golden, golden. So, make sure you guys stick around to the very end of the episode.

Ashley:
Well, let’s get on to the show. Kai, welcome to the show. Thank you so much for joining us. Can you start off telling everyone a little bit about yourself and how you got started in real estate?

Kai:
Yeah, so I got started right out of undergrad, actually 21-years-old. I had no experience in real estate at all. Actually, my family they’re … Have you guys read Rich Dad Poor Dad by Robert Kiyosaki? My family, my dad was absolutely poor dad. Loving, sweetheart of a guy, just didn’t know anything about money. 21-years-old, I graduated, came back home, lived with the folks for a little bit, and then I was like, okay, I need a place to stay, and I started looking at rent prices, places to rent our. I realized that they were higher than mortgage rates.
Then I’m like, oh, I’m going to save money. I might as well just buy a place. That just led into a whole world of going into the rabbit hole of real estate and then house hacking and all that stuff.

Ashley:
What did you go to school for?

Kai:
I originally went to a school for mechanical engineering, switched to civil, and then settled on construction engineering, and then business management. I switched it a couple of times.

Ashley:
I have to say, at least your last two degrees probably have helped with your real estate investing though, construction manager and business management, knowing how to run a business.

Kai:
You know what? It was one of those things that you don’t really plan for, but absolutely, it’s more of the project management side, but I always tell this too, because I got involved, and maybe we’ll touch on it later, I got involved in higher education as well. I always tell students or tell people, it’s like, listen, I don’t remember anything from undergrad or grad school, but what I do remember is how my brain works and how to think and how to learn new stuff.
I don’t really remember the accounting basics or anything like that. I don’t remember anything from engineering. I haven’t practiced it for 15, 16, 17 years, but I remember how to dissect problems and then how to figure out solutions, and that’s one of the best things I learned through the higher education system. Definitely helped with real estate.

Tony:
Yeah, Kai, it’s so funny. I actually followed a similar path. I started my undergrad as an electrical engineering major. I was in the middle of my junior year when I decided that I actually hated being an engineer. And then I also switched to business. But what you said was something that you hear a lot as an engineering student, is that your undergrad isn’t even really meant to teach you everything there is to know about being an engineer. It’s to teach you how to solve problems and how to be a critical thinker, and those are the skills that parlay really well into the real world.

Kai:
Oh yeah. I can’t agree with that more. I did an internship. I was doing a heavy civil project, this is giant bridge highway project, and I was an internship at 19 years old, and that’s when I realized, this is not the world for me. But yeah, it was always about figuring out the solutions. I think that’s honestly, for entrepreneurs, transitioning, bridging that gap to entrepreneurs, you have to be a problem solver and critical thinker. I don’t think it’s possible to be a principled, good entrepreneur without that skillset. Engineering definitely helped me with that, even though I hated the field. Love my engineers, just not for me.

Ashley:
With your house hack, what did your family think about this, as to you’re going to buy a property, you’re going to be living with other people, what were their thoughts?

Kai:
They were just supportive at first. They’re just like, okay, that’s great. He’s relatively young. Hopefully he gets into something decent. At that time, it was 2006, and so I got one of those crazy 0% down interest-only ARMs. I think it was like a five or seven year ARM, adjustable rate mortgage. I got that, and my folks didn’t know anything about that stuff. They just let me sign, and then I got into this home with zero down interest-only. It actually became one of the best things ever because my mortgage rate was so low that I was really able to hack it and actually create an income, or yeah, basically make a couple extra hundred bucks a month once I started hacking it.
But yeah, they were super supportive and then started realizing that, I first ran out of room to my brother, and then my girlfriend moved in, and then I rented out to friends and that type of stuff, and then even had some folks sitting on the couch every once in a while. You’re 21, 22 years old. It’s like, you don’t need a lot of space, and I had a nice new house. So, super supportive.

Ashley:
What would be your advice to a rookie investor that is 21 or really young, and they want to get into house hacking? What were some of the things that you took away from your first house hack and advice you can give them to find their own?

Kai:
I would say, definitely find … House hacking is … It’s always nicer when you know the people that are going to be house hacking with, and so having some sort of strategy set up, whether it’s going to be, for example, I work a couple of students in class right now where they’re doing it with family members. So, cousins, brothers, sisters, that type of stuff. That makes it easier because you already know the individuals. When people start talking about house hacking with strangers, like Craigslist, going on Zillow and trying to just meet random people and now you’re sharing a space, that can get a little bit more iffy.
I’ll just be like, be mindful of what you’re trying to do. If you’re trying to house hack and share, if you’re three bedroom home or town-home and you’re as well going to be sharing a common space, make sure that you’re ready to share it with strangers that may not follow your expectations. Or if you want to deal with strangers, maybe set it up in a manner where you have separate living spaces, like an ADU, a guest house, a basement, maybe a converted garage or something like that, where you have a little bit more privacy, if you want to do it with complete strangers. Also, for some folks, it’s just a safety issue too. They don’t feel as comfortable around Craigslist roommates.

Tony:
I love the way you got started Kai, but I want to set the table a little bit for our listeners here. First, let us know what market you’re investing in primarily right now.

Kai:
My primary market now it … Well, it’s short term rentals, but since 2020, we had to convert some more properties over to mid and long-term rentals, which are not my favorite. I’ve done that for a long time, but primarily, I do short-term rentals, and more specifically, around very unique stays or very different types of stays.

Tony:
Got it. What cities are you investing in primarily?

Kai:
Primarily in, around the Portland and the Vancouver. Portland, Oregon, and then Vancouver Washington Area. I usually go outside of the city limits now.

Tony:
Then what does your portfolio look like today?

Kai:
Portfolio looks like we have about, I was just counting it up, we have eight properties and we have about 12 doors, and then we’re about to close on two more properties here that are land deals. Actually, sorry. One land deal, and then it’s lease and hack, which we’ll talk about more, and then one more that we’re looking at, that’s going to be acreage and kind of like fixer-upper.

Tony:
All right. You just went through a lot right there [crosstalk 00:08:44]. I’m sure people’s heads might be spinning a little bit.

Kai:
Sorry.

Tony:
I want to, I guess just take us through the flow of Kai’s journey, and then we can nail down on some of these more, kind of unique deals that you’re doing. Land hacking, like what the heck does that even mean? So, you start with this house hack. What does the progression look like from there? Just give us like the 30,000 foot view of some of the deals you knocked out.

Kai:
Yeah. So, it started off with the first one at 21-years-old, and that was the 0%, or the interest-only zero down. Then from that I started … I had a goal of, I wanted to get my, basically my payments or my monthly expenses down to just $2,000. My mortgage at that time was I think it was like $1,100 or $1,000 or something like that. HOA is what kills us anyway. I figured out the house hack by basically … Was paying no mortgage once I was renting out the spaces. Then I just kept saving up money, and then 2007, 2008 hit, and that rocked us.
Because I just saw my value decreasing. But at that time, once I saw my place decreasing, I was also either foolish or wise enough to also see that some great pieces of property were also opening up in the city, city center. At that time, 2007, 2008, we have a couple areas in the heart of the city that were very, very expensive. It was considered a kind of like the financial district, the entrepreneurial’s district where all of the “wealthy” or successful well-to-do folks moved into, and they had overbuilt significantly.
So, I went in there at 23, 24, and at that time, I didn’t have enough work experience. My income was not high enough, so I basically convinced my parents, do a PowerPoint presentation, and had them co-sign with me. I was like, “Hey, not only will … If you co-sign with me, I’ll give you 4% on the money that you loan me to get the down payment.” At that time, they were making right, I think it was like 0.5% or 0.1% in their money market account because we were in the recession.
I’m like, I’ll give you 4% because I had already run the numbers for to the house hacking. So, I’m like, okay, fine. Went and bought like this penthouse style, condo, and brand new construction, that they’re just trying to move the units. I bought that, and then that was probably one of the best decisions that we made. Then also, as a family, we also bought another condo that was on the other side of the river. Those were the two that made a cornerstone of the whole business because that’s how I got into short-term rentals.
That’s where we built a ton of equity. Then at that time, in 2008, 2009, short-term rentals was not very big outside of like vacationing areas like the beach or the mountains or stuff like that. It wasn’t really big inside the city. I was literally the first of like maybe five or six Airbnbs or VR … At that time, it was HomeAway or VRBO, and so basically we were just charging whatever that we wanted to charge, like $500 a night, $600 a night for a two bedroom place. Then everybody was booking. We were booked out like a year ahead of schedule, a year out.
That was able to fund the next project. And then we got into basically arbitrage. From there we started acquiring properties, my business partner and I, we started quiet properties through leases, and then we started managing people’s properties, and that just created cashflows for us to keep on expanding. That was a large part of our business for a long time.

Ashley:
Kai, that is awesome to hear. I definitely want to go over all of those things, but the first thing that stood out to me was the presentation you did to your parents. We talk a lot about presenting to potential partners, presenting to money lenders. What are some things that you put in that presentation to show your parents that they can trust you and this is a good investment for them?

Kai:
Yeah. That’s a great thing. I talk a lot about this too. I call them with my financial markers or people’s financial markers. My folks obviously knew me already. I was pretty disciplined. Actually, I was very disciplined at 24-years-old, 23-years-old at the time I gave the presentation. I created just basically, it was on Keynote. It was just a free PowerPoint. I didn’t have Microsoft Office. It was just a Keynote on my Apple MacBook at that time. I showed them what the market was at before the recession and I showed them the current market where it was at.
So, it showed like this difference of like, maybe I think it was like 45 or 50% difference, what it was valued at before and where was at now. Because again, they had overbuilt. I said, I believe in five years, this is what’s going to happen. I think it’s going to go back to normal in five years, and I showed them the difference in how much equity could be built, and I showed them how I was going to make my payments. That was the biggest thing that they were concerned about, was that, can you make the mortgage payments on two homes? So, I walked them through the cashflows, the revenues.
I’m like, hey, this places are rented out. I’m making money on it. Even if that doesn’t work out, I know I can rent it out for this price, that will for sure get booked out even though I’ll be losing maybe $300 a month. I can easily cover that with my salary, and then I’ll be making all this money over here with this other property. With that all said, when they saw that the numbers made sense, and then also, I already had, at 23 years old, I had nearly an 800 credit score, and I had savings stacked up. They just knew that I wasn’t very … I wast buying watches or shoes or cars or anything, so they knew that I was very financially disciplined.
That helped a lot too. But man, that presentation, I didn’t expect that I would have to do that, but that sealed the deal for me with my folks. Because usually, you think that your parents would always back you up, but I remember I went up and asked them, I was like, hey, will you sign, co-sign with me on this like $400,000 condo? And they were like, “No. Are you crazy.”

Ashley:
I think that what you just said can relate to your spouse or your significant other too, that if you’re trying to get them on board with getting started in real estate investing, everything you just said, you could put together a presentation, because actually looking at the numbers and visualizing it and seeing the breakdown can make such an impact on somebody than just hearing you talk and spin off numbers and all just rattling around in their brain. A lot of people are more visual learners, and that’s such a great idea to do that presentation.

Kai:
100%. I now see a lot of folks doing it now too, is like, they’re usually one person’s on board, right? One person’s, the entrepreneur’s like high up in the clouds like, dude, we can do this, we can do this, we can do this. And then you have the other partner who’s just like, okay, let’s slow your roll a little bit. We’ve got kids, we’ve got a mortgage, we’ve got this and that. How are we going to do all of this? So, absolutely. When they actually go through that, and I’m talking about my students here, when they actually go and they put together the market analysis, they run the numbers, they do the unit economics and then they can show it to their partner, it does relieve.
Now, they don’t always get their way, but it does, like they make it a more of a manageable and a better conversation, they’re just having these ideas thrown back and forth.

Tony:
Kai, it sounds like you had some early success with house hacking, and then that led you into the world of short-term rentals, and now, if I’m not mistaken, you’ve really, like you said, focused on creating these really unique stays in the short-term rental space. Before we get to that, I want to talk a little bit about rental arbitrage and what exactly does that mean in the world of short-term rentals. Because you mentioned it, but there’s probably some listeners that aren’t familiar with what that term is and what it means.

Kai:
Sure, sure. Rental arbitrage it’s basically where you find somebody, a homeowner or landowner, who owns a house or town-home, condo, whatever it is, and you negotiate a contract with them where you lease the property with the understanding that you will then short-term rent it out. There’s two ways of doing it. Either you pay them a lease upfront. Let’s say it’s like $2,000 a month, and you just pay them a set $2,000 a month, and then whatever you make on top of that, you get to keep. So, if you make $5,000 a month, you pay the landowner or the homeowner 2,000, you keep the 3,000.
Another way of doing it too, that we have done is that we did a profit sharing or a revenue split. We’ll do everything and we’ll give you … We’ll do a 40/60 split. Homeowner keeps 40, we keep 60, and we do all the work. We manage everything. Those were basically the two contracts and it was all negotiable on how we set it up. Whether it was based on, we brought in our own furniture, the homeowner provided their own furniture. We provided the cleaning service or they had a cleaner they wanted to use, whatever that was, we always negotiated or baked it into the contract.
But at the end of the day, it was our way of acquiring several properties or multiple properties in areas that we wanted to focus in without actually having to come … Because remember, at that time, or even throughout 2010 to 2016, ’17, you needed substantial down payment to even get into a home. Usually, it was at least 20%. Especially when it’s an investment property, sometimes 20% to 40%. This was our way to get into properties and to utilize and leverage on the cashflows from short-term rentals without actually having to purchase them.

Tony:
I love that approach. You see a lot of folks who are going the rental arbitrage route. Short-term rentals are my focus right now as well, but we’ve never dabbled in the world of arbitrage. But the more people that I talk to that are doing it, the more, I guess, intrigued I am by the process, right? Because like you say, we leverage a lot of vacation home mortgages to buy our short-term rentals. But even at that, it’s still 10% down, right? So, you want to a half a million dollar house, that’s $50,000, and you got your furniture costs, your closing costs, so it can get expensive. If you’re able to just sign a lease on a property, and how many of those can you do, can you set up with $50,000? So, the money definitely goes a lot further. Kai, are you still doing arbitrage today?

Kai:
Yes. We still have, I believe we have three or four sites right now. I think three, and we’re about to get rid of them because it’s not our focus anymore. The one big thing that’s in your corner, Tony, is that when you purchase property, is you build equity. That’s a big, and we’ll talk more about the land hacking model later, but cashflow is great. Cashflow is fantastic, but I’ve also noticing that especially all of our properties that we had done were inside the city, and the city limits are just becoming such a competitive environment. I’m sure we’ll talk about this more too, is that we’re wanting to move outside of that and be able to create higher barriers of entry in our own space, and that’s more the unique spaces.
But I think arbitrage is a phenomenal way for folks who are newer into this space and want to get into real estate, and jump in without having to, like you said, put $50,000 down, $100,000 down. We’re not even talking about the insurance or the furniture or the linens or the cleaning crews or anything. And if you just want to start and you don’t have a ton of money, and you can get a lease or a negotiated lease or work with a homeowner, it’s a great way of not just getting your business and introducing yourself into the world of real estate in small business, but also how to manage a successful rental.
Because Tony, as you know, and Ashley, I’m not sure if you’re familiar with it too, but the other side of Airbnb and hosting and VRBO and HomeAway and bookings.com and all these other sites, the management side, I would argue, is probably more difficult to do long-term successfully than just getting a piece of property and furnishing it. I think that’s very important for a lot of new entrepreneurs and new hosts to understand and learn about the short-term rental market, and it’s a great way to get started.

Tony:
I love what you said about the equity side, and honestly, that’s just kind of, I guess, maybe prevented me from going the arbitrage route. For example, the very first property that we purchased in Joshua Tree as a short-term rental, we’re selling it. We should close in that this Friday, actually. We bought that property at a purchase price of 295. Our total cash investment like down payment, closing cost, startup costs was somewhere just south of $50,000. So, we had this $50,000 investment on a $300,000 property.
We’re selling that same house for $470,000. After everything clears, we’re probably going to net somewhere close to about 170 on that property. 170 is a down payment on almost a $900,000 house at 20% down. So, we were able to take this little $295,000 property in Joshua Tree, and now parlay that into most likely a five bedroom cabin with a pool, and the Smoky Mountains, it’s going to three, maybe four times as much revenue, and we didn’t even own that property for an entire year. We bought that last September. We’re selling it now in July. That’s kind of the benefits that come with … Now, obviously the marks have been crazy. That wasn’t all me being a genius or anything. I’m a little lucky there too, but that’s some of the benefits that come along with actually owning the property.

Kai:
Absolutely. Absolutely. Just out of curiosity, are the new owners using it as a short-term rental or are they buying it as a home?

Tony:
I would assume they’re using it as a short-term rental. What we’re doing, and this is kind of going to be our, possibly our motto moving forward in Joshua Tree, is we’re selling this completely turnkey. It was fully furnished. We did a lot of updates, both inside and outside. We’re even giving them the listing photos. We said, hey, you guys can have the professional photos that we took. Literally, on day one, they could start accepting guests at the property if they wanted to. So, I’m almost certain that’s what they’ll be doing with it.

Kai:
Are they still going to cashflow nicely even at their new purchase price based on your …

Tony:
Assuming they get like a 10% down loan, even at 20%, that property is still going to cashflow pretty nicely.

Kai:
That’s awesome. That’s really cool. Yeah. What you just hit on is, this is what I tell a lot of the folks in the beginning who are first starting off, especially … I don’t know your background. My background … My family were refugees. We grew up very, very poor. Like I said, poor dad in terms of understanding of finances and strategies and money. But this is the fastest way, what you just explained, and this is how I got it too, is equity and real estate is the fastest way to build real wealth, generational wealth.
By the time that my kids or my grandkids get up, and hopefully we teach them well, is that they’ll have tens of millions of dollars just based off the equity off our properties alone. That’s not the cashflows, that’s nothing else. It’s just over decades, you just accrue that stamp that’s set 3% to 6%, assuming that nothing happens to the United States, or the crazy, the world. It’s going to keep on growing over time. You’re going to have big bubbles, like right now, where you can take advantage of. Whether it’s 2021 or back in 2015, 2016, you have this huge amount of equity that you can take advantage of, and then leverage it into something else that’s even bigger. That’s awesome. And you did it in 12 months, that’s insane.

Ashley:
Hi, before we go on to what you’re doing now, to actually build that wealth for your family, back to the arbitrage real quick. I do have one property that I do Airbnb arbitrage for, short-term rental, but it’s with somebody that I know very well. It’s in an apartment complex. He’s the owner of it. I used to manage it, so it’s a really loosey goosey relationship there, but for a rookie investor, how are they approaching homeowners with this concept and putting this deal together? What’s the first step if somebody wants to start doing this?

Kai:
I’d reached out, honestly, it’s you got to reach out to your network. That’s how I did it. There’s a lot of people that do it in different ways and I’ve found great success through just networking. I tell this, it’s weird, it’s hard for folks to grasp this because it’s not like it’s just a button that you push and you automatically get deals, but being kind and then having proven results will net you way more deals than anything else that I’ve found. Our contacts have always been a friend of a friend or a friend of a real estate agent or somebody else.
It’s like, hey, connect with these guys. They know what they’re doing, they’re doing mine and they can really help you out. Then we got to a point where we were getting deals that we were just turning down because we were like, no, that’s not really an area. No, we don’t really want it. We don’t have our systems set up an hour away from the city. We can’t do that. For folks, I’d say, if you want to get started doing something right now, I’d say start hitting up the people that you know or the contacts that you know, and see if anybody who has an extra house.
Even somebody who has a long-term rental house or a second home or third home that they’re long-term renting out, approach them like, hey, next time that the lease is up or your long-term tenant moves out, consider giving me a call. I’d love to consider talking to you and renting it from you, and then talk to you about how Airbnb or short-term rental could actually net you more money at the end of the day, and I can manage that for you. But I didn’t take that approach where we cold call people or we went into apartment buildings and rented out like five or six units or anything like that. That wasn’t our forte. Ours was a lot more small business mom and pop style and built it around relationships, so that makes sense.

Ashley:
Yeah. I think that you just said one of the biggest pieces of advice we like to give is tell anyone and everybody what you’re doing or what you’re trying to do so that you attract those people that come to you and say, hey, I have this property that maybe we could work together on it or something like that.

Kai:
Absolutely.

Ashley:
That’s awesome. Yeah. What are you doing now? How have you pivoted your business from doing arbitrage into, I think you mentioned land contracts?

Kai:
Yeah. So, land hacking. This is actually a term that I’ve been doing it since 2014, 2015 is when I first started getting into it. Because I started doing property hacks. We started looking at properties. Like we were just talking before, I think we call it house hacking. You rent out bedrooms, you rent out a space. I call it property hacking is when you kind of graduate and you start converting a garage into a legal living space or a basement, and you separate, you put in walls, and so you have two or three living areas on one property that are private spaces.
Then land hacking is you’re taking it to a whole nother level where it’s no longer about just creating spaces for people to live or stay or visit. It’s now creating multiple income streams off of one property. A lot of people usually or typically think of one door, one property. Whether it’s a single family home, maybe even a duplex or even multi-family homes on one property. What I like to start thinking about, what we’re doing now is we’re looking at properties as not one door or two doors per property, but we’re looking at as six, seven, eight, nine, 10 income streams per property.
How we get there could be rentals, like a standard home like this with an ADU, or a guest house, or it could be a dome tent, could be a safari tent. It could also be farming bamboo, or leasing out a part of the land for an organic farmer, or even have a Christmas tree farm or another piece of the acreage. All of these ways of funneling different types of revenues into your business bank account off of one property allows you to maximize the leverage that you’ve created on that one property. Because I always say to folks, listen, real estate is something … There’s a lot of things that you don’t need.
Probably don’t need to literally pay attention to the physics, algebra, geometry, even though it’s really good, that teaches you how to think, you don’t really use that on day-to-day basis. Every single person in a civilized world needs to understand real estate because you need shelter over your head. You need to provide a safe place for your family, for your kids, and so you have to understand it, or you’re going to be at the mercy of the market and landlords and the banks for the rest of your life.
If you have to understand something, why don’t you make a business and make money off of it? If you’re going to leverage, like what Tony brought up earlier, $50,000, and you have to go and put a down payment on a home for your family to live in, why not consider leveraging that same $50,000 for a down payment into a property that generates you two or three income streams, maybe even five or six income streams. Now you have a lot more flexibility financially and you can create a business for yourself that’s a lot more freeing than your, for me, a 7:00 to 7:00 job. Does that make sense?

Tony:
Now, I’m thinking about like all the ways I can divvy up my land in Joshua Tree to start [inaudible 00:28:13]. Like, can people farm in Joshua Tree? I don’t know, but we’ll find a way. We’ll make it happen. Kai, you also talked about unique stays, and this is becoming super, super important in the world of short-term rentals. For those of you, the rookies that are listening that aren’t super familiar with the Airbnb platform, they’re rolled out a big update this past summer, this summer.
One of the things that they allow you to do on the Airbnb site now is search based on the entire world, pretty much. Before, you had to enter a location to say, this is the city, this is the area that I want to go. Now you can just hit a button that says I’m flexible, and what they’ll do is just show you all the really cool unique stays around the globe. Airbnb is really pushing to elevate the visibility of these unique stays within the platform because they know obviously, that A, that’s what draws a lot of people into the platform.
B, that’s how they can continue to separate themselves from a traditional like Marriott, Hilton type stay. Kai, what are some of the, maybe more unique stays that you developed? Then I guess, where do you see that unique stay going within your own portfolio?

Kai:
Yeah, absolutely. My forks, they were container homes, or are our container homes. This place that we’re sitting in right now is essentially a container home, and then if you watch the channel, or just on the other side of these walls right here, I’ve got four containers that are under construction right now. That’s a bit kind of tough in this weird market of construction and materials.

Ashley:
We should have set it up so we could get a home tour.

Kai:
I know. I wish I could I just grab the camera and walk you around on it. This place right now was designed to be 10 containers, and then that one was going to be four containers. Then just down the hill, I know I’m pointing at nothing here, but just down the hill is a platform where we’ll be putting a dome tent. The unique stays is I got into it again, Tony, kind of like you, is I got into it because I was interested in it. I saw it as a good equity play. I had no idea that it was going to become the future.
I shouldn’t say I had no idea, but I didn’t think that Airbnb was going to move so drastically in this direction. I honestly thought that single family homes, condos inside the city were going to be the staple for this business because that’s where everybody want to go. They want to go in the city. Then I got all this acreage outside of the city, about 35 minutes outside the city, and then I set this up. Already knew the numbers in this area, it was occupancy rates of like maybe 40%, 30% with average nightly rates around like $60, $70 a night.
Then I put this up, and then all of a sudden, we’re hitting 100% occupancy rates at like $150 a night. 100% occupancy rate at $175 a night. Then you’re like, oh my gosh, what’s happening? This is not the market. Then what we realized is that we accidentally created a market in this place by being so unique and so different from everybody else. Literally everybody else was like either a basement, a small guest house or a farmhouse that they were renting out, and it was not like a nice farmhouse. It’s like a dingy country farmhouse.
Then all of a sudden, you have this brand new, modern container home that overlooks a lake and valley views and a sunset, and then people are wanting to experience that. The unique stays or not so much as about the uniqueness of the structure itself, but it’s more about the overall experience that you can give people, and people are willing to pay for that. What we realized is then, my business mindset started going, who’s our customer? What are our numbers look like? What’s the unit economics? Then what are people really paying for? That’s how we started diving deeper and we started taking on these new projects, and now we’re doing like floating A-frames. So, I’m going to do a floating tent or a floating dome tent soon. We’ve got the platform deck down there for the glamp site.
A lot of this is inspired by [inaudible 00:31:53] Rob Bill, mutual friend of ours, talking to him and seeing what he went through is learning from other people who are experts in their own niche and learning from them and then borrowing or stealing their ideas a little bit. That’s what we’re doing now. So, now we’re shifting a little bit away from just container homes, but we’re shifting into like, okay, how do we make more unique stays? And that’s our next big project, where we’re creating literally floating homes on top of like a pond where people can experience a totally different experience, but in the same area. Does that make sense?

Ashley:
My biggest takeaway from that was that you are creating a destination.

Kai:
Yes.

Ashley:
So, location really doesn’t matter to you because you’re creating that destination. You’re making it one, you are being a location. I think it was so cool, and I think a lot of times people don’t think out of the box like that. That, okay, well, what market would be a hot Airbnb? Not to poke at Tony or anything, but just saying, like he’s drawn to two destinations. I would be too, if I was doing short-term rentals all over. I love that, that you have found a way to create a destination so people are coming to you.

Kai:
Just on your point, Ashley, you brought up a really good point there is, so I do still, a lot of the folks that are starting off, it’s what I call the golden triangle. The golden triangle is essentially, there’s three points on the triangle. One is going to be like a populous city and then one is going to be a major attraction, and then the third one is strictly based on who your customer is and what that customer is seeking for. So, if it’s or looking out, looking for, and so whether that’s a hiking trails, bike trails, surf spots, snowboarding areas, whatever that is, that’s the third spot of the triangle.
The legs of that triangle needs to be less than a 30 minute drive, ideally. Now, if it’s a major attraction like Joshua Tree or something like the Grand Canyon, you can extend it out maybe 40, 45 minutes. But for most folks, I would say starting in that golden triangle is the best bet to set up a business. But what you’re indicating that you caught on very quickly, Ashley, is that absolutely, once you know … You know that old saying, once you know the rules, then you break the rules, but you don’t want to break the rules before you understand the rules?
This new location is outside of a golden triangle. However, you hit it right on the dot, is then, when you do that, you have to create a destination spot. You have to create a space where people, it’s so unique and it’s so different, that people, like you understand your customers like, “Hey babe, do you want to check this out? They have a floating A-frame here.” Or like, “Hey, check this out. They have this tree house that I’m totally willing to drive out to just experience it for the weekend, and I will pay 300, 350 a night because it’s so different, and it’s way better than any Marriott or embassy suites inside the city.” Yeah, that was a really good point that you caught too.

Ashley:
Yeah, and I think it’s part of it too, is that they’re going there to spend time in whatever that unique experience is, that they’re not there to look, or they’re not coming there just to surf or to hike or do whatever, it’s because they’re coming to experience, and mostly Instagram themselves all over this unique. I mean, even Tony’s Joshua Tree properties, there are so many people that do Instagram photo shoots and those properties because they’re so unique. That’s really awesome. Now it has my wheels spinning of different [crosstalk 00:35:05] …

Kai:
Did you watch all my videos.

Ashley:
Golden shiny objects.

Kai:
Yeah. I mean, for anybody out there who’s first starting out, you just hit on another one. You’re hitting on a lot of the techniques that I use in my properties, or when we’re thinking up of new plans and ideas, like right now, literally, after this conversation, at one o’clock, I have a meeting with my business partners over that new piece of project, or that new land, and we’re going through, what you just said, is that Instagram-ability. That’s one focal point of our Airbnbs or of our listings, and it requires some creativity and it requires some money or understanding of how to build stuff. But everything that we stepped into or step into, and Tony has done a great job.
I’ve seen a couple of his videos where he gives tours of his places, is you … Most of our customers today are millennials. Millennials are reaching their mid-thirties, or late thirties, maybe even early forties, if I got my numbers right. But regardless, they’re getting into a place where they have money, and they’re either starting families or at that point where they’re in their careers where they have a little bit more time. In your twenties, early thirties, you’re really hustling, working hard and you don’t have time to travel. Most of our guests and all of the customers that we see have money or discretionary income, and they’re in that mid 30 range and they love Instagram. They love TikTok. They love YouTube, they love Facebook.
We always think about every point, we have different points of contact around the property, around the home. Whereas like, where can they take photos for their Instagram? We’re not going to tell them, it’s like, hey, take a photo here. But we want to create a space or an environment where they are willing to take a photo or want to take a photo, and that’s huge for the business. I have a friend down in Florida that’s doing an insane job, good job of land hacking and venue hacking of property. Most of her business comes from Instagram, because the hashtags that people create, they then go to her site and they book it.
That’s something that’s very important, maybe a little bit more intermediate to advanced, is you eventually want to create different ways of getting guests, not just through Airbnb, but through your own site, and that’s a fantastic way of doing it, is through Instagram.

Tony:
Dropping so much knowledge here, Kai. I love it, man. We’re given the rookies like the PhD of short-term rentals and all the kind of ninja tricks that go on behind the scenes, man. We want to move into our deal deep dive. Do you have a specific deal in mind that we can kind of drill down into?

Kai:
Sure. Yeah.

Tony:
All right. First off is tell us what market this deal is in, what city did you buy that deal in?

Kai:
This one is in, I can’t give it out, I don’t want to give that out because … I will say it’s outside of Portland. Is that fair?

Tony:
Okay. Fair enough. Outside of the Portland Area. And what kind of property was this? Was it land? Was it an actual structure already? What was the property characteristics?

Kai:
That was why the deal is so interesting. It looked like raw land, but what had happened was that it was about seven acres and it had been owned by the bank and there was literally a mansion, like a mansion that was on it that was just very recently torn down because it was sitting there unfinished for, I think it was about four or five years and it was starting to falling in on itself. So, it was tagged, the property was tagged as having landslide or “land issues.” So, nobody had touched it in this very hot market for, I think literally for like four years being on the market.

Tony:
Wow. Okay. Sorry, you said that was how many acres?

Kai:
Seven acres.

Tony:
Seven acres. Wow. Four years in the market, that is in sane in today’s …

Kai:
Four years on the market. I think it was actually longer, Tony, now that I think about it. It was probably six or seven years, but you got to remember, it had literally this like almost 11,000 square foot mansion on it that was 60% done and collapsing in on itself, and it had land issues. Then what happened is when it didn’t sell or it was just sitting there for three years, bank took it back. Remember, that happened right around the recession. And then they were forced to demo that home, and then still it had tagged land issues and they didn’t do a very good job of cleaning up the site, and so a lot of people didn’t want to buy it because of that.

Tony:
Got it. What did you end up purchasing this property for?

Kai:
It was originally, the land itself was originally listed at 335, and I eventually got it for 90,000.

Tony:
90,000.

Kai:
Yeah. It was a lot of negotiating.

Tony:
All right. Okay. We’ll circle back to how the heck you did that and just … But let’s keep running through the deal. Once you closed in this property, what did you do with the land?

Kai:
I started building on it. Obviously I cleared it. This was like my … I guess if that downtown place was my cornerstone, I guess that the next corner was this property. I’m speaking to you from this property right now. I personally built a home on it. I cleared it, excavated it, and then built the house that you see, and then also everything on the channel, the shipping container, the great glamp site, that’s all on this property too. That was a lot of work. But before that though, before we developed all that, we had to address the land issue because the county already knew about it, and I definitely didn’t want to build another home that was going to have sinking issue or landslide issues.
There’s a little bit of a gamble there that I had to take to close on it, just back up a little bit. If you don’t mind, is that okay, Tony? If I back up a little bit?

Tony:
Yeah. No, absolutely. Yeah.

Kai:
Okay. Essentially, when I was negotiating buying the land, the reason why people didn’t want to buy it was because of the land issue and the previous house began to sink. Again, market analysis is one thing that I always tell people, and market analysis isn’t always sitting from the computer and clicking on different links and different numbers, and I’m trying to gather data. A lot of it is getting on the ground and then reaching out to people, and that’s what I did. I first started reaching out to the county and then I even reached out to the neighbors, and I was asking the neighbors, what was going on? You’ll be super surprised at how much information neighbors now, especially on the country and rural land. They know virtually everything.
I was lucky enough that my neighbor, that I’m still very, very good friends with, he was actually a builder and he said, “Oh yeah, they were having land issues because they didn’t bring in the fill correctly. They didn’t bring in structural fill. They just put in fill dirt and they just built on top of it.” And anybody who’s new, you need very solid ground to build any type of structure, especially an 11,000 square foot mansion, and they didn’t do this, so the home started sink. Now, coincidentally, we’re also on a landslide area because it’s overlooking like this valley, it has beautiful views and everything.
Those two combined, the creative story in people’s head is, because of the landslide issues, the house sunk. But in reality, based off what I talked to the county and I dug into geo-tech reports from the past, and then talking to the neighbor, I started to formulate a photo or a picture in my head. I was like, I don’t think it was so much about the landslide issue. I think it’s more of how the house was constructed. And then that’s when I brought, and I hired a geo-tech engineer, and this is the part where you’d have to take that leap of faith, where I created the scenario in my head that I thought was more realistic than what people were painting out to me.
I had to pay that geo-tech, I think it was $2,500, I think it was $2,500 that time, to come out to this site and say that the ground was okay to build on. And if I didn’t, that was out, that $2,500. If he said, nope, it’s landslide issues, then I was out that money, but I took that gamble and he came back. He was like, yeah, this is perfect. You just need to dig past this fill dirt and you can build on the ground. You’d be 100%, and that’s when I made my offer, but the bank didn’t know that, and I made that offer, they gladly took it because they thought it was a landslide risk.

Tony:
That is phenomenal, but that’s great, right? Because I think the lesson to pull out there, Kai, is just because a property has been sitting for a long time, that doesn’t necessarily mean that it’s still not a good investment, right? If you can identify the value that lies inside of that property and leverage whatever information you have to get a good deal, then you’re doing exactly what a real estate investor should be doing. You don’t have to share this if you’re not comfortable, Kai, but do you know around what that property is now worth today?

Kai:
With all the structures, it’s worth around 1.2 to 1.3?

Tony:
Look at that.

Ashley:
How much did you put into it for the structures, would you say like total?

Kai:
Remember, I built it myself, so the labor was all me. There was about, and structure’s about probably 450. 450 maybe 475, around there.

Ashley:
So, great equity build up, almost double, more than double.

Kai:
Yeah. It’s great equity, and it allows you … Not only does it allow me to then go out and get, if I wanted leverage and get loans against yeah, that HELOC, against it obviously, but just that proven … You remember that track record, the results, now you get people, it’s like, hey, can you come help us with this other project? Hey, we saw you do this. Hey, you did this. And then you’re able to open yourself up to a lot more other deals because of the results that you have in the past, and that’s one of them.

Ashley:
Well, thank you so much for sharing that with us. The last thing I wanted to know was just the financing piece on the container homes. Are you able to get financing on those, or is it just kind of, because it’s on your primary residence that you’ve been able to finance the property or get that line of credit?

Kai:
Yeah, that’s a great question that I get all the time. I actually had a couple of different that I could have done it. I’m paying for it cash, but I do have a HELOC that’s always my backup, and then also, if I wanted to, I could’ve gotten a mortgage on it because they are permanent and engineered. A lot of times, this is why I talked to folks about land hacking, is that you want permanent structures. You don’t have to stick to permanent structures, because eventually, trailers, glamp sites, that type of stuff, is because it creates so much equity and you can get loans on them.
Just because shipping containers are unique and different, it doesn’t mean that it’s not financeable. A lot of times banks just want to make sure that the money is safe, that whatever the money they’re giving you, that you can recoup it, and typically, you go through permitting engineers, architects, and you can show them that it’s going to be at value, if not higher, they’ll be more than happy to lend it to you, especially if you have a good credit score, assets, collateral and all that stuff, and a good relationship with that bank. In my situation, I did have three different scenarios, whether I could do cash, HELOC or a loan, and I decided to go at it with cash for this project.

Ashley:
It is probably a lot easier to repossess the storage container than it is to foreclose on a house too.

Tony:
You just pick it up and get a big tow truck.

Ashley:
Yeah, the property.

Tony:
All right. Well, Kai, thanks for giving us that rookie deal, man. I love going behind the scenes on how you put things together, and I’m sure there are a lot of rookies now who are going to be looking up how to start land hacking, so thank you for giving them that, that new phrase, that new idea, because I’m sure you just inspired a lot of people, man. What I want to hit on next, Kai, is I want to take us to our mindset segment.
This is where we get into the psyche of the guest on the show and see what nuggets we can pull out for our rookies. If you think back to when you first started, what were some of the misconceptions or assumptions you made that turned out to not be true about becoming a real estate investor? To add some more context there, I think a lot of times rookie investors that build up so much fear around getting started, fear that this might go wrong, fear that this might go wrong, fear that this won’t work out, but when they get started, they realize that some of those fears weren’t true. What was that story for you? What did that look like?

Kai:
Oh man, that’s a good one. I think a big fear that I had, and just it comes from my family, is the fear of losing what you already have. Because you worked so hard to get to a certain point, and it could be financial, it could be a social status, it could be your job, it could be your position in your career, or whatever that may be, is that if you go all in or you even step a toe or put a foot into this other world, you could potentially lose what you’ve already built up. That was a few that I had that was very real. It’s like, I’ve already saved up at this point in time … At each stage, I still have it now. It’s like, okay, I’ve already made X amount of dollars. I have this in my big account.
If I do this deal and then I can’t sell it or I can’t rent it out, now I’m out my money and I’m now stuck in my job for even more. I have to get a second job. That was my biggest fear. Stepping out of it is not over-leveraging yourself, is what I found out, because at first I was like, every entrepreneur has this. You have scope creep. Okay, I can start off with this. Then you’re like, oh wait, wait, but if I do this, then I can do this, and then I can do this, and I can make this. And then scope creep just keeps on growing, growing, growing until you have this massive deal, and you’re like, it’s way out of my league.
For folks, I say start small. That’s what I did, is I started really small, and at that time, I took advantage of the time, 0% down, interest-only loan, and I got into, it’s classified as a condo, but it really was like, it was like a quadplex type of building, is what I first purchased, or just one unit of that quadplex. I got into that instead of the single family home or even the town-home that were significantly more expensive because I could afford that. Then I proved and I learned the skills that I need to learn in that smaller deal that’s not as sexy or attractive, but then I built experience and skillsets that I was able to apply to the next deal, and then the next deal, and the next deal, the next deal, and it just slowly grew from there.
So, if you’re starting, you’re frightened by it, I like to use … I always say to folks is like use numbers to prove you right or prove you’re wrong. The challenging part is being unbiased when you’re running the numbers. When I go into new deals, I try to be as neutral as possible to either prove my initial reaction or my gut instinct correct or incorrect, and everything is based off of numbers now, these days. Everyone once in a while I feel like I’m making a gut check, whether you use red or blue for painting or something like that, but when it comes to numbers, I don’t, yeah, I don’t mess around with that.
I tried to make sure that makes sense. The numbers make sense, and if you have a business partner, somebody that’s more educated in an area than you, then I would run those numbers by fresh set of eyes and say, “Hey, what do you think about this?” Honestly, today, I have two business partners that I do that all the time with. And it either helps me get into a new deal or I get out of the deal.

Tony:
Kai, there’s always like one part, yeah, there’s always like one part of the episode where we’re like, you got to go back and re-listen to it, and Kai, that was this part for that episode, man. You dropped so many good things about the technical side of how to get started, but what you just said about pushing past that fear, that’s what the rookies needed to hear. That’s what they needed to hear to get that first deal done, man, so that was beautiful. Love it.

Ashley:
And your worst case scenario was that you went back to your job.

Kai:
Yeah.

Ashley:
I mean, that’s a lot of people’s everyday life, is going back to a job. You hear that a lot too, like in the fire community, the financial independence. Well, what happens if the stock market crashes or you lose this whatever? It’s like, okay, well then I go back to working a job just like everybody else. Just one other thing on that too, was that you talked about how you could afford your house hack on your own and you didn’t go to big or buy something else. I think that can be a real sense of security for someone who does have a fear of getting started, will then buy something that you could afford on your own.
But if you’re house hacking, that’s just even better suite, that you’re getting cashflow or you’re having it paid for, or part of it paid for. But taking that step where you’re not going above and beyond and buying this outrageous house because you want a house hack, if you can afford it on your own, then that’s kind of like your security there, that maybe if you don’t have roommates for a couple of months, you’re being able to pay it on your own worst case scenario. Like everybody else, who pays their [crosstalk 00:50:34].

Kai:
Ashley, you Did another great job of just digging right to the core. That was the first thing, just by you saying it, reminded me, is another lesson from Rich Dad Poor Dad. I think it was Rich Dad Poor Dad. I was a Tony Robbins fan when I was really young too. Actually, Tony, when I first saw your name pop up, I was like, you know, Tony Robbins?

Tony:
I get that all the time.

Kai:
I was like, dude, that’s so cool. You knew Tony Robbins, but …

Tony:
People are often disappointed when they see in person. They’re like, this is not who I thought I was coming to meet today.

Kai:
Yeah, I was like, yeah.

Ashley:
You should have heard when they told me my co-host was going to be Tony Robbins.

Kai:
Straight to the top. I think it was either Tony Robbins or Rich Dad Poor Dad, Robert Kiyosaki, but they said, what’s your worst case scenario? Play it out. Honestly, is it you sleeping on the streets in the gutter, no food and your family just like leaves you? I was like, for most Americans, most people, that’s not the case. If you actually think that through, what your worst case, at 21-years-old, I’m like, oh, my worst case is I’m living my worst case, is I sleep at my mom’s place or my family’s place. That was my worst case scenario.
I could lose everything and I’d just go back to my mom’s house and I rebuild and I reconstruct and I get back out there. But I knew that I wasn’t going to be homeless. I wasn’t going to be having to go to the homeless shelter or anything like that. At that time, it’s a lot of money, don’t get me wrong, I think it was like 20,000 or $22,000 in my bank account. If I lost it, okay, I was 21-years-old. I know I could make it again. I know folks are starting all different stages, but when you really run through your worst case scenario, and I’m really truly mean your worst case scenario, like sleeping in the gutter, is that really what would happen or do you just have to restart in a family’s home?
Now, I know not all of those have that opportunity, but playing out that scenario helps us make a decision moving forward, and then what you just brought up, Ashley’s a safety nets. Whenever I get into the deal, even the deal that I’m getting into with, I don’t think I said this in the beginning, the new deal that we’re getting into is a 267 acre piece of property that I got for $0 to get access to or to acquire. The worst or the safety nets in all of my properties, I always run the numbers.
So, it’s either house hack, short-term rental, to make the significant cashflow play, or do I have to long-term rent it out to make maybe a couple hundred bucks? Now, that doesn’t even work, but if I have to drop the rent rate by even 35% just to get somebody into the house to help pay the mortgage, how long can I survive losing $400 a month because I have to make up the difference between what rent is and what my mortgage payment is? If that number is like, oh, I can afford $500 in a perpetuity, I can do that forever. I make way more than $500. Or at that time, it’s like, I can do that for two years or I can do it for six months, right?
That helps gives you a game plan, and then the worst case scenario is I have to liquidate. If I have to sell this property, how much money do I get or how much money do I lose? You play that game long enough and you make the right strategic decisions so you don’t ever go bankrupt or you don’t lose, or in your worst case scenario or your bad case scenario, is we have to rent it out to somebody and you lose $300 a month, you can survive and ride out those recessions. You do that long enough, and you get to a point where today, like 2020, Tony, I’m not sure if you, or Ashley, if you guys were both inside the short-term rental market at that time when the pandemic hit, but we literally could have sat on our properties for a decade because we already went through that mindset of setting up all of those safety nets.
And worst case scenario, absolute worst case scenario, if we had to sell some of our properties or whatnot, we would have made so much money just from the equity play that we had set up several years back, right? So, you have the equity safety net, you have the long-term rental safety net. You have your cash reserves safety net, and then you obviously have all the cashflows from the short-term rentals and such. When you do that, it reduces the fear of going into new deals, is because you already have a system in place with several layers of safety nets.

Ashley:
Thank you so much for sharing that, and I think it needs to be constantly reinforced to rookie investors and even experienced investors, because you get so caught up in the growth and the scaling, and let’s go, let’s go, let’s go. Even for you, you said it was two years, I think, before you bought your second property and then gradually snowballed and you’ve … Accumulating 257 acres now. That’s awesome. Yeah, definitely, rookies, take that away, like set up those securities, set up those exit strategies when you’re looking at a deal. I want to go to our rookie request line now. Anybody can call in at 1-885-ROOKIE, and leave a voicemail for Tony and I, and we may choose it to play on an episode for a guest to answer your question.

Maria:
Hi, my name is [Maria 00:55:13], out of Chicago, Illinois, and I’m calling to ask how to buy my biggest property. Where do you get the finances from? Do you really have to have 20% down cash to buy it? Thanks, bye.

Kai:
A lot of times what you can do is if your first property, I’m assuming your first property is probably your primary property. If it’s not your primary property and you’re house hacking and you have income, if you pay taxes on that income, then you can actually use that to go to the bank and say like, hey, I have my 9:00 to 5:00 job, my W-2, and I also have this rental income or this other income from this other source. Reporting, that’s what I was thinking of. Then also, this is when I had to use co-signers. When you’re young and you’re starting off and maybe your salary is not as growing as fast as it needs to be, to be able to purchase multiple properties, use co-signers, if you have it, whether … But you have to make sure that these co-signers are people that obviously clearly trust you and that you also trust them.
Other options too, is probably hard money, hard money lenders, where it’s basically private equity, where it’s a short-term loan, but you want to be very careful that you read the terms, because interest rates are usually higher and the terms are a lot shorter. But that’s, they usually assess the value of the property itself instead of your W-2 or your income, but they’re going to be digging into you in different ways. Then also seller finance. Seller finance is probably one of my favorites. That’s how we just basically got into this other deal that we just kind of closed or working on closing on right now, is seller finance, basically you can set up whatever the terms are that you want to negotiate with that seller.
At the end of the day, if you don’t pay or you miss it, they get their property back. When people are first starting out, that’s usually what I kind of point them in the direction with, but the financial markers are really your best bet, if you really want to grow and expand, is figuring out how do you increase your income or reported income if you want to work with traditional lenders, or you’re going to have to be strategic about co-signers and maybe even hard money lenders or seller finance deals.

Tony:
Awesome, Kai. Before we wrap up, I just want to give a quick shout out to our rookie rockstar for this week. And this week’s rookie rockstar is Cody G., and Cody just got an offer accepted for not one, not two, but three duplexes. Each one is a two-one at 800 square feet. Cody said that this pushes me to my lien fi number. Cody’s at 18 apartments and two houses with $3,200 in monthly cashflow, all of them, 120 notes. And then he’s getting another 3,000 or so in mortgage pay down. It took them four years to make this happen, but Cody is absolutely crushing it. So, Cody big shout out to you for hitting your fi number. That’s what everybody wants, right?

Kai:
That’s awesome.

Ashley:
That’s so awesome. Yeah. Kai, thank you so much for joining us today. Can you tell everyone a little bit more about you or where they can reach out to you and get some more information about you?

Kai:
Sure. Just go to my website, kaiandrew.com. I have a bunch of free stuff on there where you can see my spreadsheets on how I analyze deals. I have PDFs and guides, and they’re all free guides. Just, if you go there, you’re more than welcome to take a look at it, or you can just join me on Instagram, just kaijandrew on Instagram. Yeah, I’m really responsive typically through email or group messages. If you have any questions, just shoot me your question.

Tony:
Yeah, Kai, you’ve also got a really cool YouTube channel. Don’t sell yourself short there.

Kai:
Oh, I appreciate it, bringing that up.

Tony:
Yeah.

Kai:
Yeah. I also have a YouTube channel, Kai Andrew, where I talk about short-term rentals, my journey, all my projects that I’m working on from the glamp sites to this new deal that I just published that video yesterday about the property that we just got. So, if you’re interested in that, watch that. And then just short term rentals, and then basically, like what we’re discussing here, is just getting to your fire number, or getting to retire early, or get to your financial independence earlier. We talk about all that type of stuff on my channel too.

Ashley:
Well, thank you so much. This has been really awesome. We’ve loved all the information you’ve given us some short term rentals and your advice too. It’s been really great.

Kai:
Thank you so much for having me. This is really cool.

Ashley:
Yeah. I’m Ashley @wealthfromrentals, and he’s Tony @tonyjrobinson on Instagram, and we will be back on Saturday with a Rookie Reply. Have a great week, everyone.

 

Watch the Podcast Here

In This Episode We Cover

  • Why house hacking is still a relevant strategy in today’s market
  • How to convince your partner/parents/friends to invest with an investor presentation
  • Airbnb arbitrage (rental arbitrage) and building your business with no home purchase necessary
  • Land hacking and using a single property for many income streams
  • Creating a “golden triangle” for your unique short-term rentals
  • Setting up safety nets so you never have to realize your “worst-case scenario”
  • And So Much More!

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