Ashley Kehr:
By the time most people hit 50, they’re thinking about the finish line. Today’s guest had a 35-year engineering career that was quietly stalling and a retirement she couldn’t quite afford yet. Then her son whispered two words, ski condo. Four years later, she owns four short-term rentals under a whiskey themed portfolio called Distilled Destinations, and she is completely retired.

Tony Robinson:
Today’s guest, Sandy Lee, is going to show you that your best career skill might be your biggest investing superpower and that a comfortable life can end up being maybe the most dangerous trap of all.

Ashley Kehr:
This is The Real Estate Rookie Podcast. I’m Ashley Kerr.

Tony Robinson:
And I’m Tony J. Robinson. And with that, let’s give a big warm welcome to Sandy. Sandy, thank you for joining us on the Real Estate Rookie Podcast today.

Sandy Lee:
Thank you so much for having me. I’m a fan girling over here. I’ve been a big fan from the beginning.

Ashley Kehr:
Well, we are so excited to hear your story today and the journey that you’ve been on. And you actually started out with an engineering and construction degree working for two companies for 35 years. You had senior leadership roles and really a career that most people would call a success story. So what was actually happening inside the story around the time you turned 50? I

Sandy Lee:
Mean, I absolutely loved my career, so you won’t hear me speak too ill of it. I was so lucky to have it. I worked my way up from pipe stress engineering into some senior leadership roles, and I loved all of those different experiences along the way. But I could see that I didn’t want to live out the rest of my years in an office setting and keep doing the same exact thing that I was. So I was kind of just looking for more when I turned 50 and trying to figure out, like you said, how to get to retirement.

Tony Robinson:
So Sandy, I mean, 35 years is a good amount of time to invest into a career. Was there a moment at some point in that journey where a light bulb went off or was it more of a subtle shift or a subtle realization that you need to do something different? Just take us back to that moment where you realized that maybe a change was needed.

Sandy Lee:
It was very subtle, and I think you hit on it with the long time that it was. By the time I was at the end of my career, I had had such great roles, but I was running our private equity division. I was still helping out a little bit on the services side, but it wasn’t a role that necessarily fit any of my background or really my skillsets. Fantastic education. I didn’t even realize it at the time, but it wasn’t really me. And so I was starting to just feel like, I wonder what else there could be. I longed for more travel. I grew up with a mom who was a travel agent. So travel was in my soul from a very early age and I was looking for flexibility.

Tony Robinson:
And what about from a financial perspective, Sandy? I mean, to work 35 years, do you feel like you had put yourself in a position to kind of coast into retirement or was there something from the financial perspective that motivated you a bit as well?

Sandy Lee:
I was in a position that I could have stayed in the same career company industry for another five years and then coasted into retirement. I wasn’t quite there yet, but I certainly had more resources and I was very lucky to have been there. But no, I wasn’t ready to just hit the button and be done. Even if I was, I don’t think that would’ve felt great to me. I think I’m the kind of person who always needs something to focus on and I was trying to figure out what’s that next thing going to be.

Ashley Kehr:
Now, what were you doing before you actually bought your first property as far as getting yourself ready and how long were you consuming content like BiggerPockets and reading and listening to podcasts before you actually pulled the trigger?

Sandy Lee:
I feel like I was doing all of those things. And for at least two years, I was thinking about how to diversify my portfolio. That’s really how this started. I was all in stocks. I had a lot of stock in my actual company. I was thinking about, I don’t want to be so invested in the stock market. So I started going to some, after listening to you guys forever and reading books, I started going and visiting some homes in Houston, Texas, which is where I live, thinking about long-term rentals. How could I just get a few long-term rentals, sort of the bigger pockets mentality and get something else in my portfolio, but it just wasn’t feeling great. So that’s what led to this big two-year time span where I was just listening to a bunch of content. It kind of started in COVID and trying to figure out what I wanted to do, but the long-term rentals just didn’t feel like me.
Everyone we walked into, I just couldn’t picture it.

Tony Robinson:
So Sandy, when you say that it just didn’t feel right or that it just wasn’t clicking, was it mathematically like you look at the numbers and the numbers weren’t working out or was it like a fear that you had about actually pulling the trigger? When you say it wasn’t working, what did that actually mean?

Sandy Lee:
I don’t think it was a fear, though I am a single mom with one son, so there’s always a fear of jumping out and doing something crazy that comes back to bite us. The numbers were fine, not fantastic. Long-term rentals are good, they’re solid, but it just didn’t feel exciting to me. And I’m the kind of person that wants to feel excited, joyful. What’s the next thing going to be and how’s it going to benefit me, not just from a money perspective, but from a joy perspective.

Ashley Kehr:
Now with this version of your story, most people decide that they’re going to grind it out till 60, 65 and just work that safe career that they’ve had. What made you decide that that wasn’t the life, the path that you wanted to take?

Sandy Lee:
And for a long time, I thought that’s exactly what I would do. So many of my friends have and are doing exactly that, more power to them. That’s great, but I’m kind of the crazy one, which doesn’t sound like it when you hear about my career, but I’m kind

Ashley Kehr:
Of- And you’re among like- kinded people. We would not do the same. Right.

Sandy Lee:
Things were changing rather quickly in my industry. I don’t know how much you guys knew about what was happening with oil and gas over the last 10 years, but things were shifting and it seemed like the right time to come up with a clear exit plan. So I wasn’t panicking because like I said, I had resources, I had had this great career, but I started to wonder what could it look like if I didn’t work in an office at all and started to just supplement that retirement by taking some of my money and putting it into real estate. Didn’t know I’d take all of my money in to put it into real estate, but hey, we’re getting ahead of ourselves.

Tony Robinson:
But you talk about the safe piece, right? You said you have a son, you think about what’s safe. Did you have to maybe redefine what safe looked like for you? Or how do you reconcile that desire for safety with maybe taking this bet on yourself?

Sandy Lee:
Well, to tell you the truth, I’m not sure I’ll ever reconcile that need for safety. And I think that’s okay. About two, three times a year, I still have to get deep into financial models and convince myself that, yep, the value’s still there, the equity’s still there. Yep, I still have money. It’s just not in a big pile in the stock market that it used to be. So maybe it is about redefining safety and seeing it in other places, but I think it’s also okay to go chase something as long as you have some sort of a backup plan, which could just mean turning a corner and doing something different, believe in yourself kind of thing.

Tony Robinson:
So you said redefined safety. So how was your definition changed? As someone who climbed the corporate ladder, checked all of the boxes of typical American dream, how is your definition of safety morphed as you’ve gone on to do real estate full-time?

Sandy Lee:
Well, now I’m counting on myself and that definitely took some inward looking and some deciding that I could do that on my own, but that’s what’s happening is now I’m counting on myself. I get up every morning and I look at my own spreadsheets and my own things to do for the day. And I think about maybe how to grow my own businesses in a different way instead of going to an office, sitting down and seeing what’s needed of me. They’re just very different paths. I loved them both, right? I’m having so much fun with this, but I also loved that too. It was very safe.

Ashley Kehr:
So Sandy had the career. She had the knowledge. What she didn’t have was the right entry point until her son kept whispering the same two words over and over again. That’s right. After this break, we’ll be right back. Okay. So welcome back everyone. We are here with Sandy and her son kept whispering ski condo, ski condo. And you know what? I hope my kids start whispering that in my ear and it manifests me to get a ski condo. But Sandy, you had spent years consuming every piece of knowledge of real estate education and you still couldn’t find the right entry point that was perfect for you until COVID happened. And your son actually went off to college in Colorado. So what happened from there?

Sandy Lee:
Right. This is where everything changes, right? I certainly never thought I’d be going to buy a ski condo, but it was about midway through my son’s college career. Like I said, he was in Colorado and his friends and he were leaving Colorado to leaving their campus to go skiing every weekend. I don’t know, side note, I don’t know how they got mechanical engineering degrees and went skiing every weekend, but somehow they pulled that off. I guess they don’t need a lot of sleep.

Ashley Kehr:
Or could afford to ski in Colorado while in college.

Sandy Lee:
Well,
Boy do they find out cheap ways to do it. You can do that wherever you are. They figure out these college things they can do. But anyway, they had so much fun doing all of that. And meanwhile, Jackson and I had gone every year at that point for 20 years in a row to Steamboat. It was kind of our love. We did skiing every year. We skied as a mother and son. And so because we loved Steamboat so much, I laughed at him at that point though and said, “No way, we’re not doing that. We’ll still be able to go every year. Don’t worry about that. ” But it didn’t sound like an investment to me. It kind of sounded like a toy. But internally, I hadn’t really dismissed it. I started thinking more and more about it. I started going down those rabbit holes that we all do in the evenings where you’re on your iPad or your phone thinking, “I wonder what this could look like.
I wonder if it could pay for itself even partially with some short-term rentals because I just hadn’t considered it at all before then.” But boy, that rabbit hole works. And before you knew it, I was looking at properties.

Tony Robinson:
So you eventually end up buying a condo. So walk us through, how do you get from up late night, scrolling through on your iPhone to actually finding a property, turning it into an investment property? What happens in between those two steps?

Sandy Lee:
During this time in the market, everything was moving fast and furious. So we scheduled a short ski trip and I knew that on a couple of those days, I would just walk the neighborhoods and really get familiar with what is where in the area so that I’d be ready to pull the trigger when something came on the market. This was spring of 22. And so things were still really booming in the market back then. So found a couple, it took me a couple of offers to get the right one. Biggest purchase of my life, $1.3 million. I still can’t say it without choking a little bit on it, and I didn’t see it until the morning of closing.

Ashley Kehr:
Oh my God. Wow.

Sandy Lee:
So I went from safe that we just talked about to, “Hey, let’s buy the most expensive, most ridiculous condo and I’ll see it the morning and closing. It’ll all be fine.” My family thought I was ridiculous, but it all turned out just wonderfully. I had done enough research at that point to really believe in Steamboat. There were a few things happening at the resort that made me think this area is going to boom. Aspen had bought Steamboat a few years earlier. They were midway through a big expansion on the mountain where they were adding a second gondola, which was the longest, fastest one in the world, but it wasn’t there yet. They were adding a bunch of land, but the ski area wasn’t getting any bigger at the base. They also had just gone through all of that talk that so many towns are on the regulations and put in a bunch of new regulations in Steamboat.
So the opportunity to pick up a four bedroom in the green zone seemed a little bit infallible to me. Like how could this go wrong? At least I could sell it if this doesn’t turn out

Tony Robinson:
To be our thing. Yeah. Sandy, well, you answered my first question, which was how did you build confidence in that decision? And you kind of walked through what you saw there, but if part of the initial tension that you were feeling was around this idea of safety and somewhat protecting your investment, and you even said it now, like saying that the purchase price, you still get caught up on saying 1.3 million. Why start so big? Why not go buy something maybe in a different market for half the price? Well, what pushed you to such a big purchase price to begin with?

Sandy Lee:
Well, at this point, I really didn’t know that this was going to become a business for me. I thought it was going to be one investment that would sit alongside the rest of my investments. I didn’t realize you could get a mortgage that was for, in my case, I think I put 25% down on that property. So it was still a big cash investment for me, but it could sit alongside the rest of my portfolio. So I was able to convince myself I’d be able to sell it. Things were still rising rapidly there. Sure enough, in the first year it went up another 25% in value. So it turned out to be a great decision even early, but I convinced myself that I could always just sell it. That’s

Tony Robinson:
How. So you buy it for 1.3. What do you have to put into it? Well, I guess first, what strategy are you using on this? I’m assuming because it’s a ski town, this is a short-term rental, is that correct?

Sandy Lee:
That’s right. It’s a short-term rental. And we use it about two weeks a year, a little bit more sometimes in the off season if we want to go hiking and things, but we use it very little. It’s definitely a rental. It’s there to make money.

Ashley Kehr:
I just have two questions on the money piece here. The first one is, how much are you making on average at this property?

Sandy Lee:
So right now, well, last year my revenues there were 135,000 gross. When I started out, they were about 80. So in that few years, it’s gone up pretty material every year there. And my expenses there are 72. So it started out just breaking even basically, but now it’s my biggest money maker even with much more equity in some other places, Steamboat continues to be my big … If I could do it over again, I would.

Ashley Kehr:
Your big cash cow.

Sandy Lee:
That’s right.

Ashley Kehr:
My second question is, when you and your son would go on your yearly trip, how much were you paying to rent somewhere?

Sandy Lee:
Boy, that’s a really good question. So this was a while back, but still cluster $1,000 a night. I mean, it’s hard to get anything for less than $1,000 a night during ski season around these places. So certainly, yeah, now we get free ski trips, which is huge.

Ashley Kehr:
You said two weeks you’re going. I mean, that would be $14,000 you would be paying if you didn’t have your own place. So really that’s added on to the benefit, the bonus, I guess.

Sandy Lee:
Absolutely. So Tony asked how much I had to put into it. I did have to put some into it. We didn’t talk about that. I put about $40,000 into a light remodel. I did some light remodeling on all three of the bathrooms, painted the whole thing, and then I completely refurnished it. So that was another 25,000 or so. No,

Tony Robinson:
It’s actually not bad. 65 grand, you said it’s a four bedroom?

Sandy Lee:
Yeah, it’s a four bedroom. Yeah,

Tony Robinson:
That’s a pretty good price to set up a four bedroom. And to be able to net, you said maybe like 60 grand a year, give or take on that same property. That’s an amazing return.

Ashley Kehr:
Yeah. I already paid that back in one year, just the rehab and the furnishing.

Sandy Lee:
I brought my own contractor from Texas. That was another thing. One of the things that I did really right was you can’t find a contractor in a ski town, especially if you’re from Texas, especially if you’re from out of town. They don’t want to work for you. They’ve got so much work that they can do there locally. So I packed up my contractor from Texas and I asked him to drive to Colorado and do a remodel for me. And now he’s done that at every single one of my properties. So I kind of love that story. It’s like, find yourself somebody that’ll travel for you.

Ashley Kehr:
Does he just stay in the property then while he’s working on it?

Sandy Lee:
Exactly. I just tell him what I need to done. He takes his sons, he goes and has a vacation and works for a couple weeks when I need him to do something. I love

Tony Robinson:
It. That’s fantastic. Actually, we did the exact same thing for the hotel that we bought in Utah. We were having a very hard time finding contractors here locally. It’s a smaller town outside of a national park. We took our crew from California and they didn’t stay there the entire time because I think it took maybe three months to do or maybe four months to do that full rehab, but they would drive up from California. It was a six-hour drive. They drive up every Sunday and then drive back every Friday and they would stay at the property in the meantime. But if you do have a connection to someone, I think it does help tremendously to kind of skip that part of finding someone to actually do the work for you.

Sandy Lee:
And lower the cost because there’s that mutual trust on both sides. Absolutely.

Tony Robinson:
Now, given that this was your first one, Sandy, did you self-manage this? Because you were still working a full-time job at this time as well, right? Or had you left already?

Sandy Lee:
I was still working a full-time job. And this was, if you were to ask me what my biggest mistake was, this is it. I did not self-manage at first. I hired a management company, and so that cost me all kinds of money. And as soon as my contract let me get rid of that managed company, that’s what I did. That was just a confidence piece. And that’s something that I haven’t looked back on since then and try to educate other people on now of this is not as hard as you think it is. You can do this from afar. The tools will let you do it from afar these days.

Ashley Kehr:
And you probably realize you could do it better too.

Sandy Lee:
For sure. And I don’t like to say that too much out loud because these folks are doing their best. It was actually a fairly small company, but nobody cares about your property like you do. If you really want all five star reviews, you’re the one that’s going to get it there, right?

Ashley Kehr:
That would be an interesting comparison to look at some of these bigger nationwide companies and gather all the reviews and see how many of them are actually five star reviews compared to individual owners.

Tony Robinson:
That data’s actually been put together already and it is 100% verified that as your number of listings increases, there’s like a direct relation to your review score decreasing. And the people who are one or two listings, they’re the ones that are really at the top when it comes to review scores. When you see the people with tens of thousands of listings, the Vacasas, the evolves of the world, they’re the ones that are really suffering when it comes to that. So you’re absolutely right. As the portfolio gets bigger, it gets harder to maintain those review scores.

Ashley Kehr:
Now from that first property, you went on to build distilled destination. So how did this plan evolve from one ski condo into four properties within two years?

Sandy Lee:
Right. So that ski condo, we branded it from the very beginning. We called it Whiskey Ridge. And like I said, about six months into it, I started to see, hey, this is doable and I enjoy this a lot. And that’s when I started really thinking about actual retirement, what could this be? And then yes, in the next year and a half, I bought three more properties. Whiskey Sands is in Orange Beach, Alabama. I’ve got Whiskey Hills just north of Asheville and Mars Hill, and then Whiskey River in Texas and the Hill Country and Green. So have loved putting it together. It just started seeming like, how can I make this brand into something that we would enjoy? The theory was always the same vacation homes that the family could use. Both my son and I and our extended family were real close to my brother and sister-in-law and their three kids.
So how can we all go vacation together and enjoy some holidays, but also by the way, pay for my retirement along the way. So that’s what this became. What’s that minimum number of homes that I could do exactly that with?

Ashley Kehr:
Now for each of these properties, did you do the same kind of financing where you put 25% down for each? And where was this cash coming from for each of these down payments?

Sandy Lee:
For the second property, I did do 25% down and I have a really large mortgage on that one. That was the Orange Beach property. The third and the fourth were lower entry points. And just to be blatantly honest, really liquidated some investments and went all in cash on those last two. My long-term goal, different than some, maybe different even than what’s the smartest, is to have no mortgages. So I’m now in that case where I don’t think I want a lot more properties. So scaling to me looks like getting rid of all mortgages in my life by a certain age. So that’s the big goal.

Ashley Kehr:
And I don’t think we hear that enough on the podcast as like that as an option. It is consistently put into your brain, scale, scale, scale, grow, grow, grow, buy, buy, buy. The bigger the portfolio, the more successful you’ll be. But really, I think it’s refreshing to hear that that’s not the case. You don’t need a ton of properties to retire or to cashflow or to build the life you want. And some cases, you could have these four properties and make as much money as someone with 20 properties that’s over-leveraged on them. So I think it’s very refreshing to hear that.

Sandy Lee:
Well, that’s the goal.

Ashley Kehr:
Well, the path would be on, yes.

Sandy Lee:
Right. And now in the market, as you guys know, short-term rentals have been seeing some struggles over the last couple of years, and especially in some markets, the goal is going to be to stay with them, to make just enough money to get by, to keep my own personal expenses fairly low and not quit, not walk away because I have a lot of faith that in five years, this is just going to be the greatest decision I’ve ever made. I really do believe that. I think that sticking with it is the big key right now.

Ashley Kehr:
And like you said, the worst case scenario is that you sell the properties.

Sandy Lee:
Absolutely. Go back into the market. I could even go back to work. Lord, help me. Who knows? But hopefully not. Hopefully we can just stick with what we’re doing over here.

Tony Robinson:
Sandy, you went into a few different markets, right? You’re in Steamboat, you said Orange Beach, just outside of Asheville and then Texas Hill Country. Walk me through your thought process on casting a wide net versus just buying all four in Steamboat where you started.

Sandy Lee:
Right. It definitely would’ve been easier to buy all four in one place, but my vision of retirement was to travel during the off seasons at each property and spend even months there to where we could go and do some hiking or some other things, whatever was in the area, still have that vision. Boyfriend lives here and we try to get out to … In fact, we’re going to Orange Beach this weekend. We tried us to see when things aren’t booked and get there. Couldn’t have really done that if we had four altogether. So I decided it was worth the operational headache to have four different states. I also did not want to invest much in Texas because the property taxes are so high here. So I’ve been trying to get out of Texas in a way as much as I could.

Tony Robinson:
But Sandy, I love that so much of your approach is really centered on what kind of life do I want my portfolio to support? And you said, “I don’t want a big portfolio because I want to take up too much time managing, so I’m making different decisions there. I want to be able to use them myself so I’m going to these different markets.” I love that approach, but how did you actually choose the other markets, especially that’s a pretty tight timeframe. Was it just places that you already knew and liked to vacation yourself where you felt the numbers made sense or some of these markets that maybe you hadn’t considered before? Just how did you land on all those cities?

Sandy Lee:
Actually, not at all. I had never even been to Orange Beach or to Asheville when I started all of this. So that’s kind of an interesting aside, but the approach was to try to replicate what I had found in Steamboat. Asheville’s a good example of that. The property in Mars Hill is on a ski hill where it was actually shut down, but new owners had already bought this resort and they were turning it into Hatley Point and it was going to reopen within six months of when this house was for sale. So it was another one of these cases of, I can see that this thing is about to happen and I can see that in three to five years, it’s going to be amazing. I’m willing to jump in now, maybe even take way less revenue than I’d like right now. Orange Beach was kind of the same.
Some people will call it saturated, but I see something different. I see people coming from Florida and starting to vacation in some lesser expensive places. I see the airport and Gulf Shores just having gone public. I see some different things happening there with a beautiful beach town, so that’s why Orange Beach. And then green and the hill country in Texas, we’re on the river, we’re walking distance to the oldest dance hall in Texas and there’s great concerts there all the time. So that was just more of a money play. It’s kind of close to a lakehouse that we have.

Tony Robinson:
But Sandy, I think even taking a step back, and I appreciate the insight there, but how did you go from 20,000 potential cities in the United States to even get Orange Beach and Asheville on the list of potential places?

Sandy Lee:
Well, I will say I’m not much of an analysis paralysis kind of person. If I get an idea and then I think something looks cool, I’ll go look at it and I’ll pull the trigger very quickly. I realized that the first 10 minutes of this podcast did not sound like that, but once I’m in on something, I’m in. So we looked at Florida. I had gone to Destin quite a bit. I wanted to maybe invest there. I had concerns about the insurance costs there and everything that was happening in Florida, even taxes. So I said, “I don’t know anything about Florabama. Let’s go take a quick trip for a couple days.” Brought my son down to Orange Beach and we just fell in love with it. It’s beautiful. It’s more spread out. We back up to a Gulf State park that is hundreds of acres of just green area where there’s all this hiking and biking.
I’m not even much of a beach person and I love it there. So I just was really surprised by that. So it was kind of the same as Steamboat. We bought a house that we loved in an area that we loved and figured, okay, this’ll at least break even. And if it pays for itself, then it’s doing its job and if it makes more, even better.

Tony Robinson:
Just really quick, I’ve never heard of the phrase Florabama before. I had to Google that to like- Oh really? Abama. Wasn’t

Ashley Kehr:
There an MTV, TV

Tony Robinson:
Show that was like that? There was. That was the first thing that popped up, MTV TV show, Florabama Shore. It’s

Sandy Lee:
Definitely the redneck version of Florida, and I am right there. I’m from Texas. My dad’s from Alabama. These are my people. This is where I should be.

Ashley Kehr:
I actually went to a mastermind once and stayed in one of the houses right there on the beach, and it was super nice house, great layout. Every room had their own en suite and it was beautiful beach and it’s like house, house, house, house. And there’s like where we were, at least there was no hotels. So it was all just residential and super nice because it wasn’t overly busy.

Tony Robinson:
Yeah. Alabama. There you go. Learn something new today.

Sandy Lee:
There you go. It’s worth a visit. It’s pretty neat.

Ashley Kehr:
So even in this same market, there was actually a new build community that went up with 70 short-term rental units. So you knew the risk kind of going into this, but why did you decide to buy anyways and what ended up happening?

Sandy Lee:
Right. I knew the risks. Well, most of them, I had lost some money on a personal new build. So I knew it wasn’t the smartest purchase unless I was going to hold onto it for a really long time, which is our plan there. But with a new build community, we were able to really get a vision for what it would be, get in fairly early while pricing was still good. We were one of the first six or seven houses in the community. We could pick the best lot or the best lot for us anyway, has the most land. It backs up to the Gulf State Park. Like I said, it’s got four en suites in there, which we can fit all king beds, no problem, and really just make it into something that would work great, we thought for multiple generation families. We were looking for how can we support multifamilies, not just mine, but also other people who would want to go visit there.
So we made it beautiful. We took a chance on it. It’s stayed level in revenue, which I think for that area is a win over the last couple of years.

Tony Robinson:
Now, I know one of the other things too, Sam, that you focused on was improving the occupancy. So I think you went from 51% occupancy in 2024 up to 77% occupancy in 2025. And given that occupancy is only one metric, we also want to look at revenues, but that’s a big jump, 51 to 77. What did you do that actually moved the needle?

Sandy Lee:
Right.That’s a big jump. And it tells you, since I just told you my revenue was stagnant there, that I had to make a huge pivot to make the property work. What I really did there was really just to take a huge, fresh look at my pricing. Well, I did a few things. Let me back up. I did a remodel on the backyard to make it beautiful, put in a bunch of new plants, put some stone in, made it really nice. I put in a new bar in the kitchen area in a closet that always should have been a bar, very low cost, but just some things to make the property show a little bit nicer. But then I also took a look at my pricing and decided some of my pricing was just too high compared to the market. Along with doing that, I realized that I wasn’t paying enough attention to the pricing and I hired a revenue manager.
So that’s something that I’ve slurged on over the last six months or so to really take a closer look at my pricing, got rid of what I call ego pricing because I was like, “Oh, I’m never going to have a night that would be less than the cleaning fee.” Well, of course I am. So I’m looking at it way differently right now. I’m going to have the price that gets me the most overall revenue period. That’s what the house is for. It’s not for anything else. So yes, higher occupancy, which I’m proud of, but the revenue has stayed right at $100,000 there for both of the full years that I’ve had it.

Ashley Kehr:
Tony, you had hired a revenue manager before, right?

Tony Robinson:
I did. Yeah, we have one right now for our entire portfolio.

Ashley Kehr:
How, for somebody like me that has two short-term rentals, what is the process to find and kind of vet a revenue manager?

Tony Robinson:
Yeah, I think my process was probably slightly more unique because he actually came to one of our events and we met there and I just kind of got to chatting with him, but my process for vetting him was I just asked him what his process was and I compared that to mine. And if I felt that everything that he was doing was maybe below The level of what I would be doing, would that be a red flag for me? But as we had conversations, a lot of his approach was similar to mine. And there were even a lot of things that I’ve learned from him about how to really put together the right pricing program. So when we talked through and he walked me through his process, I was like, “Okay, this actually looks good.” And we started off, I think, by just giving him, I want to say it was just a hotel first, and then we started with a few listings, then we scaled up to the whole portfolio from there.
So we dated first, and then once I saw some initial results, that gave me the confidence to give them everything. And now, basically our entire portfolio has been up year over year since we started working with them. So it’s been great.

Ashley Kehr:
And how does the pricing look like the cost to hire a rep manager? Is it a flat fee? Are they getting a percentage of how they grow the profits? How does that actually work?

Tony Robinson:
We pay on a per listing basis. I would be very, I think, against anyone that charges on a rev share type model because we handed over a bunch of listings at one time. I think we’re somewhere around 100 bucks per listing, but I want to say if you’ve got maybe one or two, maybe expect to spend a couple hundred bucks per month or 300 bucks per month for revenue management. So if you’ve got a listing that’s only doing 40K a year, maybe doesn’t make a ton of sense. But if you have a listing doing 100K or 200K a year, spending 300 bucks per month to really optimize that revenue makes a lot of sense.

Ashley Kehr:
Sandy, is that the same kind of for you?

Sandy Lee:
Yeah, that was exactly my thinking. I mean, if I’m going to spend eight to $10,000 on a revenue manager a year, but my entire revenue for my four properties is about 350,000. Is it worth it? Well, yeah, I hope so. But that remains to be seen. I’m kind of early in the process. What I know for sure is that I’ve learned so much more about how price labs work and some of the things that … So it’s been a good investment no matter what, because I’ve learned a lot that I can take from this, so I’m not sorry that I did it. Price Labs is a really complex and simple tool. You can either set it and forget it and still get good value out of it, or you can really go into it and do a whole bunch of little tweaks that I think AI is going to make that a lot easier in the future.
But for now, it’s a really complex tool with a lot of data science behind it.

Tony Robinson:
Couldn’t agree more, Sandy. And kudos to you for making that decision and seeing that value. Now, Sandy just told us how she nearly left money on the table and then fixed it by kind of killing the one thing her pride wouldn’t let go of. But what makes your story really different is what she brought into this business from her 30 plus years working in corporate America. And we’ll cover that right after a quick break to hear where from today’s show sponsors. All right, we’re back with Sandy. Now, Sandy, you went from, again, sold right at 50 to retired just a few years later, not by abandoning your career, but by really redeploying what you learned in your career into your real estate business. I mean, you were known at work as a fixer, right? You got put on the broken department or a broken project or a broken process and you’d fix it, but it turns out short-term rentals are kind of full of broking things as well.
So you said that your background in corporate, again, being thrown at something and fixing it directly translated into running your short-term rental business. Can you give us, what is an example of what that looks like in action?

Sandy Lee:
Sure. I think you hit the nail on the head. I’d have to go into situations without a lot of information. Often it was taking over a department where I didn’t have any background and go in and learn the processes and then try to make everybody happy on the customer service side and within the department while I’m changing everything to make it work. So lots of different moving parts when you manage departments or come up with new operations. But with short-term rentals specifically, you’ve got to have all the same skills. You need organized, clear, good operations, but you also need to be able to problem solve really quickly and efficiently in order to not let it take over your life or stress you out really badly. There was a really fun recent example. Everybody’s got issues, but what I think is a fun one now because it came out so good.
In my Orange Beach place over Thanksgiving week, I had two families arrive on Tuesday of Thanksgiving week. They’re clearly big football watchers. I’ve got a big 85-inch TV, again, Florabama. So we’ve got an 85-inch TV on the walls where everybody can watch their Southern football and they get there and the TV’s broken. There’s a big line down the middle of the TV. It’s clearly just not okay. So Tuesday, Thanksgiving week, and they were definitely football watchers, like I said. So I learned this about 4:00 PM and I quickly went down a bunch of different paths to try to figure out what’s the best way to get a TV into that house this evening and on the wall.That’s hard. And I think a lot of people might just go, “Oh shoot, that’s hard. What am I going to do? I’ll fix it in the next week or two.” You can’t do that.
So everything I learned in my corporate business where problems don’t wait and you have to solve them right away, if you’re really going to be a great manager in a short-term rental world, you also need to solve problems right away. So between Costco, Walmart, Amazon, Best Buy, I found one at Walmart that worked. My handyman went and got it. He had it on the wall by 8:00 PM and everybody’s cheering that this all worked out. But it’s constant things like that. There’s always a problem and it seems big and people can panic, let the guests know that you care and that you’re working on it really hard and then do your best and then let it go emotionally. It’s just work. You’ve got to let it go. It’s just work, right?

Ashley Kehr:
I think one thing that I’ve learned on that piece as far as the problem solving and trying to deliver customer service, and this is more coming from my long-term rental side, but that just the more you communicate, it seems like the better the issue doesn’t escalate. You can keep it more controlled. And I feel like with at least long-term tenants and sometimes with short-term guests, I’ve learned that keeping them updated as to what’s happening, how you’re solving the problem and update on, he’s arrived at Walmart, he’s got the TV, he’s going to be there in 20 minutes. Those updating people and telling them goes such a long way. Every work order we receive, we are immediately acknowledging it that we have received it. We immediately acknowledge that it has been assigned to a contractor. They’ve been called. We acknowledge, are they going to schedule it?
Will we schedule it? Every little step of the way. Also, it’s great to have that documentation too, but it’s just letting them know and keep them informed and updated because what is the most frustrating thing to anyone is when you have no idea what’s going on.

Sandy Lee:
Right. And you feel like no one cares. They need to know that you care. And so, oh, I got the best review from this guy. So it was fantastic. Everybody wins.

Tony Robinson:
Now, you mentioned, Ash, systems and processes. And San Diego, that’s been a big focus for you as well. Your portfolio for properties runs on just a few hours a week. And I think a lot of the thing that maybe holds new rookies back from investing in Airbnbs is that they feel that it’s maybe too labor-intensive for them to try and take on. So you’re a few hours a week on managing. You don’t live near most of your properties and you’re traveling constantly. So what does the actual operational reality look like and what did it take to build to that level?

Sandy Lee:
Yeah, absolutely. I think this is really important. And I’ve heard you guys talk about it so much. Having the right tech stack in place is the most key issue for me anywhere. And that’s something that I did from day one. Some people might not. I think it’s great if you go ahead and put that property management system in place right when you set up your property, and then it does so much of the work for you in terms of messaging and controlling your locks and your thermostats and everything else. I knew I was trying for a large revenue for every property, so I just have never stressed about small software costs. Building automation into my processes has been a key for me from the very beginning. I think the software and the systems are the fun part for me also. So I’ve had a lot of fun with that.
But remote management to me is so much easier with the right tech stack in place. I think that’s the biggest key. Certainly the right cleaner, the right handyman. It’ll work well no matter where you are. If you have a couple boots on the ground and then you have a system in place that is set to work without you. It works while I sleep is what I like to say.

Ashley Kehr:
Now, a lot of rookies are actually trying to get out of their W2. They want to escape from it, but what you’re saying is actually something you brought with you. What would you tell all the rookies listening who’ve been dismissing their own resumes as an investing asset?

Sandy Lee:
I think there’s a lot around this, right? Well, for one thing, it’s never too late. If you would’ve told me 10 years ago that you could be in your 50s and start a real estate investing career, I might’ve thought you were nuts, right? But absolutely. It doesn’t really matter when you start. It’s just crafting this to look like what you want it to look like. But absolutely taking those skills from your W2 or from whatever your life is and translating them to the next part of life, I’m going to sound a little book-like on you, but that’s just learning and improving and adapting and finding what’s next and taking everything you’ve learned along the way. So the further you go along, don’t leave behind anything that you might’ve learned there. It always translates. The leadership translates, the people skills translate, the team building translates. Certainly the operational skills, the Excel, the analytics, Tableau, all of that stuff translates beautifully to this career.
You just have to sort of know where to deploy those skills and when.

Ashley Kehr:
Now, looking back, if you could do this all over again, and what would you have changed? Would you have started earlier? Would you have only focused on fewer properties, maybe more properties? For somebody that’s listening to this, what does this path look like for somebody listening right now and what would you have done differently?

Sandy Lee:
I think the only two things I would’ve done differently is started earlier, which I think is probably not a surprise answer. I bet most people you talk to say that. I definitely would’ve started 10 years before I actually left work because it only takes a few hours a week, which really surprises me. I really wish I had bought two of these properties 10 years earlier and then just let them ride and had fun with them along the way. That said, love where I am, so it’s totally fine, but I would’ve done that differently and I wouldn’t have hired a property management service from day one. I also think you guys have talked about this. If you really get into your own first property and understand how it works, even if you decide you’d much rather have it managed by others, totally fine. But if you learn it yourself first, you’re going to be a better owner in the long run.
I think all of that is just really important.

Tony Robinson:
Last question I have for you, Sandy. We’ve been talking more about AI and how that’s kind of seeping into the world of real estate investing. You said that you think guests will find their next Airbnb through a ChatGPT before they ever even open the app. What do you think Ricky’s need to do right now to maybe stay ahead of that curve?

Sandy Lee:
Right. So whether that’s right or wrong, it’s definitely a curve that I want to stay ahead of. So you’ll get lots of stories around AI, but I am so glad you asked this one. I actually just did two YouTube videos about AI and what I think the effects that we’re already seeing in the industry and where it might go. What an incredible tool. For rookies that are already operating short-term rentals, there are a few things that they can do even right now. I think to get ahead of what’s happening in the industry, having your own direct website with some sort of branding and a really clear description of what your home is, is really going to help AI find your home better. But Airbnb and VRBO are already using AI to overlap how we used to think they were showing homes to people and trying to show the home that will get the guests to book the fastest.
It used to be about keeping people in the scroll, and now it’s how can we get that person with a shorter attention span to book quickly and get off the site? So it’s just different than it used to be. And what they’re saying is that AI wants clarity. So having descriptor words like beautiful is not going to help AI at all. They want it to be quantifiable. It needs to be amenities, bed sizes, beds and bath. Be really clear about who this home is for and say that in your listing even several times who you’re trying to attract with it. Try to call out a few specifics that makes your home better than your neighbors. All of this can be a game changer. I mean, I think we’re all using AI in some ways, but keep in mind that the software products that we’re using are probably all way ahead of us and using it in a lot of other ways that we need to be aware of as we go through this world.

Ashley Kehr:
That’s such a great point. I’m thinking about if I were to ask ChatGPT about a property, I’m going to this lake and I want to find a property that has this, this, and this. I’m not going to say I want it to have a beautiful living room. I’m not going to say I want it to look stunning. It’s going to be, I need four bedrooms, four bathrooms. It needs to have a deck. It needs to have a dock to the lake. That makes complete sense.

Sandy Lee:
And then the other thing it can do is go through and compare pictures to words. So if you’re overstating what your property is, you may not be able to get away with that in the future. I think it’s going to be great for the industry. I think it’s going to up everyone’s game a little bit. I don’t think it’s bad, at least right now.

Ashley Kehr:
Well, Sandy, thank you so much for joining us today and sharing your story and all of the knowledge that you have learned from your real estate experience. Where can people reach out to you and find out more information?

Sandy Lee:
Yeah, so I’m so happy to have been here. It’s really been a joy. You can find me. I’ve started a new platform, STR Jumpstart is what it’s called. So you can find me at strjumpstart.com. And on both Insta and Facebook as STR Jumpstart, it’s really a step-by-step, really manual for if you wanted to get your first property or second, how you could do that. It’s something that I wasn’t able to find when I got into this. When I got into this, I was a little bit scared, as I told you guys. So having that step-by-step instruction, it’s got 50 lessons in there and a lot of downloads. Financial modeling is really a key behind it. So if anybody wants to check that out, I’d certainly love to tell you all about it. So reach out to me.

Ashley Kehr:
Well, Sandy, thank you again so much for taking the time to join us today. I’m Ashley, he’s Tony, and thank you guys so much for listening to this episode of Real Estate Rookie. If you’re not already, make sure you are subscribed to our YouTube channel @realestaterookie, and you can find us on Instagram @biggerpocketsrookie. And

Henry:
Investor Greg Rodersheimer bought his first property in 2007. But wait, this isn’t going to be the story that you think it is. In his early 20s, Greg was sitting on a property worth less than he paid for just a year ago. So when he tried to move out, his only option was to become an accidental landlord. But he didn’t keep buying. Instead, Greg took a break from real estate for 14 years. Only coming back when the midlife crisis of working corporate until 65 started to kick in. Greg saw how real estate worked with his first home, so why not repeat the system? But this time he did something different. Greg targeted the exact home the optimal tenant would want. He partnered up when he didn’t have the cash and he bought more when his savings were replenished. Now, just five years later, Greg has nine paid off properties, cash flowing over $100,000 a year.
He didn’t buy during the crash. He always put at least 20% down, and he even self-managed his portfolio. A small portfolio with six figures of income, Greg did it starting in 2021, and he’s still buying deals today. What’s going on everybody? This is Henry Washington with the BiggerPockets Podcast, and today we have an investor story from investor Greg Rodersheimer, who bought his first property right before the crash and today has an amazing portfolio with a ton of cashflow. So let’s jump in and learn how he did it. Greg, welcome to the BiggerPockets Podcast.

Greg:
Henry, thanks for having me.

Henry:
Awesome, man. Well, let’s just jump into this. Tell us about where you were and what you were doing before you got in real estate.

Greg:
So straight out of college, I started working for a health insurance company in operations. High level from there, I started to go into Medicare, Medicaid, which was at the time a lot of the Obamacare stuff was being rolled out and implemented. So that’s where most of the opportunities were. Then I would bounce around from a lot of the different startups that were coming out, basically facilitating these types of programs. So a lot of technical requirements, a lot of compliance requirements, attention to detail, all of those kinds of things. Basically, I just kind of climbed the corporate ladder that way.

Henry:
That’s cool that you have that background. What year was it when you made the pivot into real estate?

Greg:
I bought my first residential home in 2007. Oh, wow. So you know what I’m going to start to say there, right? Ouch. Yeah, exactly. So I was in Harrisburg, Pennsylvania at the time and was there for three years. That’s where I met my now wife. And so we moved to where we live now, which is Richmond, Virginia. And so my house was worth less than what I bought it for. So I became an accidental landlord right out of the gate. Was able to sell that property when we bought our current residence. Didn’t really do anything with real estate up to that point, but leading me to my current real estate journey. I was a couple years from age 40 and a friend and work colleague of mine, we’re about in the same boat, so call it a midlife crisis, whatever you want to call it.
We were saying, do we really want to be in the office world from now until we’re 65? And I’ve always been very interested in financial independence. And my dad, for example, retired when he was 52. So that was my model. And so we settled on real estate. So I bought my first condo with this partner in 2021, so about five years ago.

Henry:
Can you give us a little more background about that deal? What did you pay for it? Did it need work? Was it a flip, a rental?

Greg:
My partner and I figured we would just dip our toe in the water to start. So it was turnkey. In fact, it’s only about 10 minutes from my residence. So even upkeep, anything that we were going to have to do with it is not far away. We bought it for 172,500. It also was already being used as a rental. So we had a tenant there.

Henry:
Paying market rents or did you have to raise rents?

Greg:
No, we did raise the rent. She’d been there 10 years. So she was paying around 1,100. So we upped it to 1,500 and she was willing to stay. Since it was a partnership, we had to get a commercial loan rather than just if I was buying it individually. So our rate was still good, especially for 2021. And of course we had to put a little bit more down. We had to put down about 50,000, so 25 a piece between the two of us to maintain the fifty fifty partnership. So we didn’t have to advertise or anything out of the gate since we did already have a tenant. So not much, I guess, in the way of lesson learned other than HOAs and that eating into your overall budget. But each month we were to the good about $500. And that’s not including other expenses that might come up, but we were already on the right side of the ledger line with that purchase.

Henry:
Do you feel like you got what you wanted out of that? You were learning how to be a landlord, or was it not quite the experience you were looking for?

Greg:
It was the experience that I was looking for and something that probably is worth mentioning up to that point when I was, dare I say, finishing up my W2 career, I started doing consulting. I was consulting for some former employers of mine, and that expanded a little bit in the years from 2021 till about 2023 in gaining other clients. And so the good thing there is that our household, we were able to basically function off of just my wife’s income. So we were able to confirm that that was possible. And to some extent, as I was doing both consulting and in my W2, viewed the consulting money as-

Henry:
Play money. Yeah.

Greg:
Exactly. So it took a little bit of the edge off from a risk standpoint. I

Henry:
See.

Greg:
And it also helped my wife sort of say out of the middle of it or feel like it was sort of part of our overall personal income. And so from those standpoints, it took the edge off a little bit for me to see if I liked it and it kind of rolled into the consulting business that I was already doing.

Henry:
So it sounds like you bought that first deal and then was it shortly after that that you started picking up some of the consulting and you were doing the consulting and your day job for a while?

Greg:
I was doing the consulting and day job actually about a year even before I picked up that property. So my portion of that 50,000, the 25,000 all had been made in consulting on the side.

Henry:
So you really picked up a side hustle with the consulting. You used that to help fund your down payment. You bought that first one that started producing some cashflow and the side gig of the consulting plus the positive cashflow from the rental property gave your wife some confidence in like, “Hey, if I want to do more of this real estate thing, we can live off of your salary and we could potentially do this. ”

Greg:
Exactly.

Henry:
Okay. And did you make that shift prior to doing your next deal or did you do another deal first?

Greg:
I still had some money left over in the consulting side of things. So we ended up buying another condo in the exact same place, almost the exact same deal. It was a little bit smaller. They were both two bedroom, two bath, but it was for 173,000. But yeah, with those first couple, it was all the money that I had made up to that point from consulting.

Henry:
Were these just listed on the MLS or how were you finding out about these opportunities?

Greg:
Just through the MLS. I had not really expanded into any off-market opportunities yet. I have since then, but at that point was just keeping it straight on the MLS.

Henry:
When you decided to kind of jump back in and buy that first one, did you have some goals in mind or was it just like, “Hey, let’s give this a shot and see how it works out.

Greg:
” Really just give it a shot and see what works out. And when my partner and I were deciding that real estate was where we were going to go, we were comparing that to buying a business or starting our own business. So we were saying to ourselves, “We’re going to have to scale up pretty quickly if we want this to be a business that would eventually replace what we’re doing as our day job.”

Henry:
Takes a few doors at $100 a pop for you.

Greg:
Exactly. So without doing a whole lot of math at that point, we were just saying, “We know we have to scale up a lot, so let’s keep looking for deals that make sense for us and keep on scaling.”

Henry:
That’s cool. I like hearing you say that. That first deal, you kind of need to have some more realistic expectations. Your first deal’s probably not going to be a home run. It’s probably going to be a base hit. You’re going to make mistakes. You’re going to under budget your rehab or you’re going to underbudget your timeline. You may not be able to get the rents you think you’re going to get because you’ve never done it before. You’ve never had to pick a tenant. There’s just so many variables that may not work out exactly as perfect as you underwrite them to perform, but that first deal, the goal is to learn all of those things in a way that’s going to protect you financially, especially in your situation. Worst case scenario, you buy this condo, you don’t get the rent you want. It’s in already decent shape.
You don’t have to rehab it. Well, your worst case scenario is you break even or you have to pay into it a little bit of money every month, but you learn so much through that process that helps you be better for the next deal. It’s okay to learn on your first deal so that you become a better investor. And it sounds like you were able to get paid to learn on your first deal, and then you went back for more, you went back for seconds in the same complex, so it must have been all right. What shifted from buying condos in the same complex? You said you wanted to scale. Were you able to do that? What was the next step?

Greg:
So the next step really was noticing that small starter homes that are on a decent size lot weren’t being built, at least not here in Richmond. And I gather that it’s very similar nationally. So any new homes that are being built that could be considered starter homes are either right on top of each other or they’re costing a lot more than most people would be able to pay for it to be a starter home. And then also just from the dollars and cents standpoint, I was at the point where I could go and purchase my next property. My partner was not quite in that same position. So just from that standpoint, I started to look to see what my next purchase could be whenever he was ready to partner on another deal. So it was really just those couple of basic things. And then frankly, the other thing that I was interested in was being able to get a 30-year mortgage that I couldn’t necessarily get under a partnership.
The numbers made a lot more sense and meant I could go after a property that was a little more expensive than what those condos were. Well,

Henry:
That’s cool. It’s an interesting story hearing your evolution as an investor. And I absolutely have questions about this single family deal, more so around what gave you the vision to know that your market needed this kind of an asset. And I’ll dive into those questions when we come back from our break. As a host, the last thing I want to do or have time for is to play accountant and banker. But that’s what I was doing every weekend, flipping between a bunch of apps, bank statements and receipts, trying to sort it all out by property and figure out if I was actually making any money. Then I found Baseline and it takes all of that off my plate. It’s BiggerPockets official banking platform that automatically sorts my transactions, matches receipts, and shows me my actual cashflow for every property. My tax prep is done, my weekends are mine again.
Plus, I’m saving a ton of money on banking fees and apps I don’t need anymore. Get a $100 bonus when you sign up today at baselane.com/bp. BiggerPockets Pro members also get a free upgrade to Baselane Smart. That’s packed with advanced automations and features to save you even more time.
All right, everyone. We are back with investor Greg Rodersheimer, and we are talking about scaling his investment portfolio. Greg, so now you’re focused on looking for, it sounds like a single family home, and it really sounds like you’re targeting kind of that first time home buyer or maybe the tenant that wants a single family home. And you said that you didn’t see a lot of that product around. Were you purposefully looking at what your market was missing or how did you come to the determination that this is an asset that is in demand?

Greg:
As simple as it sounds, even driving around town was part of it. There are a lot of apartment and condo complexes being built, but any single family homes were either significantly more expensive or just didn’t have the land. And so when I was comparing the numbers for those condos and what I could afford having to put down 25% to 30% as compared to the single family homes where I can do 20 or 25%, depending on the numbers and the banks that I was dealing with, I was able to spend a little bit more money to get to those properties. And frankly, from my perspective, if I were at the age where I had kids, I know that I really wouldn’t want to share walls if I could help it. And so that was kind of my premise, admittedly, maybe a little bit not proved until I actually bought my first deal.

Henry:
But this is like the essence of real estate investing. This is exactly what you should be doing as an investor. Leveraging the things you see, feel, taste, touch every single day. If you’re a backyard investor and you drive through your neighborhoods, what are you seeing? What’s being built? Who’s living there? And these are just some questions you can stop and ask yourself right now. You already have the data in your head, you see it every day. And so to be able to take that information and make some educated guesses. Now, I’m not saying go out and buy an asset based on some unproven theory, but I am saying use the information that you have, that’s your competitive advantage. And then go take your theory to a property manager or a real estate investor who has some actual data for you to compare it to. And then you can find yourself having some sort of competitive advantage by providing a product or a service that your community needs.
Real estate is a business. And as any good business, your job is to provide a product or a service that’s in demand. I love that you took a look around to say, okay, what does my community need and then how do I provide that? So I guess that’s my next question for you is how did you provide that?

Greg:
So the home that I settled on is a rancher.

Henry:
By ranch, you’re saying all one level.

Greg:
All one level.

Henry:
Yep.

Greg:
I think a good thing to target are ranchers so that if you have older folks that have trouble with stairs, things like that, from a accessibility standpoint, you have that ready to go. And so the first one that I bought is for 245,000. So had to put 50,000 down on that. I was able to rent it within two weeks of purchase. It was still relatively turnkey, not brand new anything, but everything was well maintained enough. Most of the properties that I’ve bought have been built in the either late 70s all the way up through the early 90s. Love it. The carrying costs are about $1,200 on that, and it rented for 1,600 out of the gate. In fact, this property, I just filled a vacancy and it’s now renting for 2,200 in the span of four years.

Henry:
Gosh, so it’s gone from 1,600 a month to 2,200 a month in rental demand there. Yes. Is it because they’re still not building a ton of single family homes?

Greg:
Yes. The amount of inquiries that I’ve gotten on my vacancies, and I’ve only had three vacancies coming up on five years. So I have tenants that are staying for quite a long time. And even when there is a vacancy, they get filled very quickly. In fact, the next property that I bought was the exact same profile. I’ve probably spent an hour inside of it because it’s rented so quickly and I’ve had the same tenants for that long of a period of time.

Henry:
Were these both MLS deals as well?

Greg:
Yes.

Henry:
That’s cool. You’re finding ways to make deals on the market work. You’re not doing heavy renovations. It’s what Dave and I call just good old-fashioned boring real estate. Find a property, get a loan, put your 20 to 25% down, rent it out, maintain the property. Buy the best asset you can given your financial situation. You’re not buying anything super old. This is just tried and true old boring real estate, but old boring real estate has been making people wealthy for generations. And one of the things you mentioned was that you are managing these, so you are finding the tenants and it sounds like it’s not been a ton of work because you’re buying such great assets. Talk to us a little bit about being your own property manager and how that’s either helped or hindered your business.

Greg:
I’ve heard this advice and would definitely second based on my experience that self-managing, at least for some period of time, whether it’s a financial consideration or not, is really going to help you understand your workflow and how to make a deal work for you, even if you want to use a property manager at some point. I think it’s certainly worth having some background in self-management so you know how to manage the property manager. But from my standpoint, I’m handy enough that I can take care of most issues that come up and all of my properties are within a 20 to 25 minute drive to me. That’s cool. So it’s really not a huge deal to get to those properties. And actually, I’ve been able to lean on contractor, partners of mine, as well as even just other colleagues of mine when I go on vacation that they’re willing to at least field a phone call for me.
That’s kind of, I feel like the nightmare scenario that something goes really wrong if you’re out of the country or anything like that. But I’ve had really good colleagues and friends that have helped. So that’s all been really good for me. And if I admit, I’m a little bit of a control freak. So

Henry:
If I

Greg:
Would hand off too much of the control and the power from day to day, I think that would drive me just about as nuts as anything else.

Henry:
Getting the experience of doing it yourself will help you be a better manager of property managers when you go to hand it off, because you don’t just give up managing your assets. When you hire a property manager, you just pick up a new job of managing your manager.

Greg:
One thing I would add that from my perspective is unique why I had 10 properties as my goal and also from the timing standpoint is my kids are getting just about to the age where I can start to employ them. And so that- There’s

Henry:
Tax benefits there.

Greg:
And specifically, so it makes sense for me to manage from that perspective.

Henry:
Do you pay them $12,500 a year?

Greg:
That’s a real good guess, but that’s something I couldn’t necessarily do if I didn’t have this type of business. I can’t do that through my stock portfolio, for example. So at that number, the financial numbers make sense that I can start to bring them into the fold.

Henry:
Well, Greg, you hinted a little bit earlier that you’ve employed some different deal finding methods later in your investing career. So that leads me to believe that A, you continued to scale, but also B, you weren’t just buying on the MLS anymore. So kind of what did the next phase of investing look like for you? What were you focused on and how were you finding those deals? Tell us maybe about one of them and what they look like.

Greg:
And as far as from the time standpoint, this was getting into about 2023. So gone were those three and a half percent rates that I was able to get with those first deals.

Henry:
Yep.

Greg:
We’re

Henry:
All sad about that still, but you know.

Greg:
So I really started to look to see how I could pay cash. And so when I started to be in a position to pay cash, that meant that I could start to engage wholesalers and then also even look on the MLS for as is properties that needed some work. I was really trying to stay within that $250,000 purchase price. And at that timeframe, at that purchase price, it was going to be a house that needed some work.

Henry:
There usually is, buddy. When you start looking off market, now you turn it into a value add investor. This is the stuff I like. Let’s go. Let’s

Greg:
Go. Tell me about it. So I bought one wholesale property that really didn’t need a lot of work, just needed to rip the deck off and replace that really paint patching and just a little bit of update to the bathroom. So it was not that bad.

Henry:
About how much worth of work there?

Greg:
Well, it was about 40,000. So not too, too bad. And frankly, I could have done more of that work myself if I wanted, but I did find a contractor through a friend of a friend. He did a fine job and it worked out okay.

Henry:
Give us the quick rundown. What’d you pay for that one? You put 40 in it and then tell us what either rent or sold for.

Greg:
Yep. So I paid 240 for it. And then with the 40 in, it was 280 all in. It rents for 1900 and the current value is about 320.

Henry:
Okay. So what was the next one like?

Greg:
So the next one was MLS, but it was as is. I paid 255 and it had significant floor issues that I could see. Turns out that there had been some joists that were cut. There was definitely subflooring that had significant issues. I did the bad thing, went on nextdoor.com, tried to find a handyman that could do the basic part of the work, and then I thought I would do the rest. He was awful. It cost me about 6,000 and he didn’t really finish anything. I got really lucky that a neighbor of mine referred me to a contractor he had used. He came in and fixed everything for a really reasonable price. And so I was at 255 purchase price. It was at 290 once it was completed and it rented for a similar 1975 once it was ready to go. And in fact, I actually just refied that property to have money for this most recent purchase.
So that’s my first, I guess we would call that the slow burr.

Henry:
The first slow burr. Awesome. So you bought a wholesale deal and an MLS deal. You paid cash, so it’s obviously producing cash flow. You had to pay the cash to get there, but it’s a great place to put your money. Have you ended up doing any real value add, like real off market?

Greg:
While we were finishing up that MLS deal, there was another wholesale deal that was, it was 180,000 and-

Henry:
Yeah. Yeah. Now we’re cooking with gas. All right, 180K. That sounds more like what I would get. All right, 180K.

Greg:
So this contractor, while I was working on the house and he was working on the house, turns out he wanted to get into the world of real estate investing and flipping. So he said, “What do you think? Do you want to go ahead and purchase this? ” And so we did. It was a very small house, three, one, not even a thousand square feet. So we purchased it, assuming we would flip it and have us split it at the end. It took more like nine months, what we thought was going to be six months to get it completed. All in, it ended up costing about a hundred thousand to get everything done. And I agreed to flip because I just didn’t think I’d have enough cash to have multiple properties going at a time, especially if we flipped it in six months. But since it started to take more like nine months and it was in my buy box for every other metric, I ended up keeping it.
So I just, once we settled on a purchase price, I bought him out.

Henry:
How did you structure it? It sounds like you paid for the deal and he did the renovation. So you didn’t have to pay for the renovation at all. That was his contribution? Correct. And so you were fifty fifty partners?

Greg:
Correct. Yes.

Henry:
Okay. Did you guys do any other deals together or was this a one and done kind of a thing?

Greg:
We are still partners and so we have bought the last two, both have been through the same wholesaler as a matter of fact. They didn’t need the same amount of work. We were able to get those completed in a three to four month timeframe, again, in the same area of Richmond.

Henry:
Well, this is cool, Greg. I really like the concept of partnering with a contractor. I just believe that if you’re going to partner, then you both need to bring something to the table that the other doesn’t bring, especially if you’re going to be splitting it fifty fifty. And I’ve got a few questions about this because I’m sure there are some people listening who want to consider an option like this, and I’d love to ask you those right after the break. All right, we are back with investor Greg, and we’re now talking about how he partnered with his contractor to help build up his portfolio. This is something that I’ve considered doing before and something that I’ve heard other investors doing, but partnerships can be a little bit shaky sometimes. And so I’d love for you to kind of share with the audience, Greg, maybe some lessons you’ve learned or best practices you have for working with a partner.

Greg:
First off, I would compare that initial partnership that I was mentioning for my first couple of deals to the now partnership with a contractor. I would certainly encourage people to partner with somebody that you don’t have overlapping skillsets. For that first partnership, we basically were bringing the exact same skills to the table so we weren’t really able to work off of each other and let each person deal with their area of expertise. And so with the contractor that I now partner with, obviously he does all of the heavy lifting for the renovations, the estimates, anything like that related to what needs to be done to get the house to where it needs to go. The other thing that we say out loud, I think to each other is we are the key, so to speak, for each of us being able to get into these off-market wholesale deals, i.e., I don’t have the skillset to buy one of these and then do those renovations on my own.
And he doesn’t necessarily have the capital to go ahead and make sure that we can get these cash so that he can get in and do these types of renovations. So I think from an appreciation standpoint, we both recognize what we’re bringing to the table so that we can get into these kinds of deals. There is definitely a healthy tension as far as how often we’re purchasing a property, what might need to be done with it. And flipping has been one of the constant negotiations, i.e., I am definitely more on the buy and hold side, and I think he’s looking more into the flipping side, and that just has to do, I think, with what our financial goals are. For me, buy and hold means that I can hold off on paying capital gains in the short term versus long term, which is something that I definitely am looking to do.
However, now that I’m right at the edge of getting this 10th property completed, I do appreciate what he’s brought to the table. So we are going to start looking at flipping a little more aggressively so that he can start to build his portfolio a little bit more on his side. So it’s been real positive from that aspect.

Henry:
In a situation like yours where the financial goals may be a little different, one thing that I did with an early business partner of mine was we just had kind of like a decision matrix document where we kind of predetermined how we were going to make some of the decisions about whether we flip a house or whether we keep a house. And that was based on the buy box, like where that property is, right? Cash we had in the business at the time, like in the LLC. And then we essentially put it into a document. We had it notarized, we signed it, and we amended it to our LLC documentation. And the amount of times that that saved us from having a knockdown drag out fight about, should we keep this one or should we sell this one, we would just say, “All right, well, let’s go look at the document.” And then we’d look at the document and it saved so much trouble.
So my advice to anybody who’s considering a partnership of any kind, not just with a contractor, is to think about it with the end in mind. Every partnership will end at some point. It may be in a year, it may be in 25 years, but at some point in end. So what’s the end look like and how do you get out amicably? And to just document everything you can upfront so that there’s less argument during the process because you will butt heads. You absolutely will. It’s like a marriage, guys, and anybody that’s been married for any substantial period of time knows you and your spouse are going to butt heads. And trust me, partnership woes weigh on you, man. It’s heavy sometimes. So just write it down, get it on paper, and it will save you a ton of headache. So where’s your portfolio at today?
About how many properties do you have and do you have goals of expanding it?

Greg:
I have nine properties today, the two condos and seven single family homes.

Henry:
Oh, you ain’t sold nothing.

Greg:
I have not. No, I’ve kept them all, and knock on wood, Richmond has been good to me as far as continued rent growth and not a whole lot of issues with the properties that have caused enough of a headache for me to sell anything just yet.

Henry:
And Greg, if you don’t mind, could you share with us an overall cashflow number? I know you’ve paid cash for a lot of your properties, so I’m guessing it’s a pretty healthy number.

Greg:
Yeah, overall cash flow, it’s right around 120,000 because we’ve been able to make cash for all of these properties.

Henry:
And the next question I have for you is, has real estate been able to help you accomplish the things that you set out to accomplish? Just give us a sense of what life’s been like for you because of real estate.

Greg:
It definitely has. I know I haven’t mentioned this earlier, but flexibility is a really big thing for me, especially for the age of my kids who are 11 and nine. And so I’m able to help with the Little League team. I started to teach guitar lessons, which I haven’t done since I first got out of college. We travel a lot. So it’s definitely given me the flexibility and the amount of time that I’ve really been looking for, as well as that financial independence, which was sort of generically the first goal that I was setting out for.

Henry:
Guitar lessons, man, that’s cool. Do you have a list of illegal rifts you don’t allow your students to play?

Greg:
Well, of course, Stairway to Heaven is the big one. However, I started out by saying that midlife crisis, it’s really depressing how many of my middle school and high school students don’t even know who Led Zeppelin is.

Henry:
Oh, bummer.

Greg:
But for all of my female students out there, I have learned more Taylor Swift songs than I would like to admit.

Henry:
There’s probably some young listeners you’re right, have no idea what we’re

Greg:
Talking

Henry:
About. And finally, before we get out of here, there’s probably a lot of investors who are listening to your story and are inspired and are wanting to do something similar. Maybe they’ve got cash put away and they’re trying to decide, is it better for me to buy something turnkey and pay cash or should I put my money in the stock market? There’s a lot of options for people. Do you have any advice for those who are maybe just a little intimidated by real estate right now, but want to follow a similar path to you?

Greg:
I am not very risk tolerant. And so for people that aren’t, you can still actually get into real estate and it’s really just trying to find a deal that you’re not trying to hit a home run. Just make sure it’s at least cashflow neutral, if at all possible. And trust your gut as far as what you’re seeing in your particular area and what you think the need of the community is and the type of property that you see that there’s more of a need for and go for it from there.

Henry:
I like that. I think there’s two really important keys to your story that I think other investors should pay attention to. One is that you really took the time to try to figure out what your buy bucks should be based on what your market needs. The second thing is you bought the best assets you could given that buy box. I think a lot of investors get in trouble when they go and they try to buy the cheapest asset they can buy because it sounds nice to be able to get a house for under a hundred grand, but under a hundred grand house has got under a hundred grand problems sometimes. And you can really lose some money by getting yourself in over your head. So Greg, thank you so much for coming on and sharing the story. It’s really inspiring. And I’m sure that there are lots of people listening who are glad that they tuned in today.
And thank you everyone else for tuning in and listening to the BiggerPockets Podcast. If you enjoy Greg’s story, then I recommend you check out BiggerPockets Podcast episode 1231. That’s from January 26th with investor Neil Whitney. Neil’s another inspiring example of how basic, affordable real estate investing can change your entire financial future in just a few years. Thank you everybody for listening. We’ll see you on the next episode.

Dave:
If you’re scared about the economy, listen to this. Inflation is up. Unemployment is rising. World events are feeling crazier than ever. If you’re feeling uncertain about your financial future, you are certainly not alone. I’m definitely feeling it too. But I’m not sitting on my hands holding onto cash and hoping everything will be okay. I’m still investing. The economy feels less predictable than before, and that makes me more motivated to put my money to work. But I need to own assets that I control, not just stocks or crypto that feel like they just go up and down almost randomly these days. For me, that means single family and small multifamily real estate. I am still finding ways to make those deals work today, and you can too. Maybe you even need to make those work these days, whether you’re looking for your first deal or optimizing a longstanding portfolio.
Hey, everyone. I’m Dave Meyer, Chief Investment Officer at Bick of Pockets. Here to try and make sense of these wild economic times is my co-host, Henry Washington. All right, Henry. So give it to me straight. How are you feeling about the economy? Good? You happy? Are you excited?

Henry:
On a scale of one to 10, I’m at about a fear factor of six.

Dave:
Okay. Yeah. I think that’s right. It’s not a disaster. It’s just confusing, right? There’s weird signals going in every direction. So it’s hard to be at a one or a 10. I feel like the only logical answer is to be somewhere in the middle because one day I’m like, oh my God, the economy’s going to crash and the next day. I’m like, everything’s great. It’s totally hard. It’s just hard to get a beat on and everything is changing so quickly.

Henry:
I couldn’t agree more. It is very confusing. I’m just trying to stay fundamentally sound and pay attention to what’s truly happening locally and not what’s happening in the headlines.

Dave:
I think that makes a lot of sense. And I wish I could do that, but man, I just read the newspaper all day. Every day just freaking out about everything I read. But I will just say this, I want to be honest with people that … I give an assessment of the economy very regularly here and on the market as well. And I’ll just say, I do think the economy is getting worse. I think that generally speaking, if you’re talking about the average financial position for the average American, it does seem like it’s deteriorating. Now, there are good things going on with the economy as well. The stock market continues to do well. GDP is growing. If you’re the owner of some sort of AI startup, you’re probably crushing it right now. But I think the average American, if you just look at the data, you look at spending patterns, you look at savings rates, you look at consumer sentiment, it’s starting to deteriorate.
And I don’t really see how that turns around in the short run. I think that’s the thing that kind of worries me about the economy is that unemployment’s starting to go up. If the Fed cuts rates, I don’t really think that’s going to change that much. I think it’s like an AI induced labor shortage. And I just think we’re in for what a lot of people have been calling for, which is sort of like a transitionary time in the economy. We have this brand new technology. We’re sort of at the end of an economic cycle. And whether they call it a recession or not, I think we’re in for a shift in the economic vibe. That’s just how I see it. Not necessarily saying that means negative things for real estate. And we’ll get to that in just a minute, but I just think if you’re looking at the macro picture, it’s slowly deteriorating in my perspective.

Henry:
Yeah. I find it hard to see how people who only depend on one income stream are going to continue to be able to afford to live comfortably with the rate which things are going up in price. I mean, everything costs more money, groceries, rent. And if you don’t have some sort of plan to bring in more income to supplement that, then you end up supplementing with credit card debt. And that’s probably why credit card debt is at an all- time high right now as well.

Dave:
Yeah. And defaults are starting to go up, which is the stuff that’s … You see credit card debt going up and up and up and you’re like, okay, that’s going to end someday and that’s going to end badly. And maybe that time is soon. And usually when credit cycles like that end, that’s when you start to see a recession. That’s typically how it happens. Now, I don’t know if we’re going to call this a recession or whatever. I think that’s up to some academic people who make those decisions. But I do get the sense, just not even data, anecdotally, I don’t know about you. Everyone I talk to, this is just constant source of conversation. It’s just like how expensive everything is. People are having a hard time making ends meet. And even if you’re not currently having a hard time making ends meet, you’re worried that AI is coming to take your job.
It just feels like there’s so many risks or threats to financial security right now. I think it’s on people’s minds. And sentiment, whether it’s accurate or not, does impact behavior and does impact the economy. So I just generally think we’re in for more difficult economic times.

Henry:
I agree with you.

Dave:
That doesn’t mean you shouldn’t invest. And I actually think a lot of people would make the case that that means that you should invest. So I’m just curious, given the fact, Henry, that you have at least some nerves, you’re at a six out of 10, you’re not panicking, but you’re above average. How does that impact your investing decisions?

Henry:
It impacts my investing decisions in a way that helps me be more conservative with what I’m investing in. But I mean, the truth of the matter is, no matter how uncomfortable it is to say is that wealth is created when there’s pain in the market. Pain creates an opportunity to buy assets at a discount, whether that’s real estate, stocks, crypto, that’s when people buy. Crypto’s down right now. And if you believe in it as an asset, this is when you should buy. So because you’re betting on it going back up with the stock market tanks because we are in a war or some crazy decision is made that causes fear and stocks go down. I mean, historically we’ve seen that stocks will come back at some point. And so the opportunity to build wealth is built during times like this, but that doesn’t make it any less scary to spend money on those assets during times like this.
And so the way that I battle with that fear is with being very picky about what it is that I’m buying. And so this is another time when I feel strongly about single family and small multifamily as an asset class, A, because it’s more affordable than buying a multifamily asset class. B, because regardless of what’s going on with AI and the economy, people still need a place to live. People have to have four walls and a roof. And so I can afford the single family asset class. If things go terrible, I think demand for this single family asset class will continue to rise. I mean,
Historically, we still don’t have enough inventory to supplement the demand that we have, even though in some markets it seems like real estate’s going down. There’s just a need for housing, both for rentals and for owning. And so I’m just buying less risky assets. I’m buying at deeper discounts and there’s actually more opportunity right now. It seems to buy at a discount. The last three deals we put under contract, I mean, I’ve gotten them at 50 cents on the dollar, some even lower than that, which is really, really good or just it hasn’t been like that in a few years.

Dave:
Are you buying more or less than you were like a year ago?

Henry:
Then a year ago, I’m probably buying more, but we were down so much last year versus what we’ve done in the past that it’s not that much more. Historically, I’m probably on average compared to what I do each year, but last year was such a low for us that I’m definitely buying more, but not a ton more.

Dave:
Yeah. Last year was just rough. I feel like last year we still had no inventory, but things were incredibly unaffordable. That was just a tough year in 2025 where things are getting a little bit more affordable and there’s better deal flow now. So I do think things are getting better. But I guess the question about whether or not to invest in real estate comes down to what else are you going to do with your money right now? Because it sounds like, I know that’s just such a lame thing to say, but it’s true. Holding cash is okay, but there’s inflation. So if you’re going to just put it in a savings account, you’re probably not going to make money. If you put in a money market, you’re about flat. That’s okay, but I would like my money to earn some money. The stock market, I have a good amount of money in the stock market, but I am not putting new money into the stock market right now.
If it tanked, like Henry said, I would put more money into it right now, but it is at very frothy valuations historically. And I have a hard time seeing how it’s going to go up much more. I think there’s just … It could go up more, but I think there’s more downside risk to upside potential right now in the stock market. I don’t bet a lot on cryptocurrency. And so I’m just asking myself, where would I want my money? If there’s a recession, what do I want to do with my capital? And I just keep coming back to real estate. And I’m not just saying that because I host this podcast. I will admit to everyone I am selling some real estate right now too.

Henry:
Yeah, me too.

Dave:
Yeah. So I am pruning and just keeping the stuff that is really good that I know I want to hold through a recession. But generally, I just feel like everything that Henry said is true. Where do I want my money in recession? I want it in something that is generally recession proof. Real estate might not grow a ton during a recession, but it traditionally does not go down that much and rents really don’t go down that much. It is a great inflation hedge. You’re still getting amortization. You’re still getting tax benefits. And so all of those things, even during a hard economic time, may be the safest place to keep your money. And so you said you were being conservative. I have felt for the last year or so that it’s like a quote unquote risk off time for investing. I’m more focused on modest returns and not losing money than I am on taking big swings and getting great returns.
And to me, real estate is the best asset class to do that still.

Henry:
Yeah, I agree with you. I mean, where a lot of investors are willing to buy at the same margins they bought at last year and the year before last, I’m not. I am buying at much deeper discounts. And if that means I do less deals, it means I do less deals, but I’m actually finding the opposite right now. The people are taking the offers that we’re making right now. It’s creating opportunity for us for the future. Either opportunity to hold onto some of these assets that we’re getting at deeper discounts as rental properties or opportunities to turn around and sell these assets to some of these other investors who are less risk averse than I am and taking them on.

Dave:
Yeah. I think that is the flip side of this, that there is going to be additional opportunity. And that is the main reason I said I was selling some stuff. It’s not because I want to get out of real estate, it’s because I want to reposition into different real estate because there are certain times deals sort of peak out at their usefulness. You do a Burr, you do the renovation, you get the equity kicker, you stabilize it, and it’s good. But if you sell that property and put it into a different Burr, you might make more money. And so that’s kind of what I’m thinking about because I think the deals are starting to be there, at least in the places I invest, but I think more are coming is my expectation. For better or worse, when the economy does poorly, people sometimes freak out and just sell stuff that maybe they shouldn’t even sell.
Or there’s unfortunately some financial hardship. And I’m not rooting for that, but I’m just saying as an investor, if people are selling and there’s more inventory on the market, there’s more deals on the market, there’s going to be more opportunities for you to find the kinds of assets that you like. And to me, that’s the upside to this whole situation. I’m not expecting though these deals to be Grand Slams in the first couple of years. I’m basically sticking to this sort of upside era that I’ve been talking about for a long time here is that I’m going to buy deals now knowing that they might be flat in terms of value for a year or two or three, but they will recover. And I’m just treating this more as an opportunity to get my portfolio in place for like the next era of growth, whether that comes in a year or two years or five years from now.
So that’s a little bit about what Henry and I are doing and how we’re feeling about the economy, but we want to talk a little bit about you and what investors at different stages of their investing career should be thinking about how they should be adjusting their strategy and tactics if they are fearful about the economy. We’re going to get into that, but first we got to take a quick break. We’ll be right back.
Welcome back to the BiggerPockets Podcast. Henry and I are here being honest about, we’re a little scared about the economy. I think that’s the general vibe. I think we’re feeling a little better maybe than the average person because we own some real estate and have some secondary sources of income and some control over our finances. But I think we need to address that this is going to be an uncertain time economically. But Henry, I’m curious what you think for people who are fearful about the economy, haven’t done their first deal. Thinking about doing a deal, I’m wondering with everything going on and all the uncertainty, is now the time to do it, how would you advise someone thinking that?

Henry:
Again, there is opportunity right now to enter the market. And yes, it’s going to feel scary, but this is the time when you need to really focus on the fundamentals. And one of the things that you’ve said on previous episodes is that people should buy the best quality asset that they can in a particular market. And I think that there’s some truth to that. So if you’re looking to enter the space right now, especially if you’ve never done a deal, I think there’s a lot of value in learning how to do this business with a single family or a small multifamily to start off. And this isn’t the time to search for the cheapest market where you can buy the cheapest asset. But I do think starting with a single or a small multi and being pretty choosy about the market that you do that in.
So if you live in a market where you can generate cashflow or buy a deal that you can afford that’s going to produce the return you’re looking for, that’s great. You probably should invest in your backyard. There’s advantages to that, but that’s not everybody in the United States. So if you have to invest out of state, I think that you want to be pretty selective in the market that you do that in. We’ve had several shows where we’ve talked about what areas of the country real estate is doing well in. Right now, the Northeast and the Midwest are both performing fairly well. They both have assets that are affordable, but also there are several markets within the Northeast and within the Midwest that have rents that are performing above the national average. I’d be choosing a market where population growth has been steadily improving. You don’t want to see a big hockey stick in population growth, but you want steady population growth.
I’d look 10 to 20 years and remove the outliers. So don’t look at the COVID years, don’t look at the real estate 2008 crash year. So you want to look for median and not average population growth. And then I’d be coupling that with job growth. So what markets in maybe the Midwest or in the Northeast that have positive population growth, positive job growth, I’d be looking for markets where the average cost of a home is less than the median for the nation. And I’d be looking for markets where the average rent is somewhere around the median or higher than the median, because that’s where you can probably find cashflow and where you might get some appreciation as well. Those are just good market fundamentals. If you can buy a single family asset in a semi-decent neighborhood, in a market where people are moving to, that has the jobs for people who are moving to that market, where the home is somewhat affordable and where rents are going to supplement that, that’s just a formula for an asset that you can probably hold onto through the storm.
Now you need to be financially capable to hold onto that asset because we don’t know what’s going to happen. There can be some Black Swan event that causes something terrible to happen in the real estate market, but the people who lose when that happens are the people who don’t have the financial banking to be able to hold onto those assets. And so first and foremost is you got to get financially stable enough to be able to afford an asset. And then the second is you want to buy an asset in a market where it has great fundamentals and then you just try your best to hold onto that asset and let it produce some income for you. I know that sounds very rudimentary and basic, but that’s in my, again, primal, easy brain, that just seems like the safest way to get into this space because worst case scenario, you have an asset in a market that people want to live in and where rents support that asset and that’s just a good formula.

Dave:
What you’re saying tactically, I stand by. I want to say something about the mindset of this for people, because if people feel that it’s risky to get into real estate right now, I don’t blame you for thinking that, but I would say this, find a deal that lowers your overall risk. And I know that might sound impossible, but I actually think for a lot of new investors going out and buying a rental property, or even better, house hacking, you are probably lowering your overall financial risk as opposed to doing nothing. Just say you’re sitting on $50,000 right now and you’re worried about whatever, your stock portfolio going down or that something bad is going to happen in the market. Can you reduce your overall living expenses by house hacking? If so, you are reducing your risk during a financial downturn. You’re actually improving your financial situation in the short run and giving yourself that upside if the market actually goes well.
If you can buy a rental property that brings in an extra 500 bucks a month and you’re worried about inflation or childcare or whatever it is that’s causing you stress, that can actually reduce your overall risk. The thing I want to remind people is that even though there is risk in the housing market, I think certain markets are going to see 5% declines this year. Austin’s seen a 10% decline. There’s going to be declines in the market. That’s why you need to do what Henry’s saying, buy at a discount, buy in a market with good fundamentals. But even in markets that go down 2%, you’re still going to be improving your financial situation because you’re going to get tax benefits, you’re going to get cashflow, you’re still going to get amortization. And so I just encourage you not to take additional risk, but find deals that lower your overall risk in the big picture because that absolutely can be done right now.
So that’s for newbies. And I totally agree with what you were saying, Henry. I think low risk, figuring out the ways to buy with good fundamentals, don’t need to take a big swing, just find a way to conserve your capital and let it grow consistently over the next couple of years, despite what happens with everything else.
What about experienced investors? I mean, we’ve talked a little bit about what you and I are both doing, but what’s your general mindset for people who maybe own two to 10 units out there?

Henry:
If you own 10 assets around that, you need to be assessing the performance of the assets. And I would encourage you, you probably need to be doing this on a quarterly basis because things are changing so rapidly. What I’m doing is I’m looking at the assets, I’m seeing the ones that are performing the best, and I’m seeing the ones that are underperforming, and then I’m taking an assessment of the ones that are underperforming and figuring out how much capital do I have to throw at them to get them to perform. And before I even make that decision, I am asking myself, on its surface, now that I’ve been operating this asset for a while, is this asset truly one that I want to maintain in my portfolio for the next 10 years?
If it’s not, I’m heavily considering selling it. And selling it means what’s the tax implication if I sell it and what can I do with that cash if I sell it? Because right now what we are seeing and what Dave and I talked about earlier is there are a lot more opportunities coming up to buy at better discounts than when I bought some of these assets a couple of years ago. And so now I’m at a pretty prime position in terms of like, the market’s still giving me a good value for selling assets. Assets are still selling and trading for higher prices. And so now I can sell something maybe that isn’t producing like I hoped it would produce, and I can take that money and capitalize on new opportunities that are in the market now, or I can get a better discount, or I can trim the fat in my portfolio and just not purchase another asset.

Dave:
I

Henry:
Can put that money towards the assets in my portfolio that are performing well, pay them down a little more and get them to perform better. So for me, it’s all a math problem, but you’ve got to take the time to assess your portfolio and have some honest conversations to give people a picture of what I’ve done. I’ve gone through my entire rental portfolio and I’ve given everything a green light, a yellow light, and a red light. And the green lights are the things that are performing well I want to keep for the long haul. The yellow lights are things that are performing well or okay. I’d keep them if I have to, but I’d be okay selling them if I need to. And the red lights are the things that aren’t performing that I don’t want to put money into making them perform because I can get a better opportunity cost with that money, either investing back into my current portfolio of green and yellow lights or buying an asset at a deeper discount that’s going to give me a better cash on cash return than that one property is getting me at the moment.

Dave:
I am doing the exact same thing and it is difficult. I think that is true. It’s kind of frustrating. You got to be like, that one didn’t work out the way I was hoping that it did, but that’s just part of being an investor. Literally, you take risks to make reward. I do think though what Henry’s saying and what I’m doing as well is selling some stuff, but I want to be clear that I’m not selling it because I’m panicking. I’m not like, oh my God, there’s going to be a crash. I need to get out before some crazy thing happens. In certain markets, I might do that. If I was in Austin two years ago, I might’ve done that. But I think I live in Seattle. I think that Seattle’s going to be in for some tough years, but I’m just saying in general, I am not selling stuff because I’m panicking.
I invest in Denver being one of the biggest corrections in the country right now. I’m not selling there because I’m panicking. I am selling because the numbers just aren’t working as a buy and hold. That’s the difference. I’m not saying I’m trying to time the market perfectly. And in fact, I’m holding onto most of my stuff in Denver because they are performing actually, and I’m just going to ride out the declines in appreciation. I just think that there are times when you look at an asset and you say, “Appreciation’s probably done. I’ve done what I can for this property. I’ve forced enough appreciation and the market’s not taking it any further. Rents are what they are. Maybe they haven’t grown as much as I wanted them to. ” Maybe the tenants are difficult or whatever. I can’t find the right people to be in this home and it’s just time to move on.
I just think that makes a lot of sense. I’ll just give you an example. I was doing a slow bur in this duplex. I renovated the first one, went great, time to do the second one, getting quotes right now, and it’s going to be like 30 grand to do this unit. And with the way things are going, it’s going to raise my rents like 200 bucks. And I’m like, “That’s just not worth it. ” And I’m looking at the ARV and it’s like, I’ll spend 30 grand, it’ll maybe increase the value 40, 45. I’m like, “That’s just not worth it to me. That’s not worth the risk. So I’m going to sell it instead. I’ll actually make some money off of it, but it’s not what I wanted it to be. That’s not why I bought this property.” But this is a house I’ve been telling you I’m trying to shed my turn of the century Civil War era properties.

Henry:
You getting rid of all your Robert E. Lees.

Dave:
Yeah, exactly. This was built in, I think it was like 1910, right? Woodrow Wilson was president when this was built. I think I’m getting rid of it.

Henry:
Is there still a post out front where people would park their horse and buggy? Yeah.

Dave:
Yes. I should put one back out there, but I just don’t want it. I would rather sell it. I probably won’t 1031. I’ll just pay the tax. What? I know. No. I’ve done a lot of 1031s. I’m a fan, but I just don’t want it right now. I’ve said repeatedly on this show that I think the number one value of a investor right now is to be patient and a 1031 does not allow you to be patient. And so I’m going to pay some tax and I think I will more than make up for that by buying the right deal that I’m going to hold onto for 10 years. So that’s just an example. If I don’t sell it, if I can’t get the price, if I, whatever, I’ll just hold onto it. It’s not like I’m freaking out. It’s not going to be terrible, but this is kind of the calculus that I’m doing because I look at this economy.
I think people are fearful. I think the market’s going to stay slow for a long time. I’d rather be acquiring new things at discounts than holding onto mediocre assets.

Henry:
If you’re going to trim the fat, it makes sense to do it at a time when values are there for you to do that. If something terrible happens and the market crashes and people are forced to sell, well, now you’re not getting rewarded for doing it. Right now, I can trim the fat and get a small reward for doing it because the market is allowing us to sell sell when values are up. So trim the fat when you can, so that way if the market turns, now at least I’m sitting on a portfolio of assets I know I want to hold onto and I’ve positioned myself well in a time of crisis.

Dave:
Can I tell you something I’m thinking about doing?

Henry:
Yeah.

Dave:
I’m thinking about like if I sell this property, right? Taking this money and either recasting a mortgage or paying off a different mortgage, not because I’ll probably do it forever, but I think it’s actually a good way to hold cash right now instead of like putting it in a savings account. I’m going to basically put my extra money into a rental property because it will earn me seven, eight, 9% cash return by paying that down. And then when I find a deal, I’ll just refinance that mortgage and that will cost me a couple grand or I’ll take out a HELOC or a line of credit on a rental property and go buy something opportunistically. But I actually just kind of like the idea, especially in a down economy of like less risk on that rental property. So I’m reducing my overall risk, but I’m not limiting my options.
I can still go refinance that anytime I want to go buy something else. And I’ve just been thinking about doing that rather than sticking money in a money market account or a savings account because it’s just a better return.

Henry:
That’s 100% what I’m doing. Yeah. My goal is to pay off two more assets this year.

Dave:
Oh, that’s awesome. You’re going to sell and then pay off to whatever single families or-

Henry:
Two of my green light rental properties. Yep.

Dave:
Boom. I love that. That’s just like, now you’re good. Those are just forever properties, right? It just doesn’t feel good.

Henry:
Man, when I paid off my first one this past year, it just felt good. It just felt good. I ended up having to refi a property and pull some cash out. And I took that cash that I pulled out and I paid off another one and it was perfect. It was a perfect time.

Dave:
And so

Henry:
Then we ended up, we paid off two last year. I want to try to do two this year.

Dave:
That’s awesome. Good for you. I love that goal. All right. This is great advice. I think again, this is just risk off, fundamentals investing. Take care of any risks that you have. Don’t limit yourself in terms of upside and maneuverability. I think that makes a lot of sense. Question though, Henry, do you think there’s any situation you think people should be selling or panicking or freaking out? Are there any situations that you would just really avoid right now?

Henry:
Like what are the signs to throw on your life vest?

Dave:
Yeah, exactly. I think there are certain markets where if you have assets that aren’t performing and the market itself, the fundamentals aren’t good, I would sell all of it. If it were me, the reason I’m holding onto in Denver, because I believe in the long-term fundamentals of that market and those assets are performing, which is fine. But if I was in a market where I bought in, I’m just going to throw out markets Some markets in Florida. Those markets might have years of declines to go. And if you’re not performing now, I wouldn’t hold onto it, to be honest. Even if I was selling at a loss, if it were me, I would cut beat. I was curious if you have any thoughts on where you might just need to bite the bullet and live to see another day.

Henry:
For me, the science would be if my market is doing the opposite of the advice I gave to new investors, if you’re starting to see population decline year over year and not do the opposite, if you’re starting to see jobs decline year over year, and conversely, if you’re starting to see rents go down, you’re unable to raise rents because of those things, you probably need to pull the plug sooner than later, unless you know something that other people don’t know. Maybe infrastructure or something is coming that people don’t know. But typically if population’s declining, rents are declining and there aren’t jobs, then you need to pull the plug that the town is starting to die. The economy’s dying.

Dave:
Yeah, agreed. And I think there’s also just, you probably know in your heart certain assets, you’re like, “This thing it’s just a turd. I got to get rid of it. ” I think there’s just times-

Henry:
Sometimes you buy a turd, guys.

Dave:
Yeah. Sometimes if you’re just struggling with an asset and trying to figure it out and you’re like, “Oh, if I just hold on or just hold on, ” to me, it’s not the time to do that. Unless you have a solid plan to turn it around, if you’re questioning, is this going to turn around or not? Those are the ones I would get rid of. The

Henry:
Two best feelings I’ve ever had in real estate, one was paying off an asset, two was selling a turd, even if I took a loss. Oh, feels so good.

Dave:
All right. Well, thanks for being honest with us, Henry. I appreciate it. And I hope you all appreciate this because I will be honest, I am sort of obsessive about following the economy. I am a little bit worried about it, but I am not freaking out about real estate. I’m more concerned just about average people being able to afford their lives. But I think real estate has provided me a little bit of a buffer, an insurance policy, if you will, against downturns. That doesn’t mean every asset I own is going to perform great if there’s a recession, but it does mean that I know that I’m at least probably inflation hedged. It knows I’m going to get tax benefits. I’m getting cashflow that I’m not worried about going away. And that makes me feel a little bit better. And I would encourage people to just figure out ways to use real estate to make you feel better, have less risk, not feel like you’re going out there and taking some massive swing during a risky time.

Henry:
Couldn’t agree more.

Dave:
All right. Well, thank you all so much for listening to this episode of The BiggerPockets Podcast. He’s Henry Washington. I’m Dave Meyer. We’ll see you guys next time.