From $40K in Debt to 4 Properties and How to Snag a Low Mortgage Rate in 2023


Low mortgage rates, sneaky homebuying strategies, and getting into (and out of) debt, Lindsey Iskierka‘s story has it all. As the lead real estate agent on the SoCal David Greene team, Lindsey is in the thick of real estate day in and day out. But she’s not just helping others buy and sell homes, she also boasts a respectable rental property portfolio, with four units sprawled out across the states in three completely different markets. And even though Lindsey is in the real estate game now, it wasn’t always this way.

Back in 2015, Lindsey wasn’t making much after getting her grad degree. With her husband interested in real estate, they decided to go to a seminar, which later turned into a $40K debt they had to climb their way out of. Lindsey decided to get her real estate license to not only help pay off this debt but save enough to buy their first home—a house hack in Long Beach. It didn’t take long for the home to appreciate, leaving Lindsey and her husband with a hard choice—sell or refi the property.

We won’t spoil the story, but her choice allowed her to buy multiple other units across the country, which has now become a portfolio of short-term and medium-term rentals. Lindsey also gives some killer advice on how first-time homebuyers and investors can snag rock-bottom mortgage rates in 2023. We’re talking two percent lower than today’s rate! If you want to hear how you can lock in a rate below five percent, we suggest you stick around!

Ashley:
This is Real Estate Rookie, episode 247.

Lindsey:
And there’s a program that was recently released called the 2-1 buydown. It’s not an adjustable rate mortgage. Basically, it’s saying, “Hey, rates today are 6%,” which do 6% for easy math. For the first year that you own the property, you’re going to have 4% interest rate. The second year you own the property, you’re at a 5% interest rate. Year three, you go to 6%. There’s no pre-payment penalty and it’s not an adjustable rate where you’re subject to the market rate at that time. So in three years, if rates are 10%, 11%, 12%, we can’t even fathom that, right? But rates have been there.

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

Tony:
And welcome to the Real Estate Rookie Podcast, where every week, twice a week, we’ll bring you the inspiration, motivation, and stories you need to hear to kickstart your investing journey. And I want to start off today’s episode by shouting out Nick Halden 5621, who left us a five-star review on Apple Podcasts. Nick said, “I recently started listening to podcasts and I really like the way both of you conduct the show, the way you ask questions, the way you share your experiences, it really gives a lot of insight and knowledge to someone like me who is planning to buy his first investment property. Keep up the good work.” Nick Halden, we appreciate you, brother.
And if you’re listening to the show and you have not yet left us an honest rating and review, please do on Apple, Spotify, whatever platform news you’re listening to. The more reviews we get, the more folks we can help. And helping folks is what we do around Isn’t that right, Ashley?

Ashley:
Yes, it is. And speaking of all of our wonderful listeners, especially the ones that leave us five-star reviews, we are going to be in Denver on February 23rd, with almost all of the podcast host from every bigger pockets podcasts, and we’re going to be having a meetup in Denver. So make sure you guys go to bigger pockets.com/events to check out what we have in store for you in Denver. And if you guys want us to come to your city, send a DM to the Bigger Pockets Instagram account, or to myself or Tony at Wealth Firm Rentals or at TonyJRobinson and let us know where you guys want us to come.

Tony:
Well today we’ve got an amazing episode. We have someone who’s somewhat connected to the Bigger Pockets ecosystem. We got Lindsey Iskierka and she works with David Greene. Some of you guys may know that name from the other Bigger Pockets Real Estate podcast. But Lindsey comes on, and she’s just a wealth of knowledge, both as an investor and as an agent. And we talk about both sides of that equation as we go through the episode.

Ashley:
Some of my favorite lessons and takeaway from this episode are talking about different markets, 1031 exchanges, and then also the current market, which we had this drastic change from high housing pricing, low interest rates, and now it has shifted to high interest rates and lower prices. And Lindsey, I think explains why this actually can be an advantage to you as an investor and just a buyer in this market today.
Lindsey, welcome to the show. Thank you so much for joining us. Can you start off telling us a little bit about yourself and how you got started in real estate?

Lindsey:
Yeah, happy to. First off, thank you for having me. It’s a pleasure to finally talk to you guys and connect here. So my name is Lindsey Iskierka and I’ve been in real estate since 2015, got my real estate license, bought my first investment property in 2016 and since about May 2021, I have served as David’s partner and lead real estate agent for the Southern California real estate sales team. So, help investors buy, sell, invest, house hack, short-term rentals, mid-term rentals, long-term rentals, we do it all. And real estate’s my life and I love what I do.

Ashley:
And that is the David, David Greene that you are talking about.

Lindsey:
Absolutely right. For clarification

Ashley:
You probably don’t need to say his last name, but just to clarify. So Lindsey, when you got your license, this was before you actually started investing then,. That came first?

Lindsey:
Fully after I knew I wanted to invest in real estate, but we just didn’t get started quite yet. But I have an interesting story as to how I even got into it and I’ll probably go into that, but-

Ashley:
Let’s hear that right now. I would love to hear it.

Lindsey:
So I don’t recommend my start to real estate to anybody, but it is my story and here we go. So after grad school, I met my now husband and he had an interest in real estate investing. Real estate was not on my radar. No one in my family invest in real estate, owns properties. I have one memory of my parents buying a house when I was seven and they still live in that house today. Real estate just really wasn’t even on my radar or a wealth building strategy I had heard of. After grad school, I was making 14 bucks an hour, thinking there’s got to be a better way here. And I met my husband. And at the time, he had an interest in real estate investing but hadn’t gotten storage yet. [inaudible 00:05:02] of course. And then we went to one of those free seminars that’s supposed to teach you everything you need to know about real estate investing.
One thing led to another. Next thing we know, we were $40,000 in debt. We had bought one of those guru programs. And while I’m grateful for that experience and what it made me do, it was, they promise you the world, they promise you they’re going to teach you everything you need to know. And in reality, it wasn’t. We were just so far back in terms of our goal. So we had to get real and paid this debt off. And a way that we decided to do that, moved in with my grandmother. We rented a room from her for a year and a half. And so we got married during that time. So newlyweds going back to grandma’s house, you can imagine.
But we had a goal in mind, and I got my real estate license at that time. So, then within a year we were able to pay off that $40,000 in debt and save up reserves to buy our first house hack. And so, while I don’t recommend those programs to anyone, it served its purpose for our story and I’m actually really grateful for that experience. I don’t know if I would be where I am today if we didn’t endure that. So that’s how I got started. And so getting my license was a way to help pay off debt. But I had grinded, I worked really, really hard, built my business over five years before meeting David Greene. And so that was how we got started.

Tony:
So Lindsey, first thank you for sharing the hard part of your journey in terms of getting started. And a similar thing in my journey as well where my partner and I, we spent not quite $40,000, we spent $20,000 on a program like that. The program was more so focused on teaching you how to become an apartment syndicator, do commercial real estate. And after we, joined, we did zero commercial deals. And I always think, man, was it a waste of $20,000? But through that program, I became really good friends with the guy who introduced me to short term rentals. And it’s like, had I not done that program, would I have found this asset class? Would our portfolio people we’re at today? Would I even be on this podcast?
Even though it’s always super crappy to have to go through those situations, it’s like if you can find that silver lining and use that as your motivation to keep going forth, and there’s maybe still some value in that. So I just want to know, how did you not get discouraged? You invested all this money, you had these big dreams of everything that was going to happen, didn’t turn out the way you wanted to, you moved back in with your grandparents, it’s almost like a worst case scenario. So how did you, even with all that happened, stay motivated to continue moving forward and really still take your start in real estate investing?

Lindsey:
Really good question. I think we had a powerful why. We were already planning our feature together and I thought, “Okay, what I’m exposed to, it makes sense.” I know this can work and this wasn’t it, but here’s what we’re going to do. And when we lived in southern California, so it’s very difficult, very expensive market to start investing. And we thought, “Okay, if we’re going to own a home, we have to house hack.” There’s really no other way to get started. And we just had a strong enough conviction that he and I can do it together. This program wasn’t what we hoped it would be, but like you said, I did end up having some relationships with people that I don’t know if I would have if I didn’t go through that program. And opportunities came from there and it gave me hope that there’s a better way and I knew this could work and I just hadn’t found it yet.
So put my head down, I realized, and I fell in love with real estate. That was another thing too. I loved it. And that level only grew stronger as I saw the potential for it. So I knew the path that we were going on before was not the right path, and we hit a speed bump here, but what can I learn from this? I would argue that also is what makes a successful investor. Because you’re going to make bad choices, you’re going to make bad decisions or you’re going to have to pivot and say, That didn’t work. Now what.” But you can always find the lesson and the blessing in everything. So we are blessed that we also were put in a position as a newer couple to have conversations about money. We had to have real talks about how we’re going to pay off this debt, what are we going to do? How are we going to come together and do it?
So talks about money weren’t taboo to us, it wasn’t a fighting point, it wasn’t a difficult point for us. And I’m grateful for that very early on. So, several combinations and just his support. He was so supportive of me and he believed in me that I could do this. Because he was in law enforcement, and so he was really the steady, W2, not many flexible hours. I had more flexible hours and I was set off to go into this real estate thing. And he had such belief in me that I thought, I have no other choice. I have to make this work. So how am I going to make this work? And ultimately, we knew house hacking would be the best way to get started. And in paying off that debt, I built a pretty good real estate business for my first year being an agent. So it just all started to come together with consistent action.

Tony:
I love your story so far, Lindsey, and I can just see the motivation coming off your face, but I want to, before we go too far, I just want to, if you can let the listeners know what does your portfolio look like today? How many units do you have? Where are those units spread out? Because a lot of real estate agents, even though they might do a ton of transactions a year as a real estate agent, they might own zero real estate themselves.

Lindsey:
Yes. But they’re investor friendly, right?

Tony:
But they’re investor friendly. So what does your portfolio look like today?

Lindsey:
Sure. So we have sold a few of our houses this year. We’re in the middle of our second 1031 exchange right now. But as it stands today, we own four properties. Two of those are short-term rentals. One is a long-term rental that we’re actually going to start renovating and turning it into a midterm rental for better cash flow. And then we have a primary. So that’s where it is right now. But we’re actively buying, looking for more deals and really wanted to, probably more than double that next year.

Ashley:
Lindsey, can you explain real quick what a 1031 exchange is?

Lindsey:
Absolutely. So 1031 exchange, it’s a tax deferring strategy for real estate investors. So anytime you sell a property, it’s an investment property, meaning non-owner occupied, you don’t live in it, you’re a subject to capital gains tax. So what investors do, and it’s a great way to scale a portfolio, is you take the income from selling that property, you immediately roll all those proceeds into the purchase of another property. And so you avoid the capital gains tax.
And it’s a great way to scale. It’s a great way to buy a bigger asset or get into a new asset class and it’s used by investors to scale a portfolio more quicker and you avoid taxes. So, it’s our second one that we’re doing. First one worked out well too. That was from our house hack that we did. And if you want to do a 1031 exchange or thinking about doing it, you need to make sure you have a QI, qualified intermediary, to help you with that transaction. Really important piece of the puzzle. And then an agent that knows what that is and knows what is needed when you get into escrow to make sure that it actually goes through. And you can save tens of thousands of dollars in taxes if you do this correctly.

Ashley:
Lindsey, I want to talk about and start getting into some of your deals. So what markets are you currently investing in for those properties that you have?

Lindsey:
So personally, our first house hack was in Long Beach, California. So coastal town in southern LA County. Right on the border of LA Orange and County right there. That’s where I started. And then we thought it was a good idea to 1031 exchange that property into three houses in the Midwest. And those cities that we invested in were Kansas City, Missouri, Birmingham, Alabama. And so we were in those two markets for a little bit. We also now own a short-term rental in Kalispell, Montana. It’s right near Glacier National Park. I personally love national parks for short term rentals. I just think it’s always going to be a market or a key component of the market that I want to choose for my own investments. So we have that, but we still own one property in Kansas City, Missouri. And then we’ve sold the other ones. And I own again in Joshua Tree, is my other short-term rental.

Ashley:
With the 1031 exchange, so when you sold that one property, you bought those three with the funds from that first property. So what made you decide to, how did you even begin to find those three other markets? Can you walk us through that process?

Lindsey:
I can, definitely. So it was an interesting time in our life. So I would’ve house hacked longer. And that’s something that maybe we’ll get into in a little bit as well. Our family was growing, we were expecting [inaudible 00:13:45] and I thought we are out of space where we currently are at. And so we moved out of our first house hack, rented it out. It was cash flowing, but it needed some major repairs. We didn’t have the capital at the time to replace both roofs and redo the plumbing. It needed a lot of work. But we had equity and we thought, okay, we want to scale. How can we make this property work for us? A cash-out refinance did not work. We did a VA zero-down loan on it, so just a [inaudible 00:14:13] and cash out refinance. Ultimately, just really didn’t leave us with enough equity to really do much with. The only option was to sell it.
And I wanted to keep that property, but just at the time we had to make a decision. Made sense to sell it. When you do a 1031 exchange, you have a very quick timeline in terms of when you have to identify the properties that you’re going to buy. At the time that we were doing this, I had a newborn and an 18-month-old and did not really have a ton of energy or knowledge about other markets where I could manage renovations, I could do all of the different facets of buying several properties. So we turned to turnkey. We’ve been Bigger Pockets listeners for many years already. I’ve been listening to Bigger Pockets since 2015. So we had heard about turnkey investments, the pros and cons. At that time, turnkey properties made the most sense for us in that life stage. We were able to see the properties on a spreadsheet and say, okay, where’s the best ROI? What are the best neighborhoods that are available that we can identify within that 45-day period to meet the goal that we had to have for the 1031 exchange to go through?
So not to get too complicated with 1031 exchanges, you have to meet a certain property value limit and you also have to breach your proper loan amount limit. So all the pieces of the puzzle made it so that we were looking at turnkey properties and what available inventory they had for us to meet those requirements. We chose Kansas City, Missouri because my husband’s sister actually was in medical school in Kansas City, Missouri. And she was able to tell us in those suburbs of Kansas City where the better areas were. She said, “Oh, you want to go over here, go over here, avoid this area.” Thought great. And then Birmingham, Alabama actually had some really great ROIs according to the spreadsheet we’re looking at it. It was right next to downtown Birmingham. That was the best performing property that we had. So it was on a whim. We knew we wanted Kansas City out of the choices that we had based on the boots on the ground knowledge that we had access to. But other than that, it was just, “This’ll work, this’ll work.” We have to choose the markets.

Tony:
Lindsey, I just want to circle back really quickly on that decision you made about refinancing versus selling the property. You said that doing a refinance, you wouldn’t be able to tap into all of the equity. Can you just elaborate on what you mean by that? Why can’t you access all of the equity in a cash-out refinance?

Lindsey:
So we were going to do a cash-out refinance, we could only pull out 70% of the LTV. At the time, we had about, or that’s loaned to value. So we had bought the property for 750 in 2016. By the time it hit 2018, early 2019, it was worth 950. So we had 200,000 inequity. And if we’re going to do a cash-out refinance after doing all the math, we were only left with $65,000, $70,000 that we could actually put towards a purchase of another property because we put zero down.
So when you have equity, you have to also think about how much did I put into the deal? And with this one, since we didn’t have any, it really ate away at that plus. So we were doing the math, it didn’t make sense for us to let this property go and we really couldn’t do much more to it. And we had some hard tenants that gave us the idea that, let’s just get rid of this one. It’s served as purpose, let’s move on. So if we were refinance, we had wonderful tenants, it might have been a different story, but still, the money that we had access to after the refinance, was not enough for us to feel like we could fix up the property to hold onto it long term and to scale.

Ashley:
I think that was a great explanation because I think we get a lot of questions like that and we see people post in the Real Estate Rookie Facebook group as to here are my two options, which one should I do? And I think you did, the thing that everybody should take away from this is, you ran the numbers on both, what’s going to, the outcome, if you go either path, what are you going to be left with?
So, if you are going, say you have this amount of capital available, are you going to put it all into one house? Are you going to spread it out over several houses? We’ll use those scenarios and run the numbers, and what’s it going to look like in a year? What’s it going to look like in five years? And that’s what you did with either refinancing or selling and you looked, what capital do you have left and what can you do with it? So I think that was a perfect example of how running the numbers and just doing that analysis on those scenarios instead of just like, eeny, meeny, miny, moe, catch tiger by the toe, I’m going to go refinance.

Lindsey:
We had to. Funny thing too is, this is something to note is that at that time we wondered if we were at the top of the market. We had $200,000 in equity as new investors. That was pretty attractive. And we thought, gosh, what if the values do go down? This is in 2018, early 2019, pre pandemic. We thought we were at the top of the market or there was chatter about that. So I had to take that into consideration. If we don’t sell it and I refinance, can we make these repairs on the property, have it still cash flow? Because we had a great interest rate, and rates were up at that point. So can we make this work? And ultimately, it just didn’t. And we thought, “Hey, we have to make a move here. Here are the options that we have.”
So we at least made a move. And I think that’s something I really want the rookies on here to pay attention to is, taking action, even though it’s not the absolute best action, it’s better than not taking any action at all. I think people are so afraid of making a mistake and that’s inevitable. You’re going to make some mistakes and that’s okay. But the important point is to take consistent action with the available information that you have at hand with your trusted team, your advisors, and move the needle forward, however that may look in that situation.

Ashley:
You hit it right on Lindsey, that, so focused on making the right decision. But sometimes either decision can work out for you. Don’t get so focused on maximizing the cash flow. That’s why there’s more deals to be done, especially your first deal. Don’t waste time actually taking action by getting into that analysis paralysis of what’s the best way to do this? I want to maximize and pinch every single penny, but just getting started, that’s going to give you the momentum to go and give more deals. And that’s going to end up giving you a better return starting now than waiting until you’ve finally decided this is the route you’re going to take.

Lindsey:
Now you can no longer afford that property.

Ashley:
Yeah, that’s a great point

Lindsey:
Because you waited to long.

Ashley:
And how you were talking about the market, how you were thinking maybe it’s the top of the market, we should sell it now too, is something if, you went and refinanced and you pulled out that equity and then all of a sudden values did drop, but something comes up where now you do have to exit the property and now it’s not worth what you had drawn out in equity too. So there’s always that risk and that’s something, you know guys did a great job of foreseeing if those things were to happen along with running the numbers too.

Lindsey:
Thank you for that.

Tony:
Lindsey, you also mentioned that part of the reason you sold was because of the, not issues, but maybe the tenants weren’t your ideal tenant. Were you self-managing this property or what did that relationship look like with those tenants?

Lindsey:
Ooh, really good question. So partly yes, we did a property management for the back house. So just to give you a quick layout, it was a front house, a little craftsman house in the front that we lived in. There was a duplex in the back, the duplex in the back had sets of tenants and we had property management for that. Part of it was because, like I said, my husband was in law enforcement, he wanted safety, he wanted people to not bother us if they had concerns, they want us to see us as the bad guys. We wanted to act like, “Hey, we’re tenants too. You go talk to the property manager and not think that we’re the ones raising rent.”

Tony:
They didn’t even know that you guys were the owners. No.

Lindsey:
Oh wow. The first set of tenants did, because they saw us moving.

Tony:
So they’re moving in, you’re like, man, those landlords, they kind of suck guys, watch out for them.

Lindsey:
I know. [inaudible 00:22:18].
We had to play it up and it worked. Because we were the same age group, roughly, and they believed it. And it wasn’t until we had a main waterline backup that one of my tenants saw me walking the property with a contractor and she’s like, ‘Wait, are you paying for all this?” I was like, “Okay, fine. We own the property.” They caught me at that waterline to take care of. So that part was property management. We cut that as property management.
When we moved out of the front house and we bought another primary residence, when we moved out of that front house, we decided to do section 8 and we used a VA program actually called the VA VASH program. And essentially, a section 8 for veterans. So we wanted to do good with our housing. We had this wonderful house in a great part of Long Beach and we thought, “Okay, we may not get maximum rent here, but how can we use this house for good?” So we put a military family in there where they were trying to go through school, they couldn’t really afford rent in the area. And so that made us feel good by putting military housing, providing housing for veterans, which is very close to us. My husband’s a veteran too, obviously we used the VA loan, so we wanted to do good with the house that we had. So we did that. But things just turned a little sideways with some of our tenants, and it’s okay, we learned lessons, but they were not that ideal.

Ashley:
I think this is the first time anybody’s ever talked about this program. Can you maybe explain it a little more?

Lindsey:
It’s a wonderful program. I’m so glad we found it. Basically it’s sponsored by the VA and they work right alongside HUD. And essentially, it works just like section 8. Your unit is valued by the zip code and number of bedrooms, just like section 8 is. And it’s given a market value for that area. And it goes up little by little every year. So you get the benefits of section 8, where you do have guaranteed income coming in, which is really nice. Is that during COVID, should any tenants not be able to pay their part of the rent, HUD stepped in and paid the full rent amount, which was nice. So we didn’t run into that issue, but it was just another perk of that program.
So you have guaranteed income and you get to choose the background that you’re comfortable with. We really wanted a family in there because we had two bedrooms. We brought our daughter home in that unit. We really wanted to help out a military family. So we did that. So you can choose if you want a single person, a family, if you want no history of substance abuse or evictions and things like that. So you can set your criteria as to what kind of tenant you would accept and then they get the application process. You have a rep from the VA that works with the family or the tenant works with you and it’s very, very similar to section 8, but it’s only for veterans. So it was a great program.

Tony:
What was it like for you as the landlord to get added into that VA VASH program? Was it a long process? Was it pretty quick and easy? What was the vetting process for you to get onboarded?

Lindsey:
Probably depends on your perception of easy and quick versus difficult. It wasn’t bad. It wasn’t bad. The property had to meet certain criteria for inspections, but we took great care of that property. We had renovated it during the time that we lived there. And it wasn’t that long. Maybe it took six to eight weeks I want to say, for our application and inspections to be done. So it did sit vacant for a little bit and that was okay, but it felt good to know that we were going to do, like I said, we really wanted to do good with the property that we had. Six to eight weeks I want to say, with inspections and everything. And then we got tenants in there pretty quickly after that. So it wasn’t very quick. It wasn’t super easy. There were a lot of trips back and forth to the HUD office. So if things like that stress you out, just be prepared for that. But in hindsight, it really wasn’t that bad.

Tony:
And the quality of tenants that you got, you said that maybe you wouldn’t do it again, if I heard you correctly? what were some of the lessons there?

Lindsey:
I would do it again, just these, I would do it again. I think part of it too, and this is a dynamic that house hackers have when they move out of a home that was an investment property, but also primary residence. You put your blood, sweat, tears into those properties. So when you go back and you see tenants not taking great care of the home, smoking in it, grease stains all over your kitchen, they were damaging our doors and our brand new windows. So it’s rough to watch someone not beat up your house a little bit, when you’re like, “I brought my daughter home in that house, can you not?” So that was just a more emotional thing. But they were complaining quite a bit. They were not supposed to be smoking in the house. They would blame everybody for certain problems and they called us certain names when things didn’t go their way. So I would do the program again. Just at that time, the tenants were stressing us

Ashley:
Lindsey, when you did that program, did they pre-screen these people for you? And then did you do any additional screening on top of that too?

Lindsey:
They did pre-screen the tenants to make sure it fit the criteria that we wanted and then they presented their application to us and we can approve it or deny it. If I recall, we weren’t able to meet them in person, but we could deny their application if we wanted to at that time. It may change since then, but at that time we were able to approve or deny them as tenants as they came through.

Tony:
Well, thank you for introducing us to VASH, Lindsey. I’ve never heard of that. Ashley had never heard of that. And part of the reason this show is so cool is because Ashley and I can learn new things and selfishly take them into our own business. But obviously so many folks in the Rookie audience are going to be benefit from hearing about this program as well.
I want to transition just a little bit because you are in a unique, I think, viewpoint or vantage point as opposed to most of our guests, because not only are you a real estate investor, but you also see a ton of volume as a real estate agent. And there’s been so much uncertainty this year around whether or not people should get started in real estate investing. If I’m someone that’s sitting on the sidelines that has zero deals, is now the right time to buy? There is a bunch of price competition earlier in the year and then as that slowed down you saw interest rates climb super, super fast. So from your perspective as both an investor and as an agent, what are your thoughts on whether or not right now is a good time for new investors to get started?

Lindsey:
Really good question. Of course, this is a common conversation that we’re having and it goes back to what’s more important to you. So we had people, like you said, there was prices getting bit up through the roof. It was so hard to get an offer accepted. People held off. Okay, once interest rates started going up, prices came down, competition ceased, but people are holding off because now interest rates are too high. The fact of the matter is, we’re never going to have the perfect storm of a market where interest rates are low or good, prices are stable, there’s less competition, you have negotiating power. Something has to give. So the wonderful thing about real estate investing is that it comes back down to the fundamentals. Does a deal work today? Yes or no? What’s great, an advantage about people who do want to get started or continue their portfolio in today’s market, they are forced to underwrite the deal better.
People could get away with buying not such great deals earlier this year and in 2020 because they were saved by low interest rates and by prices going up. They’re just grateful they got a deal, because it’s so hard to lock one in. Today, you really have to make sure that the underwriting is solid, that the monthly payment, that the cash flow, that whatever metric you’re tracking makes sense with today’s interest rates. If rates go down, fantastic, you’ll refinance. You won’t then be having to jump into the market when everyone else is now going to jump back into the market. Because then if rates drop, I ask clients to sell the time. If rates drop, what do you think is going to happen? Oh, maybe prices will go back up. Yeah, exactly. And then we’re going to be right back to you complaining that prices are too high, it’s too competitive and you want to wait till it cools off. It’s cooled off.
So you have to decide what makes more sense for you. And what I think is great is that if you lock in a property at today’s interest rates, it can only get better. Because if rates drop, you’ll refinance. If you bought when rates were 3%, two and a half percent, if you need to refinance right now for whatever reason, you probably can’t afford that mortgage payment. And you’re stuck with that. And maybe the property is lost value right now already. And now you can’t sell that in scale. So I think you’re actually more at a better advantage right now than people were eight months ago, nine months ago, because that market is gone. You’re back to the fundamentals of real estate in this market. So there’s me buying opportunities no matter what market we’re in. If you’re an investor, you’re investing, no matter what the market’s doing. You’re finding opportunities in that current climate and taking advantage of it.

Ashley:
I saw someone post that on Instagram a couple weeks ago, maybe a month ago. And probably was you if you posted, but it was a real estate agent. And it seriously hit me, like, oh my gosh, that is so true, is your, whatever you pay for a property, you’re stuck with owing that dollar amount.

Lindsey:
Yes.

Ashley:
You owe that. So if you’re paying $300,000, no matter what the interest rate is, you’re going to have to pay that at some point or sell the property and cover it. But that debt or that cash has to be provided to pay for that property. But if you get that interest rate, that can change, you can change that interest rate. So whether rates are dropped and you go and refinance, you find a private money lender or you do something, you do creative financing, things like that.
But it just really, it was like an eye-opening thing for me is, you’re paying a lot, you can pay a lot less now and then, especially if you’re holding the property, a couple years down the road or however long down the road when rates do drop is going and refinancing and you’re going to be a lot better off because you purchased that lower price. So I am so glad we touched on that because I think that is such a valuable tool lesson that everybody can learn from this is that, the market was hot, it’s cooling off and interest rates are high, but how long do you, and that’s the thing nobody can predict is, how long do you have to cover that high mortgage payment until rates do drop-

Lindsey:
And don’t buy if you can’t afford it right now. And we’re also getting the sellers to buy down the interest rate. We’re negotiating killer deals right now. I just negotiated 2-1 buydown, we got $50,000 in credits. So the buyer can take, I think they’re doing a 3, 2, 1 buy down. They’re getting a crazy good interest rate and this property, they easily would’ve paid over 150 grand more for it eight months ago.

Ashley:
Can you explain that? If somebody’s agent isn’t doing that for them, how would they, what’s that process look like?

Lindsey:
Well, first call us, I’m just kidding.
But honestly, so basically, it’s a lot more likely because sellers are very fearful right now that they just want their house sold. And so they’re willing to, you’ll see some marketing that says like seller willing to buy down interest rate, but if they don’t, then you can find a way for the buyer essentially to get their interest rate buy down paid for by the seller. So when you go to buy property, in any case, there’s always interest rates that you can lock in. There’s par pricing, meaning this will cost you zero extra points. You can use lender credits to have less closing costs out of pocket, but have a higher interest rate or it can buy down the interest rate and have a lower rate that’s going to cost you more money. Right now we’re able to get the seller to pay it down.
And there’s a program that was recently released called the 2-1 buydown. It’s not an adjustable rate mortgage. Basically it’s saying, hey, rates today are 6%, we’ll do 6% for easy math. For the first year that you own the property, you’re going to have 4% interest rate. The second year you own the property, you’re at a 5% interest rate. Year three, you go to 6%. There’s no prepayment penalty and it’s not an adjustable rate where you’re subject to the market rate at that time. So in three years, if rates are 10%, 11%, 12%, we can’t even fathom that. But rates have been there. Rates were at 18% at one point. But so it’s not an adjustable rate mortgage, but you are essentially having the seller pay the interest upfront for you to have a lower interest rate for the first two years that you own the property. Really powerful.
So you have to qualify for the loan at today’s interest rates. It’s not a way for the buyer to be able to buy more or qualify for it, which I think is a really important point to distinguish. It’s not like, “Oh, I can afford this at 4% interest rate if we get the 2-1 buydown.” No, you have to qualify for the loan at today’s interest rates. You have the benefit of having a lower mortgage payment because you have a lower interest rate for the first two years that you own the property. So it’s great for short term rental owners because this only works for primary home buyers and second home loans. So if you’re doing a second home loan for a short-term rental, you essentially can have two years of a lower interest rate, paid for by the seller, again. And you can withstand, maybe if we have a downturn or market slows a little bit, you got your listing up and running, you can probably improve your cash flow for the first couple of years you own the property by having this program.
So we’re getting this paid for by the seller and we’re getting a lower price than list price. A list price is no longer a starting bid. List price is a suggestion now. And we’re saying, okay, is there a number that you have to hit to make this deal work for you? Let’s offer that. Let’s not be offensive, but let’s see what they come back with. And now we have healthy negotiations going on again. I love this market because we have negotiations. Both buyer and seller have to compromise and give a little bit. No one’s really having the full advantage right now, which I think it means a healthy market.

Ashley:
Lindsey, how much does that buy down typically cost? Have you seen that it’s, I’m sure it probably varies from the lender, but is there a typical percentage of the purchase price or what does that cost actually look like?

Lindsey:
Typically, what we’re seeing, and I’m not a lender. Talk to Dave’s lending team. The one brokerage, they’re fantastic at this. But typically we’re seeing anywhere from two and a half to 3% of the purchase price be enough for the 2-1 buydown.

Ashley:
Awesome.

Lindsey:
So it’s hefty. Sometimes we’ll work that into the sales price if it works. We’ll tell a seller, Hey, we’re going to take a chunk of your profit for the closing cost credit, but we’re going to add that back in to the purchase price in some way to make it a win for everybody.

Ashley:
It’s amazing to me how creative you can actually get with just your regular on the market bank financing deals. I mean, you hear creative financing a lot, but that’s usually off market seller financing, different things that are done with the creative financing. But there really are so many ways to get creative with traditional bank financing too. It’s always great to hear.

Lindsey:
It’s fun.

Ashley:
And learn more about.

Tony:
Well Linda, you’ve been like a wealth of knowledge and I’ve really enjoyed this conversation, but I would love to get us to our Rookie request line. That way our listeners can poke into that brain [inaudible 00:37:38] of yours and get some more information on how I can keep moving. So awesome. So if you guys are listening, you want to get your question featured on the Real Estate Rookie podcast, give us a call at 8885 rookie. And if the question is a good one, we just might use it on the episode. So Lindsey, are you ready for today’s question?

Lindsey:
I’m ready.

Tony:
All right, awesome. So today’s question comes from Schmidt, just the first name, like Oprah. I can’t find a deal anywhere. I do live in North Carolina, probably one of the hottest markets. I guess my question is, how should I start? Should I try to get a condo that is overpriced and has an HOA restriction on renting and just start there so I can start building equity and then move forward once the market cools off in a couple of years? I’m 30, so I want to get started sooner rather than later. But also my question is, do you guys think I should up and move? I work remote so I can move to a rural town that has an up and coming market, and start somewhere with lower prices. I have funding, I’ve been saving for years, but my comfortability is extremely low. I do plan a house hack and would love to hear your response. So what’s your advice, Lindsey, for Schmidt?

Lindsey:
This is a great question and immediately halfway through the question as it was going on, I’m thinking, you need to be able to make some adjustments and sacrifice. So I love that he is open to moving. I don’t know if you necessarily have to. I think it’s going to depend upon what he thinks is going to be a better “deal” for him. Is he looking for cash flow when he turns this into a rental or is he looking to let this stop the bleeding of rent and scale with equity, build quicker? If it’s equity position, then I would suggest staying where he is and buying the condo that he feels is overpriced. You could probably get a good price right now. And if realtors are telling you that, “No, it’s too hot,” find another realtor that’s a really good negotiator. Skills guys, is going to be more important in this market than ever.
You need to have someone representing you with the skills to get the negotiations done. So really be mindful of that as you’re searching for someone to help you. But if he is looking for equity, I would suggest staying where he is and find the best deal that he can. Suggest living in something that needs some work, add value to it over time. Don’t be afraid to get your hands dirty. You don’t have to live in the nicest and best unit and the best part of town. You want to live in a good part of town, have a unit that you can add value to over time that’s going to maximize the equity potential that will put you in a position to scale down the road. Either it be another house hack or buying more rental properties or what have you. If he is looking for less out of pocket, also depends on his budget too. So it’s going to be another situation that I don’t have information on.
But if he is wanting to be more cost conscientious and buy at a lower barrier to entry, then moving for a short period of time in an area that is growing, area that has population growth, job growth opportunities, something that he can do if it’s near a university, if it’s near a hospital where you have multiple extra strategies for that property in the future to hold onto as a rental, long-term rental, midterm rental, short-term rental, that’s going to be another great avenue too. So it depends upon what he wants to get out of this first deal and where he wants to be the next three to five years. I don’t have that from him. I would need a deeper conversation, and your realtor should be asking you the same thing.
But I hope that at least gives him a bit more of an idea on which direction to go. But I love that he’s open and not saying, “No, real estate doesn’t work. I’m going to keep on renting and I’m just going to hold off until the market goes down or what or whatnot. I was just getting in now, negotiating a great deal.” And just deciding what you want this deal to work and how you want it to work for you.

Ashley:
And you know what, I do love the questions too, where somebody has options. What’s a better position you could be in than having different options? So, congrats to Schmidt for wanting to get in, started in real estate investing and having those options. So you’ll have to write for us in the Real Estate Rookie Facebook group and let us know what you end up doing. Okay, Lindsey, are you ready for our rookie exam?

Lindsey:
I think so. I haven’t studied, but I think I’m ready. I’ll be okay.

Ashley:
What is one actionable thing rookies should do after listening to this episode?

Lindsey:
Oh, I have a two part to this and so I hope that I don’t get disqualified here. So part one of this, I want everyone to really take an honest inventory about where they’re getting their information from. There is such a hype of spreading fear, spreading the headlines that elicit a response and people are making decisions on their investing and their long-term goals based on these headlines. And so, if someone’s listening to you guys, if they’re listening to Rookie, Bigger Pockets, they’re involved in these kind of discussions, they’re already a step ahead, which is great. But just be mindful of where you’re getting your content from right now and who you’re allowing to influence your decisions on investing. Because these news articles, these sources, they want to make you feel a certain way. They want you to think a certain way. So almost try to think about when you read something, have some discernment.
Is this benefiting me? How are they benefiting from sharing this information with me? And just making sure that you’re not making any emotional decisions on your investing based on mass media. I think that’s a trap that I can see a lot of people who are nervous about getting started in investing falling into. I’m not saying don’t be prepared, don’t be well-informed, but just really try to have some discernment when you’re deciding who you’re going to allow to influence your decisions moving forward into 2023. Part two to that is also to evaluate your circle. I know from personal experience. I’m partnered with David Greene. That has done wonderful things for me in my journey. And I know that if you took an honest inventory of who you’re allowing to spend a lot of time with you, whose influence, whose opinions and is influencing you, really try to think about, are these people serving me?
They may be well intended, they’re probably very well intended, but maybe they just don’t get it right. Maybe they just don’t have the same goals or vision that you have. So really evaluate who you’re allowing to also influence you personally and look to elevate your circle in 2023. Meetups are great. I just recently joined GoBundance Women. I’m super excited about that. I know I need to elevate my circle of people that I look to for inspiration. So two parts to that, just be mindful of who you’re allowing to influence you and be intentional about that in this year.

Tony:
Absolutely love that answer. I love that answer. Your circle and the people you surround yourself with have such a big influence on you both consciously and subconsciously. So I think all of us should be more intentional about who we let into our lives and who we allowed to influence us. So love that. All right, question number two, what’s one tool, software app or system that you use in your business?

Lindsey:
Something I should use better as my CRM? You know, as you’re getting leads, whether that be for deals for clients, you really need to keep track of everything. And typically, us entrepreneurs are not very organized. And we hear CRM and we just, I avoided it. I’m like, “No, my notepad and paperwork’s just fine.” But we use a CRM called Brivity, and I don’t use it to its potential, but that’s at least helped me stay organized and focused. And then in terms of short term rentals with automation and analysis, I love PriceLabs and I love, PriceLabs, I think is what I use to analyze deals. And then Guesty for automation and taking that off my plate so that things don’t slip through the cracks and my Urban B guests don’t feel as accommodated because I didn’t message them right away or things like that. So those two, I gave you three, I’m sorry. I’m hoping for extra credit here. I’m giving you [inaudible 00:45:44].

Tony:
That’s fine. Totally fine.

Ashley:
Lindsey, with your CRM, what are some things you track in it besides just the person’s name and phone number? I’m just curious because my birthday was a month ago and I got a text message from this loan officer that I’m using that told me, “Happy birthday, I hope you have a great day.” And I was just like, okay, this is super random. Is this something he tracks and texts all of his clients or that, I’m just his favorite client and he happened to see it was my birthday today on a loan document.

Lindsey:
Maybe send me a copy of that text and I can say if it’s a template or not.
So really good question. I track important milestones and I track what they tell me. If they tell me that they’re going on vacation, if they tell me that they have big goals to renovate the house that they’re in, or this is where they want to be in a year from now, I track what’s important to them in the conversation. There’s a note section for every call that you make to prospects or a client. And that way, when I follow back up with them, I can relate to that. I can ask them a follow-up question so they feel, and they can see that I cared enough to remember that.
And I get pulled in so many different directions. My brain is always going a million miles a minute with our team and everything. So having those trackers about points of the conversation that I want to refer to later, next time I call them again, is really important. And then any objections that they have, I like to share that so I can make sure I address their personal objections and fears and not just blanket them with everyone else’s concerns too, so I can speak to them more on an individual basis.

Ashley:
I think that’s really awesome right there. And I think this doesn’t even just apply to clients, it’s just networking in general, is going to conferences, events, and writing those notes about somebody. What did they talk about? What made them light up, what excited them? So keeping track of those things so that when you do follow up with them or see them again, you’re going to be, they’re going to remember you because you remembered something about them too. And it’s going to make you stand out to them compared to somebody who’s just, “Oh hi, nice to see you again. Do you remember me from this conference?” And then somebody else who’s going, “Oh, how did your daughter like that car she ended up buying?” Or something like that.

Lindsey:
Or who are you looking to meet? I love asking people, who are you looking to meet? Who can I introduce you to?

Ashley:
That is another great point, that connection, being the connector. The matchmaker.

Lindsey:
Yes, absolutely.

Ashley:
Okay, so last question. Where do you plan on being in five years?

Lindsey:
I love and hate this question so much because if you told me five years ago I would be partnering with David Greene and running this big real estate team and having a portfolio, I’d be like, “You’re nuts. You’re crazy.” So I love this question, but I’m also like, “I have no idea.” So if I had to guess or goals that I have for myself and our family, I want my real estate team to be thriving. We would love to hit 200 million every year. We’re serving so many people. Our mission is to help everyone build wealth through real estate. Simple. So I really want to maximize that and grow and opportunities that come with that.
Personally, for our portfolio, I want to get into other asset classes. I’d love to get into self-storage. I’d love to get into other commercial spaces that are going to have more and more opportunity as things start, continue to shift. And I’m open to receiving leads or whatnot for those different ideas. I want to have a medium size rental portfolio. We’re more simple. I don’t want a huge portfolio. I’d rather have a handful of good performing properties and pivoting as necessary to keep that going. I don’t want to over complicate my life looking to simplify it. So I’d love to have a good handful, maybe 10 to 15 properties that are performing and performing well and now getting into other types of businesses and commercial asset classes.
And then I’d love to, this is silly, and you guys might laugh, but I would love to live on a farm. I want to buy land and we want to build a forever home, and I want to have the chickens and the goats and all the things, and just a simple life. I would love that. So if I can do that in the next five years and teach my kids how to grow their own food and be self-sustainable, I would love that.

Ashley:
Well, I can’t laugh because I live on a farm.

Lindsey:
I’m jealous. I love that life.

Ashley:
It’s a very, very working farm. We just have dairy cows. There’s no chickens, there’s no pigs. My nieces will sometimes raise a pig and we keep them at our barn. But it’s not the hobby farm, I guess, where you have all the cool animals and things like that.

Lindsey:
I would love that though.

Ashley:
No garden, really. Just crops to feed the cows.

Tony:
I’ve never felt more left out for not living on a farm in my life.

Ashley:
But you live near the cows?

Tony:
I do live near. There are some dairy cows that are near me. I’m not too far.

Lindsey:
Hey Tony. I’m from California too, so you never know. You may get exposed to farm life and be like, “I like this.”

Tony:
Fall in love with it.

Lindsey:
Exactly.

Tony:
Well those are great answers. You passed the exam with flying colors, Lindsey, as I thought you would. So as we wrap things up, I do want to give a shout-out to this week’s Rookie rockstar, which is David Long, and David says, ‘Seven years ago today at age 25, I bought my first rental property. It was four units full of drug dealers, which I didn’t know at the time. Right after closing, I drove down to the building filled with drug dealers, collected all the rent and cash, but it changed my life forever. I quit my job at 30 and never looked back. Now I make my own schedule. I started doing social media content creation, which I had no idea how much I liked or how lucrative it can be. Real estate opens so many doors when you can take chances that wouldn’t be possible being stuck at a desk all day. I now own 11 buildings with 31 units.” So David Long, congratulations. That is an amazing story. Love hearing the success.

Lindsey:
Why we do what we do. That fuels me, that gets me so excited. I love stories like that, and anyone can attain it. It’s not out of reach, really, and I love that.

Ashley:
Well, Lindsey, thank you so much for joining us today. Can you let everyone know where they can reach out to you and find out some more information about you?

Lindsey:
Absolutely. So I’m heavy on Instagram. That’s probably the best way to get to know me a little bit better. I put out a lot of content. I’m not great at reels. Tony and his team are just, you guys are all wonderful at the fancy reels. I just, I do stories and I share a lot of stuff with what I shared here on the podcast today, I like to share almost daily on my Instagram, so find me there. My handle is lindseyiskierkarealtor, and I’m also on Bigger Pockets, so you can reach out to me there as well. But I’m really heavy on Instagram. It’s probably going to be the best way to get ahold of me. If you guys want to talk to me and our team at all, you can go to [email protected] and we’ll make sure you guys get set up with a great agent to help you accomplish your goals.

Ashley:
Lindsey, thank you so much for joining us. We really appreciated all of the value that you had for us and to our listeners. We definitely learned some new things today and we really appreciate you taking the time to share that with us.

Lindsey:
Oh, this was fun.

Ashley:
I’m Ashley at WealthFromRentals and he’s Tony at TonyJRobinson. And thank you guys so much for joining us. We will be back on Saturday with a Rookie reply.

 

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