Turning Their Basement Into a $4,500/Month Money Making Machine

Ashley:
This is the Real Estate Rookie, Episode 211.

Simon:
Really putting your head down and figuring out what you’re going to do and start doing it, and it’s not going to be easy at first. Nothing’s ever easy at first. We just got to dedicate time, dedicate time. Even if that means I’m not in a position to buy right now, that’s okay. Most people might not be. But if you start taking step one and step two and step three, the next thing you know it’s 2023, and now you have money saved up. Then you can start putting things into motion. For us, I think the important thing is it didn’t happen overnight, and success doesn’t happen overnight. It took a lot of dedication, a lot of reading, a lot of just researching, and ultimately just lining the ducks up for what we wanted to accomplish.

Ashley:
My name is Ashley Kehr, and I’m here with my co-host, Tony Robinson.

Tony:
Welcome to the Real Estate Rookie podcast where every week, twice a week, we bring you the inspiration, information, education, motivation you need to kick-start your real estate investing journey. I usually like to start the show by highlighting some folks from our real estate rookie community who have left some reviews for us on Apple and Spotify. Today’s review comes from, actually that’s a pretty crazy username, 1727738AHEB. I have no idea what that means.

Ashley:
You [inaudible 00:01:16] pronounce it.

Tony:
I wouldn’t even know. I wouldn’t even know. They said, “Great and informative and fun. Great podcast for beginners or seasoned pros discussing the ins and outs of real estate investing without the fluff. This duo was easy to listen to, and they keep things fun and light. Quickly becoming my favorite and has helped me jump in feet first.” So for those of you that are listening, if you haven’t yet, please you leave us an honest rating review on whatever platform you’re listening to. More reviews help us reach more people, and the goal here is to help as many people as we can. We definitely appreciate it. With the reviews out of the way, Ashley, let’s get into some boring banter. My favorite part of the show now, what’s new in your neck of the woods?

Ashley:
I’ve got a couple projects in rehab right now. I just got a text last night from a contractor. It was actually from a garbage removal company that went into my hoarder house. They sent five pictures. I was looking at the pictures, and the first picture was of a kitchen. I was like, “What is this?” I realized it was the same house. I didn’t even recognize it. Because the sink and the cabinets and the floor have been covered in so much stuff, I had no idea what the cabinets or the floor even looked like that I never even imagined it without everything on it. I was just in shock. So I can’t wait to actually go to the property, get some footy for some Instagram reels before and after. It’s just amazing. We haven’t even done any rehab, and it’s already went through this major transformation.

Tony:
How much did it cost to dump everything, do you know?

Ashley:
It was $3,900.

Tony:
That’s not bad.

Ashley:
No. I expected it to be at least over five grand, but it was $3,900. It’s 1,500 square feet I think the house is. It was just packed full with a path that went through the upstairs, tons of stuff. Then there was a garage. Then there was a little goat barn and then just some scrap and garbage scattered around the yard. They went in, and they brought their own dumpsters, everything, and hauled it all out.

Tony:
Wow. Well, hey, I’m excited to see the progress of the hoarder house. You got to keep us updated on the IG.

Ashley:
Yeah, yeah, I definitely will. What about you? What’s new with your projects?

Tony:
We’ve been doing some hiring, but we unfortunately lost some folks that we recently hired. I’ve hired two personal assistants since Memorial Day or early May, and we’ve lost them both. One, we had to let go just because it wasn’t quite the right fit. This replacement that we hired, she walked away from us because she felt that it wasn’t the right fit. So now we’re back to square one, trying to find another personal assistant. If you’re listening to this and you want to apply and you live somewhere near where I live, alphageekcapital.com/jobs. We’re looking for good people to help us grow this business out. We’re at the point where there’s a lot of things that we just can’t do anymore. I know I’ve always been bad with my phones and my text messages, but right now the little number icons on my phone, 332, and my text message bubble says 289. Then I’ve got another 300 unread emails. So my life is in shambles. I need some help. So if you’re interested, feel free to reach out and apply.

Ashley:
Here’s just a fair warning. When our producer, Erik, started, what, a year and a half ago on here, the first thing that he was told that Tony likes the room at, what, 72 degrees and red Skittles only in the candy dish. So make sure you guys know what you’re getting into before you apply.

Tony:
Yeah. I’m a bit of a diva behind scenes. I need my black shirts pressed a certain way.

Ashley:
I know exactly when we get off of this and we’re talking to Erik, he’s going to tell me that I was wrong, that it was actually 68 degrees or whatever. He’s going to know exactly what it was. Well, today we have a couple on the show. I feel like it’s been a while since we did two guests at once. We have Simon and Chrissy on. They are house hackers who actually turned their basement into a short-term rental.

Tony:
I love their story. Simon actually participated in the Short-Term Rental Bootcamp that I led earlier this year. From that bootcamp, he actually went out, took action, and got that first deal done. They talk a lot about their journey as a couple and how Simon was able to convince Chrissy that real estate investing was the right thing to do and some of those compromises that they made. They talk about how they were able to navigate the strict short-term rental policies in Denver. But most of all, and this is the thing that stood out to me, they use a basement unit to kind of kick-start their business. I was thinking, “Man, why doesn’t California have basements?” I was literally google searching on the side while we’re talking to them.

Ashley:
It’s earthquakes, right?

Tony:
That’s what I thought, but it’s a common misconception. It’s not because of the earthquakes.

Ashley:
Oh.

Tony:
I guess it’s because on the East Coast and some of these other places, the foundation, the joist going into the foundation will freeze if they’re not dug deep enough into the surface. So you have to dig deep on the East Coast anyway, so they have to build out that foundation and that basement to hold up the joist for the house. In California, because it’s so warm, it doesn’t freeze that low, so you don’t have to dig deep. Apparently, it’s really expensive to build out a basement. Anyway, I learned something new today because of Simon and Chrissy.

Ashley:
That’s interesting. Because there are houses around here that are on just concrete slabs or they have crawl spaces and stuff. So if you live on the East Coast, your house is better built if it has a basement [inaudible 00:07:02].

Tony:
Yeah, there you go. There you go.

Ashley:
Chrissy and Simon did the bootcamp that Tony hosted. There’s actually new bootcamps coming out this fall if you guys want to join them, but you have to hurry because the deadline is August 31st. So make sure you go to biggerpockets.com/classes.

Tony:
Simon and Chrissy, welcome to the Real Estate Rookie podcast. We are super excited to have you both. Chrissy, maybe you can start us off. Tell us a little bit about both of your backgrounds and what brought you guys here today.

Krissy:
Awesome. Well, like you said, my name is Chrissy. This is my partner, Simon. A little bit about us, we started our real estate investment journey back in, I don’t know, December 2021, which in reality, it started way before that with Simon being really interested in a part of the BiggerPockets community. Simon and I had been together for a while. He had been consistently telling me about BiggerPockets and all the different real estate investing opportunities and ways to learn about real estate investing and that he wanted to house hack. I said, “Okay, what is that?” and he told me all about house hacking, what that opportunity would look like. My first and initial thought to that was, “No way.” I feel like how I grew up when you envision buying and owning your first house, I wasn’t expecting other people to be living with me, and it was not something that I was even remotely excited about. So we talked about it and we kind of moved on.
Then some time went by, we talked about it some more. Simon started sending me a lot of books, a lot of resources, and started sharing, what felt to me, pie-in-the-sky stories about how our life could change and how cool this experience would be if we were to start getting into the real estate space. So long story short, he got me on board with it all. In the fall of 2021, we got connected to a Rockstar realtor who was in the short-term rental space. Through that, we found our first property in December 2021 and launched our first short-term rental in May 2022.

Tony:
Well, first congratulations to you both for getting that first property up and running. I want to go back to something that you said, Chrissy. You said Simon was feeding you stories that you felt like were pie in the sky. I’m curious. Why did you feel what those people were achieving was so out of reach for you guys?

Krissy:
Simon and I started this journey while still working full time. Simon works in sales, I do as well, sales and marketing. For me, I was like, “We have a full-time job. When are we going to be able to do this in our spare time?” He would so often send me Instagram stories or different people to follow about how they just started this journey in their spare time. Knowing Simon and I, I was like, “We don’t have a lot of spare time. What’s this going to look like?” So it just felt like something that was really out of reach for us. Slowly but surely, he started sending me information, I would feel like, in pieces, like step one, let’s learn about what this could be, step two.
Honestly, I would probably say one of our most important steps was finding a realtor that was in this space and had done it themselves. We had, like I mentioned, a Rockstar realtor with Good Neighbor Realty here in the Denver Metro area. Our realtor, she also had short-term rentals and was doing some real estate investing. So when we started this conversation with her, as much as you want to believe and trust in your partner that these crazy ideas are real, hearing it from someone else who had real-life, tangible examples about how they were living it made it a lot more comfortable for me, I would say.
Then when we started looking for homes, I felt like I had an okay vision for how this would work, but she really helps me bring it to the next level. When we were looking at properties, she was like, “All you have to do is move a door frame, add this here, here’s your lockout, here’s your Airbnb space.” I was like, “Okay, that doesn’t sound as crazy. It sounds achievable.” So I think, step one, building your team, so your realtor that can help you with your vision, I would say, was a huge starting point for our success.

Ashley:
Well, Chrissy, that’s great advice within the first five minutes of the episode right there. Simon, I want to hear why you wanted to do real estate, maybe your point of view, and what it was like trying to get Chrissy to come on board and why you didn’t just give up and be like, “You know what? It’s not for her. We’re not going to do it.”

Simon:
It was a process, and it didn’t just happened overnight. It happened throughout several years. I remember a few months ago I was just going through my notes on my phone on an airplane ride, and I found a note of the first time I listened to BiggerPockets Set for Life, reading it, I bought the book by Scott Trench, and wrote a note, “What is house hacking? Looking into house hacking.” This was back in 2018. So I’ve been a big fan of BiggerPockets. I had the opportunity to work at BiggerPockets and surround myself with the like-minded individuals. I really knew that what I wanted my life to look like was just have the freedom, not only for myself, for Chrissy, but for the family that we are trying to build. Really looking at it not from a short-term horizon, but at a long-term horizon of what are the steps that we need to make right now in order to set us up for success over the next 5, 10, 15 years.
We started living together about a year after we started dating. My initial plan was to buy a short-term rental in Orlando. I’m from Orlando, so I had boots on the ground in Orlando. Learning everything that Avery Carl has taught us and you guys have taught us is really just managing it long distance. That was going to be my initial plan. Chrissy was not on board for that. She was anxious about managing a property from long distance. She was anxious about not being able to touch it, feeling it. So after further consideration, we decided to not go that route.
Then I really had to sell her on the opportunity of, like, “Okay, well, if we’re not going to buy a house out of state, then this is what I want to do. I don’t want to buy…” I kept telling her this. I’m like, “We’re going to buy a home. We’re going to start a business. We’re not going to buy a home. We’re not going to buy our forever home. We’re going to start buying investment property in order to set us up for success and being able to really buy the house of her dreams in a few years.”
It took a lot of patience. I sent her a lot of videos, a lot of books, which she may or may not have read. But I think it ultimately just came down to trust. I remember one night after a couple drinks setting out a five-year plan of, like, “Hey, if these are the steps that we can take right now, this is what our life can look like in five years from now.” I think that’s really ultimately what brought her on board. It really just comes down to trust and me being knowledgeable about the space, about what we want it to look like, and she really had 100% confidence in my ability to make it happen.

Ashley:
Simon, I think what you did there where you actually wrote out the five-year plan and showed it to her, I think that helps so many people when they provide that visual as to like, “Okay, it’s just not me talking,” but putting it on paper so they can actually look at it. I think it makes it so much easier to digest because you can see the numbers, and you can see what’s happening. We’ve had a bunch of guests that have come on and showed that. That’s like with my husband when we were paying off debt, I’m like, “I want to do this Dave Ramsey thing. I want to get rid of all of our debt.” I made this whole Excel spreadsheet of just like, “Here’s how we’re going to do it.” He was like, “Okay. Yeah, actually, let’s do it,” after it took me so long to get him on board with that. But I think that’s great advice right there. Chrissy, what was the one thing that made you…? Was it that night for you, that five-year plan visualizing it, or was it multiple things?

Krissy:
Yes, definitely the five-year plan and seeing what that could look like was definitely helpful. But I also think it came with a set of compromises about what he really wanted to do and what I felt comfortable with. When we first started talking about Florida, the control freak in me was like, “Absolutely not.” I was like, “I have to be able to manage this. I can’t envision us doing this across the country.” So I think that’s where the first compromise came, and Simon said, “Okay, let’s do it locally.” That was probably our first big step towards getting aligned on this journey and taking that next step.
It’s kind of funny in hindsight. Because now that we’re actually doing it, I feel a little bit silly about being so against doing it across the country, because I’m like, “Oh, we got this now.” But I needed that ability to be able to live in the moment and check on things. So I think that’s where it comes with compromise and working with your partner to be like, “Okay, this is the vision. This is how you envision it. This is actually how I envision it. Where can we meet in the middle? Then we can get started.” I think deciding to do our first one locally was the big first step in that.

Tony:
Chrissy, you mentioned a couple things. I want to go back to one of them because I was feverishly scribbling as you were talking because it was a really profound thing that you said. When I asked about the pie-in-the-sky thing, you said that it just didn’t seem achievable, but you started to just try… Instead of focusing on this big, huge task, you were just like, “Okay, what is the next step that is achievable?” I think for anyone that’s trying to tackle any goal, that is such a phenomenal framework to apply to that journey. It’s like, “Yeah, if we’re working our day jobs, the idea of retiring and sipping piña coladas on the beach, that seems too far fetched.” But the idea of reading that first book or going to that meetup or buying a ticket to that conference, those are things that I know I can do. Once I’ve done that thing and I feel comfortable with it, what’s the next step? Maybe after I go to that meetup, maybe now I go talk to that agent. Now after I talk to that agent, maybe I go talk to a lender. And it all kind of starts to snowball.
I think for so many people I’m sure, Chrissy, were in the exact same situation as you where it felt unrealistic, or it felt like too big of a journey to take, but if you just really boil it down to the next step that you feel most comfortable and confident in, that’s how you continue to make progress. I don’t even know if you realize that you said something so profound, but that was an amazing, amazing thing.

Krissy:
No. I think that’s why Simon and I actually make incredible partners in the sense that Simon has the pie-in-the-sky vision. He has the vision and the dream that I never had. I don’t think I ever would’ve dreamed this for myself. My first step is, “What’s the action plan? What are we going to do? What’s step one? I need structure. I need all the details.” He’s like, “Well, we’ll just figure it out.” I’m like, “That’s not going to work for me.” I needed the details.
Like you said, biting off as much as you can chew in the moment probably would be my best advice because that’s what we did. When I thought big picture, I was like, “No way.” Then when I thought, “Okay, fine.” Literally, step one for me is, like, “Fine. I’ll start following real estate investors on Instagram. They can come up in my feed. I’ll start to see what they’re chatting about. I’ll watch their stories, and I will get comfortable with this.” Then more and more, we went to a meetup, we started talking to other people, and they just were like, “Oh, yeah. You got this. This is not that hard.” I was like, “Okay. Yeah, we got this.” I started with those meetups. I will say, I started seeing other people like us and how they were achieving it, which also made me feel more comfortable. Then, like you said, that’s when the snowball effect happened where we started talking to a realtor, we got lending and everything going, and then here we are.

Ashley:
Along those lines of those steps that you did going to the meetups, looking at different resources, were there any other tools or things that you did that gave you that extra confidence to like, “Okay, we are ready. We can do this”?

Krissy:
For me, I would say that’s where I leaned on my partner. I know we talked about this earlier, how he’d give me a bunch of books. I did not read them. I was like, “I don’t have time for this.” Basically, I told Simon earlier, I have to say I started following Sarah’s Instagram, and I was like, “Okay, this is getting me on board. I like this. I like her. I like the vibe of this. This is all really going forward.” I just started consuming knowledge in places that I know I’d be receptive to. So I would read blogs. I would google things. I knew sitting down and reading a big book about real estate investing probably wasn’t going to be how I would feel the most connected to this. But Simon did that work, and that’s where I think partnerships come into play. So he had all of the details that I probably wasn’t so sure about.
Then I would say networking is huge. I know that networking will probably take our business, as we look at more opportunities going forward, to the next level. But I will say that talking to people that are similar in age to you, similar experiences, similar places in their career and learning how they’re doing it, I would probably say was the biggest factor in beginning to have a vision for us achieving this.

Tony:
Chrissy, I want to give you a thank you for shouting out my wife, Sarah. If you guys aren’t following her on Instagram, it’s @saraaraad. Obviously, she talks everything short-term rentals, but she’s also a bit of a character, so you guys will get a laugh. You can get some fun.

Krissy:
Definite, you should follow. It’s a great. It’s entertaining. It makes you feel awesome. I love it.

Ashley:
She’s not a character, Tony. She is the main character [inaudible 00:21:33].

Tony:
That is it. She’s the leading lady.

Ashley:
Simon, what about you? Obviously, you had been learning about real estate. You had the opportunity to work with people at BiggerPockets. What were the things that really helped you decide, “Okay, I know I can analyze a deal. I know how I’m going to manage it,” things like that?

Simon:
A couple things. Number one is you just got to start somewhere. A lot of people get paralysis by analysis. They just start looking at properties on Redfin, on Zillow, and they never start making progress. So I think the first thing is dedicate some time, dedicate your weekends, read some books, figure out a strategy, what are you going to do, but also figure out what works for you. For us, it was short-term rentals here in Denver. Other people in other markets, that strategy might not work. So you have to really figure out, what do you want to do, and what are the steps that you need to take?
Something that was very valuable for us is we were part of the Short-Term Rental Bootcamp that kicked off earlier this year. It’s one thing to watch videos and figure out how to analyze properties, BiggerPockets has a lot of tools out there, but it’s invaluable for someone to walk you through the actual steps of this is how you find a deal. These are the tools that you need to take. This is what you need to be watching out for, and this is the red flags that you need to also be looking out for. So I think just really putting your head down and figuring out what you’re going to do and start doing it.
It’s not going to be easy at first. Nothing’s ever easy at first, but you just got to dedicate time, dedicate time. Even if that means I’m not in a position to buy right now. That’s okay. Most people might not be. But if you start taking step one and step two and step three, the next thing you know it’s 2023, and now you have money saved up. Then you can start putting things into motion. For us, I think the important thing is it didn’t happen overnight, and success doesn’t happen overnight. It took a lot of dedication, a lot of reading, a lot of just researching, and ultimately just lining the ducks up for what we wanted to accomplish.

Ashley:
That’s awesome, Simon. I’ve been fortunate enough to teach a couple of the bootcamp classes, but not the short-term rental one. Tony, you were the instructor for this one, right?

Tony:
I was. I was. I’m always super happy to see when folks who attended the bootcamp actually go out and use that knowledge that we share, man. So love to hear it.

Ashley:
After you guys have learned as much as you could, you’ve found your team, built your team, what about the other parts of managing a short-term rental? Did you go ahead and find those people, like a cleaner, a handyman, before you got your deal? Or did you close on the property, get it ready, and then you’re like, “Oh, wait. We need these other people”? Or maybe you guys are doing it yourself. What did that look like?

Simon:
I can take this one. I think there’s only so much reading, so much learning that you can do, but it just comes down to, like, “Hey, let’s make an offer.” It got accepted the same day, which we were extremely lucky. We closed on the property on December 1st, but we actually didn’t move in until February 1st because the sellers were doing a rent-back. They were building a new home that was under construction that was delayed, so it gave us some time in between getting it started. Then once we got started, we found there was a lot more things going on with the house than we were aware of initially, and it took a lot of time. We moved in on February 1st. I was like, “All right, Chrissy, March 1st, we’re getting this thing up and started.” Then it was April 1st. Then it was May 1st. Finally by May 24th, we got it up… No, it was May 19th. We got it up on Airbnb. 30 minutes later we got our first booking.

Tony:
Wow, congratulations. That’s amazing.

Krissy:
Yeah.

Simon:
Thank you.

Tony:
That first booking is always the most memorable. I always tell this, but it’s almost like a gambling feeling or something. There’s this high that comes in every time your phone chimes and that booking comes in and you see the booking amount. It’s unlike anything that I’ve experienced.

Simon:
The first one was awesome. Even now, when we still get it every day, now it’s even better because it’s like… For me, I was like, I got Chrissy on board. I had her to believe on me, but I was still like, “I hope this works. She’s trusting me with all this. I hope I’m making the right decision.” Then, ultimately now, we got it listed in May. June and July, we were almost 100% occupancy, and it’s booked through October now. It’s just our basement downstairs. It’s been a phenomenal journey, and we’re just getting started.
Going back to what you asked, Ashley, it was a journey. As Chrissy mentioned, we both work full-time jobs. The last thing you want to do after working eight, nine, ten hours in your W2 is heading down to the basement and paint and build furniture and get things started. We tried to do most of it ourselves, but there were a couple projects that we needed to outsource. So we found a really good painter who painted our entire thing. We had to install egress windows to make it official for legality reasons. Then we built a door separating our kitchen from the downstairs to really split the units. Everything else we did ourselves, and it was just a lot of building furniture. I think our go-to places was Target, her favorite, HomeGoods, Ikea, and Hobby Lobby.

Krissy:
Amazon.

Tony:
Amazon.

Ashley:
Well, that’s Tony’s favorite thing to do is to build furniture. I know that from watching all the Instagram reels that are made in building furniture. I want to ask real quick about… You talked about putting in the egress windows. Can you just explain exactly what that is for anyone that doesn’t know? Then how you found out that you actually needed that and any other things that maybe weren’t up to code or needed to be. Even the short-term rental laws in your area, where did you have to go to learn those things?

Simon:
I’ll take the regulations in Arvada, and then you can take the egress windows. We did a lot of research by the short-term rental regulations in Denver. The way that it works in Denver, in the city of Denver, you cannot have Airbnbs that are not your primary resident, so they must be owner-occupied. We knew that our goal was not to just buy a property, live in it forever. We wanted to buy a property, put it on Airbnb, and then a year later move out of that property and do it all over again.
We learned by really just calling the city, relying on our realtor, that we found Arvada is a close city about 10 minutes west of Denver near the mountains, that you can have up to three non-owner-occupied short-term rental properties. So we identified a couple of other cities. It was Arvada and Wheat Ridge, basically, that it came down to. I was like, “Okay, this is where we’re going to focus our search. That is a no-brainer. We’re not going to buy properties in Denver. It must be in Arvada.” So that’s how we chose the location.
It just comes down to calling the city and having conversations with the public officials. BiggerPockets has great, great content. You can do a lot of research, and lot of people are constantly talking about the short-term rental market as well. But really just picking up the phone and calling. People can’t be afraid to do that. Call the county, call the city, speak to people, learn the regulations.
Also going back to what Chrissy said earlier is rely on a really good real estate agent. I think that’s the number one thing that first-time home buyers make a decision, a mistake that they might make is not going with the best agent that meets their needs. For us, we want to find someone that specializes in short-term rentals, that specializes in house hacks. We found someone that not only specializes in these strategies, but she has gone through the process herself, and she has been successful. She’s on her third, maybe even fourth property by now, and she knows all the regulations. So we really relied on her for advice in regards to what city we’re going to be buying the property. I’ll let Chrissy talk on the egress windows.

Krissy:
As Simon mentioned, we Airbnb our basement. Egress windows are windows in a basement that someone could exit, they could go out of. Our Airbnb is a three-bedroom Airbnb. When we purchased the house, it had a single egress window downstairs, which I believe does meet Airbnb’s requirements for the square footage in this space for having a single egress window.
But for me, when I was looking at this space, I was coming at it at at a point of experience. If I was staying in a basement, what type of natural lighting could there be? How could I feel the most safe and comfortable? I grew up in New Mexico where basements really aren’t a thing, so the thought of staying in a basement on an Airbnb, I was like, “Does that make me feel trapped downstairs? How can we make this space feel the most accessible to people?” For me, I was like, “We need these windows.”
So we looked at our budget and what we had planned, and we decided that this would be a priority for us, when building out our space, would be to add these windows. So not only does it add value to our Airbnb, but it adds value to our overall property. When we go to resell this house, if that is something we do years down the road, having those egress windows down in those other bedrooms make them full bedrooms with Colorado regulations. That was also important to us. How do we invest in the short term for our short-term rental but also in our overall property?

Tony:
Just one follow-up question, just for folks that aren’t familiar with egress windows, what does it cost to add an egress window to a basement unit?

Ashley:
Each window was about $4,000.

Tony:
That’s not too bad because you literally have to cut into the side of the home if there was no egress there before.

Krissy:
Right. We have a brick home, so they were going through brick and cement to get in there. The one thing that I will also say, a hidden plus that came out of our egress windows, is Simon and I are both pretty chatty people. So when we met the people who were doing our egress windows, we were telling them what we were doing, and we were telling them about how we have these other projects. They were like, “Oh, yeah. We could build a doorframe for you guys.” We were like, “Excellent.” I think that was kind of the snowball start of continuing to build our network when it came to people. Technically, they were an egress window company, but they also had the skills to do other things. We liked them. We trusted their work. We thought they gave us a fair price when we were comparing it to other things. So we were like, “Absolutely. When you have time next Saturday afternoon, you can come build our doorframe for us.
I would also say, too, Ashley, going back to your earlier question about building our network and choosing our cleaners and stuff, we started with one cleaner and it didn’t quite work out, but we started talking and connecting to these cleaners and were able to keep another team member who’s now become our lead cleaner. So I think, for us, it’s been really helpful to just connect with the people that are supporting us with our business. Whenever we’re here, we go down and we talk to them. We ask them how it’s going. Are we supplying everything they need? Do they have any suggestions for us? Are they seeing things that we’re not seeing? Because we don’t always look at the property every time they turn it over.
We, this summer, went out of the country for a couple weeks, and we had two or three same-day turnovers while we were gone. I was a nervous wreck. I was like, “Oh my gosh, same-day turnovers.” I’m like, “Not only am I not here to double check everything, but to also be in the same place to do it.” Everything went seamlessly. I think after the first one, because we trusted and we were so well connected to the people that were supporting us through this, that it was a pretty seamless process for us.

Tony:
I want to talk about how you two split up the duties between you. But before we do, since you mentioned cleaners and the important role that they play, Simon, maybe if you can walk us through, who is on your short-term rental team, and how did you guys go about finding those folks and vetting them to make sure they’d be able to do a good job?

Simon:
We’ve gone through a few handymen. We actually haven’t used them since launching our Airbnb, but I decided at first, I was like, I don’t want to just pick one. I want to have multiple so we can have multiple resources when and if the time comes. I would say the only person in our team besides Chrissy and I right now is our cleaner. How did I find these people? I joined Facebook groups, I used Nextdoor, and I just asked questions. I was not afraid to just pick up the phone and call people. I come from a long sales background. I’ve been in sales my entire career, and I’m not afraid of just picking up the phone and calling whether it’s a plumber, whether it’s a handyman, whether it’s a cleaner and having them come to the house. We can interview them, walk us through their process, and just speaking with a lot of people and networking.

Krissy:
I have one quick thing to add with that, we also started with small projects. So when we found a handyman, we’d say, “Hey, can you do this one thing?” If that one thing went really well, we were like, “Okay, great. Here’s the 32 other thousand things that we need done.” So I think that helped us feel confident in them, and I think it just helps to build that partnership. We take this in steps. Let’s take this in step with our partnerships as well.

Tony:
One follow up to that. I’m so glad you mentioned starting with the small things. I was thinking about this when you were talking about the rehab and the egress company. The same thing happened to us in Joshua Tree. When we first found our rehab crew out there, the first thing they did for us was they built an outdoor pergola, and that’s all we needed them for. They built a pergola in our backyard for one of our properties. Then something broke at the property and our regular handyman wasn’t available. We’re like, “Hey, would you mind? Are you able to go and fix this?” He’s like, “Yeah, for sure, I can go fix it, whatever.” And he knocked it out.
Then I think something bigger ended up happening. We wanted to like replace some cabinets or something. We were like, “Hey, can you replace cabinets?” He was like, “Yeah, I can replace cabinets.” We just started progressively asking for bigger things. We were like, “Well, is there anything that you can’t do?” He was like, “No. I was actually a home builder for 30 years, so I can pretty much do anything inside of a property.” It’s crazy to think now. I would probably lead with that if I was him, but he was just doing whatever we needed him to do. My point is is you never know what people are capable of doing unless you ask and you give them that opportunity to show and prove. So I’m glad you guys found the benefit from that in your business as well.

Simon:
It just comes down to just treating them like a human and asking questions, like, feel them, welcome. They’re on your team. Your success is depending on their work, so just being grateful for anyone that comes and helps us. Then asking those questions. It’s like, “Hey, what, what else can you help us with? Or if you can’t do X, maybe you connect us with someone that can do it.” That’s really how you’re supposed to build your team.

Ashley:
I want to ask something about doing it in the basement, so doing a remodel in the basement. How was it? Was there already plumbing down there? Did you have to add in a pump for the toilet? Then also, what about your laundry? I know in New York here, a lot of houses have basements. That’s where a lot of people’s laundry is actually located in the basement. Did you guys have to relocate that or anything?

Simon:
For us, the basement was already furnished. There’s three-

Krissy:
Finished.

Simon:
Oh, yeah. Finished, not furnished. It’s already finished. There’s three bedrooms down there and one full bathroom. The laundry is a little bit of a problem. I’ll let Chrissy talk on this because she’s very passionate about this subject.

Krissy:
Like Simon said, our basement was already finished. The only, I would say besides the window, big improvement was we didn’t really have a kitchenette down there. So we were building out the refrigerator or the microwave, and we were going through different things. Then we were like, “If someone was to need to wash something, where would they go? The bathroom?” We’re like, “That’s weird.” Like Simon said, our washer and dryer is downstairs, and it’s in a locked-out room. We were really lucky that we could put a little kitchenette up against that wall and run the pipe through the laundry room.
We actually lock out our laundry room and don’t let our guests use it. I jokingly say it’s the laundry room of death because it’s not finished. There’s pipes and ceilings. From a safety and a liability standpoint, that just something I wasn’t interested in doing. So far, it hasn’t been a problem at all with our guests needing to use the laundry.
For us, it takes planning. Sometimes that planning can get frustrating because we’ve gone two or three weeks where we’ve been at full capacity. Usually it’s they’ve checked out at 11:00, run downstairs, and throw your laundry in. We’re going to be flipping the sheets. For the way we’re doing it and the minimal access to our washer and dryer, I will say when we were first starting to read about how many sets of sheets we should have, how many sets of towels and stuff, I was reading double was around best practice. So that’s how we started. Then knowing our constraints around the washer and dryer, we went ahead and bumped everything up to three sets, which has been really good for us. So if we aren’t able to finish everything before a new guest checks in, we can do that.
But it really just comes down to capacity planning. If we know there’s a two-day gap, it’s go-time on the laundry front for us personally as well as getting bedspreads, sheets even more done. A couple times we’ve had to go to a laundromat. We just tell ourselves, the cost of our time to spend two hours at a laundromat, because you can put in six loads at a single time, is definitely an opportunity cost we’re willing to be a part of for this Airbnb.

Simon:
I’ll be honest. One of my favorite things about running the Airbnb is finding an excuse to not do laundry and just taking it to the laundromat and picking it back up. Just treating it like an operating expense.

Krissy:
Oh, lordy. We disagree about that. I’m like, “You can wait.”

Ashley:
My only active short-term rental right now is an Airbnb Arbitrage. It’s in an apartment complex. They have laundry rooms there, but they’re very small washer and dryers. You basically have to take over the whole laundry room to do all the sheets and bedding and towels and stuff. My business partner on that short-term rental actually owns a laundromat around the corner. So our cleaner actually takes it to the laundromat, throws them all into things, cleans it while it’s going in the wash. When she’s done cleaning, goes back and throws it into the dryer, and then will come back and get everything and have the second set done for when somebody comes in. But it’s definitely so much easier, I think, taking it to the laundromat and just using only two washers instead of having to use a whole bunch of them or doing multiple loads, I guess.

Krissy:
Absolutely. I will say when the time comes that we move probably out from the upstairs and decide to Airbnb the entire property versus just the basement, we’ll probably have to think through a little bit more on the laundry front because it can be a lot. But I will say, definitely recommend the multiple sets of things. I thought that at first I was like, “Why do I need so many things?” Now I’m like, “Oh, this is fantastic.” You never know when something might get ruined as well. It’s just so much easier to just move on and pull up your extras and do an Amazon order like it’s part of the business, and it’s okay. It definitely a little takes a little bit more navigating than we thought, but it’s worth it.

Ashley:
I want to ask about that. You mentioned that when you move out of the upstairs, if you were to Airbnb it, are you able to do that since it’s not going to be your primary, or since it was your primary at one time, you can?

Simon:
We can certainly do so. That’s why we bought it in Arvada. In Arvada, you can have up to three non-primary short-term rentals. So that was a leading indicator as to why we’re going to purchase property in Arvada and not the city of Denver. So that is our plan to purchase a new home next spring.

Ashley:
And do it all over again.

Simon:
Do it all over again.

Ashley:
Yay.

Simon:
Learn from our mistakes, learn how to budget a little bit better. Also, the opportunity from a revenue standpoint, it can essentially nearly double our revenue because it goes from being able to sleep a maximum of six to potentially 12 guests and open up the entire upstairs and downstairs.

Tony:
And the revenue you’ll get from your second-

Simon:
Exactly.

Tony:
… Airbnb house hack, so it’s almost like a 1.5 or 2.5 increase because you’re doubling it and some.

Simon:
Yeah.

Ashley:
Well, we want to go into the numbers of this property. We’ve talked a lot about what it is and what you’ve done with it. What was the purchase price of this? It was on the MLS, correct, and you used your agent to buy it. That was the deal source.

Simon:
Yep. It was on the MLS. On a Saturday, we saw four properties. We really like two, and we ultimately went with this one. We bought it with a conventional loan of 5% down, and the home price was $575,000.

Tony:
So it was only one Saturday. So you guys only looked at four properties, and out of those… Oh, okay, all right. It was just one of the Saturdays that you guys were out shopping you found this one.

Krissy:
Oh, I guess we did two or three Saturdays. So this was probably our eighth or ninth property that we saw before we made the decision for it. For me, I was really big on location. We, obviously, both had been living in Denver city for years, and I loved it. So moving super far out to make sure that we were in a place that allowed us this flexibility with Airbnb wasn’t something that I was super thrilled about. I was like, “I want to stay in Denver.” But now knowing how close we are and the experience of the area that we chose that we can give our guests as well as ourselves, it’s almost like I can’t imagine living anywhere else.

Ashley:
Could you explain the conventional loan? Because usually when you hear conventional loan, you hear 20% down, and if you want 3.5% or 5% down, it’s FHA. So can you explain where you found this at a bank? I know my sister got pre-approved for this loan, too. I was like, “Wait, you can do that, only 5% down on a conventional?” So maybe you can explain how you found that loan and where you got it from and the benefits of going with the conventional compared to the FHA.

Krissy:
When we first decided that we were going to do this, we thought about our financing and how we were going to be able to tackle it. Neither of us have been homeowners before, so we definitely wanted to leverage that first-time home buyer opportunity here in Colorado. So we sat down and said, “What would make the most sense for us? Should we do this property together? Should we take it in pieces? Should we do it separately? How can we begin thinking about this in the long term?” So when we decided to do this property, we decided that we were going to go at it together, but only put it in one of our names in order for us to qualify for that first-time home buyer opportunity. That is how we tackled this one together and got started in this space. It’s been good for us in the sense that we thought about it from the standpoint is leverage the things that you have access to.
We definitely are first-time home buyers. We aren’t two people that have a ton of cash. We’ve been saving really hard for these opportunities. So that’s where we said, “How can we divide and conquer, but then also conquer together?” So that made that decision for me to use my first-time home buyer opportunity on this property. Then the next one we go to will be where Simon uses his first-time home buyer opportunity for us. Then eventually when we get married in October of 2023, then we will combine everything together.
I think at least when dividing and conquering and looking at our investments and our finances, I always just thought, “Of course, we would do this together. We’re partners. We’re getting married. Like, of course.” I think we kind of took a step back and said, “What actually are all of our options?” We’re 100% not only committed to each other, but to building this together. Let’s make sure that we leverage everything that we have access to because we’re young. We’re starting from scratch. We’re pretty green in all this. So definitely doing our homework and also talking, not only talking, finding a lender that will a) lend to you is the first part, but b) that you trust and you build a relationship, too. I feel like everything goes back to building that relationship.
This was the first time we purchased a home. We sat down with our lender, and I said, “I have a stack of questions. Half of them are probably dumb, but I’m just going to throw them out here about how this works,” and just be brave enough to ask them. By the end of this, taking on a $575,000 mortgage didn’t seem as scary as it did in the beginning when I was like, “Oh my God, no way.” So I think it literally goes back down to that relationship building. We still talk to our lender. He still checks in with us, gives us updates on our property, asks us about our next one. He is definitely someone we will go back to for future properties, and he’s someone who we valued his perspective and his opinions as well.

Tony:
Chrissy, I’m so glad you mentioned that story about asking all those questions to the lender because a lot of times what drives fear is a lack of knowledge, and the fastest and easiest way to overcome that fear is to increase the amount of knowledge you have in that given subject. For new investors, if you’re not doing what Chrissy and Simon did where you’re sitting down with your agent and you’re asking them all the questions, even the ones you think that are dumb, or you’re not sitting down with your lender and asking them the questions, your property manager, whoever it is, those are the things you need to do especially at the beginning to overcome some of that fear.
Just a really quick side note, when we were trying to get Sarah on board with some stuff we were doing, I literally picked up the phone and called my lender and said, “Here, just ask the questions that you’re thinking of. That way you’re not just hearing it from me.” So it’s a really good way to get your spouse on board, too.
Before we wrap up talking about the deal, I want to just go into the cash flow numbers. You guys have had this property for a couple of months now. What kind of revenue is your short-term rental unit bringing in for you guys on average?

Simon:
We listed it on May 19th. June and July is $4,500 each month-

Tony:
Wow.

Simon:
… so $4,500 a month. That being said, June and July are the busiest seasons for it. But it’s already really excited to see that we have bookings through September through October. So really excited to see how this plays out over the next few months as we head into the winter season.

Tony:
Again, the goal of a house hack is to offset your mortgage. I would assume at $575,000, 5% down, the Airbnb’s probably covering all of your mortgage, or if not, pretty, pretty darn close to it. So as a house hack, I would say this is really successful.

Simon:
The mortgage was a 30-year mortgage. Our mortgage is at 27, so we are cash flowing right around 15, $2,000 after paying the cleaner. That’s really our biggest expense.

Tony:
You’re getting paid to live at home.

Krissy:
Yeah, it’s great.

Ashley:
We’re going to go onto our rookie request line segment. This is where anyone can call in at 1-888-5ROOKIE and leave us a voicemail, and we may play it on the show for a guest to hear. Today’s question is, “Hi. I’m a rookie investor from New Jersey. My girlfriend and I are looking to buy a house hack soon. My question is, what should we be asking an agent so we can purchase the right home for us?”

Simon:
Hey, Ju Yun. Thank you so much for your question and congratulations on taking the first step. I think what I’ll say, before asking your agent, is figuring out what you want to do, what strategy you want to pursue and what works in New Jersey. My second point would be to leverage the BiggerPockets agent finder. They have a large network of agents who specialize in working with investors. These agents are typically investors in their own markets. They understand what works, what doesn’t. They understand the regulations. They understand the strategies. They’re really able to give you detailed information about what may work in New Jersey. Because my assumption is going to be that what works for us here in Denver may not work in New Jersey. I’m sure the short-term rental regulations are different. Our long-term goals might be different than your long-term goals. So really just figuring out your why, but also finding an agent that really understands the market.

Krissy:
The only thing that I would add to that from a much simpler level, like I said, Simon’s the vision and I’m the “How do we make this happen?” is bring your realtor into your vision and ask the question as simple as when you’re looking at properties of, “How would this work?” That was my favorite question to ask our realtor. Your realtor has probably seen thousands of properties. They will probably have a vision for a property where, if you move this door or add that, here’s your lockout, here’s your house hack, here’s your Airbnb. Starting from scratch, I didn’t see it, but I had a realtor who did, and I asked the question, “Okay, I like this property. I like the neighborhood. I like the kitchen back splash. How will this work?” Leaning on them to answer that simple question might almost be one of your most important questions.

Tony:
I’m going to take us now, guys, to our rookie exam. Thanks for answering that beautiful question from Ju Yun. I’m sure they really appreciate that. Are you guys ready for the rookie exam?

Krissy:
We hope so.

Simon:
Yeah.

Tony:
We’ll go question by question, so you guys can take one… Simon, maybe you take the first one. Chrissy, you can take the second one. You guys can both maybe answer the last one together. Question number one, again, Simon, we’ll point this at you, what’s one actionable thing rookies should do after listening to this episode?

Simon:
Create a BiggerPockets account, set up your keyword alerts, and start networking with people. Don’t be afraid to ask questions, and don’t be afraid to engage with people who have already done what you’re doing and just get comfortable at being uncomfortable.

Ashley:
I think that’s the first person to ever recommend on here to set up those keywords in the forums. You know what? That is not talked about enough because that was what I did, too. Like, anything with Buffalo, anything with seller financing. Those are my original keyword alerts that would come in. Yeah, it is so interesting. You’ll get the ping of the email where somebody’s talking about this. You can go in and see what’s going on because there are so many forum posts in there, and this makes it like you get to see what’s happening as people are going through the forum conversation because you’re alerted about it. So that’s an awesome tip.

Simon:
There’s so much valuable information on BiggerPockets. Start with the keyword alerts. My favorite is setting up location keyword alerts so at least you have an understanding of the conversations that are being had about your market or the market that you’re interested in purchasing your property in.

Ashley:
Chrissy, what about you?

Krissy:
Probably very similar to Simon. I would say surround yourself with information that you know will be receptive to. So I think for me, like I said, today, if you’re interested in this, do something as simple as follow five people on Instagram who are doing it. I know everything that you see on Instagram isn’t real life. You will build furniture together, and you will cry, and it will be tough, but then you will build furniture together and have beautiful pictures for your Airbnb listing. So you’ll get both. But I would say start to open your lens and see people doing it and start to see the small things. Then, like I said, day by day, follow by follow, it will start to feel more achievable. So just baby steps. There’s nothing wrong with baby steps.

Ashley:
The next question, what is one tool, software, app, or system in your business that you guys use?

Simon:
Hospitable. We use Hospitable to manage guest communications automations when they’re checking in, when they request an inquiry, when they arrive, when they check out. It also sends automatic notifications to our cleaner. She has her calendar synced to our Airbnb calendar, so as soon as there’s a booking, it automatically pops up on her calendar. It just makes our life so much easier. I’ve said this to my friends and I’ll say it before, for us, for this business, our house right now, the hard part is already done. The hard part of finding a property, building it, building furniture, that is hard. For us now, it’s just texting people through Airbnb. Hospitable makes it so much easier for us so that we don’t constantly have to be looking at our phone when there’s a new inquiry, when there’s a new message, or communicating information with our cleaner.

Tony:
Hospitable is great.

Krissy:
100% agree. It’s forget it, forget it, and leave it. Like I said, also getting comfortable with it. When Simon first told me we were going to automate everything, but I was like, “Well, what if I need to talk to them? What if there’s a one-off situation and they need to hear from me?” He was like, “No, that’s too much work.” Now we’ve done the “set it and forget it” with Hospitable, and it’s been incredible. Of course, there’s those couple of moments where they ask a specific question and they might get an automated response, and then you respond back to them. Nobody has ever said anything. They’ve been like, “Okay, sounds great.” So 100% recommend it.

Tony:
Last question for you both. Where do you plan on being in five years? Chrissy, I want to start with you because I know you were the one that was a little bit more hesitant to begin with. So I’m curious how that’s changed over this journey that you’ve been on.

Krissy:
In five years from now, I see Simon and I close to in our forever home with non-downstairs friends living with us and multiple other properties. So our five-year plan is definitely us being in a home on our own, and then keeping the current house we’re in fully on Airbnb and hopefully having at least two or three other properties. I don’t know. We’ve talked about, like, “Could this be the future where this, one day, becomes our full-time jobs?” Potentially. But also, Simon and I really like our careers. We like what we’re doing work-wise, and balancing this in addition to all of that has been really exciting for us. We also might have a family by then, so we might have a totally different perspective on balancing all these different things. But for now, it’s definitely in our own home, not being on Airbnb five years from now, and hopefully a couple properties in addition to it.

Simon:
Yeah, that was a good, good answer. I think for me it’s having a lot of income-producing properties, Airbnbs, and leveraging that money, leveraging that income to buy more passive investments. For me, I just want to be financially free. I don’t want to rely on my W2 job, and I want to have multiple properties. Especially now in our line of work where remote working, working from home is going to be probably a forever thing, I see ourselves having properties all over the country, in Florida, possibly even in Colombia, my home country, and being able to work from wherever we want in our properties so that they’re not only a business but that we’re also leveraging them for our own personal use and being able to retire from the W2 and really managing the Airbnbs, managing our investments, and potentially getting into other investments.

Tony:
Love that. I’m sure with the projection that you guys are on, the path you guys are on, you’ll more than easily get there. So it’s [inaudible 00:59:16] to have you guys back on one day and you can tell us all about your Airbnbs in Colombia.

Krissy:
I love it.

Tony:
Before we wrap things up, I just want to give a quick shout out to this week’s Rookie Rockstar. If you’d like to get highlighted as a Rookie Rockstar, get active in the BiggerPockets’ forums, Real Estate Rookie Facebook group, or [inaudible 00:59:32] Ashley’s DMs. This week’s Rookie Rockstar is Scott Alair from Ontario, Canada. I like Scott’s post. He posted this in the Real Estate Rookie Facebook group. The first thing Scott said, before he even told his story, he said, “I will become a millionaire one day, and for some reason, I can say it confidently knowing there’s a path to get me there. I’m sure anyone can if they can just get out of their comfort zone.” So Scott, way to set the bar high for people.
Scott said that he bought a property with a 5% down payment. It was one of the best decisions he made. He bought the property during COVID, early 2020, and he put about $22,000 into the property, refinanced a few months later, and pulled out $21,000. So he is only got 1,000 bucks left in the deal. Since then, he’s gained over 20% in equity, which is about 50 grand, which he said is more than he’s ever even made at a job. So Scott, congratulations to you. Excited to see you one day hit that millionaire status.

Ashley:
That is so cool, Scott, and thanks for the little bit of advice and motivation, too, at the beginning for everyone listening and congratulations on that deal. Simon and Chrissy, where can everyone find out some more information about you guys and reach out to you?

Simon:
We are both active on Instagram, on BiggerPockets. You can find us on Instagram. I’m sure, Tony and Ashley, if you want to put our handles on the show notes. Also on BiggerPockets, I’ll put my link on there as well. Feel free to ask us any questions you have whether or not you’re looking at buying a short-term rental or any other different strategies. I think it really just comes down to communicating and learning for people that have already done it. We would be more than happy to answer any of your questions, hop on a quick call, and share further details that you may have.

Ashley:
Well, thank you guys so much.

Krissy:
Thank you so much for having us. We were super excited, a little nervous to share our story because, definitely, we don’t see ourselves as experts by any means, so we’re coming on this podcast truly as rookies. We took step one. We did the first property. So hopefully the next time we talk to you guys, we might not be full-blown rookies anymore.

Ashley:
Well, Chrissy, within the first five minutes, you were already giving away great advice so-

Tony:
Totally.

Ashley:
… [inaudible 01:01:44] yourself.

Tony:
I just want to add one thing onto that really quick before we wrap. So many people who only have one deal oftentimes sell themselves short in terms of how much knowledge they have towards the person that has zero deals. So if someone who’s never done an Airbnb or short-term rental or any kind of investment property before, if they came to you and said, “Tell me what you know about Airbnbs and real estate investing,” you will blow their minds. So don’t sell yourself short. You guys, obviously, maybe you don’t have a massive portfolio, but you guys do have a lot of experience. You’ve gone through the process. You know what you’re doing. So excited for you guys to keep growing.

Simon:
I was just going to give you guys a shout out. We love the show. We listen to it all the time. Just keep doing what you’re doing because it’s helped us tremendously as we get started and continue to expand and grow into the business that we have right now and what we hope to be in the near future.

Ashley:
Well, thank you so much. We really appreciate that. I think having guests on who have just done one deal are some of our most important and valuable guests because it is so fresh in your mind as to how you got that deal and what you’re doing right now. I think that is tremendous value. Sometimes when you have these experts on, they forget those little tiny details, those little things that actually made a huge impact on getting that first deal. So thank you guys so much for coming on and sharing your story with us.

Krissy:
Thank you for having us. This has been great. Hopefully, we can inspire another couple like us. I know, like you said, it’s like, being able to listen to people that are like-minded, not only like-minded, but you’re like, “Oh, we’re like them. We don’t have enough money for a bunch of properties, but we can tackle this first one.” I always think that’s really, really helpful to just hear from people where you’re like, “Okay, we’re on a similar playing field.”

Ashley:
Well, thank you everyone for listening to this week’s Real Estate Rookie podcast. We will be back on Saturday with the Rookie Reply. I’m Ashley @WealthFromRentals, and he’s Tony @TonyJRobinson. We’ll see you guys next time. (singing)