BiggerPockets Real Estate Podcast - From $17K/Year Teacher Salary to Financial Freedom with Repeatable Rentals

Starting point is 00:00:00 It's very common these days to hear people say that you can no longer find cash flow, or you can't buy deals on the MLS and make them pencil. And this is particularly true when people start talking about some more expensive markets. But I'm curious if that's actually true, because I've spoken to a lot of investors who say that they are still buying in this market, even in more expensive areas of the country. And so today we're actually going to do a deep dive into how you can absolutely still make deals pencil. And it's not using some fancy new creative tactic. It's using the same old fundamentals that have always worked for real estate investors. Hey, everyone. This is Dave.

Starting point is 00:00:53 Welcome to the Bigger Pockets podcast. Today we're talking to a super cool, very interesting, fun investor named Corby Goad, who is operating out of Boise, Idaho. He has been investing for a couple decades now, but he left his W-2 job recently. He actually rebuilt his entire career around real estate, not just investing, but also by building real estate services businesses. And we're going to talk to Corby about a bunch of things,

Starting point is 00:01:22 first and foremost, about market cycles and how he's adapted his tactics, his strategy, his portfolio, being through a lot of different types of market conditions, We'll also talk to him about the Boise housing market, and we're going to get into a really great conversation about how to build a buy box that works even in this high interest rate confusing economic climate. Let's bring on Corby. Corby, welcome to the Bigger Pockets Real Estate podcast. It's so good to have you here. Thanks for joining us.

Starting point is 00:01:53 Thank you for having me. This has been a dream of mine for many years, so I'm honored to be here. Thanks so much. I love hearing that. We're making dreams come true. Absolutely. Well, I'm eager for this conversation. So I'd love to just start by having you tell us about how you first learned about real estate investing and why you decided to pursue it. Well, I'm older than probably most of your audience. And back in the day when I was in college, I was studying to be a teacher. And as you guys all know, teachers aren't known for raking in a ton of money. And so I was always kind of, I was trying to think of side gigs that I could do in the summer and that sort of thing.

Starting point is 00:02:30 You sold out, man, just trying to be a teacher. It's unfortunate, but so I don't know how many people remember. Back in the day, there was basically a wholesale guru, like the original one named Carlton Sheets. And he used to do these late-night infomercial selling a kit to go out and learn how to wholesale properties. And I was so broke, I didn't actually buy it. I went to the library and rented it. And it just kind of planted a seed. I never actually wholesale properties, but it started my mind thinking about real estate.

Starting point is 00:02:57 And without going into too much detail, When I was in college, I was working full-time putting myself through school. And I ended up buying a starter home with an FHA loan. And one of my buddies moved in. So I was house hacking, and he was paying me rent. And he was handier than I was. And so over the year that he lived there on the weekends, we'd put in some tile or we'd pay in a room. And after a year, my lender came back to me and asked if I was interested in getting a he lock.

Starting point is 00:03:22 And I didn't know what that was. He informed me. I filled out an application. And they sent an appraiser back out. And the bottom line is, is in that year. year messing around with my buddy at the house, I had made double the equity that I did teaching full time. Wow. And a light went off for me. And I just thought, what if I could replicate this two times or five times that it would create all kinds of opportunities for me. And so that was the first

Starting point is 00:03:46 introduction I had to real estate being something that I thought I could do. Very cool. Well, congratulations on that. There are a couple parts of your story, though, I do want to dig into. So tell me about this. What was his name? Carlton Sheets have never heard. Original sort of late Night Guru. You went to the library. How much was it, by the way? I'm curious, how much, do you remember what the course cost? It was tapes.

Starting point is 00:04:09 You would order to, I don't think they were even CDs. That's how old I am. I think you had to order tapes. Cosette tapes? Yes. It was hundreds of dollars, hundreds of dollars, far more than I could have imagined having for something like that. But something in there must have appealed to you, even though you didn't wind up wholesaling.

Starting point is 00:04:24 What about that sort of education, even though it was very expensive, sort of made you think that real estate was worthwhile? Well, it just was the idea that like a lot of the gurus do now, he was selling the idea that anybody could go out and buy a property for less than market value and turn around and sell it for more. And he made it seem really attainable. And obviously, as we know, bigger pockets exist because there are more challenges than just knocking on somebody's door and buying their property and turning around and making $100 grand. But it just gave me that idea that this is something that anybody could do and just kind of got my mind thinking about it. And even when I was younger, I always just loved real estate and walking through open houses

Starting point is 00:05:03 and just imagining doing projects. I didn't have any skills or knowledge, but the idea of it was really appealing to me. And so that was something I just continued to explore. And do you think any of the education in that high-priced course actually made you more successful? Were you able to learn what you needed to learn on your own or through actual just getting in there and doing things? Honestly, I don't think I learned anything from listening to those tapes. but it's like anything else. It's like you said, about taking action.

Starting point is 00:05:32 And listening to those tapes or listening to Bigger Pockets Podcasts or getting other forms or reading books, it keeps that fresh in your mind. And it kind of keeps the dream alive and the idea that you can go out and do these things forefront. And so I think that's what it did for me is that it wasn't just an idea that popped in my head. And then I never thought about it again. Engaging in those types of things keeps it fresh in your mind and kind of create some creative thinking around those concepts, I think. Yeah, absolutely. And it sounds like your first deal went extremely well. How did you wind up landing that first deal? Were you teaching then? Or were you still studying? When I bought the house, I was still studying and I graduated a few months after and got a teaching job. And so it was kind of both when I was there. I'm a big proponent for people going out and just taking action. And this was a property on the MLS. It was a fixer. It was just a cosmetic fixer. I didn't have any business getting into something heavy. It needed paint and flooring and things that anybody could do.

Starting point is 00:06:30 And so I wasn't thinking of it as an investment. I just thought it was a house I could afford that I could make nice on my own. And I still have that house today. And that one house that I bought on the MLS with an FHA loan with basically no money to my name has probably bought me five or six other properties. Wow. By refinancing? Yeah, just pulling the equity out and moving it to another spot.

Starting point is 00:06:50 I was a teacher. I never made, I don't think I had more than $3,000 to my name for several years, but I was able to move that equity around. That's incredible. Well, let's talk about how you did that because where we left off in your first deal, you made double your salary on that first deal and thought, man, if I did this a couple times, I could really improve my financial situation. So what did you do next? So my wife and I, she was my girlfriend at the time. We got engaged and we started looking for a house for ourselves. And she had inherited some money previously and used that as a downpaint for her house.

Starting point is 00:07:26 her parents co-signed for her, and they put the house on the market. And because of this idea that was planted in my head about investing in real estate, and this was 20, I don't know, 23 years ago. When we went to move into our new house, my wife asked, well, when are you putting your house on the market? And I just said, I think I'm just going to try to rent it out. And she was very unhappy with that idea. Why? She didn't like the idea. I think a lot of bigger pockets listeners and readers struggle with this in their relationships, too. She did not like the idea of having an extra mortgage? What if it was vacant for a month? What if the roof needs replacing? And we were both teachers. And our first salaries were right, like in the $17,000 range.

Starting point is 00:08:07 If there was a catastrophic issue, there was not cash in the bank to jump on that. And so, I mean, she had some legitimate concerns, but a lot of people who are getting into real estate and that are coming to bigger pockets for education are kind of in that same boat. And you have to take on a little bit of risk, and it is going to be a little bit scary. And our first few deals were like that. But you did it. So you rented it out, right? So I guess it turned out just fine. But I totally understand the concerns, especially if you're uninitiated. There are a lot of questions. Those are totally legitimate questions, but sounds like you convinced her you knew what you were doing. Oh, no, I did not. I did not convince her I knew what I was doing.

Starting point is 00:08:45 Are you said 23 years later, you're still working on that. Well, no, she's come around. But one of the things that's most interesting that I hope gives a little bit inspiration to people, of this podcast is that I did everything wrong. And my wife was very clear about the fact that I was doing things wrong. And a very, I mean, she was a great partner. She was encouraging me. But she's, I'm more of a jump in and make things happen kind of person. And she's a process person. And as a landlord, I was not screening people properly. I was doing all the repairs myself. I was going over knocking on the door and asking for rent increases and just making things as difficult for myself as possible. And the first tenant that I screened, honestly, she was there for three years. She was

Starting point is 00:09:27 on Section 8. She destroyed the house. So she was there for three years. And when it was done, we had to go in and do a full renovation. And really, the conversation that I had with my wife was she said, you've been a terrible property manager. You've done everything wrong all along the way. And somehow we still made money. Somehow it's been okay. We had enough money to renovate the house. our mortgage have been paid for. And so honestly, ironically, that's when she came on board. She said, I think that if I help out by creating processes behind what we're doing and start coming up with some plans to help scale, that we could actually make a run at this

Starting point is 00:10:02 thing. Because if we can still make money doing everything wrong, then doing it right, it's got to be a lot better than that. I love that. I say this on the show a lot that I think I'd love to plan so that even if things go wrong, I still make money. I'm just a conservative investor in that way because I know I'm going to screw up. It's impossible to get everything exactly right.

Starting point is 00:10:23 And it's probably the most common advice I give to people who ask me about deal analysis or how to pick a market. It's just like if you're counting on everything going right, that's not a good business plan. You need a lot of wiggle room in there. And it sounds like you used up some of that wiggle room in the early years, but still came out ahead, which is great. Yeah. All right.

Starting point is 00:10:43 I am loving this conversation, but we do have to take a quick break for our sponsors, but we'll be back with more from Corby Goad right after this. You've upgraded how to buy properties, but did your insurance get the memo? When investors start scaling, insurance can't be an afterthought. Most policies were designed for a single property, not multiple rentals, LLC ownership, short-term stays, or properties mid-rehab. That's where blind spots can creep in. NREG works exclusively with real estate investors.

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Starting point is 00:12:26 investments around those fundamentals, pairing tax efficiency with disciplined operators and a long-term approach. This isn't about chasing hype or guessing market timing. It's about building durable, tax-aware wealth over time. Learn more at biggerpockets.com slash bam. There are two kinds of real estate investors, those who have reviewed their insurance, and those who think that they have. Most don't realize their coverage wasn't built for how they actually invest. Vacancy periods, rehabs, short-term rentals, or LLC-held properties. These gaps surface only when filing claims. That's why investors work with NREG. They specialize exclusively in real estate investors, understanding portfolios, risk at scale, and cash flow protection. One claim can erase years of returns. If you own a rental property, don't assume you're covered. Have NREG review your insurance with someone who gets investing at NREG.com. BPod. That's N-R-E-I-G.com slash B-P-Podd. Welcome back, investors. I'm here with Corby Goode about how he got started in real estate while working full-time as a teacher, I should add, and how he's making deals work today. So then, did you keep doing buy and hold to rentals after that first one?

Starting point is 00:13:35 Yeah, actually, the next few deals we did were just fixer uppers that we found on the MLS that we bought, and she and I went in and did what we could, and we brought in conference. contractors to help out with the rest. And we essentially did Burrs before Burr was a thing. And we'd put tenants in there and let them pay the bills and just kind of kick back. And over time, we'd raise the rents and we were making two or three hundred bucks here and there. A lot of times they were break even the first year and they just got better and better over time. But we did three or four of those over the course of five or six years there at the beginning. Oh, wow. That's a pretty heavy look for it. And you were both working full time at that point, right? Yep. Yes, we were.

Starting point is 00:14:10 And was there a point when you went into real estate full time? Yeah. After those first few deals is when the recession hit in 2008. And so being teachers who didn't make a bunch of money, and we were upside down in all of our properties at that point because everything in our market had lost probably 40% of its value. Oh, wow. And so we just kept our heads down. Rents didn't really suffer much here. So we continue to run our places out, and they paid for themselves.

Starting point is 00:14:35 And then when things started coming back in our market is when we really started getting serious about getting back into investing and making a career out of it. Tell me more about what it was like during that time because I think a lot of newer investors don't know about what it was like to live through, myself included, I started investing in 2010. So I didn't live through 2008. But was there any point where you just thought about selling, closing up shop, just given up and doing something else? No, partly because of ignorance, probably, but also we were negative equity in almost all of our

Starting point is 00:15:08 properties. And I wasn't interested in destroying our credit because I knew I was going to need that if we were going to take a run at it when when equity started coming back. And all of my friends thought I was crazy and all of our family thought we were crazy because we were underwater on everything we had. We had friends that were voluntarily doing short sales and destroying their credit, giving their properties back to the bank, just because they had negative equity, not necessarily because they couldn't afford it. And I mean, that was happening everywhere. And my wife and I just talked and and we decided that the houses were paying for themselves. And we were confident that our market

Starting point is 00:15:39 was going to come back and be strong. And so we just put our heads down. And so we just put our heads down. and wrote it out. We kept tenants in there and did our best to take good care of them. And it came back with a vengeance. And it's been gangbusters ever since then. That's such a good point. And I think something that people often overlook is that even in the relatively unusual scenario where housing prices do go down and you are underwater, that is a relatively unlikely thing in

Starting point is 00:16:04 U.S. history, the great financial crisis being a very big caveat to that. But even when that happens, if you keep paying your more. You don't have to sell. And I think that's why as real estate investors, time is really always on our side. If you have cash flow, if you have appropriate cash reserves, and you can withstand some of these difficult times, like what Corby and his wife went through, you don't need to sell at a loss. You could just keep doing what you're doing, generating the cash flow and have it be a quote

Starting point is 00:16:35 unquote paper loss, where in theory your property has lost value, but you don't actually realize those losses until you go on and sell. So I commend you for having the foresight and the guts to sort of stick with it. How long did it take for the market to rebound? Well, this was in Boise, right? Yeah, yeah, we're in Boise. It was about five years, probably between 2008 and about 2013, where things came about to the point where they were in 2007. But once it came back, Our market, I'm sure some of the listeners have probably heard of Boise before, but our market has just continued to grow exponentially since then. And equity growth and appreciation here has been just crazy since that point. During the pandemic, Boise was for, I think, maybe even close to a year, the fastest appreciating housing market in the entire country.

Starting point is 00:17:26 I think it's moderated since then. But in your wildest dreams in 2008, when you thought that it would come back, did you ever expect you would see? the growth that we saw from 2020 to 2022, 2022, 23? Oh, no, not in a million years. Yeah. And I mean, that's one of the things, too, that just to go back to my original point about just taking action is that I don't think anybody who was on bigger pockets or even anybody who lived here was thinking, man, I should really invest in Boise.

Starting point is 00:17:55 Like, that's the next boom town. The only reason I'm sitting here today is because I took reasonable action and took some risk and made some moves that were scary to me at the time that put me in a position to be able to do some cool stuff. Absolutely. And it's a perfect example and story of why you can't time the market, right? Like, no one would have guessed in 2018, all by in Boise, and all of a sudden we're going to see, you know, 30% appreciation in a year or two years in a row or something. I forget exactly what it was. But it was something remarkable like that and just proves that all you can do is just make good decisions and make incremental progress like you're talking about.

Starting point is 00:18:32 out. Absolutely. There's a line in one of Gary Keller's books that I really like. He talks a lot about timing the market and how the only way that you can know when you've hit the bottom of the market is when it's already gone. Right. And so if you're waiting for that moment, it'll pass you by when you realize that it was actually there. And so it, the only way you can actually buy at the perfect time is pure luck. Yeah, absolutely. That's entirely right. And I study this for a living and I don't try to turn the market. It's just not possible. Yeah. So tell us what you're up to. You're up to. today, Corby, because, you know, I assume your strategy has had to shift because what was possible in Boise in the early 2000s and even, you know, five, ten years ago is probably different

Starting point is 00:19:13 from what is profitable in today's economic climate. Yeah, I mean, it's a little bit different, but when the market started coming back here and our equity started growing in our own personal properties, we just decided we were going to go all in. And so we started refinancing and pulling money out every opportunity that we could and started buying small multifamily. families around the Boise Metro area. And so essentially after a couple years of doing that, we just got to the point where we had enough passive cash flow that it was more than covering all of our bills. And so my wife basically sat me down one day and said, like, let's take a run at this. And she had already left her job. We had kids and she was staying home with our kids.

Starting point is 00:19:51 I honestly hadn't even been thinking about it. And we had this conversation. I went in the next day and quit my job. And we went full time into real estate and haven't stopped since then. And it's really, I wish I would have done it 10 years before. And what does that mean to you, Corby? What is full time? Does that mean you're doing Burr's full time? Or like, how do you spend your days? So we actually now own, we own three businesses where we serve other investors in our market.

Starting point is 00:20:17 So we own a property management company and we manage hundreds of properties around town for other investors. Most of our clients are out of state. Some of them are out of the country. I have a small real estate team and we only work with a. investors. And so we work with a lot of local people who are trying to get into real estate investing and want to do house hacks and burs. And we handle transactions for people who are investing in our market from all over the place. And then we have our own investment business as well that we do on the side when an opportunity presents itself. Awesome. That's great. Well, congratulations.

Starting point is 00:20:46 It sounds like it's like one of those very rapid decisions years in the making. You know, you've probably imagine you've been thinking about quitting your job for a decade and then you just decide overnight to do it. That's exactly how it worked. Yeah, it was one of those things where it was kind of a marathon to get there. And then when we got there, all the pieces are in place. And it was much less scary than I thought it would be. Great. Well, good for you. So, Corby, where is your portfolio today? How many units do you own? How many are you managing? So we only own personally about 20 units. And so I like to tell people that that you don't need to own 500 units to have financial freedom. So we only own 20. I quit my job. I think. we had 10. So it's very possible for anybody. It's one of the things I love about real estate is it really is for anybody. I absolutely love that. I want to celebrate more people who just have modest medium-sized portfolios. I'm in the same range myself. You know, like I just think that

Starting point is 00:21:47 you don't need to own hundreds or thousands of units despite what a lot of people on social media say you can most people can achieve their financial goals with by just picking really good deals. Right? Like, just get really good at it. Then you can have fewer properties. Fewer properties means less work. And to me, that's the perfect sweet spot. So congratulations on that. Thank you. Yeah, I agree 100%. Once your living expenses are covered, everything else is gravy. Yeah, exactly. You said the third thing that you do, you know, in addition to your brokerage and your property management company is still opportunistically buying and operating real estate deals yourself. Can you tell us what a deal looks like for you in today's market?

Starting point is 00:22:31 Is there like one in particular you could tell us about as an example? Sure. So a deal is relative, obviously, to everybody. And depending on where you are in your personal life and financially, that can be vastly different. But in our market right now, if I can buy a property that's going to at least be cash flow neutral, that I like the location. And I think there's an equity upside. I typically like to either burr or walk into a deal where I have 15 to 20 percent equity on the front end.

Starting point is 00:22:59 Okay. And it's cash flow neutral. Then I feel pretty good about that. And we work with all of our clients who go out and find deals that look just like that. And with the rent growth and equity growth that we've had here, those deals tend to just get better year after year. And as you mentioned before, when you have a mortgage, your payment stays the same. And if we can raise rents and build your equity from there, those deals just continue to get better. Okay.

Starting point is 00:23:20 Great. So can we dig into this a little bit? because I would imagine there's a lot of people thinking, Boise seems like a great market, long term, it's relatively high price, cash flow is hard to find. So can we just sort of like walk through how someone might achieve something like this? Sure. Yeah, I would love to. All right.

Starting point is 00:23:35 So what's the price point of, I assume, is this like a single family home or a small multifamily? Yeah, most of our deals are fourplexes are smaller. Honestly, the majority of them are single family homes. All right. So what's the price point of a single family home on a deal that you, you would either do yourself or recommend to a client. So the median single family home price in Ada County where Boise is right now is about $570,000.

Starting point is 00:24:02 So it's not a cheap market. But most of the deals that we do with our clients are in the 350 to maybe 450 range on single families. The things that we look for on that end are, it's nice to have four bedrooms. We can get more rent for four bedroom houses. We can get more rents for homes that have private backyards, that have three car garages, and have two living spaces. So those are the things that we generally look for. We find that depending on location and some of those amenities,

Starting point is 00:24:27 we can get 10 to 20% above market rents for properties like that. Wow. Okay. So you said four bedrooms. I love that. I think that's universally true. You know, just the more bedrooms you can get,

Starting point is 00:24:38 particularly if you're doing a long-term buy and hold, the better your rent prospects are going to be. You said two living spaces, right? And then what was it, a two-car garage as well? Three-car garage. Three car garage. Yeah, lots of space. Everybody in Idaho has an RV, a truck, and a car.

Starting point is 00:24:55 You have to. Okay. Excellent. So how long did it take you, or how did you develop that very specific buybox? Because I think this is a super important lesson for everyone listening. You know, of course, everyone wants to know their price point and what strategy that they're going to work on. But there are these sort of like X factors in every market that make the deals either more valuable on a resale or able to. to attract more rent. So how did you figure out which ones were applicable for your business?

Starting point is 00:25:26 Well, we had the benefit of having a property management company. And so we've been tracking how long our turnovers take, which properties rent faster, which properties we could push rents on, the quality of tenants that we got, how long they stayed, all of those sorts of things. And we found a sweet spot there using those criteria. And that's not every deal that we do. I mean, there's obviously other properties and criteria that can work. But by and large, if we can get a property that ticks all those boxes, we know that we can get higher rents on those, and our turnover is going to be very quick and very rare. Now, not everyone owns property management companies, but I guess it's something that anyone with a property manager could

Starting point is 00:26:05 ask, and I would imagine that, you know, a good quality property manager would be able to help you identify some of those characteristics that you should include in your buy box? Sure. And actually, I do have a tip that I go on the forums and, and push this quite a bit, but it's something a lot of people don't know about. There's a national association of residential property managers. It's an organization called Narpam. It's just a trade group for property managers. But in some markets, they're the only group that track local market stats. And so if you're investing in an area, whether or not you're working with a property manager, if you find a property manager who's a Narpam affiliate, or you can just reach out to the local

Starting point is 00:26:42 Narpam chapter and ask them to send you the last quarter stats or the last four quarters stats, they can send you all of the average rents for different types of units of town, for multifamilies, for single families. It's super helpful information. And especially Idaho does not regulate property management in any way. And so in some states, you can get some of that information from a real estate brokerage, but especially if you're in a state where property management is not regulated by the state, then NARPOM is the only organization that tracks that information. Cool. That is a great tip forever. I did not know that. I'm literally writing it down right now. Yeah, I mean, I feel like that's super valuable information

Starting point is 00:27:22 that people should be looking at. We do have to take one final break, but we'll get back to Corby's buy box and how he thinks about deals right after this. There are two kinds of real estate investors, those who have reviewed their insurance, and those who think that they have. Most don't realize their coverage wasn't built for how they actually invest. Vacancy periods, rehabs, short-term rentals, or LLC-held properties. These gaps surface only when filing claims. That's why investors work with NREG. They specialize exclusively in real estate investors, understanding portfolios, risk at scale, and cash flow protection. One claim can erase years of returns. If you own a rental property, don't assume you're covered. Have NREG review your insurance with someone

Starting point is 00:27:59 who gets investing at NRE.com slash BP pod. That's NR EIG.com slash BP pod. When I bought my first rental, I thought collecting rent would be the hard part. Nope. The admin crushed me. Every night was receipts, tax forms, and checking who was late on rent. I kept thinking, if this is one unit, how do people run 10? Base Lane changed that. It's BiggerPock's official banking platform that handles expense tracking, financial reporting, rent collection, and even tenant screening, all in one place. It's the system I wish I had from day one. Sign up today at baselane.com slash bigger pockets and get a $100 bonus. Baselane is a financial technology company and is not an FDIC insured bank. Banking services provided by Threadbank, member FDIC.

Starting point is 00:28:36 Here's the truth about passive investing. If the strategy isn't right on day one, there returns won't save it. Multi-family real estate offers structural advantages. Many investors are overlooking, including depreciation that can help offset taxable income while cash flow continues. Bam Capital builds its investment with that reality in mind. They are focused on solid operators, tax efficiency, and long-term performance. For investors who want real estate exposure without being landlords and who care about consistency over hype, this is a smarter way to allocate capital. Learn more at biggerpockets.com slash bam. There are two kinds of real estate investors.

Starting point is 00:29:13 Those who have reviewed their insurance and those who think that they have. Most don't realize their coverage wasn't built for how they actually invest. Vacancy periods, rehabs, short-term rentals, or LLC-held properties. These gaps surface only when filing claims. That's why investors work with NREG. They specialize exclusively in real estate investors, understanding portfolios, risk at scale, and cash flow protection. One claim can erase years of returns.

Starting point is 00:29:34 If you own a rental property, don't assume you're covered. Have NREG review your insurance with someone who gets investing at NREG.com slash BPod. That's nR-eig.com slash B-Pod. 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

Starting point is 00:30:09 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 Cost Segregation Guys.com slash BP to get a free proposal and see your potential tax savings. Hey, everyone, welcome back to my conversation with investor Corby Goad. Okay, so let's get back to the single family. You said that you're buying below the median price for the area, so 350 to 450. What kind of shape is this in? Is this sort of like a total rehab kind of job or cosmetic rehab at that price point?

Starting point is 00:30:48 Mostly cosmetic. Every once in a while we'll get lucky and find something that needs very little. Most of our cosmetic paint, flooring, every once in a while we'll replace some countertops and some hardware, do some landscaping, those sorts of things. But we try to shy away from deals where we're going to have to get down to the studs or we know we're going to have to gut a bunch of rooms. So we can usually, if we're doing a burr, we can usually get in that 15 to 20 percent equity increase by doing some of those costs. cosmetic things if we find the right property. And just in theory, if you bought this property and did nothing to it, I assume it would not generate positive cash flow.

Starting point is 00:31:23 Probably not, at least not where we are right now with seven and a half, eight percent interest rates. During COVID at three percent, it was gangbusters. That was no problem. Yeah, yeah. I bet. But I think it's important for people to know that there are deals that still work. But if you're underwriting the deal, just day one,

Starting point is 00:31:42 it's going to be harder to find. It's certainly possible. I have bought a deal on the market this year that was cash flow positive, not amazing, you know, three, four percent right off the deal. But with a lot of, especially these markets with strong underlying fundamentals, I would put Boise in that category, you're going to probably, if you're looking for, you know, a really strong cash or cash return, you're probably going to have to do the type of rehab work that Corby is talking about. So let's talk about that. These are mostly cosmet. You know, do you have a range? I know it varies a lot from property to property, how much money you would have to put in to be able to pull this off and get rents up to where you want them? Sure. Depending on the scope of work, we have a couple general contractors here that we work with regularly and one in particular that we do probably 90% of our turnovers with. And those cosmetic things, maybe some hardware flooring and paint on, let's say that's an 1800, maybe 2,000 square foot.

Starting point is 00:32:42 house, that's going to be in the range of 15 to 20,000 bucks. Okay. If we have to dig a little bit deeper and maybe we're putting in a new bathroom or two in a kitchen, sometimes we work closer to like that $30,000 range. So all in, I mean, what kind of financing are you buying these on? We're putting 20% down? You're doing hard money? Personally, I don't really do hard money.

Starting point is 00:33:01 So a lot of times we're putting 20% down. And the clients that we work with, a lot of times they're doing 1031s. And so they're buying the property with their 1031 cash and then coming out of pocket for the rehab. more of the deals we've been doing lately are house hacks. And so we have clients that move into those places and they're doing what they can on their own. So it varies greatly. Personally, I put 20% down and then rehab it with cash. Or actually, I should back that up. I'm a huge fan of Helox. I do use a heloac for a lot of that stuff. Okay. Got it. Yeah, I mean, it makes sense. And like, you know,

Starting point is 00:33:34 we're talking about a relatively expensive market here, but just in the house hacking scenario, I'm just ballparking this. So no one double check my math here. But, you know, if I, go in the middle of the range of what you were talking about from 350 to 450. We're at 400k. If you house hack, let's say you put 10% down with an FHA loan there, you're putting in 40 grand. You're going to need closing costs and cash reserves that probably gets you to 50 grand. And then you need 20,000. So you're talking about 70 grand. So, you know, that's obviously a lot of money. But I think for people with a pretty good job, it sounds like Boise's got a good market. That does seem like something that could be feasible if you spend a couple of years putting yourself in a good financial position.

Starting point is 00:34:19 Just wanted to call that out for people who do feel that, you know, it's tough to get into these types of more expensive markets. Just want to give you a general ballpark of how much money you might need to get into a deal like this. For sure. And a lot of people we're working with are using FHA loans or 5% down conventional loans. And if they're doing house hacks and doing painting and flooring and that sort of thing themselves, they can get by spending far less money. Right, right. That's totally right. And then so if you did this, you put in 20, 30 grand, like what kind of cash on cash return would an investor expect? Depending on what method they're using to rent the property, generally we see a lot of those deals coming in somewhere around 8 to 10%. Okay. Sometimes we'll do a little bit better and get a little bit more, but generally something

Starting point is 00:35:05 in that 8 to 10% range is reasonable to expect after a year and a rehab and on a house hack I'm talking about moving out. I mean, to me that sounds fantastic. to 10% cash and cash return is very good in this market. And you mentioned earlier that you probably got a 10 to 15% bump in equity from making those rehabs as well, right? Yeah. Yeah. That's not unreasonable at all. I love it. I mean, this is an excellent type of deal. I mean, I think for people who have the kind of cash, this is exactly the kind of deal that you can and should be looking for. It combines cash flow appreciation. It doesn't sound like you're doing anything super risky investing in a strong market like Boise and to a more cosmetic type of rehab. So thank you for sharing this with Corby. Sorry I went on sort of a little bit of a tangent, but I think it's really important for people to understand

Starting point is 00:35:53 exactly what goes into good deals these days because it's easy to say, oh, it's just so hard right now. But when you put the dollars and cents behind it, I think some people say, oh, it actually, that is out of my budget. But for a lot of people, they might say, hey, I actually can get into this and do something like the deals. Corby is talking about. And along those lines, if you're listening and want to get a better feel for the types of

Starting point is 00:36:18 properties that might be a fit for you, just a quick reminder that Bigger Pockets has a great tool for that. Our renter property calculator will help you figure that out, and you can find it at BiggerPockets.com slash calculators. So tell me a little bit about what the future holds for you, Corby. Like, what are your aspirations? What are you looking to do with your portfolio and your businesses next? Well, we're just kind of growing as opportunity presents itself. We've been really fortunate in that the businesses that we've built tend to bring opportunities to us through the property management company. We have a lot of investors that call us to have properties that they need us to manage or that they want to get rid of and don't know what to do with. We work with a lot of wholesalers locally. And so one of the things that I do, and I'd encourage anybody who's really familiar with their market, I network with a lot of the wholesalers here I offer to help them run comps on ARVs and as is.

Starting point is 00:37:09 I'll help connect them with resources and help them come up with scopes of work and that sort of thing. And in exchange for that, I get to see a lot of those deals first. And so sometimes we do some of those deals ourselves. Sometimes we bring them to our clients and work those through. So doing more deals like that, I really love doing that kind of stuff. And we're really working on growing our property management business as well, trying to get into, there's been so much building here that now there's a lot of larger multifamily development. So we want to work our way into managing some of those. Awesome.

Starting point is 00:37:37 Great. Well, good luck with all of that. Thank you. Before we let you get out of here, I'm curious if you have any additional advice or tips for investors who are just trying to get started or just navigating the challenges of today's investing climate. Yeah. You know, it's not anything new that I know people from Bigger Pockets have not heard before, but taking action is far more important than trying to spend years ingesting every bit of information that you can. You'll learn so much more by taking action. And not only that, but you'll see more. opportunity when you start doing that. So to be specific, I'm beating a dead horse here, but house hacking a small multi as your first deal and just taking action, get out there and do it. There's so many opportunities to buy things with FHA loans, 5% down conventional loans and getting in and offsetting your living costs by house hacking multifamily properties.

Starting point is 00:38:29 There's no reason not to start that way. I wish I would have. In retrospect, if I would have done that five times, once a year every 18 months for five years, I would have quit my job way sooner than I did. Yeah, absolutely. Well, it is tried and true advice in the real estate investing community, but for good reason, right? Because it is actually true. There's a quote, I think it's Marcus Aurelius. Forgive me if I get this wrong.

Starting point is 00:38:58 It says, more is lost from indecision than the wrong decision. And I think about that all the time, that doing nothing is way worse than making the wrong decision. making the wrong decision, at least you learn something. With indecision, you don't actually learn anything, nor do you achieve anything. So I definitely want to second what Corby said there. Well, Corby, thank you so much for joining us. I really, really enjoyed this conversation, learning about your story, your businesses,

Starting point is 00:39:23 your successes, very cool. If you want to connect with Corby, you can find him on Bigger Pocket. Sounds like you're an active member of the community there. I appreciate that. And we'll put his contact information in the show notes below as well. Thank you so much for having me. It's been an honor. I really appreciate it. Absolutely. And thank you all so much for listening. For Bigger Pockets, I'm Dave Meyer. We'll see you again soon. 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.

Starting point is 00:39:55 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 Calicoe 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.w.w.com. The content of this podcast is for informational purposes only.

Starting point is 00:40:16 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. I'm going to be the next.

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