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18 Deals in 2 Years AND a Full Time Job with Kevin Christensen

18 Deals in 2 Years AND a Full Time Job with Kevin Christensen

57 min read
Real Estate Rookie Podcast

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Real estate investors are very busy people, and often, rookie investors become busier than ever as they’re learning the tricks of the trade. Kevin Christensen is no different, he works a full-time job, runs a retail store with 5 locations, and self-manages his long and short-term properties, all while doing some handyman work himself!

As a United States Marine, Kevin was used to the “improvise, adapt, and overcome” mentality, which has served him well in his investing career. Kevin only started actively investing in real estate around 2 years ago, but has so far done 18 deals, won a lawsuit, and hired two full-time contractors for his properties. He runs a very tight ship, and doesn’t let much slip through the cracks.

Kevin’s secret to success is centered around just being himself: work hard, be kind to others, and focus on customer service. As you’ll hear in the episode, Kevin was able to get a $350,000 house reduced to $190,000 simply by listening to the seller’s needs and being courteous throughout the transaction, something that the other wholesalers in his area failed to do.

If you’re interested in subject-to properties, it will serve well to heed Kevin’s advice. He was sued in the middle of a subject-to deal while renting out a house as a short-term rental. Kevin walks through exactly why the sellers were suing, how he protected himself, and how he pulled in $14,000 of revenue in only around 2 months!

You’ll probably hear Kevin on the BiggerPockets Real Estate podcast soon, because even though he’s a rookie in years, he’s a pro in experience!

Click here to listen on Apple Podcasts.

Listen to the Podcast Here

Read the Transcript Here

Ashley:
This is Real Estate Rookie show number 51.

Kevin:
I buy every one of my deals within an hour of my house and I pass up 10 times as many deals as I’ve bought. So there’s real estate deals everywhere if you understand how to look and how to market.

Ashley:
I’m Ashley Kehr and I’m here with my cohost Tony Robinson and I don’t even want to banter today because I just want to talk about our guest Kevin.

Tony:
So much good stuff. Kevin, he’s really active in the Rookie Facebook group so if you guys aren’t in there, Facebook.com, look for the Rookie Real Estate group. But he dropped so much knowledge today. So much, so much knowledge. I was scribbling feverishly throughout the whole podcast trying to keep up with all the different stuff. He talked about subject to, he talked about hard money, he talked about hiring folks. Just so many things that that rookies I think will benefit from hearing.

Ashley:
Yeah and he actually volunteered himself to help me on a subject to deal. So if you don’t know what that is, we talk about it right in the beginning and a little more in the middle of the episode but he’s going to help me do my first subject to deal. So make sure you guys watch in the Real Estate Rookie Facebook group for me and Kevin to go live in there. And Tony, you want to join us?

Tony:
Yeah, absolutely. I’ve never done a sub to deal.

Ashley:
Yeah. You can talk short term-

Tony:
Yeah, we’ll talk short term rentals. But I think it just really cool because I think he talked a lot about relationships and understanding people’s problems to be able to find deals and make them work. So that was a good nugget that you’ll pull out of that one as well.

Ashley:
Yeah. I mean we could have gone on and talked to Kevin for hours. But if there was anything that he talked about that you wanted more information about, he’s super active in the Real Estate Rookie Facebook group so you guys can ask him there.
Kevin, welcome to the show. We are so excited to have you. Tony and I have reviewed the prep notes and just can’t wait to dive into everything you’re going to share with us today. Do you want to start off telling us a little bit about yourself and how you got started in real estate?

Kevin:
Sure. I’m super excited to be here. I mentioned to Tony earlier, this is a bucket list thing for me. I’ve been listening to the OG podcast for a long time. Probably about six months before I got started in real estate. I was just looking for an alternative way to pay off my student loans. Somebody on one of the OG podcasts mentioned wholesaling and I got excited about it only because I’m cheap and I thought this is a way for me to make some money and I don’t have to do a ton of work. I’m already a super busy guy. And I started doing the research and digging into wholesaling and I really got invested in podcasts and I listened to hundreds of BiggerPockets podcasts and other podcasts and YouTube videos. And it just consumed me for probably three months. Hundreds of hours of content and then finally got up the nerve to go out and drive around and look for a property. I tried some driving for dollars. My first deal was such a ridiculous deal that I couldn’t wait to come home and tell my wife about it. I was probably going to make $50,000, $60,000 as the wholesale fee on the first deal. I got such an incredible price on this property.
And then I’m bouncing around telling my wife, “Holy crap, I’m going to pay my whole student loan off on this first deal. What is going on?” And my wife is like, “Why don’t you just keep it?” And it never even crossed my mind. I just was thinking about this short term gain on it. And it slowed me down and reeled me back in and I started running numbers. And I was like, I can’t sell this property. There’s no way. And the rest is history. I kept it, I started doing research on becoming a landlord and getting into rentals and that brought me to the BRRRR method and it’s been a wild two years with the schedule that I have. I just completed my 18th deal in two years and most of it in my free time so it’s been a very, very fast paced, steep learning curve. I’ve made a lot of mistakes that I’m very open about but I’ve had a blast along the way so it’s been really, really cool.

Tony:
Can you walk us through what those 18 deals are? I think that’s what everyone’s going to get excited about is hearing 18 deals in two years. Everyone’s ears kind of perk up when they hear that. Just give us the 30,000 foot view of what those 18 deals were. Were they all wholesale, longterm? What made those deals up?

Kevin:
Yeah, yeah, no problem. So in the beginning like I said, I was really, really gravitating towards not spending money. So my first couple deals were subject to. And not counting the one I was just talking about, the first actual deal I did took 10 months to close and I can go into that one a little bit later and why it was so difficult. But I did a couple subject tos in the beginning.

Ashley:
Can you explain real quick what a subject to is?

Kevin:
Yeah, absolutely. So you’re essentially taking over the mortgage payment. So you’re taking the deal subject to the existing mortgage. So you’re not paying off their mortgage but you’re going to make the payments. And essentially the house gets deeded to you and the loan stays in their name for a period of time. It can be up to and including the entire length of the mortgage depending on the deal. And unfortunately when I got into that in the beginning, I didn’t have a mentor, I didn’t have anybody to explain to me the dos and don’ts. And I did not know that I needed to go through a formal closing process and have the house deeded to me. And it ended me in a lawsuit with a subject to seller that fortunately I won but it could have been very ugly and if I didn’t have a pit bull of a lawyer I would have lost probably $45,000 not counting my lawyer fees. I did about $42,000 worth of work to the house and the seller tried to take it back and it was still deeded to him at that point. I didn’t know any better. This is prefect rookie content. I made major mistakes and it ended up costing me almost $20,000 in legal fees, but I won. I was able to keep the house.
It forced me to purchase the house years ahead of schedule which set me back. I probably would be at 25 or 30 deals right now had that deal not come along and forced me to put that cash down. But it worked out. That house is actually a short term rental now. It’s actually been short term rental the whole time. That was the reason the guy tried to take it back. The neighbors were complaining about the short term rental guests coming in and out all the time. The guy who owned it got scared and told a bunch of lies to a lawyer and said that I lied about everything I was doing. Fortunately I had everything in text message so I was able to prove that he was lying about everything. Basically between our two lawyers the consensus was you can either man up and purchase the house right now in a traditional fashion or we’re going to pursue this as an illegal contract and it’s going to be very expensive and you’re going to lose. I still to this day don’t believe I would’ve lost. I had a full subject to contract lined out. It was a 20 page contract that was all signed up and Ts crossed and Is dotted. But I didn’t want to be in that position where it was risky for me to lose the 40 some thousand dollars I already had in the deal.

Ashley:
I definitely want to talk more about this because my husband is trying to buy a farm and we’ve had it under contract for one year and we are resorting to doing a subject to. And actually my attorney is supposed to call me tomorrow to discuss it, if this is something that we can do. So I think I’m going to need you to mentor me on this and how to do this because this’ll be my first one.

Kevin:
So for the rest of the deals I had a couple subject tos. I have a lot of estate sales that I’ve done through my realtor. Most of them are hard money, BRRRR style loans. I have one commercial loan on a two unit and then I just recently in December did my first wholesale deal that I got all excited about in the beginning. And that’s kind of a cool story too on that one. So I’m happy to discuss whatever you guys want to talk about.

Ashley:
Yeah. This is all great. I’m excited to talk about all these different things that you have going on and it’s funny that wholesale was your main point of entry at first you thought and then you kind of transitioned to doing other stuff and now did your first wholesale deal. I want to ask you about … You had your mind set on that strategy. You said your wife said, “Well, why don’t you keep it?” How was that thought process with your wife? Was she always on board with you doing wholesaling and getting into real estate investing and what would be your advice for someone trying to talk to their spouse about getting on board?

Kevin:
I will tell you that my wife and I have a very good relationship. We’ve been together 20 years. We got married after knowing each other for two months and 10 days.

Ashley:
Oh my gosh.

Kevin:
So we have a very unique relationship story. She’s always been supportive of everything I’ve done. We started a retail company six years ago with one location. We have five locations now. And all of this by the way … I have a full-time day job Monday through Friday so this is all stuff that I’ve done in my spare time.

Ashley:
The retail stores are on top of another job?

Kevin:
Yeah. I have a full-time job as a systems engineer.

Ashley:
Wow.

Kevin:
So she was dead set against rental properties. 100% against it. The irony that she suggested keeping the house is not lost. So the house’s value is 350,000. It was two houses and a 12 car garage on a one acre property split down the middle. I had it under contract for 190,000 and it needed $4,000 worth of work. So I mean, it was a slam dunk. $160,000 in equity. And I was just going to sell it for 250 as a wholesale to somebody, make a quick 60 grand and move on. And she’s like, “Well, who gets the other 100K?” And I said, “Well, the buyer is going to get that money. That’s his benefit for buying the deal and giving me 60 grand.” And then she said, “Well, why don’t you just keep it?” And I don’t even know if she knew in that moment that that means becoming a landlord because she definitely did not want to be a landlord. In the beginning we talked about it and I said, “Look, you’re not going to be a landlord. When these people call and they want their toilet plunged or whatever,” I said, “if we have to get a property manager that’s what we’ll do.” I have not done that by the way. I self manage all of them.
But at the beginning it was just, “I’m going to do this. I just need you to be in the background doing what you always do. Being supportive, keeping our kids schedule in check, and let me go out and grind and do what I do.” My work ethic has never changed. I’m not a partier. I don’t go out, I don’t drink, I don’t smoke. I literally do nothing but spend time with my family and work and that’s it. So it’s really … The thing that I’m doing every day is different than when I was working my retail businesses or whatever but it’s the same daily routine for me. I do my day job, I get done, I go to work building my legacy. So she’s always been very, very supportive of that. Honestly it truly does … For the spouses out there who don’t want to be part of this or think it’s risky, you’ve got to put a little bit of trust and faith in your partner and I promise you it will go miles and miles. There have plenty of days that were hard days for me and stressful days for me and my wife just wrapping her arms around me and telling me it’ll be okay made the day much easier than it could have and brought me back down to the ground and let me reset and start over.
So it’s been a huge asset to me for 20 years as a human being, not just as a real estate investor in the last two.

Tony:
That is a beautiful story man. And I love your mindset around how your wife’s been able to support you. And we see that a lot where the other spouse has this faith in the partner that wants to start the real estate investing. And that’s how it was for me. I know Ashley, that’s how it was for you as well. And I think when you’re the person in the relationship that’s really trying to drive the investing and your spouse trusts you kind of blindly, you don’t take that trust lightly. I think it motivates you a little bit more to work even harder to make sure that you’re actually doing it the right way. At least that’s been my experience and it sounds like it was similar for you. But man, you’re also a model for how to manager your time appropriately. People always ask me, “Tony, how do you have a W2 while you also build your real estate portfolio?” And I’m just going to send everyone your way now Kevin. You’ve got it down I think better than I do so that’s awesome man.
Now, I want to talk just a little bit about the negotiation piece of some of the deals that you’ve done. Because you have the subject to which was one your first actual deals. You’ve got that really great deal you just talked about where you end up holding it as a longterm rental. Just walk us through what the negotiation process looks like on those kind of deals. Like if I’m a new investor, how do I even bring up subject to as an option? What does that opening conversation look like?

Kevin:
So what I’ll tell you is I feel like a lot of investors get into this and they don’t trust themself, if that makes sense. They doubt themself. When I talk to people there’s no doubt that I’m self confident. And that’s a massive, massively important part of any negotiation. When I’m having a discussion with somebody they’re not unsure if I’m sure of what I’m talking about. And I think that that weighs in heavily when people make a decision is, this guys sounds like an expert. He sounds like he knows what he’s doing. And even in the beginning where I made a thousand mistakes on that subject to deal, I sounded like I’d been doing it for 20 years. So I think it’s super important that people look in the mirror or whatever. I don’t have any self confidence issues. I’m blessed in that way. My parents raised me to be confident and strong and always speak my mind. And I think that that has carried me my whole life. But when it comes to this type of negotiation, you’ve got to be a genuine person. Anybody who knows me in real life, I’m the most direct guy in the world. You see my flag behind me. I’m a marine. I’m straightforward. I don’t sugarcoat things.
I genuinely don’t care about hurting somebody’s feelings, but in the same breath, I would rather hurt your feelings than BS you and drag you along and tell you things that aren’t true. And when I negotiate with sellers I just treat them like people. It’s not a number to me. Like for example, that first deal. That guy had the house listed for $290,000. And it was a for sale by owner. I pulled up in the guy’s driveway. Like I didn’t even call the phone number. I literally pulled into his driveway and I walked up, knocked on the door. He was an 80 year old guy with is wife. They’re my favorite two sellers to this day. And it has nothing to do with the deal. They were two of the nicest people I’ve ever met. My great grandparents passed way in the early 2000s and they reminded me a lot of them so they’re two of the sweetest people and I walked around and this guy spent an hour, and you could see the like on his face, talking about how good he’s taken care of this home. And sure, there was tons of stuff that needed to be updated. There was tons of stuff that had little repairs and things. Nothing major. The house was well maintained. But I could see that he was passionate about this house. This was his home. His father built the home 50, 60 years ago.
It made an impression on me that this was important to this guy. So when I got to the part where we were going to talk about money I said, “Mr. so and so, I understand you’re asking 290.” I said, “I’m an investor. I’ve got to make some money here.” I said, “If was going to come in and make you a cash offer for the house, what’s the bottom line? I don’t want to beat around the bush. I don’t want to make this hard for you or uncomfortable. I really enjoyed meeting you. This has been a great conversation.” He told me all about his car collection and I said, “But I got to make money here. What’s the bottom line?” And he looked at me and he said, “You know what Kevin,” he said, “I’ve talked to 10 guys just like you in the past two months.” I guess he was referring to other wholesalers.
He said, “Every one of those guys walked this property and they picked it apart limb by limb, pointed out every single discrepancy, looked for every reason why they were going to knock the price down.” He said, “But I really like you.” He said, “But I still need to make my money.” He said, “So the best I could do” … And he looked at his wife and he looked back at me and he said, “The best I could do is 190.” And my jaw almost fell on the floor. I was expecting him to say 275. Come down 10, 15 grand. He dropped $100,000 because I was nice to him. I didn’t lose my cool, I didn’t get all excited. I said, “You know sir, I appreciate that.” I said, “We’re not far off from our number.” I said, “I want to go home and sleep on it.” And like I said, I wish I had been recording it then because when I came on I was jumping out of my skin telling my wife like, “Oh my god, we’re making 50 grand.” I’m sure it was hilarious on her end. It could have been a totally different experience if had I gone in there …
And I’ll be the first to tell you, I’ve watched a thousand wholesalers, whether it’s on YouTube, whether it’s guys doing their live calls with customers, I’ve watched them just berate customers and sellers with this is what’s wrong with your house, that’s what’s wrong with your house. You don’t need to do that. And I think there’s a time and a place. You get a reasonable number and then you can have an educated conversation with the seller and say, “Look, 150 is your number. We haven’t talked about the roof yet. The roof is a big deal. We’re going to need to be compensated for that or we’re going to need you to fix it.” If the seller is somebody like us who understands what it really costs to get a roof put on, it’s in their best interest to fix the roof. If they’re not, if they’re a regular person, then they say may say, “Okay, I’ll knock 15 grand off.” So I would say that it’s super important to be genuine. Your sign in the background, work hard and be nice to people, that is literally my entire life. It’s coincidence that that sign’s there but that is literally how I live my life every single day. Outwork everybody around me, be nice to everybody. It’s that simple.

Tony:
So many good nuggets Kevin to pull out of everything you just shared man. My head’s still spinning on where I want to go first but I think the last part that you mentioned is super important. And we’ve talked about this before on the podcast is that people do business with people that they know, they like and they trust. And you said that that seller had multiple other wholesalers come through but he just didn’t like them. He didn’t like their approach, he didn’t like how they treated his property. But you came through, you were genuine, you built an actual connection with him. And after an hour, after an hour you got a $100,000 discount on this property simply for being nice. So I think there was a big lesson to take away from that.

Kevin:
Yep.

Tony:
I think the other point that we kind of breezed through that I want to circle back on is the fact that you knocked on his door as a new real estate investor. I think that would terrify most people.

Kevin:
I was terrified.

Tony:
Walking up to some stranger’s door. Walk us through that. So like you knock on the door, what do you say? What are the words that come out of your mouth that open up this conversation that ends up with this $100,000 discount?

Kevin:
I literally pulled in the driveway. They had a for sale by owner sign stuck out in the front yard. I pulled into the driveway and I got out of my truck and I walked up to the door and knocked. An elderly woman came to the door and she said, “Hello.” And I said, “Hi ma’am, I noticed you guys have a for sale sign out front. Are you interested in selling still?” And she said, “Give me one second, let me get my husband.” And he came out and he was ecstatic to walk me around and show me everything. And the front house is a two bedroom, one bath that had a tenant in it. So we didn’t go in there that day. He said we could go through if I want to. I said, “No, I don’t want to disturb your tenant. It’s not a huge deal.” And that’s a risk that I wouldn’t take today that I took then. So that’s another rookie point. I was being too nice. And the guy offered to walk me through the property, I didn’t take it. That house definitely needed the majority of the work that we did to the property. There was nothing major but that’s a fortunate experience because it could have been trashed inside and I would have not known at all because I passed up the opportunity.
But I introduced myself, he introduced himself. He’s a guy who’s lived in the town. I live in a small town and I think this is another huge thing for a lot of people I see in the forums. They think that if they don’t live in Atlanta or Chicago that you can’t be a real estate investor. There’s 11,000 people in the town I live in. I buy every one of my deals within an hour of my house and I pass up 10 times as many deals as I’ve bought. So there’s real estate deals everywhere if you understand how to look and how to market. So anyway, we walked around the property, he showed me everything. We got back into the main house and he was showing me pictures. He had a collection from the ’50s or ’60s. It was this TV cowboy. And he had an entire room decorated in stuff from this … I mean it was probably worth tens of thousands of dollars. And he was so proud to talk about all these things that he’d collected over 50 years. And I just sat there and smiled and listened and let him tell me everything. Like I was in no hurry. Tell me all about this thing that gets you so excited. And I just showed genuine interest. I smiled. We talked. I talked about family and kids.
It was just financially the best 60 minutes of my life. I’ve never made more money in 60 minutes than I made in that conversation. So I was excited to be talking about real estate like I knew what I was doing and I just let it flow naturally and it worked to perfection. I didn’t rip them off in any way. They got exactly what they wanted and I ended up with an amazing deal on the other side of it. So I was able to sleep at night. And even way beyond that, I helped them move into their new house. I helped them find their new house. And that was all just I really enjoyed meeting them and they reminded me of my grandparents and I felt like I needed to do something extra for them. And a lot of that was because the deal that I was getting was so ridiculous, I felt like I needed to do whatever it took to help them get to the next stage.

Ashley:
I think a really important thing is that you weren’t only nice to them but you also listened to them. And it’s those two things combined, and then you knew that they needed. So they needed somewhere else to live. They needed help moving and you helped them with those things too even after the fact. And I think it was Prescott that we had on the episode. I’ll tag in the show notes, biggerpockets.com/rookie, whatever his show is. I got to find it. But for this show it’ll be biggerpockets.com/rookie51. But he talks about how he was super nice to a lady and listened to her and figured out what she needed. And at the closing table the lady deeded him two vacant lots. Just like, “I really liked you. I liked dealing with you.” And he tried to make the process so easy for her just like you did this couple and he ended up getting rewarded for something he didn’t even ask for in the end. So I love that story too. It just reminded me of that.
So we talked a lot about negotiating and getting your deals but now when you have your deals, you’re ready to rent them out, what does the property management look like? So you’re self managing. What kind of systems are you using? Any kind of software?

Kevin:
I use Cozy for everything. I think Cozy’s free up to 100 properties. I’ve had no issues with it. I pay for the expedited rent deposit which is three bucks a month per property. What I found is I’m building such a connection with all of my tenants on the process, like when I’m showing the property and getting to know them. I already have a personal connection with them. They already have my cellphone number. So that’s been kind of a pain point for me is that when they need something they literally just text me or they call me. And I’m trying to get to the point where the tenants understand that we have to use this platform. So that’s one thing I would tell people is set a ground or a baseline with your tenants right away on what your process is and how you’re going to do it. I don’t like the fact that they call me and text my cellphone but that’s self inflicted and I’m fully aware of that. If I didn’t give them the cellphone up front … I have a Google voice number but when it receives a text message it goes into my email so I don’t see it as easily.

Ashley:
Kevin, I just want to jump in there. Is the Google voice number … You can actually put the app on your phone so that you’ll get the text. You change it in the settings and you’ll get a text to that app. And you can also set it so that the text goes right to your regular text messages too.

Kevin:
I didn’t know that. That’s beautiful.

Ashley:
Yeah. You’ll have to look into that. It’s so easy.

Kevin:
Yeah. That’s great. Thank you. So I would say the biggest thing for me from a property management standpoint … And I know this is going to probably piss off a lot of people that listen to this. I don’t do the slum lord thing. I don’t renovate houses. All of my rentals are BRRRRs. When I renovate them I renovate them like I would live there and I say that to everybody. I say it in the forums all the time. I’m putting granite countertops, I’m putting brand new brush nickel fixtures everywhere. Almost every house I’ve replaced entire plumbing systems, electrical panels. Whatever thing I think is going to create a headache for me down the line, I’m fixing on the front end. And that may be from an investor standpoint, especially a new investor standpoint, that may dampen your short term gains on your property because you’re spending a little bit more money up front. But just to put it out there, all of this is longterm play for me.
I’ve been doing this two years, I have not taken a single dime from anything that I’ve made in two years. I’ve been driving all of it into growing what I’m doing so that when I turn 40 I can make the decision to keep my day job or walk away from it. And that’s really what the driving factor is for me is I love what I do during the day. I love the people and the company I work with. But I want to be at a position where I decide okay, I’m going to work because I want to work, not because I have to work. And allowing that money to scale itself is a huge factor for me right now. And it’s worked out well.

Tony:
And that’s a big benefit Kevin of having that W2 job. You hear a lot of people that say, “I want to quit my job today. And I hate my job and I want to leave it right now.” And when you do that, if your real estate business hasn’t grown enough, you can actually end up hurting it by leaving your W2 job too early because like you said, you’ve been able to take the last two years worth of profits from your real estate business and reinvest that money back into your business. So it’s now growing much faster. But if you were relying on that income to feed your family, to pay your mortgage, to do all the things you need to do, your business wouldn’t be growing as fast. So I love the mindset that you have and I just wanted to highlight that because I know so many people who are listening to the show, they have W2s. Some of them have W2s that they don’t like as much and they’re in this big rush to leave. But if you can give yourself a little bit more runway you end up building a business that’s a little bit more sustainable. So I just wanted to highlight that. You’re on a roll but that’s a great point there.

Kevin:
Yeah. If you go look through the rookie forums or the rookie Facebook group and just search my name, you’ll see about 173,000 times where somebody says they’re going to quit their W2 and I’m the first comment and I tell them to go get their job back. It’s an absolute mistake. I have a friend and I’ll shout him out, Lee. I know he’s going to watch this. Who had a great job and I think he had $40,000 cash. We got together. We actually linked up I think through the BiggerPockets forums and we found out he was local. And the first meeting I had with him, I was kind of trying to mentor him and help him get started and I said, “Dude, go get your job back.” I said, “Banks are not going to lend you money.” And I don’t know if he took it adversely or not but we really kind of went our separate ways. And that was about a year ago. And he and I just reconnected maybe a month and a half ago and he said, “Hey man, I got my job back. I need advice. What do I got to do?” And now I think things are starting to roll for him but it really does hinge on understanding what your goal is. If you’re going to be a BRRRR investor, you must have a W2 job if you don’t have two years of tax returns.
It’s plain and simple. I don’t care if you have a million dollars in the bank, banks are not going to give you a mortgage if you don’t have some steady income coming in. But maybe if you had a million dollars they would. I don’t know what the numbers are where the bank feels comfortable. But it’s highly unlikely. And my realtor makes a tremendous amount of money and he had to do a no doc refi at five and a half percent on his personal house because he could not do a regular refi. A bank would not give him a loan because he’s only been a realtor for a year and 10 months and whatever the number is. I forget how long he’s been a realtor. But he did not have enough tax returns to show two years of real estate work. They wouldn’t do it. And so many people get in and they don’t understand that aspect.
It’s amazing that you saved 40 grand and you can go buy a house for 10 grand and renovate it and do whatever. But I promise you if you have $125,000 hard money loan that you’re paying 12% interest only on and you get to the end or your renovation and you can’t refi, you are massively going to regret what you’re doing because you are literally throwing money in the trash and there’s nothing you can do about it. So you’re either going to have to bring in a partner or if you’ve got the cash laying around, pay the loan off yourself. Whatever the case, you’re in a bad spot. And people need to know that ahead of time. Don’t get down that road where it’s time to refi and you’re like, “Oh, I don’t know what to do here. I’m out of options.”

Ashley:
I think something too to look at is okay, you have your full-time job. You have what, seven retail stores?

Kevin:
Five.

Ashley:
And your property managing and you have your investments, and you’re looking for new deals, you’re doing all things real estate. If you have the time to do all of that, someone who just has a W2 job should have the time to do real estate on the side. And I think that people want to focus on real estate. They just want to jump in, go after it, stay on it full-time. But you can put systems in place so that real estate investing becomes somewhat passive for you or takes up very little time. Kevin, what would you say? How many hours a week do you spend actually on your property management and then sourcing new deals?

Kevin:
Property management and sourcing new deals is very small. I mean very small. I would say one to two hours a week. I’m really not sourcing new deals unless I’m in the market for new deals. Right now I’ve got three houses. I actually had four going on at the same time. I’m down to three. One of them is pretty much done so I’m hopefully down to two shortly. But 99% of my effort is spent communicating with the guys who work for me. I have two full-time employees now that renovate for me so I can spend a little bit more of my time on other things. But I would say minimal time. A large part of that is because I’ve built these properties in way that I’m not running into issues. Everything is new at these houses so I’m not having problems. And I’m clear with the tenants up front. If you tell me something’s wrong with your HVAC …
Like for example, I had a house up north and the tenant texted me and said, “I ran the heater out of oil and when we filled the oil tank, now it won’t turn on.” And I said, “Well, if you’ll refer to page seven in your lease it tells you that if you caused the problem … Which in our original discussion … Do not run the oil out of oil. You have to fill it before it gets to zero. It’s an oil pump. You have to prime it. It’s a pain in the butt. If you run it out, you’re going to pay that.” I said, “I’ll send an HVAC guy over there right now but understand if they charge me $150 that money is coming to you. I’m happy to send somebody.” And I got a text … No response to that text by the way. But an hour later I get a text from him, “Hey, I got it fixed.” It’s amazing what you can do when there’s some financial motivation behind it. So I would say that there’s a minimal effort from those things. I spend the majority of my time actually renovating or kind of navigating projects right now. Figuring out this is what needs to be done at this property and scheduling my guys around and making sure that things get done.

Ashley:
I am very curious to hear about your two full-time employees. So you have retail stores. You must have had employees before. You have experience managing them. What made you decide to hire two full-time contractors instead of outsourcing this and using subcontractors?

Tony:
And sorry, just one additional piece in that. When did you make that decision? Was it on your first BRRRR, your second BRRRR?

Kevin:
It just happened in July of last year so it was probably my 13th or 14th deal. What happened was … As funny as this is going to be, it was 100 degrees outside and I was doing siding by myself. I told my wife, “I physically cannot do this by myself. I need somebody else.” So my 14 year old son, I would rival him against almost any adult I know at building and doing things like that. He’s been doing it with me for two years. But the work we were doing was extremely challenging and he plays travel ice hockey. So he was doing two a day practices, he was completely exhausted and I didn’t want to put him out in the sun all day. So I just posted in a local Facebook group and said, “Hey, I’m looking for somebody with a little bit of carpentry experience. You don’t have to be an expert but I need somebody.” I said, “I’ll pay you cash at the end of the day.” And I just needed to figure out what the process was to get somebody in there. And the first guy no call no showed. And I’m at the job site, it’s hot as heck, I’m getting ready to go and this guy doesn’t show up.
So I go back on my phone like in the Facebook group. “Hey, this guy who said he was coming didn’t come. Anybody else?” And this guy Billy messaged me and said, “Hey, I’ve done a bunch of stuff. I’m available today.” I mean from the minute this guy hit the ground I was blown away. I think at the end of the first month I voluntarily gave him a 30% raise because I was like, “I just feel bad paying you what I’m paying you because your skillset and your work ethic are absurd.” He’s the only person I’ve ever worked with besides my realtor that I would put his work ethic at the same level as mine. He is just a machine. He does not stop. And I’m telling you, he can literally do anything. And it’s a huge asset when a customer calls or a tenant calls and says, “Pipe’s leaking in the ceiling,” or, “A window’s leaking in the corner.” It does not matter what the problem is, between his skillset and my skillset we can solve anything. So it’s been a huge, huge asset. I still contract out major electrical. I still contract out major plumbing. I have an incredible contact for getting roofs put on. So those things I usually don’t use him. But any interior small stuff, he’s doing most of it.
And then the way it evolved to a second guy was I was furloughed from my day job from April until October of last year because of COVID. And in October when I got called back to my day job I was not expecting it. I expected them to let me go and I thought real estate was going to be my future and that’s it. Well, didn’t workout that way. And I had stacked projects because I was like, “If this is what I’m going to do, I got to have deals in the pipe.” So now I got four or five properties in the pipe and it was just my one guy working and I said I got to get this guy a helper. So I posted again and this time it was much easier because I’m not looking for a skill guy, I’m looking for somebody that’s going to carry boards and help move drywall and do all the things that my guy needs help with. And I got a 21 year old kid who his dad messaged me, he said, “Hey, my son’s looking for a job. He’s a hard worker. He doesn’t know any of this stuff but he’s got his own vehicle, he’ll be on time every day and he’s a great kid.”
He doesn’t move as fast as I’d like every day but he’s learning. He’s a sponge. He soaks up everything around him and he shows up on time every day. I have no issues with him calling out of work, anything like that. So he’s been a tremendous asset and I hope that my business continues to scale so I can pay these guys more and more and more. I would love to make both of them full-time salaried employees and let them love what they’re doing as much as I love the help I get from them.

Tony:
That brings up a really I think interesting question Kevin about, as a real estate investor, how much work should you be doing yourself versus hiring someone else to do that work? Now, obviously we’re talking to a lot of rookies so they maybe haven’t even done their first deal yet. So they may not be at a point where they want to go out and hire employees. But they do have that decision to make, especially if they’re looking at a property that needs renovations, of should I do this drywall myself? Should I do this flooring myself? Actually this is a good question for you too. I’ve never done any of that work. All of the properties that I’ve done I’ve always hired that out because I did have a W2 that I was balancing and I knew that my time was better spent on finding the next deal, lining up the financing and all of the kind of more strategic things as opposed to the tactical work. So how did you make that decision? And Ashley, maybe if you can answer that first because I know you’ve got a pretty big portfolio also. But how do you make the decision of, what work to do yourself versus what you hire out?

Kevin:
I would say that for me it’s part passion and part financial. So I’ll lead with … And this is going to upset every experienced investor. I don’t do anything based on my wallet and that’s just the truth. And if you go to my retail stores and any customer who’s ever come in pissed off about something, my district manager who runs my retail company will … She wants to choke me sometimes because the customer will be insanely difficult and rude and they’ll send me an email and tell me the whole scenario about how they were right and my district manager was wrong. And I’ll message the district manager, forward the email and say, “Hey, give this customer a refund.” And she’s like, “I just said we’re not doing it.” I said, “Well, I own the company, I just said we are.” I would rather lose $80 than have a customer go bad mouth my company on the internet. It’s not worth it. So I don’t do anything, and I mean that, anything in my life based on the financial aspect of it. I consider it. But the thing that I weigh in is, is it the right thing to do and is it something I want to do?
I absolutely enjoy doing drywall and framing. And you can say that that’s guy stuff or whatever but I just enjoy doing it. And there’s days where I don’t want to and there’s days where it’s 10:00 at night and I know that something’s got to be done by tomorrow. And I’m like, “Oh man, I want to sit on the couch and watch CSI reruns with my wife. But this has to get done.” So I get up and I get in the truck and I go do it and suck it up. Everybody’s got their own vision of what life is and what’s happy. And I think that my reality is I have an incredibly happy life. My wife and I have a fantastic relationship. I have three really, really great kids. I don’t have anything in my life to complain about that is of any substance. So when something isn’t go right, I handle it extremely well because I don’t have a bunch of stress. Even with … My schedule is nuts. 90% of people would probably jump off a bridge if they tried to juggle the schedule that I juggle on a weekly basis. But the reality is it’s just what I’m used to. I just grind and grind and grind and grind.
When I take my downtime, it’s my downtime. When I’m with my family, I don’t care what else is going on. It’s my time with them. My son has hockey, I don’t care what’s going on. My daughter has cheer, I don’t care what’s going on. I go do those things with them and then … There’s plenty of times I drop … My son has a three hour hockey practice on Tuesday and Thursday night every week. I drop him off at hockey, I drive 20 minutes to a reno property, I work for two hours and I drive 20 minutes back and pick him up. And that’s just maximizing the time I have available. And even though in two hours I might only get a wall demoed or whatever I can get accomplished in that short period of time, it’s one less thing my guys have to do the next day. So those little steps add up to a bigger project being accomplished faster. So I just try to get in and do whatever I can to help. And whether the drywall is something that’s financially in the budget or not, if I feel like doing it, I do it, if I don’t feel like doing it, I tell the guys to do it or I pay somebody else or whatever the case.
So it’s very, very rarely financial. And I know that’s a horrible thing to say for investors but I know what the numbers are. I always budget for that stuff but I don’t go do it to save it from the budget as much as I go do it because I enjoy doing it.

Ashley:
Yeah. I have to relate to some of that but the opposite. So at first it was financial for me. It was like me and my partner could do this so much cheaper. Like lay flooring. It’s so easy for us. We can do that. And then when we did our first major rehab it was more, we could move faster than the contractors we had been using and we were so tired of trying to schedule them and trying to get them to show up and then them not showing up and having to figure out why. So it was more just not having to deal with contractors why we did like our first big full gut rehab together and pretty much did everything ourselves except for electrical and some plumbing. But that was the big motivation there. And then it was a whole mindset shift for me. My mentor just said, “You love this stuff now, you love doing the construction, the rehab, but you’re not always going to love it. You’re going to get burnt out. So make sure that you’re putting things in place now so that when you are ready to step away you can easily do that.”
And then you have options. So like you said during hockey practice you can go on work on something but you don’t have to do that. And just like now, I don’t have to go and paint a property. But if I wake up and decide I want to do that I can go and do that but I also have people in place to do that for me if I decide not to. So that was a big mindset shift for me is that, I want the options to do what I want to do and I don’t want to have to go and do that today just because I don’t have anybody else or any systems in place to take care of that particular task. That was the big thing for me.

Kevin:
I agree with all of it.

Ashley:
Kevin, I am really excited to actually jump into one specific deal and find out the numbers and the nitty gritty. What rookie deal did you want to talk about with us today?

Kevin:
Well, I guess we can talk about that first one just because it’s an interesting story. Oh, I’ll tell you what, you guys can pick. Do you want to talk about the first one or do you want to talk about the one that ended up with the lawsuit that became an Airbnb property? Either one’s fine with me.

Ashley:
Let’s do the lawsuit one and talk a little bit about short term rentals.

Kevin:
Okay cool. Yeah. So it was a subject to and I posted an ad in a local Facebook group and I said, “I’m looking to buy a property, three to four bedrooms, as it conditions. I don’t care what it is.” Literally like the we buy houses speil. And a lady messaged me and said, “Hey, a friend of mine is a military family and they are already in I think Utah or Idaho and they can’t sell their house because of the condition it’s in. They owe too much on it. Do you want to come take a look?” I said, “Absolutely.” I go take a look and the house was … Structurally there was nothing wrong. I needed a new roof but it wasn’t dire. The interior was just hideous. It needed a lot of touch up work. All new flooring. It’s dated. So I went through, looked at it and I start talking to them and explain to them, I said look … First of all they were behind on their mortgage so they were a month or two behind on their mortgage. Their electric, water, everything was behind. They were financially in a mess. They had a brand new baby. They’re 22 years old, this couple. And they’re Air Force. I’m a veteran. If I can help a veteran out, it’s extremely important to me.
So anyway, I go back and forth with them and I tell them a little bit about what I do. I said, “Look, I have this tool that I use called subject to where I’ll take over the payments and everything and you guys are essentially just holding the note and I’ll manage the house. I’ll update it and I’m going to rent it out.” Well, it turned into me doing all the work. And the way it turned into a short term rental is so ridiculous. A friend of mine was renting his one bedroom apartment that he lived in. He was sleeping on the couch and renting out the one bedroom and making $800, $900 a month and he kept posting it on Facebook. And he’s like, “I can’t believe this thing.” I knew what Airbnb was but I had never even considered doing a short term rental. So I just kind of threw it at my wife and we joked about it and I said, “What would it really cost us to furnish this? $5,000, $6,000 maybe?” So we said, “What the heck, we’ll try it for 90 days. If it doesn’t work out we’ll sell all the furniture. We’ll make most of the money back. And then we’ll see what happens.”
So long story short, fix it up, renovate it. I themed the bedrooms to make it fun. Like I did one like video games. It’s near a NASCAR track in Delaware here so I did one room in NASCAR. One room is a Pittsburgh room. I’m from Pittsburgh so I had to do that. And we’re in Philadelphia country so my son was like, “All the Flyers fans are going to burn that place down.” I went live on October 20th of 2019. From October 20th to December 31st I made $14,000. And I was so blown away. I was like, this is the craziest thing. There is nothing near this. There was no NASCAR race going on. I’m an hour from the beach. There is nothing. And it was booked solid every single night. And in the STR world if you’re booked every night your prices are too low. And I have not increased my prices still a year later which I probably could of made a lot more money than I have. So like I said, it cost me six grand to furnish it. I made 14 grand in the first two and a half months. And it really turned into what is this actually capable of?
So I got super excited about it. Well, right before Christmas … And I mean, right before Christmas … I think it might have been Christmas eve. I get served by a lawyer. And it says, “I’m representing” … And I won’t say their names because I don’t want to call them out. “And they are saying that you misrepresented your contract, that you were going to live in the property and now you’re renting it out as a boarding house.” And I was like, “That’s not what’s happening.” And he said, “Well, you have until December 31st to hand over the keys or we will come with the police and change the locks.” So my first attempt, I called the lawyer who served me and I said, “Listen, you understand that everything your client said to you is a lie.” I said, “I have it all in text message. He knew exactly what I was doing with this house. He agreed with everything.” I said, “Not only that, but I paid all his past due debt.” My normal process for subject to is you bring your house current and I will take it over going forward.
So I told him, “I’m too nice of a person. My heart before my wallet.” I said, “Listen, you’re a young family, you’re a veterans.” Well, they were active duty military. “You’ve got a brand new family. These are all things that are dire importance to me. I’m going to pay all the debt that you’re behind.” It was like eight grand. “And I will make sure that you guys don’t have anything worry about with this house.” They were like, “Awesome. Great.” I paid all the debt, got the house up, paid all the bills. No, our subject to contract said I was going to pay all the bills, I was going to pay the mortgage. I never missed a beat on anything that I said I was going to do. And I said that to the attorney. I said, “We have a signed contracted signed by him, his wife, myself. And I’ve honored every piece of the contract on my side. They’re the ones trying to back out of their part of the contract.” So what happened was, I tried to call the guy, he hung up on me. He basically told me … To be fair, I was very stern with him because I was upset that he was representing someone who was clearly lying.
And he demanded that I send him screen shots of everything that I had proving his client was lying. And I said, “You can collect them from my attorney.” So I called my attorney and I own retail stores so I have a very good lawyer on retainer. And my attorney just picked the whole thing apart. I sent him all the documentation. Everything I said was correct. Everything that I did was correct. The only thing I didn’t do was I never did a formal closing and had the deed transferred to my name. So if you’re listening to this and you’re considering subject two, you do not put a dime in a property until the deed is in your name. That was a huge mistake on my part that I can look back on and thankfully it didn’t end poorly. My attorney told the other attorney, “If you step foot on the property you’ll be prosecuted. The property belongs to my client as per the contract.”
The attorney tried to tell me from his side that the contract was an illegal real estate contract, which sub to is completely legal. His lack of knowledge does not make it illegal. So there was nothing illegal about it and I very clearly said that to him in an email in those exact words. Insulting a lawyer’s intelligence is probably not the best approach but I’m a pretty smart guy and he was aggravating the crap out of me so I wanted to take a jab where I could. So anyway, we came to agreement and by the way, December 27th or whatever, when they were closing in on the day they were going to change the locks and the day that I was arguing with them, we came to an agreement that they would not touch the property and I would be able to continue renting it as is until we negotiated a purchase. So the two attorneys were negotiating the purchase and … I probably shouldn’t say this on the air. I dragged it out as long as humanly possible. We did not sign a purchase agreement until the end of February. And I dragged it out for two and a half months because I was so pissed off that they lied about everything.
And it was petty and it was beneath me and I still smile thinking about it because I wasted two months of their time. So at the end of February we signed the agreement. It gave me 45 days to make the purchase in a traditional fashion, which I did. I had to bring … I want to say it was like $38,000 or $40,000 to the table to put 20% down, do the purchase. I bought it at exactly what was owed on it. So I think right now I think the mortgage on the property is like 135,000. I bought it for like 170, somewhere in that range. And it’s worth about 235. And my total expenses all in on that property are about $1,400 a month and I’ve been averaging between 3,000 and 3,500 a month as an Airbnb from the time it started. It’s booked all day every day. I mean, literally the only days it hasn’t been booked over the last six months are days that I blocked it on purpose to go in and do something or fix something. And I love doing the Airbnb thing. I’ve spent maybe a total of two hours a week on being the host, answering questions.
There have been an occasional issue. I had somebody throw a party and do a little bit of damage in the very beginning. I got it worked out. I’ve got cameras everywhere now on the exterior of the property so I don’t run into that again. And I actually have two more STRs that are getting ready. One’s getting ready to go live by February 1st and the third one will be live hopefully by April 1st.

Ashley:
Do you think part of the reason that your Airbnb is doing so successful, and you said you’re in a small town of 11,000, is because there’s nothing else available and that’s the nicest place to stay in the area?

Kevin:
There’s tons of other ones available. And my Airbnb is actually in Dover which is a 100,000 people town so it’s in a bigger city. But I think what it is is it’s in a private location and I have excellent reviews. In my retail business, in my life, customer service is the core of everything. If you are a good customer service person, if you can learn to not be petty and drag things out for two months for spite, those are the things that lead to success. If you’re good and you’re kind and you’re genuine with people, it works out. I’ve had people that had a bad experience at my Airbnb leave me a five star review because I communicated with them and I did my best to solve the problem. No matter what the issue was. I had a lady come in and she found a dead bug right by the front door. 100% dragged in by her feet. And I refunded the cleaning fee immediately. I didn’t argue with her for one second. I’m so sorry. I was apologetic. I knew that it wasn’t my fault. My cleaners don’t leave dead bugs. The house is spotless every time they leave.
But do I argue with this lady over 75 bucks or do I realize that keeping her happy and getting a five star review out of it is exponentially more valuable in the longterm? And I think a lot of people lost sight of that. In the short term they’re so bent out of shape about losing a little bit of money that they don’t realize the longterm impact financially to making a customer upset. I’ve not had any tenant issues in all my rentals. I’ve had a couple lates here and there. I did have an eviction. The guy in that two unit that was in the front house ended up having to be evicted. But that’s the only issue I’ve had. And he’s the only tenant that I’ve absorbed through a purchase. Every other tenant I hand picked and I’ve not had a single issue with any of them. So it’s being kind and working hard is the most important part of this business.

Ashley:
Kevin, have you ever read the book Hug Your Haters?

Kevin:
No, but that’s how I live my life.

Ashley:
Yeah. And I was going to recommend this to everyone listening. If you want to be like Kevin and get into that customer service mindset and do what he’s doing to be successful, Hug Your Haters is a really great book. It’s by Jay Baer and we’ll link that in the show notes too. But yeah, Kevin you don’t need to read it because you’re doing everything that’s in the book. But for someone who wants to read more about it, it’s a great book.
That is a great deal and thank you for sharing that with us. Tony, did you have any short term rental questions you wanted to ask him before we move on to our mindset segment?

Tony:
No. I think it just shows that no matter where you’re at there is an opportunity to be successful with a short term rental. And what you said about the customer, just how you treat your customer is super important. We’ve had guests who have had plumbing issues with a property or, like you said, cleaning issues. And it’s not so much that there’s an issue but it’s about how the host handles the issue that determines the review. So if you have an issue and you handle it well, you get a glowing review. If you have an issue and you handle it poorly, that’s where the negative review comes from. So yeah, really good insight there.
So yeah, let’s talk about mindset. I know we’ve kind of included this and sprinkled this out throughout the entire episode, but if I were to ask you specifically Kevin, if you think about yourself before you started, and you think about some of the assumptions or maybe misconceptions you had about real estate investing, what were some of those misconceptions that you identify now that you’re two years into it? Like what were some of those assumptions you made that turned out not to be true?

Kevin:
I’ll be honest, it’s the other way for me. It’s things that I assumed were going to be no problem that turned out to be a problem. Like I said, I came into this … My mindset has been the same way before real estate. My work ethic hasn’t changed. When I came into this, I thought I’ll come in, I’ll find a property, I’ll hire a contractor, they’ll do this beautiful freaking work for me and I’ll rent this property out, refinance it and move on to the next one. And I found that finding contractors is absolutely the most stressful and painful part of this business. And it had a lot to do with kind of why I lean towards using my guys as much as possible. I have probably 10 guys in my Rolodex who I can call them for whatever they specialize in and they’ll do a tremendous job and I would tout every one of their businesses locally and I do send tons of people to all of them. But for every one that I have that’s good, I’ve dealt with 10 that are ridiculous. And three of my deals I’ve paid a contractor soup to nuts to do the work. They are the three worst deals financially. They are the three worst deals from a timeframe. They are the only projects in 18 projects that have come in over budget our outside of the timeframe.
And the problem is I genuinely like all three of those guys. You guys know who you are. I hope all three of them hear this podcast and they understand that as people I love all three of them. I would drink a beer with any one of them any day. They’re good people. They are scumbag business people and it is what it is. They lie, cheat, and steal and it’s frustrating because I am a guy who sees the good in people first, second, third, fourth. I give people way too many chances when they don’t deserve it. Two of the three of them, I paid them all their money even though they didn’t do all the work. One of them came in 13 weeks past schedule of a 10 week project. So it took him more than double the time. And then had the nerve to give me a hard time when I told him I wasn’t paying him the last $6,000. And then I paid him anyway. Because as a person I felt like he spent the last 13 weeks doing my project. When in reality, now that I’ve spent so much time doing it myself, I know that he wasn’t working all that time or it would have been done. So it’s frustrating.
And I came into this thinking I’m a smart guy and a little bit arrogant and overly self confident that this’ll be a breeze. And I’ve run into problems like the lawsuit, like the contractors, that are not life ending. They’re stressful, but there’s resolutions. And I think that’s the biggest thing that I’ve learned over the last two years is what I should have already known from being a Marine. Improvise, adapt, overcome. You’re going to have things where you feel like you hit a wall. You’re going to have properties that you struggle on. You’re going to have things blindside you. I’ve had days where I needed $15,000 and I didn’t have the money so I had to figure out a way to make that work and figure out a way to get those contractors paid. And really from a mindset perspective it’s really important to take a deep breath and focus on a solution rather than throwing your coffee cup at the wall and throwing a temper tantrum and being upset. And trust me, there’s days where I’ve wanted to do that. And I’ve had days where my realtor … Actually this happened two weeks ago on a house I’m selling right now.
My realtor called me to tell me we’re dealing with a very difficult buyer who’s being ridiculous. And he called me and I was screaming in the phone, I’m like … And when I got done yelling, I’m expecting the guy that I’m paying to tell me, “Okay, Kevin.” And his answer was, “Are you done? Can grown up Kevin come back to the table now?” It took me back but it made me laugh and it made me realize how ridiculous I was acting over something that it wasn’t that big a deal. It’s annoying, it’s a pain in the butt, but at the end of the day it aint that big of a deal. We’ll get it worked out. We’ll get the house sold. We’re going to walk away with close to $100,000 profit on this flip. So why am I getting so mad over something that’s really not that big of a deal? And having that mindset and having people in your life that’ll check you … I could kick his butt and he knows that but at the end of the day he knows that I’m being ridiculous. You’ve got to slow down. You got to take a deep breath. And he’s one of my best friends. We’ve done all 18 of my deals together.
Even on the subject tos and stuff where I found them myself, he’s been there for advice and guidance. And my realtor … For any of the rookies listening, I’ve said it a thousand times in the Facebook group, get a realtor that’s investor minded on your side. Somebody you trust and connect with. Somebody who’s done investments. It is an absolutely integral part of your team. Sorry, I steered away.

Tony:
No, no. So many good things there. But I think your initial point about it wasn’t so much that you were afraid of things happening in real estate investing but that you were so overconfident, that you might have overlooked some things.

Kevin:
Jaded.

Tony:
Yeah. That’s a unique perspective because I think most people kind of see it the other way. So it’s nice to hear it from both.
I want to take us to our next segment Kevin, which is the Rookie Request Line. So for those of you that are listening, if you guys want to call in and have your question answered by one of our lovely guests like Kevin, give us a call at 888-5-ROOKIE. Ashley and I will get those questions and we’ll pick some to be on the show. Today’s question …

Tamika:
Hi. My name is Tamika and I am from the New Jersey, Jersey City area. And I just have a quick question. My question is how do you know if a home is good for BRRRR, good for flip, or good for hold? Thank you. Bye bye.

Kevin:
Tamika, that’s a good question. It’s a great question. I would tell you that it’s genuinely a situational decision for me. And this is just me personally. I can’t speak for every other investor. What I hear from a lot of people is that if the margin is thin, if the equity is thin, that’s when it’s better for it to be a hold. Typically, what I run into is, I BRRRR, BRRRR, BRRRR, BRRRR, BRRRR, and then when I want to stock my cash reserve back up I flip. So I’ve held houses that have tons of equity in them and I’ve flipped houses that had a lot less equity in them just because I wanted to put some money back in my account and pad it up a little bit. I am very much a rookie from a financial standpoint. I mean, I live a nice life but I am not even remotely rich. And I’ve spent a ton of my money and not taken a dime from this. So when I need money back in my account, I got to sell a property or I got to generate that money somehow. And that’s the way that I’ve been doing it.
So I would say it’s completely situational for me. If I need some cash, I flip it. Otherwise, my goal is to hold everything. And I’ll tell you the main reason is because flipping is a job and being a rental owner is passive income for the rest of your life. And some people may argue that and say it’s work. You can always hire a property manager to handle the workload of it and just collect your check if that’s what you want to do. It’s very minimal work for me because of the way I renovate. And I’m collecting a substantial income at this point from passive income. And again, I’m not taking it yet, but I know when I get to that point, it’s going to be a very comfortable income and it’ll be worth all the work that I put in for the last X amount of years, whatever that is when we get to that point.

Ashley:
I really like that answer because instead of saying, “Well, if you look at the numbers or you figure this out,” it’s all about your situation and what strategy is going to fit the life that you want. So you want to retire by 40 if you want to. You want to have that option. So for you buy and hold is the way to go so that you have that mailbox money coming in. So I really love that answer. Thank you Kevin.
We’re going to go into our next segment now. It is the random questions. And I’ll actually take the first question. Kevin, we see you all over the Real Estate Rookie Facebook group. I want to know what is the most asked question by rookies and what would be the answer to that question, your advice for our listeners?

Kevin:
Well, I think the thing that I hear the most is where do I start? And I see that a lot. My answer to everybody is it’s a tricky question. I know that’s not the answer people want to hear. But the reality is there are so many variables in doing this, especially in the beginning. Confidence matters. Money matters. Your time available matters. Your location matters. So I would say that you want to start by being educated. I’m not exaggerating this at all. I spent 400 to 500 hours from August of 2018 to October, November of 2018, 400 to 500 hours of my free time. And you can do the math and see how much of that … It was pretty much all of my free time for three months reading, listening to podcasts. And my son is ecstatic that I’m on this podcast with you guys because he’s so sick of listening to real estate podcasts in the car because that’s all I do. Everywhere I go it’s on. And I’m a music junkie but in the beginning I needed to know more to build my confidence up so I bought books, I read, I listened. The big thing, I asked questions. So many people are afraid to get chastised or are afraid to look dumb so they won’t ask a question.
And actually in that Facebook group, I’ve led many times with, “I’m going to get laughed at here.” It doesn’t bother me at all. You want to hate, do it. But on the other side of that hate, you’re going to realize I’m doing just fine for myself. Somebody telling me I’m an idiot … If this is what an idiot looks like man, there’s people doing a lot worse. So I think it’s extremely important that people are self confident. You have to trust yourself. And this thing behind me … And my parents go a long way to that. I’m as self confident as a human being can be. And even when I’m unsure of something, I lead with confidence even when I’m not confident because I know that my attitude will determine my outcome. And if I come into this with the right attitude and I’m confident, it’s much more likely to lead to success than if I come into it timid and scared that I’m going to make a mistake. And even if I do make a mistake, I read somewhere in one of those hundreds of hours something that said, “It’s only a mistake if you don’t learn from it, otherwise it’s experience.” And that has really stuck with me. I really, firmly believe that.
If you give up, it’s a mistake. If you pivot and make a better decision the next time you hit that problem, it’s experience. It’s a past experience. I mean, think about it like relationships. You had a partner that you went back and forth with and it didn’t work out, it turns into an ex. And you take the things that worked in that relationship and you apply them to the next one. You take the things you didn’t like and you avoid them from the next one. That ex is not a mistake, it’s an experience. You learned from it, you got better. You are better as a person. You treat other people better. And that to me is more important than anything, that you learn from the things that go wrong and just keep pivoting and pivoting. If you’re making these mistakes and you’re correcting, it starts to bring it back in. As long as you’re learning from the mistakes your window of failure gets smaller and smaller. And that’s it. It becomes easier and easier to succeed.
I run into things now in these flips and BRRRRs that would have absolutely broke me when I started. And now it’s unconscious. I mean, I literally just solve the problem before I even think about it. Because it’s so automatic because I’ve learned so much and I’ve made the mistakes and I’ve learned from them so they’ve become experience rather than mistakes.

Tony:
And as long as you’re learning, that’s all that matters. And for so many of the folks that are listening to this podcast that haven’t done their first deal yet and they’ve got all this kind of hesitation and nervousness about getting that first deal done because they don’t want to do it wrong and they’ve got to get it perfect and they got to hit this rule, they got to do this thing, let all of that go. Because the purpose of the first deal is what you just said which is to educate yourself. It’s to build that confidence and it’s to kind of break through and break down some of those misconceptions that you have about real estate investing. So great advice on that point Kevin.
I want to talk … And my question’s going to be more about tools. So you’ve got this big portfolio. You’re juggling a W2 with this other business. You mentioned Cozy, but what are some of the other systems or tools that you’re using to help you manage your real estate business?

Kevin:
I use a free time sheet app for my two guys that work for me to clock their hours and that’s literally it. I don’t have anything crazy. I don’t have any crazy systems. And it’s funny because in my day job I do a lot of automation. Now, for the short term rentals I use a program called Smartbnb, which does some automated messaging for your cleaners and it really, really automates the short term rental side. So if people are doing that business, I highly recommend looking at Smartbnb. Lot of people use PriceLabs for automated pricing. I don’t really mess with the automated pricing. I started with PriceLabs in the beginning. I didn’t love it. So I backed off of it and I just manage it myself. But from the real estate stuff in general, I pretty much just manage it via email and my cellphone. I mean, I’ve got my cellphone at my hip 24/7 and it’s amazing what you can manage with that little tool.

Ashley:
Kevin, thank you so much for all of the valuable information today and also thank you for your service too. We didn’t get a chance to thank you yet for that. But please tell everyone where they can find out some more information and where they can contact you.

Kevin:
Diyrealesateinvesting on Instagram, which I am terrible about. I never use my Instagram. But I’m happy to connect with anybody. The Facebook group, the Real Estate Rookie Facebook group, I’m in there all the time commenting. There are probably dozens, maybe 100 people in that group that have messaged me privately and many of them I’ve had hour conversations with on the phone. So I’m always happy to help people. I’m not into the whole selling courses thing. If I can spend an hour of my time and it changes the trajectory of somebody else’s life, to me that’s a win. So I’m happy to help. If I can help you, if I got the time, I’m always willing to have a conversation and to answer questions. Instagram I guess would be the real way. My email is [email protected] if somebody wants to send me a personal email. I’m one of those weird people that can’t have a notification in my email box so I read every single email when they come in. So I will get back to you if the time requires it.
Like I said, this is a bucket list thing for me. I’m super honored and appreciative to be here. I can’t imagine two years into this already being on a podcast like I’m somebody important. I’m really not. My brother and I started this together on a whim and he’s kind of the silent guy and I’m the one doing the work and it’s been a really fun journey. I’ve learned a ton. I’ve made a ton of friends. I would recommend it to anybody.

Ashley:
Kevin, I just want to say, you really provided a lot of great value today. I’m sure Tony would say the same that we could keep talking to you and going on.

Tony:
Absolutely. There’s so many things I have that I couldn’t get to. Right?

Ashley:
Yeah. An hour and a half now and this is one of the longest recordings we’ve ever had because we couldn’t stop talking.

Kevin:
Look, we can keep going. I’m good. I love talking.

Tony:
We need a part two.

Kevin:
I’m in.

Ashley:
Yeah, yeah, yeah. Well, thank you so much for joining us and a lot of the things that Kevin mentioned, we will put into the show notes at biggerpockets.com/rookie51. And of course make sure you join our Facebook group, Real Estate Rookie and you will see Tony and I in there and also Kevin. Ask us some questions and there’s over … What is it? How many people are in there now Tony?

Tony:
20 plus thousand. Yeah.

Ashley:
Yeah. So somebody’s going to have an answer for you.

Kevin:
Yeah. Lots of great content in there every day.

Ashley:
Yeah. It’s amazing how fast people respond when a post comes up. It’s up for a minute and there’s already two or three responses.

Kevin:
It’s usually me saying get your job back.

Ashley:
Well, thank you everyone for listening today. I’m Ashley Kehr, @wealthfromrentals, and he’s Tony Robinson, @tonyjrobinson. And make sure you guys listen to our newest episode on Saturday.

 

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In This Episode We Cover:

  • How to be a better wholesaler and listen to what sellers need
  • Getting your spouse on board for real estate investing
  • What a subject-to property is and how to facilitate a subject-to transaction
  • The best property management software (that’s also free!)
  • The importance of having a W2 income if you’re going to BRRRR, flip, or buy long-term rentals
  • Why short-term rentals can be serious cash-flowing investments
  • When to BRRRR and when to flip (depending on your goals and finances)
  • And SO much more!

Links from the Show

Rookie Deal

  • Purchase Price: $89k
  • Hard Money Loan: $110k
  • Down Payment: $7k
  • Renovation Costs: $25k
  • Refinanced: $133k
  • Appraised Value: $170k
  • Mortgage: $700 roughly
  • Rental Income: $1500/month

Books Mentioned in this Show:

Connect with Kevin: