Month: January 2022

Since the early days of the coronavirus pandemic, all corners of the GTA real estate markets have benefited from households leaving Toronto’s downtown core, in favour of greener, cheaper pastures within a short drive to North America’s fourth-largest city. The York Region real estate market, from Markham to Richmond Hill to Vaughan, has seen prospective and first-time homebuyers flocking to destinations like these, just outside the urban core. This has prompted plenty of new trends in the region over the last two years. Will this lead to even more price acceleration?

Whatever the case may be, York Region kicked into high gear in 2020, sizzled in 2021, and could maintain its strength in 2022.

GTA Real Estate: A Look at the Booming York Region Housing Market

What does booming York Region look like these days? Here are the four specific factors contributing to the rise of this GTA real estate market.

Shrinking Supply, Surging Demand

Inventory levels have been at or near historic lows throughout the GTA housing market over the last couple of years. The numbers suggest that new housing construction is not keeping up with demand, which could maintain this imbalance: low supply and strong demand, leaving prices moving on an upward trajectory.

“Tight market conditions prevailed throughout the GTA and broader Greater Golden Horseshoe in 2021, with a lack of inventory noted across all home types. The result was intense competition between buyers, pushing selling prices up by double digits year-over-year. Looking forward, the only sustainable way to moderate price growth will be to bring on more supply. History has shown that demand-side policies, such as additional taxation on principal residences, foreign buyers, and small-scale investors, have not been sustainable long-term solutions to housing affordability or supply constraints,” said Toronto Region Real Estate Board (TRREB) Chief Market Analyst Jason Mercer in a recent report highlighting December market statistics.

Buyers Moving to Smaller Areas

Several months after the first wave of the coronavirus pandemic, a common term passed around in the business media was “urban exodus.” Many news outlets discussed that a growing number of households were fleeing the big cities to plant new roots in suburbs, small towns and rural communities. While a place like Markham is not situated in the middle of nowhere, the city does strike the right balance between living in the downtown core and enjoying small-town living. York Region has certainly benefited from the trend of families ditching shoeboxes in Toronto for a spacious residence in Richmond Hill.

York Vacation Properties Are Buzzing

When you think of York Region, you do not necessarily consider it a vacation hotspot in Ontario. However, there has been a lot of buzz outside of Richmond Hill in Wilcox Lake, which has attracted many people to purchase recreational and vacation properties. As well, throughout the pandemic, where more people are working from home and can enjoy the benefits of telecommuting, families are trying to live and work in nature; Wilcox Lake offers this highly coveted balance.

Will Vacant Home Taxes Come to York Region?

In recent months, many policymakers have come together proposing a myriad of tools to help cool down the housing market. York Region is no different. Officials in the regional municipality are mulling over a tax on vacant homes and speculative activities. The idea is to spur more housing units and to reduce prices amid the supply and demand chaos unfolding throughout York and the rest of the Ontario real estate market.

But critics contend that taxation is not the solution. Instead, many industry observers concur that facilitating more supply is the answer to today’s problems in the real estate market.

“Unless governments work together to cut red tape, streamline the approval processes, and incentivize mid-density housing, ongoing housing affordability challenges will escalate,” TRREB president Kevin Crigger noted in a statement.

Be Prepared in This Housing Market

Ultimately, no matter what transpires over the coming months, it would be a prudent to be prepared for rising interest rates and tightening mortgage lending standards. Whether the market sustains the boom or initiates its easing pattern, homebuyers must be ready for whatever happens. If you plan on buying a home, be sure you have saved an adequate down payment, get a mortgage pre-approval and work with a professional real estate agent, to help guide you through the process.

Sources:

TRREB: https://trreb.ca/index.php/market-news/market-watch

When you purchase a home, a down payment is typically applied to the purchase price, and the balance is to be paid off over your term of the mortgage. The loan you receive from a lender in order to pay for the house is called a mortgage.

Simply put, a mortgage is a legal and binding agreement between a lender and a borrower for a specific amount of money that must be paid back within a predefined amount of time. The mortgage is a secured loan in that the house you are buying is collateral for the loan. This means that, should you not meet your mortgage repayment obligations, the lender has the right to take the property.

Purchasing a home and taking on a mortgage is a big commitment. In addition to the amount borrowed, the interest rate you receive is also a factor in assessing affordability. Shopping for a better interest rate could save you tens of thousands of dollars over time.

10 tips to help you get the best mortgage rate in Canada

1. Research Mortgage Interest Rates

There is no one-size-fits-all approach to getting a mortgage. There are a few different types of mortgages, each of which will impact the interest rate you receive, based on a few of the factors we will be touching on later.

The first, and also the best option, is a prime mortgage. These are offered to borrowers who are considered less risky by lenders. These borrowers typically have a credit score of at least 670, have contributed a down payment of between 10 and 20 per cent, and have a low debt-to-income ratio. The most significant perk of a prime mortgage is a lower interest rate, which will help the borrower save thousands of dollars over the loan’s lifetime.

The other is a subprime mortgage. These are offered to borrowers with a lower credit score, typically between 580 and 669. Subprime mortgages carry higher interest rates because borrowers are seen as “riskier.”

By knowing your credit score before speaking with a professional, you can be sure to get the appropriate interest rate.

2. Decrease Your Debt-to-Income Ratio

A simple way to get the best mortgage rate in Canada is to decrease your debt-service ratio. This represents the percentage of your gross monthly income used to pay off your debts. Lenders use this value to assess the risk you carry when borrowing money. Canada Mortgage and Housing Corporation recommends keeping your Gross Debt Service (GDS) ratio (your monthly household income that covers your housing costs) below 39 per cent, and your Total Debt Service (TDS) ratio below 44 per cent.

To decrease this ratio, make larger payments on your debts, reduce debt by purchasing only what you can afford in cash, or increase your income. By decreasing your debt-to-income ratio, you signal to lenders that you are less of a risk.

3. Improve Your Credit Score

Improving your credit score takes time, but it can be done. Some easy ways to accomplish this are to make larger payments on your outstanding credit card bills, pay off any collections that may be on your credit report, get caught up on all your bills, and keep outstanding balances on credit cards low.

4. Increase Your Income Stability

Income stability signals to a lender that you’re less likely to default on your mortgage. First, sit down and run an honest assessment on how much money you bring in every month versus how much you spend, to improve your income stability. Then, look for ways to spend less and earn more. This can be accomplished by cutting out frivolous expenses, asking for more hours at work or taking on a side hustle.

5. Gather Your Employment History

Before meeting with a mortgage lender, gathering your employment history is key. Mortgages are large loans, and lenders want to know that you are serious about paying them back and are a low risk for default on your payments. Compiling your employment history shows the lender that you have a track record of gainful employment and are unlikely to be unemployed in the foreseeable future.

6. Save More and Increase Your Down Payment

By contributing a larger down payment, you can reduce the size of your mortgage and attract a more favourable interest rate. Typically, if your down payment is greater than 20 per cent, you will receive a better interest rate than if you put down only five per cent.

7. Use Cash Reserves

Lenders will look at your savings account to ensure you have enough cash in reserve to cover your mortgage in case of job loss. They like to see a few months worth of mortgage payments tucked away in your bank account. This also shows lenders that you are suitable and fiscally responsible. Consider saving up three or four months worth of mortgage payments to get a more favourable mortgage rate.

8. Consider Interest Rates

Currently, interest rates are exceptionally low. Consider timing the purchase of your home during a time when interests rates are lower, to reduce your monthly payments and the interest paid over the lifetime of your loan.

9. Low- Versus High-Ratio Mortgages

If you have less than 20 per cent as a down payment on the home you plan to purchase, you’ll need mortgage loan insurance. This serves as an added layer of security for lenders, should you default on your loan. This fee can be paid up-front or added to your monthly payments. To avoid this expense, save up at least 20 per cent for your down payment.

10. Shop Around

Finally, once you have completed all the steps above to get the best mortgage rate, it is essential to shop around. Some lenders can give you a better borrowing rate than others, and it is vital to know all the options available to you before you commit to one of the most significant investments you’ll make in your lifetime!

Sources:

Canada.ca

Forbes

If you are ready to get away from the harsh Canadian winters for sunnier climates down south, buying U.S. real estate may just be for you. Every year, many Canadians are buying homes south of the border for vacation, retirement, or investment – and it’s not as out of reach as you may think. However, though U.S. mortgages share some similarities to Canadian mortgages, there are still big differences between our two countries that you will need to know before you buy anything.

We spoke with Alain Forget, Head of Sales & Business Development at RBC Bank in the U.S. and a fellow Canadian with over 15 years of experience in cross-border banking. RBC bank is the U.S.-based division of the Canadian bank and a national residential lender specializing in helping Canadians to buy cross-border. 

“The first message I would like to share is: yes, Canadians can get a U.S. mortgage,” said Forget, “but the process itself can be quite different.”

Forget stresses that it’s important Canadians understand the differences over the border to make their real estate purchase go smoothly and avoid costly mistakes. You may already have purchased a home in Canada and some of that experience will be helpful when buying in the U.S., but in some ways, your preconceived ideas of how mortgages work in Canada can be a hindrance. 

Let’s look at the process of attaining a U.S. mortgage and highlight some of the key differences you need to know when buying.

Getting pre-approved for a U.S. mortgage

When it comes to getting approved for a U.S. mortgage, working with the right lender can make all the difference. Many U.S. lenders will not issue mortgages to Canadians as it’s more difficult to verify their eligibility. If they do choose to work with Canadians, you may be charged premiums for the privilege.

The benefit of working with a Canadian-focused lender like RBC Bank, which is a U.S. National Residential Lender dedicated to Canadians, is they can pre-approve your mortgage based on your Canadian credit history/score, income, assets, debts and making things much easier for Canadian buyers. In general, your pre-approval will take three or four days to finalize and is then valid for 120 days.

Your application process

Once you have your pre-approval and you find your dream home under the sun with an approved contract then you can begin your application process in earnest. 

One thing that Canadians should be aware of is that a U.S. mortgage can take much longer to finalize than in Canada. In the U.S., it’s normal for the process to take around 35-45 days, and many buyers plan a closing date up to 60 days beyond when they begin their application. This is true for both U.S. residents and foreign buyers, so there is not much you can do to reduce this timeline.

“It’s just a slower process down here. It’s a bit more of a cumbersome process, but we have to play by the book as a U.S. lender,” says Forget.

In the first seven to ten days of the application process, your lender will work with you to collect information about your assets, liabilities, income, employment status, proof of down payment and more. They may also require additional info you may not have needed for your Canadian mortgages such as bank statements, investment statements, and copies of any other mortgage agreements you may have in the U.S. or Canada.

When it comes to your credit score, the U.S. uses a similar system to Canada and similar scores are required for getting the best mortgages. Generally, a score of around 680 is considered a minimum and 725+ is ideal.

Once your documentation is in order, your mortgage will be packaged by your mortgage advisor and sent to the underwriter for approval. After that, your mortgage advisor will schedule an appraisal which can take some extra time these days as the market is so busy. Finally, it will be time to lock in your mortgage rate and prepare for the closing. With RBC Bank, closings can be done as mail-away (remote) in Canada with a local legal witness for many states (as a few states like California don’t allow for out-of-state closing).

U.S. down payments

Down payments are handled a bit differently in the U.S. than in Canada. In Canada, we have more options when it comes to our down payments, with some buyers being able to go as low as 5% down when purchasing a home. 

In the U.S., this is not the case – especially for Foreign Nationals – and all down payments must be 20% at a minimum for primary or second homes. In addition, if you are buying a property strictly for investing as “Non-Owner Occupied” your down payment can be 25% or more.

U.S. mortgage rates, terms, and payments

Mortgages also work a bit differently in the U.S. First, applicants are not required to pass a stress test when applying for a mortgage so you will only need to prove you can afford the mortgage at current rates. Currently, interest rates in the U.S. are slightly higher than in Canada, but the lack of a stress test may actually make them more accessible.

In terms of amortization, most U.S. mortgages will be 30 years, with terms from three to ten years. U.S. mortgages are commonly set up as Adjustable Rate Mortgages (ARM). This means rates are fixed until the end of the first term, converted to an adjustable rate that is updated about every six months to a year. However, since RBC Bank only works with Canadians, when the term expires the lender can renew for a similar or different term at the current rate without closing costs for the renewal.

Finally, one of the benefits of U.S. mortgages besides being in USD is that they are fully open, meaning you can repay as much as you want at any time during the term with no early repayment penalty. This can be a benefit for Canadians looking to mitigate the impacts of currency exchange, repaying larger amounts when the Canadian dollar is in a stronger position.

U.S. closing costs

Closing costs on mortgages are comparable in the U.S. and Canada, though they are handled differently. 

Firstly, closing costs will vary by area in the U.S., just like in Canada. These closing costs may include lender fees, bank fees, title insurance, state and local taxes, and more. States like Arizona may have closing costs as low as just under 2%, while a state like California may be closer to 5% and Florida around 3% all-in.

One benefit for Canadian buyers is the fact that closing costs in the U.S. are bundled together and paid by the borrower at closing through the title/escrow agent responsible to facilitate the closing process with all parties involved. For Canadians, this saves you the headache of trying to track down and pay multiple different parties from across the border.

Forget also warns Canadians to be aware of the origination fees and Foreign National Premiums. Some lenders will charge these fees to Canadian buyers and can make a significant difference in the amount of money you pay.

“This is really important for Canadians to understand,” says Forget, urging that when Canadians compare their mortgage options, they need to be sure to “compare apples with apples” as RBC Bank doesn’t charge those extra fees besides the standard lender fees.

Be aware of legal and tax “traps”

Forget stresses that any Canadian looking to buy in the U.S. or any other country should consult with professional legal and tax advisors as early as possible before engaging in this buying process. According to Forget, there are numerous “traps” that can arise from poor decisions along the way, that can result in huge issues down the line. 

It’s not uncommon for some Canadians to make costly mistakes when taking advice from friends or peers, but Forget warns: “Sometimes free advice from friends can cost a lot.”

Only a trusted cross-border professional can help you have the peace of mind to avoid any of these traps and ensure you will be able to enjoy your purchase without any unexpected costs.

How RBC Bank can help

Despite being a U.S. institution that must comply with U.S. laws and regulations, RBC Bank does as much as possible to make the U.S. mortgage process as seamless as possible.  This begins with pre-approval based on Canadian credit score, a process that may also be completed online quickly and easily. They also offer mortgage terms that are more familiar to Canadians, such as offering their own version of fixed rates mortgages over the more unfamiliar adjustable-rate mortgages that are common in the U.S. Their U.S. team of mortgage advisors only works with Canadians, so they understand the differences well and can provide relevant advice and guidance every step of the way. They are also able to help Canadians with remote or mail-away closing to help facilitate purchases without the need for travel.

Finally, RBC Bank allows Canadians to access a network of external legal and tax professionals who specialize in working with cross-border buyers to make sure everything is processed correctly.

All this and more is accessible through RBC Bank’s HomePlus™ Advantage, a program designed to provide full-service support to Canadians looking to make their U.S. homeowning dreams a reality.

The Greater Toronto Area (GTA) housing market has enjoyed immense activity. But has the growth been equal across the region? In recent years, the Durham Region housing market has joined the boom taking place in neighbouring Toronto. The sizzling conditions have become more pronounced during the COVID-19 public health crisis, with stellar price growth and exceptional sales activity occurring in Ajax, Oshawa, Whitby and other Durham municipalities.

Be it low interest rates or homebuyers leaving the downtown core, the area just east of North America’s fourth-largest city has witnessed exceptional gains over the last decade. But how did Durham perform last year? Let’s dive into the statistics to find out!

The Durham Region Housing Market Outperforms Most GTA Markets

According to the Durham Region Association of REALTORS® (DRAR), residential property sales tumbled 33.7 per cent month-over-month in December, totalling 671 units. The average selling price in the Durham housing market rose 3.4 per cent, topping $1.033 million to end the year.

The months of inventory sat at 0.2, which represents the number of months it would take to exhaust current inventory at the present rate of sales activity. Days on market numbered just nine.

Despite the tepid slowdown in December, 2021 was a record-breaking year, with home sales soaring 13.9 per cent. The MLS Home Price Index (HPI) composite benchmark price advanced 42.33 per cent to more than $1.002 million, the highest rate in the GTA.

Supply in the Durham housing industry has been one of the chief factors for the explosive growth.

New residential listings dropped 45.9 per cent month-over-month in December, totalling 565 units. Active listings also fell 58.2 per cent month-over-month, to 152 homes. New housing construction has also eased among some Durham Region housing markets. Canada Mortgage and Housing Corporation (CMHC) reported housing starts slipped 19.11 per cent year-over-year to 182 units in November.

“We generally see a decline in transactions as we enter the winter months, especially with the holidays. The 2021 record breaking sales in Durham are a true testament to the strength of the local economy and desirability to settle in the region,” said DRAR President Meredith Kennedy in a news release. “The strong demand during the summer market made for a strong push for Durham’s housing market and record residential sales were reported in almost every month.”

Ajax to Scugog: A Peek at the Durham Real Estate Market

So, how did the broader Durham Region real estate market perform in December? Here is a snapshot of how the different municipalities performed to close out 2021 on a year-over-year basis.

Ajax

• Average Selling Price: +30.2% to $1.089 million
• Detached: +32.9% to $1.228 million
• Townhouse: +30.9% to $989,931
• Condo: +24.4% to $543,833
• Residential Sales: -30.1% to 86 units
• Active Listings: -34.6% to 17 units
• Days on Market: -20% to 8

Clarington

• Average Selling Price: +38.8% to $1.02 million
• Detached: +40.8% to $1.108 million
• Townhouse: +36.3% to $887,633
• Condo: +28.1% to $568,250
• Residential Sales: -2.4% to 127 units
• Active Listings: -45.1% to 28 units
• Days on Market: -50% to 7

Oshawa

• Average Selling Price: +40.7% to $913,000
• Detached: +43% to $1.035 million
• Townhouse: +30.4% to $828,643
• Condo: +46.5% to $418,080
• Residential Sales: -8.9% to 194 units
• Active Listings: -48.6% to 37 units
• Days on Market: -10% to 9

Pickering

• Average Selling Price: +15.6% to $1.038 million
• Detached: +19% to $1.351 million
• Townhouse: +38.1% to $1.031 million
• Condo: +23.4% to $611,833
• Residential Sales: 021.4% to 92 units
• Active Listings: -45% to 22 units
• Days on Market: -40% to 9

Scugog

• Average Selling Price: $1.02 million
• Detached: +14.4% to $1.043 million
• Townhouse: $908,323
• Condo: N/A
• Residential Sales: -22.7% to 17 units
• Active Listings: -47.6% to 11 units
• Days on Market: -45.9% to 20

Whitby

• Average Selling Price: +28.2% to $1.088 million
• Detached: +33.1% to $1.259 million
• Townhouse: +38.8% to $1.012 million
• Condo: +14.8% to $634,422
• Residential Sales: -5.9% to 127 units
• Active Listings: -62.9% to 13
• Days on Market: -30% to 7

Another Strong Year Ahead for Durham Real Estate?

With the Bank of Canada (BoC) widely expected to raise interest rates as early as March, and the federal government employing tighter mortgage standards, can the Canadian real estate market maintain its impressive streak of growth? In the Durham Region housing market, prices and sales are anticipated to remain strong in 2022.

According to the 2022 RE/MAX Canadian Housing Market Outlook report, Durham Region real estate prices are projected to climb seven per cent to a jaw-dropping $978,566, while sales growth is also expected to grow seven per cent. From Clarington to Oshawa to Whitby, being less than an hour outside of Toronto is proving to be beneficial for residents and sellers alike. Whether prospective homeowners will see some easing over the next 12 months or not remains to be seen.

Sources

David Greene:
Hey, before we get to the show, I wanted to mention BiggerPockets is hiring a full-time supervising producer for our podcast network. This is a remote position. And trust me, it’s a huge opportunity for the right person. We’re looking for someone with at least a couple years’ experience managing production teams and someone who will feel confident taking the lead when launching new podcasts.
So, would you or someone you know be a great fit? You can find the full job description at biggerpockets.com/jobs. That’s biggerpockets.com/jobs to apply for our open podcast supervising producer job. Now enjoy the show.
This is the BiggerPockets Podcast show 563.

Sarah Weaver:
I think long-distance investing is the absolute way to go. Even from day one, people ask like, “What do you do if something breaks?” And I say, “It’s great. You don’t do anything.” And so I have seen all my properties. So, I do want to say that, but you don’t need to. You could own real estate that you never visit.

David Greene:
What’s going on, everyone. This is David Greene, your host of the BiggerPockets Podcast, where we arm you with the information that you need to start building long-term wealth through real estate today. If you’re new here and you like today’s show, make sure to check out biggerpockets.com. It’s a free one-stop shop for all things real estate investing to help you save time and money, avoid mistakes, and tap into the wisdom of two million fellow members.
Basically, this is the place that you come to if you want to build wealth through real estate bar none. Here with me today is my co-host and good friend, Rob Robuilt Abasolo, the short-term rental specialist, the tiny home … Man, I was trying to think of a way-

Rob Abasolo:
The tiny home titan.

David Greene:
Titan. I was going with tyrant and that didn’t sound good. So tiny home titan, much better. And also what I would look like if I could grow hair that often like shot off at the 45-degree angle that yours does too. I feel like we have the exact same head. You just have hair on the top of yours.

Rob Abasolo:
Hey, but thanks to a Movie Magic and Photoshop, we can make that happen, my friend, in editing. It’s called Movie Magic.

David Greene:
We could probably get one with our two heads together, but our hairs moving towards each other and touching at the top, wasn’t there a Dragon Ball Z thing where they did something like that?

Rob Abasolo:
Yeah, a fusion. And then we fusion ha.

David Greene:
Real estate fusion. What was it, hot?

Rob Abasolo:
No, fusion ha. Man, this is a deep cut. This is a deep cut for a lot of people.

David Greene:
There we go. Well today, Rob and I are interviewing a very special and awesome guest. Her name is Sarah. And Sarah has found a way to travel the entire world, letting real estate fund it while continuing to grow the portfolio. So this isn’t a case where somebody built up passive income through investing and then said, “Okay, I can quit my job and I can travel.”
This is a person who said, “I’m going to travel while continuing to work, but only doing the work that I enjoy doing to make more money, to buy more real estate, to have an even better life.” And we get into some really cool, practical examples of ways that anybody else can do what Sarah does as well as some of the mindset shifts that Sarah had to go through in order to make this happen.
We talk about understanding which area you’re buying in and what some of the violations could be when it comes to short-term rentals. We talk about medium-term rentals, which is kind of a new phrase that I don’t know if everybody’s using, but what to do when you buy a short-term rental and the municipality where you’ve bought it has out outlawed them and says you can’t do it anymore.
We get into BRRRR deals. We have a really good conversation between how agents and investors should be communicating to be successful. I thought this one was just full of practical information. What do you think, Rob?

Rob Abasolo:
Oh, yeah, man. I mean, I think if you’ve ever wondered why a realtor has ever ghosted you or not responded back to you, maybe you’re the problem, David. Not you, me, I’m the problem. I’ve learned a lot about how I communicate with realtors in this episode today.

David Greene:
Yeah. This is really good, especially in the front part of the show. So if you’ve ever had trouble working with an agent, or if you’re an agent who’s like, “I don’t know how people ever make money with investors. It never goes well,” this is a great show to listen to.

Rob Abasolo:
I’m excited to dive in, man. Let’s do it.

David Greene:
All right. And now for today’s quick tip. This month, we are bringing on a lot of guests who go a mile deep on one particular strategy. They might be rent by the room, raising private money, seller financing, stuff like that. We keep returning to this theme for two reasons. Number one, a lot of you have been telling us that we want to hear more detail.
Well, we’re committed to diving even deeper into strategies in topics as we make the show even better. And two, personally, I believe that going deep on one strategy is the best way for newer investors to thrive in today’s competitive environment. It’s not like the old days where deals were everywhere. You could just throw a rock and find a great one. The investors who will win are the ones who are willing to commit to one strategy and master it.
So there’s your quick tip. Go a mile deep, which brings us to today’s show where the guest did just that. Before we bring in Sarah, Rob, is there anything that you want to add that you particularly liked or something you think that listeners should pay attention to, to pull out of this show?

Rob Abasolo:
Hundred percent, man. I think this show very much personifies the idea of shiny object syndrome. And one thing that really resonated with me is it’s a lot easier to set one goal and hit that goal than it is to set a hundred goals and try to hit those goals. And I think Sarah really, really talks about narrowing down that approach so that you can have success in real estate.

David Greene:
Very insightful. I love that. Thank you, fusion brother. All right. Let’s bring in Sarah.
Sarah Weaver, welcome to the BiggerPockets podcast. How are you today?

Sarah Weaver:
I’m wonderful. Thanks for having me.

David Greene:
Oh, it is our pleasure. So let’s hear it. Tell me a little bit about your business, your investment portfolio. What is your connection to real estate?

Sarah Weaver:
Absolutely. I have been in real estate in some capacity since 2015. I have a real estate agent coaching business. I coach agents. And I think what makes my story unique is that I am in what I consider like a fixed location industry. Real estate is fixed, but I am fully nomadic and have been for three years. And I’ve been working remotely, a hundred percent remotely from my computer for seven years now.

David Greene:
So you’ve sort of found a way to combine two passions, it sounds like, travel and living remotely with real estate.

Sarah Weaver:
Absolutely. I can talk about those two things for hours. So I’m happy to be here.

David Greene:
So what does your portfolio look like right now as far as real estate you own?

Sarah Weaver:
I own 15 units in four states. I am in the Omaha market, Des Moines and Kansas City.

David Greene:
And are these mostly small multifamily? Are they short-term rentals? How are you using them?

Sarah Weaver:
Five of the 15 units are currently furnished. I am using the medium-term rental strategy. So I’m excited to talk about MTR and then they are all small multifamily and I have one single family.

David Greene:
And then the last question I have before I turn over to Rob will be, what about your agent business? How many houses are you selling? What does that look like?

Sarah Weaver:
I’m actually just coaching agents. I have a referral business, but I don’t focus on selling myself. I focus on coaching agents.

David Greene:
When did you make that transition? I lied. I did have another couple of questions.

Rob Abasolo:
Come on, man. I had a softball ready to go.

Sarah Weaver:
The transition from selling, I sold for about a year in Austin, Texas. I was actually in the KW flagship office. And so little Sarah Weaver, I thought you joined Keller Williams and you got to see Gary Keller and Joe Williams in the hallway. I just thought that was normal. Now, I obviously realize that was a huge privilege, but I always knew I wanted to be what I called location independent.
And so the moment I had an opportunity to take my job remotely, I grabbed it and haven’t looked back since.

David Greene:
Rob, turn it over to you.

Rob Abasolo:
I’m ready. I’m antsy. I’m antsy here. So I do have questions. I have several questions actually. You said that you have a whole portfolio of, I guess, 15 rentals or so in four different states. Can you walk us through exactly like how long it was before you actually got into the long-distance investing? Because a lot of people tend to think that that’s a privilege reserved by the highest of highest, mightiest investors who can undertake such a big task. Can you tell us a little bit about your journey there?

Sarah Weaver:
Yeah, absolutely. I was living in Denver, Colorado in 2017. And laughable now, I looked around and thought, “Wow, these houses are too expensive.” So I drove across I-70 with tears in my eyes knowing that I could get something “cheaper” at a better price in Kansas City on the Kansas side. And so I house hacked in Kansas City in 2017.
And then someone wiser than me, I think, calls it the stack. So I went from the single family to the duplex, to now the fourplex and house hacked, but always did it like in a new market or in a new state. And so it was kind of a turn on long-distance investing. I would find a market I wanted to be in and then I would invest from afar and then just move there.

Rob Abasolo:
So as someone that does long-distance investing, it seems like you doubled up, first of all. You went from single family to duplex, to fourplex. So you’re up for an eightplex here pretty soon. But are you happy with the progression that you went? Do you wish you had waited a little bit longer to get started in long-distance investing, or what are your thoughts on that? How soon can someone jump into long-distance investing?

Sarah Weaver:
I think long-distance investing is the absolute way to go even from day one. People ask like, “What do you do if something breaks?” And I say, “It’s great. You don’t do anything.” And so I have seen all my properties. So, I do want to say that, but you don’t need to. You could own real estate that you never visit, which I’m sure, David, I know that’s true for you. Rob, you’ve probably been to all of yours because your properties are way better looking than mine.

Rob Abasolo:
No. Actually, I would say of my 14-unit portfolio I’ve been to about half. I’ve seen about half. I’ve seen the photos of them though.
So let’s dive into this because for sure things go wrong. It’s just a part of real estate. A lot of people think, “Oh my goodness. If you’re across the country, you have to hop on a flight and you have to go address all these little issues.” What’s the reality there? Obviously, you’re not flying across the country. I got to assume you have a team, a dream team as we call it or in my business, in the Airbnb business, we call it the Airbnb Avengers. So how have you developed that whole team on your side?

Sarah Weaver:
Yeah, absolutely. I have what I call the vendor list. And so I don’t just have one plumber. I have five plumbers because of course the day that something happens, the plumber that you love and trust isn’t available. And so that list is crucial. I start gathering that information while I’m under contract. Actually, when I’m really confident that I’m going to close and that list is key. I actually self-manage all 15 of my units. And then one thing I should add is I actually bought that fourplex, so my third property, from 8,000 miles away.

Rob Abasolo:
So that’s just like a quick hop over there. So is there any extra due diligence that’s needed for that? That’s 8,000 mile. That’s 2,000 miles times four. That’s very far. What kind of due diligence do you need to do to buy a property that’s so far away?

Sarah Weaver:
You have to have a team on the ground that you trust. And so that’s where investor friendly, investor-savvy real estate agents are absolutely clutch. You need to trust them but just like online dating, you trust but verify. And so I like to have video tours. I walk the neighborhood on Google Earth. There’s lots of steps in my due diligence process that make long-distance investing possible.

David Greene:
There is a large demand from investors for investor-friendly agents or investor-savvy agents like you referred to. It’s typically looked at like, “Hey, there’s an investor-friendly agent or a normal agent with … I want the investor friendly one.” But obviously, life doesn’t work that cleanly. There’s sort of a spectrum and you have to figure out where this agent you’re working with fits and what strength do they have, what weaknesses do they have.
I think a lot of people end up with a bad relationship with their real estate agent. Obviously, it’s all over the forums. People complain about this all the time because they weren’t sure what to look for in that agent. Just like I supposed, online dating. If you don’t know what you’re looking for, you’re not going to find what you want. So can you share with us, Sarah, from your experience, especially as coaching agents, what are some things that someone should look for when they’re picking their real estate agent if they are an investor listening to this podcast?

Sarah Weaver:
Absolutely. So I love what you’re talking about. You do have to change your expectations. Let’s say, my parents are buying their dream house. Then their agent needs to be very responsive, showing them lots of properties. My parents are going to touch the walls, walk through the property. But for an investor-friendly agent, if they’re not answering my call, I’m secretly clapping silently because it means that they’re so busy that they’re out hunting deals for me.
And right now, I actually don’t make my agents walk a property unless I’m under contract. That means I’m writing offers on deals and the agent hasn’t even walked the property because I’m writing so many offers. And right now, so many things aren’t getting accepted and I value my agent’s time so much more than maybe I would value the “residential agent”. And so the expectations are totally different in that sense.
And then as far as criteria goes, they need to understand investing. Ideally, they own a lot of rentals themselves. They don’t necessarily have to own a lot of rentals in that market I’m finding, but they need to think like an investor and they need to see, “Okay, if we up the amenities in this property, you can add this much to the rent.” And maybe they don’t have that information, but they sure as heck have a property manager on speed dial that does have that information.
And that’s where the Rolodex or the vendor lists become so important because I don’t need to start out from square one. They have all of the vendors, property managers, basically the on-the-ground team presented to me on a platter.

David Greene:
This is so good. In long-distance investing, I talk about this quite a bit is what I look for an agent. I can’t tell other people what they should look for, but I think there’s similarities between someone like Sarah and I who are both agents and investors, and what we expect from our agent versus someone who is not an agent and the expectations they have, which like you said, are often not accurate.
I would probably sum it up by saying what you and I do is we look for a person who has skill, knowledge, and resources we can leverage, not somebody who’s going to hold our hand and walk us through and answer every single question we might have that some of it could be on us to go get the answers for. And I think when you find a really good agent who knows they have a lot to offer, if you portray yourself like an insecure needy person who isn’t sure what they want, it’s the fastest way to be getting rejected by that person. They know this isn’t a great use of my time.
So I would like to highlight what you said when you said they have a property manager that can solve that problem. They have resources. They have a contractor, a handyman. If you’re buying a place and you need to furnish it, they can tell you, “Well, this is the store you want to buy the stuff from,” that’s gold. If they don’t have the warmest personality, if they don’t answer their phone every single the time you call, it’s probably because they’re good. It’s probably because they’re working. It’s not because they’re at your beck and call.
So I really appreciate you saying that. I want you to sort of dive a little deeper into why you believe this is how you coach your agents. And then, Rob, I’d like to get your perspective because you’re not an agent. And as you’re hearing all this, are you like, “Oh, I’ve been doing it all wrong,” or have you kind of learned in the hard way? Yeah. That’s the way it works.

Rob Abasolo:
Yeah. I would say it’s very rare. I have put in, oh man, hundreds of offers over my course as a real estate investor. And I don’t think that my realtor has ever found one of those properties for me. It’s not because they were not doing their job or anything like that. But I think with the way that the information has changed and how accessible it is through Redfin and Zillow and everything like that, I’m the one that’s finding the deal. And I’m usually the one bombarding my realtor with like, “Hey, can we get an offer in?”
And exactly right, Sarah. I don’t ever make my realtor go … Well, I’m pretty sure for the most part 99% of the time, I don’t make a realtor walk a property until I have an offer accepted or at least an offer in because unfortunately, we don’t have time for that in today’s market and many of the places that I’m investing. So for me, I am looking for somebody that’s responsive, but more so responsive to putting an offer in.
And I think for me, the biggest criteria that I’m looking for is a Rolodex for a good cleaner because in Airbnb, your cleaners are your foundation of your business, a good handyman because you always need someone to come and fix stuff for you. And then a contractor, depending on the project. If I’m doing like a full rehab or something that’s going to take extensive work, I do need that contractor. So a Rolodex, that’s pretty stacked. It’s usually kind of like that first interview question that I have.

Sarah Weaver:
Absolutely. And what’s really nice is that I’m also coaching investors and my agents love it when I send them an investor that I’ve coached because I’m coaching investors on how to be an ideal client. So David, you touched on this. I call it, do you want to be sent to the bottom of the list? Well, one of the quickest ways to be sent to the bottom of an agent’s list is to tell them your crystal clear criteria, the agent sends you that deal, and then you don’t write an offer on it.

David Greene:
That’s so good. Think about everything else in life. If you acted that way, what kind of a result would you get? Sarah, you brought up online dating, so you tell your friend, “I’m looking for a guy that has this and this and this and this, and all these things.” And your friend goes and they spend a lot of time finding that person. They find the perfect one. They go talk to him, they get him all excited about you, and they bring him to you and you go, “Ah, you know what, maybe I’m just not ready.”
Your friend is going to lose their mind. We can all understand that’s how it happens in other areas of life. But when we get into real estate, we forget that that’s a normal thing. So I really like that you’re highlighting that. What are some other things that you think investors need to know when they’re dealing with an agent that they have to get right?

Sarah Weaver:
That there’s some things that they can ask for and some things that they can’t. And when the agent tells you no, it’s not because they’re lazy even though there are lazy agents out there. But if you found a good agent, it’s not because they’re lazy that they don’t want to share all of the details. They’re probably being careful. Their broker says, “Hey, you can’t guarantee that this is going to be a 14% cash-on-cash.” That’s like the quickest way to get a phone call down the road and the investor is upset with you.
And so as an investor, you need to show up and you need to do your due diligence.

David Greene:
Rob, what did you think?

Rob Abasolo:
Yeah, that’s very true because, I learned this kind of early on. Listen, I recognize that I’m probably a higher maintenance client than most, so let me just put that out there. But I’m like relatively friendly and I have a good rapport with all my realtors. And I remember a couple years ago, I was getting some packages delivered to property that my realtor helped me close on and I wasn’t going to be there for a couple of days. And I was like, “Hey, do you think you can run the packages inside the house? It would really help me out.”
And my realtor was like, “It’s not really part of my scope.” And I remember being so annoyed because I was like, “Hello, I brought the deal to you and this and that.” And then I really had to just realize that you have to be flexible with your criteria and understand that, yes, realtors are there to serve you, but you also have to respect their time.
And so I totally relate to, if they take time to send you a deal and then you just ignore the deal or you don’t move forward, I’m not going to say you disrespected their time. But now they know, “Okay, well, when I put my time forth, it may not be reciprocated by my client.” So been there many times and I think just kind of one of the things of growing pains with the realtor. I’ve stayed in touch with a lot of my realtors for every market that I’m in. And no one is perfect, including myself, very much myself. And I try to understand we’ve all got our flaws, so we got to work around them. And that’s how everybody stays happy, I think.

David Greene:
That, and I would say, the closer you get to having each party having the same expectations of the other, the happier that you’ll be. This goes wrong when an agent has an understanding that if I do everything you’re asking me for, you’ll buy the property and it is my job to represent your interest, to cover you legally, to advise you on your options. It is your job to make decisions on those.
And as an agent, if I can smooth out the process by referring you to contractors and handyman and giving my experience that makes you more likely to buy, well, that helps both of us. But it’s not necessarily my job to go run out and find everything that you might need. And I think for the person who’s buying the property to understand that they are usually not compensating their agent directly, that agents probably close somewhere between 3% to 5% of the people that they actually talk to who have all these questions about real estate.
So even though you think that’s a huge commission, they’re getting that 3% of the time. Divide it by that, and it doesn’t seem that big anymore. And agents can’t be good at everything. If they were amazing at answering their phone and answering all your questions, you’re probably their only client. Is anyone good at anything that they do two or three times a year, but when it comes to selling houses?
So I love, Sarah, that you’re doing this because I think our industry needs this liaison to heal the pain between both parties where it’s funny, because you go to real estate agent training and they’re like, “Don’t work with investors. They’re the worst. They’re vampires. They’ll drain you. They’ll suck all your energy. They’ll never buy a thing. And then as soon as they do, they’ll ask for part of your commission to cover it.” And you go to invest your things and they say, “Agents are terrible. All they care about is a commission. They don’t care about you at all.”
Both sides have very strong feelings about the other one. And I believe it’s because we’re both going in with really bad expectations. We don’t have a good understanding of how this should work out evenly and fairly.

Sarah Weaver:
I couldn’t agree more. I just want to be like, can’t we all just get along? And the truth is we can, but we have to adjust our behavior. I teach a lot on the DISC behavioral assessment and I always say, “You’re not going to change your personality.” I am never going to become a patient quiet person. That’s not in my nature, but I can learn to bite my tongue when needed, communicate differently when it’s best suited.
And that’s what I tell real estate agents is if you have an investor that’s a time waster, move on because there are hundreds of thousands of investors waiting for good deals. And so if there’s an investor that’s sucking your time, move on from them and build a stronger investor database or an investor buyer list, which is what I teach my investor or my agents to do.
And then same with investors. If they have an agent that’s not sending them deals, then either their deal criteria is not realistic or clear enough or they found the wrong agent and move on to the next one.

David Greene:
Man, this is so good. Like we should do an entire series on just agent-investor relations so each side can see what the other doesn’t. Did you have something you’re going to say, Rob?

Rob Abasolo:
Yeah, we need a mediator. Someone that can help mend all the pain, all the broken hearts.

Sarah Weaver:
I have had an agent call me in and say, “Hey, I am not having another conversation with this investor. I told her that she needs to coach with you.” And so I have had coaching clients where I’m essentially helping a little problem child. And what’s really cool is my investor clients, while that’s not my main focus, guys, they go under contract. I just had my fourth coaching client go under contract within six days of their first coaching goal with me. And so whatever I’m telling investors is working.

David Greene:
That’s awesome.

Rob Abasolo:
So I want to kind ask a little bit about that because obviously you’ve successfully worked with investors and we’ve sort of talked about the expectation, sending them deals. You’ve talked about your do-not-call-back list or whatever. So when you do find an investor that you’re working with, what are some of the things that you’ve done as an agent to help find a deal for investors? Are there any specific strategies or any way that you’re going out into the world and finding a deal, plucking it out from the street and bringing it back to an investor?

Sarah Weaver:
There’s a lot. So I’ll actually use my agent in Omaha as an example. I sent him a text message, the most clear criteria I could come up with. So it was, I want a fourplex at this price or a duplex at this price. And they were different prices because of financing. I want them to be value add. I’m willing to spend up to $10,000 in renovation per unit because you’re amazing and you have the on-the-ground team. Keep in mind, I was living in a van in New Zealand while this was happening. So talk about like extreme long-distance investing.
And the criteria text message went on and on. It was incredibly detailed. And four days later, he texted me and I think his exact words were, “You need to buy this.” And I looked at the deal, I ran it through my deal analysis calculator. He knew to give me purchase price, current rent, market rent, estimated rehab, taxes and insurance. Yes, the tax is something I could do, but he appreciates that I asked for that and I ran it through my calculator and I said, “Great, write the offer.”
And it was that seamless because we were so clear with each other. And I asked him, “Okay, how did you find this?” And he was like, “That’s my job.” I said, “Okay, really, how did you find this?” And he went to his database because I had sent him such a crystal clear criteria, made it so easy for him. You guys, he literally copy and pasted that to a bunch of real estate agents, including commercial real estate agents.
And I essentially bought what was considered a failed flip from a commercial broker. These guys thought it was really sexy. They could flip this fourplex. They got in over their head. Everything that could go wrong went wrong. And so when they had an eager buyer like me ready to purchase it off market, they jumped on it.

David Greene:
Rob, what do you think about that?

Rob Abasolo:
I am now seeing flaws in how I deal with realtors, which I think it’s so important to help a realtor understand your particular criteria. I think for me, realtors have a general idea that I’m looking to buy a property that cash flows pretty well. But hearing you say this, it’s like, “Okay, why not send them my calculator?”
I actually have a pretty thorough calculator and model, and it talks about cash-on-cash returns and write off deductions and everything like that. I could probably send that to them and say, “Hey, here’s why this deal works. Here’s why it doesn’t. Here’s why it works, why it doesn’t.” I don’t feel like a lot of the times I’m really hoping a realtor understand why I didn’t like the deal.
And so when they keep sending me the same kind of deals that I keep saying, no, and then I might be taken as a time waster here. And so this is kind of mini therapy for me now. I’m going to change, you guys. I’m going to change today. This is the day that I change how I communicate with my realtors.

David Greene:
Sarah, you’re making a difference. You’re healing broken hearts. Something that stood out to me about that would be your realtor must have had so much trust in you that he was willing to put his name on the line. Because imagine if he sent this, “Hey, private deal, I’m looking for off-market stuff. It looks just like this,” and someone had it and he brought it to you and you’re like, “Ah, I don’t know.” He now looks like a total goofball to everybody that he just put his name on the line for. And that person’s thinking, “I’ll never do this again.”
And I think a lot of us just don’t realize when we say, “Hey, I’m looking for an off-market deal.” First off, well, the agent is not getting a commission on off-market deals. So it never makes sense when people come to me and other agents and say, “I want an off-market deal,” unless they’re planning on paying for that, which most people don’t want to.
But secondly, that means that we are going to our database of past clients and other agents that might have stuff that’s coming up on the market but hasn’t yet. And if we go get all this information from them, we spend 30 minutes, 60 minutes talking to them and bringing it back to the client and then the client passes for no reason, now, that agent never talks to us again and it hurts our livelihood. It hurts our business.
And I think that kind of stuff is happening every day all the time. This is funny this is coming up because Rob and I just had a conversation with an agent that I know in Arizona yesterday. And there were some properties that we were looking at and we went to him and we said, “Hey, this is what we want. Can you find out?” And he did a great job. He called the listing agent right away. He found out how motivated they were. I came up with an initial plan of this is how I want you to present what we’re doing. And this is the price we want to try to get it for.
And in the middle of that, he actually came to us and said, “Hey, by the way, there’s an HOA and this property can only be rented out for six months of the year.” So that stopped the deal. But that’s why we want him. He would’ve spent God knows how much time trying to work on this deal that never would’ve worked out. We would’ve put all of our time into running numbers on this, and digging and doing due diligence that we can’t do on other properties. Everybody spins their wheels and then we get to escrow and that’s when we finally realize, “Oh, this isn’t going to work.”
That good realtor can get in 15 minutes done what a not good realtor might spend 8 to 10 hours of time doing. And that’s why we look to leverage sort of their experience. I want everyone to understand what goes on behind the scenes. I don’t want to take the whole podcast talking about it, but Sarah, do you have any, on this topic, anything else that you’d like to add that you just wish agents and investors both understood?

Sarah Weaver:
Yeah. I wish that agents understood the power of having a strong investor buyer list. So agents would send me deals, not all of them work for me because I have pretty high expectations. I’ve spent a lot of years building relationships with investor-friendly agents. So my cash-on-cash requirement is really high, but that doesn’t mean that everyone’s cash-on-cash requirement or even deal requirement is the same as mine.
And so if I pass on a deal, that deal immediately should go into an email that then gets blasted out to their entire investor database. Even just the Arizona deal that you just mentioned, I’m like, that sounds like the perfect house hack for a snowbird. And so your agent’s time wasn’t wasted if he threw that deal into whatever MailChimp or whatever email and sent it out to his investor database. And so I think that every single time an agent finds a deal, they should be able to sell it.

David Greene:
So in 2020, you sort of had a transformational year, you had these big goals and you were trying to achieve them and you were having a little bit of difficulty doing it until some things changed. Can you share with us what was going on at that pivotal time in your life?

Sarah Weaver:
Absolutely. You know how everyone kind of starts out the year with the word of the year. Unintentionally, mine was frustration. And then some lovely mentor was like, “The language that you use shapes your world.” You don’t tell a frustrated person this. And so then it made me more frustrated.
But I realized that I was writing so many offers and I wasn’t crystal clear. So of course, I like that I was able to share how I did it right at the beginning, but I did it wrong for about nine months. I was looking at nine different markets. I wanted a short-term rental, a BRRRR and a house hack, obviously, not all in one property.

Rob Abasolo:
All in one? Oh, okay.

David Greene:
That does happen.

Rob Abasolo:
Yeah, they exist.

Sarah Weaver:
I did end up doing a lot of those things, but I didn’t have that crystal clear criteria. And I was frankly, probably one of those time wasters that we’re talking about because I was texting too many agents looking in too many markets. And so someone that I admire sat me down in a nice way said, “Knock it off. You need to look at one strategy. We get it. Airbnb is really sexy. I know you’re going to do it, but is that your very top priority?” And I said, “No, you’re right. I want a house hack so that I can quit my job.”
And so I put my house hack first and foremost, and then that became that crystal clear criteria, which I’ve already told you. And then I wanted to BRRRR. And so I sent a really similar text message to an agent in Des Moines and he found me a BRRRR on the MLS. And then for all of the agents and investors listening, he did something that every single agent and investor should be doing. He asked the seller, “Do you have anything else that you’re selling?” And just so happened that the seller owned the duplex next door. And so I bought that too. And I BRRRRed that as well.

David Greene:
That’s awesome. So it sounds like what you’re saying is you realized you were going a mile wide and an inch deep. You were doing too many things, which a lot of … It’s almost probably where we start any endeavor is we do a little bit of everything and then we sort of narrow it down. Was it just that conversation with the agent that opened your eyes to the fact that you were sabotaging your own success?

Sarah Weaver:
Absolutely. And one thing that as a coach, I have to be really coachable. And so when I was told that, I listened and I pivoted, I think that text message that I told you guys, I sent the day after that conversation. And so within the week I was under contract.

David Greene:
Yeah. That’s something really important to highlight. As I think about my career in 2021, I got out of actually having my name on the sales contract and I had my team members do it and I sort of just guided them. And in some ways, it was rough because they don’t have the experience that I have.
So what I’m realizing is it’s those conversations that they’re not as good as having, I would have the person that would come to me and say, “All right, David, I want to use an FHA loan to buy a place at 70% of ARV that is going to be a short-term rental, but it could also be something that I could do long term if it doesn’t work out, and I want to BRRRR it,” and over and over and over. And I’m like, “Why do you want to BRRRR if you’re putting three and a half percent down? You don’t have to. You’ve already done the job just with the loan you’re getting.”
And so what would make things go well is when I would have that conversation that your agent had with you. “Look, you can do all these things, you don’t do them all on the same deal. Let’s put a systematic plane together where you take step by step by step, and each step makes the next one a little bit easier and you kind of progressively move your way along.”
And now that’s almost all that I do. Someone comes to me with a house that they say, “Hey, I got this property. It’s got a lot of equity. What should I do?” And I look at, “Well, what’s the cash flow? Okay. The cash flow is not great. What’s the area? It could be the better, but there’s a lot of equity. If we sold it, we could buy four more. We’re going to buy in these areas that appreciate. These two will be this kind of deal, and these two will be this kind and you sort of amplify their portfolio.”
It’s very hard to find that. It’s very difficult to find people that have that experience that are still willing to help with clients. Because most of the time, by the time you learn that you’re like, “I’m done. I’m just going to go sit on the beach and drink my mai tai.
So now in your experience, as you’re looking to find different agents to help you, Sarah, are there certain questions you’re asking to figure out if they’re the right fit to work for you particularly?

Sarah Weaver:
Yeah. I’m asking them what does their lead generation look like? And depending on how much they stumble over their own words tells me really quickly. And then I build a relationship with them. I ask them about their portfolio. I ask them these things. I ask them about their personal lives. And then every once in a while I’ll throw something and I’ll be like, “Oh, and have you done a BRRRR?” And that’s where I can see like, oh, they don’t even know what the strategy or what the acronym means.
And so I’m not trying to trick them, but I’m cutting out time wasters to tie it back to online dating. Nobody has time for time wasters. So let’s get some of those big important questions out of the way. And I think the biggest thing is are they too busy? And so my best agents, their number one skill is finding deals. And if they don’t need me, if they already have a really strong buyer list, they’re selling to a hedge fund, then they’re not the right agent for me. They might be great. They might be really savvy. But are they willing to turn over stones to find a bird deal for me?

Rob Abasolo:
It’s pretty important to have a realtor that can relate to the strategy. If you have to walk them through what a BRRRR is and you’re like, ah, there’s a little bit of education there and it’s very common with me. When I’m talking to a lot of realtors, a lot of the times they don’t really know. They’ve only heard of Airbnb or short-term rentals. And so having to explain the concept of a stranger staying in your house and then paying you a really nice nightly rate, and a lot of questions start happening.
And I’ve always found that when I have a realtor that has a couple of Airbnbs in their portfolio, we just click more because, A, we can celebrate together. We can rant to each other. And there’s just a little bit more of a connection there.

Sarah Weaver:
Rob, I’m really glad that you brought that up because I switched over to furnished rentals this summer or this last summer for the first time. And I’m doing it in a kind of an unconventional way. I don’t necessarily consider Omaha, Nebraska a destination hotspot of America, but I’m doing really well. And what was really fun is my agent was just as enthusiastic about the strategy as I was because he’s been wanting to try it on his units.
And so really he was, one, because he found such a great deal for me, I was kind of willing to play that educational part even though I’m the investor and he’s the agent. And we’ve been learning alongside of each other and he’s been incredibly helpful when I need a last-minute snow removal because my guy backed out. And so it’s really important to build a relationship with these agents so that they’re there for you when you need them. And we’ve had a lot of fun learning about Airbnbs together.

Rob Abasolo:
Yeah. So I guess I’m kind of curious here as someone who, you’ve done it both. Well actually, you’ve done the long distance and long term. Has your process at all changed in that? Has your dream team or your vendor list or your Avengers, if you will, has that at all evolved moving into kind of the short-term strategy side of things?

Sarah Weaver:
Absolutely. The cleaner is your MVP. And that was actually brought to me from someone in my network. I asked another property manager who has Airbnbs. And interestingly enough, he said, “Yeah, I would love for you to hire my cleaner because I’ve switched over to the medium-term rental. So I’m not using her as much.” And so she needs the business and she is the best cleaner. I had a dog eat some blinds. She helped me order the blinds and even reinstalled the blinds. She felt like the stairway was a little bit smelly, which there’s no way for me to know that from 400 miles away. So, I Amazon Prime some air fresheners to her personal residence and then she took them over to the house.
And so your cleaner is everything. And that’s obviously something that I’d never really had to deal with when I was doing long term.

Rob Abasolo:
Sure. So really quick just for the people at home, because obviously short-term rentals are the big buzzword. We’re all familiar with long-term rentals. Can you just give us like a quick overview of what’s the difference between short term, midterm or medium-term as you call it, or long-term investments?

Sarah Weaver:
Absolutely. So everyone kind of knows buy and hold long term. You get a tenant. They sign a year lease. You don’t furnish the unit typically. Then for short term, we’re talking about Airbnb, VRBO. They can be two-night stays, two-week stays. That’s your typical Airbnb. Because of city regulations really cracking down on short-term rentals, that’s where this medium-term rental strategy is going to come into play for most people.
Denver is obviously where BiggerPockets is headquartered. They’ve really cracked down on Airbnb regulations as well as Austin, Texas, actually cities all across the country. So that’s where we come into 30-day plus rentals. So if you have someone who’s willing to book your place for a month, two, maybe three months, they want it fully furnished. You, the landlord, cover utilities and you might not get as much rent as you would on Airbnb, but there’s less turnover. There’s guaranteed income.
I just had a traveling nurse. She moves in tomorrow and it’s a four-month contract. And it’s nice. It’s the middle of winter in Omaha, Nebraska. My Airbnb guest rate was getting lower and lower, so I decided to switch over to traveling nurses. And now I have five of my eight units in Omaha are fully occupied by traveling nurses. They tend to stay 13 weeks minimum. Some of them stay up to six months.

Rob Abasolo:
Wow. Yeah, medium term, midterm, I’m not going to lie. It is probably my favorite, especially traveling nurses. They’re very respectful and they clean the place up. And a lot of the times, they’re not there for like 90% of the day.

Sarah Weaver:
They’re the best tenants. They’re so tired when they come home. One of them I think she lived there for three months and she never cooked because she was just so exhausted. The place was spotless. And then because they’re there for three months, I just got a new vacuum. The tenant was like, “Oh yeah, I don’t need this vacuum.” So I just left it in the unit. Score.

David Greene:
Where do you advertise the vacancy for these properties when you’re going for the medium-term tenants?

Sarah Weaver:
Two places, I do post it on Facebook Marketplace. I was actually able to get a couple who was renovating their kitchen. Normally in any other time in life, they would’ve just dealt with it and lived without a kitchen, but they had two dogs and they both work from home because of COVID. And so they said, “Man, we just cannot go through this renovation,” so they rented my place, which was only a mile from their house.
And because we’re all in real estate, I was smart and I blocked off the month after them, knowing that I was going to get a phone call, “Hey, our kitchen’s not ready.” And sure enough, she called me and panic and said, “Oh my God, can we extend?” I said, “Yeah, I already planned on this. I’ve renovated the kitchen before. Contractors are never done on time.”
So, Facebook Marketplace is a good place to start. But the most reliable, the most success I’ve had is from a website called furnishedfinder.com.

David Greene:
Tell us a little bit about that website. Why do you like it?

Sarah Weaver:
It is where most traveling nurses hang out. It’s $99 a year to post your unit on the website. And my tenants are quality. The website user face is a little bit clunky, but it puts you right in contact with the nurse or the guest. Typically they’re all nurses, but puts you right in contact with them. Most of them list their email, phone number. And so recently, I had a nurse. Her hospital assignment changed. I had a unit went vacant right away. I just opened Furnished Finders and I just started calling. And within 20 minutes, I found a tenant that wanted to move in next the week later.

Rob Abasolo:
By the way, this podcast is brought to you by furnishedfinder.com … No, I’m just kidding. So, you don’t really do you any midterm lead generation through Airbnb or like VRBO or anything like that?

Sarah Weaver:
I have it listed on Airbnb, but I have stayed fully occupied through Furnished Finder that I actually haven’t secured a tenant through Airbnb yet.

David Greene:
That makes sense, I suppose. If you’re the tenant looking, you wouldn’t think to look for a 30 to 90-day place on a short-term rental website like Airbnb or VRBO.

Rob Abasolo:
Most of mine actually, they do come from Airbnb. Similar stuff here, obviously, travel nurses but also, there is a family like next neighborhood over and they’re like, “Hey, we’re remodeling our house. Can we stay at your place?” And yeah, they’ve been there for a bit. So, I guess always happy to find a new strategy.
So you’re kind of in the short term, midterm rental game. I know that design is kind of like a big part of your overall business plan and everything like that. Can you tell us a little bit about the design side of Airbnb? How much of that are you doing? Are you actually in there setting up thousands of boxes that come in every single month? How does that all work as far as your workflow?

Sarah Weaver:
Absolutely. So because I believe in long-distance investing, I also have done long-distance furnishing. And when I started posting about this online, people went crazy and they were like, “Wow, can you do that for me?” And so I am now filling a need in the market. I started a company called Arya Design Services and we help investors either revamp or fully launch their Airbnb. We can buy all of the furniture remotely, have it sent to the unit, and people on the ground can put it together or you can fly my team in to furnish it themselves.
We also do your house manual, all of the automated messaging. Really, whatever you need to launch your Airbnb successfully to make that a cash flowing machine, my team can handle.

Rob Abasolo:
But what do you do with all the boxes? That’s the real question because setting up a place like right now, there are 200 boxes outside of this door. What’s the secret there? That’s what everyone really wants to know. Secretly just me, but …

Sarah Weaver:
You just tape them back up and you run them across to the neighbor’s house.

Rob Abasolo:
Love it. So did you ever end up doing what we call like a BRRRR-STR, like a BRRRR into a short-term rental? I know you were looking for a BRRRR. Did you ever end up executing on that strategy?

Sarah Weaver:
I have done my first BRRRR. I took both David’s book, Long Distance Investing and the BRRRR Strategy, and did a long-distance BRRRR. And currently they’re all long-term tenants. I would love to hear if you’ve done it. I’d love to hear the financing strategy on how do you refinance if they are all going to be Airbnbs. That was the piece that kind of tripped me up. And so for now, I put long-term tenants in those units, knowing that when their lease is up, I will turn it into an Airbnb.

David Greene:
What was the question you had on how to do, why can’t you refinance if it’s an Airbnb?

Sarah Weaver:
Yeah, just figuring out how to refinance without showing the income because I needed the income to refinance the property.

David Greene:
The income of the property, you’re saying?

Rob Abasolo:
Yeah. Basically, how do you do a cash out on a short-term rental, right?

Sarah Weaver:
Exactly.

David Greene:
Assuming that your debt-to-income ratio can’t support it, that’s what you were saying here?

Sarah Weaver:
Yeah, because I was a genius and I quit my W-2 during the refinance.

Rob Abasolo:
Yes, we’ve all been there.

David Greene:
And that’s the next section we’re going to get into, but there are a few ways there. One is, if you’re just doing a standard, like you’re going to do it under yourself. If you show the lending company a lease of the person that’s going to be staying there, they can usually use that income. And then there’s also a loan product that we use that uses income from the property, which is perfect for short-term rentals.
Isn’t it funny how like this probably, Sarah, to you was like a life-ending like, “I can’t do anything because I’m stuck,” and then someone like me pops up and like, “Oh, if you had just contacted me, I could have taken care of that”? There are so many things like that that I find where people are just smashing their head into this wall and they’re so frustrated. And then one person comes along and they’re like, “Oh yeah, I have a thing,” like if you just knew the right people to talk to, they solve these problems so fast.
I’ve been there so many times in my career. It’s amazing.

Sarah Weaver:
Yeah. What I ended up doing, you guys, because I did knowingly quit my job during the refinance. I’m not an idiot. I did know what I was doing. And I did a 30-year product from a hard money lender. They did not care that I didn’t have a W-2 any longer, and my interest rate was 3.75.

David Greene:
Everyone’s going to be emailing you to find out who that hard money lender is.

Rob Abasolo:
Yeah, seriously. Who was that? You better get an affiliate link for that.

David Greene:
All right. So this is the fun part of your story. So we’ve kind of gone over how you got started, the challenges you had, how you overcame them, how you earned the right to do that by coaching agents and working with investors and helping each side kind of come together and built up the value that you’re offering, which probably I would imagine that the Keller Williams influence that you had, especially if you were in the hub in Austin, that that sort of like rubbed off onto you. That company is very big on bringing value to other people before you ask yourself.
And now, you get to enjoy the fruits of that. Now you are living the dream that is kind of being dangled in front of everybody else when Brandon Turner says, “Hey, you should go do this because you could live in Hawaii like me too.” So, I would love to hear how are your businesses set up where you’re doing consulting and you’re buying property and you’re managing property. And it sounds like you’re just bebopping all over the country.

Sarah Weaver:
I am. So, I wrote in my journal back in 2015, I want to be location independent. And within eight days, I got a job where I could work a hundred percent remotely. It was funny enough still in the real estate industry, and that was this aha moment of manifestation. And so, ever since then, I’ve just been really diligent about writing down what I want in life and then not really taking no for an answer. So, I wanted to live in Buenos Aires. And so three years ago, actually about three years ago this week, I bought a one-way ticket to Argentina and I’ve been fully nomadic ever since.

David Greene:
How are you structuring this so that you can get all this stuff done while you’re being a self-proclaimed nomad?

Sarah Weaver:
The strong wifi is crucial. So you need to research the place before you go. If people have been given this added privilege of working remotely from their job, I recommend don’t burn the boats. You don’t need to sell your house, sell your kids. You can just buy a one-way ticket for two weeks or buy a round trip ticket, and just try it and see if it’s something that’s for you.
I recommend traveling on a Saturday or a Sunday so that you can get established in likely an Airbnb abroad and just test out working remotely. There are things that get in the way like spotty wifi or time change. And so you need to be mindful of those. But I really believe that COVID has gifted a lot of people the ability to work remotely, and I hope to see more people take advantage of it.

Rob Abasolo:
A hundred percent. I think a lot of people realize like, “Hey, I think I want to try something different than what the world has been doing for the last thousands of years,” right? I guess I’m kind of curious because you are obviously a nomad now. What was the tipping point for you to leave your W-2 job because it’s very scary, it’s very scary to leave the stability and the benefits and the healthcare. At what moment for you where you’re like it’s time?

Sarah Weaver:
It was always the end goal. So I switched jobs at the beginning of 2020, so talk about funny timing with COVID, into a job that was more focused on real estate investing. I wanted to earn while I learn, so I took a job in investing and I never kind of experienced the lifestyle creep. The one nice thing about living abroad is that you can keep your expenses really low. So, I wasn’t paying United States healthcare. I wasn’t paying car insurance. Even my cell phone plan was cheaper. And so I was kind of experiencing what some called geoarbitrage, which means living somewhere else to keep your expenses lower.
And I lived a hundred percent off those … I had three units when I first went abroad. And I was living a hundred percent off of that rental income and then saving a hundred percent of my salary. And so that gave me a really nice cushion. So then in the summer of 2021, I went from three units to 15 units in 68 days. And when that happened, I woke up and was like, “Wow, I did it,” like I exceeded my lean F-I number, or lean financial independent number. Meaning all of my expenses are more than covered by my rental income. I can easily leave my W-2.

David Greene:
Yeah, that’s really the point everyone’s trying to get to, that crossing point where you went to the 15 units and instead of it just being money coming in, that equals a lifestyle change. I am no longer tied to this area that I’m at, like there’s some kind of freedom that you experience. What do you think led to you taking that step? It sounds like you were trying and trying and trying and not quite getting in anywhere, and then all the pieces clicked in place and boom, you got there. What was that?

Sarah Weaver:
It was functioning in the fear. So, things were scary. I didn’t know anyone in Argentina and my Spanish is pretty rubbish, and I still bought the plane ticket. And I wrote offer after offer after offer. I was living in New Zealand at the time and I was getting really frustrated. And a lot of people were telling me, you’re going to have to start offering all cash. That’s the only way you’re going to get your offer accepted. And I just was confident that there had to be a better way.
And so I changed my criteria and I put my head down and I did the work. And so I think staying disciplined and not getting discouraged and then functioning in the fear, I think those are the three things you have to do.

David Greene:
What about practically speaking? Did you talk to agents differently? Did you target a different kind of property to get that many that quickly?

Sarah Weaver:
Yeah. I focused on two markets. So, I focused on Omaha and Des Moines and the rest was noise. You guys mentioned Phoenix. I would love to have a short-term rental in Phoenix, but I knew that that would come later. I knew that I needed to focus on what I was focusing on step by step. So first, I needed to get an owner occupied because I wanted to use my FHA spot before I quit my job. And the next, I wanted to do a BRRRR because I wanted to recycle the capital so that I could use it on the short-term rental on the third property.
So there was an order of operations and then I stopped listening to what other people were saying. Even though, I mean, I’m sitting here in the Smoky Mountains this week looking at property, but I had to earn this. I wasn’t looking at Smoky’s a year ago.

David Greene:
I think that is the key. So Craig Curelop and I were doing a podcast and he used the phrase of beachhead. So it’s the idea of like in World War II when the troops were pushing their way forward. If you can establish a beachhead like a base where you can’t lose that ground, you don’t have to worry about going backwards. You can then establish the next push you’re going to have to go forward and then establish that ground. And it’s that incremental systematic progress where you’re not trying to just knock your opponent out in one punch.
And that is a lot of the time where success in real estate and business come from. It’s understanding, I want to be the person that is investing in a Phoenix real estate, like maybe a luxury short-term rental. But I can’t do that right now because I don’t have enough in reserves. So I got to get enough in reserves to earn the right to be able to do that. Well, what do I have to do to get enough in reserves? Well, I got to be to save more of my income. What would I have to do to do that? Maybe I need to move to a cheaper area and be a nomad and save the rental income I’m having until my reserves are at a point that I can take that next step.
And then when you buy the Phoenix property-

Sarah Weaver:
Oh, shucks. I have to buy at Brazil, like what a shame. What a sacrifice.

David Greene:
Right. If you look at it with the right eyes, you can find a way to be happier and better off while going through the process of getting to your goal. It doesn’t have to be, I’m stuck shoveling snow out of my driveway every single morning somewhere in North Dakota saying, in nine years, I’ll finally be able to get out of here. There are ways to go about doing it if, I think what you said was a key, if you’re flexible. If you’re willing to change something about you whether that’s a skillset you have to build, an attitude you have to adopt, location you have to move to whatever it is.
When I look at people that are stuck where they don’t like to be, it’s almost always because they’re trying to find an answer that will work for them as they are now. They’re trying to change another person or they’re trying to change their boss or their job, or they’re trying to make people cater to what they’re comfortable with. And the successful people we interview here always say I had to do something different. I had to think a different way. I had to take another goal.
And I think, Sarah, what warms my heart about your situation particularly, is you found a way to change something about yourself and move in a way that also made you happy. You didn’t have to give up happiness in order to achieve your goal. You just changed it and now you’re getting both. And my guess would be the real estate consulting business that you have probably is fueled by your drive to buy more real estate, right? So now you have two sources of income that are both fueling each other. Is that how it’s been?

Sarah Weaver:
Well, and David, I’m also is like self-prophesizing. So I’m teaching agents how to get really good at finding off-market deals. Who do you think they send the deals to? “Hey, Sarah, is this a good deal?” I’m like, “Yes, I actually will write an offer on that.” And so I’m creating my own deal funnel from clients that are paying me to coach them.

Rob Abasolo:
Yeah, that happens all the time. When I had a consulting business, it was really great because I would consult people and they’re like, “I’m thinking about buying in this market. I’m not sure, will you help me comp it out?” And then I would comp it out and be like, “Oh my goodness, this is a gold mine.” I had no idea that Grayling, Montana, or wherever, it was such a great market. And so I was able to find many deals just by helping people.
And I think that’s always kind of one of those benefits is when you help people, it always ends up coming back to you, I feel like.

Sarah Weaver:
Always. And then you always are surprised by what people really want. Sometimes, I’ll get a phone call from a high net worth individual like an agent in Los Angeles. And she was like, “Hey, I want to spend three months in South America. Can you help me do that?” And I was like, “Oh yeah, I love … Let’s talk credit card hacking, travel hacking.” And so it’s been really interesting as I post more online, you get surprises all the time of what people are actually listening to you say.

Rob Abasolo:
Yeah. So, I have one quick question about all of this. And it seems when you hear your story, because it is a very heartwarming. I have seen the character arc developed over the course of 60 minutes here, but it does seem like it was all just so clear cut. There was a way forward, not linear, but it was all very strategized. And it always feels that way when you’re looking at it in retrospect. But I’m just curious, was it this easy to figure out?

Sarah Weaver:
Easy? No, but intentionally, yes. I think one thing that I can say with confidence is I live really intentionally. And so for example when COVID hit, I was living in Bali and just happened to be in Malaysia for the weekend on a visa run. You have to leave the country every 30, 60 days. And the United States decided to close their borders to Europe and my jaw hit the ground. And I thought, “Okay, the next country I’m going to be in is likely I’m either going to be stuck or they’ll kick me out and ship me back home.”
And so I sat down with my journal and I wrote top three countries to be trapped in during a pandemic. And number one, New Zealand. Island in the Pacific, great leadership. If all goes, it’s an island in the middle of nowhere. So I thought, okay, that will be a great place to hide out in. And then people were like, “Oh my God, you’re so lucky. How did you end up there?” And it was like, no, it was intentional.
And then same thing with real estate, like, “Wow, how did you grow so quickly?? No, it was really intentional. Was there a lot of tears and setbacks and frustrations? Absolutely. But I woke up and I was really clear on what my goals were and I didn’t let the little things knock me down.

Rob Abasolo:
Plus one retweet.

David Greene:
Yeah, there you go, retweet. Sarah, Do you have a deal in mind for the Deal Deep Dive?

Sarah Weaver:
Yeah, I can talk about my fourplex.

David Greene:
Okay. Then let’s move on to the next segment of our show. It is the Deal Deep Dive. This is the segment of the show where we dive deep into one particular deal that this guest has done. Sarah, this is going to be rapid fire style. So I will start with the first question and we will alternate back and forth. First question. Well, you actually already answered it. What kind of property is it? It was a fourplex. So I’ll actually go to the second one. No, Rob, I’ll let you take the second one. That way, we don’t mess up our rhythm.

Rob Abasolo:
I know, man. I was like, “Ugh. Don’t throw me off, man.” Sarah, how did you find it?

Sarah Weaver:
I found it from an investor-friendly agent.

David Greene:
There we go. How much was it?

Sarah Weaver:
It was $320,000.

Rob Abasolo:
Fourth question, how did you negotiate it?

Sarah Weaver:
There was not a lot of negotiating. I offered three and a half percent down FHA and then just crossed my fingers and closed my eyes and hope they accepted. And they did.

David Greene:
And how did … Oh, you said you funded it with FHA. Back to you, Rob.

Rob Abasolo:
Oh, man, the easiest day ever. What did you do with it? Did you flip it? Is it a rental, BRRRR?

Sarah Weaver:
I moved into one of the four units, owner occupied. And then overnight, one of my tenants didn’t like me, fled in the middle of the night, ended up being the best blessing. They had two barking dogs that didn’t stop barking. So I was happy to have them leave. I furnished that unit, furnished my unit that I live in, and so I have two long-term tenants and now two medium-term tenants in that fourplex.

David Greene:
And you just answered the question of what was the outcome. So once again, thank you, Sarah. Rob, I’ll let you wrap it up.

Rob Abasolo:
Hey, final question. Let’s end strong here. What lessons did you learn from this deal?

Sarah Weaver:
To be ready to pivot. So when you start to approach winter in Omaha, Airbnb occupancy starts to drop. And so I tried medium-term rental. It went really well. To give you guys some of the numbers on this, my PITI, principal, interest, taxes, and insurance, is $2,017. My long-term tenants are paying $830 and $850, but I’m able to get $1,575 each for the medium-term units.

David Greene:
I love it. It should feel good. You’ve earned that. All right, we will move on to the next segment of the show. It is the …

Announcer:
It’s time for the fire round.

David Greene:
Much like the Deal Deep Dive, Rob and I are going to fire questions at you that come directly from the BiggerPockets forums. Question number one, how do you stay on top of local regulations and restrictions while being abroad, or what can I do to prevent violations?

Sarah Weaver:
I set up go Google Alerts. So I type in like Omaha, Nebraska, Airbnb furnished rentals restrictions. And I get email alerts when things change.

Rob Abasolo:
Second question, do you use any great pieces of technology to help you stay connected to your portfolio or just email with your teams in place?

Sarah Weaver:
I use Smartbnb and Personal Capital to track my net worth.

David Greene:
What is the difference between Smartbnb and AirDNA?

Sarah Weaver:
Rob, I’m going to throw this at you. I feel like you are an AirDNA analyzing machine.

Rob Abasolo:
Did you say Airbnb versus AirDNA?

David Greene:
No, AirDNA versus Smartbnb.

Rob Abasolo:
Oh, okay. So AirDNA is the analytics tool where you can go in and actually analyze future projections, occupancy, seasonality. Smartbnb is more of a property management system where you can automate your messaging. You can automate pricing, I believe. And then you can also automate things like scheduling your cleaners and leaving reviews for different guests that stayed at your property.

David Greene:
So Smartbnb is kind of like the CRM that you would use to manage your short-term rental?

Rob Abasolo:
Yeah, in a sense.

David Greene:
Okay. Thank you for that. What are some misconceptions on being a digital nomad and investor?

Sarah Weaver:
That it’s always fun. Sometimes it’s Instagram versus reality. So you’re getting off the plane in Bali and your dishwasher breaks. And you have to deal with that if you don’t have a property manager in place. So, you just need to have everything set up. That’s why that vendor list that I mentioned is so important. Do that while you’re sitting in your parents’ living room, not while you’re sitting on a beach in Brazil.

David Greene:
I’m always so impressed by people, like Rob, you move around a lot. And Sarah, you obviously do too. And when I talk to Rob, every time, he’s got a different background. He’s bouncing around all over the place. And I just think about, I don’t think I could handle constantly having to reacclimate my environment to make it work for all the stuff I needed to do. I tend to be a person who’s always thinking so many steps ahead of the future.
It’s like I’m looking so far ahead that I trip on the stuff that’s right in front of me, if you move it. So, I got to be in the same place all the time so I don’t just step on that toy that the kid left there and fall. So, props to you guys for being able to just constantly move to a new place, be flexible, flow with what’s going on. It’s probably an amazing tool to have in your arsenal.

Rob Abasolo:
Final question. What country comes after Buenos Aires, or I guess what city?

Sarah Weaver:
Ooh, I love Lisboa, Portugal. I could spend a whole summer in Lisbon.

Rob Abasolo:
I have heard very good thing. I had one friend one time that said, “All right, if I’m not going to live in LA, it’s going to be Lisbon.” And I was like, “Oh, okay.” And she said it was, yeah, just the greatest place on the planet. So, cool, I’ll check it out.

Sarah Weaver:
You should.

David Greene:
All right. Well, thank you for that, Sarah. This moves us onto the last segment of our show. It is the …

Announcer:
Famous Four.

David Greene:
These are the same four questions we ask every guest every week with one bonus fifth question. I suppose we could call it the famous five because they both start with F’s, but famous four is just sort of etched into BiggerPockets lore.

Rob Abasolo:
Or the baker’s dozen Famous Four.

David Greene:
That’s funny, the baker’s dozen. That’s because a baker’s dozen is 13, not 12, if anyone here is less than 30 years old who doesn’t understand why we’re talking like that. All right, question number one. What is your favorite real estate book?

Sarah Weaver:
It is the book that helped me the most last year. It’s Matt Faircloth’s Raising Private Capital. I am excited to say I read that book and then raised $80,000 off Instagram.

David Greene:
Way to go.

Rob Abasolo:
Yeah, kudos.

Sarah Weaver:
And then sorry, shout out to Matt. When I told him that story at BPCON, you guys, I’m pretty sure he almost shed a tear and it was genuine. And he was really touched and I was really touched. And so shout out to anyone out there that has written a book and it’s changed people’s lives because Matt’s book really did change my life.

David Greene:
He is such a cool guy and he gets very little credit because he has such an unassuming personality. He just wants to give value. He just wants to be nice. He doesn’t get out there and shout and scream and demand attention.
So, if anyone here has been touched by Matt Faircloth, would you please send him a message through BiggerPockets messaging system and let him know? Sarah, thank you very much for doing that. I think that you’re going to repay Matt just by the correspondence that he’s going to get from all the people that have enjoyed his counseling and his guidance along the way.

Rob Abasolo:
All right. So question two, favorite business book.

Sarah Weaver:
Yes. It’s an oldie, but a goodie. Switch: How to … What is it called? How to Change Things When Change is Hard by brothers Dan and Chip Heath. David, like you mentioned, I love change. I think Rob probably does too. We’re constantly changing locations and changing investing strategies. But it turns out most of the world hates change. I mentioned the DISC behavioral assessment, and 69% of the population is a high S and they absolutely despise change.
And so it was really interesting to me, I thrive on change. And I always knew I was really different, but it wasn’t until I read that book that I understood how I could use that to my advantage.

David Greene:
Really good. I actually wrote an article for BiggerPockets explaining what the DISC profile is, if anybody here is curious, because we’ve been mentioning it. It’s a behavior profile. If you google DISC in the BiggerPockets search engine, you should be able to find it. And I’ll see if we can throw that in the show notes as well because it would make a lot more sense to what Sarah’s explaining here.

Rob Abasolo:
Next one, hobbies. Do you have any hobbies, Sarah? What do you like to do for fun? And you can’t say build an empire, building a real estate empire. No, I’m just kidding. You can say that if you want.

Sarah Weaver:
I mean travel has to be my hobby. I’ve tried to pick up other hobbies here and there. And that’s the cool thing about traveling is like I’ve been in a drum circle in Portugal or I’ve been salsa dancing in Guatemala. And so I have picked up hobbies along the way, but hands down travel is my true passion.

David Greene:
All right. Question number four. In your opinion, what sets apart successful investors from those who give up, fail, or never get started?

Sarah Weaver:
Functioning in the fear. I mentioned it earlier, investing is scary. Being a digital nomad is scary. Heck, just like waking up every day and being a human is scary. And so the absence of fear is not necessary to take action. And so even if you’re scared, you should do it anyway.

Rob Abasolo:
Yeah. I love it. Last question here or a little bit more of a statement, it’s not quite a question. So we can still call it the famous four questions by the way, David, because this isn’t a question. All right, number five. Tell us where people can find out more about you.

Sarah Weaver:
Absolutely. I have two freebies. I have one for agents and one for investors at sarahdweaver.com/freebies. I’ve also kind of monopolized Sarah D. Weaver, if they want to find me on Instagram, Facebook or LinkedIn.

David Greene:
Wonderful. And thank you, Technical Tommy, for pointing that out that that’s technically not a question. That’s very insightful of you. All right, well, Sarah, this has been fantastic. I really appreciate you sharing what you’ve done. I think your story is so cool because it’s equal parts inspiring, warming, practical, and multifaceted. You’ve got multiple streams of income, you have multiple skill sets, but they all flow out of the same passion of real estate. And you’ve made that work with your passion of traveling.
So, this is a great example of you don’t have to be a billionaire in real estate to be happy. In fact, sometimes that’s probably worse that if you did become a billionaire, the time you spend worrying about protecting the assets you have is time you can’t spend enjoying the life that you have, and we only get one of them. So thank you very much, Sarah, for coming on here and for sharing that. Is there any particular way that you prefer people to reach out to you?

Sarah Weaver:
I love hearing from people on Instagram. And similar to Matt, like really, we put our hearts out there to help people. And my word of the year is connection. And so if anything I’ve said has touched you in any way, I would love to hear from you.

David Greene:
Wonderful. That’s great. Rob, what’s your handle?

Rob Abasolo:
I’ll reach out to you right after this. My handle on the IG, on the gram, robuilt. You can find me on TikTok if you want to watch me dance. No, I’m just kidding. I don’t dance on TikTok. Robuilt, and of course, you can always smash that sub on YouTube at Robuilt.

David Greene:
There you go. And that’s Robuilt with one B, right? You use that-

Rob Abasolo:
That’s right.

David Greene:
And you get double usage out of it, very efficient with your letters.

Rob Abasolo:
It’s a play on words.

David Greene:
All right. And I am DavidGreene24. Reach out to me on Instagram or Facebook as well. And then make sure you’re following BiggerPockets. If you’re listening to this as a podcast, please check out the YouTube channel. Subscribe to BiggerPockets YouTube channel and leave us a comment. Tell us what you like about Sarah’s story. This is one of those podcast where you’re going to have a ton of questions, you’re going to want more detail. How do you do it? How do you do this? And luckily, Sarah is the person that will provide that.
Whether it comes to travel hacking, getting your credit cards set up, things you need to know about visiting different countries, how to manage your properties from somewhere else, this is the person to talk to. So, please let us know what you liked, what you didn’t like and reach out to any of us. We’re happy to talk. Any last words before we get out of here, guys?

Sarah Weaver:
Buying the plane ticket.

Rob Abasolo:
I love it. Well, Sarah, I think you’re doing it right. And I very much appreciate you giving us your time today. You’ve convinced some people to do things differently in how they approach investing, so thank you.

Sarah Weaver:
Thank you.

David Greene:
This is David Greene for Rob “Technical Tommy” Abasolo signing off.

 

Canadian real estate prices expected to continue rising

Rumours of an imminent interest rate hike did not materialize, as the Bank of Canada opted to maintain its benchmark rate at a record-low 0.25 per cent in its scheduled interest rate announcement today. The move (or lack thereof) comes despite soaring inflation and a stronger-than-expected economic recovery. The Bank noted that economic slack has been absorbed, but said the Omicron variant of COVID-19 continues to weigh on growth.

Globally, good are in high demand, with supply-chain disruptions impeding production and transportation pushing inflation upward. The Bank projected global GDP growth to ease from 6¾ per cent in last year, to 3½ per cent in 2022 and 2023.

Meanwhile, Canada’s economy proved stronger than expected in the third and fourth quarters, rounding out 2021 at +4½ per cent. Entering 2022, the Bank highlighted economic momentum, pointing to employment growth, a tighter labour market, job vacancies, strong hiring intentions and rising wages as positive factors. The Bank forecasts Canada’s economy to grow by four per cent this year and another 3½ per cent in 2023.

“CPI inflation remains well above the target range and core measures of inflation have edged up since October. Persistent supply constraints are feeding through to a broader range of goods prices and, combined with higher food and energy prices, are expected to keep CPI inflation close to five per cent in the first half of 2022. As supply shortages diminish, inflation is expected to decline reasonably quickly to about three per cent by the end of this year and then gradually ease towards the target over the projection period,” said the Bank. “Near-term inflation expectations have moved up, but longer-run expectations remain anchored on the two-per-cent target.”

On a final note, the Bank also expects elevated housing market activity to continue putting upward pressure on prices, which aligns with the 2022 Housing Market Outlook, where RE/MAX Canada anticipated average residential prices in the Canadian real estate market to increase 9.2 per cent this year, amidst high demand and a severe housing supply shortage.

The next Bank of Canada interest rate announcement is scheduled for March 2, 2022.

Tony Robinson:
Hey, before we get into the show, I wanted to mention BiggerPockets is hiring a full-time supervising producer for our podcast network. This is a remote position and a chance to work with an amazing team, if we do say so ourselves. We’re looking for someone with at least a couple of years’ experience managing production teams and someone who will feel confident taking the lead when launching new podcasts. So, would you or someone you know be a great fit? You can find the full job description at biggerpockets.com/jobs. Again, that’s biggerpockets.com/jobs to apply for our open podcast producer job. Now, enjoy the show.

Ashley Kehr:
This is Real Estate Rookie episode 151.

Daniel Shin:
I was driving and I was feeling burnt out and I was really hoping that I could pull back, but I couldn’t. I felt these golden handcuffs. And for me, that’s when I was like, “Okay, so what do I have to do to put myself on a path toward freedom?” And for me that was personal finance and getting into real estate.

Ashley Kehr:
My name is Ashley Kehr, and I am here with my co-host, Tony Robinson. Tony, it has been like a month since we have recorded, so why don’t you just give an overview to everybody of what the Real Estate Rookie Podcast is?

Tony Robinson:
The Real Estate Rookie Podcast is here to inspire, to educate, to motivate all of those new investors who want to get started in the world of real estate investing but aren’t sure where to start. So we break it down, give you the basics and help you get off on the right foot.

Ashley Kehr:
When we were recording today, we have a great guest Daniel, and when we were recording, we had to go through our checklist because it’s been so long that we were recording, “What do we need to touch on? What do we have to do,” and review before we got started. But you guys will notice one thing different, my background, if you’re watching on YouTube, I am not in my closet. So I recently this past week I went snowboarding in Colorado and I hit a couple of trees.

Tony Robinson:
Real, nice and casual about it.

Ashley Kehr:
Yeah. So I ping ponged off some trees going in a woods trail and I am now sitting here on the couch and my leg elevated with some ice, knee brace, crutches, and waiting to go to an orthopedic surgeon on Monday. So we’ll see. But I think it’s a ligament that I tore. So we’ll find out.

Tony Robinson:
Just another day in the life of Ashley Kehr, you never know what you’re going to get. One day it’s bull riding in New Orleans, the next day it’s ping ponging off the trees in Denver, you never know, but it’s a fun story. I’m glad I get a first row seat for all of this stuff though

Ashley Kehr:
And there’s so many other things that have it on this trip. There was a windstorm in Buffalo so the flight was delayed, so I had to stay overnight in Buffalo because there was no sense of going home. Then on my way home, there was a windstorm in Denver, so I’d to end up spending the night in Detroit because I missed my connection. So it was interesting. Well, it’s my first time ever on crutches and then having to travel being on crutches is definitely interesting.

Tony Robinson:
But there are some good things that happened while you’re in Denver as well. I hear something about some commercial properties, something’s happening. Give us the update.

Ashley Kehr:
Yeah. So while I was in Denver, I was actually there with my business partner and we were meeting with Tyler Madden and his wife, Zosia. Tyler’s been on the podcast before, and you guys could probably have seen him on social media if you’re on Instagram @tylermadden, but we just had a brainstorming mastermind a whole day, Sunday. That was awesome. And then on Monday, we went to a real estate meetup, but also on Monday, my business partner and I got our offer accepted on a 700-acre campground. So we are beyond excited about this, and now the work begins.

Tony Robinson:
I wouldn’t even know where to start on 700 acres. That’s so intimidating to me to think about that much land. So I’m all the more, I think, impressed with your courage on taking down something that big. It’s amazing.

Ashley Kehr:
Yeah, it is. I was actually surprised how many people already doubt me. I have an agent that I’ve worked with on some other smaller deals and stuff and she even said to me, “Oh my gosh, are you sure about that?” And even when I had my check written for the down payment, the bank that I was using to get the check out of, I have a good relationship with that person and they were like, “Are you really sure about this? This is a big undertaking.” And I just haven’t had people doubt me like that for a while. So it’s going to be a good challenge.

Tony Robinson:
There you go. Hey, I’m not doubting you at all, I got nothing but faith and confidence in you. And it’s nice when people challenge you in that way. I’ll never forget, just a quick side story. When we bought our first property in Joshua Tree, I told that agent, I said, “Hey, my goal is to buy one property every quarter.” And he looked at me and he laughed, and he was like, “Man, you’re pretty ambitious.” We ended up buying them one almost every month. We bought 12 in the last 12 months.

Ashley Kehr:
It drives you.

Tony Robinson:
Right.

Ashley Kehr:
It gives you that little bit. Yeah.

Tony Robinson:
Yeah. Well, that’s awesome, Ashley. I’m excited for you.

Ashley Kehr:
Yeah. So what’s new with you?

Tony Robinson:
Actually really exciting. We sold our first turnkey Airbnb flip about three weeks ago now, really excited to start building up this part of our business. We have second turnkey flip, we just listed about three days ago now. And if you guys want to see the flips, you guys follow me on Instagram @tonyjrobinson, I usually post them all there.

Ashley Kehr:
Actually, the better place to follow is his wife, Sarah, because her Instagram pictures and her reels are amazing.

Tony Robinson:
That’s true. That’s true. She’s got this recurring, like cropped image of us. So she just like plops on every house we buy. She’s @saraaraad, S-A-R-A-A, anyway, follow me on Instagram, you’ll find her profile pretty easily. But that’s been really cool to see because we’ve done renovations in the past, but we’ve never actually flipped before. It’s just like a different cooler thing for us to do, so we got the flips going on. And I spent a lot of time in the past couple of weeks just trying to get my goals in place for 2022. So we’ve got our single family stuff nailed down, putting my team together for our commercial business as well. So things are moving, exciting things.

Ashley Kehr:
Yeah. Because you got to hang out with Brandon Turner a little bit in Vegas and also Tyler Madden, who I was just with, you were with him, making your goals, everything about the day before I saw him. So we had a joke the whole weekend that Tyler had been hanging out with Tony and Brandon, the two greatest podcasters so ever to going to slumming it with the okayest podcast so it was tougher. Very funny.

Ashley Kehr:
Okay. We are going to bring on today’s guest, Daniel. Daniel is a doctor and he is going to talk to you guys about personal finance, turnkey properties, taking on your own BRRRR and what mindset shift looks like, starting to take properties on your own and moving away from that turnkey model. So let’s get to the show.

Tony Robinson:
Daniel, welcome to the Real Estate Rookie, brother. Super happy to have you with us, man.

Daniel Shin:
Yeah. Thank you for having me. I’m really excited to be with you guys today.

Tony Robinson:
Yeah. And for those of you that are not watching this on YouTube, Daniel’s got like a really cool art history collection going on in the background. So putting mine and Ashley’s background to shame, but for a change, Ashley is not in her closet today, she’s in her living room. So she’s got like a pretty decent background there. But Daniel, we’re not here to talk about-

Ashley Kehr:
Are you saying this is better than my closet, because usually it’s not decent?

Tony Robinson:
I’ll let you read between the lines as you choose. But Daniel, we’re not here to talk about your art history collection, we’re here to talk about real estate, brother. So why don’t you give us the listeners little background who you are, how you got started in real estate?

Daniel Shin:
Yeah, absolutely. Again, my name is Daniel Shin. I’m a surgeon, I’m a real estate investor and I’m a blogger and educator at Darwinian Doctor, sort of my alter ego. And basically a few years ago, I went through this awakening that I wanted to become financially independent. And although a lot of people think that it’s easy as a high income professional, it’s actually not, you have to make a lot of intentional steps. And that led me down the path of personal finance and then to real estate now. And over the past few years, I’ve grown a portfolio about 28 units.

Daniel Shin:
And I say about because I hope that it’s going to be 27 next week because I’m selling off a problem property.

Tony Robinson:
Yeah. I had a different comment, but you said you’re selling off a problem property, which reminds me, I still have a property for selling in Shreveport, Louisiana. We’ve reduced the price, I think two times in last week. We’re honestly now at this point, actually we’re going to sell it at loss. We owe like 130 on it, we have it listed right now for 129. So we’re literally just trying to get rid of it at this point. Anyway, sorry. Brought up bad memories for me, Daniel, but I wanted to go back to something that you said. You said that a lot of people assume that because you’re a surgeon that it’s easier to achieve financial freedom, but you said a lot of times it’s not.

Tony Robinson:
And I think a lot of people would hear that and they question why you would say that because when people see big incomes, they automatically assume that there’s a really easy path to financial freedom. So let’s break that down a little bit.

Daniel Shin:
Yeah, absolutely. And I think that’s one of the most common questions or criticisms I get on social media when I talk about money and everyone says, “You make a high income, you don’t have any right to talk. You’re set.” And it’s absolutely true that a high income makes it easier to do a lot of these things, but you can only use the money that you actually save. And I think that’s one of the things that people don’t realize, no matter how much money you make, you can spend above and beyond that. And if you’re not making those intentional choices to put yourself on that good financial path, you’re not going to be able to build wealth no matter how much money you make.

Ashley Kehr:
Daniel, if you had to start all over again, was there something different you would’ve done in the beginning, maybe even the beginning of your career or when you were going to school to set yourself up. So maybe if somebody’s listening that’s going to med school right now or is a doctor, what would be your advice to them about getting started in real estate?

Daniel Shin:
I think that’s a great question. I think for me, I don’t know if I would necessarily change anything. When I was young, I had a very idyllic early childhood. We were growing up in suburban New Jersey, my dad worked in New York. And I think he was doing commercial real estate actually. And then at the end of the ’80s, I’m dating myself, but at the end of the ’80s, there was a recession and my dad’s whole job went to crap. And all of a sudden we went from this nice idyllic, suburban life and things changed overnight. We lost our house to foreclosure, we had to move.

Daniel Shin:
Literally load over everything up into a moving van one weekend, we moved across town to a rental. And there were some really tough years where my mom struggled to even put food on the table for dinner. Things were really tough. So one of my goals in early childhood was to get a job later on that would be well paying with good financial stability so my own family and my own kids wouldn’t have to spare experience that. And for me, I also wanted to help people and I understood what doctors did. So my goal early on was to become a physician. And to do that, I had to do the whole thing, like get good grades, go to good college, get into med school.

Daniel Shin:
And one after another, I was able to do all that. And then once things finally got rolling, I got through six years of surgical training and then I started making that attending salary, in a lot of ways felt like I had finally done it, but then a couple of years into my practice, I was overworked, I was driving 10 hours a week with my commute here in Los Angeles, and I was feeling burnt out, but I was also feeling trapped because I had made that mistake where you expand your lifestyle to your paycheck. So we had bought the Dr. House, I was driving an expensive car, and I was really hoping that I could pull back in my practice a little bit, but I couldn’t, I felt these golden handcuffs.

Daniel Shin:
And for me, that’s when I was like, “Okay, so what do I have to do to put myself on a path towards freedom?” And for me that was personal finance and getting into real estate. But by that point, I had the income to do that and make those changes. And so I don’t know if I would necessarily change anything when I think back.

Ashley Kehr:
Daniel, when you did decide that you wanted to get more into learning about personal finance and real estate investing, what was the first action step you took towards getting your first property?

Daniel Shin:
Basically it came from a lot of immersion into the world of personal finance and real estate investing. So I started listening to BiggerPockets. I had so much time in the car where I wanted to poke my eyes out because of the traffic, and instead, if I put on a podcast from BiggerPockets, I started thinking about and visualizing a life that was different. It was like a gateway drug. So I’d be able to listen to podcasts and start formulating a plan. So before that point, I was mostly into stocks. My plan to get to financial independence was to invest into stocks, do that for like 15 or 20 years and then have a big pot of money.

Daniel Shin:
But what I realized is that you can get there a lot faster through the cash flow of real estate investing. So I actually sold $100,000 of stocks. I had a few stocks that had done really well, luckily, it was all blind luck, but I had some Amazon, Apple, etc. And I just sold it because I knew that I would incur a capital gains tax, but that’s what I needed. Because if I had this pot of money burning a hole in my pocket, I knew that would provide me the motivation to start down the real estate investing path

Tony Robinson:
Daniel, you made a point that I want to go back to about lifestyle clip, that you put in all the hard work, you went to med school, did everything you needed to do. You finally got the salary, the financial security that you were looking for, but then you allowed your other expenses to meet that new income that you had. And I think that’s human nature. I think that that’s what everyone struggles with as their income starts to grow. But it just makes me think of this, I guess, these two competing path to financial freedom. If you listen to Dave Ramsey, Dave Ramsey’s all about controlling your expenses and eating beans and rice and selling the car and not doing this and not doing that.

Tony Robinson:
And then if you look at someone like Grant Cardone. Grant Cardone’s like, “I’m going to buy as much coffee as I want, but I’m going to focus on selling hundreds of millions of dollars’ worth of real estate.” So there’s this school of thought that’s focused on living way, way, way below your means, almost to the point that it’s unbearable. Then you have this other end of the spectrum that’s all about just focused on the income, the expenses will take care of themselves. But what I’ve found is that you probably need a little bit of both. You need to be conservative with your expenses and find a happy medium of still enjoying life, but still thinking of your future, but then just as aggressively focusing on exploding your income, because I noticed my real estate life changed when I was able to blend those two things together.

Tony Robinson:
So I’m just making a comment here, but I’m just curious, Ash, maybe you can start first, what are your thoughts on finding the balance between those two things?

Ashley Kehr:
Yeah. When I actually was a Dave Ramsey’s follower, I wanted to pay off my debt, but I had already started real estate investing. So for me I was taking all my cash flow to pay off my debt. So I was still investing because I was doing the BRRRR strategy where I wasn’t using any of my own money and then just using that to pay off my debt. And now I just have mortgages, but no personal debt, not vehicles or anything like that, but I’m looking at it a different way even now. I just thought, “I don’t want to any personal debt. I want to own my cars free and clear.”

Ashley Kehr:
But then you also hear people talk about, “Well, a car loan is only 3% interest. Why wouldn’t you take that money instead of paying cash for a car and go and put it into a property and have that cash flow pay for your car?” So it really is a mix of mindset and how would do the numbers work out? Because for me to keep a mortgage on my primary residence, that is super cheap money to me because that’s the lowest mortgage I’m going to get as I am on personal residence, but it’s also a mindset thing for me, I want to own my own free and clear. So I think it’s really just like a mix of both and what helps you sleep at night too.

Daniel Shin:
Yeah, I absolutely agree. I think it’s a mix and I think that a lot of it actually depends where you are in your financial journey, because if you’re having a hard time making ends meet, you’re drowning in credit card debt, I absolutely think that Dave Ramsey will probably help you because you got to buckle down. You got to sell that car that’s sucking away your paycheck, you got to make some changes. But if you’re maybe a little bit along your financial journey where you have a bit more means, and you’re thinking about, “Where do I spend this extra that I have as a gap between my income and my expenses,” I think that it’s really relevant to start thinking about the worth of your money in terms of growing assets versus paying down debt.

Daniel Shin:
I think this is especially relevant for people who do a lot of professional school and end up with hundreds of thousands of student debt. When I graduated residency, I literally had $300,000 of student debt. And then I could have spent the next five years aggressively paying that down, but instead, after a couple of years when I went through all of my financial awakening, I was like, “Look, I’m going to start investing that, I can make a much higher return investing that extra money that I have instead of paying down this debt that I had at like 3% interest rate.” So I know that a lot of personal finance writers and thinkers are all about getting rid of debt, but I think that it’s really important to think about the five or 10 year horizon.

Daniel Shin:
You’re going to end up with a lot more money if you invest that smartly, in my opinion. You’ll probably have more risk along the way, but if you can stand that risk and it’s not going to be a psychological burden to you, I think you’re much better off investing.

Tony Robinson:
Daniel, thanks for opening up that can of worms. And obviously, this isn’t the BiggerPockets Money Podcast. You guys can go hang out with Scott and Mindy when they drop those episodes, but Ash and I we talk about this all the time that your personal financial position plays a big and very important role in your ability to become a successful real estate investor. So I know there are a lot of people out there right now that maybe hear Daniel’s story and say, “Well, I’m not a doctor. I can’t get started in real estate investing.” And if that’s what you’re thinking, you’re missing the point.

Tony Robinson:
The point is wherever you’re at focus on controlling your expenses, focus on growing your income, and you can follow a lot of what Daniel said here. I want to talk a bit about your portfolio. Did you have something to say, Ash?

Ashley Kehr:
Yeah. I was just going to say, it’s not about how much money you have. It’s about how you manage the money that you do have. So even if you have a low paying job, living below your means, is what’s important and saving that extra little bit of cash that can help you get towards your first deal.

Tony Robinson:
Maybe we need to have a side hustle episode where we just bring people on and talk about the different side hustles they’ve had to help fund through real estate career. That might be cool.

Ashley Kehr:
Yeah. That’s a great idea.

Tony Robinson:
Well, Daniel, let’s talk about your portfolio. You mentioned the top of the show, but just give us like a 30,000 foot view of where your portfolio is today, and then you can take us on the journey of how you got started.

Daniel Shin:
Sure. My real estate portfolio currently is 90% long-term rental. I started out with a couple of turnkey, single-family homes, scattered in the Midwest and Southwest. And then I actually focused more active, real estate investing in Indianapolis, and I purchased over the last three years four duplexes and two small apartment buildings. One of the apartment buildings is seven units, the other apartment building was eight units, and I’m trying to make it a 10 unit, but it’s fighting me. And I just bought a short-term rental in Palm Springs that I’m furiously renovating now. And we just got the granite poured for the pool in the back. So that was a huge milestone.

Ashley Kehr:
Daniel, congratulations. That’s an awesome portfolio and I can’t wait to be invited out to Palm Springs when that house is done.

Daniel Shin:
It’s whole, hopefully going to be really awesome.

Ashley Kehr:
Yeah. Cool. Let’s start from the very beginning. You started out with turnkey, so please tell everyone what a turnkey investment is. And then let’s talk about how you even found out that you wanted to invest in the Midwest in those markets.

Daniel Shin:
Absolutely. A turnkey rental is, I think it’s a nice gateway in to real estate investing, especially if you have a lot of fear and anxiety about the process because a turnkey company will essentially take a lot of the guesswork out of it for you. They will find a distressed property, their team will renovate it and figure out what’s wrong with the property. And then they’ll sell it to an investor at a retail price, but they’ll take care of often finding a tenant and doing the property management and they’re selling you a whole package.

Daniel Shin:
When I was thinking about getting into real estate investing, I didn’t know much about it to start and I wanted that hands-holding experience. So I focused on a couple of areas where I felt that the cashflow would be better, so the Midwest and the Southeast. And so my first property was actually in Birmingham, which is I think a well-known cashflow market. And a company down there basically sold me already a renovated house for $92,000. And this property, I think is a black sheep of my portfolio and I’m actually hopefully selling it on Monday, but it was the gateway that got me started. So I have a love-hate relationship with it.

Daniel Shin:
It was my first deal, my worst deal, but it got the ball rolling. And now, I think I’m going to essentially net very little on the property because of septic tank issues, which I’ll talk about later, if you guys want me to, but it was what got the ball rolling.

Tony Robinson:
Can I ask one follow up question? I guess first, what is the benefit of the turnkey model for someone like yourself? And then the follow question to that is, how did you find a turnkey operator that you trusted enough to invest with?

Daniel Shin:
Yeah, great questions. Basically I think the benefit is that it takes a lot of the risk out of the renovation aspect. So since that experience, I’ve more focused on the BRRRR strategy, but if you’re buying a turnkey product, they’ve already done the renovation for you. So if someone is going to find out that its knob and tube wiring in the walls, or if the sewer line’s all messed up, it’s going to be the turnkey company. And then by the time they’re selling this property to you, they’ve figured everything out, they know how much it costs and they’re going to sell it to you at a price that makes them money and also gets you hopefully a pretty good return.

Daniel Shin:
I think what I found in my experience at turnkey, you’re probably going to get about a five to 10% return, closer probably to the five to 8% these days than the 10%. So that is, I think, the benefit of it, it’s a reliable return. It’s not great, but you can learn about the process in a way that’s very safe. That being said, if you can do things smartly on the more active side of investing and you’re doing things where you’re renovating yourself and pulling money out via refinance, you can get much higher returns, infinite return, 50% return. And that’s something that I’ve seen in my own portfolio.

Tony Robinson:
Once you decided that, “Okay, turnkey is the way for me to get started,” how did you find the right operator to invest with initially?

Daniel Shin:
I’m sorry, you’ve asked that three times and I keep on ignoring you.

Tony Robinson:
No, no, it’s all right.

Daniel Shin:
I just keep on forgetting. But basically, it was through BiggerPockets. In the BiggerPockets forums, I started looking at what had been written about turnkey operators, and I contacted people who had bought properties from them and I asked them, “How did things go?” And I would say that nothing replaces actually going and meeting the operators. I make up that one of the reasons why this property didn’t do as well is that I didn’t fly down and meet the turnkey company. I did that for the second turnkey company that I used. I actually went and saw their operations and shook their hand and I was like, “These guys are great.”

Daniel Shin:
And that property has done much better in Little Rock, but essentially, I talked to people, I asked around, I looked up people’s experiences and for reviews, and I called them and talked to them. And I think they have a good operation things, just did not go my way eventually three years down the road.

Ashley Kehr:
Yeah. If anybody wants to learn more about turnkey, I’ll throw in there that we did episode 29 with Whitney Hutton on turnkey properties too, if you guys want to check that out. But Daniel, how much was your plane ticket? How much did you spend to go and check out and meet this turnkey property? This is a large investment that people are making, purchasing a property. And how is that value? How is that an opportunity cost for you to pay to go and fly out and meet these people?

Daniel Shin:
I think it’s definitely relevant question. I had to take off a couple days from work, so I wasn’t making money in my job. Actually I think I got a paid vacation day or something like that, but I had to buy the plane, get out to Little Rock and I suffered the worst allergy attack of my life, basically flying out. The base of these guys’ operation was actually in Memphis. So I flew out there and as soon as I sat in the airplane in Los Angeles, the air from Memphis gave me the worst allergy attack of my life. I started sneezing and essentially didn’t stop the entire way.

Daniel Shin:
And then I had to drug myself halfway to death. So I was able to talk to people and interact with people in Memphis. I don’t know if I could actually ever go to Memphis again. But it was really valuable because the plane ticket, I think it was about 500 bucks round trip. I got an Airbnb, but for me, I had already mentally allocated that money. This was education for me. I was getting in the game and I had already cash out those stocks, So I needed to figure out how to spend that money wisely. And for me, I wanted to actually learn about it firsthand.

Ashley Kehr:
I think that’s something people forget about is those little tiny costs that are actually add so much value and save you so much money in the long run. And I know out of state investing, the idea is to not have to go to the property and things like that, but if this is your first time, don’t be afraid to spend that extra money to go and meet people firsthand, to go check out the property and make yourself feel more comfortable and confident. And then you can go ahead and purchase property site unseen and never actually ever see them in person, but if it makes you feel more comfortable and you really want to know who you’re going to be interacting with, what the property looks like, then spend that money to go and look at a property.

Ashley Kehr:
I just looked at a property a couple months ago where we paid the maintenance guy on the property like 100 bucks to take us through and tours the property and tell us so much information. And yeah, that was $100 for a property we didn’t even know if we were going to get under contract, but we learned so much and were able to underwrite the deal so much better because we took the time to pay this guy. And that’s the same with an inspection, that is an opportunity cost so that you are learning as much as you can about the property and not end up, “Oh, there’s $20,000 I now have to spend after closing.”

Ashley Kehr:
So add those into your number too. When you’re analyzing a deal, put in your travel, put in what the Airbnb is going to cost you so that you know what your total expenses are going into this property. And you actually get a better value, a better return on how much you’re putting into the property of adding those costs into it.

Tony Robinson:
Ashley, I was just going to say you make a really good point because there’s so many people that ask, “How do I get this agent to take me seriously?” Or, “How do I as a new investor, get this general contractor to take me seriously?” Or, “How do I get this wholesaler to take me seriously?” I have a friend who was investing, he lived in California where I’m at. He wanted to invest in Huntsville, Alabama, was having a hard time with deal flow. Couldn’t find anything on the MLS, was getting ghosted by a lot of wholesalers. So he finally got in contact with one and he said, “Hey, what do I need to do to get on your list, to actually be one of the people that you send deals to?”

Tony Robinson:
And the wholesale was like, “Come out here and see me.” And he booked the next flight out to Huntsville, Alabama, spent the whole day with him. They ended up buying like nine or 10 houses from this one wholesaler. So if you want to stand out as a new investor, show that you’re serious, show that you’re not just going to waste their time, hop on a flag, get out there, shake their hands and meet in-person. I love that advice, Ashley, really good point.

Daniel Shin:
Oh, yeah. I think that is a big stumbling block early on because essentially when you’re starting out a side hustle or a new business, I think it’s really tempting to try to do everything on a shoestring and not spend any money. But if you think about it, people spend money on education because it’s worth it. And in the end you know that is going to yield you a lot more return. So for me, I mentally put aside some amount of money and I chalk it up to education. When I take a real estate investing course or when I fly somewhere and do hands-on research for me, that’s part of an investing into the business that I know in the long run is going to net me a lot more return.

Tony Robinson:
Yeah. One more comment for me on the turnkey side, Daniel, because I love that you’re talking about the educational component, because I think if you get with someone that’s experienced with the right operator, they can be a source of education, of confidence building for you. I don’t know if I should share this widely because I feel like people might steal this idea, but we’re toying with the idea of doing this in the short-term rental space. There aren’t, I think a lot of, or really any that I’ve found so far that do this for short-term rentals.

Tony Robinson:
So we started flipping houses in some of the markets we’re in this past summer and we’re not just flipping them and making them nice, but we’re flipping them, fully furnishing them, giving you really cool Airbnb experiences, so that way whoever we purchase that house pretty much on day one can take that property live and not have to worry about, “Oh man, how do I rehab? How do I design? How do I get it ready for guests?” So I think that there’s a big opportunity there to help people break into some of these spaces with really low risk. Obviously, the returns won’t be as good as the person that found the deal and did all the work, but you’re getting in with a lot less friction than what it would typically take someone,

Ashley Kehr:
My business partner, Daryl, is here and he is actively writing down your idea right now and about to launch it.

Daniel Shin:
I think that’s going to do great, Tony. Being on the renovating side of a pretty big rehab right now in Palm Springs, this thing has been torturing us. And I think it’s going to be worth it in the end because the market is just going bonkers out there, but there are these hours requirements that you need to do to get material participation in these things. Initially when my wife and I first bought the property, we were like, “Oh, we got to make sure to get these hours.” God, that is not a problem. We’ve been out there so much, this thing has been such a time suck, but it’s a labor of love at this point.

Ashley Kehr:
Daniel, how did you get comfortable with making that switch from turnkey to your ready to take on a property on your own? What did that look like for you?

Daniel Shin:
Basically I wanted more of the action when I ran the number. I was like, “This return is pretty good.” But then you read about infinite returns from a good BRRRR property where you’re buying, renovating, renting, refinancing the property yourself, and I wanted that and I knew that to really access that I would have to do it myself. And I wanted my money to go further because when you’re even buying a turnkey property at the price points in the Midwest and Southeast where you can buy a nice home for 100,000 or $120,000, that’s a lot of money. That’s 25 to $30,000 that you have to plunk down.

Daniel Shin:
And even when you’re making a really good income as a physician or surgeon, you’re going to run out of capital at some point. So the most efficient way of growing your portfolio in my opinion is by that BRRRR method. And I wanted to be more efficient with my money. So when I was thinking about where to do that, through BiggerPockets again, I had a an acquaintance down here in Southern California who was investing in Indianapolis and we met for lunch at some point, we had some like Hawaiian pizza and he talked to me about out his team in Indianapolis, and then he made an introduction. And I was able to build my own team, I flew out there, I drove around, and I met a realtor.

Daniel Shin:
And then on that same visit, on the very last day, we found the first duplex that I purchased there, which is still my like crown jewel property, I think.

Tony Robinson:
I love that you mentioned that you guys ate Hawaiian pizza. That’s the key takeaway from today’s episode is that if you want to build good networks, you got to break out the Hawaiian pizza. And so I want to get into your psyche a little bit, Daniel, because it definitely is a lot more work, but we understand why you did it. But once you made that decision, once you found that duplex, and maybe we can use this for our Rookie review or our Rookie deal review, how did you actually go about executing on that vision of buying this asset, this distressed asset, getting it renovated, placing tenants, because I think that’s the part that a lot of people struggle with is, “Man, I’m halfway across the country, how do I on this part of the globe, renovate, find tenants, do all this thing on the other side of the globe?” So walk us through what your process looked like.

Daniel Shin:
Sure, absolutely. Basically, I had probably a half dozen conversations with these people before I ever flew out to Indianapolis, but basically I had essentially a GC, a general contractor who was going to be able to manage the renovation that I had talked to and my friend had used him so I knew that he was trustworthy. And I had a real estate agent who was younger, hungrier to build her business. And when I flew out there, I met with both of them and I basically communicated… One of the biggest things that I wanted to do in that visit was to communicate to both of these people that I was serious.

Daniel Shin:
I painted to them the vision of my portfolio in five or 10 years, which was going to be, jokingly on my blog I call it my real estate empire. I want an empire of real estate property. I painted that picture, I said, “Look, I have assets that I’m willing to invest. This is where I want to get to. I would love for you to be a part of that.” And I think that really helped give us all the trust to move forward. And then on the last day, my real estate agent, just showing me around, this one property came on the MLS, it popped up and she called me and I was getting ready to go to the airport, but I just was like, “Okay, I’m right by here.” So I just drove by it, I looked at it, I couldn’t go in, but I said, “Okay, let’s make an offer, let’s get it under contract.”

Daniel Shin:
And just within an hour of it going on to the MLS, we had it under contract, and things just started from there.

Ashley Kehr:
That’s so awesome. That’s really exciting, especially being in the city when you are looking to invest and you get your first property before you even leave.

Daniel Shin:
Yeah. It was really exciting. And then basically, I could go into numbers now or I can talk more broadly about it. What do you think?

Ashley Kehr:
Yeah, let’s go into the numbers of it.

Daniel Shin:
Okay. This was a duplex and it was just east of downtown Indianapolis and an area that is rapidly up and coming called Arsenal Heights or Holy Cross. And basically, it was listed for $165,000 and there were three bedrooms on both sides. And the purchase price, looking back at this now, this would never happen today, but we offered $157,000 and we got it under contract at that price. Right now you have to offer usually 10% above what the list price is and they’re bidding wars, but this was, I guess, about two and a half years ago.

Ashley Kehr:
How were you financing this deal? Were you using cash from your stocks or what did you use?

Daniel Shin:
I used a loan, so I got a loan on it, but I put a down payment, I believe 25% since it was a duplex. And I was using cash to finance a down payment, and then I got a loan for the rest of it. So with the closing costs, it was about $161,000 total to buy the property, including a loan, and it was in pretty good shape. We didn’t have to do much of the roof, and some of the floor was messed up. One of the bathrooms was really weird. So we did a pretty thorough renovation actually, where we gave it a complete facelift, painted everything. We ran countertops, we completely redid one of the bathrooms, both of the kitchens were essentially completely upgraded, all new appliances.

Daniel Shin:
And it looked really sharp when we were done with it. And that cost about $68,000 or $69,000. And that just blew my mind coming from Los Angeles where you fix your bathroom and it costs $30,000 to where you can renovate a duplex in Indianapolis for 70,000. That just blew my mind.

Ashley Kehr:
Daniel, when you purchased this property, did you get this budgeted out before, or did you decide to do the rehab after you purchased it? And then, where did you kind draw the line? You said you put in granite countertops and at least near me, if you put in granite countertops in a lot of the places, you’re not going to get that value back, you can’t increase rents high enough to cover that kind of cost of putting these high-end finishes. How did you make that decision of what’s too much? What’s over upgrading the property as to where you’re going to get that sweet spot, where you can raise the rent and you’re getting a nice property?

Daniel Shin:
Yeah. Great question. Basically I had everything plugged into a cash-on-cash return calculator. So using my real estate agent there, she also does property management. So I essentially asked her, “This is what I’m thinking with the property, what do you think we can get for rents?” So she projected her rent and my contractor there walked to the property and basically gave us a quote. And he said, “This is what it’s going to cost to renovate both units.” And using that information and knowing how much I put into the property, I was able to generate a projected return. And that was a projected return without the refinance portion. Just if I rent innovated it, put in the money and rented it, what was my return going to be?

Daniel Shin:
And I was targeting 10% or higher. So my real estate agent thought that if we did the stainless steel appliances and the granite countertops, we would access a little bit of higher return because there’s actually a lot of young professionals in that area, because it’s right near downtown Indianapolis where there’s sales force and all this things. So there was definitely a market for that. In some places around Indianapolis, definitely you’re not going to really get your money back if you go that high end, but she thought we would and she was right.

Ashley Kehr:
What does it look like today? What are the rents and what is the property value at right now?

Daniel Shin:
Basically what I was able to do is about six months after I’ve renovated the property and got it all tenanted, I went for a refinance. And it was appraised for $256,000. So it was pretty good. So basically, we were able to cash out ReFi, almost all of the money. And at the end of the day, I only had $14,000 left in the deal. So 70% of that new appraisal amount was given back to me as a check and I used it to pay off almost all of the initial investment and the initial loan. And then when you count that against the rent that we were getting and including things like vacancy, property management, maintenance, property taxes, our return projected was 62%.

Ashley Kehr:
Daniel, that is great. What did you say the value was again, 260-

Daniel Shin:
$256,000

Ashley Kehr:
Okay. So you have $14,000 into a property that’s valued at 256,000. I think so many times people get hung up that you should have all your money back out, and that’s the only way to do a BRRRR, but only having $14,000 into a house for 256,000, that is awesome. That is a great BRRRR. Congratulations.

Daniel Shin:
Thank you. I was super happy with this. And basically, this was proof of concept to me because I’m a surgeon, I’m a numbers guy, so basically I needed to have proof of concept to really go all in. And I also wanted my wife to come on board. So this whole time, this took about a year, and this whole time I was doing it on my own, my wife was looking at me with skeptical expressions all the time when I was talking about what I was doing, because she’s also a spreadsheet person. So basically when I was able to show this and I showed her the returns that were projected to get, she was like, “Okay. All right. I think I get it now.” And actually she’s been my partner ever since in the real estate investing as well.

Daniel Shin:
A couple of things ended up being a little bit more expensive than projected, the property tax went up a little more than we thought and I think one of the water heaters went out. But consistently over the last two years, we’ve been able to get about 50% return from this property, which is not as good as that 62 that we projected, but how can you not be happy with a 50% return on your money?

Tony Robinson:
Daniel, what an amazing first BRRRR for you? And I think hopefully you’re just inspiring a lot of other people that they can do the same thing from multiple, multiple states away. I guess my last comment on the BRRRR, were there any lessons that you learned throughout that process that you applied to the next BRRRR and more like tactical, we’ll talk about mindset in a minute, but more like tactical things, like, “I missed this and we were doing this scope of work or I should have priced a property at this”? What are some tactical things you learned?

Daniel Shin:
I think the biggest take away, this has just made a dream property, now, something’s going to go wrong with it, knock on wood. But what I have learned from the other properties is that you don’t want to skimp on the inspection part. As I learned in one of the next duplexes that I purchased, it was a wholesale deal and I was like, “Oh, I’m going to buy it cash, anyway, I don’t need an inspection. My contractor walked it.” I wish I’d paid for the inspection and I wish I’d scoped the sewer because both of those things ended up being problematic. There were things wrong with the plumbing that we didn’t foresee, there were things wrong with the sewer line. So that ended up being an expensive lesson. And I would say that was the takeaway, but it’s more on the second or third deal.

Tony Robinson:
It’s a really, really great point, one that I think a lot of rookies need to hear. On all of our single, really on any purchase we make, we always get an inspection as well. And if we find something that’s far above and beyond what we had originally scoped out for our scope of work, we’re going to ask for some price reduction, and we hope that the sellers are reasonable and willing and understand that those things that can happen. So not only does the property inspection help you, I think, preemptively take down certain problems or at least plan for them appropriately, but it also could give you a price break on the property to get it at a slightly discounted rate.

Tony Robinson:
So Daniel, congratulations, man. What an amazing first BRRRR, thank you for sharing those lessons with us, man. I just want to keep rolling with the portfolio really quickly and then we’ll talk mindset, but you said you bought that first property two and a half years ago. Did I hear that correctly?

Daniel Shin:
I think that’s about right. Yeah. It was about two and a half. Actually, is it three years ago now?

Tony Robinson:
It’s somewhere in that ballpark. Three years ago, right?

Daniel Shin:
Somewhere in that. I feel like I’ve been a real estate investor forever, but it’s actually only been a few years.

Tony Robinson:
But now you’re in the 20s approaching 30 units, which is absolutely amazing, man. There’s a certain level of momentum that comes along with being a real estate investor that I really want to make sure we highlight because there’s so much effort and energy, and courage, and time, and patience, and failure that goes into that first deal. But once you get that first deal done, you don’t have to start all over. You can carry that momentum into the second deal, into the third deal, into the fifth deal, into the 20th deal, into the 30th deal, so the most important thing for the rookies that are listening right now is to focus as much of your attention, as much of your energy as you can into getting that first deal done.

Tony Robinson:
And then hopefully, three and a half years later, three years later, you can be like Daniel and be at 20, almost 30 doors, because that’s an amazing journey, man. So I want to go back though, to Daniel three years ago, before you got that first deal, before you burned houses halfway across the country and knocking it out the park, what were some of the misconceptions that you had about being a real estate investor? What were some things that you assumed to be true that turned out to be false?

Daniel Shin:
I’d say one that comes to mind is that real estate and investors are sketchy individuals who don’t have the interest of their tenants in mind. When I make a TikTok video about real estate investing, a lot of my comments are like, “Real estate investors are awful. You’re parasites to humanity.” And I think that’s totally, totally BS. I think that real estate investors, and this is my approach in life in general, if you properly incentivize everyone, everyone can win. And I really believe that. And my property manager is the same way, when something’s going wrong, you can fix that as quickly as possible for the tenant, you can basically do everything you can to make it a great experience for the tenant. And you don’t have to be that typical what the general public might think of as a real estate investor, which is essentially a slum Lord.

Daniel Shin:
That doesn’t have to be you. You can make a good profit, you can have great properties and provide awesome housing, and you can actually support the economy in a way that you can’t do in your W2 job. In a W2 job, you’re working and helping your company, but as a real estate investor, you’re employing dozens and dozens of people. You’re employing real estate lenders and brokers, and contractors, electricians, plumbers, and you’re providing a great place and supporting the housing market. So that I would say is the biggest mindset or realization, that you can be an ethical, good influence on society as a real estate investor.

Tony Robinson:
Daniel, I’m so glad you mentioned that, and I’m also glad that you mentioned TikTok because people on TikTok are very angry, and my wife and I, we get a lot of hate on TikTok as well. But I think like with any profession, there’s good and there’s bad. And you prove that, just because there are some out there that are giving us a bad name on TikTok, doesn’t necessarily mean that that’s the path you have to follow as well. So you can be whatever landlord you want. So if you guys are on TikTok, try and find the positivity there, not so much the negativity.

Tony Robinson:
Also, if you’re on TikTok, follow me and my wife, we’re @therealestaterobinsons. And if you’re on Instagram, follow me, @tonyjrobinson. Ashley’s @wealthfromrentals. And there’s lots of nice people on both the social media platforms talking about all the good that real estate investing is doing.

Ashley Kehr:
I only have like 100 followers on TikTok, so I don’t get hate comments yet. I don’t get any comments yet.

Tony Robinson:
Give it some time. Give it some time.

Ashley Kehr:
Daniel, what is your TikTok?

Daniel Shin:
All of my social media and my blog is thedarwiniandoctor on Instagram, thedarwiniandoctor on TikTok, as in just, thedarwiniandoctor, all one word, and add .com for my blog. It’s not the easiest name, but when I was thinking about what I was going to try to achieve, I wanted to evolve into a real estate investor, I wanted to evolve into a personal finance wizard, and so I thought it epitomized my journey.

Ashley Kehr:
Yeah. We’ll make sure you guys check out Daniel’s social media. I’m going to take us right now to the Rookie Request Line. Today’s question is from Landon. If you guys want to call and leave us a voicemail that we will play on the show, you can call 1-8885-ROOKIE. So here’s today’s question.

Landon:
Hi. This is Landon. I’m calling from Anchorage, Alaska. I have a fourplex out here and I’m house hacking as my first property, so I’m just getting started. I had a question regarding using other people’s money. I’ve heard so many podcast episodes and guests talk about the power of utilizing other people’s money for investing. I recently met a doctor and he has another friend who’s [inaudible 00:47:08]and investing with someone who knows a little bit about real estate, and they’re turning to me to ask those questions and to potentially partner up in the future.

Landon:
And I just wanted to ask, what are some great ways to structure a partnership and also present the partnership in a profitable way to these people that are really just bringing the money to the table? And how can I add the most value to them as the investors to, I guess, both will mutually benefit. Thank you.

Daniel Shin:
I think that’s a great question. First of all, I want to congratulate him for doing a house hack because that’s a fantastic way to get into real estate investing. And OPM, other people’s money, it’s like people, I think use this as a catch phrase, but essentially, I think a lot of real estate gurus out there are saying, “Invest 100% with other people’s money, don’t put any of your money in.” And I think that other people’s money doesn’t necessarily have to be money from a person, it can be money from a bank. So when you’re using a mortgage, you’re also using OPM. In this scenario, though, you have a typical scenario, I think, that is going to be awesome.

Daniel Shin:
It sounds like this investor has a bit more time on his hands and a bit more hustle, and he has some partners who have funds, but not necessarily time. So it’s like a marriage made in heaven. He can basically look for deals, he can do the legwork to find them and get them under contract and maybe manage renovations, and he could utilize the cash flow that his partners have. And there’s ways to structure it so that they make a great return, but he also is able to grow his portfolio and benefit from that growth in a way that benefits everyone. Again, basically incentivizing both sides.

Tony Robinson:
One comment for me on the OPM piece is that you can also structure this, Landon, as just like a debt-based partnership. It doesn’t necessarily have to be an equity-based partnership. So if you just say, “Hey, private money person, I’m going to pay you 10% interest paid out monthly, quarterly, annually,” whatever it is, that’s another way to structure the deal, so that way they don’t necessarily worry about how well the asset’s performing because you’re just contractually obligated to pay them a specific return. So there’s no right or wrong answer on structuring the partnership, Landon. Hopefully that works for you.

Tony Robinson:
Daniel, you’ve been knocking out the park, brother. We really appreciate everything that you’ve brought to the table here so far. As we wrap it up, I just want to give a quick shout out to one of our Rookie Rockstars. And today’s Rookie Rockstar is from our Real Estate Rookie Facebook group, which is, I don’t even know, almost 40,000 people strong at this point, truly one of the most active, one of the most engaged Facebook groups out there. So if you guys haven’t joined, please make sure you do that. But today’s Rookie Rockstar is Bethany T. And Bethany said that she’s excited to get a nice big check from their first flip today, that she’s amazed at the power of real estate, and they couldn’t have done it without the group, the BiggerPockets group.

Tony Robinson:
But they bought it for $100,000, the rehab only took six weeks. They were able to sell it for $165,000. And they had a few costs, holding costs, things like that, but they ended up profiting a total of $39,410. That’s a lot of people’s salaries. So to be able to make that on one transaction in six weeks is amazing. So Bethany, big congratulations to you.

Ashley Kehr:
That is awesome, Bethany. Congratulations. Daniel, thank you so much for joining us today. Can you let everyone know again where they can reach out to you on your social media or your website or anywhere else?

Daniel Shin:
Yeah, absolutely. I would say one of the best places to find me is at my blog, thedarwiniandoctor.com. And it has three years of my ravings about medicine, about personal finance, and now a lot of interesting real estate content. And I’m also on Instagram @thedarwiniandoctor, and I have a pretty amusing TikTok account now with some pretty interesting content there about personal finance in real estate, and it’s growing rapidly. So that’s also thedarwiniandoctor.

Ashley Kehr:
Awesome. Thank you so much for sharing with us today, sharing your story and providing so much value to us and the listeners. I’m Ashley @wealthfromrentals, and he’s Tony @tonyjrobinson on Instagram. And lastly, before we close out, here’s a final word about how BiggerPockets can provide you value right now.

 

This article was supplied by Mark Weisleder, RealEstateLawyers.ca LLP

In the initial wake of COVID-19 and in the subsequent waves (we’re now into the fourth) there has been a lot of uncertainty. This fragility has extended to the housing market as many buyers and sellers found themselves either mid-deal, planning to buy or sell, or had a construction project underway. As real estate professionals, we have received many questions regarding the pandemic and the housing market, frequently around real estate agreements and how COVID-19 has impacted such agreements. Here are the answers to our most frequently asked questions from both clients and Realtors, about how the pandemic has affected real estate agreements.

Can a buyer cancel a real estate deal due to COVID-19?

Is COVID-19 a valid excuse to get out of a purchase contract? The simple answer is no. It doesn’t matter if a buyer cannot obtain a mortgage, goes into quarantine or the value of the property decreases, these are not an excuse to cancel a real estate agreement. In these cases, either terms of an extension are agreed to, or the buyer can be sued for any deficiency the seller suffers on a resale.

Can a seller refuse a pre-closing viewing of the property, for fear of contracting COVID-19?

If the visit is provided for in the agreement, a safe compromise should be worked out, with perhaps only one buyer visiting the home. The buyer may be expected to wear a mask and gloves, and only enter the home for a prescribed period of time (for example, a maximum of 20 minutes). During such visit, the buyer may also be ordered not to touch anything in the home to ensure safety. Another option is for the buyer/seller to agree to a Zoom meeting where the seller goes around the entire house, virtually showing the buyer all areas of concern. A final option we have seen is when the seller arranges to vacate the property early on the closing date and have the buyer enter the property for the final inspection.

Can the Government Land Registry System close down?

While this is theoretically possible, we have been assured by the Director of Titles that this will not occur since the system is being operated by staff who are working remotely. In the unlikely event that this did occur, most real estate closings could still proceed as long as the buyer had title insurance, which provides gap coverage, meaning that the agreements can close as scheduled, money can be paid to the seller, the keys released to the buyer, and registrations occurring once the system is up and running again. Gap coverage means that in the unlikely event that a lien or judgment arises in the intervening period, which could affect the title, the buyer’s title insurance policy will remove it.

Can a buyer or seller complete a real estate closing without visiting a lawyer in person?

The answer is yes, but not all law firms offer virtual services. Technically speaking, there is no requirement to meet any buyer or seller in person. All document signings can be done via video conference. If a law firm is registered as a bill payee at major banks, buyers can transfer the closing down payment directly to its trust account online, so that they do not have to attend a bank branch in person for an extended period of time to obtain a bank draft. For sellers, this would mean signing all documents by video conference and automatically transferring closing funds by Electronic Funds Transfer directly to the seller’s bank account after closing, the same way real estate commissions are paid after closing.

Do you need special clauses to protect buyers and sellers during the pandemic?

You should consult your lawyer, but here are three practical clauses to consider including in any agreement during the pandemic:

1. The Buyer shall pay the balance of the purchase price, subject to the usual adjustments by wire transfer.
2. The parties acknowledge and agree that all closing documentation can be signed electronically and forwarded by email or fax in accordance with the Electronic Commerce Act, 2000, S.O.2000,c.17
3. The parties agree that the keys to the property shall be left in a lock box at the property and the code to the same is to be provided to the Buyer’s lawyer in escrow pending closing of this transaction.

Otherwise, no further clauses should be added, as they do more harm than good–especially when they give buyers or sellers the right to terminate an agreement. As stated earlier, even in the remote situation that the government registration system goes down, real estate agreements can still close if there is gap coverage in place through the title insurance. Legal advice should always be obtained before any additional clauses are introduced into any real estate agreement of purchase and sale.

This article was supplied by RealEstateLaywers.ca LLP. It is intended for information purposes only, and does not constitute legal advice. Consumers are advised to reach out to a lawyer regarding their specific situation. Find one by visiting the Canadian Bar Association.

Considered a market to watch in 2022, the city of Calgary has largely benefited from an influx of prospective out-of-province buyers over the last two calendar years. With housing prices hovering below the national average (and well below prices in larger markets such as Toronto and Vancouver) many first-time homebuyers have been flooding the Calgary housing market.

Market trends experienced through much of 2020 and 2021 are expected to continue into 2022; most notably high demand and low supply, which will likely continue pushing prices upward. Here are the latest numbers emerging from this thriving western Canada housing market:

Calgary Market Finishing 2021 with Record High Sales

Exceptionally high unit sales in December brought the Calgary housing market to a record high, with 27,686 unit sold in 2021 – up almost 72 per cent year-over-year and more than 44 per cent above than the 10-year average, according to the Calgary Real Estate Board (CREB).

“Concerns over inflation and rising lending rates likely created more urgency with buyers over the past few months. However, as is the case in many other cities, the supply has not kept pace with the demand, causing strong price growth,” said CREB Chief Economist Ann-Marie Lurie.

The number of new Calgary real estate listings in October sat 25 per cent below the long-term average for the month of December, rendering supply levels lagging well behind demand across all property types with the exception of condominiums, which maintained inventory levels above historical levels.

Tight market conditions throughout the month forced average property prices to rise across the Calgary market. The unadjusted benchmark price rose by nearly one per cent month-over-month in December, and 10 per cent above December 2020 figures. “Overall, the 2021 benchmark price rose by more than eight per cent compared to last year for a total of $451,567, just shy of the annual record high set back in 2015,” says CREB.

Reports Suggesting a Strong 2022 for Calgary Real Estate

Recently, PwC released its 2022 Canadian Real Estate Forecast. The report suggests that strong demand for real estate in Calgary will remain throughout 2022, and particular strain will be put on single-family detached homes where supply will remain tight.

The PwC study makes note that migration from larger markets and other provinces will help keep demand in Calgary strong as 2022 progresses; Calgary was ranked as experiencing the fourth-most migration of all Canadian cities over 2021.

With an influx in demand expected, average prices in the prairie city are also expected to creep upwards. According to the RE/MAX Canada 2022 Housing Market Outlook, Calgary residential real estate prices are expected to rise by 2.5 per cent this year.

Given the expected price increase and interest rates rumoured to rise, now might be an ideal time for hopeful buyers to begin the search for their prospective Calgary dream home.

Sources

In just the last couple of weeks alone, mortgage rates have shot up from about 3.1% to over 3.5%—the highest they have been in over 22 months. 

The fact that mortgage rates are starting to rise should come as no surprise. After all, the Fed recently signaled that it would raise rates between two to four times in 2022. And, bond yields and mortgage rates are likely to follow suit.

What is surprising, though, is how quickly rates have risen. It appears that the market is starting to price in future rate hikes well before they happen. And, as a result, housing affordability—which I believe is one of the two most important indicators to watch in 2022—is taking a big hit. 

How housing market affordability is affecting homebuyers

Housing market affordability is a metric that measures the ability of an average homebuyer to afford an average home in the U.S. This metric can be measured a few different ways, but there are generally three primary components: 

1. Median home price
2. Interest rates
3. Median income 

Median income and interest rates are important metrics when measuring affordability because they help to gauge how much a homebuyer will pay for the median house, presuming that they are using at least some type of financing for their purchase. And, because financing involves paying interest on the money you borrow, when interest rates and home prices go up, affordability goes down. 

To fully understand affordability, you also need to take into account the median income in the U.S., as that determines whether homebuyers can reasonably afford the true price of a home purchase. When income goes up, affordability improves. 

Right now, all three components are rising. We all know the median home price is up more than 15% compared to last year, which means that homes are less affordable.

And, as I mentioned at the beginning of this article, interest rates rose 45 basis points in the last few weeks. Luckily, wages in the U.S. are also rising, but not enough to counteract the impact of rising home prices and interest rates. 

One of the major ways affordability is measured is through the National Association of Realtors First-Time Affordability Index. And, just last week, that index dropped below 100, which means it dipped below a significant threshold.

“This means that first-time homebuyers with the median income don’t have enough income to qualify for a mortgage on a median-priced starter home. Specifically, the median family income of renters in the 25-44-year-old age group is about $57,000, while the qualifying income for a starter home is $62,000,” said Nadia Evangelou, NAR’s Senior Economist and Director of Forecasting, 

This is what I mean when I say that the housing market is entering precarious territory when it comes to affordability. Because rates have risen in the last few weeks, the average first-time home buyer can no longer qualify for the loan needed to purchase a median-priced home.

What does this new data mean for the housing market overall?

I don’t want to be an alarmist here because I do not think a crash is imminent. That said, I believe this data represents an important shift in the dynamics of the housing market. As affordability declines, it is likely that demand is going to suffer.

And, when demand drops, the prices can, too. To be clear, though, that’s not necessarily going to happen. Things in this housing market are not that straightforward. 

There are a few other factors to consider here. For starters, this analysis is just for first-time homebuyers and for median-priced homes. This doesn’t account for investor activity, repeat buyers, or second-home buyers.

And, demand has actually gone up in recent weeks. According to the Mortgage Bankers Association, people are applying for more purchase mortgages right now than even a few weeks prior. This makes sense, as homebuyers are looking to lock in rates before they increase even more.

That said, it’s unclear how long the fear of rising rates will actually bolster demand, or what the rates will be when they hit a point where demand falls. But as we all know, inventory is severely constrained in this housing market, so it could take a big drop in demand before prices growth slows, or starts to fall. 

To me, what happens next is a question of how fast rates rise and what happens with the housing inventory. If rates rise quickly, it will cool the housing market significantly. And, it could even send prices sliding backward—particularly if inventory levels start to climb. 

If rates rise slowly, the market will likely adjust to the rising rates. As such, home prices could keep trending upward, albeit at what is likely a slower pace. 

Other questions to consider in the current housing market

The biggest question I have is this: What exactly is the mortgage market pricing in right now? Is the market assuming three Fed rate hikes this year and thus pricing current day mortgages accordingly? Or will we see mortgage rates spike each time the Fed actually makes a hike—which would be on top of the recent increases? 

While this is just my opinion, I don’t think the dynamics of the housing market will change too much in the coming months. Demand is still strong, supply is still incredibly low, and prices will likely keep going up. But this analysis by NAR could be a lead indicator of dropping demand in the not-so-distant future.

Ultimately, what happens in the second half of 2022 is more of a question market for me. My estimate right now is that a cooling will drop year-over-year appreciation to 2% to 7% appreciation rates by year-end. 

That said, I am still looking to buy. Why? Because of this: 

Final thoughts on the current housing market affordability trends

Yes, interest rates are increasing—and yes, we’re no longer seeing record lows. This will put downward pressure on housing prices. But even at 3.5%, mortgage rates are still incredibly low in a historical context.

And despite rising rates and a lot of economic uncertainty, the one thing I have supreme confidence in is that I will be very happy with a 3.5% interest rate in 10, 20, or even 30 years. 

This, of course, is just my reading of the data and the economic climate as it stands today. Things are changing rapidly, and I will be continually updating my outlook in the coming months. As I do so, I will be sure to share my thoughts with all of you—especially as we get more economic data to help guide investing decisions.