Rookie Podcast 111: 26 Doors in 1 Year? Here’s How You Can Do It Too!

Rookie Podcast 111: 26 Doors in 1 Year? Here’s How You Can Do It Too!

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Purchasing one rental property is an accomplishment in itself, but what about purchasing 26 units in your first year of real estate investing? Not many do it, but someone who has is Amelia McGee. Amelia didn’t have any formal training on real estate investing. She wasn’t a broker, an agent, or a contractor; none of her family invested in real estate either. You could say that Amelia had to take a ‘’leap of faith” to begin her real estate investing career, a leap that has paid off quickly.

Amelia had exhausted much of her funds after investing in her first deals, but through leveraging her social media she was able to find partners who funded the down payment for an 11-unit apartment complex. She received equity for her hard work and her financers received equity for their risk, a true win-win!

Now, Amelia is helping others purchase their first deals by TA-ing for Ashley during BiggerPockets Rookie Boot Camp. If you weren’t able to get in on the Bootcamp this time, fill out this form to be notified when sessions open up next!

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Listen to the Podcast Here

Read the Transcript Here

Ashley:
This is Real Estate Rookie, episode 111.

Amelia:
And I made a very modest salary of $50,000 a year. So, I wasn’t making a ton of money, and you don’t have to be either to grow and expand in the real estate space.

Ashley:
My name is Ashley Kehr, and I am here with my cohost, Tony Robinson.

Tony:
Ashley, what’s going on?

Ashley:
Today, it’s been a long day of recording for me, Tony.

Tony:
It has been. It has been. We’re going on like an hour four, four or five right now that been in the series, but we do it with gratitude. We do it with love. Because we know that all the Rookies listening on the other side are getting some value from it. It’s really weird being a podcast host, because when we’re recording these episodes, it’s me in my office, Ashley in her office, the guests in their office, wherever that is in the middle of the United States, and we don’t get to see the people on the other side.
But when we hear from folks on the Facebook group, on Instagram, I think that it reminds me that there’s so many people that are listening, that are impacted, that are getting value from what we’re doing. So, it makes a long day as well worth it.

Ashley:
Yeah. And it’s not in the long days, it’s just like, you get so hyped up talking to everyone and then you get expired that you’re like sitting here jittery. Like, “Okay, I got to go [inaudible 00:01:19]. I got to go do this, or I got to get this done.” I get all hyped up and ramped up. I could start my morning like, “I feel tired today.” And then, by the end of the podcast, I’m all-

Tony:
Jazzed up and ready for the next thing.

Ashley:
Jazzed up with the next thing. All right.

Tony:
Well, if we can this shiny object. So, my most recent shiny object was a nine-unit hotel. We put off on that last week. We’ve been going back and forth with the broker. So, I’m hoping to hear something back today. But I’ll be super, super excited if we can make that happen. Because we’ll get the benefits of commercial real estate, because it’s a nine unit, with all of the things we love about short-term rentals and mold those two worlds together.

Ashley:
I think we’re going to have to do a Rookie Reply on Saturday, if you end up going through with this deal.

Tony:
Absolutely.

Ashley:
Like, what does the due diligence period look like? Because I have… I don’t know if I told you guys this, but I have a self-storage facility under contract. And it has three commercial buildings with the self-storage, and one is mechanic service shop. So, I’m having an environmental phase one done with it. I’m doing seller financing on it. But I talked to a bank for, if I do decide to go and refinance using their preferred person for the environmental study, but those would be all great things to talk about, I think on a Rookie Reply is, what goes into a commercial property purchase.

Tony:
Cool. Well, let’s get into today’s episode here.

Ashley:
Well, today, tell me what are we talking about today?

Tony:
We got Amelia today. And Amelia’s story is super, super inspiring. And I think what listeners are going to love is that she closed on, not one, not five, not 10, not 20, but 26 doors in her first year of real estate investing. It just absolutely blows my mind.

Ashley:
And she quit her W-2 job. And she found a partner on Instagram for one of her deals. Like, there’s just so many amazing things to her story. She started out with a flip house and then just really grew and propelled her investing portfolio from there. So, another great thing about Amelia is she is a TA in the BiggerPockets Real Estate Rookie Bootcamp. So, anybody that is in her group is super lucky to be learning from her and getting to share that experience with her. Let’s bring Amelia onto the show.

Tony:
Amelia, welcome to the BiggerPockets Real Estate Rookie Podcast. And we’re super pumped to have you on. Why don’t you give us, give the listeners a little bit of your backstory, who you are and how you got started in world of real estate investing.

Amelia:
Yeah, thank you so much for having me. I’m so honored to be on the show. So, my name is Amelia. I’m 29 years old, and I live in Des Moines, Iowa. I have only been investing in real estate for about a year now. And I just closed on my 26th door yesterday. So, I’m very excited to share how I was able to grow so rapidly in one year.

Tony:
And the Rookies are very excited to hear exactly how you did that. So, it’s going to be a good time getting into that. But before we do, I mean, one year, 26 doors, that’s a whole heck of a lot of work. Were you an agent, or were you a contractor? Were you a property manager? What were you doing before you bought that first door that helps you scale so quickly?

Amelia:
Yeah. So actually, I didn’t have any background in real estate and none of my family members really had any background in real estate either. I was basically just looking for a way to earn passive income, and I stumbled across real estate and convinced my parents to go in on a flip with me. And from there, everything just snowballed.

Ashley:
Before we get into more of your first deal and your background, can you just give us a quick overview of what your portfolio looks like? So, what does those 26 doors? What are they made up of? Are they single-family, apartment complexes, et cetera?

Amelia:
Yeah. So, I started out with a flip and use the proceeds of that flip to buy a few small multi-families. I currently own two triplexes, a quadplex, five single-family homes that I purchased from another real estate investor in a portfolio. And then, most recently, I closed on an 11-unit apartment.

Ashley:
That is awesome. Congratulations.

Amelia:
Thank you.

Ashley:
So, what were you doing before real estate, your 9:00 to 5:00 job? And then, what was that moment like when you decided you wanted to be an investor?

Amelia:
Yeah. So, before I started in real estate, I was a project manager for a magazine company. And I made a very modest salary of $50,000 a year. So, I wasn’t making a ton of money, and you don’t have to be either to grow and expand in the real estate space.

Tony:
So, can we talk a little bit more about that? Because I think that’s a pretty critical piece here, it seems like. To kickstart your career, can you just give us the quick numbers on the flip? How much profit did you actually make from that? And how is that distributed between the two small multifamily properties that you purchased?

Amelia:
Yep. So, the flip we purchased now, I remember I’m in Iowa, in rural Iowa. So, the properties here are a lot cheaper than they would be in some higher cost of living cities. So, we purchased the four-bedroom, two-bathroom house for $30,000. We put about $30,000 into the property and ended up selling it for a little over $120,000. So, we came out with $60,000 in profit, and we split that profit 50/50. And then, from there, I used my portion of the profit to purchase a triplex along with some money that I had saved during that time while we were renovating that house.
So, I purchased that triplex all cash and stumbled into a BRRRR. Basically, my appraisal wasn’t going to come back in the amount of time that I wanted it to because I had already advertised the property and had tenants ready to move in before the appraisal could get done. So, I said, “You know what? I’m just going to purchase it all cash. And then, I’m just going to fix it up real quick in two weeks, and refinance it.” And the local bank that I used was okay with that. It was pretty much a perfect BRRRR. I got out all the money that I had put into it.
So, I reutilize that money to put another down payment on the quad, fourplex that I also own. Fun fact, it’s the same owners for both. It was the same previous owners for the triplex and the quadplex. They weren’t planning on selling the quad. But when I bought the triplex, I said, “Hey, are you guys interested in selling that other building that you own?” And they were gung-ho for that. So, that’s how I got that deal.

Tony:
There are two strategies that you utilized already for your first three real estate transaction. So, you did a flip, you got a partnership, and then you did a BRRRR. And then, you also went direct to seller, right? These are all different strategies that people try and leverage. And you prove that you don’t have to have a ton of experience to make those strategies work. And I love that you’re able to represent that or be a good example of that for the listeners.

Amelia:
Right, exactly. And I really want to show that you don’t have to know everything, and you don’t have to be perfect at something before you start. That’s just how I roll. I just go with the flow. And I learn as I’m going. Don’t let not knowing everything be an excuse to not get started.

Ashley:
As a rookie investor, when you decided you were going to jump into real estate, what were some of the things you read about or you learned about? What would be your advice to Rookie listeners today as to, they want to start investing, they’re brand-new, where do they even start?

Amelia:
Yeah. So, I get that question a decent amount on Instagram. And it’s the most cliché thing, and a lot of people say it. But truly just reading online, BiggerPockets is a huge resource for investors. I was self-taught. I literally just read online how to do it, read online how to run my numbers. And then, I’m also a firm believer in thinking of the worst-case scenario. And if you can handle whatever the worst-case scenario is, then it’s okay to move forward with that deal. And my worst-case scenario was, I don’t make any money.
And I’m still okay because I have a W-2 income that can cover the mortgage or whatever, for a certain period of time.

Ashley:
That’s great. I love that advice. So, let’s talk about your partnership with your parents. So, you have no experience, and they’ve jumped on board with you to do this flip. How did that conversation go?

Amelia:
Yeah. So, I think jumped is an aggressive word to use, it took a while to convince them. I had been looking at buying a flip or actually a flip. I wasn’t even interested in rentals when I first got started. So, I had been looking for about a year and sending those details to my mom, because my mom was the easier target. My dad was harder to convince. So, I’d been sending those details to her and just saying like, “Look, this is such a great deal.
There’s absolutely no way we’re going to lose money on this. Here’s the numbers. Here’s the estimated rehab, plus with the profits 50/50.” And so, finally, a deal came along that the numbers made perfect sense to them. And we convinced my dad to go in on this flip with us. And it worked out well. And they’ve been gung-ho ever since.

Ashley:
So, you said you presented to your parents the numbers and said that you’re going to make dealing lists. You talked about giving them the rehab estimate. How did you get comfortable? Because that hangs a lot of people up as to, “Well, I don’t know how much this cost, or I don’t know how to do repairs or a remodel.” How did you get comfortable with that being your first deal?

Amelia:
Yeah. So, my parents are both pretty handy. So, I knew that we were going to be able to do a lot of the work ourselves. So, for the supplies budget, I basically just went online to Home Depot, Menards, Lowe’s, looked up all of those items, put them into a spreadsheet. It was very basic, but it worked. And then, anything that we were going to have to pay for labor-wise, I basically just did a Google search, and took the highest estimate. They’ll give you a range, “Okay, here’s how much it’s going to cost to re-plumb a house.” So, I would use the high end of that and plugged it in. So really, it was just Google. I’m serious.

Tony:
That’s such a good answer, because it shows that it’s not super complicated to figure those things out, right? And as long as you put one foot in front of the other, and you keep searching for answers to the questions that you have, eventually you get to a point where things start to happen. You closed that first deal, and then you’re off to the races. I think if there’s one thing that I’ve learned from you so far is that, you don’t need to be an expert to scale quickly, right?
You can learn as you go. And when I was in my W-2 world, we used to call it, building the plane as you’re flying it, right? You’ve already taken off, but you got to keep putting it together while you’re already in the air. I want to talk a little bit about-

Ashley:
You go a David Greene with your analogies.

Tony:
Well, I’m glad. I’m really glad.

Amelia:
That was a really good one. That was a good one.

Tony:
I can’t take any credit from that. My old boss, she’ll say it all the time. But I want to talk a little bit about the financing piece of money because I think that’s another part that working investors tend to get stuck on. So, we know how you finance to flip. We know how you got into your first two small multis, the three and the four. But you since then bought five single-families, bought another three plex, and then an 11-unit apartment complex. How the heck are you coming up with the funds to close in all those deals?

Amelia:
Yeah. So, I partnered on a few of those deals with my parents again. And I just want to put a disclaimer out there. My parents are, they make a decent living, but they are not extremely wealthy by any means. They’re the typical Iowa parents that work their 9:00 to 5:00 job. They’ve got a 401(k) saved. So, they use… actually, they had access to a personal line of credit at a bank that had an amazing interest rate of only 6%. And we didn’t have to pay any money towards it until for an entire year. No payments on interest or anything like that.
So, we basically used the bank as a hard money lender, essentially for the five single-family portfolio. Because I was working with a small bank, they allowed me to take 80% loan to value of whatever the house is appraised at. So, because I purchased them in a large portfolio, I got a great deal on the price. So, they appraised at quite a bit higher than the purchase price. So, I was able to only put 20% down of the appraised value. So, I had some built-in equity there.
The triplex that I purchased most recently, I actually did seller financing on that one at 1% interest. I was just listening to an episode the other day where you guys said you never heard of that. Well, they actually wanted to charge 0% interest, but my boyfriend’s a tax attorney. And apparently, he wasn’t okay with that. So, he said, “It’s got to be 1%.” And then, most recently, this 11 unit that I purchased, I partnered with a couple that I met through Instagram, believe it or not, and they put the full down payment down on the property.
And I’m going to be managing that property for them. So yeah, if you’re not already utilizing social media to network, I highly recommend doing so.

Ashley:
I want to break into that because finding a partner, especially finding a partner on the internet, that’s not something easily done every single day. So, what did that look like? How did that happen? How did the conversation go? And how did you guys end up trusting each other and building this partnership structure?

Amelia:
Yeah, that’s a great question. And I feel very lucky and blessed to be partnering with a couple that I am because we are such a great personality fit. And it just fell into our laps. So, what I did was, I found this great deal in Des Moines, and I ran all the numbers. And I was like, “Wow, this is amazing. It’s a 27% cash on cash return and cash flows over $2,000 a month.” So, I posted about it on Instagram. And I said, “Hey, I’m looking for an equity partner in this to basically front the money for it,” because I don’t have any money left. I’ve spent all my money.

Ashley:
Tony and I know that feeling all the time.

Amelia:
Yeah. So, I posted that on my story. And I had quite a few people reach out to me. So, I just said, “Hey, send me your email address. And I’ll send you all of the info.” So, I basically sent a blanket email to all of the people who had responded to my story. And the Reardons, Jimmy and Serena, were the ones who I ended up ultimately going with. I had a few different options, but they felt like the best fit. And they’ve been amazing to work with.
And everything has just been so easy. I feel so blessed. And again, I started that Instagram. I didn’t know what I was doing, but you don’t have to be perfect to start. Like, look at where it’s led me. I’ve literally made money from my Instagram account now. It’s just crazy.

Ashley:
What did the structures look like? How did you set that up as the… they gave you the down payment, how much equity they have, things like that? What did that look like?

Amelia:
Yep, absolutely. So, the 11-unit is in Des Moines, Iowa. The purchase price was $500,000. So, they put the down payment down for that. We created an LLC. And then, in our operating agreement, they have 60% equity in the property, and I have 40% equity. Obviously, they have a little bit more since they have all the money in the deal right now. And then, so we’re going to split the profit 60/40. And we really just talked all of that out and had an attorney create the operating agreement. And so, that’s how we did it.

Ashley:
And when you discussed that structures, I know a lot of people get caught up as to, “Well, what’s the right way to do it?” Can you reinforce for me how you guys came up with that arrangement? Because I’d like to show to everyone that as long as it’s legal, there is no wrong or right way to structure your partnership deal. I mean, they could have put the money in and they could have got only 20% just because you found the deal, you’re managing the deal, you did the acquisition, stuff like that.
So, can you talk a little bit more about how you guys decided on those numbers?

Amelia:
Yeah, it’s tricky because there wasn’t a whole… I guess there wasn’t a whole lot of thought put into that. I mean, again, I’m a fly by the seat of my pants kind of gal. So, I basically sent that email out and said, “Hey, I’m looking for a 50/50 partnership.” They came back and said, “Basically, since we’re fronting the money, we feel like 6/040 is going to be more fair.”
And I was like sold, “That’s great.” I still have this $500,000 property that I own 40% of basically, and I have no money in the deal yet. So, it was just… and again, that’s why I say I feel so blessed to be partnering with them because everything has been so easy. We’re on the same page about basically everything. And I feel like that’s very important when you’re getting into a partnership with someone. You need to make sure that the personality fit is there.
Because otherwise, you’re basically married to somebody that you can’t stand. That’s extreme, but you got to be careful there.

Tony:
You talked about the structure more so based on who found the deal and who’s putting up the equity. But what happens when after you guys closed or you guys now have closed, right, how are you splitting up the duties of actually running this property, these 11 units on a day to day basis? Are your partner’s doing some of it? Are you doing it all? Is there a property management company in place? What does that look like?

Amelia:
Yep. So, right now, I am the property manager for the property, and so the split is still the same. They’re getting 60% of the net profit each month, and I get 40%. Now, we do have a caveat in there, that if one of the units turns into an Airbnb, which we were looking into, then I’ll get paid an additional 12% on top of my 40% for that specific unit, because it’s a lot more work to manage a short-term Airbnb than it would be to have a long-term tenant in there.

Tony:
And I love that you guys have decided to partner just on this one deal first, right? Like the LLC that you guys created just for this one deal. And that gives you guys an opportunity to feel each other out before you go out and buy 30 of these together. So, Ashely, well, I think when I was on the OG podcast, Brandon mentioned that as his, one of the mistakes he made in partnering with people is that instead of partnering small first, he would do these really big, intricate partnerships with people.
And sometimes it wouldn’t work out. So, I love that you’re already taking that approach of starting small, testing it out, making sure it works. And then, these could be your partners for maybe the rest of your life, right?

Ashley:
You want to date them before you marry them.

Amelia:
Yes, exactly. That’s so true.

Tony:
I got one other question, right? Were you at all, Amelia, nervous, afraid about buying 11 units at once? Because you bought a three, you bought a four, but an 11-unit, that’s three times bigger, almost four times bigger than anything that you’ve purchased. What was your thought process going into that? And how did you get past that fear, if there was any?

Amelia:
Oh, absolutely. I was definitely scared. And I still am scared. And I recently went full-time with real estate investing. So, I no longer have that W-2 salary cushion anymore. But you can’t let fear hold you back. And I know that’s cliché, too. But you have to push through that. And the numbers made sense, so we moved forward. But yeah, I think if the unit is vacant, all 11 units are vacant, I still have to pay the mortgage. I still have to pay the insurance.
And an 11-unit apartment in Des Moines is not cheap. But failure is not an option, honestly, for me. It’s just, it’s not.

Tony:
Fear is something that’s real and holds a lot of people back. But the way that I’ve always framed it is that, being brave, being courageous doesn’t mean that there’s no fear. It means that you move forward in spite of the fear, right? Being courageous, being brave means that you don’t let that fear hold you back. And the point that you made earlier about, like, “What’s the worst-case scenario?
And can I live with that?” I think that’s what the Rookie Real Estate investors really need to take home with them. Because if you can live with that worst-case scenario, then what reason do you have not to move forward? Last thing, Ashley and I were together in Denver a couple of weeks ago, and I think it was Tyler Madden, either Tyler Madden or Nick Cooley said this.
But they were saying like, “If the worst possible outcome of me trying to become a real estate investor is that I have to go out and get a W-2 job and work there for 40 years, then my worst-case scenario is everybody else’s best-case scenario.” Right? “And then, I’m just like everybody else, you have to go with my worst case.” So, I love that approach because it’s so true. And I think you embody that ideal so well, Amelia.

Amelia:
Thank you so much. Yeah, my worst-case scenario, if this doesn’t work out is, I’m just going to go get another W-2 job. You know what I mean? So, I might as well try it.

Ashley:
Amelia, I want to ask about your property management. Are you using any software? Do you have systems in place? What does that look like to grow up to 26 units in one year? I’m sure it’s changed from when you were managing your first property to now. So, can you give us some insight as to how you become successful as a property manager?

Amelia:
Yeah. So again, fly by the seat of my pants, I got set up on apartments.com. And that’s how I’ve been keeping track of all my tenants. I also have the app Stessa that I use to keep track of all of my expenses. And then, most recently, I’ve started using monday.com, because I’m trying to systematize a few things since I am self-managing now all 26 units.

Ashley:
What are some examples of the things you’re using monday.com for?

Amelia:
Really, I’m using it for tenant management right now. You can set up certain auto responses, like for lease renewals, or certain notifications that go out to the tenant based on whatever date you put into the system. So, that’s really what I’m using it for right now. But I know there’s all sorts of different uses for it.

Tony:
Yeah, the software and tools are super important, no matter what part of real estate investing that you’re in. Ash and I talk a lot about how we’ve leveraged software and these different tools to help keep our businesses lean also. I want to switch gears just a little bit, Amelia, because you said that you’re in Des Moines, Iowa, and you said that you’re in a rural part of the country, right? Did you at any point consider investing somewhere else?
Maybe because the numbers didn’t work, or like, were you at all concerned about this world investing? Or was your heart always set on investing in your own backyard?

Amelia:
Yeah. So, I started investing in southern Iowa, which is about an hour south of Des Moines. So, that’s where the rural part of my investing journey started. I know some people are really worried about investing in rural markets, because I just don’t think they understand it. But the specific town that I invest in has all the major things that I was looking for, has a large employer. It has a hospital, and it has the only school district in the county.
So, it’s got a bunch of great things out there. That mean, I’m going to have renters that have jobs. And I actually have some traveling nurses actually staying in one of my units there, because there’s a hospital in town. So, I wasn’t nervous about it. Like I said earlier, I’m more interested in cash flow than appreciation right now. And rural markets are great for cash flow.

Tony:
There are lots of investors who live in coastal states like me, where things are a little bit more expensive. And I think they always want to look to other markets to try and get started. And I think sometimes they shy away from some of the smaller towns because they feel like it might not work. So, I’m glad you’re able to prove that there’s still plenty of opportunities, even in the markets that maybe aren’t as big. So, you dropped a lot of good knowledge so far, Amelia.
I mean, I think we can go into the deal, our Rookie deal. Ash, I don’t know, do you have anything else before we jump into that?

Ashley:
No, I’m excited to hear what deal do you want to talk about, Amelia.

Amelia:
Yeah, let’s talk about the first rental property that I purchased which was the triplex that I did a BRRRR on. Just because I really, like at that point, I didn’t know a ton about real estate still. But I knew how to run the numbers. So yeah, I would love to talk about that.

Ashley:
Tony, do you want to whiz off the questions to her real quick before she gets in the story because you always remember them way better than I do.

Tony:
Yeah. So, we’re going to do this quick-fire round, Amelia, just to set the table for the listeners. What city or what market was this deal in?

Amelia:
This was in southern Iowa, South Central, Iowa to be exact.

Tony:
South Central? I don’t know there is a South Central in Iowa. There’s a South Central and southern California, but it’s probably very different from the South Central in Iowa.

Amelia:
Yes. True it is.

Tony:
What was the purchase price?

Amelia:
The purchase price was $78,000.

Tony:
Seventy-eight? Cool. And what kind of rehab adjustment into this property, if any?

Amelia:
I put about $8,000 into the three units, just new paint and floor and just basically some cosmetic stuff.

Tony:
Got it. Okay. So, we got market, we got purchase price, we got rehab. We’ll put a pause on the rest because I want to know what you’re renting it out for and what it ARV for, and we’ll get to that after you tell us the whole story. So, you get this money from your flip, right?

Amelia:
Mm-hmm (affirmative).

Tony:
And you say, “I got to put this to work somewhere.” So, let us know how you found this triplex. Was it on the MLS? Were you working with the wholesaler? What did you do to find it?

Amelia:
So, it was actually on the MLS. And I know a lot of people say that you can’t find deals on the MLS anymore. Well, that’s not true because I found with quite a few deals on the MLS. So, it was originally listed for $99,000. I went and looked at the property with my realtor, and oh my gosh, it was scary. The tenants that were living there were the exact tenants that you can imagine that you do not want, couple pets, couple kids. It was just chaos.
So, because of the condition of the property, I submitted a lowball offer, which I am not scared to do, of like $60,000. We ended up landing on $78,000. And like I said earlier, I was going to do conventional financing on that property with 20% down through my local bank. But because the appraisal was going to take so long to come back, I purchased it all cash. I borrowed a little bit from my parent’s personal line of credit because I knew I was going to be able to pay them back immediately. And it was no money out of their pocket.
And yeah, then the appraisal after repair value came back at $92,000. So, I was able to take 80% of that out. And so, it wasn’t quite a perfect BRRRR, but it was pretty darn close as far-

Ashley:
Did you do the rehab yourself? Or did you hire contractors to do the paint and stuff like that? The cosmetic updates?

Amelia:
Yep. So, I actually do most of the work myself. I enjoy doing it, and it saves me money, especially getting started. I have no problem paying for that’s easy stuff. Anybody can learn how to do that on YouTube.

Tony:
And then, with the tenants that you had, did you keep those tenants in place? Did you ask them to leave once you took over? What did that process look like?

Amelia:
Yeah. So, the really bad tenants were already planning on moving out. The landlord had already said, like, “Hey, you guys have to get out of here.” There was one vacant unit. And then, the other unit that was full, I put in the purchase agreement that I needed them to be moved out before I closed on the property. So, I actually was… I purchased this property empty, which is scary because you don’t have any income coming in. But I closed on October 15th.
And I had it fully rented out on November 1st. So, I had to do quite a bit of work in two weeks. But the market that was in, nice housing is sorely needed there. So, I knew I was going to have no problem getting it rented out.

Tony:
Can we talk about how you found those tenants? This would be your first-time marketing to screening, placing tenants. So, what did that process look like? How did you make that happen?

Amelia:
So, I actually only advertised on Facebook marketplace. And then, there’s a local group, a local Facebook group for that area for housing. So, I found all of my tenants through Facebook. I had them apply… I just downloaded an application off the internet, have them apply, did income verification calls to their employers. I didn’t run credit checks because that’s not really common in the area that I’m in. Again, it’s rural Iowa.
So, having someone paid to apply is unheard of. But there is a really useful website called Iowa Courts online where you can look people up and see if they have a criminal record. So, I just did all the research on my own, and then also just like, Facebook stalked everyone. It is a great tool.

Ashley:
It really is.

Amelia:
I mean, I had some people apply and then after I Facebook stalked them, I was like, “Absolutely not.” Like, “No way.”

Tony:
What did you see, if you don’t mind sharing? Like, what were some of the red flags or risks if there are?

Amelia:
Yeah. One of the guys that applied had a live video on his Facebook page of him getting into a fight at a bar, just absolutely drunk, hammered. And it was… and he didn’t delete it from his feed, and it was public. I’m like, “No, this guy makes terrible decisions. Absolutely not.” And you would never know… I mean, he had a good income, he didn’t really have any red flags. But I was just like, “Who does that?”

Ashley:
Next you know, there’s a fight going on in your apartment.

Amelia:
Exactly.

Tony:
And so, what are the units renting out for today, Amelia? And what cash flow are you seeing on those rents?

Amelia:
So, there’s two one-bedrooms that rent for $440 apiece, again, small town, Iowa, and then a two-bedroom rents for $595. And I think I’m cash flowing around $900 a month on those three. And I’m also utilizing RUBS, which is ratio utility billing, which I think is something that people don’t necessarily understand. But if your state allows it, you should absolutely look into it. And what that is, is a way for you to, if your utilities, water and gas are all on one meter, it’s a way for you to charge that back to the tenants.
So, it’s not coming out of your own pocket. So, immediately increases your cash flow on the property.

Ashley:
Oh, that’s interesting. How do they do that, if it’s all on one meter?

Amelia:
Yeah. So, some states allow it and some states don’t. So, you’ll have to check. But basically, there’s a formula. So, say in this unit, for example, there’s one adult in each of the one-bedrooms, and then two adults in the two bedroom. So, for water, you take the total water bill, and the two bedroom gets 50% of that bill, and then the one-bedrooms each get 25% of that bill. And then, same thing for the gas bill. So, you basically just divide by the number of people that are in the house, and then assign based on how many are in each unit.

Ashley:
Very interesting. I’m pretty sure you can’t do that in New York. But for everybody else, check out your state and see if you are able to do that, if you have a property that only has one meter on it.

Tony:
Yeah, it’s legal in California. The apartment complex I lived in before we bought our house, that’s how their water and gas bill worked as well. So yeah, good way to maximize your income, right, or minimize your expenses, I should say. So, your total gross rents, Amelia, were about $1,475, if I did my math there. When you said your cash flow, and how much on that give or take?

Amelia:
About $900.

Tony:
Your cash flow at $900? No way.

Amelia:
Yeah.

Tony:
Wow, that’s awesome.

Amelia:
$800 to $900, depending on summer or winter, because snow removal is more expensive. Snow removal is expensive. Guys, if you are going to invest in an area that gets snow, be prepared.

Tony:
Yeah, that’s-

Ashley:
That was my mistake on my first rental property is that when I ran the numbers, I didn’t account for snowplowing. Obviously in Buffalo, there’s snow on the ground. And it didn’t kill my numbers, but it still did not make them as great. But yeah, that was my one mistake. I’ll never forget it again.

Tony:
You know what killed my numbers on one of my deals was a flood insurance. So, Amelia, if you ever want to invest in Shreveport, Louisiana, I do you have a house that I’m trying selling out there, but it has a terribly high flood insurance premium. So, just throwing it out there just in case.

Ashley:
Tony, the tables have really turned me because it started out 20 episodes ago, I would bring it up, and now I’m going to see you every single time, still preaching it.

Tony:
I’m just waiting to see who might be interested.

Ashley:
You know what we have to do is, you have to do a live podcast in the house.

Tony:
In the house.

Ashley:
So that people can come out and view the house, and maybe someone will buy it.

Tony:
Someone might buy it, yeah.

Amelia:
That’s so funny. No, it’s funny that you say that, because I was just joking with my parents the other day that like, I’m only buying homes that are on a hill from now on, because water damage. I mean, water causes so much damage, not just from significant flooding, but just like any seepage that you get is just awful.

Tony:
Yeah, lesson learned for me too.

Ashley:
Yeah. Well, Amelia, thank you for sharing the numbers at that deal. And it looks like it turned out pretty well for you. I want to move us into our mindset segment. So, what is something that you did not realize? So, before you were even investor, did you have a certain mindset or thought? And then, as you grew your portfolio, you realize that that was not true at all?

Amelia:
Yeah, I think one of the main things we’ve touched on is that you don’t have to have everything together to get started. And I think that’s what a lot of rookies are scared of, is that they don’t know it all. But you truly learn as you go. And I’ve utilized that. I was starting my Instagram. I was like, “Man, no one’s going to want to follow me. Nobody cares.” But I just started it anyways. And I’ve met so many great people. I have found a partner on there. Same thing with real estate.
I didn’t know at all when I got started. But look at me now, I have 26 doors in one year, which is just nuts to me.

Ashley:
And one more thing that you got asked to do, too, because of your Instagram. What was that thing, Amelia?

Amelia:
Yeah. So, I’m actually going to be a teaching assistant on the BiggerPockets Rookie Bootcamp, which again, is another crazy thing. That’s like, “I cannot believe I’m going to be a TA for BiggerPockets.” It’s just nuts. So, like, “Just get started. Put yourself out there.”

Ashley:
And we are so excited to have you. And especially just hearing more of your story, I can’t wait for everyone to learn from you. And I think when these airs, the Bootcamp has already started. So, the lucky people that signed up and get to share some of your knowledge and experience will be great.

Tony:
But more good things come when you take action. And I think that’s hopefully the lesson that a lot of Rookies are taking away, is that the more consistent kind of concentrated action you take, the more positive results come from it. So, thank you for sharing that, Amelia. I want to take us into our Rookie Request Line. So, are you ready, Amelia, to answer a question for one of our very lucky Rookie listeners?

Amelia:
Get me.

Ben Lehmann:
Hello, my name is [Ben Lehmann 00:38:18], and I live in the Williamsport, Hagerstown, Maryland area. And my question is, how can I help convince my family for supporting real estate? I would like to go into house hacking where I would rent by the room. And some parts of my family aren’t necessarily too supportive of that, considering of the lack of privacy or worrying about getting a bad tenant.

Tony:
Amelia, you’ve seemed to have some success on getting your family involved and having some partnerships. What would your advice be to Ben on how he can get his parents on board?

Ashley:
Yeah, so that’s a great question. I think one of the things that helped my parents is just really explaining things thoroughly to them and having a sit-down conversation, and letting them ask any questions that they might have. If you don’t know the answer, just be honest, and tell them that you don’t quite know how that’s going to work out, but you’ll figure it out as you go. But honestly, at some point, if you want a house hack, and you’re the one purchasing the house, you got to go for it. I mean, if they’re not living in the house, why do they care?
So, I feel like part of it, you just have to be your own person at some point. And there’s going to be naysayers always. Even with my parents. I told my mom, “I’m going to retire when you retire this next year.” And she never believed me. And now, here, I’m self-employed, which is not quite retired. But they will never believe me and I’m like, “No, I’m going to be retired when you’re retired.” And look at me now. So, you just got to do your thing.

Ashley:
Look at me now.

Amelia:
Yeah, exactly. Yeah, exactly.

Ashley:
I would have given the exact same answer. Just reading that, the first thing I thought was, “Who cares what they think?” They are your family, and they’re going to love you no matter what. And yes, you may have to listen to them harp and tell you that you’re doing the wrong thing. But if you’re not relying on them to invest with you, or if they’re not going to live there, like you said, then who cares? If they haven’t done what you’re doing, you shouldn’t be taking their advice. Listen to the people online, the people in the BiggerPockets forums who have done this successfully, and get support from them.
That’s why it’s so important to build your investor network, so you have that motivation. And you’ll have those people that are surrounding you to support you and encourage you, and to help you stay on that path of becoming an investor and house hacking. I think that is 100% one of the best ways to get started in real estate, is house hacking, for sure.

Tony:
And if you were looking for-

Ashley:
So, you can do it. If you need motivation, reach out to us.

Amelia:
I know that’s harsh. I didn’t want to be harsh because I wanted to be politically correct. But I was thinking the same thing. Like, who cares? I mean, do your thing.

Tony:
And if you’re looking for a community, the BiggerPockets Real Estate Rookie Facebook Group, there’s 33,000 people in that group now. So, there’s tons of people who, like you, Ben, are probably looking for someone else to tell them, “Hey, you’re doing the right thing. You’re going down the right path.” Giving you some words of encouragement. So, there you have it. All right. How about some random questions, Ashley? Ready to move into that piece?

Ashley:
Yes.

Tony:
We’re going to hit you with some random questions, Amelia. I think what I would like to know, you mentioned this a little earlier in the show, that you’re more focused on cash flow over appreciation. And I think that is a big debate that you see a lot in the world of real estate investing, where some people prefer appreciation, others prefer cash flow. Why is cashflow more important to you?

Amelia:
So, for me personally, cash flow was the most important because I wanted to quit my W-2 job. I needed to replace that income that I was making from my W-2 with something else. I’ve always wanted to be self-employed. And real estate was my way to get there. So, for me, that’s why I chose cash flow. Also, the small markets that I’m… like the rural Iowa market, it’s just not going to appreciate very quickly, but you can buy a single-family home for $30,000 and rent it out for $750. So, I mean, the numbers just made sense for the cash flow versus appreciation for me.

Ashley:
Amelia, my question for you is, what is one book or podcast or a couple that you learned from when you were first educating yourself outside of the BiggerPockets network? Because we know all things, podcasts and books are great at BiggerPockets. So, what other podcasts or books or websites did you look at to educate yourself that would be great for Rookies to check out?

Amelia:
Honestly, I utilized a lot of social media, Facebook and Instagram, and just following other people’s journeys and asking them questions. They’re sharing real-life information. And just being able to have that interaction with real-life people was very, very helpful to me. I can’t really give any other podcasts or website because I’m going to be completely honest, I pretty much solely use BiggerPockets.

Ashley:
That was the answer I was looking for.

Amelia:
Yes, nailed it. Because it’s just such a great source and it’s all there. Why go anywhere else? Because it’s all there.

Ashley:
Okay. So, here’s a follow-up question to that. If I’m somebody, and I’m stalking somebody on Instagram and I want to ask them a question, or I want their advice, what is the appropriate way to reach out to someone that you feel has worked for you, for you to engage so well with these other Instagram?

Amelia:
Yeah, so just honestly sending a DM and letting them know how much you appreciate their content, and that you’re getting a lot of value from it. And then, ask the question. And then, also ask like, “Hey, is there anything that I can do for you in return for this information?” But you also have to understand that not everyone’s going to have the time to get back to you. Some of the bigger people on Instagram, they just don’t have the time.
So, find somebody like me that’s got a smaller following or somebody that’s got a mid-sized following, and try to reach out to them. But also utilize Facebook groups, like the BiggerPockets Rookie Group, where you can ask, and then lots of people will respond. But just know that you’re not always going to get their response. And that’s okay.

Tony:
Beautiful.

Ashley:
Well, thank you for that advice. Yeah. We are going to move on to our Rookie Rockstar today. So, today’s Rookie Rockstar is [Alexandra D. 00:44:54] who closed on property number four today. So, a little backstory. Her fiancé and her go on walk through areas. So, instead of driving for dollars, they’re walking for dollars. And they looked at multifamily rentals that they like, walk by them. So, fast forward, they find this cute little number duplex.
And the guy returns their call and was willing to sell to them off market. And it’s a very hot market. So, this was a great deal for them. They purchased it for $112,900. They did a 20% down payment, commercial loan with closing costs rolled in 4.3% interest to the rents total $1,375, and tenants pay utilities, their cash flowing around $439 a month with a 20.2 for cash on cash return. And they put in $2,500 towards the remodel on the property. That is awesome. Congratulations, you guys. Super cool.

Tony:
Yeah, I love that they went off market, too. Like the idea of walking for dollars and using that time with your better half to not only walk, it’s an exercise and fresh air, but also look for deals. I love it.

Ashley:
I can’t wait to see Tony and Sarah’s Instagram scootering around this neighborhood, they’re just seeing for-

Tony:
Looking for good deals.

Ashley:
Yeah. Well, Amelia, thank you so much for coming on the show today. And I can’t wait to work with you more in the BiggerPockets Real Estate Rookie Bootcamp. Can you tell everyone where they can reach out to you and find some more information on you?

Amelia:
Absolutely. So, you can find me on Instagram, it’s @ameliajorei, and Jo is just the feminine version, J-O. And I love interacting with people on Instagram. So, please reach out to me if you have any additional questions or just want to say, “Hey.”

Ashley:
Well, thank you so much. This is a great episode. We are so glad to have you. I’m Ashley at Wealth from Rentals, and he’s Tony at Tony J. Robinson. And we will be back on Saturday with a Rookie Reply. You guys keep going after those deals. And we’ll see you next time.

 

Watch the Podcast Here

In This Episode We Cover

  • How to acquire deal #1 without any background in real estate investing
  • The best resources rookies can use to get a home-run deal on their first try
  • Partnering with family to flip or a BRRRR a property
  • Why local banks may be an underappreciated way to affordably finance your deals
  • Using social media as a way to generate property leads, partnerships, and more
  • The systems and software you need to scale FAST as a rookie
  • And So Much More!

Links from the Show

Rookie Deal

  • Purchase Price: $78,000
  • Rehab Price: $8,000
  • Cash Flow: $900/month

Connect with Amelia: