February 2023

Defining what makes your business unique is one of the most important tasks you can do to help answer the question of why customers should buy from you. Without a differentiating factor separating you and your competition, you ultimately give customers no reason to choose your business over another—which isn’t a helpful strategy when looking to grow your company.

But if you’re new to business or haven’t considered your brand’s niche before, how do you go about determining it? The members of Young Entrepreneur Council can help. Below, they offer up 10 questions you can ask yourself that will help you define what is unique and different about your brand and explain why these are such effective questions to ask.

1. What is the job that needs to be done here?

Asking this question prompts me to think holistically about the users and what their needs might be. Focusing on this question helps you assess whether you have a creative and better way to solve their problems and how you solve it differently from others. – Paul-Miki Akpablie, Akos Technologies Inc.

2. What sets my product or service apart from the competition?

One question you can ask yourself when trying to find your niche and define what is unique and different about your brand is, “What sets my product or service apart from my competition?” It is important to ask this question because it helps you identify your unique selling points and differentiators. These are the aspects of your brand that make it stand out from others in the market and are crucial in attracting and retaining customers. In addition, it can also help to differentiate you from your competitors and appeal to customers who are looking for something specific. Asking this question allows you to tailor your marketing message and strategy to the specific needs and wants of your target audience, which can ultimately lead to better results. – Kazi Mamun, CANSOFT

3. What is the bigger picture?

Strangely, “What is the bigger picture?” is the important question to ask when trying to find a niche and your unique selling point. While it’s incredibly important to know what is unique about your business, it is dangerous to get too bogged down and pigeonholed into one particular area. Once your business reaches a certain point where expansion is necessary, you might find yourself with only limited options for growth. Sussing out trends before others, looking at market potential and then tying that in with the problems your business is trying to solve will lead to a better understanding of what your brand should stand for. – Robin Saluoks, eAgronom

4. How does our brand improve customers’ lives?

When trying to find your niche and create a differentiated offer that your customers will care about, start with the basics. Ask yourself: How does our brand improve our customers’ lives? Try to get out of the mindset of focusing on your product being better than someone else’s product, or zooming in on specific features. There will always be someone who does it differently. Instead, focus on what impact you want to make and for whom. Think about what improvement you can make to how they work or live—that’s where your true value lies. – Daria Gonzalez, Wunderdogs

5. What would people miss about working with me?

Business owners are often terrible at understanding and expressing their own uniqueness. My favorite way to dive deep is to ask, “If I stopped offering my services or products tomorrow, what would people miss the most about working with me?” Typically, the answer to that important question is the ultimate differentiator. – Rachel Beider, PRESS Modern Massage

6. What emotional need or desire do we fulfill for our customers?

Ask, “What is the underlying emotional need or desire that our product or service fulfills for our customers, and how can we uniquely tap into and amplify that feeling?” By understanding the emotional drivers behind customer behavior, we can create a differentiated brand that resonates with real customers. Identify a unique way that your product fulfills emotional needs, and it will stand out in the market. Understanding underlying emotional needs helps create effective marketing campaigns, identify new product opportunities and develop new business models. This question is key to creating a brand that truly connects with its target audience and drives growth and success. – Miles Jennings, Recruiter.com

7. Why are customers referring?

Given that our growth has been driven so strongly by word-of-mouth referrals over the past decade plus, I always ask: Why are customers referring? What is it, specifically, that makes them want to tell their friends? I think this question really gets to the heart of what resonates beyond the transactional level with our customers and offers insight into what we should be doing more. – Lindsay Tanne, LogicPrep

8. If we shut down, how would our customers solve their problems?

One technique to help you identify what makes your business unique is to look at alternatives versus competitors. A question to ask yourself is, “If my company and my competitors shut down, how would my customers solve their problems in the absence of our products or services?” This causes an entrepreneur to look at their business differently, through the lens of an alternative-solution seeker. For example, if your company was a recipe subscription app that helped organize recipes, customers would resort to traditional notecards to organize recipes even though you don’t consider notecards a competitor. When you look at alternative solutions, you can identify unique problems that your product solves and can position it in a way that makes your company stand out. – Nick Chasinov, Teknicks

9. What is my perfect customer profile?

I find that starting with thinking about the ideal customer for my brand is the surest way to identify the unique product quality that will drive sales. So, I consider who would buy the product idea I have in mind; who they are in terms of demographics (location, age, gender) and psychographics (lifestyle, interests, values); and the behaviors of the best buyers. Then I try to define their needs or problems that I can solve. From this, I can narrow down why they would want to buy my product instead of products from other providers in the market. The current marketplace is highly competitive. Most businesses are not inventing but creatively innovating existing products to make them more efficient. So, identifying the unique selling point in a way is how you micro-niche. – Tonika Bruce, Lead Nicely, Inc.

10. What is it about our company that would turn me into a customer?

When trying to find out what makes your brand unique, one question you should ask yourself is, “What is it about our company that would turn me into a customer?” To understand how other people see your business, you have to look at things through the eyes of a shopper, not a business owner. Switching your mindset and thinking about things as a consumer can help you identify the strengths and weaknesses of your brand identity. As a result, you can build on what you’re doing well and find opportunities to improve. – John Turner, SeedProd LLC

Dave:
Hello, everyone. Welcome to On the Market. I’m your host, Dave Meyer, joined by three panelists today. We have Kathy Fettke. How are you, Kathy?

Kathy:
I’m good. I’m alive. That’s helpful.

Dave:
Are you referring to your heliskiing experience?

Kathy:
I am. My anniversary gift from my husband to take me up on the peak of some random mountain for our 25th anniversary. I survived it, even though the pilot didn’t want to go and the guide told us it was the most dangerous day they’d ever seen. And then the helicopter sunk into the powder and he said, “I don’t want to spend the night out here.” And I said, “I don’t either. This is not the anniversary gift I had in mind.” Anyway, we made it back.

Dave:
What’s up everyone? Welcome to On The Market. I’m your host, Dave Meyer, joined today by Mr. James Dainard, Kathy Fettke, and Henry Washington. How is everyone?

Henry:
Fantastic.

Kathy:
Good to see you guys again.

James:
I’m good. I’m back in warm California, so I’m, I’m happy.

Dave:
Are you still snowed in, Henry?

Henry:
There’s still snow on the ground, but luckily the roads are navigatable. Is that a word?

Dave:
Close enough.

Henry:
Nava-

Dave:
Navigable?

Henry:
Navigable.

Dave:
There we go.

Kathy:
Well, we had an earthquake.

Dave:
What?

Kathy:
Kind of exciting. I wasn’t there.

Dave:
In California? I didn’t even see that.

Kathy:
Right off of Malibu, about a few miles in, but I wasn’t there, so hopefully the house is still there. We’ll see. But if the earthquake didn’t take it, it might be the Santa Ana winds we had all week, so.

Dave:
Oh boy.

Kathy:
Glamorous California.

Dave:
I mean, it does… I know you’re saying it’s not, but it does seem pretty glamorous. I’m pretty into it.

Kathy:
In the summer.

Dave:
The weather at least seems really nice. I’ve been staring at, it’s like 4:00, 5:00, it’s pitch black out here, so that sounds pretty nice. All right, well today we’re going to get into a topic that we haven’t touched on this before, but a lot of the show, we want to help people understand current market conditions, and honestly, a lot of that is how you underwrite your deals, and how you make estimates into some of the costs. Sometimes we talk about rent, and income, but today we’re going to really focus on the cost side of your deals, and we’re going to talk about hidden costs.
So, what are some of the traps that investors miss when they’re underwriting their deals, or don’t know how to calculate? And I don’t know about you guys, but this is probably one of the more common questions I get. It’s like, I get the math, how to underwrite a rental property, but how do I figure out the assumptions for a rehab, or how do I figure out the assumption for holding costs for a flip? Those types of questions, I think, really trip up the investors, and they change a lot based on market conditions. So, that is what we’re going to talk about today, but first we’re going to take a quick break.
All right, so let’s get into it today, and we’re actually going to break this down into different strategies. So, as usual, James is going to represent the fix and flipping crew for us. Henry’s going to take the buy and hold position, and Kathy is going to look at syndications. James, let’s start with you, and just talk about fix and flip. Just generally speaking, at the highest level, what are the big categories of expenses that you think investors really need to know about when they’re underwriting their deals, and which ones do you think are the hardest to understand, and to underwrite correctly?

James:
Yeah, fix and flip is one of those businesses, because it’s a high return deal, there’s a lot of fees that can be associated with it. It’s also a high risk transaction, as well, because you are buying… There’s so many little things that can come up.
But the four main costs that I usually am watching when I’m buying any kind of fix and flip deal, or a short term investment, where we’ve got to close really quick, is closing costs and assignment fees. What’s your total acquisition? The lending, because a lot of times you got to take down these properties with construction lenders, which have a lot of fees that can be associated with that loan, as far as doc prepping, what kind of interest are you being… How they’re structuring their interest payments, and then construction, what are you missing outside the general scope of work?
And then lastly, it’s always seller concessions, because those things can be big effects at the bottom line in the ROI, when you’ve got to contribute to closing costs. So those are the four big things, and as an investor, you really got to dig into each one to make sure that you’re not getting feed to death, because those fees can really, really jeopardize your return.

Dave:
All right, great. I know nothing about any of this, so let’s get into that. You said the first thing here is closing costs, and assignment fees. So, what are some of the big costs associated with just acquisition there?

James:
Well, one of the biggest fees, hidden costs that I see happen all the time is in wholesaling. And because a lot of times when a wholesaler… When you’re buying an assignment deal, or you’re buying any deal, you have your own closing costs, which are typically going to be your title, and your escrow fees. And if you’re an investor, a lot of times you can negotiate a better rate, because you’re doing numerous transactions. So that’s the first fee I’m always going after is how do I reduce my transaction fees, escrow, title, I work with one title company, they give me a way better rate, they reduce my cost when I’m doing the same transaction.
The other thing I have to watch out for is when you’re buying an off market wholesale deal, you are buying the terms that the wholesaler structured with the seller as a negotiation. And part of that negotiation, sometimes, even when we’re wholesaling or working with a seller, a seller just sometimes wants to know what their net number is. Like, “I’m walking away with $10,000 or $20,000,” or whatever it is.
That usually means that the contract’s structured with the buyer paying all the seller’s closing costs. And so, there’s a huge fee that can creep in at the end. I’ve been see… Especially the last two years, it wasn’t as big of a deal until these last two years, is you would go to buy a deal from a wholesaler and they say, “Hey, it’s $200,000.” “Perfect, wholesaler. I’ll take that deal.”
I’m calculating, as a buyer, that I got my standard escrow, and title piece. But then, when they’re saying 200,000, or they’re saying, “Hey, I locked this property up for 180, I want to make 20 as my assignment fee, you’re buying it for 200.” But then if they structure that you’re paying the buyer’s closing costs, that can get rolled into the deal, and that can be anywhere between three, four, $5,000 that can get added onto the property.
And if that’s not specified in that assignment agreement, you could get stuck paying those costs, because if you’re signing an assignment and saying, “Hey, I’m just assuming this guy’s contract,” it’s up to the investor to verify what’s inside that contract. And so you can get stuck with those fees if you’re not watching that.
So, how I like to always structure my off market deals is instead of a purchase price, I do total investor acquisition. So, that means when I’m buying it from the wholesaler, I’m going, “Hey, I’m buying this for 200,000,” but that uncovers all the costs in there, and then that way if there is additional costs, that comes out of the assignment, not my pocket.

Dave:
So you’re saying that there is a chance, using your example where it’s, the house is at 180, the wholesaler wants 20 grand for an assignment fee. You’re saying that there are scenarios where you as the investor could buy it for 200, and then you would have additional costs on top of that, that could be unexpected?

James:
Yeah, because when you’re buying a wholesale deal, you’re not actually buying a property. You are, on the next transaction, you’re buying the rights to the contract on that property. And so however that contract’s structured, if it’s not clarified on if that’s being deducted from the fee, yes, you are going to be responsible for any buyer’s closing costs, because you’re now assuming that contract, right?

Dave:
Okay, that makes sense. Okay, that’s a very good tip. Yeah, I never would’ve thought about that. And so, is that something that wholesalers… What you were suggesting, the total acquisition fee, using that as the number for your negotiation, it sounds like, is that something wholesalers are familiar with, in your experience, and they’re comfortable reconsidering the way they structure their deals, or their presentations to you, around your preferred metric?

James:
Yeah, a lot of times I’ll have a little bit of issues when I’m working with maybe a newer wholesaler, just because they just also didn’t think about it either. So if they call me and say, “Hey, this price is 200 grand,” the price is really 205 if I’m paying all the closing costs. And so, I just have to educate people a little bit, like, “Oh, next time will you let me know it’s 200, and I’m paying all sellers close… So I can calculate it correctly.”
The clarification question I always ask is, “Is there any other cost outside of it?” And then, “Is this my total acquisition fee?” And if I do that, it can kind of narrow the price down, if they say yes, and then the contract states later, they’re responsible to cover the difference at that point.

Dave:
Okay, cool. Thank you, that’s super helpful. So, the second thing you said where there’s some hidden costs that you might want to make sure you’re calculating, is with lending and hard money. There are some well-known fees and costs associated with getting a loan, but what particularly about flipping, and hard money do you think people need to keep an eye out for?

James:
Especially nowadays, so the lending hard money space has changed. It has the been one of the biggest industries that’s changed over the last 24 to 36 months. Hard money, when I was buying as a new investor, was just like it… I mean, it was really hard money. We would go to a lender and say, “Hey, we got this property. They want us to put a certain amount down.” They’d verify the loan to value, and I could have my cash in 24 to 48 hours. And it was a very simple process at that point.
And then, you kind of knew what your fees were, which typically with a lender, when you’re using a construction or hard money loan, which most of the times you need to do with a fix and flip, you got to add value to these properties. They’re going to be higher rate and points. So the first things you always want to look for is what’s the points on the loan? And what points are, is it’s the origination fee, with the balance of that property, which is going to be the purchase price, and the construction component.
The next thing you want to know is, what is the interest rate? Which is going to be, typically with hard money right now, it’s going to be 10 to 12%. And based on that rate, you want to make sure that… There’s a couple things that you want to watch out on the interest, and the rate. The thing that I’m always looking out for, is if I’m doing a construction loan, are they charging me interest on the full balance of the loan, or only the drawn amount?
That can really make a big difference on a long project, because some lenders do finance, because they say, “Hey, I’m reserving you the cash, and so, if we’re reserving the cash, we’re charging you for the interest.” Now some lenders don’t do that.
And so, those are really important things to do, because again, it can be thousands of dollars on your interest when you’re reading your loan sheet. In addition, too, you want to know if there’s any kind of prepayment penalties, right? Because like what I was saying earlier was when we had hard money, it was like cash guys giving us money. Now there’s banks in the space, and banks come with different types of terms.
They’re used to prepays, they want to keep their money out on the street, because if you are a short term investor, and you’re getting a 12 month hard money loan, and you’re selling that deal in eight months, and there’s a prepay, that’s going to affect your deal, and return down. So, sometimes there can be a one to two point prepay.
Other times there can be motivation, where, like we have a hard money company called interest funding. We actually incentivize our borrowers to pay us off quickly, because we like to get in and out of loans. It’s safer for us. And so, you want to be also asking what the benefits are. And then the biggest thing you got to check out for in your lending is just those hidden little doc fees, because they just rack up.

Dave:
But can you negotiate out of those? It’s like, they always keep it at a level where it’s annoying, but it’s not worth actually arguing about. Do you actually go after your lenders for those things?

James:
I will, because there’s also the cat and mouse game all these lenders play, and it’s like, “Oh, I only charge one point, and I’m this rate.” But then you look at their doc schedules and their fees, and it’s almost the same as a two point lender that may have a lot more reduced fees. So, you do have to look through them all, because when you’re paying $350 to $500 per fee, and there’s four to five of them in that deal, that can turn into two to three points.

Dave:
Yeah.

James:
And if you’re doing that on 10 deals, that’s going to add up dramatically over a year. And so, just always be watching. There’s always the construction doc fee, the underwriting fee, then there’s a construction draw fee that could be like $500 per draw that you have. Then there could be a… What’d I get? I got one recently, I’m like, they charged me a $100 to generate a payoff. I was like, “You got to be kidding, I’m paying you off, and you’re going to charge me $100?”

Dave:
Money collection fee.

James:
Yeah, money collection. Yeah, I’m paying… Yeah, they’re trying to make it sure I’m not paying them off.

Dave:
You’re paying them to take your money.

James:
Exactly. That one I felt really good about. But all these fees add up, and you really got to watch for them. And a lot of investors will… That’s their first thing, is, “What’s your rate and points?” And they get fixated on this, but you want to look at the whole big picture. What is the total cost of all of these? How they’re structuring their interest payments, what kind of doc and prep fees, and then really compare apples to apples at that point.

Kathy:
Sounds like it would be a good idea to be a lender, then.

James:
Being a lender is one of the best businesses there are.

Kathy:
Clearly.

James:
Being a hard money lender, it is the best business to operate. I will say that. Because you don’t have to do all the hard work. The investors are doing the hard work. You just got to make sure you verify the asset, and you’re good.

Kathy:
And just charge a bunch of fees.

James:
Reasonable fees. If it’s [inaudible 00:13:07] .

Dave:
Okay. James, so far we’ve talked about closing and costs, and lending, construction. I feel like this is obviously a big one. There’s probably so many things to it, but what’s your top tip here, for helping people avoid any hidden fees, or costs with construction on a flip?

James:
The biggest one that I always say is, is the bid fixed, or is it time immaterial, or just an estimate? Those are going to be the big variances on those hidden fees, because I have had clients, and it’s happened to me too, where you get submitted a bid, and you have to read that fine print. Are these allowances that are being listed on your estimate, or is it fixed? And if there’s verbiage about there being an allowance, or it’s an estimate only, that contractor can raise their price at any time, at least in Washington state. So, that’s the big one with construction, to make sure you’re narrowing that scope, that it can’t be increased just because costs go up.

Dave:
What structure do you prefer, James, for your contractors? Is it fixing the bid?

James:
Oh, we fixed bid everything. I want to know price per square foot, or fixed bid, and if they can’t do that, it makes me a little uncomfortable.

Dave:
Okay, cool. And then last thing you said was seller concessions. Very popular topic these days. So, what are you doing to make sure you’re accounting for seller concessions right now?

James:
As the market cools down, you want to look at what demographic you’re selling to. If it’s a first time home buyer right now, we might pack in an additional 2% to 3% in closing costs, because that buyer might be asking for that on every deal. In 2008, ’09, and ’10, there was limited financing, limited buyer pools, and it was a lot of motivation for first time home buyers. And so, it was almost always on those deals we were going to have to pay 2% to 3% in closing costs.
And so you want to make sure you know who you’re selling to, or what product you’re selling. Like if you’re a new construction builder, and the rates are high, you might be buying down the rates. So these are all… If you’re paying three points on a $300,000 flip that you’re selling later, that’s $9,000, which can be anywhere… A lot of times, 25% to 50% of our profit on the smaller deal.
And so, watch out for those closing costs. So, how we kind of protect ourselves on that, when we’re running our analysis and our underwriting, we’re calling every broker, and then we’re reading through the MLS to see if there was concessions costs given when they sold it. Because if the comparables are all saying they had to support those closing costs, we have to factor in our pro forma.

Dave:
You have a good rule of thumb, James, for how much people should set aside when they’re underwriting a deal right now, for seller concessions?

James:
What I’ve been doing, because roughly is, we have 6% broker fees, and then we usually have about 2.5% in closing costs, to 3%. So, I add an additional 1% minimum to each deal. So typically when I’m selling a property, I knock 10% right off the top. If I’m selling it for a million bucks, I’m going off a net of 900, because that’s going to be all my closing costs right off the bat, plus a little bit of wiggle room. So, that’s how I underwrite things really quickly in my brain.

Dave:
All right. Well, there are some good tips for underwriting right now, in the fix and flip space. Henry, let’s move on to you, and talk about buy and hold. So, what do you see as the big buckets of expenses that need to be accounted for, and what are some of the major areas that you find investors underestimating, or miscalculating, when they do their underwriting?

Henry:
Yeah, man, so buy and hold. I think most people understand the high level buckets. So we’re talking about maintenance. Everybody knows stuff breaks. So, you need to be budgeting for maintenance out of your properties. Everybody understands that there is going to be property management of some sort, so there’s a budget for that. There’s capital expenses, there’s vacancies, and then everybody else knows there’s your debt service, and your principal, your interest, and your insurance.
So, those are the main buckets that people are typically aware of. But what I found is that people like to skimp on some of these. They’re like, “Ah, it won’t happen too often. I’ll just leave that out of my underwriting. Vacancies are really low here. Stuff rents so fast, so we’re not going to budget for vacancy.” Or, “I’m going self manage, so we’re not going to budget for property management.” So, I think people leave a lot of that stuff out.
But even within some of these expenses, there are hidden costs in the hidden expenses. So when you think about vacancy, everybody understands vacancy. Yeah, people will move out, and then when they move out, I have to re-rent it, and so I need to budget for that time that somebody is not living in my property.
But when you really break down vacancy, there’s a lot in there that people don’t account for. Yes, vacancy means when somebody moves out, you need to pay the mortgage. But what people don’t think about is, what about vacancy when tenants don’t pay rent, right? Because maybe a tenant doesn’t move out, but they’re just not paying you rent for whatever reason, and you’re going through this series of back and forth with a tenant. You’re still having to cover the mortgage for that timeframe, and they still live there.
So, I think vacancy is much deeper than just, “Somebody’s moving out, and I’m re-renting it.” Also, what about eviction costs, right? You’re a landlord, at some point you’re going to do an eviction, or two, or three, or four. It depends on how good you are at tenant selection. But no one budgets for evictions on the front side, and I think evictions are part of vacancy.

Dave:
And expensive.

Henry:
And expensive, and it’s going to vary from state to state. So you should do your due diligence, know what an eviction costs you, and budget part of that into your monthly expenses for your property. You also have utility costs during vacancies. So, if your property is empty, and you’re having to renovate it, right? Well, you’re not only covering the mortgage, but you’re covering the utilities, and those utility expenses aren’t things that people think about as part of what you pay for as a landlord. They say, “Oh, well, my tenants are going to pay for the utilities.” Yeah, they will when they live there. But what happens when you’re doing a 60-day renovation on a property? That utility expense goes back to you. So, you’re carrying utilities.
And so, it’s not just tenants moving, it’s much more than that, because you’ve got tenants moving, you’ve got renovations, and a lot of times people who are going to do this buy and hold method, or especially the BRRRR method, they’re not considering all of these holding costs on the front side. You’re buying a property that needs a renovation. So, all of these expenses start hitting you from day one, before you’re ever making any money. And so you want to underwrite that into what you’re offering for a property, and be able to budget for it on the front side.

Dave:
So, how do you do that practically, Henry? Because a lot… If you use the Bigger Pockets calculators, or a spreadsheet, usually there’s a line item for vacancy, and it’s usually a percentage of rent is what most people do. Is that what you do, or do you recommend adding sort of another lineup? Do you jack up the vacancy number?

Henry:
I don’t think that it matters, as long as you add it in there. So, if you just want to increase your vacancy percentage, right? So some people, as a rule of thumb, just use the vacancy percentage of a market, so you can find your market, and understand, “Hey, in Northwest Arkansas, we have 5% vacancy, so I’ll budget 5%.”
Well, 5% typically probably isn’t even one month’s rent. And so, I prefer to do it more on, how long do you envision a property to be vacant when you have to turn it over, and then add a little padding for these other things that we talked about. So, in my opinion, it needs to be at least one month’s rent, plus these additional things. And so, just use your best judgment, based on what these things cost, and add a little bit to that. Or you can have separate line items if you’re super detail-oriented.
Another thing to think about is a lot of people do not budget for property management. They say, “Well, I’m going to self-manage.” And I know that sounds great, and I think most people should self-manage where it makes sense, but you have to understand what your goals are as a real estate investor.
If your goal is to buy one property a year for five years, and then at the end of your journey you’re going to have five properties, okay, self-managing might be something that’s reasonable for you. But if you’re planning to scale this business, if you want to get to your financial freedom by generating enough cash flow from your rental properties, it’s probably going to mean you’re going to do more than five properties. And yes, right now managing your properties seems like a good thing to do, because you want to learn, because it saves you the money. But at some point, you are not going to want to do that if you’re growing, and scaling, and you want to be able to still cash flow your properties when that happens.
And so, if you’re not underwriting your deals with 10% property management in there, I think that you’re hurting yourself, because if you’re buying something that doesn’t work, if you add that 10%, well you’re buying a really slim deal, and then you’re going to lose your cash flow, if and when you decide you don’t want to do that. Also, you don’t know what life brings, right? You don’t know what opportunities are around the corner for you. Maybe you get a different job, maybe you have to move. There’s all these things that could unexpectedly require you to hire property management, and you haven’t prepared to do that, and I think that’s a big one that people miss that’s easily added to your underwriting.

Dave:
I think that’s such a good point. I mean, this is an oversimplification, but in a lot of ways, the only way to really lose money in rental property investing, is forced selling, like if you have to sell at a bad time. The housing market generally goes up. So, if you can hold on through bad times, you’re going to do well.
And I think property management is one of those sort of traps where you can get sucked into forced selling. Like you said, if your life changes, if something happens, and it doesn’t pencil out with you not managing, you could sell what might be a great deal, because you just… Like long term, because it just doesn’t work with your lifestyle anymore, or you can’t find a property manager to do it effectively. So, I think that’s a really good risk management strategy, is to make sure, even if you’re self-managing and intend to do it forever, to continue to underwrite with those. Very good tip. Any other ones, you think?

Henry:
Yeah, one final one to think about, that I think a lot of investors don’t think about it, because they don’t really consider it at an expense, but it kind of turns into one. So, a lot of landlords don’t… they’re not diligent about rent raises. I buy properties all the time from landlords, and their market rents are so low, and you’re essentially leaving money on the table by not keeping up with market rents.
I’m not saying you need to be at the market number every single time, but if you’re not increasing your rents with what the rent rates are in your area, essentially you’re charging yourself an expense every month, because you’re leaving money on the table from the rents that you could be getting, especially if you rented it to another tenant.
Now, I’m not saying be irresponsible, and raise rents on people without considering who your tenants are, what situations are out there, but you need to have some sort of systematic process in place to ensure that you’re keeping your rents up with the market, and with inflation. Because if you’re not doing that, then you’re paying an inflation expense, and you’re paying a rent expense by not charging those things.

Dave:
Opportunity costs are costs. I mean, if you are losing out on an opportunity, that costs you something, that is an inefficiency in your business that you need to take advantage of. So yeah, I mean, that’s hard to underwrite for though, right? You’re just like, you can’t be like, “Oh, I’m going to be bad at running my business, so I need to add this [inaudible 00:25:18].”

Henry:
And a lack of business acumen.

Dave:
I guess if you’re just really self-aware you could do that, but I’m not that self aware. You learn those ones the hard way.

James:
And that’s why we hire ho property management, right? If you don’t have the heart to raise rent on people, factor for the property management expense, let them do it. So, just put one of those in there. Either rent raises, or property management cost.

Kathy:
Absolutely. Couldn’t agree more.

Dave:
All right, well, any other last thoughts? I think we’ve covered now buy and hold, and fix and flip. Kathy, I have you going last because I know you have to go to the airport, so if our listeners just hear Kathy run out the door, it’s because she has to make a flight, but she’s here with us for now. So, let’s ask her about syndications, and what the big costs… I assume we’re, we’re going to do this as a LP, as someone who invests, a limited partner in a syndication. What are some of the, as a passive investor, some of the costs that we should be thinking about?

Kathy:
Yeah, and just to explain to some people who maybe don’t know what a syndication is, somebody, an investor finds a deal, and needs more money, doesn’t want to go to the bank, so they bring in passive investors, other investors who don’t want to do the work, just want to invest. So, the person who found the deal is generally called the sponsor, and they’re the GP the general partner, and then the investor is the LP, the limited partner.
So, I can really speak to both sides, because I’ve been on both sides, and there’s hidden fees on both sides, because it’s a partnership, and it’s flexible, meaning if the deal goes really well, then everybody generally makes money. If it doesn’t, that’s when people get upset, right? Because there’s not enough money to trickle down to everybody.
So, as an investor, it’s really important, first and foremost, to look at the fees, because the sponsor may say, “Hey, we’re going to split this 50/50.” Now, the investor generally gets like 80% of the profit, but it’s 70, 80% depending on the deal, and the sponsor gets 20 or 30%. But I’ve seen people flip it. I mean, there’s all kinds of ways these are structured.
But let’s say it’s 80% of the profit, and you’re like, “Whoa, this is great. I’m going to get 80% of the profit and do none of the work.” Well, what if within the documents, there’s all kinds of fees that you didn’t account for, and those fees eat up all the profit during the process of the deal, such that there’s no profit left, and you get nothing? So, this is really important to understand.
On the flip side, if you’re the sponsor, if you’re the syndicator, and you don’t charge any fees, which I’ve done, when I first started syndicating 12 years ago, I didn’t want to charge fees to the investors. I just wanted it to be fair, and even, and I’ll just do the work, and we’ll just split it all at the end. But I also gave an enormously high preferred return.
So, that’s the next thing, is the preferred return is who gets paid first, who gets preference? And it’ll outline that in the documents. Some documents don’t have any preferred return, everybody just gets their money pro rata. It’s better for the investor to have preference, to get paid first, before anybody else. That’s a preferred return. So, in the beginning, I was giving my investors a 15% preferred return per year.

Dave:
Whoa, I want to go back in time and invest in this.

Kathy:
Man.

Dave:
Because no fees, 15% pref, that sounds great.

Kathy:
It was crazy. But this was 2010. I mean, we were getting stuff for 10 cents on the dollar. There was so much in it that everybody made money, except if things go longer. So if you project you’re going to get through this deal in two years, but it goes three, or four, due to things that are really maybe out of your control completely, well, the investors are still getting that pref, they’re getting paid first. They’re getting that 15% before I get anything.
So, in some of those deals, I didn’t charge any fees, I gave an enormous preferred return, and by the end, I didn’t get anything. So I did all the work, didn’t get the profit, but the investors did great. So in a syndication, it needs to be equal. Everybody needs to make money.

Dave:
Absolutely. Yeah. I think that this concept of the capital stack, basically the order of which people are getting paid, is really important. And that’s not just for syndications too. Sometimes this happens in partnerships on smaller deals, as well. If someone… You really need to model out in your underwriting, the order of which people get paid.

Kathy:
Yes.

Dave:
Because if there’s a lot of money, it might look like a huge pot of money, but if someone gets a guaranteed 10% return before you get a dollar, maybe that big pot of money doesn’t go so far, and it’s really worthwhile to even draw this out, and just visually understand who’s getting paid what, before you get into any sort of partnership, including a syndication.

Kathy:
And syndications are regulated by the Securities Exchange Commission, the SEC, so you are supposed to have all of that explained in the operating agreement. It’s usually in an LLC, and a private placement memorandum, where all of that is spelled out. But most people don’t read them. They’re boring, they’re legal. But if you’re investing in a syndication, just spend the money to have an attorney review it for you, or just make sure you really understand it.
And Dave, what you said about understanding that waterfall is the most important thing. Who’s getting the profit when that profit hits? And who’s getting fees? Now, I’ve learned since that a syndicator should be charging fees, because you’re doing the work, and there might not be profit. It’s an investment, there’s no guarantee. There could be another pandemic. Right?
So in the case of, and I’ve talked about it before, but our Park City deal, we got shut down for two years because of COVID, but we’re still paying that 15% preferred return when we’re not making any money, and can’t do any work, and you can’t change the documents. Right? This is just… It didn’t say, “Oh, if there’s a pandemic, we’re not paying this.”
So, you’ve really got to understand the fees being charged, and if that’s going to take all the profit, and as a syndicator, or the investor in it, is it equal? Is it fair? So, typically, you would see a one to 2% just sort of asset management fee. We’re just kind of watching this. If it’s development, it’s going to be a higher fee, because there’s more to it, there’s more work, so the fees might be higher.
There’s generally going to be a fee for the person who does the financing, because they’re doing all that it takes to get the financing, and sometimes they’re taking a recourse loan. So, it’s okay, expect that, but not an exorbitant fee. So again, maybe one to 2%.
There might be an acquisition fee. Now, this is where the people get paid to just find the property, and go through the process of acquiring it. There’s still broker fees on top of that, and there might be a disposition fee, the time it takes to sell the property, even though a broker’s really doing that. So, these are all fees. Some syndications will have them, some won’t.
It’s got to be good for everybody, and there has to be enough cushion that those fees can get paid, and there’s still profit in the end. So with every syndication, make sure they have a very detailed pro forma showing you where all the money’s going. Because if it’s vague, and this is what I’ve learned over the years, if anything’s vague, then the syndicator, the sponsor, can say, “Well, the documents allow this, because it didn’t not allow it.” And so everything needs to be spelled out.
And then another big… I noticed this was with a single family fund that wanted us to wanted partner with us, and they were kind of Wall Street guys. And as we looked at their pro forma, and their documents, they were charging $500,000 per person in salaries.

Dave:
Whoa.

Kathy:
In salaries. And this is a fee that came on top of anybody, any of the investors getting their money. We’re like, “I mean, maybe you guys do that on Wall Street, but we don’t do that on Main Street. That’s not how it works.” So really look for that. Who’s getting paid? And what happens if they said this project’s going to be done in two years, but it goes for five years, do they still get that salary? So again, there’s a lot to look at. A lot of people just don’t pay attention, and they just believe the marketing materials, and don’t read actually the fine print. So, if you don’t want to read it, have somebody else who understands it, read it for you.

Dave:
Read your contracts.

Kathy:
Yes.

Dave:
God, yes. I mean that’s basically, maybe that’s just the theme of this episode. It’s just hidden fees. It’s like read your contracts, and you’ll eliminate probably half the fees that you encounter as an investor, or just a human, in life.

Kathy:
And then there’s another thing that people really don’t understand with syndications. We’ve noticed this all the over the years, is they don’t know their status… I don’t know how to say this. They don’t know their status, their position as the investor. So they don’t know where they fall in that waterfall.
They don’t know if they’re an equity investor, so they don’t even know what that means. They don’t know if there’s somebody ahead of them that has priority to them. Or they think maybe they’re a lender, they’re investing and they got a 6% preferred return, and they think that’s a loan. They think that that’s guaranteed. It’s not. It only comes out of profit, the preferred return, generally, unless you’re coming in as a lender.
If you’re a lender, you know what? We talked about it earlier. The loan gets paid first. Always. The lender is in the best position, almost always, and there’s usually a first and a second. Obviously the first lender has the first priority, and if there’s no profit, you still got to pay it. You still… The sponsor, the investor takes the loss, the lender doesn’t.
So, if you are investing as a lender, it’s definitely the highest priority. If you’re investing as an equity investor, you’re at the bottom. You get paid after everybody else gets paid. And if there’s huge profit, you can make a tremendous amount of money. If there’s no profit, you get nothing. If there’s losses, you lose your money.

Dave:
It’s very good advice. Well, thank you all for all this. It’s been super helpful. There are, actually, if you want to learn any more about the nuts and bolts of operating of these different types of businesses, there are actually great Bigger Pockets books for any of these.
Jay Scott did a really good house… He has two flipping books, one on estimating rehab costs, one and just being a flipper. Brandon wrote a great book about managing rental properties, and Brian Burke has a great book on investing in syndications. So, if you want to learn a little bit more about underwriting deals in a written format, you can check those out on biggerpockets.com/store.
With that, we have one question from the Bigger Pockets forums that I want to ask you guys. It is about the general economy, and then we’ll let Kathy make her flight. Emily Hazard went on the Bigger Pockets web forums and said there, “Morgan Stanley sees something called the 4-4-4 happening in 2023.” Have any of you heard of this?

James:
No, I have not.

Dave:
Me neither. I hadn’t either. So, it’s called, “Morgan Stanley sees an environment in the future with 4% federal funds rate, which is a little bit below where it is now, 4% inflation, which is definitely below where it is now, and 4% unemployment, which is a bit higher. Do you think this is accurate? What are your thoughts?” All right. Anyone want to take a first swing at this?
So just as a recap, it’s Morgan Stanley forecasting that we might see a year in 2023 where the federal funds rate is 4%, inflation is 4%, and unemployment is 4%. That would be inflation and Feds coming… The Fed fund rate coming down a little bit, inflation coming down a pretty good amount, and for unemployment going up just a little bit. So, what do you guys think?

James:
It sounds balanced, and nice.

Kathy:
I think it’s hopeful.

Dave:
Yeah.

James:
I personally don’t see that happening. I actually think the federal fund rate will be around 4%. I think, hopefully inflation gets to 4%, maybe by the end of the year, it might, probably a long shot. But the one thing is this unemployment numbers are just not moving.

Dave:
Yeah, it’s wild.

James:
The labor market is getting no ease on that, and that’s where I’m like, “At some point, something’s going to happen there,” but it right now, it does not seem to be breaking.

Kathy:
Yeah, I mean that’s wishful thinking, and it would be wonderful. I guess the question is when? I mean, are they thinking it would be this year? Because the Fed has made it really clear going to keep raising rates, and shooting for 5% Fed fund rate, and yeah, they’re really shooting to kill jobs, and they haven’t done a great job at that yet, which I guess, depending on if you would like a job, or not, it’s good news for the person with a job that they haven’t killed the jobs the way that they wanted to. So, I highly doubt that. I think the Fed fund rate’s going to be higher, and inflation probably higher too, at this point, unless there’s a little tweaking with the data, which is possible.

Dave:
Really? I think inflation’s going down. I think, we’re already at 6.1%, if we stayed at the run rate we’re at for the last six months, we will be at like 2.5% by June. So as long as inflation doesn’t go up, we will be well under 4%, just from a mathematical perspective. It could go back up. I have no idea, but just based on the trajectory right now, I think it’s going down.
But I totally agree on the Fed funds rate. I think they’ve basically said there’s no way they’re cutting rates in 2023, and it’s already above 4%. So, that seems like a long shot. Unemployment is just the big question, right? It’s weird. You would think that it would be higher, but it does seem like there’s kind of this bifurcation of the labor market, and there’s this big… All this public discussion about layoffs, but those are just happening in the tech sector.
If you look at more traditionally blue collar jobs, the labor market is incredibly strong there. And I read something today in the Wall Street Journal that said that 78% of job openings right now are at “small businesses.” So still, we hear about Amazon and Microsoft laying off businesses, but that’s not… Or, laying off people, but that’s what’s driving the labor market. It’s all these small businesses. And so, it’ll be interesting. Personally, I think that’s sort of the X factor for the economy this year is what happens with unemployment.

James:
And we are seeing, for like our job, because we’re the small business in Seattle, all the tech guys just steal everybody. And the last 24 months we’re really frustrating. You’d be like, “I need an accountant, and I can’t get an… This is crazy.”

Dave:
You can’t pay 750 grand for an accountant, James?

James:
Oh, yeah. It’s like, it’d be an entry level marketing person, they’d be like, “I’m going to get paid a $100,000 at Amazon.” I’m like, “Well, I can’t do that. It’s just, that doesn’t work.” But it is easing up a little bit. There is some, like construction companies are starting to lay off some people. There is, some of that blue collar is lightening up, but at least you can get applications now.

Henry:
Typically the layoffs that I’m seeing are in industries that had to staff up during the pandemic, or staff up during what happened as a result of the pandemic. So, the mortgage industry is doing some layoffs, but obviously, that’s affected by the rates being what they are, and mortgage applications not being what they were. And then in tech, and then a lot of different customer service industries, where they had to staff up to handle the load of calls coming in from people who were just sitting at home.

Dave:
Totally. Yeah. So, it’ll be interesting, but I hope they’re right. That sounds like a great place to wind up. If we wound up with 4% unemployment, that would not represent a significant break in the labor market. It would be mean inflation still too high, but back in the stratosphere at least. And then, federal funds rate a little bit low below where they were? I mean, that would be wonderful. So let’s all hope that we’re right, but it does seem like there are some headwinds that might prevent this forecast from coming true.
All right. Well, Henry, James, Kathy, thank you so much for being here. For everyone listening, if you appreciate this show, appreciate the insights from the three panelists, please give us a five star review. We really do appreciate it. It really does help us. You can do that on Apple, or Spotify, so please go do that. Give us a five star review. We’d really appreciate it. Thank you all for listening. We’ll see you next time for On The Market.
On The Market is created by me, Dave Meyer and Kailyn Bennett, produced by Kailyn Bennett, editing by Joel Esparza, and Onyx Media, researched by Pooja Jindal, and a big thanks to the entire Bigger Pockets team. The content on the show On The Market are opinions only. All listeners should independently verify data points, opinions, and investment strategies.

Today, consumers can enjoy personalized experiences in almost every area of their lives. In fact, the move toward hyper-customization has extended into the healthcare field. And five companies are taking individualization to the next level with their innovative solutions.

As McKinsey research points out, it makes sense to treat consumers as unique people with equally unique needs and wants. When 71% of consumers say they like to receive tailored interactions, companies need to listen. However, until now, healthcare and medicine have lagged behind in the personalization department.

It’s not hard to understand why healthcare has been slow to adopt individualization. The healthcare machine is large and looming, as well as complex. These factors have stunted its progress toward taking an evolutionary leap. Nevertheless, the 2020s have ushered in an environment where the disruption of traditional healthcare has become inevitable.

As the years go on, more healthtech startups are likely to leverage the desire for custom healthcare products and services. For the moment, though, several have taken center stage. These five organizations are helping push personalized medicine toward a net worth of $3+ billion by 2025.

1. OK Capsule: Solving Supplement Confusion

People have been taking supplements for years. Since the pandemic, supplement usage has ramped up. A recent Harris Poll showed 76% of Americans rely on supplements. The only problem? They’re playing a hit-or-miss game. Though there’s no dearth of supplements available, the supplement offerings are aimed at broad audiences.

As naturopathic doctor Dr. Andrew Brandeis explains, this problem became the impetus for him to launch OK Capsule. OK Capsule creates and ships individualized daily supplement packets on behalf of supplement brands, directly to their buyers. “Consumers will be loyal to a brand they feel sees them as an individual,” says Brandeis. “Brands must be able to offer these consumers a supplement program that is safe, simple to understand, and designed specifically to meet their nutritional needs, which is why we provide the technology for them to do so.”

Different things work for different people. With OK Capsule’s tech powering personalized supplement brands, consumers can be sure that they’re taking the right high-quality supplements for them. This confidence not only encourages compliance but allows them to get the maximum benefits from supplemental nutrients.

2. Nurx: Eliminating Medication Access Friction Points

It can be a hassle for people to access reproductive care or manage health problems like urinary tract infections and acne. Plus, the care they get at an urgent clinic or even their family physician often feels like a one-size-fits-most experience.

Nurx, part of Thirty Madison, was created to provide custom healthcare unique to each patient’s needs — easing roadblocks to birth control access and offering medication for non-emergency conditions including genital herpes and migraines. The Nurx process to get medications is faster and more convenient, especially for individuals who want personalized service. Consumers can make prescription requests digitally. These requests are reviewed by licensed clinicians and then, if medically appropriate, fulfilled by mail or at a preferred pharmacy.

Ultimately, Nurx enables anyone to take control of their health in a very individualized way. As an added personalized benefit, Nurx also offers a high degree of privacy.

3. Flow: Revolutionizing Custom Depression Treatments

The World Health Organization estimates that 3.8% of adults and minors deal with depression. But depression doesn’t follow a standard playbook. As a result, every person must find the right balance of tools, techniques, and healthcare solutions to minimize depressive episodes.

One of those tools is called Flow. The basic Flow product setup requires a headset and access to the app through the Internet. The headset delivers transcranial Direct Current Stimulation (tDCS) into the scalp. The app allows the consumer to monitor what’s happening during the 30-minute tDCS sessions. Additionally, it helps pinpoint specific, personalized behaviors and habits most likely to help the user manage depression.

In clinical studies, Flow has been shown to produce safe and measurable results. In one study, the results showed favorable effectiveness for those who tried tDCS consistently. Among Flow subscribers with depression who used the product for six weeks, 83% reported positive outcomes.

4. Oura: Merging Fashion With Healthtech

It’s safe to say that fashion is all about showcasing individual style. So what could be more apt than a product merging haute couture with healthtech? That’s just what some biowearable companies are doing, most notably high-profile Oura.

What makes Oura a standout in the emerging biowearables category is its extraordinary appeal. The Oura ring itself has all the technical capabilities to connect to any device through Bluetooth. Once connected, the Oura sends individualized data based on 20+ biometric signals to the app. The data is then transformed into usable information, like sleep activity and fitness tracking.

Oura proves that biowearables can be runway beautiful as well as functional. Even Gucci has jumped on board, offering a special Gucci-Oura jewelry line. It’s personalization times two—and made for consumers who like to marry the practical with the aesthetically pleasing.

5. Marodyne: Giving Bone Loss the Boot

Osteoporosis is a devastating disease that can hinder people’s ability to live life on their terms. However, it’s always been challenging for the average consumer to stay on top of their bone health. The Marodyne LiV is attempting to make the process more intuitive and simple.

Marodyne LiV looks somewhat like a larger version of a bathroom scale. When stepped on, it gently vibrates to send stimulation through the body. With regular use, these stimulations help encourage new bone development. Simultaneously, they give the muscles a mini workout, further improving the user’s balance and overall health.

The Marodyne is a pricier tech tool but is tailored for users concerned about bone mass. Chief Scientific Officer and leader of Marodyne Dr. Clinton Rubin notes that the science behind Marodyne LiV is sound. Says Rubin, “Low-intensity Vibration promotes the building of lean muscle mass and the conditioning of muscle reflexes.”

Personalization doesn’t have to stop at Netflix recommendations. With today’s access to countless pools of data, consumers can enjoy the reality of individualized healthcare.

David:
This is the BiggerPockets Podcast, show 728.

Jesse:
And the cool thing about the agencies is you can actually get these agencies, they can be the lessees on these properties. So in San Francisco or Central Valley, who you worry about, holy crap, there’s squatters. I don’t worry about that too much, but a lot of people do. These agencies are actually the lessees. And these are multimillion-dollar agencies, there’s no way they’re ever going to screw you over. And that’s one of the things that I love about this space too, is that they’re taking responsibility for the clients that are there. They’re taking ownership for that. And any damages, the agency’s actually paying for it.

David:
What’s going on everyone? This is David Greene, your host of the BiggerPockets Real Estate Podcast, the biggest, the best, the baddest real estate podcast in the world. Here today with my good friend and talented co-host, Rob Abasolo. Now, we have one of the best episodes we’ve ever done for you today. And I’m not exaggerating, it’s that good. You’re going to listen to it more than once. It’s going to inspire you. You’re going to go follow the listener, and you’re going to think, “Gosh, darn it, that’s why I listen to this podcast.” When you get that feeling, please do me a favor and leave us a review on Apple Podcast, Spotify, Stitcher, wherever you listen to this. Because we really need those, and you’re going to love it.
I’m going to make this a very short intro here, because we went long. We were supposed to record for a certain time, but it was such good content, that we just kept going and going and going. And I don’t think that you are going to be upset about it when you hear it. Today’s quick tip before we get to the guest is, look for creative ways to exercise your leads. Our guest today tells you about different ways of finding guests for different asset classes of properties that you probably never thought of. But he is making more than 10 times some of his competition, by looking for ways to do it. Make sure you listen to today’s episode all the way to the end, because you are not going to want to miss this. It is subtle, yet brilliant. Rob, anything you want to say before we get started?

Rob:
I have a feeling that if you listen to this all the way through, you will probably listen to it again. This is one of those episodes that I think people will reference for many years to come. I’m so excited. I’m so excited. This is one of my favorite, legitimately that we’ve ever done.

David:
Yeah, I end up asking our guest today, if he wants to coach me on the topic of today’s show. And so hopefully he does, and we come back, and you guys can follow along with the journey of me trying to implement Jesse’s methods. So without any further ado, we are going to jump right into our interview with Jesse Vasquez.

Rob:
Jesse, welcome to the show. To give our listeners some background, you run a full-time mid-term rental or medium-term rental business rather, that caters to healthcare workers. You’ve hacked this market segment, and are here to give all of your secrets to our BiggerPockets audience. Your business includes 27 properties in Texas, Oakland, and in the Central Valley. And you’re a self-described go-giver. Did I miss anything?

Jesse:
No, man, that sounds pretty damn perfect.

Rob:
Oh, and also you’re a fellow YouTuber, right?

Jesse:
I am, man. Yeah, so I’ve been able to build a beautiful business, you guys, from both mid-term rentals and short-term rentals, and co-hosting other people’s mid-term rentals. And specifically in the Central Valley, in the Bay Area, David, wherever you’re at, San Francisco, Oakland, Berkeley, all those beautiful places in the bay. And even though the prices are high there, we still are able to get a pretty solid amount of income in a high market, which is difficult to do in a lot of places. That’s pretty much it, man. I worked in healthcare for 18 years.

Rob:
What’d you do in healthcare, specifically?

Jesse:
Yeah, I was actually a business development manager, so it’s a fancy way of saying sales. I was a sales rep for a hospital for companies. My job was to get permission for these doctors to have privileges at a hospital. And also for patients that were discharging, my job was to connect and schmooze with these case managers, to get them to use me to send folks home. If they needed… So David, imagine if you fell, God forbid that happens. You broke your hip. And Rob, you are the case manager. My job was to be buddies with you, so that you would send me David as a referral, and then I would get paid on that end. So yeah, it was a really cool business. It paid me really well. I was making over 200 grand a year. I had golden handcuffs at that time in my life, and I finally decided, “You know what? I’m not doing this anymore.” Plus, I was driving the Bay Area from the Central Valley. And for those of you who know, it’s like literally… Dave, you probably know Modesto.

David:
Oh yeah, I’m from Manteca, which is like 20 minutes away from Modesto.

Jesse:
Holy smokes. Yeah, we’re neighbors. So literally driving from Manteca, Modesto to the Bay Area, literally daily is, I’m not kidding you guys, is like a three and a half to sometimes even four-hour drive depending on what day you decide to go, what accidents and whatnot. So for me, it was just burning me out. That drive was killing me. And I just decided one day I went into work, I’m like, “I’m just done. I’m going to just go full in on investing in real estate and mid-term rentals.”

David:
This is fascinating. Also, so are you from Modesto? Is that where you grew up?

Jesse:
Yep. Yeah. And actually speaking of Modesto, there’s a couple of people that I know that know you, that actually started working with you back in the day, or working on deals. You probably knew who I’m talking about.

David:
That’s funny. We’ll have to catch up on that. But you can still catch me in Modesto at the Vintage Faire Mall, once every two years when I have to go shopping for new clothes. That’s the best deals around. So this is interesting because as people are going to see later on in the interview, these sales skills that you developed in this business development role, have come in incredibly crucial for you when it comes to running a medium-term rental business. And so this stuff is going to, it’s going to come full circle. That’s really good. Before we hear about your freaking empire that you’ve been building, tell me about your first real estate experience as a kid.

Jesse:
Yeah, this is a beautiful story. Well, it depends on what kind of beautiful you’re talking about here. All right, you guys have all seen National Lampoon’s Christmas Vacation, right? I’m assuming?

David:
Yes.

Jesse:
All right. So you know that Woody, that station wagon? So I need you guys to picture this. Me being a nine-year-old kid in the back seat of this wool, there’s literally wool upholstery in the car. My mom and dad were in the front seat. I grew up in a very Catholic household. Rob, you might know about this. Hispanics usually grow up Catholic, maybe in… I don’t know. So anyway, my parents were in the front seat. I was in the back bouncing around, because those cars do not have any shocks at all, by the way, and in this Woody. And my parents were arguing as we were on our way to the courthouse. They were arguing because they had tenants that were living in the property that didn’t want to move. They were literally not moving.
My parents, again, being super Catholic, were always very forgiving of people like, “Oh, they can’t pay this month. We’ll pay next month.” And literally as a kid, that was my first experience in the backseat, never hearing my parents argue of this 19… it was like a 1983 Woody, the same one in National Lampoon’s, for those of you who are picturing this. That’s my first introduction to real estate. And I remember thinking, “Holy crap, I don’t ever want to be in real estate.” Because here I am as a nine-year-old boy sitting in the back of a courthouse, my parents, and this lady that was renting from them.
And do you know the crazy thing, David and Rob? The judge looked at her and said, “This is not the first time this lady’s been in here.” And I remember her name specifically, I’m not going to use it on this show. But he said, “This is what she does.” So it’s literally she would go and stay at people’s places, take advantage of them, not pay the rent for months, and then eventually go into court. And then that’s what it was. So it was literally just repeating the cycle. So for me, that was my very first introduction to real estate in the backseat of a 1983 Woody, that’s what I’m going to call that. It probably doesn’t sound very good. Backseat Woody. Whoa, what’s going on here, guys?

Rob:
I’ve really restrained myself several times.

David:
So you got exposed to the very worst of the industry from tenants that are professionals at taking advantage of landlords. And you said, “When I grow up, I want to put myself in a position to let that happen to me?”

Jesse:
I grew up and I said, “I am not going to allow that to happen to me,” yeah, yep. Which is where the contracting stuff came in, and the Airbnb stuff came in. And my dad was always like, “Real estate’s great.” And this is not the first time my parents were going through that, you guys. Keep in mind, literally over probably the next… I was nine at that time. Over the next five, six years, we probably ended up in court again, probably three or four more times. Finally, my parents started selling off some real estate, and I just thought to myself, “Do I really want to end up like this?”
Yeah, obviously that’s not the route I wanted to go. And I was always told real estate’s such a good thing. Keep in mind, my parents were immigrants that came here in the ’70s, and built this pretty good real estate business. And then I watched it kind of deplete over that span of seven, eight, nine years, just because of them being generous in a lot of ways. And also not very business oriented. They were more on the emotional side of it than the actual business side of it. And I think a lot of people, especially immigrants sometimes can have that mindset. You know what I mean?

Rob:
For sure, man. So question, did your parents ever have any wins throughout the year? Were there ever any moments where you remember watching them actually have success in real estate, or was it always sort of a downward spiral, if you will?

Jesse:
No, it had peaks and valleys. So it was like, I’d watch them do really well, buy multi-unit properties, two doors, three doors. And then all of a sudden end up in court again. It was like the same thing. My mom was the business mind, and my dad was the emotional mind. So it was, those two things together were always kind of clashing with each other. And I think for me, real estate probably wasn’t the best avenue for them, because they were just way too forgiving. So I came in, and when I decided to do this, I’m like, “You know what? I need to get paid first. I’d watched this too many times.” I never heard my parents fight ever. My parents were not the fighting type. But the first time I was able to hear that was over real estate. Which David, you’re absolutely right, man. That was the ugliest thing that you could potentially see in real estate on the landlord/tenant side. That was it. That was my introduction.

David:
So that clearly had an impact on the way you decided to structure your real estate business. Before we hear about that, I just want to commend you. Props for not saying, “Oh, there’s a bad thing with real estate. I’m just going to throw the baby out with the bath water. Just screw it. There was a bad experience.” So many people take that approach. Instead, you were smart enough to say, “Well, how do I eliminate the problem and maintain all the benefits?” So you figured out a way to structure things to where the tenants had less ability to professionally screw you over. So let’s hear, how did you first come up with the idea to invest in real estate the way you do now?

Jesse:
Yep, yeah, so this is going to take me back to what I did at my W2 job. I was working on the floors of the hospital. And in California, you guys know how everybody says dude, and bro, and man, David? Rob, you’re in Texas, you don’t know. I guess you’re here from California.

David:
They say y’all in Texas.

Rob:
Y’all.

Jesse:
Y’all. So there was this really sweet lady, her name was Barbara. And I was working at the hospital, and there was a little… We were on the floor. And she was saying things like, “Oh, don’t you know? And such a doll.” And I’m just like, “Holy crap, where’s this accent? I love this. Where are you from?” And she’s like, “Fargo.” And I was like, “Cool. I watched the show. I get it now.” Or I watched the movie, this was a while back, and 2015 by the way. And I was like, “What are you doing here?” And Barb was like, “I’m a travel nurse.” And I was like, “Oh, that’s cool. Where are you staying?” And you guys are not going to believe where she was staying. And Dave, you might know this because you are from Modesto. She was staying at Motel 6 on 9th Street, Downtown Modesto.

David:
Why?

Jesse:
And for those of you who can’t see David’s face right now, he’s making a pretty cool face. And because literally, it’s not a place where a travel medical professional, especially a nurse is going to feel comfortable. And I asked her, this is my follow-up question, “How much are you paying for that place?” She was paying $3,000 a month for Motel 6. That’s what the rent was for her to pay. And at that time, this is 2015, I could buy a property for under 300 grand, my payment would be 15, 1,600 bucks. And they’re paying 3K, so my brain was like, boom, “I need to do this right now. How do I figure out how to do this?” She started to talk to me about contracts, which I already knew about. And everything in healthcare, you guys, whether you’re a doctor, nurse, clinician, physical therapist, everything goes around contracts.
Housing is not any different. Everything in healthcare is based around contracts. So I walked down to the HR department, knocked on the door and said, “Hey, I’ve noticed all these clinicians that are travelers here. How do I actually become a housing solutions provider for these folks?” Because they’re all staying at this crappy place.” And the hospital, Doctors Medical Center, by the way, David, was like, “Oh, we’re actually looking for housing. How do you want to accommodate housing? What property do you have?” And at that point, I was just like, “Tractor beams, real estate.” I didn’t even own my own house yet. And I went and bought an investment property. So that’s kind of how it started.

David:
My cousin is a nurse at Doctors Hospital in Modesto. We have a lot in common here, Jesse.

Jesse:
I know.

David:
That’s funny.

Jesse:
What’s going on here?

David:
I mean, we’re kind of glossing over it, but that’s brilliant. That you recognize the problem, that you saw a solution. And that you just said, “I can buy a house for 15 or $1,600 a month.” The nurse is going to be happy to pay three grand to have a house and not have to live in Downtown Modesto. That area’s gotten even worse, if you’ve been there lately. It’s kind of over overrun with transients at this point. So they’re not going to even feel safe leaving the hotel to get to their car, is what I’m getting at. And they’re probably doing this at nurses’ hours. So graveyard shifts, swing shift, they’re coming in and out in the dark. It’s terrible.
And they don’t have their own space. When you’re staying in hotels of ill repute, the type of noises you’re going to have to hear, and the screaming and the yelling, and just the overall chaos. And nurses need a place where they can find some peace and respite from the insanity that they’re dealing with. So you see all these things, and it just clicks like, “Oh, this is what I’m going to do.” Do you think that your parents’ background in real estate had something to do with your confidence level to say, “Okay, I can jump in and meet this need in a business way?”

Jesse:
Yeah, definitely, man. I think somehow subconsciously, that burned into my brain. I need to get paid. I need to make sure I get paid up front. And then also, my dad would always tell me, “Real estate is where most people make their millions. You want to build…” “It’s basically like a long-term bank account,” is what he told me. Verbatim, that’s exactly what he said. He’s like, “You buy a property, you rent it. It’s just like having a large bank account that’s going to eventually pay you in dividends over years.” It’s not like that you get to make money right away. In real estate, it’s not like that, right? It’s a long game. So he essentially burned that into me as a child. “Buy real estate, buy real estate, but don’t end up like me, in court every six months.” And he knew he consciously, he was in that specific space.
So yeah, 100%. My brain was like, “How do I do this? How do I grow, but how do I get paid?” So that was my introduction to… And that was just the nursing side. For nurses, the pay. At the other side is the contracting. I’m sure you guys are going to dive into that a little bit, but it’s so different. And by the way, David and Rob, you guys, I noticed this because my job was to go to all these hospitals. So like Manteca, David, you mentioned that. I was in Kaiser, I was in Memorial Medical Center, Emanuel in Turlock. Every single one of these hospital floors, guess what was there? A bunch of Fargo accents, “Don’t you know?” And stuff like that.
And so I realized, holy crap, the Central Valley has such a need for clinicians. And actually at that time, I had a friend that was going to Stan State University, another friend that was going to JC. And there’s only 30 graduates a year for these nurses in our specific market. And there’s over 400,000 people between Turlock and Lodi. Actually more than that. And what I noticed is, then I started calling around to these colleges, 30 graduates, and only a quarter of those students would actually stay in the Central Valley. So we’ve always been understaffed for the healthcare industry.
In fact, California, Illinois, Texas, North Carolina, and Florida are the most… they’re five underserved states for travel medical professionals. And they’re not going to be to pre-pandemic levels until 2030. So if you guys are in one of those states, you have a long roadway to build the legitimate business, that is housing clinicians. Because there’s not going to be enough clinicians until 2030, is what the National Registry of Travel Medical Professionals is predicting.

Rob:
And you’ve just ruined those tips for us by saying that on the podcast. No, I’m just kidding.

David:
Yeah. Thanks, Jesse.

Rob:
So Jesse, bring us back a little bit. Because you stated that you were making really good money at your previous job or at the job that you were working, the W2, multiple six figures. And it is golden handcuffs, right? You’re making money, very comfortable. You’re probably past that threshold where, yeah, it’s like you’re very comfortable, and you can probably buy whatever you want within reason, and travel, and do all that kind of stuff. And so the difficult thing with making that amount of money is that when you start going into real estate, you have to try to replace all that money that you’re making at your W2 with real estate, which at that level, takes a long time. So tell us about that shift and that transition from going to W2 all-in on real estate. What was that like? Why did you decide to even go all-in on real estate, when you were crushing it so much at your job?

Jesse:
Yeah, I had success and self-fulfillment. I was not happy with the job, but I was happy getting the paycheck. And at the end of the day, 200 grand for those of you in the Central Valley or people that realized, 200 grand is a lot of money in the Central Valley. It’s not very much in the Bay Area. But if you’re in the Central Valley, you’re like the top 5% in these areas. So for me, I was like, “Holy crap, I’m crushing it. I’m doing so well.” But at the end of the day, I was not happy. And I think my timeframe, and I think a lot of real estate investors always go like, “Oh, the time, freedom,” whatever, yada, yada, yada. But that’s not actually the case. When you dive into stuff, full force, it takes years to build that.
But for me, man, I just didn’t want to do that grind anymore. I was just done. And one day I literally went into work, and I’m just like, “I’m not doing this anymore.” I gave my resignation letter. They let me go that same day. And literally that was July 17th at 3:43 PM, I was in San Francisco. I know the exact time, date, everything. I know what I was wearing. I remember vividly, you guys, vividly. And from that point on, my family was like… Dave and Rob, they were like, “You are insane. Why would you ever do that?”
Remember my daughter, who was 17 at the time, 16. Called my mom, and she’s like, “My dad just quit his job. We’re going to be homeless.” Literally, my daughter called and told my mom this. Because in Hispanic families, you tell the moms, the grandmas everything, and then they’re going to get on me, and I’m going to be like, “Oh God, why did I do this?” So that’s what happened. Literally, everybody in my family was like, “You’re so dumb, why are you doing this?” And now, they’re just like, “You were right on. We were supporting you the whole time. We knew you could do it.” So it’s tough, man.

Rob:
Yeah. And so you go into this, you decide to transition into it. Obviously, the timing of going into real estate is always, you just never really know until you make that decision, and you march into the office. Tell us a little bit more about how your family took that. Was it something that… Because you said now they accept it, was it fast? Or did you really have to convince your parents? Because I’m sure they had some biases with their relationship with real estate. So how much did you have to pitch them on this idea? And how long did it take really before they were like, “Oh, okay, I think you got a good handle on this.”

Jesse:
So Hispanic families are very like, you go and do a job, you work your butt off, then you move up to manager. And then you move up to this, you climb that corporate ladder. So my parents were 100% like, “That’s what you need to do. What are you doing?” So it was not an easy transition. I think that the first few months, it was kind of, I had money saved by the way, you guys. I had six months of cash reserves, and probably even a little bit more than that. So that if it didn’t work, I can always go get a job somewhere else. I’ve been in this space for so many years, that I can literally go get a job. Even today, I can go get a job right now if I wanted to.
So for me, in my brain was like, “If I don’t do this right, if I don’t try this, then I’m not going to have any success. And I’m going to present this later on in life.” Granted, I did give up a 200K a year job. But I mean right after I did that, everything just took off. I started teaching people what I was doing, and that was successful. And then my portfolio was growing. Which by the way, for those of you who decide to leave your job, make sure that you start your actual corporation two years ahead of time. That’s where I screwed up, that I didn’t actually start my corporation until 2020, and I left in 2021. You have to have two years of experience through the IRS. They want to see those two years on paper. So that made things a little bit difficult to go buy property, but I did the SCR loans. But you know that you can’t conventionally get a loan that way.
So I did things kind of on a whim. I should have thought it out a little bit more, but I’m so glad I did it, you guys. My life is completely changed. I’m working way more than I ever have, but I’m also making way more than I ever even dreamed about making. And it’s just been such a beautiful ride. And not only that, but inspiring other people that are in these spaces like Modesto and the Central Valley, and places all over the US are not big. You don’t have to be in these big urban markets to do extremely well. You can be in the very underserved small market, and have a pretty good amount of doors. And build an actual legitimate business based off of relationships. And I think that’s where a lot of people can really drive home this specific model.

David:
So you mentioned that you’re making more money than you ever have before. Can you give us a quick rundown of what your business stands look like today, how many units you’re managing, and the revenue they’re providing?

Jesse:
Yes. Right now, I have nine properties that I own. I just did my books, and we did about $987,000, and that’s gross in just nine properties. And then I manage for other people, and we’re doing over a million, that’s short term and mid-term off of 11 other properties. So between the combination of these two, we’re doing 2.1 million. And then my coaching business is like, that thing’s going crazy right now. And so just the combination of all those things. And just keep in mind, you guys, when I talk about these numbers, those are gross numbers. The revenue, if you own properties, it’s usually 40, 50, 60% is what I get to keep, what I actually get to keep. But with mid-term rentals, there’s not as much turnover. For medium-term rentals, there’s not as much turnover, there’s not as much products that you need to use in these properties. So we have less kind of… And Rob, I’ve heard you mention this before. I feel there’s less wear and tear with having actual medium-term rentals in my specific place. So yeah, it’s been fantastic this last couple of years with just the growth.

Rob:
For sure. The wear and tear aspect of medium-term rentals. When I first started doing it, I was doing it incorrectly, because I was really only cleaning after that guest checked out. So if a guest was there for three months and we cleaned it, it was a disaster. But now what I’ve done is, I send cleaners in every month now to do a checkup, and to fix anything that I might like to… Basically, point anything out that might need to be fixed. For example, my cleaner just went over to one of my mid-term rentals last week. And there was a mailbox that’s attached to my house that was just on the ground. And she was like, “Hey, this is broken.” And I was like, “All right, I wish the tenants would’ve told me that.” So sent my handyman. So it’s a good way to help avoid some of that wear and tear. Do you have anything like that that you do for your mid-term rentals, or do you just let them play out their entire lease?

Jesse:
Yeah, man, there’s a lot of things we do for the mid-term rentals. So going back to the contract, connecting with agencies, and maybe we can drop in this in a second. But we have car rentals. So a nurse can literally hop on a plane, end up in San Francisco or Oakland, get an hour Uber into Modesto. As they check in, they have a car in the garage waiting for them. We had a grocery delivery service to clinicians or resident doctors that are there, we’ll actually go deliver groceries that they want. Kind of a shipped in Instacart before that, we were doing that. We’re still doing that now. So literally all they would do is work, and we were supplying literally everything they needed from point A to point B. And I think this is where you start building relationships with the recruiters of these agencies.
Their jobs are to place people in these specific jobs, and if I’m able to be a person that solves problems for them, then they’re going to use me every time. And that’s kind of what happened with me with a company called AMN Healthcare. I was able to see the needs, and then I solved the problems. And then I became that go-to guy for this specific market. So everything just kind of snowballed, like I was mentioning before, being able to grow so fast. And it’s doing things different. Most people are not intuitive in that way. They’re not going to go out of their way to build something that way. And for me, it’s like, how do I make these jobs easier for the recruiters?

Rob:
That’s really cool. So you’re a very turnkey solution basically. You’re not just housing, you are also transportation, and effectively food. And I think obviously there’s a lot of value there. It’s really, really smart. A lot of hosts and a lot of people in this space tend to really just stop at what they consider to be their “job.” But this really does seem to provide a solution. So if you wouldn’t mind, can you walk us through a little bit how you structure your business?

Jesse:
Yep, yeah. So I’ll kind of break things down for you. So again, going back to the needs. The needs of these clinicians are… So for you guys that don’t know, or anybody listening to this right now. If you just go on expedia.com, and you just type in the cheapest car you could potentially get, which is like a Geo Prizm. Do they still make Geo Prizms? I don’t know if they do or not.

Rob:
I don’t think so.

Jesse:
They don’t make Geo Prizms. But anyway, the smallest compact car is literally going to be like $1,800 a month. I had at that time, a 2012 Civic that I would rent for a $1,000 a month. So my payment was literally 180 bucks, you guys. So I was renting that car, renting that property. And then we’d also do the grocery delivery. So my cleaning crew, because I had short-term rental after that as well. So we already had these cleaning crews that were doing stuff. So we just applied them to pick up the cars, drop off cars, go in and do maintenance in the properties. Clean them weekly, monthly, pick up grocery services. If they wanted specific kind of oat milk. I know that we were talking about milk earlier, you guys. So they would literally go get all these things that these clinicians and doctors are very specific on what they eat, what they… so it’s very specific.
So we would go out and do all these things, so that these folks would literally go back to the recruiters and say, “Holy smokes, Jesse literally takes care of everything.” So once those recruiters find out about that stuff, that’s where I’m actually building market share with these actual companies. And I’m actually building a business that I don’t need to rely on Airbnb. I don’t need to rely on Furnished Finder. I don’t need to rely on all these people. I am creating my own business. And if I eventually want to sell my properties, guess what I get to sell? Not only my tangible real estate, but also my contracts, my actually legitimate business.
So I think that a lot of people think about real estate, and they’re just like, “Oh cool, this is just like a tangible house or a property.” But there’s other things that you can actually build that make it a business. And that’s being one of them. And again, David and Rob, if I didn’t have the 18 years of healthcare experience in that sales background, I would’ve never been that intuitive to think that way. I think a lot of people have jobs now, whether you work at AT&T, or you’re a drug rep for a pharmaceutical company, everything goes back around customer service, essentially everything. The easier you’re able to make somebody’s job, the better you’re going to be able to do in the outcome.

Rob:
So can I just ask a little bit more on the logistical side of this? Because I know a lot of people, they have to be wondering. So you talk about the Instacart thing, you talk about the transportation. The actual logistics of that. Is the client or the travel nurse, are they actually renting that vehicle from you? Is it a different business than the actual business of the home itself? Are you renting it via Turo? How does that look? And then I’ll get to the Instacart question here in a second too.

Jesse:
All right, cool. Yeah, we ended up actually getting an umbrella policy that covered both the property and the cars. We have two separate businesses. So I have my AirVenture, which is the hosting company, and then we have another company that actually handles all the vehicles, so we weren’t intertwining the two things. And then we had an umbrella policy that covered literally both businesses, and both businesses were under that policy. So that was the difficult thing is getting people from other states to get coverage in California. And for those who don’t know, if you drive a car in California… If I got in your car right now, Rob, and you’re in California, I’m literally covered to drive your vehicle. That’s how California state law is.
So we ended up getting an attorney, paying thousands of dollars to get this coverage so that I’m protected, and whoever rents the car is protected as well. And then we had them buy their own supplemental insurance, which was a short-term insurance for that specific car. So we were covered on three different angles. And for anybody thinking about doing that now, you can literally do that with Turo, which is Airbnb for cars. That’s literally what it is. So you can essentially do the exact same thing that I’m doing, and not to pay the thousands of dollars, but just pay Turo, what is it? 20 or 30% of the daily revenue or the revenue of that vehicle that it’s rented out.

Rob:
I think it’s anywhere from 10 to 30% depending on how much coverage you’re looking for. Okay, so on the Instacart side, this is just really interesting. I’ve really never heard of this angle. Is that something that, do you provide some kind of form or some kind of survey that’s like, what are the kind of foods you like, and then I’m the one that’s going to physically order it for you? Or do you just give them I don’t know, a promo code that gets the money off of their first delivery? How do you set that up?

Jesse:
Yeah, we use Typeform, I don’t know if you guys ever heard of a company called Typeform. So you could basically essentially put any type of questionnaire that you want, and we would formulate all the things that they like, what they don’t like, from Typeform. So whether it’s dairy, meats, a specific kind of meat, they would be able to put all that stuff. And I think it was 14 questions that were asked around food. So they would literally put what was in there. My cleaning crew would then go out, pick up that stuff, drop it off, and we would charge a $45 delivery fee specifically for that, which is including time.
So essentially, we weren’t necessarily making very much off of that, but what we were doing is creating that business mindshare with the recruiters, the agencies. Because these recruiters and these nurses, they’re very well-connected, especially the first time they’re coming in. So they’re going and just telling them like, “Hey, this company’s taking care of everything. We want to use this guy, we want to use this company. Or the next nurses that are coming behind me, you should refer them here too.” So even if there’s a company that doesn’t do contracts, where these actual agencies are paying me a specific amount, they’re at least giving the referral to these nurses. And that’s exactly what I was going for at that time.

Rob:
All right. So you’re talking about the contract aspect of this. Walk us through getting a contract. Because obviously you worked at a hospital, and you walked into the HR like we talked about. But the everyday person can’t just… I mean, not without being escorted out by a security. But they can’t just walk in the hospital, and go into the HR department. So how can the everyday person go about snagging a contract like this?

Jesse:
An everyday person can go into the hospital and knock on the HR department, first off, you can definitely do that.

Rob:
Okay.

Jesse:
But the smarter way would be to just call the hospital, ask for the HR department, and just say, “Hey, can you tell me what agencies you’re working with that are on the healthcare side? Is there any specific companies you’re connected to?” And secondary, “Is there a recruiter that’s attached to you guys, that you guys need for housing?” I’m just giving you an example. I own, I’m going to say five properties in the specific market. I want to be a solutions’ provider specifically for them.” Nine out of 10 times, we’ll have a HR department that will say, “Yeah, we use one company, AMN Healthcare or Trustaff, whatever those are. And our recruiter is Barbara.” I’m going to use Barbara again. Cool. That gives me some really good information. Now guess what I could do? I can literally call that company.
I can talk to Barbara and say, “Hey, I got referred to you from DMC. They’re telling me that you guys are connected. I actually have properties here. Is there a way that you and I can connect and actually create a contract for these clinicians to come?” And if they don’t answer you that way, guess what I can do secondary? We’re talking about business, right? I can now go on LinkedIn, and I can connect directly with that company, connect to Barbara with her last name on LinkedIn. And there’s my backdoor into getting this specific contract.
Again, everything’s about building relationships. And you got to think about it just like if you’re dating, everything’s very slow. It takes time, it takes energy, it takes consistency. But once you do that, and you’re able to build an actual contract with these agencies, you can get paid every time. You get paid up front, sometimes three months at a time. So first, last and deposit. And you can really actually build a legitimate business. And these agencies will go to you every single time, and you don’t have to rely on Airbnb. Again, we talk about Furnished Finder, we’ll dive in on a bit. But you can just actual build a legitimate business this way, by just literally building relationships, which is not an easy thing to do, but it’s possible.

Rob:
So I’ve heard you mention LinkedIn a few times on your channel, and I know that this is something that you do with connecting and everything like that. Do you ever advise anybody that’s wanting to go the LinkedIn route to get a LinkedIn premium subscription? Where they get the, I think it’s called an InMail, that allows you to just send a message to somebody without them accepting your connection invite? It’s been a while since I’ve been on LinkedIn obviously, but I think that’s about right.

Jesse:
Yeah, when I first started, I didn’t use that. You can send a message directly. So if I wanted to add David on here, I would be able to write, I think it’s like 500 characters. So I’d be able to say, “Hey David, my name’s Jesse. I own seven properties in Modesto. I just want to let you know that I talked to Barb over at DMC,” whatever, yada, yada. And that’s the other thing too. I’m creating instant credibility by that name, they already know that person, they work with them in the hospital. And they’re nine out of 10 times likely to actually read my email, because I’m name-dropping somebody that they connect with on a regular basis. That’s a warm lead, folks, you absolutely want to have those. If you have a cold email or a cold draft email, it’s harder to get across to those people.
So for me, that was how I built my business is just kind of talking to these clinicians. And we can all do it now on Furnished Finder, there’s something called the unmatched leads. And this is going to be a good tip for everybody listening right now. Take note of this. If you get on Furnished Finder, there is leads that come in, and there’s unmatched leads. All you have to literally do is pick up the phone and dial every single one of those nurses, and let them know what you’re doing. Ask for their recruiter and what agency they work with. And that’s literally how you could build your business for free. You don’t have to pay anything to do this. You can literally do it for free. So that’s another way that folks can get into this space by going after these agencies is by going on Furnished Finder.

Rob:
I need some clarity. When you say agency, like you said, “Call the HR department at the hospital, and you say, Hey, what agencies are you working with?” Can you just clarify what kind of agency are you talking about? Like a staffing agency?

Jesse:
Yeah, so every hospital does not have enough clinicians to meet the demand of patients. We talked about this a minute ago. Central Valley doesn’t have enough clinicians to meet the demand for patients. In the Central Valley, David, you might know this, there’s a lot of high acuity patients. Which means a lot of folks here are sick, compared to the Bay Area, it’s worse than the Valley. There’s just not enough nurses to meet the demand, so these hospitals have to outsource to be able to bring more clinicians in, and they have to outsource with agencies. And those hospitals typically have contracts with, say, AMN Healthcare, which is national or huge. Trustaff, which is another big giant company. Aya Healthcare is another big giant company. They’re national.
So they’ll have one recruiter or two recruiters that literally the hospitals will deal with. So if the hospital gives you that information, then you can now reach out as a third-party person and say, “Hey, I just got your information from the HR person at the hospital, here’s her name. How do I connect with you? How do I build an actual business? Or how do I actually build clientele with you guys? What is it that you need, or how can I assist?” And I think that’s where asking the right kind of questions, and making sure that you’re a go-to person for them. If you have multiple properties in the market, that’s better. I usually tell people, “Go deep, not wide,” which means you want to have a lot of properties in one little market, as opposed to being spread out so far. Agencies like to deal with people that have more properties in one specific space.

Rob:
Yes. So are you basically saying they want to know, “Hey Jesse, when I call you, I need you to have something available?” And so if you keep saying, “Oh, all my places are completely filled up,” they’re less likely to call you because it’s sort of a crapshoot with you, right?

Jesse:
Yep. Yeah. So most agencies will look at you, if you have five or more properties, you become on their preferred provider list. You’ll actually become like a preferred vendor. And that’s what you want to be. You want to be a preferred vendor. Not only on the healthcare side, we didn’t even dive into the insurance side of stuff. But that is what’s going to solidify you as being an actual true player in that market. If you have a one-off property here and there, you’re going to get bookings, I’m not going to say you’re not. But if you have that portfolio of five or more, there’s tremendous more upside of being that number one person that they go to on a regular basis.
And I’m seeing this more and more, where these agencies are now leaning towards, if you don’t have five or more properties, don’t contact us. That’s literally what they’re saying. So anybody’s looking to invest, you got to have multiple doors, and build an actual portfolio. Well, think big from the very beginning. Cool, I’m going to have my first door now, but in two or three years, or one year, I’m going to have five. And you build in that specific market.

David:
I want to ask you about how you choose the market, because I think you made a very good point, is in that, this is not a thing that you can casually step into, which at one point, it was. And so a lot of people hear the success stories from someone that says, “I bought a property in X city, and it does great.” And then they go, “Oh, if I buy a property in X city, mine will do great too.” And then you find out the competition is more fierce. They have a headstart on you. If you can’t get in with, like you’re saying, a minimum of five properties in some markets, it’s not everyone. But in some, it might not make sense. Probably the areas where there’s the most competition, where you’re making the most money.
That’s a very smart and helpful point, I suppose I would say, for the listeners who are like, “Oh, I was about to go buy one in Topeka, Kansas, maybe I shouldn’t. I need to look into it deeper.” What about the specific property? I don’t want to go too far down this, I just want to ask before I forget. Are you always renting to one nurse? Is it always a one-bedroom property that’s best? Or are there times where having two or three bedrooms in the same property is actually beneficial?

Jesse:
David, that’s an awesome question. So for me, I stick with two bedrooms and above. Any savvy investor, any intuitive investor is always going to have an exit strategy. And for me, that would be mid-term first, short-term secondary, long-term being last. That gives me more exit strategies. The more beds that I have, the more opportunities that I’m going to have. Most of my clinicians are coming in groups. They don’t come by themselves. There is a lot of clinicians that come by themselves. But I’ve been seeing over the last five years, millennials travel in groups. They’ll go to the Bay Area, work for three months, and then head to Ibiza for a month. And literally that’s the culture of this healthcare industry. It’s been changing over the last… I’ve been doing this since 2015, I’ve watched it change.
So for me, if I’m able to put more people in a property, that’s going to give me more opportunity to get paid more. And not only that, but I can house… I’m nicheing things down even more. Because most people will, exactly what you said, David, will get a one bedroom or a studio. But again, going back to what we were talking about a second ago, you got to diversify your portfolio, whether that’s a one bedroom, three bedroom to be able to serve multiple different people and clientele. But for me, it’s always been serving more people than just your typical one-off nurse.

David:
So getting a two bedroom or a three-bedroom property isn’t overkill, because sometimes they travel in groups. Which actually makes sense. If you got to move into a new area that you don’t know anything about, you don’t have any friends, you’re going to feel more comfortable doing that with other nurses you can relate to.

Jesse:
A 100%. And they’re already booking together. So when I talk to recruiters, I’ll say, “Hey, who do you have that’s coming in a group? Who do you have that’s coming with their wife or their children?” Especially during COVID, we saw this a lot. And you want to be able to house those people. And if you only have a one bedroom, you can’t, you’re not going to be able to get that extra income. And agencies want to group people together, that’s kind of why they connect. And a lot of times, doctors will actually travel with their families. So we got to contract with UCSF. And I’ll give you as an example. It’s a doctor that came from Europe, him and his family. He’s got two kids, a dog, a wife, and they’re staying in a property in San Francisco. And that’s what they do, they’ll pay. And they’re paying 14 grand a month for a property in San Francisco. They’re not paying, the agency is actually paying.
And the cool thing about the agencies is you can actually get these agencies, they can be the lessees on these properties. So in San Francisco or Central Valley, who you worry about, holy crap, there’s squatters. I don’t worry about that too much, but a lot of people do. These agencies are actually the lessees. And these are multimillion-dollar agencies, there’s no way they’re ever going to screw you over. And that’s one of the things that I love about this space, too, is that they’re taking responsibility for the clients that are there. They’re taking ownership for that. Any damages, the agency’s actually paying for it.

David:
That is so smart. So smart. Because you’re not going to have a hospital that wants to take you to court and potentially be sued, as much as you might have a individual that would be willing to roll the dice. It’s very similar to the advice I tell people who buy in college towns, and they rent out to the students. I say, “Don’t put the student’s name on the list, put their parents’ name on the list. You’re definitely reducing your risk by taking that approach.” So we’ve talked about the way you get the contracts, the type of properties to look for, the level of commitment that you recommend before someone gets into certain markets. Let’s talk about the actual market that you target, and why you target it? So what can you tell me about that?

Jesse:
Yeah, so this is perfect. This is the bread and butter of this conversation, you guys. So anybody looking to get into a market, here’s what I suggest you do. There’s hospital levels. Each hospital has a Level 1 and Level 2 hospital. These are like what you typically see on ER, Grey’s Anatomy. You guys have all seen that, I’m assuming, right? It’s this high acuity, lot of… Rob watches that all the time. So you’ll have these high acuity doctors that are there, brain surgeons, literally there’s on-call people. And I usually say, “Look for a hospital that has 300 or more beds. And that is not including labor and delivery beds.” These hospitals are going to have way more turnover. So if you look in the Bay Area alone, there’s probably, I’m not kidding you, probably like 15 Level 1 hospitals. These are massive. So they have a lot of people coming in and out.
So Level 1 and Level 2 hospitals are very similar. Level 3, Level 4, and Level 5 hospitals. Those types of hospitals are more rural, and they also have a lot of clinicians that sometimes come into these markets. So you’re going to want to look at what the level is. It’s going to give you a better insight on how many beds they have. It’s going to tell you a little bit more about how many clinicians are actually traveling there. Like UCSF, Dameron Hospital in Stockton, these big hospitals have a lot of people that come in and out on a regular basis. They need to have more clinicians to meet the demand of patients. In California, we have to have two nurses to one ICU patient. So you have these ratios that come into play, too, which means that bigger hospitals have more clinicians that are going there.
So look at that first. Call the hospital if you can’t get that information. It’s all public knowledge, you can look it up. But just call and say, “What level of hospital do you have?” One of the other things that I do, too, you guys, is I’ll actually go on indeed.com. And if you guys are all listening to this right now, you can do the same exact thing too. Go to indeed.com, type in Hayward, California, and whatever, travel RN, travel registered nurse. And you’ll literally see probably, I’m not kidding you, 30 or 40 different companies that are hiring for those specific people. That’s going to give you a mindset that, okay, cool, here’s a demand in my market. This is actually legit. This is today, right now, information.
Then I can go on Furnished Finder, and I can see what the demand is on that side. So furnishedfinder.com/stats will actually show you how many clinicians or how many people are actually looking for property in that market. So you have these two different angles. You have the factual data from Furnished Finder, right? And then you have the Indeed or Monster jobs, which is actually people hiring for travel nurses right now. And you can pick up the phone, and that’s another way to get contracts right there, is literally just by doing a simple, free Indeed search.

Rob:
I mean, it seems like you’ve got basically all these different I don’t know, places that you’ve kind of found on your own organically. Are there any other creative ways for getting some of these contracts or clients into your business?

Jesse:
There’s so many creative ways, man. Yeah, I can dive into a lot of them, the healthcare is one of them. So you guys know what Dave & Buster’s is, I’m assuming, right? You guys know what that is?

Rob:
Yes.

Jesse:
So they were building a Dave & Buster’s in Modesto a while back, about two years ago. I saw a construction truck. I literally went there and took a picture of it, called the company and said, “Hey, where are your guys staying that are working here?” And they were staying at Holiday Inn Express. There was five rooms that they were paying for. It was a $1,000 a day to have these five dudes working at this place. They were all engineers, by the way. So I just called that agency and said, “Hey, I can rent you guys a property for $7,500. They can house all your people there.” They’re literally going to be saving thousands of dollars. So there’s different ways of doing things. You guys have all heard of Extended Stay hotels?

David:
Mm-hmm. Of course.

Jesse:
Okay, cool. So if you literally just drive by there at 7:00 PM at night, and you take pictures of all the work trucks. Extended Stay hotels have literally massive contracts. They’re like the number one contracted agency with construction companies, stuff like that. All you got to do is literally pick up the phone, take pictures at 7:00 at night. That’s when the dudes are back, or people are back at the place. And you just call those companies in the morning and say, “Hey, I noticed your work truck out there. I have properties here. Can you tell me how many rooms you guys are renting? Did you guys contract with other people? We have a safe, comfortable house that can house all your people that are working right now. I can save you money. What are you spending right now?” You just start finding out information about these companies.
And again, this is the intuitive side of things. If you think outside the box, you’re going to be able to build a business. And I think a lot of times, people don’t necessarily think that way. And these are creative ideas and ways that people can literally start building a six-figure business relatively pretty quick, by literally just taking the time to call somebody and ask questions.

Rob:
That’s good, man. I love it. I love it. All right, so I don’t want to go down too much a rabbit hole on this, but you did say something that really sparked… I mean, we could do a whole nother episode on this, I’m sure. But you did mention, even outside of the medical industry, you talked about the insurance industry. Can you give us a little brief rundown of what you meant by that, what that means, and that entire side of the MTR business?

Jesse:
Yeah. So medium-term rentals in the insurance companies, so folks that are displaced from fires, floods, or any kind of catastrophic event. And just by the way, you guys, every 88 seconds in the US, somebody loses their property due to a fire, flood, or something like that. There’s a lot of these claims. So there’s companies like ALE Solutions, DAN Housing, these are two large scale agencies. And what they do is, if somebody loses a property, they have to relocate them right away. And a lot of times, just like we talked about with these construction workers a while ago, families are literally renting two or three rooms, and they’re paying thousands of dollars to… these companies are paying thousands of dollars. Families want to be comfortable, they want to be in a place that they know, that they feel like sharing. Two different rooms doesn’t work necessarily all the time.
So for me, this is something that’s been really growing for me too, you guys. I’m actually renting properties right now in the Central Valley and in the Bay Area from four to 5X what the long-term rental rate is, and I’m not kidding, this is legit. Because these agencies are actually paying, it could be 10% of the property value that they lost per month. So if somebody has a million-dollar house, they’re paying 10% of that per month on housing for them. That’s over 10 grand a month that they’re specifically paying for these properties. So that’s a huge play. It’s been something for me that’s been able to grow tremendously. With just two properties, I can cash flow 10K a month off just two insurance claims.
And all these things that we’re talking about a second ago, building relationships, connecting with these folks. There’s somebody called a relocation specialist, and you guys can all go on LinkedIn right now, and you guys can all look up these people. Relocation specialists are basically the bird-dogs for these families to find another property. So if you connect with them, you build rapport with them, they’re going to send you these clients relatively… not necessarily easy, but it’s about building rapport, building relationships with them. So for me, man, that’s been a game changer, going from the healthcare side and being able to serve multiple different clients.
You don’t want to put all your eggs in one basket, right? You want to have multiple different avenues or avatars to go after. And I think for me, the insurance side and the healthcare side, those two together, they work beautifully. And you can make a substantial amount of income from those.

Rob:
Can you clarify really fast? You said 10%. Does that mean if on a million-dollar house, roughly they’ll give you a $100,000 a year for a housing allowance?

Jesse:
Yeah, every housing allowance is going to be different. But yeah, so that’s how you can look at it, a year. If the family lost a million-dollar property, they’re going to be able to give you a $100,000 for that year. So that’s what we’re kind of looking at right now is… And when you talk to these folks, they’ll tell you. I had ALE Solutions tell me, “We pay 10% of the value of the property per month.” So again, if it’s a million dollar, they’ll split it up in 12 months, and give you that amount. So for me in the Central Valley, I have properties that are 1,500 to 2K a month, and we’re renting it for 8,000. I’m cash-flowing literally 5K a month from one property.
And people are doing this all over the US in a lot of different places. David, here in the Bay Area, same thing. Most properties are over one million, one, 2 million. So these companies are paying 14K, like I mentioned, in San Francisco. 9K in Oakland. Berkeley, we have 11K. So you can get substantial income, even in markets that are urban, that are more expensive. And that’s through building relationships.

Rob:
Jesse, on working with these insurance, I guess relocation specialists. Are there any tips that you might have for building rapport with them? Is that the same level of… I mean, do you do the same type of stuff for the insurance relocation specialist, as you would do with the medical HR department and agencies?

Jesse:
Yep. So what I typically do is, I’ll get on a call with them and I’ll say, “Hey, do you guys have five minutes, that I can have a conversation with you and your entire staff?” And they will say yes or no, or whatever. So I want to get on a Zoom call with them. So what I’ll do is I’ll… Actually, we have this beautiful thing in this world called DoorDash, you guys have heard of that? So I’ll actually find out what office they’re working in. I will find out every single person that’s working in that office, what their name is, what their favorite Starbucks drink is, how hot they like their Starbucks drink. And I’ll literally order Instacart or DoorDash food to them, get on a five-minute presentation, talk about my properties. I will literally have everybody’s email, favorite Starbucks drink, and that’s how I’ll build my business.
It’s almost like you’re meeting somebody in-person, but you’re talking to them over the phone. So for me, that’s, again, going in thinking intuitively, you guys, is not a lot of people think like that. Me coming from my background of being in healthcare and this is what I did for a living, it’s the same kind of concept. You want to build relationships. You want to be cute but not forgettable, right? You want to be somebody that they’re not going to forget about. And I promise you now, most people listening to this, those relocation specialists aren’t getting Starbucks drinks. People aren’t buying them Dunkin’ Donuts, we’re thinking different. We’re building a business and a brand. And I think that at the end of the day, you have to think about those things. And just get five minutes. That’s all you need is five minutes with somebody to talk about what you’re doing, and how you can help them.

David:
I want to highlight something I think you’re doing so much better than other people that have not had as much success. It comes down to the mindset and the approach you’re taking. Because you’re approaching this as a business, not a replacement for work. So many people get into real estate investing because they don’t like their job, and they’re like, “All right, I just want to get a couple of houses, and never have to work again. Once I’ve bought the properties, I’m done.” And that may have worked at one point in history when there was less competition, but there are so many people looking for yield, as rates have been kept very low. There’s not a lot of opportunity. Everyone’s hearing all the YouTube videos and Instagram Reels of, “I don’t want to work anymore. I do this thing.” It’s not a secret. It’s out there. Now you got to be better than other people.
And what you’re describing are fundamental techniques that worked in your sales role at the previous jobs you had. You are applying them to your real estate business, and you are having more success than other people that are doing the same. Rather than saying, “I don’t want to have to email someone, I don’t want to learn their Starbucks drink. I just want to buy a house so I don’t have to.” That subtle approach, taking a skill you had in one area, applying it to real estate, has probably made you 10 times more successful than the other people that could own the same properties you do, that could listen to a podcast like this.
You’re describing it so clearly, and it really is simple. It’s not a complicated strategy, but it isn’t easy. It doesn’t just fall into your lap, right? You got to do a little bit of work, learn their Starbucks drink, learn what Instacart is, learn what DoorDash is, learn how to use Zoom. Have a clear delivery when you go to this half-hour meeting that you explain what properties you have. You probably have a slideshow that’s prepared, or something that they can see pictures of what they look like, so they can feel comfortable here.
In my opinion, the future of real estate investing looks more like what you’re describing, than what it’s looked like looking back over the last 20 years, which was buy it, set it, forget it. Now is going to require an active role if you want to stay on top. And we should be very grateful for that by the way, because if this wasn’t the case, Blackstone would buy every single property and push us all out of it, and we wouldn’t be able to have a business anymore. It’s these detailed nuances that allow us to compete with the big dogs. And that is why podcasts like this are so important, because you can learn these sorts of techniques that worked in other parts of business, that will also work in real estate.
Okay, Jesse, you’ve mentioned Instacart, you’ve mentioned offering rental cars, everything you could do to make this convenient. I also, I keep highlighting everything you say. That’s good. It’s brilliant. You’re talking about customer service. You’re not saying, “I want to buy a property so I don’t have to cater to people.” You’re saying, “I’m going to buy a property, and cater to people through that property,” which gives you an edge. What other amenities can people be thinking about, that will improve their odds of being successful? Is design super important? Are there little details or things that can be left in a house that will improve the actual experience a person’s having, so that they go to their HR department and say, I loved it, I want to stay with them again? What are you doing?

Jesse:
Yep, yeah. So there’s two things I want to highlight here, David. As more regulations come into place from the short-term side, you’re going to see more investors looking at the mid-term rental space. Right now in the US, only 3% of the entire US is regulated by short-term mental regulations in municipalities, 3%. I was just reading a study, it’s expected to actually triple this year. So you’re going to see more people that have these beautiful, sexy, Rob, like you, Airbnbs that are going to get regulated, then what are you going to do next? Oh, I’m going to mid-term it. So you’re going to start seeing a lot of these properties come into this space that are beautiful, sexy, that have all these cool things in there. But at the end of the day, you want to be very thoughtful and insightful on design.
Most places on Furnished Finder, and everybody listening to this right now. If you go on Furnished Finder, it looks like most properties on there look like it was a hand-me-down, somebody lost their family member and they decided to put that property, grandma’s house on Furnished Finder. Literally, that’s what they look like. So right now it’s a competitive edge where you can have a pretty decent looking property. It’s not a crazy Airbnb, that extreme experience, but you still have a place that is done up well, and you’re probably going to do well. So you want to make sure you design it with intuition as far as what kind of clients you’re going to go after. If you’re going to have nurses, you want to have blackout curtains. David, you brought this up a minute ago. Nurses work from 7:00 PM to 7:00 AM, they work the graveyard shift. Guess what they’re doing during the day? They’re sleeping. So you want to have blackout curtains.
Box fans are really important. I’ve had so many requests for box fans, we have those in all of our properties now. Noise machines. Just stuff that’s simple that people… If you’re in an urban market, there’s a lot of car noise, things like that. A lot of these clinicians come from the Midwest or different parts where they’re used to sleeping in this absolute quiet stillness. And without box fans or those kinds of little simple things, it’s going to be important for them to have. And plus that’s another added little touch to those specific properties. So those are just small little things that I would say, really think about the design, and think about the little amenities that are going to help them sleep at night or during the day.

David:
As a former police officer, who also had to sleep during the day for much of my career. I can say with a resounding yes to everything you just mentioned, the box fans are huge. It’s hotter during the day, so it needs to be cooler. And they may not want to run the AC or may not be able to get the room cool enough to be able to sleep, and it drowns out all the noise. And I still have blackout curtains in my room because it was so hard to sleep when the sun was up. So these are things that set you apart from the competition, that can only happen at the micro level. That’s what’s so important if I think about the information you’re giving, and the strategy you have. Is it’s micromanaged, which puts the power in the hands of the investor, as opposed of the huge freaking corporation that can go buy 3,000 properties in every major city, and just try to push us out so that we can’t make a living like this.

Jesse:
Yeah. Well, David, there’s actually REITs like Greystar. All these big companies are actually in the medium-term rental space. I don’t know if you knew that or not. Over the last six months, they’re actually allocating a certain amount of properties. And all saw this with the Airbnb, right? They’re allowing mid-term, medium-term rentals in their property, so they’re actually doing the same exact thing as that I’m talking about here, just not on that super intuitive level. So we’re going to see more and more of this happening. And eventually, one day, my goal is to have such a big, big portfolio that smart institutional money comes in and buys my property, and they buy my book of business. That’s something to think about. That’s my exit strategy, for me thinking later on, is I have…
I was talking to a friend… I’ll talk about this real quick. This guy owns 200 doors in the Midwest. I’m literally making just as much as he is with 200 doors with literally 10 properties, literally 10 properties. So if you do things the right way and you’re really intuitive about it, you can make a pretty substantial amount of money. It does take more work though. Dave, you mentioned it perfectly. It takes more work, and most investors are not willing to put in that work.

Rob:
All right, Jesse, I have so many more questions, but we are getting towards the end here. But I’m sure that one of the more common things you hear are the squatters, the squatters, Jesse. I see those comments all the time, on mid-term rental and medium-term rental comments on YouTube videos and on threads. Do you make your tenants, whether they’re through Furnished Finders or through Airbnb, do they all still have to sign leases?

Jesse:
Yep. Yeah, they absolutely have to sign leases. And we have addendums that say that they’re there for a specific amount of time. That they’re not considered long-term tenants, even though they are there for over 30 days. But again, go back to what I talked about earlier, you guys, most of these contracts that I get, these agencies are the lessees. So I don’t have to necessarily worry too much about. And these folks are professional too, by the way. You’re not going to have a nurse that’s going to squat at your property. You’re not going to have guys that are working for Dave & Buster’s, these engineers. They’re not going to just be like, “Oh, we’re not going to pay.”
So I think you got to screen people just like you do with long-term, see, exact same kind of concept. I think people just take this to way an extreme in a what-if scenario. And most of the time, this doesn’t happen on a regular basis. And it can. Yes, it can, but you got to protect yourself in a way that if you can get these agencies to be the lessees, awesome. But you just got to do regular screening that you typically do with every other tenant that you have.

David:
I would bet it’s less likely to happen with a medium-term rental than even a traditional rental.

Jesse:
Right.

David:
Right. Because that’s someone who has something to lose. They don’t want to screw this thing up with the hospital. They don’t want to get the hospital in hot water by refusing to leave. They don’t want to lose their contract to go work there again. These traveling nurses, if that’s who you’re renting to, can make really good money. Especially in Northern California. I would guess that Northern California wages are probably higher than anywhere in the country, outside of maybe specific niche markets like Manhattan or something like that. So whenever you’re renting to someone who has something to lose, the odds of being taken advantage of like that, significantly decrease.

Jesse:
A 100%.

Rob:
It’s funny. It’s just, when people make content about long-term rentals, no one is ever commenting a thousand times, “But what about the squatters?” I mean, it’s a problem. It’s something that could happen in literally every real estate asset class that exists, not just mid-term rentals. But I just feel like that’s always the biggest fear.

David:
It’s the new, what do you do when the toilet overflows?

Jesse:
Yeah, I agree. Yes, I’ve heard more people with Airbnbs that have had these issues than mid-term rental operators. I mean, I’m not worried about it, I’m just not.

Rob:
Okay, so long-term rentals are, what do you do if the toilet overflows. Mid-term rentals are, but what about the squatters? And then Airbnb is, but what about an LLC? Do I need an LLC? Those are the three main questions I hear in all of real estate.

David:
Toilets, LLCs, and squatters have cost people more money than anything else that I know of, in my career. Those concerns about toilets, yeah. There always is going to be a challenge, but you have to learn to enjoy the challenge. Because if it wasn’t for the challenge, you wouldn’t have the opportunity. If it was super easy and nothing went wrong, people with more money than you, would’ve already stepped in and taken all the opportunity, and there’d be nothing left. It’s these little tiny paper cuts that are annoying that stop people from being able to do it at scale. And so as the mom and pop investors, the people that are listening to our podcast, that are all trying to find financial freedom through real estate, are looking for opportunities.
You actually should be attracted to and drawn to the obstacles to success that you may find, because that means you are going to have an opportunity. Where if it becomes too easy to do it, you will be pushed out. And we’ve seen this over and over and over through so many different industries. I actually feel better about something like this, Jesse, and the method you’re describing. Because it sounds safer, and it’s a more defensively sound option. Compare that to buying a 400-unit apartment complex that some massive corporation can buy, and hire one property management company to take care of it, and do nothing. That’s going to be much harder for the small person to be able to get into that space than this one.

Jesse:
Totally. A 100% agree. And you’re going to start seeing more of this stuff happen. Right now, I think about medium-term rentals as Airbnb in 2007. There’s no property management software out for it. There’s no PriceLabs. These companies aren’t necessarily making anything for it. So imagine being able to know where Airbnb is now. This is where we’re at in this space. I feel like Airbnb is in the fifth inning, right? It’s been around for a while. They’re pushing experiences now, unique properties. And going back to baseball terms, I feel like the medium-term rental space, the umpires are barely walking the field. They’re just chalking the field, grounds crew is out. That’s how early we are in the game. And the sooner that you get in, the better you build your foundations. The likelihood of you being able to succeed in the space is tremendous. And I think there’s just so much opportunity for people. And they might not necessarily see it like that, but I do. I’m all about skating to where the puck is going, and I see that, the bend is there. So that’s just my two cents.

David:
Fantastic, man. I’m glad that we had you here to share this information before anybody else heard it. This has been really good. We’re going to move on to the next segment of our show. It is the Famous Four. At this segment of the show, Rob and I will take turns asking you the same four questions we ask every guest, every episode. Question number one will come from me, and that is, what is your favorite real estate book?

Jesse:
My favorite real estate book is called Loopholes of Real Estate. That was the first book I ever read in real estate, and it was basically like tax stuff. It was how to find your first property. It was part of the Rich Dad Poor Dad series. You guys probably never heard of it. It’s not really that huge of a book. But that was, for me, my introduction to actually investing in real estate. And I kind of go back to it every now and then. So it’s called Loopholes of Real Estate.

Rob:
Awesome. And number two, what’s your favorite business book?

Jesse:
Favorite business book is The E Myth. So The E Myth, I’m sure you guys have heard of it. It is about removing yourself from your business. And that’s where I’m at in my life is, only doing the things that I’m uniquely qualified to do, and everything else is going to be delegated to people that can handle it. And that’s going to allow me more time for me to actually focus on the actual business. Because again, going back to what we talked about before, you guys. This type of business that I’m in, it’s very mindful that you have to be very intuitive with who you’re going after, what you’re going to do. So that book was extremely helpful for me to realize that I need to remove myself from a lot of the day-to-day operational stuff. And I think a lot of times, investors want to be involved in all this stuff all the time, and you can’t. In order to grow an actual legitimate business, you can’t be the guy that’s doing everything all the time, everywhere all at once. It’s impossible.

Rob:
Great book, would love to read it someday. Number three, hobbies. What do you do whenever you’re not out there crushing the mid-term rental game?

Jesse:
I play guitar. I love playing guitar, drums, bass guitar. Baseball. I’m a big baseball fan. I still play baseball even at 40 years young. I still skateboard, you guys. I can still kickflip. I have younger kids, I still go out and skateboard with them, so I stay young and hip, and still like a cool dad. So those are my hobbies.

David:
It’s always funny when we ask the hobby question of anyone that has kids. It’s like the biggest struggle ever to try to find anything to say, because I think when you have kids, they are your hobby. You’re like, “I do real estate. That’s my hobby. I freaking have kids, what do you expect out of me here?” All right. My last question for ya. What sets apart successful investors from those who give up, fail, or never get started?

Jesse:
Yep. I think grit, and having a mindset that is going to keep you going is extremely important. I think a lot of times, most of us will run into an obstacle. And you just talked about it earlier, David. Those finger cuts, those simple things that people are just like, “Oh, I’m not going to do this anymore.” It’s about being consistent. The more consistent you are, the more reps that you have, the more opportunities that you have. And I think that being able to build a business takes time. It takes energy, and it takes consistency. So if you have all those traits, that’s what’s going to make you successful. That’s what’s going to keep you going. That’s what’s going to keep you. From your first YouTube video to your thousandth video, it just takes reps. It takes consistency. And I think that, for me, is what is the most important. Because we’re all going to fail. No matter what we do, we’re all going to fail. And you have to learn from those mistakes. And you still stay consistent, and diligent, and build. I think that’s what needs to happen to be successful.

Rob:
Amazing. Well, Jesse, tell us where people can find out more about you on the interwebs, Instagram, YouTube, all that kind of stuff?

Jesse:
Yep. Yeah, you can find me on Instagram @therealjessevasquez. I have a website, therealjessevasquez.com. And YouTube, you can type in Jesse Vasquez on there as well. And one little quick thing, if you guys don’t mind me saying this. There’s a Mid-Term Rental Summit coming up. I’ve actually linked up with Furnished Finder. It’s going to be April 30th to May 1st, in San Diego at the Mission Bay Resort. So head over to MTR Summit or the midtermrentalsummit.com to pick up your ticket. I’m extremely excited about Furnished Finder jumping on with me, and we’re hosting this first ever mid-term rental event.

Rob:
Very cool. Everybody, go follow Jesse. Jesse, you are one of those people, that you’re frustratingly smart and very good at this. And I learned so much from you. And I’m always like, “I wish I could be that smart.” Your content is really great, very knowledgeable. So thanks so much for coming to share. David, where can people come and find you if they want to get in touch, connect to you, all that kind of stuff?

David:
Yeah, please do. You can find me on Instagram or everywhere on social media @davidgreene24. There’s E at the end of Greene. And now you can find me on YouTube there as well. So youtube.com/@davidgreene24 will take you to my YouTube channel. And there’s real estate agent advice, there’s loan officer stuff, there’s investor stuff, there’s walkthroughs of my properties. There’s all kinds of cool content as I’m trying to become more like Rob and less like me. Rob, how about you?

Rob:
You can find me over on YouTube @Robuilt, and Instagram @Robuilt. And lastly, if you like this episode, if this episode got you fired up about MTRs, which I know it did. And if it was useful, and you want to get into the medium-term rental game. Then consider leaving us a five-star review on the Apple Podcast app or wherever you listen to your podcast. The five stars really help us get served up to new audiences, so we can teach other people how to get into the medium-term rental game, and the real estate game all around. So that’s it. Please leave us a five-star review, it would mean the world to us.

David:
All right, and that is our show for today. Jesse, thank you so much for being here, man, this is one of the better interviews I think that we’ve ever done. Tons of good information. You’re a very good communicator. I hope everybody goes and follows you. And I’ll be reaching out to you myself, because I am a budding medium-term investor myself. I’ve got three properties being rehabbed that should be coming online. So I’m going to get your information and make sure we stay in touch. And maybe we can have you back on, and we can kind of share what’s been going on with my properties, and how you coached me, what I did. That could be a cool experience that we could have. This is David Greene for Rob the short-term specialist Abasolo, signing off.

Bill Smead of Smead Capital Management joins ‘The Exchange’ to discuss the economy and the homebuilder trade. He’s been bullish on the homebuilders for nearly a decade.

Until recently, the prospect of working four days a week was just wishful thinking for most workers. However, since the pandemic and the move to more flexible work patterns, many businesses have transitioned to a shorter working week.

Last year’s four-day workweek pilot schemes in the U.K., U.S., Canada, and Australia proved successful. On a scale of zero to 10, the average rating from companies taking part was nine, with many pledging to continue the new work regime beyond the trials.

A four-day workweek won’t suit every organization. It may only be viable for companies able to adapt to a new way of working, which may be why many naturally agile startups see it as the future.

Web development company Buckeye Innovation has seen huge benefits from a four-day week, including an increase in productivity, a 30% revenue growth in 2022, and a boost to morale among the firm’s 16 members of staff.

“Allowing staff more time to spend on personal and professional development, volunteering, and supporting their families has increased team morale,” says President Brad Griffith.

One valuable benefit has been the increase in ideas generated by the team to improve efficiency and reduce wasted time, resulting in increased profitability while reducing hours worked. However, one of Griffith’s biggest concerns is talent acquisition. He says: “A four-day workweek could be an incentive for employees and candidates who aren’t an ideal fit but value a shorter work schedule. With a shorter working week, we need highly focused and productive people, not team members who want to be held to lower expectations.”

Design agency Lyon & Lyon employees have been working a four-day week for the last three years. While there have been some bumps in the road, the experience has been mostly positive. Benny Lyon, who cofounded the business with his twin brother, Mat, says: “If we reverted now, I think our staff would struggle to adjust, which shows how prevalent it has been.”

Turnover has continued to grow by more than 30% year on year since implementing the new working hours, and it has proved a massive draw for talent; most applicants cite it as a key reason for joining the company. The four-day workweek also features in their client pitches, which has found favor with the majority who see it as aligning with their beliefs.

However, Lyon admits that some client relationships have suffered. “We may have lost some continued relationships with clients because of it. For example, some want a rapid turnaround on the artwork, and we can’t give that on a Friday,” he says. “The four-day week is here to stay, but we still have a lot to do to make it work for us.”

Success may also depend on how startup founders define a four-day week. According to Victoria Firth, cofounder of business transformation consultancy Grey Lemon, the question for any entrepreneur shouldn’t be ‘how many days a week do you need to be at work, but rather ‘what do you need to perform at your best’?

The business was launched in 2020 on a four-day working week, a decision driven by necessity. The pressure of establishing a new business during lockdown, combined with the realities of family life, meant that Firth, and her business partner Rhonda Curliss, had to get through as much as possible in four days to keep the rest of their worlds functioning. “We fell into the trap of cramming five days of work into four, which was not only counterproductive but also left us exhausted,” says Firth.

But the pair adapted quickly, challenging the entrenched working habits acquired from 20 years of corporate careers, to focus on what was needed to deliver the best outcomes for the business, their clients and themselves.

Swift investment in their systems, processes and the proper administrative support proved critical to providing the space and time they needed to be productive and enjoy their work without reaching a stage of burnout.

“Regardless of how many days a week you officially ‘work,’ there is no moment of switch-off,” says Firth. “However, as our work and personal lives become increasingly integrated, that’s not necessarily bad. If, by ‘four-day working week,’ you mean four days of a week focusing directly on your business and your clients, then with the right support, it can work. But if you interpret that as ‘switching off’ at 4pm on a Thursday, that’s never going to be the case.”

Ashley:
This is Real Estate Rookie episode 261.

Nancy:
I think a big part of my journey really started with not understanding what debt was when I went to school, my undergrad, not really understanding what it meant to get a car loan right before I graduated. And then having finished school and having $100,000 of debt. I did go through like the Dave Ramsey baby steps to get rid of my debt, and that took about two years, which was around the same time I actually bought my first property as a duplex and I did the house hacking for that property.

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 today I want to shout out someone by the username of Shep 34. They said, must download if you want financial freedom. The real estate rookie is the best real estate podcast out there with invaluable information that has helped me grow my portfolio. I’ve learned so much over the last year from Ashley and Tony to work towards financial freedom. To top it off, my eight-year-old daughter will even listen to it with me because she loves Ashley. She always says she sounds so happy, and she’s already sharing ideas to buy empty stores and rent them as offices. So if you haven’t yet, please, you leave us an honest rating and review on whatever podcast platform it is you’re listening to. The more views we get, more folks we can help and helping folks that we want to do. But Ashley, how do you feel inspiring young eight year old girls out there to jump into the world of real estate investing?

Ashley:
Tony, since this airs the day after Valentine’s Day, all I have to say is I don’t even need a Valentine this year. All I have to do is go and read your guys love notes to me on the podcast reviews. So thank you so much. But I, okay. That is so cool. I love getting kids involved in interested into what is going on here. Yeah, so exciting and thank you so much for sharing that with us. So if you’re listening, eight year old girl.

Tony:
There you go.

Ashley:
Thank you so much for listening and we can’t wait to have you on the show as a guest sometime.

Tony:
Cool. What else is going on, Ashley? How are things in your neck of the woods?

Ashley:
Good. We just had a blizzard here about a month ago.

Tony:
Oh, crazy blizzard, right? Oh my goodness.

Ashley:
I don’t know what I was doing, but I went to go and look at my phone and I had 10 text messages of people asking if I was okay. They’re like, “Oh, it must have hit national news.” But it actually just missed our house. We were very south of it. We had the really bad winds and snow was blowing, but we barely got any snow. Snow, so we didn’t have really high drifts or anything like that. So we spent the days snowboarding, ice skating. We had a deep freeze also at the same time. So the pond froze over at one of my properties. So we turned into an ice skating rink that was super fun. So we had two properties that had some damage from the storm, just one having ice build up on the roof and then leaking in. And then also one of the rehabs we’re doing right now, there’s just three inches of water sticking out of the ground, and we didn’t have any of the water actually hooked up.
Well, somehow the furnace got shut off. We think the flipped the switch was flipped on the breaker or something, or it’s a brand new furnace. Well then the furnace froze, so we couldn’t get it to restart. Well, then when we finally got it restarted, the plumbers came and actually dethawed the furnace, we put a heater on it, an electric heater. Then when that started working again, the water in the pipe that had froze it cracked the pipe. And I put a picture of it on my Instagram. I mean, it was a pretty good crack into this metal piping. And so it was spraying out everywhere. Luckily, the flooring wasn’t down yet and didn’t we? There’s another cabin on the property where my business partner’s actually living. So he had happened to just stop in and see if the furnace had turned on yet or what was going on, and he saw the water spraying. So he was able to do a fix with that, and we got it taken care of right away. So I think we were lucky compared to a lot of people as far as the storm damage that happened.

Tony:
Yeah, since we’re sharing horror stories, I got two quick ones. So this Christmas was super crazy for us because we have properties that are on the East Coast as well. We had water outages, we had power outages, and not just for a day. The water, our pipes froze, and this is the first time it ever happened to us as well. And we didn’t even know what to do. That’s never happened to us in our life. So we’re like, “What do you do when the pipes freeze?” We have our handyman out there trying to dethaw the pipes and all these other things. But anyway, we found out there’s a lot of things you can do moving forward to kind of prevent that from happening.
But then in our California properties, we have propane tanks and we paid extra to have meters on the propane tanks that the propane company can measure the levels, and they just refill it as it gets below like 25%. On two of our properties, the meters were broken, so the properties went without gas. The gas company was never notified. And because it was the holiday, we had families that were there over Christmas weekend that didn’t have gas, the property. So it was a terrible Christmas from a property perspective. Just another day in the life.

Ashley:
Well, one of the things I know to do the pipes is to, you leave a little water trickling, turn a faucet on a little bit to help that happen. But what about the propane issue is how do you even prevent that from happening? If they break, are you having, every time the cleaners come now, they’re checking to make sure the gauge is still working?

Tony:
It was the company. I think it was the company because both those tanks are with the same company. And it happened in two separate places. It was one in Tennessee where it was … I won’t say the name of the company, but it was that company in Tennessee and that same company in California. I think whatever they’re doing with their meters isn’t accurate, so we’re firing that company. We’re placed in with local companies that have better customer service.

Ashley:
Well, today we have an exciting guest on the show. We have a guest from the reality TV show, Love Is Blind, season three. We have Nancy Rodriguez on to talk about her investing journey. She started investing seven years ago. She’s done a focus on house hacking, short-term rentals, but she’s here to talk about how she actually started out with Dave Ramsey and getting her own finances in order and how she built her portfolio.

Tony:
Yeah, it’s really cool. I don’t watch a lot of reality TV, but Love is Blind Season 3 is actually one that I did watch, so I was excited to chat with Nancy. And like you said, she started investing before Love Is Blind even premiered. So don’t listen to this episode thinking like, “Oh, she only did that because she was this famous TV person.” She had a lot of hard work and she invested a lot of her time, her energy into building this foundation far before Love is Blind to allow her to start investing in real estate.
So there’s a lot of really good nuggets throughout this episode. But one of the things that I really loved that Nancy talked about, two things. One was how she handled squatters and hoarders that were living in her property before she purchased them, and how she got both of those people to leave the property peacefully and with the property in good condition. She did, not once, but twice. And the second thing she talks about is NACA and this loan program that she used to purchase one of her property. So two really good things to listen to in this episode.

Ashley:
Nancy, welcome to the show. For everyone listening, you may recognize Nancy from Love Is Blind season three, and that is where we found out that Nancy invests in real estate. It came up on the show and you’ve actually been doing it for seven years, which is amazing. So Nancy, can you tell everyone a little bit about yourself and how you got started in real estate?

Nancy:
Yeah, absolutely. I just want to say I am so excited to be here, first of all, because part of the whole podcast era for me, that has been the last 10 years really focusing on where does my mentorship come from when I don’t have a close friend or a family member who knows about what I want to learn. So for me, Bigger Pockets has always been a podcast that I’ve either gone to or really starting with Dave Ramsey and then just working my way through the different types of streams and episodes that y’all have. So thank you so much for having this platform for us, people who truly want to DIY a dream and really put it to life. So I think a big part of my journey really started with not understanding what debt was when I went to school, my undergrad, not really understanding what it meant to get a car loan right before I graduated, and then having finished school and having $100,000 of debt and realizing that now I have a career as a speech pathologist, and what am I going to do with this?
So I think for me, it was realizing that I was in a position where I could make a change in my family, the thinking of what money is and how it will change your life if you treat money differently or if you learn about it. And so I did go through the Dave Ramsey baby steps to get rid of my debt, and that took about two years, which was around the same time I actually bought my first property as a duplex, and I did the house hacking for that property. And that actually afforded me the opportunity to save up so much money in two years that I was able to pay off my $100,000 of debt.

Tony:
That by itself is super impressive. $100,000 in two years is super impressive. But Nancy, I want to go back because you talked about Dave Ramsey, and I think a lot of people kind of start in that community, but Dave obviously preaches no debt. If you want to buy real estate, 15% down, do this, do that. So being a real estate investor, making that your full-time thing sometimes is that odds with what Dave Ramsey preaches. So how did you transition from being Dave Ramsey disciple to being an actual real estate investor?

Nancy:
It’s funny, because in that same process that I was going through the baby steps, I was also reading Rich Dad, Poor Dad. I guess the way that I really saw it was it’s kind of like the general rule of don’t eat the cookies, don’t eat the cookies. Cookies are bad. So then no one’s going to eat the cookies, but what if I just eat half of a cookie and I can control myself and I can eat the other half tomorrow? So I think having that concept of understanding what it meant to be debt free, fully having that feeling and then also knowing, but now that I’m debt free, what can I do next? And then that’s when I really just tried to, in the smartest way possible, still be debt free, but then figure out, okay, well the next deal maybe can’t be cash only, it’s going to have to be with a mortgage. And I think understanding the concept of having a mortgage be not so much of a liability because it was an income producing property. I think that’s really what changed the mindset as well.

Ashley:
And during this Dave Ramsey transition, did you already own your own home or did you purchase your first home, not even an investment property before or after Dave Ramsey?

Nancy:
Yeah, so the Dave Ramsey era started, it’s funny because when I graduated in 2014, I was 25, 24, and I didn’t think that, “Oh, in the next couple years I want to buy property.” So that wasn’t on my mind because I had $100,000 of debt. So I knew that there was like, I need to slow my horse. So what happened is that I actually, two years into being a speech pathologist, I actually heard about a program called NACA, and it was just a dinner that I had gone to with a realtor, and then the other guy was a wholesaler, and then his wife was also a wholesaler.
So they just randomly said, “Hey, we’re going to this NACA meeting tomorrow. Do you want to come?” So went to the NACA meeting and was super excited about being a homeowner. That was the idea, oh my gosh, I could actually have my own home. And you guys don’t care about the certain qualifications that they have is you can have debt, you just can’t have debt in collections, and then other benefits or they pay for your closing costs, you get the lowest interest rate. And then also, yeah, I said they pay for your closing costs and I had no down payment.

Ashley:
And it’s zero down payment.

Nancy:
Yes, it’s a zero down payment. So the really cool thing about that process is that when I was learning about Dave Ramsey and learning about investing in general, it was all either through hearsay, but nothing that I had actually done. So when I went through the NACA program, it was about a, I want to say six to ten month process from the day I went to my meeting to the day that I got approved. And then once you’re approved, then you have to go through the home buying process, put in 20 offers before I was actually able to get a deal locked down. So what happened is that in the NACA program, it is a very stringent program. They are very into your finances. They want to know exactly what money’s coming in and what’s coming out. So for the NACA program, it was so stringent on budgeting and monthly finances.
And because I had put in so many offers, I just wasn’t getting the houses that I was putting offers for. So I kept saving and then saving and then saving. So six to ten months later, you’re like, “Oh my gosh, I have all this money, just a lump sum and I don’t have a down payment.” Oh, one more more thing that I took advantage of is they actually allow you to roll in repairs into your loan, which is a really neat feature.
Again, just knowing, okay, if I’m going to get a property and there are some, even if it’s just cosmetic, I want to paint the house or whatever it might be, they will actually allow, with certain restrictions, they will allow you to roll in the repairs, roll it into the loan. So once I close on the house, and again, no down payment, I think my closing costs, because I did have some fees that I had to pay, I think it was a thousand dollars that I had to come to closing with and proof of reserves, not that I was going to use the reserves, but just the proof of I think it’s three to six months of reserves that I had saved up and I closed on the property.
So at this point, I went through the NACA program that really kept me tight on my budget, and I was at the same time listening to Dave Ramsey and Bigger Pockets and reading Rich Dad, poor Dad that I knew. At that point, I was like, okay, it’s time to close on this house, which I did. And the very next day I had all this money saved up that I knew that the only other option, which I could have done so many things with that because you think, “Oh, I bought my house, let me go on a vacation and congratulate myself.”
But no, I hurt so bad, but it also felt so good to write those checks to my loan agencies from school. My car note, I went in to the bank for that one to just write a $14,000 check and hand it over. And they were like, “Are you sure?” I’m like, “Yeah, I’m sure.” So yeah, that’s kind of where that process I think happened with doing the debt free, wanting to really understand where my finances were going, and then once I was able to pay everything off, it launched the rest of my real estate career.

Tony:
Nancy, what a fantastic story. And I just want to talk about NACA just a little bit because it is such a great tool, not just for primary residents, but for investors as well. And I know other investors who have used NACA to buy small multifamily to where they’re house hacking with NACA loans, and it’s a great tool, but it is super stringent. And my wife and I, when we were searching for our primary residents, we went through the NACA process as well. We got approved through NACA, but it was so difficult to find a property that met their criteria. We just ended up giving up. But if you can, I just want to recap the benefits of using NACA for folks that might have missed it.
It’s no down payment. So they’re covering 100% of the purchase price. They cover the majority of your closing costs, and the interest rates are typically lower than prevailing interest rates. I just looked up NACA’s website right now. They always post what the market rates are, and right now they’re at a 5.6 on a 30 year fixed. Ash, have you closing anything recently using personal debt? Do you know where rates are right now on the personal side?

Ashley:
Yeah, actually I do. If you want, I can just pull it up real quick.

Tony:
Yeah, we closed in a cabinet like six and a half, so almost a whole point higher than NACA. What have you closed on at recently?

Ashley:
So I did a commercial loan and I did it for a five-year fixed 20 year amortization, and that was at 7.4%. But then I just got a quote for a personal loan. There was a current rate for a 30 year at six and half percent, 20-year, 6.375% and 15 year 6%. But then they also offered an ARM mortgage, a 5/1 ARM at 3.62 for 2.5%, and then a 7/1 ARM, which would be, let’s see, where’s the seven, would be at 3.875% for the first seven years.

Tony:
So NACA is great. You get a 30-year fixed, a point typically lower than what prevailing interest rates are, and it’s a great product. So Nancy, you actually closed on the NACA loan and bought your primary residence. That’s what you said, and through that process, how you saved up all this money to go out and do these other things?

Nancy:
Yeah, absolutely. And one of the other benefits too, because once I did the program, I was spreading the word like the bird. I was telling everyone who was a first time home buyer, you can do this, but just be stringent about all the rules and the regulations. So I actually I had a friend who did the same program, NACA in Chicago, and I think he ended up buying, I forget what the details are, but when he closed on his NACA property, they actually matched his buy down points. So his interest rate at the end of all the buying down and what they were able to match, you have to qualify for the match, but once you do, his interest rate was 0.025, something insane. And this was years ago. This is years ago, but a friend, just to give some light, a friend closed on a NACA loan last summer in Florida, and she got her interest rate down to 1.25, I believe, with the matching of the buy down because they qualified for it.
So yeah, there’s other benefits too that they don’t actually really advertise that part of it because I think the main thing is just really getting people who are first time home buyers to understand their finances, what are you making? What is going on every single month? And being able to educate the NACA, I guess people who are accepting the NACA mortgages on how to manage that on a month-to-month basis and how to qualify through that process. So it is actually very educational. I don’t know if you got that too, Tony, from learning about the payment shock process and what it is of how much can you actually afford? And the underwriting that they do for mortgages is much more detailed than what-

Tony:
I’ve closed on tons of properties at this point. And the NACA loan approval process was by far the absolute worst. The amount of documents that they asked for, the level of detail that they go into your personal life is insane, but at the end of day, you get a really cool loan product. So Nancy, I guess let’s talk a little bit more, right? So you go through this process with NACA, you get your primary residence. What else are you doing to build that big pile of cast you have at the end? Is it just that you’re saving money from your job or you doing other things to help subsidize and build that nest egg a little faster?

Nancy:
Yeah, what happened once I closed on the property and I paid all the debt off? Is that what you mean? What happened next? Yeah, so what happened next is that I closed on a duplex. So when I was living on one side, I had no rent. And the tenant at the time, she had been there for about 10 years, so she was just paying normal rent, actually way below market rent. So I gave her some time and I gave her a deal. I said, look, if you want to renew, and she was month to month, I gave her the option to renew at a higher, if she wanted to stay for three years, she would get a higher monthly rent payment. But if she didn’t want to renew or if she wanted to go month to month, I believe that is what it was, I gave her the option … I wanted her to leave is what I was trying to say.
I wanted her to terminate the lease because she had been there for 10 years and been paying really low rent. So although she wanted a long-term lease, I made that one more expensive versus the month to month. So because she wanted month to month, she ended up just moving out six months after. So then I was able to save at that point because rent was coming in from the duplex. Anything that I was making from the one or two jobs or three jobs that I had at that time was really just saving it up for the next deal. And then the next deal was a $40,000 duplex that had burn damage and squatters. It came with squatters and burn damage. And so I think it was just really seeing that in six months, I believe it was about a six-month timeline from the closing, I guess within at least the next six to 10 months was when the next property was purchased. But again, buying ugly, buying with squatters, it was on the market for a while, and at that point, 40,000 was attainable just to purchase the property.

Ashley:
Nancy, how did you get the courage to jump into a property that had squatters, that had fire damage? What was your mindset behind that is to, okay, I can make this beautiful and I can rent it out?

Nancy:
What’s so funny is that day that I wanted to go see the property, I got ready, the realtor that was working with me, he came as well and we were ready. We had a game plan because the listing actually said in the description section, by the way, it comes with squatters. So we go to the property and they were having a garage sale. So I was like, okay, this is my point of contact. I’m going to buy some stuff from their garage sale, not tell them that I’m here for the house, but just I bought a ladder, don’t know where they got a ladder from. I bought some random tools that they had and some stuff, and then I gave them a $10 tip or something. And then slowly just talking with them, they were really nice people. They were just in a really rough place that at that time they just weren’t ready to leave the house.
So getting to know them on that first initial visit was I think what sweetened the deal for them. Once I closed on the property, what I did is I actually hired them to do the demo work. And so we made a deal that, okay, we have this many weeks and I want you, I’m going to pay you this much on a weekly basis as long as the progress is being done on the house and after this demo was done, you have to move out. And they agreed to it. So I think it was just really seeing them as people and seeing them as just you’re going through something and I have the ability to help you get to the next phase or the next transition. So the squatter, I actually don’t know their real names. I just know that the guy’s name is Buzz and the wife was Big Baby. So Buzz and Big Baby were my friends for a while.

Tony:
Ashley, out of all the guests we’ve interviewed on this podcast, have you ever heard of a situation where squatters not only happily leave your property, but they fix it for you before they leave?

Ashley:
No, I think this is a new record, yeah.

Tony:
Yeah, that is probably the best situation with squatters that I’ve ever had. We bought a property over the summer last year that had squatters in it, and it was tough trying to get those people out. So the fact that you found a very peaceful and mutually beneficial way to get them out is fantastic. But I want to go back to something you said earlier. You kind of mentioned it briefly, but you said that you were working two or three jobs at the time. I guess what was the motivation for doing that? And did those funds maybe go towards this rehab job you just talked about? Or what was the purpose of those working so many jobs at one time?

Nancy:
It’s funny because I think for me it’s always been a baseline to have, if you have extra time you work. And I think that’s something that comes from my mom and dad’s work ethic. They’re both immigrants from Mexico. And so for them it was always, if I’m not at home with the kids, I should be working or vice versa. My mom would work the night shift and then my dad would work the day shift. So even just switching off jobs. So I think that mentality has always been in my ingrained in if you want something to happen, how do you do that and how do you make that possible? So the reason that I actually continued to have multiple jobs after I got my career as a speech pathologist is because I literally had extra time. And so I knew that with the next deal that $40,000 duplex, I knew that the funds to pay for the rehab was going to come from my pocket.
So then again, it just gave me more motivation to have a second job as a speech pathologist, continue my job online as a research analyst. And then actually at the time, I think that was about the last year that I was able to do my egg donation. And so I qualified one last time for egg donating. So that was another form of income that was coming in on that last year. So yeah, it just kind of seems like that’s what I’m supposed to do. At least until I recently got into the last two years, I’ve been full-time real estate, and it’s kind of nice to be like, “Oh, this is kind of my only job. I don’t have to go to work anywhere else. This is as easy as it gets.” But it took a long time to get to a place where I don’t, and even now, now I’m back to having multiple forms of income, which is so good. But again, I think it’s just a mentality.

Tony:
Yeah, I love that. Because you had this strong kind of financial fundamental foundation between watching your parents, you talked about the Dave Ramsey piece and wanting to pay off the debt, but what was your relationship with money and work like growing up? Was that always how it was? Or was it once you realized you had this burden of debt, what was it for you growing up?

Nancy:
No, I think money has always been a topic that my family never spoke about. And I think unfortunately, although my parents were trying to protect us, I didn’t know why we were going to this church on Christmas where our names were being called and we were coming up to get gifts. I didn’t know that that was the lower income families that were going to, that was our Christmas gift that year. So I think our family just didn’t really have the concept of, “Hey, it’s okay to talk about these problems at home.” And all we saw was the product of it. We saw that there was food on the table. We saw that mom and dad were always working jobs. So I think for me, as I got older, my first job was at 12 working at my godparents’ restaurant, busing tables on weekends when I wasn’t in school.
So I think for me, the concept of money was always just work until you have to save, and then you spend what you work, and there’s no real concept of investing because you don’t have the funds to do that. But again, I think as a young 12-year-old, I knew I wanted to go to the dance and buy the dress that I wanted. So I was like, okay, well, I’m going to work every weekend until I save up the money to do that. I will say one of my favorite memories looking back at when I started looking at money and wanting to do things was I had just moved to Texas and I was in third grade and I wanted to get my dad a Father’s Day gift, but we had no money. So I hosted a garage sale and I just grabbed a bunch of random things in the house and my mom was okay with me giving away or I guess selling, and I made 30 bucks. I bought him a razor. He was so excited, an electric razor, not the plastic lens.
So yeah, I think for me the concept was always you just work until you don’t have any extra time left. I think where really things turned around was realizing that in after grad school and having $100,000 that I owed to someone, that fear of what happens if I can’t afford to pay this next? Thankfully I have a career as a speech pathologist, but what if something happens? And so I think having that mindset, what Dave Ramsey did was really … I call him Uncle Dave because I do feel like he was my guiding light to the right way of understanding money and understanding what it means to be financially free. Then when I actually saw being financially free, the cash flow that was coming in, and again, saving for the next property and then that cash flow coming in, and then it’s like, okay, I guess that there’s another deal coming up. And then that cash flow coming in, I think that was where I really started to mold my concept of finances.

Tony:
Nancy, what a great story. And what you talked about is I feel like there are parallels in how I grew up as well where money was scarce growing up, and I feel like you develop a certain mindset around that. But I think what’s more difficult is that when you grow up in an environment where money is scarce, you develop a certain mentality and the people around you tend to carry that same mentality as well. And it can be kind of hard at times to, I guess, surround yourself with people who have the mentality of someone who wants to be successful and someone who believes that success and wealth and all these other things can actually happen. So all that to say, how has your circle changed as you’ve gone through this mental shift? Do you find yourself maybe cutting people out that you used to associate with and maybe latched onto people that are of a different mindset? How has that changed for you personally?

Nancy:
Yeah, what’s really cool is that once I became debt free, and that was like 2016, that was when I closed on my duplex. When I became debt free again, I was preaching the word like a bird, just telling everybody, “Oh my gosh, it feels so amazing to be debt free.” And so I had a conversation with my mom and I remember she was one of the first ones that I really pushed or convinced to see the light. And having these kinds of conversations, how much do you owe on your house? What’s left on your car? How many credit cards do you have open? What kinds of credit cards do you have? I was what, 26 at the time? And that was the first time we had ever had any kind of conversations that way. I will say that I’m super thankful that at the time I was in a relationship where my partner and I, we were just very much so on the same page to learn about that and to change what we grew up learning.
And he was also a realtor and my business partner. So essentially having that rock as part of our foundation is actually what actually kept our relationship the strongest was that we truly wanted to learn and believe that financial freedom could get us so much more in real estate investing. And so that carried on to talking to my dad about real estate. And so I feel like where I’m at now, I’ll be really transparent. I don’t feel I have a friend that I can just be like, “Hey, we need to talk about, I have these ideas.” So I do have my business partner, I have podcasts that I listen to, and I use that as a sounding board, but not that you guys are talking back to me, but just looking for. If I’m like, “Oh, I want to buy an apartment complex, how do I do that?” I literally just go online and I start looking up Bigger podcasts, Bigger Pockets podcasts, episodes that have that.

Ashley:
Nancy, I can relate so much to what you’re saying. I started investing seven, eight years ago too, and I didn’t know anyone in my area. My first business partner, he’s like, “I just want to invest the money. You do everything. I don’t even want to talk about it or anything.” So it was a very lonely process starting out in the same thing. It took me a couple years to find Bigger Pockets. And even now, there’s not a ton of investors in my area that I have to talk to in person. I literally hang out with my business partner every single day because all I like to do is talk about real estate. So we hang out every day, and then it’s so fun going to conferences, and then I have friends across the country who are in real estate. And now with me being on the podcast, people have reached out to me in my area and be like, “Hey, I’ve actually been investing for several years too. Let’s get together. Let’s connect.”
So I’ve built some friendships and relationships that way, but it can be a very strange transition from going to hanging out with your usual friends to where you only want to talk about real estate and focus on things and not go out drinking and partying and doing all these other things that your friends may be doing, and this sounds awful to say, but another investor that I’m really good friends with, she’s a mom too, and we just say, “We just can’t stand to go and talk to you about your kids or our kids. We like to talk about our kids with their dads and stuff like that and with our kids, but when we’re going out, we want to talk about real estate, building a business, things like that. I’m so sorry, but we don’t care what funny thing your child did that day.”
And it sounds awful to say, but you get into this kind of pattern and you start to realize there’s other people out there that have the same mindset, the same things they enjoy. It can propel you and give you that momentum and just energize you. And of course it’s important to have hobbies and doing things outside of just business and real estate, but having that group of like-minded people and Pace Morby has been talking about that a lot. He’s a really interesting investor out of Arizona, and he talks a lot about how his circle has changed so much because he’s like, “I want people who are going to push me and grow and help me be my best.” And he is like, “I’ve had to change my friendships based upon that too.”

Nancy:
No, definitely. And I think one of the realizations that I had a couple years ago was I was looking for a new CPA and I wanted a CPA who owned real estate. I wanted a CPA who knew Airbnb’s short term rentals. I wanted him to educate me because at the time I was just using my CPA that I’ve used for years, but I knew that I wanted my people that were on my team to feel like my friends, to feel like, okay, you’re here because you’re on my team. And so I think just having that mindset definitely has taken me back from, I don’t want to just go to dinner, like you said, and talk about things that are just like, Ugh, no, can we have real conversations?
But I think that’s definitely, for me, that’s a goal for this next year and having this new platform after Love is Blind, I really do think that it’s going to open up opportunities for me to make those connections and not feel so alone. And in an industry that is so … I think it would be intimidating. I’m not saying it’s been easy at all. So I would say that real estate investing can be intimidating and where do you start and how do you begin? And it’s been seven years, so this didn’t happen overnight. Some people actually asked me, “Oh, so since you were on the show, what have you done in real estate?” And I’m like, “Okay, I’ve been doing this for seven years. It’s been time.” So I’m excited. I’m super excited to take my knowledge of what I know and spread the word, but then also learn as well.

Tony:
I’m so glad that we’re talking about this. And just so last thing before we move on, I think so many rookies that are listening feel the exact same way that both of you have just explained as well. And the good thing is that now, even if physically where you’re at, maybe there isn’t a strong community. There are so many different ways to get involved online, or like you said, actually traveling to conferences. The Real Estate Rookie Facebook group, what asked for 50, almost 60,000 members in that group right now, literally one of the most active, most engaged real estate Facebook groups that there are.
The Bigger Pockets conference, there’s different meetups, there’s so many ways to surround yourself with people who are on the same journey as you or her, or maybe even a step ahead of you. And to me, that has been one of the biggest, I think, blessings of my career is getting to interact with people who have taken the steps that I’m looking to take to look back and say, “Tony, it is possible. It is achievable, you can do it.” So I’m glad we’re all on that same page here. Before we go too far though, Nancy, we haven’t, and we probably should have did this at the top of the show, we haven’t really talked about what your portfolio looks like, what strategies you’re into. So can you give us the 30,000 foot view of what your portfolio looks like today and what strategies you’re using?

Nancy:
Yeah, I currently have five properties and over the last seven years I’ve had up to nine properties. And it’s funny because sometimes I forget whenever one gets sold and then unless it’s tax season, I kind of forget which one was sold on what year. But currently right now I have out of the five two were bought cash only. And just thinking ahead, I know this is off topic, but thinking ahead, I want to really learn more about using those properties as leverage because I think my biggest fear is my other properties do have mortgages on them. And seeing that difference in cash flow is significant from a cash only house versus a house that has a mortgage on it. And then currently I have one duplex and the other are single family homes. And I do focus now more on getting homes that have potential to be short-term rentals.
And then also anytime I consider a new property, I always want to ask myself, what are the other options? Because with regulations of short-term rentals right now in different cities, in a heartbeat, they can ban the short-term rental game. So even just asking myself, can this be a sober living house? Can this be a house that is rented per bedroom? Is this something that I can do where I only rent to a specific genre of professionals? So I think where I’m at now with the portfolio is that I do want to continue to expand on that concept of what are the multiple things that this one property can actually bring in as far as tenants, what kind of tenants can actually be in the house?

Tony:
We talk about that a lot because my entire portfolio is short-term rentals. And people ask me all the time, “Tony, do you have an exit strategy for your short-term rentals?” And we buy, because you’re in Dallas, which is a major metro, every property that we own is in a true vacation destination where there is no business headquarters, universities or anything like that. So that’s kind of how we hedge against the idea of regulation shifting is that we buy in markets that are somewhat economically dependent on short-term rentals operating in those markets. So there’s definitely different ways to go about achieving that same goal.
Before we move on to our next segment, Nancy, I just want to talk a little bit because we’ve touched on this a bit, but you spoke about your upbringing and the role that your parents played and this mindset you have about working hard and using your time effectively and hustling pretty much. You’ve come a long way from where your childhood was. So when you think about your parents, what is their reaction to the success you’ve had so far and just what do they think of everything you’ve done so far?

Nancy:
No, I think that words can only go so far. So they’re very proud, they’re very excited. Even my dad telling me the first time he got recognized because someone recognized me that he was my dad in person a couple months ago, and he was just beaming with joy. So words is one thing, but I think what I’ve seen in my family is the actions that they have taken. So even my mom paying off her house, paying off her cars, she’s now doing real estate investing in the town that I grew up in, and she just bought a vacation home. So for me that is like, “Okay, I’m planting the seeds and letting them grow.”
My dad too, he’ll call me one day and he’s like, “Okay, I just sold another house. I have this much money, what should I do next?” I’m like, “Dad, let’s start investing in your Roth IRA or let’s put some money here, or let’s,” so I think for me it’s the actions that I’ve seen my parents do that has just any words are fine, but it’s the actions that I’ve seen them implement in their lives. And they’re actually still pretty young for my mom and dad. My mom will be 50 this year, and my dad is in his mid-50s. So there’s still so much time that they have left, and I think they’re really just seeing, at least in the last seven years that I’ve been doing my success in real estate and the mistakes that I’ve made along the way, but they’ve really just took what I’ve been giving them as far as knowledge and really ran with it.

Ashley:
That is so powerful, just talking about how yes, your parents could say they’re so proud of you or what you’re doing is awesome, really cool, you’ve become so successful. But the fact that they are implementing and taking action on what you have shared with them, it shows a million times stronger how much they actually value and show how proud they are of you that they are going to go and model and do the same exact thing for themselves. And I think that that really does show how proud of you they are and these amazing accomplishments that you have made. It really goes a long way seeing that action instead of just words.
You’re right, they make you feel good in the warm inside, but seeing someone physically do something and making those steps, and plus being able to see your parents go to reach financial freedom. That’s just amazing in itself and so awesome that they’re following your footsteps. Okay, well, Nancy, we want to go into one of your deals. Did you have a deal in mind that you wanted to share with us?

Nancy:
Okay, I’ll tell y’all about the hoarders.

Ashley:
Okay. Nancy, what was the purchase price of this property?

Nancy:
170.

Ashley:
And what market was it located in?

Nancy:
It’s in Garland, Texas.

Ashley:
And is it a single family duplex?

Nancy:
Yeah, single family home. It was four bedrooms, two bath.

Ashley:
And what was the intended strategy with this property?

Nancy:
That one was an all cash property, and for that one it was in really bad condition because it had a family that was a hoarding family, and they had about seven cats and dogs in the home. The house was packed, jam packed, and then the dad at one point wanted to start a restaurant, so there was this exterior restaurant slash patio with more stuff in there. So essentially the goal was once everything is cleaned out, this could actually be a four bedroom, three bath, and that’s essentially what it converted to after rehab.

Ashley:
And was it short-term rental or a long-term rental?

Nancy:
Oh, yes. So that was originally for a short-term rental. And this is actually, I do have a question for y’all. So short-term rental, I recently read something, I think it was actually Amanda who said anything seven days or less is short-term rental and anything, but I’ve heard that 30 days or more or less is short-term rental.

Tony:
So from a tax definition to get the tax benefits of being a short-term rental, your average stay has to be less than seven days. But typically from a county city code enforcement perspective, a short-term rental is 30 days or less.

Nancy:
So it was long-term rental, so I wanted 30 days or more for this particular property.

Ashley:
Okay. And how did you find the deal?

Nancy:
The deal was actually emailed to my realtor, who is my business partner, and he’s part of an email chain of other wholesalers investors, and I think that list price was actually 190 and he got him down to 170.

Ashley:
Okay. So do you want to take us through the story of the property as to how did you get all of this stuff out of the house, the rehab, and then how the numbers ended up on the deal?

Tony:
Yeah, and can I just ask one clarifying question? You said that this owner wanted to start a restaurant. He wanted to start a restaurant at the actual home? He was trying to turn the home into a restaurant?

Nancy:
There was this outdoor patio that he constructed and enclosed, so it was an outdoor indoor patio, but he had all the restaurant equipment there. In his mind, people were just going to come through the side of the street, I guess, and be like, “Hi, come to my restaurant.” So really, really neat guy, really nice people. But I think just a lot of dreams that were started and then never really followed through. Yeah, because there were some interesting equipment that was in the house and just when … Okay, it is funny because the day that I went to go see the house, the owners weren’t there, but the children were, and they were all of age 18 and up, I believe. And so they’re taking us through this house and it’s like a maze. I thought I was on hoarders, it’s the TV show because even just to walk through the pathways to get through the living room, to go through the kitchen and the kitchen was actually non-functioning. They had a grill on the side.
There was just a lot of very much, this house needs a lot of love, and when this house gets a lot of love, we’re going to reconstruct some of the rooms and have that third bathroom be a thing. And so I think what happened is that, again, just going through the process, we actually got it. We bought the house and we also got a leaseback because their house that they were moving into kept getting delayed on their closing date. So when I bought the house in October, I didn’t actually get access to the house until January because it went from, “Oh, hey, our house is going to be ready in November.” Nope. And then it got pushed back again to December. So I was able to charge them rent lease back for a few months, which gave me time to replenish my funds because I expunged everything to get that deal.
It was my biggest cash deal that I had done. And so I had expunged everything that I could find to be able to get the money to upload this. And then again, just working my job and having the cash flow of the other real estate properties, at that point, by January, I had a good cushion to put into having a contractor do the work. And this was something that, again, my biggest project that I bought cash, but then also my first project that I only used a contractor and I did not lift a finger. That was a new experience for me because my dad’s background is he owns a remodeling company, not in Dallas, but about two hours away. So for me, I’m like, “Oh, my dad can do it or my dad can come help on the weekend.” This property was in pretty bad shape that once the leaseback was over and the tenants moved out, which were the previous owners, they actually did a really good job of getting everything out of that house.
The wife on the very last day actually came back and she swept and she mopped the entire house. So I was, again, very thankful, very blessed that this family was open to clearing out their stuff. But I think the leaseback had a lot to do with it because I could have easily, and even at the leaseback, I charged them, maybe it was 1500 when market rent was close to 2000. So I knew that I was taking a cut, but I also knew that I wanted to play nice and give them an incentive to stay as long as they kind of needed to in a reasonable amount at a time, and then not leave with a bad attitude.

Tony:
Nancy, just really quick, I think that’s an important lesson for rookies to understand because you’ve done it now twice where you made it a win-win situation for the tenants that were already in the house to leave the property somewhat timely and the property in a condition that was easier for you as the new owner. In the first situation, you literally paid them to do the work, which was, I don’t think I’ve ever heard anyone doing that before, in this situation giving them a break on the market rent, to like you said, play nice with them so that they could clean up all that stuff that they had inside the property. So if there’s a lesson for the Rookie listeners, it’s if you are in a situation where you’re inheriting tenants that you hope leave, what is a way that you can structure that situation so it becomes a win-win situation for both you and for that person? So I just wanted to point that out, but please continue with the story.

Nancy:
Thank you. And so then after that, once the rehab started on that property, my job at that time was to focus on the other properties that I currently had, managing those. And so really, the contractor took over. He had the list. Interesting enough though, that was my first time too, having to pay a contractor on a weekly basis. Every Friday he got a paycheck no matter what work was done or not. And so there was a time that Dallas had a really bad ice storm and our pipes had busted in that particular house, and the whole house was flooded to a certain point. I think part of the house was flooded to a certain point, and that wasn’t part of the original bill, but he also had taken the week off because it was an ice storm. So we had to compromise. I’m like, “Okay, well you didn’t come to work this week, so why don’t we add these pipes getting fixed into the contract and going that way.”
And so once that project was done, so that project took from January till about, actually when I left for the show, they were still working on it. So probably about June, from January to June is how long it took. However, he said, I remember when we made the deal, at first he was like, “Oh, nine weeks.” And then nine weeks turned into almost six months. So that was a learning lesson too, that just the trust that I would have in my team to be able to help me. I could have done better if I would’ve just hired my own subcontractors and everyone has a specific job. It’ll be done in a shorter amount of time. But that was also, like I said, a lesson learned of when I get the bundle deal of a contractor says, I’ll do, it all really means I can do most things, but I’m not an expert at everything.
So it might take me two weeks to do drywall. It might take me two weeks to do flooring. Actually, he ended up not doing the flooring. And then I had this subcontract, the flooring guy, and we just deducted that from the final bill. But once that property was done, it took me about a month to furnish that property, have it listed as an Airbnb, and I also use other outlets as well, like VRBO and Furnished Finder. And so that property, initially once it dropped, I don’t think that property has been vacant for more than two weeks. And that was since 2021.
I’ve gotten really lucky that I set for that particular property at the time, I set my settings at a certain 30 days or more, so anyone who wanted to come for the weekend really couldn’t. And so what I found is that that’s initially how the property launched, was just booking working professionals who were coming for two to three months to the area. And then when it got a little bit slower, I think it was at about the two-week mark, I did drop down to 14 days. And so I think it’s just really working with that longer stay just gives me more benefit in less turnover and less wear and tear, just overall less headache when I have more longer term stays.

Tony:
So Nancy, in an entire 12-month period, how much money do you think you’ll gross and what’ll what’ll be your net on that property, ballpark?

Nancy:
Yeah, that property I would say on average, the gross was about 6,000 a month. So that was about 72,000 a year for that property.

Tony:
And do you know ballpark, what is your net on that? I know you don’t because you pay cash for this, so there’s no mortgage, so your expenses are probably super low, right? We’re talking utilities and …

Nancy:
Exactly. Actually, because this was the first biggest property that I had done cash, it was also the first one that was bringing in 6,000 before bills were paid. So net after that was probably closer to 4,000, maybe 4,500 because it does have a pool. So we do have maintenance come in for pool maintenance, which is pretty pricey in this area. And I think what really worked so well with that property is that is the location of it is so central to the rest of Dallas. So not necessarily just downtown where people think like, “Oh, I need to buy a house closer to where it’s up and popping. But really no, there are so many other surrounding areas that people come to Garland for and they’re wanting to travel to Plano or all the way to Rowlett or Rockwall. So I think the location too was a really sweet spot for that property.

Tony:
So typically when I look at and when I talk to people about short-term rentals, I say you want your annual gross revenue to be at least 20% of your purchase price. So with you at $72,000, you’re more than double that at almost 40%. So that’s a slam dunk deal, Nancy, and congrats to you for knocking out the park with that one. Just one thing I want to mention before we move on, this house was a hoarder home. And Ash, I’m sure you’ve bought properties like this, I know I’ve brought properties like this as well, where you’re almost surprised or shocked when you walk into some of these properties and you see the condition that some people are living in. We have a property in our contract right now that you can literally see the sunshine coming through the roof in the living room. And those aren’t conditions people should be living in.
And real estate investors, oftentimes they get this bad rap for buying properties and making them beautiful, but in reality, we’re taking what was unlivable for many people and turning into a property that’s going to improve the value of the neighborhood. It’s going to be a great experience for guests that are coming on a short-term basis, or your tenants if they’re there for the long term. So I know sometimes as a real estate investor you can feel bad that there’s all this negative talk, but in reality, I think we are really doing a positive work in a lot of communities.

Nancy:
And I think if anything, it really just opens up the mindset too, that real estate is a form of income. Real estate is a form of investment. So I would hope that in that, like you said, I’ve hosted from families traveling for medical reasons. One of the properties is four minutes away from the major hospital that we have in Dallas. So it’s not always, I think the favorite word people like to use online is the slum landlord. And it’s like, no, I’m taking these properties and in areas too that are maybe not so favorable, but making it livable, making it accessible for a family. And in my seven years, I haven’t always turned a property into an Airbnb or a short term rental.
Sometimes it was just flipping it and holding it. And housing, for example, undocumented workers that were in a position where the house that they were in, that landlord did not have good living conditions for them, didn’t fix anything, bought that house, put up the sign, and within the next day they walked over and they were like, wow, we would love to live here. And seeing that they didn’t have credentials or credit history or anything, I took a chance on them at the time and they’ve been tenants for four years now and take great care of that house. And again, just knowing that I’m able to offer that kind of opportunity for someone, for me, it’s like there’s so many aspects of real estate that you can get into, whether it’s short term rental or other options as well.

Ashley:
Well, Nancy, thank you so much for sharing that deal with us and also an insight as to some of the other investments you have done. We really appreciate you sharing your knowledge, and I think there is definitely a lot of value from this whole episode, but especially that deal as you broke down the numbers and exactly how you did it. We’re going to move on to our Rookie exam, where we have three questions to ask you. And the first one is, what is one actionable thing rookies should do after listening to this episode?

Nancy:
I think the first step is definitely understanding your numbers, understanding your finances, how much money is coming out, how much is going out. And I think that concept is what worked for me. It was going through the NACA process and them forcing me to know my numbers, for me to then realize where I’m overspending, where I can penny pinch, where I can increase my income to be able to move forward in whatever financial plans I have, whether that’s real estate or investing in general.

Tony:
Awesome, Nancy. All right. Question number two. What’s one tool, software app, or system that you use in your business?

Nancy:
I could not live without Expensify. Life-changing, the automated receipts that I use for all of the properties. It’s one thing to say, “Oh, I’m going to take a picture and I’ll upload it later.” No. Expensify makes you do it right there, right then in the report. And it’s super easy to automatically upload. And then on a monthly basis just go through receipts, make sure that the smart upload is correct and that the numbers look good, matching the receipts.

Tony:
That’s interesting. Does that connect with QuickBooks?

Nancy:
I think there is actually a feature for that through QuickBooks.

Ashley:
QuickBooks has their own built into the app.

Tony:
Yeah. Have you used Expensify, Ash or do you know?

Ashley:
No, no, I’ve never even heard of it. Yeah, I think this is the first time someone has recommended it, yeah.

Tony:
Okay. Awesome.

Ashley:
Nancy, where do you plan on being in five years? What is your goal or what do you want to accomplish?

Nancy:
In five years, I think for me the term really leaving a legacy for my family when it comes to real estate. I want to be able to have enough of that passive income, more of that hands-off investing that is happening, that I would be able to take care of my family. I would be able to have more memories that I would cherish with my mom and dad and my brothers as well. And I think that for me, that’s who I’m doing it for. And if anything, money will come and go, but it’s the experiences that you make with the money that you do have. And it doesn’t have to be extravagant and luxurious, but I think just creating more of those bonds and memories with my family is super important.

Tony:
Awesome, Nancy. Well, I love that and I think that’s a big goal for so many of us getting into this world of real estate investing. So you’ve been fantastic. Absolutely love this conversation. Before we start to wrap things up, I just want to give a shout out to this week’s Rookie Rockstar. This week’s rookie rockstar is Gray Clifton and Gray just closed on a duplex, added $440 per month to their passive income stream. They’ve got a goal of getting to $3,000 per month. They’re about halfway there. They bought this duplex for 179, put down, I don’t know, 20% it looks like, and their cash flow makes about 450 a month for a 10% cash on cash return. So congrats to you, Gray for knocking it out the park on that duplex and being halfway to your cashflow goal.

Ashley:
Well, Nancy, thank you so much for joining us. We really appreciated you taking the time to come on to the show and share your experience and your knowledge with everybody. Can you let everyone know where they can reach out to you and find out some more information about you?

Nancy:
Absolutely. Thank you so much for having me. This is such an amazing platform. I am now on YouTube, Nancy Rodriguez Life, and I think what’s really neat about that platform is that it’s going to be explaining more of the details and where I started, how real estate investing has worked for me and all the details of that history. So I’m super excited about that content. On Instagram and TikTok is the Nancy Rodriguez. You can follow me there as well because I will be posting updates and clips as well from the YouTube channel.

Ashley:
Awesome. Thank you so much. And I’m looking forward to checking out your YouTube channel. I’m Ashley at Wealth from Rentals and he’s Tony at Tony J Robinson. And we will be back with a Rookie Reply on Saturday. Thank you guys so much for joining us.

More than four decades after her death, the author of the popular novels Atlas Shrugged and The Fountainhead is still one of the most divisive public intellectuals.

On one hand, her position of defending rational selfishness and attack on altruism (sacrifice of personal values for the good of others) puts her at odds with the modern understanding of corporate social responsibility and the commitment of a lot of founders to create value for all public stakeholders, rather than focusing narrowly on the shareholders of the company, embodied in the growing popularity of the benefit corp.

On the other, her focus on rationality, self-sufficiency, and the pursuit of excellence and personal achievement means that most objectivist values fit very well with the reality that most tech startup founders experience.

This contradiction leads to a situation in which in public the “acceptable” stance on Ayn Rand is to ignore or deride her. Yet, in private a lot of people in the startup world are fans of her fiction and her basic philosophical principles, as Will Storr describes in his excellent book “Selfie”.

Below, you’ll find three ways objectivist principles can be productive for startup founders.

1. Metaphysics: Objective Reality; Epistemology: Reason

“You can avoid reality, but you cannot avoid the consequences of avoiding reality.” – Ayn Rand

“Embrace reality and deal with it” is without a doubt one of the most important decision-making principles for startup founders. While it sounds like common sense, it’s much harder to stick to than it seems. After all, we are masters at self-deception.

Yet, in a startup context, it is crucial to try to objectively evaluate reality and act accordingly regardless of your ego because failing to do so has only one possible outcome – a failure for your project.

The best approach to achieve this is to treat your project as a scientific experiment – to employ rationality and empiricism in the form of strategizing, running validation tests, and evaluating your results through KPIs in order to achieve your goals.

2. The Pursuit of Personal Happiness

“My happiness is not the means to any end. It is the end. It is its own goal. It is its own purpose.” – Ayn Rand

As a startup founder, it can be easy to get caught up in the expectations and demands of investors, employees, customers, and even friends and family. However, by embracing the principle of the primacy of the pursuit of personal happiness, you can more easily put things into perspective and avoid falling into the trap of advancing your project at the cost of your mental health.

Your project, after all, is a means to an end, not a cause that requires martyrdom.

3. The Pursuit of Excellence and Achievement

“Do not let your fire go out, spark by irreplaceable spark in the hopeless swamps of the not-quite, the not-yet, and the not-at-all. Do not let the hero in your soul perish in lonely frustration for the life you deserved and have never been able to reach.” – Ayn Rand

By embracing objectivism’s emphasis on achievement, startup founders can push themselves to strive for the best possible outcomes. This can help to create a culture of excellence within the startup, which can be essential for attracting and retaining top talent and building a strong brand reputation.

In summary – don’t be ashamed if you derive value from the writings and thoughts of Ayn Rand just because she is divisive. The world is not black or white – even if some of your values and premises differ from hers, this doesn’t mean you can’t benefit from her wisdom.