BiggerPockets Real Estate Podcast - 674: Investor Update: The "10 Deals on $20K/Year" Investor's Explosive Growth w/Ashley Hamilton

Episode Date: October 13, 2022

Ashley Hamilton is a landlord, multi-unit investor, reverse flipper, hard money lender, and everything else in between. You may recognize her name from episode 331, appropriately titled “10 Real Estate Deals on a $20K Waitress Salary,” which became one of the most popular BiggerPockets Real Estate Podcast episodes. If you haven’t heard of Ashley, here’s a quick rundown: As a teen mom, Ashley was working hard daily to provide for her kids. With only a $20K/year salary, she began buying rental properties, often in cash, in the Detroit area. The last time we chatted, Ashley had ten units. But now, things are very different. Ashley knew that ten units and $7,000/month in cash flow was life-changing, but wanted to go even bigger. Since then, she’s rapidly expanded her rental property empire, growing her portfolio by many multiples and expanding into other businesses like consulting and hard money lending. She’s even developed her own version of the BRRRR strategy called “reverse flipping,” which makes high interest rates a non-issue when trying to refinance out of your property. She gives some killer tips on keeping tenant turnover low, why paying taxes isn’t such a bad thing, and how betting on cities like Detroit can make you much wealthier. One surprising thing about Ashley is that she built the foundation of her portfolio on cash deals while making a below-poverty salary. So if you think money is the one thing stopping you from investing, Ashley will probably change your mind! In This Episode We Cover: Buying properties in cash and why leverage isn’t always the best move to make What to do once you’ve hit financial freedom and building generational wealth  Going slow to build a property portfolio fast and “portfolio architecture” Reducing tenant turnover and how Ashley kept 80% of her tenants over ten years! The “reverse flip” strategy and why you should be on the lookout for PILFs Investing even on a low salary and where cash flow can still be found And So Much More! Links from the Show BiggerPockets Youtube Channel BiggerPockets Forums BiggerPockets Pro Membership BiggerPockets Bookstore BiggerPockets Bootcamps BiggerPockets Podcast Listen to All Your Favorite BiggerPockets Podcasts in One Place Learn About Real Estate, The Housing Market, and Money Management with The BiggerPockets Podcasts Get More Deals Done with The BiggerPockets Investing Tools Find a BiggerPockets Real Estate Meetup in Your Area David's BiggerPockets Profile David's Instagram Rob's BiggerPockets Profile Rob's Youtube Rob's Instagram Rob's TikTok Rob's Twitter Hear Our First Interview with Ashley Tenant Turnover Can Wreck Your Profits—Here’s the Simple Solution to This Costly Issue Book Mentioned in the Show: Buy, Rehab, Rent, Refinance, Repeat by David Greene Connect with Ashley: Ashley's BiggerPockets Profile Work with Ashley Hamilton Consults Ashley's Instagram Click here to check the full show notes: https://www.biggerpockets.com/blog/real-estate-674 Interested in learning more about today’s sponsors or becoming a BiggerPockets partner yourself? Check out our sponsor page! Learn more about your ad choices. Visit megaphone.fm/adchoices

This is the Bigger Pockets podcast show 674. I put myself in a position of the tenant, right? The number one thing that I did, I kind of over-improve my properties. And again, investors, you're new here, you do not. That's not always advice. It just depends on where you're at. But obviously, I may spend three to five thousand more on a project, but this person wants to say forever, or at least three to five years.

I know it's a business, but I constantly relate to my tenant. that, hey, I'm a single mother or I've been in your shoes. And I feel like letting them identify with me versus I'm just the big box landlord that really helps me with turnovers. What's going on, everyone? This is David Green, your host of the Bigger Pockets Real Estate podcast here today with my co-host, Rob Abo Solo, bringing you a fire episode. In today's show, we bring back Ashley Hamilton, one of our most popular guests we've

ever had on the podcast. Ashley is a Detroit, Michigan investor who is crushing it in her space and has evolved quite a bit since the last time we had her on. She has a fantastic story that I know you're going to love. Rob, what were some of your favorite parts of the show? Honestly, this is a crazy full circle moment for me because I remember the first episode that she did. I was in my garage. I was cleaning my garage. It was like 7 p.m. It was in the dark. People were like, why is this guy like cleaning his garage at night? And I was listening to this. And I remember thinking her story was so insane. Like, one of the most inspiring stories. So my favorite part about this episode is that we had her back on

and she's actually able to top the original episode, which I think was episode 331, if I'm not mistaken. Yes, it was 331. And Ashley did not fail to deliver. You're going to love this story, especially if you're someone who's had a hard time getting traction or you can't figure out which market to invest in or you don't know why it's so hard to get a deal. Ashley has a lot of good advice from all those perspectives. Today's show went a little bit long. So I'm going to make the intro short here. And I'm just going to remind you, you don't have to listen to a whole podcast in one setting. it's okay if you have a 45-minute commute to listen to a 55-minute podcast. Just listen to the last 10 minutes on the way home. Before bringing, Ashley, today's quick tip is consider, because all of us don't like high rates,

interest rates have been going up. Just consider that the lower that the price point of the home is and the lower the loan balance, the less important the interest rate is. When you get into these lower-priced homes, really high rates have much of a smaller impact on the mortgage than when you're at a high price point. I have a quick tip as well. Can I throw it in? Yeah, let's hear.

All right. I've got a, or as I like to say, a quick, quick, quick tip. When you're thinking of an acronym and you want to brand yourself in the real estate industry, just make sure that you think through

all the different possibilities of what that acronym can mean before you go out and mass market it. If you're wondering what I mean by this, just stick around it to the very end of the episode and I think it's going to make a lot more sense. Very nice, Rob. I like you bringing it out.

So make sure you guys listen all the way to the end because we have a very, very fun and entertaining moment at the end of the show. I think, hey, by the way, I think that's the most I've ever laughed on Bigger Pockets, BTWBs. So just stay tuned for this. It was pretty good. Ashley, you did a great job. Do you ever notice how every passive investment somehow turns into a very active lifestyle, active spreadsheets, active phone calls, active stress?

Here's a better question. What if you could buy brand new construction homes, 10% below market value in the best markets across the country without making real estate your second job. That's exactly what rent to retirement does. They're a full service, turnkey investment company handling everything for you. In some cases, investors get 50 to 75% of our down payment back at closing, plus interest rates as low as 3.75%. They've partnered with Bigger Pockets for over a decade, helping thousands invest smarter. If you want to do the same, visit BiggerPockets.com slash retirement to learn more. What if I told you you could forget everything you know about investment property loans?

Because host financial is rewriting the rulebook, tossing out those pesky DTI restrictions. They focus on your property's income potential. No tax returns or personal income statements needed. Simple, efficient, and tailored for investors like you. Imagine a lender that sees the gold mine in your property, not just the numbers on your paycheck. That's the host financial difference. And they're approved in 47 different states, so your next big deal could be just around the corner. Ready to unlock your property's true potential, visit hostfinancial.com.

Don't let old school lending hold you back another day. That's hostfinancial.com. Did you know your house gets bored when you leave? I can't actually prove that, but it probably misses out on the action, the footsteps, the late-night fridge raids. Yeah, when you're gone, your place is basically on unpaid leave. It's sitting there in the dark thinking, I could be contributing right now. Your side room wants a side hustle. Even your Wi-Fi is like, we could be networking.

You're on vacation, spending money like it's a sport, while your staircase at home is fully capable of sending your income upwards. Here's the twist. You can go on a trip and actually earn money. Airbnb makes that possible with the co-host network. If you're away for a while or have a secondary property, you can hire a vetted local co-host with real hosting experience to handle it all. A co-host can handle guest communications. It can manage reservations and keep things running smoothly so you don't have to check your phone between beach days.

That means less stress and more time enjoying your trip. You can relax, knowing guests are taken care of, and your place is in good hands. You travel, your house works. Everyone wins. If you're ready to host but could use some help, find a co-host at Airbnb.com slash host. All right, let's bring it Ashley.

I remember when we did our first episode with you, you made such an impression on so many people. I think because like, 98% of our audience was like, I see myself in her. I've been there. I felt that. I've done that. So in the past, we would focus more on like, tell me the strategy. Tell me what you did. Right. We're going to get to that. But we want to start off with more. This is why it mattered. This is what my journey was like. This is what changed when I finally decided I'm going to use this strategy. Right. Yeah. So everybody says, oh, I want to get in real estate from my kids, right?

But I had to get real estate from my kids. So at age 18, I was a single mother of two. And I got march to the welfare office, right? Because I needed government assistance. I needed food stamps. I needed child care. When my daughter just turned 18 in December, I marched her in a bank. She has a business of 700 credit score. You know what I'm saying? She has her college debt completely paid off. And all that was done by one property, right? So I had four pillars for my kids and for them own an investment property to have their car free and clear, to have college with no debt, and to have a good credit score. So that was just a big change, right? Me at 18 versus my kid at 18. So then that would go back to why. Why is so important? And a lot of times we don't see that because we're waiting five,

10 years from now. But just because I was blessed for my daughter to just turn 18, now I can see my why and why I was so important. But it was really to break the generational curses where I started in life and in real estate with a severe disadvantage. My daughter is now starting with a severe advantage. And even if she chooses to work at McDonald's, she's still there. So when I was 17 years old, I had my daughter, she was premature. She was two pounds, seven ounces, 27 weeks. And I had to leave her every single day at the hospital, right? I was a senior in high school. So I knew early on that I had to change my life. I didn't know it was going to be real estate, but that was because I didn't want to leave my daughter again every night or hand her over to daycare or anything like that. So I knew that, for one,

I had to change my life so that I can have freedom to spend time with my kids. And for two, I needed whatever I chose to be where I can still be at home with them. And I didn't have to hand them over. So fast forward, when we got our first property, they were three and five. Like my son held the flashlight and my daughter was with the screwdriver and we were changing the locks ourselves. So, you know, I didn't have a babysitter, but I still got that, didn't have to drop her off. So real estate was able to do that for me. Yeah, that's, yeah, that's a very inspiring story, Ashley. And let me just say, as a former listener of the show, now I'm the co-host. So this is an interesting experience for me. Your story is perhaps the most remembered story that I've heard

on the Bigger Pockets podcast because way back when I listened to it every day, I remember hearing your story and thinking, oh my God, she is killing it. Like what she has created is something that that's just so inspiring me. It really did push me in my journey. I don't like I don't I truly mean that like I remember your story so clearly but for for those of us that are just catching up can you remind us you you got into your first property what how did that happen because I know that you said it was difficult than you you I think you were waiting tables um I know that there's some some adversity there and so I'm kind of curious like how hard was it to get into your first property knowing that something like this could you know it's a big risk right

And when you're working so hard, any crack in that system could really, really crumble, like, your daily routine. So what was that like even jumping into your first property? Absolutely. Thank you for that. So to be honest, it wasn't a scary situation because where I came from, I had no, you know, real estate investors, no business owners. So I never really had anybody to say, oh, the people can not pay their rent. The contractors can run off with your money. So I'm thinking, this is a piece of cake.

I had heard a saying be greedy when others are fearful, right? And that has literally stuck to me for my whole investment journey. And I left the seminar, cut on the radio, and everybody's like, don't buy in Detroit, right? Cut of my headphones, bigger pockets, Josh Dorkins, who I love, and I literally tackle to this day, don't buy in Detroit. So I took that as this is the sign. People are being fearful of Detroit, but I live here and I see it's nothing like I see on TV. So that was like, hey, this is confirmation, right? That Warren Boreffit quote and turning on the news and everybody said not to buy in Detroit.

So I literally picked up the phone on the first listing I seen and they were like, the house is $6,300. Like that's it. So that's another reason why it wasn't so much as fearful because like if I, if everything went wrong, essentially I only lost six, seven grand. You know what I'm saying? Obviously it was detrimental to me because I was significantly under income or lower income. but I was spending my tax returns every year anyway and didn't know where they were going in three months.

So if I lost everything, it would have just been the same as if I went out and went to a fancy vacation or bought a car that only would last three to five months anyway. Okay, so you buy this house in the 6,000s, and then you're like, okay, I'm good. I'm going to call it in. I'm good with this one house. What actually happened? Like, what happened after that? Yeah, absolutely.

So when I got it, it was just like take the problems as it comes. So I need a new plumbing, furnace, hot water tank. So I said, hey, I need new plumbing. Let me find some plumbers. So that's what I did, just basically handle problems as they came. But this was not like your dream house, right? So when everybody's younger, you watch HGTV, you're like, oh, my house is going to have granite countertops and beautiful view.

Like, no, it was not a house that I was proud for everybody to be at, but it was saved. There was no vacancies, no burnt down houses. And it was a park right close to the house. So it was a perfect location. It just wasn't like glamorous. So I said, you know what? I'm going to do this every single year for seven years. When I turn 30 years old, I'll have 10 properties and I'll retire like free. Right. So my whole goal was to stop working really, really early. You know, I didn't know about fire, none of that stuff. But the goal was to stop working. So I'm kind of like the lazy, like being lazy motivated me. But I mean, I call it lazy, but more so control and freedom, right? Control and freedom. Yeah, I don't think you can ever really say that you're, you, you, you

you went full time in real estate to stop working. I mean, obviously there's a lot of work that goes into it, but maybe it just doesn't feel that way because obviously you're really good. Can you give us a quick snapshot? When you did the last episode, I believe that was episode 331. Where did your portfolio stand at that moment? And where are we at today? Can you just give us like a little snapshot just to refresh everyone at home? Yes, I would love to. So this is so funny. So when I was on the first bigger pockets, I thought I was done, honestly. I was probably I think I was like 33, something like that, 34. And I had 10 properties free and clear.

And I was cash flowing, though. So what's most important that I was cash flowing $7,000 a month, and I owned my primary free and clear? So you don't have to be a multimillionaire to retire early, right? You just have to live below your means. So my expenses were like $25 to $3,000, right? And I'm making $7,000 a month, whether I wake up, brush my teeth, whatever. Like, no matter what I did, I was going to make that month. So I thought I was done and that was 7,000 a month, but those were free and clear.

So I didn't have any debt on the properties. Right. So David, I got his book and just talking to them. I feel like David like beamed down on me some stuff in like in my mind, but didn't say it, but I just felt it. And I just got like on a frenzy. I was like, you know what? I'm not done.

I need to use this thing called leverage and bird what David teaches. So read the book literally. So the interview came out in May, 2019. In August 2019, I decided to start buying again. And when I looked up in August 2020, so that was one year, I had purchased 11 more doors. So talk about 10x with Grant Cardone. I collapsed time by 10 years, right? So what essentially took me 10 years to do, I was able to do it in one year by using leverage, right? So that was the one year. So from 10 doors to 21 doors in one year just from being on the bigger pockets and David secretly beaming down that I need to use burr in my mind, right? So today I have

35 units, so 35 doors. So I've also, so in the last three years, I've bought about 22 properties. And then I'm under contract, which is, it's a quick closing because I already had knowledge of the deal. So I'll probably be closing about 20 days on a 31 unit apartment building that I'm buying all cash for 300,000 in the city of Detroit. So that's where I'm at today. Okay. Wow. That is highly impressive. You have scaled up very, very quickly. I mean, you said that was in 2019. Yeah, absolutely. So what I feel like is that people thought that, because I was on there saying I own all my properties free and clear, that that was my strategy and that I chose to do that. No, when you're poor and you're starting with a severe disadvantage, my disadvantage was I didn't have time, I didn't have money, I didn't have credit, or I didn't have knowledge, right? The four things that you need. So I didn't have any of those things. So I had to buy all cash.

I was blessed enough to be in a market like Detroit. I had never had $1,000 in my bank account at one time in my life except for when I got my tax returns, right? So it all just worked. Somebody that's severely disadvantaged, never have any money at one time, making $20,000 a year. And as a waitress, and just a fun fact, I make $20,000 a month just in cash flow off of my portfolio. So that's the big, aha. So going from 20,000 a year to 20,000 a month in real

estate was able to do that. But again, a lot of people assume that I chose to do free and clear. And they're like, oh, you could have did it much, much faster, right? You could have owned triple what you own now if you just had used leverage. But everybody is not in that position, not physically either with credit, money and stuff like that. But the mindset, right, you cannot just go into this journey without having a strong mindset. So yeah, I could have went out, use leverage and bought 30 properties in 10 years, right? Or 100 properties in 10 years. But what I would have had the foundation, that solid foundation to sustain, right, to make it through two recessions and COVID, right? I don't think so. Especially when, you know, when I first started, I wasn't even

interested in Section 8. But to have people not pay their rent in two years, like I could have literally lost my shirt and so many investors did and I literally tripled my income during COVID to I couldn't even qualify for anything, you know, but that's just my strategy. You have to be able to conform, but I want to do it longevity, right? So yes, I delayed gratification in the beginning, but it has allowed me to do so, so much more versus starting off very, very high at the top and then have to scale back. Totally. David, what's this like, man? I'm sure you hear a lot of people that reach out to you and they're like, dude, I love your book. But what's it like hearing someone like Ashley with the success she's had using the birth strategy and scaling up? How does that feel?

How does that make you feel over there? You know, it made me think about Brandon often said when he first read Rich Dad, Poor Dad. He said some like, this book put towards the feeling that I've been having the whole time and that creates a connection, right? What Ashley was saying is that I don't know if it was just the content itself was helpful. I mean, as part of it, it sounds like it was more David is thinking the same thing I'm thinking. He's feeling the same thing I'm feeling. We're looking at the world from the same perspective. And that is really what a like a connection tends to be. When you meet a person and they see life from the same perspective that you see it from and you meet somebody who looks at it very differently, it can make you think, it could challenge you,

but you don't usually feel close to them. And I was thinking it's funny that actually says that because when she told her story in episode 331, I felt what she was going through. I resonated with her struggle. I was like, oh, those are very familiar emotions growing up, seeing everybody around you that thinks a certain way, living under this, this thought or this belief that never goes away, that you don't deserve more out of life and you're lucky to even have what you have. And you're never going to be those people that, you know, you see that have either a better body or a better car or a better life or something, right? Like, well, that's just for them. I never will belong in that world. And always be in the window looking in, like, where could I get it?

and that desire being so strong and then you find the doorway. Like you stumble across the door when you're looking through the window and you're like, I could get in there too and you just hit it with this fury. Like I'm going to do everything I can. When Ashley told her story, I remember just thinking, oh, I know what that felt like.

It created that connection to where we're on the same page. And the next that I had was like, isn't it cool that real estate, something as like boring as buying houses can actually create such a connection between the people that are doing it. because we're all on this journey to go from where we don't want to be to where we are. And so I live on the West Coast. Ashley's out in Detroit.

Is that considered East Coast? Well, Midwest, but closer to the East, right? Like we come from very different backgrounds. We don't look the same, but we have like the same heart that beats inside of us and real estate brought us together. So it's cool to hear that my book did that. But it's also cool that we get to have Ashley on the podcast so that everyone listening, who I know, we're not the only two that experience those emotions or go through that.

they get to relate as well. Yeah. So Ashley, I know that you're a really big believer of having to go slow to go fast. Can you take us a little bit through that philosophy and how that guide your real estate journey now? Yeah, absolutely. So it's a little bit what we just talked about before, about, you know, just doing the one property a year, right? Most of it is because what I could do, right? So a lot of investors overextend themselves. And obviously I was listening to a podcast before and David talked about this a lot where, you know, you want to go out and buy 10 doors, right, all at once, or you want to go buy a lot, but then you're not really going to cash flow. So the deals that David's doing now, he's not expecting to get the cash flow or the benefits right now. He's

expecting to get that in three to five years, right? So obviously when I was on the pocket, I had a ton of people reach out to me. And a lot of people bought properties in Detroit or just anywhere and they were expecting to use the bird method and like just keep you know adding fuel to this which is great but they also wanted to quit their job as well right so you cannot do that that's the biggest thing i would say as far as going slow so when i bought my first investment property um i didn't just say i'm going to quit my job tomorrow right i essentially had a plan that i was going to buy another house every year until i was 30 um and then that's when i would consider quitting. So at one point, I was making more than my general manager, right, on cash flow, but I still

went to work. So that's another big thing. People are so quick to just leave their job right away. So essentially, I feel like the solid foundation and what really helped me was essentially for the business after each investment property I bought, I reinvested the profits. So I essentially took a job for seven years without taking a payment, right? Can you imagine being on your job, getting a paycheck for seven years straight and never spending it? That's what. like added rocket fuel to my second journey because I delayed the gratification. I wasn't depending on the 10 units free and clear for my income. I still worked, right? And it wasn't because, you know, well, first of all, it was because I was young, right? And I just believe in hard work.

But mostly is because I wanted this to last longer, right? And then also another mistake I feel like people make is that when you're starting at a disadvantage, like you cannot just go and do everything. So as soon as you make your first hundred grand, you're going to be a hundred grand, you're run out to buy a Ferrari or whatever the case may be. No, because sometimes you have to reach back and you have to help your family or you have to delay the gratification again so that you can break those generational curses. So again, I know everybody wants to start fast and just, you know, but really think about what is it really meant, right? What does it really mean when you be real with yourself? So for an example, when I told you guys, when I first came on the show,

I had 10 doors free and clear. That was 7 grand a month. I know people that own 4,000. 40 unit apartments that don't even make seven grand a month, right? So that's another aspect to it. Just being clear what you want and delay in the gratification so you get what you want. Sorry for the long windedness. No, you know, I actually just got done at a retreat teaching on this concept that I called portfolio architecture. I don't hear it talked about very often, but it's the idea of looking at your investing as opposed to an individual property. Like, what is this house?

What does this cash flow? What does this do? and then the next property is like its own thing. Instead, it's having several properties that all form, like a form of a living organism. So you don't want, if you have a human body, you don't want 14 feet and then you don't have a hand. So like different asset classes build wealth in different ways. And balancing them all out is kind of how you build a successful sports team, a successful business. Even in a family, you have people that perform different roles.

In Detroit, I think when you started actually, you were sort of limited in the type of asset that you could get your hands on. It was like, get it and then pay it off. And then at a certain point, you realize, okay, I don't want to have, do this forever, this one method. Let's bring some diversity into this and then maybe develop some synergy. So can you tell us how did your portfolio develop and then what made you choose the assets that you were going to bring in? Because like you said, some of the properties that I buy cash flow right away, but many

of them, I already have enough cash flow. Those are set to be more valuable three to five years down the road. What's your perspective like on that? Yeah, absolutely. So I am a diehard. I identify myself as a DIY buy and hold investor. And I know it's frowned upon, right? I know it is.

But just so my lifestyle, that's the way that it works for me. So my philosophy is cash flow is the only thing that helps you quit your job. And first of all, I'm an equal opportunist. If I see a flip that I can do, I would love to do it. But Detroit isn't that market, right? And then another thing is I could buy in the, you know, heavy appreciating markets like the California and stuff like that. but because I'm still a parent and still have other activities, I want to be closer to my investments as well.

I just feel like it's a greater way to be more successful. So number one, cash flow helps you quit your job, right? So if you're flipping properties, and let's say you make a million dollars this year and flipping, right? January 1st, you start working again because you're using that million dollars to support your lifestyle to pay your lenders, or maybe you live for two or three years. But eventually you will have to start working again. If you have $20,000 a month in cash flow and your expenses are $10,000, then you're essentially retired, right? And again, I wanted to quit my job because I wanted the time, freedom to spend with my kids,

and I want it control. So that's my strategy. Cash flow helps you quit your job. And then tenant turnovers kills cash flow, right? So those were the two things that I had to do. Get cash flow heavy so I can quit my job and eliminate turnovers because that's going to kill the cash flow. So those are the type of properties I look at.

and that's still what I look at to this day, what's changed now that I'm adding leverage and using other people money is I'm being able to do bigger flip quality projects, but I don't know if it's because I'm a woman, if I'm a nurturer. I have a hard time selling properties. I am not a flipper, and I know David will like,

no, Ashley, if it's there, it's there, you know, because that's what smart people do. But I'm still very emotional right now. So I have developed a strategy called reverse flip, and it's just like David's Burr strategy honestly it really is with like one or two things different but I call it reverse flip because even though it's a strategy that's been around for years when you put a name to it is catchy right like Burr obviously Burr been around for years but until David said it it's like wait what is this thing you know it's like something new like we all thought so that's what

I'm doing now that I'm able to use other people's money is I'm doing the reverse flip strategy what I got my trademarks pending for and I kind of coined and I would love to talk to you about that. And then when we do the deep dive, I'm going to go into my reverse flip deal. Yeah, I do want to talk about that. One thing I wanted to hit on really quick before we do is you mentioned that you didn't want, or you have to really stop tenant turnover. And I'm curious, is there anything that you do specifically with that? Because I think that's probably a pain point that, like, 99% of real estate investors deal with. Absolutely. So number one is, and I learned this from Brandon and David, obviously, but number one is I treat, well, I put myself

in a position of the tenant, right? And I remember growing up, we were on Section 8 and we were just getting treated badly and we just got the worst properties on the block. So I knew early on that no matter what I did, I wanted to have very nice, clean, safe, HG quality properties. And I was trying to fit that in a very low market, right? So that was the number one thing that I did. I kind of over-improve my properties. And again, investors, if you're new here, you do not. That's not always advice. It just depends on where you're at. So don't go out over-improving your properties saying Ashley told you. But obviously, I may spend three to five thousand more on the project, but this person wants to say forever, or at least three to five years. And each turnover,

even if it's bare minimum and it's two grand a month, when you're only cash flowing five grand a year, it can really set you back. So that was my strategy, which is making sure the properties is nice as possible, spending a little extra in the beginning to retain the 10. tenant. I do other things like give them gift cards during the winter Christmas months and just treating it. I know it's a business, but I constantly relate to my tenants that, hey, I'm a single mother or I've been in your shoes. And I feel like letting them identify with me versus I'm just the big box landlord that really helps me with turnovers. I really like this. I remember listening to this and when you said that, I was like, it was so weird because I don't ever hear anyone say this.

like, you know, hey, for Christmas every year, I give my tenants a gift card for this and this. Of course, I'm sure it's been done, but a lot of the times, especially on the long-term rentals, we're talking about the cash flow being so much smaller, yeah, you know, a gift card could not set you back, but it's definitely going to, you know, decrease things. So really cool to hear that. I mean, you're bringing like a human element to real estate, which I think is important. Do you still have any original tenants or any tenants from when you were first starting out that are still around today? I'm just curious. Absolutely.

So I would say for that original 10, eight people are still there, like to this day. So I know when I first started this, again, obviously no education. I thought this isn't going to work. I'm going to have to find something else because I paid $1,900 for a house that obviously that was a purchase price. I put about $17,000 in. So I was all in $19,000. But I was charging somebody $800 a month.

And I was like, well, she would just save up her money for two or three months and just buy the house next door. You know, this isn't going to work. people are going to catch on. And that was in 2013. She still lives in that house to this day. And I've done that multiple times. And again, it's with tenant retention. I guess it was the nicest house on the block is why they stayed. But yes, that's definitely what helps you with cash flow as well as everything else. Do you have any specific tips of things that you do in your house that makes them nice? Maybe things that don't cost a ton of money, but that go really far as far as the impact on the tenant.

Absolutely. Oh my God, David. you for asking that yes i literally uh because i almost forgot so the simplest thing that i've done and it has been so rewarding to me is i get this delta faucet that has an LED light on it right and it's 69 bucks at home depot every time you cut the lights on it glows in a dark but this 60 000 i mean 60 dollar faucet literally lights up any kid that walks in that bathroom's face right and if you get the kids you get the parents right i mean it's Like, that's just what it is. So I don't want to sound like, like, you know, a creep. But I always love kids anyway. And I'm like, if these kids fall in love, they're going to nag their parents. Like, mom, we got to pick that place. We got to pick that place. Even if it's $50, $100 more a month than a place down the street, it has the light up faucets. Right. So that is literally a good tip that I can give you guys. Any new investors. Do anything like that while the kids, you get the parents. You know, Rob, you're in the short term mental space and I've now recently joined it. And I got to say my strategy.

is very similar to Ashley's. I'm trying to find something in the pictures that makes the kid go, oh, oh, oh, I want to go to that one. Because like you said, Ashley, you get the kid 80% chance. You're getting mom and dad. So what are some of the things you're doing in your short-term rentals, Rob, specifically that we'll catch a kid's attention and want them to stay there. Totally. So every house I have, we set up like a small petting zoo in the living room. And when people see that in the photos, it like instantly books for a lot of people. But aside from that, there's not really, so, okay, there was a house in Destin that we bought that we were so close to closing on and then last second the appraisal came

in like $300,000. You told this story. This is the one that got away. Rob is so hurt about that. I still cry myself to sleep, but that's okay. But one thing that we were going to do on that one is like there was this garage space that was being unused and we were basically budgeting about, I want to say like $30,000 to build like a fully kid proof kind of bounce house like, you know, everything is squishy in there.

and like memory foam like pillows and like, you know, ball pits and everything like that so that parents could see that. Because that's, to me, that's a really big frustration. So we weren't able to close on that. However, one thing that I did in my Tennessee property when we were moving out of that house and turning it into an Airbnb is we actually left our nursery. And this was like a big, like everything, we had like two cribs in there. We had like expensive kid pillow type that, you know, there were like triangles and circles,

like, you know, squishy stuff basically. We left like hundreds of dollars worth of kids books and everything that we had used to basically raise our kids at, you know, they were one year old. Everything that we used in that one year period, we left there and it was going to be expensive for us to replace all that. But for me as a parent, I'm just so frustrated all the time when I go to a short-term rental and there's like a glass coffee table or like a super sharp wooden table where I'm like, oh, my kid's definitely going to like bust their head on that. And so now whenever I'm formulating Airbnbs and trying to like spruce them up, I try to add some kind of kid element to it that a parent can somewhat relax in, unless it's just not like a property meant for kids.

But that's one thing for me, it's super important. So on top of just doing that, we're sacrificing a room. In Airbnb, it's all about beds and heads. Most of the time an Airbnb host will leave a pack and play. But we decided to just sacrifice the room, put two cribs in there, leave all our kids stuff. And honestly, people rave about it. Like, a lot of people have reached out. We had childproofing locks on all the sinks underneath and everything.

and reviews have been really nice. People are like, this is by far the most kid-friendly place I've ever stayed. And I would pay a premium for that just because it's such a pain point for me. So now I'm always trying to tailor any new Airbnb that I set up to be more kid-friendly. Yeah, that makes so much sense. So I know I just talked to you guys about I'm just starting off my Airbnb journey, thanks to this guy. I was already a fan before he's on the show.

Amazing. So what I did was I added the chalk wall. I, you know, obviously, I know it's kind of probably done a lot, but I feel like that's good, but it's all the way down so kids can write on it. And then my daughter, she does like custom paintings in the basement. But a friend of mine who's in Airbnb convinced me, so I bought a Pac-Man machine for the basement, right? Because, so that's like an arcade. And even if you don't like it, oh well, it's in the basement. So if you don't have kids.

And then lastly, the kid, I would say teenagers. I do QR code. So you can create a QR code and then you can put like a sticker on there. So I do that for like the house book, I would say, which shows you how to work everything. But I also have it like for like fun videos and stuff like that. So that's just what I started. But I don't know the return because I haven't listed them. I haven't said it live yet.

I think this is the kind of stuff though that people need to be focusing on and hearing a podcast because the days of buy a property, make it an Airbnb, sit back and collect the money are gone. it's getting more saturated, it's getting more competitive. You've got to be the person that puts this creative thought into how you make your property stand out and how you make someone want to stay there. Moving on to another topic that I know that you're passionate about is paying taxes. I know that you loved paying taxes. So tell me about why that is.

Right, absolutely. So that's funny. And I know, like I was going to say, it's controversy. Nobody likes to pay taxes. So I had an epiphany, right? I got my start. I truly account that to my income tax return, right? And I know obviously it's not like, oh, it's some free money.

It's what I put in. But once I started to have to pay taxes, I wasn't upset. I was like, wait, I was getting $6,000 to $7,000 a year in a tax refund. And now I have to pay $3 to $5. I'm going to do that graciously. I'm going to do it with this mom. I'm going to write this check every year. I don't care about all these tax saving strategies because I want to do this for the government

because they helped me, right? Also, when you're a buy and hold investor, I don't do flips. so I don't have that capital gains and stuff like that. So I already was my tax liability was already very low. It wasn't until I added consulting and self-employment income that, unfortunately, I don't like paying taxes anymore, right? Yeah, that's how it happens to everybody. Because that $7,000 a year has turned into $60,000 and $80,000 a year.

So I was a person for the last, what, seven years that love paying my taxes. I'm like, no. So the good thing was I just bought a Tesla. It was 87, like 87,000, and that was a complete write-off to offset that. So now that I've hit that mark, I'm definitely, like, I booked three conferences to go out and talk to the best CPAs. So now I'm like all about tax strategies, tax savings now. But for a good couple of years, I love paying taxes. And everybody just thought I was so weird by saying that.

And obviously I see now, but when your burden is 5,000 and you use it from a form of gratitude. Not, first of all, not, oh, man, I have. have to pay taxes to what? I get to pay taxes now. Like that was just, I was happy to do it because I never made enough money to have to pay taxes. So I just used that from a big point of gratification and gratitude. Like if the government got me started, my tax returns is what got me here. Let me give back to the government pay taxes. I get to pay taxes versus I have to. I had a quick question here because you've sparked my interest. Taxes to me are the thing that I nerd out 100% on. I just paid a tax bill that was four times my annual salary last, my salary from last year. So it hurt. You said you bought a

Tesla. What kind of Tesla was it? Model Y. And I got the performance one because it was four months and the long range was like a year and like I can't wait. Like I need delay. I need instant gratification now. Sure. But to be honest, I had never done research on Tesla. I literally, the gas had hit $5 and I was like, oh, I'm going to buy this car. And in six months, it'll be worth like 10,000 more than I'm. just hurry up and sell it, or I'll rent it out on like a car site or something, and I'll get the benefits, but I've already fell in love with it. It's only been a month since I had it. And, but basically what it is is I bought it in a vehicle. I financed it through my company name, my consulting company, so that's a 100% tax write-off. My consulting business is a self-employment

business. That's tax twice. But we need to hop on after because if you got kids, those are the best things. I know they're still a little bit young, but you can pay your kids to save money on taxes. There's so many other things you can do max out 401k, so I don't want you to pay those anymore. So we'll definitely have to connect offline. I was asking about the Tesla because there's a section in the tax code called Section 179, and it's goes to basically, it basically means if you buy any machinery or any vehicles that weigh over 6,000 pounds, you can completely write that off on your business. Now, obviously, you can still write off your vehicle and other capacities, but if you buy a vehicle for 6,000 pounds or heavier, you can completely write that

entire purchase price so long as it's being used for business, you know, 100%. Obviously, if it's used for personal and business, you have to kind of split that. But there are a lot of really fun tax strategies like that that I didn't know. And that's something that I think a lot of people are always like, taxes are so unsexy. And I'm like, no, no, no. Taxes are very sexy when you figure out how not to pay them. Because that's the real game. You've got to master real estate first. and then you got to master taxes. And if you can save money on taxes, that's extra money that's going to go into your pocket. Especially when you start to realize that saving money in taxes you pay directly to the government

actually makes the government more money through the jobs that you created from the assets that you bought and the people you gave jobs to. So for every dollar you don't spend in taxes, if you put that at a new short-term rental, now you just employed a house cleaner, a handyman, a person who can do the pictures for your listing, a person that's going to build the chalkboard that you put in there, right? Like, you actually amplify the money you pay to the government when you reinvest your money and you make it bigger. And so it's kind of a win-win.

You're not actually screwing anybody over. You're making your own portfolio better. You're building jobs for other people and the government gets more money. Well, David, tell that to my TikTok comments. I'm going to tell that to the new, what is like 80,000 new IRS workers that are supposed to be hired. Yeah, whatever it is. I'll make sure that, like, they listen to this episode and they can hear that. Ashley, I know you are in a controversial situation for a long time when Josh Sorkin and Brandon Turner

were hosting this podcast. They were dumping on Detroit and you are a staunch Detroit advocate. You actually bloomed right out of the Detroit concrete jungle and are doing great. You're wearing your Detroit sweater right now. Tell me why you are bullish on Detroit and what you like about it. Absolutely. So Detroit to me knocks out all the what you can't do in real estate. right? So obviously when people say like, oh, you can buy cheap properties for 80,000, well, typically that's the highest you're going to get for that property. It's already at the top of the market. There's no appreciation. Rents are low. Turnovers are high. Cash flow is still low. Detroit kind of knocked that all out of the park. What's unique about Detroit, though,

and it's because that back in 2008, 2009, a lot of lenders left. So Detroit is a cash market, though. So I remember when I did my first podcast, people were like, hey, you were buying properties for 40,000, 50,000. I'm going to go buy six of them. I'll put 10% down on each and I'm like, no, no, no, no, no. You have to buy it with 40,000 cash. And I call that cash in quotation marks because it can be a credit card, right? Credit cards are those are the $25, $40,000. So you can take two credit cards and purchase a property on it.

So those are the good things. But because of the low price point to entry as well as the cash flow and the low, and the low expenses. Those are all reasons why it invest in Detroit. Also, I don't know, I did look at our population is definitely increasing because we did have about a million people leave, you know, throughout the years when we were during bankruptcy. But now that Apple's here, Google's here,

they're building the first ever in the world. Electronic charging road in Detroit is going to be released in 23. So as you're driving on the road, you won't have to get out of your car. it'll actually charge it. So they're going to do a one mile. That's here in Detroit. So and then on top of that, once COVID hit, I started to do research on Section 8, and I got really good with networking with Section 8 managers.

And I realized that there's 30,000 voucher holders with Section 8 that don't have a place to go right now. So they're extending their vouchers would normally take them 60 days to find a property. It's taking them 90 days. So I'm like, wait a second. There's 30,000 people that have guaranteed rent. and they don't have housing, like, let me buy an apartment building. So those are all the reasons why I invest in Detroit. And most importantly, because it's the underdog, right?

There's not a lot of investors here because everybody hear the horror stories or the why shouldn't you invest in Detroit. So actually, that's why I love the show. And, you know, obviously I didn't agree with it. But I feel like, yes, they're taking another investor away from Detroit, more properties for me, right? So it kind of worked in my favor that so many people were being fearful of Detroit. and that's why I wanted to be greedy in Detroit.

But again, your expenses are pretty low. So on average, I say now, especially if you're out-of-state investor, someone like myself could do it a little cheaper, but you can be all in. I'm talking about purchase, renovation, consulting fees with the project manager for $80,000 in Detroit. That property, even if it's in like a bad neighborhood, you're going to get, if it's a three-bedroom,

a minimum of $1,200 a month and rent. But if it's good enough for Section 8, you're going to get $14,600 a month in rent, right? But hey, that's just the money, right? It's not about how much you make, it's how much you keep. And that's what I love Detroit, right? So even though I'm making $1,400, let's call it $1,400, because that's the average for a three-bedroom, now let's talk about our expenses.

So in other states, especially like Chicago, which I love, which has very low prices, their property taxes are outrageous. So Detroit, on average, and I own 35 doors right now, so my property taxes are $100,000. hundred dollars or less per month. My insurance is $70 per door or less. So if it's a duplexus 140, so single family, $100 a month in property taxes, $70 in property insurance, and $1,400 in project management. If it's a cash deal, that's about $240, $320. And then if you have, if you refinance use the birth strategy on an $80,000 property, your mortgage payment probably be about another $300, right? So all.

together, you're spending $600 a month. And because we're buying these properties and we're fixing them up, over fixing them in the beginning, our capax is lower. But of course, we do, I always encourage people to save about $100, $150 for a single family per month. So add that all up, you're about $750 and you're getting $1,000 a month in rent. That's $6.50 a month in pure cash flow. But let's say you use the $80,000 or you have it and you cash out on a 401k and you don't have that mortgage, then that 300 goes back into your cash flow. So essentially, you're cash flowing $1,000 a month if you can buy a property for $80,000, cash, and, you know, have a Section 8 tenant. Now, again, I don't want people to leave their money and properties that is, well, it just depends on your

goals, I would say. Because even though I have essentially two portfolio, one that's unleveraged and one that's heavily leveraged, I see the benefits and the disadvantages of both, right? And that's another thing. I feel like with real estate investors or even people, they're always like, well, I'm only a flipper because buying hold is too slow or burrs this or I only want to buy cash because I don't want to over leverage. There can be a happy medium, right? But based on my lifestyle and my goals, which is to not work for anybody and have complete

control over my time and freedom, I need cash flow, right? Now that I've, you know, made all the, well, made all the mistakes and built that solid foundation, now I can go and invest in syndications and for appreciation, right? Because now I'm in a better position, but it's not always smart to start off for appreciation if you're new and you have to build that foundation because if you're still working a nine to five, you're limiting your time. So that's where I'll say it that. So I know you mentioned that Detroit is a really great market, but you either you're going to maybe have a tougher time doing the conventional thing or you might have to buy cash. For the people out there, you're out there. You're going to be a lot of

there that may not have either of those options. Do you have any steps that they can take to acquire real estate out there or any tips for people out there with the maybe creative financing? Yeah, absolutely. And now within the last three years, so there are banks and lenders that will do it, right? So you can buy an $80,000 house on a mortgage, but you're just going to run into people like me that's going to put an offer in and say, hey, I'll close all cash in five days and waive all contingencies, right? Because it's because I'm, you know, I prepped for this market. So I had to develop cash-heavy strategy. So number one, I use hard money lenders. That is a strategy that works in Detroit. But most importantly, I like using credit cards, preferably business credit cards. So if you

have, like me, I have a property management business and a rental business. So as long as that's generating income, you can walk into any bank and you have a 700 credit score and you can get business credit cards, right? But so I might go into four banks on one business, right, and get about 60, 70,000 in funding for that business, and then I can use those cards to buy a property, and then I'll go ahead and use the cash out refi to pay them back because it's a year typically interest-free. So that's what I call cash and quotation marks, is leveraging business lines of credit, business credit cards, personal credit cards. You can also use hard money and traditional lenders, but I just, I've heard about subject too, right? I've always toyed with that,

but I just never thought that I can convince anybody to do that, right? But I was just lucky to pick up a duplex subject to, and I met a couple people that's been doing them in Detroit. So that is also another great way to purchase properties here in Detroit. And I feel like, I know obviously subject to has died down a lot, but with the market and where we're heading at, where people bought and paid $20,000 overask and write with their appraisal guarantee. And COVID, well, a lot of those jobs are being eliminated,

or now a lot of companies are realizing, hey, we can cut our expenses by keeping everybody working from home, but we're going to lower their wages because they're not commuting and traveling. So people aren't as qualified as they were two years ago. So I feel like subject to is actually going to be a really great strategy to use in this upcoming market. But that's just a couple of strategies, if that makes sense. Yeah, yeah, totally. Well, I think we're going to get to the deal deep dive here in a second. But before we do, I also wanted to just ask because we didn't go back to this.

Can you just briefly take us through the idea or the concept of reverse flipping? Oh, yes, yes, and then I'll break down my reverse flip. So essentially it's just like what David did. But so you're going to purchase a property using hopefully the cash and quotation marks method. So the business credit, business credit card will be the best. Or you can use hard money lenders, though, but those are just typically the two. So you want to actually buy the property and it's going to be a rental property, but it's going to be flip quality. right so you're going to do it just like you're going to do a flip so take out walls full renovation

update kitchen granite countertops all that stuff and then when you go you rent it out obviously for top of the market because it's the best house in a block instead of you can refinancing it at a regular bank and i guess it didn't matter with the birth strategy but i am using hard money lenders or secondary lenders not traditional for the 30 year mortgage now obviously if you're a successful real estate investor, you're like, wait, why would you use hard money on a long term because you're paying six to seven percent interest where you can go right to a bank and pay three to four percent? Well, again, this is not an issue for any investors, so don't use this as an excuse, but most people are only allowed 10 loans and their personal credit, right, until you get maxed out.

There's just evil, evil creature that nobody really talks about is debt to income, right? The first time I feel like I got knocked out when I heard the word debt to income because I can't hide that, right? It's on your credit report. They can count it. They see your income on your taxes and they're like, you don't qualify, right? So I didn't want limits, right? So I was like, wait, I can only have 10 loans.

And obviously, if I would have talked to smarter investors like David, if I had people like that, they will let me know that that's not an obstacle. But to me, it was an obstacle. So my philosophy is if I'm hard refinancing with hard money lenders or private lenders, the debt is not shown on my personal credit. I'm a personal guarantee, but the debt is. and everything is to the business, right? So now I'm not limited to 10 loans.

Now I can go get a 4% interest rate on my primary because I don't have any debt, right? So yes, I am paying 2 to 3% more interest on the hard money side, but the available debt to income and benefits that I have on my personal credit by it being so less debt has been phenomenal for me,

which has allowed me to get more business credit cards or personal credit cards because, again, you are personal guarantee, in this stuff, it just doesn't show. So that's my strategy. And that's why I use reverse flip versus the burr. And again, it's not really different. I just made a name to it so it can be catchy. But I don't use traditional lenders for the 30 year. I only use secondary hard money lenders. Fantastic. Thank you for sharing that, Ashley. People love to call real estate passive income, which is interesting because most of the investors I know are very busy. Busy finding deals,

busy managing teams, busy worrying, they picked the wrong market. Rent to retirement flips that model. They help investors buy turnkey new construction homes, often 10% below market value in top rental markets across the country. Their local teams handle the build, the property management, and the details, so you don't have to. In some cases, investors even receive 50 to 75% of their down payment back at closing, and there are interest rates as low as 3.75%. They've been trusted partners with Bigger Pockets for over a decade. And if you want to learn more, visit BiggerPockets.com. Did you know your house gets bored when you leave? I can't actually prove that, but it probably

misses out on the action, the footsteps, the late night fridge raids. Yeah, when you're gone, your place is basically on unpaid leave. It's sitting there in the dark thinking, I could be contributing right now. Your side room wants a side hustle. Even your Wi-Fi is like, we could be networking. You're on vacation, spending money like it's a sport while your staircase at home. home is fully capable of sending your income upwards. Here's the twist. You can go on a trip and actually earn money. Airbnb makes that possible with the co-host network. If you're away for a while or have a secondary property, you can hire a vetted local co-host with real hosting experience to handle it all. A co-host can handle guest communications, it can manage reservations and keep

things running smoothly so you don't have to check your phone between beach days. That means less stress and more time enjoying your trip. You can relax, knowing guests are taking care of, and your place is in good hands. You travel, your house works. Everyone wins. If you're ready to host, but could use some help, find a co-host at Airbnb.com slash host. Tax season reminder for all the real estate investors listening. If you own rental properties, short-term rentals, commercial buildings, basically anything that's not your primary residence, you need to know about cost segregation. It's an IRS-compliance strategy that lets you accelerate depreciation on your properties, which means you're paying less in taxes this year and keeping more cash in your pocket for your next deal. Cost segregation

guys is the go-to firm, having done over 12,000 of these studies with $500 million in total depreciation identified. Head to costsegregationguise.com slash BP to get a free proposal and see your potential tax savings. You just realized your business needed to hire someone yesterday. How can you find amazing candidates fast, easy. Just use Indeed. When it comes to hiring, Indeed is all you need. That means you can stop struggling to get your job notice on other job sites. Indeed, sponsored job posts help you stand out and hire the right people quickly. Your job post jumps straight to the top of the page where your ideal candidates are looking. And it works. Sponsored jobs on Indeed get 45% more applications than non-sponsored post. The best part, no monthly subscriptions or

long-term contracts. You only pay for results. And speaking of results, in the minute I've been talking to you, 23 people just got hired through Indeed worldwide. There's no need to wait any longer. Speed up your hiring right now with Indeed. And listeners of the show will get a $75 sponsored job credit to get your jobs more visibility at Indeed.com slash rookie. Just go to Indeed.com slash rookie right now and support our show by saying you heard about Indeed on this podcast. That's Indeed. Deed.com slash rookie. Terms and conditions apply. Hiring Indeed is all you need. Rob, did you have something you're going to say there? Yeah, I was just going to ask on the hard money thing, aren't those lenders typically like bridge lenders like they'll only do the hard money

note for like a year or two? No, so we didn't talk about this. So I have developed seven streams of income from real estate and just seven businesses. And one of those is I'm a hard money lender slash broker. So at face value, or if you pick up the phone and call 10, yeah, they probably will tell you that. But all you have to do is find one, but I have about seven or eight that does 30-year loans. So if you find one, now let's say when COVID hit, some may suspend the program temporarily. But now I'm doing them. I did some during COVID. You just have to find a good lender, I would say to do it. I can highlight a little example here of why this is not a terrible strategy. So tell me, Ashley, what would standard financing be just a ballpark and what would your hard money rate be?

So far as the percentage wise or? Yeah. Yeah, so standard would be like 3.5. Well, you know, obviously they've done two or three interest rate hits. So I don't know yet, but around 3.5. And what's your hard money rate? 7%. And that's today?

Yeah, that's today on the long term. Yeah. That's not much different than where. That's what I was saying. I will call you right after this podcast. That's what I was saying. Back in 2019, my rate. had one that the rate was like 8%, but again, it still made sense. But yeah, that's today.

I got quoted 7% yesterday on a second home loan. Yeah. That's crazy. And that's not terrible, Rob, like I'm in the nine and a half percent for the stuff that I'm usually trying to get. So here's the point I want to make. When you have a lower loan balance, the interest rate becomes exponentially less important as when you have a high loan balance. So we'll do a little exercise here on an $800,000 loan balance. If you have three and a half percent, like Ashley said, your principal and interest would be just under 3,600 a month. If that jumps up to the 7% number, you go up to 5322. Most deals don't work if you go from 3,600 to over 5,300.

It's going to fall apart. But let's drop your loan balance down to $80,000, like what Ashley was saying, you could be all in on that. So maybe you're going to be borrowing actually less than that. You're going to be borrowing like, say, $60,000. the three and a half percent payment on that is going to be two hundred and sixty nine dollars a month and if you jump all the way up to seven percent that's going to bring you up to three ninety nine so you're going to jump from what was the first number i gave there 269 to

three ninety nine right like a hundred and twenty hundred thirty dollars that's not going to break most deals when they're bringing in between twelve hundred and seventeen hundred a month it almost I don't want to say it doesn't matter because you always want to try to get a better rate, but it becomes very insignificant, right? Like that's less than the difference of insurance or property taxes at a higher price point. So it may, someone may hear, someone, someone may hear Ashley speaking and saying, well, why would you pay 7%? I would never do that.

Well, it doesn't really matter on a $65,000 house nearly as much as it matters on a $1.4 million property. And I've noticed there's certain patterns that emerge in real estate like that. Like the 1% rule is very, very important. at low price points. It becomes less important as the prices go up. The 1% rule was developed at a certain interest rate that we had, right? But if interest rates are lower than the number that we started with, say 7 to 10%, you can fudge off the 1% rule and be okay because interest rates are lower. So when we're giving you these examples, they're, you know, an overall way of approaching it.

Ashley's sort of looking at the details that other people are missing because you're in Detroit, Ashley, and you know how that market works where someone from the outside looking in might make false assumptions and say that market won't work for me. Yes. And that's why you have to speak to experts or like you can't do what I do if you don't talk to me. Like even if it's a DM, like email me. Like last time I did the show, people found me because I was a realtor, found my person's cell phone. But I'm not saying call me, right? Obviously. But what I'm saying is if you're going to mirror your investment strategy, like, oh my God, Ashley's using reverse flip, I'm accessible. Reach out to me first because there are caveats like David said that maybe we just didn't share. Not because, you know,

we just forgot to talk about it, right? So, yeah, so that's absolutely right. And that's why I love how David thinks, like, literally, he just, I don't know how to explain it. It's just so crazy. But there are caveats that you have to do. And that's with any investment strategy, right? Obviously, if you're invested in California, you're doing it for appreciation. There's different things.

But, yes, that is absolutely correct. It fits this market. It does fits a lot of other markets. My sweet spot is $250 to $350 max for that, for the reverse. flip yeah so any market you can do that and purchase price right 250 000 to 350 000 yes absolutely or all in i'm sorry yeah because the arv because the cash out refi so cash out refi based on the loan payment at 350 it's like the max before it starts not to make sense right because we are so the reverse flip method and why i call it reverse flip because it does the exact same thing as the flip but when you flip a property okay

for all my flippers out there and i come off as a anti-flipper but i come off as a anti-flipper but But again, I'm an equal opportunist. I have clients that are flippers. When you flip a property, how much money do you make on a property after you sell it? $0,000, right? You may make $100,000, $200,000 profit. But the moment you sell that house, you will never get paid on it again, right? When you have a rental property, you're going to get paid on that house for the rest of your life,

for the rest of your kid's life, and so on. So with the reverse flip strategy and when we go through my deep dive, you'll see it, I still get the benefits of a flip. So maybe I won't get $100,000 a profit. I'll get $60,000 a profit just to put it on the deal. So I may have left $40,000, but I'm recouping that because I'm still getting $2 to $300 a month in cash flow. Not to mention I've gotten 80% of my cash or, you know, out of the deal.

So that's the strategy why it's reverse flips. So it's like, hey, all you flippers out there, you can still do that. But why not try to finance it long term? get 60,000 instead of 100, but still get that 300 a month because what cash flow helps you quit your job. So that's the strategy. We're now going to move on to the next segment of the show, the deal deep dive. And in this segment of the show, we're going to dive deep into a particular deal that Ashley's done. And Ashley, I'm curious to see which deal you have in mind and which strategy we're going to be highlighting.

So do you have a property picked out? Yeah. So initially, I had wanted to do my subject to deal because it's such a, a good deal, but I didn't feel like I elaborated enough on it, and it does, you know, have some contents in the background. So I would love to break down my reverse flip strategy on a deal that I did. That's perfect. Yeah, so that's the one. I was secretly hoping we would get to hear a reverse flip. Same. David's currently scouting out the competitor to the Burr method right now. He's like, yeah, tell us more about this reverse flip. Yes. And then we need to

stand on stage at BP Khan together with my reverse flip and Davis Burr. Like, take your pick. No, I'm just joking. Go rock him, sock a robot. That's funny. I was actually thinking of how you would spell flip backwards because that's reverse flip. So it would be like the pilf method or something. It's hard to spell a word backwards in your head without looking at it on screen. It took like more time than I would have thought to try to do that. I don't think that'll be it to work. I can. Oh, my God. This is this is why we leave that up to Brandon and Rob. I frequently will come up with this idea and I'll tell people and they're like, that's brilliant. And I'm like, I know, but I don't know how to market it because I don't have. I have Brandon here to come up with a name for it, so no one will ever hear about this. That's a big problem of mine. I'm not creative like you guys. All right. Question number one, Ashley, what kind of property is it?

Okay. And it's just a funny analogy. I'm so sorry to go back. But if you think about the PILF, P-I-L-F and the MILF, like what it really means, property I like to, or we could check property I like to flip, right? So I'm sorry. That is awesome. I just cannot, like, I just got instantly came to my mind and I could not hold it in.

Probably I like to flip. That's going to be our merch at BPCon. Pilf. David is literally a genius. I mean, I know he knows it, but I know he's humble, but it is just how he makes people think.

Like, yeah, I don't know. Or just me and day. I just, I get those ways. I think you got some genius as well, Ashley,

that you came up with that on the spot really, really quick. Like, yeah. Someone needs to give you a recording contract. Oh, you need to be like bigger pockets first rapper. Like that was very impressed.

that you came up with that. The pill. Speaking of rapper, since I'm not going to disclose the address, and I was going to get to this at the end. So when I first bought the property, the family, the neighbors came and introduced me like, hi, if you need anything, my mom, my dad lives here, my brother lives here,

my sister lives here. So it's a family of four all around it. Well, if you're familiar with rap music and the rapper Big Sean, Detroit Native, his whole family, including his dad, is my neighbors, right? So I won't disclose the address or anything like that, but I've met them multiple. times. They don't know I know, but I know because I'm a big fan of Big Sean. So I, and they steal my

contractors. I'm like, hey, they don't still. Like, I got new gutters. You got to protect your contractors more than you got to protect your girls sometimes. Like, people will grab those guys quit. For sure. Yeah. So I got new gutters. They got new gutters. They're like, hey, my, your driveway guys doing work. So I'm like, hey, can you have your son like shout me out, you know? But I just, I'm playing it coy. What's a song that people would recognize from Big Sean? Because he I don't think he's had a hit in a little bit, but I know who talked. Yeah, absolutely. Yeah, but he's just known for like just D. Choirite, right?

And all the things that he does. So it's amazing. But yeah, I love Big Sean. All right. So what kind of property is it? Okay. It is a single family property in Detroit, Michigan. Rob.

That's all right. I'm so hung up on Bill. Yeah. Yeah. Did you find him? Yeah. I did. Yeah.

Big Sean was the one that dated Ariya and Grande for a while, right? Yes, absolutely. Yes. He had the mean breakup song that everybody. that was bitter about a breakup of singing for years, yes. Which we won't say on the show. No. I don't flip with you.

We'll leave that up to do Mois. All right. That's a gossip account on Instagram. That's what the kids are doing. Doesn't matter. Number two. How'd you find it? Ashley,

how'd you find this property? So this was a wholesale deal. And I don't do many of those. And essentially, so I was teaching a group of investors that wanted to get started in Detroit and I came across my desk and I didn't want to buy it.

But I felt like, since this is a group, let me take them on live and tell them all the reasons why I'm not going to buy it. So I went and did the video and on the video, it's so amazing and look at it because I'm like, never buy this. This is never going to work too much, too much work. So it was a wholesale deal that I was not going to buy. I just thought it would be a fun example to show a group of real estate investors a deep dive. It's so funny how deals come across like that.

I have one that's a really, really good burr in a super good city. And someone had just asked me, how did you find it? And I'm like, well, there's an answer I want to give you. Like, I use this criteria and I searched the MLS and I found it this way. The reality is I was at a round table pizza, picking up some pizza to drop off for a group of friends. And they had like a little advertisement running on a TV. And it caught my attention. And I literally just looked at the pictures and were like, I can triple the size of this thing just by converting the basement.

So for you, it's the same thing. Like, I was just looking at a property to show other people and something about it caught your eye. Absolutely. So the next question is, how much was this deal? Right. So that was the reason I wasn't going to buy it. He was asking $85,000 for it. Yeah. And I end up getting it for $50,000. Now, before Rob asked his question of how you were able to negotiate that price, I want to ask you, how long ago did you find this deal? I closed September 2021. So, oh, just about a year. Yep, a year ago. Okay. So how did you negotiate this deal? Well, I offered him 60,000, right? Because I was teaching my group on how to be firm and not, you know, get excited about the numbers, make it make sense. So I offered him 60,000 and he flat out denied me. And I just told him, okay, no problem. But I'm still interested, you know, you can keep it as a backup. And his contract was expiring. So if you're in a, first of all, you, I'm sorry to say this. So when you're doing deals out here, if you want to be longevity,

in this business, make sure you're doing deals where everybody wins, right? So I'm not saying this for the wholesaler, but the wholesaler got it under contract for I think 36,000 and he was trying to make 40 or 50,000 on the deal. And I'm like, you know, make sure everybody wins, but that's neither here nor there. So he had a big spread in it. So either way I go, his contract was six days from expiring. And if his wholesale contract expire, now I can go back to the buyer and buy it directly. So he called me five days before the contract expired and said, hey, I'm willing to take your offer at $60,000. I said, oh, yeah, but the offer is $50,000 now,

and I can close quickly in four days, you know, because I'm liquid, I'm cash. So that's how I was able to negotiate it. He rejected the offer. His contract dwindled down. He knew I was liquid in cash and can close quickly, and he took the, but he still made $15,000. The reason I asked about the timeline that you bought it is because opportunities, like what you're describing are becoming much more available in today's market of higher rates

than what they would have been two years ago for the last eight years. So you have, it used to just be so many people wanted that how someone was going to buy it. The sellers had 100% of leverage. You were just hoping and praying that your offer would be accepted. But now that we're seeing buyers that are kind of backing out of the market, demands decreasing, sellers have lost a lot of that leverage and you can go in and start with the deal that you're like 80,000, that doesn't work, I'd work at 60. You get them down to 65. You're really close.

I got like three deals right now. I look at it like the fish took the bait and I'm railing it in the boat, but I'm not all the way there. I'm just waiting. And every week they come back and we're getting closer and closer to the number that I wanted. That's why I'm saying I'm having so much fun. I see you're smiling.

Like, yeah, that's what makes this so much fun when we get to buy real estate this way. You haven't been able to do that for a long time. But your strategies will work for everyone unless your market is red hot across the country. Absolutely. And to be honest, like I'm not. go out and have a ton of cash, but being able to be a cash buyer in the smaller markets, that's the leverage because where else, you know, could he have, could we have closed in five days? You know what I'm saying? Let me give you guys a little quick tip here. Quick tip.

Yeah, quick tip. When you're trying to get a loan for a property, it's very difficult to get a loan for a low balance purchase, like price. So most lenders don't want to go through the headache of having to originate a loan to lend out 50 grand, 60 grand, 70 grand, 70 grand. They will sell. at a limit of a minimum of 100, minimum of 120. It used to be 50 before inflation changed everything. So you can find this sweet spot, Ashley, like where you're buying, where the purchase price, if they were to borrow 80% of that or even 90% of it is less than the minimum amount that a lender will lend on.

So financing becomes incredibly difficult to get for the house. So the seller doesn't have a big pool of buyers, even though people would go buy that property because they can't get a loan for it. So then they either have to take a cash buyer, which is going to, get a significant discount or the buyer has to be like you and create creative financing options for themselves like this line of credit, the business line of credit. So now you're getting the best of both worlds. You're getting the price you want and you're getting financing at the same time where

your competition either had to pay cash for the property or they just couldn't buy it. Yes, absolutely. Yes. And that's the sweet spot. Maybe I need to focus on that and just like tell her. That's what you've done is like you found the like the chink in the armor, right? Like it's weak right here, the Achilles Hill. This was similar to how Rob and I got our Scottsdale property.

It was on five acres and none of the lenders wanted to lend on that many acres. So because I own a mortgage company, the one brokerage, we were able to get a loan where other people couldn't. But that's really what good investors are looking for. They're not just complaining, oh, it's really hard to get a house. Ashley's like, oh, no, no, I figured out, right? Like, you always see the movies where there's a fortress that no one can get into. That's the market. Like, Rob, you should make a meme of this.

You have this big wall. And it's like, and then at the other, at the top of it is like great deals. and then at the bottom are all the little people trying to get into the fortress, and that's buyers. And then Ashley's got like the little, what would it be like a ladder or a stairwell? It's more like the little vent that they have where the water comes out and the good guys figure out like, aha, we can sneak in through this little thing. There's always a movie where that happens.

And that's what your Detroit method is. There's always a movie. I remember 10 of those came out. Yes, exactly. All right. Next question before I get too far down off this rabbit hole. How did you fund this deal? All right. So I used a business credit card that I, in a business line of credit, I'm sorry, that I got probably two weeks before. And I funded the deal for 50,000 cash because, again, I didn't have to. I could have used my hard money lender. But because I only had five days to close, I had to self-funded, right? So it did need 55,000 in renovation. So what I did was, and a lot of people, I don't know if you can do this with hard money. This is why hard money is slept on. First of all, when I found out,

when I was looking at hard money for the short term, the one year and I was getting rates like 11, 12, 15%. I was like, oh, that's awful. I won't pay 15% but that's per month. So it's annualized for the year. I'm sorry. So 15% interest rate on a year is really like less than 2%. Right. So if you want to hold the property for four months, you're paying 8% interest and you're making all this profit. So you cannot look at interest just like David said. So but anyway, when you purchase a property cash and you have so much equity in it, you can get cash back at the table. So because I purchased it cash and the ARV came up, when I went to the hard money lender to finance the rehab, not only did I get all the funds for the rehab, I actually brought back a check for $17,000 from the closing table, right? But that was just part of my $50,000 back that I put in it. So that's how I funded the deal, purchased it $50K cash on the line of credit, and then I used a hard money lender to do the refinance, I mean to do the rehab, sorry. Awesome.

So we kind of know bits and pieces here, but what did you do with this property? Flip, rental, burr, reverse flip. I reverse flip this property. Yes, I did. So one thing else that I discovered, one of my other properties, I was really like focused on making the basement look really, really nice. And then the appraiser came in and said, hey, the basement is great. But no matter what, because it's below ground, we do not count the square footage.

Like we can give you a boost on the finished basin, but we cannot count the square footage. So this property had an attic. So I met a guy that was talking about he's a builder. And I decided for the first time ever my career to do a dormer on the property on the attic and finish the attic off. So because it's above ground level, grade level, I'm sorry, it allowed me to add that square footage in the square footage. So this is where the big changes went. So first of all, for my first plan, 50,000 purchase price, 50,000. $25,000 renovation, I would have been all in at 105.

The Hartmoney lender did an appraisal of the ARV in order to fund the rehab, and it came back in at 265. So that was the big, like, wow, 105 all in, ARV 265. So once I added the, finished the dormer and finished that attic off, I can count the 400 square feet now into my square footage. So properties in that area sell for about $175. a square foot. I did $135 because I'm conservative. So $135,000 per square feet times 400 square foot added $54,000 to that 265 number. So now the ARV was 319,000. But the dormer and the addition

finishing that off only cost an additional 15 grand because I was already doing new plumbing. I was already doing electrical. So it's just a matter of running it to the office, the extra space. and it's like a loft with a bathroom, so it's not like finishing. So all in all, sorry, I spent all in $120,000. I spent $70,000 on rehab, $50,000 on purchase. The ARV is $319,000. And then I reverse flip that thing. So this is how it would work.

So the ARV is $319. My lender gives me 80%, but most investors won't. So they'll get 75%. So I did the numbers at 75%. so we all are fair, right? So the cash out refi is $239,000 with a hard money lender at 7%, right? 4% more than I probably could have got on a traditional. But I only invested $120,000 in the property all in, right? So I'm going to take the $19,000 for lender fees, obviously because they will charge me points. So I was able to put in my pocket on the cash out refi $100,000, which is a flip profit, right?

When you factor in taxes and the work and the time you put into it, you're really make that 60,000 as quickly turn into 35,000 on the flip. Let's just be honest, right? So with the reverse flip, I put $100,000 back in my property. But what's more is that is a high class rental for $2,200 a month. They don't know that they're right next to a celebrity, so they may see them one day. And I'm still cash flowing $200 bucks a month. But I've already put $100,000 back in my pocket and on to the next one. right so I use that property to get paid forever instead of stopping getting paid when I flipped it

if that I love it yeah you got all the profit of a flip without the tax ramifications and you kept rent to property and you get to cash flow yeah all right next question here what lessons did you learn from the deal well I learned that the more negative I am no I'm just joking how to pick apart it like I really learn to always go look at a deal right even if you feel like it's not going to make sense, right? It just depends. If it's checking off two out of five boxes, you know what I'm saying? Go ahead and do it because I feel like I believe in the law of attraction a lot. So I feel like as long as I'm surrounded by real estate, so as long as I'm going to look at deals, even if I don't necessarily get that one, it's going to attract the right

deal for me. So again, I did not want to look at this property. I swear I was so unmotivated to look at this property and I stopped. I went ahead and did it. And that was the lesson I learned. also the price is the price, right? Always be in a position where you can be quickly liquidated so you can get that $30,000 off the asking price because you can close quickly. And obviously that takes knowledge and being an expert in that area. But I would say those are the lessons. Awesome. And then lastly, I mean, it sounds like the answer is you on this one, but I'm still going to, I'm still going to ask it anyways. Who was the hero on your team for this deal? It was me. Well, fortunately, so. That's fortunate. That's all good.

Yeah, I say a lot of things that, you know, and I just want to say it's not advice, right? It's just what works for me. So just with my personality, and I think I even talk to David's about this after the show, like I'm the type of person that kind of do everything themselves, right? Not because I'm a perfectionist, and I know you want to delegate, you can't do everything yourself, but because I am able to do these things myself, I'm getting better deals and I know the process. So now when I step back from the business and with this new great migration or great resignation, right? They're so hard to find help now. So if my VA decides to quit or my property manager

decides to quit, I could still step in if I had to to save my business or if the recession gets really bad and I have to cut costs, I can do that. Because in real estate or in anything, it's not what you make is what you keep. Now again, I know that I'm taking off years of my life because I'm doing this and not delegating, but I really can't do much anyway because I still have a kid in high school, right? So I can't travel all over the world 24 seven and be you know, citizen of the world, I still have to be here because I'm at every single basketball game, every single football game. I want to be active in my kids' life. So it's not such a, you know, a rush to do things. So that's my philosophy. All right. That was fantastic. We're going to move on

to the last segment of the show, the world famous. Famous for Famous For. Ashley, in this section of the show, as you know, because you probably listen to every podcast we've done. We ask every the same four questions. Question number one, what is your favorite real estate book? Okay, so in the first part of my journey, I didn't get a chance to read a lot. Obviously, now I am reading real estate book. It would have to be the burn method by David Green. Couldn't agree more.

Yes, that's like the second time in the history of the podcast, anyone ever said my book. So thank you for that. And the first time might have been the first episode we did with you. Hey, I say it every episode. Number two, Ashley, favorite business book. Okay, so, and again, it's just because I'm just starting my library. Like, I really love the power of reading. But I read a book called Am I Being Too Subtle by Sam Zelle? And oh my gosh, it's literally changed my life, like the crazy stories in there. So I really love that book. I've listened to it twice already and ready to listen to it again. Okay. Awesome. Number three, when you're not building your real estate empire out in Detroit and mastering the art of the reverse flip, what are some of your hobbies? right so right now honestly i'm in a transition in my life which i'm really grateful for and i'm trying to

figure out what's next for ashley so right now my biggest hobby is networking i'm flying anywhere you know go to any networking events going to CPA conferences real estate conferences you know everything just to expand my knowledge and expand my network because i don't want to be a one-woman show right i had to be because i didn't have the knowledge but now i want to meet people and partner with people and be a social butterfly. So that's number one. Number two, I just still have a passion for kids and just trying to make their life a little bit better, just considering like what's really going on with life. And yeah, so just instilling in kids, my four pillars on how to set your child up for success with just one real estate property. I know we were supposed to talk about

that. Maybe if you got a second, I'll talk about it. But that's my goal. It's deepening that message, just educating more people on how to set yourself up for success with one property. And networking. All right. In your opinion, what sets apart successful investors from those who give up, fail, or never get started? I feel clarity. Clarity is what it is. So obviously when you first are, you may not have clarity, but that's where it goes into mindset and really having that conversation with yourself to figure out what you really want to do, right? Because I do, you know, consulting and stuff like that. And I'll have people call me and they're like, I want to flip properties because I want to quit my job next year.

I want to be just like you. And as we said in the show, flipping doesn't help you quit your job, right? So I feel like because a lot of people don't know what they don't know or they'll hear podcasts and don't try to reach out to the person or try to really, like if you're going to mirror that person, obviously you need to talk to them

and see all the caveats and stuff. So that's what I feel is making people not so successful. Sorry about that. Is that they don't have clarity or they'll say they want to do something but the reasoning why they want to do what does not align to what they're able to do right now. Yeah. And putting on blinders for sure,

that's what helped me be successful. It's sometimes you have to put on blinders and kind of blind out some things and just focus directly on that goal. Amazing. And lastly, Ashley, can you tell us where people can find out more about you? Absolutely. So my number one platform is Instagram and I'm at Detroit underscore investor. I literally, the 11 properties that I bought in one year. If you were following me, you saw the renovation, the before and after, the me standing out like 10 people are trying to get in the property. Like you've seen it all, I showcase that daily on my stories. I'm actually doing seven renovations right now, like various levels. So that's the best place. I also do have a website. It's Ashley Hamilton Consults. So my name, Ashley Hamilton

Consulting.com. Lastly, definitely, I am on bigger pockets for sure. So you can definitely message me on there. Awesome. Dave, what about you? You can find me at David Green 24 all over social media or on YouTube at David Green Real Estate. And also beware because there's tons of scammers. They're popping up every single day. It's a big pain in the wazoo trying to get that blue checkmark to avoid this. I've tried about 25 times. Instagram. Keep saying no. So don't know what we have to do to change there. But please, please, please, please, please. I know that it's cool when it looks like someone followed you and they start messaging you and these people are very good at saying things I would say. They are listening to this podcast right now and hearing what David said and they might even bring up the

PILF method just to sound like me. I'm not asking you for money ever. If I do borrow money from somebody to invest in the real estate, you will go through my assistant. We will have a form that you're filling out. You will definitely know that it's me. Don't send money to any link that someone sends you good friends of mine, like legit good friends have actually sent tens of thousands of dollars to these scammers. They're horrible people. So please be careful about that. Yeah. So if you get a message from David Green Pilf, don't, don't respond. It's not him. He's David Green 24. You can find me over on Instagram at Rob Built. YouTube on Rob Built as well. All righty. Ashley, thank you so much for joining us and updating us on your journey.

Every time we talk to you, you seem to be doing better than the time before. And I love seeing somebody like you win because you're doing it the right way. You're learning. You are very persistent and you share with other people. So I appreciate you being here with us. I'll let you guys get out of here. This is David Green for Rob. I don't flip with you. Abas Solo, signing off. Thank you all for listening to the Bigger Pockets Real Estate podcast.

Make sure you get all our new episodes by subscribing on YouTube, Apple, Spotify, or any other podcast platform. Our new episodes come out Monday, Wednesday, and Friday. I'm the host and executive producer of the show, Dave Meyer. The show is produced by Ian K. Copywriting is by Calico content. And editing is by Exodus Media. If you'd like to learn more about real estate investing or to sign up for our free newsletter, please visit www.w.com. The content of this podcast is for informational purposes only. All host and participant opinions are their own.

Investment in any asset, real estate included, involves risk. So use your best judgment and consult with qualified advisors before investing. You should only risk capital you can afford to lose. And remember, past performance is not indicative of future results. Bigger Pocket's LLC disclaims all liability for direct, indirect, consequential, or other damages arising from a reliance on information presented in this podcast.