How Jenny and Myke are Trading Up on Their Primary Residence
Jenny and Myke White share their experience of purchasing a new home and transitioning their former primary residence to a rental property.
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 14 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.
Since then, Myke and Jenny were able to purchase their first duplex using the BRRR (buy, rehab, rent, refinance) strategy in 2019. Although 2020 came with many unique challenges as first-time rehabbers and landlords, the duplex is running well under property management. The housing market took off like a rocket and made finding deals a little more challenging, however, Jenny and Myke had one strategy available to them to consider, which is using the VA loan. They had used it on their current primary house but it can be used more than once if done strategically. Jenny and Myke started looking at properties with potential for additional income, which came in the form of a house that had an attached mother-in-law suite. The potential for income includes AirBnB, renting to travel nurses, military short-term rental, and/or pharmacy students.
Episode Summary
Nate Hedrick and David Bright are thrilled to bring back Jenny and Myke White to hear what they have been up to over the past year since we started the show! The White family is growing both in their investments and the actual family. Jenny is pregnant, and they have purchased a new primary house with an in-law suite that is essentially a stand-alone second unit. In this episode, Jenny and Myke share the details of refinancing their primary residence, how they used a VA loan and its many benefits, and the Thanksgiving story of scoring their new home. With multiple exit strategies (which safety-oriented, risk-averse pharmacists love) in place, Jenny and Myke seem to have planned for all of the possibilities as landlords. Listeners will learn about their plans and decisions around turning the in-law suite into a short-term rental space through Airbnb, the permits required in their area, and what made them feel it was a good fit to keep their old house as a rental. They also share what they have learned through this process, some top tips around patience in the current hot market, and always focusing on the big numbers first. As Jenny says, “a good deal is a good deal if the numbers work.”
Key Points From This Episode
- Myke and Jenny update us on what they’ve been up to with their new primary residence.
- Talking about their decision to keep their old house as a rental and why it was a good fit.
- Walking us through the numbers of payments, cash-flow, and rent expectations.
- Having seller’s regret for their house in Washington.
- They walk us through using a VA loan to get the most bang for their buck.
- Being patient in the hot and competitive market for the right opportunity to come up.
- How they landed their new primary residence with it’s mother-in-law suite.
- Clarifying the floor plan layout of the in-law suite and how it differs from a duplex.
- Discussing Airbnbing the suite and what permits are needed in their area.
- They share their plans and multiple exit strategies.
- Some top advice for anyone wanting to do a short-term rental as part of the primary.
- Decisions on cleaning and tenant/guest management if the Airbnb route pans out.
- Making sure the big picture works first and then figuring out the details.
- Some of the things they’ve learned and how it’s changed their criteria for future houses.
Highlights
“If you’re a service-disabled veteran, theoretically, there is no loan limit. You can finance however you want, no down payment. Same thing with the funding fee, depending on your percentage of disability, the funding fee is waived.” — Myke White, USAF [0:13:35]
“Get creative. Everybody is kind of struggling at this market to find properties or to move fast enough.” — Jenny White, PharmD [0:22:24]
“A good deal is a good deal if the numbers work. We don’t want to jump into something just because we’re in bidding wars.” — Jenny White, PharmD [0:28:31]
Links Mentioned in Today’s Episode
- YFP Real Estate Investing 05: None to One: How to Get Your FIRST Investment Property
- YFP Real Estate Investing
- Join the YFP Real Estate Investing Facebook Group
- Your Financial Pharmacist Disclaimer and Disclosures
Episode Transcript
[INTRODUCTION]
[0:00:00.4] NH: Hello and welcome to the Your Financial Pharmacist Real Estate Investing Podcast, a show all about empowering pharmacists to achieve financial freedom through real estate investing. I’m Nate Hedrick and each week, my co-host David Bright and I explore stories from pharmacists all over the country who are achieving their real estate goals while maintaining a meaningful career in pharmacy.
Whether you’re a first-time investor or a seasoned pro, we’re here to provide education and inspiration about the world of real estate. Please note, this podcast is intended for educational purposes only and should not be considered financial or investment advice.
[0:00:42.9] NH: Hey, David, how’s it going?
[0:00:43.8] DB: Hey, good, thanks, how are you doing man?
[0:00:44.9] NH: I am well, sir, we are right between two projects right now and they’re both on market, MLS deals, which I know people think are impossible so but you’re ramping up one as well, right?
[0:00:55.7] DB: Yeah, I know that we’re seeing a lot of headlines and things like that about what’s going on in the market, how there’s no inventory out there too but yeah, we just sold a flip property the other day and we’re fortunate to find another rental project to start that was an MLS deal also. Yeah, despite the headlines, there are deals out there, which is good news.
[0:01:18.5] NH: Yeah, that’s actually really similar to our story today. We brought Jenny and Myke back from episode four. We’re kind of recycling our old guests, which I think is really fun to see where they’ve gone over the last year or so since we’ve started the show. And they’re really growing in both their investing world and in their family. Jenny is pregnant, which is super exciting.
We really wanted to bring them back on just to talk about the new property that they purchased and what that’s going to look like for them.
[0:01:43.8] DB: Yeah, one of the things that I love about what they talk about is they use one of my favorite strategies, which is taking your primary residence when you choose to move to a different primary as in just, keep your old house that that’s a really easy way to add a rental property to your long game. They were able to do that with their prior primary residence and then even cooler is that in their market, they refer to this as an in-law suite but it is essentially a second unit on their new primary residence.
Similar to a duplex kind of, a separate unit, separate entrance and that allows them to have that separate space for other uses, subject to any of the local use restrictions and in that municipality or that area.
[0:02:27.4] NH: Word of caution, before you go and copy and paste anything we talk about in the show today, do make sure that you’re checking with your local restrictions, municipality laws, whatever your market allows, in-law suites might be normal for one neighborhood and not normal for another, so definitely check on that. Jenny and actually, Myke will refer a couple of times to the types of things that they’re looking into to make sure that they can do that.
I mean that’s super important. We want to make sure we’re doing things by the book and not just the numbers work but that it follows the regulations as well. We hope you guys enjoy, these two are always super inspiring and we’ll take you right to the show.
[INTERVIEW]
[0:03:01.3] NH: Hey, Jenny, Myke, welcome back to the show.
[0:03:03.8] JW: Hey, morning, thanks for having us back.
[0:03:05.7] NH: Yeah, thanks for joining us. We saw all the awesome updates that you guys had and just the life story expanding and so we said, “Oh we got to have them back on the show, these guys are killing it.”
[0:03:14.6] JW: We’re excited to be back.
[0:03:16.0] NH: Yeah, why don’t we dive right in, I mean, since we last talked, you guys have made a huge move in a couple of different directions, maybe just update us on what’s been going on?
[0:03:24.2] JW: Yeah, so recently, we actually closed the December 30th. It’s what’s going to be our new primary house, a couple of interesting pieces to it is that it has a mother-in-law suite and so with that, we’re going to have a way of making extra income. We really focused on kind of using that for short-term rental so that will be a new area that we’re traversing into whether it’s going to be Airbnb, we also are close to the military base so that might be part of it, we’re also really close to one of the hospitals here and so, we might be doing travel nurses.
With that too, we have our current primary house which we haven’t moved out of yet but we’re going to be turning that into a rental, so lots of different moving parts that we’re trying to get situated right now and hopefully we’ll be into our new house and getting that established probably here in the next month.
[0:04:14.2] NH: That’s awesome, there’s so many moving pieces to that but it just – it shows how important it can be to buy that single-family home and start to build equity in it and the things you can do once you start to expand. I mean, you added one property to your portfolio but you’re adding really two more opportunities and a great new place to live. It just shows how important it is to once you get in, it starts to build on itself, that’s really neat.
[0:04:34.8] JW: From our previous one, I know a lot of people know that Myke’s military. We actually are able to use a VA loan which is another interesting thing and we wanted to get the most bang for our buck by using the VA loan. And so when we are looking into new areas to move to, we wanted to make sure that we are adding value or potential income. We’ve looked at multi-families in the past but living that close with like long-term tenants, we kind of weren’t really into that because we have three dogs and usually, they don’t have yards.
This mother-in-law suite actually offered a really unique opportunity because it has a separate entrance so we don’t have to worry about someone sharing our house with us. It has its own door, own backyard. That was what was really cool about how this was able to be utilized and then using the VA loan as just an amazing benefit for our veterans and for active duty.
[0:05:30.0] DB: Very cool, I love the number of moving pieces on that, how you made them all fit, which I know can be intimidating to a new investor but I think as pharmacists, we’re used to juggling 20 meds at once in a patient, making that all fit together. Hopefully we can make this fit here today. I’d love to kind of break this into steps and talk about some of the decisions that you made along the way that made this a good fit for you and for your family.
If you could talk for a minute about the decision to keep your old house as a rental because I think, standalone, that decision fits a lot of people, whether they move into a house that has a rental component or not or VA loan or not or those kinds of things, the decision to keep a former house as a rental is one of my favorites. It’s one that we’ve done before and I love that. Why was it a fit for you both?
[0:06:15.9] MW: Obviously, our niche is buy and holds, long-term investments. There’s quite a few reasons why we decided to hold on to our primary residence. For one, the appreciation for the house is steadily going up but not the same rate as say our past house in Washington. We’re obviously sitting on it to let it grow, let the value grow. Not only that, we are in a premier neighborhood in our area and we know that it’s going to garner quite a bit of income for us.
There really wasn’t any good reason to get rid of it and there’s no value lost. We know, especially compared to how much the mortgage is and how much we could potentially get for the rental cost, it was almost a no brainer.
[0:07:09.0] JW: We also knew this going in that we were going to keep it as a rental property at some point and try to reuse the VA loan. We actually refinanced this house back over the summer when rates were killer so we actually refinanced from 4.25% to 2.25% and cut about $200 off of our mortgage payment, knowing that if we had the opportunity to use the VA loan by decreasing that monthly payment that was only going to improve our cashflow.
[0:07:39.2] DB: Yeah, that 2.25% interest in a long-term rental, if that’s a fixed rate in things, I mean, that’s just killer. Can you walk us through the numbers a little bit more of what that payment is, what you’re expecting to get for rent and then how you justify that? Because Michael, I like what you’re saying about the appreciation, I think that’s something we don’t talk as much about, I think from the long game, if you’re going to hold that for a long period of time, makes great sense but even in the short-term, the security of that cash flow, if you could talk us through that for a minute.
[0:08:08.0] MW: Absolutely, yes, so we were able to drop our mortgage payment down, it was about $1,450 and we dropped it down after the refinance, rather, to about $1,200 flat. That was the savings of about $200 and we’ve already spoke with our property management company and they think we could get upwards to –
[0:08:29.1] JW: $2,000?
[0:08:30.3] MW: Exactly.
[0:08:32.7] JW: Yeah, that’s something that we’ve gone back and forth on for property management but as of right now for this show, I’m seven months pregnant and then with all the other stuff going on, we decided to go the route of the property management at least initially. Just because again, we know the time that it takes to get in a good tenant and our property management team has been phenomenal, and so we are happy to lose that 10% of the income because we know that, cashflow-wise, it’s a newer house.
We don’t have any big repairs or unexpected repairs coming up and so again, we think that return on that investment by using property management will benefit us in the long run.
[0:09:13.8] DB: Yeah, I think that math helps with that too because if you were telling me that your payment was $1,800 a month and you could rent it for $1,900 a month, suddenly, the property management squeeze really hurts, right? With the spread between $1,200 a month, mortgage payment and $2,000 a month rent income, yeah, it’s much simpler to carve out $200 a month for property manager to just handle it and then you collect the rent and not collecting the headaches so I love that.
From an appreciation standpoint too, I know, one of the things we’ve talked about on prior episodes, particularly from a tax standpoint is, there is that, at least, a present, there are those exceptions where if you live in the house for two out of the last five years or whatever, the specific rules are, that you can sell and not pay tax on the gains of the house.
When you talk also about appreciation, I didn’t know if you were thinking, “We’re going to hold this for 30 years, it’s going to double or triple in value, we hope.” Or are you thinking more of that short-term, we’re going to ride out a little more of this appreciation and then sell while there’s some tax benefits to that.
[0:10:18.2] JW: I think Myke and I both have seller’s regret for our house in Washington and so I don’t think we’ll sell another house as we continue through our real estate journey. I know there might come an opportunity when that’s a thing but as of right now, everything that we collect, we are going to be holding it for the very long-term future unless obviously, something happens to change that.
[0:10:40.9] MW: That’s not to say that there wasn’t opportunities that opened up for us with the sell of the house in Washington but again, knowing what we know now, we know that that’s not necessarily the move that we want to make again.
[0:10:54.8] NH: Yeah, especially if you can pull it off, right? Where you can purchase that new home without having to sell the old one. I mean, it really can benefit you in the long-term. Walk us through that a little bit too. How did you use a second VA loan or how does that work for someone using a VA loan when they’re buying a second primary residence on the same loan itself?
[0:11:12.4] MW: With the VA loan, there are loan limits and this is by country, so every county has its own specific loan limit. Usually the standard in the United States is about $650,000. High-cost counties sometimes can be upwards to a million dollars and what the loan limit is, is it’s not necessarily a maximum amount that you can have finance. That’s just typically what the lender is comfortable with financing for you without you providing a down payment.
That’s also another plus, there’s no down payment. Also, with the VA loan, no mortgage insurance, now, what they do have is a VA funding fee and it’s a one-time fee that you pay to the VA. Usually, you can pay that closing or you could have it just lumped into the loan, and this is kind of the form of mortgage insurance but it’s usually at a much lower rate and then of course, you can get a much lower interest rate of the loan versus other loans out there.
[0:12:22.2] JW: The benefit of using the VA loan, as Myke said, there’s certain amounts that you can have per county. If you are strategic with it, you could take out, for example, our primary residence was about $180,000 and that’s Mississippi but if you live in that property for a year, then the next year is one you still qualify for the loan because they still do credit checks and all that. They’re not just handing out free loans but as long as you qualify for it, then from there, you can have another property.
We had our first house for $180,000 and so if you take I think what is $650,000 or $625,000 for this area and you subtract that out then that means that’s how much we still have allowed to use for the VA loan, as long as you qualify for it, which we did. So that’s where now, we’ve taken a second portion of our VA loan and then depending on how we play things, we might consider again in a year, looking to see if we can find another one to finish out the rest of what our VA loan allows.
[0:13:24.1] NH: Yeah, I love that. The VA is almost like having a lot of credit, just sitting out there, waiting to tap into it, as long as you qualify each time, you get to tap into that credit and max it out if you need to which, is really cool.
[0:13:34.3] MW: There’s even more benefits if you’re a service-disabled veteran. Theoretically, there is no loan limit, you can finance however you want, no down payment. Same thing with the funding fee, depending on your percentage of disability, you don’t – the funding fee is waived. So yeah, the benefits just go from there depending on your situation.
[0:13:54.7] NH: Something that again, I think I almost glossed over but we need to reemphasize too is that no down payment and no PMI. We talk all about these physician’s loans, pharmacist’s loans, all these great advantages but it’s right in front of you, you have access to this with no down payment and no PMI. Even at that funding fee in there, it’s still just an outstanding way to tap into capital that most people don’t have access to, it’s really awesome.
[0:14:19.0] JW: Which is why we knew we had to take advantage of it a second time. We just kind of – we knew that and that’s again why we went ahead with the refinance on our primary. We just, with how hot the market has been, it took us a little bit longer because we’ve been in our primary residence for two years but again, we weren’t going to jump into something that didn’t make sense or wasn’t going to bring value to us. So that’s why, we kind of patiently waited and then this opportunity came up.
[0:14:43.0] NH: Yeah, talk to me about that. With the hot market too, was it difficult to find that new primary residence? Because with my clients, a lot of times, if they’re VA, sometimes FHA or even USDA, the sellers don’t look at those loans typically as favorably as a conventional loan because there’s maybe an extra inspection window or something else that goes with it. Did you run into any struggles with that, where you were getting beat out by other conventional offers or was it not a problem?
[0:15:06.8] JW: Surprisingly, we didn’t. I think part of the luck was that we found this house during Thanksgiving week and so we actually went to look on it like look at it on Tuesday, put in an offer on Wednesday and then we’re under contract Friday. It was like, during holiday weeks, so I think that might have been one of our saving graces is because actually, this neighborhood and the location of the property is actually a really, very, very hot market.
We kind of just prayed on it and said if it was meant to be, it was going to happen. And it worked out because we actually even offered under what they were asking, which we were kind of worried about too but it ended up working out. So yeah, the market has been pretty competitive, which is why it’s just taken us a long time to find anything and then again, the mother-in-law suite was something we’ve recently started pursuing after I went to real estate conference earlier in November just because again, it’s a little nicer than maybe a duplex or a fourplex but we still get that added income.
[0:16:11.9] DB: Yeah, that just shows the importance of being ready to take action. You guys sell property even though it’s the holiday and it wasn’t like, “Oh, we’ll wait. We’ll think about it.” no, you guys jump on it and that ability to move quickly was rewarded, which I think is super important and something that shouldn’t be overlooked.
[0:16:25.9] MW: Yeah, I think the biggest kind of theme of this situation was just opportunity, because really honestly for me, it took me probably maybe a day to kind of be in the mentality that, “Well shoot, we could be out of our house in a few months from now.” Because we love our house, we honestly don’t want to move but again, the opportunity was there and we saw the way that we can kind of capitalize on the situation so we wanted to make that move.
At the same time, we weren’t going about it hastily. We were still checking our options and seeing if it will truly work for us and I believe that we made the right move.
[0:17:09.3] JW: Yeah and I was a little bit faster. I think 10 minutes into the house I was like, “I want this house.”
[0:17:13.5] NH: “Give it to me right away.” I love it.
[0:17:16.3] DB: Now, it sounds like part of that attracts you and was that in-law suite, so can you walk us through kind of precisely what that is, how that differs from a duplex? I mean, clarifying, it doesn’t sound like you’re going to actually rent this to in-laws but this is more of just like a short-term rental, that kind of thing. Can you kind of explain the floor plan layout, how that works?
[0:17:34.0] JW: Yeah, so actually we found out after when we were already in the process but, so the house was a standalone house and the owners – her dad is actually a licensed contractor. And so about five or six years ago, they went and got everything permitted and so he built on an addition. The reason why the addition was such a selling point for us is it has full kitchen, full living room, has hook up for laundry, one bedroom, one bath and so it’s like literally a standalone apartment.
The other thing for us was we’ve considered Airbnb and travel nurses in the past but we, again, has just been hesitant to have someone coming in and out of our own house where we live. I know a lot of people do it. We have three dogs, we just never wanted to have the headache of that and always being worried about what could potentially happen. So the fact that this had its own separate entrance, has its own little patio, again is as a standalone apartment we were like, “Okay, this we could actually do.”
With the upcoming baby too then we were kind of like, “Well, this is nice” where we leaned more toward short-term rental because we could book off if we have family or friends coming in, then that mother-in-law suite would be for them and then when we want to have tenants or people coming to stay, then we can open it up and we don’t have to be concerned about having a long-term tenant in place and so that flexibility was really the selling point for us.
We’ve also like I said, wanted to do Airbnb for a while and what better way to do it than having to do like cleaning and all that stuff. It’s like literally right next door. It should be easy to manage, it is not like a big – it is not like a house where we’re going to have 10, 12 people staying. The max occupancy is going to be about four people.
[0:19:22.8] DB: Yeah, I mean that definitely simplifies it. I know that some people feel like at some point in life they kind of want to graduate from that like shared walls experience, they don’t want that. At least, in my area a lot of duplexes are 800 to a thousand square foot and so people want more space in that, and this feels like an opportunity where you were able to get that more of a bigger house to fit the growing family and not have to worry about some of the long-term tenant issues.
You did mention permitting, so in your area does something like this require any other kind of rental compliance or certificate or anything like that in order to rent it out?
[0:20:00.1] JW: Yeah, so that’s what we’re in the process of looking at right now, just again where we wanted to make sure we had a couple of options, because it looks like Airbnb might take us a little bit longer to get into because the city of Ocean Springs is a super popular area here in Mississippi. And through them, then we actually have to be permitted for Airbnb. We do not have to be permitted for anything that’s medical, so like Travel Nurses, anything over 30 days.
That’s where we’re like, “Okay, well worst case if Airbnb takes a while or we get some headaches from them, we can easily transition.” And then the same with being a faculty member at a pharmacy school, we have students that are coming on six week rotations. A lot of them have to commute and so that was another option, so as long as it’s over 30 days, we don’t have to have it permitted, and so that was again where we had multiple exit strategies.
Then again, we could also even do long-term, worst case, if all else fails, so we have multiple options to go with.
[0:21:00.0] DB: I think that’s super important that one, the multiple exit strategies for safety-oriented risk-averse pharmacists, we talk about that all the time, so I love the multiple exit strategies, multiple options that you can do if something were to not be a fit. And I also appreciate the thoughtfulness behind looking into all the regulation because that seems to be varying drastically in different places particularly with the Airbnb model.
I think that’s huge there also. From the kind of short-term rental as a part of the primary, any other just like tips or anything that you want to throw out there for someone that’s like, “Hey, I wonder if I could do this in my house?”
[0:21:35.6] JW: Well, I think we kind of learned going forward but I think for me, the most important thing was just being comfortable. Like I said for us, it was still possible to do short-term rental. You know, there might be other options for people like if they are comfortable with renting because I know some people’s houses kind of like separate or they might have like a second entrance, keep that in mind.
Being creative when you are looking at properties. So we have still been on the hunt for regular rental properties but I mean, they’ve just been flying off the market. When I went to this real estate conference, they had a speaker coming from California who talked about a lot of like the AD user, the accessory dwelling units and so that’s kind of what helped me trigger to think like, “Okay, so maybe if I can’t find duplexes, fourplexes, how else can we use this?”
Again, just get creative. Everybody is kind of struggling at this market to find properties or to move fast enough but again, if you think of things maybe outside the box and even short term sacrifices, again, we’ll see how the Airbnb goes off the top, doesn’t like another year to let you know how the short-term rentals go but again, the flexibility of being able to say that we want tenants, we don’t want tenants, that was something that definitely sold us.
[0:22:51.2] MW: Yeah, that was definitely a huge plus in my opinion because I feel like we’ve kind of wanted to try to experiment with having some short-term rental probably as early as 12 years ago being in Arizona. Just having someone rent our room out in our four-bedroom house but again, it was kind of the privacy thing. It was kind of our dog situation and so now that we have like a truly efficient way to kill these two birds with one stone and still have the privacy of our primary residence but also capitalize on the cash flow or the potential rather of short-term rentals that was a huge plus.
[0:23:32.9] NH: Talk a little bit, you mentioned this before too about being so close that you can do a lot of the cleaning and things yourselves. Is that the plan, for at least the beginning, is to not hire that out and to take on the management tenant or action or the guest interaction and the cleaning and all that stuff yourselves for a while if the Airbnb route does pan out?
[0:23:51.2] JW: We have both figured out, so initially I wanted to – I would like to try to do the management myself. The cleaning, I am not opposed to, so our unit I think is like 700 square feet like the mother-in-law suite, so it’s not terribly big but we’ve also had established relationships here with the cleaner. And so we actually had her come by to check it out. She has already given us quotes and so it’s going to be about like 40 bucks to clean it, which is just going to be the fee that we add on to the Airbnb and so it all ended up working out.
Then if I choose to do it or we choose to do it, you know, then that is just additional money in our pocket, however again, we try to look at all avenues. We try to incorporate, “Does this make sense if we add in property management, does this make sense if we add in a cleaner?” We look at all of those because we just never know and again, with a kid coming on the way, we just never know what time it’s going to allow us and so we wanted to make sure it made sense however we did it.
[0:24:51.9] DB: Yeah, I am looking at the room around me and all the kid’s toys that are laid around and so I’m like, “If I can’t even clean my own living room, I am not sure how you guys are going to clean the STR next to you but –
[0:25:02.9] JW: Yeah, so we’ve figured it out and like I said, we had a great cleaner and she’s very reasonable and so she’s already been by to check out the property and given us quotes so.
[0:25:13.1] DB: I think what’s so cool and what, again, people that may not be paying attention might have missed is that you guys really mapped out every different option, right? It’s not just, “I don’t know, we’ll figure it out” and then, “Oh shoot, it doesn’t actually work with the number now that we’re down, you know, half way down the road.” You sat down and said, “Okay, if we do it ourselves, here’s the numbers. If we have a management company, here’s the numbers. If we have a cleaner, here’s the numbers.”
That is so important in whatever you’re doing, whether it’s a short-term rental or a long-term rental, all those things map out the strategies. Because you don’t know what it’s going to look like in five years, even if the goal is to always manage my own long-term rental down the road, it should also work with property management because what if I move across the country for another job, you know?
Those are really important things that I’m just pumped to hear you’ve already done because it is so essential to making sure that this is going to be a success.
[0:26:00.1] JW: Well, don’t get us wrong, there’s still a lot of unknowns and I think we – I am probably a little bit more okay with risk than Myke is but I think having a vision and seeing potential and just not getting bogged down with all the details, right? Like some of this stuff we’ve kind of then figuring out as we go but the initial point was that the numbers worked and then from there, it’s just trying to figure out like, “Okay, what are the small details?”
Then just having exit strategies and then from there, like we know that we’re going to have trials and tribulations. There is going to be things because it’s all new but just don’t get so bogged down in the little details. Again, I kind of look at the big picture and from there, then you can figure out those small minute details to make sure that you get the most bang for your buck.
[0:26:47.6] DB: Yeah, that feels like a really healthy balance in how to get started, making sure that the big picture works and then you can kind of figure out the small details, you can tweak it, you can do some science experiments along the way, learn what’s a fit for you for your risk tolerance, a lot of that. You did mention too that you’d seem to have a goal and are keeping an eye out for other long-term rentals.
I am curious, since we talked not quite a year ago but since we talked a bit ago, what kind of things have you learned and how has that changed kind of your criteria? What are your criteria for your next houses that you’re looking at for a long-term rentals as well?
[0:27:21.5] JW: I think a lot of it, we’re still primary looking at multi-families. We looked at single-families, I think our biggest thing with the market how it is now is we’re just not looking for hefty rehabs and that’s just because of the issue with contractors, time, time is money. So, that’s kind of obviously narrowed down our window. And then again because of how quick things are going but we’ve also noticed, and I am sure you guys have probably noticed, is that people are offering like ridiculous amounts of money for properties that they’re probably not worth.
Myke and I, I mean, it’s easy to get pulled into that. We have to bet on something because everything is going, so we’ve just kind of been sitting patient, like, we know at some point something will shift or we’ll find something off market. Which we do have something like off market under contract right now. It’s just that is like a probate issue we’re trying to work with but we’ve really just been focusing on making sure that it is still a good deal and not to just get caught up in, “Oh we have to get a rental property now. We have to get this.”
Like we have to take advantage of the rates and again for us, a good deal is a good deal if the numbers work. We don’t want to jump into something just because we’re in bidding wars, it doesn’t make sense, you know? If this property, say we had been in a bidding war, if we would have gone over what they had been asking, we probably would have backed out because then the numbers were starting to get really tight and not making sense for us and so again, the biggest thing is focusing on the numbers.
[0:28:56.1] NH: Yeah, that’s great. I love that and it just shows that with a little bit of patience, you wait for those good deals to come around and then you can pounce when they do show up. So great advice and again, really awesome having you guys back on the show. I really appreciate you guys sharing an update to your story and just always great tips for ways to get creative within your own single family home, within your own primary residence and ways to go even beyond that and so, I appreciate you guys sharing and just awesome to have you back.
[0:29:20.2] JW: Yeah, thank you.
[0:29:20.9] MW: Yeah, anytime.
[0:29:21.6] DB: Thanks so much.
[END OF INTERVIEW]
[0:29:22.6] ANNOUNCER: Thanks for listening to the YPF Real Estate Investing Podcast. If you like what you heard on today’s show, please leave us a review and subscribe to the show so you never miss an episode. If you have a question, know someone that would make a good guest or want to connect with Nate or David, head on over to yfprealestate.com and join the growing YFP Real Estate Investing Facebook group.
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[0:29:44.3] ANNOUNCER: As we conclude this week’s podcast, an important reminder that the content on this show is provided to you for informational purposes only and it is not intended to provide and should not be relied on for investment or any other advice. Information of the podcast and corresponding materials should not be construed as a solicitation or offer to buy or sell any investment or related financial products. We urge listeners to consult with a financial advisor with respect to any investment.
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