\n<\/p>\n
Growing a real estate business<\/strong><\/a> with multiple rentals<\/strong> and HUGE cash flow<\/strong>\u2026in just two years<\/strong>!? How do you get so many deals done in such little time? Simply by putting one foot in front of the other, today\u2019s guest was able to create a sizable portfolio<\/strong> in no time\u2014allowing her husband to<\/strong> quit his job<\/strong> in the process!<\/p>\n Welcome back to the Real Estate Rookie<\/em> podcast<\/strong>! Today, we\u2019re chatting with Mackenzie Brogdon<\/strong>, a wife, mother, realtor, and<\/em> investor<\/strong> who managed to lock up seven deals in just two years<\/strong>\u2014with more in the works! With a general contractor<\/strong> for a father and a background in interior design, Mackenzie was bound for a career in real estate<\/strong>. But that didn\u2019t make getting started<\/strong><\/a> any less intimidating. With concerns about house hacking<\/strong><\/a> as a new parent, she could have easily hit the \u201cpause\u201d button. Instead, she plunged headfirst into her first deal<\/strong>\u2014one that, despite having its fair share of headaches, opened the door for many more deals to come.<\/p>\n Whether you\u2019re a \u201cnervous Nellie\u201d or an \u201ceager beaver,\u201d this episode will teach you the importance of taking wise, deliberate action<\/strong> on your real estate journey<\/strong>. Join Mackenzie, Ashley, and Tony as they cover a variety of investing strategies<\/strong><\/a>\u2014from house hacking<\/strong> and flipping<\/strong> to arbitrage<\/strong> and subject to deals<\/strong>. They also talk about why every investor should document their journey<\/strong> and how to find the perfect investing partner<\/strong><\/a> to complement your strengths!<\/p>\n Ashley: Mackenzie: Ashley: Tony: Ashley: Tony: Ashley: Tony: Ashley: Mackenzie: Ashley: Mackenzie: Ashley: Mackenzie: Tony: Mackenzie: Ashley: Tony: Mackenzie: Tony: Mackenzie: Ashley: Mackenzie: Ashley: Mackenzie: Ashley: Mackenzie: Tony: Mackenzie: Tony: Mackenzie: Tony: Mackenzie: Ashley: Mackenzie: Ashley: Mackenzie: Tony: Mackenzie: Tony: Mackenzie: Ashley: Mackenzie: Ashley: Mackenzie: Tony: Mackenzie: Ashley: Mackenzie: Ashley: Mackenzie: Ashley: Mackenzie: Tony: Mackenzie: Tony: Mackenzie: Ashley: Mackenzie: Tony: Mackenzie: Tony: Mackenzie: Tony: Mackenzie: Tony: Mackenzie: Ashley: Mackenzie: Ashley: Mackenzie: Tony: Mackenzie: Tony: Ashley: Mackenzie: Ashley: Mackenzie: Ashley: \u00a0<\/p>\n<\/div>\n Help us reach new listeners on iTunes by leaving us a rating and review! It takes just 30 seconds and instructions can be found here<\/a>. Thanks! We really appreciate it!<\/p>\n Interested in learning more about today\u2019s sponsors or becoming a BiggerPockets partner yourself? Email <\/em>[email\u00a0protected]<\/span><\/em><\/a>.<\/em><\/p>\n Note By BiggerPockets:<\/b> These are opinions written by the author and do not necessarily represent the opinions of BiggerPockets.<\/p>\n
This is Real Estate Rookie episode 317.<\/p>\n
So it was definitely scary to get into investing, but then we started seeing the long-term benefit of just this multiple streams of income and residual income, and by being in real estate, I started to see, oh, my gosh, the equity, and when we had bought and sold houses before, so that opportunity for equity and appreciation in there too opened our eyes, \u201cOkay. I feel like this is a safe route to go,\u201d if that\u2019s a good word to use. So that made us jump into doing that.<\/p>\n
My name is Ashley Kehr, and I\u2019m here with my co-host, Tony J. Robinson,<\/p>\n
Welcome to the Real Estate Rookie Podcast where every week, twice a week, we bring you the inspiration, motivation, and stories you need to hear to kickstart your investing journey. Ashley Kehr, I\u2019m pumped for today\u2019s episode. This is actually someone that you recruited into the ranks of the real estate rookie world that you met at an event, and I\u2019m super glad you did. We got Mackenzie Brogdon on the podcast, and she\u2019s just a ball of energy and she\u2019s got a really, really cool story as well.<\/p>\n
I met her at AJ Osborne\u2019s CRE Circle live event in Boise, Idaho, and she was just a ball of fire, had great energy, but also had a really good story. So she\u2019s going to tell you all about that story of how she got into investing in real estate. She\u2019ll do a great job of actually explaining why she chose not to invest out of state and give some of the reasons that turned her off from doing that. One thing to highlight with Mackenzie is that she was a new investor. She hadn\u2019t done a deal, but she\u2019s going to tell you how she got a partner on her very first deal that pretty much put in the majority of the capital.<\/p>\n
She also talks about how she started off as a real estate agent, how much volume of sales she did in a relatively short period of time, which was amazing. She goes in to talk about how she manages her rehab and what she learned between that first deal and that second deal. She\u2019ll go on and tell you guys a really cool strategy for how she\u2019s finding subs, managing her budgets, and keeping her projects on track for both time and money. So just overall, I think you guys are really going to get a lot out of this conversation with Mackenzie.<\/p>\n
Mackenzie also breaks down what sub two is, a creative financing strategy, and also a sober living facilities, and how she actually was able to coordinate arbitrage situation, and she will go into and explain what that is.<\/p>\n
We go over a few real estate terms throughout this podcast, and we probably didn\u2019t do the best job of breaking those down in the moment. So just a resource for all of our rookies that are listening, if you go to biggerpockets.com\/glossary, there\u2019s actually a glossary of terms that are all important in the world of real estate investing. So for example, we talked about EMD on the podcast today. That stands for Earnest Money Deposit. So if you weren\u2019t familiar with that phrase, that\u2019s what it means, but if you want the whole rundown of all the real estate key terms, again, head over to biggerpockets.com\/glossary.
Now, I want to give a quick shout out to someone that left us a five-star review on Apple Podcasts. They go by the name of JeanBean16, and Jean says, \u201cTruly the best podcast for rookies.\u201d Her review\u2019s a little bit longer, but it\u2019s such a good one. I got to read the whole thing. She says, \u201cAshley and Tony, I love you guys. I\u2019ve listened to over 100 BiggerPockets podcasts,\u201d and she\u2019s talking about the real estate show, \u201cand recently listened to the one with the two of you on it.\u201d So Ash and I recently co-hosted an episode on the Real Estate Podcast. She says, \u201cI really love the information you both provided, so I immediately followed your podcast and, wow, the wealth of knowledge that has come from the two of you in just a few short days is unbelievable. Listen, you guys, if you\u2019re truly new or relatively new to the real estate investing market, this is the podcast to dive into headfirst. Between the BP Podcast and the Rookie podcast, I feel like I have my degree in real estate investing for beginners. Keep up the good work.\u201d
So Jean, or I\u2019m sorry, it\u2019s actually JenBean16, but Jen, I think you\u2019ve said everything that is the goal of Real Estate Rookie Podcast is to help folks at that beginning phase and give them the confidence to move forward. So for all of our rookies that are listening, the reason we ask you guys to leave reviews is because it encourages that next person that\u2019s on the fence about listening to actually dive into the whole BiggerPockets ecosystem, and when they do that, it\u2019s a life-changing moment. So take a few minutes, leave a review on whatever podcast platform it is you\u2019re listening to, and you can inspire that next person to become a real estate investor.<\/p>\n
Mackenzie, welcome to the show. Thank you so much for joining us. Do you want to start off with telling everyone a little bit about yourself and how you got started in real estate?<\/p>\n
Yeah. Well, first of all, thank you so much for having me. I\u2019m so excited to be here. I am a Southern California native, born and raised in Southern California. I moved up here to Boise, Idaho in late 2017. I got licensed as a real estate agent in 2020 and started investing in 2021. I have a husband and two little kids. Both of them are toddlers under three years old, so life\u2019s a little bit crazy, but we love it.<\/p>\n
So what\u2019s that first initial thing that got you into real estate?<\/p>\n
I actually can\u2019t take credit for it. In 2020, my husband was the, I guess, main income earner, main breadwinner for our family, and he goes, \u201cHey, Mackenzie, we should get an investment property,\u201d and I go, \u201cOkay. Cool. That sounds awesome. Let\u2019s do that.\u201d We owned our house at the time, we had some equity in it up here in Boise. So he sat down with a good friend and mentor of ours who was a real estate agent, Shelby Paget, and Shelby goes, \u201cHey, yeah, let\u2019s get you in investing, and Mackenzie should just get her real estate license.\u201d So that sparked, \u201cYeah, I should get my real estate license.\u201d I have a background in network marketing, sales, graphic design, interior design. My dad was a general contractor growing up, so done all the things, it seemed to be a good fit. So I got licensed in October of 2020, and then my husband ended up quitting his job to let me thrive in real estate. So it was like a make it or break it, has to work in real estate moment for us, and thankfully it did.<\/p>\n
So tell us about that first conversation about investing in real estate. What were some of the things that piqued your interest? Did you have any hesitation that maybe buying an investment property wasn\u2019t the right thing for you?<\/p>\n
Yeah, I think it was tough. We were looking at going the house hacking route, and at the time we had a , I think, four or five-month-old. So we said, \u201cWait a second, are we really going to do this right now? This is crazy.\u201d So the fear of, \u201cWhat if it doesn\u2019t work out? What if you move your family? What if you stretch yourself too thin?\u201d and knowing that, \u201cOkay, maybe my husband is going to quit his job. We don\u2019t want to stretch our finances so far and then get too overextended,\u201d and we don\u2019t have a fallback plan. So it was definitely scary to get into investing, but then we started seeing the long-term benefit of just this multiple streams of income and residual income, and by being in real estate, I started to see, oh, my gosh, the equity, and when we had bought and sold houses before, so that opportunity for equity and appreciation in there too opened our eyes, \u201cOkay. I feel like this is a safe route to go,\u201d if that\u2019s a good word to use. So that made us jump into doing that.<\/p>\n
Mackenzie, I just want to pause for a second, and if you can, let\u2019s give our listeners just an overview of where you\u2019ve gone since October, 2020 when you got that license to where you are today. So I guess, how many transactions have you done? What does the portfolio look like today?<\/p>\n
So I feel like real estate sales for me on the realtor side of it is different than real estate on the investing side of it. It\u2019s completely different. I think people think, \u201cOh, my gosh, all real estate agents are investors,\u201d and that\u2019s actually very much not the case. Most agents don\u2019t invest in real estate, which I don\u2019t understand how that happens, but I got licensed in 2020 and it was a make it or break it moment for us. So I just put my head down and started working probably harder than anyone else, and I was grateful to Shelby for mentoring me and teaching me a lot of the ropes and I watched him as he was investing and things like that.
So as far as the sales part of it, I\u2019ve been really blessed. I\u2019ve done over, gosh, three million in my time here and then a little over 60 transactions. Actually, it\u2019s probably pushing 70 now, a little over 70 transactions in my sales time. Then as far as investing goes, we started in March of 2021 when I found a opportunity on market that looks like a good flip, and I always wanted to flip. Of course, everyone\u2019s seeing all the flipping shows, and with my background in interior design I\u2019m like, \u201cThis just goes hand in hand.\u201d So we ended up grabbing this flip. We brought on a partner, that partner took the main equity stake, and I said, \u201cHey, you\u2019re out of town. I\u2019m going to help manage it for you, and I\u2019ve got a little bit of cash that I can invest in it. Will you just let me partner in this with you?\u201d
So he said yes. So we flipped that house in April of 2021. That went well, and then within another calendar year, one full calendar year, we had flipped a second house and that one we had more of an equity stake. So those were just fix and flips, and then we started moving into long-term holds. So now we have four long-term hold rentals, and then we are under contract on another that\u2019ll help us house hack a little bit and then working on some other creative finance deals in the background, underwriting them right now. So we\u2019ll see how that goes.<\/p>\n
So you have really propelled yourself over the last couple years, even two years. Congratulations on that. I want to go back to that first deal where you talked about you found a partner. How did you find this partner? How did you approach them? That\u2019s one of the biggest struggles of a rookie. You\u2019ve never done a deal, but yet you\u2019re asking somebody to be your partner in this. So go into the details on that for us, please.<\/p>\n
Before you do, Mackenzie, anytime we say the word partner now, we got to plug our book. So this podcast is going to come out in the future, but today, the day that we\u2019re recording this is actually the day that mine and Ashley\u2019s book Real Estate Partnership launches. So if you guys head over to biggerpockets.com\/partnership, you guys can pick up a copy of this book, and I think there\u2019s still a couple bonuses that are available for folks that order during the first month that it releases. So if you want to capture some of those heads of real estate or heads of biggerpockets.com\/partnership, just pick up a copy. So Mackenzie, sorry to interject there, but it\u2019s just a mandatory now that anytime anyone says the word partnership that Ash and I plug our book.<\/p>\n
I love it. I love it. Worth the interjection. So I was newer to real estate, but what I did is I started with finding the deal. So I found the deal, I ran the numbers, I had learned how to comp properties so I knew what this property would be worth after the repair, I knew what it would take to go into it just with my background in general contracting, had some people look into it. So I started with finding the deal and then we go, \u201cOkay. How are we going to fund this? Who\u2019s going to buy this?\u201d Even though I didn\u2019t really have real estate experience at the time, I had life experience.
So back from my home in Southern California, my husband and I were very involved in multiple circles. We were coaches in different aspects and sports and things like that. So this connection was someone who we had worked with for years. They had trusted us with their kids. So I was like, \u201cWell, if they trust us with their kids, they\u2019re going to trust us with their money, right?\u201d So we just called him and we said, \u201cHey, Bob, I know this is crazy, but this is the deal. This is what it\u2019s looking at. Here\u2019s the numbers, I\u2019ll show you. I\u2019ll send you the comps. Here\u2019s what I think it can do,\u201d and because they had that trust aspect I think already with us, they trusted us in the opportunity.
So because we had already built that relationship with them, they felt comfortable to take that leap into partnering with us. So since then, they actually are one of our main partners. They partner with us on a lot of deals now and we\u2019re very grateful for them.<\/p>\n
Mackenzie, you just did a phenomenal breakdown of a lot of what Ash and I talk about when it comes to finding partnerships. So I\u2019m just going to break down what you said here for a second, so bear with me. So first, you identified what your unique skillset was, and that was finding the deal. So you leveraged your strengths, you leveraged your skills to find a really good deal. Then you said, \u201cOkay. If I\u2019m looking at the puzzle pieces of making this transaction happen, I\u2019ve got the deal finding, I\u2019ve got even the property or the project management side, but I\u2019m missing the capital side. So okay, let me go out and find a partner to fill that void.\u201d So you go out there and you find someone that has those resources that you\u2019re lacking.
Now, this person had never really done real estate before, but you said the reason that they were willing to work with you was because there was that level of trust there. One of the things that Ash and I say in the book is that when you\u2019re looking for a partner, people typically partner with people that they either know, like or that they know, like, and trust. So you need all three of those. So even though this person had never invested in real estate before, because you had that foundation of know, like, and trust, when you presented them with an opportunity, they were willing to jump at it because you guys had built that foundation.
Ash talks a lot about her first partnership where that partner invested his life savings into a deal, and it\u2019s because him and Ashley had that know, like, and trust. So I just love that story because you really exemplify all of the critical elements of putting a partnership together.<\/p>\n
I think a lot of people think, \u201cOh, I can\u2019t get started until I have all this real estate experience.\u201d Well, you\u2019re never going to get started if \u2026 because it takes deals and capital and things to get that experience. So I completely agree, and I think if people open their eyes to, \u201cOh, maybe this person \u2026\u201d I hear that all the time, \u201cI don\u2019t know anyone with money.\u201d I actually really doubt that\u2019s true. So really look, and it never hurts to ask, and I always say, if you find a deal, I feel like the money and the capital will follow. You just got to start with the deal. So yeah, I agree.<\/p>\n
That\u2019s definitely great advice. Mackenzie, would you go into how did you structure this deal? Would you mind sharing the numbers of how much money each person contributed, what your role was, what their role was, and how much equity each person got?<\/p>\n
Yeah. So probably not the prettiest on paper, meaning that there was no paper. It was a handshake agreement, which now that I\u2019ve done more deals, I\u2019m like, \u201cOh, man, that was sticky for me, that was sticky for them,\u201d but we just trusted each other so it worked out. So essentially, we just structured it as whatever anyone was putting into the property was their equity stake in the property. So they fronted the majority of the money for the \u2026 They bought it in cash, took title to the property, and then they funded most of the renovations. I guess we funded a lot of the purchases of the supplies because we said, \u201cHey, we can buy in \u2026\u201d I think we sent in $30,000, which was like, \u201cThis is a 10% equity stake in the property.\u201d
So then at the end of the day, we put together all the profits and losses once we sold it and just distributed things out from there. I actually, because I didn\u2019t really have experience, I didn\u2019t even charge. We\u2019ve worked other deals now where I\u2019m like, \u201cOkay. If I\u2019m going to property or project manage it, I\u2019m going to take an additional portion of the equity or charge or something like that.\u201d I didn\u2019t even do that on this one because I just wanted them to feel like they could trust me. So I just took the portion of what I put into it, capital-wise, of the profit and the deal when we sold it.<\/p>\n
Mackenzie, I did the exact same thing on my first deal. I didn\u2019t put any dollar amount to my value. Really, I gave up a lot in that first deal, but that\u2019s what gets you started. Being able to show that you can do that, you can be the boots on the ground, you can be the project manager, whatever that is, then that\u2019s where you can go and bake your value in. It sounds like you also dated this partner. You went into this partnership not just, \u201cOkay. Every flip now we\u2019re doing with you guys and this is how it is. Whatever the money you put in, that\u2019s your equity from now until forever,\u201d but you did one deal and then you bring the next deal and you\u2019re able to renegotiate with them. I think that is a tremendous point is when you\u2019re dealing with a partner is to try to set it up that way you\u2019re not locked into something that you end up regretting and you can change it for the next deal.<\/p>\n
Yup, absolutely. It\u2019s changed every deal. We\u2019re on our third partnership deal with them, and then they\u2019ve done a few investing deals with me that I\u2019ve just served as their agent on it, and every deal has looked different.<\/p>\n
That\u2019s definitely cool of having that flexibility with somebody. So let\u2019s talk about, okay, so you did your flip and then what comes next? Did you get the bug? Did you guys make a bunch of money on that one? What happened?<\/p>\n
So that one, I\u2019ll be honest, the margins were slim. We ended up learning a lot of what, I guess maybe not even what to do, but what we wanted to do because we learned a lot of what not to do. I\u2019ve heard multiple guest speakers on here talk about the struggle with general contractors and, oh, man, we struggled with a general contractor. So it was in the heart of 2020 where everyone was slammed, the real estate market was going crazy, everyone was losing it. So I brought in someone who was a mutual friend and I go, \u201cOh, this is going to work out great. I know them,\u201d and it didn\u2019t work out great.
So it ended up we were overpaying for terrible work that was taking way too long and me being over here on the project management side of it too, I\u2019m like, \u201cOkay. Let\u2019s push it along.\u201d The partner\u2019s like, \u201cHey, what\u2019s going on?\u201d because he lives out of state and I\u2019d be there all the time, \u201cNo one\u2019s here, no one\u2019s here. We got to push this along. This is a terrible job. The paint\u2019s bubbling,\u201d all this stuff. So we ended up about a month or two before we wrapped up, I said, \u201cThis is it.\u201d I told the contractor, I\u2019m like, \u201cI\u2019ll pay you for what you\u2019ve done. We\u2019re going to just finish the rest of it.\u201d
So then I just brought on subcontractors for it. So at the end of the day, it worked out. We made a little bit of money enough to put a good taste in everyone\u2019s mouth, but I think that we realized we just learned a lot. So then there was more competence in what we\u2019re going to do next. So actually, when we were in escrow on that property under contract to close it, it sold after two days on market. It didn\u2019t even get through first full weekend. We wanted a contract to buy another flip. So we did another flip with them, and this time we were actually a higher equity stake, and then I also buffered in a portion of the profit for my project management in the next deal.<\/p>\n
So Mackenzie, you said that the margins were slim. So it sounds like you didn\u2019t maybe make as much profit as you wanted to, but there\u2019s something important I want to point out there. You basically got paid to educate yourself on how to flip a home for a profit.<\/p>\n
Oh, absolutely.<\/p>\n
There is an incredible amount of value even if you broke even on everything that you learned throughout that first flip that you were then able to apply to that second flip to do it more confidently. So I would love to break down some of those lessons you learned in the first flip that you\u2019re like, \u201cOkay. We need to change this for the next one.\u201d So what were some of those lessons learned and how did you change when you went into the second flip?<\/p>\n
Yeah. Well, you totally touched on it. Honestly, even if we had lost money in it, which thankfully we didn\u2019t, it probably still would\u2019ve been a good opportunity because I was very vocal on social media with it. So I shared the whole deal, \u201cWe\u2019re flipping this and we\u2019re doing that,\u201d and I shared all of the, \u201cOh, man, this didn\u2019t work out, but this is working out and this is how it turned out.\u201d It actually solidified me as a real estate investor. So it pushed my career forward in sales for investors, \u201cOh, Mackenzie knows how to work the real estate market.\u201d
So that was huge. I can\u2019t even put a value on how that pushed me forward, but then as far as lessons that we learned in it, I definitely think we learned, one, you got to be conservative on your numbers. You think it\u2019s going to take X amount of dollars and X amount of time, just double it, just plan to double it. Then if you end up closer, everyone\u2019s happy, it\u2019s a great day.
Then I think on the other side too, we really did learn, \u201cHey, I don\u2019t think I need to bring a general contractor in,\u201d because at the end of the day, they\u2019re just project managing it. They\u2019re bringing in all their own subs, and the most times they don\u2019t even know what\u2019s happening. So for me to have made connections during that by reaching out and just building my book of people I want to work with, it made the next process so much smoother and quicker. There was just so much more of an ease because it\u2019s like, \u201cOkay. I trust my tile guy to come in and do an amazing job. I trust my painter to come in and do an awesome job.\u201d
Then I don\u2019t even worry about, \u201cOh, was that a good bid? Did I get a second one?\u201d I just know it\u2019s going to be great. So I just learned to grow your list of people that you know and trust and use them, and it makes it a lot easier. Then we learned too the benefit of just not using a general contractor personally.<\/p>\n
Mackenzie, you talked about growing your list of people, but I think for a lot of our rookies that are listening, that\u2019s where that challenge is is that, \u201cHow the heck do I find a sub?\u201d So is there a Facebook marketplace that you\u2019re going to? Is there Craigslist? How are you identifying these subs? How are you vetting them? Then how are you as the, quote, unquote, \u201cjuicy for your own property\u201d, making sure that you\u2019re sequencing these subs at the right time so they\u2019re not getting each other\u2019s way because I think that\u2019s the challenging part as well?<\/p>\n
I think experience and referrals are the greatest place to find people. So it goes back to that like, know, and trust people. So for instance, I found my tile guy through another agent at my brokerage. She goes, \u201cOh, my gosh, I\u2019ve used this tile guy for my houses before. He\u2019s the best. You have to talk to him.\u201d So that starts the conversation. Then I always look for how responsive are they and then how professional are they in my interactions. My tile guy showed up on time, he brought a notebook, he brought a tape measure, he measured all down. He had a professional invoice that he sent to me. I think a lot of contractors fail in that part because they\u2019re more of just like the hands-on, they don\u2019t understand the admin part of it, but if you really care about the process from start to finish, I feel like that gave me peace that I know he\u2019s going to be an exceptional tile worker before he even laid a tile for me. So I think that was huge.
Then, yeah, I did share a lot and I wouldn\u2019t just blast it on Facebook marketplace. I started with people I knew. So I started within real estate agents that I worked with, \u201cWho are you using to paint houses? Who are you using as electricians?\u201d Then in my personal Facebook sphere, if someone I knew had used this person, he did a great job on their plumbing, I would talk to that person. So really trusting that personal word of mouth referral helped build that book a lot. If someone I know had a great experience with them, I feel like that\u2019s just an extra leg up that I\u2019m going to have a great experience with them.<\/p>\n
How has your process changed as far as estimating the rehab from that first deal until now? Give us those scenarios and then maybe even some tips for somebody getting started as to what they can do to learn how to estimate a rehab. You said your dad was a contractor, but beyond that, did you really know a ton about what it costs to do construction?<\/p>\n
Honestly, I tend to wing it a little bit, which probably isn\u2019t a great advice here, but I\u2019ve just gotten a lot of bids. So in that first Reno project, I got three general contractors to come out and bid the job, and I would see where everything would line up. Then you just start realizing, \u201cOkay. To paint an exterior of a house should be around maybe $7,000, $10,000.\u201d So on my estimating, I always estimate on that slightly higher range of what I know. The houses we\u2019re flipping are all about the same. We\u2019re looking for that mid-range square footage, so you can ballpark, \u201cOkay. This is about the same house, so this is probably what it\u2019s going to cost for exterior painting.\u201d
If you\u2019re not sure, I think you just get multiple bids. Most contractors, especially now that they have a little more time on their hands, are great at getting you bids. So I do try to gather as many bids as I can, but to put together that budget, I\u2019ll aim high with my estimate when you have to move quick on getting a property under contract. Then we just put in placeholder bids Let\u2019s say $10,000 for painting, and then the paint comes in at 9,500. Cool, I have an extra buffer. So I say aim high and then get the actual bid and then adjust your spreadsheet.<\/p>\n
Mackenzie, as a real estate agent, do you think that you have an advantage of getting contractors into the property because you can really schedule a time for you to go anytime you want to a property, correct, and bringing them in?<\/p>\n
Yeah. Most of my deals have come on market or coming soon or now, I\u2019m starting to build a network of people who are bringing me deals off market, but most of mine are coming from on market. So I think a lot of people say, \u201cOh, you can\u2019t find a deal on market.\u201d Well, that\u2019s not true. That\u2019s happened multiple times for me. I love the coming soon listing on the MLS. It\u2019s like this sweet pocket of time. People don\u2019t ask questions. I don\u2019t know if they\u2019re scared of being told no or what, but they don\u2019t ask questions and I\u2019ll ask questions. So both of my flips actually were coming soon. They weren\u2019t even on the market, but I just called the agent. I said, \u201cHey, I know this is coming soon. I know I can\u2019t see the property because we can\u2019t get into it until it\u2019s on market. Can I submit an offer before it\u2019s even on market?\u201d
They\u2019d say, \u201cYeah, sure,\u201d and then I can write contingencies in there like, \u201cLet me get my inspection done. Let me do things like that,\u201d so yes. Then as far as if you\u2019re working on market deals, I do think that agents give you a little more credibility and it gives them a little more confidence too even when negotiating with their sellers of like, \u201cOh, she\u2019s an agent and I\u2019m a very high producing agent in the area. Oh, I\u2019ve worked with her before. I\u2019ve heard of her,\u201d whatever. It does help give some credibility to it. So I do think it\u2019s been helpful.<\/p>\n
I just want to go back to one thing you said, Mackenzie, because you mentioned spreadsheet, and this is something we\u2019ve always struggled with with our flips is just the best way to manage all of the expenses and make sure you\u2019re coming in on budget. So once you set up that initial budget, what are you using to track expenses to make sure you\u2019re within range?<\/p>\n
Google Drive all day, every day. You should see my spreadsheets. I feel like nothing makes me happier than a good spreadsheet that auto sums down at the bottom. I\u2019m not even that good at creating them, but I can use the sum. Sometimes I was like, \u201cOh, this one turns green,\u201d if you\u2019re under, \u201cThis one turns red.\u201d So honestly, we just do Google spreadsheets. I will say now too even moving forward, I\u2019ve delegated a little more of that. So my husband does most of that now, which is great because he\u2019s actually better at numbers than me, but we just use good old Google sheets for everything. Then it\u2019s so great too because we share that with our investors. So look at it. So we\u2019ll share that with our partners and everyone has access to it so they can see, \u201cHey, this bid came in,\u201d or, \u201cHey, this came in lower, this came in higher,\u201d and they could just see it all.<\/p>\n
So Ash and I are both spreadsheet nerds here. I\u2019ve probably seen more pivot tables in a week than most people see in a lifetime. So are you just literally taking every single transaction like, \u201cHey, we just paid the painter X dollars. We just paid our drywall guy this much\u201d? Are you taking every single transaction and just drop it into a big Excel sheet and then categorizing all of those?<\/p>\n
So we\u2019ll have the master budget. So let\u2019s say painting came in at $10,000. We have set aside for it in the master budget, but at the end of the day, we only paid him 8,500. That goes in there. So then we see that $2,500 surplus. Usually it gets spent somewhere else, but it all balances out like over here we had 5,000 budget, but it took us 5,500, somewhere in there. So yeah, we have the big bid and then underneath it will be what the actual was.<\/p>\n
I want to pivot to a different direction. So you did your flips and then you mentioned you have four rental units too. So can you tell us how you made that pivot from doing flips to acquiring rental properties?<\/p>\n
So our first flip that we partnered in on was March of 2021. We caught the bug for investing, but we want to do this, and at that time, my husband had quit his job, so we couldn\u2019t qualify conventionally because I didn\u2019t have two years of tax returns so we don\u2019t look good on paper, but we owned a house that had significant amount of equity in it because we bought it before everyone thought Idaho was cool. So in July, we said, \u201cWell, we wish we could do a HELOC or something like that, but we can\u2019t. Let\u2019s just sell our house and take the equity out of it.\u201d
So we put our house on the market, our primary house on the market in July and netted a very large amount of money from it. So that helped catapult us into things. So from selling that house, then we bought a new primary residence. We used those funds to partner in on that other flip. We purchased a property. We went under contract for a new build actually in Tennessee out of state.<\/p>\n
What made you find that and decide on that?<\/p>\n
It\u2019s been a learning lesson. I actually don\u2019t really investing out of state as I\u2019m learning. I think maybe it\u2019s my realtor pride. I just like that I can run my own comps. It bothers me to use another agent. I would just rather run it myself, but it was through a friend of ours who we \u2026 Actually, the agent, Shelby, who mentored me, he had a agent connection over there and it was these four houses that were being built, and $300,000 purchase price. It rents for $2,800 a month. The earnest money was a thousand dollars. Then at the end of the bill, it appraised for 350. So it was a huge win. So that\u2019s just how we found it was I guess word of mouth connection for that one.<\/p>\n
I was just going to ask one followup on the Tennessee. Outside of the comping, is there anything else that I guess you\u2019re not enjoying about the long distance piece? Is it the management itself? I guess what advice would you have for rookies to make that piece a little bit easier?<\/p>\n
I don\u2019t know this area of Tennessee, I\u2019ve been to Tennessee before. My property\u2019s in Maryville, which is about 30 minutes outside of Knoxville from my understanding. I\u2019ve been to Knoxville, I\u2019ve been to Nashville, but so yeah, just difficult working with another agent. I don\u2019t know, you just see like, \u201cI feel like this could be a little bit better,\u201d when numbers kind of go from a high end to a low end, just a little bit of confusion. I love Zillow, but I can get the data that I can get from the MLS. So just working with another realtor, I prefer to be my own realtor.
Then we do hire a property manager for that, which is fine. He does great, but I just don\u2019t know the market there as much as I know here. So when I have my in-state rentals, I manage them myself because I know the area. It\u2019s easy for me to pop over. I know my contractors. I don\u2019t know anyone there. So to be honest, it\u2019s probably probably an issue with my own. I want to micromanage everything. So I don\u2019t like that I have to trust other people to tell me what the rental estimate is, and yeah, I can run it, but that in neighborhood like, \u201cI know this street, I know \u2026\u201d For instance, we bought this property and I look it up on Google Maps, but you don\u2019t even realize what\u2019s down the street from you. You\u2019re like, \u201cAh, that\u2019s a weird spot for a rental.\u201d So just not being able to see the property, touch the property, know the area, and then you\u2019re having to pay property managers, and if I want to sell it, I have to pay a new realtor fees and all that stuff.<\/p>\n
After that property, did you only do deals in Idaho for your rentals after that?<\/p>\n
Yeah. So now we have, let\u2019s see, three, soon to be four in state. One of ours we bought, it was the good old end of the year scramble so we don\u2019t have to pay some taxes. So we bought a property here in Idaho and renting out as a sober living facility, which is great. Then our next one, our last primary residence that we purchased, we flipped into a rental and moved into a new primary. So that helped us put less down. Then we just bought a property subject to that we\u2019re renovating. That will be a long-term hold and will also be sober living. Then our current property that we\u2019re in right now is a primary, we\u2019re building a new primary, and so that\u2019ll flip into probably a corporate living or executive rental.<\/p>\n
We have a lot to unpack there. Let\u2019s start with-<\/p>\n
I know that was a lot.<\/p>\n
Let\u2019s start with, what is sober living? Explain that strategy and what you\u2019re doing with the property to make it sober living.<\/p>\n
So there\u2019s a couple ways that you can go about this. The way we\u2019re doing it, I love it because it\u2019s very hands off. So I know someone who actually has been in the prison system, turned her life around, she\u2019s amazing, she\u2019s awesome, and she has a heart for people in those situations. So she actually has a direct contract and connection with the Idaho Department of Corrections. So what happens is when people get released from prison, they get released with $650 for their first month\u2019s rent, and it goes directly to this gal for them to live in this house, and in the house, they have to abide by the rules, drug tests, do all this stuff. So they have to remain clean.
So it\u2019s nice because I actually feel like I\u2019m providing a place. There\u2019s, oh, my gosh, I can\u2019t remember the line, there\u2019s literally people that can\u2019t get released from prison because there\u2019s not a sober living house for them to go to. So we\u2019re actually trying to help her in gaining as many houses as we can for her. So how it works with her, you can do sober living on your own where you just literally market it almost like you would a rental and people can come to you, but there\u2019s just a lot more management with it, but how it works with her is she signed a two-year lease and then essentially, it\u2019s arbitrage or she\u2019s subleasing it out.
So she signed a two-year lease at a fixed rate with me, and then however many people she puts in it, whatever income she brings, that\u2019s all icing on the cake for her. So it\u2019s really nice. It\u2019s a set it and forget it from me, and they also property manage the house. They have a house manager that lives there. So they take care of any repairs under $500. If it\u2019s major, we talk about it. So it\u2019s been great so far.<\/p>\n
Mackenzie, did you charge a premium to them for this arbitrage deal or was it basic market rents?<\/p>\n
No premium because it doesn\u2019t make sense to have that many people living in the house. So the house that we have right now that she\u2019s renting is a four-bedroom house, and I think she fits 10 to 12 people in it. So there\u2019s certain state criteria that she has to follow, but it has to be above market value for me to justify the wear and tear on my property. So she does, for instance, that property, probably long-term rent, would rent for around 22 maybe, if I\u2019m lucky, $2,400 a month and she signed a two-year lease at $3,200 a month.<\/p>\n
That\u2019s awesome. I think that\u2019s a big benefit as a landlord to doing rental arbitrage, which is what you said, where you lease it out to someone who instead of them living in it themselves, they turn it around and sublease it to someone else. So arbitrage is pretty big in the Airbnb space. If you\u2019re listening to this and you\u2019ve got a small multifamily or single family house, you want me to arbitrage it, send me a message, I\u2019d love to connect because I think it\u2019s a win-win situation. The landlord gets an elevated rent and the operator gets to acquire a unit at a fraction of what it would cost for them to purchase that. So it really is a win-win situation.
For our rookies that are listening, if you guys want more information on the sober living model, we interviewed Davana and Reed back on episode 265, 265, yeah. They did an entire hour breakdown of this model that Mackenzie\u2019s talking about. So if you want to learn more about that, go there, but you also talked to, Mackenzie, aside from the sober living, you talked about subject to and creative finance. What the heck does that mean? We\u2019ve got some other resources in the BiggerPockets ecosystem, but I\u2019d love to hear from your experience. What does creative finance and subject to mean?<\/p>\n
So to be honest, I\u2019m newer to it. I guess I was doing creative financing without realizing I was doing creative financing because our property that we just bought, the sober living one that I was telling about that we bought last year, we ended up bringing in our partner as a private money lender. That\u2019s a form of creative financing because we bought in cash, but we needed a little just to make up a little difference. So that was one aspect of it. When we purchased our property in Tennessee, still couldn\u2019t qualify for traditional loans, so we purchased it using a DSCR loan. So there are other ways to go about it, but I really just got opened up to this world of true creative finance where we\u2019re talking about subject to or really seller financing.
A lot more people have heard about seller financing. They have a bad taste in their mouth over it I think just because they\u2019re not educated on it, but subject to is this powerful tool, and I really feel like it\u2019s having its day in the sun right now. What it is essentially is we go into a contract with a seller where we agree to make their payments on their behalf. We take title to the property. The property is legally mine. I can use it for tax depreciation. I can do whatever I want with the house, but the power is that the debt actually stays in the seller\u2019s name. It doesn\u2019t negatively affect them, but it stays in their name so that I don\u2019t have to go through credit checks, I don\u2019t have to go through loan closing costs, I don\u2019t have to go through debt to income. No one looks at my stuff. It\u2019s actually scary. No one even looks at my stuff and I buy this house.
So it\u2019s really the easiest way of transferring title and then agreeing to make payments to the seller. So we did that, and what sweet is now, I\u2019m paying a mortgage that has a 2.6 rate on it, and I should be able to cashflow about a thousand dollars a month once it\u2019s renovated and up and running.<\/p>\n
That\u2019s awesome. That\u2019s really cool. We did interview Pace Morby on here. It was episode 280. He\u2019s always a wealth of information. He\u2019s also going to be one of the guest speakers on the Real Estate Bootcamp for BiggerPockets. So if anyone wants to join the bootcamps, you can go to biggerpockets.com\/bootcamps and Pace will be one of the guest speakers on it. So really exciting, but that\u2019s an awesome deal.
I want to ask, and you mentioned a couple of lessons that you had learned along the way, such as dealing with a general contractor, such as investing out of state, but what do you think was the hardest lesson that you had to learn? What was the most difficult thing through your journey as a rookie investor?<\/p>\n
I think sometimes I\u2019m all about you have to start to get anywhere. You\u2019re never going to get further along if you never start. So that\u2019s a huge piece, but also sometimes you get this adrenaline rush of like, \u201cLet\u2019s keep going, let\u2019s keep doing this.\u201d So sometimes I just think you need to be wise about the steps you\u2019re taking before you take them. So probably our biggest moment was my husband and I went under contract to build a house, and we did the number one thing that you don\u2019t do, which is buy the most expensive house in the neighborhood, right? Never do that. It\u2019s terrible for values, but when it comes to a primary residence, this was going to be our house. We\u2019re going to be in it with our family, dream home, blah, blah, blah.
However, we went into a contract on it at the peak of the market. So the market started tanking, which is okay if you\u2019re going to ride it out. During that, just life changed a little bit for us. We want more kids, and this house wasn\u2019t perfect for it, and just different things came up. Here nor there, at the end of the day, we ended up pivoting. We lost some money, but not as much as we could have. That\u2019s actually going to turn into our new rental property that we bought. It worked out, but the biggest life lesson for me was the amount of sleepless nights I let it cause me.
The market is out of my control. Yeah, I can try to watch trends and follow it as quickly as I can, but sometimes the government does crazy stuff and here we are. So you can\u2019t time it perfectly and you\u2019re not going to win in every investment. You\u2019re going to win some, you\u2019re going to lose some, yes. Leverage your risks, be smart, don\u2019t overleverage, but at the end of the day as long as you did your research before, what you\u2019ve put out isn\u2019t going to ruin your family if you were to lose it all. Just chill out. The peace of mind and the quality of life that you give up when you\u2019re stressing over something you can\u2019t even control is not worth it.
So I think when you go into investing, you just have to have a level mind about it and make sure that you keep that perspective about it, \u201cI might lose some, but I\u2019m going to win some and I\u2019m usually going to come out over top.\u201d\u2018 So I think that was probably my biggest struggle was I had to learn that the hard way, but I\u2019m on the other side of it now and now I know<\/p>\n
You make a fantastic point, Mackenzie, about most real estate investors don\u2019t have a perfect track record.<\/p>\n
Absolutely.<\/p>\n
A lot of those failures, a lot of that adversity is what makes you a better investor in the long run. For example, last summer, we attempted to do our first syndication and it was a small hotel here in Southern California and we had to raise, I think, five million bucks was our target raise, and we ended up raising 2.9 or 2.8 or something like that. So we got a little more than halfway there and we just couldn\u2019t raise anymore. I put up a 50K EMD. We probably spent another 50K in legal fees and inspections and all these other things, and we ended up having to pull out of the deal because we couldn\u2019t finish the raise.
Luckily, I was able to get my 50K EMD back, but the other 50K that I spent on legal fees and all that other stuff, that was a sunk cost. So I think there are sometimes risks that you get when you go into some of these deals, but to your point, as long as it\u2019s not a fatal amount of money, take those lumps and use those to be better on the next deal.<\/p>\n
100%, yeah, completely agree.<\/p>\n
So I want to take us to our rookie exam, Mackenzie. These are the same three questions we ask every single guest, probably the three most important questions you\u2019ll ever be asked in your life. So are you ready for question number one?<\/p>\n
I\u2019m so ready. Let\u2019s go.<\/p>\n
All right. What\u2019s one actionable thing rookies should do after listening to your episode?<\/p>\n
Go do something. I don\u2019t care what it is. Just go do something. I feel like we take so long \u2026 Pace Morby, actually, my favorite. He has a story of he talks to somebody, he goes, \u201cMan, I\u2019ve been working for \u2026\u201d I think it\u2019s like three years, four years, \u201cand I haven\u2019t gotten my first deal.\u201d What are you talking about? Go find a deal. Go do something. Yes, education is great, but you will never know anything. Here I am, I just learned about creative financing two months ago and now I got a subject to deal and it\u2019s amazing. If I hadn\u2019t been open to that or hadn\u2019t acted before I knew everything, I never would\u2019ve started.
So I feel like figure out what it is that you can go start on, whether it\u2019s finding a deal, whether it\u2019s finding a partner, whether it\u2019s finding a contractor, building a contract list, do something to get you closer to your next deal today. That\u2019s what you need to do. Do something. It never works if you don\u2019t work. So just start working.<\/p>\n
What is one tool, software or app or system, in your business that you use? You can\u2019t say Google Drive because you already said that one. So what\u2019s another tool that you use in your business?<\/p>\n
Honestly, this might be a slightly unconventional answer, but Instagram. You guys, you need to be using social media. The power of sharing my journey on social media even when I didn\u2019t have a lot of real estate sales behind me, even when I had no investing experience and I\u2019m winging it on my first flip, use that tool. I feel like when you offer value to people, don\u2019t even say, \u201cHey, I\u2019m getting into real estate investing. I want to find a partner.\u201d Just start adding value to people and people will come to you because they feel like what you\u2019re giving them, what they\u2019re getting from you is way more than what they\u2019re going to give to you.
So I would absolutely use your social media channels, whether that\u2019s Instagram, Facebook, Snapchat, Pinterest, whatever, the new threads, all the other things. Use your social media and just start sharing what you\u2019re doing and share opportunities and start establishing yourself as a professional in real estate. Whatever that is, start becoming the educated voice of reason in all of your followers\u2019 heads, and I think it will absolutely multiply your business and be your partners later in life.<\/p>\n
Mackenzie, you make a great point about just sharing your knowledge and you don\u2019t have to have any experience to share what you are learning. So if you\u2019re listening to a podcast, what\u2019s one thing you learned in that podcast? Post about it. You\u2019re reading the new book you\u2019ve just got in the mail, Real Estate Partnerships, post one thing you learned about it when you read that book. So I think that\u2019s great advice.<\/p>\n
I feel like everyone feels like they need to reinvent the wheel when it comes to social media and they need to know it all. I think you just need to remember that you probably know 1% more about whatever topic you\u2019re talking about than most of your network does, especially when it comes to real estate investing. So even it\u2019s that you just read the Real Estate Partnerships book and you got one quote and you put it on there or use ChatGPT. It\u2019s not cheating. Use ChatGPT and share that knowledge with people. So I completely agree. You don\u2019t have to know it all. Just share something and you probably know one more percent than everyone else.<\/p>\n
I think the other challenge people have is that they\u2019re thinking about the wrong person when they\u2019re creating content. When I post something on my Instagram, I\u2019m not posting to educate Ashley about real estate investing. I\u2019m not trying to impress her with my knowledge. I\u2019m trying to give information to the person that doesn\u2019t have that. So I think if you reframe who your audience is, it makes it a little bit easier to be transparent and vulnerable on social. All right. Last question for you here, Mackenzie. Where do you plan on being five years from now?<\/p>\n
Ooh, that\u2019s such a good question. It\u2019s a good time that you asked, actually. I just reevaluated where I want to be. I\u2019ll give you my three year, two and a half year plan, okay? So I\u2019m 27 years old. This is fun fact. You know the whole golden birthday where you turn whatever year on your day? So I will turn 30 January 30th, 2020, oh, gosh, six, okay? So in about two and a half years, my golden birthday I\u2019ll be 30. My goal is to increase my rental cashflow to replace my real estate sales income right now.
So buildup, it depends on the cashflow, it equates to around 20 doors, but it depends if cashflow is higher. So that\u2019s my goal is to make enough income from my rentals every day over the top on top of expenses, so what I\u2019m taking home after all my partnerships is enough to replace my real estate sales income. Then I do run a team here, and so my goal with that is then to be able to feed my team more deals, give them more opportunities. They love sales, they love that. So if I can give them more deals and I can focus on more of the real estate investing, it\u2019ll free up a little bit more time for my family. My town will be my own. I can travel more, do all of that, create that financial independence life. So that\u2019s my goal, I guess, financial independence by my 30th birthday.<\/p>\n
Well, Mackenzie, it\u2019s been an absolute pleasure getting to dive into your story. I know I picked up a few things in our conversation as well, but before we wrap things up, I want to give a shout out to this week\u2019s Rookie Rockstar. This week\u2019s rockstar is Mimi Fenton, and Mimi says, \u201cThis is a really proud moment. We just closed on our first multifamily. I\u2019ve been dying to get into multifamily for years, but felt so restricted by living in an expensive city and not having the capital. So I just followed the Zillow map until I hit areas with multifamily properties I could afford and then identified which of these had the best rents.\u201d She finishes off by saying, \u201cYou can\u2019t sit on the sidelines and plan. You have to jump in even if you don\u2019t think you\u2019re ready.\u201d So Mimi, congratulations to you and can\u2019t wait to hopefully get you on the podcast one day and you can tell us more about how you made those multifamily properties happen.<\/p>\n
Mackenzie, thank you so much for taking the time to join us here today. Mackenzie and I had actually met at AJ Osborne\u2019s conference in Boise, Idaho, and we got to talking and I just knew you would give tremendous value. So thank you so much for taking the time to come on the show. We really appreciate it.<\/p>\n
Thank you so much for having me.<\/p>\n
Yeah, you\u2019re welcome. Can you let everyone know where they can reach out to you and find out some more information about you?<\/p>\n
You can follow me on Instagram and TikTok. I\u2019m also on Facebook. My name\u2019s just Mackenzie Brogdon. I\u2019m sure you\u2019ll see it here in the comments. On Instagram and TikTok, it\u2019s Mackenzie Brogdon Realtor. That\u2019s it. Everybody will find me. I\u2019m also on threads now, testing that out to see how that goes. So Mackenzie Brogdon Realtor anywhere you can find me and I\u2019d love to chat and connect with you all. So thank you Ashley and Tony so much for having me. It\u2019s an honor to share my story. I hope it can inspire even one person listening to this to go out and do something and get your first deal.<\/p>\n
Okay. So you guys, give Mackenzie a follow and let her know how she has inspired you today to get your first or even your next deal.
I\u2019m Ashley, @WealthFromRentals, and he is Tony J Robinson, @TonyJRobinson, and we will be back on Saturday with a rookie reply.<\/p>\n