Single Mom to 60+ Unit Landlord and an Update From Ashley Hamilton

this is the BiggerPockets podcast show 674. I put myself in a position of tenant right the number one thing that I did I kind of over improved my properties and again investors you're new here you do not that's not always advice it just depends on where you're at but obviously I might spend three to four five thousand more on a project but this person wants to say forever or at least three to five years I know it's a business but I constantly relate to my tenants that hey I'm a single mother or I've been in your shoes and I feel like letting them identify with me versus I'm just the big box landlord that really helps me with turnovers what's going on everyone this is David Green your host of the BiggerPockets real estate podcast here today with my co-host Rob abasolo bringing you a fire episode in today's show we bring back Ashley Hamilton one of our most popular guests we've ever had on the podcast Ashley is a Detroit Michigan investor who is crushing it in her space and has evolved quite a bit since the last time we had her on she has a fantastic story that I know you're gonna love Rob what were some of your favorite parts of the show honestly this is a crazy full circle moment for me because I remember the first episode that she did I was in my garage I was cleaning my garage uh it was like 7 P.M it was in the dark people were like why is this guy like cleaning his garage at night and I was listening to this and I remember thinking her story was so insane like one of the most inspiring stories so my favorite part about this episode is that we had her back on and she's actually able to top the original episode which I think was episode 331 if I'm not mistaken yes it was 331 and Ashley did not fail to deliver you're gonna love this story especially if you're someone who's had a hard time getting traction or you can't figure out which Market to invest in or you don't know why it's so hard to get a deal Ashley has a lot of good advice from all those perspectives Today's show went a little bit long so I'm gonna make the intro short here and I'm just gonna remind you you don't have to listen to a whole podcast in one setting it's okay if you have a 45 minute commute to listen to a 55 Minute Podcast just listen to the last 10 minutes on the way home before Bringing Ashley today's quick tip is consider because all of us don't like high rates interest rates have been going up just consider that the lower that the price point of the home is and the lower the loan balance the less important the interest rate is when you get into these lower priced homes really high rates have much of a smaller impact on the mortgage than when you're at a high price point oh I have a I have a quick tip as well can I can I throw it in yeah let's hear all right I've got a uh or as I like to say a quick quick tip when you're thinking of an acronym and you want to Brand yourself in the real estate industry just make sure that you think through all the different possibilities of what that acronym can mean before you go out and mass Market it if you're wondering what I mean by this just stick around to the very end of the episode and I think it's going to make a lot more sense very nice Rob I like you bringing it out so make sure you guys listen all the way to the end because we have a very very fun and entertaining moment at the end of the show I think hey by the way I think that's the most I've ever laughed on Bigger Pockets BT dubs so just stay tuned for this it was pretty good Ashley you did a great job all right let's bring in Ashley I remember when we did our first episode with you you made such an impression on so many people I think because like 98 of our audience was like I see myself in her I've been there I felt that I've done that so it in the past we would focus more on like tell me the strategy tell me what you did right we're gonna get to that but we want to start off with more this is why it mattered this is what my journey was like this is what changed when I finally decided I'm going to use this strategy right yeah so everybody says oh I want to get in real estate for my kids right but I had to get a real estate for my kids so at age 18 I was a single mother of two and I got marched to the welfare office right because I needed government assistance I needed food stamps I needed child care when my daughter just turned 18 in December I marched her in a bank she has a business of 700 credit score um you know what I'm saying she has her college that completely paid off and all that was done by one property right so I had four pillars for my kids and as for them to own an investment property to to have their home their car free and clear to have college with no debt and to have a good credit score so that was just a big change right me at 18 versus my kid at 18 so then that would go back to why why it's so important and a lot of times we don't see that because we're waiting five ten years from now but just because I was blessed for my daughter to just turn 18. now I can see my why and why it was so important but it was really to break the generational curses where I started in life and in real estate with a severe disadvantage my daughter is now starting with a severe advantage and even if she chooses to work at McDonald's she's still there so when I was 17 years old I had my daughter she was premature she was two pounds seven ounces 27 weeks and I had to leave her every single day at the hospital right I was a senior in high school so I knew early on that I had to change my life I didn't know it was going to be real estate but that was because I didn't want to leave my daughter again every night or hand her over today care or anything like that so I knew that for one I had to change my life so that I could have freedom to spend time with my kids and for two I needed whatever I chose to be where I can still be at home with them and I didn't have to hand them over so to fast forward when we got our first property they were three and five like my son held the flashlight and my daughter was with the screwdriver and we were changing the locks ourselves so you know I didn't have a babysitter but I still got that didn't have to drop her off so real estate was able to do that for me yeah that's yeah that's uh it's a very inspiring story Ashley and uh let me just say as a former listener of the show now I'm the co-host so this is an interesting experience for me you your story is perhaps uh the most remembered story um that I've heard on the Bigger Pockets podcast because way back when I listened to it every day I remember hearing your story and thinking oh my God she is killing it like what she has created is something that um that's just so inspiring it really did push me in my journey and I don't I don't like I don't I truly mean that like I remember your story so clearly but for for those of us that um are just catching up can you remind us you got into your first property what how did that happen because I know that you you said it was difficult then you you I think you were waiting tables um I know that there's some some adversity there and so I'm kind of curious like how hard was it to get into your first property knowing that something like this could you know it's a big risk right and and when you're working so hard any any crack in that system could really really crumble like your daily routine so what was that like even jumping into your first property absolutely thank you for that so to be honest it wasn't a scary situation because where I came from I had no you know Real Estate Investors no business owners so I never really had anybody to say oh the people can not pay their rent the contractors can run off with your money so I'm thinking this is a piece of cake I had heard a saying be greedy when others are fearful right and that has literally stuck to me for the my whole investment Journey um and I left the seminar cut on the radio and everybody's like don't buy in Detroit right cutting my headphones Bigger Pockets Josh dorkins who I love and I literally tackled to this day don't buy in Detroit so I took that as this is the sign people are being fearful of Detroit but I live here and I see it's nothing like I see on TV so that was like hey this is confirmation right that Warren Buffett Co quote and turning on the news and everybody's saying not to buy in Detroit so I literally picked up the phone on the first listing I seen and they were like the house is six thousand three hundred dollars like that's it so that's another reason why it wasn't so much as fearful because like if I if everything went wrong essentially I only lost six seven Grand you know what I'm saying obviously it was detrimental to me because I was significantly under um income or lower income come but I was spending my tax returns every year anyway and didn't know where they were going in three months so if I lost everything it would have just been the same as if I went out and went and took a fancy vacation or bought a car that only would last three to five months anyway okay so you buy this house it's uh 60 in the six thousands and then you're like okay I'm good I'm gonna call it in I'm good with this one house uh what actually happened like what happened after that yeah absolutely so when I got it it would just like take the problems as they come so I need a new Plumbing furnace hot water tank so I said hey I need new Plumbing let me find some plumbers so that's what I did just basically handle problems as they came but this was not like your dream house right so when everybody's younger you watch HGTV you're like oh my house is gonna have granite countertops and beautiful view like no it was not a house that I was proud for everybody to be at but it was saved there was no vacancies no burnt down houses and it was a park right close to the house so it was a perfect location it just wasn't like glamorous so I said you know what I'm gonna do this every single year um for seven years when I turn 30 years old I'll have 10 properties and I'll retire like free right so my whole goal was to stop working really really early you know I didn't know about fire none of that stuff but the goal was to stop working so I'm kind of like the lazy like being lazy motivated me but I mean I call it lazy but more so control and freedom right control and freedom yeah I don't think you can ever really say that you're uh you went full time in in real estate to stop working I mean obviously there's a lot of work that goes into it but maybe it just doesn't feel that way because obviously you're really good can you give us a quick snapshot uh when you you know when you did the last episode I believe that was episode 331 where did your portfolio stand at that moment and where are we at today can you just give us like a little snapshot just to refresh everyone at home yes I would love to so this is so funny so when I was on the first uh Bigger Pockets I thought I was done honestly I was probably I think I I was like 33 something like that 34 um and I had 10 properties free and clear and I was Cash flowing though so what's most important that I was Cash flowing 7 000 a month and I owned my primary free and clear so you don't have to be a multi-millionaire to retire early right you just have to live below your means so my expenses were like 25 to 3 000 right and I'm making 7 000 a month whether I wake up brush my teeth whatever like no matter what I did I was gonna make that monthly so I thought I was done and that was 7 000 a month but those were free and clear so I didn't have any debt on the properties right so David I got his book and uh just just talking to them I feel like David like beamed down on me some stuff and like in my mind but didn't say it but I just felt it and I just got like on a frenzy I was like you know what I'm not done I need to use this thing called Leverage and bird would do what David teaches so read the book um literally so the interview came out in May 29 19 in August 2019 I decided to start buying again and when I looked up in August 2020 so that was one year I had purchased 11 more doors so talk about 10x with Grant Cardone I collapsed Time by 10 years right so what essentially took me 10 years to do I was able to do it in one year by using leverage right so that was the one year so out from 10 doors to 21 doors in one year just from being on the Bigger Pockets and David secretly beaming down that I need to use Burr in my mind right um so today I have 35 units so 35 doors so I've also so in the last three years I've bought about 22 properties and then I'm under contract which is uh it's a quick closing because I already had knowledge of the deal so I'll probably be closing about 20 days on a 31 unit apartment building that I'm buying all cash for 300 000 in the city of Detroit um so that's where I'm at today okay wow that is highly impressive uh you have scaled up very very quickly I mean you said that was in 2019. yeah absolutely so what I feel like is that people thought that because I was on there saying I own all my properties free and clear that that was my strategy and that I chose to do that no when you're poor and you're starting with a severe disadvantage my disadvantage was I didn't have time I didn't have money I didn't have credit or I didn't have knowledge right the four things that you need so I didn't have any of those things so I had to buy all cash I was blessed enough to be in a market like Detroit I had never had a thousand dollars in my bank account at one time in my life except for when I got my tax returns right so it all just worked somebody that's severely disadvantaged um never have any uh money at one time making 20 000 a year um in in as a waitress and just the fun fact I make twenty thousand a month just in cash flow off of my portfolio so that's the big aha so going from 20 000 a year to twenty thousand a month and real estate was able to do that but again a lot of people assume that I chose to do free and clear and I'm like oh you could have did it much much faster right you could have owned triple what you own now if you just had used leverage but everybody is not in that position not physically either with credit money and stuff like that but the mindset right you cannot just go into this journey without having a strong mindset so yeah I could have went out used leverage and bought 30 properties in 10 years right or 100 properties in 10 years but what I had would have had the foundation that solid foundation to sustain right to make it through two recessions um and covid right I don't think so um especially when you know when I first started I wasn't even interested in Section 8 but to have people not pay their rent in two years like I could have literally lost my shirt and so many investors did and I literally tripled my income during covet to I couldn't even qualify for anything you know but that's just my strategy you have to be able to conform but I want to do it longevity right so yes I delayed gratification in the beginning but it has allowed me to do so so much more versus starting off very very high at the top and then having to scale back totally David what's this like man I'm sure you hear a lot of people that reach out to you and they're like dude I love your book but what's it like hearing someone like Ashley with the success she's had using the bird strategy and scaling up how does that feel how does that make you feel over there you know it made me think about Brandon often said when he first read Rich Dad Poor Dad he said something like this book put towards the feeling that I've been having the whole time and that creates a connection right what Ashley was saying is that I don't know if it was just the content itself was helpful I mean as part of it it sounds like it was more David is thinking the same thing I'm thinking he's feeling the same thing I'm feeling we're looking at the world from the same perspective and that is really what a like a connection tends to be when you meet a person and they see life from the same perspective that you see it from when you meet somebody who looks at it very differently it can make you think it could challenge you but you don't usually feel close to them and I was thinking it's funny that Ashley says that because when she told her story in episode 331 I felt what she was going through I resonated with her struggle I was like oh those are very familiar emotions growing up seen everybody around you that thinks a certain way living under this this thought or this belief that never goes away that you don't deserve more out of life and you're lucky to even have what you have and you're never going to be those people that you know you see that have either a better body or a better car or a better life or something right like well that's just for them I never will belong in that world and always be in the window looking in like where could I get it and that desire being so strong and then you find the doorway like you stumble up across the door when you're looking through the window and you're like I could get in there too and you just hit it with this fury like I'm gonna do everything I can when Ashley told her story I remember just thinking oh I know what that felt like it created that connection to where we're on the same page and the next that I had was like isn't it cool that real estate something that's like boring as buying houses can actually create such a connection between the people that are doing it because we're all on this journey to go from where we don't want to be to where we are and so I live on the west coast Ashley's out in Detroit is that considered East Coast well Midwest Midwest but closer to the east right like we come from very different backgrounds we don't look the same but we have like the same heart that beats inside of us and real estate brought us together so it's cool to hear that my book did that but it's also cool that we get to have Ashley on the podcast so that everyone listening who I know we're not the only two that experience those emotions or go through that they they get to relate as well yeah so Ashley I know that you're a really big believer of having to go slow to go fast can you take us a little bit through that philosophy and how that guide your real estate Journey now yeah absolutely so it's a little bit what we just talked about before about you know just doing the one property a year right um most of it's because what I could do right so a lot of investors overextend themselves and um obviously I was listening to a podcast before and David talked about this a lot where um you know you want to go out and buy 10 doors right all at once or you want to go buy a lot but then you're not really gonna cash flow so the deals that that David's doing now he's not expecting to get the cash flow or the benefits right now he's expecting to get that in three to five years right so obviously when I was on the pocket I had a ton of people reach out to me and a lot of people bought properties in Detroit or just anywhere and they were expecting to use the bird method and like just keep you know adding fuel to this which is great but they also wanted to quit their job as well right so you cannot do that that's the biggest thing I would say as far as going slow so when I bought my first investment property um I didn't just say I'm gonna quit my job tomorrow right I essentially had a plan that I was gonna buy another house every year until I was 30 and then that's when I would consider quitting so at one point I was making more than my my general manager right on cash flow but I still went to work so that's another big thing people are so quick to just leave their job right away so essentially I feel like the solid foundation and what really helped me was essentially for the business after each investment property I bought I reinvested the profits so I essentially took a job for seven years without taking a payment right can you imagine being on your job getting a paycheck for seven years straight and never spending it that's what like added Rocket Fuel to my second Journey because I delayed the gratification I wasn't depending on the the ten units free and clear for my income I still worked right and it wasn't because um you know well first of all was because I was young right now I just believe in hard work but mostly it's because I I wanted this to last longer right and then also another mistake I feel like people make is that when you're starting at a disadvantage like you cannot just go and do everything so as soon as you make your first 100 Grand you're going out to buy a Ferrari or whatever the case may be no because sometimes you have to reach back and you have to help your family or you have to delay the gratification again so that you can break those generational curses so again I know everybody wants to start fast and just you know but really think about what is it really meant right what does it really mean when you be real with yourself so for an example when I told you guys when I first came on the show I had 10 doors free and clear that was seven Grand a month I know people that own 40 unit apartments that don't even make seven Grand a month right so that's another another aspect to it just being clear what you want and delaying the gratification so you get what you want sorry for the long-windedness no you don't I actually just got done at a retreat teaching on this concept that I called portfolio architecture I don't hear it talked about very often but it's the idea of looking at your investing as opposed to an individual property like what is this house what is this cash flow what does this do and then the next property is like its own thing instead it's having several properties that all form like a form of a living organism so you don't want if you have a human body you don't want 14 feet and then you don't have a hand so like different asset classes build wealth in different ways and balancing them all out is kind of how you build a successful sports team a successful business even in a family you have people that perform different roles in Detroit I think when you started actually you're sort of limited in the type of asset that you could get your hands on it was like get it and then pay it off and then at a certain point you realize okay I don't want to have do this forever this one method let's bring some diversity into this and then maybe develop some Synergy so can you tell us how did your portfolio develop and then what made you choose the assets that you were going to bring in because like you said some of the properties that I buy casual right away but many of them I already have enough cash flow those are set to be more valuable three to five years down the road what's your perspective like on that yeah absolutely so I am a die hard I identify myself as a DIY Buy and Hold investor and I know it's frowned upon right I know it is but just so my lifestyle that's the way that's the way that it works for me so My Philosophy is cash flow is the only thing that helps you quit your job and first of all I'm an equal opportunist I if I see a flip that I can do I would love to do it but Detroit isn't that market right and then another thing is I could buy in the you know heavy appreciating markets like the California and stuff like that but because I'm still a parent and still have other activities I want to be closer to my invest Investments um as well I just feel like it's a greater way to be more successful so number one cash flow helps you quit your job right so if you're flipping properties and and let's say you make a million dollars this year in flipping right January 1st you start working again because you're using that million dollars to support your lifestyle to pay your lenders or maybe you live for two or three years but eventually you will have to start working again if you have 20 000 a month in cash flowing your expenses are ten thousand then you're essentially retired right and again I wanted to quit my job because I wanted the time freedom to spend with my kids and I wanted control so that's my strategy cash flow helps you quit your job and then tenant turnovers kills cash flow right so those were the two things that I had to do cash get cash flow heavy so I can quit my job and eliminate turnovers because that's going to kill the cash flow so those are the type of properties I look at and that's still what I look at to this day what's changed now that I'm adding leverage and using other people's money is I'm being able to do bigger flip quality projects but I don't know if it's because I'm a woman if I'm a nurturer I have a hard time selling properties I am not a flipper and I know no David will like no Ashley if it's there it's there you know because that's what smart people do but I'm still very emotional right now so I have developed a strategy called reverse flip and it's just like David's birth strategy honestly it really is with like one or two things different but I call it reverse flip because even though it's a strategy that's been around for years when you put a name to it it's catchy right like Burr obviously bird been around for years but until David said it it's like wait what is this thing you know it's like something new like we all thought so um that's what I'm doing now that I'm able to use other people's money is I'm doing the reverse flip strategy what I got my trademarks pending for and I kind of coined and I would love to talk to you about that and then when we do the Deep dive I'm gonna go into my reverse flip deal yeah I do want to talk about that one thing I wanted to hit on really quick before we do is you mentioned that you didn't want or you have to really stop tenant turnover and I'm curious is there anything that you do specifically with that because I think that's probably a painful point that like 99 of Real Estate Investors deal with opposition of the the tenant right and I remember growing up we were on Section 8 and we were just getting treated badly and we just got the worst properties on the Block so I knew early on that no matter what I did I wanted to have very nice clean safe HG quality properties and I was trying to fit that in a very low market right so that was the number one thing that I did I kind of over improved my properties and again investors if you're new here you do not that's not always advice it just depends on where you're at so don't go out over improving your properties thing Ashley told you but obviously I might spend three to four five thousand more on the project but this person wants to say forever or at least three to five years and each turnover even if it's bare minimum and it's two grand a month when you're only cash flowing five grand a year it can really set you back so that was my strategy which is making sure the properties as nice as possible spending a little extra in the beginning to retain the tenants um I do other things like give them gift cards during the winter uh Christmas months and just treating it I know it's a business but I constantly relate to my tenants that hey I'm a single mother or I've been in your shoes and I feel like letting them identify with me versus I'm just the big box landlord that really helps me with turnovers I really like this I remember listening to this and when you said that I was like it was so weird because I don't ever hear anyone say this like you know hey for Christmas every year I give my tenants a gift card for this and this of course I'm sure it's been done but a lot of the times especially on the long-term rentals we're talking about the cash flow being so much smaller yeah you know a gift card could not set you back but it's definitely gonna you know decrease things so really cool to hear that I mean you're you're bringing like a human element to real estate which I think is important do you still have any original tenants or any tenants from when you were first starting out that are still around today I'm just curious absolutely so so I would say all for that original 10 eight people are still there like to this day so I know um when I first started this again obviously no education I thought this isn't gonna work I'm gonna have to find something else because I paid 1900 for a house that obviously that was a purchase price I put about 17 000 in so I was all in 19 000 but I was charging somebody 800 a month and I was like well she'll just save up her money for two or three months and just buy the house next door you know this isn't gonna work people are gonna catch on and that was in 2013 she still lives in that house to this day and I've done that multiple times and again it's with tenant retention I don't I guess that it was the nicest house on the Block is why they stayed but yes that's definitely what helps you with cash flow as well as um everything else do you have any specific tips of things that you do in your house that makes them nice maybe things that don't cost a ton of money but that go really far as far as the impact on the tenant absolutely oh my God David thank you for asking that yes I literally uh because I almost forgot so the simplest thing that I've done and it has been so rewarding to me is I get this Delta faucet that has an LED light on it right and it's 69 bucks at Home Depot every time you cut the lights on it glows in the dark but this 60 000 I mean sixty dollar faucet literally lights up any kid that walks in that bathroom's face right and if you get the kids you get the parents right I mean it's like that's just what it is so I don't want to sound like like you know a creep but I I always love kids anyway and I'm like if these kids fall in love they're gonna nag their parents like Mom we gotta pick that place we gotta pick that place even if it's 50 100 more a month than a place down the street it has the light up faucets right so that is literally a good tip that I can give you you guys any new investors do anything like that while the kids you get the parents you know Rob you're in the short-term rental space and I've now recently joined it and I gotta say my strategy is very similar to Ashley's I'm trying to find something in the pictures that makes a kid go oh oh I want to go to that one because like you said Ashley you you get the kid 80 chance you're getting Mom and Dad so what are some of the things you're doing in your short-term rentals Rob specifically that will catch a kid's attention and want them to stay there totally so every every house I have we set up like a small petting zoo in the living room and when people see that in the photos it like instant instantly books for a lot of people but aside from that uh there's not really so okay there was a house in Destin that that we bought that we were so close to closing on and then last second the appraisal came in like three hundred thousand dollars you told this story this is the one they got away Rob is so so hurt about that it it's I still cry myself to sleep but that's okay um but one thing that we're gonna do on that one is like there was this uh garage space that was being unused and we were basically budgeting about I want to say like thirty thousand dollars to build like a full uh fully kid proof kind of bounce house like you know everything is squishy in there and like memory foam like pillows and like you know ball pits and everything like that so that parents could see that it because that's to me that's a really big frustration um so we weren't able to close on that however one thing that I did uh in my Tennessee property when we were moving out of that house and turning it into an Airbnb is we actually left our nursery and this was like a big um like everything on our we had like two cribs in there we had like expensive kid pillow type that you know they were like triangles and circles like you know squishy stuff basically we left like hundreds of dollars worth of kids books and everything that we had used to basically raise our kids at you know they were one year old everything that we use in that one year period we left there and it was going to be expensive for us to replace all that but for me as a parent I'm just so frustrated all the time when I go to a short-term rental and there's like a glass coffee table table or like a super sharp wooden table where I'm like Oh my kid's definitely gonna like bust their head on that and so now whenever I'm formulating airbnbs and trying to like Spruce them up I try to add some kind of kid element to it that a parent can somewhat relax in unless it's just not like a property meant for kids but that's one thing for me it's super important so on top of just doing that we're sacrificing a room an Airbnb it's all about beds and heads most of the time an Airbnb host will leave a pack and play but we decided to sacrifice the room put two cribs in there leave all our kids stuff and honestly people Rave about it like a lot of people have reached out we had child proofing locks on all the sinks underneath and everything and reviews have been really nice people are like this is by far the most kid-friendly place I've ever stayed and I would pay a premium for that just because it's a such a pain point for me so now I'm always trying to tailor any new Airbnb that I set up to be more kid-friendly yeah that makes so much sense so I I know I just talked to you guys about I'm just starting off my Airbnb Journey thanks to this this guy I was already a fan before he's on the show um amazing um so what I did was I added the chalk wall I you know obviously I know it's kind of probably done a lot but I feel like that's good but it's all the way down so kids can ride on it and then my daughter she does like custom paintings in the basement but a friend of mine who's in Airbnb convinced me so I bought a Pac-Man machine for the basement right because so that's like an arcade and even if you don't like it oh well it's in the basement so if you don't have kids and then lastly the kid I would say teenagers um I do QR codes so you can create a QR code and then you can put like a sticker on there so I do that for like the house book I would say which shows you how to work everything but I also have it like for like fun videos and stuff like that so that's just what I started but I don't know uh the return because I haven't listed them I haven't said it live yet I think this is the kind of stuff though that people need to be focusing on and hearing a podcast because the days of buy a property make it at Airbnb sit back and collect the money are gone it's getting more saturated it's getting more competitive you've got to be the person that puts this creative thought into how you make your property stand out and how you make someone want to stay there moving on to another topic that I know that you're passionate about is paying taxes I know that you loved paying taxes so tell me about why that is right absolutely so that's funny and I know like I was going to say it's controversy nobody likes to pay taxes so I had a Epiphany right I got my start I I truly account that to my income tax return right and I know obviously it's it's not like oh it's some free money it's what I put in but I once I started to have to pay taxes I wasn't upset I was like wait I was getting six to seven thousand dollars a year in a tax refund and now I have to pay three to five I'm gonna do that graciously I'm gonna do it with a smile I'm gonna write this check every year I don't care about all these tax savings strategies um because I want to do this for the government because they helped me right also when you're a Buy and Hold investor I don't do flips so I don't have that capital gains and stuff like that so I already was my tax liability was already very low it wasn't until I added Consulting and self-employment income that unfortunately I don't like paying taxes know it more right yeah that's how it happens to everybody because that's 7 000 a year has turned into 60 and 80 000 a year so I was a person for the last what seven years that loved paying my taxes I'm like no so the good thing was I just bought a Tesla it was 87 like 87 000 and that was a complete write-off to offset that so now that I've hit that Mark I'm definitely like I booked three conferences to go out and talk to the best CPAs so now I'm like all about Tax Strategies tax savings now but for a good couple years I love paying taxes and everybody just thought I was so weird by saying that and obviously I see now but when your burden is five and seven thousand and you use it from a form of gratitude not first of all not oh man I have to pay taxes too what I get to pay taxes now like that was just I was happy to do it because I never made enough money to have to pay taxes so I just use that from a big point of gratification and gratitude like what if the government got me started my tax returns is what got me here let me give back to the government pay taxes I get to pay taxes versus I have to I had a quick question here because you've sparked my interest tax taxes to me are the thing that I nerd out 100 on I just paid a tax bill that was four times my annual salary last that my salary from last year so it hurt um you said you bought a Tesla what kind of Tesla was it model Y and um I got the uh performance one because it was four months and the long range was like a year and like I can't wait like I need delay I need instant gratification now sure but to be honest I had never done research on Tesla um I literally the gas I hit five dollars and I was like oh I'm gonna buy this car are in in six months it'll be worth like ten thousand more then I'll just hurry up and sell it or I'll rent it out on like a a car site or something and I'll get the benefits but um I've already fell in love with it it's only been a month since I had it and uh but basically what it is is I bought it in a vehicle I financed it through my company name my consulting company so that's a hundred percent tax write-off my Consulting business is the self-employment business that's taxed twice but uh we need to hop on after because if you got kids those are the best things I know they're still a little bit young but you can pay your kids to save money um on taxes there's so many other things you can do max out 401K so I don't want you to pay those anymore um so we'll definitely have to connect offline I was asking about the the Tesla because there's a um there's a section in the tax code called Section 179 and it's it's goes to base it basically means if you buy any Machinery or any vehicles that weigh over six thousand pounds you can completely write that off on your business now obviously you can still write off your vehicle and other capacities but if you buy a vehicle for six thousand pounds or heavier you can completely write that entire purchase price so long as it's being used for business you know 100 obviously if it's used for personal and business you have to kind of split that but there are a lot of really fun Tax Strategies like that that I didn't know um and that's something that I think a lot of people are always like taxes are so unsexy and I'm like no no no taxes are very sexy when you figure out how not to pay them because that's the real game there's you got to master real estate first and then you got to master taxes and if you can save money on taxes that's extra money that's going to go into your pocket especially when you start to realize that saving money in taxes you pay directly to the government actually makes the government more money through the jobs that you created from the assets that you bought and the people you gave jobs to so for every dollar you don't spend in taxes if you put that at a new short-term rental now you just employed a house cleaner a handyman a person who can do the pictures for your listing a person is is going to build the chalkboard that you put in there right like you actually amplify the money you paid to the government when you reinvest your money and you make it bigger and so it's kind of a win-win you're not actually screwing anybody over you're you're making your own portfolio better you're building jobs for other people and the government gets more money well David tell that to my Tick Tock comments I'm going to tell that to the dude what is like 80 000 new IRS uh workers that are 87 tired yeah whatever it is I'll make sure that like they listen to this episode that they could hear that uh Ashley I know you are in a controversial situation for a long time when Josh dorkin and Brandon Turner were hosting this podcast they were dumping on Detroit and you are a staunch Detroit Advocate you actually bloomed right out of the Detroit Concrete Jungle and are doing great you're wearing your Detroit sweater right now tell me why you are bullish on Detroit and what you like about it absolutely so Detroit to me uh knocks out all the what you can't do in real estate right so obviously when um when people say like oh you can buy cheap properties for 80 000 well typically that's the highest you're going to get for that property it's already at the top of the market there's no appreciation rents are low turnovers are high cash flow is still low um Detroit kind of knocked that all out of the park uh what's unique about Detroit though and it's because that back in 2008 2009 a lot of lenders left so Detroit is a cash Market though so I remember when I did my first podcast people were like hey you're buying properties for forty thousand fifty thousand I'm gonna go buy six of them I'll put 10 down on each and I'm like no no no no no no you have to buy it with 40 000 cash and I call that cash in quotation marks because it can be a credit card right credit cards are those are the twenty five forty thousand dollars so you can take two credit cards and purchase a property on it so those are the good things but um because of the low price point to entry as well as the cash flow and the low expenses uh those are all reasons why I'd invest in Detroit also I don't know I did look at our population as definitely increasing because we did have about a million people leave um you know throughout the years when we were doing bankruptcy but now that apples here Google's here uh they're building the first ever in the world electronic charging World in Detroit is going to be uh released in 2023 so as you're driving on the road you won't have to get out of your car it'll actually charge it so they're going to do it one mile that's here in Detroit so and then on top of that once covet hit I started to do research on Section 8 and I got really good with uh networking with Section 8 managers and I realized that there's 30 000 voucher holders um with Section 8 that don't have a place to go right now so they're extending their vouchers with normally takes them six months UH 60 days to find a property it's taking them 90 days so I'm like wait a second there's 30 000 people that have guaranteed rent and they don't have housing like let me buy an apartment building like you know so those are all the reasons why I invest in Detroit and most importantly because it's the underdog right there's not a lot of investors here because everybody here the the horror stories or the why shouldn't you invest in Detroit so actually that's why I love the show and you know obviously I didn't agree with it but I feel like yes they're taking another investor away from Detroit more properties for me right so it kind of worked in my favor that so many people were being fearful of Detroit and that's why I wanted to be greedy in Detroit but um again your expenses are pretty low so on average I say now especially if you're out of state investor uh someone like myself could do it a little cheaper but you can be all in I'm talking about purchase renovation Consulting fees with a project manager for 80 000 in Detroit that property even if it's in like a bad neighborhood you're gonna get if it's a three bedroom a minimum of 1200 a month in rent but if it's good enough for Section 8 you're gonna get 14 to 1600 a month in rent right but hey that's just the money right right it's not about how much you make it's how much you keep and that's what I love Detroit right so even though I'm making 16 or let's call it 1400 because that's the average for a three bedroom now let's talk about our expenses so in other states especially like Chicago which I love which has very low prices their property taxes are outrageous so Detroit on average and I own 35 doors right now so my property taxes are a hundred dollars or less per month my insurance is seventy dollars per door or less so if it's a duplex it's 140 so single family 100 a month in property taxes seventy dollars in property insurance and 1400 in project management if it's a cash deal that's about two hundred forty dollars um one to three hundred and twenty dollars and then if you have if you refinance use the bird strategy on an eighty thousand dollar property your mortgage payment probably be about another 300 bucks right so all together you're spending 600 dollars a month and because we're buying these properties and we're fixing them up over fixing them in the beginning our capex is lower but of course we do I always encourage people to save about 100 150 for a single family per month so add that all up you're about a 750 and you're getting 1400 a month in rent that's 650 a month in pure cash flow but let's say you use the 80 000 or you have it in your cash out on a 401K and you don't have that mortgage then that 300 goes back into your cash flow so essentially your cash flowing a thousand dollars a month if you can buy a property for 80 grand cash and you know have a Section 8 tenant now again I don't want people to leave their money and properties that is well it just depends on your goals I would say because even though I have essentially two portfolio one that's unleveraged and one that's heavily leveraged um I see the benefits and the disadvantages of both right and that's another thing I feel like with Real Estate Investors or even people they're always like well I'm only a flipper because uh Buy and Hold is too slow or Burrs this or I only want to buy cash because I don't want to over leverage there can be a happy medium right but based on my lifestyle and my goals which is to not work for anybody and have complete control over my time and freedom I need cash flow right um now that I've you know made all the well made all the mistakes and built that solid foundation now I can go and invest in syndications and for appreciation right because now I'm in a better position but it's not always smart to start off for appreciation if you're new and you have to build that Foundation because if you're still working a nine to five you're limiting your time so that's where I said that so I know you mentioned that yeah Detroit is a really great Market but the uh you know you either you're gonna maybe have a tougher time doing the conventional thing or you might have to buy cash for the people out there that may not have either of those options do you have any steps that they can take to acquire real estate out there or any tips for people out there uh with the maybe creative financing yeah absolutely and now within the last three years so there are banks and lenders that will do it right so you can buy a 80 000 house on a mortgage but you're just gonna run into people like me that's gonna put an offer in and say hey I'll close all cash in five days and wave all contingencies right uh because it's because I'm you know I um prepped for this market so I had to develop cash heavy strategy so number one I use hard money lenders that is a strategy that works in Detroit but most importantly I like using credit cards preferably business credit cards so if you have like me I have a property management business and a rental business so as long as that's generating in uh income you can walk in into any bank and you have a 700 credit score and you can get uh business credit cards right but so I might go into four banks on one business right and get about 60 70 000 in funding um for that business and then I can use those cards to buy a property and then I'll go ahead and use the cash out refi to pay them back because it's a year typically um interest free so that's what I call Cash in quotation marks is leveraging business lines of credit business credit cards personal credit cards um you can also use hard money and traditional lenders but I just um I've heard about subject two right I've always um toyed with that but I just never thought that I could convince anybody to do that right but I was just lucky to pick up a duplex subject to and I've met a couple people that's been doing them in Detroit so that is also another great way to uh purchase properties here in Detroit and I feel like I know obviously subject to has died down a lot but with the market and where we're heading at where people bought and paid twenty thousand over asking right with their appraisal guarantee and covet well a lot of those jobs are being eliminated or now a lot of companies are realizing hey we can cut our expenses by keeping everybody working from home but we're going to lower their wages because they're not commuting and traveling so people aren't as qualified as they were two years ago um so I feel like subject to is actually going to be a really great strategy to use in this upcoming Market um but that's just a couple of strategies if that makes sense yeah yeah totally well I think we're gonna get to the deal Deep dive here in a second but before we do I also wanted to just ask because we didn't go back to this can you just briefly take us through the idea or the concept of reverse flipping oh yes that's and then I'll break down my reverse clip so essentially it's just like what David did but um so you're gonna purchase a property using hopefully the cash and quotation marks method so the business credit business credit card will be the best or you can use hard money lenders though but those are just typically the two so you want to actually buy the property and it's going to be a rental property but it's going to be flip quality right so you want to do it just like you're gonna do a flip so take out walls full renovation update kitchen granite countertops all that stuff and then when you go you rent it out obviously for top of the market because it's the best house on the Block instead of you refinancing it at a regular bank and I guess it didn't matter with the bird strategy but I am using hard money lenders or secondary lenders not traditionals for the 30-year mortgage now obviously if you're a successful real estate investor you're like wait why would you use hard money on a long term because you're paying six to seven percent interest where you can go right to a bank and pay for 3 four percent well again this is not an issue for any investor so don't use this as an excuse but most people are only allowed 10 loans and their personal credit right until you get maxed out there's this evil evil uh creature that nobody really talks about is debt to income right uh the first time I felt like I got knocked out when I heard the word debt to income because I can't hide that right it's on your credit report they can count it they see your income and your taxes and they're like up you don't qualify right so I didn't want limits right so I was like wait I can only have 10 loans and obviously if I would have talked to smarter investors like David if I had people like that they would let me know that that's not an obstacle but to me it was an obstacle so My Philosophy is if I'm hard uh refinancing with hard money lenders or private lenders I the debt is not shown on my personal credit I'm a personal guarantee but the debt and everything is to the business right so now I'm not limited to 10 loans now I can go get a four percent interest rate on my primary because I don't have any debt right so yes I am paying two to three percent more interest on the hard money side but the available debt to income and and benefits that I have on my personal credit by being so less debt um has been phenomenal for me which has allowed me to get more business credit cards or personal credit cards because again you are a personal guarantee in this stuff it just doesn't show so that was that's my strategy and that's why I use reverse flip versus the Burr and again it's not really different I just made a name to it so it can be catchy but I don't use traditional lenders for the 30 year I only use secondary hard money lenders fantastic thank you for sharing that Ashley Rob did you have something you're going to say there yeah I was just going to ask on the on the hard money thing aren't those lenders typically um like Bridge lenders like they'll only do the hard money note for like a year or two no so I we didn't talk about this so I have developed seven streams of income from Real Estate and just seven businesses um and one of the is I'm a hard money lender slash broker so on at face value or if you pick up the phone and call 10 yeah they probably will tell you that but all you have to do is find one but I have about seven or eight that does 30-year loans so if you find one now let's say when covet hit some may suspend the program temporarily but now I'm doing them I did some during during covet um you just have to find a good lender I would say to do it I can highlight a little example here of why this is not a terrible strategy so tell me Ashley what would standard financing be just a ballpark and what would your hard money rate be uh so far as the percentage-wise or yeah yeah so standards be like 3.5 well you know obviously they've done two or three interest rate hits so I don't know yet but around 3.5 and what's your hard money rate uh seven seven percent and that's today yeah that's today on a long term yeah that's not much different than words that's what I was saying I will call you right after this stuff after this podcast that's what I was saying back in 2019 my rate I had one that the rate was like eight percent but again it still made sense but yeah that's today I got quoted seven percent yesterday on a second home loan yeah that's crazy and that's not terrible Rob like I'm in the nine and a half percent for the stuff that I'm usually trying to get so here's the point I want to make when you have a lower load balance the interest rate becomes exponentially less important as when you have a high load balance all right so we'll do a little exercise here on a 800 000 loan balance if you have three and a half percent like Ashley said your principal and interest would be just under 3 600 a month if that jumps up to the seven percent number you go up to 53.22 most deals don't work if you go from thirty six hundred to over fifty three hundred it's going to fall apart but let's drop your loan balance down to eighty thousand dollars like what Ashley was saying you could be all in on a so maybe you're going to be borrowing actually less than you're gonna be borrowing like say sixty thousand dollars the three and a half percent payment on that is going to be 269 dollars a month and if you jump all the way up to seven percent that's going to bring you up to 399. so you're gonna jump from what was the first number I gave there 269 to 399 right like a hundred and twenty hundred thirty dollars that's not gonna break most deals when they're bringing in between 1200 and 1700 a month it almost I don't want to say it doesn't matter because you always want to try to get a better rate but it becomes very insignificant right like that's that's less than the difference of insurance or property taxes at a higher price point so it may someone may hear someone someone may hear actually sit speaking and saying well why would you pay seven percent I would never do that well it doesn't really matter on a 65 000 house nearly as much as it matters on a 1.4 million dollar property and I've noticed there's certain patterns that emerge in real estate like that like the one percent rule is very very important at low price points it becomes less important as the prices go up the one percent rule was developed at a certain interest rate that we had right but if interest rates are lower than the the number that we started with say seven to ten percent you can fudge off the one percent it will be okay because interest rates are lower so when we're giving you these examples they're they're you know an overall way of approaching it Ashley's sort of looking at the details that other people are missing because you're in Detroit Ashley and you're you're no you know how that market Works where someone from the outside looking in might make false assumptions and say that market won't work for me yes and that's why you have to speak to experts or like you can't do what I do if you don't talk to me like even if it's a DM like email me like last time I did the show people found me because I was a realtor found my personal cell phone but I'm not saying call me right obviously but what I'm saying is if you're gonna mirror your investment strategy like oh my god Ashley's using reverse flip I'm accessible reach out to me first because there are caveats like David said that maybe we just didn't share not because you know we just forgot to talk about it right so yeah so that's absolutely right and that's why I love how David thinks like literally he just I don't know how to explain it it's just so crazy but there are caveats that you have to do and that's with any investment strategy right obviously if you're investing in Cal California you're doing it for appreciation there's different things but yes that is absolutely uh correct it fits this Market it does fit to a lot of other markets my my sweet spot is um 250 to 350 Max for that um for the reverse flip yeah so any Market you can do that and for purchase price right 250 000 to 350 000 yes absolutely or or all in I'm sorry yeah because the arv because the cash out refi so cash out refi based on the loan payment at 350 it's like the max before it starts not to make sense right because we are so the reverse flip method why I call it reverse flip because it does the exact same thing as a flip but when you flip a property okay for all my flippers out there and I come off as a anti-flipper but again I'm an equal opportunist I have clients that are flippers when you flip a property how much money do you make on a property after you sell it zero dollars right you may make a hundred thousand two hundred thousand dollar profit but the moment you sell that house you will never get paid on it again right when you have a rental property you're gonna get paid on that house for the rest of your life for the rest of your kids life and so on so with the reverse flip strategy and when we go through my deep dive you'll see it I still get the benefits of a flip so maybe I won't get a hundred thousand a profit I'll get sixty thousand a profit just depending on the deal so I may have left forty thousand but I'm recouping that because I'm still getting two to three hundred a month in cash flow not to mention I've gotten eighty percent of my cash or you know out of the deal so that that's the strategy why it's reverse flip so it's like hey all you flippers out there you can still do that but why not try to finance it long term get sixty thousand instead of a hundred but still get that 300 a month because what cash flow helps you quit your job so that's the strategy all right we're now going to move on to the next segment of the show the deal deep dive and in this segment of the show we're going to dive deep into a particular deal that Ashley's done and Ashley I'm curious to see which deal you have in mind and which strategy we're going to be highlighting so do you have a property picked out yeah so initially I had wanted to do my subject to deal because it was such a good deal but I didn't feel like I elaborated enough on it and it does you know have some contents in the background so I would love to break down my reverse flip strategy on a deal that I did that's perfect yeah so that's I was secretly hoping we would get to hear a reverse flip Dave is currently scouting out the the competitor to the Burr method right now he's like yeah tell us more about this reverse flip yes and then we need to stand on stage at bpcon together with my reverse flip in Davisburg like take your pick now I'm just joking go rock them soccer robots that's funny I was actually thinking of how you would spell flip backwards because that's reverse flip so it'd be like the pilf method it's hard to spell a word backwards in your head without looking at it on screen it took like more time than I would box try to do that I don't think that was gonna work oh my God this is this is why we leave that up to Brandon and Rob I frequently will come up with this idea and I'll tell people and they're like that's brilliant and I'm like I know but I don't know how to Market it because I don't have Brandon here to come up with a name for it so no one will ever hear about this that's a big problem of mine I'm not creative like you guys all right question number one Ashley what kind of property is it okay and this is just a funny analogy I'm so sorry to go back but if you think about the pill pilf and the MILF like what it really means property I like to or we can check property I like to flip right so that is awesome it came to my mind and I could not hold it in like yeah like I like to flip that's gonna be our merch at bpcon pilf David is literally a genius I mean I know he knows it but I know he's humble but he it is just how he makes people think like yeah I don't know or just me and Dad I just I get those I think you got some genius as well Ashley that you came up with that on the spot really really quick like yeah someone needs to give you a recording contract you need to be like Bigger Pockets first rapper like that was very impressive that you came up with that on the pill speaking of rapper uh since I'm not gonna disclose the address and this I was gonna property the family the neighbors came and introduced me like hi if you need anything my mom my dad lives here my brother lives here my sister lives here so it's a family of four all around it well if you're familiar with rap music and the rapper Big Sean Detroit native his whole family including his dad is my neighbors right so I won't disclose the address or anything like that but I've met them multiple times they don't know I know but I know because I'm a big fan of Big Sean so I and they steal my contractors I'm like hey they don't still feel like I got news you got to protect your contractors more than you got to protect your girl sometimes like people will grab those guys quick for sure yeah so I got new gutters they got new gutters they're like hey like your driveway guy is doing work so I'm like hey can you have your son like shout me out you know but I just I'm playing it Coy but what's the song that people would recognize from Big Sean because see I don't think he's had a hit in a little bit but I know who you're talking yeah absolutely yeah but he's just known for like just Detroit right and and all the things that he does so it's amazing but yeah I love Bichon all right so what kind of property is it okay it is a single family property in Detroit Michigan Rob that's all right I'm so hung up on you all right did you find him yeah I did yep Big Sean was the one that dated Ariana Grande for a while right yes absolutely yeah you had the mean breakup song that everybody that was bitter about to break up the singing for years yes yes which we won't say on the show no I don't flip with you we'll live that we'll leave that up to dumois all right uh that's a gossip account on Instagram that's what the kids are doing it doesn't matter number two how'd you find it Ashley how'd you find this property so this was a wholesale deal and I don't do many of those and essentially so I was teaching a group of investors that wanted to get started in Detroit and I came across my desk and I didn't want to buy it but I felt like since this is a group let me take them on live and tell them all the reasons why I'm not gonna buy it so I went and did the video and on the video it's so amazing to look at it because I'm like huh never buy this this is never gonna work too much too much work so it was a wholesale deal that I was not gonna buy I just thought it would be a fun example to show a group of Real Estate Investors uh a deep dive it's so funny how deals come across like that I have one that's a really really good Burr in a super good city and someone had just asked me how did you find it and I'm like well there's the answer I want to give you like I use this criteria and I searched the MLS and I found it this way the reality is I was at a Round Table Pizza picking up some pizza to drop off for a group of friends and they had like a little advertisement running on a TV and it caught my attention and that I literally just looked at the pictures and were like I can triple the size of this thing just by converting the basement so for you it's the same thing like I was just looking at a property to show other people and something about it caught your eye absolutely so next question is how much was this deal right so that was the reason I wasn't gonna buy it it was uh he was asking 85 000 for it um yeah and I ended up getting it for fifty thousand dollars though now before Rob asked this question of how you were able to negotiate that price I want to ask you how long ago did you find this deal I closed um September 2021 so oh just about a year yep a year ago okay so how'd you negotiate this deal well I offered him 60 000 right because I was teaching my my group on how to be firm and not you know get uh excited about the numbers make it make sense so I offered them 60 000 and he flat out denied me and I just told him okay no problem but I'm still interested you know you can keep it as a backup and um his contract was expiring so if you're in a first of all you and I'm sorry to say this so when you're doing deals out here if you want to be longevity um in this business make sure you're doing deals where everybody wins right so I'm not saying this for the wholesaler but the wholesaler got it under contract for I think 36 000 and he was trying to make 40 or 50 000 on the deal and I'm like you know make sure everybody wins but that's neither here nor there so he had a big spread in it um so any either way I go his contract was six days from expiring and if his wholesale contract expired now I can go back to the buyer and buy it directly so he called me three day uh five days before the contract expired and said hey I'm willing to take your offer at sixty thousand I said oh yeah but the offer is fifty thousand now because and I can close quickly in four days you know because I'm liquid I'm cash so that's how I was able to negotiate it he did not he rejected the offer his contract dwindled down he knew I was liquid and cash and can close quickly and he took the um but he still made 15 grand the reason I asked about the timeline that you bought it is because opportunities like what you're describing are becoming much more available in today's market of higher rates than what they would have been two years ago for the last eight years so you have it used to just be so many people wanted that house someone was going to buy it the sellers had a hundred percent The Leverage you were just hoping and praying that your offer would be accepted but now that we're seeing buyers that are kind of backing out of the market demands decreasing sellers have lost a lot of that leverage and you can go in and start with the deal that you're like 80 000 that doesn't work at work at 60. you get them down to 65 you're really close I got like three Deals right now I look at it like the fish took the bait and I'm reeling it in the boat but I'm not all the way there I'm just waiting and every week they come back we're getting closer and closer to the number that I wanted that's why I'm saying I'm having so much fun I see you're smiling like yeah that's what makes this this so much fun when we get to buy real estate this way you haven't been able to do that for a long time but your strategies will work for everyone unless your Market is red hot across the country absolutely and to be honest like I'm not saying go out and have a ton of cash but being able to be a cash buyer in the smaller markets that's the leverage because where else you know could he have could we have clothes in five days days you know what I'm saying let me give you guys a little quick tip here quick tip yeah quick tip when you're trying to get a loan for a property it's very difficult to get a loan for a low balance purchase like price so most lenders don't want to go through the headache of having to originate alone to lend out 50 Grand 60 Grand 70 grand they will set a limit of a minimum of 100 minimum of 120 it used to be 50 before inflation changed everything so you can find this sweet spot actually like where you're buying where the purchase price if they were to borrow 80 percent of that or even 90 of it is less than the minimum amount that A lender will lend on so financing becomes incredibly difficult to get for the house so the seller doesn't have a big pool of buyers even though people would go buy that property because they can't get a loan for it so then they either have to take a cash buyer which is going to get a significant discount or the buyer has to be like you and create uh creative financing options for themselves like this line of credit the business line of credit so now you're getting the Best of Both Worlds you're getting the price you want because and you're getting financing at the same time where your competition either had to pay cash for the property or they just couldn't buy it yes absolutely yes and that's The Sweet Spot maybe I need to focus on that and just like tell her that's what you've done is like you found the like the in the armor right like it's weak right here the the Achilles heel this was similar to how Rob and I got our Scottsdale property it was on five acres and none of the lenders wanted to lend on that many acres so because I own a mortgage company the one broken we were able to get a loan where other people couldn't but that's really what good investors are looking for they're not just complaining oh it's really hard to get a house Ashley's like oh no no I figured out right like you always see the movies where there's a fortress that no one can get into that's the market like rob you should make a meme of this you've got this big wall and it's like and then at the other at the top of it is like great deals and then at the bottom are all the little people trying to get into the Fortress that's buyers and then Ashley's got like the little the little uh what would it be like a little stairwell it's more like the little vet that they have where the water comes out and the good guys figure out like aha we can sneak in through this little thing there's always a movie where that happens and that's what your Detroit method there's always a movie you know I remember 10 of those came out yes exactly all right next question before I get too far down off this Rabbit Hole how did you fund this deal all right so I use the business credit card that uh in a business line of credit I'm sorry that I got probably two weeks before and I funded the deal for 50 000 cash because again I didn't have to I could have used my hard money lender but because I only had five days to close I had to self-funded right so it did need uh 50 55 000 in renovation so what I did was and a lot of people I don't know if you can do this with hard money this is why hard money is left on first of all when I found out when I was looking at hard money for the short term the the one year and I was getting rates like 11 12 15 I was like oh that's that's awful I won't pay 15 but that's per month if you so it's annualized for the year I'm sorry so 15 interest rate on a year is really like less than two percent right so if you only hold the property for four months you're paying eight percent interest and you're making all this profit so you cannot look at interest just like David said so but anyway when you purchase a property cash and you have so much equity in it you can get cash back at the table so because I purchased it cash and the arv came up when I rent to the heart money lender to finance their rehab not only did I get all the funds for the rehab I actually brought back a check for 17 000 from the closing table right but that was just part of my 15 50 000 back that I put in it so that's how I funded the deal um purchase it 50k cash on the line of credit and then I used a hard money lender to do the refinance I mean to do the rehab sorry awesome so we kind of know bits and pieces here but what did you do with this property flip rental bur reverse flip I reverse flipped this property yes I did so um so one thing else that I discovered um one of my other properties I was really like focused on making the basement look really really nice and then the appraiser came in and said hey the basement is great but no matter what because it's below ground we do not count the square footage like we can give you a boost on the finished basement but we cannot count the square footage so this property had an attic so I met a guy that was talking about he's a builder and I decided for the first time ever in my career to do a dormer on the property on the attic and finished the attic off so because it's built above ground level grade level I'm sorry it allowed me to add that square footage in the square footage so this is where the big changes went so first of all for my first plan 50 000 purchase price 55 000 renovation I would have been all in at 105. the heart money lender did an appraisal of the arv in order to fund the rehab and it came back in at 265. so that was the big like wow one 105 all in arv 265. so once I added the finish the Dormer and finished that attic off I can count the 400 square feet now into my square footage so properties in that area sell for about 175 dollars a square foot um I did 135 because I'm conservative so 135 000 a dollar per square feet times 400 square foot added 54 000 to that 265 number so now the arv was 319 000 but the Dormer and the addition finishing that off only costs an additional 15 grand because I was already doing new Plumbing I was already doing electrical so it's just a matter of running it to the office uh the the extra space and it's like a loft with a bathroom so it's not like finishing so all in all sorry I spent all in 120 000 um I spent 70 000 on rehab 50 000 on purchase the arv is 319 000 and then I reverse flip that thing so this is how it would work so the arv is 319. my lender gives me 80 but most investors won't so they'll get 75 so I did the numbers at 75 so we all are fair right um so the cash out refi is 239 thousand dollars with the heart money lender at seven percent right four percent more than I probably could have got on a traditional but I only invested 120 000 in the property all in right so I'm gonna take the 19 000 for lender fees obviously because they will charge me points so I was able to put in my pocket on the cash out refi a hundred thousand dollars which is a flip profit right when you factor in taxes and the work and the time you put into it you're you're really make that sixty thousand is quickly turned into thirty five thousand on the flip let's just be honest right so with the reverse flip I put a hundred thousand dollars back in my property but what's more is that is a high class rental for twenty two hundred dollars a month they don't know that they're right next to a celebrity so they may see them one day and I'm still cash flowing 200 bucks a month but I've already put a hundred thousand back in my pocket and on to the next one right so I use that property to get paid forever instead of stopping getting paid when I flipped it if that I love it yeah you got all the profit of a flip without the tax ramifications and you kept rental property and you get to cash flow yeah all right next question here what lessons did you learn from the deal well I learned that the more negative I am no I'm just joking how to pick a product like I really learned to always go look at a deal right even if you feel like it's not going to make sense right it just depends if if it's checking off two out of five boxes you know what I'm saying go ahead and do it because I feel like I Believe In The Law of Attraction a lot so I feel like as long as I'm surrounded by real estate so as long as I'm going to look at deals even if I don't necessarily get that one it's going to attract the right deal for me so again I did not want to look at this property I I swear I was so unmotivated to look at this property and I I stopped I went ahead and did it and that was the lesson I learned also the price is the price right always be in a position where you can be quickly liquidated so you can get that thirty thousand dollars off the asking price because you can close quickly and obviously that takes knowledge and being an expert in that area but I would say those are the lessons awesome and then lastly I mean it sounds like the answer is you on this one but I'm still gonna I'm still gonna ask it anyways who was the hero on your team for this deal it was me unfortunately well fortunately so that's fortunate that's all good yeah I say a lot of things that you know and I just want to say it's not advice right it's just what works for me so just with my personality and I think I even talked to Davis about this after the show like I'm the type of person that kind of do everything theirselves right not because I'm a perfectionist and I know you want to delegate you can't do everything yourself but because I am able to do these things myself I'm getting better deals and I know the process so now when I step back from the business and with this new uh Great Migration or great resignation right they're so hard to find help now so if my VA decides to quit or my property manager decides to quit I could still step in if I had to to save my business or if the recession gets really bad and I have to cut costs I can do that because in real estate or in anything it's not what you make is what you keep now again I know that I'm taking off years of my life because I'm doing this and not delegating but I really can't do much anyway because I still have a kid in high school right so I can't travel all over the world 24 7 and be a you know citizen of the world I still have to be here because I'm at every single basketball game every single football game I want to be active in my kids life so it's not such a you know a rush to do things so that's my philosophy sorry all right that was fantastic we're gonna move on to the last segment of the show the world famous famous four famous for Ashley in this section of the show as you know because you probably listened to every podcast we've done we ask every listener the same four questions question number one what is your favorite real estate book okay so in the first part of my journey I didn't get a chance to read a lot obviously now I am reading um real estate book it will have to be the bird method by David Green three more yes that's like the second time in the history of the podcast anyone ever said in my book so thank you for that anyway the first time I'd have been the first episode we did with you I say it every I say every episode uh number two Ashley uh favorite Business book okay so and again it's just because I'm just starting my library like I really love the power of reading um but I read a book called am I being too subtle by Sam Zell and oh my gosh it's literally changed changed my life like the crazy stories in there so I really love that book I've listened to it twice already and ready to listen to it again okay awesome number three when you're not building your real estate Empire out in Detroit and mastering the art of the reverse flip what are some of your hobbies right so right now honestly I'm in a transition in my life which I'm really grateful for and I'm trying to figure out what's next for Ashley so right now my biggest hobby is networking I'm flying anywhere you know go to any networking events uh going to CPA conferences real estate conferences you know everything just to expand my knowledge and expand my network because I don't want to be a one-woman show right I had to be because I didn't have the knowledge but now I wanna meet people and partner with people and be a social butterfly so that's number one number two I just still have a passion uh for kids um and just trying to make their life a little bit better um just considering like what's really going on with life and um yeah so just um instilling in kids my four pillars on how to set your child up for success for with just one real estate property I know we were supposed to talk about that maybe if you got a second I'll talk about it but that's my goal is deepening that message just educating more people on how to set yourself up for success with one property and networking all right in your opinion what sets apart successful investors from those who give up fail or never get started I feel feel Clarity Clarity is what it is so obviously when you first start you may not have Clarity but that's where it goes into mindset and really having that conversation with yourself to figure out what you really want to do right because I do you know Consulting and stuff like that and I'll have people call me and they're like I want to flip properties because I want to quit my job next year I want to be just like you and as we said in the show flipping doesn't help you quit your job right so I feel like because a lot of people don't know what they don't know or they'll hear podcasts and don't try to reach out to the person or try to really like if you're going to mirror that person obviously you need to talk to them and see all the caveats and stuff so that's what I feel is is making people not so successful sorry about that is that they don't have Clarity or they'll say they want to do something but the reasoning why they want to do it does not align to what they're able to do right now um yeah and putting on blinders for sure that's what helped me be successful it's sometimes you have to put on blinders and kind of blind out some things and just focus directly on that goal amazing and lastly Ashley can you tell us where people can find out more about you absolutely so my number one platform is Instagram and I'm at Detroit underscore investor uh I literally the 11 properties that I bought in one year if you were following me you saw the renovation the before and after the me standing out Live While 10 people are trying to get in the property like you've seen it all I show case that daily on my stories I'm actually doing seven renovations right now like various levels so that's the best place I also do have a website it's Ashley hamiltonconsults so my name Ashley hamiltonconsults.com lastly definitely I am on Bigger Pockets um for sure so you can definitely message me on there awesome Dave what about you you can find me at David green24 all over social media or on YouTube at David Green real estate um and also beware because there's tons of scammers they're popping up every single day it's a big pain in the Wazoo trying to get that blue check mark to avoid this I've tried about 25 times Instagram keeps saying no so don't know what we have to do to change there but please please please please please please please I know that it's cool when it looks like someone followed you and they start messaging you and these people are very good at saying things I would say they are listening to this podcast right now and hearing what David said and they might even bring up the pilf method just to sound like me I'm not asking you for money ever if I do borrow money from somebody to invest into real estate you will go through my assistant we will have a form that you're filling out you will definitely know that it's me don't send money to any link that someone sends you good friends of mine like legit good friends have actually sent tens of thousands of dollars to these scammers they're horrible people so please be careful about that yeah so if you if you get a message from David greenpilf don't don't respond it's not him he's David green 24. uh you can find me over on Instagram at Raw built YouTube on Raw built as well alrighty Ashley thank you so much for joining us and updating us on your journey every time we talk to you you seem to be doing better than the time before and I love seeing somebody like you win because you're doing it the right way you're learning you are very persistent and you share with other people so I appreciate you being here with us I'll let you guys get out of here this is David Green for Rob I don't flip with you ABBA solo signing off [Music] [Music]

Channel: BiggerPockets

Views: 57,851

Keywords: unit landlord, landlord, rental property, rental units, cash flow, real estate cash flow, financial freedom, financial independence, rentals, how to invest in real estate, investing, real estate deal, real estate deals, flipping, house flipping, brrrr, brrrr strategy, brrrr method, brrrr real estate, section 8 investing, reverse flipping, real estate investing, real estate investor, brrr, income property, investment property, buy a rental, biggerpockets, biggerpockets podcast

Id: ZC-alkT7lg8

Length: 79min 24sec (4764 seconds)

Published: Thu Oct 13 2022