Rookie Podcast 55: Combining House Hacking and Live in Flips with Tyler Madden

53 min read
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Talking to Tyler Madden for any more than a minute, you can tell that he’s a smart guy. But would you ever guess a general contractor and real estate investor has degrees in biology and chemistry? Probably not!

Tyler went to school to be a doctor, but after leaving school he found himself in the restaurant industry. He was serving tables, which later turned into bartending, and later managing the restaurants himself. He enjoyed the growth he found in the restaurant industry but realized that there was a cap to the success.

At the same time, Tyler was fixing up his primary residence every so often, learning new tricks of the trade from online. He got so good at fixing up his own house, other people started asking him to take care of projects on their houses. Tyler loved fixing up houses, and decided to get his general contractor license and start up his own business.

Tyler was even inadvertently house hacking and doing a live in flip/rehab on his first primary home without even realizing it. He rented out a room in his house while he was fixing up the property, which helped him cover a lot of costs. When Tyler and his wife decided to move into another house, they kept it as a rental property, and held on to a LOT of equity that he is now using to pursue future deals.

He’s had a fire in a home, a break-in, and at one point had 40 cop cars surrounding him with guns drawn (he shares in the episode). Tyler is an interesting guy, and has a lot of knowledge to share on rehabbing, contracting, cost estimating, and financing!

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Read the Transcript Here

Ashley:
This is Real Estate Rookie Show number 55.

Tyler:
We didn’t even really know it, but we started house hacking. We would get renters and we’d be like, “Okay, we need to pay for the backyard. We need sod and we need a patio and we need a sprinkler system.” And we were like, “Let’s rent out one of those four bedrooms.” So we got a renter.

Ashley:
My name is Ashley Kehr. And I am here with my cohost, Tony Robinson. And today we have on Tyler Madden who is going to share with us his Madden practice.

Tony:
Tyler who is a great guest, right? But I think what’s more important before we get into Tyler, can we talk about the fact that we’re matching today? So you guys, please go watch us on YouTube. Ashley and I are twins today. There’s only about like a 12 inch difference in height between us but other than that, we look like twins right now.

Ashley:
Yeah. And it’s really funny too. This is a great episode to watch on YouTube because Tyler’s background is amazing.

Tony:
Like beautiful.

Ashley:
You think it’s like a green screen. It’s so beautiful. So you’ll hear him talk about the renovation that he did in the property that he’s living in now. And like we get 40 minutes into the episode and he starts dropping these, oh, by the way, I did this, oh, by the way this happened and I was like, okay, we’re 40 minutes in and those are like top of the line stories to hook people into that.

Tony:
Totally. He created a new strategy and we talked about… I’ve never even heard an investor do this, but he combined a house hack with a live in flip, where he was using the House Act to help fund the flip. So really, really cool and interesting story. And I think he also does a really good job of the mindset piece and talking about how he uses affirmations and his network to really kind of fuel his real estate investing. So many good gems from Tyler’s interview today.

Ashley:
Tyler, welcome to the show. Thank you so much for joining us.

Tyler:
Thank you.

Ashley:
Do you want to start off just telling everyone a little bit about yourself?

Tyler:
Yeah. So I am Tyler Madden, 34 years old, and I am a general contractor. Not necessarily by intention though, it’s a path that I got to in a roundabout kind of way, not a very linear story, but I went to college to become a doctor. I got a biology and a chemistry degree. And after that I went into what everyone does when they graduate. They go into restaurants. So I went into restaurants and I started as a server and started experiencing growth in the company. And I enjoyed that growth. And I got to the point where I turned into a bartender, I turned into a manager and then I hit a ceiling and realized that that growth was not going to happen anymore. I capped out and I couldn’t continue that growth. So I walked away from that just knowing that I didn’t want to be tied into anything, but not really identifying that I was an entrepreneur in the making.
So that was kind of the early stages. And then after I walked away from that is when we got our first house, my wife and I. And getting that first house, I started off on this path where I just wanted to give my wife the nicest house that I could. And I didn’t know anything about home ownership or fixing stuff. And I was cheap. So I started doing stuff on my own and I taught myself everything that I needed to know as I’d come up against it. One, because if I tried to pay people for it, it was always disappointing, the quality of work and it was always disappointing that I had to pay so much money. So that kind of started that path. But ultimately I discovered I was pretty good at it and I actually enjoyed it. And it turned into taking on jobs for other people, small remodeling things here and there, and that grew into larger remodeling for other people and ultimately led me to starting my own remodeling business and getting my GC license.
And then growing that business into something that it is today, I don’t do any marketing and it’s all word of mouth. And I put all of the effort that I put into everything and I’m experiencing that growth that I liked from the restaurant. And I’m realizing that there’s another ceiling, but I’m that ceiling that I’m slowing myself down and I’m the bottleneck. And that kind of brings me to where I’m at, where I love real estate and I know the capabilities of it, but I also know that I can’t give any more and I’ve exhausted what I’m capable of. So it’s time to start leveraging what I can to get some time back in my life.

Ashley:
That’s great, Tyler. So let’s talk about your first deal. So you have your living flip and then you also flip a property too.

Tyler:
So my first property actually turned into our rental. So we bought our first house, we fixed it up over the course of four or five years, put quite a bit of sweat equity into it and then that turned into a rental when we bought the house that we’re in now, which is our new primary. So there’s probably a lot to unpack there with regard to all of the details of that house and how we funded this one.

Tony:
So I just want to make sure I’ve got the story here though. So you go to school, you get a really, really hard degree in bio and chemistry, and then you become a GC. I think the point that’s most interesting is that you said you learned kind of the trade of becoming a general contractor by working on your own home, did I understand that correctly?

Tyler:
Correct. Correct. Yeah. I didn’t have any formal training. It was something that I learned along the way and forced myself to get good at.

Tony:
That is awesome, right? And Ashley you’ve said this so many times, is that getting your feet wet by doing something real estate related before you become an actual investor is like one of the best ways to get started. And you were like a prime example of that Tyler, like you took a home remodel and turned it into a business, which is awesome.

Tyler:
I didn’t know that I was doing that, but absolutely in practice that’s what happened and having a real estate adjacent career now like Jay Scott always says, it’s really set me up to be able to utilize all of that that I’ve gained and really start putting it to work.

Tony:
So I was just going to ask you for all the rookies, if you want to get good at rehabbing, you obviously have to get a degree in biochemistry before you make that happen?

Tyler:
Necessary steps for sure.

Ashley:
I want to talk about that shift from running your own business as a general contractor. When did it start to you make that change, you’re like, “Okay, I need to have more time for myself, I need to be less involved in the business and I need to start real estate investing,” what made you decide? How did you even come about real estate investing? Was that from your first property?

Tyler:
Yeah. So it’s interesting I’ve always been super interested in real estate. I’ve always had Redfin and Zillow apps. Even when I lived in apartments, I’d drive around neighborhoods and look at the values and see the pictures and really get a sense of the value in having a house. And growing up, my dad, he would always buy houses that needed a lot of work. My mom and dad had four kids and they would buy a house, put a lot of work into it, live in it for quite a while and then sell it and move into a nicer house. So house up, that was always the strategy for him. So not necessarily real estate investing, but pretty close, like 90% of what real estate investing is where he wouldn’t rent it out. He wouldn’t hold it, he wouldn’t flip it. And it was always just the primary houses.
So I kind of had that to lean back on, but like you mentioned, getting the time back and running a business, doing this, the reason what caused me to want to get that time back is we’re having a kid, my wife and I, we decided to have a kid, we’re six months pregnant and I can’t keep burying myself with work. And I think that there’s no better way to gain time back than to leverage my skillset that I have with being able to fix houses and invest in real estate to get my time back, if that answers your question.

Ashley:
Yeah. That definitely does. And to kind of follow up on that is, what’s like the next step? Because it sounds like you have all of the tools in place. I mean, you have the skillset definitely, you’ve freed up some time for yourself to start finding deals. So what’s your next course of action to actually get your next deal?

Tyler:
So the next course of action, fortunately, I’ve put myself in a really good position with both my rental property and my current primary is I have tapped into the equity on both houses. I’ve gained a boatload of equity in both houses by virtue of self performing the work and doing it to a high level. So I can tap into that equity with a HELOC, home equity line of credit and start using that capital to start funding new investment properties and getting into ideally rentals, but being in an expensive market like Denver, it’s tough to get into the burst strategy, which is ideal for me at MLS pricing or at that higher price point, just because the ratios are so much different than your $20,000 properties that you’re picking up, Ashley. Getting into a three or $400,000 house, you’ve really got to get it into an extremely high ARV to be able to get your money back out.
So I’d love to start finding off market deals just so that I can secure a better deal and flips are certainly not out of the cards for me just because I’ve got the toolkit. I own a construction company, so I can start leveraging that to actually do the work and then figure out what the exit strategy is, whether it’s a hold contender or if it’s something that just needs to be flipped and take that capital into another property.

Tony:
That’s a great strategy. Now I remember reading this book. I can’t remember which book it was. I think it might’ve been Crushing It in Apartments.

Ashley:
With Brian Murray?

Tony:
Yeah, I think it was that book. I think it was that one. But his strategy was flip one, flip one, hold one, right? So like for every four properties, he’s going to flip three and he’s going to hold one and that was kind of his process of generating these big chunks of cash, but also still being an actual real estate investor by holding some of these properties long-term. So it sounds like you can kind of approach your situation similarly. Now you mentioned the price point about the houses being $300,000, you have to get to a certain ARV for it to work. How are you actually financing these properties at such a high price point?

Tyler:
Yeah. So I’ve got a variety of options. I’ve made some really good connections with networking with both lenders and hard money lenders. And then I’ve also got, like I said, a HELOC on my rental property. We took that HELOC out before it became a rental property. So we’ve got $100,000 HELOC on that property. We still have on top of that $200,000 in equity on that house. And then same situation with this house where we’ve got over $300,000 in equity and I’ll tap into this house for another HELOC. So I’ll have in total, a couple hundred thousand dollars of my own capital that I can deploy because I fixed up these houses, saved a bunch of money and the market appreciates like crazy here. So it can be a combination of things, which is nice. I don’t feel like I’m pigeonholed into just one version of funding a property. So ultimately I’d love to have private lenders over hard money lenders, but at the end of the day, you do what you need to do to get a deal done. So I’ll take any kind of lending I need to.

Ashley:
I want to really break that down. So you have your first house as your primary residence. So was this you got the HELOC before you moved to your next property?

Tyler:
I closed on that HELOC one day before I closed on my new house.

Ashley:
I mean, that is smart because you’re going to get a way better interest rate with that HELOC than you would if it is an investment property.

Tyler:
Exactly.

Ashley:
And a HELOC, let’s talk about that real quick. So you have a mortgage on the property and that extra equity, banks will give you a line of credit up to usually 85%, sometimes 90% of the appraised value of the property. So you can take that. And the way a line of credit works is you’re only paying interest on that money once you pull that money out. So a mortgage, you’re constantly making payments every single month no matter what you’re doing with the money, because you just get that lump sum upfront, while the line of credit, you can pull it off, purchase a property, refinance, do your bar, and then you can pay it back. And then it’s just sitting there, you’re not paying any interest and it’s just available for you. So I mean, that is so awesome that you have it on two properties to choose from. And Tyler and I have talked before, and I honestly think he is one of the most prepared people ready to get into investing. He has so many tools in place. Just look at all of the different ways that he has access to money.

Tyler:
Yeah. And a couple of things on that note, the beautiful thing that I love about HELOCs is it’s reusable. You pay it off and then you get that money back. It’s not like doing a flip and you get that one chunk of change, you get to use it one time. The HELOC is available to you if you pay that off. So that’s a huge thing that I love about HELOC rather than like a cashout refinance or something like that, but obviously getting a HELOC on your primary is the key so that you can get better rates. It’s difficult to do that with the other properties. And then on your note about me being extremely prepared, I love that I’ve been able to talk to you and been super lucky with the network that I’ve been able to create, because all this time I’ve been doing this work and thinking yeah, that’s neat and everything, but I never had that extreme amount of confidence like, “Yeah, I can do this.”
Obviously I’m doing it for myself and my own house and for my wife, but at the end of the day, how hard is it to translate that into investing in real estate and actually doing it for profit? So it’s been cool seeing high level people like you being like, “Yeah, you can absolutely translate this into doing it for a living and not just for yourself.” So I appreciate the confidence boost that I’ve gotten from just networking with people like you.

Ashley:
Well, thank you. That was very kind of you to say, but I want to go back to the HELOC real quick and then maybe we can move into more of that, but with the HELOC, so a lot of times there’s no closing costs either. So if you’re putting a mortgage on the property, you can be paying eight to $10,000 in closing costs while a lot of times a HELOC especially on a primary residence, you’re not paying closing costs and I’ve even seen banks that will cover the appraisal. You don’t even have to pay for the appraisal on the property too. So definitely something to check out on.

Tony:
Really quick. I want to make sure that we break this piece down to like how long do you folks have to pay back that HELOC? Because if you remember, we had a guest on the show recently where… It was Rich Kelly, where he bought his property because the house is being foreclosed on or the bank was trying to take it back because they didn’t pay back the HELOC in time. So what’s the typical timeframe that as a homeowner you have to pay down that balance against the HELOC?

Tyler:
So mine is 10 years. I’ve got 10 entire years. So if I wanted to carry a balance on it that whole entire 10 years, I could. Ultimately, I want to use it, pay it off, use it again, pay it off. So the cool thing about it is even at the end of that 10 years, there’s always opportunities where if you’ve been a good client of that bank that gave you the HELOC and you’re continually paying it off or paying them interest, you’re a good client. They could potentially extend it or give you another one with the same terms. It’s a really fluid thing that’s flexible, but obviously it’s predicated on treating it the right way and not just treating it like, oh, I have a credit card, I can rack up a $100,000 worth of debt and I don’t have to worry about it for 10 years.

Ashley:
Yeah. I have a HELOC too on actually an investment property, not my primary. And it was a five-year term and it actually just expired. And the loan officer sent me a text and I was just like, “Oh, can I renew it?” And then a week later he’s like, “You’re all set. It’s renewed.” And so it was for another five years now. So you get those really great relationships with bankers and it can be very, very easy and a smooth process working with these line of credits.

Tyler:
Yeah. I’ll say it’s surprisingly easy to get them when you’ve got the equity. I mean, the one that I did, there was no income verification. It was all on stated income. And I’m not advising that you go lie about your income so that you can get equity, but it’s worth knowing people in the industry. And I found out about the banker that would give me that version of the HELOC from my lender who was helping me get the mortgage on this. So having a good lender that can refer me to other people in the industry, even if it’s a product that he’s not able to help me with is super powerful.

Tony:
Lots of good information on the HELOC and you see a lot of real estate investors leveraging that tool. So I’m glad we spent a little bit of time there. One thing I want to go back to though, Tyler, is your transition, which seems like it happened pretty quickly. Maybe you can give us the timeline, but your transition from being a W2 employee in the restaurant industry to being a full-blown entrepreneur, doing the GC thing, I guess, walk us through that journey like how long did it take and at what point did you know that you were ready to walk away from your W2 and work for yourself?

Tyler:
Yeah. So I wish I could say that it happened super quickly. It happened in a much longer timeframe than looking back in retrospect I wish it would have. But I left restaurants let’s say that was in 2016. And I knew that I didn’t want to get back into a W2 job at that point. And I’m the type of person that’ll just kind of force myself to figure stuff out. I know that I’ve got enough drive behind me to succeed at whatever it is I’m putting my effort into. So when I left the restaurant, we had a house, we had a house payment, I was still working on the house and it actually kind of coincided at a perfect time where I was learning a new trade essentially. And I really prioritized fixing up my own house more than I did trying to find projects or other people to do it for.
But then small projects started coming up where I worked with a designer for a little while where she would just need help doing some stuff around her projects, hanging artwork, taking care of little things here and there. And all the while I was gaining this experience on my own house and then her clients would inevitably ask, “Oh, can you do maybe a bathroom refresh or can you do this certain thing?” And I was like, “Oh, I just did that on my house. So yeah, I’ll bite that off.” And starting to do more and more for other clients. And then I branched out on my own after I realized that I have a lot of desire for this. I’m really good at this. I’m super detail oriented so why don’t I just make that what I do? So it kind of fell into place, maybe unintentionally, but then I started relating it to how much I realized I actually enjoyed houses and real estate and the market. And it kind of just fell into my lap after all the experience that I forced myself to have.

Tony:
How long were you doing this on the side before you went full-time?

Tyler:
Yeah. So I went full time, let’s say 2016, 2015. We bought our house in 2013. So between 2013 and 2016, I was kind of doing that side stuff for people here and there. I wasn’t crushing it financially because like I said, I wasn’t prioritizing it as a living. It was more of a means to making a cool house, but then I realized it could be a living and I started doing full-on remodels, whole homes, kitchens, basement finishes, that sort of thing. And that was kind of the eye opener where I was like, “Oh, people trust me with $300,000 budgets on their house, I can do this for anybody.” And then I created my own branding and business and really started to put a little more of a push behind me where the confidence grew. So that was about 2017, 2018 when I really got the confidence to start doing it on my own.

Ashley:
How did that impact your getting financing or have you talked with lenders even going forward as you’re going to be self-employed, what are they looking from you and have you had any obstacles with that?

Tyler:
So it was definitely interesting. We were able to… When I was working with the designer, I was getting paid. I actually started an LLC, well, before I ever intended to have one just for tax purposes. So I started an LLC. So I would receive my checks, even though they were not weekly, biweekly, or even monthly sometimes. But I’d get them in that LLC just so that I could have a track record of some income. So that’s what lenders are looking for. And then the flip side of that is my wife is a complete rockstar and she brings the stability to our relationship where she’s got a great job, a salary. She handles the health insurance. So I mean, she’s my saving grace in all of this. I’m the dreamer and she’s the doer. That is the way that we see it. So we have lenders. Fortunately this year after I filed taxes, it’ll be my fifth year of the LLC being in business.
So that’s actually going to loosen a lot of the regulations because they either need two years of combined income for my LLC. And last year I did not crush it for taxes purposes. And then this year after I file, it’ll be my fifth year so they only need to take one year of verified income from last year. So I’ll be smooth sailing. I’ve got it scheduled for February 12th, the very first day that you can E-file your taxes. I want to get it all cleared up so that we can hit the road.

Ashley:
That’s awesome.

Tony:
Yeah. That’s awesome, man. Now, Tyler people can’t see those who are listening, but if you’re on YouTube, you can see it, but you’ve got like a beautiful background and I’m super jealous. So it seems like you go really, really high end on your finishes, I guess, just kind of walk us through what your thought process is, your methodology on what kind of product it is you want to create because some investors might want to go just kind of really middle of the road, just standard everything but it seems like you’re going a little bit more high scale so just walk us through that.

Tyler:
Yeah. So I mean, conventional knowledge always tells you not to be the nicest house on the block or not the nicest house in the neighborhood, but I’ve always kind of steered myself to target the nicest house in the neighborhood, at least with my primary houses, because I know that if I find the nicest house in the neighborhood and it’s a true comp size wise, bedroom wise, all of that, I can probably finish it nicer than they did and get 15% more than what they sold for. So I actually do try to be the nicest house within reason in a neighborhood, especially in Denver, because I know that the market supports it here. Buying a house for if it’s a flip or if it’s a rental, people are emotional people and I don’t want to over improve something, but at the same time, Denver accommodates it where I can really put all of the quality and all of the time that I feel the house deserves and put really nice finishes in.
Now with a rental, there is somewhere that you need to draw the line where you’re not putting in all of the little things here and there that renters really don’t care about. So I think that’s something with my rental property being that it was a primary, it’s probably over done a little bit for renter’s sake, but at the same time, one of the things that I picked up from another podcast was Tarl Yarber, he does flips in Seattle and his mentality is kind of the same thing where if you fix it up to the nines and you take care of everything and you front-load the renovations, you’re kind of guaranteeing that there’s minimal maintenance. You’re guaranteeing that your capEx is going to be offset for at least 10 to 15 years. So really it maximizes my cash flow on the rental perspective. And in the meantime on this house, it really just raises the ARV, which gives me more equity and a better HELOC.

Ashley:
Yeah, that’s great. And I love Tarl too. He always gives such little golden nuggets.

Tyler:
Oh, he’s one of my idols as far as the podcasts go.

Ashley:
So I want to go back to your wife and let’s bring her into the picture. And you mentioned her a couple of times. So what was it first like introducing her to like, “Let’s get into real estate investing. I’m quitting my full time job.” How did all that take place? And then how has she motivated you or how has she supported you throughout this whole process?

Tyler:
I think support is like the name of the game with everything that you just said. She has been instrumental from the get-go. So we’ve been together for 12 years. We’ve been married for four years. So, I mean, she’s seen everything that I’ve been a part of. She’s seen the ups, the downs. So she has been really crucial with all of that and the real estate talk, I’ve probably talked about it for eight years, six, seven years easily, but it was something that she always was very hesitant to get on board with. And especially before we realized that we could create so much equity and I always had this idea that every dollar I spend on a house needs to make me more than that dollar. So for me, it was always an investment, whether or not she was on board or whether or not I told her what my technique or my tactic was.
So it took honestly until after we lived in this house for her to fully get comfortable. And I proved it to her firsthand that, hey, we can use and leverage our rental property. We can make great cash flow on that. And we had to actually do it in practice for her to finally understand that, oh, if we can just rinse and repeat and do that more, it took a lot of conversations that were very hard. And ultimately she just didn’t like the risks. She didn’t want to take risks of losing everything. And I said, there’s no way. The worst case scenario is you lose a little bit. It’s not like someone’s going to be able to come and take our house away if it goes poorly but now I’m in fast forward to today. And I’d say the last six months or so for me and her, I’ve really been focusing on mindset and changing my perspective on things and just gaining more of a positive mindset.
She’s right there with me. Every morning we start, we write 20 I am statements and positive affirmations. We read books together. We discuss them. It’s unlocked this part of our relationship that I honestly never knew we could have. So now we’re just on the same wavelength with regard to real estate, with regard to the mindset. And she’s obviously got the same intention where we want to get time. We decided to have a baby after 12 years. I mean, we were pretty patient. We decided to have a baby because we want to force ourselves to make the time. So now she’s really ready and willing to put in the effort to change the mindset and reprioritize our life. So she’s huge.

Ashley:
Could you give everyone just like two little piece of advice if they’re in the same situation trying to convince their partner, their spouse, is it having them listen to podcasts? Is it just sitting down with them? Is it showing them numbers? What would be one or two things that you highly recommend someone share with their partner to get them on board?

Tyler:
I think it’s a matter of starting slow. Honestly, it’s really easy to feel overwhelmed. And for all the listeners that are loving the podcast and you get really jazzed and you’re doing all this stuff, if you’re doing that without your spouse, and then you come home and you spout off all this stuff that you’re super excited for, it’s overwhelming for a spouse that just isn’t part of that yet. So starting small and having those conversations. And I also think identifying your goals, both your individual goals, but your couple goals. If you’ve got a spouse, making sure that, hey, if they’re content working at a job until they’re 65 and counting on a pension, then maybe it’s going to be a harder conversation to have.
And not to say that they can’t shift away from that mentality, but it does take talking about numbers. And I think podcasts have been really big, finding guests that have been in a similar situation to us and seeing how they were able to break through to the other side and just repetitive effort instead of feeling like one conversation’s going to do it. I’m going to talk to my wife and she’s going to be on board. Ultimately, you got to break down that wall over time. So a little bit at a time, be gentle, be patient and realize that you’re doing it for your joint future and they’ll come around.

Tony:
I totally agree with the concept of kind of making it a slow burn and understanding that it’ll take a little bit of time, depending on your spouse’s personality, their disposition, all those things. It was kind of similar for me too when I told my wife, my fiance or girlfriend at the time that I wanted to start investing in real estate, it was like, “Oh, I just read this book and here’s some cool things that I learned,” or, “I just listened to this podcast and what a cool thing that I…” or, “Hey, I just went to this meetup.” And she was like, “Wait, you’re going to a place with a bunch of random strangers to talk about what?” But you just kind of pepper those things in and over time and they’ll get a little bit more comfortable. So I love that advice, man. Tyler, I want hit what you’re working on now. What’s next for you? You’ve got these two beautiful homes. You’ve rehabbed them, what’s next in the pipeline for you?

Tyler:
Yeah. So next in the pipeline, I kind of touched on it with taxes and February 12th kind of being my unleashing date, I really have been getting super familiar with what my criteria is and what I want to be taking on because when you start having some success with especially renovations and my business and all of that, opportunities fall on my plate that I don’t always want to take or need to take. And I’ve been identifying what those opportunities are and figuring out are they going to get me closer or farther away from my goals. So really getting that laser focus of that. So honestly, I’m turning down more projects than I used to with the business so that I can make sure that I’ve got the time to put into the real estate and then finding…
I mean, we’re on the hunt, hopefully before this baby comes, I want to have another property under our belt, whether it’s a flip or a rehab, just something, because I want that momentum. I want to get that traction. So we’re not trying to force it, but we are making offers. We’ve been making offers using hard money lenders, offering seller financing to certain homeowners. So really running the gamut of whatever technique we can find and just get a property going.

Ashley:
Do you want to give us a little breakdown of some of the offers you are doing? Are any of them in negotiations, anything close to being under contract?

Tyler:
That would be nice. It’s cool because like I said, networking, I’ve got quite a few people who now that they know what I do and know what I’m interested in, they find things that might be interesting to me and then they send it off to me. And if it works for a deal then yeah, absolutely, you are in my business as a real estate agent. So write that offer, let’s go in at these numbers, let’s see what happens. And that is the wild thing in Denver. I think Anson Young was just recently on the Oji BiggerPockets Show and he’s from Denver. He was saying there’s something like 19,000 real estate agents in Colorado. And you’ve got to think that a lot of those have investors on their deck. So you’re competing with so many people when it’s an MLS listing. And that doesn’t keep me from throwing my numbers at them and offering, but it’s wild to see how standard convention just doesn’t apply so much anymore where if you put a deadline on a contract, chances are, you’re not even going to get that response.
So we put an offer in over asking price. All cash on a property, I think it was a $500,000 purchase price. ARV was in the high sevens. So we put our offer in day of sight unseen. We didn’t even go look at it. It fit my criteria. It was super similar to both of my current houses where it’s a brick ranch from the 50s. I love those. So we put our offer and we never heard a thing from the real estate agent. So it’s becoming more and more clear that I’ve got to find another way to get deals into my pipeline. And that’s where finding off market properties is going to need to be the focus.

Tony:
You kind of hit on what I was going to ask you next about diversifying your deal flow. But before we go there, is there at any point, Tyler, where you say, all right, Denver’s too hot of a market for me to be successful in, let me go somewhere else where there’s a little less competition, has that crossed your mind at all?

Tyler:
It has crossed my mind and I think a couple of reasons why that’s something I don’t feel like I want to do at least initially until I prove that Denver really isn’t habitable for me and my investing strategy. I think that I’ve got such a huge asset at my disposal being able to self-perform or at least having my business and my subcontractors go perform this work. I can’t imagine being an investor that’s paying retail for all this. Obviously there’s a lot of you guys that are doing that and you’re still making money, but if I can stack the cards in my favor and maybe I can fudge the numbers a little bit more and pay a little bit more because I spend less.
So I feel like Denver being that I know it so well, it’s my own backyard, it’s where I’ve grown up my whole entire life, it would be most ideal to stay here and I have full trust in myself and my capabilities that Denver’s not too scary for me. I’ve got a tool belt full of different tools that I can utilize here, I just need to start taking them out of the bell.

Tony:
And I think that’s the critical points Tyler about… Because you’re in an inexpensive market, right? And for folks that live in expensive markets, they always kind of immediately think that they have to go elsewhere, but it’s not so much about can I invest in this market or is this a good market to invest in? It’s, what’s the correct strategy to apply to this market, right? Because I’m in SoCal and there’s plenty of investors that are making millions and millions of dollars investing in real estate in California, right? But it’s like, what’s the strategy that makes most sense for that market? So I love your response there. I want to go back to the deal finding. So you said the MLS is really hot, what additional kind of strategies are you looking at using to help with the deal flow?

Tyler:
Yeah. So I’m getting more familiar with lists and I think that there’s a lot to unpack there. Obviously, like I said, I’ve always had the Zillow app and the Redfin app and I’ve always kind of relied on that methodology. So that’s my comfort level of let’s find a house on the MLS. That’s how we found both of our houses and it worked, but that was not easy. So now I’m starting to identify other techniques like driving for dollars, instituting some of the apps and programs and there’s a variety of them. So it’s almost kind of overwhelming when you start getting into like batch leads and all of the off market lists and how to stack them and everything.
So I’m trying to digest all of that right now so that I can start getting into that. But then yeah, finding a comfort level with just approaching people that aren’t expecting you to be approaching them, cold calling people, knocking on doors, getting out of my comfort zone there, I’ve been familiarizing myself a lot with that method. So it’ll be a matter of continuing to learn more about it and then just pulling the trigger on cold calls.

Ashley:
I think an important thing to point out is that even though you are getting defeated in putting in offers on the MLS, you are still doing it. You are still putting in offers because I think there’s a lot of people that sit there and I know they’ll never get accepted. All the houses are selling way more than I can offer, but you are still out there because even if you don’t get an offer accepted on the MLS, that experience of writing out those offers is awesome and you’re not going to get that anywhere else. Putting down like, okay, so I know the seller is selling because of this, I know that I have this tool in my bell, I can offer this, I can not have a contingency, I can waive an inspection, learning how to tailor your offers based on the property and the seller, just that practice of putting in those offers and learning how to take rejection.
I mean, getting all of those rejections, then you’ll have no problems sending out low ball offers, but just make sure your offers work for you. And so I think that’s great. You’re still doing that and then you’re also learning how to find deals other ways using different sources.

Tyler:
For sure. I have a super high threshold for denial. I mean, I told you how long it took me to get married to my wife. I mean, I’m used to it. So it’s just something where if it means enough to you, you’ll jump through the fire for it and you’ll get better. You’re not failing when it doesn’t go your way, you’re learning. And if you take those lessons and apply it to the next offer, you’re going to get better and better and eventually it’s going to work out. So the persistence is definitely key and not looking at it as a failure so much as an opportunity to learn from it.

Ashley:
Yeah, exactly. That’s a great way to put it.

Tony:
Ash, have you done any direct mail campaigns to get deals?

Ashley:
No. I mean, if I drive by a house seller, I write down the address and I’ll send a letter, but I’ve never actually gotten a deal from doing that, but I did just sign up for a prop stream and you use that, correct?

Tony:
We do. Yeah. So actually, because I invest in Joshua Tree as well, Tyler, and it’s kind of heating up as a market for short-term rentals and a lot of the substance on the MLS, same thing. It’s going like over asking price. So we just sent out our first batch of postcards last week and we got our first phone call, we were all super excited. So we’re going out there this weekend to go take a look at it. But as you get more comfortable and familiar as a real estate investor, you feel more confident in kind of going to some of these off market strategy. So I guess my point to the listeners is it’s totally okay to start with the MLS and maybe you get your first one or two deals from there and then eventually you can kind of graduate to some of the more advanced or sophisticated techniques for finding deals.

Ashley:
And one thing I recommend to as a rookie is that focus on one way first and learn that instead of trying to do like 50 different ways of getting deals, like doing direct mail, doing driving for dollars, having realtors on the MLS or all these different ways that you can do it, focus on one at first and then once you get done, move on to a next one and then incorporate both of them. It will be so much easier to put a system in place like, okay, every single day I’m getting emails from a realtor on the MLS, this is my criteria. She’s only sending me deals on these. My routine is to go in, log in, look at these properties, do they meet my criteria? Check, check, check, check. No. Okay. You have that deal flow done. You have that ready. This is how I’m sending out offers.
Then move on to your next thing. What’s your next thing? Every Sunday, I’m packing up the kids and we’re doing two hour drives around town. Like I’m picking my route, I’m doing this section of town, then this section of town. Get those systems in place because it will drive you crazy and you won’t be able to track things and things will pass you by if you are trying to use every single deal source strategy there is especially at first and doing it on your own.

Tony:
It gets very overwhelming and hectic I feel like when you’ve got all of that going on and you feel like you can take a deal from anywhere. I think that’s absolutely clutch finding that funnel that Brandon always talks about and get people. I’ve got wholesalers that email me. I’ve got agents that email me and figuring out the analysis and the numbers, figure out if it works for you and then move forward. But yeah, when you’re trying for every technique that’s under the sun, none of them are going to work if you’re just trying a little bit everywhere.

Ashley:
So Tyler, let’s break down one of your deals and hear the numbers on it.

Tyler:
You got it. So I’ll probably use a rental property instead of the current primary if that’s what you want.

Ashley:
Yeah, definitely. Let’s do that.

Tyler:
Do you want me to just give you everything or?

Ashley:
Yeah. The numbers, we love the numbers.

Tyler:
Perfect. So we bought it in 2013. We bought it for $215,000. We used FHA loan because it was on our occupy and we put three and a half percent down. And then between 2013 and 2017 is when we lived in it. We rehabbed it over time. What’s funny about rehabbing it over time is obviously it all costs money. Even when you’re doing it yourself, you still got to pay for materials, you still got to hire out some stuff. We didn’t even really know it, but we started house hacking. We would get renters and we’d be like, “Okay, we need to pay for the backyard. We need sod and we need a patio and we need a sprinkler system.” We’re like, “Let’s rent out one of those four bedrooms.” So we got a renter and we didn’t even identify that this was such a powerful strategy back then, we were just like that means-

Ashley:
We’re 40 minutes into the episode, how could you not even mention this until now?

Tyler:
I’m telling you, it took a while. I’m pretty dense. It took a while for me to realize the power of all of this. So we got a renter and started making rental income off of one room, and then we would start putting that money into the renovations. But I think we, over the four years that we lived there, probably spent about $40,000. And that’s with me self-performing, that’s obviously not retail. If that was to be paid out all in one chunk, it probably would have been upwards of 75. Obviously, self-performing saved a significant amount of money. So there’s a huge benefit just personally to be able to self perform and do it to the quality that I knew I wanted.

Ashley:
And then when you guys decided to move out and you have your appraisal to get the HELOC on it, what did it appraise for?

Tyler:
Yeah. So in 2017 is when we moved out and we had an appraisal and I think it appraised for about $440,000. Like I said, that was in 2017. It was enough to get a $100,000 HELOC. So we had that much equity that we had improved. And obviously this is also Denver where it appreciates rapidly. So year over year your appreciation is awesome, but then forced appreciation and forced equity also piggybacked on that. So it was kind of a combination of everything. So it appraised it like 415, 420, and then we got our renters in pretty much right as we found this house and right as we moved out with the HELOC and armed ourselves with all that money to do it on another house. But today that property, it would sell tomorrow for 525, 550 and it would probably go over asking price and have multiple offers.

Ashley:
Wow. And you had 250 into it, all set and done 255?

Tyler:
Yeah. So there’s another interesting story about that 40 minutes in I probably should have mentioned also, our first renters had a fire at the house.

Tony:
No.

Tyler:
Yes. So here’s our first experience with the rental. We think it’s all fine. And well, we’re making good money. Seven months after getting our renters in the house, they call us and it’s the middle of November, winter in Denver. And they are like, it smells like an electrical fire. And I’m like, “Oh no.” So we go over and we check it out, there’s seven or eight fire trucks in front of the house. It’s all walled off. And we look in the window and apparently there was an electrical fire. There’s an unfinished part of the backroom and they overloaded some circuits and the kids were playing video games in an unconditioned space. They had three space heaters all at once. So like a nightmare situation for a landlord and it kept flipping the breaker back on, which caused a small electrical fire in the addecks.
So the firefighters come in and they ripped down the ceiling from the main space, drywall and insulation goes everywhere, it damage all the tiles in the kitchen. And it’s funny because that was the one part of the house that we didn’t remodel was the kitchen. So when we moved out, it wasn’t fully done to the nines, it was done to the sevens. Every other part of the house had been touched, but we’re like, we’re out of money and I don’t want to keep pouring it into this house because I know we’ve peaked at our ARV. So we were like, cool, we’ll rent it as it is. And then I spoke that into the universe. I was like, man, I wish I would have had the opportunity to remodel the kitchen because I always wanted to.
The universe listened and ultimately we had to deal with insurance for 13 months. We had to get our renters out of there, terminate their lease and I renovated the kitchen over the course of 13 months. Fortunately, we were getting rental reimbursement the whole time. So it wasn’t something where financially we were crippled. However, they would forget for three months at a time to pay us. So we did have to handle that. Long story short, I finally got to do the kitchen that I always wanted and I was able to do it with insurance because I’m a licensed GC. So I self-performed everything. We still got what retail was for all of the renovations.
So it was a huge blessing in disguise. It was free money since I was self performing the work. So I did the kitchen just the way I always wanted. I took out a wall, I put up a beam and now it’s like to the nines. So that was a huge opportunity. And that’s why, like I said, the ARV today is 550 or above. And we were able to increase our rental amount off of that as well when we got new renters in.

Ashley:
That was going to be my question, what did the rent increase to?

Tyler:
Yeah. So before the kitchen and the fire, we were renting for 2,400 and then after the renovations of the kitchen… And we went beyond the kitchen too, I put in new floors and again, it was a personal house, but we raised it to 2850. And just this week, we’re resigning for another one-year lease with our tenants. Now we’re raising it to 2993. So almost three grand a month. And our mortgage payment is $1,400.

Tony:
No way.

Ashley:
That’s awesome.

Tony:
Wow.

Tyler:
And like I said, there’s no CapEx. I took care of everything. It doesn’t need a furnace. It doesn’t need appliances. There’s no maintenance because I know that I was in the crawlspace ceiling, all the duct work, I went above and beyond. I replaced the sub floors. I replaced everything because it’s going to be a house that’ll perform for me for decades.

Ashley:
Yeah. That’s really great to hear.

Tony:
Yeah. I want to make sure I got the kind of financing piece down. So you bought it with an FHA at three and a half percent down and then you funded the actual rehab you were doing by renting out the rooms within the house. That’s genius.

Tyler:
We offset the rehab. Yeah.

Tony:
That’s genius, man. What a great way to do a live in flip and really fund it with very little money out of pocket? I love that. I love that approach, man. I don’t know if I’ve really met anyone that’s combined a house hack with the live in flip at the same time to kind of fund both of them. So you might be the first person on the Real Estate Rookie Podcast to do this for all we know, man.

Tyler:
I had no idea. Honestly, I stumbled upon it and it worked out really well. We made the best of it.

Tony:
You got to give it a name or something like that. I don’t even know, man, the flip house, the flipping house hack, the house flip hack. I don’t know, man. You’ve got to come up to make with something.

Tyler:
I’ll call it to your wife happy strategy.

Tony:
There you go.

Tyler:
That was all I was out to do, man. I was just-

Tony:
There you go.

Tyler:
My goal was always just to give my wife a nice house because I thought she deserved it, but then it turns out it’s super lucrative.

Tony:
Man, we got to put you in touch with the BiggerPockets publishing team because if we put that out, the Make Your Wife Happy book, that’s like a New York Times bestseller.

Tyler:
That’s right. That’s right. It’s not a cookbook.

Tony:
Awesome. Well, I love the first deal, Tyler, it sounds like it turned out really, really well, man. And for the listeners, hopefully there’s some instruction there that you can follow. There’s some ways to get creative with getting that first deal done. I love the way you finance it, man. So I want to take us to the next segment, which is the rookie request line. Today’s rookie request line for the listeners if you guys want to get your questions featured on the show, give us a call at 8885 Rookie. We might play your question on the show and you can get an answer for myself, Ashley and the guest. But Tyler, today’s question.

David:
Hi, my name is David. I’m from Salt Lake City. Currently, I have a few rental units that I pay of 50% of the equity. My question is, should I keep the money in the equity of the home or should I do casual refinance and keep it as reserves? And the other question is, what’s the percentage of equity do you guys like to have in your investment properties? Thank you.

Tyler:
I think that’s a really great question. And as you can see from my story, I love equity. I think that equity is one of the most powerful things that you can get and being that their rental properties, Ashley touched on it earlier, where she was able to take out HELOCs on her rental property. You might not get as great of terms on a HELOC, but if you can find a lender or a bank that will lend on the equity, he said he’s got multiple properties, I think that that’s a bulletproof strategy to be able to rinse and repeat and reuse that funding. And I think cash out refinances have a time and a place. And honestly, that’s what I did to pay off my HELOC. So I did a cash out refinance on this property to pay off that other HELOC. So I think there’s a lot of value, but understanding that a cash out refinance is a one-time deal, you get that money, you use it, it’s gone. There’s a big benefit to going the HELOC route in my eyes.

Ashley:
Yeah. I have to agree with that. And for the percentage of equity to have in years, I was like at least 25%. So never a loan to value that’s more than 75% of the property. And I’ve only been able to get HELOCs on investment property through the commercial side. So definitely check out commercial lenders to get that. And I’m actually working on one now, hopefully closing in the next couple of weeks where it’s actually a line of credit on two properties. So it’ll kind of be a portfolio HELOC where it’s going to have the two properties as collateral. And then I’m having one big HELOC instead of two separate ones. Anyways, I can minimize the amount of loans and paperwork I have to sign, I will group as much together and do it at once as possible. So yeah, thank you, Tyler, for sharing that. And to go into our next segment, it’s kind of like a mindset segment here where we want to touch on mindset, but first I need to hear the cop story.

Tyler:
Oh no. Yeah. So this has to do with the rental property when we lived in it. There was actually an instance where I experienced a break-in at my house while I was home in broad daylight. It was something where a couple of people broke into my house and I had no idea what was going on. I heard voices in my house. I was like, that’s not right. There’s no one’s supposed to be here right now. So I am a gun owner, a responsible one who trains and knows a lot about how to handle that situation. So my first instinct was, what in the hell are you doing in my house? Confronted them and then realize I had no idea what their intentions were. So get to where my guns are, hold these guys at gunpoint and all the while it took a minute for it to click there’s people in my house and I have no idea why.
And then they started bolting out of my backyard. So they’re going through the house because I’m between them and the door. They go out of my house and I’m like, well, problem isn’t solved. I don’t want to just let them go do whatever it is they’re trying to do because I’ve got neighbors who are single moms. They have young kids, I’ve got elderly neighbors. So I follow them. I follow them over the fence. I wouldn’t advise doing this, but I follow them over the fence all the while I have a gun, I don’t want to shoot anyone and I’m not trying to do that. But at the same time, I’m not just going to let this go exist into the rest of the neighborhood. So my neighbor overhears it. I get them down finally in the backyard, not my backyard, my neighbor’s backyard and get them down and tell my neighbor to call the cops.
He calls the cops within seconds. We hear sirens on both sides, front and back. It turns out these people actually stole a car earlier in the day, there was a kid in that car. So they kidnapped a child inadvertently and they took this car. So the city that they stole the car from was like 30 minutes away. But the mom left her phone in the car. So they were tracking track my iPhone. So they roughly knew where they were. So every jurisdiction that they passed through was on their trail, but hadn’t yet found them. So all those cops were looking for them.
And then the police get a phone call that there was a homeowner with a gun holding people at gunpoint. So now there’s a whole new batch of cops that are like, cool. We should check that out. Long story short, there’s like 40, 45 cop cars that are in front of my house, in the backyard, cops in plain clothes, jumping over fences, dogs, canines, everything the whole nine. And fortunately it didn’t turn into something, but they’re both in prison now and nobody got hurt. And it still blows my mind, but it ended really, really well considering.

Tony:
Tyler, you have to have maybe the most interesting real estate journey ever. Your first rental burns down, you got these crazy criminals but I think the moral of the story is that even with all of that, you’re still cash flowing like 3000 bucks a month on that house. So it’s all worth it, right?

Tyler:
There’s no bad Juju on that house. I think at the end of the day relating that story to maybe a real estate or a mindset thing was the reason it went well is because I was prepared. I was prepared for it. It didn’t catch me off guard. It wasn’t something where I had no idea what to do. I had prepared myself. I thought about that scenario 25,000 times in my head before it ever happened. So once time came, snap to you do what you’ve told yourself you would do in the scenario. So applying that to real estate or any deal that you get into is understand that things could go South but that doesn’t mean it’s the end of it. You’ve got tools at your disposal to figure out how to get out of it.

Ashley:
That’s great. I love how you tied that into mindset.

Tyler:
I can’t just on a rant about all my weird stories from my life without making it relevant to listeners.

Tony:
Oh man.

Ashley:
Okay. So on top of that, what are two, three mindset pieces of advice you can give our listeners? So you talked a little bit about, I am statements. Maybe clarify exactly what that is.

Tyler:
Yeah. So about six months ago, I really started paying attention to mindset in a very directed fashion instead of just saying I should be happier, I should be more positive or whatever, and hoping it happens or just listening to a podcast and thinking, yep, that’ll fix my problems. Realizing that there’s got to be daily consistent action towards that goal. And the goal for me was just becoming more positive and mindful and having a better perspective. So the I am statements that I was talking about, every single day I wake up and I kind of have this routine where I write out 20 I am statements. And what those are is you think about what you want in your life both personally and wealth wise, health wise, professionally, all of that. And you write it down in a present tense. So for instance, one of mine is I am creating a legacy.
I am networking with top tier performers because I am one. So it really builds a lot more self-confidence and takes away the negative self-talk that all of us are guilty of. I was certainly no stranger to all of that and the lack of confidence catches up to you. So that is one really good technique. And another really good technique that I think worked with me is making sure that you’re intaking a variety of sources of positive content. Because like I said, if you listen to one podcast and you think it’s going to change your life or you listen to one book, it’s not one thing and then you wait for it to take place, it’s everything around you need to start becoming what you want it to be.
And the positive source of content, I even took that to Instagram. I stopped following a lot of accounts that I’d followed for years that were just a waste of time or things that people weren’t doing the same thing that I was doing so I didn’t feel like I could connect with them. Following the right people and just gaining insight to other people’s success really fired me up and made me want to do that. So doing it with other people also helps. My wife does the same thing. We read books together like I mentioned and it’s powerful once your community and once your network is kind of on the same wavelength doing the same thing.

Ashley:
Tyler, I love that you said that because this morning I was actually thinking about how you said that fill yourself with positive stuff, keep that around you and keep that content around you. And today I was thinking, I was really reflecting on the podcast and I thought, wow, Tony and I are so lucky that all we get to do is interview people about positive stuff. Like every single episode is exciting. It’s success stories and there are struggles, there are obstacles, but everybody learns to overcome them and shares them. And I think we’re so lucky that we’re not newscasters that share bad news constantly that… Well, you get to experience the joy and the excitement and you are so right about that. Bringing in the positive content really, really can help you with that mindset shift. And it is important to learn how to overcome struggles and stuff like that for sure but I really liked that you said that. That’s a great piece of advice.

Tony:
The other benefit is as you start to spend more time with people, you guys start to get in sync and Ashley, I don’t know if you’ve noticed, but this is the first episode where we’re actually dressed the same, right? So for the folks that are on YouTube, I wear a black shirt almost every episode we record and Ashley just subconsciously has picked up on that and now we’re both in the black tees today.

Ashley:
Well, after I put it on today like a couple hours after I had it on this morning, I was thinking, I was like, “Oh my gosh, I’m going to match Tony.” But I hadn’t thought of it until a little bit later.

Tyler:
Tony, the fact that you mentioned that I think that there’s a really cool thing when you start getting it from a variety of sources, when your circle of people are talking about it, the same way your Instagram is talking about it, your books are talking about it. You start seeing these common threads through everything that you’ve surrounded your life with, whether it’s the people or the social media or the books. And it’s really cool. And it gives you this feeling of being able to graduate kind of away from that and be like, “Cool. Now I get to go focus on something else.”
And I feel really lucky to be in the place where I feel that all of those threads are connecting and Brandon Turner’s analogy of building multiple bridges and how that never works because you always fail at getting where you’re trying to go. And I feel like I’ve focused a ton on building one bridge in the mindset direction. And now that I fully feel like I’m surrounded by it, it gives me the ability to go focus on another bridge because I feel like I’m done building that bridge or at least pretty close.

Tony:
Yeah. I love that. And I guess just one last thought on that, right? The people that you surround yourself is so important. And we talked about this a lot too, right? As you become more ingrained in the world of real estate, you’re naturally going to start just spending more time with other real estate investors. And you have to make a decision as a newbie as if you want to be super successful, that might mean you’re spending a little less time with the people that aren’t doing real estate and that’s something that I picked up on early. So for me, it’s always kind of been my goal to help involve the people that I care about the most in the real estate business as well, right? Obviously my wife is my partner in a short-term rental business. We forced our son to go with us to our short-term rentals and help set those up.
My wife’s cousin is one of our partners. My brother-in-law is working with me on some wholesaling stuff. So it’s trying to bring in people that you care about so that as you start to grow and you start to elevate yourself, you kind of bring them up with you as well. So random thought from Tony for today. But on that note, random question time for you, Tyler, we want to finish off the episode with a few random questions. You’ve got a lot of experience redesigning and fixing homes and I think the fix and flip is always kind of that care that kind of dangles in front of the face of a would be real estate investor. What are some pitfalls that you feel a new would be flipper might make that you can advise them against or give them that kind of insight so they can prevent that mistake from happening?

Tyler:
Overspending and over improving, I think is something that is really easy to fall into, especially if you’re not experienced in performing the work and estimating your rehab costs accurately before you just start pulling triggers on everything that you think looks nice because that stuff adds up quickly. As anyone that’s experienced knows, those rehab budgets can get away from you pretty quick if you’re just going for what looks good. So make sure you know your numbers and make sure you don’t over improve the space and find value out of everything, make connections with contractors and secure yourself a better deal by working with them on multiple projects. There’s a lot to be said about wasting money when you don’t have to on a flip.

Tony:
Yeah. And BiggerPockets has a great book on estimated rehab costs, just google it, there’s a tons of good reviews on that one. But Tyler, I guess just like your 30-second kind of piece of advice, how do we accurately estimate rehab costs as a new investor relic? If I’ve never done this before, what do I need to do to make sure I get as close to being on target as I can?

Tyler:
It’s funny there are so many assets online to help with that both the book like you said, but there’s also different costs per market and coming to find out even if you’ve never done the rehabs or even if you’ve never had it done on your house or flipped a house, I mean, there’s so many websites that you can use to help you estimate what the average in your neighborhood is based on the zip code, based on the square footage. So I highly advise at least just getting started with that. And I mean, shoot, at the end of the day, if you’re curious what a floor costs to replace, call a hardwood flooring company even if you don’t have hardwoods at your house, even if you don’t have a project, even if you just want to get familiar, cold call a contractor and say, “Hey, what does it cost to get a floor done?”
And honestly, that stuff gets to be more and more familiar so that you’re estimating. Just like with anything, the more practice and the more effort you put into learning about it, the easier it will be. I mean, it’s hard for me still to estimate rehab costs at face value until I sit down and break it all down for client remodels based on the price per square foot of this, that and the other. So I mean, I don’t know that there’s a try and true method, but just practice and familiarize yourself with what it costs in your market, because it varies so much.

Ashley:
That’s great advice. Thank you. So for my random question, I want to know about college. Okay. So you went to college, you’re going to be a doctor, do you regret it? And what advice do you have for someone that’s maybe like I went to college, I spent all this money on the degree, I have to stay in this or else I’ve wasted all of that money. What kind of went through your thought process there?

Tyler:
So I don’t regret it at all. I think one of the major benefits of going to college and getting these very difficult to get degrees, I mean, I can’t tell you anything about chemistry or biology right now because I’m so far removed from it and it’s out of practice.

Ashley:
That was the next segment we were going to do, please.

Tyler:
No. If we have any organic chemistry segments, I quit. I wouldn’t change it for anything because if nothing else, college taught me that I have the capacity to learn and the capacity to do things that are really crazy difficult. And I think that that was a huge takeaway. And ultimately, could I have gotten a different major that would have set me up to be more successful more quickly? Maybe, but at the same time I was young. I had no idea what I was going to do. And unfortunately I’m not one of those prodigy 22 year old guys that are on these podcasts that are blowing it out of the water with hundreds of units. I didn’t have the capacity to figure that out early enough.
And I think a lot of people find themselves struggling with the same thing when they’re that young. So I experienced a lot of life through college and after college and I wouldn’t change that whatsoever. Do I think college was necessary? Would I advise people you have to go to college? Not necessarily. If it’s for you, then absolutely give it a shot. But if school isn’t for you, don’t feel like that’s something that’s required. No one’s asking me if I have degrees when I’m applying for loans. No one’s asking me what did I study in school. It’s not an industry that cares or puts any weight on that. So it could go either way.

Ashley:
I really like that answer. Thank you. Because I went to school for accounting, but actually I use my Accounting degree a lot in bookkeeping and taxes and keeping track of things.

Tyler:
I should be reaching out to you with numbers questions.

Ashley:
Someone who wants to go to college, then go for something that can help you in your real estate business, a different tool that maybe like taking a real estate course when in exactly give you. Tony, what did you go to college for?

Tony:
I actually got my degree in Rural Dance, so it has nothing to do now until Rookie. I got my degree in Business Management, so very basic.

Ashley:
So that helps you too.

Tyler:
Super pertinent and smart.

Tony:
But I got a minor in Rural Dance, so I’m not allowed to work there.

Ashley:
Well, we better start seeing some TikTok videos, that’s all I got to say. So we have another new segment today. Tony and I are just coming up with all these good stuff for you guys. So we’re going to highlight a rookie rockstar each week. So today we want to highlight Lily Kay. She’s in the Facebook Real Estate Rookie group and she just got her six property under contract with a 70% loan to value of a good burst. So congratulations Lily on that. That is really awesome. Well, Tyler, thank you so much for joining us today. Can you tell everyone where they can find out some more information about you and where they can reach you?

Tyler:
Yes. So MySpace handle is… If we still access those, that’s probably the best way to get ahold of me.

Ashley:
I’m going to start googling it now.

Tyler:
Oh good. I apologize right now for what you’ll find. So Zubieta General Contractor. I don’t find a ton of time to be in front of the computer so I’m not super active on anything except for Instagram. I do find quite a bit of value from Instagram. So I kind of focus on that one, but you can find me @tylermadden just like it sounds. I got in early and I got my name. So that’s probably the best place to find me. My business name is Laurelless, L-A-U-R-E-L-L-E-S-S. And you’re probably saying that’s not a word. And it’s just to piggyback on the thought that went into that. I don’t know if you’re familiar with the phrase sitting on your laurels or resting on your laurels where essentially it’s just being satisfied with good enough being good enough. That’s totally the contrary of the way that I run my business, where I put so much effort into everything that I do, where I always try and find a better outcome. And that’s where the name came from. I don’t have laurels to rest on so laurelless. That is my website, laurelless.com.

Tony:
Love it.

Ashley:
That’s really creative and that’s cool.

Tony:
We found Tyler’s MySpace. So we’re going to link to that in the show notes as well. So we’ve got some-

Tyler:
Yes. Do you know the password because I’ve been trying to get into that thing for years.

Ashley:
Don’t worry. We’ll have our tech guy hack into it.

Tyler:
Yeah. There you go.

Ashley:
Well, Tyler, thank you so much for joining us today. It was really great to have you and talk to you.

Tyler:
Of course you guys, I really appreciate it. It has been my absolute pleasure. Thanks for having me.

Ashley:
So make sure you guys check out the Real Estate Rookie Facebook group and join there, make sure you answer all of the questions including that you agree to the rules or else the moderators will not let you in and make sure you check out our new Saturday episodes called The Rookie Reply, where we are answering your guys’ questions. So thank you guys so much for listening. I’m Ashley Kehr @wealthfromrentals and he’s Tony Robinson @tonyjrobinson.

 

 

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In This Episode We Cover:

  • How doing a great remodel can boost up the price of your house significantly
  • Taking out HELOCs (home equity lines of credit) and keeping them around for future financing options
  • Starting an LLC so you can take advantage of financing later on
  • Using high-end finishes vs. using standard finishes for rentals
  • How to get your spouse on board when they are worried about real estate risk
  • Making offers on and off market so you can get a deal in an expensive area
  • And SO much more!

Links from the Show

Books Mentioned in this Show:

Rookie Deal

  • Rental Property
  • Purchased Price: $215,000
  • Used FHA loan: 3.5% downpayment
  • Renovation cost: about $40,000
  • Appraised Value: $440,000
  • Rental Income after repairs and renovation: $2993/month
  • Mortgage: $1400

Connect with Tyler: