KGCI: Real Estate on Air - How to Build a Rental Portfolio (Part 1)

Episode Date: July 26, 2024

Okay, everybody, welcome back. I'm really, really excited for today's topic, which is how to build a rental portfolio that nets you six figures annually. And I don't do this very often. But today, I have a special guest, one of my dearest friends, Jill Wooten, Jill, thank you for being here. Thank you for having me. I'm honored. Well, I'm just honored to have a little bit of your time and have you share your wisdom. I just love being friends with you, but I won't make everyone listen to that part of things. But I'm just going to tell all of our listeners a little bit about you and do some of the bragging for you. So Jill has been in the real estate industry for 11 years, the majority of which for about nine years, she worked at Ryan Holmes, which is the fourth largest home builder in the country. She was a top 10 sales rep for an unprecedented period of time while there.

cumulatively, she sold over $160 million in sales volume and 400 units through her time there. And in March of 2022, Jill decided to switch from new home sales to the resale side of the business. She closed $16 million in volume in her first 10 months. And today's topic is how to build a rental portfolio. And Jill is uniquely qualified to speak to this because she owns 11 high-end rental properties in a desirable and gentrified. area of Baltimore City. And then she also manages four more properties for a close friend of hers in the same area. So let's just give a tiny bit of backstory about how this episode came to be. Jill and I text all the time and I have to cop to something. I didn't warn her about this right

before we started recording. But my husband and I have been calling her machine gun Jill ever since the beginning of COVID. Do you remember coming over my house when Tucker ate your shoe, my bad dog? Yeah. And Jill and I were like sitting at the kitchen table, talking about what I don't even know what. And when you left, my husband was like, she talks so fast. And I was like, yeah, she's like a machine gun of wisdom and information. And that's been your nickname ever since. I hope you don't mind it. That is so funny. So we text a lot, rapid fire. And in one of our conversations, we just sort of talking about how this is such a doable and phenomenal way to build long-term wealth and generate additional income. And we're basically, this is.

we're going to be splitting this episode into a two-part series. Generally, these run about 30 minutes. So we're going to divide this into half because Jill has so much to share. And anyone who has listened to this podcast for a while knows, like I like to give like real actual information, really tactical, things that are actionable. So we're going to talk through as much as we can that would kind of cover two full episodes. And then Jill is also going to give her Instagram at the end. So if you want to connect with her and network and, you know, just get to know her,

you're going to have an opportunity to do that. So we're going to talk about how she got started, building her portfolio, the mindset habits and skills that have led to her success, which in our prep, it became clear to me that that was such a huge factor, the discipline that it's taken to accomplish this. And then all the things people always want to know, even us real estate agents that help other people do this, but we can get kind of tripped up on like, how can I finance it and what loan options are there? And, you know, how much could this, like one of my concerns early on was like, is this going to take away time from my sales business? So we're going to really just walk through how to do this. And then of course, what the income and the cash flow potential is.

So is that enough, Jill? Do you think that that covers it? Yeah. I mean, I'm an open book. So anything you ask me, I'm happy to share with the audience and speak from my own experience. Okay. Great. And I will say it's so intimidating for a lot of people when you hear someone, you know, is basically managing a property, a portfolio of 15 properties and owns 11 of them. And it's so easy to be like, I can't, I can't imagine how I would get there. That would be really nice. So we're going to start at the beginning. How and why did you get started on your first rental? So I got hired at the builder when I was fairly young. I was 22 years old. It was an 100% commission job. And a big part of our job was to pre-qualify all of these people who are coming into the model. And I was absolutely shocked.

to learn that most people were just one paycheck away from missing a bill or, like, being in serious financial turmoil, they were so highly leveraged. And that kind of got the wheels turning in my head that I didn't want to be in that position. And I wanted to like think of a way to get out of that cycle. So I was just a few days away from my 23rd birthday when I closed to my first rental, which was back in 2013 for reference. Okay, thank you. So we're taking it back 10 years. Love that. And, you know, it's interesting. You said, like, seeing that people were really cash-strapped and one check away from not being able to pay their bills. So you obviously started to have this vision for yourself and, you know, you really were overhearing things from your coworkers and also seeing how they were living commission to commission, which is such a tough part about being in real estate. And everybody wants, quote, passive income. But it can just seem a little bit like a black box of how to figure that out. So like what early decision or decisions did you make when overhearing those conversations to move into action instead of just wishing and wanting? Yes. Well, apart from just being.

surrounded by the prospects that we were pre-qualifying in their financial positions, my coworkers were also always talking about money. And this is like known to be a well-paying job. We all know you can make a ton of money selling real estate, but they were always saying things like, oh, that closing got pushed from the end of September to early October. I needed that home to settle so that I could make my mortgage payment or pay my daughter's dance tuition or whatever or at the end of the month. They're pushing for one more sale because they have a bill to pay. I never wanted to be in that position. and I thought to myself, I want to sell homes to people that will truly benefit from them

for their own happiness and my own enjoyment. I don't want to try to sell someone a home because of the pressure of me needing more money in my bank account that month. So I just, I was thinking about like, what could I do that will never land myself in that position? So at the time, I was renting in Canton and I was paying, I think, 800 at the time for a bedroom. I had three roommates and I just did some quick math and I thought this, landlord is getting $3,200 for us to live in this house. So how can I cut my housing expense to make that happen for me? Yeah, and one thing that was such a thread in, because we did like pretty heavy preparation before this episode to really like make sure we got into the good stuff. There was such a

thread that you talked about about saving and being disciplined. So before we get into the how tos, let's just talk a little bit more about your mindset and your habits. So you told me that you've always been a saver. And then, of course, being in a high paying job is a great way to save money. But can you talk about your journey with that and then how you were able to ultimately funnel that and buying that first property? Definitely. So I think I would equate saving to weight loss in the sense that everyone knows how to lose weight. You burn more calories than you take in. Easy. Same with savings. You have to save more money than you're spending. Similar to weight loss, I think people struggle with actually knowing how to implement that and the discipline that it takes

and the sacrifice that it takes and the consistency that it takes. It's never linear. Saving money is very similar. People know how to save money, but they have trouble doing it. So for me, I've always had a budget from the time I was probably 21 years old when I was saving up for my first car. I took, it's just a Google sheet that I have and I just wrote down on a monthly basis. What I am making, what I am spending, and it was really eye-opening to see that if I continued on my current path, I would never save money, I would never invest, I would never vacation, and I would just break even. So figuring out how you can save is key. And it just comes down to like what sacrifices you are willing to make and are able to make, but it's not comfortable or easy. And I would equate that to

weight loss. It's not an easy thing to do. So you definitely have to have discipline. Does that answer what you're asking? Yeah, it does. And I mean, we're going to go like down a couple different roads with it, but my mind was kind of worrying as you were answering that question because I think about one of the traps of being a high earner is it's so easy to just keep spending at new levels that are commensurate with how much money will make. Yeah, lifestyle group. That's that term. So I think that that is something that you probably could have easily fallen into with your early success in your new construction career. Like, can you give an example of one or two things you'd, because everyone knows like, okay, I should make a budget and

you know, some people just the idea of making a spreadsheet, their skin corals. But either way, like, can you give an example or two of what you did in that early phase to cut the fat, if you will? Definitely. So I have been a car fanatic my whole life. I read motor trend. I read car and driver. I love a flashy vehicle. For years, I drove a very modest Chevy Cavalier for anyone that knows cars well into my six-figure earning career. And it never crossed my mind to buy a nicer car because I had other priorities like saving for houses and investing and setting myself up to really feel like I'd earn those things down the road. So that was one thing. I didn't spend unnecessarily on things that I didn't actually need. And then I didn't, this is like unfortunate,

I guess, but I didn't go on vacations for probably about three years. I didn't really go on any trips or anything like that because at the time I was young and my priority was saving. So you just have to look at what can you cut and what are you willing to cut? And looking back, do you regret any of those decisions? Honestly, no, because now I can travel and do whatever I want. Yeah, you're headed on a trip today. Yeah. I mean, it sounds crazy. But I was young and at the time I was really motivated and I loved working and learning all the time and the money was obviously rewarding and addicting. So I don't regret it. I mean, there are things I missed out on, but it just depends how intense you want to be. I'll share more of my path and what rate I acquired properties at and how I did it. But there are definitely ways you can do it

being less intense than I was. Yeah. And I feel like that's the beauty of anything with real estate, whether it's investing or selling homes, that there's so there's like such a spectrum of ways you can do things and the pace. And I feel like there are seasons of life where like going hard is really appropriate. And there are other seasons of life where recovering and resting is more important. I think you and I are both in that chapter. But we both worked really, really hard for a very long time before. I don't want to say, you know, it's funny. I feel like the idea of plateauing has a terrible connotation, but I heard a wonderful podcast episode a week ago from a dear friend of mine. Her name is Dara Bruce Dean, if anyone knows Dara. And she said,

she basically like debunked that. And she was like, you know, if you're just always going uphill, you never rest. She even gave this like great comparison to like if you're trying to climb Everest, like you have to stop at all of the, I don't even know the right words, the stations, yeah, along the way, or you will die because you need to like acclimate to that new altitude and all of that. And I feel like that is something that I didn't always give myself permission to do. I had an idea that like plateauing was a bad thing. But the whole point of building something like what you've built and what I've built with my real estate team is to be able to sit back and enjoy it and letting yourself do that at a certain point.

I can definitely relate to that. And I, similar to you, struggled to sit back and acclimate to the new altitude as the analogy you used. That was definitely something I struggled with. It was like someone put me on the on setting and I couldn't figure out how to turn it off for probably 10 years. Yeah. Oh, God, that's such a deep topic. But let's talk about that a little bit. And, you know, what inspired you to go work for Ryan Holmes? Because I know you had a ton of success. And I think one of the most paradoxical things about real estate is when you're really successful, it also tends to mean that you're working 24-7 or almost. And yes, like teams and delegating and leverage are all these like beautiful technique. But it's still like a very intense industry. So like, tell us a little bit about your trajectory and, you know, that putting yourself in the position to earn at the level that you did so that you could say it because I think that helps for people to understand. Sure. So I started working there. I don't know. After college, I took a job. I was selling office supplies door to door. It was really high effort, really ruling. 100% commission. But when I got my first paycheck, the commission structure was a total scam. So it was

low pay and just not fulfilling. So I left. I started bartending. And my parents were like, cool, you can hang out at home, but for up to a year. And then they said they would start charging me rent. So that was kind of the catalyst for me wanting to move out of their house, but I just wasn't sure what I wanted to do. My dad has been in residential construction project management my entire life. and he told me the new him sales reps were paid really well, but that it was a grueling job. And he almost scared me when he said it. I think he was concerned that his 22-year-old daughter wouldn't be able to survive under the pressure of lot takedowns, lot takedowns, developer deposits, sales quotas.

It's a really competitive environment where it's corporate and they're pitting sales reps against each, sales reps against each other to get them to succeed and compete. But I wanted to prove that I deserved a spot and I deserve to be taken seriously. I have always thrived in competitive environments. I just love it. And I was determined to prove to my dad that not only could I do it, I would be the best at it. I love that part of your story because don't ever tell me that I can't do something. Like I will, not only will I do it, I will want to shove it in your face afterward. I may not, but I will think about it. A hundred percent. And you use the word grueling. And I think, you know, it's just interesting. Like I met you. you when you were kind of closing out your chapter at Ryan Holmes, you were starting to think about like what else you can migrate into. So there were obviously some downsides there, but you were able

to save a lot and, you know, you sacrificed. So what, there was one great story that you mentioned to me when we were out for a walk a few weeks ago. You told me how you didn't want to sacrifice having an amazing car anymore, like you said, being a car bump. And you figured out a way to cover the lease on the fancy car that you wanted without actually coming out of pocket. So let's just kind of sidebar on that story of like you can sacrifice, but you can also be smart and find like loopholes with like tax benefits and business cash flow to make things work differently. So tell us about that. Definitely. So it was 2018 and I had five rentals at the time. I was living in my sixth property with roommates, of course. And up until this point, I had only ever worked for the purpose of saving

money for down payment as fast as I could, like work, down payment, repeat. I was finally ready to buy the luxury car that I felt I had deserved and earned. And I had saved up and I was ready to go get my dream vehicle. And this is like very on par with my mindset is I was planning to pay cash for the car because I didn't want to finance debt that wasn't generating income for me. So up until that point, I had only ever done mortgages, which I love mortgages. And I'll talk about that soon. But anyways, after I saved up for my car, I had an epiphany that I could take the money, buy the car and that would be that. Cool. Or I could just, you know, put 5% down on another home, move into it, rent out my room at my current place, and boom, cash flow $900 a month. So instead,

my tenants paid for my car and I invested in another property that still today, way after that car is gone, still cash flows for me. So effectively my tenants paid for my lease on my first luxury vehicle. So thank you. I love it. And I feel like there's just something, I feel like, being self-employed and being in these like ruling type industries, it's nice to be able to reward yourself in those ways, right? And like really celebrate the win, especially if you're someone that just wants to like, I said, charge of the mountain and never stop and take a break. Like just, I don't know, creating those wins for yourself and actually like appreciating what you've accomplished. So I think that's just a great little anecdote. But we did kind of jump ahead.

I want to talk about how you thought your very first property going. So you started to say it before and we kind of went down a little bit of a bunny trail. So you were renting for $800 a month. Can you unpack that story in a little bit more detail for us? Definitely. So like I was mentioning, I was paying $800 and I had three roommates at the time. So I did some quick math and I was quickly realizing my landlord was getting like $32 to $3,300 for the place. At work, because we were doing financing with these buyers, I was running cost estimates all day long and learning about mortgages. So, I decided I would run numbers on a four-bedroom home down the street for me. And I did the math and saw that buying one with only 5% down was around $2,400 a month. So immediately, I was like, wow,

$800 a month, profit if I can put down 5% on a home and I could live in it for free. So immediately I knew I wanted one. All I was doing at the time was studying for my promotion at work. So I wasn't really going out or spending money. So on my training salary, I was saving about $1,200 a month. my first year working there, which is aggressive, but at the time I was young and it was very doable. So I saved $14,000 my first year when I was in training, combined with about $4,000 that I had saved up bartending in Ocean City. So I had like about $18,000, which isn't the 20% down that a lot of people think they have to get to. I did have to get closing help from the seller, but I got my offer accepted on the third home that I made an offer on. And before I closed, I had already

lined up three roommates from Craigslist. I had met them. They had signed leases. And part of my mindset at the time was that I was there to maximize my cash flow. So I actually chose to live in the smallest bedroom. And I rented out the room I had fallen in love with when I toured the house. It had a walk in closet. There were speakers in the ceiling. It was huge. I actually wound up renting that home, that room out for 950 and living in a room that I would have probably rented out for like 525. But it was worth it. Oh my gosh. I was thrilled. There's that threat again of like discipline, sacrifice and like thinking about the big picture. So that's incredible. So that's how I got my first house, five percent down. Okay, five percent down. So straightforward. And closing help, right? And in the market we've been in, this is like a little bit of a different climate. But you said you had to offer on what three homes before you got one. And that's part of the investor mindset too, right, of like not falling in love as much. Again, looking at the big picture, keeping your emotions in check. There's anything you want to add on that side of things. It's all the stuff we tell our own clients. But like experiencing it for yourself is different, no matter how well you know it.

It is hard to follow. Like, I would fall in love with homes because they had really charming trim or exposed brick. And yes, like the tenants that I rent to were pretty similar in demographic to myself, like young professionals who wanted a great place to live in a convenient area, lots of stuff to do within walking distance. But ultimately, I set criteria for myself that if I couldn't live in the home for free, I wasn't interested. So I really held myself to that. And there were a few times when I wavered. And I was like, oh, I love this house. Like, I could live here for $300. But I knew if I waited. I would find one that I could live in for free. And I really held myself to that. So whatever your criteria are, stick to them because they're going to, that'll be what you're dealing with for the next 30, 50 years. Yeah, so, so true. Now, tell me this. Okay, so I feel like getting the first house is pretty straightforward, right? I mean, it's straightforward. It's not easy. I mean, the fact that you, like, there's hustle in finding tenants on Craigslist and screening and like being in that learning curve, but it's manageable. It's the first one. Can you, and I didn't actually ask you this specifically in the prep. How did you go from one to two, like the beginning of scaling? What was next? So basically, from my first

property, I mentioned I was already saving $1,200 a month before closing on that house. So I kept to do that. Like every single month, we got our paychecks on the 15th. And I would transfer $1,200 to my savings account no matter what. So I kept doing that. I also was no longer paying $800 a month in rent, gone because I was living in my home for free. So I also would transfer the $800 to my savings account, which translated to $2,000 a month. So fast forward one year, I had $24,000 put down, and I wound up finding another home that was half a block away from my first home that I just absolutely loved. And I wound up talking to basically like private investors that I knew either through work, like friends of coworkers and family members to get a personal loan for the balance of the 20% down. It was a pretty aggressive loan

because I was young. I didn't really have much of a track record as a landlord. I had been at my job on 100% commission for like a month at this point. I think I had just gotten promoted. So it was a pretty aggressive loan. It had a four-year payback period. And at the time, the interest rate was higher than what a bank would have offered me. But I couldn't have gotten a loan from the bank. So just I would encourage you to be resourceful and think about who you know, who might believe in you and might bet on you and who you could convince and how you would convince them. So I wound up getting a personal loan for the balance of it and actually paid it off in just under four years. Otherwise, I just have to pause you. I love this story because these are the

things that honestly seemed like a complete mystery to me early in my career, especially because the people I was surrounded with when I was first selling home, they just weren't doing this stuff. So like I never even had the chance to like overhear anything. And we didn't have podcasts back then, by the way. It was just different. Like, there was less knowledge exchange. But can we just drill that down? Like, do you remember what the personal loan percentage rate was compared to the mortgage rates at the time? Yes. Not exactly, but I have a rough idea. So mortgages were really low at the time. I want to say a 30 year was like 3.75. A 15 year might have been closer to 3%. And my personal loan was either 6 or 7%. Okay. And I think it's such like, that's just good context. I think,

Right now, personal loans are running, I don't know, nine, 10%, if not more, with rates being seven to eight percent, depending on the day. Kind of drastic compared to the example you just gave. But I think that's something that a lot of new investors don't realize is there are so many people out there in the world that are sitting on cash and are looking for opportunities to do a short-term loan, to do something different, to diversify, to bet on someone they believe in, basically everything that you just said. So there's probably someone in your network or someone in.

someone's network who you know who is looking to invest. So I feel like that could be a first line of defense for people who are like, you know what, I'm not earning at that level yet where I can save as aggressively. How can I do this faster? And you can speak to like a title company about having that person like be on the title or have some type of right to the property if you defaulted. Like there's ways to work that. So just be creative and I don't know, don't write anything off. Yeah, creative, resourceful, a little bit, you know, a little bit. Think out. box. Yeah, and asking people for things. I mean, that's just part of sales 101 too, right? For me, at least, is like to ask for a little more than I'm comfortable with of people. And even just asking for help,

like, that's hard too, right? But like just saying, hey, like, do you know anyone who does look? You just don't know what's out there unless you start networking. Definitely. And if I couldn't have, I'm sorry, go ahead. No, you go. I was going to say if I couldn't have found the personal loan, my plan at the time had been to wait for four more months. So when you close on a primary residence, and I believe this is still true today, but check with a lender. And you buy a primary residence, you are signing an occupancy affidavit at closing that says you will reside in this property as your primary residence for the next 12 months. That's technically all that's required of you. So I was basically waiting 12 months to go find another home and just do the 5% down again and repeat and move out of my home, rent out my room,

and start it again. So if I hadn't been able to find a personal loan, I was probably three months away from putting an offer in on another primary residence anyways. Another factor that kind of helped accelerate me from there was that my income had also more than doubled when I was first promoted. I went from a training salary to making commissions on selling a good amount of real estate. And then it increased again. Once I had consistent settlements from the builder, they paid you half when you sold the home and half when you settled. So my income really ramped up. So saving for house number three came about a year and a half later when I myself had 20% down. And then I paid off my personal loan, I think a year and a half after that.

So I love this. I was actually going to ask you, why did you get the personal loan? So you already answered that question. For the third house, was the decision to put 20% down yet again a timing thing? Or was that just for better loan terms and cash flow and you had the money? It was better loan terms cash flow and I had the money. Okay. And looking back, do you feel like that was the right call or do you think you could have just kept doing the 5% plan until you've hit the max of 10 properties? I kind of felt. like I wanted to save the 5% down for if I ever didn't have the money and that if I could do the 20% down, I would want to because I knew that that is basically unlimited. You can have

10 conventional mortgages as investment properties. So I thought, like, while I have the 20%, I should do it. And then if I ever don't, I know that I can always buy another primary residence. So that is a big thing. And I think a lot of real estate agents aren't familiar with is mortgage financing. We learned a lot of it at Ryan Homes pre-qualifying everyone. There is no limit to have. how many primary residences you can buy. So right now, even though I have 11 mortgages, I could go buy a 12th home right now with 5% down and buy a primary residence. You just actually have to live in it. So it's very doable. Beautiful. Okay. I feel like that is one of the things that I think can get, I mean, the concept of understanding how to do it and then the cash

itself of like how to hack that. So knowing that you could kind of bounce between these options, as well as a lot of other options that are out there. And I don't want to go too far down that funny trail because that could be a whole series of podcast in and of itself. But I think it's interesting. So, you know, you own 11 properties now and I was kind of curious what the pace was. So you told me that you bought roughly one home a year. Is there anything else you want to add about how you scaled specifically from the standpoint of the financing and the down payment side of things? Every single dollar that I made, like all of the cash flow went into a savings account for another one. It wasn't like I got two homes and was like, okay, I'm going to disson.

or wherever, everything I made, I saved and went into an account. So it was kind of like a snowball effect. As it rolled down the hill, it got larger and it rolled faster. So I was able to get roughly, like you said, one home a year between 2013 and 2021 when I closed on my last property. So it was nine years total to acquire 11 homes. Beautiful. Okay. So now you've got 11 homes in your portfolio. You manage four for your friend. And one of the things I was curious about because I feel like people have so many different end goals with investing. Are you looking at appreciation and just owning homes that will get more valuable over time and you'll resell them someday? Are you looking for the cash flow? I feel like we've kind of already covered that. But what is your approach and why?

So I am cash flow 100%, which is a good thing for me since Baltimore City seems to be exempt from the rest of the country regarding the rate of appreciation. But that's okay with me. I want Baltimore to stay affordable so that young people can continue to invest in this. city. And selfishly, I want to buy more property. So I would almost say I do not care about the value of my homes, whether they go up or down. I'm not selling them as long as they continue to rent. I would encourage listeners, though, to think about their goals. I have a lot of friends who own rentals, and some of them have the goal to just own an expensive piece of property in an appreciating area where they are just breaking even. And in the end, they've gotten a free house. So it really

just depends on what your goals are. But those are mine, cash flow. Yeah. And it's fun. again like I'm thinking back to the mindset of when I was a new agent like no one had told me what cash flow was and it was mind blowing to think what you said that it I mean it might stink to have a house actually depreciate but there are rentals in in parts of Baltimore where that is the strategy right where it's all about cash flow and it almost doesn't matter if the value of the house tanks over time but it's a long-term approach right and you're a long-term thinker you're long-term with your ability to like have discipline and save. So there's, it's just, I think it's fascinating. And I just want to say that I am glad that we're talking about this because I have a rental in Baltimore City. So I did my own mini version of

house hacking. And if I would say that I have one regret as like a young person and as an investor is that I didn't house hack repeatedly. So I bought my first home and rental and turned it into a rental when I got married in 2012. And then we moved into the home that I have now. So that house I put on a 15-year mortgage when rates were really, really low. And it's interesting. So like you said, like Baltimore City is not like a super rapid appreciator compared to other segments of America. And I would say even my rent there has not been rapid, but it's been very steady. So when I put my house on a 15-year mortgage, the mortgage payment went up by a fair amount. So I basically break even on it every single month. But for me, it's worth it because I have renters that they actually

like do a lot of basic maintenance for me. I'm super, super, super hands off. I never have to chase them for rent. So it's just like you used as you get experience with us, you start to figure out what you value. But what hit me is that I'm 12 years from having a free and clear asset that right now is worth over $300,000. I don't know what it will be worth in the future, but I'm thinking at least like 400. And I'm like, well, that could pay for one or both of my kids to go to college, depending on where they go. So it's more for me, it's more the appreciation gain than the cash flow game. And now. specific example. That's a fantastic example because for you, cash flow isn't really coming from the time that you did that refinance until 15 years later, but you're able to see long term. So this is something

I would encourage listeners to think about too, is there are different approaches to this and different levels of risk and profit associated with each one. So you just have to think about your risk tolerance and it's like most things, it's high risk, high reward, low risk, low reward. For example, I have buddies that own college rentals in a small college town where I went to school. Those units at turnover are absolutely trashed. There is usually about a month of vacancy while they fix it back up. The tenants are turning over every single year because they are moving in with new roommates or graduating or they're moving on campus or whatever. So it's high turnover, really high cash flow, but a lot of management, like they are trashing these houses. I also have friends that own homes

in really high-end suburbs of D.C. where they barely make anything, but their tenants are paying early every single month without asking. They are steam cleaning the carpet every couple months because they are just the type of meticulous people where you would walk in and be like, this is incredible. So they're making less money, but they're getting peace of mind and less stress. So it just comes down to like what balance of that do you want? And there's pros and cons to to everything. So for me, my tenants are typically between 21 and 24 years old. They don't have a lot of education on how to maintain a home. A lot of times they inadvertently break things or misuse things and don't realize like dryer vent filters or garbage disposals or they trip a breaker and they don't

understand and they turn over a lot. So my tenants typically stay for one to two years, which that's a big negative to my portfolio is I'm often turning over these units. That's interesting. There's a few things I want to unpack from that. First of all, the visceral reaction I have when you describe the college tenants. I'm like, oh my God, it's like a property manager. nightmare. But I think that if you're someone who's in a different life phase than I am now where my time has so much value, like, I think that would be a great model when you're early on and like you have time to spare, right? And the properties near you and you're up for like being on that learning curve. And then there's that that risk versus reward of all of the cash flow. So I think that

that's an interesting piece for sure. And I just think like even just in what you describe, you know, hearing, you know, the spectrum of, you know, that from the people in the D.C. suburbs where they treat the house like they actually own it. And like, what's your comfort zone? And, and, and I think that really ties into the next thing that I wanted to talk with you about, which is managing your time and energy with a portfolio because that is really how it's all going to affect you to day to day. Because when you own a house, like, unless you have a property manager, you are the person that needs to deal with it when things break, especially if anything's like emergency levels. So let's talk about the big picture at this point that you're at now with 11 homes in your portfolio.

How much time are you spending on management? During turnover season, which for me is the summertime, end of May, June, July, August, and early September, I am easily spending 20 hours a week or more. So that's something to think about if you have a full-time job, where would that time come from, or who is doing that? And I'm spending that time screening tenants, writing ads, free screening before showings, holding showings, writing leases, managing repairs at turnover, doing move in and move out walkthroughs, those type of things. So that is substantially more time-consuming during the summer where it's

20-plus hours easily. The rest of the year, I'm honestly spending maybe five hours a week on my rentals. The only downside to that is it's not like I can say Tuesday between 12 and 5 p.m. I'm going to work on my rentals and be done for the week. Those five hours are chaotic and they come up like whack a mole. You don't know which house is going to have a leak next, which home is going to have a tenant lose their job next and not be able to make rent. It just comes up at random. So you have to be ready and able to react whenever that winds up happening. But honestly, five hours a week seems like very fair and manageable, considering what I'm making off of them at this point. Yeah. And I just laugh because it's like the pain of being in real estate. But I think if you've

been a realtor, you don't know when you're going to get a nightmare home inspection request that you need to sit and, you know, wade through and get, you know, eight different contractors out to bid on it. So I think, like, when you're when you're working in the industry, this is such like a parallel skill set to apply. There are different like areas of knowledge and expertise, but the skills are the same of like organizing, communicating, optimizing. And one thing I think that's interesting is you have your turnovers in that like June July timeline. That's specific to your market, right? Like you've been strategic with that. Can you speak to that a little? bit.