4 Keys to Building a Portfolio While Working Full-Time With Robert Leonard

Ashley:
This is Real Estate Rookie show number 14.

Robert:
The numbers make sense, I just need to do it. It was my first rental, so real rental traditional and out of state. So I said, I need to just, I’m never going to progress. I’m never going to continue to build my portfolio if I don’t just jump in and do this.

Ashley:
Hello, my name is Ashley Kehr and I am here with my cohost Felipe Mejia who is living the life of potty training. How is it going?

Felipe:
Oh my gosh. It’s so hard. My son is two and a half and some days he loves to go on the potty and some days he’s like, no papi scared, papi no, no [inaudible 00:00:42]. I’m like, no [Mikova 00:00:42] you can do it. No [inaudible 00:00:42], and I don’t think he understands that I’m tired of paying 50, 60 bucks for diapers.

Ashley:
I have three boys and my youngest, he just turned three and I’ve always waited for them to kind of be ready and potty train themselves. But so he just potty trained, starting in quarantine. So it was a month before he turned three that he actually started potty training but we are officially out of diapers. He’s still wearing them at night, but I mean that’s way better than during the day.

Felipe:
Heck, yeah. Well, we’re not talking about potty training in our show today. We actually have Robert Leonard. And what I really liked about today’s show was some of the bombs that he dropped when it comes to ad estate investing, finding partners and great realtors. I mean. three huge topics that’s talked about with newbies, right?

Ashley:
Yeah. And Robert, as the show goes on, we find out all this stuff he has going on, but he still finds so much time for his real estate investing. I mean, he’s hosting two podcasts. He has a full-time job and a family and he takes the time to call 35 realtors to find the one he wants and interview all of them. So he has really great advice too, about a partnership. He has an out of state deal with a partner and he breaks it down how that relationship began and how it’s felt.

Felipe:
Yeah, that’s great. I can’t wait to get into it. So let’s bring him out, Robert Leonard. Hey Robert, thanks for coming on the show, man. Super excited to have you here, man.

Robert:
Yeah. Thanks so much, I’m super excited to be here.

Ashley:
So why don’t you tell us a little bit about who you are and give us some background on your real estate investing.

Robert:
So when I became a real estate investor, I did it accidentally. I didn’t know I was becoming a real estate investor. I didn’t really have any intentions of becoming a real estate investor. I was always a stock investor. I started learning SOC investing when I was about 14 or 15 years old. I studied it for about seven or eight years, and then when I was graduating college, my parents told me when I went into college, that when I graduated and started earning a salary I would have to pay them rent. And it really wasn’t a big deal. A lot of people have to do that, but I knew that I did not want to pay rent. For me I just, I wanted to own something. And so I worked nearly full-time all throughout college and I purchased a property before I walked at my college graduation, my senior year.
And so I ended up living there and basically what happened was I had two bedrooms and I never opened the bedroom door for the second bedroom for months. And I was like, well, I should probably do something with this. And so I ended up renting out that bedroom and it covered about 700, $750 of about $1,100 mortgage. I said, well, this isn’t so bad. And I hadn’t found BiggerPockets or anything like that. I don’t know if house hacking was even a thing yet or as a name. And so fast forward a few months I found out, well, hey, this is a real estate investing strategy, I guess I could actually do this. Being a stock investor I never thought that I could be a real estate investor, I always thought it was just for the wealthy and for the rich. And so that’s kind of how I fell into real estate investing.

Ashley:
That’s awesome. I love the accidental house hacker and Felipe, he calls himself the king of house hacking, right Felipe?

Felipe:
That’s right.

Ashley:
But actually it’s your mom that taught it to you, so you can’t take all the credit.

Felipe:
Right. A lot of people don’t know that, that I actually picked it up from my mom. And then that’s how I got started. I just kind of 10Xed her, but Robert out of curiosity, were you never curious about that door or what that door was for or what was in there? I mean, did you just say it’s just empty space, I’m going to use it for storage.

Robert:
I didn’t even use it for storage, I didn’t use it for anything. I mean, I went in there of course, during the inspections, things like that. And when I moved in, but I mean, it was just a spare room that I didn’t need and I just, I had plenty of space in the house, so I just never went in it ever. I just never, just kind of always walked past it.

Felipe:
So what gave you the idea to rent it out though? I’m sure you weren’t just like, hey, I’m going to rent this out. Did somebody ask you? Did you see it on YouTube? I mean, what gave you the idea that, hey, maybe I can make some money off of this room.

Robert:
I’m not sure exactly. It just kind of popped in my head really, I was just like, well-

Ashley:
You had the epiphany.

Robert:
Yeah. I just had the epiphany. I think it was like innate and it’s kind of always been innate in me to be an investor and do businesses, side hustles, things like that. So I said, well, I like to have toys, things with motors and I want to buy some more so how can I get some more money coming in? And that was just one of the ways.

Ashley:
That’s great. I love that. So what does your portfolio kind of look like now? So what was the next step for you after you did that initial house hack?

Robert:
So I’ve done more deals since then, but I’ve sold off some of my portfolio. So I’ve done about six deals, but I own three units right now. So from the house hack, I lived there, so it was kind of strategic, but it kind of wasn’t. So when I went to buy the property, they were putting a special assessment on the property because it was a condo so there’s a homeowners association. And so that was holding up the purchase. And so I knew something was going on, but they didn’t really release all the details. And I said, “Well, I’ll buy it anyway and just see what happens.” And so I owned it for about nine months and basically what the special assessment ended up being was the homeowners’ association did a $7 million renovation to the property, because they’ve never done any project like this they had a big savings in their HOA fund and so they used almost all of the money from that to fund the renovations.
So us as the owners only had to put about $10,000 of our own money into the renovations for about 60 or $70,000 worth of work. So we got all new siding, all new doors, windows, roof, parking lot got redone, pool, everything. So the community looked amazing after, and this was just after I bought it. So I eventually-

Ashley:
Poor timing there.

Robert:
Yeah, so it kind of worked out. And that’s why I said I kind of speculated a little bit because I knew something was coming, but I didn’t know what. And so basically I was going to turn it into a rental, that was my plan. Lived there for a year, year and a half, two years, and then move out and turn it into a rental. But because of that, the value skyrocketed and I was able to sell it and make a decent chunk of money. And so I put that into a live-in flip. I had never done anything like a flip or anything like that. I’m not very handy myself, so I didn’t want to go super into one that was super detailed, that was a full gut or anything like that. So I got one that needed some paint, some minor renovations on the inside. And then a lot of it was on the outside, the exterior landscaping. So we did a lot of that.
Put up fencing, just made the whole space a lot … leveled the space, got brought in equipment to flatten the hill in the backyard, do all kinds of stuff to just make it a lot more functional. And so we’ve done that. I live there now, I’m about to sell it after about a year and a half of living here and make about 50,000 or so on that. And I’m looking to buy another house hack. I just looked at a three unit to house hack yesterday, and so I’m looking to do a three or four unit for a house hack. And then in there I purchased a duplex and also a long distance single family rental.

Ashley:
That is awesome. And I love how you said that you’re not handy, but yet you’re still doing a live-in flip. You don’t have to do anything and you can still have a live-in flip. You can hire everything out or find the property where there’s the stuff that you can do, like the landscaping and exterior work, the cosmetic updates and I can at least paint. So yeah, that’s awesome.

Robert:
I can’t build walls or do anything that takes like a lot of skill, but I figured, well, I can learn, I could learn landscaping or I could paint or hang a door or do a few things here and there so.

Felipe:
Robert, kind of give us a rundown of what your definition of a live-in flip is? And then what did you end up doing to that property? And you’re saying your living in there now, right?

Robert:
Yeah. So I’m there now. We’re supposed to be putting it on the market or I’m supposed to be putting it on the market in the next couple of days or weeks. So hopefully will be selling that soon. But so basically a live-in flip is you move into a property that’s not a hundred percent living, like rent ready or live ready. So there’s some things that need to be done to the property. Sometimes it could be more extreme and you can get a construction loan kind of go through that way. Or you can get something that you can still get traditional financing, which is what I did, but it still needed, cabinets were outdated. Paint was outdated, needed some paint, maybe windows, like I said, landscaping, things like that.
So what I did was I came in, everything was original, all the trim on the walls, all the paint, everything was original. So I painted the trim black and then I painted all the walls. Did some small things to the bathrooms, updated the kitchen a little bit. And then a lot of it was on the outside. So where I purchased the property, people don’t have a ton of land and that’s kind of one of the downsides to these properties is back in the 80s they built a community of probably a hundred different duplexes and they kind of just threw them up all at once and made them all cookie cutter. And so not everybody got a ton of land. And that was the problem with this property is it didn’t have a lot of usable space in the yard and it’s a super family oriented area.
So I figured if I can get some more space out of this yard, it’ll probably add some value. So I brought in an excavator, excavated the backyard. It was a very steep Hill, we were able to flatten it out, added a ton of space in the backyard, replanted grass. It was all just dirt and then we threw up a fence, added a very nice, has a huge deck, 20 by 10 deck. So it’s a large deck, added some fencing and a bench around that. So the whole outside looks a lot better. It’s a lot more oriented towards families. And I think that’s going to help when I go to sell, because now someone with a family is going to be willing to purchase this property whereas before it was more of a bachelor.

Ashley:
So on this live-in flip, what is your optimal hold period? Do you have a set timeframe for a live-in flip that you want to shoot for?

Robert:
It really depends. I mean, at least a year because for the financing. So you’re going to want to keep it for a year. I could turn this into a rental, but I’d rather take that money and put it into a three or four unit. So it kind of depends on what your goal is. If it’s going to be a rental, then of course you’re going to just hold it forever. But if you’re going to just flip it at least a year, but if you can do it-

Ashley:
The seasoning period.

Robert:
Exactly.

Ashley:
So some banks require that you, when you purchase a property, you hold it for a year before you go and refinance. And there’s some banks that don’t make you wait at all, some six months, some a year. There’s probably banks that do longer than a year or two, just depends what bank you go to. But that’s called the seasoning period where you can wait to refinance. There’s also, some people wait to flip a house, a live-in flip so that they get the tax benefit too. Is that two years or one year that you hold a primary residence and you don’t pay income tax on the profit?

Robert:
You live in it for two years of the last five years.

Ashley:
Two years, okay. So yeah, you’d have to hold it for five years and then live it as a primary residence. So that would work if you fix it up, you live in it for two years and then you rent it out for the other three, then sell it, you want to pay an income tax on it.

Robert:
You actually just have to live there. You don’t have to own it for five years, you just have to live there for two years of the last five years.

Ashley:
Oh, okay. I see. Okay. Cool. Learning something new every day.

Felipe:
There you go Ashley.

Ashley:
Yeah.

Felipe:
Start taking notes.

Ashley:
I just always wanted to do house hacking or a live-in flip, but we built our own house, like hopefully our forever home a couple of years ago. And I just, I’m always interested in the wealth creation from jumping from house to house like that.

Felipe:
Hey Robert, was there anything that scared you about having a live-in flip? I know that a lot of people will ask me a question and say, “Hey, that’s a concept that I would like to do, but I’m not handy. I’m not going to be able to fix anything, so I’d rather just buy a house that’s, a move in ready.” And usually what I tell them is, well, when you do a live-in flip, you’re going to be able to add value. You’re going to, you’re buying it at a lower cost because it is not rent ready or live ready. Like you said, it is livable obviously, but there is upgrades that need to be done. Was there anything that scared you about moving into a property that wasn’t “Rent ready?”

Robert:
Not really because I was very conservative with this. This is a property that a lot of people would move into and be completely fine with it the way it was. And so I knew my downside was pretty small. The part that kind of made me a little nervous was just, I was going from … the condo that I lived in before was very nice. Everything was modern. It was perfect inside, it had just been remodeled, everything like that. So going to something that was a little less up to date, if you will, was a little nerve wracking, but in terms of doing the live-in flip itself, no.
I really wasn’t because like I said, nothing was major and worst case, if I ended up not being able to do it myself, those things didn’t have to get done for me to be able to sell the property in the future. And so I knew I was limiting my upside in terms of profit potential, because you’re not going to add a ton of value by throwing paint in the wall. But I figured, hey, it’s a conservative low risk way for me to give this strategy a try.

Felipe:
What advice would you give our listeners that are thinking about that’s going to be their first real estate move, a live-in flip? I mean, that sounds scary to those who it’s their first time doing it. So what advice would you give to somebody since you’re going through the process now and it sounds like you’re getting towards the end. I’d love to hear what you think the numbers are going to be after you close, but before we get to that, what is some advice that you would give to our listeners regarding a live-in flip, if they’re like on the fence about it?

Robert:
I think the biggest thing is to manage your expectations. If you go in and you buy something conservative, kind of like I did, you’re not going to expect to make a hundred thousand dollars in value add in a year, or two years, you need to be able to maintain those expectations. Because if you … It’s really an expectations game, because if you come into this and you expect to make a hundred thousand dollars, and then in two years you go to sell and you only make 50, you’re going to be like, oh, this real estate thing isn’t really for me, it’s not great. Or-

Felipe:
But you still made 50 grand.

Robert:
Right, right. But that’s why, some people would be upset by that. They’re like, hey, I only made half of what I thought I was going to make. So I think that’s the first thing, really manage those expectations. The other thing is, if it’s your first one and you’re not handy like me consider if a bank will lend on it with traditional financing, it’s probably pretty safe because they’re pretty strict with those types of loans. So that might be a good one for you to start with if you aren’t super handy, because you can live there. It’s livable, habitable as is. If you’re going to go … If you’re a little more handy and you want to go that route, you could go the construction route, but just be, I just caution you to be careful with doing that. Not that it can’t work, a lot of people do very well, but make sure … I’d probably recommend those for the more handy people.

Ashley:
Okay, cool. So do you have a full-time job? And did you do all of this live-in flip while working full-time?

Robert:
I do, yep. So I do work full-time right now. I’m a corporate finance manager. Over the last two or three years I’ve kind of just been climbing the corporate finance ladder, and right now I’m a corporate finance manager.

Ashley:
Sound busy.

Felipe:
So how does that affect your … Yeah, it does sound busy. How does that affect your live-in flip? And sorry, I keep going back to that because I know our listeners are going to want to know, if you have a full-time job, how do you have time to work on the house?

Robert:
Nights and weekends. So that’s kind of the other piece of it really that you got to think of. Like, are you willing to do that? A lot of people get into real estate to be passive and it’s not necessarily the most passive thing, but it’s, you have a Saturday afternoon, you don’t really have much going on. You’re just kind of hanging around the house. Oh, I’ll paint this bedroom or got the weekend free, I don’t have any plans, I’ll go out and do some landscaping. I’ll throw some sod down or I’ll bring a machine in to do some work.
So you just kind of find the time, do it on nights and weekends. And it doesn’t have to be … The good thing about the live-in flip versus a regular flip is a regular flip you’re on a super tight schedule. You got to get it done so you can make a profit. The longer you hold that, the less money you’re going to make. And it’s not necessarily the exact same thing with a live-in flip. It’s your primary residence so you’re living there anyway. You can kind of take your time with it.

Ashley:
So with that $50,000 profit, so that’s not even including the mortgage that was paid down for you to live there for the year and three months. Correct?

Robert:
Correct.

Ashley:
So technically, I mean, you lived for free in that house. You got paid back, right?

Robert:
Correct, yeah.

Ashley:
That’s awesome. So let’s go on to a deal analysis. Was that the deal you were going to use or do you have a different one you wanted to really dive into?

Robert:
Let’s dive into my long distance rental, I like talking about that one.

Ashley:
Okay, yeah, that sounds good. Okay. So tell us how you found the deal, let’s start there.

Robert:
So this was my third deal after I did the live-in … Well, I’m in the live-in flip still, but after that had kind of settled a little bit, I said, I want to get into some more traditional rentals because that’s what I wanted to do with the condo. And it just ended up, like I said, turning into more of like a flip. And so I said, I want to do a rental, a traditional rental, but in my area an average duplex is almost 400,000. And so I’m in the greater Boston area. So it’s a pretty expensive market. It’s not like Los Angeles or New York necessarily, but it’s pretty expensive. And so I didn’t have, I mean, I was only 22, 23 years old at the time. I didn’t have that kind of money to invest. I didn’t know anybody that had that money to invest. So I said, “Well, what are my other options?”
And so I read David Greene’s book Long Distance Investing. And I said, “Well, I can do this.” And so I decided to buy a long distance rental and it’s kind of funny because I always told myself I’d never buy a single family. I always was super against it. I never wanted to do it. And then I got kind of stuck in paralysis by analysis and I wouldn’t buy a deal. And then I said, you know what? This single family came across my plate. I said, this is a great deal. I need to just buy it and so I did.

Felipe:
Robert, I think it’s really important for people to kind of take in what you just said, that you got into analysis paralysis because you were looking for a very specific type of property probably and you were like, no, I’m not going to do single family homes. But I think once people analyze their goal, their personal goal and they stop measuring rentals based on everyone else’s analysis and you finally just do it, like what is going to benefit Robert right now. And this deal makes sense and just because it doesn’t fit the “Mold” that you think it should, right? If the numbers make sense, it’s just four walls and a roof anyways.
So like you said, it’s a single family home. It might’ve not been what you were actually looking for, but it probably did meet your personal goal. And that’s why you were able to pull the trigger because you stopped looking at it as, well, it’s not a multifamily, so I’m probably going to pass on it or it’s not a mobile home, so I’m not going to buy it. But no, it’s like, okay, it’s a single family home and the numbers make sense. And if the numbers make sense, that is what’s most important. You’re able to let go of your emotions of purchasing that property. Does that sound about right?

Robert:
Yeah, that’s exactly right. It was a completely emotional thing. I had no rationale as to why I only wanted to do multifamily, I just kind of always thought that single family was more risky because you only have one tenant. So I kind of hedge that and I just said, like you said, the numbers make sense, I just need to do it. It was my first rental, so was real rental traditional and out of state. So I said, I need to just, I’m never going to progress. I’m never going to continue to build my portfolio if I don’t just jump in and do this deal.

Ashley:
Last or a couple of weeks ago, we had Jay Scott on the episode and his first deal ever was his wife … They looked at like a hundred houses and his wife said, that’s it. The next house we look at, we’re buying and they bought it. And that’s how they got over their analysis paralysis. Funny.

Robert:
Yeah. I actually had Jay Scott on my show not too long ago as well and he said the same story that I think they ended up buying four. I think they bought one and then they ended up buying four right away.

Ashley:
Yeah.

Felipe:
And it’s like we tell everyone, you’re not going to become a millionaire on the first one, it’s the lessons you learn. Right? And Robert, you went out of state with your first single family that you were completely against and it’s probably crushing it. I’m excited to hear the rest of the story, but I just want to let people know that it’s about taking action. Right? And your fear might’ve been well, it’s out of state and it’s a single family home that I swore I wasn’t going to do. But maybe in that market, that single family makes sense. Right? So it’s just different markets, different areas. And you need to run your analysis just based on the numbers, take the emotion out of it. So what happened next Robert? Tell us.

Robert:
So basically what happened was, I said, all right, I’m going to go out of state. I could have … I can’t really afford here and it’s not really an afford thing, it’s just, I don’t want to buy a duplex 400,000 up here. The numbers aren’t as great as I can get in other parts of the country. I kind of had a lot of things that kind of all came together, as I knew I wasn’t taking enough action. And then I learned a quote and then David Greene has said it before and a couple of other people as well. So I’m not sure who originally coined it, but they basically said, “Live where you want to live, invest where the numbers make sense.” And that really hit me. And I said, I’m not taking action and I just heard this quote, I need to go after these two things.
And so I analyzed demographic data for about 7,000 cities across the US. My background in finance, I do a lot in Excel, so I was able to analyze a lot of data that way. And basically I narrowed it down to about 20, 25 cities that I enjoyed, or that met the demographic data points that I need, which made me think that it would potentially be a good investment. And so when I started calling around to see if there were investor-friendly agents in those areas, and then once I determined which ones had investor-friendly agents, I then looked at some of the inventory on the MLS, not necessarily because I was going to have to buy from the MLS, but I think it’s a good indicator as to if there’s any inventory there.
If there’s nothing on the MLS, you’re probably going to have a hard time finding something even off market, so that’s kind of what I did. I narrowed it down to about 10 cities and then I just started spreading offers out pretty much, as much as I could on a bunch of properties. And then once one hit, I just, I went with it.

Felipe:
Man, that’s a great story because that’s you taking action. And I wanted to get into that a little bit more. First question, and then I’ve got a question after that, but the first question is where did you get the data that you needed for that, was that just like on Realtor or, I mean, where did you get that data?

Robert:
So that’s from a website called city-data.org.

Felipe:
city-data.org. We’ll make sure to put that in the notes. And then my second question is, so everyone talks about real estate friendly, right? Like are you a realtor that’s friendly to real estate investors, right? Or is your lender real estate friendly? So what does that actually mean for you, Robert? Because I know that different people have different definitions of real estate friendly. Right? So what does that mean for you when you’re looking out of state? How does somebody find a friendly realtor to real estate investors?

Robert:
Yeah, I think that’s a really good point to make, because I think there’s a couple of different types of investor friendly agents. If you ask any agent and you say, are you investor friendly? They’re going to say yes.

Felipe:
Of course I am.

Robert:
Exactly. Exactly. Everybody will say yes, so that’s not enough. You need to dive a little deeper. And so I think you have local investor friendly agents, and then you have ones that are going to help you when you’re long distance. And that’s a, I think they’re totally different types of agents because one needs to be more hands on if that’s how you’re going to build your team. And the other one just needs to be more like a regular agent, but needs to understand some of the investor terminology. So for me, I knew I was going to be long distance so I needed to find a really good agent that understood the area so that they could tell me where I needed to invest.
So I was able to use demographic data to find the city overall. I was very comfortable that this was a good city, met every characteristic that I wanted in a city, but the best city in the world is going to have bad neighborhoods, bad areas, things like that. So I needed to rely on this person to help me navigate the good neighborhoods and I of course called for multiple opinions, but the agent needs to be able to tell me that. And so what I look for was somebody who was an investor themselves, someone who understood the terminology, who could have a conversation with me and understood the types of things that I was talking about. You can, it’s kind of hard to explain, but you get a feel as to how the conversation is going as to whether or not they understand what you’re talking about.
And then the other thing was, are they willing to go above and beyond what’s needed? So on long distance, I’m going to need somebody to go in, check out the property for me. I need somebody to go there for the inspections. I need somebody to do the move in, move out checklists for me, I need them to do, if the tenant locks out their keys, they need to be able to provide me with a locksmith or just have a big network. So I look for someone that has a huge network of people, real estate professionals that I can connect with. And so those are really big things that I look for in an agent.

Felipe:
So to recap, you make sure that they have real estate themselves, right? So are they an investor? Second, do they know the terminology, right? ROI, just CapEx, like do they know the terminology that you’re talking about or do you have to sit there and define it for them? Right? And then the third one is their network. Do they have a large network of individuals in this city that it’s going to positively affect Roberts goal with that property that he’s potentially going to buy, great points. I love it.

Robert:
They also need to be able and willing to go a little bit above and beyond. So for the inspection, I needed someone that was going to be my boots on the ground there. So he was literally on FaceTime with me walking through the inspection. And I think this is one of my favorite points to make when I talk about long distance, because people look at me, especially my family who’s not really an investor. And even my friends, they say, you’re investing long distance. Like, what are you doing? You’re crazy. And I said, but guys, I don’t know anything about this kind of stuff. So if it’s my next door neighbors house that I buy, if I go in there and I’m looking at something, I don’t really know what I’m looking at anyway.
So what I’m going to do is I’m going to hire a professional that’s going to come in, give me their opinion and tell me what’s right or wrong with this property. And so basically when I go there, as long as I’m on FaceTime walking around with the inspector and my agent, it’s essentially the same thing. So that’s just an example of one of those things that my agent needs to be able to do for me is during the appraisal, during the inspections, things like that, walk around with your phone on FaceTime so I can actually see what’s going on. Show me the property.

Ashley:
That’s a really good point because a lot of people talk about out of state investing. How do I find someone I can trust? The realtor, well, do you trust yourself to make those judgment calls on things that a professional can do for you? So I really like that a lot because even for me, one of my goals this year is out of state investing and it’s like finding a team I can trust. But also like if I go into a property, I can definitely know a lot more now than I did years ago, but I’m not going to know anything about that market. And I need to … the realtor is going to know better than me anyway. So I don’t need to go there and to study, does the families that want to rent there, do they want a backyard or would they rather an extra bedroom? Stuff like that.
All of those are things that I’m going to trust a real estate professional in that area to know. And plus that saves me a ton of time and research, just going off of what they know already, because they’ve been doing this for so long and they’re the professional. It’s kind of like a property manager, they’re the professional, they know the rules, the laws, the regulations and that’s something easy to outsource for them to take care of.

Robert:
Yeah. It’s almost like having a property manager as an agent as well. And the reason I also like them being an investor is like you said, they understand all of these different things. And so for me, my agent actually said, if you guys don’t buy this property, I’m going to buy it, so that gave me a lot of confidence to move forward. And of course he didn’t tell us that until a little afterwards, and I didn’t make my buying decision based on that. But it’s just one of those things that makes you feel good about it. And they need to be willing to go do those types of things. Take the videos for you is a really big one when you’re investing long distance.

Ashley:
And that he didn’t steal the deal from you either.

Robert:
Exactly.

Felipe:
So let’s get into the numbers there Robert, what did you purchase it for? What did you have to do to it? What’s it renting for? Did you refinance? Do you still have it? I mean, give us the whole picture with the numbers in it.

Robert:
Yeah. So the acquisition is actually a little bit of a funny story because we were going to buy it cash. It was … So like I said, I’m in greater Boston, duplexes are about 400. So when we went to Texas, this is a beautiful, that’s where it is, in Texas. It’s a beautiful three bed, two bath, one car garage, beautiful fenced in yard, great neighborhood, great schools. So it’s a great property, but it was only $65,000. Or they were asking 70, I think. And we were shocked. I was shocked. And so I was going to buy it cash, and I had a business partner on this deal, but we were going to buy it cash together.
And then they started wanting a proof of funds and things like that. And it was just, it’s kind of a pain to get a proof of funds from a bank. And so we said, let’s just kind of forego this deal. If you’re going to require for proof of funds, we’re not interested. And so we pulled our offer.

Ashley:
Let’s explain that real quick. So a proof of funds is a letter from your bank stating that you have this amount of money in your bank account. And some banks will actually put a hold on that money for up to two weeks, and sometimes even 30 days giving you that light.

Felipe:
Yeah. It’s a month in my city. If you want to get a proof of funds in your savings, it’s like 30 days frozen. And it’s like, whoa, like what if this deal doesn’t even go through? So I don’t like that either actually.

Robert:
And it sometimes takes time for them to get you the letter. Like you can’t just take a screenshot of your bank account online. Sometimes it takes a couple of days. And if, real estate can be fast moving. And if you just don’t have time for that, then-

Ashley:
And that’s where the banking relationships come key. Like I have a banker that will give me a proof of funds letter that day and they won’t freeze my accounts. So working with smaller banks, stuff like that can be an advantage, but yeah, that’s 30 days to freeze your funds is not the best.

Robert:
Yeah. We just didn’t want to deal with it. And we had two separate banks for me and my business partner and we were just like, it’s not worth it for us. I think we had like 13 other offers out at the same time. So we’re like, well, we’ll probably get one of those or we’ll buy another property. It’s not a big deal. So we pulled our offer and we were full asking price with cash. And then we pulled that offer and then a couple days later, they came back to us and said, we have a bidding war, we’re asking for best and final. And we said, you know what? We have a preapproval, let’s just submit it with the preapproval. And so we’ll use a financing offer and we offered, I believe it was five or $10,000 under what asking was. So I think we ended up offering 65,000 and we actually got it.
Apparently they had seven offers they said, and we got the property at 65. And so I don’t know how or why we got it. We didn’t even ask, offer full asking, but I wonder, I still to this day, think it might’ve been because they knew we went in with cash. And I think in the back of their mind, they knew we would close. And I think that might’ve helped. I don’t know for sure, but yeah.

Ashley:
I think that’s definitely an advantage.

Felipe:
Oh, a hundred percent. Yeah. I would have remembered the cash offer too because if somebody would offer at even a thousand, 2000 bucks more than you did but it was bank financing, that’s risky to me. I’d rather lose a thousand bucks and make sure that Robert is going to close it cash, so.

Robert:
Yeah, well we ended up coming in with a financing offer. That’s what we did.

Felipe:
Nice.

Robert:
And so we ended up using the financing, but I think they knew that we originally offered cash. So anyway, we ended up getting it for 5,000 less than asking in a contested bid. So we went through the process. My agent, like I said, helped us through the process of the inspection. The appraisal, all of that.

Ashley:
So you never saw the property?

Robert:
Never.

Ashley:
Yeah.

Robert:
I like to say if I have to go to the properties, then something very, very bad happened because I hope I never have to go there. So yeah, never seen it in person. During the initial showing he took great videos, showed us everything, he’s an investor. So he knew what to look for and sent me really quality videos of what I need to look at, so went through the inspection, got all of that done and then close on the property. We were able to get a tenant in, in about two weeks. It was the strong rental market and it rented for 900.

Felipe:
Nic.

Ashley:
And this was pretty much turnkey, you didn’t have to do anything, yeah.

Robert:
Right. So straight off the MLS, turnkey, nothing, no renovations needed to be done. We’ve had some small repairs that we’ve had to do here and there, but nothing major by any means. And so rent it for 900. Our total mortgage with taxes, insurance, I think is like 350 or 400. And you have your reserves that you have to take into consideration repairs, maintenance, CapEx, things like that, that we put money aside for, but it’s cash flowing about $300 a month.

Ashley:
That’s great. When did you purchase the property? How long ago was this?

Robert:
One year ago, this month.

Ashley:
Oh, well congratulations.

Felipe:
Is this a cashflow pay for you? Is it an equity play? Is this reinvest the money and buy more in that city? What’s the play with the property?

Robert:
Just a rental for cashflow. It’s one of those things with the Midwest is you don’t often get a lot of appreciation. Usually it’s more of a cashflow type play than you do get on the coast. And so I’m not expecting a ton of appreciation, it’s a strong market just outside of Dallas, about an hour and a half outside of Dallas. So we might have some appreciation there, but I’m more focused on the cashflow.

Ashley:
I want to ask you about the financing for an out of state investment. So did you have to go with a bank in Texas and did the realtor kind of hook you up with that? Or how did you go about getting that mortgage on the property out of state?

Robert:
So I don’t think we had to, I think I could have used a lender that’s nationwide if I wanted to, but my agent had a really good relationship with someone that he uses for his own personal investments, so he gave me the connection. I reached out to them and-

Ashley:
Everything done online, right?

Robert:
Yeah. Everything was done online. And then when we did the closing, the closing company, the title company just FedExed me next day, the envelope. So the night before closing, they send you everything and then they tell you not to sign it until the day of closing. You do that on the day of closing, you go to your local bank and get it notarized or wherever you want to get it notarized. And then you next day air back to them and they get it back the next day. And then you get the keys.

Ashley:
I did a bank financing once on one of my rentals for an online bank. So they don’t actually have a branch and they do mortgages and stuff. And they actually send a notary to my house for me to sign all the documents. But it was definitely a very different experience, but I really like doing everything online and through email. So it did work good. It was Bank of Axos that I used.

Robert:
Yeah. Technology has made all of this so much easier. And that’s kind of what I always tell people is, if you try to do long distance investing 10 years ago even, it’s a lot different than it is today. I think a lot of the stigma around it is gone now because of technology.

Felipe:
I had a business partner of mine who, when we were closing on his property, speaking of technology, we’re closing on his property, he was actually on, and this is so funny. He was on his honeymoon when we were supposed to close and he was in Hawaii. So he had to sneak out, run downstairs to the hotel lobby, sign all the documents because the bank, they sent a somewhat the same thing like Ashley, a notary down to the lobby. He ran down and he signed all the documents and ran back upstairs. And he was like, “Dude, you’re going to get me in trouble and we haven’t even been married two weeks.” So like you said, technology has been great. I mean, it’s definitely made things a lot easier.

Robert:
Yeah. So it’s funny you say that Felipe because my business partner was actually on his honeymoon as we were going through the closing process. I swear, he really was. Thankfully he made it back in time. He came back a couple days before the actual closing, so he could sign the physical documents with us. But like if we had any questions or anything like that, I was calling him, he’s in Aruba and I’m trying to get in touch with them and-

Felipe:
Dude, stop calling me.

Robert:
Right. I’m Facebook messaging his fiance, we’re going back and forth. And yeah, so it’s funny. The same thing happened for me. But to answer your question. Yeah. So we, again, this was really a learning experience. Felipe said it earlier is your first property is not going to make you rich. And I knew that, and that’s why I was comfortable doing this deal. The mortgage, all in, like I said is about 350, $400 a month. I said, absolute worst case scenario I can cover this mortgage myself if I have to. So that’s why I was so confident to go long distance. And I kind of took the same approach with property management. I had done some, like I said, house hack. So I’d done a little bit of tenant management, but not a ton, but I’d read a ton of books.
I’d read a lot of Brandon Turner’s books, listened to all the BiggerPockets podcasts, things like that. So I felt pretty confident. And I had my agent who was willing to help us with property management if we needed him. But I said, “Can you do just X, Y, and Z? Can you just do the tenant move in for us? We’ll handle everything else. That’s all I need you to do.” He said, “Yeah, absolutely.” And then he said, “If things go bad, can we call you and then have you take over the property management if we need to?” And he said, “Yeah, of course.” And so that’s what we did. We said, “Let’s test it for a few months, three, six months and see how it goes. If it’s too much, we’ll hire a property manager.” We built that into our numbers originally, but things went really well. It’s actually really easy for us to do. We have good systems in place and with technology it’s really not too difficult. So we’ve continued to just self manage it from 2000 miles away.

Ashley:
Are you using any specific software at all?

Robert:
Yeah, we use Cozy mostly for the tenant management and then we also use Stessa mostly just because I’m an accounting guy background. I love to keep the financials in Stessa, but Cozy is really the one that helps us a lot.

Felipe:
Interesting. Hey Robert, real quick, because I know other people are going to want to know, regarding the bank financing, did you use a bank in the same city as the house? Or did you use a bank from where you live?

Robert:
I used a bank local to the property.

Felipe:
Local to the property. So you reached out to a bank local to the property, said, “Hey, I’m an out of state investor. Here’s funds, here’s all the information, I’d like to purchase this property.” And you were able to move forward with that, right?

Robert:
Exactly. My agent uses him, the loan officer and that bank for all of his investment [inaudible 00:36:17] in that town. So we went with that.

Felipe:
And I was hoping you were going to say that because I wanted our listeners to know how important it is to have a real estate agent that has rental properties, because they’re going to know what banks work well with out of state investors, in state investors, whatever the case may be. But a good realtor is going to be like your lifeline to the best mortgage company, to the best home inspector, to the best … all that stuff. And can’t remember what episode it was, but Rose Buckley, we had recently, she’s a home inspector and she talks about her relationship with realtors as well. Right? So it’s very important to build that relationship with a realtor and make sure you get the right one because they’re going to be your lifeline to that property if it is out of state.
So bang, I’m so glad you said that. And then my next question that I was going to ask was for that property, when you’re investing out of state, do you ever feel the need to want to go see it by any means? Or like you said earlier, you’re like, nope. If I got to go see it, that’s it, something bad happen.

Robert:
So I kind of want to go see the city just because I have rental there and I want to buy more there. But if I’m ever … my corporate job actually has an office. It’s only about an hour away from where I purchased the property. I bought the property before I worked at this company, so when I made the transfer to that company it just kind of happened that they had an office there. It wasn’t on purpose or anything. But yeah, so I mean, I really in general think that if I have to go there, there’s an issue. If someday I’m in the area, I’ll swing by. But yeah, I hope to never have to go there.

Ashley:
I want to ask because Felipe and I get this question a lot, how did you find your partner and how did you structure your partnership?

Robert:
So he and I met at the gym through mutual friends. So I had a workout partner and it was his brother. And so him and I met and we’re younger guys, I’m 25 now he’s 27 or 28. And at the time I was like 22, he was 25. So there’s just not a lot of people our age that are into a lot of the same things that we have, that kind of have the same mindset that we have. We’re both very much go getters and we’re both into investing in real estate, so we just kind of hit it off really, really well. We were friends for three or four years, maybe five years. And then that’s when we kind of reconnected and said, “Hey, do you want to do this real estate thing together?” And he actually originally came to me and said, “Hey, I know you invest a lot in stock market, which I do.”
He said, “I’m going to give you a chunk of money, would you be willing to invest it for me?” And I said, “No.” I said, “I’m not willing to do that. I don’t like where the market is right now. I don’t think there’s enough good opportunities for me to put your money to work and be not reliable, but have my name on your money. I’m not comfortable with that at this point in the market, if it was a different market. Sure. But right now I’m not. And so he said that that meant a lot to him because it showed like who I was as a person and that I wasn’t willing to just take the money and make money off of him for no reason, if it wasn’t a great opportunity. And so from there we just continued to talk and talk and talk. Our relationship grew and we were very well aligned on what we want for our portfolio and also longterm. So we just decided to become partners together. And we basically just split everything 50/50.

Ashley:
So 50 money in and 50 of the … How do you kind of separate the responsibilities? So if you’re self managing, there’s one of you doing the bookkeeping and another one responding to tenants. How does that work?

Robert:
Yeah, so I do the bookkeeping. I’m an accounting finance guy, so it just kind of falls in my lap and I actually enjoy it honestly. And for the tenants stuff, we just split it really. If sometimes, if I’m available, I’ll take it and he’s not, if he’s available and I’m not, he’ll take it. We don’t really get a ton of requests really. I mean, the property is in good shape. The tenants we got, we make sure we get really good tenants in there. So it’s really not been a huge burden on us.

Felipe:
Yeah. Robert, how do you find good tenants out of state? You said we find really good tenants. You’re out of state, so how do you make sure you get the creme de la creme of tenants?

Robert:
We look at people’s credit history, background checks, employment history. And that’s really the biggest things that we’re looking for in a rental history, how they’ve done in the past, we call references, things like that. So really we’re just looking for the best of all those options. And then we’ve set the criteria so that if people meet these criteria, they’re likely going to be good tenants. I mean, you never know what anybody’s going to be like until they’re actually a tenant for you, but by having strong criteria that we’ve read and gathered from Brandon Turner’s books, we were able to get good tenants in there.

Ashley:
Yeah. On Brandon’s podcast today, so the BiggerPockets Real Estate podcast with Brandon and David on talking about partnerships, they actually had two partners on. And when you were just talking, I was thinking about this, I think his name was Sam Grooms. He was on there. And he said that him and his partner worked so well together because they have different strengths. So they play off each other, but their mindset on their real estate goals and investments are the same. And that’s why they work so well together. Their short term, longterm goals are the same, but they each like, you’re you said, you’re the finance guy and you do the bookkeeping side of things and that’s your strength. And they talked about the different strengths they have.
So I think that anyone looking for a partner, go out and look for someone that maybe is better at something that you’re not. And you guys can kind of use your strengths to each other’s advantage, but make sure your goals are the same. So plan it out. Well, what do you want to see six months from now? A year from now? What do you want out of investing in real estate? Do you want time freedom because your partner might want to be hands on for everything to save more money. So it’s definitely, I like to call them alignment meetings where you sit down with your partner and make sure that your goals still align. Whether their quarterly, every year, but it seems like you and your partner have a lot of those systems in place. And as ours right now, your goals are very aligned moving forward.

Robert:
And we learned that exact same thing from Brandon and David and the BiggerPockets community, the podcast and the books, but my business partner and I are that exact same way. I’m more introverted than he is, he’s a sales guy. He’s a pharmaceutical sales rep, so that’s what he does all day. He talks to people and he’s very outgoing and it’s just how he’s always been.

Ashley:
So he’s a high DNI on the disc profile.

Robert:
Exactly, exactly. And I’m the opposite. I like having conversations, I host a podcast. I talk to you guys, so I don’t mind it, but I’m just a lot more introverted. And so we see us scaling as him being kind of our money raiser. He’s going to go out there and meet people that want to raise and help us raise capital. And then I’ll be the guy that’s, I’m more analytical. I know how to do all the deal analysis, find the deals, acquire the deals. And so that’s kind of really how we work so well together.

Felipe:
I love that. That’s how me and my business partners are as well. I’m definitely more the sales guy, the more talking to the contractors, I’m out there, I’m boots on the ground. Like, I love that stuff. But if you put me in front of an Excel sheet, man, I’m like, why is there letters on this thing? Like what is going on? Right? So I’m totally not that guy, but I have great business partners that are, so I agree a hundred percent.

Ashley:
And that’s why you have an amazing wife too that does that stuff for you.

Felipe:
Let me tell you, my wife and my son have made me the best entrepreneur that I’d never thought I could be. Right? She is great when it comes to that kind of stuff. And I was just like, well, why don’t we just buy it? We’ll figure it out later. She said, “Well, we got to run the numbers and like all this stuff.” So she’s made me a great … But that’s the importance of having a great partner and having common goals that you both want to reach like Ashley said at a certain timeframe or whatever the case may be because just saying, oh, well I want cashflow. That can mean so many different things for so many different people. And unless you have those open, clear cut conversations with your partner, you have the potential to fail, and that’s not what you want to do.
You want to be open and clear from the beginning with your partner and say, “Hey, this is what we want to do. What do you think?” And if your goal is aligned, then yeah, move forward. But I would be hesitant to get into a partnership with somebody who doesn’t share the same common goals that I would have regarding real estate.

Robert:
I think that’s very, very important. That’s exactly what we did. We have the skill sets that kind of help each other compliment each other, but we also have the same goals, but I’d even take it a step further than that is having the right goals and matched goals is important, but having the ability to actually follow a path to get to those goals, I think is even more important. And I don’t think a lot of people talk about that. And what I mean by that is if you have the goal of longterm, just cashflow, and you’re going to just going to continue investing money, and you’re not going to take anything out of the business. So for us, we haven’t taken a dollar out of the rentals. It just stays in the business account basically. And so I think we have that goal match, but now you need to see, does my partner actually have the means to be able to do this strategy that we want to do longterm.
And it’s not to judge people or anything like that, but if you’re trying to buy properties with somebody that makes maybe $25,000 a year, maybe they need that cashflow to supplement their career. But if there’s somebody that’s high earning, they’re doing well in their career, things like that, then maybe you can assume that they’re going to be better off and leave that cashflow in there and be able to actually go towards that goal. And so it’s not necessarily to judge them or anything like that, it’s just to make sure that your personal finances are in order so that your partner doesn’t have to sell out early on the deal because they need the money for their own personal finances or their mind changes because of something they’re doing in their personal life, because that does impact you as their partner.

Ashley:
Yeah. That’s a really good point. And I always stress that you should, as a real estate investor you need to focus on your personal finances yourself, but look at who you are partnering with. And if you want to partner with someone, show them your financials, show them your tax returns, your personal financial statement, and your bank accounts. Show them that you have your own finances secure and stable. And that doesn’t mean you have to have a ton of money, it just means you manage what money you have. So I think that’s a really great point, but I want to move on to our next session. So this is the part of the show where we learn about a key player on your team. It can be an agent, a lender, a handyman, someone who has been your MVP. So Felipe, want to do your chant?

Felipe:
Okay. So this is really important, Robert are you ready? Who is your MVP, MVP, MVP? Who would you say the person is that had most positively affected you guys out of state investing goal?

Robert:
Definitely the agent that we have in that local city. He’s … People talk about building a team and that sounds daunting. It’s like, oh, I got align all of these different people, but really if you get a really good agent, when you’re investing long distance, they can be like you said, your MVP and they can do a lot for you. So for us, he gave us the lender. He gave us the handyman, he gave us either the electrical contractor, anything we need, somebody to mow the lawn. He’s given us everybody that we need so we didn’t need to build those relationships. We just call him and say, “Hey, who do you know that can do X, Y, and Z.” And he helped us through all of that. And of course, everything he did to help us get into the property, he’s just really been vital in our success.

Felipe:
Okay Robert, so great. You found a great realtor. Awesome. Everyone’s going to want to know how did Robert do it though. So how did you find this realtor and how do I find one out of state?

Robert:
So I looked on Zillow and I looked at that local area and I looked at the top 30 agents or so, and I just called every single one of them. I just conducted “Interviews.” And I just talked through them and you can be as structured or as not structured as you want. But I had a set of questions that I wanted answers to, and then the rest of it was just kind of feel, how did this person talk with me? How did I feel when I talked to them? How did they understand the language? Could they hold a real estate conversation? Did they seem passionate about real estate? Or did they just do it because they think they can make a couple bucks that way?

Felipe:
Because the way they talk to you is the way they’re going to talk to your contractors. The people that are going to move into your property. People need to know that, the way they treat you is the exact same reason they’re going to treat other people.

Robert:
And how often they’re going to be willing to help you. I mean, if you talk to someone that’s not passionate, they’re not going to answer the phone on Friday night at 7:00 if you need a contractor or a handyman. But if they’re passionate about real estate, they’re going to get it and you’re going to call them and they’ll be there for you.

Ashley:
Yeah. That’s really great. And plus they want your continued business.

Robert:
Exactly. Exactly.

Ashley:
So you kind of talked about all the things your realtor has done for you, but can you name one thing that was really great and really stood out to you that would make you want to use them again?

Robert:
The biggest thing is the videos. And so he went through six, seven, eight properties. I forget exactly, but he was going through a lot of properties for us taking videos the whole time. So he FaceTimed us and recorded videos that we’d have it afterwards. So walking through the whole property, like I said, it was as if I was there. I don’t know any, like too, too much about the handy side of things, so that level of detail is good enough for me. I’m going to bring in an inspector to really give me a professional opinion anyway. So the fact that he was able to go to seven, eight, nine properties, walk through FaceTime video, do all of that for me, it was super helpful. And he drove around the neighborhood, took videos like that, and we didn’t pay him any extra for this. This is all part of his commission. So the fact that he’s willing to do that was huge for us.

Felipe:
And speaking of commission, how is he compensated now that the deal is done? Does he still help you with stuff? Or how does that work?

Robert:
No, not really. So we paid him his normal commission, two or 3% when we purchased the property, which was paid by the seller anyway. But he helps us get the tenant in, so for his troubles of doing the move in checklist, the move out checklist, handling the keys, things like that, we pay him half of the first month’s rent. But other than that, he’s not really doing anything for us. So we’re just getting him for … or we’re just contacting him for relationships, but he’s not actually doing any work or anything. So we just call them and say, hey, we need a plumber who do you know? And he’ll tell us, but we don’t pay anything for that.

Felipe:
Awesome.

Ashley:
Yeah, great. Well that is today’s MVP and we will put some more information in the show notes at biggerpockets.com/rookie14. So Felipe, you want to take us to the next section?

Felipe:
Yes, let’s do the next segment. And this is probably one of my favorites. It’s called the rookie request line. We have a few more questions. So basically the rookie request line is where you can call in at 1-888-5-rookie and you can leave a voicemail and we’ll read it on the show.

Jorge:
Hi, my name is Jorge I’m from San Francisco. My question is how do you legally organize your properties? I read in a book that you should put each individual investment property in a single LLC, whereas I feel that is a lot of work, it seems to provide a lot of legal protection. Thank you for your time.

Robert:
So when I first started real estate, I said, I’ll never own a property outside of an LLC. That was the only way I would ever do it. And then as I got more educated, I talked to, I have a podcast, which I’m sure we’ll talk about later, but I talked to a lot of people about this on the podcast, and then I just got more educated on it. And I realized that there’s a lot of different things you can do to get yourself protected. And so we bought that property. We were going to transfer it to an LLC afterwards because it’s very hard to get financing for an LLC, especially on this type of property and what we’re doing. So we’re going to quick claim it to an LLC, but then we quickly learned that we’d have to pay taxes in the local area there and where we live business or formation cost basically.
So another, almost a thousand dollars to form the LLC locally there in Texas. And then it’s really cheap up here in New Hampshire, it’s only about a hundred dollars. So it just didn’t really make sense for us to do that. So we decided to just keep it in our regular name. So I would probably recommend until you start scaling or you’re going to have financing terms where you can do an LLC. So if you’re doing five units or more, I would recommend probably just doing an LLC, but if you’re doing less than that, I think it’s fine to keep it in your personal name. Just make sure that you have the insurance policies, everything, all the paperwork, everything in order so that you’re covered.

Ashley:
Yeah, that’s really important is the insurance policy, get an umbrella policy covering you and your partner on that property, especially if you’re not going to have the LLC. So that’s a great tip and make sure you have, still have an operating agreement together for that partnership stating who’s responsible for what now, if something happens and later on, and I also like to recommend life insurance. You guys life insurance policies-

Felipe:
I was about to say.

Ashley:
We may not know, that’s why I’m saying that.

Felipe:
Ashley, this is funny because I was waiting for it, because Ashley goes a step further and she’s like not to be morbid, but she’s like, if my partner dies, I want to buy out whoever was going to get the other half of this part, so Ashley tell them. But you get like a life insurance on top of all your insurances on your business partners.

Ashley:
Yes. So, well, I’m also-

Felipe:
It’s quite funny.

Ashley:
I became a licensed insurance agent, so I have to make commission off myself.

Felipe:
Of course.

Ashley:
But I get in a life insurance policy and my partner, they get one on me. So if one of us were to pass away, then the proceeds from that life insurance policy would be used to buy his family out. So instead of me becoming partners with his family automatically, I would retain 100% ownership and then his family would receive a lump sum payment for the ownership in that. And there is like a calculation in our operating agreement that we actually, we have a buy sell agreement too. So if one of us wanted out of the property, what would happen or if we decide to sell it, and then it also states the term of one of our deaths and there is like a calculation to value, put a value on the property and how much it should actually be paid out to. I don’t know it off the top of my head, I think it’s actually different for each of my partnerships, but yeah I think that’s really important.

Felipe:
So I don’t do that. Yeah, I don’t do that yet. And it’s funny, actually, we recorded a podcast together just the other day and you had told me about that life insurance strategy and ever since then, I’ve been thinking about it and I think it is a really good idea.

Ashley:
Yeah. I mean, it’s … and you can have like your company. If someone does have an LLC, you can have the LLC actually be the … but they’d be the beneficiary I believe. And then you can actually write the premium payments out of it.

Robert:
Yeah. So for us, I think as we scale, we might start to look at something like that, but we just have three units altogether. So it just seems like it would be a little bit much for us. And this is probably totally not the optimal way to do it, but like I know his wife really well. So I feel like if God forbid something did happen to him, her and I would be able to work something out. And I mean, business is business. Money is money. And if something happened, I don’t know what she would necessarily be like in that situation. You never know really but … So it’s probably a little naive on my part, but in general, our portfolio is still relatively small. So I think we haven’t gone through that process yet.

Ashley:
I like to say, whatever makes you sleep at night is what matters.

Robert:
And I maybe able to sleep well at night right now, so.

Ashley:
Yeah, right, exactly. So the next thing we have is just a bunch of random questions that Felipe and I stay awake at night thinking about what to ask. So Felipe, go ahead, you can take the first one.

Felipe:
Sure. Robert, I’m wondering, what were you like in high school? What clique were you a part of? You said you’re an introvert, but you have two podcasts. You have, I mean, you’re doing this one. I mean, it sounds like you’re pretty outgoing. So what were you like in high school then?

Robert:
So my earlier days are a little bit different than they are today. So basically growing up, I had no intentions of going to college, nothing like that. I was a motocross racer and I was on path to become a professional motocross racer. So I missed a lot of school when I was younger, not so much in high school because I stopped my freshman year, but I always just kind of hung out with athletes. But I also hung out with more businessy type people as well, or “Nerds” because I’m a huge nerd. But when I was racing, I had no intentions of going to school, but once I stopped racing, I said, “Well, I got to do something now.”
And so I got really, really into investing and studying Warren Buffett, things like that. And I became a huge nerd. I had never read any books before that. And then after that I’ve started to read a ton, built a huge personal library myself. So I started to hang out with a lot of the nerdy group and also, but I played sports in high school as well. I played baseball, basketball, so I was also hanging out with those folks as well.

Ashley:
Can you give us a little insight to your morning routine if you have one?

Robert:
Yeah. Well, we’re recording this during COVID-19 so my morning routine is thrown off a little bit, but during the normal course of life, usually I’m up around 4:30, 5:00. I’m at the gym by 5:30, out of the gym around 6:37. At the office by 7:00, 7:15 and I work my corporate job till about 5:00 and then go home, hang out with my family for a few hours, usually till about 7:30 or 8:00, and then they all go to bed and then I hop back on my computer, do more work, do podcast work. Do all the different side hustles I got going on. Do-

Ashley:
Call 35 realtor.

Robert:
Call realtors. Well, thankfully is I’m able to do that during my corporate job too. I’m doing Excel work, so I’m able to call them and have that conversation. So that works really well for me.

Felipe:
That’s awesome. So I got a question for you a little bit off the list here that we have, Robert, if you could have a drink with anybody dead or alive, who would it be and why?

Robert:
Warren buffet, because-

Felipe:
I knew you were going to say that.

Ashley:
[inaudible 00:57:25], that’s a great answer.

Felipe:
That was easy.

Robert:
Because I mean, I’ve studied him. He’s been my idol for 10 years and I think it’d be him.

Ashley:
Okay. Well the last question we have is a little bit of rookie hazing, Felipe will help you out with this though, but what song is your guilty pleasure? And can you sing a little bit of it for us?

Robert:
I could tell you my guilty pleasure, I don’t necessarily remember all of the lyrics, but it is Avril Levigne’s Skater Boy.

Felipe:
All right, go for it.

Ashley:
He was a skater boy.

Robert:
Exactly, exactly. You know the words.

Ashley:
That’s all I know.

Robert:
Yeah, me too. That’s all I know too. Yeah.

Ashley:
Okay, great. Well, I’m sorry, I took it away from you.

Robert:
No, that’s okay.

Ashley:
Because that’s like one of the only-

Robert:
You do it much better than me.

Ashley:
Well, it’s like one of the only songs I’ve known that people have said, most of the times I have no idea. A lot of times we’ll ask people ahead of time and Felipe and I have to like look it up on YouTube and like try to figure out the lyrics so we can say.

Robert:
Yeah, it’s my guilty pleasure song because people have always doubted me and like they did in the song and then ultimately he becomes successful and that’s kind of why it’s my guilty pleasure song.

Felipe:
I hear you, Robert. That’s awesome. Well man, just kind of to close it all up, man, where can people find out more about you? Tell us about your podcast, where can people reach out to you if they have questions?

Robert:
The best place to reach me is on Instagram. That’s where I’m the most active or in our Facebook group. But if you want to listen to more of my content, I just recorded recently interviews with you Felipe and also you Ashley, they should be coming out around the time of this interview as well. So you can come listen to those. I have two podcasts. One is called Millennial Investing. So on that show, we talk, it’s generally geared towards people that are about 22 to 35 or 40 years old. And it’s mostly about stock investing and personal finance and side hustles. And then I also have a second show that’s just called Real Estate Investing. And on that show, we talk about all different types of real estate investing for relatively newbies to medium of the road type investors.

Ashley:
So really you have to have nothing going on if you want to find the time to be an out of state investor. Man, you have a lot going on, that’s awesome though. But can you give your, the name of your Facebook group and the name of your Instagram handle?

Robert:
Yeah, so my Instagram handle is just The Robert Leonard and that’s Robert L-E-O-N-A-R-D. And the Facebook group is the Investors Podcast Community.

Ashley:
Thank you. And thank you so much for coming on with us today. I think this was great. I love talking about the partnerships and out of state investing, especially those two. But I am Ashley from @wealthfromrentals on Instagram and he is Felipe, @felipemejiarei and don’t forget to join our Facebook group. We’re almost to 7,000. So search Real Estate Rookie on Facebook, and if you guys like Robert, ask him some questions in there when this airs and he’ll be more than happy to answer them for you.

Robert:
Absolutely. Thanks so much for having me guys.

Felipe:
Thanks Robert. See you later.