BiggerPockets Real Estate Podcast - 340: How a Mom with a Full-Time Job Bought 10 Houses Her First Year with Whitney Hutten

Episode Date: July 25, 2019

Would you be interested in taking your retirement account and turning it into 22 cash flowing rental properties? What about doing it with someone else’s capital? Today’s guest did just that! Whitney Hutten shares her incredible story of how she built a rental property empire off of a 401k account by leveraging the power of a team! You’ll love how she made 50k on one of her first deals (without paying a dime of the mortgage herself) and how she used Brandon Turners method known as “the stack” to keep building! She also shares how she got her start in turnkey houses and moved along a spectrum to get to fixer-upper BRRRR’s, how she bought 10 houses her first year, and why she invests out of state. Whitney goes DEEP sharing which parts of town she invests in, why she invests near hospitals, and how she netted a 30% ROI on a BRRRR gone wrong! You do not want to miss this inspirational story of how an “average Jane” accomplished extraordinary results through real estate-including how she fixed a bus falling on one of her houses and survived a racoon infestation on another! This show is hilarious, insightful, and content packed. Download today! Learn more about your ad choices. Visit megaphone.fm/adchoices

This is the Bigger Pockets podcast show 340. You know, held on to the property. I had sunk cost and sold it two years later. I broke even and almost got sued in the middle of it. My neighbor's bus fell into the roof of the house for hours after closing. You're listening to Bigger Pockets Radio. Simplifying real estate for investors large and small. If you're here looking to learn about real estate investing without all the hype,

You're in the right place. Stay tuned and be sure to join the millions of others who have benefited from BiggerPockets.com. Your home for real estate investing online. What's going on, everyone? This is Brandon, host of the Bigger Pockets podcast here with my co-host, Mr. David Green. David Green, what's up, buddy? Not much, dude.

I'm feeling great. I just got back from San Diego. I was taking a class down there at Keller Williams class on how to become a presenter. And I actually almost sent you a video from there. I learned a new way of giving a presentation that's like very, very solid method for doing it. You know what? I'm going to make you a video today showing it off and send it to you. So you can see how it works.

You should. And then maybe you should make like a blog post or video and put it or like a video and put it on your Instagram. There we go. And then other people can learn as well. So if I, if you guys go on my Instagram at David Green 24 and don't see that video, then you know I'm a slacker. Okay, there you go. Now you got some reason.

But yeah. Because like presenting, like not just like in front of an audience, but like in front of people, deals, potential lenders. That's such a valuable skill. I'm anxious to learn what you got to say. So very cool. Which actually leads us to today's. It actually doesn't lead us there at all.

I completely made that up. It's completely different. Today's quick tip actually, David and I were talking about before doing the intro what we wanted the quick tip to be. And we realized like a lot of people have like one preferred way of learning. Like they want to learn on a podcast and they listen to podcasts all the time. And that's all they do for learning. What we want to encourage you to do today is find a nice.

find a way to add another medium or two under your learning. You know, if you like podcasts, which obviously listen to this one, that's great, but maybe like add a webinar onto your thing. We do webinars every week at bigger pockets. Maybe pick up a book if you're not a big reader. Maybe say, you know what, I'm not a big reader, but I'm going to become a more of one. Or I'm going to listen to Audible and listen to some more books. So just find a way to add a different dimension because every way of learning has a different

way of that information being processed in your head, which might give you a different take or a different idea, different strategy, plus just opens up the world of education to you. So find a different medium for learning that you can learn and grow and expand in life. That's beautiful. I've noticed like one of the things we learned in this class was different people learn differently. So you incorporate all these different techniques into your speech that you're giving like to get the people engaged. You ask questions to get the room talking to you. You give them an exercise to do to get their brain working. And as you were talking, I realized that's what happens on webinars. When you're at a podcast, you're just listening to other people talk.

You're not engaging. But during a webinar, you're doing exercises to learn stuff for yourself. during a Facebook live, you're asking questions. So your brain has to be thinking of, well, what would I want to know? And it really engages you and pulls you into the content as opposed to just listening to a podcast where you may be thinking in your head. I wish that they had asked this part right here, but you don't really get to do anything about it. So it's kind of like using different muscles.

You always want to change out your workout. It's the same way with your learning. There you go. There you go. All right. Well, before we get into this show and you guys are going to love today's show, we're interviewing a fantastic woman named Whitney. Whitney got started.

She had like a goal of getting like one deal. And she talks about how like she completely, and you guys got to hear it like she completely blew that goal out of the water. Her first year in real estate, her first full year, which is awesome. We talk a lot about the REI spectrum is what David, David Green here calls it the real estate spectrum.

Basically like different ways of finding deals. And as you move along that spectrum, you can get better and better deals. Make sure you listen for that, especially if you're struggling finding deals today in this market. And then we, she tells this really funny story early on in the interview about how a bus, yes, an actual bus, fell through the roof of one of our houses.

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Now, I think it's time. You think it's time, David Green? I am ready. This is an exciting show. Let's jump right in. All right, Whitney, welcome to the Bigger Pockets podcast. Good to have you here. Thanks for having me on.

Yeah. So let's talk about your real estate journey a little bit because I know next to nothing about you. But you do real estate, I'm assuming, or unless we're talking about something else today. We're going to go. Am I in the right place? Yeah, I think it's the underwater basket weaving podcast was down the hall.

Dang it. All right, no, let's talk about your journey. How did you get into real estate? What came before and then how did you get into that very first deal? Well, my first deal was actually an accidental land board type deal. I bought a house in 2002. And with my significant other, closed on the home. And about a month later, the relationship unraveled.

And here you know, I have a house that I have to. bills for. So shoved it full of roommates and also needed to update it. It needed probably about, you know, $10,000 worth of cosmetic rehabs. And so my roommates had to be able to live in a construction zone. And I swear to 11 months later, I had not only not paid for any part of rent or mortgage, I had $300 in my pocket and then I had pushed the value in the house of $52,000. Wow. sold it. I thought I was the coolest thing since sliced bread. In a mountain home in Colorado,

violated every law of immutable law of real estate and purchased the home and nearly lost it on that second deal. Really? Yeah. What happened? What were wrong? I mean, everything. So I bought that.

I probably overpaid for the house. I, you know, purchased it in a very bad area. I had 19 steps. from the parking area up to the deck. Most people who were looking to purchase the home from me when I was looking to sell, they'd only get to step number eight. You know, mind you, it's 8,000, you know, right, 8,000 feet.

And they're out of breath. So they're like, no thanks. We're going to turn around and drive away. And anyways, by the time I, you know, held onto the property, I had sunk cost and sold it two years later. I broke even and almost got sued in the middle of it. That's a whole other story.

Ooh, that sucks. Yeah. My neighbor's bus fell into the roof of the house for hours after closing. Wait, the neighbor's bus fell into the roof. Explain this. How does that happen? How's it? So during the process, in the inspection process, the inspector flagged the back retaining wall.

It was built into the side of the mountain and said that the retaining wall was compromised. So the buyer forced me to repair the retaining wall. And we used his contractors, his engineers, all of his city contacts to get the wall rebuilt. My realtor just said, hey, sign this clause saying that you're only going to bring X amount of dollars to closing to pay for the wall. Which I believe it was $6,000. The wall ended up costing about $27,000. By the time it was all said and done. and the whole entire time, I was just saying,

if my neighbor just moves their bus, the wall is going to be fine. Well, of course, they moved the bus in order to repair the wall. And as soon as the wall was finished, my neighbor moved the bus back into position. And this bomb-proof wall collapsed within about 48 hours of the bus moving back into location. Wow. Yeah.

So that's a really tenuous time right after you close the house because you're just like, am I going to get sued? Yeah. So in the meantime, I met my husband. And, you know, he's just watching this whole thing, just this entire spectacle unravel. And close the house, realized I'm done. My liability is over with.

And I'm like, hey, I got this figured out. I know what to do next. Let's go invest in the house. And he was like, crazy. No way. So we just kind of sat on that for a couple years. We purchased a couple personal residences here. in Boulder, and traded up into what our house is now.

And then it was in 2016. My husband works for the government. We really just were looking at our situation. You know, we're married. We have a child. And we realize that his benefits plan with the government are just really at the pressures of what of politics. And so we were like, you know, nothing's really sacred in this case.

So we need to kind of take action here. My job also had an expiration date. it and we were like, you know, here in about a year and a half, we could have nothing, you know, that we had built our future on. So what did we do? We went and bought a house and we started off there. All right. So interestingly, I've never had anybody on this podcast tell us their journey started with a bus falling through a roof. So you're the, you're the first time there. It's crazy. All right. So how do you walk us to that mindset change. A lot of people, I mean, I know you had a success the first time kind of accidentally you got some success.

Then you got some, we'll call it failure for lack of a better term, or at least an interesting learning experience the second time around. Walker's like that mindset of going from, I just like, that sucked. Like most people would go, I've never buying a piece of real estate again. I am never going to invest in real estate. I never want to get sued again or the threat of that. I don't want a bus to fall in my building. Like I just, how did you go from that to now I'm going to invest in real estate?

Yeah, I was always cultivated. I mean, that was a mindset that I brought with me. You know, it was growing up, my dad, he was in the Air Force. So there was no failure. It was lessons in learning the whole entire way. I also was a collegiate athlete. So that kind of like aggressive mindset is just something that I've naturally grown up with. I think what I watched my husband kind of go through the transformation and, you know, making, you know, looking at my failures and then taking a step back going, you're nuts.

But when I logically drew out the numbers on paper and I showed for him, showed him like what I had done and what we could do and the power of real estate going forward. I mean, he just, it was just a no-brainer. I mean, I just had to break it down step by step, show a logical progression and that there's actual returns and what the power of real estate could do. Yeah. So what did you guys do then? 2016 comes, you decide to get into real estate more heavily. 2016, we put a house under contract on Christmas Eve, which, by the way, holidays, I feel are the best time to buy a house.

Me too. So our goal was to buy a house the first year, two houses the second year, three houses this, you know, third year. You know, take a nice, you know, gliding path. We bought 10 the first year. Oh, wow. So, I mean, hey, I mean, we, between actually changing our mindset and like pulling the trigger within a month, we had a house under contract.

And I'm like, well, wait, like, 2017. hasn't even started yet. We got it. So we did one in 2016. Now we need to do two in 2017. And we did 10. The second house really didn't come that easily for us. We had put our capital into a very expensive market. We bought here locally in Colorado. And our goals weren't aligned with what our actions were. So here we were saying that we needed to replace income and have cash flow. And we bought an asset that barely cash load after you put aside all, all the, all the, expenses. And anyways, so we paused after our first investment and said, okay, we need to, all these other people are investing out of state. Like, it can't be that hard. We just don't know

what to do. So our next four investments were turnkey investments. And then, you know, which works for us. It got us and, you know, we learned about other markets. We learned about working with property managers. Can you, before you walk into that, the next, I'm just wondering, Can you define turnkey for those who don't know what that is? Yeah, definitely. So turnkey is where you're buying a house that has already been rehabbed or fixed up, and it has a tenant in place. So essentially the day that you close on the property, you're collecting rent.

You don't have to negotiate the price of the property. You don't have to negotiate any part of the rehab. You don't have to work with the contractors. You don't even have to find property management or lease up the tenant. All that's been done for you beforehand. and somebody else is actually earning the equity on the house when that happens. So really what you're, you're just getting the rent paycheck.

So. It sounds like a dream. For, yeah, definitely for us, like we're like, yay, we figured out of replace income.

And then we're just sitting here, like looking at other properties, you know, other people, you know, successes like David Green posting on bigger pockets. And I'm like, wait a second,

he's like this. Like, how do you get on that side of the deal? So we dabbled a, little bit. Our next two properties, we purchased off the MLS. We didn't have any major rehab that had to be put into them, but we bought them for below market value. So we were able to push a little bit of equity in them. We placed our own tenants. So we kind of worked out the property management piece that way. And then, you know, about that brings us to about 10 in a year later. And I said,

okay, I'm looking at our capital reserves. I don't have that much money left. We have to figure out how to do our own rehab investment. So I went to my property managers and said, hey, would you ever walk us through how to do this? And one of them said yes. And so that's really- Like to actually walk you through how to rehab a property?

Yep, watch us through purchasing the property, managing them, doing the project management on the property. They handled all the contractors, thankfully. And we placed the property with them, you know, once the rehab was done. And, you know, away we go. Wow.

Okay. So I want to go back a little bit and then move forward to that point. You know, you started with these turnkey properties. You're looking at them realizing, you know, I think we can get better returns. We can buy them cheaper because like the thing I've always looked at, you know, there's a lot of pros and cons with with turnkey, right? Like people ask me all the time, what do you think about turnkey? And I share my thoughts real quick.

You can share your other. Maybe we'll ask David if he wants to chime in his. But basically, I always think like, yeah, with turnkey, it's, it could be very hands off. Typically, I don't usually trust the numbers that turnkey providers put out there. I mean, some turnkey providers are great and some are awful. Some are like, oh, yeah, properties never go vacant. Don't worry about vacancy or maintenance. We already fixed it up. You don't have any maintenance ever.

And I'm like, that's not true. Yeah, that's not true at all. Yeah. But then again, like, if you're on an expensive market and your time is best spent working your job because you make a really good income at your job, well, yeah, maybe you shouldn't be out there, you know, like you spend all your time finding deals. So, I mean, that's kind of my thought. There's pros and cons to it.

But what do you? I mean, I'll go Whitney first. then we'll go to David. Like, what are the pros and what are the cons of turnkey? Well, I think you did a really good job addressing the pros. For us, I mean, you have to think about my position. I was working full time. I knew my job actually had an expiration date.

So I was also trying to find another job at the same time. I'm a wife. I'm a mother. My husband, he's doing his own, you know, full-time work. And we just literally, time was very valuable to us. And so I knew that I wanted to get started out of state. I didn't know the markets. And we had the means at that point in time to pick up one or two

and start learning different markets, different property managers, starting and trying to figure out how the whole thing worked. And Trunkey, for me, got me in the game much faster than it would have had if I had if I had just sat there and kind of tried to pick away and put together my whole system and dive right into Burr investing. So for me, it was kind of an easy glide path. That's a great point. that's a really because David and I would talk about like it's the first deal the first couple

deals you do like aren't going to make or break your life for the most part as long as you don't buy an awful deal like but just doing something gets you along that path so you're basically saying like we just did something it didn't have to be the home run deal it might have been a very you know base hit but you know whatever he got us in the game we got us learning got us growing and got us moving David what do you think on that I think turnkey works really well in this case with Whitney as a transition piece so I know I want to get into real state investing, especially out of state investing, that could be even scarier. But I don't want to jump right in off this 50-foot cliff.

Why don't I go to the diving board of the pool and I'll jump in from there and I can, this is how water feels. This is what the impact felt like. Okay, now I know what I'm getting into. I can handle more than this. And then you take your next step is maybe, maybe out of turnkey and into a move-in-ready MLS house. Not a big rehab, not a whole lot, but you had to work with an agent.

You had to get it yourself. You had to do a little bit of repairs. You don't do anything crazy that can cost you a lot of money. but you did get the cadence of the rhythm down of how it works with dealing with contractors, what a property manager does and what they don't do. Because in the beginning, you don't even know what you have to do and what they're going to be doing. It's just all a mystery. So then, you know, you kind of wait in a little bit deeper with that.

Then maybe you go into a MLS property that's a fixer-repper. Not a complete tear-down. You're not building a whole new building, but it needs a pretty big rehab and you manage that. Now you've got enough tools in your tool belt, enough experience. You can get into the heavy stuff where you can pick up big chunks of equity. every deal. Absolutely. To you would explain it.

Yeah. I mean, truth be told, we just sold off five of the six turnkeys that we had and made a 55% return. Nice. So yes. Could I make more? Absolutely. Doing Burr investing. But I'm not, I'm not sad about a 55% return.

No, especially because you might not have ever got to Burr investing if you wouldn't have started with those turnkeys, right? We'd be sitting here or we wouldn't be sitting here. You'd be listening to the podcast. I wouldn't be talking. Oh, I wish I could buy my first deal. That's where you'd be. Yes.

All right. So walk us to it. So then you got into doing your own a little bit. You eased into a rehab. You got some help from a property manager. How did that? That was a bur property, right? Was that your first burr?

That was my first burr. Okay. So walk us, walk us through that property. What, where was it? What'd you pay for it? What'd you end up doing to it? Yeah. So the first bur property, it was in Kansas City, Missouri.

We picked it up for $60,000. It was very competitive, though, at the time. So we put down cash. Okay. The rehab on it was only 10 grand. So very cosmetic, very light. And it rented out for $950. Wow.

And we can do the math on the return there. But for me, that was kind of a slam dunk because I was like, okay, we're not really getting, we're not getting into foundations, roofs, HVAC, water heater, there's nothing like that. It was in very, a rental market. And I had already worked it out because I purchased it cash, I didn't have, I had not figured out the hard money lending or private. lending. So I had already talked to my conventional lender and he said, yes, I will refinance out the

$60,000 for you as soon as you get a tenant in place. So I felt comfortable at that time leaving $10,000 in. Again, you know, kind of dipping your toe in the water, it was a good first for us. Yeah, I think a lot of people, when you hear the word burr, we talk a lot about burr investing. For those who don't know, burr basically means you buy a property, rehab it, rent it out, saying I got a nice fixed-up property rented out. You refinance it. So you go to a bank, just like Whitney did. She went and got the 60K back. So she paid cash for it. Later on, once it got rented out, got the 60K back. So now she could repeat the process by rehab, rent, refinance repeat. That's what we're talking about here. And a lot of people, I think, they hear stories that maybe like we hear

talk about on the podcast or I say or David says or somebody says about Burr, and they feel like they have to get all their money back or else it's not a real Burr deal. But like, I leave money in bur deals all the time. Like, there's nothing wrong with that. If you have capital, especially, it's not a big deal. Ideally, the perfect burr, maybe you get all your capital. all back and you can go invest in elsewhere. And it's a true no money down thing. But I don't think people should ever feel like sad that they left some money into a deal. Yeah.

Like if you were going to be leaving 40 grand in the deal and you only left 10 grand in the deal, that's still a success, you know? Is this, by any chance, Whitney, is this the deal you were going to go over on your deal deep dive? It was not. No. Okay. Good. So let me ask you.

What did you cash flow on this thing a month? I don't have that in exactly in front of me. Give me an average number of one of your average deals. So without, so I always set aside CAPEX maintenance reserves. So if you look at it with that calculated in, it's $450. I only set aside about 200 of that like for kind of play money. So right around $250 a month is what this one would probably cash flow, right? On average.

So that's $3,000 a year. If you divide that by the $10,000 that you left in this deal, you're looking at a 30% ROI. Oh, yeah. It's pretty stinking good on a deal that most people would say, oh, you failed. You didn't get all your money. Yeah. Where else are you going to go get a 30% return plus whatever equity you added to the property, plus your rents are going to go up every year so that ROI increases plus the low.

Yeah. Yes, exactly. I mean, tax benefits and the depreciation and yeah. You're starting off at a 30% ROI with only going up. And that's why we, uh, Burr, why I wrote the Burr book is why Brandon's wearing a Burr T-shirt. Right. I am as we speak because we're burros. We're bros.

Yeah. Okay. So I'm very curious because I also wrote a long distance investing book. So you're kind of like. talking about all the stuff that I love. Why Kansas City? How did you know that this was an ideal area? I had already picked up a turnkey in that area. I had been networking heavily on bigger pockets. We had several friends that also had invested in rental real estate in Colorado, but had come from different areas of the country and could speak really eloquently about those areas.

And Kansas City was just one where, you know, when we were evaluating markets, it was a market that was appreciating and getting good cash flow. So, I mean, I, you can, there's several different terms for that, but a linear market, and that was the market that we wanted to be in. Also, it had good job growth, good income growth, wasn't heavily dependent on any one job sector, so good variation of jobs. And, you know, just visiting the area, I mean, it has a wealth of opportunity there. That was, was this Kansas City, Missouri or Kansas City, Kansas? All of our properties, except for one flip is on Kansas City, Missouri side.

Okay. So how do you know in an area like this? You're in Denver, which is not a quick afternoon drive over to Kansas City. So, like, you're a little ways away from this. How do you know, like, one street from the next? How did you feel comfortable over in this area of Kansas City and not this one? How much research do you put into understanding the market? How much are you relying on other people? Because that's the one thing that kind of scares me.

When I go into a new market, I'm like, you know, I just don't know. I mean, that could be just the worst street in the world over there. Well, I mean, this isn't the approach that we took. and it's one that approach and we'll be taking on different markets going forward, but literally just flying in, breaking on a map, and then driving around the town. We relied heavily on property managers,

they are in realtors, and also our inspector on the properties was an investor as well. So we were talking to different investors in the area, I think, a pool of like all told six before our first investment there and just really getting to know, you know, their style, how they were investing,

where they preferred, and you map that out. out, there were three different areas that continually popped up. And so those were the areas that we were focusing on. One thing that I really like is investing near medical centers. So there's always, it's a good job pool. There's always going to be the need for medical care, especially in markets where hospitals are expanding and not contracting.

So that's not the case throughout the whole United States. So you can't take that and move that to rural Oklahoma or anything like that. But like in major metropolitan areas, health centers tend to be expanding. And so they're relying on, you know, travel nurses, travel doctors, you know, to come in. And those are, you know, not always who we rent to, but a good portion of our renties. That's great. That's a great point.

I never really think about it too deeply with the medical thing. I never look at that, but I probably should. But when I think about some of my best tenants over the past few years, a lot of them have been traveling nurses, traveling doctors, like some of our best tenants that stay, they don't stay forever. They don't know years and years and years, but they stay for a good year, but they pay above average rent, especially when we offer. a few, like, units that are, what are they called?

Like, already, like, furnished? Furnished. Yeah, that's what I'm looking for. And they've been great because, like, they pay higher rent for that. And, like, I've even had, uh, the hospital itself has paid their rent and the utilities and all this other stuff. It's like guaranteed money. And they leave, they always leave the place is so nice and clean. Like, uh, every time I have those tenants. You know, I'm reading this book right now called, actually funny.

I have a sitting here. It's called Clockwork by Mike McCallivitz. Uh, hopefully I'll get them on the podcast someday. Yeah, really good book. But in there, he makes this point. about like identifying what your best customer is. It's not a real estate book, but it's a business book. What's your best customer or your client if you're like a, you know, a coach or whatever?

Who's your best customer or client? Like if you really identify what they are, how can you build a business around serving just those people by offering amenities? And so I've been thinking a lot about that lately, but I bet a person could go, you know what? Our best client or people we like doing are near hospitals. So let's buy near hospitals. It just makes your entire business life easier when you start thinking of real estate in those terms of your tenants or clients or their customers, what are our best customer and how do we

get more of them? Buy near a hospital. It just makes a ton of sense. Yeah. And it's an industry that I understood. Yeah. Is that what you did? Is that like your job that you said you had to, it was going to come to an end? Are you in medical? Public health. So I was for community and pharmacy at the time. So it's just the whole medical arena. It was, it's an industry I understood. And interestingly enough, before we did the first burr and probably an impetus for us to getting into that is I had lost my job. Like that expiration day came. And so, you know, most people would kind of, you know, take a kick in the teeth. And they did for a couple hours. I cried. Yeah. Who like Spain told me no longer need you. You know, and that company was in the process of

downsizing. So I didn't take it personally. And I got home. But we had two houses under contract. And I'm like, oh my gosh. They're under my name. What am I going to do? And I called my lender. And the lender was like, I can't, I can't lend to you. I'm sorry. You're, you know, you're, you're, you're kind of done. Wait a second. My husband can buy a house. Yeah. By the end of the day, we had him approved.

He was purchasing the closing on those next two homes. And, you know, of course, my husband was like, okay, we need to pause. What are we going to do about all this? I'm like, hey, I just got my 401k back. We're going to invest. That's awesome. Okay, I want to make, I want to make a point. I want to pull something out that you said here that oftentimes in my real estate journey,

I'm sure, David, you've heard this as well. And I'm sure, waiting, you've heard this. you hear a lender basically say things. Maybe not in those exact words, but yeah, you're done. Or you can't, you can't do this. Or it's not going to happen. What's amazing to me is how little lenders know about, like, they're not typically, most lenders I've ever met are not ones that think, well, that didn't work.

Let's try something else. Most lenders I know go, yeah, it doesn't fit in the box. Sorry, you're done. So I just love that you're like, instead of just taking no as an answer, you're like, no, you know what? I'm going to keep thinking, how do I do this? And, oh, my husband, he can get a loan. You know, people are always like, well, you can't get more than 10 loans in your name.

It's against the rules. I'm like, sure you can. Just get your spouse to do 10 and you get 10 or go to a local community bank. There's always other ways to get this stuff done. But so many people are just, they hear that lender saying no. And they're like, all right, well, they know more than me. It's, I guess I'll just give up and go back to watching TV. So the older I get, the more I'm convinced that most people at their job

have zero idea what's happening outside of the very tiny little specific world that they work in. Like when you go to a Burger King, the girl at the cash register doesn't know what's happening on the fry machine. She's like, that's not my job. I just do the cash register. Because as I talk to lenders and I'll say, can I do this? And they'll say, no, I can't.

And I'll just ask a question like, well, why not? They should have the answer lined up because of blah, blah, blah. These are the requirements. They usually don't know. It's like, oh, well, because we don't do that. Why don't you go ask your boss if you could do that? And they come back, oh, my gosh, it turns out we can do that. Like 80% of the time there's something like that or why not.

And then they go ask and then they actually learn. So you're helping them become better. But Brandon, you're 100% spot on. There are so many people who I talk to and they say, I tried these three things and none of them work. There's nothing I can do. And I asked that same one question. Well, why did they say it won't work?

I don't know. I didn't ask him that. And then they call them back and they ask, they come back. Oh my gosh. This is awesome. They can do my loan. I just have to do this thing different. Right.

I just like you said, it just has to be in my husband's name. But we're relying on the person we're talking to to come up with a solution for our problem. And unless you just get lucky and that loan officer is wants the money enough to say, well, are you married? Or do you have a friend that could do a loan? Or can you do it in an LSC? Then we're never going to get the answer. So you kind of got to start with taking responsibility for solving your problem.

And then like Brandon said, relentlessly asking why or how every single time you get told now. Absolutely. So I want to ask, how many do you have your portfolio now, Whitney? We have 20. Well, 22, by the time this airs, I bet. Okay. And the majority of them are in Kansas City, Missouri? Yes, Kansas City and Indianapolis.

Okay, awesome. So what did you learn while scaling that, like, now it sounds like you're really, really systemized. You don't have a lot of anxiety. Well, in the beginning, it probably wasn't that way. Every single deal just feels like a cliffhanger and it's so exhausting. What change for you where you started to get comfortable where you're okay, scaling faster and buying more property?

properties. Well, so my background is in logistics, systems and logistics and, you know, project management. So I think it's really for me, I had to learn the different pieces of the puzzle and then put checklists in place and then make sure that I could hand that off and step out of that piece. So, you know, but when you're first getting started, especially if you jump into Burr, there's multiple areas that you have to understand. So, you know, what do I have to do? like to secure the initial loan. What do I have to do to get the initial, well, obviously the property under contract,

you know, the budget all drafted for the, with the contractors, and then get it tenanted, and then, you know, get it rehabbed out. And make sure that you're not dropping the ball in any one of those pieces. So I think, really for me, it's putting together a checklist.

A checklist is a system. Yeah. A box. I mean, David, I think I heard when you speak to this really eloquently a couple weeks ago, It's just like you put together your checklist. You know, there's several different moving parts. And then you look to, once you get your checklist together,

what app can you put in place or what person can you put in place to take that over to take it off your workload? I think for me, I fell into this too. I was trying to find all the cool like apps and bells and whistles and stuff like that. Instead of just actually going down, stripping it down to simplistic steps, and they're like, okay, there's a little literal checklist and then I can get cute and fancy later with all the different apps and bells and whistles. That's such a good point. I'm actually working on a book right now that I want to call systems and I'm breaking down. This is just, it was such an elusive concept that I was so esoteric, just how do you build a system?

And then I basically realized it was nothing more than a platform that I could write down a checklist and then start to break that checklist down from big concepts to smaller tasks and then start assigning those tasks either a person or a program. And at the end of the day, like you're left with five percent of it that you have. actually have to do. And I've done this so many times now. I have a guy that I'm helping learn how to invest in real estate. And what we found is just analyzing a property. The only number that he actually has to do any work to figure out is the mortgage. The rest of it, you can make a spreadsheet or you can use a calculator that will automatically calculate all that for you. The only piece that you even need to put into your phone, which is an app that will do it for you for free, is just the mortgage. But I see people sit down every single deal they analyze. They want to do numbers for the whole thing.

and it takes them 45 minutes just to find out that's not a property that works. And as you do this more and more often, systems become a bigger, bigger deal. And I love that you're saying that's what took the pressure off of you is you weren't doing it all. You had a system doing it. For those who want to do a rehab from a distance, this is a big scary thing. A lot of people get scared about this. What are some of the systems that you've put in place that have made that much more manageable? For me, it goes back to the team.

So I really have pieced together a great team. in both Indianapolis and in Kansas City. And I really heavily rely on those people. And for me, the property manager is the key. I mean, they're the key anyways in the investment, you know, how the investment performs over the long term. But the property manager, too, can really help you kind of be the glue that holds everything together with the contractors,

just managing that, like, all the different contractors in the subs from a distance being they're going to also help you not over rehab the property. So, you know, keep your budget more. checked. And then even when you're on the purchase side, they're going to help if your property manager is involved, you know, they're going to be able to tell you whether that's a good area to invest in because if they don't want to manage the property, like, don't buy the property. There you go. Yeah, so let's talk about this a bit because I think what you're saying is that the team is the key piece you need to manage a rehab, really everything, right? Pick out which property

you want to buy, where you want to buy it, even how much you want to pay for it, your team can have some input in. So how did you go about building? the team. Who did you go for first? How did you use them to help you? How do you tell if this person's good or not? That kind of stuff. So we, when we were getting into the turnkey side, you know, picking up those initial properties, we interviewed about 40 turnkey providers between Indianapolis and Kansas City. That's awesome. Yeah. And daunting. Yeah, that sounds daunting, but like that's so good. Like we're on another phone call. He just lost track. He just lost track. He stopped keeping track that point in time.

But I had a spreadsheet. Like, I had my system. So for me, like, you know, vetting their property manager, I mean, you know, I think people really get drawn to, like, what are they going to charge me? Like, how much are the expenses going to, you know, are they going to layer on a fee for any sort of maintenance? What is their average cap X? Their average vacancy.

Those are great. You have to know all those metricsies because those are going to help you with your underlying underwriting. But for me, success looks like, how are they, finding tenants, how are they working with the different contractors? How are they handling tough situations? If somebody says never had an eviction, that's a red flag for me. Like, I want to know how you handled an eviction.

Yeah. You know, because if they've never had an eviction, like, maybe they have amazing, you know, tenant screening, but they haven't been challenged in that way, because there will be somebody that gets into, you know, one of our rentals. And if they're going to just kind of take their head and stick it under the sand like an ostrich, then that's a problem.

I've had a property manager to do that before. Me too. Also, I think, you know, we went through this experience last year. We had part of our portfolio with a property management agency, another agency in town folded. So they and their business almost tripled. And then all of a sudden we're, you know, non-existent to them. So we had to be able to speak up for ourselves and let them know what we needed. as far as service and then be willing to walk away and move the portfolio.

So that's also, you know, something that I really strive for. I always keep two property managers in the market that I know like in trust in case something happens, either the portfolio is getting too large for them or, you know, something happens and service is going down. That way we can easily move, you know, take care of our investment and move it with a different property manager. Yeah. I always have at least two in every single city where I have a rental property.

I have my primary and I have a backup because, yes, you'd ever know. But see, that in itself is a system. You've got a generator in case the power goes down that will keep things moving until you get the power turned back on and you get another. David, analogy green. There it is. Well, you know, you know how they say when you go blind that like your sense of smell gets better or whatever?

That was what happened when I lost my hair. about an analogy. Yeah, I went deep there, didn't I? It's a dream within a dream. You see my rambling

and making it sensible. I love it. No, it's not rambling at all. It's really good. I think that

what I love about you, Whitney, is that you make me look smart because this is everything I tell people they should do.

And you went out and did it and you got 22 properties in a completely different state without being like a hedge fund manager or something crazy. And you're like, you're just like me,

just the average show. I was a police officer. You worked in logistics. You went on. You built a huge portfolio. because you did it, I don't want to say on the backs of, but by leveraging other people. And one of the things that I've heard that you do really well that I really want to ask you about is you don't just leverage people.

You're leveraging the systems of those people. So you're not just building your own system and sticking a person in there. You're actually finding a person. They already have a system. And you're leveraging that system to make your job easier. Can you tell us how you learn to do that and how that looks in practical terms? I read a book. Just kidding.

That's actually like the best answer in the world. Just so you know, like, that's my answer to everything pretty much is like I read a book. It really is, Brandon's answer to everything. Like I drop analogies and he drops book titles. Literally, I was sitting on the deck the other day on my front of the eye with a friend of mine who was visiting. He's like, Brandon, if you could just like sum up like your entire like success story like and like why you've been successful in life. And he's like, what would you say? And I was like one word books.

That's like it. I'm just like I read books and I do exactly what they tell me to do. and then it tends to work because smarter people than me already figured out the system. Exactly. But you can expand on that, I'm sure. Go ahead. I'll just, you know, I'll just, you know, bring in a part of the conversation, David and I were having earlier. You know, we started off, you know, building our portfolio. We got to 10.

We picked up our first couple of our investments. And then David's book, Long Distance's Real Estate investing came out. I went, I really want to read this book. I'm scared too, because I didn't know. You don't know what you don't know. And I didn't know if I did it wrong, right? So you're like, okay, I'll go to class. I'll read the book.

And there was a few light bulbs that came on for me. Like, you know, at that point in time, I was still scrubbing the LMLS, doing everything that I could to find all the deals. And I hadn't been tracking the numbers because my, every deal that I had picked up, my property manager had sent me. So then I was like, wait a second, what am I doing? He's finding all the deals. There's my deal finder.

Yeah. It was just like I can actually immediately take back. about three to four hours a week of my time. That was mind-blowing for me. And his deals were great. I mean, it didn't get me off the hook for continuing to analyze my own deals, but I was just like, now I'm going to dig deeper on his deals. Like when something hits my inbox, that one's priority.

You know what's great about that? This exactly ties into what I was saying earlier about this book clock where I'm reading where they say, find your ideal customer or your ideal client. The exact same thing is who's your ideal deal finder? Like where do you get most of your deals? Duplicate that and build that system because, Like, again, once you know what's working already, and it could be working for you or working for

someone else, just duplicate that over and over and over and have your ideal client, deal customer, ideal, you know, deal finder. That's, I love that. It's so much more simple than people really think. Someone was asked me the other day, like, well, David, with your real estate in agent business, how do you know where to go to find leads? What do you, what do you do? How do you know where to put your money?

And I said, I sit down at the end of the year and I look at where all my deals came from and I count them up. Like let's say I did 40 deals last year, I believe. And I say this many of them came from open house. This many of them came from a sphere and this many of them came from a meetup. And I can see where most of my deals came from. And I say, okay, this year I'm going to do more of that thing. It's that simple. And then you just come up with a plan for how you're going to do that. That's what you did, Whitney. You're like, okay, I'm buying deals. Where are they coming from? My property manager is sending me deals. Okay, maybe I don't need to be spending a ton of time doing direct mail and putting all this energy into looking for off market deals or combing the

MLS and going through emails all day long, especially if you don't like it. Maybe I just need to sweeten the pot for this guy. So he brings me every deal before anybody else gets it. And if he's going to be managing it, it's only his own best interest to find more properties for me to buy and them to manage. And I would even take a step further and call them and say, you're doing a great job. What would it take for you to find more of these? Well, we would need this piece.

What if I help you with that piece, right? How can I help you to make more money to help me make more money? And boom, real estate investing is super easy. You've got a flow of deals coming to you that you don't have to do. the work for. That property manager has a whole company of pieces to make this work. They've got all the pieces of the clock that Brandon was talking about already. You don't have to go find them and put them all together like we talk about. You just jump into what they're doing. You skip to the head of the line and boom, you're getting fed sweet deals all the time. So I love that you've learned to think

that way. You're not trying to build the entire building all by yourself. Brandon, would you agree? That's like one of the main things that screws people up is they think they have to learn everything. everything is about all of investing. Yeah, yeah, definitely. Definitely. Did you know you can go on vacation and actually earn money? Because while you're out exploring new horizons, your home is sitting there, dark, silent, and wildly underemployed.

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Okay, all single family, which is cool. How has your investing been different? Like looking back now, what you've done so far, how has it been different than what you expected, both either good or bad? Hmm. Well, I think one thing, you know, getting into real estate investing,

especially, you know, well, we started off in turnkey. And so that's almost, you know, really passive. Yeah. Until you actually have to start dealing with the issues. And the issues for us and start coming until about a year in. And I think that's where our mind shift had to change is that this isn't investing in single-family rentals, even if they're at a distance, you're still active.

It's not 100% passive. So even though we had passed everything off to a property manager, we'd got out of actually self-managing our property here in Colorado. We sold it, reposition the equity. We still have to make a ton of day-to-day decisions. So it was more hands-on than we'd probably like. But we are in total control. And I think that's been kind of the monumental shift for us.

Beforehand, we were heavily invested in the stock market. That's where all over our money was. And we didn't have daily cash flow, and we weren't in control. And so our mind shift in investing has been more on a high level, a 30,000 foot view, that we are now invested in a hard asset that we can control, we can pull levers on. We get to say when we sell it, we get to say what we sell it for. and, you know, holding it and holding it in our portfolio, we're generating cash flow. And, you know, I know the classic saying is cash is king.

For me, it's cash flow is king. So. I like that. Cash flow is king. Very, very cool. I can't claim total. I don't know where I heard it. I heard it from somebody. So I like it. Hey, what in your business do you absolutely love doing that? It makes you feel alive, like you're in flow. You're doing it. Like your time just appears. is like you're just like in the moment. What is that?

And then what for you just do you just can't stand doing? Well, I can start with what I can't stand doing. Okay. It's the bookkeeping. Yeah, me too. And that is something, you know, we've dabbled with hiring it out and we just haven't found the good fit for that yet. You know, actually piecing together the deals and understanding that the due diligence

and the underwriting and the initial part of the deal and putting in the offer, I really like that. I like, you know, running down that checklist and, in, finding something that hits all the marks. And they've been like, oh, wow, this is a great investment. And then at the same time, you might have something that doesn't hit all the marks. Maybe it doesn't hit your cash flow number or doesn't hit your rent. And then looking at what levers you can pull and see how you can add value to that deal to actually make it better,

because it might be seeing an opportunity that somebody else hasn't seen in the deal. So we have a property that we picked up in March. It was another investor. It was a two-bedroom, one bath home. the tenants were, I believe, getting evicted from the property so that he was, you know, kind of in dire straits to get them out and get the property moved. And, you know, my property manager went and looked at the property. And I'm like, really, it's 12,000 square feet or 1,200 square feet. Well, that's a big house. 200. Yeah, 200 square feet. And it's a 2,000,

and one bath. Are we sure about that? Like, is this a typo? And he went in, he was like, no, it's not a typos. It's 2-beder one bath. And I'm like, is there any? Is there any? any other place to put a bedroom. I was like, actually, yeah, there is. Yep. I'm like, okay, we'll take the house. We bought it for $71,000. Awesome.

Put $8,500 into it, you know, fixed up, added another bedroom, corrected a minor thing on the foundation, which was keeping other conventional buyers from buying it, which I have a funny story about that too. And then we have, you know, we just, you know, did a kind of a paint cosmetic overhaul, and it appraised for 112.

Awesome. Yeah, so that's what I like doing. It's just kind of taking a look at something and just feeling like, what lever can we pull here in order to make that a deal that would fit our model? That's awesome. So, I want to know the story, too. You said you had another story. But I'm also just, again, it shows like you're looking outside.

I love that you're looking outside. Like what the broker, you know, like, oh, the listing says it's two better one baths. I'm just going to accept what they said. You know, the lender said I can't get a loan. So I'm just going to accept what they said. You know, my mom said, I shouldn't invest in real estate. So I'm going to accept what she said. Like, not that you said that.

But like, like, people are always, everyone like, it's like somebody else tells you who hasn't actually done it, usually. Yes. Like what you should do or what you shouldn't do. Versus somebody like, you know, David Green here, if I was going to go buy a house in Kansas City out of state and I was doing something, he's like, hey, dude, I looked at your numbers.

It's not a good deal. You shouldn't buy it. Hands down, I should listen to David Green because he's done it, right? If you told me the same thing. If you told me, you know, Whitney that I shouldn't buy it. Yeah, I'm going to listen to you. But when Joe Schmo. says, yeah, I heard my, you know, I heard real estate. That's not a good idea. You shouldn't do it.

Or some lender, like, I don't know. blows my mind. That happens. Anyway, tell us that story. You said you had another story. So I figured out on another deal last year that you can actually, this kind of goes, beats back into the thread of somebody telling you know, we were closing on a property. We were buying it conventionally. We weren't doing the rehab up front to push the equity. And we were doing it afterwards because it only needed about $3,000, $4,000 to put into it. and it just wasn't worth it to us to do a construction loan on it. So we were buying it conventionally.

The appraisal came back and the lender said, I can't lend on this. And I'm like, what are you talking about? You can't lend on it. He was like, it has an X on the settlement state or in the appraisal seeing that there's settlement. So there's an issue with the foundation. And I'm like, no, the foundation, we have it all certified with the inspector, with a certified foundation inspector, engineer, that there's nothing wrong with the foundation. He goes, it's on the appraisal.

I'm like, can we talk to the appraiser? He was like, I can't. I'm like, can I? He said, yeah, give him a call. See if they'll remove the X. I'm like, are you kidding me? No way, that just happened. So I hung up the phone, I called the appraiser.

And she agreed. She was like, if I can leave my notes on the form, I'm totally fine. I'll remove the X. And then away you go. We were closed in 48 hours. That's awesome. Again, you're not just accepting what somebody else said.

you're saying, you know what, I'm going to work through this figure out. I'll take my, you know, take matters into my own hands. That's super cool. Super cool. Remove the X. That's a cool way to say. Yeah. How do you remove the X?

That's the new phrase. That's, that's, that's, Whitney, you can write a book called Remove the X. It's all about how to, how to get through. I got to come up with a good subtitle. How do, you know, how to, how to force through other people's negativity and create your own future. There you go.

What I love is the appraiser said, as long as I can leave my notes. So they felt like they're covering themselves. They're not in trouble anymore. they don't have to have an X there, which you never would have known if you wouldn't have asked. They're like, okay, fine, I don't care. Take away the X. But my notes need to be there. So if the house crumbles and they come ask me, I very clearly said, this is what I noticed with

the foundation or whatever the case was. It was such an easy solution that you never would have known if you would have just accepted, oh, I guess I can't. Yeah, that's how it is. Do I have dancing with the stars on TiVo that I can go look out and sell myself? All right. So I want to ask you one more question before we move on to the deal, deep dive. and it has to do with how you have scaled to 22 deals.

Now, it could be that you're just insanely wealthy and real estate's just fun for you, so you love to throw money at it, but I have a feeling that's not the case. Can you share with us how the birth strategy has helped you to grow to 22 out-of-state deals from someone who wasn't just throwing money at problems? Yeah, so we started off with our initial savings. And again, like that got us through about six to seven deals, and then I lost my job. and was let go, laid off. And we had been stocking away in my 401K

at a majority of my paycheck for about 10 or 12 years. And I had been investing in the Ross side of my 401K. So when I was let go, there's a clause that you can actually access your 401K, move it to a traditional IRA provider. I didn't have to roll it over into my next company's 401K. and by doing so that opened up me being able to access my basis in my 401K and because I had been investing in the Ross side of it.

And not a CPA, not a lawyer, but I were to give some perspective, I think the government rules you can put $19,000 a year away on a Roth 401K or in our 401K. So imagine that we have been doing that for about 10 to 12 years. And so I was able to pull my basis out, not my gains, penalty-free. And then we use that to move forward to fund our next investments. And then after you funded those, did you just keep recycling that same capital? Yeah. So we probably leave anywhere from zero to $10,000, $12,000 in a deal depending on how we're investing and what levers we're really pulling on it. But we still have majority of that capital.

So I feel like it's better protecting us as an investor because that 25% equity we have to leave in a house on a conventional refinance or even a commercial refinance now. It's not, it's the force equity in the house. It's not my capital. Not your own capital. I'm also better protecting the bank because if I, for whatever reason, have to sell that asset, I can actually fire sale it 20% off. And I didn't lose money in the bank didn't lose money. I feel like actually we're better positioned, you know, in the crazy case of a downturn or, you know, some other financial disaster where we had to liquidate our properties. I refer to that concept as the velocity of money.

I think I talk about it in the burr book where I teach people this concept of putting money out, having it gain equity, like you said, like the forced equity in every deal, you're adding 25% or so to the deal, getting the capital back and then sending it out there to do that again is very similar to having an employee. goes out and makes a sale, earns your company money, comes back to the office, reloads. You send them out there again to go make another sale. The faster you can turn around that capital and make it work for you, the quicker you can grow your own equity, your own net worth. But the beautiful thing is it's the same equity. It's not, you're not just dumping it in a deal. Now I got to stop and go save another 50 grand before I can go buy my next house.

And that's why Brandon and I love Burr. Yeah, we have actually less capital invested in our last 12 deals than we did in our first six. So it's really a powerful tool. I mean, I am really happy that you wrote the book, David, because I mean, that's such a powerful way for new investors to get started that have limited capital. Yeah. Fantastic.

Fantastic. All right. Well, let's head over to the next segment of the show. This is our deal deep dive. Deep dive. All right. This is the part of the show where we dive deep into one particular deal that our guest has done. Whitney, you got a deal in mind something we can dig into?

I do. I'm just pulling. up my notes because I need asking numbers. All right, good. So I'm curious, first of all, what kind of property is it and where was it located? Single family house located in Kansas City, Missouri. All right. All right.

And how did you find this single family house located in Kansas City, Missouri? I used my property manager who actually picked it up off a wholesale. Oh, I love this. There's like two levels to leverage. You're like your property manager leveraged day's wholesaler to get you this deal. I'm all about win, win, win, win. Like if everybody can have money and the numbers still work, I mean, who cares? Yeah, that's fantastic.

All right. Well, on that note, then how much was it? And we picked up the property for $65,000. Okay. By the way, what, what's the incentive for your property manager? Are they getting a commission as well on that because they're an agent as well? Or when you buy a property that they give you or it's just because they want the commission to, I mean, like they want the management fees going forward.

Both. Okay. Yeah. So he's getting the commission from, well, he's either getting a split in with the wholesaler. If he goes direct buyer, he's getting a commission. So he's working out that. We pay him on property management fee. Then he gets the lease up fee for property management,

and then the ongoing check forward. And then if we reposition the property, he's getting a cut of, you know, we try not to do full commissions because generally our properties are flipping to other investors, so it's usually a flat fee. But if you do retail, he gets a commission that way too. Okay, cool.

And that's a good thing that he's making all that money because he's now incentivized to go find more deals to grow your wealth. He's aligned. Yeah, we want to make. I think we can dig into this a little bit deeper. I don't want to derail the conversation. But I mean, you know. Oh, please. All about aligning, lining interest.

And that's the best way that I can help align, you know, his interest with mine. We're all making money. I think too many times we're, you know, we're taught to make it a win-lose situation. just as the sake of saving a dollar. But like if the numbers are there and the deal works, like, why not? Yeah, that's fantastic. Yeah, win-win as much as you possibly can, align interests. Yeah.

Fantastic advice. All right. So how did you negotiate this deal? I didn't. I'm just kidding. My property manager actually had it under contract and assigned it to me. So from a wholesaler. So we were at 65,000 purchase.

And then we had an inspect it and the rehab on it. was 45,000. Actually, the rehab on it was 35,000. 35,000. Was that more or less than you expected when you? So the initial rehab was 35,000. It ballooned up to 45. So our lesson learned there was have a contingency. Yeah. Okay. And did you though, did you like, did you assume when you, when you first brought the deal to you, 65k, you knew what was a rehab though. You knew it was a burr, you knew that you were getting into a big rehab. It just ended up being 10 grand more than you thought. Exactly. Well, so it was actually an investor that had purchased a deal and started the rehab himself.

And then he got in over his head with the rehab. And so we were actually able to pick it up with the, like all the paint was there, all the cabinets were there. We were able to pick it up with the supplies in place. So it was a really large rehab, even though $5,000 doesn't sound that large. It was a really big rehab. Okay. How did you fund this project? This was one of my first deals of using hard money. So we've funded the purchase price and 90% of the purchase price and 100% of the rehab using hard money. Nice. So almost no money down, which is awesome. What did you do with it then? Well, so we were all in for 110K and then appraised at 135.

So we then refinanced out our money and we left in $8,500 after everything was sent and done. We were hoping to get, we underwrote it to get 100% of our money out. I also learned to build in on much. larger contingency budget. Yes. Yeah. So you would have, so in other words, had you cut the budget at 35, you would have actually been out with no money, you know, no money in the deal whatsoever.

It would have pulled a little bit of cash out. Yeah. You know, that's, that's one of the things I just want to know about Burr investing in general is like that appraisal is kind of your wild card. Yeah. It's probably the only part of the deal that you really do not have control over. Even if you line up a bunch of comps, you don't know if the appraiser is going to use the same one or if they're getting

pressure on the bank to come up with the lower appraisal. You just, you can't control it so you can't beat yourself up when that part doesn't work out like what you were hoping for. You just got to remind yourself that a lot of the time it appraises higher than what you were expecting to. And it's going to balance out over time. And even when it appraises low, if you're leaving only a little bit of money in that deal,

your ROI skyrockets, you get capital back. You can go buy the next property. And you're going to be okay. So what lessons other than I need to build contingency into my rehab budget did you learn from this deal? I learned probably the biggest lesson of all, which is don't buy a house that has been infested with raccoons. Really? So on my checklist, has it been infested with raccoons.

The raccoon asterisk. That's funny. Because you know what? What did they do? What do they do? Yeah, what's so bad of our records? They're cute little fuzzy like pandas, trash pandas, right? Well, you've seen the Allstate commercials like Mayhem.

Yeah, that's you. Yeah, they roll around in the... Raccoons like to party, man. The installation in the attic. And they don't really care where the bathroom is. Have you guys seen that movie, the other guys with Mark Wahlberg and Will Ferrell? It's like a cop show, really funny. There's a scene where Will Ferrell's car gets stolen.

It's like a Prius. And I think like a raccoon gives birth to a literal raccoon's inside. It makes a big mess. That's what that reminds you of. Yeah, they're mischievous little guys. I can see that they could just completely tear something. it apart. That's funny.

So your, your inspector missed the raccoon damage. No, we knew that. We knew that going in. It was in there. But raccoons like to come back. And during the rehab,

it started to rain when the roofer was correcting some of the roofing and the soffets. And left, accidentally left one of the soffets on, are open. Oh, no. Yeah. They got back in.

Back. And they like to party. And they went right back to the same part of the house and destroyed part of that house. Oh man, that sucks. Okay. Raccoon proofing your house. We got to figure out how we can work that into our system. There you go. I think when you, when you, when you, you know, hit some of those things that you know that you can't tolerate, like, you know, somebody else, my inspector, when he inspected that house, he was amazed. He was like, if you can't finish the rehab, give it to me, I'll take it. Like, he was all, he was really hoping that I was going to stumble on that deal.

He didn't want me. He wasn't really. Yeah. Yeah. I had it out. He was. He was. He was, like, I had an out. He It was like, if it gets to be too much, give it to me. Yeah, let me know. Yeah. That's cool. All right. That's a good sign. But every time they're like, well, it's going to be this much money.

But hey, you know you don't have to pay it. I'd like, I'd take it off your hands. Exactly. Yeah. All right. Super cool. Great deal. Deep dive.

Great example of a really good burr. Even when things go a little bit wrong, you know what? You've still, you know, you got an awesome property. I think now today, cash flows a little bit, I'm assuming. And you make some money on it every month. You got those numbers? We rent it for $1,200, um, month we're cash filling 28%.

That's awesome. So good. So good. All right. Well, very cool. Well, before we get out of here, let's get over to the Fire Round. It's time for the Fire Round. All right, this is the Fire Round. This is part of the show where we dive into the questions from the forums. These are

questions that real life people are asking from the Bigger Pockets forums and we're going to fire them quickly at you. Whitney, number one, Darren in Utah said, I've noticed that house price appreciation has stopped. I think it's time to stop flipping. Too dangerous now because margins are slimmer and worse, you might get stuck at a market peak. What do you think? Flipping, I have done two flips. I've done a couple of live-in flips. So I would,

you know, I think it's, you know, you have to understand your market first, but, you know, you're really, you don't need the house to appreciate if your whole time is short. You just need the market to stay stable. But at the same time, if you're underwriting these deals, you have to, I would have multiple outs. Like, if the market did start to turn on you, can you rent it? Can you Airbnb it? Can you do a corporate rental on it? That is something that we've been actually looking at one of our flips.

It should it not go under contract in the next month. Yeah, that's good. One of my outs are now, I'm working on building up my flipping here in Maui, which Maui is a different price point than most of the world, right? So like an average price over a million dollars. And I'm looking at this. I'm like, we're probably at the peak of the market. Not the best time to flip houses, but the margins are just stupid good if I can do it,

Right, right? So I'm looking at this and what I'm doing to, like, again, as an out, is I'm not flipping by myself. Any flip that I go into, I'm going to partner with people. In fact, I have a couple friends that I'm working with, hopefully on this thing. But we're going to partner together essentially where they put up 100% of the money for the flip, 100% of the rehab budget for the flip, and I make no payments to them during the whole entire process. Then we will split everything at the end of the day. We'll just do a rev share, you know, probably 50-50 on the profit at the end of the day. Now, of course, a hard money lender would be cheaper than doing this or I could find a bank loan.

There's other ways to get this done. But I'm nervous buying a million dollar house where I'm going to put a half a million dollars of work into it or something at this price point. And then the market crashes six months later. And so for me, splitting it with somebody else, all we're going to do then is rent it out. Because I can rent it out. I'm good at renting out properties. We'll rent it out for the entire recession if we hit one.

I'll be just fine for three, five, six years. And whoever, you know, my friend who's putting the money in, that's their risk is that they might only get a two or three percent return on their money from cash flow for a few years. And then we'll sell it later for a higher amount when the price does come back. So it's like we're not losing no matter what, but we're building that backbone in. So anyway, I got to find more wealthy friends who can afford it, you know, a million and a half dollar like investment. But that's what, like, that's what I'm doing to prevent against that. So again, some people are like, you shouldn't flip houses because it's a bad market.

And good investors are saying, no, how do we flip markets? How do flip properties because of the market? Like, what can we do today to prevent against that? And that's my solution. I'm sure other people have better ones than that, but that's what I'm doing. So anyway. Do you guys think that if he's,

if this person's model is building in, there has to be appreciation to make sense that maybe they're paying too much for the house in the first place? Yeah. That's a great point. Okay. Cool.

Thank you. Question number two. Let's say you have your property. This is from Dennis Higgs. Let's say you have your property and everything is going according to plan. How often do you want your property manager doing a walkthrough of your tenant occupied units just to make sure that everything is in decent shape. Good question.

Well, for me, I have minimum of one time a year. I would go for twice a year. That's what I'm comfortable with. At the same time, what is your tenant base? Like, if you're dealing with a, you know, college rentals, I would have them in there. Every month. I don't know.

Every week can be good. You know, but if you're, we have a renter, you know, they're in there. They're upper 70s and they take, you just care. I'm not going to check on that often. They're the opposite of a raccoon. They don't like to party. Right.

That's funny. They do, you know, I don't encourage you, but they do a lot of the maintenance themselves. Yep. But anyways, I think it really has to go back to knowing your customer. Like, you know, who's in the property? What are you comfortable with? But at the very least, I would say a couple times you're going to want to get eyes on your roof, you know, your gutters, you know, maybe you and the H-Fact, too.

One of the things that I like to do is because my property manager always wants to charge me to do these extra walkthroughs and I don't always trust that the employee that they send is really paying attention is I wait until a maintenance request comes in that for something really small and I send my handyman and I task him with like you're going to look everywhere in that house check every toilet, every sink, make sure it's not leaking. Because as you guys, as Brandon, I'm sure you have to have seen tennis will let a water leak go on for like nine months and completely destroy one of your because they just didn't bother letting you know. Oh yeah, the cocking's bad. It's been leaking like that for two years. And now you've got an

entire subfloor that has to get ripped out. So I just, I leverage my handyman. Hey, you're going there anyways. Say, hey, does anything else need to be tightened up around here and walk out with your crescent wrench and just look for everything? Look for drug paraphernalia. Look for signs that raccoons are in this place. Look for anything else that could cause problems. You guys are going to let me live that one down, are you? You should write a blog article. I like total like these are the signs you need to look for to know of raccoons have yes, crash your party. That's awesome. All right, number three. Oh, this is a great question. Corey from Charlotte, North Carolina, said, what do newbies say or do that makes you roll your eyes and groan? Wow. Such a good question. If you want to think for a minute, I want to think for a second, I want to ask David Green as well, because this is a hilarious question. David, what about you?

I think my favorite thing or the thing that drives me nuts with newbies say it is when they try to tell you why you shouldn't be doing it. But it's very clear that they don't understand themselves how real estate investing works. Like that comment earlier, I think we should. stop flipping because prices aren't going up anymore. It almost sounds like insightful, but then you think a little bit deeper and you realize, well, if you're getting a good deal, like prices could go down and you could still be making money. The market doesn't have to go up. That just makes it easier. Yeah. Like when the, when the wind's not at your back, do you just stop running? Oh, this is harder. So I'm just, you know, no, you still value in doing it. You just do it differently. So that's one of the things is just when I hear a newbie that gives me like a naysayer, like here's why you shouldn't

invest in real estate. But they're, they very clearly don't really understand. what the factors that go into building wealth through real estate are. What's yours, Brandon? I was going to say, the thing that always makes me laugh is when wholesalers say, you know,

things like, I've got buyers in all 50 states or I've got deals in all 50 states that like, and they try to make themselves sound like there's some big deal. And I'm like, you're like a 21-year-old kid

who's never bought a single property. You don't have deals in all 50 states. You don't have buyers in all 50 states. Yeah, I know. I get these emails from people. It used to be worse. It actually doesn't happen much anymore, but that used to be like a line.

Some guru must have been teaching people to say that It was everywhere for a while. It was like, I've got deals in all 50 states that like, no, you don't. Stop it. That was like your red flag that you knew this is a new. Yeah, it just gives them away right away. Yep. I think for me is just the mentality that you have to do it all yourself, right?

Honestly, like I would, I kind of felt that way like when I was getting started. But, you know, I quickly realized this is all about relationships and partnerships. And that, you know, even though I am leveraging other people's systems, you know, I would love to meet people that would learn how to leverage. Yeah. Sound bad. You know, that would like,

you know, I can network with. Yeah. And then I can help them leverage the systems that I put in place. So there's a power in leverage. There's a power in win-win. And just to say that, like,

I don't have the time. I don't, I don't have X in order to get started. Like, there's always a way to figure it out. You just have to, that's the part that you have to figure out is how to overcome the obstacle. Remove the X.

Remove the X. There you go. I got one more just because I'm, I want to throw one out. actually got two more. One of them is when newbies will say things like, hey, can I just get on like a quick phone call with you? And like provide no value whatsoever.

Hey, can I just get on a cool phone call with you and pick your brain for a while? And then the second one was, oh, shoot, I lost it. Anyway, that's a big one. I get that from newbies all the time. It's like, hey, can I just pick your brain for a little bit? How about the one where the newbie wants to jump like seven steps ahead of where they really are

and talk to the person that's so far ahead of them that it doesn't matter what that person's doing? Yeah. You know, like, like, I do not need to talk to Mr. Olympia about my weight limit at all. It doesn't matter what he tells me. I need, what do you do to go to the gym five times a week? That's the guy that I should be talking to, right? When they're like, I really want to go talk to Grant Cardone and figure out how he's doing what he's doing. I just think, why would you?

What is he ever going to say that it could apply to your position, you know? Find a person who's like two steps ahead of you or one step ahead of you and say, what did you do to get there? I think that's a much better. There you go. Okay. I remember the last one. Sorry, remember the last one.

I actually hear that's fairly often. There's different ways of phrasing it, but essentially, we tend to focus on building our portfolios, but what's your ultimate end goal with real estate? Do you want to keep your rentals and pass them on to your kids, sell them at the end of your life, exchange them into something bigger? I think this is a really good question for you, Whitney. So we have a couple different strategies. I don't have one just end game strategy with my rentals, you know, because I'm all the time,

like going back and looking at our spreadsheet, the overarching returns. of the portfolio and really trying to understand which ones are better positioned for retail sale, which ones are better positioned for investor sale. Which ones can I kind of, you know, another really smart thing that I heard from this guy who's sitting here in the room right now is like packaging them up and like five

and maybe flipping them out on a portfolio. That must be David. I know, right? And then reinvesting that and trading it up for larger properties. So we actually trade ours up when we do like a package sale. We'll trade them up for multifamily syndication. Very good. Yeah, the reason that works so good for someone who hears that and goes, why,

why would you do all the work to get it and then exchange it? It's because building wealth through cash flow is very slow and laborious. It's very, very, very slow. But building equity can happen fast. It's so much easier to buy a house that you're all in for 75 grand. It's worth $100. You made $25,000 in equity than it is to save up $25,000. of cash flow. That just takes forever.

So what you do is you focus on the part you have more control over building equity, then you exchange that into an asset that will build you cash flow faster or more passive, like a syndication. And you just supercharge the rate at which you can build that cash flow. That's the short story. There it is. Thank you. Thank you for pointing that out.

That's great, Whitney. All right, Brandon, you want to move us along? I will move us along to the next segment of the show, the final segment called our Famous for. Famous for the same four questions we ask every guest every week. But before we get to that, let's hear what's. going on this week over on the Bigger Pockets business podcast. Hey, guys, this week's show is all about breaking into a low barrier to entry businesses,

businesses where you're sure to face lots and lots of competition. Our guest this week started a self-storage of moving business. And on Tuesday, he's going to tell us all about how he competed against some of the biggest companies in that industry and kicked their butts. So tune in to the Bigger Pockets business business. podcast next Tuesday. Subscribe, and we will see you then. All right. Thank you. And now let's get to the famous for number one. Whitney, what is your current favorite real estate related book?

I still am a big fan of long distance real estate investing by doing. Oh, is that the first time anyone's ever said that? I think it is. I don't know. It's up there. It might be the first. Maybe somebody said it. I'm sure lots of people think it. Just nobody wants to like, you know, flatter you too much in a podcast, David. So they all hold it. it on the screen for YouTube. If it gets too big, it won't serve me. If it's just a big forehead staring at you. I can pick a different book if you want me to. No, absolutely not. Moving along, what is your favorite business book? Well, so I'm going to cheat. I'm going to do too. I think e-muth is fantastic, again,

for learning to put systems in place. And then also for just getting started in real estate or any part of your life, really, the one thing by J. Pappasen. Very good. All right. How about some of your hobbies? Anything outdoors. I live in Colorado. I'm a typical Colorado girl, mountain biking, trail running, when I can, climbing. Cool. Very cool. Last question. What sets apart successful investors from those who give up a fail or never get started? You know, I think, you know, several of the guests on the podcast have really talked about resilience and focus.

And I think, you know, something that I can point out of the value is just really creating those win-to-win relationships, understanding that it's not a win-lose games, that you're not in and all by yourself. but you know, how can you bring value to somebody, even if it's a realtor or something that you're paying, how can you bring value and create a win-win relationship? Because you're going to go so much farther, faster with partnerships. Yeah, so true. All right.

All right, Whitney, this has been a fantastic interview. I really like how this turned out. Can you tell us for those who are fascinated by your story and want to learn more about you? Where can they find out more about you? Yeah, absolutely. They can find me on bigger pockets. So feel free to message me there.

And also you can find me in ash capital LLC.com. All right. And, of course, we'll put links to that in the show, Not to BiggerPockets.com slash show 340. Again, Whitney, thank you so much for joining us today. This has been fantastic. This is David Green for Brandon, my best brother Turner. Signing off. You're listening to Bigger Pockets Radio,

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