New Co-host Tony J Robinson: Scaling with Short-Term Rentals

Ashley: This is real estate rookie show number 37.

Tony: I bought four properties in that town that I started investing in, but I’m probably not going to buy there anymore because my strategy changed a little bit. Right. So just because you start somewhere doesn’t mean you need to be there forever. So pick somewhere don’t overthink and just get started.

Ashley: my name is Ashley care, and I am here today to introduce you to a very new co-host we have on the real estate rookie podcast. We are all very sad to see Philippe go, but I am so excited to introduce you to Tony Robinson. Hi Tony. Thank you for joining us.

Tony: What’s up Ashley? This is like super surreal for me right now.

Um, it’s like, uh, like a kid in the candy shop or kid on Christmas Eve, whatever you want to call it. Uh, it feels so good to be here.

Ashley: Yeah, I can definitely relate to that. When I first started on the podcast, what was that initial feeling like when you found out you were going to be the new cohost

Tony: almost disbelief, right?

Like, I feel like it’s still sinking in a little bit, you know, I feel like every, every new real estate investor, like I think of bigger pockets, it’s like the pinnacle of real estate education. So to now be a part of this team and help other folks get started. It’s it’s such a cool feeling.

Ashley: Yeah. So I’ve gotten to know Tony a little bit, and he was also a guest on episode number 10, where we originally interviewed him.

And we’ll talk about that some more, but I am so excited to work with you and to interview our rookies and get, you know, just as much information as we can out and. Yeah. So thank you for coming on board and we’re going to have to put up with a lot, having to be micro

Tony: you’re. You’re awesome. Ashley, I’m just hoping that I don’t, I don’t start pulling you down, right.

I’m like a newbie here. So I feel like it’s like, I’m the freshmen, you’re the senior and I’m just trying to, you know, fit in with the cool kids. Yeah.

Ashley: Don’t worry. I’ll look into shape real

Tony: quick.

Ashley: Uh, before we get into Tony’s story today, where it’s going to talk about where he was, when we first interviewed him and how he has grown and scaled since then.

Okay. So Tony episode 10, we originally interviewed you. What happened for anyone that hasn’t listened to that episode yet? And I highly recommend everyone goes back and listens to it to get to know Tony a little bit better, but can you give us some of the highlights about where you were when your investing career.

At that time.

Tony: Yeah. So, uh, when I first came on the, I had two deals under my belt, uh, to both single family houses. I live in California. I invest primarily out of state. So I had purchased two long-term rentals in Shreveport, Louisiana, and this little town in Northwestern, Louisiana. And I think what was unique about my story is that I bought both of those properties and they were burgers with zero money down for the purchase and the rehab.

Um, so I really walked guests through how I was able to set up the financing for that. Um, some of the, the struggles that I went through as a first time real estate investor, trying to manage a rehab from multiple, multiple States away and, and kind of how I built my team in this state that I didn’t, uh, I didn’t live in.

If you’re looking for a quick crash course on how to invest out of state, I think it’d be a good place to start.

Ashley: I have one question for you. That seems to be a super common question is how did you identify an out of state market?

Tony: Yeah. So I got a little lucky right in that I had family that lived in that state and they had actually bought some real estate out there using this, this kind of similar loan program where they bought a property, they need to rehab and they’re able to get it fixed up.

And they had a bunch of equity. So for me, it was almost a no brainer. Once I saw them do that to say, Hey, if they can do this, I’m sure that I can too.

Ashley: So if there are people that, you know, that are already doing this in out-of-state markets, you would recommend reaching out to them. And were they more than happy to kind of guide you along and show you how they did it?

Tony: Yeah, it was actually my mom. So she didn’t have much choice. Right. But yeah. I mean, if you’re, if you’re a newbie and you’re, and you’re looking to invest out of state and you do have family or friends or whoever the love out there, like definitely reach out to them. But here’s what I’ll say to you, Ashley, is that I think a lot of times people overthink that first market.

Right. Just because you start investing in the market doesn’t mean that you have to continue investing in that market. And I bought four properties in that town that I started investing in, but I’m probably not going to buy there anymore because my strategy changed a little bit. Right. So just because you start somewhere doesn’t mean you need to be there forever.

So pick somewhere don’t overthink it and just get started.

Ashley: Okay, Tony, this is like five minutes into your first podcast and you’re already upstaging you with better advice. No, that was really awesome. So let’s, let’s go into what has happened since then. Uh, during COVID did you just stop investing? What happened?

Tony: Yeah, I just, I climbed under a rock and then I haven’t done much since then there, um, it’s actually been pretty busy for me, so I had two properties back in, I think February when we initially spoke and I’m up to six properties now with a seventh and their contract will be closing and just a few weeks here.

So, um, I ended up buying two more properties in Louisiana, um, in that same city. Um, and, and we can kind of get into those because I actually end up using a different financing program because when COVID hit a lot of these banks, they kind of got spooked. Um, so I had to find different ways to purchase some of these properties.

So I bought two more in Louisiana. I actually bought a five bedroom cabin in pigeon forge, Tennessee as a short-term rental in August. And then actually just yesterday, I closed on my six property, which was in Joshua tree, California. And I’ve got another one in Joshua tree that is scheduled to close in early November.

Ashley: That is awesome. Congratulations.

Tony: So it’s been a busy summer,

Ashley: right? Definitely. And you’re getting married soon

Tony: too. Yeah. 33 days now. So we’re, we’re counting down. Wow,

Ashley: great. Great. So let’s talk about the first two and Louisiana.

Tony: Yeah. So those two, um, they were both heavy rehabs. That was actually our first time buying from a wholesaler.

So you don’t have to, we, we did the first two properties in Louisiana and we felt like we had a pretty good model. We had a good team built out. Um, we knew that we wanted to try and search for better deals. So we found a couple of wholesalers found one that we connected with and we bought two deals from him.

Now when you buy it from a wholesaler, um, it, it is a little tough to try and get bank financing, um, right. Because, um, one, the, the speed at which you need to close the, the wholesalers typically just don’t want to wait that long. So to be competitive, you gotta be quick. So we didn’t have a ton of just cash laying around, um, that we wanted to invest in these properties.

So we got kind of creative and we ended up using a line of credit. And you hear lines of credit all the time, right? You, you hear of home equity line of credit, personal lines of credit. Um, but what we actually used was a line of credit against, uh, stocks that we owned. Um, so like E-Trade fidelity all these kind of big companies where you, you know, you’re you’re, you can buy and purchase stocks.

If you have enough in stocks with those companies, they’ll give you a line of credit. And the interest rate was like super, super low. It was like 2% or something like that. So it was a, it was a really good deal. So we use that to buy both of those properties. Now, the funny thing is. As we purchased those properties, um, we had the bid set up for all of them were, we were getting ready to start doing the rehab, but we ended up finding this cabin in pigeon forge.

And as we kind of delved into that market a little bit more and understand what was going on over there, we identified that there was a really, really good opportunity. To transition our business model. So initially we’re focused on, uh, like long-term rentals and the single family space on our goal was to kind of scale up and to start buying larger multi-families and the long-term rental space.

But we found out about the power behind short-term rentals, and then we ended up going into this pigeon forge market. And when we got that, that property under contract. We were kind of in this weird position, right. We had these two properties that we had purchased that we hadn’t yet started the rehab on.

We had this new property, there was a short term rental that we knew nothing about that we were going to have to try and figure out. And we said, okay, do we, do we want to continue investing in the short-term or in the long-term rentals? Or do we want to kind of put all of our eggs in the basket of the short term rental?

So we, we bought these two properties and we actually didn’t do anything with them. We, we bought them and just kind of let them sit for, for a couple months now. And we’re actually in the process of reselling them so we can reinvest those profits. So we bought those properties. I think I learned a lot about buying from wholesalers, but we actually never finished the rehab because we kind of changed our focus a bit.

Ashley: So you had multiple exit strategies when you purchase that property?

Tony: Yeah, I mean, so the, you know, when we bought it out, I don’t think we were initially anticipating that we were just going to turn around and kind of resell them. But when we, when we got kind of tied up in this other property in Tennessee, we just knew that we didn’t have the bandwidth because we both work full time.

You know, we’ve got a lot of other things that are going on. And when we looked at just the return on investment, it was so much higher. With the short-term rental than it was for the long-term rental. So we said, Hey, we bought them. We’re actually trying to sell them out, not a loss right now. We’ll take a small loss in these properties just to kind of get rid of them so we can focus all of our attention back on the loan on the short-term

Ashley: rentals.

And when you say we it’s you and your fiance, or do you have another partner?

Tony: So that’s a great question. So my fiance, she wasn’t involved in any of the, the first properties that I purchased. So the, the four properties that I bought in Louisiana, um, that was just me and my partner, uh, who, who just happens to be my fiance’s cousin, but it was just he and I, the focus on those.

But when we, when we transitioned into the short term rental game and to the Airbnb space, we knew that we needed someone to. Uh, kind of help us with the hosting and you know, some of the design aspects, because neither here I are are generally really good at that. So my fiance she’s now like the face of our Airbnb.

So like when you go to book, it’s her face, she’s the one that’s communicating with all the guests. So she’s now part of the business as well.

Ashley: Oh, that’s so awesome.

Tony: Yeah.

Ashley: And then, um, my next question was, how did you find the cabin? So you were focused on long-term buy-and-hold you were looking in Louisiana.

How did you end up in Tennessee doing short term rentals?

Tony: My partner and I, uh, it’s the two of us who we bought all of our single family homes with, but we had actually partnered up with a, with a third person in our pursuit to start acquiring multi-family properties. And, you know, we, we, we meet regularly, right.

Just to kind of talk as a team about what we’re doing. And one day he brought up to us and said, Hey guys, I think I’m buying a cabin in Tennessee. And we were like, you know, like what the heck is going on. And, uh, it actually turns out that he listened to one of the bigger pockets, real estate shows and Avery, Carl was a guest.

And she talked about her experience in pigeon forge, Tennessee. And I think at the time she had like five short-term rentals there and she was just killing it. And our other partner, he’s just a really, once he gets an idea, he just kind of goes down the rabbit hole and tries to figure everything out. So he had pretty much set up, you know, a, a pretty solid team out there.

He found a cleaner, he found a maintenance man, a handyman, he found the realtor, like he had everything that we needed. So we kind of let him go first. And once he kind of proved out that that model worked, then we just jumped in right behind him and kind of followed the same path.

Ashley: And that’s like another perfect example of connecting and networking with people you already know.

And I’m sure he also, wasn’t too afraid to kind of show you how to do it and share your team. And that’s what I love about. Real estate investing is that they’re very, very few people that want to keep it as a secret to themselves. A lot of people are willing to share all of this information and what they have access to.

Tony: Yeah, absolutely. And I think the other thing that I’ll add too, right. And this was like an eye-opening experience for me is that you’ve got to be flexible in your approach, right? Like, like, be very clear on what your goals are, but be flexible in how you get there. Like, when I first started investing in real estate, You know, I, I thought for sure that my path was going to be a apartment syndication.

Like, you know, when I, when I was doing my initial research, I was like, that’s what I want to be able to do. But as I kind of started going down that path and building that team and taking all those, you know, doing all the things that are required to be successful in that I realized there’s there’s. And not that I’m afraid of work, but there’s so much work that goes into building that as, as a successful business.

And then when I found the short-term rental space and kind of everything that comes along with that, It, the light bulb kind of went off in saying that I can achieve almost the same financial goals that I had, but I can do it in a way that’s more conducive to what my skill set is. Right. Like I couldn’t be, I don’t, I don’t think I could ever be a wholesaler because I don’t, I don’t have that.

You kind of got to have some, some teeth really to, to be a great wholesaler and, you know, love dealing with the sellers and negotiating and all that stuff. And you know that that’s not quite my personality and I couldn’t be a flipper, I don’t think because, um, I don’t get as excited about the rehab. Like I love seeing the finished product, but like managing the rehab, like I’m just.

I’m not passionate about that, but I love the short-term rental space and I’ve really grown to enjoy because there’s a, there’s a personal connection with the guests. Um, a lot of times you can even buy turnkey and the deal still work out. Great. Um, there’s a lot of systems that you get to put in place, which I love doing and, and there’s, you know, software and things that you can implement.

So I’ve found something that I think speaks to my skillset. And when you put me. My fiance and my partner all together, we make like the perfect team to really tackle this. So be flexible in your approach. And I think you’ll, you’ll find some success.

Ashley: That’s awesome. And it’s a great feeling when you find that perfect strategy for you and you really put in those systems and those processes and really fine tune and make that work.

So going forward, are your other properties that you purchase short term? Is that the model that you’re sticking with right now?

Tony: So our goal right now is to buy a one short term rental every three months for the next two years. And I think once we get to the end of that road, we should be somewhere around 11 properties.

Um, and then we can kind of pivot at that point if we choose to, but by the time we get to 11, that’s a, that’s a lot of cashflow coming in, you know, and that, that really kind of opens up our options in terms of what we want to do moving forward.

Ashley: And then how are you paying for these properties going forward?

You had mentioned your line of credit. Is that what you’re doing? And then putting long-term financing on them, paying back the line of credit?

Tony: No, so, yeah, so we’re actually just, uh, we’re, we’re using cash or we’ve saved up to put down the. The down payments. So I’ll take a step back. So the company that I worked for, my W2, Dave, they’ve done really, really well this year in the stock market.

And part of my compensation is tied to the stocks. So every quarter, you know, we get paid out in restricted stock units and, you know, I’ve got a lot of co-workers that are, you know, buying bigger houses or buy boats or doing all these big things. And every single time, I’m just throwing that money, uh, into the real estate.

So that that’s our plan right now is to leverage that capital to. Keep buying more properties. And then my, my partner, he’s a, he refinances his private residence. He bought back in 2011, I want to say. So he had a ton of equity in his home. So he was able to pull some of that out to help fund these deals as well.

Ashley: That’s awesome. Those are both great strategies for years. I love people who can manage their own personal finances and then get into real estate. So like you, you know, even though you’re making more income, you are still staying at the same life. Style, you’re not inflating your lifestyle to match the new income or go over your income.

Having like the personal finance foundations is so important when getting into real estate, because it is so easy to let your money get out of control and real estate on a rehab. And having a solid foundation at home really helps build with that business. So with your fiance, was she always on board with real estate investing or did you have to kind of convince her, did she say, yeah, you’re making all this money, let’s spend it on real estate or do what she, you know, like let’s buy a beer.

Tony: Yeah. You know, I’m, I’m lucky because she, she always supports me. You know, and, and, and I think she, she understands that when I do try and do something new, that I’ve, I’ve really taken the time to understand what it is and I’m getting into. So I don’t think she was ever opposed to it, but she wasn’t excited about it when we were doing the long-term rentals, because, you know, you, you buy a long-term rental and, you know, and the way that I was setting it up, like I had property management and there were some other things involved.

So I was maybe cashflow in a few hundred bucks a month on each property. And, you know, for her, the, you know, the, the numbers felt kind of small. Right. You know, but when, when we bought the first short-term rental, right. Like, and, and you see the, the cash, and I’m sure we’ll get into this, but you see the cashflow starts coming in and it’s, it’s, it’s crazy, you know?

So she got super excited about that. And obviously she got to go in and help decorate and do all these different things. So she’s really kind of flexing her, her creativity muscles as well. So she’s loving the process now.

Ashley: When you guys purchased it, did you go to the actual property?

Tony: We, we bought it sight unseen.

Right. And, and I think we were comfortable doing that because we’d already done it four or five times with our other properties in Louisiana. So we bought it in August and it was actually already an existing short-term rental. It wasn’t listed on Airbnb or VRBO or anything like that. It was this local property management company that was kind of running it.

Um, and they, there weren’t. Honestly, doing that great of a job. Um, and they were charging that the previous owner, like an arm and a leg to, to manage this property for them, which is why they, they ended up selling because it just wasn’t worth it for them. So there was an existing contract in place that we had to honor, uh, upon purchase.

So we bought it in August in that contract with that property management company went through all this September. So we didn’t actually take ownership, ownership of the property until October. And then when we got ownership, we flew out there and kind of got everything set up how we wanted it to.

Ashley: Oh, very cool.

And so it’s listed now on Airbnb, correct? I think you had Tony or like already booked up.

Tony: So it was like Ashley it’s. It was insane for us. Like we, we listed and within the first like four hours, half of October, it was booked. And if I recall right now, I think we had two open nights in October and through the end of the year, we’re already at like 77 or almost 80% occupancy through the end of the year.

So it’s, it’s been, it’s been a whirlwind these, these last couple of weeks.

Ashley: And it it’s exciting too, when you get that little notification on your phone that, Oh, someone just booked

Tony: here, addicting thing ever, right? Like it’s like social media combined with gambling because you’re, you’re getting these little notifications, but every time it does there’s money tied to it.

So it’s, it’s, it’s crazy.

Ashley: And then like when someone is staying there and you get like, Oh, the Airbnb is sending you. Yeah.

Tony: So like, it’s the best thing ever. It’s I love this.

Ashley: I have a small Airbnb. It’s actually in an apartment complex. And I rent from an investor that I know, well that lets me run the unit.

And then I Airbnb it out with my partner. And, uh, we’ve done it. We actually started last August. So we’ve had it almost a year. And to me, one of the, and we’re in a super small town, like there is no major attraction. Niagara falls is probably an hour away and we still get people that come and stay there because it’s cheaper than staying in Niagara falls.

But to me, I love that. Seeing why people are coming there, what they’re doing. And like the majority of it is weddings. But recently we had someone that booked for a full month because they rented land to hunt on near our Airbnb. And instead of driving from the city at 3:00 AM to get in the woods before.

The sun comes up, they are renting the Airbnb and they’re only going to be using it about seven days out of the month when they go hunting on this land. And then we’ve had people that are remodeling their houses that come and stay there for a month, two months at a time. And I just think it’s so interesting.

The reasons. People use it in the small little town. That’s not even, you know, an attract.

Tony: Yeah. But I think that’s like an illustrative point as well. Right. Is that even, you know, big markets like pigeon forge and the great smoky mountains and even smaller markets where you’re adding, like not upstate New York or where are you at?

Like

still an, a, an opportunity to, to make strong cash flows outside of just long-term rentals. Right. There’s other options for folks if they want to get started.

Ashley: And like the nice thing too about this apartment is that it can always turn into a long-term rental if needed. Is that something that you could do too?

Tony: The, the difference is that where we’re at in the kind of great smokey mountains area is that it’s, it’s a very mature vacation rental market. So even before Airbnb, even before VRBO there, this was always like a vacation destination for folks. And like the, the great smoky mountains is actually like the most visited national park in the United States.

Like by far, I think they get like almost 13 million visitors a year and the next. National park gets like 6 million. So this is, this is like a very consistent, mature vacation rental market. So I don’t think we would ever have a need to turn it back to a long-term rental. But I guess if we did the, the, that is always an option.

And

Ashley: it sounds like there’s multiple attractions there. It’s not like you’re just relying on one six flags theme resort. And if that were to shut down in there, it’s,

Tony: it’s actually, it’s, it’s a crazy town. Right. So we went in October and that was my first time going. Yeah. And it’s, you know, you’ve got the national park where like maybe 30 minutes away from the national park entrance there’s Dollywood, which is like this big amusement park out there.

And then in the city of pigeon forge, there’s all of these amusements and attractions and museums. And it’s just like this, you know, it’s beautiful place for a family to go and just like, enjoy a vacation. So there there’s a lot to sustain that economy. Yeah.

Ashley: Is it near Gatlinburg? Because I think I saw the sign cause I took my son to, we stayed at a monkey ranch, these people that own like a hundred monkeys and we went to Gatlinburg for the day.

And I think I remember seeing the pigeon.

Tony: Yeah. So they’re right next to each other. So, so Gatlinburg is like right at the, at the, like the park entrance and then pigeon forge is right next to Gatlinburg.

Ashley: Cool. Cool. So what’s the next, uh, short term market you’re going after? Are you going back to the smokey mountains?

Tony: We, we do love the smokey mountains and we want to buy there. We want to continue to buy there, but the price points there are heating up a little bit. So we bought. Um, in August, we paid five 90 for that house, and that was a five bedroom, four and a half bath. And now those same properties are going for like $700,000.

Like we can’t find anything in that same price point. So we’re, we’re, I think we’re going to wait a little while at some of our cash flow, build up and try and reinvest there. But, uh, we’re, we’re actually looking in California now. Which is so cool because all of my investments have been, you know, I got to fly to get to them.

So now the property we closed on, yesterday’s in Joshua tree, California, and this is another like very, uh, well visited national park. I want to say, get somewhere between like three to 4 million visitors a year. And we’re lucky that we’re close to it. And this has also been kind of a maturing short-term rental market as well.

So we, we bought that property there and then we have a second one under contract in Joshua tree as well. Now, one piece of advice that would give to folks is that. If you spread out your properties and in different places, you, you get more attractive financing, right? Like when we bought our property in pigeon forge, it’s technically listed as a, as a vacation home for us.

And we were able to get 10% down financing on that one. And the same thing for this first Joshua tree property, it was another vacation home for us. So we’ve got 10% down.

Ashley: Wow. That’s really interesting. I thought it was like, you only get like one second. It’s a secondary home, but wow, that’s cool. I didn’t know that.

Tony: So it works out well, if now the second property that we’re buying and Josh, Richard, obviously you can’t have two vacation homes that are like a mile away from each other. So we’re, we’re putting 20% down there, but there’s some other markets that are kind of mature vacation rental markets here in California as well that we’re thinking we’re going to, we’re going to move into next.

That’s

Ashley: awesome. And I don’t know how well you read your contract, but in there it stated that I get a week free in each of your Airbnbs throughout the year. I’m a, I’m

Tony: a great negotiator from time to time. So I was able to mix that one. Ours

Ashley: we’ll swap.

Tony: We’ll swap. I’ll give you a week. Mind

Ashley: you give me a week. Exciting to come here for, but yeah, we can meet each other. Okay. So, yeah, but besides Joshua tree, is there anywhere else you’re looking right now? What’s the next move you have? What? Three more months before you purchase the next.

Tony: So another big kind of destination by us as a big bear Lake.

So it’s a, it’s a Lake here. And so cow that, that gets a lot of visitors. And again, it’s a, it’s a very mature market. Even before Airbnb and VRBO, there were a lot of vacation rentals there, so we’re okay. We’re looking at that as potentially our next market. Um, we also kind of like Las Vegas, um, you know, we’re, we’re a short 45 minute flight from Vegas and that’s obviously a, you know, a big kind of tourist destination as well.

So we’re, we’ve got some things where we’re actually trying to keep it a little bit closer to home, just to see if we can start building that. Uh, the, before the, a little, a little closer.

Ashley: I actually went and met this property manager, this guy that owns this property management company in Las Vegas recently, and do the systems he has in place and just his whole process is so amazing.

So if we need a property manager, I don’t know if he does short-term rentals, but yeah. It’s really interesting.

Tony: We’re actually managing ourselves. Right. So with the long-term rentals, we had a property manager in place. Uh, but with the short term rentals, we’d made the decision to do it on our own. And, uh, are you using like any software Ashley to help manage yours?

Ashley: No. I’m just using the Airbnb

Tony: app. Yeah. We’ve got some pretty cool stuff and I want to walk the listeners through if I can. So in terms of our pricing pricing, your Airbnb is almost like, um, Like price and hotel, right. And like, depending on what day and what time and where you’re booking, like the price can be different.

So we use price labs to help us with our pricing. And it’s a really cool tool because it gives you a lot of data on like your competition in the market. So I can see in pigeon forge, um, all of the current listings for other five bedrooms, I can see the distribution of their prices. So how many are charging between, you know, two and two 50 per night, two 50 and 300.

So on and so forth. And then I can also see like the occupancy levels and those different price ranges. And then that helps me decide, okay, where do I want to be with my prices? Do I want to be a little bit more aggressive? Do you want to be a little less aggressive so I can kind of take the guesswork out of what my prices should be.

And it’s got all of these really cool automations as well. So it’s like if I’ve got a vacant spot and it’s 30 days out, Maybe I won’t give a discount right now. Let folks just kind of hopefully fill that spot, but see, I get to 14 days out in that date. So hasn’t booked, but to automatically decrease the price by 10% and if I’m seven days out, it’ll automatically bring it down a little bit more.

So you can be a little bit more aggressive and dynamic with your pricing. So price labs has been, uh, almost an invaluable tool for us to measure the we’re we’re capitalizing on. On on all of our, our open days. And then we’re also using smart BNB as our kind of property management platform. And this one’s so cool because it automates a lot of the messaging that you have with your guests.

So we have automated messages to go out like three days before someone checks in. Um, and it gives them like our, our guests book and like their access code and all the things they need to know about the cabin. We send another automated message. I want to say 18 hours after they check in. So like the morning after they check in, they get another message from us and it just says like, Hey, hope everything’s going well, let us know if you have any questions.

Uh, we’ve got another one that goes out 18 hours before they check out, just to kind of remind them of all the things we need them to do, you know, turn off the lights, you know, cover the hot tub, so on and so forth. And then after they check out, we send them another message that says, Hey, we hope you enjoyed your stay.

You know, we’re going to give you a five star review as a guest. If you can leave us an honest rating review, we’d appreciate it as well. So a lot of that communication with the guests is taken care of because we’ve got all these automated messages going out. Um, so price labs, uh, smart BNB, those have been great.

And the last one I’ll share is called host flee. Um, mostly has both a, like a property management arm, but they also have like a digital guidebook arm and we use them for the digital guidebook. So one of those automated messages that you get, it’s a link to our digital guide book for the cabin. And it gives you all of the local attractions.

Some of the restaurants, you need to go check out directions to some of the, you know, the sites to see and things like that. Yeah. Um, and it also gives you all of our house rules and you know how to use the cabin, all these questions that guests typically have. They’re kind of captured in that, uh, that digital guide book, but it’s, it’s given to them in a way that’s easy to digest.

So honestly, it’s, it’s been a pretty smooth process for us and we don’t get a ton of questions from guests and we’ve got nothing but five star reviews since we started. So I’m loving the systems and the automations to help make this business a bit more scaled.

Ashley: Have you ever thought of managing other people’s short-term rentals?

Tony: You know, it it’s something that we’ve thought about, but I feel like our, our goal right now is to build our own portfolio first. And I think maybe once we get to a point where maybe we’re having a hard time getting financing or, um, you know, maybe we we’ve exhausted some of our capital and we feel that we don’t have the resources to buy our own.

Then maybe we’ll, we’ll get into like either an arbitrage or like co-hosting or something like that.

Ashley: It’s nice. Not having to be responsible to anybody else either. So yeah. Thank you for sharing those software with us. Those are very interesting. I have to look at them the only thing with price lab. So in my market, there are three other Airbnbs.

So it’s not very hard to figure out what the going rate is. So I’m not sure if that one would really be worth it for me, but, uh, definitely the other two I’m going to look at, I love the idea of the automated messaging. Yeah. So I’ll look into those, but I’m, I’m excited to have someone with short term rental experience.

I mean, I really don’t know that much about, and definitely not on the level that you do, so this will be,

Tony: yeah. And then you can teach me how to buy properties for, for like $20,000 or something like that.

Ashley: Yeah. Then you can come and visit it and when you buy it here, stay in my Airbnb. Okay. So let’s go on.

So. Even though you’re not really a guest, so we can still do our MVP section, the most valuable player.

So besides your new cohost, who is the most valuable person on your team? Yeah.

Tony: So for me, if we look at like our short term rental and how we’re scaling that business out, the most valuable person that we’ve had is our cleaner. Yeah. You know, typically when you think about like your cleaners, they’re, they’re like, uh, you know, th they’re just there to clean your property, but when you’re in the short-term rental space, and especially when you’re managing from afar, they’re literally your partner in that property.

So, you know, we, we pay our cleaner, a premium, right. It kind of at the top of the market and, you know, we, we tip her when we can, anything that we can do to, to kind of keep her happy and make her feel like she’s a part of the team because she is w we’ll do that because she, not only is she coming to keep the property clean.

But if something looks off or if, Hey, there’s a leak here that you need. Like, we just had a leak in one of our restrooms and she called and let us know that we behave. We need to get that fixed. We shipped so much stuff to her house before we actually closed on the property and she was willing to hold that stuff for us.

And she put up decorations for us and she did all this other stuff for us. So she’s been like absolutely invaluable to us being able to scale this business properly from, you know, being several States away. That

Ashley: is so awesome. I love that answer because when I think about it, that is how our current cleaner is too.

I mean, she just takes care of everything. So let us know, but it will be like, I already, I already took care of it to see no, but I wanted to give you a heads

Tony: up. We had a guest that left. Like a big, like laundry bag full of clothes at the property. And our cleaner texted and said, Hey, there’s, there’s a bag of clothes.

You know, like sitting at the front door. And she was so nice enough that she, she picked up that bag, she box it up and she shipped it back to that guest for us. Right. So it’s like when you have that level of like support from your, your cleaner, they really are truly a partner and you got to treat them as such.

Ashley: Yeah. Yeah, definitely. And I like the tip idea too. When we have like friends stay in the Airbnb, instead of them paying for paying us to stay there, we, uh, say leave a hefty tip for the cleaner we always, and then they leave it on and leave it for them. So, yeah. Okay. Well, that’s awesome. That’s a great answer.

I love that. And you’re right. It’s, she’s definitely become more of a partner than just someone who works for you, right. Let’s go on to the rookie request line. So anybody can call in to our voicemail box one eight, eight, eight, five, rookie, leave us a message. And me and Tony, we listen to these messages or at least he will be now.

And then we pick out a couple of questions to have our guests answer on the show. So today, Tony and I are going to take on a couple of questions.

Tony: Hi, this is Mason and I’m out of Mustang, Oklahoma. I’m trying to invest in rental properties and I have a 10 99 job on 22 years old. And I don’t have over three years of tax records to show that I.

Have good income, but I do have good money for a down payment. I’m just wondering how I could do it. Financing with my 10 99 job with a good down payment. I don’t really know how to go about it. Um, one home already, but looking for my first rental. Thank you. My first thought is I guess, two things, right.

One, I would maybe shop around to a few different mortgage brokers because some are, some are a bit more creative than others, right? And just because one person says no, or one bank says no, doesn’t mean that there isn’t an actual path forward. I’ve known people that have gotten mortgages with very little income and you know, that they still find a way to make it work.

So that, that would be my first piece of advice. My second would be, find a partner. Right. Like if, if you’ve got someone and you’ve already kind of proven that you can buy real estate and, and, you know, I don’t know if the first property was an investment property or not, but you’ve already proven that you can go through that transactional process.

And if you can find someone whose kind of goals and plans and everything aligns with yours, that’s the best way. Like, I wouldn’t have been able to scale my business nearly as fast as I have without the support and the help of my partner. So finding someone who you can work with, I think is key, and you can obviously leverage their, their W2 income, their, you know, their paychecks and all that stuff to help you get approved.

Ashley: He stole my answer. I was going to say partnerships too. Yeah. It finds someone who is bankable and partner with them. Or you can find a private money or hard money lender. I mean, I wouldn’t really use a hard money lender, I guess, because it’s going to be a while before you can pay them back. If you need to build up.

Three years of tax returns, but even a private lender. I’ve used someone who has put me on a 30 year amortization, low interest rate, and then it’s callable in five years. So that gives me five years to put private lender or put a conventional mortgage on the property. So you could go in that route too.

Tony: Let me ask you a question on that, right? I know for myself, like I’ve never used private money. So if I’m a new investor and I’ve never done this before, or maybe I’ve got one deal, like how do I go about making that connection? Like, you know, my, am I just putting an ad on Facebook saying, Hey, send me some money.

Ashley: No Craig’s list.

Yeah. So what I recommend is first write down all of the people, you know, you already know that you think in your network would be interested in being a private lender. And then the second thing is how is this going to be an opportunity for them? So you don’t want to make it about like, I need money. Can you help me, blah, blah, blah.

Making an opportunity for them. Look at your money. You know, you can estimate and say, the stock market has done this the past year. This is the return I can give you this return on your money. Mine is a lot safer because of this. I’ve done all this research, basically put together a binder, a portfolio of word, document, a presentation, something.

With showing all of your personal finances, you want to show them that you can manage your own money. It’s not about having money. It’s about having or managing the money that you do have. So I like to recommend putting that in your tax returns, your credit karma report, your any current loans you have showing that they’ve been paid every single month.

You’re not behind any kind of your personal financials. You can put together a personal financial statement. Then go through and put together the deals. So what deals are you looking at? Print out the BiggerPockets report showing you know, that this will cashflow this a month. I can easily make the mortgage payment, things like that.

And then give that binder to the person who you want to be your private money lender and show them, you know, this is a great investment for them. And it’s going to be an opportunity for them as is for you as well.

Tony: I love that advice. And I think the one thing I would add on to that right, is that, you know, that you might be thinking that’s a great process.

If I have someone, what happens if I don’t know anyone that that might be a good private money lender. Right. And the thing that I always tell folks is you got to get out there and start networking. Right. And obviously it’s a little weird right now, but there’s so many virtual meetups, you know, there’s places like bigger pockets.

There’s a Facebook group. Like there’s so many different avenues to start building relationships with folks. And it’s not always with the intention of, Oh, maybe you’ll be my private money lender, but it’s about letting people know what you’re up to. Right. It’s like, Hey, I just analyze this deal. Can I get your feedback or, Hey, what do you think about this market?

Here’s my analysis on it, or, Hey, what do you think about this strategy or whatever it is you just want to do your best to start finding folks that have a common interest and sharing and dialogue with them as much as you can, because you never know. Where that conversation may lead. Right? Like my, my partner now ki, like, I didn’t know that he was interested in real estate investing, but we just both so happened to follow David Green, believe it or not.

And I, I was on Instagram and I saw, I was like, you know, why, why is he following David Green? And I reached out and we opened up that dialogue. And now we’re partners, right? Our, our third partner who we’re looking at, uh, a multifamily with who got us in the short-term rental space. I met him at a meetup.

And we just happened to connect and we talked and then, you know, we didn’t see much of each other. And then three months later we met at a conference and we just, you know, we saw each other and like, Hey, I remember you from the meetup and we hit it off. Right. So there’s so many different avenues to start finding folks.

If you feel that you don’t have that network

Ashley: already. Yeah, that’s great. And it’s really about building your network and your connections and letting everybody know what you want to do. So I never used business cards anymore, but I do have business cards. And on the back of them, they say I buy multifamily property.

And just to letting people know, I’ve had people reach out to me that heard from my realtor, that you know what I’m doing and, you know, would they be interested in being a lender for me or they want to invest with me, but that’s such a good point. It’s just how everybody. What you want to do what you are doing, and you’ll find that people’s actually start coming to you to talk about it.

That’s how I found a couple of deals too, is people actually brought them to me just because they knew that I invested in rental property and I purchased.

Tony: And if I can add one more thing on that, Ashley, right. I, I think if you can focus and I’m talking directly to the listeners, right? Like if you can focus on getting that first deal done, it changes everything.

Right. Because even, even if it’s not a super successful for us deal, just being able to communicate to people that you were able to go through the processes and the steps to get that first deal done, you gain so much more credibility. And, you know, w you post that picture on your Facebook, on your social media and your LinkedIn, wherever you’ll be surprised at how many people start reaching out to you saying, Oh, wow.

I didn’t know that you were interested in real estate investing. So am I? And that’s like the kind of gateway you need to start building those relationships. So whatever you can do as a listener to get that first deal done, do it because not only do you get like, All of the positive benefits that come along with another property, but it also opens up your network a ton.

Ashley: And I think it’s very rare that someone’s first deal is a home run, except for Amy that we had on a couple of weeks ago who had a hundred thousand dollars equity in her first deal. But she’s the exception, but yeah, but just getting it done, going through the motions, it’s such an, a learning experience and it’s also proof that you know what you’re doing and you know how to do it.

You can get it done. So let’s move on to our next question.

Tony: Hi, my name is Rachel I’m 23 from Pennsylvania. My question is when is the best time to refinance a rental property? And, um, how does the cash out refinance work? Thank you.

Ashley: You want to kind of take this one together? We can talk about the burn method, right?

Sure.

Tony: I’ve actually only done one refinance and it, and it wasn’t a cash out. It was just like a, like a rate term refinance. So I think I’ll let you lead this one, Ashley.

Ashley: Yeah. Okay. So when you purchase your property, you can purchase it in cash, whether that’s money from a line of credit, a hard money lender, but you’re not putting a conventional mortgage on the property when you first purchase it.

So I would say the best time to refinance your property is after you go through the birth strategy. So whether it’s a rehab or just cosmetic updates, what are you doing to add value to it? Or did you buy it under market that it’s already has more equity built into it than the original purchase price? I would get your, if this is, you know, a long-term rental, I would get your tenants in place and, you know, have your lease agreement, showing proof that you’re getting this much income every month.

And that’s something the appraiser would look at. So for your refinance, some banks will require a seasoning period where you have to wait six months a year until you can actually do a cash out refinance and get some of your money back. But there are small local banks that will definitely do this for you.

Like I had it done. I closed on a property. I had the appraisal the next week, uh, to get the financing done. So there are definitely banks that will do it sooner. So just shop around as Tony had said, reach out to as many banks just because one bank says no doesn’t mean, they’re all gonna say no. So after you have completed the bird, the buy rehab rent, and then you’ll do your refinance and then repeat it.

But so how it actually works is you go to the bank. You say, I own this property free and clear. There’s no mortgage. They will do an appraisal on the property, establish what the value is. And they’ll give you up to a certain amount. So common on investment properties can be 75% of the value of the property.

Sometimes 80% of the value of the property. So that’s how much they would give you back. So if you have only put 50 it’s 50,000 into it, and it’s a hundred thousand dollar appraisal, you can get a lot more than that. 50,000 back, you can get 75,000 back and then you’re paying yourself back that 50,000 or you’re paying back your line of credit wherever you got that money from for the purchase and the rehab.

You’re going to pay that back. And then you can even take out that extra cash if you want and use it as a down payment on your next property. Buy a Tesla, whatever, but yeah, that’s, uh, that’s kind of just the, the basics of a cash out refinance. Do you want to take the next one? Tony practice, uh, doing the request.

Tony: My name is Gabe and I am a rookie investor in South Georgia. I hear about landlords having tax advantages. Could you detail what tax advantages? Not loads. Get. So, this is actually something I’m still learning about as well. Right? Because I bought my first property in 2019, right at the end. So 2020 has been like my first full year as a, as a real estate investor.

But I’ll share a little bit of what I know, Ashley, then I’ll lean on you to kind of share what, what you’ve been able to experience. So one of the things you get is you get to write off, I know your interest payments. Right. Uh, your property taxes, those are things you can deduct. And that’s true for anyone, whether you’re investing or whether you’re, you know, you’re a single family residence, but then you also get a depreciation.

And one of the things that I’m super excited about for our pigeon forge properties that we’re looking at potentially doing like a cost segregation side, because it’s such a big, uh, kind of expensive property, right. We paid almost $600,000 forward. There’s a lot of stuff that goes into it. And the, the benefit of doing cost segregation over like typical depreciation is that you accelerate a lot, a lot of that depreciation early on.

So typically on a house you can depreciate, I think over like 27 and a half years for not mistaken. And it’s just everything, the entire house. But when you do cost segregation, you get to say, Hey, I spent, you know, X dollars on this, and it’s only going to last for five years. So let me appreciate, or depreciate that over five years.

And this thing is going to last for 10 years. So I would appreciate over 10 years. So you get a lot more tax benefits early on, as opposed to seeing that spread out over several years and obviously basic thing, you know, other expenses for the property, you can kind of deduct and things like that as well.

But I know the thing that I’m most excited about moving into this as the cost segregation on those larger, larger properties.

Ashley: Brandon Turner talks about that a lot. He’s done that on several of his properties too, and really has saved a lot in taxes going through the cost segregation. One thing do as a 10 31 exchange.

So you can actually defer the taxes that you will pay on the sale of a property. So when you sell the property, you identify another property and use the proceeds from that sale to purchase another investment property. And this is how some people scale. So you sell your hundred thousand. Dollar property and use that as a doubt, that money as a down payment on a $500,000 property, and you are not taxed on that a hundred thousand dollars.

That you made from the sale of the first property and it just, if you keep doing these exchanges, just defer, defer, defer deferred until eventually you don’t do a 10 31 exchange. And then maybe if you pass away, I’m not, I’m not really, yeah.

Tony: Swap to use Rob swap. So you drop that’s what they call it, right?

Yeah.

Ashley: And then the other thing would be just the rental income coming in, uh, for long-term rentals, you are paying a lot lower income. Tax on it, then you would say a W2 job. Or if you’re self-employed, you’re paying, you know, the self-employment tax for, uh, it’s double when you’re self-employed cause you’re paying what, you know, usually a company would contribute, your employer would contribute and then you’re playing the employee one.

So that definitely is an advantage to having that lower income tax, um, rental income. There is a great book. If you guys want to check it out, Go to biggerpockets.com forward slash tax book. And it’s a tax strategies for savvy real estate investors. And there’s also an advanced version too. I highly recommend reading both of them.

Tony: Yeah. I actually just finished one of them. I can’t recall which one, but one of the other things that I think is really cool to call out is that you can get a designation as a, as a real estate professional. And when you get that designation that opens up like so many more. I like tax benefits. So we’re actually in the process of trying to get my fiance designated as that.

And that’s part of the reason why we brought her into the short-term rental, because there’s some limitations, right? Like, like if you have a full-time job, you have to put more hours into your full-time or I’m sorry, into real estate than you put into your full-time job. And if you’re, if you’re, if you’re doing real estate full-time, I think there’s still some kind of like hours threshold.

I think it’s like 15 to 20 hours a week or something along the lines, but then it opens up to so many more tax benefits. So read the book, look into that and hope for that hopes as well.

Ashley: That’s our, I learned that. From two is that book and yeah. And there’s a lot more things you can write off to being the designated real estate investor.

Yeah. So definitely check out those two books. If you want to learn more about. Tech strategies. I wasn’t accountant for six months before I became a real estate person. Yeah.

Tony: So you were an accountant, you were aren’t you like an insurance agents, you got this, all these kinds of hats you’re wearing, huh?

Ashley: Yeah. I think all these streams of income, but yeah, I started out as a, an accountant and when I graduated school, I had a degree in accounting and finance and I lasted. Not even six months working at a public accounting firm and then I quit to become a property manager. Yeah. So that’s the difference though?

I get bored easily. I chase this shiny object syndrome. Well, it’s

Tony: day one for me. So I hope you don’t get bored. Me too, sir.

Ashley: Board with businesses and practice. Actually, what I really like to do is I like to. Build a business started, you know, from the ground up or whatever, get it profitable. And then I like to hand it over for other people to run it. Like I like the nitty gritty of building it and getting it going. And then once it’s like running, then it gets boring to me.

Tony: Good. Good. I’m the center more

Ashley: change the podcast up every couple of years. So it stays interesting. We’ll do that. So let’s go into our random questions and maybe I can ask you one and you can ask me one, but let’s see here. Uh, What is one fear or self doubt you’ve overcome or trying to overcome.

Tony: That is a good one.

One fear or self doubt. I think for me, it’s really strange, right? Because on one hand I kind of have this. Irrational self-confidence to where, if I, if I set a goal, I feel pretty confident that I can find a way to make it happen. But on the other hand, it’s like, as you’re working towards you’re like, well, man, is, is it really possible?

Right? Especially if you’ve never met someone personally, that’s achieved the things that you want to achieve. If you’ve never seen firsthand how that success happens, sometimes you can start doubting yourself. And I think what kind of helps me push through that, that self doubt of my abilities to achieve the things I want to achieve.

It’s when I’m able to connect with folks that are on the same path as me, right? Like that’s why for me having a partner so invaluable and you know, early on, I always thought that I could do it on my own, but having a partner that that’s kind of there to, uh, bounce ideas off of, and kind of sanity check you and remind you that, Hey, we’re, we’re making progress.

We’re moving in the right direction. I think that that makes a world of a difference. And. As you start to kind of stack your successes, you get more and more excited about, about what’s to come. So whenever you feel yourself kind of retreating or feeling some self-defeat, if you can get like a small, quick win to kind of keep that momentum going, that that’s, that’s what you need because real estates it’s a long-term play.

Right. Like, like, no, one’s going to get rich in real estate overnight. You’ve got to kind of have that persistence that grit, that determination to push through and things are going to go wrong. Things are always going to go wrong. Like every week, every month, every year, something big, something bad is going to happen, but you gotta be able to push through that.

So for me, being able to surround yourself with a, with a group of folks that can keep you on track and motivated is huge.

Ashley: Yeah, I definitely agree with that. My first deal was with a partner is because I wanted that security and I wanted just, you know, someone to work with me. I just didn’t want to do it by myself and just having the community, the network of people.

I was talking to someone today. Who they actually were in some kind of a community of real estate investors. And they said that like, what they were doing was getting discouraging, but then they log into the Slack channel of the community and then they’d get some momentum and, you know, people would motivate them.

And that other went through the same challenges. So like grab onto your community, whether it’s in a Facebook group or it’s been, I’ve been in a couple, uh, just Instagram. Group messages of other investors that just, just nonstop going and godly keep up. But it’s so fun because it’s interesting to see what everybody else is doing.

It gives you that inspiration momentum to keep it.

Tony: Yeah. All right. Well, let me ask you, when you mentioned Instagram and being with other investors, so who are some folks that our listeners should go follow on Instagram that, that you, you enjoy talking with?

Ashley: Okay. So nerds guide to fight is one, Sarah. She was actually a guest on our show, but.

When I first started my Instagram account, it’s been like a year and a half now. She was like one of the first people I connected with. And, uh, she has bought rentals and she’s currently doing a live in flip kind of house hacking books. She’s living in the upstairs and then turn the basement into another unit and is going to rent that out.

But she does some really unique, interesting strategies and creative financing. Uh, so she’s a great follow for that. And it does some DIY stuff too. But another person would be let’s see, what was another one? I don’t know. There’s like, there’s so many great ones, but, uh, yeah, to her, I think just because since the beginning that I I’ve connected with her, I think just she and she puts out so much content too.

And then, Oh, I know one, uh, Ryan Dawsey so recently started doing these little PR like ads, like he’ll. Answers. They’re not ads, I guess, but he’ll answer someone’s question that they asked him on Instagram, but he does these really funny, uh, real stories about it. And I think he’s maybe done two or three, but they’re definitely entertaining.

And then he obviously gives really good answers to the real estate questions though. Yeah, those would be my two recommendations today off the top of my head.

Tony: Okay. I’ll throw a third one in there. You guys can follow me on Instagram as well. Um, I’m at Tony J Robinson. Uh, I don’t have any funny reels on my, on my, on my profile yet.

So maybe I’ll try and throw some of those in there for, for Ashley.

Ashley: Yeah, you’re supposed to wait until the end. That’s what we say. Um, so

Tony: I get two shots today, then.

Ashley: So, yeah, I mean, that is it for the show today and you guys, I’m so excited to be working with Tony. And what is your other podcasts? Can you say a little bit about that?

So people can go back and listen to some of the other episodes you have done.

Tony: Absolutely. So, um, my, my previous podcast was the, your first real estate investment. Um, and every week I interviewed guests, uh, specifically about their first deal. So very similar content to kind of what we’re going over here.

I think a lot of folks will, will benefit from hearing it, but, uh, we spent the entire, you know, 45 minutes to an hour deep diving, one specific deal. So how they, how they found it, how they funded it, how they closed it. Um, so if you all want to go back and take a listen, your first real estate investment is, uh, where it’s at.

Well, I

Ashley: think it’s been a great first show.

Tony: I agree. I’m still kind of shaking off the butterflies. So, uh, you know, I’m sure I’ll get more comfortable as we keep going, but I’m, I’m super excited. It’s almost so weird as you’re right, because I hear your voice all the time. So now it’s, uh, Seeing your face and we’re, we’re talking to him.

Um, so I’m still kind of getting used to everything, but I’m excited.

Ashley: Yeah. You’ll get annoyed with it.

Tony: It’s so funny. Right? I feel like our voices kind of balanced each other out you, right? Like I’ve got this like kind of deep, you know, California mellow vibe, and you’ve got this real bubbly, you know, kind of high pitched, laugh.

We’re, you know, we’re, we’re bouncing each other out. I love it.

Ashley: Yeah, my dad, he listens and he always tells me I laughed too much. He’s like people are going to get so annoyed. I’m like, I can’t help it. I think things are funny, but thank you everyone for listening. And I am excited to get to know Tony more along with you guys.

So go back and listen to the real estate rookie episode 10. We’ll also have some show notes with more information about [email protected]. Forward slash rookie 37. I’m Ashley care at wealth from rentals. And he’s Tony Robinson at Tony J Robinson. Thank you guys. And we will be back next week. .