Hello everyone, and welcome to another episode of Passive Real Estate Investing. So before we get to today’s episode, I wanted to bring on one of our Florida property providers. He was on the show about five months ago. We did a market spotlight on Southwest Florida. Reed, welcome back to the show.
Hey, thanks a lot for having me today, Marco. I appreciate it.
Yeah, so we were chatting, and you had mentioned to me that you’re running some specials on properties that you guys are constructing new construction in Northport. Mm-Hmm. <affirmative> and in Port Charlotte, which is just north of Fort Myers, the Fort Myers market, and some pretty interesting incentives. So you asked if you could come on the show and share them, and I said, well, sure. You know, sure. I think the audience wants to hear about it and, you know, it might be something that can take advantage of, especially when it increases cash flow. So just give us a very quick overview of what you’re building and where, for those people who are not familiar either with the market or have listened to the episode that we did together on the market spotlight about five months ago. It was actually a, what was it, August? I think it was August
Yeah I believe it was August. It was before the storm, so, yeah. Okay.
All right. So give us a quick overview of the two markets, what you’re constructing, and and then those incentives. And we will we’ll, we’ll drop this into our next episode.
Awesome, awesome. Well, we build single family homes in southwest Florida in port Charlotte, north Port. The model we build most often is 1500 square feet three bedroom, two bath, two car garage, really nicely built with luxury vinyl plank flooring, granite stainless steel appliances, taller ceilings. So it’s a, it’s a really nice looking house and it’s worked out really good for a lot of our, you know, investor clients as a nice rental. And now we, we know what over the last six or eight months, interest rates have changed and, and cash flow numbers have changed. But what we’ve been able to do is with one of our strategic partners that’s a lender, is we’re able to do an, an adjustable rate mortgage for either seven or 10 years. That way you can take advantage of the lower rates in the adjustable now.
And when interest rates straighten back out within a, you know, some people say a year, two years, whatever it is, then you can refi back into a 30 year fixed. But in the meantime, we will be paying 2% of the amount financed in order to pay for that buy down of the rate or that adjustable rate mortgage. The other thing we’re gonna do is we are gonna be paying the first two years of property management and that really is gonna increase cash flow. You know, right now with the higher rates, cash flow’s, not as sexy as it was a couple of years ago, but doing these two things we’re able to get you right back to the same cash flow numbers when things were were awesome. It’s, you know, know three 50 to four 50 per month is what our clients are seeing in terms of positive cash flow.
So Northport, and by the way, those are two good incentives. So Northport and Port Charlotte, and these are single family homes, new construction, typically three bedrooms, sometimes four if I’m not mistaken. We
We do have a four bedroom model that we’re starting to to, to get a few of ’em that are nearing completion on that.
Okay. So to summarize, you’ve got two years of what you’re calling free property management, which means that there’s no monthly management fee on collected rents, correct? Correct. And 2% is 2% of the purchase price. And that goes towards a rate buy down with mortgage financing?
Correct. Okay.
Is you can use the 2% for whatever, but most often people are doing a rate buy down or an adjustable rate, like a seven one arm or a1 year arm, but that’s between them and their lender. But the money is available and set aside for that.
Okay. That 2%, by the way, is if you apply it towards financing, does it have to be your partner lender or could it be any one of the investment property investment lenders that we work with?
We would prefer it to be ours, but I’m, I’m open to suggestions on that cuz I’m sure that there, there might be some, some lenders out there that have programs that are even better than what we have, but this is the best that we’ve found. So, but yeah, that can be discussed on a case by case basis.
Okay. Very cool. All right, Reed, any other things you want to add real quick? Since our, you know, August market spotlight, anything changed in the local market?
I wonder what’s changed since August in southwest Florida?
<Laugh>? Oh, we had Hurricane Ian. Yes, and it was bad if you, you know, if you were on one of the islands, you know, probably everybody saw that on TV and Fort Myers Beach and sandal took, took some pretty good shots. But luckily I, I can say this, out of the hundreds of investor homes that we’ve done over the last couple years with people from all over the country, out of hundreds, I had one that a tree fell on. So that was the only storm damage that any of our homes got during the process. We had one where a tree fell on it, it got fixed in a couple of weeks. The renters are already back in there, you know, so the hurricane was bad and it changed the market. But one thing that hasn’t changed is the demand for the rentals down here. It’s still really quick. I I don’t have any clients that are, that are closing on a property and waiting to get a renter when they’re closing on the property. There is somebody waiting to move in that house. So the rental demand is awesome. Rental numbers are high and, you know, the, the interior parts of, of, you know, Southwest Florida have rebuilt, but it’s gonna take a minute on the islands.
Well, that’s great news. It sounds like it’s still a very strong, vibrant market and I know it has been for a long time and everything I’m looking at is showing that it will continue to be that way just because of strong demand and supply is there, but you know, you can only build so much so fast. But anyway, it’s a good position to be in.
Yep. And we’ve got some homes that your clients wouldn’t have to wait on. They’re either already coed or they’re within a week or two of, of getting their certificate of occupancy. So it’s not like, you know, you put your deposit down and you gotta wait a year, you could put your deposit down. We’re closing in 30 days, so if you, especially somebody with a 10 31 exchange, this could be an ideal situation for ’em.
Yeah, for sure. Good stuff, Reed. Well, thank you for the update and those are great incentives. I’m sure there will be people who take advantage of it. So if you’re listening to this and you wanna learn more about what is available and these incentives and how they apply, just contact your investment counselor here, shoot ’em an email or give ’em a call and we will give you a hand and we’ll connect you with Reed’s team and make sure that you’re well taken care of. So, Reed, thanks for coming on.
Thank you very much, Marco. I appreciate your time.
Thank you.
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I literally just finished recording a client spotlight episode with one of our real estate investors and back to back, I have another great guest, another one of our clients, although she’s not exclusively our client, but I’m doing literally two back-to-back client episodes today, and it’s long overdue. It’s been a while since I did a podcast recording with one of our clients to talk about their personal experience, their journey into real estate investing, what they learned, their trials and tribulations and all that good stuff. So I’m sure you’re gonna get a lot out of this conversation today. Emily is a successful real estate investor. I’m very proud of her. She’s done well with and without us, so I’m sure she’s got a lot of nuggets to share today. So, with that, Emily, welcome to the show.
Hi, Marco. It’s so awesome to be here. Thank you for having me on.
Yeah, thanks Emily. It it’s good having you on. I’m excited to learn a little bit more about your real estate investing and the journey you’ve had. You don’t need to share, you know, too much if you don’t want to, but just maybe tell us a little bit about you and your background and you know, what you do so people can relate to who you are and what you been doing.
Yes. So I have been a real estate investor since 2015 and I started, we got our first property when I was a full-time mom and a military spouse. My husband was still active duty at the time and I now I’m just addicted to it. I love it so much, <laugh>. I, I also have a license as an agent. But I, I love following your podcast and learning because I like to invest around the country, as you say, where it makes sense. I live in Utah and it’s been a really hot market out here and prices have gone up right now. Things are, you know, cooling off as they are most places, but this is just such a fun thing to, to discover real estate investing and I love to just talk about it to anyone that’ll listen.
<Laugh>. Okay. So Emily, what actually keeps you motivated today? I mean, actually, you know what, before you answer that, tell me how you got started in real estate investing. Everybody kind of falls into it in a different way. Some people kind of already know they want to invest in real estate because they know that real estate is the asset class to be in, and others have successful people that have an influence in their life. And others just think about money and they go out and read books and listen to podcasts and figure it out. How did you get into real estate investing?
Well, I’ve always kind of had this drive for financial stability. You know, I started working as soon as I could. As a teenager. I bought my first car when I was 17. You know, I put myself, myself through college. I’ve just always kind of been drawn to personal finance and how to be smart with my money. And then as I was a kid growing up, my, my parents moved us across the country a couple of times and I was somehow aware that at least twice when they sold our home, it had, they sold it for double within about four or five years of us moving. And so that kind of just stuck with me. And I just knew there was something special about real estate. You know, I didn’t, I was an English major in college. I didn’t really do much with it.
I bought a condo, then I got married and I sold that my husband was, you know, active duty. Active duty. So we were overseas then. While we were overseas, I didn’t think I could invest nowadays I would tell me that, Hey, you could <laugh>, you know, you, you call Nira and they’ll find you a nice place. But I didn’t know that at the time. But then in about 2014, we had moved back to the states and I just, you know, I had two young kids. I was a full-time mom, but I just felt like it’s time. And so I, I did a lot of self-educating. I listened to podcasts and, you know, online communities. And I got a book on Landlording and we found our first rental property was actually off market. It was across the street from my mom which is, it’s actually about an hour away from where I live.
So as a landlord, it’s a little bit of a pain, but at the time we were still active duty and we thought we would end up moving again. Well, we haven’t. But and so that, that little condo just got us off on our journey. It was a three bedroom, two bath. It was in a nice little neighborhood in a good location. And we bought it for 132,000. And you know what I actually, at the time, I kind of felt bad thinking that, oh, it doesn’t meet the 1% rule because it was rented for a thousand a month. But I have to say that that condo has done so much for us. It has gone up in value. Of course, rents go up too. I think I’ve, I’ve done two cash out refinances on it. Oh wow.
It’s been amazing. So I love how I got started. I got something locally that, you know, and you really learn a lot and appreciation for property managers by self-managing
Mm-Hmm. <Affirmative>.
So, you know, we got that one and it was great. I think we just pulled money outta savings for that one. We were able to do that. And then, you know, we still wanted to keep going. And we, a couple years later, I got my real estate license thinking that could help us buy more. And we did buy another property locally. It was a brand new, new construction. It was a townhouse and it was 208,000. And that one that was a little bit harder to do. I think we pulled money out of a Roth IRA and maybe did a little bit from a HELOC. Cuz to me that’s a, that is a key as you’re a newer investors, like how do you do this? How do you get the money? How do you finance it? So I like to mention that. So there we were, we had two rental properties and we thought things were great.
We had awesome tenants, we screened well, but then we felt stuck. We were like, how do we, how do we get money for more bec I mean like, the second property was quite a bit more than the first one. It was like, how can we keep going? And I kept trying to learn more and I, there’s this saying that I believe in it that, you know, when the student is ready, the teacher will appear. Mm-Hmm. <Affirmative>. And I found, I found a community and some mentors and I, I joined a mastermind and I learned a ton and how to do some crazy things like buy outta state <laugh>, like what you offer. And I think that’s about the time that I found Nevada and I learned that it is okay to take money out of retirement. That we, I actually think that’s great. I don’t have any money in retirement anymore because I have properties instead.
And by harvesting the equity and pulling out retirement funds and also during 2020, the CARES act that you could pull money out and not have to pay that 10% penalty. Yeah. We were all over that. So that really helped us take a big leap forward. And I met Melissa and we bought eight properties in the next year. So that’s the power of having the right information and just things just kind of clicked for us. So we’re, we’re now in multiple states and yeah, that’s helped us just move forward, you know, light years. Yeah.
Yeah. Good for you, Emily. That, that’s fantastic. It’s a great story. It sounds like you’ve done very, very well. Whether by accident or just, you know, you had the right team, the right place, right time. Your experience with that first property sounds like it unfolded almost perfectly. I didn’t hear anything like a problem or a hiccup, but I’m gonna ask you, did you have any issues with that first property, whether with the property or just in your, I guess, lack of experience, investing in that first property, not knowing what you don’t know and then, you know, kind of following into a bit of a trap or an issue?
Well, one thing that did happen was the, when we bought it, there were some existing tenants and then a few months later they, they had another opportunity to move out, which is good cuz I needed to raise the rent. They were under market. But between the new tenants that we found moving in, the waterline in the fridge leaked and it leaked downstairs to the property below. So that was a big mess. So we had this insurance claim, but it actually got taken care of pretty quickly. Insurance covered and j but things like that happen. And that’s, sometimes I get so excited about all the positives from real estate investing that I don’t wanna gloss over that there are challenges. I have to say that property itself really has been so good for us and that the importance of screening well, and I’ve had some really good tenants and it’s nice because my mom is and stepdad are across the street, and so they can kind of help me out and keep an eye on things. But also that one isn’t an hoa and HOAs can be tricky. The fees have gone up. It has a clubhouse in a pool, so I don’t know, I don’t always recommend buying in an hoa, but at the same time, I don’t have to worry about the roof or fences or landscaping. The HOA covers that. So that one really has been my, my golden egg
<Laugh>. Yeah, no, it’s a good experience. So when you started off, did you have what I’ll call a defined investment goal or real estate goals? Or were you just saying, Hey, I need to invest in real estate, and the one across the street happened to be available and you looked at that and, and you were just there. It was, it was there in front of you at the time when you were thinking about it, but you, you didn’t have defined goals. Right?
I did not. Like I thought I was supposed to meet that 1% rule and I, it wasn’t. And so I kind of thought, well, maybe that’s not great, but we’ll just go for it. So in a way, you know, it was a good opportunity. But I also believe fortune favors the bold. Like you learn as much as you can and then at some point you
Mm-Hmm. <affirmative>. Well, this is true. So I guess in the beginning you weren’t looking for a specific market. It was, you know, your backyard literally across the street.
Well, for me it’s actually about an hour away across from my mom.
Oh, got it. Okay. So it was in your local market, so you, you weren’t Yeah. Necessarily thinking about investing outta state, you know, I like to call it being market agnostic where you’re not married to any market, let alone your own backyard. At what point in time did you kind of shift from looking beyond your local city or metro area?
Well, things were just getting so expensive here that it, it, you know, I felt like how do I get more properties? And then just kind of learning about and finding you guys learning about these other markets where you could find properties for a hundred thousand. And that just kind of blew my mind at, at first. And it did seem scary at first, but I don’t know, I just felt like I got, again, I kind of had this inner drive, like, I need to go for this, I need to try it. And so we bought our first out-of-state in Memphis. We actually got mm-hmm. <Affirmative> six there
<Laugh>. Nice. Yeah. And Memphis has been a great market. It’s been a perennial market. In fact, Memphis was actually one of the first markets that we brought on. This is 19 years ago. It’s now, we’re recording in January and it’s literally our, our 19 year anniversary this month. Yeah. So Memphis was, I don’t know if it was the very first, but I wanna say it probably was the first market that we, you know, introduced. And still to this day, Memphis, the Memphis MSA or Metro Market is a great market to be investing in. There’s many submarkets in that market so that you can always find a place where there’s inventory and the market or the numbers make sense on the property. How did you choose Memphis at the time? Was it just something that we introduced to you or did you have a specific criteria or list of markets that you were looking for?
I think this was before I had met Melissa. So I I think just through my own searches and Googling and you know, looking at some of the online real estate communities and I just, I liked like the numbers there. There’s, you know, there’s a lot of similar type markets. I like the south. I grew up in Orlando for a while and you know, they don’t normally have is cold of weather, although, you know what, sometimes they do. I have burst pipe in Memphis two years ago and I know some others in my, my mastermind have mentioned that they’ve had burst pipes very recently. Yeah. And so sometimes those bad things happen and you have to plan for that. You’ve gotta keep the reserves and you have to have the right insurance.
Yeah, well that’s a good point. You definitely, you’ll always have to have insurance. Definitely have enough coverage and reserves is an important thing too, which I think some investors kind of sidestep or maybe don’t even think about because they’re just not thinking about it or they weren’t, you know, told or educated. But yeah, having reserves for whatever, any kind of maintenance repairs or unplanned things that come up like burst, you know, pipes, which has happened in Texas as well by the way. But how did you pick that market? Did you have a criteria in mind or was it just, you know, you were reading online and other people were investing in that market?
Oh gosh, I think I found a provider there that I liked the sound of. And I think the, the fact that I could find properties that were the 1% rule, that’s what I remember. I did end up actually switching my property manager. I wasn’t as in love with how they were handling some things, you know, cuz some of the markets where you do have these more affordable homes, maybe if they don’t screen as well. You know, I did go through a number of turnovers and I’ve been through evictions. We had about four evictions in about eight months at one point. Mm-Hmm. <Affirmative>. So there are definitely ups and downs and I, I did, you know, that happened after the burst pipe and that was kind of a, was that in 2020? I think that was the fun year <laugh>. And yet, despite some of those challenges and it, you know, it is a different experience between your actively managed ones that you keep close by and you know, you kind of, you can know the tenants personally and that’s a good thing.
But it, it’s different when they’re out further away and you, you have to trust in your property manager and you have to be a good owner and you can’t, you can’t micromanage. I may have been guilty of that at times because I know things, I would do things a little bit differently if I were running it. But that’s part of the process. And it’s great to have people to take care of those headaches for you. You know, here’s another example. Christmas Eve just, you know, last year I had got an email in the morning that my property manager in Pennsylvania said that the tenant had called in at [spp-timestamp time=”1:30″] AM saying they had no heat, which is terrible and this is during all these storms, you know. And so I’m like, oh, I think there’s a fireplace, I hope they’re okay. And you know, she just emailed to say, Hey, we have someone on the way to go out and get it fixed. So that was great, you know, hey, I didn’t have to call the, the text she told me later she had to call about 15 HVAC companies to find someone available and willing to go out. Cause they were so busy with all the storms. So, but hey, I didn’t really have to worry about it, thought, okay, she let me know it’s getting taken care of. Awesome.
So yeah, and that’s part of the job of the property manager. I mean, they’re there to manage your assets and so they’re going to handle it all and if it’s over a certain dollar amount, they’re gonna call you and just get your approval on something. But that’s so you can sleep at one 30 in the morning and not worry about, you know, the heat being out at one of your properties. I mean, these things happen from time to time, but that’s why you hire professionals for it. In, I guess in hindsight, if you had to do it over again, what would you look for in finding a particular market? Now we know you started in your local market, but from everything you’ve learned to date over the last several years, what would you look for in choosing a market?
Well, first of all, I am just so grateful that I have the two properties locally because they have been, they’ve been my foundation. You know, when there have been some challenges with some of the other properties, my two local ones, they have been so consistent mm-hmm. <Affirmative>. And so I’m grateful to have those. And then, you know, I tried, I don’t know if I went to too many markets. I kind of just went where I liked the property the best and sometimes not, that’s not always the best way to go. But I’m in Memphis Little Rock Harrisburg, Pennsylvania. And then I got a new construction town home in Atlanta this year and just recently closed on single family home in Lehigh Acres, Florida. So I’m probably in too, too many markets now. I’ve said no more markets. But one thing I have kind of shifted is just knowing how my, my two local properties that are kind of nicer have done is that I bought some that were, you know, around the a hundred thousand range.
And then I decided, you know what, I really like how things work with as far as appreciation and kind of the, the caliber of the tenant and being a newer property with kind of the nicer, newer properties. And so I’ve shifted and I’m trying to go after new construction and that has pluses, you know, pros and cons. The thing with new construction is that they take longer. Right now I have one that’s been under contract since October, 2020 that I’m still waiting on and it’s under construction now, but and the price has gone up a bit, but the rents have gone up a lot too. That’s one in southwest Florida. They, they’re more expensive. So maybe I could have had more properties right now, but I, I like nice properties that go up and you, you know, you can’t count on appreciation, but if you wait long enough, you know, it happens.
Isn’t that the, the phrase equity happens? Yeah. So I’ve, I, I kind of have a mix of some of the more affordable homes and then shifting to some new construction which has kind of slow me down, like I said, with the delays and that they cost more. But I kind of like having the mix. I don’t know if I would’ve, I don’t know if I would’ve changed anything, but just in hindsight I am, I’m focusing on some of those, but then I might wanna go back and get a few more that are more affordable just to up my numbers, you know?
Yeah. How has your investment strategy changed in terms of markets? So it sounded like you kind of started off with an eye on cash flow and then migrated to markets that have stronger growth. And I’ll say, you know, appreciation potential because that’s certainly what you’re doing if you’re investing in Florida and especially if you’re investing in new construction, cuz they’re not sexy on paper in terms of cap rates or cash on cash returns. I mean, that will catch up in time and your cash flows will increase. But they are very favorable and have performed very, very well for the last, let’s say three to five years for investors who have been investing in markets like Florida and in new construction because they’re typically in growth markets and in the path of progress. So they have both just organic appreciation from the dynamics in the market. Plus you’ve got builders who are slowly bumping the prices up of what they’re selling and you know, that’s just creating new comps and that those new comps are establishing new prices, which are just giving you, you know, higher values. So it sounds like you shifted from cash flow to kind of appreciation.
I did. I definitely was going after cash flow more when I first started investing out of state. But you know what, I have learned that, you know, there are multiple ways that real estate can grow. There’s the tax benefits, there’s appreciation, there’s the mortgage pay down, the hedge against inflation. And but cashflow, oh, go
Ahead. No, I was gonna say, and the ability to leverage your investment capital, basically five to one, borrow 80% of the purchase price and, you know, own and benefit from a hundred percent of the assets. So, you know, you can’t do that with any other asset class.
Yeah. And I, for a while there, I thought that the big thing was cash flow. That that was my number one thing to go for. But I’ve since realized it’s a piece of the puzzle piece of the pie. But it, it actually might be the smallest piece in the beginning, you know, over time as your rents go up. But what has really, what I have personally experienced is appreciation. And that has enabled me to buy more properties doing the cash out refinances. Yes. And so that’s kind of why, another reason I’ve, I’ve shifted to the new construction, fewer headaches, fewer repairs, hopefully tenants will stay longer. I’m still kind of proving this out, but the appreciation can be better on a nice new construction compared to, you know, an older rehab time.
Yeah. And that approach, that plan, if you will, is better for many people who are not flush with cash or, or sitting on piles of cash because you can let that equity grow as fast as possible. In other words, you want to gain as much equity as you can so you can tap into it at some point and redeploy that equity as down payments into more property. And, and for many people that’s the best place to start. It’s kind of like the fast track, if you will, too, real estate wealth. So the fact that you did it the other way around means one of two things. Either you were focused on cash flow knowing that you could have done it the other way or you just didn’t know that there was another strategy out there <laugh>, where you could have just fast tracked your growth through growing your equity as, as rapidly as possible.
And there’s no right or wrong, it’s just, you know, like I said, I call this a journey, you know, we all learn through this journey and you learn from other people, whether it be, you know, colleagues or masterminds or podcasts or books or you name it. So if investing is a journey, you know, you can take many investors through this journey and shift their lives from what I like to call financial frustration to financial freedom. And people start to experience this once they get to that second, third, fourth property because then they start to see the light at the end of the tunnel and they feel the impact on their life, especially their financial life. In your journey from where you first decided made the decision to move forward to where you are today, what was, if there was one, your biggest frustration in that journey?
Just how do I go faster? How do I get more funds? And for a while there it was kind of hard to find properties. But honestly to me this is the greatest thing since sliced bread. There’s so many reasons to love real estate investing. It’s been so awesome for me. And I kind of feel like, oh, I wanna be a missionary and share the, the good news of real estate investing. Everyone needs to understand it. And even my own family members are like, whoa, we bought on their property. They’re like, okay, whatever. Like, they don’t, I feel like they don’t get it. Like, I, I want to help them invest, I’ll give them my services for free and yeah, I don’t wanna be a landlord, I don’t wanna wanna fix toilets. And you know, people just don’t understand and it’s not really taught, you know, if you haven’t read Robert Kiosaki at some point, a lot of people just, they just don’t realize how amazing it is and how amazing 30 year fixed mortgages are. No one else has them. Our rates can be fixed. Like, you know, right now Great Britain and Canada, like they have to refinance every few years. They don’t have these long-term fixed mortgages. Yeah. And people are getting hammered and losing their homes because their interest rate is, you know, doubling and they can’t afford it. So we have such a great environment to invest in an own property. It’s a privilege. You know, it’s, thank you founding fathers for giving us land rights. It’s Right. It’s amazing. I’m so grateful
For it. Yeah. And, and that really is kind of one of the cornerstones or basis for capitalism is just the fact that you have property rights, be it real estate or otherwise. So you may have answered my question, but my follow up question to that, based on what you said was gonna be, why don’t people take action and invest in real estate when they actually have the ability to, you know, they have, they may have the income in and the down payment or the savings for it, and they’re looking at what you’re doing, Emily, and they see that you’re having one success after another and that you’re creating your own little empire of rental properties. Why is it that they just don’t get it? Or maybe they get it and they don’t take action? I personally, I just don’t understand why more people are not actually pursuing this.
I think there’s a fear factor, especially of maybe buying properties in another state. And I have a lot of people kind of asking me questions about that and I, I love to talk about that and help them overcome fears. Cuz there are ways, you know, you can, things like knowing your team and trusting your property manager and having a lot of savings and kind of knowing what is the worst that could happen? Well, I had a burst pipe and that was a big deal and it cost thousands of dollars and insurance covered it and I was made whole, you know, and I had, I kept, as long as you keep savings, I think that is a huge thing. And then I also think people have this fear of debt. They think that all debt is bad, which is so wrong. Of course there’s bad debt, there’s, you know, silly consumer debt that is not good.
But like, like I said, mortgages, a 30 year fixed mortgage is a gift. <Laugh>, I mean, it is amazing. I wanna max all out that we can we to max out all of our, our Fannie Mae spots between me and my husband. Yeah. But people think I wanna pay off my house and I no, no, no, don’t do that. You can use that and you can have, you know, five houses instead mm-hmm. <Affirmative> and have that income stream that will protect you. Like I think you’ve talked about before, you’ll still always have something to pay on your house because you’re gonna have taxes and insurance. So it’s never gonna be like a zero,
Never free.
Right.
Real estate ownership is never free. There’s always insurance, there’s always property taxes, there’s maintenance and repairs. So even if you don’t have mortgage financing, you, you’re still gonna have costs or expenses along the way. But that’s okay because, you know, that pales in comparison to, you know, what the property values will be over the long term when you average it out on an annual basis. But everything you just said was spot on. And you know, clearly you’ve gained that through two things. One, educating yourself to, you know, your experience. You have that. A lot of people don’t have that, but that’s also implying that everybody can have it if they just take the time to learn and educate themselves. So, you know, it’s, it’s like what you’ve accomplished is fantastic, but it’s not necessarily unique. What, what I know and what I’ve learned has come through, you know, years of just gaining education and knowledge and experience.
But anybody can achieve that. Anybody can have that. So, you know, I, I don’t know if we’ll ever be able to answer that question that I ask you. You know, why don’t other people pull the trigger and do what we are doing when they see what we’re doing and they know it, it’s possible, but maybe it’s not meant for everybody and maybe everybody’s not meant for, you know, running a business, owning a business, investing in real estate or investing at all. I think that’ll be one of the mysteries that we’ll never ever solve. <Laugh>. So we’ll leave it at that. But on that note, what advice would you give to people listening to you today that are new investors that want to get started or are just getting started? What advice would you give them?
Well, I know for me personally, I mean of course there’s always just start learning as much as you can. You know, listen to our Olive Marco’s podcasts, there’s lots of other podcasts as well, and learn all you can. But something that really helped me kind of just step it up was finding mentors and a tribe, like other people that you can connect with. My, my community is, is online, although I did convert one of my neighbors and they’re in the same group as well. And so it’s fun to be able to talk face-to-face. Yeah. so yeah, find people that can help you, that can be your mentors and find a, a bigger community as well. Yeah. And that has made all the difference to me.
Yeah, yeah. No, that’s great advice. And that can come in different layers or levels. There could be friends, family, local, real estate investor groups, although I haven’t been to one in many, many years. But I know that there were many running in southern California, you know, from San Diego all, all the way up to la. There were, throughout the whole month, like pretty much every week you can go to a local real estate investors group or club or meeting re EI clubs is what they call them. Masterminds you know, masterminds are a little bit more involved. They’re typically not online. They’re typically, you know, more expensive, meaning that there’s, you know, some sort of capital contribution on an annual basis, but you get tons of value from it. Tons of value. So I have you have Yeah. Yeah. You’re in a mastermind if I’m not mistaken. Right, right. Yes. Well that’s great. So kind of a similar question, what advice would you give to seasoned investors that are, you know, already successful, maybe not as successful as you are, or maybe even more successful, but they’re looking to grow, they’re looking to level up. What, what would you tell them? What, what advice would you share?
Oh boy. <Laugh>, I’m
Putting you on the spot, Emily.
They’re ahead of me. Well, something that I we’re focusing on in our mastermind is with kind of the economic uncertainty coming is just learn to produce more, bring in more income that will help you weather the times ahead. Especially if you had like adjustable rate loans. I do have two HELOCs, so I’m dealing with a little bit of that shock right now. Yeah. and just, you know, see how you can bring more value. I think having reserves is, can get you through the tough times.
Yeah, yeah, for sure. So, you know, it said that experience is more or less the greatest teacher and a lot of wisdom is gained by the experiences we have, the knowledge we gain. And that comes through schooling and education experience, reading, all that good stuff. If you were to look back, I kind of asked you a similar question before, but put it a little differently this time. But if you were to look back at everything you’ve done up until today, what would you have done differently in your real estate investing journey?
I don’t know that I would change anything. I appreciate the journey I’ve been on. You know, I, I’ve learned a lot. I think it’s good to go through the hard times. It makes you appreciate the benefits. So I just appreciate the journey that I’ve been on. I, I don’t think I would change things. I am grateful for where I am and
Yeah. No, that’s good that you’re happy with your accomplishments. I mean, they are great. I mean, regardless of how many, you know, upsets or challenges you’ve had broken frozen pipes, whatever it may be. So 20 years from now, if you were to come back and give yourself some advice, you know, now you’re, you know, your future casting here, what advice would you give yourself today, putting yourself 20 years into the future, coming back to yourself? I know this is kind of really stretching the mind, but what would you say to yourself today?
Keep going and keep buying new construction. I think in the future, own the new construction properties that I’m buying now are the ones that I’m gonna love the most.
Yeah, I think you’re right on that. I think you’re right on that. Did you ever have an issue with long distance real estate investing or, you know, what I refer to as out-of-state investing? Did you ever have a challenge of fear or an issue with it?
Well, I have switched property managers before where I didn’t feel like I was getting the best service. And I actually, I think in both cases I asked Melissa for recommendations and I switched. So, you know, we’ll be able to get through those. No
<Laugh>. Yeah. Okay. Well that, that’s fair. But you know, did you ever have an issue or a fear with investing out of state? Meaning out of, you know, your local market, was that ever a hurdle? For some people, people, it’s a mental hurdle. They just can’t, they can’t come to grips with buying real estate in another market without actually being there seeing it, touching it.
It did feel strange at first, and I moved kind of quickly when we bought a, you know, a, a bunch in Memphis. And I know the first time it felt a little strange, but then I, I don’t know. I got over it and I, most of the, actually all the out state houses I have not seen in person. I’ve seen the lot, I’ve driven past the lot where one was gonna be built, but I have not seen them in person. And I know that can sound crazy. Yeah. But at the same time we bought our house when we were moving from overseas, from South Korea to Utah we, we put under a contract and without seeing it in person. So maybe I was just able to take that leap of faith
<Laugh>. Yeah. Emily, do you have a criteria for when you’re looking at property or buying property? Is there something specific you’re looking for? Or is it as general as any single family home, as long as it, you know, is in a good neighborhood and, and cash flows? Or how specific or tight is your criteria if you even have one?
I sort of feel a little silly saying it, but I want it to cash flow at least $300
<Laugh>. Well, that’s not silly <laugh>
As long, you know, I, I, I consider the other factors and you know, you look at the cash on cash and all that, but I actually, that’s kind of been my simple answer and I know that’s not as professional as some people would say, but that’s, and just kind of my gut, you know, do I think this is a good property in a good area?
There’s nothing wrong with that at all. You know, some, some people don’t have a criteria, other people have criteria that’s so, so well defined that it becomes difficult for them to find the property that meets their criteria because they’ve eliminated 99% of what’s out there. And that, that becomes compounded worse in when you are in a tight inventory market like we had 12 months ago, you know, prior to mortgage rates going up, prior to that it was very difficult to find inventory pretty much anywhere in the market. There, there was just a lack of inventory, strong demand, lack of supply. Now things have changed, you know, because mortgage rates have gone up this year or over the last, let’s say nine months or so. But, you know, it’s good to have a criteria, but it doesn’t have to be everything about the property and the location and the neighborhood and all that kind of stuff. I think it’s good to have, and for many people it’s just kind of a driving criteria of what they want to have in their portfolio. And it could be, you know, slanted towards a cash flow, you know, three bedroom, four bedroom home in a particular neighborhood, like a BB plus class, neighborhood, whatever. I was curious if you had a criteria that was driving you, it sounded like you didn’t really have much of a criteria when we first started here today, but now I I can hear it. You do have more of a thoughtful process
And I, I, you know, I have, I have spreadsheets that I run the numbers through, but honestly, if to summarize, I, I would look for that number, although there’s a little more leeway on that with the new construction. And I’ve also learned, don’t look too much at the first year or two in new construction because it’s not gonna cash flow as much. Although my earlier townhouse this year, you know, I cash, cash flow’s over 500 in the first year, but I had to wait for that to get built. So, you know.
Yeah. So probably my last question here. What’s keeping you motivated today with your real estate investing?
I love it. This is what I wanna do all day long. This is so fun for me. I, I guess there’s something about my personality that as I kind of update my, you know, my tracking and my numbers every month and I look at my portfolio and I see growth, it’s, it’s such a good feeling and it gets, gets us closer to financial freedom to being job optional for my husband. We’re not there yet, but it’s just, it’s so fulfilling to me. I really, I really enjoy it and would like to help others have that stability that it gives me so much comfort. Cuz you know, I have been through times where, you know, the rocky Financial Times and things are rough and stressful and I hate that <laugh>. Yeah. So this is giving us this foundation that, you know, whatever happens with a job, we have this at least a fallback on, and eventually it’ll be job optional. Mm-Hmm.
<Affirmative>, that’s a great answer. The one thing I don’t hear often from investors when I have conversations with them and then when I bring it up, they go, yeah, yeah, you’re right. Is the sense of control. You know, you don’t hear that often. You talk about financial freedom, having the cash flow, job optional, all these things. But I don’t often hear that I have a feeling or sense of control, control over my life or control over my financial future or whether I need to go to work or not. You know, it’s my choice. It’s, you know, control I think is at the heart of a lot of it. Well, Emily, I appreciate you coming on. You’ve been a wonderful guest. Share whatever you’d like to share with our audience, be it social media or your Facebook page or whatever you’d like to share. This is where we’re gonna wrap things up.
Okay. Well, I have people that reach out to me to ask me questions about getting started. And I, I like, I like <laugh>. I could talk all day about real estate <laugh>. So I’m happy to help people and in fact, I’m almost joking, thinking I should start some kind of a community or course real estate investing the busy mom way because I lift no hammers, I do no flipping. I am not handy. That is not me. But I do invest both passively and actively, and I completely enjoy it. And, and I like sharing it with others. So you can connect with me at hallhomeinvestors.com. I’m Emily Hall, so it’s, you know, HALL home investors.com. You can even email me, emily@hallhomeinvestors.com. And I have a Facebook page, facebook.com/EmilyHallRealEstate. And maybe I’ll get something together to help handhold and those who are new and afraid to take the leap because I really am passionate about this. I believe in it and I would love to help others get going or further along the path. So yeah, reach out to me.
Awesome. Thanks for sharing that. Emily, once again, thanks for coming on the show. You’ve been a wonderful guest, a great client of ours, and I’m very happy for what you’ve achieved and the success that you’ve had. You know, just keep that momentum, keep going. You’re, you’re doing extremely well. So again, thanks for coming on.
Thank You, Marco. It’s been a pleasure.
And my pleasure.
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