96. Embracing Bold Conversations: Strategies for Real Estate Growth and the Power of Networking

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 .

You kick off the new year with all these goals and now you are one sixth of the way through the year in a blink . I hope that you guys out there are getting after your goals and really shooting for the stars to achieve it in 2024 .

And tonight is going to be more of an open session , and so if there's any questions , please feel free to drop it in the chat and or join live . But while we're waiting for that , one of the things that's top of mind for me today that I wanted to talk about is leaning into the uncomfortable , uncomfortable conversations .

I can tell you that this morning I had a couple uncomfortable conversations around different properties as well as just things happening kind of in the market and just out there , and one of the things that I was told by both individuals that I had this conversation with is hey , I appreciate the fact that you did this , that you wanted to come forward and have

this conversation on this piece , and so , as you get into the real estate investing game , but even your career . Whatever you're doing , you want to get comfortable having these difficult conversations and not just going to go hide somewhere in a closet because it's not going to go away , right ?

Whether it's hey , going over budget on a project and having to have a conversation with a contractor or any myriad of things , I would highly recommend leaning into those uncomfortable conversations and making it happen .

But again , this is going to be an open session , so feel free to join the chat and or live , and we will kick this thing off While we're waiting .

Another piece that's popped up is actually was in Louisville , kentucky , this past week , and it was my first time being back there since we started the self storage units , and it was pretty incredible to see the finished product , and so now we have the building inspectors in there just making sure we're good to go .

They've already given us the green light to start renting these things out , and so I've put together a marketing plan with my partner , and next week we're going to kick it off . We've got some discount codes that we're going to give to the school across the street if teachers need to be able to store some of their stuff .

So we plan to send some cool presents to all the teachers out there to kind of roll out the storage . We plan to send postcards to all the neighbors right within you know , one mile radius of the storage and give them a discount code . And we also plan to start doing Google ads , facebook ads , things that nature for the storage to really kick this thing off .

So super excited to get that one going . That was a long project , plenty of delays , but we learned a lot and now , with this one kicking off officially next week for rent , we're going to be able to shift our focus to the townhomes and start really kicking that fundraising in the high gear so we can get that one going as well . Thank you , thank you .

I appreciate it . Desmond , why are you sitting in the dark man ?

But going from that to doing , you know , self storage and then 100 something townhomes and doing that all on your own at least , just with , like one other partner and like you guys like driving a syndication and like so much sophistication , I feel like it's super cool . So kind of a question I have out of that , like I guess , when did you ?

What made you feel ready for that ? Like how'd you know , dude ?

But the piece that I always encourage everybody to do and I personally do this every year I'll try to make at least one decision where it's forcing me to grow , because I just think about the time and I'm gonna come back to answering that question . But let's take it to sports right .

When you see an athlete come from high school to college , from college to professional , there's always a time period where it takes them to adjust , and so typically in the NBA , nfl , things that nature people hit their stride and you're like five , six , seven after they've been doing something for a while .

And so if you carry that over to business , it makes sense that you're not gonna be an expert day one . When you get into something right , even with the corporation that you work for , it's like okay . First year you're trying to learn hey , what am I actually doing here ?

Then you start to know the key players and move up , and five years later you're doing pretty well . And so when I look at the real estate investing game and really anything in life , I'm always trying to push the boundaries and say yes , and in full transparency .

It also helps to surround yourself with people that are either a couple of steps ahead or on that same journey with you , and so it's a blessing to have my partner on that deal in my life , because she was somebody that I invested alongside right as my investor , friendly realtor for seven years , so she saw all kind of my temperament .

I saw how she worked under pressure , and she's the one that brought that deal and said , hey , neat , I want to partner with you on this . Believe me , it wasn't me actively seeking it . It was her like , hey , do you wanna do this ? And me saying you know what , if she's gonna be the boots on the ground , heck , yeah .

And then we both figured it out together . Nice , robbie , how you doing man .

It was really interesting , like one of those things about that , when I got the house in March , I was right at that high point of Airbnb bookings and everything so , but I also had a lot of money to spend on different repairs and just getting the house ready and set . So it was .

I still profited during those months , but I wasn't anticipating the drop off in like the winter . So that was something that definitely was a lesson learned . But I think that the timing of when my lease ends in September , I'll get the spring , the summer and then be able to still make it like a real house hack and move in there .

But you know I'm excited to move there . I just I don't wanna break the lease and deal with all those stuff that goes into that , so I'm just gonna wait it out a few more months and then move over at that time .

And I got a question actually for Desmond . I meant to shoot you a text earlier and then I got completely distracted With bookingcom . In the past , one of the things that I was a little bit nervous about was being able to request for , like , repairs or if there's damage , things that nature . But I was fooling around the website and I think there's a way .

Are you able to request , if somebody damages something for repairs ?

You can let them do it for you and then if a guest does break something , you can file a claim and then booking will like investigate and probably have you submit pictures and whatnot , and then if they determine that the guest did break it , they'll issue you the money .

The other way is for you to collect the deposit on your own and then I think and I know that that's the method that we have selected on yours because you have the auto host and whatnot and then from there I don't know if there's a way after that to submit a claim on the booking system , given that , like , I think they think that you're managing it

completely on your own Right . So I think that with the option that you have selected , because you have the auto host and because I think it's implied that like you kind of have like the insurance and you kind of have the backup on your own , there's no clean process with bookingcom .

We're starting to pull back on the auto host piece for everything outside of the mansion because we started getting red flag man , I actually had to recreate a new VRBO like a couple weeks ago because we got hit like three or four times for going outside the website , even though it's clearly stated like hey , this is a software things at nature .

Long story short , they red flagged our account and a lot of people started complaining on that piece like , hey , is this real ? And we got hit . So they took the whole VRBO down , which is like 25 properties which sucked .

And so if you were trying to reach me over the last week and I was busy , it was probably because I was uploading everything again , which takes forever . But we created a whole new account , new email address , and pulled auto host off of everything but the mansion because we definitely need it there .

And so I'm looking at bookingcom and I'm like , okay , this is the place . This was the whole reason I got it to begin with because I was nervous about bookingcom and so I made me to connect with you offline on a way to put that stuff back in if we're not using auto host .

I like my properties haven't done well there , but for Airbnb I know that they like monitor the inbox , they say something off the wall like they're going to check you and like you know if you try to do some illicit shit they're coming in on that . But for booking I don't think it's that way .

At least from what I've seen , I've never gotten any sort of like flag or notice or herd of anyone , because I kind of have looked at the forms and stuff too . They have like host forms and stuff you can look at . But at least in my experience there are a lot more hands off in terms of the communication .

So I think you could probably get away with doing something like an auto host and booking , especially , like you said , since a lot of hotels are on there as well and I think a lot of hotels will have their external stuff in the inbox as well . So yeah , just something to note .

I'm sure you guys , being investors yourself , are constantly getting calls from people , Some of them you don't want to answer , but other times just worth it . For instance , earlier we were at just at home and then one of our previous clients that we've helped do deals with out of the blue randomly hey , can you get me a CMA for this ?

And then a couple of days later , immediately randomly , again hey , I want to put an offer in on what you just gave us me a CMA for , completely out of the blue and kind of the . I guess takeaway from it that I really realized is that opportunity presented itself for me just due to building a relationship with them , and I can tell you as well .

Another really random call I received was from a wholesaler who I previously helped an investor buy a deal with , and they called me and said hey , I'm starting to get a lot of stuff that is in retail condition .

Could I use you as my listing agent for it and take it to market so kind of consistently checking in randomly , and you don't have to do it consistently , but if someone's doing something where it's in line with what you're already doing whether they're selling deals to people or doing something you're already doing maintaining , like how we do here meeting , kind of

checking in every once in a while is really kind of beneficial because you kind of stay top of mind in those people and when they eventually have something that they want to go give a deal to or give an opportunity to your kind of the first people that's coming in to their top of head .

Like he literally purchased a house because he was just talking to the neighbors like , hey , guys , this is why I'm looking for it , and was able to make it happen . Leabon over here is making it happen by having conversations with a lot of different individuals .

And I can tell you another way is the longer you're in this game and people start to know like , hey , you like to buy or shop for investments , and they kind of know your neighborhood and your buy box , quote , unquote and what you're looking for , the more opportunities that'll come your way .

I can tell you that I get random calls now right , and I try to if I'm able to answer every call , right . And so a couple of days ago somebody a Louisville number called me and I don't even know how this guy got my number .

But long story short , it's a different individual doing a project in Louisville and he needs to buy dirt and we still have some dirt to sell . And so he's like yeah , man , we need like 300 loads next week , can we work out a deal ? And so we worked it out $70 a load , that's pretty good money , right ?

70 times 300 is Eric please don't quote me , I think 21,000 , right , that's pretty good , right , yeah ? So long story short . Answer the phone , talk to everybody about what you're doing and what you're looking to do , and you'll be surprised what type of opportunities come your way . 100% , eric , what you got going on man .

That's part of how we got this seller finance deal out in Pittsburgh , right Was . The house was sitting for a while , came in and said hey , I'll do it for X amount if you can hold the rest . So it's huge , that sumable mortgage piece .

I know that the the richman row that you had on here before he was talking about some different you know some tactics or strategies with Airbnb where you don't purchase the place and then you can , you know , get involved with like nine or 10 grand or something like that .

So I was just wondering if you guys had thoughts on other things that maybe I should look into , because I'm hoping that by the end of the year , like , I might have around that much to think about using or obviously just continue to save it and then wait for something bigger or better . But I just wanted to know if you guys had any thoughts on that .

The cash flow is great and it helps you hang on to the property , but my whole thing is I want to buy properties in awesome neighborhoods where it's going to appreciate and this is just gravy on top right that cash flow , but I want to just hang on to the property and let it pay itself down . But , desmond , I know you have a unique experience with this .

Having done the rental arbitrage before , what are your thoughts on potentially trying it again and the actual cost that go into it ?

I'm taking the money that I'm making for BNB , I'm putting most of that toward my mortgage and then I'm taking what's left over and then doing splitting it up how I want . So I think that can definitely translate very well to arbitrage and I think it's just a matter of finding the area and finding the right building that's going to fit that .

But I know that there are people where that's their whole game or people that are starting to scale much and much larger . So , like Tony Robinson , for instance , I listened to him a lot and he mentioned arbitrage . I feel like more and more as time goes on , especially with houses being harder and harder to purchase . So definitely think there's merit there .

I tried one out . Didn't work as I really wanted it to , but that was really just a product of me not doing things that I knew I was supposed to be doing . But I definitely want to try that again .

I think that there's definitely some value there and I like the low barrier to entry specifically low barrier to entry that I don't have to put a lot of my own cash into , so I can take my cash , use that for the first month's payment , the security deposit and maybe the second month's payment , but ideally after that the Airbnb can be sustaining the lease and

then I furnish the BNB and this would be the model that I would use and I feel like one I've heard can work . But you furnish the Airbnb with a 0% APR card and even the same model is used for BNBs that are owned . Nii really was the one that said hey , don't use your money .

I think the first time I was trying to set up the BNB , what do I get on this cash ?

So I think being able to utilize that strategy of not using your money to furnish it , paying back that credit card with the revenue that you're making and then , ideally , paying the lease with the revenue that you're making as well , after like month two , you're only like $3,000 , $4,000 , $5,000 of your own cash into the deal . Now that's like best case scenario .

I feel like that's like peaches and cream . It sounds nice Right .

Setting this up in the department I don't own , working at the maintenance and stuff like that , but I feel like after that I definitely could see it working well . I want to try it out myself again , just because I know it can work .

If you find One big issue I ran into is that me and the landlord kept butting heads a lot and I knew , going into the deal , really I shouldn't have signed the lease .

I was so eager to get an arbitrage and make some more cash flow that I was ignoring some obvious red flags of me of just the relationship not working out well and us not having a good business relationship . So that ended up really affecting the deal and affecting the money that I can make and I ended up getting screwed on the security deposit piece .

So yeah , we'll definitely take those lessons . I want to go into the next one , but I think that it can be done well .

you're going to have to just take care of it . However you do , there's other people involved , so I was kind of surprised to hear him say that there was a way to do this and not spend a lot of time on it also , but I'm sure he has a process to get that done , yeah .

I can't tell you the last time I actually sent a message to a guest , we got VA's Operations Manager . I just get text messages when something hits the fan . They're like , hey , nia , is it good if we move forward ? And I'm like , yeah , sure , but keep me updated on different things of that nature .

And so with the more scale that you get , the easier it gets . And one of the things I guess , instead of the arbitrage model , what I've personally leaned into is the management model . Like to Desmond's point , once you set up one or two of these , you understand how to set up the systems and manage .

Adding more units doesn't necessarily add more stress to your plate . You've got all the automations going anyway .

You know exactly what you need in that unit how to set up a cleaning closet , how to set up the locks to where they're automatically going to do their thing , the cameras , all that stuff , and so you could help somebody else take on the management task , and that's pure cash flow as well .

And I think that may be even purer than the rental arbitrage , because you're not out of pocket 10K , you're actually making money from day one . So that's kind of my philosophy .

That's why we've leaned a bit into the management piece , and one of the goals that we have this year is to manage one unit out of state , similar to what Rich is doing , so that we can start to expand in other states as well and then eventually , go out of country .

I'm sure the first month there was some odds and ends , hey , can you fix this and that . But the past eight months you've probably just been like , hey , man , I'm good , just leave me alone , right , pay it every month and kind of go about your way . So they charge a bit less .

For short-term rental management , because it's more involved and there's constant communication and things that need to get fixed , people charge anywhere from 18% to 30% . We charge 20% because it wasn't my goal to build out a whole company .

People started asking I was like all right , sure , and this is what allows us to pay the rest of our team , but we charge 20% of the gross right , and that's pretty good . And you think about some of the properties we manage .

That can take up 40% of the income right there , right , and so it's going to be tight . It has to be the right deal , and if it's not the right deal , you're probably going to be breaking even most of the time .

But some of the individuals that we work with truly just want to have this property continue to grow in equity and kind of have that first one take off in us to handle it form from the beginning until they eventually take over , and so they're good with that . And other ones have a big enough spread that it doesn't matter .

Ie , the mansion makes so much that they're like dude , yeah , we'll pay that management fee and you guys just handle everything . But if you're starting out and you're looking at hey , like your budget and trying to make sure that you can recoup all these funds very quickly , I honestly try to push people toward like dude , if you can manage this yourself .

It's not that hard . It just takes setting up the systems and making sure that you're kind of on it in the beginning , and then you can automate a lot of it . So just keep those numbers in mind . First is cleaning . Cleaning cost is probably going to be your highest , but most people do want to outsource that .

Next is the management cost , which , at 20% , is a good amount of that income that you could have as your profit .

It'd be nice to have some activity going on between that in the limited time between my W2 . But what kind of scares me is being at the beck and call of the property owners .

I think that's the biggest concern that I have , because I know with my rental sometimes I might do things like a little ad hoc sometimes , or we might not do it perfectly , but it works and the guests are OK with it , so it's fine .

But I think that's what my biggest concern is is like not having my shit buttoned up enough and not , you know , having everything be perfect to where if someone I Don't know right , I guess just having to answer to someone else and , like you know , provide reports and provide , you know , everything that someone might want when they're paying you and you know that

response level I think as well concerns me , especially given that I am the staff . This is the team , right , so can you speak to that a little bit Like is this something ? Is it something that you think you'd be able to do not having the folks that you have on your on your side , or you know how was it getting started , I guess ?

Okay , this is what we're gonna do and this is the process for setting it all up and this is how you have access and this is how we can set up time to talk . Otherwise , you'll get calls at like 9 pm For the smallest thing , like , hey , all the tenant just sent a message . Did you see the message come through ? Yes , I saw the man .

Everybody saw the message . Right , we're gonna handle this piece . And so you definitely do got to set boundaries because literally it could turn into a 24-hour thing and you will burn out very quickly , I've learned and so you got to set boundaries for all that stuff , even just your work , life balance in general .

Right , so that's one piece , but starting out I was the one man team and before I knew about setting boundaries it was like a 24-hour thing , especially I was working the w2 , so I'd literally stopped that . And then you know , around the time you finish work is when everybody's checking in .

So that's when you're sending all these messages and it was me solo and I could do about . I think we got to about five or six properties solo when I was like you know what , I need some help , otherwise I can't keep going right . And so when we got to that five or six properties , that's why I started looking for a guest experience manager .

I just started out with just another individual who wanted to get into real estate , one to learn this game , one . It was interested in being , you know , a property manager , short-term rental manager . I mean , I met them actually through somebody else who joined these calls . They said , hey , this person's interested , talk to them . They came on board .

I gave them a percentage of what we brought in from a management standpoint and that's how it started . And we went through many iterations to get to what we have now , which is VAs that work around the clock 24 7 , and there are frontline of defense . Plus we have like a what's that ?

Group with our operations manager as well as me , as like a backup to send anything that they need questions on . And then we have another chat , that's with the cleaners . You know the the VA is an operations manager in case there's something that needs to get taken care of , and so it's not going to start that way on day one .

It's really just going to be you right . And then you continue to grow a little by little , and the more units you take on , the More economies of scale you can get to . But to your point it's going to be painful up front because you don't necessarily have the income coming in to make it worth somebody's while .

But you got to fight through that pain point until you get to about six or so units and then you can really just take off because it's no longer dependent on you .

So , like there's been some days I'm like man , like I gotta find time to like do my actual job , me , me .

Sometimes , like Emily , are you working , you know like , because it can definitely be tough , I feel like During the day having to like do that response , especially for the short-term rentals , right , I think for the long term it's a very different piece , but for the short term , when the level of support is like minute by minute , I think it can be tough .

One question I did want to ask , because we are talking about short terms how do you guys manage and do you guys do any sort of like routine checks , right ? So like deep cleans , like routine maintenance , like pest control ? This is stuff I'm trying to like get better at and bump my cadence up on , since it's slipping in some places I've noticed .

So Question I have . You've been in the game for a minute now .

And in terms of like the routine stuff , normally what I'll do is I'll stock the cleaning closet and a lot of those like Tassel we have to do like change out the battery stuff , cleaning closet , like towels , putting extra towels , making sure that's all done , doing a check of the house , see if it needs to be deep , clean and stuff like that .

I'll do that like once a month . I'll try to do that . And then a lot of other times I just have the cleaner will go through and they'll be doing those routine stuff of just the cleaning , you know , changing the linens and stuff like that , like refilling the soap dispensers and stuff like that .

And then I'll be doing the cleaning , filling the soap dispensers and stuff like that . And then I also have like a schedule for like pest control . They just , you know , you just sign up for that and they come at certain time periods and stuff like that .

And then I guess , just personally for me I also just like when I scheduled those things for like once a month . That's also what I'm normally doing , the purchasing for my Airbnb . So right after I do that thing , I see what's out of stock and also do purchasing once a month for whatever's I need .

If you know the guest needs something right away on that rare instance , then they'll usually be able to take care of it and you know , especially if I'm out of town , they'll do the trash . You know , just because I'm in a like a single family house , so you got to pull the trash out to the curb and all that stuff .

But I think the biggest thing is , you know , just having someone that wants , because the cleaners took forever to get the right ones . It took like three or four different cleaners to figure out how to actually clean the house right , leave the key where it needs to be , and all that .

But once you find them like even if it costs you a little more , you can lean into them because they're going to be at the house more than you and you know that's been working really well , making my life a lot easier .

And then also we look at the reviews right on a weekly basis we're looking at what reviews have come in and if there's anything arrived from a cleanliness standpoint or from anything like , we're taking a look and we're sending our team back out there to go investigate . So we have the operations manager . She'll go to look at a property .

If somebody says like , hey , you know , I don't know that .

Or they send a message , hey , the chairs were wobbly , things that nature Okay , we're going to send our operation manager out there to check and see the whole house and then we'll get the maintenance team out to correct any issues that we see as far as like setting up other things just for the quarterly maintenance . We also do the filters right .

So when you look at like HVAC and furnace , these things can run like a car right . If you keep giving it the old change , if you keep doing those filter changes every three months , they'll run for a very long time . And so we do that piece and anytime we have somebody on site doing the filter changes .

They're also checking around to see if there's anything else that needs to be fixed . And then we do quarterly checks with our operations manager as well to make sure you know do we need to switch out rugs and things of that nature .

But typically the cool thing about short term rentals versus long term rentals is a long term rental you don't know if you're going to need to really gut rehab the whole thing until the person moves out . There could be a bunch of stuff in there , nobody's visiting , they haven't reached out in eight months and you're just like collecting money , right and then .

And then you get they leave the property and you realize , hey , all that money is going back into the property , whereas with short term rentals you're getting constant feedback from guests , from cleaners , from maintenance individuals , so it's a lot less likely that something's going to slip through the cracks .

But to answer your question on the pest control too I think Eric talked about it I would highly recommend in Georgia , in the city , in the forest , that you hire pest control and pay them to come out on a bi-monthly or quarterly basis . It's worth it and if anybody sees any bug you can call them and they'll come right back out for free .

Is there anything that's top of mind from the chat and or on live call ?

You know , they said just pay like what it usually is usually like 50 bucks and then have somebody come out and check all the pipes and then if you find something , you know , send the invoice in , send the information from the plumber and we'll adjust it or whatever . But you know , that's basically the situation , but they don't .

You know , I'm not going to pay that , I'm just not going to pay all that . So it'll , it'll get fixed one way or another .

But I got to get someone to come out and look at everything , because there wasn't even really anyone in the house like that month , because it was like I think it was December or January I think it was January where , like , not many people were even there and I wasn't doing a good job of changing my prices either , so it wasn't getting booked that much , but

the bill was still like that high .

Literally it's been like puddles in the living room . So I've gone down there multiple times like during a guest stay and like man , diy , everything , diy , everything . I'm down there like on the floor , hands and knees and towels . They're like watching , like reality TV . I'm like cleaning up the water .

So I'm still trying to get that figured out before I go to Spain next month . Would appreciate your X done .