84. How to Thrive in Real Estate and Short-Term Rentals with Niyi Adewole

I'll keep you posted on that but I did not want to miss out on this Wednesday call . So I am you can notice the camera is not as high quality because I'm just working off the computer and things that nature but excited to hear from you guys what you're working on and anything that I can help with and any type of conversations that we want to jump into .

But this is going to be an open session , so feel free to go ahead and throw any questions in the chat and or join live and we will get this thing started . And to join live , you're going to want to click that live call in button at the bottom and we'll be able to accept you in or to send in messages through the chat .

On a complete side note , being back down in Florida for the first time in well , that's only been a week , but being back down in Florida twice in one week has given me a newfound appreciation . This weather down here is awesome . In the fall and winter time it's warm , the palm tree swaying side to side is peaceful , With the hurricane things that nature .

I don't know if I could live here , but definitely like visiting Florida and probably should take more advantage of that . And again , this is going to be an open session , so feel free to throw any questions in the chat and or join via the live call in and we'll get this thing started . The man , the myth , the legend himself AJ , how you doing , man ?

So usually , you know , I like to tune in and have the live chat going on , but anytime I can't be presentable . If I got my hands tied up doing some different things , I'll just join on from the phone .

The only drawback from joining from the phone is that I can't actually pull out the video and do a video chat , so I can just , you know , just listen in , but that's the only drawback . So ran in the house and grabbed my laptop because I wanted to kind of chat with you and see how things were going for you .

Man , I'm actually sitting in Florida right now and you I know you utilize hospitable for some of your messaging they have things that nature , so I'm actually doing a like a video with them . They're marketing director because we have a lot of properties with them .

I've done some stuff for them in the past and so they reached out to me last week to say , hey , could you come down to help with something like recording or whatever .

And so , long story short , I am in Boca Raton , get to meet up with some of these guys tomorrow , which would be awesome , and I plan to ask a lot of questions around kind of what they got coming out , because I'm always interested in new stuff .

So one feature that I really love about hospitable is the bad review option , and I don't like giving out bad reviews . I'm an honest man . If somebody most of the time all of my guests they get five star reviews for staying , so long as they treat the property Well , follow all the reviews , follow all the instructions , check in and check out .

But I recently just had a like really bad guest . She basically just didn't follow any of the check in instructions . So there's the feature where it automatically just sends out the five star review if everything goes solid and then , if not , you can kind of check the bad review option . So I did that for her .

But again , what I really like about this option is that it pretty much , as you know , the Airbnb has like a 14 day period to leave a review from the whole side and the guest side . So I triggered a review for her because , again , I think she deserved it .

She , you know , didn't follow any of the check in instructions and what's cool about the bad review option is that it literally and I had to read up on this , but it literally kicks off the bad review like , I think , 30 seconds before the 14 day period window is over . So I think basically what that does is it protects the host .

Obviously , because a lot of guests they'll leave retaliatory reviews . If you know , you were to maybe leave a bad review or maybe the situation or it wasn't as good between the guests and the host , so that got kicked off and then basically she wasn't able to leave a retaliatory review on her end , which she actually tried to . She tried to .

I guess she thought she was going to leave a public review but she actually just DM me thinking that it was a public review .

But the thing is , you know , if you really make it a hard time for me as a host , I mean , I think that's what it's there for , just for the host community to check out and , like you , leave me no choice . You know , if you're not going to follow the check in instructions , the checkout instructions , then I mean you just get what you deserve .

So that's what ended up happening . And I guess , again , like I said , she thought she was leaving a public review but she just DM me directly and at that point I just I didn't respond . I don't think it's no need to know .

Even if the guest was good right and they had an issue , say like a water heater went out for a night or something , we weren't able to get somebody out there , and things that nature even if we resolved it , just to be safe , I'll click the bad review button but leave them a good review and it still delays it .

So even if somebody leaves you a bad review , you have 14 days before it's going to show up so you can get more reviews in there to kind of boost up things that nature . So we use it for the situation that you had , and even if we're like , if he like , hey , I don't know how this review is going to come out .

We'll click that button just so it's delayed , so it doesn't hit us immediately .

Like no hospital kicks that off literally 30 , like I read it up , it was like 30 seconds before the 14 day review period is over . So I thought that was pretty funny .

But it is extremely useful because I mean , as you know , in the Airbnb business , the short term hosts , rental business , like you really have to protect your profile and reviews are everything that kind of like the butter butter of you know how we continue to get more bookings in the future .

So I really appreciate that just that feature from hospitable , one of the many great features from hospitable .

I'm actually on my hospitable trying to see what y'all are talking about . About this bad review , I don't really use it for leaving reviews . I always just go to the app and like click through really quick . But literally just last week I started setting it up .

Come on , man , I'm trying , I'm tired of like clicking through these like stars and like putting the same message every time because I pretty much just assuming they didn't like trash the place .

I pretty much just give like five stars and like say , a nice message because , like I don't really know , like you know , most guests I'm not really talking to , and then for the ones that Do end up causing an issue , like I do , you know , I know those and like I'll , you know , tend to that , but typically I kind of just put the same thing .

So I'm trying to see what y'all are talking about . And yeah , good question though about this , about the retaliation like Airbnb , doesn't allow for that right , because they can't see your review until they put one right .

The main piece with Airbnb is if somebody leaves you a view , it'll tell you hey , this person left you a review , you should review them back , and so that's a nice prompt . If I get the normal one , it's like whatever , but if I get the one hey , they left you a view I'm like , okay , maybe I should leave a review .

So that's where it can get you in trouble , whereas with AJ's piece , when you delay it and they send it 30 seconds before , this person may not even see their email For 30 seconds , and then it's too late to try to say , oh well , I'm gonna hit him with a review , because I know they hit me with a review .

So like if nothing happens , you know I have a cleaner that cleans my property , so she just gives me the thumbs up , she says you know they were great guests , I don't do anything and that review just gets sent off .

But in a situation where maybe you know you had some communication issues with the guests or things like that and Maybe they may be anticipating you know what's the best way I can describe it Um , so say , a bad interaction happened with the guests , right , and their trip ends , as opposed to sending off that automated message , basically you can kind of go in and

click , hey , send a bad review and , like knee said , when you send a review as a host , that kind of triggers a message to them say , hey , you know , like , the host left a review . Please , you know , rate the host and your experience . So the protection is there , just to like not remind the guest that basically you left a review .

So it leaves it to the last second . And then in that event , you know , 30 seconds before the 14-day Period is over for the review , they won't get any reminders , because it's literally the last second , and smart that's sneaky .

That's just just a small thing , but it's extremely helpful in the grand scheme of things is just trying to , you know , protect your profile as a host .

We looked at the ring cameras and there was a whole block party there . No lie like a whole block party through block party .

So I don't know , I think it's just something , that's Just the added feature that really helps host out honestly and AJ , now that you got your property stabilized well , semi stabilized right , what's next , man ?

I'm honestly just trying to take a little breather , enjoy myself a bit and just get my mind prepped for the new year right . I don't want to like run myself into the ground Going into the the new year and then not have the energy and the momentum to keep me , you know , moving forward for the next year .

So this winter I just want to kind of enjoy myself , see friends , family and then definitely have some plans upcoming for the new year , but definitely keep you tuned when that happens .

He owns multiple properties on the street so it kind of fell into my lap where he's looking to offload some of his properties . I'm looking to purchase my next property . So definitely want to get that , you know , ideally wrapped up by the end of the year . Like that would be dope if we could have the closing by the end of the year , right .

So we'll see how that goes . We're starting to work on offer now , right , and then going into the new year . Man tax planning and strategizing is the next kind of piece on my list . So I've been Interviewing CPAs like pretty much all month .

I had two calls with two different ones today , um , so trying to see who's gonna be the best fit Right , who can help me get on Trump's level in terms of tax burden , right , because folks be , you know , dog a ham and trash a ham . But I was talking to a friend earlier . I'm like yo , like I feel like in the investor world , like that's the goal .

You know I'm saying like if I could get my , get my burden down to zero , folks can talk about me as much as they want . You know what I mean . Like I welcome that criticism , if you know those are the kind of problems I have , right .

So I'm trying to Bring in someone who's knowledgeable about not only real estate but also about , you know , someone who can factor in my total picture in terms of income and , you know , have a good plan Going forward and , like you know , not only trying to get this year's taxes buttoned up but also , like looking toward the future and , you know , just trying to

have some sort of game plan right . Things are still , you know , a bit early in my investing . You know , career , if you , if you will , but yeah , I think that's the next piece I want to , you know , kind of wrap up . I've got Bookkeeping kicking off now .

So , mayor , hopefully their hard at work as we speak getting my books that are so behind and so trashed In order . I hope they don't like charge me extra , but no , I think it'll be good and yeah , man , that's , that's mostly it , I think , for you know , kind of wrapping up this year and yeah , we'll see where next year takes us .

Do we need to , you know , move these funds to come from here ? There's so many ways to make it happen and that's a huge piece of the puzzle .

Literally , when I made the decision to move away from the W2 last year , it was not with the thought of making as much as I was gonna make there in the first year which it actually has , which has been amazing but it wasn't with that thought .

It was with the thought that , hey , even if I make half of what I'm making there , the tax benefits alone and all the stuff that I've had kind of aggregate over the years that I couldn't take advantage of before , will be enough to make up the difference in it . More than half , like , this year was the first year I got an actual check back In .

Like seven years I was like man , this is pretty cool , I don't owe money to . I rest of actually getting money back . So I'm hoping to continue with that . We'll see how it looks . But one of the goals I have for heading into next year as well is to focus on the team , focus on building the team super strong .

You guys have met a lot of the different team members right now Just trying to work on moving everybody up to that next level , to where we can all Really take over the metro Atlanta market man and in kind of Georgia right , we're trying to grow the team .

We now have six individuals on the team with Now a transaction coordinator full-time working with us , and so it's just trying to pass over whatever knowledge I have , to make sure that it's a seamless experience , no matter who you're talking to on that team .

So that's kind of my main focus at in the 24 and then , from an investing standpoint , trying to keep it going like I definitely Love the fact that we can now get multiplexes with 5% down , so I plan to take advantage of that next year , hopefully early next year , before anything happens with interest rates .

I want to get it why everybody's still kind of shot away . And then from the investment going on in Louisville we are finishing up with storage . It's gonna happen . I'm gonna say end of November . There's been plenty of delays , right , I think that's with any type of ground-up build .

But excited to get that one off the books because right now it's like you know every other month , hey , 30k here , 40k there it's like alright , this is kind of a lot adding up , and so Once that one's up and running , it'll be off the books .

We can refinance that thing , pull a lot of capital out , because it's definitely worth more than what they gave us to build it , and so that's kind of the main focus I got heading into 24 and the self-storage piece .

Right , so no , we haven't built the townhomes from ground up , but look right next to it , we have the whole team in place and we built the storage from ground up , went through the whole process Townhomes adds , you know , maybe a couple more elements , because now you got to put in like plumbing , things that nature , but outside of that it's the same stone walls

going up , and so , yeah , we're planning to finish this piece , get that thing leased up quickly and then move on to the townhomes , because we still need to raise the rest of those funds To make it happen .

But I actually talked to Ricardo at BP con last week and he is hard at work trying to find a commercial lender that can compete with the lending that we already got , to see if we can get even better Lending for , you know , 75% of that project .

Did you kind of just have that sitting in your back pocket like hold on , let me just find my checkbook , or like how does that work ?

Way back when in Louisville , I was able to just sell off a couple of those and there goes the money right . Like you know , we talked about the first one , about about it for 190 , sold it for 310 , right , that's a six-figure check right there . That's like half of the way there . Right now I use that to allocate and buy some more here .

But that was one of maybe six different separate properties that I sold off to reallocate the money into buying property here and the Taylor'sville investment project . So that's kind of where most of the funds came from . And then you know , obviously closing deals , things at nature , I'm putting some more away for the future and for the next project .

But it was just being able to sell off those small multi units that I bought previously to get this one . Like , imagine , you know , two years from now , right , a large multi unit , maybe in a location around you , comes available and it's like , hey , I've got equity in these other ones , is it worth selling these two off to go and take this one on ?

Maybe it is right , and so that's kind of what it was . It was trading up , trading in the small units to get one large one . That is not going to require really any of my time or headaches . I don't got to get any more emails from property management saying , hey , this is broken .

You know , we got to take care of this , we got to replace it or whatever . Right .

It was just forgetting , like what you call it , it was just aggregating , right , like , while you're working a w2 , if you're a high-income earner and you go and replace a roof , you're not able to depreciate that right now , like it just adds up for you until such time that you become a real estate professional or that you can use that , like if you sell the

property . And so , long story short , I can give you one example . There was a 12 unit that we sold . Right . I bought it for 500k , I think . We sold it for like 500k 12 unit . Yeah , it's in little . It needed work like we did , foundation work new roofs , new size it was . It was a lot going on , bed bugs it was .

It was all the stuff going on and we had to switch out all tenants and it was all one bedrooms . But long story short , we were able to sell that for like 690 or something like that , or maybe 700 , something like that .

Right , and the tax burden instead of being 200k , when we factored in all the money that we put in to get all these updates done , the CPA was like hey , man , there's only like 80k that you're gonna have to pay taxes on , right , because we're gonna be able to take all this other stuff as quote-unquote losses , and so at that point I could 1031 it into

another property or just pay taxes on the 80k , which is fine . Taxes on 80k capital gains , if you're doing like 25% is 20k and if you're getting 200,000 , I don't mind paying a 20k fee and then being able to do whatever with the 180 . So that's how we're able to navigate some of those . But the full effect we're gonna figure out this year .

But I plan to do a cost segregation that for unit I plan to , and I got a couple other things I need to talk to my CPA about , but that's that's one thing I'm gonna do this year , or try to negate that got you , so it sounds like you were able to take advantage of the proper tax Deductions from the sweat equity you put into the property .

like I Guess , finance to your personal name , which one is with that fall under ? both . So all the properties right that we own and things that . Well , except for the commercial properties , we're all purchased in my name because you get the best lending right .

And then I moved it to the LLC 30 to 45 days after the 12 unit was purchased commercial because it does like you can't . You want to get it in your name anyway . But all the small multi families and the single family homes purchased in my name so we can get the mortgage and then transferred to the LLC about 30 to 45 days after closing .

But if you're just going to move it over into the LLC , you know , just maybe a month or two after the purchase , then kind of what's the benefit of doing it that way versus , just like I said , like Purchasing it directly through the business other than the , the , the lending terms ?

Or if you're going to do commercial right , because commercials different lending anyway they're only going to give you Amortized over like 20 years instead of 30 years , so your payments going to go up and they're only going to keep your rate the same for like Five years right , and so it doesn't matter . You can buy through a business .

But the whole point of that is for the lending , so you can get the low-down Interest rate that they're talking about on TV , which is still a lot lower than commercial right . Commercial right now is through the roof and and then just transfer it over for liability protection is the reason you move to the LLC after .

The piece you're thinking about probably is the do-on-sell clause , right , where if you change ownership of the home , the bank could technically say , hey , you got to pay this back . That being said , all years up , done it and all the books I've read and podcasts I've never actually seen this or known somebody that's had this called .

As long as you keep paying that mortgage , the banks typically Aren't looking to open their books and start looking through everything and like , hey , this person , that person , because they don't want to call this , do and have to take the property right . So as long as you're paying on time , things at nature should be fine .

I haven't run to any issues with that Kind of doing that method .

Now , if somebody really wanted , they could figure out , hey , who's in the LLC . It would take a little bit of digging , but it gives you one step removed . Like , for example , desmond , if you were to move into another home after buying it , the next step would be to put your current one into an LLC . You don't want to do that with a personal home .

If you live there , don't do it , because it just complicates things . But when you move out , you want to put in an LLC .

Or why do people stray away from that ?

And they were like hey , do not do this for this , that and the other , and just stuck with them . Ok , do it when you move out If it's your personal property . Don't put in an LLC . As soon as you move out , move that thing to an LLC .

But I'm really interested in that piece and I'm just kind of curious if I should start taking steps to figure that piece out and form an LLC and then transfer it over . If it's worth it not quite sure I think that's something I'll have to figure that out with a tax professional or CPA or somebody .

But just kind of really curious on that aspect because , like I said , I've been moved out since July now .

But if there's a slip and fall , things that nature , that's the protection you're looking for to where , hey , this is a separate entity and they'd have to take you to court and spend a lot of money to try to pierce the veil to say , hey , this is really the same , because the LLC is technically its own person .

So if somebody sues this that's why I have an LLC in Louisville , multiple so if somebody sues the thing in Louisville , they're not suing me and taking properties in Georgia . They can only take what's in the LLC in Louisville and things of that nature . So that's kind of the protection you're looking for .

So are there annual meeting minutes that you have to keep ? Are there ? You mentioned the operating agreement . How much work is it to actually run the LLC and have that be proper ?

And two , it doesn't take much time and effort , especially if you're going to be a single member LLC . Ideally you want to have at least another member in there , because then it's really hard to pierce the bill , because then you got in Louisville . I had another member that joined the LLC once .

We bought that 12 unit and then we expanded from there , and so now that's truly like its own thing . Piercing the bill is a little bit easier when you have a single member LLC , just because it's like OK , is this truly separate ? And so with that , the way to make it truly separate is to have separate bank accounts .

Do not co-mingle funds , because that's the quickest way to pierce the bill . If they see , ok , payment from this property got zelled to you personally and then you transferred it to this account , it's all co-mingle . Or if you have it , you just got to keep it separate .

So when you create an LLC , I just created one for the fourplex up in Snowbill and I opened another bank account . I don't know how many I have now , but I have a lot of bank accounts and now all the profits and all the expenses and everything comes out of that same bank account . It's not co-mingled with anything else , right ?

So that's how I keep it kind of separate . So if anybody was able to come to me and say , hey , was this actually a separate entity ? Yes , this is its own bank account , this is all the communication for it , and kind of go like that that makes sense and you set up ?

You know you have 5% in and 95% leveraged on three properties , right , you can bunch those together as long as it's in the same state . So , like in Louisville , I had the whole cluster of most of our properties in one LLC .

And then for this project that we're doing , that's two separate LLCs One for the storage , because that's going to be worth upwards of 3 million months done and it costs 2 million to build , and then an LLC for the townhomes , because that's going to be worth upwards of 28 million months done , it's going to cost about 20 million to build , right and so .

And then in Georgia I have three LLCs One for the real estate , one for the short-term rental business . And it's funny because I didn't know we were going to start a whole short-term rental business .

So I had an LLC for the real estate that I had that was short-term rentals , and then the business started taking off and I had those two in the same one and you know , my lawyer was like , hey , this is a no-no , you got split . That I was like , okay , let me get another one .

And so I got three LLCs one for the properties that I own , one for the short-term rental business so that anything happens there , it's only the business that they would take out and then one for the realty business as well .

So , to answer your question , I think you want to look at the equity that's in an LLC , and my whole thought process is half a million to a million . You should start thinking about opening up another one for the other properties inequities .

Right , and don't put that part of the recording on Instagram .

I feel like you know , just for you know most professions , you can go get that really quickly , and so you know , I think that that should be something that you have .

We don't even have the first property yet . I'm like , guys , let's go get the first property and then we'll figure out how to get the next one , and then you'll add these pieces . So to your point no , I didn't have any of these people , it was me trying to figure it out . It makes me feel a little better . No , I got the Traplex .

I started going from there and I was like , okay , how do I get another one ? And then , oh , I got this job opportunity . Now I'm going to buy this Twellplex . And I'll tell you this even when I first was running the numbers in that Twellplex , the first time I was going to buy it , I ran the numbers as a 30-year fix .

I didn't necessarily understand that the lending was going to be different . I'm like , oh man , this is a knockout hit . This is crazy . Why are they selling this ? And then we get under contract and I start talking to the lender and they're like no , no , it's not 30 years , you're going to get 20 years to pay this . Your interest rate is going to be X .

And I'm like , oh , the numbers don't even look that great to start out and so , no , it's one where you do need to jump in . I think more than anything what you said just taking action is the most important step in the beginning , and then , as you start to go along , you'll just learn along the way .

And , desmond , I'd love to get your thoughts on this , because I know you're fully into this too . But what are your thoughts ?

So , coming out of the gate with my short-term rentals , I was the cleaner and me and my girlfriend were the cleaner . So after a while we were like , look , we can't do this , and Ney and Karim , and shout out to Karim , who's not here right now . But most people are saying , hey , you're going to get tired of that .

And I'm like , no , it's good right now it's working and it was . But after a while , man , after so many trips to the laundry mat , I'm like , man , we got to bring someone in because this just isn't scalable and this isn't the best use of our time . This isn't the most efficient thing that we could be doing .

And I think that's where a lot of the team building comes in . You just realize this could be much more efficient if we end . We could probably be doing this in a better way if we brought in a person whose literal profession is doing this . I'm running to the same thing right now with the bookkeeping . So , starting out , I was the bookkeeper on the team .

I was making sure that the books were in order , at least trying to do so , and literally I fell out of that , like back in April .

Man , I was like man , I'm so tired of looking at this goddamn website and I wasn't even using QuickBooks at the time , which now you know the bookkeeping team , you know Umair , has pushed me to do that and I have QuickBooks set up and you know they're going through that whole process . But you know , starting out I was trying a bunch of different softwares .

I had QuickIn , which would not recommend I had Stessa , which is another you know tool for , you know , trying to track your real estate books .

But I think it really just starts to develop naturally , right , and after a while , you know , maybe after going through one eviction , you realize , okay , like this is a good person to have on the team , right , or like after your books you know are just in shambles , you're like , okay , I should probably bring in someone to like button this up for me .

So I think that's where a lot of it comes out of . And you know , you start to see it as it develops .

You can't be afraid to make mistakes , because that's how you learn , that's how you get better and , like the first property I bought , compared to the most recent property I bought , it's night and day . You know the types of challenges I can take on now and the contractors that I know that can get work done confidently in the numbers and things of that nature .

And the only reason I know all this stuff is because we've been through this for eight years . Right , when you look at professional athletes , typically when they come into the league they're not that great . Right , they go from amazing in college to you know professional athletes like ah , you know what happened .

Right , and it takes about four or five years before they fully develop and are crushing it and are in their prime . Right , and I think we got to take the same approach when you look at this real estate game .

When you look at you know just life in general , right , or business , like it's going to take a couple of years before you hit your stride and really start to understand exactly what you're doing and the pieces that are needed to kind of solve this puzzle , and you just got to keep taking it one step at a time .

Like my team did not look , like it did I mean even last year . When you look at the real estate team , right , it's a blessing to be able to say like , hey , we got six agents that are going to be coming at you , you know , heading in 2024 . Last year it was me , it was me trying to figure it out , okay .

And I was like , hey , man , there's four under contract and I'm running around and I got to do this paperwork and I can't keep up with it . Let me get a transaction coordinator . Okay , I need to be at two places at once and I can't do it because one's in the Blue Ridge Mountains and one's in the middle of Atlanta .

Let me get a showing assistant , right , and then you keep growing from there .

I have , you know , one or two years under my belt and at this point , like I feel , like you know , I have no other choice besides to other than to just jump in . You know , because if I wait around and sit here and try to figure out you know all the pieces and try to make it perfect , and you know , I just feel like I won't be making any progress .

And then you know , if I'm not failing , then I actually won't learn . You have to grow in in from from your failure . So I think that's just what I'm trying to do right now .

I just wanted to kind of check with you guys to see you know where you guys are at too , because if , if I should have had my ducks all lined up , then I guess you know I missed that part already , because I'm already like , way ahead of the game . I'm just doing things , I'm trying to jump in .

There , got the real estate setup , I'm doing Turro , so I'm just trying to figure it out .

So you know , once we hit that number , basically be looking to go back out in the market , buy another used vehicle and rinse and repeat . So that's that's my strategy right now . I'm a text . Got you All right ?