Hey everyone, and welcome to Passive Real Estate Investing. I’m Melissa Nash, your guest host Jumping in for now. Let’s dive in. Welcome to the show, you guys. I’ve got Jefferson here with us today, and before I let him say hello, I wanted to kind of give you guys a little bit of a backstory. And it’s a little bit, how many years has it been Jefferson? When did we meet?
About six years? I think it was 2020 when we started working together.
Yeah, COVID Times. Yeah, <laugh>. That seems like a, that seems like a lifetime ago. But anyways, okay, I digress. You guys welcome. I want you to help me welcome Jefferson to the show. He is a wonderful, wonderful wonderful investor and client of mine that we met in 2020. And so if you don’t mind, Jefferson, can you please tell the listeners a little bit about you, where you live, and then we’ll kind of dive into all the cool real estate stuff you’ve done.
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Absolutely. Thank you, Melissa. Yeah, so Jefferson Howell, I live in Thomas Field, Georgia, which is South Georgia. If anybody really knows about ge, Georgia, it’s about in a southwest corner. So I’m about 80 miles, I mean 30 minutes north of Tallahassee, Florida. It’s on the southwest corner. I’m in medical sales. So I’ve been doing that about the last 15 years. So I enjoy that. So I’m not in an office all day and, you know, different area each day, you know.
Perfect. So now the reason why I asked you to be on this podcast is because, well, number one, I was kind of telling you before we hit the record button. I’ve been doing this for a really long time, and I’m always on the phone with new clients and new people and people who’ve never invested before. And it’s a little bit scary. It’s a little bit nerve wracking and sometimes it takes a little bit of courage to do that first property and to jump into the unknown. And if you guys are not watching this, Jefferson is laughing right now. This is on video as well. And so, you know, we, we both know with real estate investing, there’s amazing things that happen and there’s also little bumps and bruises that happen along the way. But I wanna kind of go back in time a little bit. Why did you first take action and invest in real estate? Like, where was your mindset and what were you kind of thinking back then in 2020?
Growing up I’ve always, like my parents and me always just did the stock market, which that’s what I do. Also, but I knew years ago I wanted to, I talked to a lot of people that had rental properties or commercial real estate, and it was like, man, that’s something I’d like to diversify and get into, but I didn’t really know how to do it myself or like take that chance. But then after listening to a lot of real estate podcasts, I came across you and you helped me out and I hadn’t looked back since.
Okay. So let’s dive into that. So you started with one property and tell the listeners where that first property was and kind of what was going on around that. It was a turnkey property. So kind of take us back to that first property, if you don’t mind.
Yeah, it was a turnkey. We did up in York, Pennsylvania. So we did that. We did the first one, it was actually a duplex, but it sold us two. So we did that one. We did both of those at the same time. And then I think a month or two later, we did two more up there.
Okay. So, so you’re on three there now. Where are you at today? How many doors do you have today?
Today I have, let’s see, 10 properties, 11 doors.
Amazing. Okay. Yeah. So what has kept you going? Like, why have you kept on investing? Like we started with, with the one in Pennsylvania. What was it about it that you were like, yeah, this is cool, let’s keep going.
Well, I know that you can do up to 10 properties under your own name. I was like, why not just do all 10 if I, if I can, why not <laugh>, <laugh>.
So what is your goal for real estate? Were you just like, I want 10 and that was it? Or are you like, kind of think like bigger than that or kind of where was that goal setting what you were thinking in the beginning?
I thought I was gonna do like, you know, maybe like do as many as I can, but then once I got into it and realized, you know, it’s a lot more to it than you think it can be, you know, once I got to the 10, now I’m kind of thinking about what was generating and what’ll be generating down the road. I feel like I’m now starting to use that money to pay ’em off quicker is my goal now.
Perfect. Wonderful. I love that strategy. I don’t know if you and I have talked about this strategy or it’s something you’re just kind of thinking about. Have you and I talked about the, the snowball strategy?
You did mention that me in the beginning.
Okay, cool. So for you listeners, and I mean you can kind of tell us your thought process on it or what you’re thinking. So the idea is, and your, your 10 properties are perfect, well, we’ll just say 11 doors, we’ll just say 10 doors to kind of keep it simple. But the idea right, is you, you have to own them first. So you buy, buy, buy, save up, buy, get as many properties as you can. Now we’ve got the 10. And just to kind of make up random loosey goosey numbers here, let’s just say your cash flow is $3,000 a month for 10 properties. Then you take that $3,000 and you dump it into mortgage number one. And then that mortgage is paid off in a couple of years, and now you’ve got, let’s just say $3,700 a month in passive income. Then you dump that into property number two and then property number three. And then eventually all the properties are owned. And when you don’t have that debt service on it, now all of a sudden you’re like, cool, instead of $3,000 a month in passive income, now I have, you know, eight, nine, $10,000 with no debt service. So that’s kind of the, the big picture of it. So how are you tackling it and and what are you thinking about all that?
So for the last, for the first year or two, I just paid the normal mortgage and then I started doing like extra money on principal per month for every one of ’em. Ah, like two or 300 bucks.
Okay.
And that made a difference. Then I was like, like what you’re talking about, I’m like, hold on a minute, I need to stop it on all of ’em and focus on one at the time. So about about a year ago I started doing it all on just one, taking everything. So now my first one we paid off on schedule, be paid off I think June or July of this year.
Amazing. Oh my gosh, that’s so cool. Very cool. Very exciting.
If I keep doing that, my calculations tell me they’ll be all paid off in 10 years.
Yeah, that’s about right. You know, and it depends on like how aggressive you are and it also depends on the cash flow of the properties, right? Like in the meantime, you know, there’s vacancies that happen, there’s maintenance calls that happen, right? So you’re not always able to put all of that cash flow back into one of those properties. And also it depends on if you’re taking other income outside of the rental income to apply to it too. You know what I mean? Because you could do that in theory if you wanted to. So yeah, I’ve seen some people pay off about 10 properties in about five years.
Wow. Yeah.
Yeah. But again, it depends on the purchase price and how much the loan was and how much you put down and all the things, you know, there’s a lot of variables.
That’s right. The money I’m using on ’em. I just kind of already told myself that sometimes I might have to use my own money to keep it going like that on certain months or something, but I just kind of made that decision to do that so I can get to where I wanna be as soon as I want to. And the good thing too is, you know, most of my loans are threes and four, four and a halfs. So my payments are what, seven, 800 bucks and my rent’s 13, 1400, you know, so it’s it’s got some good, you know, margin there.
Yeah. Well it’s so interesting. I don’t remember, ’cause you know, my brain, I’ve got, you know, COVID brain, old lady brain, whatever it is. But, so you’ll have to remind me, but I just remember those that timeframe, the COVID timeframe, you know, 2020 and so many people like, were like right when that shutdown happened, people were like in escrow or people were looking to buy and they were going to, and so many people got scared and so many people were like, oh my gosh, you know, the sky’s falling. Which, which it was a scary time. We didn’t know what was going on. And then all of a sudden we saw the interest rates drop like crazy. And then it was like the gold rush. I mean, I remember just like watching people on Instagram that were like basically on vacation working from home and, you know, and I was like, I’m on the phone, I’m trying to do deals, you know, it was like crazy. Everybody was like, I gotta get those low deals. I gotta get those low deals. And you did it. You were actually one of those investors that got some really amazing rates. But then at the same time, I’m a little bit torn. I’m like, I dunno if you should pay those off. Those are pretty cool low rates. Right, right.
So now that I’m thinking about it, I think we were working together before COVID. So I’m thinking it might have been like 2019 when we started, because I remember I, I’d already had some when COVID came.
Okay. And yeah, it would’ve been earlier then.
So I have, I would say six or seven of ’em are in the three to four range. And then like the other one’s in the five and a half one’s, like six and a quarter. So I have a couple that are a little bit higher, but most of ’em are in that four, four
And a half range. That’s amazing. So yeah, I’m a little bit torn for you to pay them off because, you know.
Know, but then I’m like, well, when they’re all paid off, they’d be like, its own business is taking care of itself, you know, and it’ll be just, you know, that’s what I’ve kind of Yeah.
I agree. You can’t, you can’t go wrong. And that’s, that’s the cool thing about real estate is you have some really cool choices here, you know, and it’s, it’s giving you some power. So what do you think your portfolio is worth at this time? Like if, if you put a dollar amount to all of them, do you know?
I’d say probably 1 3, 1 4 probably. Yeah.
That’s pretty awesome. Yeah. That’s pretty cool. Mm-Hmm <affirmative>. So going back to, you know, talk about diversification where you were like, I was in the stock market and we’re just playing a gamble there. I mean, there’s safe ways to do it. There’s risky ways of doing it. I think it’s a great thing. It’s cool. I, I do a little bit of stock market, but being able to diversify into a hard asset like that is pretty awesome.
Yep. And I, I think I was looking at my, my accounts the other day. I think my mortgage to what they’re worth, I think I’m about 50 50 paid off equity in them. Okay. All of them. Yeah.
And we’re talking like six years.
That’s right. Yeah. And we not fast <laugh>.
That is not too bad. So, okay. So let’s get into a little bit about, I know you’ve done some cool strategies to get these properties. ’cause That’s the other thing is people are like, cool, that guy bought 11 doors, but like, where did he get the money? How did he get into them all, you know, in six years? So there’s a little strategy, it’s, I I kind of wanna say I was one of the ones that invented this strategy. <Laugh>. I personally call, I’m gonna take claim for it, whatever anybody says, I don’t care. I’m taking claim, I call it the easy BRRRR strategy. Some people have since called it kind of like the BRRRR key strategy. And so the idea of it is, so your first properties were turnkey, meaning that the seller that I introduced you to renovated the property, you didn’t have to hire a contractor.
The property was given to you off market. You didn’t have to make offers on the MLS. And then there was property management in place. And so the idea of it is, you know, you got the people, all the things done for you. So you can just be like, Hey, I, I live in Georgia and I wanna buy a property in Pennsylvania. How do I do it? You know, so, so that’s the turnkey. Okay. So we did a few of those. Amazing. Great. So now this burkey or easy bur model. So normally you hear people online that are like, Hey, I found a distressed property from a wholesaler. And then I went out and I hired a contractor, I oversaw the contractor and then I did a cash out refinance on that property and I got some of that money back for the purchase, rehab, whatever. So this, this is the borough model, but as you know, we talked about this years ago, it that’s active investing. It’s, I mean, you live in Georgia, like what are you gonna do? Go to a fly to another market, build the team, find the team, oversee it, all people do it. It’s tough. It’s hard. I’ve done it <laugh>. I don’t know if I would do it again. All my own Anyway, so, so this new Burkey model. So tell us a little bit about, little bit that model that you got into within Memphis.
So as we discussed, my first four were in Pennsylvania and then we, I have six that are in Memphis now. And working with you and like working with Robert up there in Memphis I’ve done probably two or three in Memphis. The normal down payment way, the normal, traditional way. But the other ones I did through that birth strategy, my most successful one was after I rehabbed it and everything and refinanced it, it cost me $165.
What? <laugh>. Okay. Okay. Okay. That’s a really good one. Was that one with Robert? Yeah.
Yeah.
Dang. Yeah, that’s a good one. You have me well beat on that. I have not hit one like that <laugh>
That was my best one, but my other ones I did with him were still much less than the 20% down. You know, maybe five or 10%. But it definitely made a difference. But yeah, that was the one, yeah, after I did the refinance it was $165
<Laugh>. Dang, that feels so good. I mean, your return on investment on that is like, that’s like gold <laugh>.
Exactly. Yeah.
Yeah. So, so walk me through, what did you do in that property? Like what was your responsibility?
My responsibility is pretty, not a whole lot. I mean, just letting Robert do his thing and telling me what, you know, showing me the house, the scope of work, what he’s gonna sell it to me for all in. And then what he thinks it would be worth. And I just trusted him and he’s been good to me the whole time and it worked out, you know. Cool. I think having somebody you’d like and a good relationship with and trust is a, is the biggest thing, you know?
Yeah, yeah, definitely. Well, and I will say it’s like your situation is extremely rare. I have not heard of anybody that got out of it for such a little amount. Like that one’s good. So everybody listening like, don’t expect that <laugh>.
Right? Yeah. That was the only one. Yeah. Yeah. You’re
Not gonna get that just so don’t, don’t call me and be like, where’s that deal for $165 <laugh>? Right? Yeah. You’re right though. The most typical ones, and the way that I explain it is if you buy a turnkey property, you know, let’s say for $150,000, you’re gonna put 20% down plus closing costs. Okay. And if you did that same turnkey type property with this program maybe you put 10% down plus closing costs. That’s right. That’s kind of typical kind of what we’ve seen. Maybe it’s 10% mm-hmm <affirmative>. Maybe it’s 12%, you know, but you’re saving money, you’re not getting all of your money back out of it. But like you said, you didn’t do anything <laugh>.
Exactly, exactly. Yep.
You just kind of verified the information. That’s right. You weren’t out there overseeing the contractor and putting together the scope of work and, you know. Right, right. And part of this too that I wanna ask you about is the lending side of it. So were you able, I’m curious, I can’t remember which lender you used, were you able to do a cash out refinance immediately or did you have to wait that six month seasoning period?
Let’s see, I did have to wait, I did have to wait. I used, so I used Security National Mortgage for all mine. Okay. Everyone mine, I’ve used Aaron Chapman with mm-hmm <affirmative>. Before.
Yeah. Yep. Okay.
I’m thinking I had, wait, I’m, yeah, let’s see. Yes, I had to wait six months. Yeah.
Okay. So there’s new loan programs out there, just so everybody knows, and for you, for your knowledge as well, that they can actually avoid that six month seasoning period. And you can actually do your cash out refinance sooner. You just have to work with the lender at the very beginning when you, when you’re first putting that property under your name for the first time before the renovation started. If they include certain documents and certain information and certain verbiage, then it’s looked at as, as a flip kind of a situation. And so that’s how you’re able to do the cash out refinance. You don’t have to wait that six month seasoning. And I’ve got some amazing lenders that can do those all day long. So anybody listening, let me know. We got the hookup <laugh>
<Laugh>,
So Yeah, so yeah, so I was gonna say, you know, I’ve done some of those Memphis deals as well with Robert and yeah, they’re kind of cool. It really helps you save money to scale so that you can buy, I don’t wanna say two full properties for the price of one, but maybe one and a half properties for the price of one, unless you found that 165 <LAUGH> dollars deal <laugh>.
Yeah, no, I agree. Like with Robert, I feel like he’s a friend that I’ve never met before in person, you know, I’ve built a good relationship with him. I’m planning on going this spring, I think drive up and, you know, hang, meet him and everything. But the thing about Robert is we had some hiccups here and there, but the good thing about him is he’s gonna answer the phone and he’s gonna take care of, you know, he’s gonna, he’s gonna, he’s gonna do what’s right. A
Hundred percent. And you know what, and I’m so glad that you said that and you kind of led into this segment is because it sounds amazing. Like we’re sitting here going, oh, everything is roses and daisies, you know, but there are things that happen and there are things that come up and working with people that are going to help you understand. You pick up the phone, you know, I’ve had clients that call me and they’re like, Hey, I’m having an issue with a property manager in X market. And I’m like, okay, let’s talk about it. Let’s look at what’s really going on. Is it really the property manager? What are your options? What are your choices? You know, at the end of the day, you can move property management companies. Sometimes people just need to have a little bit of handholding, a little bit of comfort knowing that somebody’s in their ballpark that wants for them. And you’re right, Robert is that person and relationships are the business, right, <laugh>.
Yep. Absolutely. Absolutely. Yeah, <laugh> went up there in Memphis because I just enjoyed working with him, you
Speaker 2:
Know, that’s cool. Just rinse and repeat. Well, that’s right. You know, and that model has worked out really well for Robert because of, like you just said, how, how Robert is, this model has not worked out for everybody. Many people have tried to repeat this model and it’s been a failure, and it’s because you really need somebody on the other end that’s gonna pick up that phone and answer <laugh> when you call. That is, that is a huge part of it. And then since I’ve been able to help a couple other teams do this model as well and a couple of other areas I just did one in, in Little Rock. I was like, Hey, I’ll be the Guinea pig, I’ll help you guys kind of set this up. That one worked out great. I think that one, now, my total out of pocket on that one I think was $6,000.
Oh, nice.
Nice. So I, you know, that’s a win <laugh>
Absolutely <laugh>
Not $165 like yours, but it was still pretty good when, where I got a amazing property, you know, and I’m like, I spent $6,000 on it, I’ve owning it for one year. I’ve already recouped the cash flow.
Exactly. Yeah.
Okay. So anybody, this is my call to action for you guys listening. If you guys wanna learn about this Burkey type program, just reach out to me. You’re gonna see the links in the show notes, so we will hook you up. But other than that, so what is the next steps? I mean, you’re starting to pay these off. Are you gonna continue to buy, you, you might be flying out to Memphis to see Robert, like what is your plan? What, what’s next for you?
I’m not sure yet, but I’m, I’m thinking about, I’m, I’m not that stage of do I wanna just pay ’em off and just have the 10, or do I wanna keep growing a little bit? So I’m just, I’m starting that mindset where I’m trying to figure that out yet. Yeah.
Cool. Yeah,
Not totally sure.
Yeah. Yeah. Well you’ve made such good progress getting to those 11 doors in such a short amount of time that it’s okay to let the desk kind of settle and kind of take a second and go, okay, you know, what, what is next? What is the real strategy here? I think that’s smart, given yourself a lot of choices there. So, very cool.
Did a lot of them pretty quick, so I just kind of Yeah, yeah. Sit back for now, you know?
Yeah, well, you know, and that’s the thing is you’re gonna let them do their thing now. Like 10 might be enough for you, and that’s okay. Or 11 doors <laugh>, right? They’re doing their thing, they’re going up in value. You kind of set the stage for your long-term goals, so, amazing. Anyways, okay. I’m gonna ask you one last question then we’re gonna let you go. So what is one piece of advice you have for the listener, the kid, brother, or sister that you’re gonna put your arm around them and be like, Hey, this is one thing that I would love to tell you about your real estate journey or investing or starting. What would that piece of advice be?
I would just say that it’s not as scary as it seems. Find somebody like you or somebody somebody they can trust and, you know, show ’em the ropes in the beginning and just go ahead and dive in and try one and see how, what you think about it. I mean, it’s, it is not as scary as it seems. It can, it seems it can be
<Laugh>. So, great advice. You guys heard it from the guy who started investing from Georgia and he bought his first property in Pennsylvania. It’s not so scary. You guys, you can do this <laugh>. That’s right. <Laugh> amazing. It was so great catching up with you. And thank you for your time today on the show. And again, you guys listening, please check out the links in the show notes. I’m gonna have all this information for you, so I can’t wait to chat with you. Thanks again, Jefferson.
Thank you, Melissa.
Thank you so much, Jefferson and Melissa for sharing your experience investing in turnkey properties. That brings us to the end of today’s episode. If you haven’t subscribed yet, now is the perfect time so you don’t miss any upcoming episodes. We truly appreciate you spending your time with us. Thanks for listening, and we’ll see you in the next month.
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