the bossbabe podcast - 17. Real Estate 101: The Step By Step Process to Buying Your First Investment Property and Leveraging Your Money to Work For You

Episode Date: June 14, 2019

In this week’s episode, co-founders of BossBabe Natalie Ellis and Danielle Canty are sitting down with total Boss Babe, real estate expert and author, Courtney Poulos. Courtney is a member of the Forbes Real Estate Council, was the host of FYI Network’s “My City’s Just Not That Into Me,” and her book “Break Up With Your Rental,” is the go-to book for women who are unapologetic in their ambition and are wanting to make their money work for them in the real estate game. Courtney’s mission is to empower women to gain equality in financial independence and she teaches how you can leverage your money to work for you. Courtney shares how investing in real estate became attainable for her and how it can be for you too, the step by step process to buying your first investment property and how you can stand in your power by breaking down the conditioned beliefs and perceived stories that investing in real estate is a difficult goal to accomplish. Together they expand on the pros and cons of investing in stocks vs real estate, how to shift your mindset around money and how to be creative in the ways you use your money to invest in real estate. No matter what your current situation is, the ideas and insights you will take away from this episode are invaluable. This episode is sponsored by the Insta Growth Accelerator. A 12 week accelerator designed to show you how to grow and monetize your Instagram account. www.instagrowthaccelerator.com   

You cannot make a mistake here. Even if the market tanks, it will recover. And so just getting in is the smartest financial decision you can possibly make. Having your own nest egg will make you a more attractive partner to the kind of people that are in your future, maybe not in your present. It's a function of when you sell, not when you buy. Welcome to the Boss Babe podcast, a place where we share with you the real behind the scenes of building successful businesses, achieving peak performance, and learning how to balance it all. Natalie and I are the co-CEOs of Boss Babe and we just love bringing you these weekly podcasts.

We love not only chatting about what's going on with Boss Babe but also what's going on in other successful businesses and sharing all with you. It's a real honour not only to have conversations around the ups and the downs of being an ambitious woman but also discussing how we can all strive to be the best versions of ourselves. So far on the podcast we've chatted about imposter syndrome, low confidence, women's health, Natsuki and I have both shared our stories which we did in the first two episodes and we have a ton more like this planned but we would love your opinions too so if you can spare just 30 seconds please leave us a five star review we'd be so grateful and just an episode subject that you would love us to cover and we'll make it happen thank you so so much so without further

ado I want to introduce this next episode because we are heading back to LA when Natalie and I interviewed boss babe Courtney Paulos. Courtney is a realtor in LA and a member of the Forbes Real Estate Council. Now getting on the property ladder is no mean feat, which is why I wanted to do this episode. And Courtney has made it her mission to help and support more women to achieve financial independence through real estate. Personally, Natalie and I are in completely different situations when it comes to real estate because firstly, Natalie lives in the US and is currently looking to purchase her first home whilst I'm in the UK and I'm currently renovating my second home. And so we share this with you because not only are we in different situations in different countries, but we both took a lot away from this conversation. So this week's quote is this,

don't wait to buy real estate, buy real estate and wait. Courtney has made her money work for her in the real estate game and she is sharing so many insights in this podcast. However, I will add it's really important you don't take this as personal actionable advice. It's given as a general information, so allow it to inspire you, but please consult a qualified professional who knows your personal situation before taking or acting on any of the points discussed. Okay, so last thing before we start, because I know you cannot wait to listen to this episode, but I just want to tell you about our IGA course, which has sponsored this episode today. Now, if you don't know what our IGA course is, where have you been? I'm only joking. It's our

Instagram growth accelerator course, helping you gain more followers and monetize them. So if you have a business or a personal brand that you are wanting to grow, then look no further. It's 12 modules with step-by-step video tutorials, workbooks, insights, and behind the scenes of how we have built our bossbabe.inc account organically. So if you want to know that, definitely stay tuned and join in. We are giving you the exact strategy we have used to grow to 1.3 million followers. So if you have a business or a personal brand that you are wanting to grow, then look no further. It's 12 modules with step-by-step video tutorials, workbooks, insights, and the behind the scenes of how we have built our bossbabe.inc account organically. We are giving you the exact strategy

we have used to grow to 1.3 million followers. So if you are ready to invest in your business, take a look at instagrowthaccelerator.com or if you have any questions, just drop us a DM at bossbabe.inc or I am Natalie or Danielle County. A boss babe is unapologetically ambitious and paves the way for herself and other women to rise, keep going and fighting on. She is on a mission to be her best self in all areas. It's just believing in yourself. Confidently stepping outside her comfort zone to create her own vision of success. Okay, so I am so excited for this episode. Real estate is something that I find myself talking about a lot right now because a lot of people say it's a great place to invest your cash and

I just can't wait to pick your brain. So how did you even get started in this world? Well, my name is Courtney Polis, first of all, and I used to be an actor, a singer, a front desk girl, a waitress. I finally ended up as an editor for the federal government before I couldn't take it anymore. And I got my real estate license. And when I got my real estate license, my whole entire world shifted. I stopped looking at things paycheck to paycheck, and I started looking at my opportunities in terms of lump sums. So I looked at purchase to purchase or vacation to vacation, as opposed to paycheck to paycheck. And when that shifted, real estate became attainable for me. And I wanted to share that with the world. I love it. So your new book just came out in January, which is super exciting. And for

everyone listening, make sure you listen all the way till the end because you're going to get a chance to win the book, which is absolutely epic. What message are you trying to get across in your book? So Break Up With Your Rental is a guide for women who are professional, single women who are looking to gain some equality in their finances, making them a better partner, a better perspective for future mates, and also giving you some stable ground from which to launch. I'll give you an example. I bought my first place when I was 27 years old.

It was a $235,000 condo in DuPont Circle in Washington, D.C. Within two years, it had appreciated about $35,000. I sold it and I bought a two-bedroom apartment. I kept that as an income property. I moved back to L.A. I bought another house. I sold it. I made $200,000 profit.

I bought a bigger house. I sold it. I made $200,000 profit. And I bought a bigger house with an income property that I bought for $1.2 is now worth $2 million. That's kind of how it can go. So 2627 is a great place to take $6,000, which is all you really need to buy a $235,000 property. Put your $6,000 aside and jump in. Okay. So I'm 27. Okay. So this is perfect for me. I knew it. So, okay. So $6,000 to buy a property seems crazy. It does, doesn't it? I'm exaggerating a little bit. It's three and a half percent down is the minimum, minimum, minimum that you can put down. And that would be

an FHA loan, which has better qualifying options. So your credit doesn't have to be as good, and you don't have to have as much in reserves, and you don't have to make as much money as you would with a conventional loan. FHA loans still work in most of the country. In competitive markets, sometimes you're at a little disadvantage, but I think actually as a first-time homebuyer, you can make a better investment when you go outside the city that you live in. I definitely want to jump into that buying in different cities because it's something that we're considering a lot of. But say you can pay a big chunk of your deposit for a house.

Is it better to pay more or less? Is there kind of a rule there? That's a really good question. Leverage is the ability to take your $1 and turn it into $2. So when people are buying real estate, especially for the first time, they tend to think, oh, my God, this is the most expensive thing I have ever spent my money on. I have to make sure I'm buying the perfect house and there's no risk. The reality is the bank is taking the biggest risk. So you want to put down as much down payment as you can to make sure that if you had to rent the property out, that you'd break even or make a small profit. So there is a space at which it doesn't make sense to buy something in cash because then you're not taking your $1 and turning it into $2. When you get a loan, you're taking your $6,000 and buying something worth $235,000.

So even if I put a little more down, basically, I want to make sure that if I decide to move up, that I can rent the property for the cost of carrying it or a little profit. Gotcha. And so you mentioned perhaps buying a house in a state you don't live in, which I think is very relevant. You know, house prices in L.A. can be crazy. And for the size we want, I think we're not going to get anything less than 2.5 million, which is just wild, especially compared to the U.K. where Danielle is. It's just a whole new world.

And so for me and Stephen, looking outside of state has become something we're super interested in. So what does that look like? And do you recommend it? Sure. I used to host a TV show on FYI Network called My City's Just Not That Into Me. And one of the things that I know is like the Miranda moment on Sex and the City. I don't know if everybody got it. It's kind of a long name. But anyway, what we did was we looked at a price point and then we searched different cities and saw how far our money could go in each of those different cities. Some hot spots included Nashville, Austin, Portland, and then some random places like Boise, Idaho, Lincoln, Nebraska, like State College, Pennsylvania, places you might not even think of. The best place for a beginner investor to put their money is typically a college town.

They tend to have an economy. So there is some salaried professors and there might be an opera house and there are lots of bars and restaurants to satisfy the students. They tend to be safer. And the people who rent your property might bail after a year. So you won't have rent control issues where you have a long-term tenant paying a low amount of rent. So college towns have a lot going for them. Austin, for example, is the capital, is a college town, and has lots of natural, environmental kind of fun things for people to do. It has a great quality of life. People love living there. That's a great place to buy

real estate. Boise, Idaho, believe it or not, I've never been there, but on the show, we sent our people there. Really cheap real estate, super high quality of life. Another place that people really love is Madison, Wisconsin. Interesting. I know. I know. America is huge. So the critical things are quality of life. If you go and Google top 10 American towns with high quality of life, start looking at what the prices for real estate are in those towns, because you tend to get a higher quality renter. And if it's a college town, then they're going to turn over quicker, which is really important when you're buying your first investment property. I think this is really interesting.

So let's say I live in L.A. and I can't afford to get on the real estate ladder here, so I want to create an investment property. Like, where do you start with that? So should you be going and visiting? Are there people that will help you do that? And then also, like, how do you find people to rent it? Are there agencies that will help take care of that for you? Absolutely. there are. So let's start at the beginning of your question.

So first thing you do is you speak with a lender. You find out how much you're going to be pre-qualified for. Some lenders can loan nationally, like Quicken Loans or Loan Depot. And some can only loan in a particular state. So if you know you're going to look nationally, I would recommend that you get pre-qualified with a Quicken Loans, for example. It's really easy online too, and they aren't paying me to say that, but they tie into your bank account so you don't have to upload all the statements, which makes it really easy to qualify. It only takes about 24 hours to get pre-qualified for a loan, which is amazing. So you'll find out pretty quickly what your budget is. Your budget is going to determine where you can look. So you can then go on Zillow. That's what

I do. And I start looking at Austin real estate or Nashville real estate, Portland real estate. And I see what moves me. If you're going for an investment property, having more than one unit is a really good idea. Because then if one unit is vacant, investment property having more than one unit is a really good idea because then if one unit is vacant you still have the other one paying a portion of your mortgage or carrying costs so maybe look at duplexes or triplexes or houses that have a guest house let's take a quick pause to talk about my new favorite all-in-one platform kajabi you know i've been singing their praises lately because they have helped our business run so much smoother and with way less complexity, which I love.

Not to mention our team couldn't be happier because now everything is in one place. So it makes collecting data, creating pages, collecting payment, all the things so much simpler. One of our mottos at Boss Babe is simplify to amplify and Kajabi has really helped us do that this year. So of course I needed to share it here with you. It's the perfect time of year to do a bit of spring cleaning in your business, you know, get rid of the complexity and instead really focus on getting organized and making things as smooth as possible. I definitely recommend Kajabi to all of my clients and students. So if you're listening and haven't checked out Kajabi yet, now is the

perfect time to do so because they are offering Boss Babe listeners a 30-day free trial. Go to kajabi.com slash boss babe to claim your 30-day free trial. That's kajabi.com slash boss babe. And is that something that people should be really thinking of like if they are doing an investment property? Like how many months can I afford to pay this mortgage if I don't have somebody in it? Yes, absolutely. That's your vacancy rate. So that is a factor in how you can calculate whether or not it's a good investment or not. For baby investors, for first-time investors, I personally think you really can't go wrong, but you want to make at least $500 profit a month and keep that in account. So if you have one-year tenants, for example, you've got their security deposits

and you know your property is protected by that. And hopefully they wouldn't do so much damage because you're such a good judge of character that you pick good tenants. So you have your security deposit in a protected account and then you're putting in your monthly rent checks and your $500 profit is earning interest every month. And then if you have something you have to pay, you pay out of that account. On year two, you'll see it starts to grow. You kind of just leave it there until you

see that the property values have gone up. In my case, that was only two years after I purchased. So I'm like, oh, the house I bought for $650 is now worth $900. I'm going to cash out. So then you sell it, you take your money, and now I can get into an income property in a better neighborhood with higher rents. And by better, I mean real estate prices are higher. Because I've looked at doing this in the U.K. and I don't know how it applies to the U.S., are there, like, tax implications that people need to be aware of if they're renting out property? So in the U.K., like, let's's say you owned property and you had a rental. The income that you're making on the rental, you would pay tax on. Does it apply the same?

It is. It's the same here. And what if you only had the rental? Let's say you were in LA and you bought the rental in Austin because that's what you could afford to buy. Do you still pay? It is considered income. Your rental income goes towards your income tax. But what you would want to do is speak with a tax attorney to make sure that you've structured your finances like how you take ownership to the property in a way that saves you the most money.

So maybe taking ownership as an LLC or a corporation or something like that will save you some money as opposed to taking it as a primary owner. On your principal residence, you'll get a mortgage interest deduction. Do you know what that is? No. So for a 30-year fixed rate loan, those are the safe loans that everybody sees the interest rates and goes like, oh, it's four and a quarter percent. It's amortized over 30 years, meaning the last payment that I make on year 30 is going to be the final payment. They typically have a medium interest rate. Like right now, it's four and a quarter.

For the first 10 years of that 30-year loan, you're paying interest mostly out of your payment. So you're paying the same amount every month, but the majority is going to interest during the first 10 years. That interest is a tax write-off. It's called a mortgage interest deduction. Your president, Donald Trump, actually made it so that you can only take $10,000 in mortgage interest deduction per year, I think. But there are some properties that are grandfathered in. So talking with a tax attorney or your accountant is a really good idea

to see how you would fall into that. It's based on what your tax rate is on your income tax to see how you would fall into that. It's based on what your tax rate is on your income tax, how much you can credit from this. But a really great strategy is to buy something that you can live in for the first couple of years, take that mortgage interest deduction because it's your primary residence, and then right around year 10, it starts to become mostly principal. So now you get tenants in there, and they're just paying your principal down severely, you know. So by five years later, now when you go to sell it, you're going to be making a lot more profit.

Got it. That makes sense. So let's use the example again that you live in a really expensive city, and perhaps you're just renting, but you really want to buy a property, would you consider that first property being out of state somewhere where you can afford it, you buy it and rent it out? Or would you suggest, you know, if you're open to it, maybe you move to that other place and you live in that house, the first house you buy, you actually live in? It's a really good question. And every house is different. But I think buying an investment property, buying a duplex for $300,000 in Austin is a great first investment. Gotcha. And it's liberating.

You don't have to qualify for as much as you would to buy a single-family house here. You're making income. You've got two people paying your income. Your principal payment is pretty low, so the risk you're taking is pretty low monthly. And you would have somebody who's local managing the property. So if you decided to do an Airbnb, you would have an Airbnb management company who take like 12 to 18%. But you will never get a phone call regarding toilet paper or whatever, you know, so worth every dollar. So you can have an Airbnb management company or you would have a property management

company. Some really good hearted realtors will do it for you also. I love that. And so kind of with these properties in the beginning, say, is the money really coming from when you're able to sell and you own that property as opposed to monthly? You're not going to see like a massive increase in your revenue monthly? A hundred percent. Okay. Especially when you're buying at the low end. So if you're only qualified for $200,000 or $300,000, it's a waiting game.

But it's a really smart waiting game because you just put maybe $10,000 down, but you have an asset that's worth $300,000 that's going to be worth $400,000 in three years. So you just made $100,000 profit and you didn't even do anything. You just put ten thousand in that monthly profit is your carrying costs and a little bit of padding for if something goes wrong a system breaks you need to pay the gardener or whatever but really you make your money on the appreciation when you sell that makes sense so say you have to put ten thousand dollars down for like a two hundred thousand dollar home what say you have to put $10,000 down for like a $200,000 home.

What if you have $100,000 you could put down? Do you recommend going for a higher priced property or do you recommend just paying as much cash as you can? So going back to that idea of leverage, I think that it makes more sense to buy two appreciating assets if you can, than to pay more down on one. Gotcha. So you might look for two $200 houses. Exactly. Two $200 houses. Two $200,000 houses.

I'm buying a few of them. Yeah, totally. That's what I do. I love this. It's such an interesting conversation as well. And I want to make sure we're catering for everybody listening. So there's some people who are like, going to be in a position where at the moment, they're just really saving, like they can't afford to get on the property ladder just yet. Like, have you got any tips? How do we know they can't afford it? Well, okay, this is the other thing, because it's a story. Right. It's a story. So in Breakup With Your Rental, I sort of go through real estate, almost like

Tinder dating or whatever. And I know Tinder is like a little passe, but I don't know the names of all the other ones. Raya. It's Raya. So the thing is, is that we tell ourselves this story where we think we can't afford it because we can't afford what we see that we want normally in life at that point. We're working 45 hours a week. We're getting paid $65,000 a year. We want Louboutins. And we have an Instagram profile that really needs more likes. And we need more likes or something, you know.

And so property is not on our mind. And a lot of us have absorbed our grandparents or parents' idea that it's the place you raise your kids in. So the most frequent thing I hear from young, single, professional women is, well, I don't want to buy it right now because I can't afford it, or because I don't know where life's going to take me. Like, what if I get married and I have to move? I'm like, no. You have to approach it like you're looking for a five to seven year boyfriend. You know, it's not the one. It's like a reliable man for five to seven years or whatever.

You know, so sometimes the pictures on the MLS are misleading. Like it can be older in person than it looks in the picture. Or maybe it looks really terrible or the realtor put their thumb in the MLS picture. And then you go there and you're like, wow, this is like an undiscovered gem. Looks can be deceiving. So the first thing anybody, everybody should do who's interested in building wealth through real estate, which I am a testament to is possible, is to call a lender and find out what you could qualify for today. I have a friend who is a real estate agent. Real estate agents are notoriously broke during the first two years of their career. And he saw online that the house

he was raised in in Cleveland, Ohio was on the market. Three-bedroom row house, $89,000. $89,000. So 10% down is like $8,000. Wow. Okay. And so he rents it out for $1,500 and his mortgage is like $800 a month. And he bought the house he grew up in for $89,000. Most women who are making $70,000, $75,000, even if they only have a bonus to throw at it, they can only save $8,000, can buy a row house in Cleveland and make $1,000 almost profit every month. It is so attainable. And then you can alleviate yourself from this idea that you have to live in it. And also that it's the place you raise your kids in. It's not just that. You want to be the woman at 35 who meets Mr. Right and has two assets to sell because you're pregnant and you're getting

married and you want to buy the dream house in Pacific Palisades. And now you have $600,000 down because you made smart financial decisions when you were 27. I love in this conversation because I feel like it's changing the way I'm looking at real estate. I think for so long, like everything about my parents' generation and my grandparents' generation, it was like you buy one house, maybe two in your lifetime. And actually, you're kind of saying you don't need to look at it that way. And the other thing which I'm going to bring up is I've always thought, and I feel a bit ashamed to confess it now, it's like you have to buy with a partner almost. Like I never thought in my single days, I mean, I did meet Greg when I was 18, so that's a bit more understandable, but I always

approached it with someone I think is really interesting actually being, you don't need to do that. You can do it on your own and you can make it work for you in whatever shape or form and getting a bit creative with how you buy. I make a hypothesis in my book that it's possible in our brain somewhere we think if we buy a loan that we're like committing to a future of solitude or something, you know, but statistically we're getting married later in life, which I think is smart. And we have more opinions and thoughts about how we want to spend the money that we are now making later in life because we have to pay our college debt back. And we have to be super women, so we have to go to really expensive private liberal arts colleges or whatever. And we come out of college loaded with debt, and we're working our brains out until we're in our 30s. So I think that it is a shift in the way that you see how your money can work for you, and you realize with or without someone, having your own nest egg will make you a more attractive partner to the kind of people that are in your future, maybe not in your present. I love this conversation so much. And I think

as well, there's a lot of decisions about where to put your money. So I work with my financial advisor on when I get paid or when I get a bonus, where this money goes. So it might go into my investment portfolio, it might go into my 401k, solo 1k, HSA, FSA, all the things. There's lots of different places that you can put your money. But one thing that I'm not voting right now is, well, what if we put the money in real estate? Now, where do you think we find the balance between putting into 401ks or putting into real estate? And also, are there some kind of creative ways you can use your money pre-tax with real estate? Yeah, actually, there are a lot of really good points in what you just said. I personally experienced being sold a 401k when I worked for the federal government,

and these guys came in and they were like, oh, are you low risk, medium risk, or high risk? I didn't know what I was signing. All I knew was that the medium risk return was like 5% to 10%. And when the market tanked, when the stock market tanked, everybody called their 401k a 201k. They lost so much money. Real estate is different. It's tangible. The land doesn't depreciate, so the structure may, but the land doesn't. And it's a waiting game. So if you ask people who bought in 1970 what their house was worth in 2011, if they sold it, did they make any profit? You better believe they did. It's a function of when you sell, not when you buy. Different than stocks in that way, I think. So 5% to 10% return for me is not good enough. I don't find that the risk I want to take. I know that defeats all 401k good financial guidance, but I don't have a 401k.

I have like a couple million dollars in real estate. So even if the market tanks, I know I can rent it out. I can live in it. I can plant tomatoes in the backyard and live on that during Armageddon or whatever. I've got a plan. But I also do know that you can take some money out of your 401k. If you pay it back within a certain amount of time, it's a very minimal penalty. So you can use your 401k to, for example, acquire a house, then maybe you do some renovations on the house, and then refinance. So for example, taking my own

personal example, buying a house, I bought a duplex for 1.2. I put about $250,000 into renovation. And then I refinanced it. In the refinance, it was worth 2 million. So now I have way more equity because of the repairs that I did to the property. So you can do that, then you pay yourself back and you could pay your 401k back and avoid the penalty. What if you have these loans and then a recession hits or something hits and you can't afford to pay the installments? Right, then you move out and you rent it out.

It's so simple. If it's in LA especially, you're in a market where rental properties, inventory is low too, you know? So when it takes a hit, what does that look like? $100 off? Like $200 off? There are more people here than there are houses. So, you know, you've got that.

But the real estate market is a cycle. Your value will go up and down. The things that point to whether or not it's going to happen now or later, in my opinion, are very local data points. As a listing agent, I get to see what kind of offers we're receiving on properties. So when I start to see really low money down loans in a multiple offer situation, when I see them winning, then I think, okay, so this is interesting. The sellers are choosing the higher price because they're nervous, but it's also a higher risk. And that person now has less equity in the house. So if they can't pay their mortgage, they might walk away. That's a cue that that market, wherever that neighborhood

is, might be sensitive to market forces more than, say, a Beverly Hills or West Hollywood, where all the offers I get are 20% down or cash or much more down. Now, I know that these people aren't going to walk away. They have too much equity in the house. So what they're going to do is hold tight and ride through the wave. So when the market meets the demand is when prices tend to level out. The previous situation that we were in was a result of people who were not qualified for loans being given loans at such a rate that it was inflating the prices really, really quickly and to an unsustainable point. And when they couldn't pay their adjustable rate mortgages, which, by the way, are not a bad product in and of themselves.

They're actually quite good for a five to seven year plan. Then people walked away because they had no money in it. There was a zero down loan. They're like, oh, can't pay it. Got to go. And I think I saw in with a big short. Oh, yeah. The big short.

There was a stripper that had like four houses in Florida. Like they were giving multiple loans to people who were not qualified to buy. Yeah. So that's four houses she walked away from. So that obviously inflates the problem, you know, and I don't think we have that problem anymore as a result of the restrictions that were put in place when Obama took office. Okay, so for the people listening who are really considering it, the first thing that they're going to go and do is get pre-qualified. Call a lender, yes. Okay, so what's next?

They go and they call a lender, they see what they've got, and they start looking for properties. They find something on Zillow, they can afford it, it's in budget, ready to go, what happens? Okay, so it's up to them how they handle this. But I do have a nationwide network of realtors in most major cities as a result of my work on my FYI TV show. So I do have, like, a place on the Breakup With Your Rental website where you can type in your name and your email and the city you want to buy in, and I can put you with somebody who's amazing. Is that BreakupWithYourRental.com?

It is BreakupWithYourRental.com. So there's that. My experience with Zillow is that you never know who you're going to get. It's either somebody who paid a lot of money because they don't have a lot of business, or it's somebody who has so much business they can afford the advertising, but you might not really get them. You're going to get someone else on their team. So in that case, I would just do a little online research or call a realtor that you

know and let them find a person to refer to you for the service of hunting for the house. You can also tell who has the most reviews on Zillow and those are the teams that do the most sales in particular neighborhoods and would be more attuned to what the rent might be for your duplex, for example. So having a realtor in the areas that you're looking in is critical. And in most states, buyer agency is free to the buyer. It's paid by the seller. So there's no cost to you. It's extremely valuable. So it doesn't make sense to try and navigate it on your own. Plus, if you've never seen an inspection report, you do not want to go through

that process by yourself. It's like a full physical stuff you don't want to know about the thing you're buying, really. So having somebody guide you through what's important, what's not, what's normal, what's not, how to negotiate that is very, very critical. So after you get pre-qualified, you submit your inquiry on breakup with your rental, or you talk to family, friends, you find somebody who can refer you to somebody, somebody who knows how to pick a good realtor. And then you speak with a realtor in the city where you want to start looking. And they will be able to advise you on a local level what's happening, what are the trends in that area, what is the rent you can expect, who are the renters, are they college kids, are they families, et cetera, et cetera. And that's going to help inform your decision.

But I think the most exciting thing to do at the very beginning is to see how far your money can go. You get your $300,000 prequal, and now you start looking like, I bought a cabin in Big Bear. I never go there. But I bought the cabin. I had it designed. It's got featured in Dwell. It's a thing. It's cute. I have clients who couldn't find something they could afford in LA, a couple with a kid, but they have like a cheap rental on the west side that they really like. And they were looking in neighborhoods they weren't really comfortable in. They bought a property in Joshua Tree and turned it into like a designer Airbnb, like so cool. And it's getting press.

It got featured in Dwell. It's booked like solid, amazing off-grid property in Joshua Tree. They're creative. So that contribution from that purchase is now paying their rent here. How smart is that? Yeah. And it was $300,000. That's incredible.

I love how creative you can get with that. So we get the pre-qualification and you think look on Zillow and different places like that to start seeing how far your money would go and just kind of get the whiteboards out, get some posts and start looking. Yeah, start looking. Yeah. And, you know, in certain markets, certain things are soft. So in LA, if you want to live in the place that you're buying,

buy a condo. It's so cheap to buy a condo. You can get in a much more desirable neighborhood, a much more expensive neighborhood because the condo markets are a little bit softer. Also, one other thing I want to point out is that if you don't want to be a landlord, say, that freaks you out, too much liability, you don't want to deal with the management of it, you might consider flipping. Oh, talk to me about flipping. Yeah. This is interesting. It is. And for women, especially,

we are creative and I think design oriented by nature. Like we grocery shop really well, we tile shop really well, you know, like it's intuitive for most of us. And at the very least, we know what we like and what we don't like in a strong way. So this is a creative endeavor that you get to put your mark on and create something as beautiful as a home for someone else, which is amazing. And that feeling of being appreciated for doing that, incredible. With flipping, you would get a different kind of financing. So there are rehab loans. The cheapest is the FHA 203k loan, which is like if you're buying a house that you are thinking you're probably going to live in, but it needs $35,000 worth of repairs, you could qualify for that,

build it into your loan, finish it, and then decide, do you want to live there? Do you not want to live there? And sell it. There's also fix and flip loans, which is straight investment loans. There are high interest short-term loans. So maybe your loan would be a year, 10% interest or something. You can pay it back, of course, sooner. But supposing your rehab project's going to take a while, you're budgeting for that, you put some money down, and then they will finance the rehab and the purchase, and then you will sell it, take your profit, and you pay them their points. So there are lots of products out there to support people who want to do fix and flip. The investors, they love it because they make a fast, high return. And for you, it's not like a 30-year loan at 10%.

It's like a six-month loan at 10%, so it's more manageable. The way to look at that is have a realtor who knows what they're doing with regard to renovation resale. That's very important. I think the biggest hurdle I get into with first-time investors is that they are still so scared. And it's a high-risk game. So you can't go in like, oh, I want a sure thing. There's no sure thing. You make it a sure thing by being smart.

The rule of thumb is the cost of floors is the cost of floors, meaning whether those floors were done in 1990 and just look horrible and dated or whether they are a mess from 1897, the cost to replace them is the same. So if you know basically on a price per square foot basis what the floors are that you like, so I know for me it's $7.50 installed. And that's for like mid-range engineered wide plank whitewashed oak, for example, which is what people are using in the flips now. You see it's like this airy, beachy kind of wide plank, $7.50 a square foot installed. Now when I go into the property that needs work, I go, okay, it's 1,200 square feet, $7.50 a square foot install. I know the cost of the floors is going to be this. I'm going to put that in my budget. There's a little equation I can teach you right now, if you want to know how to do it. I do. So say there's a house that is on the market for 500,000. You talk to your realtor and you're like,

what do you think I could sell this for if it was totally done? And she looks at it and says, I think you could sell it for 800,000. So you take your future market value and you multiply it by 0.93. That is because 6% I'm averaging, 6% are going to be the cost to sell the property. So that's like your agent commissions and transfer taxes. What's 800,000 times 0.93? I have a calculator. 744. Okay. So 744. So that's the future value, like the sales price times 0.93, because you're taking out the amount to sell the commission cost and closing costs. So now you have 744. Now we're going to subtract the cost to acquire, the commission cost and closing cost. So now you have $744,000. Now we're going to subtract the cost to acquire the house. That's $500,000, right? So now we're at $244,000.

How much work does the house need? Well, it needs new kitchen, new baths, new plumbing, new electrical, new floors. Okay, let's say $100,000 worth of work. So now you're at $144,000 profit. Now you couldn't buy it in cash, right? You have carrying costs. Maybe your carrying costs are $5,000 a month, and it takes you six months to do the work. What's carrying costs? Carrying costs are your mortgage payments every month. Got it. Principal, interest, taxes, and insurance would be the total carrying costs. So now I've subtracted $30,000.

That's $5,000 a month times six months. So I'm at $114,000. So maybe you think it's going to cost $100,000, but it actually costs $120,000. So maybe I just give myself a contingency for unknown stuff. $114,000 minus $20,000, please. $94,000. $94,000. That's your profit. So the difference between the buy price and the sell price is what I call a spread. So $500,000 on the buy, future market $800,000. If you're the investor, buyer, flipper, buyer woman, you say to your realtor, I want a $300,000 spread. That gets me $94,000 minimum, really, in profit per flip. So if I only put 10% down, I'm spending $50,000 to make $94,000 if I do that fix and flip loan where they're giving me the money for the rehab. So you could buy a $500,000 home with $50,000 and then you would sell it, the loan goes away,

essentially you make the money and then you take the 94 and you could now buy a million dollar home. Well, you could buy a $940,000 home with 10% down. Yeah. You could. And maybe that one will be fixed up, you know. It's addictive, this little thing, because if you have a partner or somebody you know who has like 100,000. So maybe now you put your heads together and you can buy two places. So now you've just doubled this and you're split, you know.

And so what are the time frames around this as well? Sure. So in L.A., from purchase to sale is 30 days. And then you get the keys. Depending on what the house needs and what you're going to do to it, say for the renovations you see in West Adams, Jefferson Park, like more transitional neighborhoods like Highland Park, it takes about six months to get permits and to get all the work done. Really ambitious flippers get it done in three months. They try for three, but usually it ends up being six months.

And then it takes about 45 days to sell because we're on the market for a week or two showing it. And then we select an offer. And then it's 30 days from contract to close. So 45 days from when we go on the market is when you'll get your money. I love that. So we have like obviously a lot of boss babes listening. Yeah. I want to talk about negotiation.

Oh. Okay. So what are tips if you are a buyer? You've seen this how she like, but maybe it's a little bit higher than your budget. How should you go in? What are factors that you need to consider? Okay, so in real estate, probably in everything, you're looking for the undiscovered value of the property. So when I'm choosing a house, I don't go for the shiny thing.

I go for the thing that I think has potential and nobody else can see it. So usually in that case, I'm the only offer on the table. So my advantage in the negotiation process, like I start with an advantage because I'm the only offer on the table. So if it's been listed for 30 days at $700,000, I might come in at $600,000 with the intention to meet in the middle. The objective in our negotiations around real estate tends to be emotional. So we do encourage personal letters to the seller like, look, this is the top of my price point.

I'm a first-time investor. I have this much money, but I promise I'm going to restore your grandma's house to the absolute most beautiful mid-century you've ever seen. I will love it and care for it and make sure it goes to an incredible new buyer. You know what I mean? You make an emotional appeal. Yeah. I try to get the other person on my team as much as possible from the beginning. Usually, actually, there are a lot of really great real estate agents in L.A., I'm say. So just saying, I would love to do a deal with you. I know you and how amazing

you are. And I would love to work with you again or work with you. I've heard so many great things about you. Just a simple, honest, hopefully, acknowledgement of how hard we're all working can get that agent on our team. You'd be shocked how many people don't have real advocates in the market. Like if I have a listing, I might get six offers, but the agents don't even call me. Oh, really? Yeah, they don't call to say like, hi, this is who I am. I just sent my client's offer. They love it so much. That little bit can help when you're in a tough spot with negotiation. Because I've already got the other person on my team. She wants to get the house for us.

So then I try to pull the information. My client just cannot possibly go to 650. Is there anything else we can do? What about a shorter escrow? Or what if we take it as is? Like, what can we do? And, well, I'll be honest with you, Courtney. I think that she might sign 650 if you had those terms in there. Okay.

You know, whatever. Like, you get the information you need to address the needs of the other party through your communication with their advocate. I don't know how it is in most other fields, but we are in a personal business that involves a lot of emotions and people are at their most anxious during this part of the process. So they are freaking out. The sellers always think they're leaving money on the table and the buyers always think they're spending more than they can afford. It's like the worst possible position for the agents to be in. Nobody's happy. So approaching it with a sort of

like charm is very important in my field. In the process of getting your offer accepted, you can't be too tough. It doesn't work. Now, once you're in escrow, just like having sex with somebody on the first date, you know, the buyer has all the power now. The power dynamic completely shifts, you know? It totally so interesting. It totally shifts. So in the beginning, you're like, I'll do anything. And then once you get it, you're like, okay. When you're the buyer, you have the money, and the house doesn't have the good condition that you need

or has some undiscovered crack in the foundation or something that you need to proceed, you have all the power. You can say, look, $50,000 credit or we're moving on. So you can renegotiate. You renegotiate. And now from a different power position. So at the beginning, it's charm. In the middle, it's power. It's like, I've got my money. It's here. I'm not giving more than this. This is it. I will walk away. Now the seller's maybe two weeks from taking their kids on

vacation or whatever it is they were going to use the money for. So you have much better leverage. And then if we flip it and you're selling it, so you've maybe like, you've bought some real estate and you're doing a flip or actually you're just kind of like, actually I'm ready to buy a bigger property. What are things that you can do to make sure that your house is really appealing? Oh my gosh. I have a whole list of these things in a pamphlet that I can do to make sure that your house is really appealing? Oh, my gosh. I have a whole list of these things in a pamphlet that I give out to my sellers.

Depersonalizing before you sell. Staging. Even though your furniture may be good for you, it usually isn't what looks the best in photos. Like scale is something that a lot of people don't have a good grip on. Interior designers or stagers understand scale. And that's what the photos are really showing. So it's like this balance of stuff and air and space. So you can see the size of the room. And we're selling an aspiration.

So paint the walls white. Have any leaks and things fixed before we go on the market. Remove any air fresheners or any weird smells like if you have pets or something and there's carpet that has pet stains on it, remove the carpet, replace the floors. A little goes a long way when you're selling. You have to make it feel like an Airbnb. The buyers don't know when they walk in, like, does somebody live here? Like, I don't know.

So kind of spending like $10,000 on something can actually make you $50,000, $60,000. 100%. Yes. And I would also recommend, if it's possible, to not live there while you're selling it. Try not to. You know, either go on vacation or get a HELOC, which is a home equity line of credit from your lender that's allowing you to pull some equity out of your current property. Buy something else. Move into it. Emotionally detach from this property. Let us stage it and clean it and paint it and freshen it up and put it on the market without you feeling invaded. When you're a seller and you're living in the property, it can be a very invasive feeling. Like people are looking in your tampon drawer or whatever, you know? It's not a good

feeling. Is that something that people do a lot over here? It's like actually move out their places while they sell them? Yeah. I mean, it's a very popular question I get is how can I buy something when I haven't sold my current property yet? Thankfully, there are more programs now to sort of help people bridge that gap. They used to be called bridge loans. They're not called bridge loans anymore, but they're home equity lines of credit that people can get. So if your house is worth 2 million and you only owe 1.2, you've got quite a bit of equity. You can take out $100,000, acquire the next property. And then once you sell this one, you refinance the other one into a conventional fixed rate loan.

So you put the money back, the money that you were really hoping to have from the sale, you can put into your new purchase just by refinancing it. So maybe you're only carrying like a high balance loan on the new buy for two months. I love this conversation because it's just made all of this seem a lot more simple. I hope so. Because I think it can be overwhelming. And I know I've heard before people say, well, you should be paying, you know, 30% in order to get the best absolute rate and loan. What do you think to things like that? You have to call the lenders in your local market to compare programs. Really putting 30% down might not get you a huge discount in the

rate. So because of inflation, your cash tends to be more valuable in your pocket today than it is mortgaged over 30 years at a 4% interest rate, right? So I would say leveraging more is smarter, or at least it's worked for me and my clients. And if you're in a first-time homebuyer kind of situation where you don't really want to be cash poor because you might need it, or maybe you don't have health insurance or whatever, you want to have like a little padding, do a low money down loan, leverage it. You're only going to be in this situation for like a couple of years. We tend to, especially in our 20s, I found that women tend to be looking at things in a much more permanent way than reality suggests they should. So it's like, you cannot make a mistake here. Even if the market tanks, it will recover.

And so just getting in is the smartest financial decision you can possibly make. I can't impress that upon them enough. And I'm like, it doesn't have to be gorgeous. It is not the one. This is not the house you're going to marry. This is a long-term boyfriend, maybe. Or if you're investing, it's a short-term fling. Fall in love with it for a couple of months and then be done with it, you know?

It's so like that mentally. If you can make your emotions take the risk that way, you'll have a much more enjoyable ride. I feel like buying property is actually, isn't just like you say about the financial side of it. It's about that mindset side. And I think that's something that's really come across in this conversation today. It's just about getting your mindset around what a property can do for you and the vehicle it can be and maybe not having so much attachment to it. A hundred percent. That is exactly the point.

It's like we change our mind about money, like we started our conversation with. It opens up so many possibilities. And just being able to know that you've got your money working for you while you sleep is such an incredible feeling. Being an owner, incredible feeling. Now I'm at the table. And if I'm single and I'm dating somebody and they're still renting, I don't feel like, oh, we're equals. We're not equals. You need to up your game or you're not my equal. I'm sorry. I have bigger fish to fry. You're interviewing them now. I don't know. Do you both live in LA? No, I live in the UK. You do. Okay. You live in LA? You're married? Yeah.

Okay. So you don't have this problem. But dating in LA, it sometimes feels like they're interviewing you to see if you're good enough. Are you pretty enough? Are you smart enough? You know, when you go and look at their assets and what they're doing, it's like, really? You think I'm not good enough for you? Having financial stability gives you a sense of equality and empowerment in all relationships in your life, business relationships, professional relationships, and like personal relationships. So whether I'm negotiating with a vendor or a client or a lover, you have power and you know you don't need them to make money. So you can ask for the raise, you can turn them down. Yeah, we're all about being unapologetic in your ambition and just,

you know, standing in your own power. And I really love that this is coming from a place of empowerment in terms of you don't need to go and get married to be able to get on the property ladder next year. There's lots of things. I think we've covered so much. I think for everyone listening, they're probably running out to see what this might look like for them, which is just amazing. So what I would love, and we're actually going to be giving away a book which is epic so what i would love if you want to win the book i want you to take a screenshot of this podcast just wherever you're listening and i want you to tag me at i am natalie danielle at danielle canty and breakup with your rental is it at breakup with your rental it is amazing tag those at IamNatalie, Danielle at Danielle Canty, and Breakup With Your Rental.

Is it at Breakup With Your Rental? It is. Amazing. Tag those three accounts and then at bossbabe.inc. The more you tag, the more reposts you're going to get. I know you're all here to get some more profile visits. So tag us all, we'll repost you. And we're also going to be selecting one of you to actually win one copy of a book,

which is going to be amazing and could be such a game changer. Thank you so, so much for being here and being on the podcast. Where can everyone run out and get this book? It's on amazon.com. It's on barnesandnoble.com. And you can also find out more information about the book at breakupwithyourrental.com. And thank you so much for having me. It's been such an honor. If you enjoyed this episode, we would love it if you subscribed and left us a review. Let us know what you enjoyed, what your main takeaways were, and who you'd like to see appear on the show. As a special thanks, we'll send you a copy of our Boss Babe 25. Now this is an awesome resource. It's the 25 essential things that you need for personal and professional growth. We've included everything

from must-have products to books to rituals. This guide literally covers it all and I know you're going to love it. So if you want your copy, simply leave us a review and then send a screenshot of your review to podcast at bossbabe.com. We love bringing you experts and interviews from other successful business owners so they can talk about their experiences and share information tips and what has worked for them. However, remember that the opinions or advice of our guests and as the hosts should not be taken as personal actionable advice and is given as general information and education only. Please always remember to consult a qualified professional before implementing any medical, financial, legal,

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