BiggerPockets Real Estate Podcast - 372: Flipping and Rental Property Investing 2,000 Miles Away with Erin Helle

Episode Date: March 6, 2020

Securing financial freedom for her family through long-distance real estate investing! West Point graduate Erin Helle's story starts the day she was ordered to deploy to Afghanistan. She already had a young daughter, and her husband was headed to Iraq. Something had to change. Mix in a serious health condition, the result was this: Erin felt forced to take action and build something that would endure and provide for her daughters no matter what. In this episode, you'll learn which steps she took. From buying new construction, to flipping at a distance, to using a self-directed IRA to purchase a rental property, this show is packed with valuable lessons from an investor who's acquired 20 doors in the span of two years. Erin shares a powerful story that's sure to make you think hard about the legacy YOU plan to leave behind and what you plan to do to get there. In This Episode We Cover: Buying new construction Generating momentum as a newbie investor Erin's key performance indicators Lead measures vs. lag measures Out-of-state real estate investing Teaching young kids about money Why getting your real estate license may be overrated Why she doesn't "DIY" anymore And SO much more! Links from the Show BiggerPockets Forums BiggerPockets Webinar BiggerPockets Podcast 355: From Small-Time Landlord to 1,000+ Units Under Contract with Ryan “The Mercenary” Murdock Open Door Capital $13M in Equity from One Deal & Cash Flowing Despite Being Comatose with AJ Osborne Brandon's Instagram Craigslist Zillow Redfin BiggerPockets Money Podcast BiggerPockets Business Podcast Click here for full show notes: http://biggerpockets.com/show372 Learn more about your ad choices. Visit megaphone.fm/adchoices

This is the Bigger Pockets podcast show, 372. I'm not having to look for properties anymore. If anything, I'm not even able to look at a lot of the ones that come my way. So that's something that when I was first looking for my first flip, I was like, how do people find these properties? It's impossible. And even finding 10 a day to analyze was difficult. And now I have the opposite problem.

And that's what I tell people all the time. Like there are plenty of deals to go around. So don't, you know, don't worry about the deals. 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. Hey, what's going on, everyone?

This is Brandon, host of the Bigger Pockets podcast here in the Seashed. with my friend David Green. David Green's not actually here, but you know, whatever. You're in the he shed of Northern California. What's up, buddy? I wouldn't mind being in Hawaii. I think we got there in a couple weeks, right?

I think you are coming out here in a few weeks. I've got a lot of fun stuff playing. In fact, we're going to do some maybe live podcast recordings or at least like in person ones. I got a couple things to do there. I'm pretty pumped and excited about. Make some videos. I think last time I was there, you jumped in the pool with your clothes on, right?

I think I did. That was fun. We might put a link to that in the show. It's at BiggerPock.com. That show 372. Just watch the last like 10 seconds of that video. Anyway, dude, today's show. We just got done recording with Aaron Helley.

And Aaron brought so much value. It's going to blow your guys' mind. Aaron is a former military. Well, her husband's in the military right now. She was military. A mom of two who is just crushing it in the world of long distance real estate investing right now. Tons of good tips in there. Tons of great suggestions and ideas for managing cops.

contractors and dealing with KPIs, which she talks more about. We'll talk about that later key performance indicators, but such value there. So before we get to the show, though, I do want to get to today's quick tip. All right, today's quick tip. So here's the deal. We talk about these things called KPIs, which are basically things you can do on a daily basis that you should be tracking. And every business in the world should have KPIs.

Real estate's no exceptions. We spend a good amount of time today talking about that. And that alone may just change your business forever. So here's the quick tip I have for you. Starting today, I want you to start tracking one KPI. I don't even care what it is. It could be deals, analyzed, offers made, podcast, listen to. But get a piece of paper out and start tracking it or a whiteboard.

Track that KPI. Make sure you're doing it. And report back. Let us know what it does to your business. And if you would like an easier way to track that stuff, we actually have a journal of bigger pockets called the intention journal here. And it's all about tracking your progress on different KPIs. So if that's something you're interested in,

you could always pick up a copy of the Intention Journal of Bigger Pockets and use the code Aaron, E-R-I-N, that's our guest today, use code Aaron to get 10% off that intention journal. You also get access to a mastermind group when you buy that. So anyway, there you go. That's your quick tips for today. Nicely done. Thank you.

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Somebody there called me the closer and I was standing next to him and I was like, yeah, this is the closer and the mercenary. We sound like, we sound like villains in an X-Men movie or something like that. That's exactly what that sounds like. All right. Well, that's very cool. Yeah, shout out to Jay Barton. Thanks, buddy, for putting on that conference. What you could have been there this year. Couldn't leave the wife. But next year. And with that, let's get to today's show with Aaron Hellie. Let's do it. Welcome to the Bigger Pockets podcast. It is great to have you here today. Thank you. I'm so excited to be here. Yeah, cool. All right.

Well, let's get into this thing. Who are you? How did you get into real estate? Why real estate? What did you do before real estate? Let's go through your story. Yeah. So I'm Aaron.

Like you said, I am currently living in Monterey, California. Military spouse. I've got two little girls and one year old and an almost four-year-old. My husband's active duty army. And I really think that. Real estate is something that I had in the back of my mind since probably even high school. I think from a young age, I always believed in sort of the concept of financial freedom, even though I didn't necessarily have the same definition of what that is then as I do now.

But I always kind of wanted to be financially independent. When I went to college, I wanted to have no strings. I didn't want to rely on anybody. I didn't want to take out any loans. So I was looking for somewhere that I could get a full ride. and I started being recruited as a swimmer when I was a sophomore in high school to go to West Point. And at first I was like absolutely not going there, no way, going to a military school. And then two years later, I took a tour of the campus and just knew it was where I was meant to be.

And it just happened to be a place where I could really kickstart my future in terms of a great education, guaranteed job after I graduated, and then never having to rely on anybody, you know, I didn't have to rely on my parents for money. I didn't have to take out any loans. College was paid for. Then I got a job afterward. You go to school for four years, and then you are required to serve for five years on active duty.

So I did that, and then some. I served eight years on active duty. And met my husband when I was at West Point. We got married a couple years after we graduated. So we were doing the dual military thing, living the good life. We thought, you know, we were doing it right. you know, a dual income. We thought we had a bunch of assets. We didn't have any debt besides the

house that we owned. And then we had our first daughter and I took my maternity leave and I went back after three months with her. And my third day back, I got put on orders to go to Afghanistan. Three months later, yeah, when my daughter would have been six months old and my husband was already on orders to go to Iraq that same exact month. So we would have left her. And it just wasn't something that we were willing to do, and I resigned the very next day. So it took me about five months to get out of the Army, which is a really quick turnaround for that. And really never looked back. And so I started looking into real estate once I got out. I then read Rich Dad, Poor Dad, and realized that what I thought was financial freedom and what I thought were assets probably really weren't. So it

really kind of changed my perspective, changed my direction. And it just kind of made me come up with a better plan to get to the point where we wanted to be down the road. So I started looking, started analyzing. It took me a while to get into my first property probably took me about eight months of really looking and really diving in, you know, like taking the plunge. And from there, I was totally hooked. So fast forward a little bit, I was serving in the Army Reserve at this point. And I had plans to just kind of keep growing my portfolio. And I found out that I had a heart condition and the second the army found out they kicked me out, even though at that point I had been serving for 14 years, including my time at West Point, they just said, see you

later. And that really kind of changed the trajectory of my plans, really. I was wanting to make as much money as I possibly could. I had the goal of making seven figures, you know, each year. And being faced with my mortality, I guess, made me really changed. the way that I wanted to do things. And instead of trying to make a bunch of money, it was more about building my legacy and creating something that I could be proud of and something that I could hand down to my daughters.

Yeah. Wow. Yeah, it's interesting because, I mean, if you think about it, everybody, I mean, right, like that's the thing about life is nobody gets out alive, right? Like, we all, like, we're all there. But most of us don't have to go through that, like, scenario of where, hey, there's something wrong.

Like, there's something that could end this at any point. So now I've got to change my perspective. And for you, that was a heart condition. Wow. I guess I'm curious of like, when you say legacy, what do you mean by that term? I mean, different people have different terms for that. But what does that mean?

Then we'll get into the nitty gritty of real estate. But I'm curious of how do you define that? I guess for me, it's just something that lives on, you know, after I do. And it's something that, I think for me, all that matters is what my daughters think and what my family thinks. my family thinks. And I just want them to know that, you know, to sort of see the value of hard work and see that you, you, what you get into something, what you, or you get out of something, what you put into it. And if you're willing to work hard, then you can make something awesome.

And that's just what matters to me, that they see me building it and that they see, you know, the results of it and how it plays out for them down the road. Like, for example, I, I can't get life insurance. So I, my life, this is my life insurance, you know, and we just recently got a Disney time chair or Disney Vacation Club members. And that's like my life insurance. You know, I want my daughters to be able to go see Mickey Mouse a couple times a year, you know, whether I'm here or not. Yeah. One thing that I noticed as you were talking, well, first off, this reminds me a lot about Brandon. Remember AJ Osborne story? Yeah. There's some similarities to that like, this is what I was doing. This event happened. It changes

trajectory of my life. And now I have a better life because of it. So I think that's very cool. but when you say that you want to leave a legacy, one of the things that's cool uniquely about real estate for doing that is that not only are you teaching your daughters, this is how you do well in this business, but they're going to actually inherit the properties you're buying and be managing them. It's a very clean handing of the baton.

You're actually handing the properties too. It's not like if you were a real estate agent teaching your children how to be real estate agents, maybe you can hand off your database of people, but you're not giving them an actual asset, but you're showing them this is how we get property, this is how we manage them, and then they get to actually take that property over. That's probably very fulfilling, I would imagine, for you, knowing that they're going to get them.

The question I want to ask you is when you realized that money was less important than legacy, and you had that change of trajectory, what about real estate investing stood out to you that you realized this is the way I want to leave my legacy? I think it was just, you know, the ability to scale it without having to work a full-time job. You know, you can continue to build your portfolio and continue to grow your, monthly cash flow or your equity, but it doesn't necessarily mean, you know, it's not like the more cash flow means you have to work more. It's not, it doesn't work like that, like a lot of jobs, too. So that was it for me, just being able to spend most of my time with my kids, but continue to see my wealth grow and our equity grow. Yeah, you know, I had this conversation. I think I might

have mentioned this on a previous podcast, but I'll say it again anyway. I had this conversation with a guy who was visiting my family and he owns like a machine shop or something like that. He's an entrepreneur owns a machine shop with some kind. And where he was just talking about how, like, you know, they go through ups and downs in their business because sometimes they just lose clients and they have to go back to the driving board to get all new clients and try to find new customers for their product and how difficult that was. And I was just like, I can't relate to that with rental properties at least. I was like, like I buy rental properties and I just own them. And I don't have to go and buy another one. Like everyone just, it's like little oil wells.

Like you just buy one and that's yours. I mean, yeah, you have to maintain it. I'm not saying it's zero. But like you said, it's scalable. And just because you like, you make more money. it's almost like opposite of normal work, right? You make more money over time, kind of naturally, but at the same time, your time goes down.

Like the time commitment goes down because your systems are better, your processes are better, property goes up in value, cash flow increases, loan gets paid down. So you're wealthier, you're having more fun, it's easier, less stress, system better. It's all around awesome. So let's get into your real estate thing because obviously we all love real estate.

That's why we're listening to this show. So very first property, what did you do for your very first property? Tell us that story. I found my very first rental on the MLS. I looked for a little while at some of the older, some older properties, some that I thought I could get a good deal on and renovate. But I ultimately decided to go for a new build. I bought this one in Clarksville, Tennessee, and there were lots and lots of new builds. And the cash flow there is great. It's a great rental market. And so when I balanced the numbers between, you know, putting, putting the money in up front and renovating and, you know, not putting the money in up front and seeing it grow over time, just where I was in my life, I had a young, probably two-year-old at the time, I just found out that I was pregnant. My husband was deployed. Renovation wasn't something that was really at the top of my priority list. And so I also wanted to get into something

that I knew would be comfortable for me. I was very nervous about having buyer's remorse. I was worried about losing sleep. I was already losing plenty of sleep. as a new mom. And I didn't want another reason to lose sleep. So I knew that if I was going to scale it and I knew that if there was going to be a second investment, the first one needed to nail it. And the first one needed, if nothing else, to provide me comfort and knowing that I was on the right path. And so I bought a new build and it's been an awesome investment. I literally drove from closing to lows, made a copy of the keys, drove and met my tenant at the property. And that tenant has been in there almost two years now, has never.

been late, has never missed rent. I've not put a penny into that house. It had a one-year warranty, but hardly anything really needed to be done after that first year. So it's been just a great investment. Definitely put way more cash into it than I probably should have. I put 20% down. And I just at that time didn't really realize that there was any other way to do it. I thought you just put 20% down on an investment. And so I know that now I probably could have turned that like $60 or $65,000 into maybe three or four deals. But at the same time, I wouldn't have done it any differently. All right. Let's talk about a new build. So a lot of times on the show, we talk about rehab and we talk about Burr. We talk about all this stuff. I buy a lot of old crappy properties.

I think my newest property is 1978. And so like, the idea of buying new construction and actually making cash flow is kind of foreign to me. But I know it can be done in certain markets. I mean, Certain markets it can't. Certain markets it can. And sounds like in your market, it could. So what did you buy the property for? What does it rent for? Can you get some of those details? Yeah. So the purchase price on it was 220,000. And it rents for 1760 a month. Okay. The mortgage payment, I think, is 1130. I'm paying 7% in management because that particular management company has 12 doors of mine. So I met 7% there. Taxes are low in that area. And I It's like $55 a month, I want to say.

Insurance is $45 a month. So it cash flows just under $300 a month. And like I said, every single penny of that has just gone into that reserve fund for that property. Yeah. That's so cool. And this is why it's so important not to take somebody that, like, even my own advice or David's advice here. When somebody says like, I was on a webinar a couple weeks ago and I said like, somebody mentioned something about Chicago or Illinois. And I said, yeah, that's why I don't buy in Illinois.

and it was something like the land. I don't like the landlord laws there or something like that. And then people were like, what, you're saying we should never buy in Illinois? And I'm like, well, hold on. Like,

there are people who are millionaires because they're investing in Illinois. There are millionaires who are investing in new construction. So like, just because I don't do something and I don't get it or I'm not a fan of it or David here, doesn't mean it can't be done. Like, yeah, I guess just advice to everybody is like put on your thinking caps and like,

don't let somebody else do the thinking for you. And I know, this is such a good point. And I was just speaking. at the SF-based summit yesterday about the Burr Method. And I prefaced it by telling everyone, listen, I'm going to tell you guys how I invest in real estate. This is what I do and this is why.

You can't take what I'm saying and say, I now have the step-by-step formula for exactly what to do because if I do what David does, I can't go wrong. And that's the problem when you're afraid, you tend to want as specific of information as you can get because you think it prevents you from making mistakes. But not everybody's in my position. They don't have my resources.

They don't have my life. They don't have my goals. it doesn't make sense to do it my way. And Brandon and I's biggest fear is we're going to tell people what we do and they're going to go try to do it and it's going to go bad and they're going to say, ah, you told me to go do this or you told me not to do that. And I love this story.

My brain just started firing off with all kinds of ideas. I'll get into Brandon. What were you going to say? Well, I was going to say a good example of that. So like, you know, I have this real estate fund. It's a 506 fund. This is important. So I have a 516 fund.

That allows me to talk about it. I can talk about it right now on a podcast. I can say, hey, I have a fun. Right. But if I had a 506B fund, I can't talk about it. So one of my biggest fears is that people are going to go in like, it would be legal for me to talk about if I had a 506B syndication or fund, right? So then when I put that out there, people are inevitably like, Brandon's breaking, some people are like, Brandon's breaking the law. And I'm like, no, I'm not because I have a 506C at the same time. Like, I'm worried other people are going to go and

start advertising their real estate syndication. Because Brandon does it. Because Brandon does it. They have a 506B. They have a 506B. And you guys don't need to know that like the details of what I'm saying here. All I'm saying is like, like, Just back at what you said, David, is know what you're doing, like, works for you, not just because I did it or because David did it or because Aaron here did it. Yeah, that's exactly right. And when Aaron said she buys new construction, conventional wisdom would say, oh, that's terrible.

You'll never get a good deal. You can't cash flow. But what I immediately started thinking is, this is not as crazy as it sounds. A, in most cases, you won't get cash flow. It sounds like Aaron did. That's great. But even if you didn't, what it may be a good idea. And I started realizing your CAPX will be very low.

or non-existent for the first 10, 15 years of owning that property. And I started thinking, well, if I took all the cash flow and added it up over a 10-year period, but then I had to subtract the CAPX on the 80-year property, would it even actually be net positive still? Because oftentimes they're not. And then I started thinking about new construction is probably going to be in an area where that city, part of the city is being developed. They're bringing in more amenities to people want the restaurants, like that type of thing.

So what if you're getting in a better location? And then I started thinking about every time we buy a house, we always look at day one, does it cash flow? Day one, how much money am I making? But when you look at people that made money in real estate, they did it over 30 years. And if you owned a property for 30 years and it didn't cash flow for the first five, but the next 25, you absolutely crushed it. Would you even remember those first five years? And I often see this. When you zoom out and you look at the big picture, the stuff that you were afraid of that your fears were based on was always only because you focused in on that little thing.

And if you can zoom out, you get a lot more clarity. And I wanted to get your guys' perspectives on what you think about that when it comes to investing real estate. Yeah, I mean, I think that's exactly right. And when I got into that one, I knew there were a lot of things that I didn't know. But I knew that this particular asset would not cost me a lot of money out of pocket, at least for the first couple of years. And when I just looked at that loan amortization over, you know, I'm like, I'm going to get a mortgage on this property. I want to make sure that the property outlast the mortgage. And that was sort of my biggest concern going into it.

Like just that leverage and not really wrapping my head around the power of that at this point in my investing career. And it was just really important to me that the numbers made sense long term. And that's why I felt comfortable buying a new build. And then I also saw it's in a military town. So rents are constantly going up because they go up with the basic allowance for housing. that every service member gets. And that goes up every single year with inflation. And then just the population's growing.

So I saw that equity going as well. So it was more than just about the cash flow for me. It was just about the security of that investment. Well, Brandon and I always say you got to get the first one under your belt, right? Because Brandon, do you remember the statistic? What percentage of people only own one investment property? Yeah, I don't remember. But yeah.

It's like nobody, right? The only people that have one property became a landlord on accident. They bought a house. they had to move and they rented it out, but they never really wanted to be one. Everybody else either has more than one or they have none, because once you get that first one, the next one seems so much less scary and easier, and you get over those emotional hurdles.

So I was thinking this might be the perfect way, if you have enough, you're living beneath your means, I don't want you to do this if like $200 a month that you're losing would crush you and you'd lose the property. But if you're financially savvy, getting a new construction home reduces a ton of the variables that cause all the worry. What about the rehab?

What if this goes wrong? How do I know that I'm going to get a tenant? It's the easiest place to rent out, very low likelihood that anything is going to break. You're not going to have a rehab on a new construction home because the builder's just going to come fix it. It's like training wheels. Then you get all of the stuff that scares you out of the way.

You learn what to expect. And on your next home, it'll be so much easier. Maybe that's when you get into something with a little bit more upside. It just actually seems brilliant now that we talk about it. to make the first one as easy as possible, because as Brandon and I know, you're usually not going to make money in that first one anyway.

And even if you do, it's like 20 years from now. Yeah, right. You parlay that to millions of dollars. Like, who cares if the first deal, like was a home run or just a base hit? You know,

like at least you're in the game. That's more important. It's the momentum that you got to get started. Yes. It's like teaching Rosie to play, you know, to swim, right? Like we don't toss a kid into,

I mean, Aaron, you got a couple kids, right? You don't just toss your one-year-old into the deep end of the pool and be like, swim, go. Man, what a loser, can't swim. We wouldn't do that. We start them easy. We started them like, you know, like a little flipper thingies and the big, you know, the big padded arms are so cute in those. Yeah, and then you get their confidence up and you get their momentum going. You get them swimming regularly. And then they become, you know, little world-class swimmers lately. That's what

But Brandon and I are not going to talk about swimming in the kiddie pool with our floaties on because we did that a long time ago. You don't really remember that, right? So don't get discouraged when Brandon's, you know, training for a triathlon. swimming out there in the Hawaiian ocean. Let it inspire you to get to that point, but don't let it stop you because you don't know how to swim yet. Yeah. Good point. Most investors spend more time chasing deals

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I mean, they've got the whole place to themselves, lots of sunlight, zero response. But no, they just sit there waiting for someone to spray them with some cool mist like a bunch of leafy loafers. But guess what? Your home actually could be earning you money while you're not there. Airbnb has a great feature called the co-host network, which makes hosting your home so easy. If you live far from your property or are away for extended periods, you can hire a local co-host to take care of the hosting for you. These co-hosts are vetted locals who already have experience hosting on Airbnb. A co-host can handle all the details like messaging guests, creating your host space, and managing reservation. so everything runs smoothly.

It's a practical way to earn a little extra money, maybe even some cash toward your next trip. Plus, you get to share your place with someone traveling to your area while you're off making memories somewhere else. Your home might be worth more than you think. Find out how much at Airbnb.com slash host. All right, so Aaron, what came next? So you bought that first property.

You got the momentum going, and then what happened after that? So the next thing I did was a flip. I went the complete opposite direction. I found a house that was built in 1960s. It was a really small, like 800 square foot house and needed a lot of work. And I found that actually also on the MLS and the seller was very motivated. I was able to get it seller financed. It was a $50,000 property.

Or sorry, no, it was a $25,000 property. He asked for a 50% down. So I had to bring $12,000 to closing and ended up putting like another $12,000 to $13,000 into it. Me and my dad flipped that property. we did more than we realized we were getting ourselves into, and it was because we didn't have a team yet. We didn't have the contractors in place, which I kind of knew going into it.

I was setting up my team, and it just wasn't going as quickly as I would have liked it. And I said, you know, I'm going to try to find, I found, came across this property. It was very low risk. My monthly mortgage payment was like $235. And I just decided that I was going to, just take this as a learning opportunity. And if I made nothing and I just broke even, I knew that

what I would learn would be worth it. And so we dove in. My dad came down from New York and I was like seven to eight months pregnant at the time flipping this house with my dad. And we tried to hire some stuff out. Some things were able to hire out. Other things we weren't. And we got this thing done. It was, it was really cool. It was easy to kind of see it come together because it was just such a small house and it had great bones, great structure. It was just this cinder block, perfectly square house. And we just painted the exterior, put some awesome shutters on it so the exterior looked awesome with just like some really minor landscaping. And then we did like an accent wall. I laid the vinyl planking myself with my giant pregnant belly. Wow. And yeah. And we got it done and we sold it

for 59,000. At the end of the day, it took home about 13,000. That's awesome. It's awesome. It's the same thing we just talking about with rentals, but now we are applying at the flips. It's like, let's just get some momentum. Like, anytime somebody tells me that they did a flip and they didn't make any, their first flip and they didn't make any money, I'm like, that's awesome. Because you got the momentum going.

Again, like, when you've done 50 flips 20 years from now, and you look back and you've made, you know, $18 million on flipping over the past 25 years, like, who's going to remember that you didn't make a ton on the first deal? And you made $13,000. That's awesome. Yeah. Yeah.

I mean, we worked hard for it, but. Yeah. Yeah, but at least you didn't lose any money. You learned a ton of stuff. What were some of the lessons you learned? What could you tell people who are listening to this right now that are saying, I want to go flip my first property? What are those big lessons that you guys learned?

So definitely the biggest thing we learned was just how much things cost. You know, we were able to really learn how much materials cost and how much labor cost. And I remember my paint budget was like $4,000 for the inside and outside. And I brought a painter out there and he just laughed at me. Yeah, there's no way. So we ended up having to do some of the painting ourselves. But I think, you know, learning how much things cost, learning what comes first, you know, when you can do things in what order.

And then the most important thing was just contractors, you know, dealing with contractors, learning how contractors work. And yeah, that was definitely the biggest learning curve and still something I struggle with to this day. Yeah, it's tough. I mean, contractors, I say as often, it's like, it's probably the number one hardest thing of all real estate investing is, contractors. If I had to pick one thing that's like, doesn't, I mean, yes, there's ways to make it easier, but it's always tough. Even like the best people, I mean, even like the Jay Scots of the world who, like can flip houses in his sleep, still has contractor problems where everything else can be really systematized and maybe the way to system that you's hire someone to deal with the

contractor for you. But I don't know, contractors always suck, I feel like. But this is every business has that thing. Like, no matter what you're into, there's a piece of it that you say, oh, this is where I struggle so hard. It's so hard to make this part work. So if you go into it with the expectation that you have to learn how to manage a contractor, which probably feels like, I don't know, like supervising a group of four-year-olds that are just crazy all over the place. It's never going to be easy to do that.

But you're going to have to do it to make money in real estate. You won't mind it. You know, this reminds me of that conversation. We had a conversation before we started recording today. David brought up a, like, everybody wants like this push button solution to everything. It just makes it so easy. I mean, and sometimes it works, right? Like, there are things, like, for example,

I love the bigger pockets calculators. They help you analyze deals quicker and keep you organized and accurate. But with other things in life, like deal with contractors, there is not a one-button solution to deal with contractors, and that's what everybody wants.

Like, I just wish there was like a simple software that told me how much the rehab's going to be. There's not. There's not a simple software. Yeah, and then manage the contractor for me. And it would, you know, like, and we'd just serve up three contractor bids right on my plate just for me.

And there are companies that do that, but you're going to pay heavily for them, and you're still got to manage them. And this is a really good point to make, because I know a lot of our listeners are in, like, Silicon Valley. I guess where I'm selling a lot of houses and looking for house acts. This is how this came up,

because we start talking to people that want to invest in real estate, and they live in a good market where they make good money. I know, Aaron, you live in a pretty expensive market now, but you're investing in markets that makes sense. We're going to get into that in a minute. But people who work in the tech world specifically, they're always looking for an answer that involves automation or some software that can do the job of a person.

And what they're really trying to is get out of the fact that they don't like conflict and they don't want to have to handle a contractor. Or they don't want to have to build a skill in communication or in project management or anything that requires them to have to put some effort into it. There's this belief in the tech world. I can find a computer that can do that job for me, right?

Which side note is kind of scary because if that happens and none of us are going to have jobs anymore, we're all going to be starving because that's how sky-nose. it starts and Terminator, that's when the world's going to turn over. But it's just so frustrating because they're always like, how do I find a software that will analyze every property on Zillow and only tell me about the best one so that I don't have to do it? You know, what you're looking for is a turnkey solution, but you want like retail profits. And it just does not exist. You have to get over that way of thinking that you can get around something. You have to be able to do the work.

Now, there is a time in your business where automation will come into play. But it's usually 12 steps further than when they want it to come into play. Like getting that deal in contract, you're talking to humans, you're talking to the agent or the wholesaler or the seller directly or whatever you're doing. You have to be good at that. You can't find a bot that's going to have

an artificial intelligence conversation and just hand you a deal with $50,000. And that's what Brandon and I and Aaron were talking about is if you're thinking that way, you're getting in your own way, it will not work. When you're flipping 12 houses a month, you can absolutely automate some of that process, but not when you're trying to get the deal.

deals. Aaron, I know we kind of jumped in really quick to your story, which has been awesome and what you're doing. Do you mind painting me a big picture for what your portfolio looks like now? What kind of deals you're buying and where you're headed? Yeah, so we have 20 doors currently, 21 doors, if you include this flip that we're just finishing up. And right now, cash flow is about $4,500 a month, a very wide range of cash flow. We own a 10 unit right outside of of Fort Campbell and Clarksville that we've got for a great discount and we're basically putting every single penny that we're getting out of it right back into it. Every roof needs to be redone and it's going to eventually need all new HVAC units. So that's kind of like affecting

my overall cash flow. But we're seeing the value of that property go up constantly. So that's kind of cool. And the tenants are just really happy. I think we'll have some good, I think they'll stick around for a while. So anyway, long term, my monthly cash flow goal is $10,000. and I'd like to be making that by the time that my husband can retire in about nine years. So he'll be able to retire from the Army at 20 years. Our daughters will be 13 and 11, and I just want him to be able to completely retire if that's what he chooses to do. And between his retirement and that income, that's where I want to be in 10 years.

So I don't particularly look for any type of property necessarily. It's more about the return. It's more about just that individual property. and, you know, the security of that investment or, you know, maybe the equity, it just depends on the property. So that's something I talk to a lot of people that I know about who want to get into real estate. Like, just don't close your mind to anything. Like, keep an open mind. To me, it's more about like a return on investment than, you know, any particular location or any particular type of property. That being said, now that we own a couple multifamilyes, we'll probably focus on those

over the single family homes just because they just seem easier to manage. So you're doing this long distance. Did my long distance book support what you were doing? Did it refute it? How did that go when you read it? Yeah. So it definitely supported it. I think that we, I've read that book long before it became long distance,

but it became something that helped me sort of build my systems because I knew as as a military wife, we go where the army sends us. So even though I happen to be located in a. an area that was great to invest and then also close to Nashville where I could flip. I knew we weren't going to be there forever. So it helped me build my systems and helped me sort of plan for the long term. So when I left Tennessee, I was worried I was going to take a big step back. But actually what I saw happen was me being able to scale this to a level that I didn't think I was going to be able to do for a while. I was almost immediately jumped into two flips because

I was just doing one at a time before I moved because I was like more. actively managing them doing site visits, things like that. But now that I'm out here, I don't have to do that. And it has freed up my time quite a bit. And I've hired those things out. And now I'm just receiving reports and answering my phone by striving from property to property. You know what I love about long distance investing is it kind of like refines. It's like, you know, like if you have like dirty gold, like gold that's a cover of the bunch of crap, the way that they clean it is they like put it into a fire really really bad. And it like refines the gold. Like long distance investing like refines your investing. It pulls out. It shows you, it shows you

very quickly where all your holes are, where your systems are falling through, where they're not working. And then you just have nothing but like your pure business, either working or not working. That's what I like about. And for me, like when I, my first like out of out of state investment, like I had a lot of problems with it, a lot of holes. I probably should have taken some more David's advice because like there was like a ton of holes. But like over time, I improved a lot of holes. And today, like it's a whole lot better because I again, it's gone through the fire. And now the business you have in Hawaii is benefited because your system became more pure from the refining. Yes.

Right. Side note, that is such a good analogy, Brandon. The gold, like, in order to get more of the impurities out of the gold, you have to turn the fire up hotter. So when life is really turning up on you and you're being pressured and stressed and you're frustrated all the time, that's how gold gets made more pure. You don't get that if you don't get the fire. But yeah, that's a really good question.

Now, Aaron, what you did was you took your local team from. Nashville and then you moved to California and you already had the pieces in place and now you basically just have to like keep stoking that fire to keep it going, right? Can you tell us a little bit about what the systems that you have in place that save you the most time or get you the most deals are? So I think just the systems in general, I have like a daily, I have daily KPIs, key performance indicators. So things that I do every single day. And I kind of learned that I need to put things in certain timeframes. I was kind of like, pink, back and forth all day until I realized how much time I was wasting focusing, like not focusing

on any one thing. So I have my KPI's and I do those the first thing in the morning. Can you give an example of what those would be? Like what do you mean by KPI's? So when I'm actively looking for an investment, I am analyzing 10 properties a day. And sometimes, like I'm to the point now where I can, I can pretty much throw a property away in two minutes. You know, you can just, you don't really even have to run the numbers until you kind of get an idea. and then you can spend maybe 10 minutes on a property before you can throw it away. So I can realistically analyze 10 properties in less than 30 minutes. And then sometimes I'll be lucky to find two that I would be willing to pursue.

And sometimes it's none and sometimes it's four. So but overall, my experience has been like 10% of properties are worth even looking into further. So that's where 10 came in. So hopefully every day I'll have one. And that was kind of my number in the beginning. But I've spent a lot of time networking. So I've got a bunch of different, I'm a real estate agent too. So I've got a bunch of different agents that bring me properties that are on the MLS,

off market properties. I know a bunch of different wholesalers. We're working in the San Antonio market now. So we've got wholesalers there. We've got a bunch of wholesalers in Nashville, wholesalers in Clarksville. So I'm not having to look for properties anymore. If anything, I'm not even able to look at a lot of the ones that come my way. So that's something that when I was first looking for my first flip,

I was like, how do people find these properties? It's impossible. And even finding 10 a data analyze was difficult. And now it's, I have the opposite problem. And that's what I tell people all the time. Like, there are plenty of deals to go around. So don't, you know, don't worry about the deals. You know it's so good about this.

I mean, there's so much good about this. But a couple things, KPI. So vital in every business that most real estate investors have never heard that term before. And so, I mean, there's some really good books on it. Like four disciplines of execution talks a lot about this or measure what matters. I think it's what it's called. by John, John Doors, is that right? Anyway, really good books on KPI's,

but this idea of like just, what are your lead measures? What are those things you're going to do consistently? Like, how many times have you, like David, like I know you, this happens to you all the time, just like it happens to me, you have an investor who says, I can't find any deals.

Aaron, this probably happens to you too. Can't find any deals. And I always ask them, okay, how many offers did you make this week? And the answer is always none. And then, okay, well, if you didn't offer any, how many did you analyze this week? The answer is almost always none.

maybe it's one. Okay, well, if you don't, well, usually it's because, well, I didn't have any deals to analyze. Okay, well, how many direct mail letters do you send out? How many agents did you talk to this week? Like, everything can be taken back to a KPI that we have control over. And if we work our KPI's,

the results will take care of themselves. Yet, for some reason, real estate investors didn't get that memo that we have a business. And instead they treat it like their, you know, it's a hobby of like collecting troll dolls or something like that, like David does. And at the end of the day, David doesn't collect troll dolls.

But at the end of the day, this is a business. Treat it like a business. So, Aaron, I love that you're saying this. Are there than any of the KPIs you want to, you want, like anything else that you want to throw up people? I think just something actually, I think I learned this from you,

from your Instagram graphics that you put up, is your KPI just have to be controlled by you. You know, you can't say every day this week, I need to get an accepted offer because you don't have any control over that. That's a lag indicator. Yeah. So you need to say every day I'm going to, make three offers, whether they get accepted or not. Yeah. So I think that's the biggest thing.

And those have to line up with where you're trying to go. And you have to know, you have to define that. You have to take the time to figure out what your long-term plan is, then backwards plan from there, figure out your short-term plan. And then your KPIs need to be directly in alignment with that. Otherwise, you're not moving in any particular direction. When people grasp that, success just happens. It happens so much faster. And Brandt, and I have done this enough times that we've, it doesn't really seem complicated. So we almost get frustrated when people give these excuses because they're so close to an answer. So let's say somebody wants to buy an investment property. Like they live where you live, Aaron, and there's nothing

the cash flows. Okay, can you house hack? That's a good point. I'm spending $5,000 a month in rent. I'm getting nothing for it. Okay, let's take a house hacking. Then you look at house act deals. Oh, what do you mean? I have to do like a rehab. I don't really know how that works. So let me just go look for a deal that's already rehabbed. Well, they don't exist. There is none of those. So you're just going to complain and wait until another terrible recession and then you're going to buy real estate. Okay? What if you just said, what if I learned more about construction so that I feel more comfortable? Well, how would I do that? Well, what if I start getting contractors to walk a property with me and just paying them 100 bucks for their time or something? And learning,

what do you do? How does it work? What should I look for? You start learning things like, oh, we have to have existing plumbing to save a lot of money so we can jack into where it's already there or electrical. And what happens is your confidence starts to go up. And then taking action doesn't seem so scary. And then the next thing you know, you're not saying there's no deals out there. You're like, oh, there's like 25 deals that would work, which is the best one. And you're in the driver's seat and you're confident. But when we say to people, how many contractors did you talk to and walk deals with?

It's none. It's the same thing that Brandon was saying, you know? It's not that hard to walk yourself all the way back to what you would need to do to be successful. If you ask the question, Brandon's always saying people need to ask. It's not, I can't do it. It's what would it take for me to do? it. And then answers start popping up and success starts to happen. Yeah, absolutely. Yeah. Moral of the story, follow Brandon's Instagram page. And you'll learn a lot. You can learn a lot.

Actually, true story. So last week, my team was in town. My Open Door Capital team, which is my mobile home park fund team. And there was like seven of us, I think, six or seven of us sitting at this coffee shop out here in Maui. And we spent four hours going through every single one of our KPIs and lead measures. And we established them for everyone. So for example, like one of my lead measures, because I I'm partially in charge of raising money. So one of my leads managers is to personally contact, whether it's through a letter, phone call, text, whatever, each and every one of my investors that have already invested with me,

like every quarter. Let's just reach out to them because I know that's just going to pay off whether or not it pays off in them funding future deals or them telling their friends or just because thank you for being awesome and being part of my fund. I'm going to do that every week. That's a KPI. David, I love that you brought up the KPI of education

because sometimes that is the KPI. It's education. I don't know something. I'm going to educate myself. Walker, who's on my team. His thing is 25 offers. He's our, he's our, like, basically the guy trying to find deals. He's our acquisitions guy and analysis.

So he's going to make 25 LOIs this quarter. So anyway, what happened was we all got, we got done by that meeting, and there was so much energy and fire in this company. Like, everyone was just like, duh, like, we, everyone was aligned and we knew where we were going. And, like, you don't have to be buying 100-unit apartment complexes or mobile home parks to be able to do this with your team. If you're looking for your very first deal, sit down with your spouse and say,

what are those lead measures we need to accomplish and then go do it. Yeah. And so let's say that you're in Walker's role and you say, I don't know how I would write 25 offers. I don't know how to find the deals or I don't have an agent. Okay, then what's your KPI for meeting agents? What's your KPI for finding the market you want to be in? There's something that you need to get there. And then you say, okay, I need to find an agent.

Well, I don't know what I should ask for an agent. What's your KPI for finding? Who do you need to talk to that's doing this that will tell you? In fact, actually, and we're going to go back to you in a second era and Sorry, we're just totally hijacking your show here. But Ryan Murdoch, who's like basically our like, you know, he runs the operations, like VP of operations. He was like, well, we were talking about, I don't really know what his KPI would be because

he's kind of just in charge of everything. Is his KPI just like the business? Like what, and finally we came up with this idea. And I don't know if he'd want me sharing this, but I'll share it anyway, is every week he's going to reach out to, I think it's one, maybe it's two people that are bigger investors than us. And he's going to have a conversation on the phone with them. And I thought, what a tremendous, like when we came up with that,

everyone at the table was like, oh, that's a cool KPI. Because he's really running so much of it. So he needs to associate the KPI he has is associate with other people who are running it, who are running big teams of people. And now all of a sudden he's out there. So maybe your KPI is go to coffee with somebody once a week. Even if you're brand new. Come up with five ideas someone else is doing in their business that you're not doing

in yours that would make it better. How many calls do you have to make to get that? Yeah, that empowers you. It puts you in the driver's seat where you can actually go, something. When you sit back and say it's not happening, it's very hard to be confident because you're always in a position we're getting punched in the face over and over. How many times can I get punched before I quit? That's not a fun way to run a business. Yeah, so true. All right? Aaron, so you have 21 units now, which is awesome. You've got these KPIs. You're investing out of state now because you're in,

you're in California, right? Yep. Yes, you're in California, which is awesome. You're still finding deals. I mean, like, what are your network with agents? You said, do you have wholesaler? Anything else you're doing to find deals today? I just, when I'm just kind of sitting around, I have time, I just get on Google, or I just get on Craigslist, Facebook Marketplace, Zillow, Redfin. I mean, I just look just to kind of see what's going on. And every once in a while, you might find a motivated seller and get a conversation going. I like to, especially pursue deals where I can communicate directly with the seller.

That's my favorite way to do stuff. So if I can connect with someone directly, that's an opportunity to. that I will almost always take advantage of, even if the numbers maybe don't make sense from, you know, what they're asking, at least if I can start a conversation with them and get to what they're looking for and show them, you know,

what I'm looking at, then sometimes we can come to something that works out for both of us. So cool. Hey, Aaron, what is, what was your greatest day of your investing? Like, what memory,

like, would just make, puts a big smile on your face. If you look back to the last few years of you doing this, what day was just like, oh, yeah, that was a good day. probably when we finished that first flip. We learned so much.

I was really proud of it, but also I was like, I'm never doing this again. So it was a huge learning experience, but something that I was like really truly proud of. Okay. And then next question. You're not, you said, I'm not doing that again, meaning not flipping, though, because you are flipping, right? So what, you're not going to be actively the one doing all the work? I am not laying the vinyl planking myself. I'm not painting the ceiling myself.

Yeah, that was it for me. I said, you know, I don't care how much it's going to cost me. I need to figure out how to hire other people to do it because there's no way that I could scale that. You know, you can't do more than one house if you're doing the whole thing. So what is working for you in terms of flipping long distance? This is something I've not done. I've not flipped long distance. And you're obviously doing it.

So what's working for you? I mean, it's all working really as a whole. I have some issues and some setbacks here and there, mostly in terms of contractors and communication mostly. But I've learned a lot when, you know, that first flip I did, the couple people that I hired, I didn't do contracts with any of them. And I've learned now how important it is to put a contract together that I work on alongside my contractor. And the draw schedule is, that's the biggest thing. When are you going to get paid? how do you want to get paid? And we have to agree on that.

And I think a huge way to get them to be invested in your property is if they have a say and how and when they get paid and that everybody understands how that's going to happen from the beginning. That is probably the biggest point of contention. And that's when, you know, emotions flare when you're talking about money. Yeah, really good point. Yeah, anytime that I don't establish good like benchmarks and this is when you get paid, that's when I end up at a safeway parking lot at 9 o'clock at night,

paying a contractor in cash because they need money for the next morning for blah, blah, blah. Like that's when that crap happens is because I didn't do my work ahead of time so that that doesn't happen. Or that's when I get the angry contractors that are punching each other in the middle of a, you know, job site. Like that's always in the middle of a podcast that was happening. Yeah, yeah. That was awesome that day.

Brad is trying to sort of focus on the podcast as opposed blowing up from two contractors that are fighting because one found out there getting paid more than the other one. Oh, that was awesome. That's definitely, tell us on your Instagram how you solve that problem, Brett. I need to learn.

Here's what happens. Let me explain. This is what happens when you don't have the difficult conversation with the contractor on how they're going to get paid. That's exactly what happens.

You are putting your business success in the hands of a person who, statistically speaking, is terrible with managing money just because I've yet to meet a contractor that's not. This is not an insults about contractors. That's just not what they're good at.

They're not business. people. They don't manage cash flow. They don't understand accounts receivable and accounts payable. They just know, I know how to build things and fix things and I need to get somebody to help me with it, which is usually why they hired terribly because they're not good at doing that, you know? So when you don't explain to them how it's going to work, you're just trusting that this person is going to be good at doing what you need them to do. And it's kind of like trusting Edward Cisorhands to play the piano on your wedding or something, right? Like, why would you trust that person to do that job? You have to have those conversations. You can. You can't.

cannot look for software to help you do that one so that you can avoid it because it's such a big part of investing. Yeah. Yes. Yeah. What percentage of our audience knows who Edward Cisorhands is? I just wondered that. A fair amount, I think. We got to, we're like a 24-year-olds Googling that right now. All right. So, Aaron, let's get to, where do you see us out of the future? I know you said, like, you know, legacy is obviously important. You want to build something. You want to get to that 10K a month. Are you going to keep doing flips out of state? You're going to keep doing rentals. Do you like the flipping thing? You're going to go in the larger multi. What's the plan? So I don't love flipping. It doesn't allow me the control of my schedule that I would like.

I want to be, I want to work when I want to work. But, you know, when you're at the whim of contractors and things going on at your property, you don't have that luxury. So after we sell this last one, I think I'm going to take a little bit of a break, probably until we get back to that area in about a year. But right now I have the goal of buying three doors a quarter this year. So, you know, however that plays out, whether it's a triplex or, you know, three single family homes, that's just my goal. I have a feeling that as I pursue that, something I found in real estate is that it's once you're doing your KPIs and once you're realizing how you can fund things, it's easier to scale and it's easier to buy more than you maybe planned to do just by going through. through the motions and doing the work. Because if you're analyzing 10 properties a day and you find one every single day, you could potentially buy five properties in one week.

Yeah, that's how a funnel works. That's why I love funnels. I want to ask you, Aaron, with managing properties at a distance, what have you looked for in a property manager? And what advice would you give to other people who want to do this? What questions they should be asking? Yeah, so the property manager is the critical part here. I think, you know, that's this place where you're,

you're going to lose sleep at night is if you don't have confidence in your property manager, you don't have a good relationship with them and you don't, you're not communicating well with them. So I think when you are trying to build your team, that's probably one of, that's probably the place you should start because they should have a lot of relationships with a lot of the people that you'll need on your team, you know, the other people that you need on your team. So that's a good place to start. You need to interview them. You need to get to know them as much as you can, get to learn about them who they are as a person. Are they a good person?

That's kind of what I've learned in the last couple years, working with contractors and, you know, just different people on my team. At the end of the day, I just want to know that they're a good person. And, you know, I expect them to mess up here or there, but I just don't want them to be stealing from me. I don't want them to be taking advantage of my tenants or whatever. So that's what's important to me is getting to know them and just knowing that you can trust them. And, you know, the only way you can do that is just building that relationship.

Have you ever had two property managers, one that got 9% and one that got 8% start fighting with each other. Fist fighting and had a property. Yeah. I never have. Yeah. That's a really, it's a good point. When it comes to the experience that they have, do you care if they're a big company,

more of a smaller mom and pop? What do you look for as far as the volume that they're managing? I don't think it necessarily matters whether it's. 40 doors or 400 doors, I think it matters, you know, that they have the support that they need to help you. Like I think I've met, I've got a property manager that's a couple. They're just a couple that they have 40, they probably have 60 doors now. But when we first got under contract with them, it was they have 40 doors. And they are very available for, you know, all 40 of those doors. And then I've got another one who has well over 400, but she's got a huge team. She's got tons of support. And so

there's never been a time where I can't get a hold to somebody when I need to and that's what you need you need to be getting the feedback and you need to

also be able to communicate with them when you need to especially if you're not there yeah so good all right well Aaron it's been fantastic so far

but we're not quite done we got a few more segments of the show so let's head over to our deal deep dive all right Aaron this is a part of the show

where we dive deep into one particular property or investment that you've made in the past and we see exactly how it is you pulled it off. So you got a property in mind that we can dig into? Yes, I do. All right.

So first question of the deal, deep dive. What kind of property is it and where is it located? It is a duplex in Marion, Illinois. Oh, Illinois. Did I just make fun of that a little bit ago about how I don't want to buy in Illinois? That's funny. Ironically, Ryan is in Illinois right now looking at a mobile home park in Illinois. I did the same thing with a very nice, nice man that I met at the CF base summit and I was making

fun of Eastern Washington. And everyone laughed but him. That's funny. Where he was from. I actually love, Eastern Washington is one of my favorite markets. Is FYI. I actually love it. But thank you.

Thank you for saying that to bail me out. All right. Yeah, for this deal. How did you find it? I found this on Facebook Marketplace. Nice. Yeah. I have not ever bought a deal from Facebook Marketplace, but I have heard.

of others who have done so. So cool. Number three, how much was the property? Like, what were they asking? What'd you end up paying for it? They were asking, I think, $72,000 or $73,000. And after I initially put in an offer for asking price, I started talking to the seller directly.

He listed it himself on Facebook Marketplace. And I just kind of tried to build a relationship with him, build some rapport, got under contract at asking price. And then we did the inspection. couple things came back. It was a very well-maintained property. The owner was, it was owner occupied. He was living in one side, managing the property. And he just really kept it in great shape. But there were a couple things that came up. We had to replace a water heater, replace a door, fix a fence, a couple minor things. So we got down to $65,000 and closed without issue.

Beautiful. So that's how you negotiated it. Why did you pick that market? Well, so I was trying to find something. This was a purchase in my IRA, and I had about $70,000 in my IRA. And so I was looking for a multifamily. This was my first multifamily. And I wanted something that I could buy in my IRA. I couldn't find the right lender when I was looking and actually lost a contract because my lender initially said he would do it. And then when it got down to it, he wouldn't do it. And so then I sort of, I didn't, I thought that there was no way to do it. I didn't realize that there were lenders that would, you know, loan against an IRA. There were different ways to do it. And I know that now, but I didn't at the time. So I said, you know, I'm just going to have to find a property that I can pay for with the $70,000 that's in my account and knew that there was no room for renovation at that point, because that was all I had. And if you're investing with an IRA, you can't just bring money in from outside. It all has to be within your account. And so,

I just started looking in other markets, and that's how I ended up on Facebook. I just put in some parameters, and this property came back at me and just kind of developed from there. That's cool. All right. So we talked to negotiation. You basically did the inspection, you know, got them down from there a little bit. You funded it with the IRA with your own personal, which is super cool.

What did you do with it then? Did you, you held it as a rental or what's the deal? Yep. So it's still a rental. The guy that sold it ended up living in it for a little bit longer. while he was waiting for something else to be built for him. And then he moved out. We got a new tenant.

And so those two tenants have been in there a little over a year now. And they're just paying rent. Sometimes they're a little bit late on rent. It's a C-cost property. But for the most part, it's performing very well. The monthly cash flow is pretty amazing. What do each side rent for? And then what utilities are you responsible for?

So it's exactly a 2% property. So I paid $65,000 for it. each side rents for $6.50. And I'm responsible for nothing but the management fee. Not even the water or? Nothing. Oh, that's awesome. Yeah, it's amazing.

That's a, the, the reason that people might be thinking, why do I care about the water? It's because if you look at like a multifamily, the water bill alone can make or break a deal. Like really, it can. Like, if you're like, if, if I were to tell you a $65,000 property, it's a duplex that rents for a total of $1,300 a month, that sounds like a great deal until like some places water bill is $400 a month. And then you have to also pay for gas and it's up in the, you know, the north cold in Minnesota and so now you're paying for heat and oil. And utilities, I shouldn't say just water, but utilities are such a variable expense that really can kill an investment. So a lot of people, again, look at like things like the 1% rule or 2% rule, which those don't take into account utilities, which is why you should never just rely on a rule of thumb to buy a property.

utilities make or break deals. So the fact that you're not paying utilities on this is at a 2% rule deal, it's like absurd. Absolutely. In a good way. Yeah. And then the other thing is don't make the mistake that I did on our 10 unit and just take the seller's word for it.

When somebody, you know, when you ask the questions about utilities, take the time to call the utility company and just confirm. You know, I was told that the on this 10 unit, different property, that the electric or excuse me, the gas and the water were metered off. and they weren't. And I didn't find that out until I owned the property for a month. And it didn't kill the deal, but it definitely changed it for sure. Yeah, there are all, throw one more piece of advice out there. There are companies out there. In fact, one of them sponsored our podcast a couple years ago. And I met with the guy out here in Maui recently.

They're called True Submeter. So if you have a Duplex, I'm actually going to do this on my duplex because I've been playing water in my duplex for, I don't know, 15 years now since I bought my first duplex. I'm still paying water there. And like, but you can actually submeter the individual units. Now, there are different ways of doing it, but there's a company called True Submeter. They're not a sponsor right now. I'm just giving a shout-out because I like them. But you literally, you could put like submeters on like whether on a hot water tank. You could do it on an individual like actually under the sink on the shutoff valves. There's different ways to do it. So if you can shift the responsibility of a deal on a property,

shift the responsibility of utilities from the landlord to the tenant, you can take a deal that everyone else thinks is not a good deal or just a mediocre deal and turn it into a grand slam just by, reallocating who is responsible for certain utilities. So just put that in your back pocket, everybody, and use that to find some good deals this year. All right. Sounds great. All right, other than not taking the seller's word for it,

what other lessons did you learn from this deal? Just not to give up. This type of deal is hard to come by, but you can find these type of returns, and you just have to, again, set up your KPI, figure out what your goals are and figure out how many properties you're going to have to look at before you can find that right one.

But eventually the odds will be in your favor and you'll find what you're looking for. Very cool. All right. And you're just going to hold that property long term now in your IRA. Are you going to refinance it because now you've found some lenders? Is there a plan for that? I'm just curious. No, I don't think so.

I'm happy with the return that we're getting on that. And that's just, you know, it's building before I was contributing to my own IRA every month. I was sending $457 sort it. And now I'm not sending a penny. And my tenants are contributing much more. than that. So I'm happy with what it's doing. You know, I'm 33 years old, so I've got plenty of time to watch that grow. And then once the cash is high, the cash balance is high enough in there, I'll buy another one. Fantastic. Very cool. All right. Well, Aaron, let's head over to the next

segment of the show. It's time for our fire round. It's time for the fire round. This is a part of the show where we take questions from the Bigger Pockets forums and we fire of them at you. So we're going to see what real people want to get answered and see if you can answer them. Number one, Anthony says, I live in Long Island, New York. It is a really expensive area. Duplexes are 400 grand. Any tips for investing out of state for a first-time investor? Or is that a bad idea? No, it's definitely not a bad idea. I think that we talked about this a lot already, but building a team, you've got to start by building a team. And I think a great place to start is the property manager, because like I said, they'll have a lot of a lot of

of relationships, hopefully. And that's telling about them too. You know, if they can refer you out to a lot of the people that you're looking for, you'll know that they're pretty well networked, and they're probably going to be able to deal with the things that you are going to need them to deal with as the manager of your property. But you just have to build that team and you need to find people that you can trust. You need to know what's happening on the ground. And the only way you're going to know that is if you have the right people there sending you the information that you need. All right. All right. Next question from Gary Hoffman in Vermont. My wife and I are debating whether we should help our daughter buy a house to live in and rent out rooms while in college.

Our other younger children may attend the same school in future years too. Do you think this is a good idea if the numbers make sense? Yes, always. Yeah, that's a cool idea. I've had a few people ask me that over the years. But yeah, buy a property, let your kids. What I actually like the idea of, and I can't remember who we did, somebody did this. I wish I could give them a shout out, but they bought a property for their kid, put their kid as in charge of the property, essentially, like the property manager and the kid in college got to spend like three or four years learning how to manage people, manage tenants, manage, you know, the worst tenants, which are generally can be college kids. And so they got a good, and that was like their, that was how they got

to live for free, but like, you know, free education. Something that's probably, they probably learned more from that experience than from four years of college from managing those tenants that place. So yeah, cool. All right, number three, John from Yonkers, New York. To all those investors who have become real estate agents, Has it been worth it? Why or why not? I don't think that being an agent helps on the investing side. I got my license because I thought that it would help me with investing, but it didn't change anything for me.

And if anything, working with retail clients, has just taken time away from what I'm trying to build. So I don't see the benefit of it. I know some people might disagree, but that's just been my experience. Okay. David, what do you think? 100% agree with her. It's too expensive. It takes way too much time. Everybody who's not an agent thinks that agents aren't doing anything and complain about them. And everyone that is an agent says,

like, why did I ever take this job? It's so frustrating. So do not do it unless you're trying to run a business, get really, really, really good at being a real estate agent. And you actually like that job. You don't need an agent. You don't need to be an agent. You're not going to find deals other people aren't finding. In fact, agents are free to you when you're a buyer. So just use the person who's already let them pay the dues and all the fees and everything that goes into it. Don't try to do it yourself. What about, I'm curious, David, because I don't know the answer is, what about your flipping houses pretty heavily?

Now, I don't want to make it sound like, I'm probably just going to offend both of you guys here, but it doesn't sound like it's that much work to list a property for sale as an agent. If you're going to go list your own property for sale, it sounds like not much work. So if I'm going to go and flip 10 properties a year, should I just get my license and just list my own properties because it's just as easy as clicking a couple buttons on the computer? Or is it more complicated than that? Well, if you're selling a house that's worth 100, like it could go anywhere between 100 to 110,000, I would say yes, you can probably do that yourself.

But in the market I'm working in, the job I do as an agent literally gets my clients an extra $50,000 to $80,000 probably on average when I'm negotiating those deals. And I know very quickly if the other agent is not good. And I just get everything that I can out of that person. So like there's just so much more. It's yeah, putting it on the MLS and waiting for offers to come is fine. But how do you know which of the? those buyers is going to get cold feet, which one's likely to close, how you negotiate when they

ask for extra things, how you take things out of the contract that they would use to come beat you up on stuff later? All the tools that I used to help my buyers save money, I know to take those away from the buyers of my listings. And you're going to lose a lot of money as you slowly try to figure that out. And then you're going to spend all your time on the phone with the four offers that come in figuring out who's the best one, who can I get to come up more? How do I anticipate a low appraisal where you're not looking for new deals or you're not managing your contractors? and stuff like that. Good answer.

All right. Number four, David. For those who invest out of state, how do you verify that the work was done correctly? Oh, gosh. I don't know. Well, that's where, you know, having somebody that you can trust on the ground

to inspect it comes into play. Like, I'll never pay anybody until it's been inspected by somebody that I know. Somebody that I know knows what they're looking at. And sometimes you have to pay for that. You might have to pay somebody $100, $75, $75 to go out there and do an inspection. But if it saves you $4,500 or $9,000 because they are making sure that the job's been done right. And probably 99% of the time that it's done well, but it's not done completely.

And it's just a couple things here and there that they just didn't see because they're right up in it all the time. So bringing in a new set of eyes and having someone else check it out will pay back whatever. You have to pay them to do that. Yeah, one quick thing on that. I think people need to understand. I've talked about it a few times lately, but I'll say it again. There are two types of people. There's a lot of types of people out there on bigger pockets,

but there's two huge groups of people on bigger pockets right now. And when I mean bigger pockets, I mean, in this community of millions of real estate investors who network on the site. There are people who are young and broke, or at least young and not enough to actually buy any deals. They're inexperienced, they're young. They're the 20, 22, 25, 30-year-old people.

people who are excited and they have some free time maybe, but they don't have any cash. And the other group of people on the site are people who are actually invested in real estate pretty heavily, the errands, the David's the means. If you can marry those two together, it benefits both parties significantly. And so, like, if I'm investing out of state, I mean, like, think Aaron here who has all these systems and understands how to invest in San Antonio, in Illinois, in Clarksville, and you're a young 22-year-old real estate investor, want to be real estate investor, who has no money. Think of the value you can provide to Aaron by being the person who's the boots on the ground for no cost.

Don't charge them anything. Just be like, hey, I will beat your boots on the ground here. I will do everything you tell me to do because I'm going to, through osmosis, attach myself to you and learn what you've learned. So just tell me what to do. And then for Aaron, like you're getting help. So again, I just want to encourage people like network, network, network in a market. That's why it's important to attend local meetups. Even if you're going to invest out of state, fly in maybe and go attend a meet up, meet people, connect, build relationships, send private messages, just like marry those two together and you can just make some magic happen on both sides.

Yeah. PSA, done. All right. Let's get on to the last segment of today's show. It's time for our famous for this is the famous for the part of the show where we ask the same four questions every week to every guest. All right, guys, let's get to this number one. Aaron, do you have a favorite real estate related book?

Yes, my current favorite is building wealth one house at a time. John Schwab, I think it is. Yeah, Shob. Yeah, Shab. It's a great book. Excellent book. Awesome. What about a favorite business book?

Jen Cicero's, you are a bad ass making money. I've not read that, but I see it at Target every time I go there. Buy all the Jensenchero books. They'll change your life. Good to know. We should get her on the podcast. Maybe the business podcast. She's awesome.

Maybe the money podcast. Maybe the real estate podcast. I don't know. We should get her on the show. All right. Next question. When you're not laying flooring as a pregnant mother, what are some of your favorite hobbies? I just like to live life with my kids and my family. We say every day we got to have an adventure. And whether that's walking to the playground or going to the aquarium or, you know, going on a real adventure, I just feel like every day we need to get out there and do something fun and make the most of every day. That's awesome. I use the same terminology with Rosie. I always say, let's go do an

adventure. Let's go have our adventure. And now she'll say like, Daddy, can we have an adventure today? Yeah. Yeah. My daughter says adventure. Can we go on adventure? Yep. That's about what Rosie says. Awesome. Yeah. Yeah, my, yeah, because your kid is almost four. You said my kid's almost four. So yeah, very similar. Number four. Speaking of four, what separates successful real estate investors from those who give up, fail, or never get started? Yeah, this is easy. It's just getting after it. You know, we've talked about this a couple of times, I think, but you've got to define your motivation, figure out your wife, figure out where you're going, and then take actions to get there, set your goals and ruthlessly pursue them. Do what you have to do to make them happen.

I love it. Sinked and perfect. Thank you. Beautiful. All right, Aaron, this has been awesome. Tell us where people can find out more about you. Yeah, awesome. Thank you guys so much. You can find me. Actually, I write some bigger pockets blog posts. I'm also on LinkedIn, just Aaron, Helly, Facebook. and Instagram at the Aaron Helley. And then my website is BCGlobalinvestments.com. Awesome. Awesome.

All right. Well, Aaron, this has been fantastic. We're like really, really good. So much information, so much advice and stuff that's going to really help a lot of people, whether they're brand new or been doing this forever. So again, thank you very, very much for joining us today. Thank you, guys.

This is great. Thank you very much. This is David Green for Brandon the Walking Adventure Turner. off. 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. Be sure to join the millions of others who have benefited from biggerpockets.com. Your home for real estate investing online. Do you ever notice how every passive investment somehow turns into a very active lifestyle, active spreadsheets, active phone calls,

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