YFP REI 05: None to One: How to Get Your FIRST Investment Property

None to One: How to Get Your FIRST Investment Property

Jenny and Myke White discuss some common fears surrounding purchasing a real estate investment property, specifically taking the jump from none to one, their process for screening tenants, building a team, and the importance of networking with like-minded individuals.

About Today’s Guests

Jenny and Myke are both originally from Colorado Springs, CO; they’ve been together for the past 11 years and married for the last 7. Jenny attended Creighton University through the distance program and was awarded her PharmD in 2017. After graduating, she completed a PGY1 residency at Providence St. Peter Hospital in Olympia, WA and then went on to take a position as a night pharmacist at Multicare Covington Medical Center. Currently, Jenny is working as an assistant professor at William Carey’s School of Pharmacy in Biloxi, MS. Myke has been serving in the United States Air Force for the past 12 years. Five and a half years were spent at Luke AFB, AZ, where he worked as a Project Manager. Five and a half more years were spent at Joint Base Lewis-McChord, WA, where he worked Client Systems, which is usually referred to as the “Geek Squad of the Air Force”. Currently stationed at Keesler AFB, Myke served half of his 3 year tour as a Technical Training Instructor before applying for a program analyst position working at Base Headquarters.

With Jenny being a new graduate, the thought of paying down school loans was always in the back of her mind. Her night shift schedule really allowed her to start researching ways to create more income besides just working additional hours. During this time, she stumbled across Rich Dad, Poor Dad, which completely changed her mindset on building wealth and developed her new focus of creating passive income through real estate. After sharing her vision with Myke, he also became fascinated in the beginning, with this journey to change their life trajectory in a major way.

Shortly after finding this new passion for real estate, they received military orders to Mississippi. This initially came as a huge shock to them, but it truly was a blessing in disguise. Selling their house in Washington’s hot and expensive housing market gave them an opportunity to benefit in Mississippi’s much more affordable housing market. Jenny and Myke hit the ground running to find an investment property in August 2019 and were able to close on their first duplex that December. 2020 was about many new real estate experiences to include: renovating one side of the duplex, inheriting a tenant, becoming new landlords, and facing the challenges of covid-19. Most recently, the duplex was re-financed which allowed them to pull out the cash they had in the deal to re-invest in future deals.

Summary

Nate Hedrick and David Bright welcome pharmacist and real estate investor, Jenny White and her husband, Myke White to the show to discuss how they got started in real estate investing. Jenny and Myke share their experience working with realtors, screening tenants, building their team, and networking with professionals and real estate investors across the country.

Jenny and Myke White cite Bigger Pockets as one of their greatest resources for education and inspiration to get started real estate investing. They also share that with the help of an excellent, knowledgeable realtor who is experienced with real estate investment, you can move much more quickly in the market and reach goals you might not have otherwise done, with a less experienced agent.

Jenny mentions one tangible strategy in keeping real estate investing balanced with her pharmacy career – knowing the value of your time and when it is time to get and use a property manager. She shares experiences with both good tenants and challenging tenants, and how hiring a property manager helped both her and Myke run their investment as a business, rather than involving their emotions.

Both Myke and Jenny agree that real estate investing comes with challenges but ultimately, your positive outlook and goal-oriented momentum will keep you going, so long as you view your challenges as opportunities to learn and improve with each new investment.

Mentioned on the Show

• YFP Concierge Service
• YFP 148: How One Couple Got Started in Real Estate Investing
• Rich Dad Poor Dad: What the Rich Teach Their Kids About Money That the Poor and Middle Class Do Not! by Robert T. Kiyosaki
• Bigger Pockets
• Join the YFP Real Estate Investing Facebook Group
• Realtor.com
• Zillow
• Bigger Pockets Free Real Estate Webinars
• Bigger Pockets Rental Property Calculator
• Bigger Pockets BRRRR Calculator
• Connect with Jenny on Bigger Pockets
• Bigger Pockets Real Estate Podcast
• Bigger Pockets Bookstore
• Bigger Pockets Forums
• MLS Multiple Listing Search
• Redfin
• YFP Calculators
• rentometer
• Join the Investment Mindset Book Club Facebook Group
• National Real Estate Investors Association
• Join the Real Estate Roundup Facebook Group
• Bigger Pockets Intro to Real Estate Webinars
• Bigger Pockets Youtube Channel
• YFP Real Estate Investing

Episode Transcript

Nate Hedrick: Hey, David, how’s it going?

David Bright: Hey, good, thanks, man. How are you doing?

Nate Hedrick: I am wonderful, sir. We are busy. We got our — we actually have a house under contract here, should be closing pretty soon. I know you’ve been helping me out with that. So we’ve been connecting about as much as usual, maybe more than usual recently, so that’s been good.

David Bright: Yeah, and just to clarify, this is for you personally, right? This is not a concierge because I know you’re busy in the concierge space also, right?

Nate Hedrick: We are. We’ve had a lot of clients recently, which is awesome. So if — shameless plug — if you are looking for a real estate agent, no matter where you are, even outside the country, we can connect you with an awesome real estate agent. We’ve had — I think I had five calls this week with pharmacists all over. So it’s been really fun.

David Bright: That’s awesome.

Nate Hedrick: To clarify, this property is for me. It’s our next rental property up in Michigan. It’s been an interesting one. It’s not the usual just fix-and-flip, there’s going to be plenty of that going on, but we’ve got a tenant that we’re trying to help. They’ve not been able to pay their rent, so we’re trying to figure out what to do in terms of either giving them just some new housing or figuring out a way to work with them. It’s just going to be a new challenge for us. So we’re looking forward to that.

David Bright: No, it seems like there is a lot of that going on with COVID and all that. I know some recent news about eviction moratoriums and things like that. So it’s just a lot going on.

Nate Hedrick: Absolutely. So yeah, so we’ve got Jenny and Myke White today. This is a great couple that actually was back on the YFP main show back on Episode 148. And what I really like about Jenny and Myke’s story is that they are much more attainable, I think, as an investor, and that’s why we wanted to bring them on the show. They have exactly one property. They have one duplex in Biloxi, Mississippi. And really want to make this show all about how do you go from having no properties, being a wannabe real estate investor, to that first property. And so really focused on that, and I think Jenny and Myke did an awesome job on this episode of breaking down the ways that they really dove in for that very first one.

David Bright: Yeah. I think in addition to attainable, it’s very relatable because they made this move from markets when they sold their house, they had this equity sitting there, and I think that people that are selling houses right now, just the way we’ve seen the market appreciate in the last year to probably seeing something similar. And so kind of that opportunity of I have this equity in my home, what do I want to do with this?

Nate Hedrick: Yeah. And I really like that, you know, again, sometimes we hear these stories and it feels like, I can’t do that. It worked out so perfectly for them. But they tell a great anecdote about their very first deal they had under contract, it just didn’t work out at all. Like everything went bad, and so they said, let’s back out, let’s go find another property. And that second property worked out way better than that first one had. And so it’s just — it’s further proof of keep with it, stick with things, and you’ll see good results by putting that effort in.

David Bright: Yeah, another thing that they said that I found personally really relatable is that like when you just kind of find your limit where it just makes much more sense to grow a team than to continue to fly solo, I think that as pharmacists, we try to just get started with something and just kind of plow through and I’ll just figure it out, I’ll make it happen. But at some point, it’s just worth bringing in a professional and growing that team and getting more help.

Nate Hedrick: And in the last — again, especially speaking of team, right, the last thing that I think is really important too is that they mentioned about being a husband and wife team. And a lot of people will come to me and say, “Nate, like how do I get my spouse involved? Like I’ve read ‘Rich Dad Poor Dad,’ I’ve read these books, I’m ready to do this, but my spouse is not.” And so they give some good tips on how to bring that along too. So overall, I think an awesome episode. And we’re excited to bring you guys their story today.

Nate Hedrick: Hey, Jenny, Myke, welcome to the show.

Jenny White: Hey, thanks for having us. We’re excited to be here.

Myke White: Hey, glad to be here.

Nate Hedrick: Nice to have you guys back. You were on the YFP podcast, Episode 148, and when David and I were prepping for this show and really getting it off the ground, we said, “We’ve got to have those guys back. They are ones we’ve got to have early on.” So we’re happy to have you guys here. And if you have not heard that story back on Episode 148, I definitely encourage everyone to go check that one out, great story. But we’re going to talk along those lines today as well, talking about real estate. But before we dive into that, can you tell us a little bit more about your pharmacy story? I want to make sure we kick off with that.

Jenny White: Yeah, so my name is Jenny White, and I’m the pharmacist in this relationship. And so I attended Creighton University through the distance program so my husband Myke, as he’ll tell you, he’s in the military. But we were located in Washington State, and that’s where I attended pharmacy school and I was interning there at one of the hospitals. After I graduated in 2017, I did my PGY1 residency at Providence St. Peter in Olympia. And after that, then I started working a night shift job where I was working 7-on, 7-off, which that gave me like the time to get into real estate. But we were surprised shortly after I got that full-time job that we got orders to Mississippi, and so that’s actually where we’re here right now. And so that’s kind of like my pharmacy story. So now I’m an assistant professor at William Carey University, and yeah. That’s kind of where I’m at. And then Myke can jump in and tell a little bit about himself.

Myke White: So my name is Myke White. I am in the United States Air Force. I’ve been in for 13 very quick years. This is only our third duty station, but in the 13 years, I’ve held quite a few positions, whether that’s IT project manager, client systems technician, so kind of like the Geek Squad side, fixing end user devices, computers, phones, printers, what have you. But when I came to Mississippi, I was a technical training instructor, so all of the airmen that are coming out of basic training, whether them or airmen that are already in that are wanting to crosstrain into my career field, they go to our school, which they’re taught their skills before moving to the next base. So I did that for about a year and a half and in the midst of that, I actually ended up taking another position up at the headquarters building on base, and I am currently helping direct operations in the event of crisis or contingencies. So definitely out of my element right now, but I’m enjoying it nonetheless.

Nate Hedrick: That’s awesome on both sides. Tell me a little bit too about how you got started in real estate because obviously with the YFP Real Estate Investing Podcast, we’re focused on real estate. So I’d love to hear kind of what got you started and where you are today with real estate investing.

Jenny White: So I’ll go ahead and take that question because it all kind of stemmed from me, I would say. So as I mentioned, after residency, I was working overnight. And so we tend to be busy early on in the night but it was definitely kind of a smaller hospital, so into the wee hours, I’d have some free time. And so I kind of started listening back into kind of that typical thought process, so I have student loan debt and was thinking about ways to pay that back. And so like I’m currently within PSLF, but at the time, I was trying to think OK, do I follow the PSLF track or is there a way that I can make enough money to pay down this more quickly? So as I was looking into different opportunities and ways to do that, whether it was side hustles, real estate, I fell upon “Rich Dad Poor Dad” by Robert Kiyosaki, and that’s really what kind of kicked it off for me. And then from there, I found Bigger Pockets, and so once I found Bigger Pockets, like all bets were off. And then I was kind of the one that talked about it to Myke. So I saw the potential in it and was really invested and just thought this was how we’re going to get out of the rat race and pay down the school loans. And so I really think “Rich Dad Poor Dad” is kind of what kicked it off for me and then subsequently, Bigger Pockets, and then getting Myke involved into it.

David Bright: Yeah, that’s awesome. I think a lot of our listeners and a lot of our guests have mentioned “Rich Dad Poor Dad” as kind of that springboard that got them to the next step and then Bigger Pockets took them along. And what’s great is I think a lot of our audience are listening today, trying to learn more about getting their first investment property, right? I remember not that long ago when I was in the exact same boat. So it feels like there’s all this great information out there, but that jump from none to one still feels very, very overwhelming for a lot of people. So how to find the right location, how to make sure I ran my numbers correctly, what if I can’t find tenants? In fact, we put out a poll on the YFP Real Estate Investing Facebook page a little while back, and we asked the question, “What is your biggest fear about owning rental property?” And we got some great responses, things that — fears that I have shared with our audience as well. Just looking at some of the list here, I don’t know where to start, I’m worried the tenants will trash the place and I’ll have to spend a fortune to fix it, not knowing how to do maintenance and repairs, not being handy, vacancies, managing the property, non-paying tenants during the pandemic, middle-of-the-night phone calls about problems, evictions, right? All these big things that I think are pretty scary when you don’t understand them. And while you can read about it and kind of get information about it, it still feels a little bit overwhelming. So we wanted to have you guys back, again, you were excellent guests back on Episode 148. We wanted to make sure we brought you back on to kind of teach our audience, so to speak, how to go from none to one. How do you get that first property? And what can a new investor do to make sure that they’re successful? So let’s start with the background I think. So can you tell us a little bit more about the research and the background work that you did to really start feeling confident — or at least confident enough to buy your very first property?

Myke White: So I think when we were still back in Washington, obviously that was the very initial stages of our brainstorming. Like Jenny alluded to, she read “Rich Dad Poor Dad.” And of course she had me read it as well to kind of help shift my mindset. So I think after we had both read that and kind of realized that this is something that we wanted to undertake, we — well, Jenny, again, with her kind of her free time during her job, she’s the one that really started to do that deep dive and look at potential properties in the area. At the time, there was a property, even in our neighborhood, that was going through pre-foreclosure. There was a few duplexes in the immediate area. So we’re just looking at that, not necessarily something to pull the trigger on but just seeing what our market is looking like. And I think that’s probably one of the most important things is you’re obviously not trying to get the very first thing that you see. You’re trying to kind of scope it out, scope out your situation, your market, what the properties are looking like, what the norm is per se as far as things to look for and red flags. So I think that was probably the first thing. So going from Washington and even to Mississippi, it was just kind of establishing what is acceptable to us, what do we consider a good potential rental property? Before we even really considered putting money down over anything, it was just that long game, that long process of the scoping out of the properties.

Jenny White: Well, and I think that’s kind of like an easy step for people is like just get on realtor.com, just get on Zillow.com, and start looking at the properties. We were in Washington when we first started, and our goal was to actually invest in Washington. Once we got orders to Mississippi, that shifted. And so even consider your market. So Washington was extremely expensive. So properties there that we were looking at were double if not triple the price of the properties we’re investing in in Mississippi or the ones that we’re looking at. And so for us, it was kind of a shift to think OK, do we stay in Washington and like do we consider investing in Washington? But once we saw how the market was in Mississippi, then we opted to choose that. And I think from there, Bigger Pockets offers a lot of resources. So I listened to a lot of the different seminars that they have, and that kind of brought on how to use the calculator. And so the calculator that they have is one that Brandon Turner teaches you how to use, and that was something that I started practicing pretty much every day on properties that I wasn’t sure whether they were a good deal or not. It was just using that calculator and getting more and more familiar with the numbers, what does it look like to get a cash-on-cash return, what does it look like to get the appropriate cash flow?

Myke White: Yeah, so if you look at our Bigger Pockets account, you can see properties upon properties of how we’re trying to make the number work and if this was truly a good deal or not, if it would work well for us, so yeah. That was kind of our kickoff on how to make things happen was looking at the properties but also seeing if the numbers work based on the market figures.

David Bright: I think that’s a lot of really important background to do there, and I think that one of the things that when we talk with couples that are investing, there tends to be one person that kind of jumps out there with the idea and kind of that initial big time investment and then the other that’s like, what are you doing here? So I don’t know, Myke, could you talk me through a little bit like it sounds like you were not the initial idea here or that initial major time investment, but like what clicked for you where you thought, Jenny, you’re not crazy. This might be something we should do.

Myke White: So first off, Jenny’s always the one with the zany ideas. She’s always the one coming up to me, “Hey, let’s do this. Let’s do that.” So of course, again, I thought it was just another one of those things, like she’s just going through a phase, maybe she’ll jump, maybe she won’t. But obviously the school loans was a moot point. We were still doing fairly well — I mean, it wasn’t impeding on our lifestyle, but it was still that elephant in the room that kind of needed to be rectified. So because of that, you know, I think she almost felt obligated to try to find some sort of way to start chopping that debt down. So when she kind of approached me about it, of course I was apprehensive. I have all the same reservations probably most people do. The fact that you don’t necessarily know about it, so that means that eh, I don’t think I want to take that chance. But after I saw how her dedication was shifting, listening to the podcast, reading the books, trying to network with people through the Bigger Pockets forums and things like that to try to gather different information, I knew that she was a little bit more serious than I had initially gathered. So I figured I’d be along for the ride. I kind of was there with her. I wasn’t at that same energy. And I’m probably still not. It kind of just took me awhile to kind of realize that OK, this is what we’re going to do. And it really wasn’t until quite a few big moments that I realized that this is probably how we should be investing our money. When we left Washington, we ended up selling our house and so we were sitting on quite a bit of capital. And at that point, I felt like what better way to kind of pay us in the long term than try to secure a property? So that’s when we really started getting really serious, when we got to Mississippi, looking at properties, working with our realtor. She was very helpful from the jump getting us our primary property and then after we got established, she started going out with us to look at potential prospects. And so over time, running the numbers, I kind of felt a little bit more comfortable that this is something that we’re just going to do. And it just kind of blossomed from there.

Nate Hedrick: And Mike, you mentioned two really important team members, right? One of them is you, right, the spouse, partner, like that is team member No. 1. And then No. 2 would be the realtor, you mentioned that as well. So to maybe Jenny, can you tell us a little bit about the team that’s been supporting you guys along this way and how you got connected and how you found that real estate agent, things like that?

Jenny White: Yeah, so when we were in Washington, we were looking for our primary residence down here, and I know you guys probably know that there are some good realtors and there are some not-so-good realtors. And so we initially had gotten a realtor — so we had our realtor in Washington, and she had actually like proactively looked for someone in Mississippi. Unfortunately, the one that she picked out was a dud. And we quickly realized that she wasn’t moving very quickly and the market here was actually pretty hot, which was something we weren’t expecting. And so on one of my late-night shifts, I was looking around, and I happened to find just the Exit Realty is who we ended up going through, and I was looking through the reviews of some of the different realtors and kind of looking for top-ranked ones. And you know, I read a lot of the comments. And the issue that we had had with the first one was that she wasn’t communicating with us, it was hard to get ahold of her, we couldn’t — she was difficult to ask questions to. And so it made the process very frustrating. So we were coming from Washington, we had a short window to move, we have three dogs, and so we knew we had to find a house. Like renting wasn’t an option. It’s very hard to find a rental, apartment isn’t an option, we couldn’t live on base. So we very quickly kicked the first one to the curb and then — our realtor then reached out to Charlotte and after the first time that we talked to Charlotte, we knew she knew her stuff and she was a go-getter. Like I kind of called her like a pitbull of real estate. She goes for it. And so we had success with her on our first house and kind of expressed our interest in real estate and wanting to invest, and she’s phenomenal. Like she goes with us at all hours, she knows we work, and she finds properties in all states of disarray. But the thing that was great about her is that she was a teacher too. So she would come with us to the properties and say like, “OK, so I think this might cost you this much. This is probably going to cost you this. If you keep it as a rental, you probably don’t have to fix this. If you were to do this as a flip, you would have to fix this,” sharing comps with us. And so she was definitely the first strong person of our team. And she’s still someone that we use to this day and we recommend to all of our friends who are interested in investing or looking for a house. With that being said, she is also a great feed into other people. So she helped us network like on our duplex, when we needed an A/C guy, then needed the repairs done. And so she helped us with networking that way. And so anytime we have a problem, whether it’s our primary residence, our duplex, we’ll text her and she’ll be like, “Alright, I’ve got a guy.”

Myke White: Yeah, and I really liked Charlotte because she makes it seem like you’re her only client. Like she obviously has many clients, but she’s so personable and she’s so prompt with her responses and so helpful that you almost feel like you’re the only one that she’s working with. And that’s what I kind of liked about her. She’s just been a big help through this whole process.

Jenny White: And I guess I would add to that too, so if you have a realtor who’s not doing what you need to do, get rid of them. Like I mean, I think there’s, as in any career field, there’s good realtors and there’s not-so-good realtors. And if you’re not getting your needs met, don’t hang onto the one that isn’t providing you what you need because there are real estate investing-friendly realtors.

Nate Hedrick: Yeah, that’s super important. Like you said, that real estate agent can really jumpstart the rest of your team as well. So having somebody that understands the process, that knows the right contractors, that knows the right networks, that is absolutely essential. So it’s great that you guys were able to find somebody. It’s actually one of the things that we made sure that we wanted to launch to our audience as well was the ability to find good real estate agents. So we have the YFP Concierge service. You can go to YFPRealEstate.com, sign up for a free planning call with me, and we’ll actually get you connected with a local investor-friendly real estate agent, whether you’re looking to buy an investment property or if you wanted to find your very first home, we have that service available, and it’s helped dozens of pharmacists already. So again, you guys, sounds like you worked right past it, got a fantastic agent on the second go-around. That’s what we’re hoping for. So again, we’re here to support that as well. David Bright: Speaking of realtors and looking for properties and just as a quick side note, your mention of like how your realtor said, “Don’t fix this if it’s a rental,” there’s so much good there and I just remember the first rental property that we had, we thought everything had to be granite and tile backsplash and all these high-end, fancy finishes on everything, but I think those are the kind of things that a good realtor and a local expert can know about that market, if those things are critical or not. And that can drastically impact your numbers, your search criteria, all those things. And that’s where a good agent that knows that local market can really help you find those properties. So how are you looking for properties? How did you find properties? Are you seeing things that are on-market? Can you talk us through that a little bit?

Jenny White: We primarily look on the MLS. But the thing that we’ve been doing — so we started with the MLS because that’s like, as any new beginner, that’s probably what you think is your only option. So that’s what we initially did. And we basically, we filter out — so we were looking for multifamilies from the top because we wanted to cash flow higher and the way that our money would take us further is we were thinking multifamily. So we had actually initially gone under contract for a duplex, and it ended up falling through because it didn’t appraise correctly, it hadn’t been zoned correctly, and so we had all these issues and we couldn’t get the appraisal to work. So that was kind of a blow to us initially because we were like, “Great, we’re getting this duplex, it’s going to cash flow.” Lo and behold, though, things work out the way that they’re supposed to. We got back into looking around for properties, and one thing I remember hearing on Bigger Pockets was like, look for properties sometimes that have been sitting on the market for a little bit longer, right? So if it’s an obvious good deal, most people are jumping on it right away. But take a look at the properties that have been listed awhile. And so I had seen a duplex that was listed for $125,000, and I had seen that it was sitting for like 60 or — I think it was around 60 days. And so I knew it was priced too high, and so I just told my realtor, I was like, well, let’s just go take a look at it and see what it looks like because we were also in the habit of just going to look at properties. That was, again, a good thing about our realtor. She knew that we were just trying to learn, and she would go with us. But when we got there, one unit was in pretty good condition. It had two tenants already in place, but then the other side was disgusting, terrible, like the people probably smoked in it every single day, every hour, multiple times. And like it was just reeked of smoke, the walls were brown, their clothing was everywhere and just in a state of complete disarray. And it was a Section 8 tenant, and they hadn’t taken care of the property. So I knew that one was going to be the bulk of our rehab money. With that being said, I kind of had the vision and saw that it had potential. So the next thing that I did is I knew one, it was overpriced, so two, I went to go look and see how much it had sold for when the original owner bought it. And so you can look at that through the tax records or like Zillow sometimes will provide that information. And so I saw that he had bought it for like $60,000 like back in 2011 or 2009. And so if you figure what he’s asking for and how long of a time, I knew he had made his money’s worth. And so I said, “Let’s just take a chance.” And again, our realtor’s great. And I said, “Let’s offer $60,000.” And very, very low, so the original offer was — or the request for $125,000, I said, “Let’s offer $60,000.” They countered at $85,000. And we jumped on it. And so just by throwing out a low number — that might not work everywhere, but it worked for us in this chance. And so we jumped on it, and so that was how we got our first one.

Nate Hedrick: What’s the worst they could have said? No? And then you’re back where you started. Exactly.

Jenny White: Yeah, exactly. And Bigger Pockets talks about that all the time too where it’s like start with a number. If it doesn’t work, then see if it’s back on the market like in two weeks. And then maybe offer a little bit higher if those numbers work. And so that was kind of our mentality going into it.

Myke White: Yeah, so that was a good one. I wasn’t there for the initial walkthrough, so I didn’t have that firsthand look of how much of a mess it was. So I actually didn’t step foot in that property until we had closed on it, until the property was ours. And so by then, the tenant was already evicted, that had already been arranged, everything was removed from the property, the carpet was removed. So it was already in a much better state than when Jenny had saw it. So that’s kind of when the work began. But it was — yeah, it was definitely kind of exhilarating. You know, you don’t really expect to get any sort of response. We didn’t expect really anything back after that lowball. And I think what kind of made us pull the trigger is because I think when they counter-offered, what did they relist it as, Jenny? Was it like $92,000?

Jenny White: So the realtor was smart in the other scenario too. So when they countered, they said, “We’ll give it to you for $85,000,” but they had dropped it on the MLS at $92,000. And so that put the pressure on us to not like renegotiate from like the $85,000, which was fine. So at $85,000, it was a steal. After closing, it had appraised at $105,000, so we had that value already in it. And so we really got a great deal on it.

Nate Hedrick: That’s awesome.

David Bright: Yeah, there’s a couple things in there I want to pick apart real fast. You’ve said MLS a couple times. And so can you define what the MLS is for listeners that may not know?

Jenny White: Yeah. So the MLS is basically where all of the properties go on — like so basically anytime someone wants to sell a house, so the realtors have access to this MLS. And then from the MLS that’s now provided to us — I actually don’t know what the MLS stands for. I’m trying to think.

Nate Hedrick: Multiple Listing Service. Yeah, you’re OK.

Jenny White: Oh, OK. Yes. But so basically, your realtor will get this MLS, and then they can distribute those listings. So they get access to it first. And then Zillow and Realtor will pull from this MLS that have those listings updated through Internet. And so the Zillow and Realtor or like Redfin is like the easiest access that we have, but the MLS is strictly for realtors or people who are licensed, and they can access it like in real-time, essentially.

David Bright: Perfect. You also talked about cash flow a couple times, and you’ve talked about running your numbers and calculators, so can you walk us through a little bit more detail on how you knew that $85,000 was a steal and how you knew that that was going to cash flow and how that you knew that a duplex would cash flow better than a single family house in your area?

Jenny White: This really started with, again, like Bigger Pockets has some really great seminars, they’re free just to listen to, you just have to sign up. But they have a calculator, and I think YFP has like multiple great calculators on there too that you can try and use. But at the time, this was before like the YFP had branched into this area, so we used the Bigger Pockets one. But within that, then it asks for what is the purchase price? So we can put down that like we offered $60,000. But then we can also edit it to be like, OK, so they refused that, so let’s run it at $85,000. Then it asks for what your closing costs are, it’ll ask like what are your fees going to be? So like if you have vacancy, like we typically are conservative, so we estimate like 10% for vacancy, we estimate 10% for our repairs, you know, and then if you were going to have a property manager, you can include that in your fees. And so from there, it will also ask how much are you going to put down? It basically lets you do all of the stuff that you could calculate, how much money are you going to make at the end of it? So you’re obviously, if you’re financing it, you’re going to have a mortgage, and so after all is said and done, from your mortgage and your additional fees, how much money are you going to be making per month? So with a single family, you only have one mortgage, and you’re making money off of one door, essentially. However, with the multifamily, you have one mortgage, but you have two properties — if you’re doing like a duplex — you have two properties that are going to be paying income. So when we looked at ours, we also used I think it’s called Rentometer, but that’s a way that we can look at what properties were renting in the area. And so from there, we saw that our duplex is on the low end, we’re renting between $700-800. On the high end, we could probably get $950. So again, being very conservative, I think we rented them out at like $750, just to see how much we would be banking. And so that would tell us that at the end of the day, if we rented both properties for $750, we would make $1,500 in profit but then you have to subtract your fees and you have to subtract your mortgage payment. And so when it was all said and done, I think back then, we were like cash flowing I think at least $600 or $700 a month.

David Bright: Wow.

Jenny White: And so we try to do typically $200 per door. It’s kind of what we go for. And then we also look at cash-on-cash return on investment. And so Bigger Pockets had recommended like 10%, and so the money we were putting in, we were getting I think about like a 17% return on our investment. So it was, again, it was like a phenomenal deal.

Nate Hedrick: Yeah, that’s fantastic. I get excited if it’s 12%, so that’s — I mean, yeah, that’s amazing. So one of the things that you’re alluding to then is obviously at some point you’ve got to put tenants in there, right? You’ve got to have somebody that’s paying that rent, and I think that, again, based on our feedback on our survey, that seems like a point of scariness for a lot of our audience. So can you talk to us a little bit about what it was like finding the tenants, the screening process, getting somebody in there. Did you use a property manager or did you do that yourself?

Jenny White: Initially, Myke and I planned on doing the property management ourselves. So we inherited one tenant, and we had one unit that was empty. So our initial tenant, she was paying and we didn’t really have any issues. But with that being said, we did have some adventures in having some issues with tenants, so we’ll kind of go into that a little bit. We kind of wanted to learn it because first, we thought if we can’t be property managers ourselves, then how would we know if we have a good or a bad property manager? So we wanted to do it initially ourselves. So once our property was renovated, we used a couple things. So we were looking for a Section 8 tenant if we could get it just because of the consistent income. But that didn’t end up working out. And then we also posted on some of the Facebook groups and then like I’m in like the military spouses, and so I thought, OK great, if we found someone who’s military, this would be like perfect. So we actually had the people reach out to us, we did a couple showings, and then from there, we ended up using a company that Bigger Pockets had recommended for doing like the background check and the credit check. I won’t mention who it is because we did have some issues with our tenant, and I still don’t know if it’s through the thing that they recommended or if it was because of like Mississippi having a lag in their background checks for police records because our tenants, actually they both came back clean, their credit scores came back, and everything was fine. But their background check, we found out down the line wasn’t actually clear. So we had some issues with our tenant after that. It was a lot of lessons learned, a lot of good lessons learned. I think we kind of learned that we play a little bit by emotion. We like to think that we’re nice people and you try to give people a bone sometimes, and sometimes it gets — that gets you taken advantage of. And so we quickly learned that like it truly has to run like a business, and that’s not to be mean but it needs to be ran as a business and not, you know, this is a buddy or anything like that. And that’s just to help streamline and prevent any future issues. But because of that and along the lines with all the stuff that happened with COVID because our other tenant ended up having some issues paying because she went down on her hours, we decided that the money spent to use a property manager was going to be a better investment because it was taking a lot of our time. And so I think being able to recognize when that is a solution for you is another thing to keep in mind. It’s not to say you’re just throwing the towel because I think we’ll manage our properties going forward, our other ones, and then eventually just kind of piece them off to her. But that one just ended up being a little bit bigger of an issue. So again, our realtor recommended a property manager, and she has been phenomenal. She actually even got our Unit B rented out at a higher rate than what we were renting it out at. And so we have not had any issues since then. She helped our other unit with like their paperwork for getting like rent assistance. And so that was honestly one of the best decisions we made was switching over to a property manager.

David Bright: I’ve had a very similar experience where I’ve tried myself for about half a minute, and it did not go well. And a property manager came in and did so much better than I would have ever done, so I hear you on that one. You mentioned briefly Section 8 and how that creates some stability and how there’s some there. Can you explain Section 8 a little bit for someone that may be unfamiliar with that?

Jenny White: Yeah, so Section 8 is basically government assistant housing. And so people have to apply for this and they have to be in need. So typically, you know, you’ll see tenants who maybe can’t work or have multiple kids or injuries or whatever it is. But it’s basically something that you have to apply, and so then what the government does is then says, ‘We’re going to give you so much housing allowance per month,’ but then you have to find properties that will accept it. So basically, you get this voucher and so typically in our area, like the vouchers will be between $700-900, depending on the house. And so like our duplex rents, you know, again ideally between $750-900, and so with it being cleaned up, then we knew that we would be able to rent it out for a Section 8 voucher and probably get a little bit more. And then you also have that stability because the government is paying you. Your tenant is not paying you. And so every month on the 1st of the month, you’re getting your check. With that being said, I think there’s some maybe negatives with Section 8 because some of them — I think it’s the same as any tenant. You can have good Section 8 tenants, and you can have bad Section 8 tenants. And the only reason why we had even considered it is we have a friend who she only has like Section 8 tenants, and she’s had them long-term. And they’ve been great for her. And so you vet them out the same way that you do like your regular tenant, and then you have your consistent income, which I think in this COVID era, a lot of people were probably thankful that they had Section 8 tenants just because of not knowing if your tenants were going to pay or not.

Nate Hedrick: Yeah, that’s a greatpoint. And one thing I’ll clarify as the real estate agent in the room, I have to hang my hat that some states allow you to not select Section 8, like you can say, no vouchers accepted here, whereas other states will not let you do that based on fair housing laws, so definitely check your own state’s laws when determining if Section 8 is appropriate for you.

Jenny White: That’s good to know. I didn’t actually know that the states could do that. I knew you could choose that like, here, you can choose whether you want to or not.

Nate Hedrick: Same in Ohio. In fact, we can say in our listings, “No Section 8 vouchers accepted,” but many states you cannot. It’s under fair housing to basically accept those just like anyone else.

David Bright: Yeah, can you tell us a little bit also about your financing for a property like this? Because I think there’s a lot of pharmacists out there thinking, $85,000 is a lot of money. And then I’ve got to do work on it, and how am I going to do all this? And how do I put any kind of long-term financing on it? So what was your strategy there?

Myke White: We of course still had the nest egg that we had established from the house that we sold in Washington. So that might not necessarily be typical for a lot of people starting out. But point blank is just get your game plan as far as what you want your finances to look like. If that means coming up with some sort of savings plan or some sort of way to invest more money into that particular field, then by all means, that’s what you have to do. But we got kind of lucky in that scenario. We didn’t have to start from scratch, from a blank slate. We already had quite a bit of money to work with. So of course we opted to just do a conventional loan. So we did have a down payment. From there, we kind of picked and choosed what expense or how we wanted to fund our expenses, whether it was through the remainder of our cash or our capital or if it was with a credit card if we were going to get some benefits of points or different things like that. So we tried to kind of isolate different categories, whether it was hardware-related, if we were going to Home Depot, if we’re getting furniture, if we’re doing, getting a washer and dryer, things like that. We kind of just picked and choosed, chose, our funding sources based on the scenario. For the big rehab, we of course went with a credit card just because it was a little bit pricy, and we weren’t necessarily prepared to pay for that up front.

Jenny White: That also goes into the strategy, though, that we consider the BRRRR method, which was the Buy, Rent, Rehab, Refinance. And so again, with that being said, we did have a credit card bill, but we also had an out to pay it. And so with that, we bought something that was under value. So remember, we bought it for $85,000. It appraised at $105,000. And so with that thought process, you go into rehab it. And so we actually were only able to rehab the one side. We had hoped to do both, but we didn’t want to kick out our Unit A tenant. And so after we rehabbed it — so we’ve only had this property for a year. We went and rehabbed only one property, and we just did our cash-out refinance, and it appraised at $160,000. So in one year, we added almost double the value.

Nate Hedrick: Wow.

Jenny White: By just fixing up one unit. So had we been able to fix up the second one, I think we would have gotten it for a lot higher. But as Myke was saying, we put our rehab on a credit card and so now, we’ve done the cash-out refinance, paid that off, and now we have money to do another down payment for an additional property, and that’s kind of what we were trying to do.

Nate Hedrick: That’s incredible. And briefly, just for our audience, explain what a cash-out refi is because I think it’s like the magic of the BRRRR method. That moment is pretty much the coolest thing ever.

Jenny White: Yeah, and so with a cash-out refinance, so again, this whole thing is that you get this property that’s undervalued, and then you fix it up and so then you know that it’s going to appraise higher. And so what different lenders will do — and it’s based off of like your credit card score and all that stuff — but they’ll typically give you between 70-75% of the loan difference. And so you’ll be able to pull out that money. And so now, we have like our 80% I think our loan — I’m trying to remember the math. So it appraised at $160,000. 80% of that was going to be $120,000, and so then you subtract out like what our loan was, like typically a true BRRRR doesn’t have that. You pay cash and then you get all of the money back. But for us, it was like $60,000, so then we got about $60,000 back to us. And so then that’s money that we can use again. And so essentially, we have very little money in our property.

Nate Hedrick: You’ve got it. And I think, you know, the point there is the bank basically cuts you a check for that difference, right? So you’re saying if it’s appraising at $160,000 and it’s 75% loan-to-value, you know, that’s $120,000 that basically the bank is writing you a check for. And whether you’re in that property for a mortgage already and you need to pay off that mortgage in some capacity or you’ve bought it for cash and now you’re basically getting that money back out, that’s the magic of the BRRRR method is that it lets you recycle that capital. And again, I’m in the same boat as you guys. I just finished my first BRRRR a couple of weeks back, in fact. And getting that deposit from the bank was like, this is real. This actually happens? This is crazy. So I hear you on that one.

Jenny White: Yeah, it actually — we just finished it. And we actually just put an offer on a house last night, so we’ll keep you guys posted.

Nate Hedrick: Fingers crossed. That’s awesome.
Jenny White: Yeah.

Nate Hedrick: One of the other things that — before we get wrapped up here with our final infusion questions, I wanted to make sure that we brought this up because you’ve mentioned networking, both of you several times. And I think Jenny, you actually — you exemplify this in a different way. You’ve got your Investment Mindset Book Club. So can you tell us a little bit about that and what the importance of networking means to you?

Jenny White: I think there’s multiple opportunities to network, whether it’s just going to your local REAs, which are like local real estate meetings. I’ve found a lot of Facebook groups where I met people — like a plug to Real Estate Roundup, check them out. They’re phenomenal. Within all of this, all these people that I’ve met and that I’ve networked with, I just found that I wanted to surround myself even more so with people who are interested in investing. There’s that common saying like, you’re the average of the five people that you hang around the most. And so those were the type of people that I wanted to surround myself with. And so with COVID, I had a little bit of downtime, and so I love to read. I read a lot of real estate books, self-improvement, again, investing. And so I created — it’s called the Investment Mindset Book Club. It’s on Facebook. Everybody’s welcome to join, just answer the questions in the beginning because I try to make sure that the group doesn’t get spammed by random people. But with that, we typically read one book a month but then we also have like weekly discussions and it’s a great network for, again, people, whoever, who’s just starting out, if you want to hop in and just get to know people, like we have people from all over the United States who are in that group in all scopes of investing. Like we have one guy who is phenomenal, and he’s been doing like real estate investing for 40 years. And so like you can ask questions in the group, people will answer. And again, you just kind of get to be in that energy. So I remember Bigger Pockets talked about one time too, like just talk to people about real estate. And that’s what I do. I talk to everybody about real estate or let people know what I’m doing. And it’s amazing how many people that you will find out are doing real estate that just aren’t advertising it. So for example, I had started my new job at the university and like we went to happy hour with some coworkers. And I talked about real estate investing, and then come to find out that one of my coworkers has been investing in this area for years. And so she became a great resource. And then through Bigger Pockets podcast, we had heard about some guys in Hattiesburg, Mississippi. And so then I joined their Facebook group, which was the Real Estate Roundup, then got to meet them in person, they hold the local REAs. I found some people on the Bigger Pockets forums for people that are local to the area. And so with that now, we have multiple resources, not just our realtor, but we have multiple people that we can go to to ask questions, how would you structure this deal? We’re also trying to get into wholesaling. And so like how do you structure this? And they’ve been also great resources for creative financing, so like owner financing, and trying to think outside of the box because these people have been doing it a lot longer. So a lot of those people make up my book club, but we are happy to have anyone join. It’s a very welcoming area and great place to ask questions.

David Bright: I love that. I think that really speaks to that continued pathway of how you go from zero to one and just that community and the people that you can ask and help get that information and help break down some of those initial fears of getting started in real estate. I think surrounding yourself with people like that, people of that same mindset I think just is absolutely huge for getting started.

Nate Hedrick: And we’ll make sure to mention the Investment Mindset Book Club in our show notes that anybody who is interested in that can click a link and hang out with Jenny. And I know I’ll be trying to jump into the next book. I think it sounds pretty awesome. Alright, so I want to jump to our final infusion questions. These are the three questions that we ask everyone that’s on the show. We’ll have Jenny answer first, then Myke we’ll have you answer first. So this is our rapid-fire section. So what’s one tangible strategy that you can use to make sure that your investing works hand-in-hand with your career? Normally, we say career as a pharmacist, but I want career as a pharmacist or as in the Air Force.

Jenny White: I think it’s just taking the time to get started. Honestly, you know, I think we can get caught up in we don’t have time, we don’t have time. But like again, reading one book a month. Like I learned most of what I did through podcasts the first year and reading books. So to say that you don’t have the time to listen to a podcast on your commute I think is a little bit of a copout. And so that’s like really where it started was that I would listen to the podcasts on my way to work, then I’d come home and read a book when I had time. And so even something as easy as that is enough to get started. So don’t say like not having time is a reason not to get started.

Myke White: If you’re not ready to just jump in full-force, find ways to have it slowly integrate into your daily processes. I wasn’t necessarily all-in starting out. I started reading the real estate books, the self-improvement books, but I was also just telling people what we were doing, just at work, friends of mine, family, just kind of saying, “Hey, this is kind of something that we are considering. This is something that we’ve been looking into that we would like to start investing in.” And you’ll be surprised, like Jenny said, how she found out that her coworker was involved in real estate. You know, starting that dialogue with people is really important because you never know what people are involved in already. And they might be a pretty helpful resource.

David Bright: Perfect. Second question is — and I know you’ve already hinted at this with a couple thoughts earlier, but what’s one resource that has been most helpful to you in your real estate journey, whether it’s a book, podcast, person, website, author, anything?

Jenny White: I think Bigger Pockets kind of encompasses the beginning, middle, end of what we do. And so just to highlight, I’ve read most of the books that Brandon Turner or David Green have written. Their podcast is phenomenal, like I learn something new probably every time I listen to it. But also don’t be shy, go to the forums. So like when we were initially investing in properties, like I posted in the forums, I would ask questions. And again, it’s a very welcoming network. And then the beginner seminars that Brandon Turner does, I think they’re a little webinar, it’s usually an hour to an hour and a half. But like he will actually go into like physical areas and show you how he runs the comps and the numbers and kind of breaks through some of those barriers of feeling unsure. And after watching a few of those, I think you start to build your confidence. And so again, Bigger Pockets hands-down was the No. 1 resource for us our first year.

Myke White: Yeah, I’ll have to second that. And there’s so many ways that you can check out their content. I’m a YouTube freak. I’m on YouTube all the time, but hey, they have a YouTube channel. And you know, that’s where they post some of their podcasts, they have it in video form or like Jenny alluded to, they’ll have the actual video of them going out to properties and actually physically looking at whatever they’re looking at to figure the numbers out. So whether you’re into that, Spotify, whatever streaming service, that’s where they are. And so they make it pretty accessible.

Nate Hedrick: Alright, and the last one: What is one piece of advice you’d give to a pharmacist that is contemplating a start? And I think you guys have hit a lot of these nuggets along the way, and so I think you’ve answered the question, but I’ll ask it anyway since it’s part of our last block here. But what is that one piece of advice that you would give to somebody who’s thinking about starting?

Jenny White: I think the one piece of advice that I would give is honestly, to know that problems are going to come up but to think about what your end goal is. And so our first year within real estate, we’ve learned so much. But that has built up our confidence in what we’re doing going forward, and so I think some people — or even like some of the horror stories you hear that people will have one property and it was like, ‘Oh, it was the worst thing ever. These tenants destroyed everything.’ But if you don’t look at it as an opportunity to learn from it, then I think it’s going to hold you back and then yeah, real estate is not going to be something that’s for you. So remember that there are going to be hiccups. Even Brandon Turner, who is like a multimillionaire now, like he had issues initially. But it’s like you learn from those mistakes, you regroup, and then you just don’t make those mistakes again. So there are some things that might seem intimidating, but again, go with the end goal in mind and remember — for us, financial freedom, that was kind of our goal. But that’s the bigger picture. And so we can mitigate any of these small mistakes and learn from them.

Myke White: I’m sure you guys can relate. We’ve all kind of had those experiences, those different experiences with our tenants. And you know, we very could have easily just thrown in the towel, ‘You know what? This isn’t for us. I’m done with this. I tried to be the nice landlord to save the business.’ But that’s not — that’s just a limiting experience. And you know what to do from that point on, you know what not to do. And so we’re kind of just establishing our status quo as far as any future properties that we take on. So now we know better. So again, always kind of have that positive mindset. There’s always going to be bad in everything if you look for it. But there’s also good in anything, so stay positive.

Nate Hedrick: Great advice. Well Jenny, Myke, seriously, seriously appreciate you guys coming on today. I think you’ve given us some really great tips for how to go from that no properties in hand and doing the research all the way down to getting your first deal and actually having some success. So again, really appreciate you guys coming on. And we could probably have you back in the future when you guys get that next one rolling.

Jenny White: Alright. Yeah. Thank you guys.

Myke White: Appreciate the opportunity.

David Bright: Thanks so much.

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