36% Return on Her FIRST Rental Property by Doing What Most Won't

this says real estate rookie episode 287. the number one thing hands down that allowed me to be successful and purchase my first house hack was going to networking events the more you hang out with and meet people who are in the same industry as you you're gonna become similar minded and you're gonna see what's possible when you're around people who are doing the things that you want to do so that's what I focused on my name is Ashley care and I'm here with my co-host Tony Robinson and welcome to the real estate rookie podcast where every week twice a week we bring you the inspiration motivation and stories you need to hear to kick start your investing journey and as always we've got another really amazing story for you all here today but today's guess is a is a little special a little different from our normal guests where it's actually someone who works at Bigger Pockets so we got Danielle Daley on the podcast today and she's got just an amazing story yeah so she talks about where she was before she worked for Bigger Pockets and just the mindset of trying to figure out her quarter life midlife crisis or quarter life crisis I guess it would be called and I I think it might be relatable to you if you are stuck in a job that you dislike or maybe you're in between jobs or careers because you don't know what you actually want to do with your life I think this would be a great listen if you are in that kind of scenario yeah Danielle also talks about and this is probably like my favorite thing that I heard throughout the entire episode was just the the power of her network and how she consistently leaned on people that she had met at meetups or online or wherever it was to mitigate some of that fear that she had about taking that next step and I think if there's anything you take away from today's episode it's really that step about how do you leverage your network and then she also gets into some nitty-gritty at the end about her rinse by the room strategy and how she's able to really maximize her returns by leveraging that strategy so overall just a lot of really great things that Danielle had throughout this episode and then she also shares with what's next so what does she have planned for her next investment and then also the vision five years down the road all right so I also want to give a shout out to someone by the username of joey1982 Joey left with a five-star review on Apple podcast that says I love listening to the show and often listen to past episodes when I've run out of new episodes they do a great job of presenting fundamentals and specific Concepts in an easy to digest way Joey we appreciate you and for all of our rookies that are listening if you have not yet left us an honest review on Apple podcast or Spotify or wherever it is you're listening please take it literally takes like two seconds um leave that honest rating in review because the more reviews we get the more folks we can reach and more folks who reach more folks we can help yes and it keeps me very happy so I don't have to be crabby to Tony that you're talking to monotone the reviews are bad our boring banter yeah Danielle Welcome to the Real Estate rookie podcast thank you so much for taking the time to join us today can you start off telling everyone a little bit about yourself and how you got started in real estate absolutely thank you so much for having me I could not be more thrilled to be here I uh gosh a little bit about me that's a lot to unpack but where do I start what childhood trauma are we trying to unimact today I will spare the details on childhood trauma uh no so as far as how I got started in real estate I actually used to work in Hospitality so it was a pretty long road to get to real estate but I ended up just not being happy with what I was doing and I was just being overworked and underpaid and just generally unhappy with where my career was heading so I ended up uh just making this transition and actually working towards getting my real estate license which kind of it was a bit of a fluke uh I although I loved real estate kind of being an agent was something I thought I wanted and the further down the road I got as far as pursuing my license it just didn't really kind of suit me Danielle can we can we just talk about that for a second because I know there's a lot of there's a lot of new investors who think that in order to become a real estate investor maybe you should get your license first and I feel like we see this question get asked a million times where I'm like do I need to get my license to get started so walk us through why you thought that was a path initially and then what changed your mind yeah I think that is start right you think real estate if you don't know a lot about real estate you think being an agent that's just the first thing that pops to at least my mind and I feel like a lot of others but I went down that road and just realized I want to be involved in real estate I like the concept of investing and I like the concept of owning real estate but I don't know if they want that to be my career I don't think I want to necessarily be kind of like agents are on call that is a demanding job right when you're first getting started that's the grind and I was on the grind I'm like do I want to switch from one grind to another grind not necessarily but I ended up uh just realizing how do I get involved with real estate without necessarily being an agent and that's when I actually found the job at Bigger Pockets and to say that spearheaded my development would be an understatement but working here just opened up the world of real estate and the possibilities yeah so you're you're a unique guest Danielle because you're also an employee of Bigger Pockets just really quickly can you tell folks what your role is here at BP absolutely so I am an account manager on the advertising sales team I've been here for two years now I think it's two years as of next week actually and uh yeah so just I sell advertisements and sponsorships and uh it's been it's been very exciting just being on this team in general can you talk about how Bigger Pockets has actually opened your eyes to becoming a real estate investor I think a lot of people don't even understand that investing in real estate is an achievable thing so what kind of a made you realize once you've found Bigger Pockets that like you could do this so aside from the support and just the tools and resources and Shameless plug of Bigger Pockets just being an awesome source for people who are interested in learning about real estate I think the biggest thing is just being around people who are interested in investing and seeing what they are doing and just being inspired by the fact that they are working full-time jobs they have families they're living normal lives but they're also investing on the side and they're able to make this kind of like their their life's goal of achieving wealth through real estate and so it's not just working at Bigger Pockets that really got me you know interested in and and more engaged with the whole real estate Community I think it's also the networking and the ability to go to networking events and attend our meetups that we have through Bigger Pockets and just external meetups and becoming friends with people who are into real estate just surrounding myself constantly by people who are involved with real estate I think has been the biggest change for me getting involved and Danielle I love that breakdown because I think everything you just said is something that any person listening can kind of expose themselves to like like obviously you're you're in a unique position because you work for Bigger Pockets but the the building the community the surrounding yourself with the with the people who are going on that same Journey that's something that anyone listening to this podcast can go ahead and replicate but I want to take it back to to before you joined BiggerPockets give us a little bit more insight into what you you're doing you said it was it was Hospitality were you you know did you did you love Hospitality so much you said hey I want to own the the businesses that are doing Hospitality were you were you angry and upset just like kind of walk us through how you go from this Hospitality lifestyle to uh what you're doing now Bigger Pockets and being a real estate investor yeah so just hearing you say did you love it so much it makes me cringe because no I know I I fell into hospitality and from all the people I've met in that field that's kind of the the general consensus is people just end up falling into it and it's easy money and it's easy to move around and to grow so I'll take it back I was in college I was like every other college student ever not knowing what I wanted to do with life I was a Psychology major so I knew I loved that but didn't really want to end up in that field so during my college Years I worked as a server as a cocktail waitress as a banquet server like literally everything in a hotel you could think of I did and so when I graduated college I'm like oh wow I um I have no idea what I want to do with my life so I'm just going to continue along the trail of hospitality management and I got a job as a sales and Catering account manager at a hotel so got a little bit of sales experience worked in the admin office instead of on the floor as a server which was cool but I worked that job for about a year and a half and I'm just like this is this is not it I am not enjoying this I am working all the time I don't feel like I'm getting paid fairly it was just everything about it that I didn't love so I'm like let me just try out one more Hospitality job let me give it one more go and I was a food and beverage manager it's a bit of a different portion of the hotel but still within a hotel worked that job for a year and when I tell you that was the most stressful job I've ever had in my entire life I can't even relay that over this interview right now like I I don't know how to express how crazy it was it was 10 to 12 hour shifts six days a week I was working like 70 hour work weeks on average I was managing my God I think there were 60 people under me like something absolutely ridiculous and I was told by someone that I looked up to one of my I guess kind of like self-acclaimed mentors at the time and he said look at the five people above you and see you know in your industry of course if they are doing something you can see yourself doing you're in the right place if you do not like what they are doing you are in the wrong place and I would just look around at work and I'm like this is this is also not it uh this is not what I want to be doing so I ended up quitting that job because I was so stressed out still very lost like still not knowing what I wanted to do whatsoever and I actually quit that job to become a server so I sort of demoted myself to take myself out of this stressful 70 Hour Work Week situation to become a server again uh of course it you know didn't feel great to be a manager and then all of a sudden go back to serving but I did that for a while just because I needed space to think and during that time I was like a personal development junkie of trying to start a podcast and starting a blog and like doing all these random things to just see what sticks and I was uh in Toastmasters and thinking what if I was a motivational speaker and just all these ideas that I feel like I had the space to actually think about when I wasn't working my life away uh but then long story short I got fired from that serving job because I literally right after leaving manager go to serving gets fired and I'm like all right I am I am lost I am having a quarter crisis a quarter life crisis right now so that happened uh but then our friend kovid our old lost friend uh kobit happened and that kind of Spun up my entire life where during that time I was thinking what can I do that's beyond serving because this is just you know not to downplay serving it could be a great job I just knew it wasn't for me I could just feel in my heart like this is not it and so I ended up pursuing getting my real estate license going back to our conversation earlier and I thought this could be cool what if I was a server part-time and I got my license and I could make some extra money and maybe get into real estate in this way and then the universe happened and I got an opportunity to move to Denver because one of my good friends she had a room in in the house she was renting and it was kind of random it was just hey do you want to come move I know you're you're kind of figuring out your life right now what if you figure it out in Denver instead of Florida where I was living and I ended up making that move and during that time that's when the wheels were spinning and I knew I wanted to be in real estate but not as an agent like we were talking about but that's when I found the job at Bigger Pockets and that's when things just started to fall into place as far as me kind of taking this risk and moving and then a couple months later finding this job at Bigger Pockets and then real estate just sort of sort of developed from there in my life but it was a rocky road it really was uh to get there but as soon as I realized working at this company could help spearhead my development with real estate that's when things just took off I think that your story is going to be very relatable to a lot of people that are in that position of I hate my job how do I get out of here or they've kind of transitioned out of what they thought was going to be their lifetime career and now are trying to figure things out what's the next move do I move to Denver and work at Bigger Pockets but Tony I I'm interested in when you worked at your corporate job so when Danielle mentioned that her Mentor had said to her look up at the five people above you do you want any of their jobs did you ever have like any kind of moment like that where you looked and you were like yeah I want to be the CEO or anything like that so I I literally wrote that down Danielle when you said that because I thought it was such a really bad statement because I found myself feeling the same way where this happened to me twice so the the company that I worked at um they were always kind of reorganizing quote unquote laying people off and you know adjusting their their org charts and it happened to me twice where every single person between me and the CEO was fired oh my God happened twice so think about like that fear of like oh my God like do I want to go higher because every time I see someone higher they're they're working more like you said they have more responsibility they have more stress um and they're on the chopping block so I was actually offered a promotion like a year into that role and I said no I was like I'm happy where I'm at like I appreciate you guys believing me but I'm happy where I at where I'm at and it was that second go around where I finally accepted that that promotion and I ended up getting fired like two years later right so it's like the writing was was on the wall right but there's there's this idea of like we were so I think it's so ingrained in us from such an early age that you know you you find a good job you climb the corporate ladder and you don't feel like you're progressing if you're staying at the same role and just me being who I am like I'm someone who's hungry for achievement I'm someone who's hungry to get better being in that same role almost felt like I was doing something wrong because I hadn't I hadn't moved up with that company yet right so there there's this Dynamic that we have to fight where it's like if you are in a role where you're happy uh where you feel like you can do it with your eyes closed and and now that gives you the freedom to maybe allocate keep more time towards building your real estate business sometimes a smarter decision is to say no to that promotion because it allows you to focus on other things 100 and honestly kudos to you Tony for like the one thing as I was listening to your story is you're following your gut and not necessarily logic yeah right you're following what you think is is the right thing because logically take a promotion someone wants to give you a promotion and more money you take it right more money right more money like that's more money less problems not always the case but that's awesome that you also knew you had a larger vision for yourself in the future and it's okay to not necessarily take every opportunity that comes your way if it's not the right one for you so that is that is awesome one other thing that you mentioned too was that your management job was the most stressful job you had ever been in and the first thing I thought about was here you are now working a W-2 job and building your own wealth with you know real estate in that that is less stressful than working for somebody else who's like okay worst case scenario like something happened at the hotel like ultimately it would be on the owners or whatever like that's their business that's their building that's their property but everybody is so ingrained that it's their responsibility as employees which it makes people great employees that they do care but with your real estate if something bad were to happen it would fall on you like you are the owner and real estate is less stressful than it is working a job Building Wealth for someone else and I just think that is so impactful for everyone to listen to is that going out on your own is scary and it can be a risk going out and buying properties and things like that but like in Danielle's situation my situation Tony's situation it is less stressful than working for somebody else having carrying on that stress that responsibility that you are responsible to to someone else I think is also a big issue but Danielle now that you are free and clear from that stressful job and is put it behind you let's talk about your first real estate investment how you felt comfortable kind of taking that leap into your first one absolutely and such good point Ashley um yeah as far as moving into this first deal things started to progress about a year into me working at Bigger Pockets and I just started asking questions of like I'm talking real estate 101 for dummies questions like how how much do I need in my bank account the day that I close on a deal like what what do I need what sort of uh budget should I be thinking of what are the expenses when it comes to buying a house like I knew none of this when I say none I mean none someone said capex to me at a real estate Meetup and I'm like yeah absolutely capex and I had to like go to the bathroom and like Google what is capex capital expenditures for those who don't know uh so yeah I was like very new so it started there how much money do I need to save awesome in my mind I wanted to save 40K I did not save 40K I think I had I think it was exactly 37 000 I had in my account when I went to buy my house I could have done it I think with 34.35 at the minimum and still felt comfortable and still had money afterwards so that was number one how do I save this money how long is it going to take me to save this money just so I feel comfortable you know going into a purchase of a home so I set my goal I ended up saving either thirty seven thousand dollars and then I started looking for houses and obviously reached out to an agent and A lender and went down that journey of uh you know asking around and going to meetups and just seeing like what are the steps how do I go about this and so yeah I ended up uh embarking on searching for homes for about two months I looked for about 30 houses I think yeah I toured it at least 30. and uh ends up finally finding the one after two months but that was uh the gist of this first deal I'm happy to dive in you know a little further so a few a few clarifying statements or questions or both I guess so first I just want to I don't want people to listen to this episode and say Danielle of course you were able to do it you work for Bigger Pockets which is the largest education you know real estate education company in the world like of course you were able to do this but like when you talk about your ability to like uh kind of ask some of these questions it's not like you were coming to me or to Ashley or to Brandon when he was here or to David um and to like all the hosts of the podcast like that's that's not what it was right but you were just now a part of this community and and you were leveraging the entire Community to to kind of get these answers to these questions and is that a fair statement of kind of how things went I'm really glad you clarified that Tony because yes so just I'll even back it up more as far as first getting into the entire Real Estate Network love Bigger Pockets they're fantastic but they they weren't doing this for me right they weren't saving the money for me they weren't analyzing deals on weeknights and weekends they weren't attending real estate meetups and reading the books and listening to the podcasts they just provide the tools it's there if you want it that's you know if you want to end up reading and researching and doing all the things that's on you the number one thing hands down that allowed me to be successful and purchase my first house hack in my opinion was going to networking events not Bigger Pockets related Network events networking events just to clarify external events like I was going to meetup.com and I was checking out what events are happening in the area and I was going at least twice a week to different meetups one thing I want to really make clear because I've heard this from people in the real estate Community just getting started is they feel a little awkward or they feel a little funny going to these meetups because they don't know a lot and they feel like they don't have a lot to provide or a lot to give or like teach to other people when I went I was listening and I was asking questions and that was it I had nothing to provide to anyone I didn't have a lot of knowledge or Insight yet into real estate so my goal as someone who was still new to Denver my dad is to make friends I just wanted to make friends with people who had a common interest as me so I would say at least 80 percent of my conversations were personal and maybe 20 were real estate and that is that is pretty accurate uh as far as how the conversations went I would just go and meet people and the more you hang out with and meet people who are in the same industry as you you're going to become like the people around you it is just inevitable you're going to become similar minded and you're gonna do similar things and you're going to see what's possible when you're around people who are doing the things that you want to do so that's what I focused on I didn't focus on real estate knowledge at first I think that there's a couple things to say a general stereotype about Real Estate Investors and going to a Meetup is that if there is an experienced investor there usually they are genuinely excited to talk to somebody who's just starting out and like it gets them like you know they're more than willing because there's no secrets in real estate every investor shares what they're doing the only exception is if they're trying to sell something at that Meetup and they realize that you don't have a house that they can sell you Insurance on then yes they may kind of Veer away from any conversation with you but real State investors in general are very willing to share knowledge and I think that's such a great part of the real estate investment community and then just go there to listen just like Danielle said that you don't have to chime in you don't have to try to sound like you know what you're talking about my business partner Daryl has like been thrown into these rooms with a super experienced Real Estate Investors like way above my level and every time I'm just just listen you don't have to say anything just stand that's it no one's even gonna know you're there but it's like but it but it's like you just soak up so much knowledge and now like it's been over a year a year and a half that he's traveled with me to these events and he like I will listen in on him like talking and he's like talking about what he knows and he's like feels comfortable now and that took him a year and a half to get to that point but a big part of that was yes he's gotten experience as a real estate investor over the years but also like he would listen at so many meetups so many conferences so many events as to what people were talking about and he never ever tried to make it sound like he knew what he was talking about if he didn't know he didn't say anything or he would admit he didn't know something or he would tell them to go ask me but um I think that's something too and I think people if you are continuing going to the same Meetup same conferences being around the same people I think you'll be a lot more respected too if you don't try and engage and you know just say whatever to be engaging and that you kind of just sit back and listen and ask your questions too 100 I just want to share one tip because you know before I became Tony from Bigger Pockets I'd like to go to meetups also and what I would do when I walk into a room and this is before I have my so you don't like to go to meetups anymore now that you're Tony from Bigger Pockets not what I meant I just mean like this strategy doesn't work as well now because most meetups that I go to like people tend to anyway that's not what I was trying to say um but um you know before when I would go into a meet-up and Sam I was like a an inspiring investor who didn't have any deals yet and it can be intimidating walking into that room but my my trick was you know you come in whatever write your little name on your name tag slap it on your chest and then just find a group of people there's you know people tend to kind of cluster in little and just pick a group any group whichever one seems to be having the best time walk up and say hey do you mind if I join you guys and 10 times out of 10 they're going to say yes yep and then once you get into that Circle you say hey my name's Tony you know what brings you guys here tonight or or where are you at or where are you at in your investing journey and just that those two statements mind if I join you guys where are you at in your investing Journey that can allow you to network in pretty much any Meetup in any room with any group of investors because people are always always willing to share um but you know there's that fear that you have to be able to provide a bunch of value and really you're just there to have conversations and Tony I I do this when people say that oh can I join your circle I always say like yeah we're talking about this and I'm sure a lot of other people do the same thing too as if somebody asked to come and join the conversation there's somebody that will catch them up on what they're talking about or whatever that is or like what I'll do is like you know Danielle have you met Ashley you know like if I'm already talking to Ashley and now now Daniel you've immediately made action with with this other person right so there's yeah there's so many ways to kind of network and I also love your point about like your the people that you surround yourself start to they start to rub off on you I had never seen Tommy Boy before I joined this podcast and now sort of my favorite movies from from that time period you know and uh and so there was some benefits there okay so Danielle you've been to your events you're ready to jump in you go to what was that 30 houses you looked at and tell us about that first one well I'm sorry before you before you answer that Danielle because I don't know if you mentioned this yet but you went to 30 houses but did you have a specific strategy in mind as you were you were kind of going to these different homes like were you planning to flip were you planning to wholesale like what was the what was it like what was the goal yeah great question so going into this I just got out a notebook wrote a couple things on a sheet of paper tried to have my parameters and then I told my agent and we got started so these parameters were a four to five bedroom house sub five hundred thousand dollars for the home I wanted it to be outside of Denver Metro because I didn't want to pay Denver pricing but I still wanted to be 15 maybe 20 minutes max outside of Denver I didn't care if it was south east west north that didn't matter to me it could be any city that was just on the outskirts within a 20 minute radius so that was really it uh and then I didn't know you know necessarily how many bedrooms I needed to cash flow at first I think I just said four to five bedrooms and went with it but the goal that I did have in mind is if I purchase a home and I rent out the rooms and I spend less than six hundred dollars on my portion that is a win right it's Denver I'm consistently told that it's hard to cash flow in the Denver area Denver Metro so I didn't even care if I cash flowed I just wanted to own property and spend less than 600 bucks because that was cheaper than any rent that you can find here anyway I think that's very important to highlight that that is a win and that it's not you have to pay it you know live there for free for zero if you are paying less than what you would pay to live somewhere else that is a huge win exactly great yes great thing to point out and my agent did a really good job at making that pretty clear right not saying like you're not going to cash flow you'll never get it but like just making me understand what do you want in a house it's kind of a mixture of appreciation you don't necessarily have to cash flow because think about when you move out right if you're spending 600 when you're there but then you move out let's say you break even after all expenses when you move out and then you potentially have an appreciating asset that you now own and you can move on and house hack on the second one afterwards so it was just understanding the reality of the situation was really helpful but I will say once we started looking at houses the four bedroom homes were just uh were not really cutting it I was having to spend a little bit more than 600 for a four bedroom house with only renting out three rooms by oh run by the room house hacking is my strategy probably should have mentioned that so yes definitely planning to rent out every room but I realized the five bedroom Mark as far as the cost of the home and the ability to potentially cash flow or even break even was becoming more of a reality as we started digging in and understanding interest rates uh the cost of the home expenses things of that sort and then of course the rent I could get in specific areas so then we dialed it back after maybe I don't know five to ten houses we doubt it back and I said to my agent let's look at only five bedrooms and now I want it to be five bedrooms now I know I can potentially break even and I can I can see you know the the end result here so I think that's an important point I'm so glad you brought that up about you know unicious at four then you transitioned to five which you had Danielle was a buy box you said I want this many bedrooms within this radius this price point for this strategy that is your buy box and we encourage people on this podcast all of our listeners to kind of establish their buy box but here's the thing when you're doing this for the first time a lot of your buy boxes based on assumptions and as you go out there and you actually start to look at properties you actually start to analyze move and submit offers you start to either uh disprove or prove those those assumptions and for you you thought that the four bedroom was like the sweet spot but as you started to look and analyze you said you know what actually it's not the four it's the five makes more sense so I think the lesson here for all of our rookie audience is that you don't have to be perfect when you initially come up with your buy box you just have to have something to kind of point you in the right direction so you're not looking at every single property that hits the MLS anywhere you want to be able to narrow it and focus down and as you start to take more steps you can refine it further and further and it seems like it worked out well for you so I'm after these 30 properties Danielle did you did you kind of find one that eventually checked all the boxes for you so this is an interesting one right when I found or not even found when I first toured my current house that I bought I did not know it was the one at all sort of reminds me of dating right like you don't know what the second you meet someone you got to kind of you gotta kind of date the house a little bit see if it works right like run the numbers whatever pros and cons list so I didn't know I actually remember the day that I saw that house I left and I was still thinking of the house and I realized the one downfall that kind of made me hesitant was my home has a negative slope so a negative slope is basically there's a basement right but the outer Contour of my home the sidewalk caves in a little bit towards my house that is not good for a house because rain water snow I smell things like that could potentially leak into the home which is obviously not good so that made me really nervous now going back to networking I had met a friend through a networking event we had been friends for almost a year at this point and he is a structural engineer that is his job so lo and behold you know I'm I'm struggling trying to figure out if this is the right house to buy and I think oh my friend he's a structural engineer let me give him a call and I called him told him the issue sent videos and pictures and I'm like what do you think I am stressed out I'm I'm scared I really like the house the numbers work I I think I can make this happen but this is making me nervous right is this a structural issue is this something I should be concerned about he put my mind at ease and he looked it over and said not at all he was telling me about vertical worst versus like horizontal little cracking in the foundation how much of a slope or elevation this is and where and just doing his Structural Engineering thing and he just said absolutely go for it so this seems small in the grand scheme of things but I tell him to this day like that that made up my mind to buy this house because I was scared I don't know if I would have gone through with this if I didn't have someone who was in The Profession to be able to put my mind at ease and that one little thing was from going to meetups and networking events I wouldn't just have a structural engineer you know uh in my phone like who who knows a structural engineer if you're not in real estate it's they're not as common so that was just a really cool thing to be able to call a friend and just feel better about the deal you know I think things and this is for anything in life really trying to achieve something that you've never achieved before oftentimes seems impossible it seems scary it seems dangerous it seems risky and all you think about are all of the the worst ways that this thing can go wrong but the the fastest way to overcome those obstacles is to meet someone that's already done it you know they they talk about the the four minute mile I don't know if you guys have heard this story but like for years for centuries of of the existence of manhood they thought that running the four minute mile was impossible and I think the guy's name is Roger Bannister he was the first guy to to break that record and then a month later someone else did it so for the entire existence of humankind it was impossible to do this one thing then one person does it and 30 days later someone else does it and now you got people doing it all the time right like I could probably train to get down to a four minute mile if I wanted to because the the the perception of what's possible has changed because now we know someone that's done it so when when you're a new real estate investor I think one of the best things you can do is find people is meet people who are not always 10 steps ahead of you but just one step ahead of you someone who's taken just one step further than you because then when you get to that step they've just done it and it's recent and they can give you all the ins and outs about how to do it so if I ever want to buy a house anywhere in Western New York I'm gonna call Ashley and I'm gonna say Ash help me out with this right and if Ashley ever gets stuck on a short-term rental she's probably gonna call me and say Tony here's this thing going on with this guess like what should I do so the the networking thing Danielle I love you keep coming back to this there's so much power in it but I think so many people undervalue um the the strength that comes from having a good network of folks on our rookie replies I I literally changed some of the questions so that they're tailored to what I need Danielle I really want to go like into the numbers of this deal when was this time frame though that you actually purchased this property so the closing day was September of 2022 is it yes we were in 2023 so September 23 and I started looking in July of 2022. so it took me about two months when I found the deal interest rates were kind of teetering from crazy covid low interest rate times quickly climbing so I was getting a little stressed it was changing literally by the day as far as you know when I was looking to when I actually closed on the house but we ended up closing with a 5.1 I say we I closed with a 5.1 percent uh interest rate I think it was at about a 5.5 at that time and we I had a five thousand dollar seller concession that my agent and I ended up negotiating so I bought down the rate with that oh okay can you talk about that a little bit as to that kind of option of how someone would go about buying down their rate to get it lower yes so what is cool about a seller concession is you are literally just getting money from the seller to for you to use towards whatever you would like if I wanted to use it towards just general closing costs or to use it for you know something with uh improving the home or if I wanted to use it to buy down the rate it's just free money to you to use now the cool thing about a seller concession in my case is there were actually two deals on the table there are sorry not two deals there were two offers on the table before I closed on my deal offer number one was an FHA loan and they were offering 400 um what was it 489 000 which was the list price for the house so flat rate at asking FHA loan so what we did I was at a three percent conventional which for those that don't know that exists it totally exists so it's literally less money down than an FHA loan but you're still at a conventional loan which is beneficial for getting a deal done it's just more less friction you don't have that inspection yes yes you don't have the inspection less friction was a great way to put it Tony and yeah so it's just easier to get a deal done with a conventional loan versus FHA so I had the three percent conventional and so my agent and I were talking he's like let's just offer 5K over asking with a 5k seller concession now what that does is it's a win-win it is a win for me because I'm getting a 5 000 concession to buy down the rate and as an investor I don't really care about the asking price I care about my monthly rate I care about my numbers am I able to break even or cash flow or spend less than 600 bucks whatever my my goal is so it's a win for me and it's a win for the seller because they're getting five thousand dollars more in asking so it's kind of just a nice win-win and so we offered that and with that in addition to the conventional loan my offer ended up getting accepted over the FHA it was just a like a it seems weird like to just uh kind of finagle numbers ever so slightly to make it work in your favor but it did so seller concessions can be really powerful would you have known how to do any of that without the assistance of your agent because just this episode the couple times you've mentioned your agent or things like that it seems like they were a very valuable tool to you absolutely so I would not have known what a seller concession is like the whole process was just scary you're just signing your life away on this contract I'm like yeah five hundred thousand dollars like as if I have that kind of money absolutely sign me up for a 30-year loan for half a million dollars so no I did not know at all my agent was extremely Paramount in that and how did you find your agent through my network so it was through people at Bigger Pockets that have used him through people in my network at meetups just generally through networking yet again my Shameless plug to networking uh for the 10th time in this in this episode that's what I was hoping the answer was going to be not oh I just Googled and found definitely a networking okay but Bigger Pockets does have a great resource what is it a biggerpockets.com forward slash agent finder I think is the URL so you guys know that you can get a bunch of investor friendly agents to help you let's say win the Danielle's agent helped her yep super useful tool what about the funding of this so you said you got a conventional loan with only five percent down yes uh did you go and get pre-approved how was The Lending process for you because I I'm assuming here but you're doing ad sales with this uh commission based job and then before that as a waitress did I don't know how much income I showed yeah yeah I you know with tips and everything but um how did that work out is from going from the management position to working as a server and then working to Bigger Pockets and I'm I'm just assuming commission based yeah so you assumed correctly it is definitely commission it's salary plus commission and and this was an entire uphill battle let me tell you this was probably my biggest aha moment that kind of freaked me out and almost stopped me in my tracks so when I was first looking for a lender I had been told by my network to talk to several people right shop around talk to several lenders don't just find one on Google and pick one like shop around talk with people on the phone tell them your situation ask questions the whole nine yards right just trying to find a lender the first lender that I talked to was actually someone I met at the gym just through Word of Mouth just telling people I'm looking for a house and he's like I'm actually a lender so we set up a call and I told Tim I had only been working at Bigger Pockets at the time for a year so we end up doing the pre-qualification he gets my information and all my income and everything he needs right um and so he ends up telling me that you do not qualify for anything more than I think it was like 350k for a house because we can't count my commission since I have worked there less than two years so he was basically telling me you need to hit two years for more than half of your income to count Danielle can I ask you one thing too is you had lived in Florida before yes was the cost of living lower where you were living in Florida than moving to Denver yes or was it equal yes no definitely most likely your salary in Florida too was like if you showed part of that at the income I just want to like show if somebody is thinking of making you know they're low relocating or you know changing jobs that if you maybe you have this great job now but the loan officer could go back and say okay we've had this job for three months but your last year's tax return only shows this much which may have been a great amount in that City but maybe not have carried over to a more pricier place of living like Denver yeah so that the serving job that I was in before moving in Florida I think I made 30 000 in 2020 which is not livable even in Florida just to be transparent of what I was making like this is not you know uh this is this is money that was fully made through taking that plunge of moving care and taking a risk and living in a market that is obviously more expensive but there's also opportunity to make more so risky but it paid off but this like as the the lender was looking towards my financials we weren't even looking at that serving job he was trying to base it off of the year that I was at Bigger Pockets because that serving job was so low that income was not helping me at all so we were trying to look forward because I had made a good amount during that year at Bigger Pockets so that freaked me out like that was one of those moments where I just thought everything through I'm like am I not going to be able to buy a house am I in over my head uh I think I cried to my parents for the phone just kind of super upset and I'm like my dreams are crushed it's never gonna happen and um I end up just the next day I'm hustling getting back on the phones just trying to call around to different lenders and finally I end up talking to a lender that I found uh through word of mouth and he's like yeah we can get a year of commission no problem or we can make your commission count for only working there for a year so I'm like amazing so we ended up making it work but it was definitely slightly soul-crushing to hear that in the moment right to hear someone telling you you can't do this like I'm not going to be able to buy the sort of house I want with 350 in Denver it's just not going to happen so yeah so when you're when you're told no gotta keep going yeah there's so much value in going to more than one person um because every every lender has a different skill set every lender has a different specialty every lender has different resources at their disposal that they can use to help people get qualified or different loan products that they know about yeah so I I think one of the best things that a rookie investor can do is talk to as many lenders as they possibly can and you know be open and upfront to say hey I'm just shopping around right now trying to understand what your options are but just know I'm also talking to a few other lenders to try and get the best possible loan product for for my unique situation and there's nothing wrong with doing that as long as you're open and honest um Danielle I wanna I wanna talk a little bit about the the rinse by the room strategy because it it's definitely a way to maximize uh profitability on a traditional single-family residence but there's also I think some some challenges that that might come along with renting by the room especially when you're house hacking and renting by the room because now you're sharing your space with multiple uh other people so a few questions that come to mind to me first are when when you go to find these people how are you marketing to find those people what's your screening process to find those those people and then once everyone's inside of the house what kind of ground rules are you putting into place to make sure that uh you guys aren't driving each other crazy kind of sharing the same living space yeah great questions I'll start from the beginning here as far as finding tenants this might not be the way for everyone to do it but I like Word of Mouth for me right I'm just I'm outgoing I like meeting people so for me I was telling people everywhere I went from the gym to these meetups to my Toastmasters group to like just literally telling everyone at work that I was buying a house and that I was looking for tenants by X date so I was at the gym and I ended up um I was friendly with this one guy and we just like talk and say hello and um I saw him one day and told him this he's like I actually know two people who are looking to move from Fort Collins to Denver and I think they're looking to move ASAP so let me connect you with them long story short I found my first two tenants from this friend at the gym like literally I'm I'm not even exaggerating this whatsoever and they have been the best tenants that I could ask for so that was number one was just telling people before I even made a listing I did not own the home I was telling my friend I am in the process of closing on my house and so I'm gonna start looking for tenants so be proactive start posting and looking before you even close worst case scenario you just take down the listing so might as well start early the number two or phase two I should say of finding tenants because I still have two more rooms to fill I posted on roomies Facebook Marketplace hot pads which is kind of a like a sub sector of um Zillow if I'm not mistaken because you can't post rent by the room on Zillow which I learned and I did not know until I went to post and you can't do that on apartments.com either apparently it has to be like a whole unit or a whole home and not just a room yeah I didn't know that either yeah I my posts got taken down right away so if anyone knows otherwise please reach out and let me know but for for my purposes it was not it was not allowing me to do so so out of all of those Facebook Marketplace was hands down the best lead capture tool I should say I think I got about 20 to 25 people reaching out and this was during fall approaching winter which you know if you're in the real estate Community or you're new to it winter's not the best time to find tenants usually it's not impossible it's just not the most popular time for people to move especially in a state where it snows and it's cold so yeah so Facebook Marketplace was the win for me so I got all these leads coming in I have been told and did my own research and realized I could be as picky as I wanted to with the tenant that I accepted because I was the primary and living in the home currently now if you do not live in the home you end up facing some fair housing laws and you need to be careful with who you're accepting and why or who you're not accepting and why so I ended up you know just to kind of be a little picky and like trying to choose someone who was just similar in a similar uh you know phase of life as me so I would reach out to these people or I'm sorry I would reach back out to them after they reached out to me I would set up a phone call we'd have a quick phone call if it went well I would ask them to come see the house and we would set up a day for them to come and visit if that went well then I was using this tool called rent ready they're fantastic it's a property management tool and you can send out pre-qualification sheets you can send out applications and the person literally just presses a link pays for the application and fills it out without you having to do anything aside from just sending it to them initially it's a super easy tool and that's what I used I would just go through that get that pre-qualification see if their application was accepted and eventually two of them worked out that's awesome yeah it worked out great one of them was actually not even living in Denver so she could not see the house so she was very easy going like she literally could not like we did like a little Zoom call but she couldn't get there in time to come see it before actually signing a lease so we just did yeah we just facetimed and I just showed around and that was it just just one follow-up question you mentioned the phone call just what like what did you ask did you have like a templated instead of like slate of questions you would ask each person or was it just like hey let's get to know each other like were you looking for something specific or was it a free-flowing conversation so this is where my friend Google came in and I went to Google and I said what questions should I ask a potential tenant and I think I also went on Bigger Pockets and I asked Bigger Pockets on the forums I also asked around with a few friends and just said like what should I be asking I don't really know what to ask so that was really I kept it mostly casual just to kind of get to know them and just feel you know if it would if I felt like it would be a good fit but yeah I literally just Googled and asked people and came up with a few specific questions wrote them on a notepad and had these calls and that was it I didn't overthink it too much it's like chat GPT could probably help with that too we just talk about this episode so I'm screening tenants to move into my house while I house hack what questions should I ask them and you know probably get some good questions from that so literally I'd have a whole script yeah I know exactly what to say Danielle I did want to know like what's next so have you done another deal are you looking for another deal has your strategy changed at all are you pivoting what does the future hold so I would say for this next deal I've been thinking a lot about it but I think I'm gonna just do another house hack right it's just for me it was such a low risk High reward investment in my opinion because you have to live somewhere you have to pay rent or not if you'd have sex but I think I'm gonna just do something similar however I would like to diversify and look in a different part of town so I live in North Glen which is north of Denver by about 15 minutes North Glen is amazing for breaking even to cash flowing I am cash flowing actually about 250 right now so it's you know I'm basically financially free so I might as well quit my job what will it be when somebody moves into your room oh probably cash flow about eight to nine hundred after all expenses at this rate wow that's awesome yeah give or take somewhere around there and then what did you have to spend to put into that property to purchase it so my purchase was about I think I spent a little over 20k like 21 to 22 000 and then I put about seven to eight grand in renovations so let's say in total about 30. yeah so that's gonna that's a 36 cash on cash return once you move out so that's that's pretty darn good yeah and think about the appreciation too in Denver exactly exactly and that's that's kind of the note that I was I was going to make with diversifying and potentially looking for a different area is you know places that are a little more West a little more to the mountains or a little closer to Denver they have a higher chance of appreciation at a higher rate than where I'm currently living but I'll be able to cash flow where I'm currently living when I move out so it's kind of this give and take of maybe I want to get something that's slightly different just so I feel like I'm diversifying even though it's I'm looking for the same strategy and as far as that five bedroom house hack rent by the room and I think it's also worth noting that house hacking is a comfortability skill right like I If I had all the money in the world and it was not an issue would I want to live in the house by myself absolutely I would love to have an office us and like a yoga room and just a storage room for no reason you know that'd be great but when you think of the benefits of house hacking and how you can build wealth through such a and on hand you know simple not easy but simple way of building your wealth it just the comfortability scale like you just you accept it it's okay to live with four other people and you're only doing it for a year or two so it just makes sense well Danielle this has been great uh thank you so much for sharing all of your knowledge with us um we do have one last segment for you before we close out the show and it is the rookie exam oh the first question is what is one actionable thing rookie should do after listening to this episode oh I love it okay depending on how Ricky you are I would say go to a Meetup if you have not been to one go attend it's gonna be uncomfortable you're going to be nervous it's going to be a little awkward too but just go and be consistent and then number two for you rookies who are potentially looking at houses you have the money saved you're maybe just a little bit scared just take action and understand that everything in life is a risk like you just being alive is risky you're not making that making it out of here alive so might as well just take some risks and go for it because there is not a lot of downside to what can happen I mean and the end of life like money is just money wouldn't you want to be more proud of the things that you took the chances to pursue and and things that were exciting and new and I don't know just take some action and don't be afraid because life's just scary enough might as well you know try to go for your goals and dreams all right question number two what's one tool software app or system that you use in your business I'm still pretty uh I'm a noob if you guys haven't gotten that already right I'm one property and I'm still a noob here I use a lot of Google Sheets but I think the one tool that I'd use that's been really helpful is rent ready and uh that's the property management software it's just made it really easy to manage tenants and the rent is automated like I on the first instead of being afraid of having to pay my rent or pay my mortgage I'm just getting these notifications rent in unit a paid red Unit B paid like it's just it's a nice feeling to get those automated uh you know emails flowing through okay and the last question is where do you plan on being in five years in five years it's a lofty goal but I see myself being financially free and financially free for me it's not being a millionaire it's just where all of my um my passive income is exceeding all of my expenses so that I am deciding everything I want to do in my life like if I want to keep working if I don't want to work if I want to travel Etc I'm in full control over my finances and I don't necessarily have to work if I don't want to though I probably will still want to but yeah Financial Freedom in five years I don't know how many properties but at least five awesome well let's uh jump to our Ricky rock star before we close out today's episode and today's rookie Rockstar is Giovanni Lisi and Giovanni says first house hack in the books last week I bought my first investment property that I'll be owner occupying it's a three unit building with a detached garage one's vacant and the few Giovanni's already started Renovations on to make a little more modern but he's anticipating that with some improvements cash flow would be around 900 per month while still living there and if I ever move out it jumps up to twenty two hundred dollars per month um and uh yeah it's looking for the next one so Giovanni congratulations to you for crushing it with the house hack Giovanni you got to get on the show well Danielle thank you so much for joining us can you let everyone know where they can reach out to you and find out some more information about you or if they want to sponsor the podcast absolutely so yeah my as far as social media I would say my Instagram is the most active so you can reach me on my Instagram it is Danielle F daily d-a-l-y it's my last name and then yeah if you're interested in anything podcast advertising related here's my Shameless plug reach out to me at Danielle biggerpockets.com hopefully those are two you know easy handles to remember in an email but yeah reach out to me I'd love to connect okay well thank you so much for joining us I hope everyone took away so much value like Tony and I did from this episode I'm Ashley at welcome rentals and he's Tony at Tony J Robinson and we will be back on Saturday with a rookie reply still yeah [Music]

Channel: Real Estate Rookie

Views: 25,207

Keywords: rental property, first rental property, house hacking, rent by the room, what is house hacking, house hack, how to house hack, buy a rental property, cash flow, passive income, how to buy your first rental property, buy your first rental property, denver real estate, real estate investing for beginners, retire early, early retirement, real estate, real estate cash flow, live for free, how to live for free, invest, biggerpockets, real estate rookie, real estate rookie podcast

Id: 50zWNuSOrTU

Length: 60min 46sec (3646 seconds)

Published: Wed May 17 2023