From Flight Nurse to Financially Fruitful Landlord with 7 Units (in 2 Years!) w/Stacey Stegenga

Ashley:
This is Real Estate Rookie, episode 169er.

Stacey:
It’s a very inflated market right now. I have been recommending to people, look back in the rents, see what the rents were demanding before all this inflation hit. Does that market rent still support the cash flow?

Ashley:
My name is Ashley Kehr and I am here on my couch, finally had my surgery, and I am here with my co-host, Tony Robinson of course, sitting in his nice office, beautiful glow in the background. Then there’s me, just slumming it on my couch in sweatpants.

Tony:
There you go. Hey, people still love you for it, Ash. Don’t worry. We’ll give you a break since you’re now, is the ACL gone, or is it just, they repaired it?

Ashley:
I get it repaired.

Tony:
Okay. All right. You still have it.

Ashley:
Yeah.

Tony:
Okay.

Ashley:
They took a piece off of my kneecap. I don’t remember what it’s called, even though they told me 50 times, took a piece of that ligament or tendon, and then put it to my ACL-

Tony:
Into your ACL.

Ashley:
… and attached it.

Tony:
Now, you got no kneecaps.

Ashley:
[inaudible 00:01:11] that medical terms.

Tony:
I’m going to start calling you no kneecap Ashley. Yeah, no kneecap Kehr.

Ashley:
Then I tore my MCL too, but that I guess repaired itself-

Tony:
That healed on its own.

Ashley:
… and strong enough. That was good. They didn’t have to actually touch that when they went into surgery. Hopefully, I’m finally on the mend. We have the BiggerPockets Rookie Weekend coming up. It’s still undetermined if I will be on crutches-

Tony:
On crutches.

Ashley:
… if I will have a brace on, or if I will be running and nose diving into the crowd of people. We don’t know yet.

Tony:
[crosstalk 00:01:46] on stage, we’ll see. We’ll see what happens.

Ashley:
Okay.

Tony:
We’re not here to talk about kneecaps today, right? We’re here to talk about some real estate. I guess first, outside of your knee surgery, Ash, what’s new with you?

Ashley:
I’m actually closing on a property tomorrow that, been working on for a while. They had a right of first refusal on the property, and it just took a long time to get the person that had right of first refusal to back off, and went through litigation and everything. Finally, closing that on property tomorrow. Super excited about that. It’s 30 acres, two cabins, and one of the cabins is going to be turned into my office, actually. Hopefully, I’m going to put a little podcast studio in there.

Tony:
There you go.

Ashley:
So I can look more professional like Tony, instead of being on my couch or in my closet.

Tony:
There you go. No, that’s exciting. I know you’ve been working on that deal for a while, so I’m happy to see you cross the finish line finally.

Ashley:
Yeah. Thank you. What about you? What’s new with you?

Tony:
Yeah, we actually, we’ve been hiring some folks recently. We’re just hired an event and sales coordinator to help us with some of our in-person events that we’re doing for the short-term rental stuff. We’re actually looking to potentially hire a project manager to help us with our flips as well. Team’s slowly but steadily growing. Now, we have a little bit more time to actually run the business and not run around like chickens with our heads cut off.
For those of you that are listening, if you guys want to get notified, whenever I’m looking for some help, just follow me on Instagram at tonyjrobinson. I usually post jobs there, but outside of that, I think we’re getting pretty close to hopefully closing on this 24-unit cabin resort that’s in the lake town here. We’ve been going back and forth with the seller for a couple of weeks.
I just talked to the broker yesterday. He gave me some terms that the seller would agree to. I just need to run them through my underwriting model. I did that last night, and I think the numbers still check out. I got to give him a call today and see if we can actually close it. I’m scared, because the purchase price, it’s 7.75 million. I’ve never purchased anything that expensive before. Even though they’re just a bunch of cabins, right, they’re a bunch of properties that we’ll turn into short-term rentals.
I know how to do that, but just the idea of buying that many at one time is giving me some … There’s some fear I got to work through, but I’m trying to not let it stop me.

Ashley:
You have to look at it as ratio. Okay, what’s the revenue that’s coming in, compared to the purchase price? You’re just doing that at a bigger scale than if you were to buy a house in the Smokey Mountains that brought in this much revenue. What’s your biggest fear? What’s the worst-case scenario? You can’t pay the mortgage payment, probably. You can’t afford to have the property, because it’s your biggest purchase. If you have so much revenue coming in, you have those 28 cabins, okay, maybe two, three aren’t rented, you’re still going to be able to afford a large chunk, more of that mortgage payment.
I think that’s something that helped me a lot with that limited mindset of going from $100,000 houses to, okay, let’s take down million dollar campgrounds now, was that you look at the revenue streams and look at the ratio to it. If the numbers are good, and the numbers make sense, it would take a lot of revenue loss for you not to be able to afford the property taxes, afford the mortgage payment, things that. You’re just adding a couple zeros.

Tony:
Just adding a couple zeros. Yeah. If I tried to buy each one of those cabins separately, they would cost me way more than 7.7 million. The property’s actually composed of, I think three different parcels. Even worst-case scenario, I could split them up into separate parcels and probably sell them off for more than what I bought them for on day one. We’ll see where it goes. I’ll keep you guys posted.

Ashley:
And, just more time assuming, buying each one step early.

Tony:
Totally.

Ashley:
Oh my gosh. Yes.

Tony:
Totally. We’ll see where it goes.

Ashley:
Good luck with that and keep us all updated.

Tony:
Yeah. Today, we have Stacey Stegenga on the podcast, and whenever there’s a tricky last name, I don’t know if you guys have noticed, I’m the one that has it, because Ashley refuses to fumble those names on the podcast. Stacey Stegenga is our guest today, and she’s got a really cool story. She spent almost two decades in the military. She’s been to 33 countries, so very well-traveled. She started investing in Denver, and she’s scaled her portfolio pretty quickly in the last year and a half.

Ashley:
Yeah. She actually did out-of-state investing. She settled on Tampa, and I was actually just there, and Tony, I have to tell you, it was the most amazing weather ever. You know me, up in Buffalo, I’ve been freezing. I was at a wedding, and I sat outside. I was the only person sitting in the sun, because everybody else was in shade, because it was 80 degrees. I just felt like the sun-

Tony:
You needed the sun.

Ashley:
… was warming my soul. She gives great information on how she became confident enough, and the steps she took to become an out-of-state investor, and buying these properties sight unseen, and continuing to build her portfolio, and how she was able to scale quickly. That’s one thing we ask her is okay, you go from, I think it was a six-month time period from one property to the next. She even admits, okay, I closed on the first deal and I was like, that was great, but I’ll probably never be able to do it again. How quickly her mindset changed, and the steps she took to actually get the next deal done.

Tony:
Really quick. I think my favorite part, Ash, of this episode, I want to make sure that the listeners listen for this part, is how she talks about building her network, and how it cost her $0 out of pocket, and how she was able to find the money she needed to raise the capital for her next deal. Just make sure you guys listen for that part, because it’s a big, big lesson for the rookies.

Ashley:
With that, let’s bring Stacey onto the show.
Stacey, welcome to the show. Thank you so much for joining us today. Can you start off with telling everyone a little bit about yourself and how you got started in real estate?

Stacey:
Yeah, absolutely. I am a nurse, and actually before that, I was active duty in the Air Force. I traveled around the world. I left home at 17, and was gone for almost 15 years straight. I became a nurse in 2011 and settled down in Tampa, and it was a great first learning experience, because I started in the ER, but because of the patient ratios down there and how hard nurses work, the pay is lower for the hard work that they do with their sick patients.
I started travel nursing, and then flight nursing. I landed up in Denver, which is where my family lives, and that’s where the real estate comes into play. It’s a really interesting story from there. Moving to Denver caused me to have my income cut in half by 50, actually 50%. It was through that pain that I found real estate investing.

Tony:
Stacey, really quick, before we keep going, what is flight nursing? I’ve never heard of that before. Are you on an airplane administering health to people, or what …

Stacey:
You are. Yeah. I did my flight nursing through the Air Force, actually. I’ve been in the military, it’ll be 18 years in July. I was flying all the branches, Navy, Coast Guard, Army, Marines, and Air Force. It’s anybody that gets hurt doing anything, and they need to either go to a higher level of care, they need to come home from deployed locations, they need surgery, burns, all of those things. I was just transporting military patients all across the US.

Tony:
Wow. What a job. How many countries have you been to? Sounds you’ve been all over the place. Because we were talking before we started recording, you mentioned Netherlands and some other places. You seem well-traveled.

Stacey:
Yeah. I was very lucky to live overseas for four years straight. During that time, I really took advantage of that opportunity. I’ve been to 33 countries now.

Tony:
33? Wow.

Stacey:
COVID slowed me down. I was on a roll. I’m excited to get back out there later this year. Maybe even in a month or two.

Tony:
All right. Really quick, before we keep going. Out of all the 33 you’ve been to, what’s the number one?

Stacey:
That’s so hard to answer. Italy is my favorite, but it’s because I lived there for two years, and it was the culture. For visiting purposes, Iceland, for sure. It’s a gorgeous country. They have so many different types of terrain.

Tony:
Okay, beautiful. I’m actually going to Italy for the first time this summer. I’ll have to pick your brain a little bit, so I know where to go.

Stacey:
Yeah. You’re going to love it. It’s a great country.

Tony:
What about Buffalo? Isn’t Buffalo on your top list of places to go to?

Stacey:
I can’t say that it is. Maybe For a football game. I see what you guys do to tables there. I need to experience that.

Ashley:
We have Niagara Falls too.

Stacey:
I have flown over Niagara Falls. I do have that.

Ashley:
Yeah. Even though the Canadian side of Niagara Falls is actually nicer, than the …

Stacey:
Yes.

Ashley:
Stacey, first of all, thank you for your service.

Stacey:
Thank you.

Ashley:
Once you had this epiphany that you fell into real estate, what were some of the things you did to actually educate yourself on becoming a real estate investor, or did you just happen to fall into it?

Stacey:
No. It was totally by chance, actually. I had very mediocre financial, budgeting skills and whatnot. When I moved to Denver and I experienced that 50% income cut, I just knew that what I was doing wasn’t sustainable. I actually, not the most intelligent move, but I was actually looking to buy a house, so that I could rent and basically house hack, I didn’t know at the time that that’s what it was.
The interesting part is that, the agent I was working with at the time had just randomly mentioned this book by Scott Trench one day, when we were out viewing properties. I was like, oh, that sounds interesting. I pick it up. I listen to it on Audible twice, back to back, because instantly, it changed, so many light bulbs were going off. Then, I bought the book, and then highlighted, took all these notes, and I literally created a blueprint for myself, purely off of Scott’s book, Set for Life.

Tony:
You read Set for Life, right, Stacey? I think a lot of people, for me, it was Rich Dad, Poor Dad, for other people, it’s different books, right? Everyone has that book that makes that light bulb go off. I think for a lot of people, that’s where they stop. They get all juice up, they get all this motivation. They’re like, “Man, I love the idea of investing in real estate,” but then they just spin their wheels. What was the action that you took after you read the book that propelled you into the success you’ve had so far?

Stacey:
Yeah. I’ll say that the motivation was there, just because at the time, I was 33 when I experienced that income cut. I think it was a little bit more painful, because I was so established in my life. Because I was starting to gain financial intelligence, from the book I had gone down the typical rabbit hole, BiggerPockets Podcast. The things that were most important that stuck out to me in the book, was the fact that Scott really advocated that a dollar saved is better than a dollar earned.
That specifically changed my entire life, because nurses are very hard workers, and we way too easily sell our souls for overtime. We are constantly doing that. I had been just grinding, thinking more overtime, more work was always the answer. That’s where Scott’s book was like, no, just save.
It’s where budgeting came into my life, and it’s where frugality, just learning those elements. Some other big parts of the book was that, it talks to about, focus on your biggest expenses. For me, that was housing, and it was food expenses, because eating out, brunch is a lifestyle in Denver. Just those types of things.
At 33 years old, I had never in my adult life, since 17, had a roommate. I moved into a house hack here in Denver. I cut my expenses tremendously with that. Then, the second one was just food prepping, grocery shopping, not going out to eat. Those two things allowed me to save the 25K that Scott calls the runway in his book.

Ashley:
Stacey, I’m such a big fan of setting a strong foundation for your personal finances before getting into real estate, or making sure that your personal finances are in order, along with your business. I think that’s great that you really took that approach. Myself personally, I love personal finance books. I’ll read those any day. I love them more than even real estate books.
That’s awesome. Then, for anyone who hasn’t read it, Set for Life, highly recommend it, by Scott Trench. That is a great gift to give people, especially graduating college or high school too, for readers, you can find that in the BiggerPockets bookstore. Stacey, before we go any further, can you just give us an overview right now, what your portfolio looks like?

Stacey:
Yeah. Currently, I three duplexes. They’re all in Tampa. Then, I just got under contract a few weeks ago on a single-family home that I’m going to turn into a mid-term rental.

Ashley:
Can you explain, because we really haven’t talked about this a lot on the show, what a mid-term rental is?

Stacey:
Yeah. Absolutely. In between a long-term, and then a short-term with the Airbnb. I’m very lucky that I was a travel nurse. I really know what to go for and the things that they’re looking for. I obviously want to take good care of the travel nurses in the community. The mid-term is just focusing on, I specifically prefer the healthcare side of things, but there are traveling executives, people that need the one-month length of stay, but it’s basically anywhere 30 days and more. That does help for cities that have laws against short-term rentals, it opens more doors.

Tony:
Stacey, I want to go back. First, I love the idea of the mid-term rentals. I have some friends that only do mid-term, and they absolutely crush it. That’s the beautiful thing about real estate, is you can take the same property in so many different directions.
I want to go back really quickly though, because I don’t want to gloss over this. You said that you sacrificed in your personal life, because you had never had a roommate before, and you made the decision to say, hey, I’m going to sacrifice this comfort that I’ve had in my life as an adult, I’m going to get a roommate. You said through that process, you were able to save up $25,000.
That is the part that I don’t want people to miss, because a lot of people talk about, okay, here’s the thing that I want to do, or here’s the thing that I want to achieve, or here’s the person that I want to become. When you sit down and you show them the hard work that’s required to get there, they’re like, “No, that’s too much. I don’t want to do that.”
It’s easy to look at you now and say, oh, Stacey’s got six unit, three duplexes, this mid-term rental, and gloss over the fact that you did the hard work of sacrificing your personal life. For the rookies that are listening, if you’re having some difficulty kickstarting your real estate investing career, you have to ask yourself if you’re making the sacrifices that are necessary to actually get you there. Kudos you Stacey for making that decision.

Stacey:
I won’t lie. It was not easy, especially because like I said, at 33, you’re an established adult. You’re like, I don’t want roommates, and to never had them, I wasn’t in college with the house full of people. I moved into a house hack with four roommates. I was the fifth. It was a house full of people, for sure. It ended up being phenomenal. I highly encourage it. Yeah, it really paved the way for me. It’s what set that foundation to my success.

Ashley:
Stacey, let’s talk about that first deal. Once you’ve decided you’re jumping in, what does that look, and run us through that deal?

Stacey:
Yeah. I will pay note to this really quick. It’s perfect timing that I had read Scott’s book in November 2018. I had saved that runway over one year. The timing of all of this is, it’s COVID. It’s literally January 2020, I’m ready to execute. I’m a nurse. I had a job at the time, and I got furloughed. I work in a procedural area at the time, where we work on people’s hearts. We had all the PPE, and I was actually ready to execute.
Then, I got furloughed, which is a different way of saying basically laid off. I had a lot of emotional rollercoaster ride through the next few months, because I have all the critical care experience that they needed. It’s just, the census was low here. It was just a very stressful time. I just took it as an opportunity to keep saving. I didn’t quit, and especially keep educating myself.
That did delay me eight months. I didn’t end up closing, or actually 10 months, because I closed on my first property in October of 2020. Then, to go into further detail about that, I found it on the MLS. I had been analyzing numbers so aggressively for Tampa, I immediately knew just looking at it, that it would cash flow. I just sent it right away to my agent and was like, offer on this property.

Tony:
Stacey, I want to pause there really quickly because, you were living in Denver at the time, but you decided to invest in Tampa. Walk us through that decision. Why Tampa, why not Denver or some other places closer?

Stacey:
It was one of the conclusions that I came to from mentorship, actually. I joined a military mastermind for real estate called The War Room, and I had talked to other investors in there, and I was telling them that I wanted a house hack in Denver, and they just helped me see essentially that my goals were cash flow, not to just remove my living expense. Because I was just so focused on that, because it’s the most expensive thing in Denver.
They were like, “But you want freedom from nursing, or you want freedom from one income, so if you get furloughed again, you’re not dependent on it.” They mentored me into seeing that. That’s ultimately what made me choose out of state. My money just went further. Then, I specifically chose Tampa, because that was the first ER that I worked in. I was very familiar with the city.

Tony:
A lot of new investors get really hung up on choosing their market, and they do … I did this myself too. Literally, if you go back, for all of you that’re seeing, if you go back in the Rookie Facebook group, I posted in there, the analysis that I did when I was initially looking for a market. I looked at so many different data points. I was looking at median home price, average income number, average school rating, crime, walk score, all these different data pieces.
I think to an extent, those things are good to look at. If you’re just trying to get that first deal, I’m not sure that that deep level of analysis needs to go into it. Were you looking at any of those things, or were you like, hey, this is a market that I know, I feel comfortable here, let’s go and make it happen?

Stacey:
No, not at all. I had done some of that analysis, just definitely not that in depth. What was important to me was the numbers work. I was well on my way of establishing great relationships in Tampa. It was just becoming easy. Deals were being sent to me. Things were making sense. Having the connection of the people I was meeting, and it was all virtually through BiggerPockets, that was the value for me, in choosing … That’s applicable to any network or any city. You can choose any market. You just got to build the team.

Ashley:
Stacey, did you ever go and look at this property before you purchased it?

Stacey:
I did not. All my properties were sight unseen. I think the first time I saw them was over a year after closing.

Ashley:
You have a property management company that is handling these, or are you doing it remotely?

Stacey:
Yeah, no, that’s definitely my favorite part about real estate investing, is the property managers that make it passive. I found my property manager on BiggerPockets. It’s the Out Fast Property Management brokerage, and they do agents in all of lending, all of the things now. Yeah, they were just phenomenal. I connected with them, and they take great care of me and my properties. Huge fan.

Tony:
Stacey, you go out there, you build this team. I think the question comes up often to you about, can I buy a sight unseen? I bought my first five properties, I think, without seeing any of them in person first. The way that I always look at it is, if I’m sending an agent out there to look at it, if I’m having a property inspection done, and I’m sending potentially maybe a general contractor to go look at it, if I’ve never done a deal before, how much value am I going to provide in addition to what those three professionals can give?
I think your point about building the team first is so, so crucial, so, so critical.

Ashley:
Yeah. I think where people get themselves in trouble is that, maybe they’re buying it off-market, and they’re buying direct from the seller, and the seller is telling them something, and then they go to closing. Then, when they actually close on the property, not a reputable turnkey company that’s shady and you’re buying it directly from them. If you get that third party, whether it’s an agent, a property manager who is working for you, with you, then you have that set of eyes and that person with experience to walk the property for you, and be the eyes on the ground.
Especially with technology, you can FaceTime going through a property. Video is sent to you. There’s just so many different ways to get information, and to actually see a property virtually, without actually having to go there.
Stacey, one thing I’m curious about is what is the timeframe? You close down the first property in October 2020, and then, what is the time frame of you accumulating your other properties? The biggest question we always have is, how were you able to accumulate that many properties in that certain amount of time?

Stacey:
Yeah, absolutely. I got the second property in May of 2021, and it’s funny, because after my first property, I literally closed, and the first thought was, that’s so cool, I’m never going to be able to do that again. I get the struggle, but I just immediately went back into saving. Then, the biggest thing for my down payment, because I did traditional, I found the second one on the MLS too, which I will talk about later, but I did conventional lending with another 25% down.
Part of that was, because I became more risk tolerant. I had a massive emergency fund saved up at that time. I reduced that a little bit. That was also MLS and conventional lending. Then, my third one, it’s so interesting, having bought all of my properties off of the MLS, I was discrediting my success as an investor, and I was just gunning to get something off market, so that I could say that I did that. I had done my very first skip trace, and I was planning my attack. Do you know, the duplex next to my very first purchase goes up for sale on the MLS?
That was the one that I was most interested in, because they’re right next to each other. They’re the same construction build, everything matches. That’s where things get interesting, because I actually ended up buying it cash, to beat out the overpriced offers on the MLS.

Ashley:
Stacey, I definitely want to get into how you bought that property in cash, but first, can you explain what skip tracing is?

Stacey:
Yeah. It’s just running a list or a report that gives you the list of all property owners in the area. You can search different factors. The property types, years built, years owned, delinquent tax records, things of that nature, age of the person that owns the property. It’s just depending on how you want to target your off-market strategy, it’s very helpful.

Ashley:
PropStream is a software that does that. What software did you use for that, Stacey? Just in case somebody wants to try it.

Stacey:
I think I used DirectSkip. To be honest, it was a Black Friday sale of super cheap … The frugality is still there. You can’t take it out of me.

Ashley:
No, that’s a great idea. Black Friday sales are a real estate investor’s …

Stacey:
Yes.

Ashley:
There’s always some memes that people joke about getting a house on Black Friday sale, but using the tools and software, that’s a great idea to check out those sales on Black Friday. Tony, what about you? Is there any skip tracing software you’ve ever used?

Tony:
Pretty much just PropStream. I think that’s the only one that reviews. I know, I think BatchLeads is another popular one. I’ve heard some folks use that one. Yeah, mostly PropStream.

Ashley:
Okay. Stacey, you find this other property right next to your current property, and you are able to offer that in cash. How did you make that happen?

Stacey:
First, just to be clear, the reason that I had to offer in cash, or I felt that I had to, was because I bought my first duplex for 165,000, and this one was already listed for 270. That’s how much the Tampa market had appreciated in just over a year. My first thought as an investor is, is this appreciation real? Is it going to be permanent? Just asking those types of questions, are the market rents going to continue to sustain this? Which are important questions that I think any investor should ask themselves.
I still felt that the 270 was over what the market was demanding at the time. I looked at the other comps, and I just felt offering 240, 245 was going to be my limit. It cash flowed. It made sense at 270. I just didn’t feel right paying that.
I knew I’d be more competitive with a cash offer, and I would beat out all the other way over asking conventionals. That’s the way that I went. I did cash, because … I’m sorry, I did cash with partnerships. I do event directing for a local group here in Denver called Rocky Mountain Women Invest. I started doing that just as a way to give back to my community, so that I could empower other women to become investors as well.
Through that, in just giving freely and expecting nothing in return, I built a really strong relationship, the founder of the group, and she is an exec, and manages a sales team, a global sales team. She had a lot of extra money saved up, ready to execute. She didn’t know how. I sent her a text. I never thought that would ever happen, but I just casually asked her, “Hey, could I borrow 100K?” She was like, yes, because she trusted me at that point. That’s how I was able to execute that deal.

Tony:
Stacey, two things I want to comment on. First, I want to talk about the all-cash offer. I’m glad you brought that up, because as we send more deals and some get accepted, some get rejected, I’m starting to learn and understand that sellers have different motivations. For some sellers, it’s just the overall price. They’re like, “I don’t care if you’re using grandma’s savings, I don’t care if you’re using a VA loan, I don’t care if you’re using an FHA conventional, I just want the most amount of money from my property.”
That’s what’s important to some sellers. Other sellers, what’s most important to them is speed. They’re like, “Hey, I don’t really care what you pay me, but I need to be out by next Friday. If you can get me out by next Friday, then the property’s yours.” Then, there are other sellers that value, I would say maybe convenience or certainty, maybe. On the convenience side, it’s like, hey, I can leave all my junk in the house. I don’t have to worry about how I’m going to empty out this house that I’ve lived in for 30 years, when I only need these four boxes.
Then, some people like the certainty of closing, where they don’t have to worry about an appraisal or different contingencies, and an all-cash offer can satisfy that. I love that you found out what the motivation was of that seller, and you were able to use that to your advantage, to get that deal done. That’s a big lesson, I think for the rookies that are listening. I just wanted to point out that it’s not always the all-cash offer that wins, because I have offered all-cash on some properties, and I still get beat out. It depends on what that seller wants

Stacey:
To your point, it was the quick close that he was most interested in. It was the combination of the two, the cash offer, and then-

Tony:
Cash and closing quickly.

Stacey:
Yes, exactly.

Tony:
The second thing that you mentioned, Stacey, that I thought was just really, really good was, you partnered with someone to get the cash that you needed for this deal. I know that there are a lot of people who are listening that are saying, I don’t have cash, and I don’t have a network of people that have cash. A lot of people are going to start in that position. Let me ask you, Stacey. You said that you volunteer to get involved with this network of other women investors. How much money did that cost you?

Stacey:
Nothing. Just time.

Tony:
Nothing. Just time.

Stacey:
Time is valuable, but it did not cost me any actual money. Yes.

Tony:
Through your relationships, you were able to find an individual who had the capital to completely fund your deal.

Stacey:
Yes.

Tony:
That is the lesson that I think a lot of people miss is that, it doesn’t matter what your network looks today. It doesn’t matter who you know today. It doesn’t matter if no one in your immediate circle has the financial resources, because you can always go out and expand your network. There is no limit to the number of people that you can go out there and meet and shake hands with and get to know. The important thing is, the more people that know you, that like you and trust you, the easier it becomes for you to raise the funds that you need to get your deals done.
It was time, that’s all you needed, right?

Stacey:
I will say, I’ll even highlight a few more things about that. Being a nurse, I have access to all these physicians and high-net-worth individuals in healthcare. I was stuck on an identity that, I’m a nurse, I can’t ask them for money, or they wouldn’t trust me, they wouldn’t think that I have enough skill with this yet. I even had the network where I could’ve really tried to tap into that.
It’s even more beautiful that it happened so organically, because, Marge is the group founder’s name. I think the thing that she appreciated most about our dynamic is that, I offered my hard work, and I was so confident in my own skill, and I was giving without expecting in return. Really, our partnership and friendship relationship got to develop organically in the sense that, I wasn’t expecting her to mentor me and ensure my success.
I came to her with the confidence and the skill in myself, and then just gave freely. Never once had we discussed me using her private money or anything of that sort. It was just purely organic. I definitely recommend to people to continue to meet, go out there and network, because you never know where the relationship can go.

Ashley:
I can relate to that so much, Stacey, as to building that organic friendship first, before you start even talking business. Maybe, yeah, of course you’re talking real estate, because that’s all of us real estate investors talk about, nothing else. Instead of asking for favors or that you want to be mentored, or how can they help you, just building that friendship.
I think about Tyler Madden, who we’ve had on the show, who’s going to be coming on again shortly, him and I have become great friends. It was because he actually built a friendship with me, just talking about things he knew I enjoyed. That is what his specialty is, is getting to know people and bringing some light out into them, by talking about things they’re interested in, and making them become best friends with him.

Stacey:
Yeah.

Ashley:
I think that makes it so much more genuine, when you build that friendship first with somebody, before you’re asking or trying to receive something in return, or even trying to give them anything. If you’re pushing something onto someone, it’s like, I can do this for you, I can do this for you, you still should build that friendship first, before you’re even trying to push, giving them something, which is thoughtful, it’s great, but just building that casual friendship, I think really sets that foundation, and it’s so much better for you to eventually work together, or mentor, or whatever that is.

Stacey:
Absolutely. I do think the golden nugget that everybody’s missing is learning from other people’s stories. Somewhere along the way, I feel like in our community, people became obsessed of, my mentor is supposed to answer all of these questions for me, but I prefer to learn from people from their mistakes. That’s where the value is. That’s where you’re going to save hundreds of thousands of dollars, is by learning from other people’s stories and mistakes.
I always encourage people, instead of going out there and just asking a bunch of questions, go and ask somebody about themselves, let them talk about themselves, and learn from that value. That’s where the gold is, for me.

Ashley:
People to talk about themselves, too.

Stacey:
Yes, that does make it easy. Yes.

Ashley:
It’s something your knowledge … People are confident and like to enjoy talking about things that they know a lot about, and they feel confident talking about it. A lot of people know a lot about themselves.

Stacey:
Yes, absolutely.

Ashley:
Okay. Stacey, let’s talk about the mid-term rental now. What made you decide to go into this? You said that you have the nursing background of being a traveling nurse, staying in these kind of units. What did that transition look like from purchasing your duplexes, to now putting together this property?

Stacey:
I take partnerships so seriously that I just wasn’t sure, as I continue to scale, that I was ready to partner with someone, and because I had three small multi-families under my belt, I did the math of what I would need to be able to choose to work. I do continue to hope to be a nurse, but just having that flexibility to choose working in an environment that I love, things like that.
I came up with a number and then reverse engineered it. I was like, oh, I need 33 doors this year to be able to achieve what I want, that freedom. I was instantly so intimidated by that goal, because I was like, 33 doors, who am I? I’m a nurse. I grew up in a small country town. Anyways, it was very intimidating, but I also was like, I don’t want to have to manage that many different properties. I wasn’t sure yet about getting that many doors in one single property.
Long story short, because I know about mid-term rentals, and I know it’d be one roof, easy for me to manage, and obviously, the community of nurses, that’s why I decided to go that way. I ended up finding a house that’s perfect. It has a gorgeous mother-in-law suite. The entire house was flipped, the numbers make sense. That’s what steered me into a new direction.

Tony:
There’s so many different ways that you can go with real estate, like you said earlier. You said you’re supposed to close on this when?

Stacey:
April 13th. It’ll be my first in-person closing. Yeah.

Tony:
Okay. All right. Beautiful. Good luck to you on that, Stacey.

Stacey:
Thank you.

Tony:
I’m sure it’ll go well for you.

Stacey:
Yes. I’m so excited.

Tony:
I know we’re moving along, but I just want to pick one deal where we can just really quickly break down the numbers to share with the audience, how it’s worked out. Do you have a deal in mind that we can use for our rookie deal review?

Stacey:
Yes, I do.

Tony:
Okay, awesome. I’m just going to hit you with some rapid fire questions, and then we’ll do a bit of a deep dive afterwards. Okay?

Stacey:
Okay. Perfect.

Tony:
First, tell us what market was this property in?

Stacey:
It’s in Tampa.

Tony:
What was the property type? Single family, duplex. Duplex, I think is the answer.

Stacey:
This was the duplex. Yes.

Tony:
All right. What did you purchase this one for? What was the purchase price?

Stacey:
I paid 180.

Tony:
Do you recall what your down payment closing costs were? Ballpark.

Stacey:
The 55, 50 something in that range. 25% down.

Tony:
Awesome. Let’s talk through the story a little bit. How did you find this deal? Then, how did you fund this deal?

Stacey:
This one is extremely interesting, which is why I wanted to talk about it. It was an extended MLS listing. I was actually deployed for the Air Force in South Carolina, supporting COVID, and like any good real estate investor, I was just perusing Zillow. I saw this listing that had been posted for six months. It had one photo that looked it was taken on a flip phone. I was like, what is happening here? They cannot seriously want to sell this property.
I sent it to I agent. I was like, can we find out what’s going on with this? He did. We quickly learned that the seller was very difficult. He wouldn’t actually let us see the property until we had offered. I offered on the property at asking, at that time. Then, I did.
Because he wouldn’t let us see it, and we didn’t know the inside condition, he had it listed for 195. At that point, I was just like, what’s the source that can happen? I’ll lose my inspection money. To your point, you had said that earlier. I felt the same way. We did that, but long story short, the tenants didn’t have leases. He was very hesitant to do estoppel agreements to prove that there was no leases. They were paying $500, market rent was closer to 950 or 1000 when I bought the property.

Tony:
Oh.

Stacey:
Yes. Just a lot of discrepancies and issues. I don’t know where my confidence came from, but I was like, let’s do it. What’s the worst that’s going to happen? I will say, the biggest shocker about the property was that, I was almost at closing and we had negotiated down the price for the interior condition. There’s just a ton of deferred maintenance.
I got him down to 180, and it had already appraised for 195. I was feeling really good about that. That’s when I found out that there was a vacant property next door, because I was vetting two different property managers. That’s ultimately how I ended up choosing the property manager that I hired, because the one that I was vetting was like, “This is the worst decision, it being vacant, you’re never going to be able to rent this. The city owns it. It’s never going to sell. It’s never going to flip, dadada.”
I called the other property manager, and he’s like, “Oh, no problem, we’ll rent it.” He was so nonchalant, so confident. I was like, this is my guy. I hire him. Literally within months, they flipped the entire duplex. That’s now redone, brand new, luxury finishes. Then, on the other side of that is a brand-new build, luxury single family home. Now, I’m the one holding up the neighborhood, when I thought I was going to be the trail blazer, flipping the neighborhood. That was a very pleasant surprise.

Tony:
What did you end up spending on the rehab?

Stacey:
I actually haven’t even updated it. I inherited those tenants-

Tony:
Oh, gotcha okay.

Stacey:
… and they stayed. Yeah, they stayed. When I closed, I went to them and I offered, I was like, I know there’s a ton of deferred maintenance, I’m happy to fix whatever you want, write me a list, but I’m going to increase this to … It was still below market, but it was a significant raise, compared to the 500 they were paying. We did some updates for them, but nothing … Their kitchens need to be completely redone. I am going to be in the process of doing that here shortly.

Tony:
Gotcha. Okay. Let’s talk through the final numbers then, Stacey. What are both sides currently renting out for?

Stacey:
Yeah. We currently have them both rented for 1000 on each side.

Tony:
Then, what’s your mortgage payment on that?

Stacey:
I did do a cash-out refi on this. It’s currently, I think the new one is 994, if I’m not mistaken. Instead of mixing them, I was like, let’s just do the pre. Before the cash-out refi, my mortgage was 884.

Tony:
Now, afterwards, you’re at just under $1000?

Stacey:
Correct, yes.

Tony:
You’re pulling down 2000 a month in rent.

Stacey:
Yes.

Tony:
Wow. Okay. Then, your property manager, how much are they charging?

Stacey:
I do a 9%. He does eight, but because of some other random fees, I just do nine for conservative budgeting.

Ashley:
How much cash did you end up leaving in the deal after you refinanced out? Or, did you pull it all out?

Stacey:
That was one of the discrepancies. I ended up pulling out, I think there’s 18K that’s still left in the deal. I could, because of the market appreciation, do it again and still not pay any money for the refinance, and with the market rent, it would still support it. I’m going to keep that in my back pocket for another rainy day, and just do the updates and drive the rent to the max cash flow for right now.

Ashley:
Yeah. I think that’s such a important value to hit is that, you don’t always have to pull everything out. It’s great to leave some money into a deal. Then, you just have more equity in the property. If you do need to tap into that equity, like you said, you can go and refinance again, and pull it out. Even leaving that 18,000, I’m sure, I can’t do math in my head as fast as Tony, but I’m sure your cash-on-cash return is great after-

Tony:
33%. About 33%.

Ashley:
… cash flowing 600 a month.

Stacey:
Yeah.

Ashley:
What is it?

Tony:
33%.

Ashley:
33%.

Stacey:
He made that up.

Tony:
Stacey, congratulations. That is a really, really solid deal.

Stacey:
Thank you.

Tony:
I’m sure super instructional for all of the rookies that are listening. Yeah.

Stacey:
Yeah. The moral of the story is, don’t be afraid of properties that are vacant next door. Good things can happen. Just do your due diligence.

Ashley:
Stacey, I’m going to take us to our rookie request line now. Anyone can call in at 1-888-5-ROOKIE, and leave us a voicemail, and we might play it on the show for our guests to answer.

Lauren:
Hey guys, Lauren from Asheville here with a quick question. My husband and I are hoping to get our first short-term rental in the next month or so. We’ve noticed as we run our numbers and look over comparables, that a lot of properties with short-term rental potential are overpriced in this current market. We have heard from other investors, they will often pay more for a property with good cash flow.
My question for you guys is, how much more will you pay for a property with good cash flow? Thanks so much for the advice. I love your show.

Stacey:
I’m so risk adverse enough that my first question is, will it cash as a long-term rental? What’s plan B? Because if you’re buying that property and it only cash flows as a short-term rental, that’s an immediate no, for me. I know that some other people are more comfortable with that. That’s a no for me.
Then, my other question is, it’s a very inflated market right now. I have been recommending to people, look back in the rents, see what the rents were demanding before all this inflation hit. Does that market rent still support the cash flow? If it does, then close. If those two things don’t happen, the risk is not worth it for me, personally.

Ashley:
I agree with Stacey on the exit strategies, that you should have multiple exit strategies, because if you are paying a high price, but if your property is not going to appraise for what you’re purchasing for, especially if you’re going to use a mortgage for it, then you’re going to have to fill that gap and cover that difference, if it’s not going to appraise for that, or you don’t want to buy the property in all-cash, and later want to go and refinance, but it doesn’t appraise for how much you want to pull out of the property.
I think looking at what the property is actually valued at, and your cash flow, if you are going to make a lot of cash flow, the property can be worth overpaying for. I think it’s really what you consider overpay. I think that’s different to a lot of people, is overpaying mean, that’s different than what the market is at right now, or is that because of appreciation, what the property’s going to be worth? You’re going to pay a little bit more, because you know it’s going to appreciate more.
I think that’s the biggest thing is, what does overpaying even mean? For me personally, it would be that, buying my buy-and-hold properties, overpaying would mean that the property does not cash flow for me. That would be overpaying for me. Tony, I’m interested to hear your thoughts, especially since you’re in the short-term rental market.

Tony:
I’ll echo a lot of what you said, Ashley, is that, I think Lauren is confusing, and I don’t mean this to take a dig at you, Lauren, but I think there’s a difference between expensive and overpriced. Overpriced is a function of the return. Something is only overpriced, once my return becomes negatively impacted.
A property doesn’t necessarily become overpriced because I’m paying over asking. That just means that I’m paying over asking. If I’m able, and this is the example that always use, someone could come in, maybe you have some out-of-town agent that doesn’t know the local market, and they think their property’s worth half a million, but it’s really worth 750, so they come in and price it at half a million. Then, all these investors come in, knowing that it’s underpriced.
Now you’re bidding $200,000 over asking. Is it overpriced at that point? No, it’s not. It just means that it wasn’t priced the right way to begin with. Or, on the flip side, say that they do list it at 500, but you know that based on your underwriting, you can still buy it at 650 and get a 15% cash-on-cash return. Is it overpriced? It maybe, maybe not. It all depends on if a 15% cash-on-cash is good to you.
Lauren, I make my decisions, much like Ashley said, based on the return that I get from that purchase price. I’m not as concerned about the difference between the purchase price and the asking price. I think the appraisal gap is a good thing to call out. If there is an appraisal gap there, you should that into your calculations, to make sure you still get the return that you want. Again, the term overpriced should be based on the return, and not necessarily what they’re asking for the property.

Ashley:
Especially if you’re going to be holding this property for a long time, you’re not going to be that concerned about comparables, unless you need to get an appraisal on it, to refinance the property, because if you’re not going to sell it, what does it matter what the property’s value is, what the price point is of it? If you are intending to flip the property, or sell it within a short period of time, then yeah, maybe you should be concerned with paying more for it, in case the market does dip a little bit. If you’re going to hold it, then I think that that’s less of an issue for you too.
Stacey, we’re going to do the rookie exam now. This is one of our newer segments here, where we have three questions, and either you pass or you fail, and your episode does not air.

Stacey:
Oh my goodness. No pressure.

Ashley:
Okay. Question number one, what is one actionable thing rookies should do after listening to this episode?

Stacey:
I would say they should go out and meet at least three people at local meetups, and learn from their story. Don’t ask questions, unless it pertains to their story.

Tony:
All right. Second question. What is one tool, software, app, or system that you use in your business?

Stacey:
I look at AppFolio a lot.

Ashley:
I’m very jealous. My property management company doesn’t use AppFolio. It doesn’t connect. Yeah, that is such a nice feature to have those two interlink.

Stacey:
Yes. It’s so great to see all of your properties. It’s a really good software tool for overarching overview of all of your properties.

Ashley:
The last question is, where do you plan on being in five years?

Stacey:
Oh, good question. Staying in Denver is something that I’ve been so passionate about, because my family is here, and because I initially thought it was going to be impossible for me to stay here and live a comfortable life. Because of that, and because my family is still here, I would say six months here, and six months in San Diego, is the life I want to be living in five years.

Ashley:
Thank you so much for sharing with us. You did pass, so your episode will air.

Stacey:
Yes, perfect.

Ashley:
Stacey, can you let everybody know where they can find out some more information about you, and possibly reach out to you?

Stacey:
Yeah. The first and most important thing is that I am going to be volunteering at the Rookie Bootcamp Weekend live in Denver, at the in-person event. I would love to connect and meet as many people in this community as possible. Please find me there. Then, outside of that, my Instagram would be the best place.

Ashley:
Stacey. I can’t wait to meet you there.

Stacey:
Yes, I’m so excited.

Tony:
All right. Before we close out, I just want to highlight this week’s rookie rock star. Again, if you want to get highlighted on the show, get active in the Real Estate Rookie Facebook group, or in the BiggerPockets forums, then we might highlight your story on the show. Today’s rookie rock star-

Ashley:
It is a new mom and real estate investor who just closed on her first investment property. If that’s you, you are a rookie rock star this week.

Tony:
Yeah, this new mom and new investor purchased a property for $116,000. Spent another 35K on the rehab. For all you math nerds, she’s all in at $141,000. Okay, you guys weren’t moving fast enough. The ARV was $180,000. Seems like a really solid first deal, and new mom and real estate investor, wish you the best of luck in knocking out the park on the next one.

Ashley:
Okay. Stacey, thank you so much for joining us. We really enjoyed having you on the show, and having you share your journey with us. We can’t wait to meet you at Rookie Weekend. Maybe this’ll even air after Rookie Weekend, or [crosstalk 00:49:43] before.

Stacey:
He moved it up. Yeah.

Ashley:
It’ll be before. Okay.

Stacey:
Very exciting. Yes.

Ashley:
Good. Everyone will hear your story, and then will get to meet you at Rookie Weekend. Yay.

Stacey:
Yes, I’m looking forward to it.

Ashley:
Okay. Yeah. Awesome.
I’m Ashley at wealthfromrentals, and he’s Tony at tonyjrobinson, and make sure to check out the Real Estate, Rookie Facebook, and also our YouTube channel. We will see you guys next time.