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Moving From Single Family Homes to Self-Storage Units with Dee Brock

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After moving from his home state of Georgia to Oklahoma, Dee Brock discovered a burning desire to buy rental properties. He had bought himself a primary residence and cosigned with his mother on her home, but knew he wanted to accrue units that could be cash flowing. He was then able to get a HELOC (home equity line of credit) on his primary and use it to buy a foreclosure.

Everything was going well, but Dee wanted more structure, more advice, and more of a game plan. Someone at his church group suggested going onto a site called BiggerPockets, which later became a huge resource to Dee (and hopefully to you reading this now)! Now Dee knew how to vet tenants, get a cash out refinance, and run numbers like the pros. 

Dee developed a bit of a formula for how he sends in offers on houses. He finds a house he likes, sends it to his agent to get comps (comparables), averages those comps, multiples it by 80% (cash out refinance amount), then subtracts closing and maintenance. That’s the offer Dee puts in on the house and gives him the numbers he needs to feel confident about buying it. 

What if a house doesn’t appraise for the amount needed? Dee also has a workaround for that! Dee’s local credit union that lends to him allows him to use their ARV (after repair value) number OR an appraisal. This saves Dee tons of time and money if an appraisal isn’t needed!

Now Dee is setting his sights on a new venture, self-storage units. We’ve seen a lot of successful real estate investors transition from residential buildings to self-storage, and for good reason. Less management, less maintenance, and other benefits described by Dee makes self-storage a no brainer for where he’s at in his investing career.

Ashley Kehr:
This is Real Estate Rookie, show number 67.

Dee:
I wouldn’t have learned that by reading something, I wouldn’t have. I only learned it by doing it and then telling people that it’s okay to fail. My goodness, I fail all the time. I’m on house number six and I failed just recently.

Ashley Kehr:
My name is Ashley Kehr and I am here with the birthday boy, as we are recording this today is Tony’s birthday.

Tony Robinson:
Today is, thank you, Ashley. Well, no, actually, I’m entering the first year of my 30s, so today’s my 30th birthday, so. My 20s were good to me, I’m excited for what the 30s have to offer.

Ashley Kehr:
While you’re enjoying a great birthday. I actually have a crazy story to tell you.

Tony Robinson:
Let’s hear it, you know I love a good crazy story.

Ashley Kehr:
So you know that I’m in Florida right now. Anybody watching this on YouTube can see I’m not in my closet. I’m actually sitting on the floor in a bathroom. But I left my house two days ago and I was on my way to Florida and I slept at 4:00 AM and I didn’t get to Florida until 36 hours later because of all of the travel delays, I went through two canceled flights, actually flew from Buffalo to Baltimore, from Baltimore to Atlanta, to Atlanta, to New Orleans, where they said, “Sorry, we can’t land you bad weather.” Had to fly back to Atlanta, “Hold on, stay on the plane. We’re going to fly you back to New Orleans.” And then finally I got there, so I spent the night there and then basically I hitchhiked my way to Florida, but I made it just in time for the podcast.

Tony Robinson:
I got a trip coming up this weekend too, and I’m nervous about it because we were supposed to fly through Texas for our layover, so we’re going to call when we hang up here just to make sure that it’s still that it’s still safe to fly. As much as I admire you actually for your stamina, I don’t quite want to replicate all that when I try and fly [crosstalk 00:02:03].

Ashley Kehr:
All right. And I still don’t have my bag. Last I knew my bag was in Miami on my way to Houston. So maybe you can pick up my bag. And I know it’s supposed to make its way to Pensacola at some point. So I had to go, I had to go shopping advice of clothes, a toothbrush.

Tony Robinson:
When I land in Texas, I’ll let them know that I’m there for your bags also, and I’ll drop them off on my way to my way to Tennessee.

Ashley Kehr:
There is a BiggerPockets sticker on my bag. So you’ll know it’s mine. Yeah. I got to represent BiggerPockets whenever I can. So today is Tony’s birthday. So we brought on an extra special guest just for his birthday. And we have Dee on today to talk about how he’s doing BRRRR deals, how he’s driving for dollars and how he bribed his wife to read Rich Dad, Poor Dad, to get her on board with investing.

Tony Robinson:
He also talks about how he’s solely kind of made the transition, not the transition, but he’s expanding his portfolio to include not just single family homes, but he’s got a 19 unit storage facilities under contract as well. We dig into how he found it, how he analyzed it, and why he believes it’s a good addition to his portfolio. But I think one thing that Dee highlights really well is the ability to take action. He was really good at educating himself, but then once he educated enough, he would go and then act on the things that he learned. And for a lot of the folks in our audience, I feel like that’s what they kind of struggle with, is they get so stuck in the education phase, they forget that at some point they need to apply that knowledge and actually take action, so hopefully Dee can give them that kind of encouragement to get going. Dee, welcome to the podcast, brother, happy to have you on this morning.

Dee:
Hey, thanks for having me. It’s super exciting.

Tony Robinson:
Yeah, Man. So we’ll get into the real estate story and all the deals that you’ve been knocking out. But before we do just tell us about you, when you’re not working in real estate, what are you doing? And what kind of gave you your start into real estate investing?

Dee:
I’m from Georgia. And I moved from Oklahoma, with my family. And I’ve been married to my wife for 10 years, we have four amazing kids. We bought a house here and that was my first purchase. And then I’m in Oklahoma, so my wife and I got my mom a house. So that’s how I first got started in buying a house that wasn’t mine. And at the time I knew nothing about real estate or anything like that. And then, so what’s interesting is just out of nowhere, I just decided I wanted to buy a house and this was before I got on BiggerPockets or anything like that. And so what I did was I started searching for a house, and just like everyone, it’s nerve wracking and terrifying. And so what do I do? Well, I asked my brother to join in with me so that if we fail, we fail together.
My other thing I ran to was, how am I going to pay for it? That was my fear. And so what I looked up was I did a HELOC. I’d actually did a HELOC on my primary residence. And so what I did was we found a foreclosure and I went ahead and used all my money from my HELOC to buy my first property.

Tony Robinson:
Dee, I just want to make sure I’m following. This house we’re talking about, this is a house that you purchased for your mother, you said.

Dee:
So the very first house I ever purchased was with my mom. I co-signed with her because she didn’t have enough income. But I bring that up because that was my first house. And it kind of ties into one of my rentals.

Tony Robinson:
You co-sign for your mom first, that was kind of what introduced you into the world of real estate. And then you said, “Okay, let me see if I can do this as an actual landlord.” And that’s when you found this partner and you kind of went down that path.

Dee:
Yes, exactly.

Tony Robinson:
Let’s dive into that just a little bit Dee, what was it that made you say, I do want to be a landlord. What was it about that interaction with co-signing for your mom that made you say, I think I want to do this as an investor.

Dee:
That’s the beauty of it? I have no idea. I mean, I got that first house, and out of nowhere I was like, “I’m going to get a rental house.” And I think part of it is because my dad has some rental houses in Georgia. And so he’s kind of been someone I could lean on and ask questions, but I was never involved in him buying houses, he never talked to me about it. But I thought, “Hey, I’m going to get a rental house and maybe get some income from it.”
And so I went ahead and bought it and then I didn’t do anything for two years after that. So two years later, we have life group where I go to church, and we get together in a group and one of the guys was like, “Hey, have you heard of BiggerPockets?” I was like, “Never heard of it.” And luckily he texts me, because I’m terrible at remembering things, but he texts me the website, and I went on there and I started watching some of the podcasts. And I was like, “This is amazing.” I can have residual income and not have to do anything. So I ended up doing a little more research and I actually ended up doing a cash-out refi on some of those properties, which was you ended up buying my mom, another house.

Tony Robinson:
Man, you’re a great son. I bought my mom’s zero houses so far. So I think I’m doing it the wrong way.

Dee:
She said, “Son, you’re not going to keep moving me, are you?” And I was like, “Mom, don’t ask questions.”

Tony Robinson:
What’s the strategy Dee to take that original house that you bought for her and turn that into one of your rentals, was that part of the approach?

Dee:
Yeah, so that was actually my second rental, was the house that I bought her, the very first house that we bought. And I got someone in there and he actually was an airline mechanic from Texas and they moved them out here to Oklahoma pre-COVID. And he was a great tenant. And that’s the thing is, I did a lot of vetting, trying to find a good tenant, and I went through a lot of them, and I found him and he was a great addition to my tenants.

Ashley Kehr:
So with your mom, I want to know, is this like a house hacking strategy? So did you use to kind of get like a better financing when you purchase that property? Yeah.

Dee:
So at the time I didn’t realize how difficult it is to get foreclosures. So with foreclosures, owner-occupied gets the first bidding. And so at the time, I didn’t know that, but if we were to ever get her another house, I think that we would try to get a foreclosure because sometimes the best deals are on the foreclosures, but that wasn’t the initial idea of trying to take advantage of using her with those, because that’s not what we were going to do, no.

Ashley Kehr:
And now what does your portfolio look like now as a whole? So just real quick and overview of how many units do you have now?

Dee:
So I have a total of six, I have six rental properties. Actually, I was going to close on a storage facility yesterday, but with the weather that Oklahoma has been having, we’ve been having snow. And so he got pushed until next week, but that will be a 19 unit storage unit. And so that’s exciting.

Ashley Kehr:
Awesome.

Dee:
Yeah. And it’s not a liquor store, but I looked into that. But you know, storage units are low maintenance. It’s just like rental properties, you’re learning as you go. And the biggest thing that I have learned is, you can do all the research, all the analysis that you can, but getting out there and actually doing it is what I learned the most from, it truly is, and doing research and then just jumping. And that’s my thing is people are always sitting there wanting to analysis paralysis until you jump.

Tony Robinson:
Dee I’m so glad you said that, I feel the same way, that as a would be or as a new investor, it’s really easy to get caught up in learning, learning, learning. And I learned a strategy a while ago, and it was actually on a marketing podcast, but the concept was called just in time learning. I don’t know if you guys have heard of just-in-time deliveries, but it’s like, as soon as you run out of something, it gets replenished. It’s a big thing in supply chain where it’s called just-in-time. But if you apply that just-in-time strategy to learning, what it basically means is you only learn up to the point that solves your problem. If you haven’t closed your first deal yet, then maybe the first step is getting pre-approved. So you go out and you do as much research as you can about getting pre-approved and then once you feel you’ve learned enough about that specific step, you go take action.
And then once you get pre-approved, you’re like, “Okay, what’s next?” “Well, maybe I need to go find a deal or I need to analyze a deal.” So then you do a bunch of research, “How do I analyze a deal? How do I analyze a deal?” Then you go take action. And it’s like, you learn, you learn, you learn, you stop learning because you’ve learned what you’ve need to learn, you go take that next step and then you start learning again. And I’ve realized that if you kind of approach learning in that way, where you’re learning, just for what you need to know to take that very next step, it can make sure that you don’t get stuck in analysis paralysis and keep moving forward, and it kind of sounds like that’s what you did as well.

Dee:
You learn so many things that you can’t do research on, but that’s the beauty of it. For example, my third house that I got, I actually did a conventional loan. And I used the money down from the cash refi. Well, here’s the beauty of what I do that gives me peace of mind, sometimes, is when I find a house, I will email my my agent and I will send her the address and she sends over me some comps. And so based off of those comps, my credit union, which is out here in Tulsa, it’s Tulsa Federal Credit Union will actually give me a cash-out refi of 85%, which is great. So I take the average of the comps that she sends me, I multiply it times 80%, which I did in the first house, the first house I did, 85%, that was mistake, you want to leave yourself some room. So I multiply it times 80%, I subtract closing costs. I subtract all the repairs and maintenance and things that are going to need to be done to it and that is the offer that I make.
Every offer includes closing costs. And every offer includes a home warranty because the recent house, I learned, I bought it and then I got the home warranty, but the home warranty doesn’t go in effect till 30 days. So hopefully nothing goes wrong in the first 30 days, which I could have actually bought the warranty before in negotiations. And then it would have gone into effect once I moved in.

Ashley Kehr:
I definitely want to talk about the home warranty side more because I don’t think we’ve ever talked about that on the podcast before. But first, real quick, before we do that, just to go back to when you started, how did you get your mom on board and how did you get your wife and your kids on board with this new venture that you’re doing?

Dee:
So when we moved to Oklahoma, my mom stayed in Georgia, because that’s where we’re from. And so we talked her into coming to Oklahoma because everyone’s here. So when she moved here, she moved to just an apartment complex that she had three dogs and my mom lived on the second floor and she just letting the dogs out and going up the stairs just after a while it started taking a toll on her. And so then we said, “Well, how about this? How about we just buy you a house with the fence?” And she was wanting to start, a dog sitting business. And so that’s how that got started.
My wife, she is the nicest sweetest person you’ll ever meet. And she’s all for whatever I want to do. And I actually had to bribe her to a point to read Rich Dad, Poor Dad, because Rich Dad, Poor Dad, that was the first book I read, and it changes everybody. So I was like, “You got to read this book.” And she goes, “I don’t want to.” I was like, “All right, well, what do you want?” She said, “I want a new mattress”. It’s like, “All right, so I’ll meet you in the middle. If you read this book, we’ll get you a mattress.” So she read it. And it’s just amazing, the next couple of days, she’s like, “Gosh, Dee, we could do this and get residual income off of this.” I’m like, “who are you right now? What?” So it’s amazing reading and just creating knowledge. It’s awesome, it truly is.

Ashley Kehr:
So moral of the story is just-

Tony Robinson:
Bribe your wife, right?

Ashley Kehr:
Yeah, that’s exactly what I was going to say.

Dee:
When in doubt find out what she wants.

Tony Robinson:
It’s so funny, Sarah and I, my wife, we’ve been at our house for two years now. And one of the only things that we haven’t bought since we moved in is a new mattress. So we’re like still sleeping on the mattress I have when I was in college, and she’s been asking and asking for a new mattress. So maybe I’ll use that as an opportunity to get her to finally read Rich Dad, Poor Dad too. I liked the way you’re thinking brother.

Dee:
Yeah. The third house that I got, I did the calculations, I was off because I figured 85%, I should’ve figured lower and then the repairs costs were higher than I thought they’re going to be. So in my mind, I thought, “Okay, well, I’m going to go ahead and instead of paying someone 2,500 to paint it, I’m just going to paint it.” And so I went to Lowe’s and was going to rent a paint gun. And sure enough, I go over there and the line is so long so I just go ahead and see how much they were. And I ended up buying a paint gun and I will paint a house again. It was the hardest thing ever, but it was something that I learned and I learned that it’s always good to set up more repairs. And I’ve done that in the future houses too. So not only do I do 80%, but whenever I figure reconditioning and rehab, I add an additional 5% to it give or take. So that’s definitely something.

Tony Robinson:
So Dee, I want to touch on that a little bit, because you talked through the formula that you’re using to land on your purchase price and I want to make sure that we walk through that with the listeners. So what you’re saying is, you know that you can get up to 80% of a homes value when you do a cash-out refinance, right? So if a house is worth $100,000, the most that you can get out on a cash-out refi is 80% of that or $80,000. And what you’re saying is you can’t offer them $80,000 in that house because that leaves you no money for repairs maintenance and all those things you need to do closing costs.
So you’re saying you take your value, you take it 80% of that, which is 80,000, and then you subtract out your closing costs, your repairs, your reserves, if you want to hold that in there as well, so you’re probably somewhere closer to like $60,000 or $65,000 and what you can actually offer. And I think that’s an important thing to point out, because as you said, it can be really hard to kind of miss the fact that you don’t get all of that 80% and you’ve got to budget some of that for the repairs as well. So I’m glad you pointed that out, but just wanted to recap that for the listeners as well.

Dee:
That’s a really good point because everyone’s fears this, “What if the house isn’t appraise for what it’s supposed to?” Well, that’s possible but the house that I bought, I actually have a great relationship with the banker at Tulsa Federal. So here’s the beauty of it is he can pull the the ARV. Okay. And if we want to accept that ARV, we don’t only have to do an appraisal. he’ll just go off of that. Or if it doesn’t add up to what we want, he can actually order an official appraisal, which costs, however much it costs four or 500 bucks. So on that house, I actually knew the ARV in advance. I knew what it was. So I did 85% of the amount and I was golden. Oh, I’ve got this set, perfect. But I didn’t, I didn’t factor in all the repairs and the things that needed to be done to it.
But is it always that easy? No. But I wouldn’t have learned that by reading something, I wouldn’t have. I only learned it by doing it and then telling people that it’s okay to fail. My goodness. I fail all the time. I’m on house number six. And I failed just recently. So just know that over time, it’s a long-term goal, it’s a long game. I mean, and over the whole 30 years from now, those houses are going to be worth so much and you’ll be retired.
Yeah. Anyways, we bought that house and close on. It got a Section 8 tenant in there, never thought I would do that. And a sweet lady truly. And I went through a lot of Section 8 people who applied, and I just tried to find someone who’s genuinely just trying to get by.
And actually funny story is it came down to her and a little less because the Section 8 cut me back a little bit on the rent that I could charge based off that area or someone else who would pay me more. But it wasn’t guaranteed income. With Section 8, you get the income on the first or second of each month. So I said, “Well, I’m going to go ahead and take the lower amount to be guaranteed.” Plus she’s a sweet lady, she’s got two kids she’s single. And I’ll tell you what, I drive her to her house because it’s pretty close, about 10 minutes, and she’s got decorations up. I mean, she takes full ownership of that, people do that, they want to have ownership of it. I even brought her Christmas gifts on Christmas for her kids because she’s got the twin kids and boy and a girl, and I just want them to understand that they’re important to me, they’re not just a regular tenant.

Ashley Kehr:
They’re a customer. And also Section 8, I love that too, because if they move out or they move or they don’t pay rent, like they are at risk of losing their voucher. So exactly how you said, they’re making their house a home. I have found in my experience, a lot of Section 8 people stay in place for a long time. That’s great, you have a long-term tenant and you have that guaranteed rental income for whatever portion Section 8 will pay, and usually it’s a very large amount of the rent.
I want to backtrack to where you said that you have been able to skip appraisals and have the bank tell you the ARV. Can you explain a little bit more because skipping an appraisal sounds amazing where you’re not paying $500 for an appraisal.

Dee:
It’s almost too good to be true.

Ashley Kehr:
Yeah, you know what, probably your ARV is already going to be, so please can you explain that a little more, and how can I get that?

Dee:
I don’t know how other banks do it, but no, when I went to do the cash-out refis is how I learned about it. So he was like, “Well, we can pull the ARVs on them, and I don’t know if he called them ARVs but it is basically the ARV. And if that amount is acceptable to you, we can do 85% of that.” And I was like, “Wait a second. So you don’t have to do an appraisal. He said, no, it’s $20 to pull his ARV on his side.”

Ashley Kehr:
Were they basically pulling comparable sales, like pulling the coms from other properties that had sold and said, “This is what we can do without an appraisal.”

Dee:
I don’t want to get ahead of myself, but I just bought a house the other day, I bought it for 60 grand, and I got an email from him this morning that said the ARV on it is 97 grand, and it’s three doors down from the third house I bought, which appraised for 110. So now I say, do I want to just keep the 97 grand or do I want to get some more money back to invest into other properties? So that’s going to be something that I’ll have to look into it because I want to build my income and my money to fix other properties, but I also don’t want to get to too out-leveraged there.

Tony Robinson:
I think one thing to call out too, because it’s really interesting that every bank, especially when you get to like a local and regional level, they all kind of do things differently. I’ve never heard of a bank being able to give you an appraisal without actually going out to the property and doing all the things that an appraiser does. So that’s really cool. I also had a bank loan from a local regional bank where they said, “We’re going to give you an ARV based on what we think it will price for after the repairs.” But I still have to pay for an appraiser to go and walk the property, to see it, to make all their measurements, do all their things. So the fact that you found a bank that doesn’t even need to do that and still gives you an ARV is really cool, but I think the illustrative point is that when you deal with some of the local regional banks, they’ve got a lot more flexibility in how they do things than a Bank of America or Wells Fargo will.

Dee:
Oh yeah. And I called multiple banks and emailed because research says I have to. So I did, I sent a lot of emails and I got two people that replied to me. And this guy that I worked with has done investment properties before, and I was like, “Oh, this is perfect. He’ll know exactly what to do. He can give me feedback and advice.” But the beauty of it is this a lot of people say, “Well, once I get to a certain amount of FHA loans, what do I do then?” I mean, no one’s going to give me loans. And so my wife and I were out to eat probably, I don’t know, three weeks ago, and we’re just talking about life and things like that. We didn’t have any kids with us, so we were living it up. This was lunchtime though, so we weren’t drinking or anything.
I was like, you know what, I wonder if I ever quit my job, which I don’t plan on it, I enjoy my job. But I said, I wonder if I ever quit my job, if I could still get loans because I don’t want to work forever. And so I was like, “I’m just going to text him.” I texted him and said, “Hey, what if I quit my job for example?” And he said, “Dee that’s a great point or a great question. Your extra income is just icing on the cake.” He said, “We’re a portfolio lender. As long as your portfolio is doing well, that’s perfectly fine.” And so that gave me some peace of mind, so I was like, “Perfect.” So if I decide that I want to go do a different route, I don’t have to worry about the stress of buying more property.

Tony Robinson:
And that’s always kind of the question that a new investor has to make is because I think people are so eager to walk away from their W2, they forget that sometimes that could impact your ability to get loans. I’m glad to hear that, you kind of reached out and made that connection, made that understanding before you made it a big kind of life-changing decision.
But I want to hit Dee on the storage unit. So you said your first six units were a normal kind of residential properties, but the seventh unit that you’re working on is a storage unit. And I absolutely love that. I’ve got storage units kind of on my future wish of properties to buy. So I’m curious, what was it about storage that made you think that that was a good route to go. And I guess, secondarily, were you nervous kind of going into this new asset class because running a storage facility is a lot different than running a single family residence as a rental.

Dee:
Yeah. That’s a great question. I kind of just came across it on good old LoopNet and I found it there. And so I saw it for sale and I was like, “Man.” Right away, I did some research on it, and I tried to research everything and I saw that it’s a great investment because it’s low maintenance. And so I reached out to them and went out and looked at it, it’s a nice little place. It’s 19 units, so it’s not something crazy to where it can be hard to manage. I’ve heard people say go big. Well, I didn’t want to go big right then because I wanted to kind of figure out what I was doing.
And so far, I’ve got everything set up. I’ve got a website that I reached out to people, did a lot of research on that to where they can actually go in there and set up their payments. And if a storage units vacant, people can go on there, and search it, and sign up hands-free, I don’t have to do anything. And that is the plan. And you know what, if it’s successful, maybe we’ll have another story down the road to where I’m a big storage unit investor.

Ashley Kehr:
Dee, what resources are you using to learn how to actually manage a self storage?

Dee:
Well, there’s this website called BiggerPockets.

Tony Robinson:
I haven’t heard of that one, Ash. You’ve got to write that one down. Let me go check this of a sec.

Ashley Kehr:
We’ll put the link in the show notes.

Dee:
Seriously, I Google everything related. Wholesaling, I’ll Google wholesaling, storage units, I Google storage units. I just watch videos. And then I just read articles and I read the laws to it, but I learn better watching videos versus reading things. But that’s the perfect thing because there’s so many on there. And not only that, the forums, people just don’t take advantage of the forums. If you have questions, post something and people will answer them. And not only that, but they’ll give you more information that you asked for. And that’s how I learned on the houses. I just did a whole bunch of deals on BRRRRs and I shared my BRRRRs and then people would tell me what was wrong and then I’d go and fix it, and then I send it again, and people would tell me what was wrong. And so that’s how I learned. I didn’t have a mentor. I mean, I was learning on the go. So BiggerPockets is by far the best option to do research.

Ashley Kehr:
Have you read AJ Osborne’s book? I think it’s just The Investing Guide to Self Storage. That’s a great resource too. I mean, he pretty much breaks it down step-by-step as to how to acquire property, what to look for, and then how to actually manage it.

Tony Robinson:
I’m writing that one down too.

Ashley Kehr:
Yeah. It is awesome. And follow him on Instagram too, because he does a lot of posts and stuff. I think his Instagram is just his name, AJ Osborne, but yeah, every anybody who is interested in self storage, this is the guy to check out for that.

Dee:
AJ Osborne.

Tony Robinson:
Dee, I’ve got one follow-up question before we move on? So how is it that you analyze a storage facility? Is it the same as underwriting a long-term rental, what are the differences, what do you look for? How do you know it’s a good deal?

Dee:
What I did was, I reached out to the owner and got some information on how many units were there, and there was only one that was vacant, so that was good. And then I found out how much they were charging per month. And so then I added it up and then I went on to just mortgage calculator and plug some numbers in there just to see cashflow, would it make me some money? Because with properties you have to set up repairs and maintenance, capital expenditures and things like that. And then storage units, not so much.
And then I was like, “Well, okay, numbers wise, it looks good.” And so I went a little further and did my research and made an offer on it. Oh, and I also learned a lot about cap rates. Don’t ask me about them, because I don’t remember, but I did learn a lot at one time about cap rates and I learned that actually, it was a good deal based off of that as well. So, but again, everything boiled down to, I found something, I did research and then I leaped and jumped in and did it.

Ashley Kehr:
Let’s talk about LoopNet. So I often hear like LoopNet is where properties listed for sale go to die. So how was this deal still available? We’ve had a couple of guests on before that are like, “It was just listed wrong.” The property was on the commercial side when it really should have been residential, so anyone looking for this wouldn’t have found it, why do you think this property was on LoopNet and why were you able to get it? Was there competition or were you the only one looking at it? Was it the area that it was in?

Dee:
I know it had just got posted and I’d reach out to my agent to reach out to them. And I was excited. I mean, you always have that fear of loss, you’re like, “Oh, if you don’t reach out to them in time, what if it’s gone?” And so I actually went ahead and called the agent that was listed, which actually turned out to be the owner. And we kind of built a relationship, super nice guy. And he did say he had some people interested in it. I never really dug into why he sold it to me versus sold it to them. But we did build a pretty good relationship too, we talked a lot and communicated.
My only guess would be, there’s two things about this storage unit, so it’s not gated. So when you think of a storage, you need to think it gated with the lock box to get in. It’s not gated and it is in a smaller town. A smaller town for me, it’s just 15 minutes away from me. But price-wise, cashflow, it just seemed like a really good deal. I don’t know why nobody else was interested in making an offer on it, or maybe I made a bigger offer than they did. I’m not sure.
But that was actually my first time ever making an offer and negotiating without an agent. And I researched that as well. So I sent emails, I searched templates, how do you make a low ball offer? And so I did it and I got it for, pretty reasonable price, I think. And so yeah, I Googled, I watched BiggerPockets obviously, and things on that when they talk about it.

Ashley Kehr:
Basically, you are proof that you can still find deals on LoopNet. Even today, people are saying you can’t find deals on the MLS. Well, lots of people still are, you just have to constantly keep looking at them and actually run the numbers on them.

Dee:
Yeah, LoopNet’s great. And I even saw liquor store on there and did some research and reached out to them. And eventually, I would say a week later, it turns out that he didn’t update the fact that the rent had tripled, and he just hadn’t updated it, it was just a mistake. So you got to be careful too. You got to definitely read through everything.

Ashley Kehr:
And that’s why you do your due diligence you verify every single number. Especially on the MLS, when I’m looking at a property, I always verify the property taxes, because in some towns in New York, it will be a village tax, a town tax, the town and county, and then the school, so you have those three taxes. And a lot of times they will only include two of those numbers and not the third one. So that’s why when you run your numbers, it is so important to verify. Think about it, if you would have went to purchase this property. And right before closing, you see the lease agreement and you find out then after all that due diligence, all that work of trying to acquire the property and-

Dee:
Yeah, I’m glad I caught it too. Yeah, definitely.

Ashley Kehr:
What would be some advice you’d give to a rookie on doing the due diligence on a storage unit or even one of your rental properties, what are some things that you look for during the due diligence period?

Dee:
Just go through everything with a fine tooth comb when it comes to the storage unit. First off, I’m not a professional when it comes to real estate, but definitely not storage. So I don’t know if I would be the best to give a ton of advice on storage units. I think it all boils down to the same thing of just doing the research. I don’t have a mentor, so I just try to find all the answers online. And I do need to find someone that I could always reach out to if I do have questions.
My brother, for example, he’s getting into it now, he just made an offer on a house yesterday and he’s always calling me, his name is Joe. “I can’t keep answering all these questions, without getting something out of it. I mean, it doesn’t work like that.”

Ashley Kehr:
Throw me 10% ownership.

Dee:
Come on, but you just can’t call me out of the blue. I did learn some stuff from my dad though. My dad told me two things that was really interesting. And I don’t know if y’all ever do it or ever heard of it. I haven’t heard anything on BiggerPockets about it, but the first thing was rent. So he said, what he does with his rent is he’ll charge, for example, on my first house I bought with my brother, the rent is $1200 a month. And in the lease, it says that if you pay by the first it’s $1150, so you get a $50 discount right off the bat by paying on time. If not, no big deal, rent’s already $1,200, you’re just getting a discount for paying on the first, $50.
Everybody pays on time. I have yet to have someone not pay on time because they’re saving $50 right off the bat. And the second thing they told me which was brilliant, which I think I might have heard is when it comes to service calls. So I’m perfectly fine with fixing things, I have someone that does it. But if you need a service call, it’s $50 deposit upfront to get someone out there. And the reason he said that’s crucial is because most people will fix it if they know they got to pay $50.
And so, prime example was the garage door didn’t work at the one of my first house. And I was like, “No problem, buddy. Yeah. I’ll get someone out there, just go ahead and get the $50.” And then I didn’t hear from him for three days and I followed up with him and he goes, “Yeah, I looked it up. I got it fixed.” I’m like, I bet you did. I bet you did.”

Tony Robinson:
I love that trick. I haven’t heard of the like the $50 deposit for repairs. Do you use anything like that, Ashley, in any of your rentals?

Ashley Kehr:
No. I’ve never done anything like that. I mean, we charge like a lockout fee. So if you lock yourself out, you have to have your $25 for the person when they come. And then you will find people usually, “Oh, you know what, my sister has my spare key, she’s going to come actually.

Dee:
I never thought about the lockout key.

Ashley Kehr:
Oh, in that example, but not the way you’ve done it.

Dee:
I can’t take credit for it but I have had to fix a few things. But here’s a prime example of why you do it. The house I have that my mom… the first house she bought for her a long time ago, this is the guy that lives there. And he’s a handy guy. He’s an airplane mechanic, you can’t get any handier than that. And then he said, Hey the toilet is overflowing or it won’t flush. And I was like, “Okay, well try plunging it of course.” And he said, “Yeah, I did. And I’ve reached down in there and I can’t get anything out. I just don’t know what it is.”
So I was like, “Dang, it. Okay, well, pay your $50 and I’ll get a plumber to go out there.” And so a plumber went out there and then that guy wasn’t there for five minutes and he called me, he goes, “Yeah, sir, there’s a rubber ducky stuck in the bottom of the toilet. I just reached in there with my hands and grabbed.” It was like, “Oh my gosh, I would have stuck my hand in that toilet”. Because I paid the guy to go out there, it was more than $50. That’s a prime example of if I would’ve been like, “No problem, I’ll pay for it.” But so yeah, at least I got half of the money back.

Tony Robinson:
The stories of being a landlord, there’s so many good stories. I think that’s the first I’ve heard about rubber ducky in a toilet.

Ashley Kehr:
I have a story real quick to tell where this would have been a great example. So this was just this past December, I think, tenants had moved in November. And already, they were like very hard to handle. And I was actually self managing them until we renovated the second unit and then turn everything over to the property management, but I actually handed it back over to them way sooner because it was just very difficult with them.
So they called texted me, and they knew people I knew. So they had my personal cell phone and texted, “Niagara falls, water pouring in, help, 911.” In capital letters. So I call my contractor. I’m like, “Can you please go over there?” And so he goes, and they had turned on the hose outside and they took the actual nozzle off of the hose, so when they took that off, they took the hose off, the water was still running because the spigot was broken, but if they would have capped the handle on there, nothing would’ve came out. So they just let the water run. And while ran down into the basement and was pouring into the basement because the water had nowhere else to go. And they’re freaking out on me that there’s water coming in, this house is awful, blah, blah, blah, and it’s like, because they left their water.
And my contractor, he’s like avoiding starting the rehab on that second unit. He’s like, “No, I’ll just work on this other project for you guys.” Because he doesn’t want to deal with them either. That would have been a perfect example of to use that $50 to [inaudible 00:36:46].

Dee:
Yeah, definitely.

Tony Robinson:
Wait, now I have to share a story as well about like a water spigot in my backyard. So I was in a meeting for work, I’m working from home, this is COVID time. And I’m sitting here talking on Zoom, just like I am with you guys right now. And I have a window to my right and it faces our backyard. And I’m on the second story, that’s where my office is and the second story of our house. So I’m on the Zoom I’m talking and I can kind of see out of the corner of my eye that there’s just like water shooting up from my backyard, into the sky, reaching up to the second story.
And I’m in a meeting, I’m trying to figure out what the heck is going on. So I pause my video. I go outside, look out the window and I see my son and he’s over the water spigot outside with his hands trying to put it down. So I run downstairs. I’m like, “What the heck is going on?” And he was trying to turn the water hose off, but he turned it the other way to keep turning it on. And he turned it on so much that little nozzle that turns on the water popped off and all the water kept shooting off. So I had to run over to the front of the house, turn off the water, that way we could get the fine little cap and put it back on. But it was the funniest thing and my son was absolutely soaked and I got a good laugh out of it. So hopefully, you guys will, too.

Dee:
Kids are notorious for saying, “I didn’t do anything. It wasn’t me. I just walked outside.” It’s like, “Sure.”

Tony Robinson:
All right. Well, enough about crazy water stories. Let get into a deal, Dee I want to go into our rookie deal. Do you have a good deal that we can kind of deep dive for the listeners here?

Dee:
Got a couple to go through. The first one was going to be the third house that I bought, but I kind of went into that a little bit but I’ll finish that story-

Tony Robinson:
Yeah, we can dive into it. So I just want to ask a few quick questions to set the table for the listener. So you can just give me a quick one-word response, then we’ll dive into it a little bit deeper from there, but what market was this property in?

Dee:
It was in Tulsa, Oklahoma.

Tony Robinson:
Got it, and what was the building type? Single-family, multi?

Dee:
Yeah, it was a single-family, three-bedroom, one bath.

Tony Robinson:
Got it, and what was your strategy with this? Was is it a simple buy and hold, BRRRR?

Dee:
Yeah, so that was going to be my first buy and hold, but I was going to BRRRR it.

Tony Robinson:
Okay, so BRRRR strategy on that. And what did you purchase this property for?

Dee:
I purchased it for 86 grand.

Tony Robinson:
How did you find this property? What was the story behind actually getting it under contract, and getting it closed?

Dee:
So that’s the funny story with this is I found on Realtor, which it’s so hard finding deals these days, but it’s a different story. So I found it on Realtor and it was online for 110 and I liked it. And I reached out to my agent about it. She sent me over some comps on it, some numbers. And based off of those numbers, I said to her, “There’s just no way. I mean, it doesn’t meet my formula. My formula is X, X, and X. I need to make an offer of like 75 grand, 76 grand.” And that was keeping the percentage lower. I wasn’t maxing it at the 85% just yet, because you don’t want to do that right away.
And so, I said, “I don’t want to make an offer. Let’s go to different house.” And she said, “No, let’s just make an offer, Dee. Let’s just offer and see what they say. Worst-case scenario, they say no.” And I was like, “I like the way you think.” Most agents say, “I’m not going to go through that trouble of doing all that. Are you kidding me? They’re going to say no.”
So we submitted an offer and they said no but they countered us. They countered us at 86 grand. And then we countered at 86 grand with closing costs and a home warranty. And that’s where the home warranty and closing cost came into play because I just want to limit the amount of money that I have to put down. And if I can have closing costs done, because people want to feel like they’re winning. So if they feel like they’re going to give me closing costs, it really helps me. But it’s basically essentially three, four grand on that house. But that’s how much I paid for it and how everything went into it.

Tony Robinson:
I love that you found it on the MLS as well. You found your storage unit on LoopNet where people say they can’t find deals, you found this deal on Realtor.com, where people say that they can’t find deals. So I think the fact that you were willing to negotiate is what really made this deal work. They were asking 110, which is probably why a lot of other people had passed that deal over. But because you have the courage as an investor to go in and say, “I like your house, but it’s not worth 110, but here’s what it’s worth to me.” That’s what opened it up to being a good deal for you.

Dee:
Yeah, just think about it. If you’re selling something, people are like, “What’s your best price.” You’re not going to give them your best price right away. Especially if you’re selling something, it’s going to be higher. That’s why I tell my agent, “If my minimum is here, I want you to go a little higher because I don’t want to miss these deals that will come lower.” It helps me look at more deals.
But I’ll tell you what, it is harder to get houses these days, the competition is hard. And so, I went a completely different route that I never thought I would go, but I had two options, I had option A, which was to just sit at home and just complain about how tough it is to get houses and just say, “You know what, Dee you had a good run, you did, but Desperate Housewives are coming on.” Or I could go and try and find some houses.
So what do I do? I Google and I get on BiggerPockets and I find a wholesaling. And I was like, “okay, well, I’ve seen some videos right on people wholesaling. And so, I did some research, but in my head, I thought, “Well, I need to do a lot of research. And take your time, Dee, Don’t jump into it too fast.” Well, I jumped into it fast. I started driving for dollars and started writing down houses that looked vacant, that had issues.
And so, I end up getting home and I think I got 30 houses that I spotted in the area. And I wrote down the addresses and I hand wrote letters and sent the letters to people. And then I got online and got their phone numbers and I sent out texts. And I kid you not, the house that I bought, the third house three doors down was the house, and that guy offered to sell to me.

Ashley Kehr:
How did you find their phone numbers? Can you go into that? How did you get them offline? Was it just Googling their names or did you pay for it through a source?

Dee:
No, it’s a website. I’ll have to pull it up and see. What is it called, truepeoplesearch.com, is what it’s called.

Ashley Kehr:
Is that through whitepages.com? Is that linked to that?

Dee:
Yeah, it is.

Ashley Kehr:
Okay, yeah, I have seen that.

Dee:
I found the phone number there and sent a text. And the funny thing is, his wife actually called me. She’s like, “We’re not interested in selling, we’re rehabbing this house. We got multiple rentals.” And I was like, “Okay, no problem. I appreciate you giving me a call, you’re the one who called me, at least someone’s reaching out to me.” And then I found a CRM, there’s lots of CRMs out there, but I’m testing a lot of them out. And I went to the CRM. I loaded the information because I loaded the driving for dollars into an Excel spreadsheet, which you can go import into the CRM and I sent another text out to her. And sure enough, I get a text from the same person saying, “I’ll talk to you, give me a call.” I was like, “Wait a second, that’s the same lady that told me she wasn’t interested. She’s messing with me. That’s what’s going on.”
And so, I called and it was just an older gentleman. And he was like, “What are you going to give me for it?” And I was like, “This is our practice. I know this script.” And so, I went through the whole script with him and I went out there and looked at it and ended up buying it.

Ashley Kehr:
Real quick, can you just explain what a CRM is for anyone that doesn’t know?

Dee:
I think a CRM is just where you can load customers into or people you’re reaching out to and follow up with them, text message. If you send out, for example, something, a mailer and they call that number, it actually will keep everything in the system. So it’s really a good follow-up system is what it is. It’s a way to keep track of all your people you’re reaching out to because there’s just no way that you can keep up with that amount of paper by just writing it on pieces of paper. Now, I’m sure you could. I’m just not that good. There’s just no possible way I could that.

Tony Robinson:
Dee, I love that you’re being so creative with how you’re finding your deals. You went to the MLS, now you’re doing driving for dollars, you’re using all these different strategies and it’s just showing that even when it feels that there’s no deals to be had, there are still deals to be had, you just have to change up your approach.

Dee:
Always.

Tony Robinson:
I love that approach by the way. But I want to loop us back to the deal. So you said that you found this through one, you got it under contract for 86, you were able to negotiate some closing costs and a home warranty. So what happens after you closed? Do you immediately start the rehab? Does it go perfectly fine? Kind of walk us through what happens post-close.

Dee:
Closing went fine. I ended up finding a guy that would help me with the rehab. And so, what we ended up doing was we demoed a wall in the kitchen because it had a weird setup and I want it to be an open floor plan. So I asked him to come out there and look at it with me. How much would he charge me to demo it? He told me how much. And then I say, “Well, let’s do it on my day off because I want to come there and watch you do it. And not only that, but I want to be involved because I’m going to learn how to do it because I don’t want to have to pay you every single time.”
Man, he put me in work too. He did not hesitate to make me work. He gave me a sledgehammer and he said, “You knock out these cabinets here.” You would think that knocking out cabinets with the sledgehammer’s easy, it’s not, it is not by any means. But I ended up knocking out, clearing it out. He did a great job and we ended up getting it rehabbed, and I did the painting which took me six days in a row. And painting cabinets, that’s the one thing I’ll tell you I did not Google. You’ve got a Google painting cabinets. There’s a lot that goes into it.

Ashley Kehr:
I did that mistake once where just painted it. And I was like, the next day it’s already peeling off.

Dee:
Yes, it was a terrible idea. So we did that. And then I put it online. There was a site that I used. I still use it, called TurboTenant . And what’s neat about TurboTenant is you can post it on there and actually we’ll send it out to Facebook, Craigslist, Zillow, all ready for you. And then the leads come in and the person applying actually pays for the background check. They pay for the credit app. They pay for everything. And there’s a text messaging system in there too so I can text message with tenants, but that’s how I found my first one. And really that’s the Section 8. I had no idea what Section 8 was. And she said, “Do you accept Section 8?” And I said, “No, I don’t.” And she goes, “Well, my voucher is for a $1000.” I said, “Well, maybe I might accept Section 8.” So I did research on it, and I emailed a guy, and he explained to me through the whole process and I ended up using her and getting her into the property but-

Tony Robinson:
So it sounds like it worked out well for you. Can you recap how much you spent though, Dee, on the rehab?

Dee:
13 grand give or take? I only set up seven. I didn’t set up as much. So, I had a lot of electrical had issues with, and the demo was more than I thought, painting is expensive whether you do it yourself, it costs a lot. But yeah, I ended up spending more than I anticipated. If I would have set that up in the beginning, it wouldn’t have been as bad.

Tony Robinson:
That’s not bad. So you’re all in for 99,000. Do you know what the property appraised for after all of your work was done?

Dee:
So here’s what’s funny is the amount that my bank sent me was 97 grand. So going into it, I said 97 grand is what he’s going to give me the value for, but after I had the house for a while and I did a refi, the value went down to 88 grand. And I was like, “Oh no, here, this is how it starts, this is it.” And so, I ended up paying to get an appraisal done. Sure enough, that thing came back at 110. So it was more than what it originally was. So I still didn’t get all my money back, but I’ll tell you what, if that AVM or ARV would have been 88 grand from the very beginning, I would have never even bought the house. So, it worked out really well.

Tony Robinson:
I mean, I think the numbers still work out pretty well. And then you said you’re renting it out for a $1000 a month?

Dee:
No, that was her voucher. And unfortunately, they would only let me rent it out for $865. And I had an offer for, I think it was 910 give or take. And I went with the 865. I figured $50 was more worth peace of mind than it was to try to… I mean, what’s $50. I mean, if you have to evict a tenant, it’ll add up quick.

Tony Robinson:
And then what’s your approximate profit on this property on a monthly basis?

Dee:
So my cash flow on it is about 150 bucks. I mean, that is setting up also property management. So I never did that in the beginning, but after watching more BiggerPockets, go ahead and do it now. Set your budget up for having a property manager so when you do decide to maybe have someone else do it, it’s not like, “Oh, there went all my cash flow, where’d it go.” So I have it set up automatically and I do everything myself. So it’s easy so far.

Ashley Kehr:
That’s great advice right there. And that’s something I did at the beginning. I’ve made many mistakes, but one thing I did was always add in for property management in case I decided that I did not want to do it and that day has come and gone. And you know what, my cash flow has stayed the same as to what I expected it to be because in the very beginning, every time I purchased a property, I would run the numbers with the property management fee in place so that I always had the option to go forward with that.
Well, thank you for sharing your deal with us. Okay, so Dee, I want to talk about goal setting. How has your mindset shifted in aspects now that you’re a real estate investor, you obviously have taken action, you’ve done a lot of research. Is there anything you do for goal setting and tracking your business and keeping yourself focused in that investor mindset?

Dee:
I do, and that is a great question. And I learned about it on, go figure, BiggerPockets podcast and I can’t remember the exact terminology he used, but I think he called it. And maybe y’all will know it’s called a five-year plan or something along those lines-

Tony Robinson:
The 12-week year.

Dee:
Yes, gosh, I tried Googling that today. I couldn’t remember. Yeah, but it’s great because, in my mind, I have to buy a certain amount of houses. “So, Hey, what do you want to do?” I want to retire at this age, with this much income. “Okay, well, how are you going to do it?” “I’m going to buy houses.” “Okay, well, how many houses are you going to buy?” “I don’t know, 30.” “Okay, well, how many offers is that?” “I don’t know.” What I started doing and out of sight out of mind. So everything is in front of me. I have my board behind me. I have a spreadsheet that I update every single month, that I have to make an offer a week, every single week I have to make an offer. So I have to make four offers a week, which would get me 50 offers a year.
And so, in my mind was, I’ll get 10% of my offers accepted. So that’s where I’m going to get my five deals. And so, that’s what I just continue to do is I set that up. And then I set up that I want to have $150 a cash flow a month. But I had that goal, well, how am I going to get to cash flow? What am I going to do?
And so, it’s really neat to have goals but to break it down because people always have annual goals. They say, “I want to do this, this year.” And then November comes around. They go, “Aw, crap, I forgot I was going to do that.” Versus if you have it every quarter, “Oh, it’s getting close I need to buckle down and make some offers.” So just last week it was Saturday, and I looked up, and I said, “I haven’t made an offer this week.” So I found a house and I made a ridiculous offer on it. And my agent was perfectly fine she actually laughed because I said, “Hey, I got to make an offer this week.” Now they turned it down. But they countered me, which was great. It still didn’t meet my numbers, but here’s the thing. What would have been awesome is if they said, “Yeah, sure.” I don’t know what their pain point is. Do they want to move it? Or are they moving different states? You never know.

Ashley Kehr:
And to add onto that is like, okay, you put that offer in. What if that property doesn’t sell? You are someone that they know is still interested in that property. So there’s always the chance, down the road, six months from now, it’s still sitting on there, “Hey, who was that guy that did make an offer on that property? Maybe now we realize our price was too high and we’d be willing to sell it.” So that’s why I like making offers to even low ball offers because that person is thinking of you.
I had a property, it was a four-unit. They wanted a 90,000 for it. I said I was interested, but I couldn’t pay that. And two years later they approached me and I actually got it for 20 grand. So it just shows don’t be afraid to put in those low ball offers. I definitely used to be embarrassed. And like, “I don’t want to insult people.” But you might help them out down the line when no one else is interested. They know that you are someone they can come to and possibly talk to about it again.

Dee:
Yeah, I think it’s key though also that you find the right agent that understands your game plan. My agent knows that I’ve got to make certain amount of offers. She knows that we’re going to make some ridiculous offers, but if your agent isn’t on the same page as you, if she doesn’t understand, or he doesn’t understand what you’re trying to accomplish, then you need to communicate it with them. And they’re not okay with that. No hard feelings find someone who is. But my agent is amazing because she knows, she’s been doing it a long, long time. And she can tell me certain things that are wrong with houses. And she is like my Google when I go look at properties. She can tell me everything. I got super blessed to get her for sure.

Tony Robinson:
And I just want to note the name of that book that I think you’re talking about, Dee, is The 12 Week Year by Brian Moran. I’m actually reading that book right now, I’ve really enjoyed it as well. And it kind of breaks down goal setting into these smaller, more manageable chunk. Then obviously on BiggerPockets there’s the intention journal as well. There’s been a lot of good feedback from folks in the community about that also. Dee, I want to take us to the Rookie Request line. So this is where we give folks from our audience a chance to ask our guests questions that hopefully, you guys can give them some good insights too. So for those of you that are listening, if you want to have your question potentially featured on the show give us a call at 885 Rookie. So, Dee, let’s jump into today’s question.

Sam:
Hi, my name is Sam I’m from Pasco, Washington. And my question is how do you balance the desire to grow your real estate portfolio with the desire to become debt-free? Specifically at what point do you make the decision to stop pursuing more debt and start paying it off? Thanks, guys, I love your show so much.

Dee:
It’s funny that he asks about debt because my wife and I, years ago got into Dave Ramsey. And Dave Ramsey is all about getting rid of debt. And so, we took it to the extreme by doing the envelope program. If you don’t know about it, Google it’s a great deal, living basically out of an envelope.
But when it comes to accruing debt, for example, the recent house I bought, and did I accrue debt? Well, yes, but it’s worth so much more than what I accrued that I’ve equity there, then I have cash flow. And so, the beauty of real estate is this, and this is what he needs to understand is, if I get $150 a month cash flow, yes, I have debt but I’m getting cash flow and at the time that’s not a lot of money. That’s just $150 a month. Well, that adds up. And then you got to keep in mind that you are paying down the loan. You’re paying down interest. So let’s say that’s $150, $200. And then you have appreciation. And the house appreciates what 2%, 3%, 4% a year. So then that’s 2% of a 100. That’s two grand, the 2,400, so you’re making money. So you might be accruing debt, but long term you’re going to be making way more. But you also got to be smart, don’t buy something that’s not worth what you’re paying.

Ashley Kehr:
Well, Sam’s question is, do I pay down more debt? How do you get comfortable with adding more debt to your portfolio when you stop getting more debt? So with that, take a look at it, and it really depends on your goals, which is better for you, but actually, run the numbers. You’re buying a $100,000 house. If you get a 15-year mortgage, what’s your cash flow. If you get a 30-year mortgage, what’s your cash flow. So then break that down. A 15-year mortgage say, you’re going to have $100 of cash flow. And then after the 15 years, from 15 to 30 years, you’re going to have a $1000 of cash flow. We’ll take that and go find a calculator that does compound interest and look at if you invested that money, that cash flow into another property, invested into the stock market. So run it at a 6%, 8%, 12% return, and look at what does that get you at the end, at year 30? How much money do you have?
So then take the 30 year, hey, for 30 years you’re getting $300 in cash flow for those full 30 years, each month. Run that at the 6%, 8%, 12%, whatever you’re going to get. And then look at the difference. And so, you can map that out and look and see at year 30, how much money will you have based on doing that.
So actually when I’ve run it and done it myself, the 30 year is better for me because I will have more money because I’m investing more money upfront because I have that larger cash flow upfront. But I’m also someone who’s like, “I don’t like that either. Oh, maybe I should just pay it off and be more comfortable at year 15 have greater cash flow then.” So it really depends on what you are comfortable with and what your goals are, your short-term goals, and your long-term goals too. But that’s just me, I love Excel, I love numbers. So running those scenarios like, “Okay, how much money will I have at year 30?”

Dee:
Exactly, yeah, I know.

Tony Robinson:
And an interesting story. So I’m pretty sure it was [Thatch Wayne 00:59:28]. He got interviewed on the OG podcast, episode 395. And he talked about his strategy was, I think it was like 10 years or maybe five years where he would be an acquisition mode for 10 years. He would be just buying a bunch of properties, and then he spends the next 10 years paying those properties off, and then he’ll go in acquisition mode again. And that’s kind of the cadence that he’s found for himself. To Ashley’s point, I think it’s really a personal preference. You have to understand what level of debt you’re comfortable with and what makes more sense for you and your specific situation.
I think that interest rates are so low right now that to have a property fully paid off in cash might not be the best return on your investment. But if the peace of mind of not having debt is more important to you than the return, then you got to do what makes more sense for you and your specific situation?

Dee:
Yeah, I think there’s pros and cons to both. I don’t think there’s a right answer. It just depends on you, yeah.

Tony Robinson:
I love the response to the question, but I guess we can finish it off with some random questions to get to know you a little bit better. So we talked about your portfolio and you’ve got the regular residential, you’re moving into storage, are there any other asset classes that you’re looking into? Do you plan to acquire more storage? What’s in the future for you when it comes to investing?

Dee:
So I don’t anticipate getting any stores units. I mean, if something comes along, I definitely would be interested in as long as the numbers make sense. But I definitely want to get a feel for this one and make sure that I get it down and figure it out. But I’ll tell you, I really am super excited about the wholesaling portion because my end game is to have a certain amount of houses and if I can buy them right, I’ll buy and hold. But if I get a house that maybe is in the area that I don’t want, or maybe it needs some more repairs, then I can wholesale it out. And so, that is my goal.
I feel like that is going to be what’s going to take me to the top because don’t get me wrong, Realtor.com, the MLS is great to have, but everybody’s on it, everybody is. And I learned that because my brother started looking at houses just two weeks ago, I found a house and then I called him. He goes, “Yeah, I saw the same house.” I’m like, “Oh, here we go. We’re going to run into some issues now.” But definitely wholesaling is exciting for me.

Ashley Kehr:
I guess I can ask for my question to follow up on that, as a rookie investor, maybe you don’t have any deals or you have a couple of deals and you’re looking to get into wholesaling. What are some actionable items that rookie investor should do? And where can they do some research? You said BiggerPockets.com and we love promoting as much as possible, but are there any specific people they should be following on social media or anything like that?

Dee:
That’s a great question. There’s a few guys, but there’s one guy and I can’t remember his last name, his first name is Brent, I watch him on YouTube. What I love about those guys is they’re not necessarily selling something. I feel like if someone’s selling something to you, then they’re in it for the wrong reasons. The people I follow that have given me advice, YouTube-wise, on scripts to use that’s the way to go. But the beauty of wholesaling is all you got to do is get some phone numbers and a script and just call because I listened to one the other day where the guy, he was a 19-year-old, he’d been doing it for two weeks, and you could tell because he was so jumbled and scared and nervous, but he ended up closing on that house and I think they made 30 grand on it.
But that’s the difference is, it’s just like us, you got to jump and do it. You just got to go do it. Just don’t watch all the videos and say, “I can’t wait one day until I do it.” Well, what’s stopping you. Go and just do it, go drive for dollars. That was the easiest thing, I went with my family and I have four kids. And that was the longest 30 minutes I went driving for dollars ever. But the beauty of it was my oldest son, who’s nine was like, “Oh, dad, that looks like a really good house.” And so, we wrote it down and I like to say that was the house we bought. My family is everything to me. I wake up at 5:30 in the morning to do real estate things, just so that I don’t miss time with them when I get home from work. But if I can go do things with them that they enjoy, that’s going to be the things that they remember. And life is about the little things, those little things add up so-

Ashley Kehr:
Was it a Brent Daniels?

Dee:
Yeah.

Ashley Kehr:
Yeah, okay, we’ll link that in the show notes too at biggerpockets.com/rookie67. So, Dee has given a ton of great books and different references for us to use. So we’ll link all of that there.

Dee:
Well, Tony said the book. Tony, remembered the book, I didn’t remember the name. I actually got the title wrong too.

Ashley Kehr:
Oh, just take the credit. Before we find out some more information about you Dee, where we can connect with you, I want to give a shout-out to this week’s rookie rockstar, and this is Justine Shore. So she posted in the real estate rookie Facebook group and she did her first BRRRR deal, and she’s super excited about it. She’s getting $340 per month in cash flow. She was all in at 75,000 purchase price of 34,100. And she actually got it at an online auction. The rehab she put in 40,000. So 75,000 all in and her ARV was 114,000 and she refinanced that 80 K. So she actually got 5,000 back that she didn’t even put into the property. And she’s still cash flowing $340 per month.
But, yeah, if you guys go to our show notes, we’ll link this post because she has some pretty incredible before pictures. You guys go check that out and see how she did. So congratulations Justine on that deal. So Dee, please tell us where everyone can find some more information about you and reach out to you.

Dee:
I’m on BiggerPockets, but I’m also on Facebook. I’m not the techie person. I’m on Amazon, but I’m not on Instagram, is what I was going to say. And I’m not on Twitter or anything like that, but I think that there are a lot of people on it, so maybe it’s something I do need to venture out and to get into.

Ashley Kehr:
So you’re just on TikTok then?

Dee:
Not on TikTok either. I tried TikTok but I learned that it’s very addictive and I was like, “If I know that it’s addictive, I’m going to stay away from it.” But I have learned good things about TikTok and I think that’s something that maybe down the road, we’ll see what happens there.

Ashley Kehr:
Well, thank you so much, Dee, for everything, all the information you have provided us today, and congratulations on your journey. And I can’t wait to see what you do going forward especially with the self-storage and starting. I like that you were focused on one strategy and once you got that strategy down, then you went and looked at another strategy to diversify your portfolio, that’s awesome.

Dee:
Yeah, I appreciate it. It’s truly was a pleasure being on the show. I love watching you guys, so thanks so much for having me.

Ashley Kehr:
Thank you so much for joining us. I’m [email protected] and he’s Tony @TonyJRobinson on Instagram. Make sure you guys listen to our Saturday and Wednesday episodes and we’ll see you guys soon.