Rookie Podcast 97: 19 Units in 1 Year and Starting a “Luxury House Hack”

Rookie Podcast 97: 19 Units in 1 Year and Starting a “Luxury House Hack”

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Greg Schwartz didn’t plan on getting into real estate, he was keen on becoming a private pilot. He figured he’d make $200k-$300k per year and that would be enough money to help him retire. That was until he talked to a real estate investor who told him about the potential to make 7-figures in a month. Greg knew that the investor was on to something and he took some time convincing his wife, Rachel, to start investing in real estate.

They both went in on a rental property in Alabama, but after some initial stumbles with long-distance investing, they switched their strategy to house hacking in College Station, Texas. Now, only a year into their investing journey, they have 19-units under their name, one of which is a “luxury house hack”.

Greg and Rachel have had to be diligent while building and systematizing their real estate. Rachel has already become an expert property manager and has learned through her job how to prioritize, systematize, and organize their business to the best of their abilities. This is a great interview with two rookies who chose to pivot and keep building better with every new property they got under contract.

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Listen to the Podcast Here

Read the Transcript Here

Ashley:
This is Real Estate Rookie, episode number 97.

Greg:
And I’m talking to Joe and Joe asked me what I want to do in life. And I said, Well, I’d love to be a private pilot. He’s like, “Actually yeah. So you work for the airlines, you make 200, maybe $300,000 a year, but you’ll never make real money doing that.” And he said, “I made a million dollars last month, I’m in real estate.”

Ashley:
My name is Ashley Kehr, and I’m here with Tony Robinson. Today, we are matching and I planned it.

Tony:
I noticed that. I was like, “She’s got a black shirt on.”

Ashley:
For those of you that don’t watch on YouTube, Tony wears a black shirt every single recording. So it’s super easy to randomly just match him. Today, we have a husband and wife team on, and in the last, a little over a year, they have gotten up to 19 units. So they started out house hacking, and then they both moved with no jobs in mind. And just going through their whole story is pretty incredible and then the lessons learned too. Tony, what was one of the favorite things that you took away from this episode?

Tony:
There’s a few. I think they broke down how they stay in sync as both partners in their business and partners in their marriage. That was a really cool thing that they mentioned, how they’ve been able to scale, like how they found all of these deals. There were some unique strategies they use that anybody, anywhere can replicate, as well. And then also, I think, just throughout the entire episode, they displayed so many instances where they focused on taking action over having all of the answers. And to me, I think that’s one of the biggest takeaways for today’s episode, is that sometimes just got to dive in. You can educate yourself to a certain point, but at some point, you just got to do the work. And they did a great job of taking that action.

Ashley:
Yeah. And I think something really cool that they’re doing too is their luxury house hack and how they found a house and looked at it and thought of outside of the box as to how they could actually turn a part of that into an Airbnb even though it wasn’t a duplex or anything that was meant to have a short term rental into it. So, you guys, this is going to be a great episode. If you’re listening on YouTube, make sure that you hit subscribe, you like this video. And if you haven’t checked out our YouTube yet, as of today we’ve reached 1300 subscribers.
If you guys miss this awesome giveaway that we’re doing for this, tony and I are doing a call, so maybe we’ll do it again sometime. But make sure you guys subscribe to the channel and check out the videos that we’re going to be releasing on there. Rachel and Greg, welcome to the show. Thank you guys so much for joining us. Rachel, let’s start with you. Please tell us a little bit about yourself and how you got into real estate.

Rachel:
Yes. So we’ll go the short version here. Greg got me interested in real estate. He was all about it non stop for as long as I could remember. Took me a little bit longer to get on board. I’m more of the skeptic of the whole real estate business and stuff. But eventually, Greg left on a deployment. I started reading books and I got on board with real estate. So Greg got out of the Marine Corps, October of 2019. We moved back to Texas, which is where I’m from and we are in College Station, Texas, investing in multifamily and doing a little bit everything here.

Ashley:
Very awesome. Greg, how did you get the idea of approaching Rachel with real estate investing?

Greg:
Yeah, so I’ve been in the money for a while. Dad has the entrepreneurial spirit, but never really thought about real estate. It’s one of my more favorite stories. I had a friend who was a private pilot. So I flew helicopters in the Marine Corps for seven years. While I was still active, he was flying for a gentleman who owned a helicopter. And so one weekend he calls me up, he goes, “Do you want to fly to Charleston to pick up my boss’s wife?” He’s like, “I don’t have a co pilot. You can fly with me.” Like, “Yeah, of course I do.” So I hop in the private helicopter, we’re in front of course, flying down there. I get to fly down there and it’s Charleston, it’s beautiful.
And then of course he flies back and we land at the boss’s beach house, landing the helicopter in their back lawn. And then we have to hang out because I kid you not, they’re using the helicopter to shoot a music video. It’s like an amateur country music video, and someone has to play the part of the pilot. So my buddy Collin steps up, and I’m like, “You got it, man, you are the pilot.” And so I’m just talking with the gentleman who owns all this. His name is Joe. And we just know Joe, I don’t know his last name. And I’m talking to Joe and Joe asked me what I want to do in life. And I said, well, Collin’s got a great gig. I’d love to be a private pilot. And he’s like, “Okay, that’s cool, Collin makes pretty good money.” He said, “And then Collin wants to fly for the airlines.” He’s like, “Yeah, that’d be pretty good.”
He’s like, “Actually so you work for the airlines, you make 200, and maybe $300,000 a year, but you’ll never make real money doing that.” And I paused, and I think he could sense it, right? He knew. I was like, “Wait, what do you mean? That’s the idea, that’s the dream for every pilot. That’s the cream of the crop.” And he said, “I made a million dollars last month. I’m in real estate.” And that was the first time I met somebody who really seemed like an approachable person, who seemed like a real person who said, “Hey, real estate has this avenue that is more than a great W-2. And that’s when I started really jumping in, started getting online researching, found bigger pockets, started reading books. Before that, it was just money in general, but that really focused it.

Ashley:
So that was like your aha moment there with Joe. He was like your Rich Dad.

Greg:
Right. For those 30 seconds, yeah.

Ashley:
Okay, that’s awesome. Go ahead, Tony.

Tony:
I just want to ask, have you seen that gentleman since then?

Greg:
No. So about three months later, my buddy got a job with airlines, and he calls me up and he goes, “If you want this job, you got it.” He’s like, “I get to pick my successor, and I think you’d be a great fit for it. You like real estate, this guy likes real estate. You’re in.” “But I’m in a contract the military. I’ve got a year and a half left. I’m about to be deployed. Sorry, man, I can’t take it.” And I’ve not run into Joe since then. He’s now more of like a mythical creature than an actual person.

Rachel:
Yeah, but Greg was trying to find every way out of that contract, because he was like, “I can go work for Joe. Joe’s going to be a mentor. We’re going to get our real estate business started.” I have to find someway out of this contract,” and he just could not find a way.

Tony:
So Joe, if you’re out there listening, Greg is still open and willing to work with you, man. So, hopefully he’s in the audience.

Ashley:
Greg, what you have to do is you have to… Do you remember where the property is? You have to go on the GIS mapping website or go on [inaudible 00:06:44] check the owner. That’s why we do as real estate investors.

Greg:
This is going to blow… Actually, it won’t blow your guys’ mind. He rented, he didn’t own his own property ever. Yeah, I found that out later. He never owned his own residence. Because he moved so much, he didn’t want to hassle with it. He owned apartments.

Ashley:
Like Grant Cardone, he doesn’t own his own [crosstalk 00:07:04].

Greg:
Yeah.

Tony:
Greg, I got one follow up question for you. Maybe Rachel, this is a better question for you. But one of the questions that comes up quite often is, “Hey, how do I get my partner or my spouse on board?” What was that journey like for the two of you?

Rachel:
I don’t know how long it took until I was receptive to the idea. I think, Greg, when he finds something, he’s on it all the time. And then I get to a point where I’m like, “Could you please stop. I’ve heard enough about real estate. I’m over it.” And he’s talking about house hacking and doing all these things. I’m like, “That’s weird.” And that’s strange, like the person who’s going to pay you and owes you money potentially lives right next door to you, and they know where you live. It’s weird.
So it took me a little while. He was like, “People do this all the time. It’s not a big deal.” So it took me doing my own research, and then him backing off enough to let me do it on my own, versus him just like push, push, push, push, push. At that point I was like, “I don’t want to hear this anymore.” So it was when he left on his seven-month deployment that I picked up a book and started reading, I started listening to BiggerPockets and was like, “He’s right, people are doing this, and nobody’s out there saying like, ‘Oh, my gosh, this is the worst thing I’ve ever done.'”
And two, it was me finding what I would be interested in doing in real estate. He runs all the numbers and stuff. I’m there’s like a sounding board for and I ask questions, but I don’t care about that. That’s like, if you ask me to sit down in front of a spreadsheet and start typing in numbers, we’re all going to be doomed. That’s not for me. So it was too, just finding what was going to work, what I would be interested in the real estate world.

Ashley:
Tony, I feel like that’s so comparable to you and Sarah.

Tony:
You literally took the words out of my mouth, right? What you said that I think was super important, Rachel, was that Greg eased up a little bit for you to have some space to explore it on your own. And I think that’s where some spouses go wrong, is that they get so excited once they get that real estate bug that they’re the ones who listen to the podcasts, or the ones watching the YouTube videos, maybe they’re going to meetups, and they’re getting all this information. And then they turn around and they try and shove all that information down their spouse’s throat, and they’re just overwhelmed. Like, “What are you talking about? What’s the bird… What do you mean? What are these terms?
But I think if you plant little seeds along the way, and you say, “Hey, babe I saw the story today,” and you let that marinate for a little bit. “Oh, hey I just read this book today. Really interesting concept.” And you let that marinate for a little bit. And you just start planting seeds until eventually the spouse or partner gets interested enough. And then the other thing you mentioned that’s super important is that you found the part of the business that you really enjoyed yourself. And like Ashley said, that’s what happened with me and my wife, is that when we transitioned into short term rentals, that’s when she got excited because she saw an element of that business that she could see herself doing. So great, great advice.

Ashley:
Okay, so what was the first step? You guys do your research, you’ve decided, “Okay, we’re going to do this.” What happens next once you’ve done all your research?

Greg:
Well, so we call the first deal, it’s a little of an outlier. I finished reading the book on long distance real estate investing, and I had a Marine who was from Huntsville, Alabama, and I shouldn’t… Chatting with him, and he mentioned that his dad lived in Huntsville, Alabama, that’s where he was from, and that NASA had a big base there. There was a big testing base for Hellfire missiles, which is what his dad, where he worked. So I looked into Huntsville, and I liked it. What I didn’t do is I didn’t really follow through by getting a good property manager. Not that they were bad, but I didn’t interview more than one.
My agent was the first one I called. The house was probably the first one I really looked into. I looked at a bunch of them, and we bought it right then and there. A $71,000 duplex, partnership with my dad. And then after that I made every other mistake in the book. I didn’t pay taxes for a year, like on my LLC, just figure Uncle Sam didn’t need that money. So yeah, I inherited tenants. One tenant didn’t speak any English, we met with them. His place was a mess. There were kids run around, we didn’t know who they were, where they came from. Another tenant more or less skipped on us. So we sold that one this past year, bought it for 71, sold it for 117 because we bought in a good market. I made every other mistake possible. I probably could have made double that had I known what I was doing.
And then we also made a decision then in there that we were going to invest close to home after that. So we tried out the long distance, it worked, but it didn’t work the way we wanted it to work. And we didn’t have the control that we wanted. So that’s the first one, but we weren’t as hands on with that one.

Ashley:
What would you have done different besides investing locally for somebody who has to maybe invest out of state because their market is so high and out of their price range? What advice can you give to them if they are investing out of state so that they don’t get into the same situation you guys were in?

Greg:
Right. I think had I read but in really take on the learning and the teachings that David has in that book, starting off with a rock star real estate agent, I think would be a good place, because they generally know the rest of the folks you’re going to want on your team. And what I did is I called a guy and said, “Hey, are you an investor friendly guy? Do you have investment properties?” “Yeah, I have an investment property, and I’m investor friendly.” The questions that I would have asked him would have been more along the lines of what people recommend.
I would have asked him, “How many properties do you own? How many of your clients are investors? I really want all your clients to be investors, or at least the majority. I want you to know the investing market better than any other agent out there because I can’t be there. I don’t know the market because I don’t live there. So I need my boots on the ground. If I don’t have a partner locally, I need my boots on the ground to live and breathe that market. I think that’s probably the best way to do that.

Ashley:
And then Rachel, how did you make that pivot from, “Okay, we’re investing out of state, it’s not working, we need to do it locally?” Was there any doubt that maybe you shouldn’t invest anymore, you should stop? And how did you keep that momentum and keep that mindset that you want to keep doing it, you just need to pivot your strategy?

Rachel:
Yes. So that property I really had very little to do with. That was Greg’s test run and me still like trying to get on board with it, let him go do his thing. So the only time I ever sold the property was on our way driving from North Carolina to Texas as we were moving. And we were in the discussions of selling it just because he said the property management, we have two units, and that doesn’t give them a ton of income. So we’re on their low priority list. So I’d seen the insides of those was fairly scary.
We drive up, and the property manager’s like, “We need to wait on the maintenance guy, he’s got the gun.” I was like, “What? Where are we? Why do we need a gun? My tenant should not… No.” So that didn’t necessarily scare me as much as I was like, “Who are these people? Who did they put in here that they think we need this stuff?” So for me, it’s just like, doing it ourselves. That’s where I got on board, like, “Okay, I can do a better job than this.” It’s just finding the right people, taking your time, doing it right and being there and being involved will make a lot of difference.
So investing in our backyard and the house hacking, I was more on board with that, right? A lot more stuff. And I was ready to do it because I felt that I could do better than that myself, or find people to do better than that. So that would be the next thing is if you’re ready to go do it yourself because we always say, “We have ownership in the deal. We’re probably going to take care of it a lot better than somebody were paying 10% on $500 a month.” They’re not getting very much ownership in the property to take care of it.

Tony:
Rachel, were you working like a full time W-2 when you made that decision to transition into managing yourself?

Rachel:
So back in North Carolina, with this property, I was working full time at a gym. Moving down to Texas, neither of us had jobs. We were in the search for jobs for W-2. We needed income we had quite a bit saved up which allowed us to buy our fourplex here and our first house hack. So we were in the search for W-2 jobs and I got a job with a gym here, COVID hit so the gym did not open, needless to say. So then I got a temp job doing payroll for an oil and gas company here. That ended. Mostly, our full time job was rehabbing the units at our fourplex we bought here. So I’ve been in and out of jobs, Greg’s been out of jobs. He was a real estate agent. And he still is a real estate agent. Was like, “I’m going to play this game for six months. I’ll sell a couple houses, we’ll be good.
Sold no houses, none whatsoever. So we’re sitting in our retirement that we had saved up, our six month backup we had, I’m looking for jobs, it’s all going down. So finally, I get a job at working the front desk. So yes, we’re working as much as we can, W-2, as well as managing properties at the same time and it was tough.

Ashley:
What would it have looked like for you if you didn’t have that house hack and you were paying your own mortgage? Would that have been extremely detrimental to you guys having to go through your savings, having to pay a mortgage payment every month? Explain that as to what are some of the reasons that someone should get into and house hack in case they get into a position like this where they are bouncing around from jobs? Just because I think some people don’t fully understand how house hacking can actually be a cushion for you if you do lose your job.

Greg:
Right. I guess, the scariest point is March hit and we had one inherited tenant and two vacancies, and then we were living in the fourth unit. And I’m doing the doomsday scenario of, we have nine months of money left, right, because we spent all this down, we 20% down on the fourplex. So we are out of money in nine months. And so that that was extremely nerve-racking. And then we filled our two units within about a three week period of each other. And all that went away, because now I’ve got just shy of 2400 bucks a month coming in, and my mortgage is 1,750. And now, we literally just need a barely make enough money to put food on the table, the roof’s over our head, and we still have some that savings. And now we got a chance to regroup and figure out what the next step is.
So that that was a huge relief when we went from $1,700 mortgage with a not so great tenant, a half finished rehab in this giant fourplex, and then it gets filled. And like you said, it’s that relief there and then the possibilities after that, we felt comfortable, we could both work $10 an hour or $15 an hour and still enjoy our lifestyle. Because, I mean, 1,700 bucks, it’s a lot per month that we did have to worry about.

Tony:
What a great example of how real estate can create financial security. I shared this on the… I was on the OG podcast, actually, it just came out today, and I shared the story of how my dad, when I was growing up, how he was working for this company for two decades and they abruptly went bankrupt and laid everybody off. And my dad at the time hadn’t built any streams of income outside of his W-2. And for me that was always a very big life lesson, was that you always want to have some additional sources of income in addition to your W-2 because you never know what could happen.
Like this global pandemic has shown that you can always predict what’s coming next. And the ability to have some additional streams of revenue that you’re in control of, that Greg and Rachel are in control of, that’s huge. So I’m glad you guys were able to make it through. Before we can go on I just want to give a really quick overview of where your portfolio currently is today for the listener. So how many units you guys currently hold, how many deals have you guys done since you started?

Greg:
Property manager, Rachel.

Rachel:
All right, I’ll take over this one. So we’ve got, I’m going to call it 19 units. So we have our fourplex that was our house hack. We’ve recently moved out of that. So that is owned between me and Greg, and then we have a duplex and three more fourplexes that we have in an LLC with me, Greg and his dad. So that’s Schwartz Family Realty. And then our 19th unit would be the one we have. In the house we just moved into, we have an Airbnb, a bedroom that we Airbnb out. We put that up about three weeks ago on Airbnb, and we are shocked at the number of people we have staying in it. It’s amazing.
We bought a house, it’s a 1940s house. It had some renovations, maybe in the ’80s, but we did a huge renovation on it, a little outside of our comfort zone, but we did it. And part of it was, we’re calling it a luxury house hack. So we’re in our next house hack, which is basically we have the Airbnb that is going to make potentially $700 a month for us. So now we have to pay some of the mortgage ourselves versus at the fourplex, but we get to live a great lifestyle, a way bigger place than we were before. And somebody else is going to help us pay the mortgage, and they’re here and staying in a great room.

Ashley:
I want to really get into that house hack, the private room, but first can you… When did you start? When did you actually purchase your first one? I mean 19 units, is this only been within a year, a year and a half?

Rachel:
Yeah, I can tell, it’s been quick.

Ashley:
It’s so awesome.

Rachel:
Trust me, the way I feel, it definitely [inaudible 00:20:02] be quick. January 2020, is when we closed on the fourplex. Then we got that stable, we did a lot of the work ourselves on that. So it was a slow start. Then about September, Greg was itching really, really bad to get the next one, he could not wait. It was driving him nuts. So then December of 2020, we closed on the duplex with his father. And then-

Greg:
With the proceeds of the Huntsville sale. So we sold the outer… The longest since we sold that and we were able to basically move up from a $117,000 duplex to a $210,000 duplex. So that one was a nice little swap.

Rachel:
Yep. And then it was March of 2021 we closed on, it was a package deal of three, fourplexes. Fourplexes, there’s a ton of them around here and that’s where we’ve been hunting is for those until we liked them. They work out really well. We know the model, we know the square footage, we know the rent, we know how to rehab them and stuff, especially the first one we learned some lessons on. So we closed on those 12 units in March. And so it’s been a big task taking those over. And they’re renting, average rent to about 690. We’re really close to campus. We’re here in College Station, Texas A&M University, and those rents, we just rented them out for 950. So we’re rehabbing them, and raising the rents from an average of 690 to 950. So that’s been a big task we’ve been taken on recently.

Tony:
That is like phenomenal growth in a year. I thought I was moving fast. I think we’ve closed on nine Airbnbs in the last 10 months, but 19 units in a little over a year, year and a half is amazing. We got to break this down a little bit for the listeners. I guess the first question is, where are you guys finding all these deals? Are they on the MLS? Are you working with wholesalers? Do you have some super sneaky marketing magic that you’re running? I guess just tell us how are you getting the acquisition side handled?

Greg:
So each one has been a little bit different. So as an agent, I’m on MLS every single day, and I’m trying to create relationships. Rachel working at Keller Williams admin front desk knows a lot of realtors through that. So the fourplex we got was on the market, then off the market. And then the sellers responded to a direct mailer. We use DealMachine. So we’ve got 200 mailers going out a month on that just to stay in the market on some of those rougher properties driving for dollars.

Rachel:
That was the package of fourplexes.

Greg:
Yeah.

Tony:
Got it. So I just want to make sure I understand that the right way. So you guys are saying that this was a listing that was on but then failed, and then you guys sent some direct mail marketing to that person?

Greg:
Yeah. And then they reached back out saying, “Hey, we’re still interested in selling at the same price that was listed at.” And what was crazy is initially it looks like it’s a pretty crappy deal. Basically, they’re trying to sell them for like 350 each. Like Rachel said, they’re renting out for about 700. So they’re only bringing in 28, nowhere near the 1% rule. But when I looked into it, down the street, the same layouts renting out for 1,100.

Ashley:
Wow, that’s a big change.

Greg:
So I’m sitting here going, “Well, everybody is running these numbers on 700 and going, ‘This markets overpriced, you can’t do anything with it.'” I mean, I just dug into a little research. So that one was on, off market. Our duplex, similar.

Rachel:
That one too, the agent that had listed is in my office. So I could go in and talk to him about it without having to do this awkward, you call a real estate agent, they don’t get back to you. And I had a great relationship with him before. And the owner of the property was the real estate agents brother and a partner. So he knew the property well, he knew the owners well, so I could go in and we could conversate and work something out for the both of us. And it wasn’t just like this, “Yeah, I’ve got a seller will blah, blah, blah. They don’t have anything or…” It was a lot easier conversation and we got to work out together.

Tony:
But that that strategy of going after the failed listings, you’re actually the second guest that we’ve interviewed in the past couple of weeks that’s used that same approach. So Neely Thompson from episode 91, she’s a wholesaler out in Oklahoma, and that’s pretty much been her whole strategy for doing deals, is just waiting for an MLS listing to fail, and then she’ll follow up with that listing agent to say, “Hey, I’m still interested in buying that person’s property,” and then she’s able to get a discount from what it was listed for before. So super cool to hear that it’s working for you guys as well. What about the rest of them? How’d you guys get the rest of them?

Greg:
So my favorite story is the house hack, and that one’s got the most stories with it. That’s kind of our first child so to speak. So it’s got all the newbie, what we learned. So for that one, we literally were driving College Station, we weren’t sure we were going to live here yet. We were looking at a few different towns. And there’s an old handwritten for-rent-sign in the front yard. And we drive by and it’s what we’re looking for. And we write down the number and I call him and I leave a message. “Hi, I’m interested in buying properties in the area. I didn’t know if yours was for sale, I saw the for-rent-sign. And there’s a guy outside there, we see him going in with paint cans.
And I’m driving, I drive off. Rachel goes, “We should go talk to him.” “Talk to him? We just call him. We’re not going to talk to him. I don’t want to talk to this guy, no.” And so we circle the block, we drive around, I think maybe like twice. So now we’re creepy people who’ve circled this guy twice, and we left a message and I’m the pansy in the truck going, “I don’t want to talk to anybody.” And Rachel’s got no problem with that. She’s got no fear. She’s like, “No, we’re getting out, we’re going to go talk to him.”
And yeah, we just struck up a conversation. He’s the owner, he’s out of Dallas, which is about four hours away. He bought it like 15 years ago when his son was in school, and now it’s a pain for him. It’s done what it needed to do for him, and he’s tired of driving down. He’s not screening tenants, he’s managing it himself. He’s just trying to fill it as best he can. And he was super tired. So he’s basically said, right then and there, “Hey, make me an offer.” So we did, and then he rejected our offer and went with another guy.

Ashley:
I think that’s great that you took the initiative to stop, and way to go for Rachel for getting you out of the truck to do that. And I feel like this would also be a scenario with Tony and Sarah. Sarah would be like, “Get out, Tony, go talk to this guy.” But I think that’s obviously a great learning experience for you guys and to anybody here listening, is that there was a potential deal there. And you wouldn’t even have known that there was a deal if you didn’t stop, and you didn’t call him, and you didn’t drive around twice. And you got to put an offer in on the property and maybe the property won’t work out and you guys will still get it.
But I think that’s a great lesson is that no matter what happens, even that rejection and how much hearing no hurts and stings and sometimes makes me cry, still I feel like… Is that you put yourself out there because you never could have gotten the property if you didn’t try to reach out to the owner.

Rachel:
Yeah. So he rejected us, but then when we were on vacation in Australia.

Greg:
We’ll say it didn’t seem too bad because we left for Australia. We said, “It hurt so bad, we left the country.” So we decided we’re going to go to Australia and spend two weeks [crosstalk 00:26:59].

Rachel:
Yeah, while we were gone, our agent calls us and he’s like, “He turned down the other offer. Will you bring yours up five grand?” We were like, “Absolutely.” So after he turned us down, he called us back.

Ashley:
So did you guys end up getting it or no?

Rachel:
Yes.

Greg:
Yeah, and that became our first house.

Ashley:
Yeah? Okay, right now I have this deal that I’m hoping the same thing happens with me where I was the second offer, and I’m hoping that it falls through and they call me back. But that’s just such a great story right there, is you have to first make contact, put yourself out there, not be afraid of rejection, and then even when you are rejected, be open because there are people out there, and this has been me in some scenarios to where I’d be like, “No, that guy, he blew me off. I’m going to go and find another deal. I’m not even going to work with him.”
You guys were open, and you came up to what he wanted and made it happen. So congrats on you, guys. That’s awesome.

Rachel:
Yeah, thank you.

Ashley:
I want to touch base on the financing. How are you guys financing all of these deals within a year, a little over a year?

Greg:
That’s kind of my side there. So Rachel and I are very frugal, and we started that immediately after we got married. So we’ve been married, what, five years? And immediately after the wedding, even leading up to the wedding, budgeting for that. And then we both got on [inaudible 00:28:20] and we started saving. So Rachel is working for gym, doing pretty well. And I was an officer in the Marine Corps doing pretty well. And we were living below our means. So we had 20% down to put onto that duplex. And then we had some runway as well. Now we didn’t have a job, so we had to get co signers. So that was a 20% down primary residence loan with Rachel’s parents who were kind enough to cosign for us.

Rachel:
Yeah, on the fourplex.

Greg:
We had great credit and everything else. Yeah. For then going forward, like I said, we were able to basically upgrade that other duplex, use that money to buy our duplexes in College Station there. And then for those fourplexes, the package deal, I had proved myself that point to my dad, that really what I brought to the table was more than just like a dumb idea which is usually his first thought, which is pretty accurate most of the time. But maybe I was onto something here. So we were able to structure a deal where we would bring less capital to the table, and he would dip into his retirement a little bit. Now at that point, I didn’t have any money at all. So I use the CARES Act to take my retirement out penalty-free. So now I have got no retirement, but I’ve got three fourplexes.

Ashley:
Your real estate is your retirement.

Greg:
Yeah. Rachel still has hers. So we we still going to have something there to fall back on. But yeah, that’s what happened.

Ashley:
Well, it’s diversification. And just because the norm has always been your retirement is a 401(k) or an IRA, that doesn’t mean that has to be… I think that’s become a norm and a standard that people think, “Oh, my retirement, it has to be one of those things or else is not considered retirement too. So I think it’s great that you guys are diversifying and pulling different things out because you have a retirement, you have these rental properties, that is your retirement.
And whether you’re going to live off the cash flow, or you’re going to sell them after they have appreciated, it’s like a lot of people who own a business, they may not put money into the stock market, into other real estate, but their business is their retirement. So I don’t think saying you got rid of your retirement, you just invested it differently, really.

Tony:
That’s great advice, Ashley, I’m so glad you brought that up, and you make a really, really good point. But I guess, Rachel, Greg, were either of you nervous about pulling that money out? And if so, how did you get past that nervousness? Rachel, I’ll start with you. What were your thoughts?

Rachel:
I don’t know if I was nervous at that point. So when COVID hit, we had, I don’t know, a little bit of money in the stocks, and it was gone. And we were like, “Oh, crap. Okay.” So Greg was like, “Okay, as soon as it comes back up, if it’s breakeven, we’re taking it out.” And I’m like, “Cool. I like that.” So taking the money out of the retirement, I mean, we have mine, and it’s got a good amount in it as well, I was comfortable with it, because watching with the stocks had done for almost no reason, and then they would jump up, and then they would fall down, and then jump up. And it was like, real estate has been consistent, and it’s consistently going up.
Yes, it does fall, but over time, you can pretty much gauge what it’s going to do. And it’s not, I don’t want to say, it’s always not as dramatic, but it felt safer. I could have the asset and hold it, whereas a stock to me is just so like… It’s way out there, it’s hard to touch and feel and fathom the money. So when he was ready to empty it, I was cool with that. I did have in the back of my mind, I always do, “What happens if this just all goes away?” But overall, I was comfortable with it.

Ashley:
I think you just answered your own question there, though is what if he invested in real estate and all went away? But you were saying that during COVID, your money all went away too. And the stock market changes, and it’s a really a long-term play. But if you’re going to retire, and that stock market drops and your money is gone, you either have nothing or you need to extend when your actual retirement is. So I think you gave yourself the perfect example as to how there is no perfect way to invest your money that you’re guaranteed a huge return to retire off of.

Tony:
Greg, what about you? How was your mindset going into pulling out your retirement savings? I don’t know. I’m a risk taker, I guess, in that sense, and I think mostly because I’m convinced that with Rachel working together, we can handle anything. I mean, before that, we moved back to Texas, we moved in with our parents for two months. In our 30s, and we’re living with Mom and Dad.

Ashley:
So are you saying that you guys can survive anything because you survived two months with your in-laws?

Rachel:
That’s not even the worst thing. My parents are cool. The worst thing was living in the fourplex with cockroaches. If we survived that, we moved into a…

Greg:
Yeah, we survived with the cockroaches. And if I have to move back into one of my units, I can’t. So it was like, I don’t have any regrets, I didn’t have any fear about that. It was mostly just, how can I do it and not be affected by taxes as much as possible? Make sure that this is a smart move because that’s more than anything. I didn’t want to waste money. I hate wasting money. So I wanted to make sure. I know there’s going to be penalties involved with that.
Well, there are no penalties because of using the CARES Act. We had negative effects to the CARES Act, check with your CPA. So we started off, “Hey, is this going to work? Can we justify it?” He said, yeah, we’re good. And then it was just a matter of pulling the trigger. But yeah, it was a matter of do my research first that made me feel real comfortable.

Rachel:
Greg, do you think that one of the reasons you felt more comfortable was because you would actually have control of your money instead of just letting it sit in the stock market, that you were actually controlling what it was invested in?

Greg:
Yeah. It goes with it with the long distance thing again we found out about ourselves. And I think that’s part of investing. It’s like, knowing what you’re comfortable with, and where you sit. Long distance works for a lot of people, and even if their markets good, maybe they’re better off because they’ll over rehab or they’re too close, or they’ll be at the property too much.
For us and our personalities, investing close to home… And we chose this market for a reason. This College Station, we didn’t just end up here on a whim. We chose this market because we were very comfortable with it. So all the groundwork was laid that we knew… Like you said, we had that control and we had that comfortability.

Tony:
Greg, I also want to call out because what you did is you thought about, what’s the worst case scenario? Like, “If this goes wrong, what’s the worst thing that’s going to happen?” And you were able to process that and say, “You know what? I’m actually okay with that worst case scenario. If I have to move back into one of my units, okay, cool. That’s a sacrifice we’re willing to make.”
And I think that’s what a lot of rookie real estate investors who are nervous about getting started is the mindset that they need to adopt is, “Okay, say that this first real estate deal that I’m looking to do goes sour, what is the worst case scenario? Do I lose my down payment? Do I maybe lose a few months of time that I’ve invested into this property? Do I possibly have to evict somebody? What are all of these worst case scenarios?” And if you can live with those, if you can go to sleep at night with those worst case scenarios, then you have no reason not to move forward because hopefully the upside outweighs the risk.

Greg:
Right. Yeah, absolutely.

Tony:
So I want to talk a little bit about property management. Rachel, I think you’re the property manager here in this scenario if I’m not mistaken. So how has the experience been for you guys going from pretty much zero, because you had a property manager on the other property, to now 19? How have you guys been able to scale? What have you learned along the way?

Rachel:
When we came to College Station, I’m looking for a job that would allow me to learn from somebody or be in property management. So I went and interviewed at Twin City Properties. They had a front desk position open. I was like, “I don’t care. I’m going to be around people who know real estate, they love real estate, they’re doing it every day, I’m going to learn something.” Go in, I interview. “No, I’m sorry, you’re overqualified. We need somebody that’s going to stay up at the front desk and not want to advance and all that stuff.”
Okay. So I got to know the people fairly well. And I went home and told Greg, I’m like, “We have to go talk to these people just about our stuff in general. They’re really great people. We’re going to learn a lot from them.” So we go in, and we talked to Alex, who is the president of Twin City Properties. So we create a relationship with Alex. A few months down the road, I get my job at Keller Williams, Alex sends a message and said they have a job opening for a property manager. I’m like, “Are you kidding me? I just started this job.” I’m like, but Greg hasn’t sold a house yet. Greg needs a job.”
So Greg goes in interviews and gets the job at Twin Cities where I originally went and interviewed. So it all worked out. So Greg now works at Twin Cities, it has two great mentors, Doug and Alex. So Greg is a full-time property manager. So not only what I learned from reading the book on managing rental properties by Brandon Turner, that was a big one. That’s highlighted, there’s so many tabs in there. I printed every document I could off of that. So that was a big starter. Then it was finding a mentor. So now Greg has Doug and Alex who they’ve taught him how to manage their properties.
So if I have any questions I can call Greg and it’s like, “How do y’all do X? Okay, how does that relate to us?” Because it’s not always the exact same of what they’re doing is what we’re going to do with ours, but it’s a good starting point on how to handle things and stuff like that. So it’s really just reading and learning what you can and then finding somebody that can teach you how it’s done. But then you adapt it to fit your portfolio or your personality, or the requirements that you’ve set for your stuff.

Tony:
What systems or processes have you all put in place to absorb this quick scaling? Because like I said, I know for us, we bought quite a few short term rentals in the last couple of months. And every time you get that next property, you figure out something else that’s broken and your process. So I’m curious, what have you guys identified are some broken pieces of your process that you’ve been able to dial in as you’ve gotten up to 19 units now?

Greg:
I’m going to cut on this one real quick just to say that this is literally… You talked about who does what in a business? This is Rachel superpower. She is systems and growth. I’m the growth in terms of trying to find new properties, because I constantly want to do it. She’s the growth in terms of like, “She lays the foundation for me to go find the units to stack onto it. So I’ll throw back over to Rachel. But I’ll say that this is literally in her DNA. So I lucked out in that sense.

Rachel:
Yeah, so for me, I hate being unorganized. So being organized, I think is the first thing and it makes you create systems. So the biggest thing is I’ve got folders labeled with each property. When Greg gets a receipt, the receipt goes in that folder for that property. So I know how to put it…

Greg:
Which folder folder? Wait, which folder?

Rachel:
Always. So I know where to put it, where it assigns in QuickBooks or Buildium or whatever. The other thing would be having the property management software is essential. So we started it, even though we had just four units, but it was a chance for me to learn it and make mistakes in it without having 18 units in the software and being like, “This stuff is all messed up.” So I recommend, if you plan on growing at all, having a software is great, especially to start so you can learn it and build upon it. And then really, because me and him work together, it’s like, “Okay, we need to coordinate something. Is this going to work for you? The folder system, is that going to work for you? Great, okay, we’ll continue with it.”
So it’s finding what’s going to work for both of us. Letting each other know, “Hey, I’ve done this, I’ve done that.” And we still need to create systems, there’s still a lot we need to do, especially to automate stuff. But right now, we’re growing, we’re trying to figure out who’s doing what. I’ve scaled back on my W-2 job, and I work from home two days a week. So that helps me to do some stuff while I’m here and try to create these other systems moving forward. So we’re still growing and still finding all those systems. But once you start finding yourself a little all over the place, try to sit down and get it figured out before it really goes crazy.

Ashley:
Rachel, that’s great advice right there is to build your systems now before you become so overwhelmed and you’re taking on all these units that you don’t even have time to put these systems in place. That’s great advice. I want to know, how are you guys communicating? It seems like you have great communication and that’s been a huge asset to you guys. But when you have something that you need Greg to do for the business, are you actually assigning tasks in the software, or you’re sending a text, or you guys just talk about it at home? Do you have any way that you’re tracking what you guys do together?

Rachel:
Yeah, so our tenants will send in task or maintenance request through Buildium, which is great. We usually you’re like, “Hey, did you see that?” “No, I didn’t see it. What did it say?” Or back and forth. So me and Greg communicate usually through text or on the phone. And then we decide, “Are you telling our contractor to go out there or am I?” So it just depends on, am I working from home that day? If I am, then that’s my task to do. If not, “Where are you at in your work for today? Can you do it? Can I do it?” We just go back and forth. Or if Greg knows, “Hey, I’ve already asked Julian to go over to the property to do this. So I’ll just text him and tell him to go ahead and fix the sink next door while he’s there.”

Greg:
I’ll just throw that out there that we, so we have got a dog, he’s great German Shepherd, he’s kind of a mascot to our little property management. So probably at least three days a week, usually all five, we take him for about a half an hour to an hour long walk. And that’s that is like our daily meeting. And a lot of it is think impression, it’s not always work related. But during that time period, we talk about what each of us did that day. So now we’re spooled up on everything that went on. And then we can also discuss, “Okay, you’re off on Thursday this week. What are our to-dos that Thursday so that we’re set up for next week’s move in or whatever it might be?”

Ashley:
I want to say that one thing that I noticed from you guys is it doesn’t seem like you care who does more work. And then it just balances out when it’s not, “Well, Rachel, this is your responsibility. You have to do that.” And I know you guys are married, but it for any kind of partner, this is something so important on this week on The Real Estate Rookie bootcamp that we were having. That session was all about partnerships, and we talked about how having that communication, but also not constantly comparing or nagging that one person is doing more than the other and knowing that it balances out and being able to help each other.
When you had said that you see who is available, who can do it? And that’s no problem if one person does all of the tasks and the responsibilities one week, and then maybe the next week, it’s the other person. So I think that’s really key is when you are deciding to partner with someone, whether it’s a spouse, significant other or a random guy on the street, you want to make sure that you’re not going to be nitpicking at each other as to, “Well, this is my job, this is my responsibility. I’m staying directly in this lane and I’m not going to veer off of that.” So I think that’s great. So everyone listening, you need to learn from Rachel and Greg that communication is definitely key. I love to walks, the meetings. And also to know that you can work together, and it doesn’t matter if at one point in time somebody is doing more of the workload.

Tony:
I got one thing to add on to that, or I guess more of a question for both of you, and then I want to move on Airbnbs. But I work with my wife also, she’s my business partner and our short term rental business. And it’s so easy to let the real estate talk consume the majority of your conversations with each other. And what Sarah and I have been doing recently is taking at least one day out of the weekend, we’re doing Sundays right now, to have a day and evening, whatever it is, to go out, have fun and just like not think about real estate. Do you guys have any advice on how to keep the balance between the business part of your relationship with the actual marriage part of your relationship?

Rachel:
So Greg is real estate all the time. Like sometimes he can’t sleep at night, he’s waking up doing numbers in his head. He’s real estate all the time.

Ashley:
That’s me and Tony too.

Tony:
That’s us.

Rachel:
He woke up one morning and he’s like, his clients, he has a young couple that bought a fourplex and they’re house hacking. “So if they only did that they could retire at this age, blah, blah, blah.” So he’s doing math on other people’s retirement at night. I’m like, “This is not for me.” So I think he can tell what I’m disinterested and he shuts up. It’s like, he’ll be running numbers, and he’s like this and that, and I just carry on with whatever I’m doing. And then I think he’s like, “Okay, all right. It’s time to shut it down.” We want to get to a place where we can relax on the weekends and take our time to not be worried about real estate and not be going to do projects and stuff.
We just aren’t there quite yet. And part of that maybe the… They like to call it the I’m going to. I’m going to do this. I’m going to do that. That could be part of it. We are like that. But we’re hoping, especially this fall once we get these other 12 units we took over all rented out and ready to go that we’re going to be able to have chances to take vacations and stuff like that. And I do enjoy talking real estate, but he can tell when I’m over it. So I think when it’s time to drop it, just drop it. Don’t force it. There’s always tomorrow. You can always talk about it tomorrow.

Ashley:
You guys are very much like Tony and Sarah. Like [crosstalk 00:45:00]. It’s funny.

Tony:
I feel your pain, Greg. Sometimes you’ve got to know when to shut it down, man.

Greg:
Yeah, it too a while to figure that out.

Tony:
Yeah. I want to switch up and talk a little bit about the Airbnb that you guys are running. You guys have a deep passion for short-term rentals. What made you guys decide to go that route as opposed to the traditional renting approach you guys have been following? And then based on the experience you’ve had so far, do you prefer short-term rentals, long-term rentals? Or I guess, what’s your strategy leveraging that as part of your portfolio moving forward?

Greg:
Yeah. So it’s hard for us to completely commit to the short-term rentals because our mentorship, everything we’ve learned is the long-term, right? So most of the folks that we’re learning from are long-term. So that’s where we based our strategy in. But when we started house hacking and looking into more house hacking options, and bigger pockets, talking about all the options for house hacking, and, “You’re single family, take on roommates.” You can do a duplex, you can do a fourplex, you can have somebody rent out the in-law suite. So we had in our minds that we wanted to upgrade our house hack, as we went along. We want to continue to house hack every few years. And the thought was, “Hey, we’ll do a fourplex than a duplex, and then a single family home that maybe has like an ADU, additional dwelling unit.”
And then we fell into this 1940s house that was laid out all wrong. And I didn’t sleep for a few nights as I redesigned how this would work out. And it had two front doors, and it had a front door that went right into a bedroom. If only we could add a bathroom to that bedroom, it would be an awesome place to rent out. And so that’s what we did. And so it found us and we’ve been doing it, like Rachel said, for three weeks. We had goals of maybe 50% occupancy, maybe $45 a night, and now we’re averaging 55 plus our cleaning fee at night. And I think we are about 66% occupancy in the first few weeks that we’ve had it available. So it’s been great. Rachel does more of the cleaning of it than I do because she’s home a little bit more. So I’ll toss it over to her, see what her thoughts are on it.

Rachel:
Yeah, so far, it’s been great. I mean, especially coming in, we were a little nervous. We’d never done it. People talk about Airbnb, and they’re like, “It’s great. We make a ton of money.” Okay, well until you try it yourself kind of thing. But it’s not bad. People keep it clean. Right now, we have it where you can stay one night. So in one night, people really aren’t making a mess. So it’s changing the sheets, restocking the coffee bar if you need to, wipe down the bathroom stuff, and go. I mean, it’s really been great so far. So I’m excited about it.

Ashley:
Let me ask, why did you decide to do it for one night?

Rachel:
So we wanted to get our ratings up. Get people booked and get our ratings up. So we were like, “We’re here, except for learn as you go.” Greg’s like, “Okay, we have somebody that checks out 11 and then somebody that checks in at 12.” I’m like, “What? You gave me one hour to clean it?” “Yeah, I didn’t think about that.” I’m like, “Okay, here we go. Get ready. Let’s do it.” So we’ve got extra sheets and towels, so it’s like a turn. You’ve got extra that are already clean and ready to go. But it’s really worked out. It really doesn’t take longer than an hour to clean it. Even by myself, it took me an hour. So Greg’s like, “When I go places, I want to stay as long as I can and I want to get there as early as I can.” So he’s thinking about it as the guest coming in, which makes sense, I understand that.
So we’re going to have football season coming up. So for those for sure, we will definitely do a two-night minimum just because the hotels will do the same thing. So we’re going to take advantage of that.

Tony:
I think one of the thing that jumps out to me is that the two of you are good at identifying opportunities, and then jumping on them. You saw the expired listings, I was calling them failed listings earlier, and Ashley was making fun of me on the side. But you guys saw the expired listings on the MLS and you guys went after those. You guys are driving around this new place that you’ve never lived before, and you chop up a conversation with this owner. You see this opportunity to take this additional bedroom and turn it into a short term rental and you guys jump on it.
I think that’s the really big lesson that I’ve gotten from you guys today is that as a real estate investor, you have to be educated enough to see the opportunities, but you also have to be courageous enough to act on those opportunities. And you guys have done just a fantastic job of that. So hats off to you guys for being a great example in that front.

Rachel:
Yeah, I also want to say too with the opportunities because we’ve had this discussion before. We try to take opportunities that stay within our lane. I am like anti flipper, I do not want to flip, I don’t want to be involved in that. It seems like such a headache. We went through a construction here and it was just… We learned a lot but it was… It’s slow, it’s not what you expect. You find this, you find that, so taking opportunities but within your lane because it’s easy to get distracted by all of this stuff out there. And flipping is a big one. People love it, I don’t know if it’s like all the fame and glory, or it’s money quick or what it is, but is not for me. I stay away from that.

Ashley:
I think that’s important that you’ve identified things that you know that you don’t want to do, instead of… I have this shiny object syndrome, there’s so many different ways to actually do real estate, so many different strategies. But if you can identify some that you know that you don’t want to do, that really narrows your path of vision and keeps you on track of the things that will actually work for you. Because if you got into flipping and you hated it, it’s not going to be something you enjoy even if you make money. So the fact that you already know that before you even have to try it is awesome.
I want to take us into our mindset segment. So Greg, and Rachel, when you guys first started your research and looking into analyzing properties, was there a perception you had about real estate investing and what it would be like to be an investor that has shifted or pivoted and you’ve completely changed your mindset about?

Greg:
Oh, yeah. I guess, I thought it was going to be easier. They talk about real estate, even for like taxes, right? It’s a passive investment, all your rental money is passive. And maybe it’s our growth, and then maybe that’s part of it, but it’s been anything but passive. I can’t stress how hands on we’ve been with… Initially, we did all the rehabs ourselves, now we’re doing less of that, but we’re still managing ourselves and we’re still walking with tenants, we’re still doing a lot of stuff. This weekend, I’m going to do a turn between units.
So, I guess that was part of the mindset shift that I had to accept was that I’m not going to be I’ll just sit back and say, “Oh, I’ll pick the first contractor I find. I’m going to have them go to our unit, I’m going to say, “Oh, turn it like it’s a rental. Not too nice, but don’t make it junky.” And yeah, I’ve done pretty good so far, so you’ve got to give me some credit there. I was in the Marine Corps for nine years, all right? And I just thought, yeah, you would turn a contractor loose, he would be honest and good with his work, he’d know exactly what you wanted, because he can read your mind. But we’re learning there’s a lot more to it to that. And building systems that Rachel so good at has been a huge part of our growth. I think that was probably my biggest shift.

Rachel:
For me, it was being a landlord. Everybody says, “You don’t want to be a landlord. You don’t want to be a landlord.” And almost people who have never been one, they’ve just heard stories. And yeah, it’s tough. I mean, you have to be able to communicate with people, but I think we do that well enough. If they need something, we were attentive to them. But we also don’t give them too much leeway where they try to take advantage of you. So it really hasn’t been an issue so far. I mean, our first experience as a landlord at the fourplex, we had a guy living there, we knew his name and the birth date, we didn’t know anything else about him on his application, no social or anything. He disappears. Some lady’s living there now, maybe it was his girlfriend, no idea.
He disappears and another guy shows up, I don’t know who he is. So we’ve given them a notice that they need to leave because they haven’t paid. We gave them quite a bit of time, I want to say two weeks or longer. And he comes knocking on the door one day, the new guy, I need my car started, I need to jump. We’re like, “Okay, we don’t know your name. Sure, but here we go.” So that was like an awkward experience as a landlord. So we’ve had a lot of stuff go down. And he needed his car jumped several times. And it was like… I’m over there one day. So I’m outside, I’m like, “So, what is your name?” I didn’t know his name. Being a landlord is not all bad. It really is just being able to communicate with people and… It’s Customer service, is what it is.

Tony:
I love the story, but I think you guys just do a really good job of not being afraid to take action. Like whatever it is, you guys jump in, you find a way to make it work as you’re going. One of my old bosses used to say that we’re flying the plane while we’re building it. And it seems like that’s the approach you guys are taking. I want to take us into our next segment, which is the Rookie Request Line. So for those of you that are listening, if you guys want to have your call possibly featured on the Real Estate, Rookie podcast, give us a call at 8885 ROOKIE. So Greg, Rachel, are you two ready for today’s question?

Rachel:
Let’s do it.

Greg:
Let’s do it.

Landon:
Hey, this is Landon from Utah County in Utah, and I am in the army, I’m going to be moving around a whole bunch in my career. Once every two to three years, I’ll be moving to a different state or possibly even out of the country. So I will either be investing long distance or in different markets wherever I move and live. So my question is, what are the main factors or the biggest things you would be looking at in the market ahead of time to consider whether you would like to invest there or not? That’s it. Thanks so much. Bye.

Greg:
Oh, that’s right up my alley. I love the service aspect, moving around. The access to the VA loan is huge, if he hasn’t looked into that. That’s like research number one right there is the power of that, you can use up to four units. So it’s great for a house hack. I think beyond that he’s going to be ideally around bases. So my recommendation is look at the base, the size of the base. Another thing too is every five to 10 years the government looks at shutting down bases.
So you can actually look at the list of what was considered for shutdown. Previously, I can’t remember what that list is called, you can google it, base closures. But check to see if your base was on that shortlist, because that might influence, “Hey, it’s a small town and most of the population is military, and they almost closed this base last time. Maybe it’s not the greatest place to invest.” But other than that, I mean, you’ve got a great tenant base, and a VA loan, and you’re moving every three years, man just find whatever is renting the best in that area, whether it’s a duplex or even a single family home and buy and bring in roommates and do that everywhere you go.”

Ashley:
Rachel, did you want to add to that at all?

Rachel:
That was perfectly advice. I mean, the military, they give them an allowance for housing, so you can look and see what that allowances per base, and your rental’s basically what you’re going to rent it for off of that. So you know what they get paid for their housing at each base.

Ashley:
Yeah, thank you.

Greg:
Pro tip on that real quick. When you have a tenant who’s in the military, ask him to put down his supervisor, who is his boss, and make sure it’s… Look at the ranks. You want to senior enlisted. The senior enlisted ranks put the boots of the butts of the guys who aren’t paying rent, who are skipping. If you ever have a problem with a tenant, it’s super easy, call that Gunny, say, “Hey, Gunny. You know, I got Sergeant so and so down here, and, man, I don’t know, I can’t find him. He won’t pay his rent. He owes me some money.” You’ll get your money. You’ll be fine.

Ashley:
That’s a great tip. Yeah.

Greg:
Actually, my very first tenant, he was in the military in Shreveport, there’s a base out there. And I’ve never had any problems with him. They moved there, they kept the place in great shape, but good to know in case I ever have another tenant like that.

Ashley:
In a similar situation I had a mom that cosigned for her daughter and I ended up doing cash for keys with the mom to get her daughter out of there. And I gave the check to the mom and not the daughter because she helped me get her daughter out. Okay, so we’re going to move on to our random questions. Greg, my question is to you when you are purchasing a property, doing some rehab on it, or maybe you’re doing a turnover, what are some of the materials or the repairs that you do to a property? Are you guys using vinyl plank flooring? Are you painting cabinets? What are some of the things you guys do for those?

Greg:
Yeah, we have two levels of rehabs. We have what we call upgraded and standard. And standard is going to be paint and get that back to where it was. Most of what we’re buying is 80s built, and hasn’t been touched since. But if we have the capital, we’re looking at about $10,000 for the rehab for a two 1000 square foot unit. And that usually means for us LVP floors, or carpets in the bedroom if they’re second floor, new vanity tops. We’ll go quartz countertops because we think it really pops and that’s what I would want in my rental. And then we switch out all of the things you touch. So doorknobs, switches, outlets, and then light fixtures.
Most of what we get is just Lowe’s or Home Depot, LVP for about a 1.75 per square foot plus install. Paint is Lowe’s paint. And then it’s just shopping around for what’s a good deal. I try to stay away from the most basic like Lowe’s brand or the Home Depot brand. I’ve had bad issues, especially with plumbing, with leaks with some of their lowest end stuff. So I go just one small notch above that maybe the lowest, the cheapest delta you can get for like sinks and stuff.

Tony:
That was a great breakdown, Greg. You can tell you really know your numbers, man. That’s awesome. Rachel, I guess my question for you is from a property management perspective, what habits have you developed that you feel have allowed you and Greg to scale as well as you have?

Rachel:
So really, it’s like getting everybody into the software ahead of time. So you have all your leases and everything ready to go. You’re knowing who people are, they pay when, are their leases up? So that’s been helpful because we knew going in these 12 units, we had a lot that expired June and July because we’re in a student market. Everybody here, whether you’re a student or not, is so driven by the students that your vacancies need to be between like May and August. If you miss August and September, good luck getting that filled. So we had that ahead of time so we could prepare, especially because of the rehabs we needed to do so Greg can get his budget going so we could have the money prepared and ready to go.
So going forward, it’s going to be getting the leases all ahead of time so we can see where we are moving forward. Who are we going to have to collect from? Who’s going to be a problem? Who’s going to be okay to hang around? Is this going to be a headache? So we can preemptively start talking to these people that may need some coaching into paying their rent or whatever. So getting the leases and getting it in your software and having everything laid out in front of you so you can create that game plan has been the biggest thing going forward. And especially if we want to continue to grow, we’re going to need to be able to see where everybody’s at and where we’re headed.

Tony:
I want to take us to our Rookie Rockstar, but one other question for you, Rachel. Greg, I guess if you have something to add on to this as well, with it being such a seasonal market with people leaving during the summertime, are you guys employing any strategies to try and keep people in some of your units during those summer months?

Rachel:
So we only do 12 month leases. So there are apartment complexes and larger places who do the shorter leases, but they’re typically charging more rent. And we do have a lot of students that will stay, they’ve maybe worked, so they want to keep their job while they’re here. Or they obviously don’t want to have to pack everything up and find a storage unit, because I did that when I was in school here and it’s a pain.
So we just do 12 month leases, we have especially if we’ve taken over properties, who people didn’t have their leases in the cycle, we almost give incentives for them to get out a little bit early. So if they can find their next place is a little bit sooner. We’ve had some people ask to leave early, and we’re like, “Yeah, that’s cool by us, go for it.” Because that gives us a chance to maybe go in and rehab your property and get it listed. So we allow people to get out early, absolutely. But we just do 12-month leases to keep everybody, keep them flowing.

Tony:
No, that’s that’s a great strategy. Thank you for sharing. So we’re getting to the end of the episode here. I want to give a shout out to our Rookie Rockstar before we move on, and today’s Rookie Rockstar is [Gashan 01:01:21] Singh Bansal, and Gashan purchased property number one back in 2014, and then didn’t do anything for six years. So their next purchase wasn’t until 2020, where Gashan bought a BRRR property in 2020, and they also closed on a house hack of that same year, then they were able to refinance that property they purchased in 2014 and get $90,000 in cash back, which allowed them to close on a five unit. So Gashan, awesome work. Love to see to scale, and love that you jumped back into the game after taking about six years off.

Greg:
I love that he’s done everything. So he BRRRR’d, he house-hacked, and he did multifamily in one year. That’s phenomenal.

Tony:
That’s beautiful. Trying to keep up with the two of you, it seems like.

Ashley:
Well, thank you guys so much for joining us today. Rachel and Greg, can you tell everyone where they can find out more information about you guys and possibly reach out?

Greg:
Yeah, I will. Real quick while I’m on here, I do have to do a shout out for Joe Roberts Episode 33. He beat me to the podcast. He was in my squad-

Ashley:
Oh, he was?

Greg:
… a good friend of mine. Yeah, he’s a co pilot. And everybody called us the Slum Lords because we wanted to get into real estate. So super proud of him for beating me to the podcast.

Ashley:
Yeah, Steve Rosenberg coached both me and him. Yeah.

Greg:
Yeah, he’s a really good guy. But you can find me on [Gregflies 01:02:37] on Instagram and then on BiggerPockets is probably the easiest way to reach out to me.

Rachel:
And then I’m on Instagram at Mrs.Rachel Schwartz.

Ashley:
Well, thank you guys so much for joining us today. We really appreciate it. Everybody go and check them out and learn some more information about them. And you guys, are you on the Facebook Real Estate Rookie group?

Greg:
Yes. If I’m not, I will be. I’m pretty sure I am. I’m not nearly as active as I should be. I’ll be on there.

Ashley:
Okay. Well, I’m about to pitch to everyone how they can join. So if you’re not, you can join [inaudible 01:03:09] search Real Estate Rookie on Facebook, you guys will find the group and request to join. Make sure you fill out all of the questions or the moderators will not allow you into the group. Probably by the time this airs, we will have 30,000 members in the group. But thank you guys for listening today. I’m Ashley at Wealth from Rentals, and he’s Tony at Tony J. Robinson. And we will be back on Saturday for a rookie reply.

 

 

 

 

Watch the Podcast Here

In This Episode We Cover

  • What to know before you try your hand at long-distance investing 
  • How to convince your partner to make the jump into real estate
  • Investing in your local market and knowing the small nuances of your area
  • House hacking in a quadplex and dealing with vacancy/troublesome tenants
  • Financing your deals using partnerships, retirement savings, and more
  • Systematizing your business so it can run without you
  • And So Much More!

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Books Mentioned in this Show:

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