94. Unlocking the Secrets of Real Estate: Investment Strategies, Property Management, and Airbnb Insights

We serve as a hub for connecting with fellow members during our sessions so you can share successes , ask questions and keep the momentum going .

Last week we were joined by an investor who's been in the game for 20 plus years . This week we're going to be having an open session to kind of talk through something that the Acaba Home Network received earlier today . I'm happy to be joined by our co-host , or my co-host , leibon Ismail . How are you doing ? I'm doing well , that is good man .

That is good . Can you hear me ? Okay , I can Perfect , perfect . Earlier today we sent it out to our whole network , but every so often we try to do it once a month , but every so often we make it a little bit longer we release a newsletter and that newsletter gives an update on the real estate market .

It tells you where interest rates are and things of that nature , and also focuses on a topic . Pretty soon we're going to be bringing on one of our other team members , naira Sanders , to talk a little bit about the most recent newsletter . I believe she's calling in right now . Naira , how are you doing ?

So we're seeing a lot more activity overall since the rates dropping and I think that's going to kind of that's tending to be the trend . So , yeah , I agree .

Anything else that was top of mind from the article and from the newsletter this month ?

I talked about the pros and cons to fix and flips and I like adding the pros and cons to it because there's just like so much that goes into real estate investing , so knowing like what to do and what not to do really helps .

And then also I added some tips for investors and just an overview of everything and I gathered my numbers from like the MLS and a couple of different sources .

You kind of focus on a different type of investing , right , because we work with a lot of first time investors or those they're looking to get out of what they've been doing for a long time .

Say , you've been long term rental investing , now you're looking at short term or flipping , and so it's good to hear about the pros and cons of each , because it is not all roses and sunshine , right , there's going to be some bumps along the road , and it's just hey , which type of bumps are you okay with and kind of working through to achieve your goal of

financial freedom ?

So , for example , like for the fix and flips , one of the pros that I had was the potential profit , but then the downside is the financial risk . But being an investor is all about taking risk , so that's definitely something to take into consideration .

there's stuff that comes up , which is why you always recommend contingency . That way , when it does come up , hey , I did plan for this , I even planned for something coming up a surprise . That way you kind of mitigate your risk , especially in flips .

This is going to be an open session again where we talk about kind of what you want to talk about , but we want to kick it off with some of the news that's happening in the Atlanta and Georgia market .

on . I feel like I'm back in Africa when I was growing up with 2004, . We didn't catch up yet . We didn't have the traditionals . I feel like I'm back , Naira what you got .

That way rain doesn't pull up , because that kills concrete .

The roof is like everybody else's roof . It's very weird . It's actually a terrible design because there's only three ways that the water can get out , because it's a pitched roof . So think of a roof that's then boxed in around the edges to where the water can only go to like three locations . So it's very weird . We got to clean the gutters out constantly .

That's one and two . I'm with you on the concrete . Like people don't understand that everything is built in a way to where it can drain properly and that's part of the zoning .

And so , with the storage units , we almost had a heart attack toward the end because we brought somebody else in that was a little bit cheaper to do , like the black top , and they were like hey , the grading's all off .

Like it should be three inches and you guys are at six inches , which may not seem like a lot , but it's a heck of a lot across , like when you're talking about , like you know hundreds of yards right . It starts to drop off quickly and so , long story short , it was a false alarm .

But if we were off , the drainage would just sit there on the black top and then you'd have big puddles that eventually would eat away the black top and it wouldn't last 50 years Like it should it lasts . You know a lot less than that .

They turned a baseball stadium into apartment complexes , right . So they had kind of the yeah . And so I kind of wanted to ask you guys , all of these old office buildings , these commercial buildings you know , covid kind of wrecked a lot of them and they haven't really been able to recover Do you see them turning into more that kind of thing ?

Or you think they're just going to be vacant or they're going to say , hey , everyone back in the office , try to get them back filled . And what is the future on that end ?

It's like a pushback that you get and it's because of human nature , right , most humans don't want to change . You don't want something to be , like you know , an eyesore in the neighborhood , things that nature , and so , yeah , it's hard to get the community behind you to actually get these things done and it takes many years , right ?

So , for example , in my neighborhood that I live in here , there's this developer who , back in oh wait bought up a lot of the commercial properties in the neighborhood and people say that he basically saved the neighborhood right Back in oh wait , oh nine things that nature .

But now he's actually making money on those by turning him over into mixed use buildings and apartments . And every time that he puts up like signs to get this thing going , there's like a Facebook group and community meetings and all the stuff , and people are like basically trying to tear down his house , to like . Hey why are you putting up this mixed use ?

It's like dude , he saved the neighborhood , like a couple years ago . But it's one of those like when you start to actually take action on these mixed use buildings , a lot of people come out the woodwork to try to stop you , and so that's the one piece I would caution against is is the neighbors right ?

You really got to check who the neighbors are , because they may try to come out there and put a put a stop to it .

Right , because the previous owner went through a two year struggle of getting the land rezoned from agricultural to B2 commercial , which in Louisville , b2 means you can build whatever you want right , basically , right Took him two years . He had to go to a lot of community meetings .

He had a lot of people , like you know , beaten down his door , things at nature while he's going to the Kroger and in the neighborhood , and so , long story short , he got that rezoned and did the hard lifting and all we had to do was show the final plans and we had to open it up to the community steel for the final plans and they gave us our feed ,

their feedback . A lot of people didn't like it , but on paper there was nothing they could do because it conformed to the zoning that we had . It was just a requirement that we kind of hey , you got to show this and allow people to give their opinions .

And again , for those who are just now joining , this is an open session , so feel free to throw any comments in the chat and or join , live and Desmond . Good to see you again , man . How you doing .

I'm putting some of the final touches , like finishing pieces , blinds , decor , shit like that , but I'm hoping I'm going to be able to get it hosted by this weekend and then otherwise have been onboarding my long-term tenants and I inherited it onto the portal and I feel better now because I have more than just one measly tenant in my tenant portal .

So now I have actually a reason to have that . But yeah , man , it's been good , it's been good .

I built a fence , definitely did more than I had planned , but I mean it looks good . I think it was a solid investment and hopefully will be worth it in the long run . But yeah , man , he did some solid work and came back a couple of times .

So I do the finishing touches because there were some things that weren't 100% buttoned up , but he came back and finished those things , so that was cool to see . So , yeah , man , we're getting there .

So no , I inherited three tenants and then one was vacant that's going to be the BNB and I have a tenant right now who pays late consistently every month . So I'm trying to figure out what I'm going to do About that and how I'm gonna handle that situation .

They're leases up at like the end of March , so I actually now , like tomorrow , need to give them the notice of like Am I going to renew ? My god , you know not renew what the decision is gonna be , and it's interesting because there's an $100 late fee .

But look , looking at the rent roll that we got during the closing and , like based off of last month , they pay every month with the late fee , with the late fee , so they pay an extra hundred dollars Just 15 days late . So I'm like , huh Do I ? I'm like it's like a hundred more dollars in the room than I'm making .

But it's like , do I keep betting on them ? Well , really , one , I'd be nice to have my money on time . One , because my mortgage do on time to you know . Do I bet on them continuing to pay late ? Or one month ? Do I risk them defaults in which I feel like is a risk already ? Pan on 15th Thoughts and suggestions .

And so , especially with the renewal , I would just try to sit down and have the conversation with them on this piece , like , hey , it's due on this date for us , and maybe in the new lease you bump up the late fee to encourage them to pay on time . But either way you can increase the rent by they've shown they can pay it .

To increase the rent by at least a hundred , right , but then bump up the late fee to maybe , hey , we expect rent on time , just like you expect us to take your maintenance issues on time , and so the late fees now Gonna be 150 or 175 , something of that nature .

Right , to encourage them to kind of pay on time , because that's really just a habit thing , right , they're paying on the 15th out of habit now , and so that's kind of what I would do and try to keep them in that unit Right , as much as you can , especially while you're updating this one , because you've already spent the money on one unit .

If you can keep and renew the other tenants , you know , kind of go for me . But interested to hear Kareem Robbie . What are your thoughts ?

I've heard a couple people do it where They'll tell them like , hey , you know , I'm not gonna force you to use this , but if you do use this , you know it allows me to have all my tenants on the same payment structure and I can give you a discount .

Like you know , you could already be planning to up it to whatever amount , but you can say I can , you know , if you do this , that's auto pay . I'll drop the you know monthly fee down by you know whatever , whatever you want basically .

I'm wondering if there's a World where you can put them on like a probationary , like a month to month for like three months maybe , after you had that talk , and see where that lease , because you're gonna have that talk and then you sign the lease for another year and then nothing happens right and that's actually what I was thinking too .

do a six month after that and kind of like stair-stepping it or maybe Creeping toward 12 months , because I mean me , like you said , at least right now it's nice to have that money , even if it does come 15 days late , especially for $100 extra . Like , yeah , kind of like cool like that works .

Given especially to that I'm two months ahead of the mortgage payment right and we did that strategically and that , like in hindsight , could at first in the closing , I'm like that might not be a huge deal , whatever . Now I'm like dude , thank God Trying to come up with that payment man .

That's why most leases end in the summer .

That's when school gets out , a lot of people are out looking right for houses , and so if you're gonna do that , love the month the month until the summer , and then I would look to get somebody locked in for Longer than six months , right , like I'd be looking for a year , because the whole point of having a lease is to get through that winter time .

In the summer we can rent to anybody , whether it's a short-term rental , mid term , whatever right , it's that winter time that you want to avoid , so as much as you can . If you can avoid having a lease end between the months of , like November , to Call it February , that'd be ideal .

So I'm looking at opportunities Outside of Georgia as well . What part ? What are the states , whatever the numbers you know , or whatever it can prove . I , I'm sorry Any you're saying something , no , please . Oh , I saw I try to stay Away from like the like the typical vacation Sites .

I feel the the competition is is too tough out there and like everyone's Competing over like a smaller pie , I feel . So I try to look around .

I've had decent success around airports , like what I have in Atlanta close to Desmond and most of our team , so I I try to replicate that if there's like a big hospital complex , where like a big business park or something like that , try to stay like around these areas . That's what I'm looking for .

Yeah , if you hear about something you know , you know what to do .

But my realtor Down there , who's my business partner , her husband , actually started a short-term rental last year for the first time . So I coached him through like hey , this , how you set it up , all that stuff and and and , most of the time is pretty like stable right . But during the Derby I think he made like 8k that month .

During the Derby and the houses that he has down there , I mean he bought that for like 180 , so and some nice house , and so he was hoping to make about 1200 a month . He's definitely making more than that thing , probably closer like 1800 a month , and then during the Derby you make at 8,000 . So the numbers really work out .

It's just it's not a market where you're gonna get a lot of appreciation , at least not as fast as Atlanta . But it definitely is one that works for a long term as well as short term and certain seasons .

So if it's a cash flowing market , you could take that cash flow and reinvest it into another asset or another tool that can give you that appreciation and still take advantage of like a cash flow in market , cause most cash flowing markets don't have appreciations like that's just a few , and vice versa also .

There's a lot of appreciation than usually the cash flow is cause the expenses are high . So I'm trying to explore that as well .

But I'm thinking just in terms of like maintenance and just like overall ease of everything . It would be better to move in upstairs , especially if I can do a refinance at some point this year and get my mortgage a little bit lower .

But you know , just kind of looking back on the past , like maybe I guess I bought the house in March and then got it on the sites , maybe I think like late , late April , probably , you know , I think there was definitely like a lot of things that I had to , you know , figure out on the move and just kind of I think it's stunted a little bit of my like

just the revenue I could bring in consistently . But this year I definitely am learning from that . I think that there's a lot more money out on the table with just mainly like pricing .

Like the guy who you had on yesterday or , sorry , last week he was really like dropping some good gems in terms of pricing and how he does that and I think that I can , you know , get a lot more out of it than I did the past , you know , since March really .

So I'm excited to get that part of it going once we get into more of a busy season and see how it goes .

Naira , who was on the line , is part of the Acaba Home Team and she released that newsletter right , and she's the one that's been consistently releasing that piece about where interest rates are going and things of that nature . And , robbie , I know that's one of the big considerations for you is how you can get the refinance .

But , naira , do you mind just recapping what you've seen with the interest rates over the last month ?

Oh , word to the wise right . Well , you got the W-2 . Utilize that thing right , Because when you go 1099 , it just goes a lot more . So it's at 925, . I plan to refinance that conventional , which will hopefully get me down to about a seven , right ? Even if interest rates are 6.25 , I'll be at about a seven , which I'm happy with 925 is crazy .

I can't tell you how painful it is to try to pull everything together for all the properties . It's just , it's paperwork , other paperwork . So that was one thing . And two , I only had to put down 10% and I did not , and there's no PMI on this loan . So that's the one piece that's saving it . So imagine your PMI payment and then the interest rate .

I guess it kind of evens out . But there's no PMI on this piece , which is amazing . So my goal is , with the updated units , to be able to build the equity up to where I'm gonna have 20% and then refinance it to a conventional , and at 20% there's no PMI anyway . And then my interest rate drops and now I get the best of both worlds .

But my mortgage right now is 7,100 . The two long-term rentals are bringing in about 3,100 , right Combined . And then the two short-term rentals bring in anywhere from 25 a piece to one month I did 3,700 because somebody booked the whole month right .

So the short-term rentals were needed , at least in the near term , to cover the debt and just keep that thing operating on itself . And then , once we refinanced that piece now we can really go all long-term if we wanted to , as we increase the rents .

No , so he updated those and they look amazing , right ? The other two units I'm purposely delaying that piece , right ?

When you drop 70K on a house that you just dropped 80 or 90 on , it's like all right , there's a lot of money coming out , and so with those two units , I just renewed the leases at a slight increase to where it didn't push them off , but I did it in a way where it's gonna be middle of 2025 .

So literally this year I don't gotta negotiate any leases , right ? So I can focus on the storage units and getting those leased up . So that's off the books . Focus on raising the rest of the funds for the townhome . So we get that off the books , not worry about this thing .

And then 2025 , we'll revisit the leases , start increasing those and if a tenant leaves , I'll be ready to update that unit and put a new tenant in there .

We managed those two as short-term rentals for him . He kept the other two as long-term rentals that were unrenovated and Long Story Short was able to resell that two years later for closer to 800K . Because you can see the potential right Two fully furnished units , you've got all the air DNA numbers and you get the long-term with the potential if I update these .

So ideally I'd love to keep the same tenants , just continue to increase it slowly and then , a couple of years from now , right , sell that thing or refinance it and kind of make a way .

So when the sound decibel in the house goes up to like party level , you will get a notification telling you like hey man , there's something going on .

They've built an integration into it now Cause if it was dependent on us texting everybody , believe me , I mean my team can tell you I'm knocked out at 9.5 pm so I wouldn't be like so long story short .

It automatically sends messages and so we needed this and we discovered this when we took on this short-term rental that was on the belt line Literally it was right next to the belt line and all the neighbors were just hyper sensitive , like they were calling us for random stuff . Hey , you know , a neighbor left the trash can tilted to the side .

Do you wanna come straight ? I'm like , hey , man , like leave me alone . So long story short . We put this system in there and it's amazing , Once it starts getting to a certain level , to Karim's point , it sends a message directly to the guest , to their text message . It pulls their number from hospitable , text them .

If it stays at that level for 10 minutes , it calls them and then it sends an alarm to you to where you can get them on the phone . But typically what we've seen is , by the time it gets to the call , the guest is lowering the level of the noise . It can also detect if there's a bunch of people in there .

I don't know how it does it , but it can sense like if the room's crowded and it can sense smoke and it sends all that stuff alerts automatically . So it's pretty cool . It's not that expensive and the battery lasts for like a year , right , you just recharge it once a year and it keeps going from there . So that's one way if you're super focused on that .

We haven't installed it in the Fortplex because we haven't had any issues , but if we were to have issues , that would be the solution because we've used it before .

I had someone check try to check out late and it was claiming like that , you know , there was someone blocking the driveway so they couldn't get out , but I could see on my camera that his cars parked on the street and he didn't even like , didn't even need the driveway .

And Just people like lying , just like clearly lying about stuff , and I got to decide alright , am I gonna like call this person out on their lie or am I just gonna like go with it ? And now I started to , um , I've started to tell people that I work for the owner of the house and that I'm not the owner .

That way , I like I just can tell them no to like everything they asked for and they like can't , you know ? It's like sorry , I don't have the authority to do something like that , you know .

And then I also took my picture off my Airbnb account and I started I can say this in this group I started getting a lot more white guests , like as soon as I took my picture off and and Like I started getting just more respectful , like back and forth with with all the guesses , I just changed it to a generic like Google image and took my , took my photo

off , and then people were just like giving me much more respect like , much more like Diversity of the bookings , everything .

I think I need to switch because we manage so many properties , right , and I still have it as just my regular whatever , right ? I could switch that to a logo and Actually want to try that out . That's a pretty good idea .

Like no one's gonna Book you more because he like because of your picture .

I don't want to go into the whole psychology of it , but for me it's been working pretty well , like you said , there's just no reason to have your picture , I don't think you know like he might be cute yeah . I'm not trying to my guess . I'm not my type . I'm gonna say that right now , like my guess , are definitely not my type .

Right now that we're fully past COVID and all that stuff , we got to get out of our rooms and actually come out and meet each other and stuff . So , long story short , there's gonna be an invite going out for our first event . That's gonna be in March . It's gonna be pretty dope . It's gonna be on a Friday , so we'll keep you posted .

We're gonna be sending that out in the next week or so , so looking forward to seeing all you guys out there . They're gonna be fun , awesome , oh . So that All right y'all . Hey , have an awesome rest of this Wednesday . We will catch you a little bit later .