How One Couple Got Started in Real Estate Investing
Jenny and Myke White join Tim Ulbrich to share their journey into real estate investing. They talk about why they feel like real estate investing is a good fit for them, how they got themselves financially ready to purchase their first property, the good and the bad of owning an investment property and future goals they have for building their portfolio.
About Today’s Guests
Jenny and Myke are both originally from Colorado Springs, CO; they’ve been together for the past 10 years and married for the last 6. Jenny attended Creighton University through the distance program and was awarded her PharmD in 2017. During her time as a student, she interned at Multicare Auburn Medical Center. 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. She divides her time at Keesler Medical Center, her clinical practice site where she practices as an ambulatory care pharmacist. 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. He was the IT contact for both new facility construction projects and renovations, ensuring that customer and contractor support was above reproach, and milestones were met. 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”. He is currently a Technical Training Instructor at Keesler AFB, where he trains both recent Basic Military Training graduates and re-trainees before they begin their career as Client Systems Technicians.
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 beginning 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.
They have 3 dogs, enjoy fitness, and love to travel.
Summary
Jenny and Myke recently moved to Mississippi from Washington state. They had planned to stay in Washington for a couple of more years, however, Myke, who joined the Air Force in 2007, received orders to move.
Jenny, a pharmacist, brings the student loans to the table in their relationship and felt responsible to find a way to bring more money in to pay them off. After pharmacy school, Jenny worked a 7 on/7 off schedule which allowed her to work per diem at two other hospitals. She wanted to figure out how to increase their cash flow and create passive income instead of having to work more hours. After readying Rich Dad, Poor Dad she realized that she could become a pharmacist real estate investor.
The couple works with Tim Baker, one of YFP’s CERTIFIED FINANCIAL PLANNERS™, and he suggested that she take the PSLF route in paying off her loans after hearing their financial goals. Jenny and Myke started focusing on saving money for a down payment on a real estate investment property with the extra money they had each month. They were also able to use the capital gains from selling their house in Washington to help with purchase their first property.
Myke shares that they dove into real estate investing because they can positively help other people while bringing in cash each month. They also want to be good landlords and take care of others. They closed on their first duplex in December 2019 and currently have one side rented. In this episode, they share what they’ve learned in the real estate investment process so far and what their future plans are.
Mentioned on the Show
- YFP Planning
- BiggerPockets
- Rich Dad, Poor Dad: What the Rich Teach Their Kids About Money That the Poor and Middle Class Do Not by Robert T. Kiyoaski
- BiggerPockets Real Estate Podcast
- BiggerPockets Real Estate Investment Calculators
- Long-Distance Real Estate Investing: How to Buy, Rehab and Manage Out-of-State Rental Properties by David Greene
Episode Transcript
Tim Ulbrich: Hey, what’s up, everybody? Welcome to this week’s episode of the Your Financial Pharmacist podcast. I’m excited to have on the show this week Jenny and Myke White to talk about their journey with real estate investing. Now, we have heard loud and clear from the YFP community that you want to hear more stories from those in the beginning stages of real estate investing. And this episode is intended to do just that, to share their journey into real estate investing, how they got themselves financially ready to go, what types of investing they’re doing, how it is going, lessons learned, and where they’re going from here. So Jenny and Myke, welcome to the Your Financial Pharmacist podcast.
Jenny White: Yeah, thanks for having us, Tim.
Myke White: Tim, it’s a pleasure.
Tim Ulbrich: Well let’s start with some introductions. Jenny, you first. And then Myke. Talk to us a little bit about your background, your careers and the work that you’re doing right now.
Jenny White: OK, so my name’s Jenny White, and I’m the pharmacist in this marriage. And so we actually met Tim Ulbrich through the other Tim, who’s been our financial advisor for the past year. I was starting my pharmacy career in Washington state, where I worked as an intern. I was actually part of Creighton’s distance program. And so once I graduated, I did my PGY1 residency at Providence St. Peter and then went on to work for about a year with multicare as an overnight pharmacist, so working in the ED and primarily MedSurg. And then we kind of had a change of plans, so we were in Washington for about six years during my whole time being a pharmacy student and then my pharmacy career. And then Myke, who will introduce himself here shortly, is in the Air Force, and we got orders to Mississippi, which changed things dramatically for us. ANd so now I’m actually an assistant professor at William Carey University. And so I split my time being a faculty member for the pharmacy school and then working at Keesler Air Force Base as an ambulatory care pharmacist.
Tim Ulbrich: Awesome. Thank you. Myke, go ahead.
Myke White: So my name is Myke White, I like Jenny said am in the Air Force. I joined in 2007. I started out in Arizona as a IT project manager. So I handled a lot of the high-dollar initiatives throughout the installation, whether it was new constructions or renovations, anything that needed communications, meaning network capability, computer servers. We were all up in it. So I was there for almost six years, made our way to Washington where I was a client systems technician, so I mainly focused on computer and end user devices. And I liked it. We were there for almost six years, and honestly, our plan was to stay for probably a couple more years, get Jenny established and maybe even try to get overseas if we could. And then actually came back from holiday exodus in 2018, and I realized that we got orders. And of course when you look at your orders, it just says that you’re notified or you were selected for orders. It doesn’t exactly tell you where you’re going. So I was excited because on my preference list, I had nothing but overseas. So I’m like yes, we’re going to get that opportunity to get overseas. And I checked, and I saw that we’re going to Keesler. And of course, I had to break the news to Jenny. And she was obviously not happy. But at the end of the day, we had to deal with what we were given. So now we’re here. And it’s actually not as bad as I ever would have thought. You know, it’s opened up quite a bit of opportunities for us. And hopefully they continue as long as we’re here.
Tim Ulbrich: I think the Mississippi folk listening will be glad to hear you say it’s not as bad as you had thought. And what a change, I mean, Pacific Northwest to Mississippi. We talked about before we hit record, you know, home being Colorado. So lots of transition for sure. But I’m excited, I know one of the goals that you all have going forward is sort of the flexibility and the freedom with travel and doing things that you love, especially as time in the military eventually wraps up and having more options, which is I think where real investing in the financial plan fits in so well. So Myke, I want to start with really a broad question about your financial plan as a couple and how real estate investing fits in. And the reason I want to start here is that I see many pharmacists, especially new practitioners, really struggling to get started with real estate investing. One, they want to do it but they don’t know how to get started because, you know, of course they’re balancing six figures of student loan debt, perhaps the need to build up reserves for a rainy day fund, getting rid of credit card debt, trying to prioritize other goals such as investing, home buying, wedding, starting a family, the list goes on and on, right? So tell us a little bit about for the two of you — and obviously in your work with Tim Baker as well I’m sure this has been part of the discussion — how has real estate investing been able to come up and bubble up as a priority among all the other things that you’re trying to work on?
Myke White: So starting from the beginning, honestly, I had not necessarily an interest but I just didn’t know better when it came to real estate just because you know, you have that typical mindset of people where there’s a lot of moving parts, there’s a lot of money involved, there’s a lot of things that people don’t know so they kind of just put it off, that’s not for me type thing. And of course once Jenny was introduced to YFP and in the midst of all of that, Bigger Pockets and I mean, her entrepreneurial spirit anyway, she kind of found out about everything. And then she kind of sold it to me. So of course I was a little bit apprehensive at first. I was like, eh, I don’t think so. But then after I started reading a few things, looking at a few different articles and of course read “Rich Dad, Poor Dad,” I think that’s when my whole mindset shifted. And I was like, OK, maybe we can do something different, we can stop this 9-5 mindset and think outside the box and figure out ways that our money can work for us and benefit us in the long run. So I think once we started that, we kind of started to zero in on our different priorities and how real estate can feed that. And also leaving Washington, we of course sold our house. And we ended up making quite a bit of capital, extra capital, in order for us to start to kick things off once we got to Mississippi. So we’re able to pay down quite a bit of our debt, we’re able to establish our nest egg or our real estate venture. So I think once we got to that point and once we got settled in Mississippi, we’re kind of able to set our priorities and get that going. But as far as right now, our plan is again to — so I retire in about eight years. So for us to kind of get established now, get smart on everything, establish our connects and different things and get that going. We of course got our first property. Obviously our goal is to get at least 1-2 properties at minimum a year until we get to the point where the cash flow is supplementing at least one of our salaries so we don’t have to worry about working.
Tim Ulbrich: So Jenny, you must have done an awesome job selling him well. I mean, hearing Myke go from “I’m unsure of this” to “We’re going to be getting at least 1-2 properties a year,” that gets me fired up. And isn’t it amazing — I mean, “Rich Dad, Poor Dad” had that same effect on me. And I recommend, I feel like it should be required reading throughout multiple times. It’s not one of those things you read once either. I feel like you pick up something new each time. But it’s a mindset book. It just makes you think differently about money, especially if something like real estate investing, small business, wasn’t a part of how you grew up. Jenny, talk to us for a moment about student loans because I’m guessing many people are listening saying, “My gosh. Like I would love to get started with real estate investing.” But you know, we know the average indebtedness is about $170,000 across the country for today’s graduates. So for you all, talk to us about the student loan position and then your repayment strategy and how that has played into allowing you to be able to prioritize real estate investing while you’re also facing student loan debt.
Jenny White: Yeah. So for us, student loan debt is definitely something that I think triggered this looking out for other options. So obviously when I went to school, pharmacy was my passion. Like I absolutely love it. I love what I do, I love hospital, I love ambulatory care, I love all realms of it. But once I was working as an overnight pharmacist, I’m like, yes, I finally made it. I’ve got that consistent salary, I’m making money. And we were paying down some of the debt that we had accumulated. And mind you, so Myke, he doesn’t bring this debt to the table. Like this is strictly mine. I know there’s a lot of people that are two pharmacists or other debt. Like this is all mine. So in my mind, I was almost thinking like, I have to get rid of this. So I kept looking at other things. I looked at side hustles and I was trying to figure out how we could do — how we could continue to pay it off because my first goal was I wanted to try to pay off all of the student debt because I was like, let’s just get this out of our way. Like I don’t want to deal with this anymore. But then after I’d talked to Tim and I was like, OK, I did sign up for PSLF because I was like, this is kind of my backup, if like in a couple years I realize like I’m not getting this paid down quickly enough then I could always fall back on PSLF and draw back on the payments and try to decrease them. The other thing that I noticed too was that like when I was working, I had the 7-on, 7-off working night shift, which was amazing. But it also gave me the opportunity to work per diem. And so I was working per diem at two hospitals. And then I was like looking at my paycheck, and I was just like holy cow, like so much of my money is getting taken away for taxes. And so I was like, there has to be something else, which is when I found “Rich Dad, Poor Dad,” which I recommend that book to every single person. It’s $5 on Amazon. There is like no reason, especially now in the quarantine, that you can’t read it because that completely shifted it where I was like, this is right, they’re taking all of my hard-earned money for taxes and using it for whatever they use taxes for. But like how can I hold onto more of my money? And then that’s where it really shifted to thinking about cash flow, passive income, and then we kind of shifted focus on like instead of paying down all the debt, let’s focus on saving up as much as we can to get down payments for houses.
Tim Ulbrich: I love it. And I think that strategy of PSLF here is really an important part because as our listeners know well, now if you’re pursuing PSLF, which right now doesn’t get sweeter than it is, right? We’ve got a bonus time period here of $0 PSLF-qualifying payments because of the CARES Act. But the PSLF strategy, you know, if that’s what you’re in is minimize payments, maximize forgiveness. And here, that allows additional cash flow to be freed up to be able to focus on things like real estate investing. And I think it’s a good reminder of the interconnectedness of all the parts of a financial plan and how someone like a coach can really help you balance those out and think about them where it’s often easy just to get siloed in the one part of the financial plan. So Jenny, talk to us a little bit about the month-to-month rhythm for you guys. I know if you’re working with Tim Baker, it likely means he’s talked about a budget and the spending plan and obviously I would assume that’s a key part here based on the goals that you have. What does this look like month-to-month and week-to-week for you and Myke in terms of how you’re able to account for income and expenses and ensure you’re able to fund and prioritize the goals that you guys have?
Jenny White: Yeah, so for us, Tim Baker has been a huge resource to us, and we’ve definitely learned a lot from him and kind of managing our finances as well as Tom, who is the budget guy for Tim. And so we’ve been working with him. So we really had to kind of focus in our spending. And we actually run a budget now, which is something that we didn’t really do before and we kind of just would pay our bills but we really wouldn’t look at our spending. And now when we do that, we’re like, holy cow, we spent this much money going out to eat, we spent this much money on groceries. And so it really opened our eyes, and so we try to make sure that we’re cognizant of that. So that was kind of a big thing. But even for kind of getting in the ball rolling for the real estate thing, a lot of it was just learning. And Myke and I are still doing that. We have tons of books from Bigger Pockets that we’re reading, we listen to podcasts, and we also — the thing with Bigger Pockets is that they have so many great resources. So one thing that a lot of people don’t realize too is they think like, I can’t get started in real estate because I don’t know everything. But start learning now so that you can get the ball rolling so that when you’re ready, then you’re good to go. So like we started in January of 2019. This is when I really started. And then you know, early in the year, then Myke really got involved. And so we were listening to all the podcasts, reading all the books. But they have a calculator on Bigger Pockets that you can use to like really dial in like your properties. But you have to practice it to be able to like see what a good deal is versus what isn’t a good deal. And so from the time that we started doing that, we were practicing probably from like March ‘til May-June timeframe before we got there so that when we actually got to Mississippi, we were ready to roll because we could actually pull in those numbers, we knew what we were looking for, we knew what made sense, and we weren’t trying to scramble and wonder if this was a good deal.
Tim Ulbrich: I love that. And I love your passion for learning because I think what happens here, what my wife and I have found is when you’re listening to podcasts, when you’re reading books, when you’re analyzing deals, running calculators, you can’t stop thinking about it, right? And then you kind of start talking about it more. And then you find yourself driving down the street and you’re like, ooh, I wonder if that would be a good property? Does that beat the 1% Rule?
Jenny White: Yep.
Tim Ulbrich: And it’s top of mind. And then it gets cemented as a priority, and I think it starts to build that confidence so that as Bigger Pockets talks about all the time, great resource, that first deal is the hardest deal. You’ve got to get over the hump.
Jenny White: Yeah.
Tim Ulbrich: And you’re never going to feel fully confident, fully ready. You’re going to make mistakes. We’ll talk about some of those along the way. And that’s OK. But you’ve got to get started. In that, of course, making sure you’re doing so in a way that fits in with the rest of your financial goals. So Myke, before we talk about the first property, why real estate investing? You know, I know our listeners are probably thinking about, OK, I could be maxing out 401k’s and 403b’s and HSAs and Roth IRAs, I could invest in a brokerage account. What is it specifically about real estate investing that intrigues you maybe equally or even more so than other areas and options for investing?
Myke White: For real estate, for us, obviously the bonus is money, is that cash flow. But it’s also helping people. And a lot of people don’t necessarily always think about that. They think, OK, this guy is huge into real estate. He’s in it all for the money. But a lot of money don’t realize that you’re helping people’s situation. And I feel like we’re seeing that firsthand with the property that we currently have. There is a tenant in there that, I mean, doesn’t necessarily have the best situation. But I feel like, you know, us being her landlords, we’re kind of seeing our focus shift from OK, it’s not about the money, it’s about making sure that they’re good. So if they’re good, that means that you’re good. So that’s kind of how we see it. Obviously like the money’s nice. That leads to other things. But at the end of the day, you’re helping those people. So I think that’s something that you don’t necessarily see in a lot of other forms of investment.
Jenny White: And I think too is sometimes landlords kind of can get a bad rap, and that’s not something that we’re striving for. You know, we actually want to provide a property. And we’ve had a lot of things that have already popped up that the property manager prior to us taking over this property didn’t take care of, but we’re taking care of it because it’s the right thing to do. And overall, she’s a great tenant. And we want to keep her long-term. And so by Myke saying like, you know, being good landlords and helping them out and even with like COVID-19 right now, making adjustments to payments, doing what we can. I think that’s going to help us keep her long-term, which is what we want because that helps with cash flow too. Turnover can get you quite a bit if you’re not careful.
Tim Ulbrich: I’m so glad you said that. You know, I’ve learned firsthand with the property my wife and I recently purchased, the cost of vacancy or turnover that leads to vacancy or obviously repairs that need to be done then because of damages or other things. But in tandem, it’s not just the numbers. Obviously you’re in a position to help, and I love that heart and passion to do that, especially during a difficult time like this. So Jenny, walk us through the first property. A duplex, tell us about it, where it is, what it looked like, kind of general numbers, and why the duplex is where you decided to start versus a single family home or even doing something like a house hack. What was the strategy and thinking there?
Jenny White: Yeah, so when we got to Mississippi, one, we were coming from Washington state where single family homes are easily not like even great, but they’re between $200,000-300,000 for like bare minimum. We came to Mississippi and we’re looking at like $60,000-100,000. We’re like, holy cow. So then when we started looking at properties, duplexes were popping up, which like in Washington are probably close to $500,000 where here, you can get them for under $200,000. And we were just like, we can’t believe this. So we started looking at both because to us, it was important just to make sure that the numbers made sense. And so we looked at both, and we probably looked at a good 10-15 properties, ran numbers on close to 50-60. And actually, our first deal fell through. So we had put down — or we had gone under contract for an initial duplex, which had two tenants in it. And we were planning on keeping them. Then some issues happened with the electrical boxes being in inappropriate places, so they were going to be expensive fixes for us. And then once we continued down the process, our appraisal came back down low, which would have been great for us, but the seller wasn’t willing to go down. And so we ended up losing out on that duplex because we couldn’t come to an agreement on terms and all that. And so at that point, that was like September timeframe and Myke and I were pretty bummed out because we were literally a couple days away from closing before it fell through. And so it had been over a month of working, getting inspections done. So we were really bummed. So we started going back to the drawing board and were looking at more properties when I actually went with our realtor — and we had a great realtor who was very investor-friendly. So she went with us, you know, even in the evenings, anytime she was like available to go with us. And so Myke actually didn’t even see the property until we actually had purchased it because I went with the realtor and it was listed for $125,000 for a duplex there was two tenants in. On the unit side A, it has some repairs that are needed but nothing bad. Unit B was a Section 8 tenant that had been there for about eight years, had really demolished the place. Like I mean, you walked in there and you could see like the smoke. It was just like everywhere. Everything was caked in dirt, it was pretty run down. And so we knew — I knew that it was going to need a lot of fixing up. So I told Myke, I was like, well let’s keep looking. We’ll keep an eye on that. It’s listed too high. We kept looking and I just kind of got like a gut feeling, and I was like, let’s just take a chance. And like our realtor had let us know that their realtor had kind of mentioned that the person who was selling was an older guy. He was just trying to get rid of the property. So then I went to look at the purchase information, I saw that he had purchased it back in 2009, paid $60,000 for it. So I was like, he’s got his money in and he’s made tons of money already. So I was like, let’s just try lowballing. I was like, let’s just take a chance, we’ll see what happens. They had said they were already evicting Unit B and they were going to get rid of her. So I was like, OK, if we can make that part of the contract, then that would be great. So it was listed for $125,000, and I said, “Let’s offer $60,000.” And so most people would think that I was crazy, which it was a little bit. My realtor even — our realtor even said, “Either they’re going to ignore you. Or they might come back with an offer.” She’s like, “That’s pretty low.” She’s like, “I don’t know what’s going to happen.” I said, “That’s fine.” I was like $60,000, we’ll pay closing costs, let’s see what happens. So it took — what? — about like a day and they came back and they said, “We’ll sell it for $85,000.” Yeah. So it was huge for us. Their realtor was actually really smart because at the same time, she said, “We’ll take $85,000, but we’re dropping the price to $92,000 on the MLS.” So that day, they got multiple offers from it dropping that much. But we had said, “We’re like, we’ll take it for $85,000. We’ll go.”
Tim Ulbrich: I love that. And you know, speaking of the cost difference from Pacific Northwest to Mississippi, there you go. If anybody’s hearing that, they’re probably like, “What number? Say that again. How much for a duplex?” But you know, when you talk about the 1% Rule as just a general example, when you’re talking about two units for $85,000, the math is pretty quick. I don’t really have the details, but I know just with those numbers it’s probably a good deal based on that. So you know, area matters. And I think this is important for our listeners to hear because some people might be in an area where they say, “The numbers don’t work. I live in Seattle. I live in Columbus. I live in wherever.” And so being open to out-of-state, out-of-area investing I think is really important. Actually, Bigger Pockets has a book out specifically on long distance real estate investing, which is a great read. It’s something I’ve done. And as I understand it, you all are thinking about bringing in other people that are out-of-area but see your market as an opportunity, correct?
Jenny White: Yeah. That’s something that we want to do.
Myke White: Yeah, so even when we were in Washington, obviously we wanted to try to get the ball rolling. But there would have been no way. It would have been out of our price range. So of course it’s comfortable. It’s convenient to stay in your own personal market. But sometimes you might need to consider venturing into other areas just to see what the environment is there. If you know people that invest in that particular market, you know, ask them how the climate’s been for maybe the past few months or couple years, even, and kind of go at it that way because yeah. Like I said, coming here has opened up a lot of doors and opportunities and as much as we really wanted to get into real estate, it wouldn’t have happened — it wouldn’t have happened at least as quick if we weren’t here.
Jenny White: And so we have people who are from Washington and Colorado who are interested. And I mean, getting into a partnership is kind of nerve-wracking as is. But that’s why we’ve talked to people that we knew we were interested, people that we trust, and we’re in the process of kind of like working out what those contracts would look like because basically, Myke and I are tapped on capital because we put our down payment down, we made the repairs to the other side, so it might take us a little while to pull our capital back out through the BRRRR method or just save up enough money to make that happen. And so we’ve talked to a couple people and said, you know, “You bring the funding for the down payment. We own the place 50-50 and there’s different ways to work it out with your financing. But then we can property — we’ll be the property managers for it.” And that also is a big thing that people don’t want to do, they don’t want to deal with the headache of being a landlord. And so we’re like, OK, if it’s in our area, we keep our duplexes within a certain radius for us to be able to get to, we manage that portion of it and then you get your payment every month, you get your cash flow, we both are building equity, we have this and we can figure out what we do with it down the line. But it’s an opportunity for people to get involved in real estate. And again, some people don’t want to learn the process either. So that’s another thing is we’re invested in learning in this process and managing it and being hands-on. So we’ll gladly work with people if they want to give us the money to do it.
Myke White: Yeah, so prime example, I mean, my dad came down here to visit about a month ago. And he had of course known that we were doing our thing with our duplex. And so of course, what better way to kind of tell him what we’re dealing with than actually show him the duplex, show him or at least explain to him the process so we could get there, the money involved. And really, we gave him like the short and simple version to kind of be like, oh, that sounds pretty interesting. That sounds like something I would maybe want to get involved with. So obviously, you know, you hear a lot of times when it comes to these type of things, don’t involve family, you don’t want to mess up the dynamic. And I was very reluctant, even though Jenny asked me quite a few times, “Just ask your family. Ask your mom and dad if they want to throw some capital at us.” And I’m like, no because if the crap hits the fan and something happens, I don’t want to be looked at or affect our relationship. But the way that we kind of conveyed it to my dad, he was excited about it, he told my mom. He was like, “Look, we want to make this happen. So if there’s any properties that you see come across your desk, let us know. And we’ll see if we want to provide a little bit of capital. So that’s like the best case scenario, honestly. And I know that whatever we give them, they know that we already did our due diligence and running the numbers and making sure it works for us before pulling the trigger.
Tim Ulbrich: I love the creativity there because you know — and I think as you all are discovering, like I think it certainly can be tricky with family and friends. But with really good agreements in place and good conversations and just very honest conversations about hey, there’s risk and we need to all understand what worst case scenario is. And I’ve done some investing with somebody else where I think they’ve done a really, really good job of that to say, “Hey, I care enough about you that I want you to fully understand the risk and be transparent because this relationship is first. So as long as we’re all on the same page about the risks as well as the opportunities, then we can clearly communicate that and document it.” I think that that’s reasonable. So I love the creativity because what I hear you saying is that the rate-limiting step for you guys growing your portfolio at 1-2 units a year — and I’m guessing if we talked a year from now that number might be 2-4, 3-5, whatever — is that you know, obviously you’ve got to have the capital. And I think it’s important to you all that you aren’t being overleveraged and that you can have equity in these homes. So it just takes time to build up a down payment. I mean, even when you were talking about an $85,000 property, if you’re putting a significant chunk down to get good financing and to make sure you’re not overleveraged, it just takes time to save to do that. But if you guys can put in sweat equity and bring other people in that maybe have the capital interest and don’t want to put in the sweat equity, you can essentially have the equity in the property without necessarily needing as much of the capital. And I love that creativity for you guys moving forward. So that makes a whole lot of sense. So Myke, tell me a little bit about the other side of this. You know, I think sometimes we talk about real estate investing and we talk about it like it’s roses, rainbows and cupcakes. But there’s another side of it as well, right? And that’s the — we all have stories of this didn’t go as planned or I thought this was going to happen or oh my gosh, I didn’t realize this. Talk to us a little bit about with this property what those moments were for you guys.
Myke White: Yes. Of course, like Jenny said, in regards to our duplex, I did not see the property until we had already got it. And so it was already 10 times better than it looked when she went there for the initial walkthrough because all the furniture was gone, of course the tenants were gone, the carpet was actually ripped up already.
Jenny White: Thank goodness because it was gross.
Myke White: There was a lot of that smoke smell. So I just walked in and — of course we had seen a bunch of other properties along the way that were not that great. And so I was like, OK, I feel like I’ve seen it all at this point. But I was sorely mistaken. So I walked in, yeah, it was really bad. And I was like, we’ve got a lot of work ahead. And luckily, we do have, you know, that support system and we do have our realtor that knows quite a few people that can do the handiwork. But we also have friends that can assist when needed. So we’re like, OK, maybe we can knock this out and do it on our own. But yeah, it was — once we got into it, we realized how much work it was. So we first started out by trying to get rid of that smoke smell because it was everywhere. And we knew a lot of it was absorbed into the walls. So we had done a little bit of research and we had found a solution that we got from Home Depot to literally just scrub the walls.
Jenny White: And we had white towels that were coming back black and brown and like we’ve been trying to document our journey too so we have like the videos on my Instagram and I post them to my Facebook just so people can see like what we’ve been doing.
Myke White: Yeah, so we were able to get some small stuff done. But literally, it was that first day — matter of fact, it was probably that first hour of that first day that we realized, OK, we might need to get some — we might need backup. So we called it a day and we looked into different contractors that could do at least a little bit of work for us. And so we had decided on one. They were able to get in pretty quickly and they replaced the flooring, they painted the walls and did a few annoying things. So right now as it sits, the duplex is almost OK. But I feel like anything else that needs to be done, we can do. But that’s just kind of the expectation. You’re never typically going to find a property that’s ready to go. And you know, it’s expected that you’re going to have to put a little bit of work in. You’re not always going to have the luxury of having that support system or having that realtor that just happens to know the handyman or the AC guy or the electrician. So sometimes it’s what needs to happen in order for you to make some progression.
Jenny White: But we learned too along the way that a lot of things, when we decided we were first going to do it, we’re like this is great because our tenant, the one that stayed, her rent covers our entire mortgage. So we’re like, OK, we can take a little bit of time with this, which is why we wanted to do it. Then we realized we both work full-time jobs, getting this done on the weekends and like evenings, it was taking up too much time. So realistically, with us delaying the nice rent money that we’re losing by not having a tenant in there, so we were like, we need to just get this fixed up, which I mean, we’ve had delays and life happens and things happen, so it’s still going. But that was again, when we purchased our original — when we made the decision to purchase this property, knowing that her rent covered our mortgage, it’s not anything that we’re losing money on, which is very good in our scenario. But we were like, we’re going to have this done by February. It didn’t get done by February. Then in February, like great, we’re going to get this done, then we had a delay on our appliances. We were still having trouble with the smoke smell, so we had to have the AC guy come in to do more repairs. And so now, it’s about ready and now COVID-19’s going on. And so we’ll see how long it takes us to get into — get a renter into that property.
Tim Ulbrich: Sure.
Jenny White: But that’s again, when you buy, buy smart and don’t overleverage yourself because, you know, we’re still in an OK position right now. So we’re just kind of biding our time.
Tim Ulbrich: And I think that’s a good reminder that what’s coming to me as you were talking of especially on the first property, buy smart, don’t overleverage. You know, when I heard you say one half of the total rent of the duplex covered your payment, that gives you margin right out of the gates, right? So if timing goes on, if an expense comes up you’re not aware of or doing this for the first time, we didn’t realize this or this, you’ve already got options and you have a little bit of wiggle room. So and I love — just kind of bringing this all full circle — I love as we think about the future of investing for you guys and why you’re doing this, connecting this all the way back to having some flexibility and options, diversifying your income, generating additional revenue streams so you guys can pursue travel and other passions and hobbies that you guys have. I also hear kind of a desire and a heart for giving and doing other things that you have options to do. So what a cool story, and I’m so grateful that you both took the time to come on the show to share this. And I think it’s going to help many people that are thinking about hey, I’d love to do this but I just don’t know where to get started. So I appreciate both of you taking the time to come onto the podcast this week.
Jenny White: Yeah, thanks for having us.
Myke White: Thanks for the opportunity.
Current Student Loan Refinance Offers
[wptb id="15454" not found ]Recent Posts
[pt_view id=”f651872qnv”]
