Making $160K/Year From ONE “Rare” Property Thanks to Seller Financing

Ashley:
This is Real Estate Rookie episode 375. Today’s guest is a former coach who started investing in his late 40s, and has been investing for just three years, but has already replaced his W2 income. He is a prime example of how you are one interaction away from changing your life. I’m Ashley Kehr, and I’m here with Tony J. Robinson.

Tony:
Welcome to the Real Estate Rookie Podcast where every week, three times a week, we bring you the inspiration, motivation, and stories you need to hear to kickstart your investing journey. Today, we’re here with Adam Howard, who is no stranger to doing the hard things. Like Ashley said, he’s a former Division II coach, and athletic director turned sales rep who cashed in his 401k, and took a chance on himself. Now, he’s also a follower of three with very, very active kids and super busy lifestyles there. He has a small portfolio in Ohio, and he just took down a value-add motel out of state. Now, he loves trying a mix of things in real estate, and recently started managing short-term rentals for others.
He’s doing all of this, guys, while working a full-time job, so no excuses. First, we’ll hear how just one follow-up led to his life-changing purchase from an incorrect MLS listing, and we’ll get into so much more. So, welcome, Adam. How are you doing today, brother?

Adam:
Oh, I’m fantastic. Thank you so much for having me.

Tony:
Super excited to dive into your story. We were chatting a little bit before we hit record about how hopefully I’ll get to learn something from you today about the out-of-state motel purchases. But I think based on what we already know, I’m not sure how you have time to sleep, man. So, how did you get yourself into a place to find this motel deal?

Adam:
It’s been the latest part of my investment journey. My wife and I were looking to expand our portfolio into a more drivable market from where we live in Cleveland. We were looking two hours away lake properties. We wanted something that was not necessarily on Lake Erie, which just tends to be a little rough for boating and things like that. So, we found Lake Chautauqua, and we ended up buying a small cottage there, so got that up and running. But while I was there, I had my eye on this other property that had set on the market for a while, and they listed it on Zillow, which is obviously a residential platform, and had a pretty high price. I was always curious what that property was. I had a friend while I was working on the cottage reach out to me, and say, “Hey man, can you FaceTime me and my realtor? He was also interested in the area. Can you attend showing with my realtor, and FaceTime me?”
Just got to talking to the realtor. I asked him about that property, “Hey, what’s up with this property?” He told me that it’s been sitting for a while. It’s actually a commercial property, and the owner had owned three motels. He started liquidating his assets, and this was his last asset. So, it just piqued my interest. From that meeting, I drove straight over there, and introduced myself, and the rest is history.

Tony:
One question I want to get clarity on, Adam, because you said the listing had been around. It was an old listing. I think for a lot of rookies, they actually look at old listings as there’s a stigma. They’re like, “Man, well, if it’s been sitting for four months, it’s because something must be wrong with that, so I’m not even going to look at it.” So, were you at all concerned about the fact that this was an old listing, and if so, I guess, what did you see that still made you confident to buy that deal?

Adam:
Well, it actually just piqued my interest, because through listening to podcasts and reading, there’s opportunity in sometimes the ugly places, things sit for a little while or maybe not so attractive. That’s where, I think, a lot of investors see opportunity. So, that’s what piqued my interest, and basically spawned the question to the realtor, “What’s up with this property?”

Ashley:
Adam, what ended up being those opportunities that you saw in this property?

Adam:
So, actually just pulling up to the property, it was like a trip in the past for me. My family spent nine summers in a row at a fishing camp in Canada, and this had all the same feels. You pull up and very much a fishing camp run very seasonal, had a beautiful house on the lake lakefront, but then behind that property, 13 units in two separate buildings. So, just automatically, I was like, “Wow, this could be an amazing opportunity to add some value.” I walked up to the office, and the owner happened to be sitting in there. He said, “Give me a few minutes.” He was dealing with a guest, and introduced myself. We talked for a couple hours actually. I just shared my stories about my childhood.
He walked me around the property, and I ended up just taking a risk, and I made him an offer. I wasn’t that liquid at the time. I was just like, “Hey, I’m interested in buying your property, and this is what I can do.” So, I just made him an offer right off the bat, and that’s what really got the conversations going.

Ashley:
We’re going to take a short break here, and then I want to get into the numbers as to what was it actually listed at, and what did you come in with the offer, and then any negotiation. I want to dig into that, but we’re going to take a short break, and we’ll be right back with Adam.
Okay, Adam and everyone else, welcome back to the show. Adam, you walked at this property with the seller, which I think is a huge value add in itself, building that personal connection with the seller. Instead of going through an agent and having them be the middleman, you could also find out some motivation, and you also get to know a lot of interesting things about the property that an agent isn’t going to know. So, let’s start off with what was the listing price? When you had originally seen it online, and it was listed for a while, what was that price listed for?

Adam:
So, it was listed on Zillow for 1.3 million. I walked the property, and just noticed right away there was a lot more opportunity there than just a house.

Ashley:
So, that was all that listed on there was just a single family house, and it didn’t even say the 13 units?

Adam:
Correct.

Ashley:
Wow. Incredible.

Adam:
It was only listed on Zillow, which was amazing.

Ashley:
Who was that agent?

Tony:
We got to pause on that for a second, because it just goes to show that everyone else that was looking at that listing, they only saw the single family home, and they saw this price point of 1.3 million, and they just ignored it. They didn’t do the due diligence there, but as you become a seasoned investor, you start to recognize like, “Something’s off here.” Either the realtor’s crazy, or there’s something bigger to this story that we’re just not seeing. So, kudos to you, Adam, for I think identifying that there was a little bit more there, and pulling that thread. So, how did you negotiate this deal? You said you gave an offer right there on the spot. Were you competent as you were going through there? What was that process like?

Adam:
My thought process was I knew after talking with him that he was taking a lot of cash from the property. He actually has a lot of Amish fishermen come to the property, so they have a lot of cash on hand, so he was taking that cash. I knew the financials wouldn’t be favorable for him in terms of bank financing. So, a normal investor goes in there, and tries to secure bank financing and disclosing the financials. I knew that he wouldn’t come close to what the purchase price was, so I told him I would give him $50,000 down, and then we would negotiate from there the purchase price, and try to get it under contract.

Tony:
Adam, one thing I want to drill down on a little bit, you said that it would be hard to get traditional financing on this property, because so much cash was coming in and out. Can you elaborate on that, or why exactly is more cash and maybe not a lot of revenue on the books a bad thing for a seller potentially?

Adam:
Ashley probably knows this. I know New York state, the taxes are a little bit higher than the normal place. He had owned properties. He owned it outright, so taking cash was just easy for him, and then just reconciling all of that. He didn’t really have a bookkeeper and all of those things, so they were very much a pencil-paper type operation. Knowing that the bank requires a lot more than that, I knew that there was going to be some problems going to the bank. Long story short, I did end up going to the bank. He disclosed his financials, and went to the bank just to show him, “Hey, this is what I can offer you on the property.” He obviously came back and said, “I really can’t take that,” and so we started really negotiating from there.

Tony:
So just one thing to call out for our rookies that are listening, banks want super clean books that support the purchase price of this commercial property that you’re looking at. Especially as you get into the bigger commercial deals, it’s like the bank… Say you want to buy a property that was maybe $10 million or $25 million. Banks usually aren’t going to look at the person who’s applying for that loan to cover a $25 million mortgage themselves. They’ll want to make sure that the property itself can support that level of debt. So even on these smaller commercial deals, they’re still looking at it the same way. It’s like, “Hey, if we’re going to loan you $1.3 million, we’ll want to make sure that the property itself can support that. If it can’t, then you can’t get a loan.”
I think that’s one of the benefits of going after some of these smaller mom and pop run commercial properties is that many of them use the same cash approach, and their books aren’t super clean. So, they almost have to offer seller financing because there’s no other route for getting debt on that property.

Ashley:
Okay. So, Adam, what was that number that you threw out at him, that first offer?

Adam:
Like I said, the first offer was, “Hey, let me secure this by giving you $50,000 earnest money, and we will talk about the purchase price.” Because in our conversations, he agreed that he probably wasn’t going to get full asking price, but wasn’t willing to go much below that. So, I knew there was a range there. My main concern was just to try to get it under contract due diligence, and then secure the asset in the long run.

Ashley:
Did you have a timeframe then where you could back out of it as to a due diligence period? I mean, that’s scary, giving him $55,000 for earnest money, and not even agreeing on a purchase price yet, but what a unique strategy as to, you’re right, let’s just get the deal locked up and under contract, and you have your contingencies in place so that you can get it out. You can get your earnest money back. So, tell us a little bit more about that full process. He agrees to this, and what happens next?

Adam:
He didn’t necessarily agree to that, but I wanted… I think the main purpose, Ashley, was just to let him know that I was serious and passionate about his property, and I think he appreciated that. His interest level, I think, increased once I did that. Then he started sharing more information, which was super valuable for me as the buyer. That’s really what kicked the conversation to the next level.

Ashley:
Then what was that next offer that came out? What did you guys end up negotiating?

Adam:
Took about two months of just going back and forth. I would visit the property, because I was working on the cottage across the lake. We were getting that up and running, so I would go and visit him. It turned into a relationship, honestly. My wife and I spent the 4th of July on their dock watching the fireworks, and developed a relationship where we enjoyed each other’s company. I think he respected also the business side of it, where I would go at him with an offer, and he would come back at me, and two months later, so yeah, we settled on. He wanted a larger down payment. That’s when I knew I had to bring in someone else, because I wasn’t that liquid. So, my first option was to approach an investor that I’m close with already that I knew he would bring some value to the table as a partner.
We went at it with a higher down payment. We ended up going at him with $50,000 earnest money, and then 250,000 down. So in all, we were in it for $300,000 down.

Tony:
What were the other terms of the seller financing? So, it was 300K down. What was the rate? What was the term? Was there any interest only? What were the other terms there?

Adam:
I wanted a period where I could show revenue. Like you were discussing early, Tony, I wanted a period where I could prove myself to the bank. So, I started talking to banks immediately, and talking to them, “How long would it take me to build confidence in this property that we could refinance the property?” They said, “Close to two years, showing you financials and clean books.” So, I built the offer around that where I negotiated two years interest only at 6% interest, and it ended up being a balloon payment at the end. I ended up going with that bank just to build confidence, so all of our financials are run through that local bank, and developing a relationship, inviting them on the property to take a look at the property after we were able to get it up and running.
But my whole goal and my strategy behind this is just to build some confidence with this bank, knowing that I want a really strong option when it comes time to refinance. So, I was trying to mitigate my risk there a little bit.

Ashley:
How far are you into the project now until that refinance period?

Adam:
We are scheduled to refinance in October of this year.

Ashley:
How has the project been going since then? What are some of the things you’ve encountered, maybe lessons learned, and where has some of the opportunity been?

Adam:
I could write a book about it. So many things. Once we closed on the property in October of ’22, just finding a contractor alone was the first step of just… I was already looking for a contractor before we closed. As you know, closing a property in New York, Ashley, is not easy.

Ashley:
It takes forever.

Adam:
Didn’t happen as fast as I wanted it to. In the state of New York, you have to have an attorney that represents the buyer, the seller. There’s a lot of people involved, an agent.

Ashley:
So, you’ve got the two agents, the two supplier, seller, attorney.

Adam:
Yeah, so it required a little patience on my end, but we were able to get through that, get it closed. In that process, looking for a contractor, interviewed probably 20 people, and it fell in the range of this property was not big enough for some of the big guys that have just larger projects, and then a little bit daunting for the mom and pop type operation contractor. So, I was just really struggling to find someone that wanted to work, and really lucked out just through the relationship with the owner. He had a local guy that lived nearby that worked in Buffalo all week for an investor, was a handyman for him for 15 years. This particular investor just started to liquidate some of his assets, so he was running out of work.
He had apartment buildings and single family homes in Buffalo, and he would travel up to Buffalo. It’s about, I don’t know, an hour and 15 minute drive to Buffalo. He would leave on Monday morning, and come back on Friday night. He would stay in one of the investor’s units, super knowledgeable, but he also did some work for the owner of the motel. So, interviewed him, and he was like, “Yeah, I think this could be a good fit. I’m running out of work here.” It was just a godsend, honestly. The guy was fantastic. He agreed to let me work alongside him, and it was really eight months, about six months of just really hustling every weekend, traveling there on the weekends. He would work all weekend. The guy was phenomenal, didn’t take a day off. So, very, very thankful to have found him.

Ashley:
Adam, there’s definitely different value add when it comes to commercial property compared to residential property. So, knowing you have this refinance coming up, you want your appraisal to be through the roof, what are some of the things you’re doing that may be different, because it’s a commercial property to really add value?

Adam:
Looking at the customer base, a couple of things I wanted to do. The previous owner stayed open just during the peak season, so he would close during the winter season. In this particular area, there’s still attractions through the winter. There’s ice fishing. There’s snowmobiling. It’s close to two ski resorts. So, I thought that’s going to be one way that I know is going to add a ton of value to the property. The other way that’s going to add value, it was owner operated, so he lived in the house. So, renting the house is going to be a huge value add, because the house itself sits on lakefront. The other thing that I looked at was there’s 30 boat slips on the property, and he’s actually a licensed MARINA.
In the state of New York, in order for you to do boat rental, you have to be a licensed MARINA. We’re not a full functioning MARINA, but we do have our license. So

Ashley:
Was that even on the listing, either that there was 30 boat slips? I mean, that is a huge value add right there.

Adam:
Absolutely. No, it wasn’t.

Ashley:
Wow.

Adam:
I mean, I think there was a picture of the… The pictures weren’t great, and it didn’t fully display the value of the property on the listing. So, those are some of the things that I was just thinking of how I can add value to this. Then also looking at who would visit the property, and a lot of conversations with the previous owner, mostly fishermen. Bimus Point, New York is a hotspot. There’s other things to do. There’s a golf course right across the street. There’s bars and restaurants that are on the lake. There’s a wine bar down the street. It’s like the quintessential lake town. So, I knew that there was opportunity to attract a different guest to the property. That there laid out my thoughts around design.
I had to both appease the fishermen, because I didn’t want to lose my client base. I also had to figure it out from a perspective that, “Hey, this might be a place where the fishermen would bring their wives too, and maybe some people that just wanted to enjoy the area.” That’s where we came up with our design ideas.

Tony:
Adam, I want to touch a little bit more on the design and how you manage this renovation, but first, if you can, maybe put a bow in this for us. What kind of revenue increases have you been able to see since you actually launched this property?

Adam:
After we were able to renovate the units, adding AC was a big value add to the units. Revenue increases were… The average daily rate, I think, was around 70, 80 bucks a night, what he was getting before. There’s eight kitchenettes on the property, so those units right now rent for $189 a night, and the ones without the kitchenettes rent for 149 a night.

Tony:
Wow.

Adam:
So, we were able to raise the ADR quite a bit there, and we were also able to keep most of our previous customers. We were able to send out a letter, and just… I think once they were on the property, they were blown away by some of the things and were a little more acceptant of the raise and the price.

Ashley:
Are you doing this full year then? You’re not just doing seasonal. So, what are some of the winter attractions that you’re hitting to?

Adam:
So yeah, unfortunately it hasn’t snowed that much in that area in the last couple of years, but we’ve had people that are interested in skiing in the area. Holiday Valley ski resort’s close by. Peak and Peak is close by. When the lake freezes over, we have ice fishermen and just people that just want to stay in the area. We were fortunate that a main attraction hotel in Bemus Point, an older hotel, closed down. So, that was one of the main spots that for people looking to come to Bemus Point to stay now, so that definitely helped too.

Ashley:
Is that that yellow one?

Adam:
Yeah.

Ashley:
The big yellow one. I know what you’re talking about.

Adam:
The Lenhart has been closed for a couple years, and I think a buyer backed out last year. It’s a big project. It’s a beautiful historic hotel right on the water, and a lot of people, they have a lot of memories around that hotel, coming there for 30 years. I was able to attract some of those guests over to my place, so it definitely helped out. Tony, would you like to see the bigger picture in terms of revenue too?

Tony:
Yeah, I think overall revenue would be great to see as well. I mean, a 2 to 2.5X increase in ADR is phenomenal by itself. But I guess on a year, what is revenue looking like now, and in a [inaudible 00:19:04], if you know that number?

Adam:
We had a stretch goal for our gross income was like 200K. I think it was 225 actually. My partner and I came up with goals, and our stretch goal year one, it was around 225. We ended up doing 310 gross.

Tony:
Congratulations, man.

Adam:
Thank you. Thank you. It was a grind. My wife and I managed the property too, so that helps keep the expenses down, but it was all about just trying to really take a look at the expenses. My partner’s great at looking at the books and helping with that part of it, and then just adding some amenities to the property, but our NOI without the management fee was 110. But if you consider that we operate, the property is 160.

Ashley:
Adam, we’re going to take a short break here. This is incredible. I’m super intrigued about this investment, and honestly upset that I did not get to steal myself, because I do love Chautauqua Lake. I want to talk about… You mentioned your partner does the bookkeeping, and you’re doing the management. When we come back from the break, I want to talk about what that structure is, and how it’s set up for your partnership.
Okay, we are back with Adam, who has been telling us about this gem that he found that was wrongly listed on the MLS, and actually had a surprise 30 boat slips, and surprise 30 units on the property and not just a single family home that was also lakefront. So, Adam, what are some of the reasons that you decided to take on a partner for this deal? Tell us how you negotiated that structure.

Adam:
The main reason, as I explained earlier, was that I needed a little more help based on what the seller’s demand was. So, I couldn’t go in with that large of a down payment. I probably could have liquidated some of my other properties, probably could have done it that way. I would’ve taken probably too much time, and I was afraid I would lose the deal. So, I decided to partner up. It’s been a really great partnership. I think our strengths offset one another. He’s a CFO. He’s great with numbers. I grew up in construction. My dad was a carpenter, so I had that knowledge. then the management piece was really good, because he didn’t have interest in the management part. He said, “Hey, you go at it with your expertise.” He trusts me to make daily decisions about the property. He reconciles the books, so we have a good thing going in terms of the partnership.

Tony:
Adam, you mentioned so many good things about partnership. Obviously for those that are listening, if you haven’t heard yet, Ashley Kehr and I co-authored a book called Real Estate Partnerships. You can pick that up at biggerpockets.com/partnerships. But Adam, one of the things you said, or a couple of things you said, you used the word trust. You used the word balance. You used the word compliment. Those are the things you want to look for when you’re talking about finding a potential partner. Just because you and someone like to go to the bar and have a drink together or watch the game, whatever it may be, doesn’t necessarily mean the two of you would be good business partners. So, you really want to look for the person that’s going to compliment your skillset, that’s going to compliment your resource, that’s going to compliment you as an investor to make sure that the partnership itself comes to be whole, I guess.
So, I guess maybe looking back, Adam, now that you guys have had this project for a little while, is there anything you would’ve done differently from a partnership structure perspective or maybe expectations upfront, but maybe just advice to someone who’s trying to get into a partnership for the first time?

Adam:
We actually amended the agreement. When we first agreed upon what the structure would look like, we didn’t know what a management fee for the size of a property would look like. So, after doing some research, and just the way we structured it just didn’t work. The agreement originally was for me to take a certain amount of money per month from the management fee perspective instead of a percentage. That wasn’t really working out, because it was just so inconsistent at the beginning, and getting the property up and running. So, we looked at it and said, “This isn’t going to work for the future, so let’s amend this and say, “Hey, the management fee is going to be 18%.” So from an equity standpoint, we’re 50-50 partners.
The other parts of the agreement, everything else worked out from a tax perspective, is a great value for him, because he’s a high income earner, and it helped him with his taxes, also helped me quite a bit. So, there’s a huge value there for him. Like I said, I think just the biggest value is that we recognize one another’s strengths that he could… 30 minutes probably a month, it takes him to reconcile things, and then we would share ideas financially, because he has a really sound mind financially. Then I would just be in the day-to-day operations.

Tony:
I want to understand, Adam, how you’re balancing this big of a project with your day job and your busy family life. But before we do, just one comment on the structure piece. It’s taken us a while to really identify the right structures for different type of property types as well. How we structured our first commercial deal is slightly different than how we’ve done the majority of our single family homes as well. So, we have one entity that owns the actual real estate itself, so whatever, 123 Main Street motel, and then I own a percentage of that. My partners own a percentage of that. Then we have a separate entity, which I just own, which does the actual management or will do the management for the property. So, very similar.
I have an equity piece, but then I also get a management fee for doing the day-to-day management of the property as well. So, for our rookies that are listening, don’t be afraid to separate those two things if the project is big enough. Adam, a million-dollar question here, right, because I know we get a lot of rookies who are listening that say, “I’ve got a spouse. I’ve got kids. I’ve got this. I got that. I don’t have time to be a real estate investor.” How the heck are you doing it?

Adam:
Honestly, I think I’ve been leveraging it from my previous life as a football coach, being an athletic director. Those are really, really time intense professions. When you’re young, and you’re thinking about what you’re going to do, you don’t think about having a family. How does that fit in when you don’t have a family? So, things change as you get older, but I think that built up my capacity to handle more down the road. So all in all, what I’m doing now still doesn’t compare to the amount of time that I spent as a college football coach. I’m almost ashamed to say that, because it grind me up a little bit. Very passionate about it, but, like I said, I think it built up my capacity to handle a little bit more, stay organized. I’m not going to lie, it’s hard at times.
It’s not easy, but I think that my ability to manage it, that’s one of the advantages I have. Being 49 years old over time, I was able to build up some skills and some techniques to be able to handle my time, and be more efficient with my time. I think a couple more things to add to this would be there’s probably a lot of listeners out there that can share a similar scenario, three kids, busy lifestyle, both parents working, trying to launch a real estate business, and all the chaos that ensues. I think it’s super important, and I think we talk about this as a family a lot, to have your priorities in line, just have a true north. We do try to keep God at the center of our lives, and everything else flows from there, but it’s also equally important to say no to the things that misaligned with what your priorities are.
That’s sometimes harder than just saying yes to the things that align with your priorities. So, I think that’s important, just keeping things simple, and then also just can’t do it alone. Being in sports for a long time make you realize that a lot of great things can be accomplished through employing a team, involving people around you. So if you’re listening, and you probably can do a lot. You’re on this podcast. You’re learning and you’re growing, but man, you’re only as good as the team around you. My wife is amazing. She has a great eye for design. She has a heart for hospitality, so she’s an amazing team member.
Obviously, I wouldn’t be able to pull it off this latest acquisition without my business partner, Brian, and his financial expertise, super important there. Then just lastly, I just don’t want to be one of those people that gets stuck in seeking comfort all the time, and then at the end of my life saying, “I wish I would’ve done more.” So, I think with the world changing around us all the time, the market’s changing. Interest rates change. Things change as an investor all the time. I think you have to be willing to adapt and grow, and have a growth mindset all the time. Don’t be afraid to ask that seller for seller financing, or getting told no from time to time, and maybe seek a little bit of discomfort, because on the other side of that, there’s going to be a lot of growth.
I think that’s in a nutshell how we manage all the chaos around us right now. I think one tip, Tony, that we do as a family, every Tuesday night, we get together. Some people might call it cheesy or whatever, but we literally… We sit down, no distractions. We have a cadence to our meeting with all the kids. We discuss things like what our priorities are. We discuss our calendar for the week, so we know where everyone is going so that… We have a very busy family, but we just carve out 30 minutes. It’s at 8:15 every Tuesday night. Every kid has to have their room cleaned before the meeting. Then we have a cadence to that meeting just discussing what our priorities are. It gives the kids a chance to have a voice too, so everybody in the family feels like, “Hey, they’re a part of this whole thing.”
So, we really haven’t strayed from that in the last couple of years, and stayed consistent, and that’s helped as well.

Ashley:
Adam, to wrap this up, what are some of the lessons that you have learned through the course of doing this commercial deal?

Adam:
I’ve learned a lot. I mean, I’ve made some mistakes, some little mistakes that turned into big things. Like for example, we ended up getting the wrong door lock that didn’t integrate with our software. We put all these door locks on, and then all summer long, we’re sending an email manually to all of our guests with their door code. So, it’s like, “Oh man, we’ve got to figure that out.” It’s part of my job getting more efficient this year. We had some unforeseen things happen, and you’re always going to have that. It was jumping through the hoops with the health department, things like that. We had to put a new water system in. Everything on the property is on a well, so we had to put a chlorinator in, and test the water every day, so just figuring all that out.

Ashley:
Adam, did you get a water certified, or do you have someone on site to get water certified?

Adam:
Yeah, so they came on the property, taught us how to do that. My cleaner and my maintenance person helps out with that, and keep record of that.

Tony:
For us, non-New Yorkers, what is water certified?

Ashley:
I think this is common with most commercial properties across the U.S. that have a well, where you have to do daily testing of the water, and you have to treat the water for the well. You have a pump house, a well house, and you can actually go and get certified. Daryl has gone to get his certification so that if we got a campground or a mobile home park, then it was on the well. If it has so many units on it, then you have to go and have somebody have the certification, and then they’ll keep your logs. Then the inspectors will come in from… Is it the health department, right, that sends the inspectors?

Adam:
Health Department.

Ashley:
Come in and just inspect every once in a while.

Tony:
That’s why I try and stay on CityWater. We have one property that’s on well, one of our cabins in the mountains in Tennessee, every year, it gives us trouble. Every single year, it gives us troubles. It’s a shared well, which is even worse. The house, it used to be on one parcel. There were three properties on one parcel, so there was only one well, for all three properties. The owner subdivided the land, still only kept one well. So, we have to coordinate with our neighbors. It’s a mess. Anyway, I can rant forever, but not the purpose of this podcast.

Adam:
You got to get water certified, Tony.

Tony:
I got to get water certified.

Ashley:
No, I’ll find Daryl’s textbook. He probably still has it. I’ll gift it to you for your birthday, Tony.

Tony:
[inaudible 00:30:46]. Please. Please.

Ashley:
Adam, you mentioned you have a cleaner and your maintenance person. What other staff do you have on this property to maintain it since you do live out of state?

Adam:
Really, that’s it. Well, I mean, I do have two, a main contractor that would do some of the bigger lift projects, and then I inherited the maintenance man that was there before. We have several cleaners. We actually… Just yesterday, we had one of our cleaners dropped off, so we’re in the process of interviewing new cleaners for the property. But year two, going into year two is just building out your standard operating procedures and expectations, and communicating to them. That’s been a big lift, and a stress just running the property from two hours away, but it is possible. This year, our goal is to be more efficient with our systems, so I don’t have to be so much in the business and as active as I was last year, but there’s value to that. I learned a ton. So, it was good.

Ashley:
There’s one last question I want to ask you. You had mentioned beforehand that you used money from your 401K. Can you talk about that process, and how somebody else getting started in real estate could take advantage of their 401k too?

Adam:
Sure. 18 years in college football working at small private colleges didn’t offer much in the way of retirement. So, it was one of those things where I was looking at that over COVID when I had all this time, right? I’m like, “Man, I’m never going to be able to retire, I guess.” So, learning about real estate, I was looking at that little bit of money I had in retirement. I said, “You know what? I’m just going to take a risk, and I’m going to pay the penalty, pay the taxes, and put this money to work.” It wasn’t really earning that much year to year for me. It wasn’t working for me the way I needed it to.

Ashley:
What’s the penalty, 10%, correct, to pull it out?

Adam:
Yeah. I believe it was 10%. I forget the exact number, but I think it was. It might’ve been 15.

Ashley:
Okay.

Adam:
But all in all, it allowed me to buy my first long-term rental about a duplex with it, had buyer’s remorse right away, called the realtor and said, “Man, I don’t want to do this,” but he assured me like, “Chill out. You did fine.”

Tony:
You’re making the right move, right?

Adam:
Yeah.

Tony:
It takes courage to do that, right, to be able to not reject, but to deviate from that normal path of wealth building, which is the 401k for the majority of Americans. Kudos to you for having that courage, Adam. Last question for me, and this is again me asking selfishly as we start to wrap up the rehab on our first motel project, you said that your goal was to do keyless, self check-in.

Adam:
Sure.

Tony:
That’s our goal as well. Have you been able to successfully do that, or do you find the need that there are a lot of guests who still want that kind of person to person touch?

Adam:
No, we have. We ran the property, last year, all keyless check-in. We did have some problems with the locks, so we get some phone calls, and we figured out solutions for the problem. I wish I would’ve thought of some of these problems before. But with the keyless check-in, this year, we’re going to just for a backup, put the actual key in a lockbox outside each door so that running the property from two hours away, I can always pivot and say, “Hey, here’s the code to the actual key so that you can get in.” Instead of having my cleaners come on site, go to the service garage, get the key, unlock it. Sometimes that just took too long, but we were able to do it. It worked out great. We had some issues along the way with some of the door locks when they get cold. So, you got to do your research about what type of lock you buy and things like that, and the climate you’re in.

Tony:
But overall, it seems like a successful test to say like, “Hey, this is a commercial property, but we’re not going to have anyone checking people in.” That’s what I needed to hear, just to give me some reassurance that I’m not crazy for thinking it’s possible. So, thank you for leading the way there, Adam.

Adam:
Of course.

Ashley:
Adam, could you leave us with some inspirational tips and benefits as to why someone listening should get started in real estate today? What are the benefits that you have seen personally from real estate investing?

Adam:
The benefits, honestly, is just having a peace of mind now. I love my W2 job right now, so there’s no reason for me to leave my W2, but having the peace of mind knowing that I could is a nice thing to have. I would just tell any of your listeners that it’s never really too late. It’s one of those things, where your career, if you’re sitting in a career that… I was in athletics for 25 years, and decided to pivot from that. Don’t be afraid of that change, and don’t believe the lies that you tell yourself that create all that fear and all that hesitation. Build a team around yourself, and dive in and learn, and don’t be afraid to take a chance on it.
One of the huge benefits, I think, was it’s a lifestyle asset for my family. It took us eight months to get there, nine months to get there where we actually were able to go and enjoy the property, but my kids just have an absolute blast there. My son, well, really, all three of our kids took up fishing, and just love to go out there, and fish. My two boys haven’t expressed a high interest in learning about real estate. My 14-year old’s talking about, “Hey, I can get a house, and have my friends pay for it.” I’m like, “Yeah, you can.” So, sometimes I think kids learn more by watching you, so hopefully they’re picking up some tips along the way. That’s been a huge thing, and that’s really something that my wife and I really value, that they’re getting a lot more out of this than just the financial part of it.

Ashley:
Well, Adam, thank you so much for coming on and sharing your journey and your story, and congratulations on this amazing commercial deal. I actually can’t wait to get the contact info, so I can book a reservation there, and bring the boat, and come hang out.

Adam:
Absolutely.

Ashley:
I’m Ashley, and he’s Tony. Thank you so much for joining us this week. If you want to learn more about Adam, we will link his information in the show notes. You can also find out where you can find Tony and I on social media. We’ll see you guys next time.
(Singing)