Flipping and Rental Property Investing 2,000 Miles Away with Erin Helle

Brandon:
This is the BiggerPockets Podcast show 372.

Speaker 2:
You’re listening to BiggerPockets Radio, simplifying real estate for investors large and small. If you’re here looking to learn about real estate investing without all the hype, you’re in the right place. Stay tuned and be sure to join the millions of others who have benefited from biggerpockets.com. Your home for real estate investing online.

Brandon:
Hey, what’s going on everyone? This is Brandon, host of the BiggerPockets Podcast here in the sea shed with my friend David Green. David Green’s not actually here, but you know whatever. You’re in the he shed of Northern California. What’s up buddy?

David:
I wouldn’t mind being in Hawaii. I think I’ll be out there in a couple of weeks. Right?

Brandon:
I think you are coming out here in a few weeks. I’ve got a lot of fun stuff planned. In fact, we’re going to do some maybe live podcast recordings or at least like in person ones. I’ve got a couple things to do there. I’m pretty pumped and excited about-

David:
Make some videos. I think last time I was there you jumped in the pool with your clothes on. Right?

Brandon:
I think I did. That was fun. We might put a link to that in the show notes at biggerpockets.com/show372. Just watch the last like 10 seconds of that video. Anyway, dude, today’s show. We just got done recording with Erin Helle. And Erin brought so much value. It’s going to blow you guys’ mind. Erin is a former military, well, her husband’s in the military now. She was military. A mom of two who is just crushing it in the world of long distance real estate investing right now. Tons of good tips in there, tons of great suggestions and ideas for managing contractors and dealing with KPIs, which she talks more about. We’ll talk about that later. Key performance indicators, but such value there. So before we get to the show though, I do want to get to today’s quick tip. All right. Today’s quick tip.

Brandon:
So here’s the deal. We talk about these things called KPIs, which are basically things you can do on a daily basis that you should be tracking. And every business in the world should have KPIs, real estate is no exceptions. We spend a good amount of time today talking about that. And that alone may just change your business forever. So here’s the quick tip I have for you. Starting today, I want you to start tracking one KPI. I don’t even care what it is. It could be deals analyzed, offers made, podcasts listened to. But get a piece of paper out and start tracking or a whiteboard. Track that KPI, make sure you’re doing it and report back. Let us know what it does to your business. And if you would like an easier way to track that stuff, we actually have a journal at BiggerPockets called the Intention Journal. It’s right here. And it’s all about tracking your progress on different KPIs. So if that’s something you’re interested in, you could always pick up a copy of the Intention Journal at BiggerPockets and use the code Erin, E-R-I-N. That’s our guest today.

Brandon:
Use code Erin to get 10% off that Intention Journal. You also get access to a mastermind group when you buy that, so anyway, there you go. That’s your quick tips for today. And finally I think it’s time to get into today’s show. Anything you want to say before we get into it David?

David:
I had really good time at the SF Bay Summit. I just got done doing that this weekend. Jay Murray put it together.

Brandon:
Oh, that’s right you did that.

David:
So Brian Burke was there. Ryan Murdock was there. I got to hang out with him. Yeah, there was a quite a few-

Brandon:
Ryan Murdock. Yeah. He actually spoke in front of people for the first time. He’s never done that before.

David:
Less awkwardly than you would have thought. I actually watched Ryan for quite some time and I thought he did a pretty good job.

Brandon:
That’s awesome. Nice job Ryan Murdock. Way to represent Open Door Capital in the mobile home park world.

David:
Somebody there called me that closer. And I was standing next to him and I was like, “Yeah, this is a closer and the mercenary.” We sound like villains in a X-Men movie or something like that.

Brandon:
That’s exactly what that sounds like. All right, well that’s very cool. Yeah, shout out to Jay Barton. Thanks buddy for putting on that conference. Wish I could have been there this year. Couldn’t leave the wife, but next year. And with that, let’s get to today’s show with Erin Helle.

David:
Let’s do it.

Brandon:
Erin, welcome to the BiggerPockets Podcast. It is great to have you here today.

Erin:
Thank you. I’m so excited to be here.

Brandon:
Yeah. Cool. All right, well let’s get into this thing. Who are you? How did you get into real estate? Why real estate? What’d you do before real estate? Let’s go through your story.

Erin:
Yeah. So I’m Erin, like you said. I am currently living in Monterey California. Military spouse. I’ve got two little girls, a one year old and a almost four year old. My husband’s active duty army. And I got, I really think that real estate is something that I had in the back of my mind since probably even high school. I think from a young age, I always believed in sort of the concept of financial freedom, even though I didn’t necessarily have the same definition of what that is then as I do now. But I always kind of wanted to be financially independent. When I went to college, I wanted to have no strings. I didn’t want to rely on anybody. I didn’t want to take out any loans. So I was looking for somewhere that I could get a full ride.

Erin:
And I started being recruited as a swimmer when I was a sophomore in high school to go to West Point. And at first I was like, “Absolutely not. Not going there. No way going to a military school.” And then two years later, I took a tour of the campus and just knew it was where I was meant to be. And it just happened to be a place where I could really kickstart my future in terms of a great education, guaranteed job after I graduated and then never having to rely on anybody. I didn’t have to rely on my parents for money. I didn’t have to take out any loans. College was paid for. Then I got a job afterward. You go to school for four years and then you are required to serve for five years on active duty.

Erin:
So I did that and then some. I served eight years on active duty and met my husband when I was at West Point. We got married a couple of years after we graduated. So we were doing the dual military thing, living the good life. We thought we were doing it right. A dual income. We thought we had a bunch of assets. We didn’t have any debt besides the house that we owned. And then we had our first daughter and I took my maternity leave and I went back after three months with her. And my third day back I got put on orders to go to Afghanistan. Three months later, yeah, when my daughter would have been six months old and my husband was already on orders to go to Iraq that same exact month. So we would’ve left her.

Erin:
And it just wasn’t something that we were willing to do and I resigned the very next day. So got, it took me about five months to get out of the army, which is a really quick turnaround for that and really never looked back. And so I started looking into real estate once I got out. I then read Rich Dad Poor Dad and realized that what I thought was financial freedom and what I thought were assets probably really weren’t. So it really kind of changed my perspective, changed my direction, and it just kind of made me come up with a better plan to get to the point where we wanted to be down the road. So I started looking, started analyzing. It took me a while to get into my first property, probably took me about eight months of really looking and really diving in, like taking the plunge.

Erin:
And from there I was totally hooked. So fast forward a little bit. I was serving in the army reserve at this point and I had plans to just kind of keep growing my portfolio and I found out that I had a heart condition. And the second the army found out they kicked me out. Even though at that point I had been serving for 14 years, including my time at West Point. They just said, “See you later.” And that really kind of changed the trajectory of my plans really. I was wanting to make as much money as I possibly could. I had the goal of making seven figures each year. And kind of being faced with my mortality I guess made me really change the way that I wanted to do things. And instead of trying to make a bunch of money, it was more about building my legacy and creating something that I could be proud of and something that I could hand onto my daughters.

Brandon:
Wow. Yeah. It’s interesting because I mean, if you think about it, everybody, I mean, right? Like that’s the thing about life is nobody gets out alive, right? We’re all there, but most of us don’t have to go through that scenario of where hey, there’s something wrong. There’s something that could end this at any point. So now I’ve got to change my perspective. And for you that was a heart condition. Wow. I guess I’m curious of like, when you say legacy, what do you mean by that term? I mean different people have different terms for that, but what does that mean? Then we’ll get into the nitty gritty of real estate, but I’m curious of how you define that.

Erin:
I guess for me it’s just something that lives on after I do. And it’s something that I think for me all that matters is what my daughters think and what my family thinks. And I just want them to know that, to sort of see the value of hard work and see that you get into something what you … or you get out of something what you put into it. And if you’re willing to work hard, then you can make something awesome. And that’s just what matters to me that they see me building it and that they see the results of it and how it plays out for them down the road. Like for example, I can’t get life insurance. So this is my life insurance. And we just recently got a Disney timeshare. We’re Disney vacation club members and that’s like my life insurance. I want my daughters to be able to go see Mickey mouse a couple of times a year whether I’m here or not.

David:
The one thing that I noticed as you were talking, well first off, this reminds me a lot about Brandon member AJ Osborne story?

Brandon:
Yeah.

David:
There’s some similarities to that. Like, this is what I was doing. This event happened. It changed the trajectory of my life and now I have a better life because of it. So I think that’s very cool. But when you say that you want to leave a legacy, one of the things that’s cool uniquely about real estate for doing that is that not only are you teaching your daughters, this is how you do well in this business, but they’re going to actually inherit the properties you’re buying and be managing them. Like it’s a very clean handing of the baton. You’re actually hitting the properties too. It’s not like … If you were a real estate agent teaching your children how to be real estate agents, maybe you could hand off your database of people, but you’re not giving them an actual asset.

David:
But you’re showing them this is how we get properties, this is how we manage them, and then they get to actually take that property over. That’s probably very fulfilling I would imagine for you knowing that they’re going to get them. The question I want to ask you is when you realized that money was less important than legacy and you had that change of trajectory, what about real estate investing stood out to you that you realized this is the way I want to leave my legacy?

Erin:
I think it was just the ability to scale it without having to work a full time job. You can continue to build your portfolio and continue to grow your monthly cashflow or your equity, but it doesn’t necessarily mean … it’s not like the more cashflow means you have to work more. It doesn’t work like that, like a lot of jobs do. So that was it for me, just being able to spend most of my time with my kids, but continue to see my wealth grow and our equity grow.

Brandon:
I had this conversation, I think I might’ve mentioned this on a previous podcast, but I’ll say it again anyway. I had this conversation with a guy who was visiting my family and he owns a machine shop or something that. He’s an entrepreneur, owns a machine shop of some kind. And where he was just talking about how they go through ups and downs in their business because sometimes they just lose clients and they have to go back to the drawing board to get all new clients and try to find new customers for their product and how difficult that was. And I was just like, “I can’t relate to that with rental property at least.” I was like, ” I buy rental properties and I just own them. And I don’t have to go out and buy another one.” Like everyone just, it’s like little oil wells. You just buy one and then that’s yours.

Brandon:
I mean yeah, you have to maintain them. I’m not saying it’s zero. But like you said, it’s scalable. And just because you … like you make more money. It’s almost like opposite of normal work, right? You make more money over time kind of naturally, but at the same time your time goes down. The time commitment goes down because your systems are better, your processes are better. Property goes up in value, cashflow increases, loan gets paid down. So you’re wealthier, you have more fun. It’s easier, less stress, system better. It’s all around awesome. So let’s get into your real estate thing. Because obviously we all love real estate. That’s why we’re listening to this show. So very first property, what did you do for your very first property? Tell us that story.

Erin:
I found my very first rental on the MLS. I looked for a little while at some of the older, some older properties, some that I thought I could get a good deal on and renovate. But I ultimately decided to go for a new build. I bought this one in Clarksville Tennessee and there were lots and lots of new builds. And the cashflow there is great. It’s a great rental market. And so when I balanced the numbers between putting the money in upfront and renovating, and not putting in the money in up front and seeing it grow over time, just where I was in my life, I had a young probably two year old at the time. I’d just found out that I was pregnant. My husband was deployed. Renovation wasn’t something that was really at the top of my priority list.

Erin:
And so I also wanted to get into something that I knew would be comfortable for me. I was very nervous about having buyers remorse. I was worried about losing sleep. I was already losing plenty of sleep as a new mom and I didn’t want another reason to lose sleep. So I knew that if I was going to scale it, and I knew that if there was going to be a second investment, the first one needed to nail it. And the first one needed, if nothing else, to provide me comfort and knowing that I was on the right path. And so I bought a new build and it’s been an awesome investment. I literally drove from closing to Lowe’s, made a copy of the keys, drove and met my tenant at the property. And that tenant has been in there almost two years now, has never been late, has never missed rent.

Erin:
I’ve not put a penny into that house. It had a one year warranty. But hardly anything really needed to be done after that first year. So it’s been just a great investment. Definitely put way more cash into it than I probably should have. I put 20% down. And I just at that time didn’t really realize that there was any other way to do it. I thought you just put 20% down on an investment. And so I know that now I probably could have turned that like 60 or $65,000 into maybe three or four deals. But at the same time I wouldn’t have done it any differently.

Brandon:
All right, let’s talk about a new build. So a lot of times on the show we talk about rehab and we talk about BRRRR. We talk about all this stuff you buy. Like I buy a lot of old crappy properties. I think my newest property is 1978. The idea of buying new construction and actually making cash flow is kind of foreign to me. But I know it can be done in certain markets. I mean in certain markets it can, certain markets it can’t. And it sounds like in your market it could. I mean, what did you buy the property for? What does it rent for? Can you give us some of those details?

Erin:
Yeah, so the purchase price on it was 220,000 and it rents for 1760 a month. The mortgage payment I think is 1130. I’m paying 7% in management because that particular management company has 12 doors of mine. So I’m at 7% there. Taxes are low in that area and it’s like $55 a month I want to say. Insurance is $45 a month. So cashflow is just under $300 a month. And like I said, every single penny of that has just gone into that reserve fund for that property.

Brandon:
Yeah. That’s so cool. And this is why it’s so important not to take somebody’s, like even my own advice or David’s advice here. When somebody says like … I was on a webinar a couple of weeks ago and I said like, somebody mentioned something about Chicago or Illinois. And I said, “Yeah, that’s why I don’t buy in Illinois.” And it was something like I don’t like the landlord laws there or something like that. And then people were like, “What? You’re saying we should never buy an Illinois?” And I’m like, “Hold on.” There are people who are millionaires because they’re investing in Illinois. There are millionaires who are investing in new construction. So just because I don’t do something and I don’t get it or I’m not a fan of it or David here, it doesn’t mean it can’t be done. Yeah, I guess just advice to everybody is put on your thinking caps and don’t let somebody else do the thinking for you.

David:
This is such a good point. And I was just speaking at the SF Bay Summit yesterday about the BRRRR method. And I prefaced it by telling everyone, “Listen, I’m going to tell you guys how I invest in real estate. This is what I do and this is why.” You can’t take what I’m saying and say, “I now have the step by step formula for exactly what to do. Because if I do what David does, I can’t go wrong.” And that’s the problem. When you’re afraid, you tend to want as specific of information as you can get because you think it prevents you from making mistakes. But not everybody’s in my position. They don’t have my resources, they don’t have my life, they don’t have my goals.

David:
It doesn’t make sense to do it my way. And Brandon and I’s biggest fear is we’re going to tell people what we do and they’re going to go try to do it. And it’s going to go bad and they’re going to say, “Ah, you told me to go do this or you told me not to do that.” And I love this story man. My brain just started firing off of all kinds of ideas. I’ll get into it. Brandon what were you going to say?

Brandon:
Well, I was just a going to say a good example of that. So I have this real estate fund. It’s a 506(c) fund. This is important. So I have a 506(c) fund. That allows me to talk about it. I can talk about right now on a podcast. I can say, “Hey, I have a fund.” Right? But if I had a 506(b) fund, I can’t talk about it. So one of my biggest fears is that people are going to go and it would be illegal for me to talk about it if I had a 506(b) syndication or fund. Right. So then when I put that out there, people are inevitably like, “Brandon’s breaking …” Some people are like, “Brandon’s breaking the law.” And I’m like, “No, I’m not because I have a 506(c).” At the same time, I’m worried other people are going to go and start advertising their real estate syndication.

David:
Because Brandon does it.

Brandon:
Because Brandon does it.

David:
They have a 506(b).

Brandon:
Even though I have a … They have a 506(b). And you guys don’t need to know the details of what I’m saying here. All I’m saying is like just to back what you said David is know what you’re doing works you not just because I did it or because David did it or because Erin here did it.

David:
That’s exactly right. And when Erin said she buys new construction, conventional wisdom would say, “Oh that’s terrible. You’ll never get a good deal. You can’t cashflow.” But what I immediately started thinking is this is not as crazy as it sounds. A, in most cases you won’t get cashflow. It sounds like Erin did. That’s great. But even if you didn’t, would it may be a good idea. And I started realizing your capex will be very low or nonexistent for the first 10, 15 years of owning that property. And I started thinking, well if I took all the cashflow and added it up over a 10 year period, but then I had to subtract the capex on the 80 year property, would it even actually be net positive still? Because oftentimes they’re not.

David:
And then I started thinking about new construction is probably going to be in the area where that part of the city is being developed or bringing in more amenities. People want the restaurants, like that type of thing. So what if you’re getting in a better location? And then I started thinking about every time we buy a house, we always look at day one does it cashflow? Day one, how much money am I making? But when you look at people that made money in real estate, they did it over 30 years. And if you own a property for 30 years and it didn’t cashflow for the first five, but the next 25 you absolutely crushed it, would you even remember those first five years?

David:
And I often see this when you zoom out and you look at the big picture, the stuff that you were afraid of that your fears were based on was always only because you focused in on that little thing. And if you could zoom out, you get a lot more clarity. And I wanted to get your guys’ perspectives on what you think about that when it comes to investing in real estate.

Erin:
Yeah, I mean I think that’s exactly right. And when I got into that one, I knew there were a lot of things that I didn’t know. But I knew that this particular asset would not cost me a lot of money out of pocket at least for the first couple of years. And when I just looked at that loan amortization over … I’m like, “I’m going to get a mortgage on this property. I want to make sure that the property outlasts the mortgage.” And that was sort of my biggest concern going into it. Like just that leverage and not really wrapping my head around the power of that at this point in my investing career. And it was just really important to me that the numbers made sense longterm.

Erin:
And that’s why I felt comfortable buying a new build. And then I also saw it’s in a military town. So rents are constantly going up because they go up with the basic allowance for housing that every service member gets. And that goes up every single year with inflation. And then just the population is growing. So I saw that equity going as well. So it was more than just about the cashflow for me. It was just about the security of that investment.

David:
Well Brandon and I always say you got to get the first one under your belt, right? Because Brandon do you remember the statistic? What percentage of people only own one investment property?

Brandon:
Yeah, I don’t remember. But yeah.

David:
It’s like nobody, right? It’s only people that have one property became a landlord on accident. They bought a house, they had to move and they rented it out. But they never really wanted to be one. Everybody else either has more than one or they have none. Because once you get that first one, the next one seems so much less scary and easier and you get over those emotional hurdles. So I was thinking this might be the perfect way. If you have enough, you’re living beneath your means. I don’t want you to do this if like $200 a month that you’re losing would crush you and you’d lose the property.

David:
But if you’re financially savvy, getting a new construction home reduces a ton of the variables that cause all the worry. What about the rehab? What if this goes wrong? How do I know that I’m going to get a tenant? It’s the easiest place to rent out. Very low likelihood that anything is going to break. You’re not going to have a rehab on a new construction home because the builder is just going to come fix it. It’s like training wheels. Then you get all of the stuff that scares you out of the way, you learn what to expect. And on your next home, it’ll be so much easier. Maybe that’s when you get into something with a little bit more upside. It just actually seems brilliant now that we talk about it to make the first one as easy as possible. Because as Brandon and I know, you’re usually not going to make money on that first one anyway.

Brandon:
And even if you do, it’s like 20 years from now and when you-

David:
Yeah. Right. Not right off the bat.

Brandon:
[crosstalk 00:21:46] to millions of dollars. Like who cares if the first deal was a home run or just the base hit. At least you’re in the game.

David:
It’s the momentum that you got to get started.

Brandon:
Yes. It’s like teaching Rosie to swim, right? We don’t a kid in the … I mean Erin, you got a couple of kids, right? You don’t just toss your one year old into the deep end of the pool and be like, “Swim. Go. Man, what a loser. Can’t swim.” You wouldn’t do that. We start them easy. We start them on like little flipper thingies and the big padded arms. They’re so cute in those. Yeah. And then you get their confidence up and you get their momentum going and get them swimming regularly and then they become no little world-class swimmers lately. That’s what-

David:
But Brandon and I are not going to talk about swimming in the kitty pool with our floaties on because we did that a long time ago. We don’t really remember that. Right. So don’t get discouraged when Brandon’s training for a triathlon and he’s swimming out there in the Hawaiian ocean. Let it inspire you to get to that point. But don’t let it stop you because you don’t know how to swim yet.

Brandon:
Good point. All right, so Erin, what came next? So you bought that first property, you got the momentum going, and then what happened after that?

Erin:
So the next thing I did was a flip. I went the complete opposite direction. I found a house that was built in 1960s. It was a really small, like 800 square foot house and needed a lot of work. And I found that actually also on the MLS and the seller was very motivated. I was able to get it seller financed. It was a $50,000 property, or sorry, no, it was a $25,000 property. He asked for a 50% down. So I had to being the 12,500 to closing and ended up putting like another 12 to $13,000 into it. Me and my dad flipped that property. We did more than we realized we were getting ourselves into and it was because we didn’t have a team yet. We didn’t have the contractors in place, which I kind of knew going into it.

Erin:
I was setting up my team and it just wasn’t going as quickly as I would’ve liked it. And I said, “I’m going to try to find …” I came across this property. It was very low risk. My monthly mortgage payment was like $235. And I just decided that I was going to just take this as a learning opportunity. And if I made nothing and I just broke even, I knew that what I would learn would be worth it. And so we dove in, my dad came down from New York and I was like seven to eight months pregnant at the time, flipping this house with my dad. And we tried to hire some staff out. Some things we were able to hire out, other things we weren’t. And we got this thing done.

Erin:
It was really cool. It was easy to kind of see it come together because it was just such a small house. And it had great bones, great structure. It was just this cinder-block perfectly square house. We just painted the exterior, put some awesome shutters on it so the exterior looked awesome with just some really minor landscaping. And then we did an accent wall. I laid the vinyl planking myself with my giant pregnant belly. And yeah, and we got it done. And we sold it for 59,000. At the end of the day, I took home about 13,000.

Brandon:
That’s awesome. It’s that same thing we were just talked about with rentals, but now we are applying it to flips. It’s like, let’s just get some momentum. Anytime somebody tells me that they had a flip and they didn’t make any, their first flip and they didn’t make any money on it, I’m like, “That’s awesome because you got the momentum going.” Again when you’ve done 50 flips 20 years from now and you look back and you’ve made $18 million on flipping over the past 25 years, who’s going to remember that you didn’t make a ton on the first deal? And you made 13,000. That’s awesome.

Erin:
Yeah. Yeah. I mean, we worked hard for it, but-

Brandon:
Yeah. Yeah. But at least you didn’t lose any money. You learned a ton of stuff. What were some of the lessons you learned? What could you tell people who are listening to us right now that are saying, “I want to go flip my first property.” What are those big lessons that you guys learned?

Erin:
So definitely the biggest thing we learned was just how much things cost. We were able to really learn how much materials cost and how much labor costs. And I remember my paint budget was like $4,000 for the inside and outside. And I brought a painter out there and he just laughed at me. He was like, “Yeah, there’s no way.” So we ended up having to do some of the painting ourselves. But I think learning how much things cost, learning what comes first when you can do things in what order. And then the most important thing was just contractors. Dealing with contractors, learning how contractors work. And yeah, that was definitely the biggest learning curve and still something I struggle with to this day.

Brandon:
Yeah, it’s tough. I mean contractors, I say this often, it’s like it’s probably the number one hardest thing of all real estate investing is contractors. If I had to pick like one thing that’s like doesn’t … I mean yes, there’s ways to make it easier, but it’s always tough. Even the best people. I mean even like the Jay Scotts of the world who can flip houses in his sleep, still has contractor problems where everything else can be really systematized and maybe the way to systematize is you just hire someone to deal with the contractor for you. But I don’t know, contractors always suck I feel like.

David:
But this is every business has that thing. No matter what you’re into, there’s a piece of it that you say, “Oh, this is where I struggle so hard. It’s so hard to make this part work.” So if you go into it with the expectation that you have to learn how to manage a contractor, which probably feels like I don’t know, like you’re supervising a group of four year olds that are just crazy all over the place. It’s never going to be easy to do that. But you’re going to have to do it to make money in real estate. You won’t mind it.

Brandon:
You know this reminds me of that conversation. We had a conversation before we started recording today. David brought up like everybody wants this push button solution to everything of like it just makes it so easy. I mean and sometimes it works, right? There are things like for example, I love the BiggerPockets calculators. They help you analyze deals quicker and keep you organized and accurate. But with other things in life, like dealing with contractors, there is not a one button solution to deal with contractors and that’s what everybody wants. I just wish there was like a simple software that told me how much the rehab is going to be. There’s not. There’s not a single software.

David:
Yeah, that managed it for me.

Brandon:
Yeah, and then manage the contractors for me. And would just serve up three contractor bids right on my plate just for me. And there are companies that do that, but you’re going to pay heavily for them and you still got to manage them.

David:
And this is a really good point to make because I know a lot of our listeners are in Silicon Valley. Like that’s where I’m selling a lot of houses and looking for houses. This is how this came up because we start talking to people that want to invest in real estate and they live in a good market where they make good money. I know Erin, you live in a pretty expensive market now, but you’re investing in markets that make sense. We’re going to get into that in a minute. But people who work in the tech world specifically, they’re always looking for an answer that involves automation or some software that can do the job of a person. And what they’re really trying to do is get out of the fact that they don’t like conflict and they don’t want to have to handle a contractor. Or they don’t want to have to build a skill in communication or in project management or anything that requires them to have to put some effort into it.

David:
There’s this belief in the tech world, I can find a computer that can do that job for me. Right. Which side note is kind of scary because if that happens then none of us are going to have jobs anymore. We’re all going to be starving because that’s how Skynet starts in Terminator. That’s when the world’s going to turn over. But it’s just so frustrating because they’re always like, “How do I find a software that will analyze every property on Zillow and only tell me about the best one so that I don’t have to do it?” What you’re looking for is a turnkey solution, but you want like retail profits and it just does not exist. You have to get over that way of thinking that you can get around something. You have to be able to do the work.

David:
Now, there is a time in your business where automation will come into play, but it’s usually 12 steps further than when they want it to come into play. Like getting that deal and contract, you’re talking to humans, you’re talking to the agent or the wholesaler or the seller directly or whatever you’re doing. You have to be good at that. You can’t find a bot that’s going to have an artificial intelligence conversation and just hand you a deal with $50,000. And that’s what Brandon and I and Erin were talking about is if you’re thinking that way, you’re getting in your own way. It will not work. When you’re flipping 12 houses a month, you can absolutely automate some of that process, but not when you’re trying to get the deals. Erin, I know we kind of jumped in really quick to your story, which has been awesome and what you’re doing. Do you mind painting me a big picture for what you’re portfolio looks like now? What kind of deals you’re buying and where you’re headed.

Erin:
Yeah. So we have 20 doors, currently 21 doors, if you include this flip that we’re just finishing up. And right now cashflow is about 4,500 a month. A very wide range of cashflow. We own a 10 unit right outside of Fort Campbell in Clarksville that we got for a great discount and we’re basically putting every single penny that we’re getting out of it right back into it. Every roof needs to be redone and it’s going to eventually need all new HVAC units. So that’s kind of like affecting my overall cashflow, but we’re seeing the value of that property go up constantly. So that’s kind of cool. And the tenants are just really happy. I think we’ll have some good … I think they’ll stick around for a while. So anyway, longterm, my monthly cashflow goal is $10,000. And I’d like to be making that by the time that my husband can retire in about nine years.

Erin:
So he’ll be able to retire from the army at 20 years. Our daughters will be 13 and 11, and I just want him to be able to completely retire if that’s what he chooses to do. And between his retirement and that income, that’s where I want to be in 10 years. So I don’t particularly look for any type of property necessarily. It’s more about the return. It’s more about just that individual property and the security of that investment or maybe the equity. It just depends on the property. So that’s something I talk to a lot of people that I know about who want to get into real estate. Like just don’t close your mind to anything. Keep an open mind. To me it’s more about a return on investment than any particular location or any particular type of property. That being said, now that we own a couple of multi-families, we’ll probably focus on those over the single family homes just because they just seem easier to manage. So-

David:
So you’re doing this long distance. Did my long distance book support what you were doing? Did it refute it? How did that go when you read it?

Erin:
Yeah, so it definitely supported it. I think that we … I’ve read that book long before it became long distance, but it became something that helped me sort of build my systems. Because I knew as a military wife, we go where the army sends us. So even though I happen to be located in an area that was great to invest and then also close to Nashville where I could flip, I knew we weren’t going to be there forever. So it helped me build my systems and helped me sort of plan for the longterm. So when I left Tennessee, I was worried I was going to take a big step back. But actually what I saw happen was me being able to scale this to a level that I didn’t think I was going to be able to do for a while.

Erin:
I almost immediately jumped into two flips because I was just doing one at a time before I moved because I was more actively managing them, doing site visits, things like that. But now that I’m out here, I don’t have to do that and it has freed up my time quite a bit. And I’ve hired those things out and now I’m just receiving reports and answering my phone versus driving from property to property.

Brandon:
You know what I love about long distance investing is it kind of refines, it’s like you know if you have dirty gold, gold that’s covered with a bunch of crap. The way that they clean it, they put it into a fire really, really hot and it refines the gold. Long distance investing refines your investing. It pulls out, it shows you very quickly where all your holes are, where your systems are falling through, where they’re not working and then you just have nothing but your pure business either working or not working. That’s what I like about … And for me, my first out of state investment, I had a lot of problems with it, a lot of holes. I probably should have taken some more of David’s advice because there was a ton of holes. But over time I improved a lot of those holes and today it’s a whole lot better.

David:
And now that business you have in Hawaii is benefited because your system became more pure from the refining. Right?

Brandon:
Yes.

David:
Side note, that is such a good analogy Brandon. The gold, like in order to get more of the impurities out of the gold, you have to turn the fire up hotter. So when life is really turning up on you and you’re being pressured and stressed and you’re frustrated all the time, that’s how gold gets made more pure. You don’t get that if you don’t get the fire. But yeah, that’s a really good question. Now, Erin what you did was you took your local team from Nashville and then you moved to California and you already had the pieces in place. And now you basically just have to keep stoking that fire to keep it going. Right. Can you tell us a little bit about what the systems that you have in place that save you the most time or get you the most deals are?

Erin:
So I think just the systems in general, I have daily KPIs, key performance indicators. So things that I do every single day. And I kind of learned that I need to put things in certain time frames. I was kind of pinging back and forth all day until I realized how much time I was wasting not focusing on any one thing. So I have my KPIs and I do those the first thing in the morning-

Brandon:
Can you give me an example of what those would be? Like what do you mean by KPIs?

Erin:
So when I’m actively looking for an investment, I am analyzing 10 properties a day. And sometimes like I’m to the point now where I can pretty much throw a property away in two minutes. You can just, you don’t really even have to run the numbers until you get an idea and then you can spend maybe 10 minutes on a property before you can throw it away. So I can realistically analyze 10 properties in less than 30 minutes. And then sometimes I’ll be lucky to find two that I would be willing to pursue. And sometimes it’s none and sometimes it’s four. So, but overall, my experience has been like 10% of properties are worth even looking into further. So that’s where 10 came in. So hopefully every day I’ll have one. And that was kind of my number in the beginning, but I’ve spent a lot of time networking, so I’ve got a bunch of different, I’m a real estate agent too, so I’ve got a bunch of different agents that bring me properties that are on the MLS, off market properties.

Erin:
I know a bunch of different wholesalers. We’re working in the San Antonio market now, so we’ve got wholesalers there. We’ve got a bunch of wholesalers in Nashville, wholesalers in Clarksville. So I’m not having to look for properties anymore. If anything, I’m not even able to look at a lot of the ones that come my way. So that’s something that when I was first looking for my first flip, I was like, “How do people find these properties? It’s impossible.” And even finding 10 a day to analyze was difficult. And now it’s, I have the opposite problem and that’s what I tell people all the time. There are plenty of deals to go around, so don’t worry about the deals.

Brandon:
You know, what’s so good about this? I mean there’s so much good about this, but a couple of things. KPI’s, so vital in every business yet most real estate investors have never heard that term before. And so I mean there’s some really good books on it. Like 4 Disciplines of Execution talks a lot about this or Measure What Matters, I think it’s what it’s called by John Doerr, is that right? Anyway, really good books on KPIs. But this idea of like, just what are your lead measures? What are your those things are going to do consistently? Like how many times have you … like David I know you, this happens to you all the time just like it happens to me. You have an investor who says, “I can’t find any deals.” Erin this probably happens to you too. I can’t find any deals.

Brandon:
And I always ask them, “Okay, how many offers did you make this week?” And the answer is always none. And then, okay, well if you didn’t offer any, how many did you analyze this week? The answer is almost always none. Maybe it’s one. Okay. Well if you don’t … well and usually it’s because, well I didn’t have any deals analyze. Okay, well how many direct mail letters did you send out? How many agents did you talk to this week? Like everything can be taken back to a KPI that we have control over. And if we work our KPIs, the results will take care of themselves.

Brandon:
Yet for some reason real estate investors didn’t get that memo that we have a business. Instead, they treat it like it’s a hobby of like collecting troll dolls or something like that like David does. And at end of the day … David doesn’t collect troll dolls. But at the end of the day, this is a business, treat it like a business. So Erin, I love that you’re saying this. Are there any other KPIs you want to, like anything else I mean that you want to throw at people?

Erin:
I think just something actually I think I learned this from you, from your Instagram graphics that you put up is your KPIs just have to be controlled by you. You can’t say, “Every day this week I need to get an accepted offer,” because you don’t have any control over that.

David:
That’s a lag indicator.

Erin:
Yeah. And so you need to say, “Every day I’m going to make three offers. Whether they get accepted or not.”

David:
That’s a lead indicator.

Erin:
Yeah. So I think that’s the biggest thing. And those have to line up with where you’re trying to go. And you have to know, you have to define that and you have to take the time to figure what your longterm plan is. Then backwards plan from there, figure out your short term plan and then your KPIs need to be directly in alignment with that. Otherwise, you’re not moving in any particular direction.

Brandon:
Yeah. So good.

David:
When people grasp that, success just happens. It happens so much faster. And Brandon and I have done this enough times that we’ve, it doesn’t really seem complicated, especially we almost get frustrated when people give these excuses because they’re so close to an answer. So let’s say somebody wants to buy an investment property. Like they live where you live Erin and there’s nothing that cashflows. Okay, can you house hack? That’s a good point. I’m spending $5,000 a month in rent and I’m getting nothing for it. Okay, let’s take a look at house hacking. Then you look at house hack deals. Oh, what do you mean? I have to do like a rehab? I don’t really know how that works. So let me just go look for a deal that’s already rehabbed. Well, they don’t exist. There is none of those. So you’re just going to complain and wait until another terrible recession and then you’re going to buy real estate.

David:
Okay. What if you just said, “What if I learned more about construction so that I feel more comfortable?” Well, how would I do that? Well, what if I start getting contractors to walk a property with me and just paying them 100 bucks for their time or something, and learning what do you do? How does it work? What should I look for? You start learning things like, oh, we have to have existing plumbing to save a lot of money so we can jack into where it’s already there or electrical. And what happens is your confidence starts to go up and then taking action doesn’t seem so scary. And then the next thing you know, you’re not saying there’s no deals out there. You’re like, “Oh, there’s like 25 deals that would work, which is the best one?” And you’re in the driver’s seat and you’re confident.

David:
But when we say to people, “How many contractors did you talk to and walk deals with? It’s none. It’s the same thing that Brandon was saying. It’s not that hard to walk yourself all the way back to what you would need to do to be successful if you ask the question Brandon’s always saying people need to ask. It’s not, I can’t do it. It’s what would it take for me to do it? And then answers start popping up and success starts to happen.

Erin:
Yeah, absolutely.

David:
Moral of the story follow Brandon’s Instagram page and you’ll [crosstalk 00:40:27].

Erin:
Yes. You learn a lot.

David:
You can learn a lot.

Brandon:
You’ll learn a lot. Actually true story. So last week my team was in town, my Open Door Capital team, which is my mobile home park fund team. And there was like seven of us, I think six or seven of us sitting at this coffee shop out here in Maui. And we spent four hours going through every single one of our KPIs and lead measures and we established them for everyone. So for example, one of my lead measures, because I’m partially in charge of raising money, so one of my lead measures is to personally contact, whether it’s through a letter, phone call, text, whatever, each and every one of my investors that have already invested with me every quarter. Just reach out to them because I know that it’s going to pay off whether or not it pays off in them finding future deals or them telling their friends or just because thank you for being awesome and being part of my fun. I’m going to do that every week. That’s a KPI.

Brandon:
David, I love that you brought up the KPI of like education. Because sometimes that is the KPI is education. I don’t know something, I’m going to educate myself. Walker who’s on my team, his thing is 25 offers. He’s basically the guy trying to find deals. He’s our acquisitions guy and analysis. So he’s going to make 25 LOIs this quarter. So anyway, what happened was we got done with our meeting and there was so much energy and fire in this company. Everyone was just like … Everyone was aligned and we knew where we were going. And you don’t have to be buying a hundred unit apartment complexes or mobile home parks to be able to do this with your team. If you’re looking for your very first deal, sit down with your spouse and say, “What are those lead measures we need to accomplish?” And then go do it.

David:
So let’s say that you’re in Walker’s role and you say, “I don’t know how I would write 25 offers. I don’t know how to find the deals. Right. I don’t have an agent.” Okay. Then what’s your KPI for meeting agents? What’s your KPI for finding the market you want to be in? Like there’s something that you need to get there and then you say, “Okay, I need to find an agent. Well, I don’t know what I should ask for an agent.” What’s your KPI for finding what … Who do you need to talk to that’s doing this that will tell you?

Brandon:
In fact, actually, and we’re going to go back to you in a second Erin. Sorry, we’re just totally hijacking your show here. But Ryan Murdock who’s basically our … He runs the operations like VP of operations. He was like, well we were talking about I don’t really know what his KPI would be because he’s kind of just in charge of everything. Is his KPI just like the business? And finally we came up with this idea and I don’t know if he’d want me sharing this, but I’ll share it anyway. Is every week he’s going to reach out to, I think it’s one, maybe it’s two people that are bigger investors than us and he’s going to have a conversation on the phone with them. And I thought what a tremendous, like when we came up with that everyone at the table was like, “Oh that’s a cool KPI.” Because he’s really running so much of it.

Brandon:
So he needs to associate. The KPI he has his associate with other people who are running it, who are running big teams of people. And now all of a sudden he’s out there. So maybe your KPI is go to coffee with somebody once a week. Like even if you’re brand new.

David:
Come up with five ideas someone else is doing in their business that you’re not doing in yours that would make it better. How many calls do you have to make to get that? Yeah, that empowers you. It puts you in the driver’s seat where you can actually go do something. When you sit back and say, “It’s not happening,” it’s very hard to be confident because you’re always in a position where getting punched in the face over and over. And how many times can I get punched before I quit? That’s not a fun way to run a business.

Brandon:
Yeah, so true. All right, Erin, so you have 21 units now, which is awesome. You’ve got these KPIs. You’re investing out of state now because you’re in California, right?

Erin:
Yep.

Brandon:
Yeah. So you’re in California which is awesome. You’re still finding deals. I mean look, what are your network with agents? You said you have wholesalers. Anything else you’re doing to find deals today?

Erin:
I just when I’m just kind of sitting around I have time, I just get on Google or I just get on Craigslist, Facebook marketplace, Zillow, Redfin, any. I mean I just look just to see what’s going on. And every once in a while you might find a motivated seller and get a conversation going. I like to especially for so deals where I can communicate directly with the seller. That’s my favorite way to do stuff. So if I can connect with someone directly, that’s an opportunity that I will almost always take advantage of. Even if the numbers maybe don’t make sense from what they’re asking. At least if I can start a conversation with them and get to what they’re looking for and show them what I’m looking at, then sometimes we can come to that works out for both of us.

Brandon:
So cool. Hey Erin, what was your greatest day of your investing? Like what memory would just make, puts a big smile on your face? If you look back at the last few years of you doing this, what day was this like, oh yeah, that was a good day.

Erin:
Probably when we finished that first flip. We just, we learned so much. I was really proud of it, but also I was like, “I’m never doing this again.” So [crosstalk 00:44:58]. Yeah, so a huge learning experience, but something that I was really truly proud of.

Brandon:
Okay. And then next question, because you said, “I’m not doing that again,” meaning not flipping though, because you are flipping right? So you’re not going to be actively the one doing all the work or?

Erin:
Yes. I am not laying the vinyl planking myself.

Brandon:
The vinyl at 7 months pregnant, yeah.

Erin:
I’m not painting the ceiling myself. Yeah, I just, that was it for me. I said, “I don’t care how much it’s going to cost me it, I need to figure out how to hire other people to do it.” Because there’s no way that I could scale that. You can’t do more than one house if you’re doing the whole thing.

Brandon:
So what is working for you in terms of flipping long distance? Because this is something I’ve not done. I’ve not flipped long distance and you’re obviously doing it. So what’s working for you?

Erin:
I mean it’s all working really as a whole. I have some issues and some setbacks here and there. Mostly in terms of contractors and communication mostly. But I’ve learned a lot when that first flip I did, the couple of people that I hired, I didn’t do contracts with any of them. And I’ve learned now how important it is to put a contract together that I work on alongside my contractor. And the draw schedule is, that’s the biggest thing. When are you going to get paid? How do you want to get paid? And we have to agree on that. And I think a huge way to get them to be invested in your property is if they have a say in how and when they get paid. And that everybody understands how that’s going to happen from the beginning. That is probably the biggest point of contention and that’s when you know emotions flare up when you’re talking about money.

Brandon:
Yeah. Anytime that I don’t establish good benchmarks and this is when you get paid. That’s when I ended up at a Safeway parking lot at 9:00 o’clock at night paying a contractor in cash because they need money for the next morning for blah, blah, blah. Like that’s when that crap happens is because I didn’t do my work ahead of time so that that doesn’t happen. Or that’s when I get the angry contractors that are punching each other in the middle of a job site. Like that, it’s always-

David:
In the middle of a podcast that was happening to me.

Brandon:
Yeah, it was.

David:
That was awesome that day. Brandon is trying so hard to focus on the podcast, his phone is blowing up from two contractors that are fighting because one found out they’re getting paid more than the other one. That was awesome. That’s definitely … so tell us on your Instagram how you solved that problem Brandon. I need to learn.

Brandon:
Dude, yeah, that was a day.

David:
Here’s what happens. Let me explain. This is what happens when you don’t have the difficult conversation with the contractor on how they’re going to get paid.

Brandon:
That’s exactly what happens.

David:
You are putting your business success in the hands of a person who statistically speaking is with managing money just because I’m yet to meet a contractor that’s not. This is not an insult about contractors. That’s just not what they’re good at. They’re not business people. They don’t manage cash flow. They don’t understand accounts receivable and accounts payable. They just know, I know how to build things and fix things and I need to get somebody to help me with it. Which is usually why they hire terribly because they’re not good at doing that, you know? So when you don’t explain to them how it’s going to work, you’re just trusting that this person is going to be good at doing what you need them to do.

David:
And it’s kind of like trusting Edward Scissorhands to play the piano on your wedding or something. Right? Why would you trust that person to do that job? You have to have those conversations. You cannot look for software to help you do that one so that you can avoid it because it’s such a big part of investing.

Brandon:
Yeah. Yeah. Yeah. So funny.

David:
What percentage of our audience knows who Edward Scissorhands is? I just wondered that.

Brandon:
A fair amount I think. We got a-

David:
All right. We’ve got a bunch of 24 year olds Googling that right now.

Brandon:
All right, so Erin, let’s get to where do you see yourself [inaudible 00:48:30] in the future? I know you said like legacy is obviously important. You want to build something. You want to get to that 10K a month. Are you going to keep doing flips out of state? You’re going to keep doing rentals? Do you like the flipping thing? Are you going to go in the larger multi? What’s the plan?

Erin:
So I don’t love flipping. It doesn’t allow me the control of my schedule that I would like. I want to be, I want to work when I want to work. But when you’re at the whim of contractors and things going on at your property, you don’t have that luxury. So after we sell this last one, I think I’m going to take a little bit of a break probably until we get back to that area in about a year. But right now I have the goal of buying three doors a quarter this year. So however that plays out, whether it’s a triplex or three single family homes, that’s just my goal. I have a feeling that as I pursue that, something I’ve found in real estate is that it’s once you’re doing your KPIs and once you’re realizing how you can fund things, it’s easier to scale and it’s easier to buy more than you maybe planned to do just by going through the motions and doing the work. Because if you’re analyzing 10 properties a day and you find one every single day, you could potentially buy five properties in one week.

Brandon:
That’s how a funnel works. That’s why I love funnels.

David:
I want to ask you Erin, with managing properties at a distance, what have you looked for in a property manager and what advice would you give to other people who want to do this with what questions they should be asking?

Erin:
Yeah. So the property manager is the critical part here I think. That’s the place where you’re going to lose sleep at night is if you don’t have confidence in your property manager, you don’t have a good relationship with them and you’re not communicating well with them. So I think when you are trying to build your team, that’s probably the place you should start because they should have a lot of relationships with a lot of the people that you’ll need on your team. The other people that you need on your team. So that’s a good place to start. You need interview them, you need to get to know them as much as you can, get to learn about them, who they are as a person. Are they a good person? That’s kind of what I’ve learned in the last couple of years working with contractors and just different people on my team.

Erin:
At the end of the day, I just want to know that they’re a good person and I expect them to mess up here or there, but I just don’t want them to be stealing from me. I don’t want them to be taking advantage of my tenants or whatever. So that’s what’s important to me is getting to know them and just knowing that you can trust them. And the only way you can do that is just building that relationship.

David:
Have you ever had two property managers, one that got 9%, one that got 8% start fighting with each other in the parking lot of [crosstalk 00:51:11].

Brandon:
Fist fighting in the property. Yeah.

Erin:
I never have.

David:
Yeah, that’s a really, it’s a good point. When it comes to the experience that they have, do you care if they’re a big company, more of a smaller mom and pop? What do you look for as far as the volume that they’re managing?

Erin:
I don’t think it necessarily matters whether it’s 40 doors or 400 doors. I think it matters that they have the support that they need to help you. Like I think I’ve got a property manager that’s a couple. They’re just a couple that they have 40, they probably have 60 doors now. But when we first got under contract with them, it was, they had 40 doors. And they are very available for all 40 of those doors. And then I’ve got another one who has well over 400 but she’s got a huge team. She’s got tons of support and so there’s never been a time where I can’t get a hold of somebody when I need to. And that’s what you need. You need to be getting the feedback and you need to also be able to communicate with them when you need to, especially if you’re not there.

Brandon:
All right. Well Erin, it’s time for the deal deep dive.

David:
Deal deep dive.

Brandon:
All right, Erin, this is the part of the show where we dive deep into one particular property or investment that you’ve made in the past and we see exactly how it is you pulled it off. So you got a property in mind that we can dig into?

Erin:
Yes, I do.

Brandon:
All right, so first question in the deal deep dive. What kind of property is it and where’s it located?

Erin:
It is a duplex in Marion, Illinois.

Brandon:
Illinois. Did I just make fun of that a little bit ago about how I don’t want to buy in Illinois? That’s funny. Ironically, Ryan is in Illinois right now looking at a mobile home park in Illinois. So-

David:
I did the same thing with a very nice man that I met at the SF Bay Summit and I was making fun of Eastern Washington. And everyone laughed but him and guessed where he was from.

Brandon:
That’s funny. I actually love … Eastern Washington is one of my favorite markets just FYI. I actually love it. But anyway sorry, keep going.

David:
Thank you. Thank you for saying that to bail me out. All right. Yeah, [crosstalk 00:53:08] this deal, how did you find it?

Erin:
I found this on Facebook marketplace.

Brandon:
Nice. I have not ever bought a deal from Facebook marketplace, but I have heard of others who have done so. So cool. Number three, how much was the property like? What were they asking and what’d you end up paying for it?

Erin:
They were asking I think 72 or $73,000. And after I initially put in an offer for asking price. I started talking to the seller directly. He had listed it himself on Facebook marketplace and I just kind of tried to build a relationship with him, build some rapport, got under contract at asking price. And then we did the inspection. A couple of things came back. It was a very well maintained property. The owner was, it was owner occupied. He was living in one side managing the property and he just really kept it in great shape. But there were a couple things that came up. We had to replace the water heater, replace a door, fix a fence, couple of minor things. So we got down to 65,000 and closed without issue.

David:
Beautiful. So that’s how you negotiated it. Why did you pick that market?

Erin:
Well, so I was trying to find something, this was a purchase in my IRA and I had about $70,000 in my IRA. And so I was looking for a multifamily. This was my first multifamily and I wanted something that I could buy in my IRA. I couldn’t find the right lender when I was looking. And I actually lost a contract because my lender initially said he would do it and then when it got down to it, he wouldn’t do it. And so then I sort of, I thought that there was no way to do it. I didn’t realize that there were lenders that would loan against an IRA. There were different ways to do it. And I know that now, but I didn’t at the time.

Erin:
So I said, “I’m just going to have to find a property that I can pay for with the $70,000 that’s in my account.” And knew that there was no room for renovation at that point because that was all I had. And if you’re investing with an IRA, you can’t just bring money in from outside. It all has to be within your account. And so I just started looking in other markets and that’s how I ended up on Facebook. I just put in some parameters and this property came back at me and just kind of developed from there.

Brandon:
All right. So we’ve talked negotiation. You basically did the inspection and got him down from there a little bit. You funded it with the IRA, with your own personal, which is super cool. What did you do with it then? You held it as a rental or what’s the deal?

Erin:
Yup. So it’s still a rental. That guy that sold it ended up living in it for a little bit longer while he was waiting for something else to be built for him. And then he moved out. We got a new tenant. And so those tenants have been in there a little over a year now and they are just paying rent. Sometimes they’re a little bit late on rent. It’s a C class property. But for the most part it’s performing very well. The monthly cashflow is pretty amazing.

Brandon:
What do each side rent for and then what utilities are you responsible for?

Erin:
So it’s exactly a 2% property. So I paid $65,000 for it. Each side rents for 650 and I’m responsible for nothing but the management fee.

Brandon:
Not even the water or?

Erin:
Nothing.

Brandon:
Oh, that’s awesome.

Erin:
Yeah. It’s amazing.

Brandon:
The reason that people might be thinking, why do I care about the water? It’s because if you look at like a multifamily, the water bill alone can make or break a deal. Like really it can. If I were to tell you a $65,000 property, it’s a duplex that rents for a total of $1,300 a month, that sounds like a great deal until some places water bill is $400 a month. And then you have to also pay for gas and it’s up in the North cold Minnesota and so now you’re paying for heat and oil and utilities. I shouldn’t say just water, but utilities are such a variable expense that really can kill an investment. So a lot of people would again look at things like the 1% rule or the 2% rule, which those don’t take into account utilities, which is why you should never just rely on a rule of thumb to buy a property. Utilities make or break deals. So the fact that you are not paying utilities on this is a, at a 2% rule deal, it’s absurd in a good way.

David:
Absolutely.

Erin:
Yeah. And then the other thing is don’t make the mistake that I did on our 10 unit and just take the seller’s word for it. When you ask the questions about utilities, take the time to call the utility company and just confirm. I was told that on this 10 unit different property that the electric, or excuse me, the gas and the water were metered out and they weren’t. And I didn’t find that out until I owned the property for a month and it didn’t kill the deal, but it definitely changed it for sure.

Brandon:
Oh, I was going to throw one more piece of advice out there. There are companies out there. In fact, one of them sponsored our podcast a couple years ago and I met with the guy out here in Maui recently. They’re called True Submeter. So if you have a duplex, I’m actually going to do this on my duplexes because I’ve been paying water in my duplex for, I don’t know, 15 years now since I bought my first duplex. I’m still paying water there and like, but you can actually submeter the individual units. Now there are different ways of doing it, but there’s a company I called True Submeter. They’re not a sponsor right now. I’m just giving a shout out because I like them. But you literally, you could put submeters on whether on a hot water tank, you could do it on an individual actually under the sink on the shutoff valves.

Brandon:
There’s different ways to do it. So if you can shift the responsibility of a deal on a property, shift the responsibility of utilities from the landlord to the tenant, you can take a deal that everyone else thinks is not a good deal or just a mediocre deal and turn it into a grand slam just by reallocating who is responsible for certain utilities. So just put that in your back pocket everybody, and use that to find some good deals this year.

David:
All right. Other than not taking the seller’s word for it, what other lessons did you learn from this deal?

Erin:
Not to give up. This type of deal is hard to come by. But you can find these types of returns and you just have to, again, set up your KPIs, figure out what your goals are, and figure out how many properties you’re going to have to look at before you can find that right one. But eventually the odds will be in your favor and you’ll find what you’re looking for.

Brandon:
All right. And you’re just going to hold that property long term now in your IRA? Are you going to refinance it because now you’ve found some lenders? Is there a plan for that? I’m just curious.

Erin:
No, I don’t think so. I’m happy with the return that we’re getting on that and that’s just, it’s building. Before I was contributing to my own IRA. Every month I was sending $457 toward it and now I’m not sending a penny and my tenants are contributing much more than that. So I’m happy with what it’s doing. I’m 33 years old, so I’ve got plenty of time to watch that grow. And then once the cash balance is high enough in there, I’ll buy another one.

Brandon:
Very cool. All right, well Erin, let’s head over to the next segment of the show. It’s time for our fire round.

David:
Fire round.

Brandon:
All right this is the part of the show where we take questions from the BiggerPockets forums and we fire them at you. So we’re going to see what real people want to get answered and see if you can answer them. Number one, Anthony says, “I live in Long Island New York. It is a really expensive area. Like duplexes are 400 grand. Any tips for investing out of state for a first time investor or is that a bad idea?”

Erin:
No, it’s definitely not a bad idea. I think that we talked about this a lot already, but building a team, you’ve got to start by building a team. And I think a great place to start is the property manager. Because like I said, they’ll have a lot of relationships hopefully. And that’s telling about them too. If they can refer you out to a lot of the people that you’re looking for, you’ll know that they’re pretty well networked and they’re probably going to be able to deal with the things that you are going to need them to deal with as the manager of your property. But you just have to build that team and you need to find people that you can trust. You need to know what’s happening on the ground. And the only way you’re going to know that is if you have the right people there sending you the information that you need.

Brandon:
All right.

David:
All right. Next question from Gary Hoffman in Vermont. My wife and I are debating whether we should help our daughter buy a house to live in and rent out rooms while in college. Our other younger children may attend the same school in future years too. Do you think this is a good idea if the numbers make sense?

Erin:
Yes. Always.

Brandon:
Yeah, that’s a cool idea. What I actually liked the idea of … and I can’t remember who did. Somebody did this and I wish I could give them a shout out. But they bought a property for their kid, put their kid is in charge of the property essentially like the property manager. And the kid in college got to spend three or four years learning how to manage people, manage tenants, manage the worst tenants which are generally can be college kids. And so they got a good … and that was like their … that was how they got to live for free. But free education, something that’s probably … They probably learned more from that experience than from four years of college in managing those talents in that place.

Erin:
Yeah. Absolutely.

Brandon:
So yeah. Cool. All right. Number three, John from Yonkers, New York. To all of the investors who have become real estate agents, has it been worth it? Why or why not?

Erin:
I don’t think that being an agent helps on the investing side. I got my license because I thought that it would help me with investing, but it didn’t change anything for me. And if anything, working with retail clients has just taken time away from what I’m trying to build. So I don’t see the benefit of it. I know some people might disagree, but that’s just been my experience.

Brandon:
Okay. David, what do you think?

David:
100% agree with her. It’s too expensive. It takes way too much time. Everybody who’s not an agent thinks that agents aren’t doing anything and complain about them. And everyone that is an agent says like, “Why did I ever take this job? It’s so frustrating.” So do not do it unless you’re trying to run a business, get really, really, really good at being a real estate agent. And you actually like that job. You don’t need an agent. You don’t need to be an agent, you’re not going to find deals other people aren’t finding. In fact agents are free to you when you’re a buyer. So just use the person who’s already let them pay the dues and all the fees and everything that goes into it. Don’t try to do it yourself.

Brandon:
What about, I’m curious David, because I don’t know the answer to this. What about if you’re flipping houses pretty heavily? Now I don’t want to make it sound like I’m probably just going to offend both of you guys here. But it doesn’t sound like it’s that much work to list a property for sale as an agent. If you’re going to list your own property for sale, it sounds like not much work. So if I’m going to go and flip 10 properties a year, shouldn’t I just get my license and just list my own properties because it’s just as easy as clicking a couple buttons on the computer? Or is it more complicated than that?

David:
Well, if you’re selling a house that’s worth a hundred, like it could go anywhere between 100 to 110,000, I would say yes, you can probably do that yourself. But in the market I’m working in, the job I do as an agent literally gets my clients an extra 50 to $80,000 probably on average when I’m negotiating those deals. And I know very quickly if the other agent is not good. And I just get everything that I can out of that person. So there’s just so much more. It’s, yeah, putting it on the MLS and waiting for offers to come in is fine, but how do you know which of those buyers is going to get cold feet? Which one’s likely to close? How do you negotiate when they ask for extra things? How do you take things out of the contract that they would use to come beat you up on stuff later?

David:
All the tools that I use to help my buyers save money, I know to take those away from the buyers of my listings. And you’re going to lose a lot of money as you slowly try to figure that out and then you’re going to spend all your time on the phone with the four offers that come in figuring out who’s the best one, who can I get to come up more? How do I anticipate a low appraisal where you’re not looking for new deals or you’re not managing your contractors and stuff like that.

Brandon:
Good answer. All right. Number four, David.

David:
For those who invest out of state, how do you verify that the work was done correctly?

Erin:
Oh gosh, I don’t know. Well, that’s where having somebody that you can trust on the ground to inspect it comes into play. I’ll never pay anybody until it’s been inspected by somebody that I know, somebody that I know knows what they’re looking at and sometimes you have to pay for that. You might have to pay somebody a hundred bucks, 75 bucks to go out there and do an inspection. But if it saves you 4,500 or $9,000 because they are making sure that the job’s been done right. And probably 99% of the time, that it’s done well, but it’s not done completely. And it’s just a couple things here and there that they just didn’t see because they’re right up in it all the time. So bringing in a new set of eyes and having someone else check it out will pay back whatever you have to pay them to do that.

Brandon:
Yeah. One quick thing on that, I think people need to understand. I’ve talked about it a few times lately, but I’ll say it again. There are two types of people. There’s a lot of types of people out there on BiggerPockets, but there’s two huge groups of people on BiggerPockets right now. And when I mean BiggerPockets, I mean in this community of millions of real estate investors who network on the site. There are people who are young and broke or at least young and not enough to actually buy any deals. They’re inexperienced, they’re young, they’re the 20, 22, 25, 30 year old people who are excited and they have some free time maybe, but they don’t have any cash.

Brandon:
And the other group of people on the side are people who are actually investing in real estate pretty heavily. The Erins, the Davids, the mes. If you can marry those two together, it benefits both parties significantly. And so if I’m investing out of state, I mean I think Erin here who has all these systems and understands how to invest in San Antonio and Illinois and Clarksville, and you’re a young 22 year old real estate investor, wannabe real estate investor who has no money. Think of the value you can provide to Erin by being the person who’s the boots on the ground for no cost. Don’t charge them anything.

Brandon:
Just be like, “Hey, I will be your boots on the ground here. I will do everything you tell me to do, because I’m going to through osmosis attach myself to you and learn what you’ve learned. So just tell me what to do.” And then for Erin, you’re getting help. So again, I just want to encourage people network, network, network in a market. That’s why it’s important to attend local meetups. Even if you’re going to invest out of state, fly in maybe and go attend a meetup. Meet people, connect, build relationships, send private messages, just marry those two together and you can just make some magic happen on both sides. Let’s get onto the last segment of today’s show. It’s time for our famous four.

David:
Famous four.

Brandon:
This is the famous four, the part of the show where we ask the same four questions every week to every guest. All right guys, let’s get to this. Number one. Erin, do you have a favorite real estate related book?

Erin:
Yes. My current favorite is Building Wealth One House At A Time.

Brandon:
The John Schaub, I think it is.

Erin:
Yeah, Schaub.

Brandon:
Schaub. Yeah Schaub. I don’t know. It’s a great book. Excellent book.

David:
Awesome. What about a favorite business book?

Erin:
Jen Sincero’s You Are a Badass at Making Money.

Brandon:
I’ve not read that. But I see it at Target every time I go there.

Erin:
Anything Jen Sincero. Buy all the Jen Sincero books. They’ll change your life.

Brandon:
Good to know. We should get her on the podcast. Maybe the business podcast.

Erin:
You should. She’s awesome. Yeah.

Brandon:
Maybe the money podcast. Maybe the real estate podcast. I don’t know. We should get her on the show. All right.

David:
Next question. When you’re not laying a flooring as a pregnant mother, what are some of your favorite hobbies?

Erin:
I just like to live life with my kids and my family. We say every day we’ve got to have an adventure and whether that’s walking to the playground or going to the aquarium or going on a real adventure, I just feel like every day we need to get out there and do something fun and make the most of every day.

Brandon:
That’s awesome. I use the same terminology with Rosie. I always say, “Let’s go do an adventure. Let’s go have our adventure.” And then she’ll say like, “Daddy, can we have an adventure today?”

Erin:
Yeah. Yeah. My daughter says, “Adventure, can we go on adventure?”

Brandon:
Yup. That’s about what Rosie says. Awesome. Yeah. Yeah. Because your kid is almost four you said. And my kid’s almost four. So yeah, very similar. All right number four. Speaking of four, what separates successful real estate investors from those who give up, bail or never get started?

Erin:
Yeah, this is easy. It’s just getting after it. We’ve talked about this a couple of times I think, but you’ve got to define your motivation. Figure out your why, figure out where you’re going, and then take actions to get there. Set your goals and ruthlessly pursue them. Do what you have to do to make them happen.

David:
Love it.

Brandon:
Succinct and perfect. Thank you.

David:
Beautiful. All right, Erin, this has been awesome. Tell us where people can find out more about you.

Erin:
Yeah. Awesome. Thank you guys so much. You can find me actually I write some BiggerPockets blog posts. I’m also on LinkedIn, just Erin Helle. Facebook and Instagram @theErinHelle, and then my website is bcglobalinvestments.com.

Brandon:
Awesome. All right, well Erin, this has been fantastic. Like really, really good. So much information, so much advice and stuff that’s going to really help a lot of people, whether they’re brand new or been doing this forever. So again, thank you very, very much for joining us today.

Erin:
Thank you guys. This is great.

David:
This is David Green for Brandon the walking adventure Turner signing off.

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