Snowballing to 6 Properties and $75K+/Year Cash Flow (After a Late Start!)

Do you want to get into real estateIt’s never too late to start investing in real estate. Whether you’re in your twenties and just starting to build your wealth or you’re in your forties and looking for ways to diversify your portfolio, real estate can be a powerful tool for achieving your financial goals. We’ll break down a strategy to explain how you can snowball to six properties. My name’s Ashley Kehr and welcome to the Real Estate Rookie podcast. This week Tony is on paternity leave with his newest baby girl. So we have Garrett Brown filling in to be my co-host. Welcome to the show, Brianne and Douglas. Thank you guys so much for joining us today on this episode of Real Estate Rookie.Thank you.So Douglas, why don’t you start off telling us about your first couple of deals. Why did you choose to even get into real estate in the first place?I’m a tradesman. Brianne worked for a big bank and we saw some of my colleagues and some of Brianne’s colleagues acquire real estate and secure their future and it just made sense.Brianne, what about you? Did you have any experience in real estate and what were your thoughts kind of getting into this?For me, it was really about an opportunity for us to have another kind of mechanism to ensure our future was secure and we would have options for our retirement when we got older and also to help our family and our kids seeing that other people were doing it and once we started learning more and understood how we could finance that and really utilize the equity in our primary home, it just made sense because we’re like working the grind, working our day jobs is not going to get us that future wealth that we would want to have to ensure we’re comfortable.No, and most people I think we’ve seen a decrease in our income theoretically. Everything’s gone up. My income hasn’t gone up with inflation and especially in this day and age, you have to do something and I’m really glad we did real estate because I don’t see really anything else that brings the returns and that you can not just have a nest egg or a strategy or an investment, but you can also push into the industry and be entrepreneurial.Yeah, I think that was another thing that really got us hooked is that it’s not typical investments where you go to your advisor, you throw some money in a mutual fund or so on. It is a very active thing you end up falling into and there’s so many different aspects to real estate investing. So along with just managing the renovation, the property, getting into property management aspects of it, there’s massive communities, networking. We just kind of felt like we kind of found our space, our community, whether it be in-person stuff or online. So I think it was really great to just be able to connect with like-minded people as well across the globe really who’ve kind of discovered real estate investing and just are benefiting from that.Can you tell us a little bit about y’all’s first deal and how y’all decided to land on that strategy and what were some of the things you were thinking as you were going through that process?So I think as we got started and we’re talking to different realtors, given the budget we had and our skill sets and especially Doug already knowing everything about construction and what we’d be in for, we felt comfortable going into that kind of bur strategy because we wanted to have the ability to add value to the property and then be able to reuse that money. So that kind of strategy really appealed to us because we were at a point where we didn’t just want to buy one property, we wanted to be able to keep doing this a few times to kind of get ahead a little bit because also we felt like we were our late thirties at the time and we’re like, okay, some people are in their early twenties and they’re already doing this. So we kind of felt like we want to catch up a little bit. So what strategy can we do that will allow us to kind of fast track a little bit?Anne, what did your finances look like at this point as you’re deciding you want to make this investment?We’re lucky enough to buy our primary house. I guess it was 2013 or 2012 and we live in Toronto. So this city, many big cities around the world see massive growth. You really get that equity boost. So we were able to free up about 350,000 Canadian. So with that we were able to have money for a down payment and then plenty to do a rental. So what that looks like is the first house was about, I think it was 457, so we had to put down 20% and then the Reno for that one was about one 30 and then it refied for 7 68. So with that we were able to pull out a big chunk and then add to what we had left and we just kept goingAnd we did it in a different city. So it was around two hours away, but it was really hot. The prices were moving up, it had great legislation in there in the city. So every weekend we packed the kids in their car seats and we drove there and we worked and I think we did that for a couple of years.So we would have some trades doing some of the work, but we would also do what we could as well.Did you guys stay in the house or did you stay in a hotel?Sometimes, but no, we would drive two hours there, work like eight to 10 hours and then drive back.And that’s the thing is there are these opportunities out there, but you have to take the time to put in the work to get that sweat equity. Not everybody is going to want to drive every single weekend two hours each way and spend the whole Saturday working on a rehab.We consumed so much information as well. I mean I would meet people that were in investing in real estate for 10 years and they just wouldn’t know what we knew because we just consumed it so fast. I mean we’re like full-time for a while there when we knew it made sense. So why stop if there’s not that much risk? And if we establish tenants and they’re good tenants, even if the market crashed, we still had those tenants paying rent and because there’s rent control where we live, it’s not like the tenants were going to move because usually with rent control means that people aren’t moving around because they don’t want to pay more once they leave. So it was a great strategy and it worked really well. As house prices got more expensive and more expensive, it is not working all that well. But still, I mean that first house is now what worth what was the last time?Yeah, it’s like mid eight hundreds now. It’s gone up and it’s gone down, but we’re still ahead and with those as well, our goal is to hold those for the long term. So in a few years we can refi and probably do another cycle again of getting a handful of properties and continue then to get some of those paid down with our rent payments.So we’re going to take a quick ad break, but first rookies, don’t forget, we do have the new rookie Instagram page and Facebook page. When come back, we are going to hear more from Brianne and Douglas on their short-term rental strategy.Can you give us a little on how your story started and how you decide to move into the STR space because that’s a pretty different change going from the B strategy to deciding something like a short-term rental that is such a bigger operational uphold. What was y’all’s thoughts into that and how did y’all decide on moving into that?Yeah, so I think it actually started with a bit of a lifestyle kind of strategy mixed in there. So living in Ontario, we grew up going to cottages, going camping. So one of our goals was to eventually have a family cottage given the market was kind of really hot at the time and we had been growing and just we had such a great relationship with all of our trades and our contractors we’re like, okay, maybe now’s the time to look for a more rundown cottage that we can rehab. And understanding that rental strategy, it just made sense to flip that into renting out the cottage using as a short term opportunity. So we found the perfect cottage, we were able to rehab that very quickly and get that paying for itself. So it was more of a personal leap into have a bit of a lifestyle property but utilize STR to pay for that.Yeah, there’s also, like I said, rent control in Ontario and we’ve got a housing crisis and there’s some challenges that come with that. I deal with all tenants and it gets complicated. So one thing is if you’re going to have real estate, you want to diversify a little bit and diversifying into something that doesn’t go under the landlord tenant board was appealing. And then the other thing is we had a really big debate about what do we want to do because we knew that we were older and we couldn’t buy a couple of homes and then suddenly retire because I’m 21, I can live on craft dinner. It’s just not, we made a lot of money. I mean we both have really good jobs, so where can we take our expertise and make it into an actual entrepreneurial venture like a company? That’s what we wanted to do and we thought about let’s go get our real estate license and then well then I’m stuck in one place and do I want to do, we had months of discussions and finally it was like hospitality is kind of cool. I’ve worked in hotels and built some of them andWe love to travel,We love to travel and we like cottages and brand’s really good at it.It was just a great opportunity to combine all of our skills and passions into a business that we can work on growing to help sustain us as well beyond just our investments.And it’s something that I don’t have to wake up and drag myself out of bed. And I’m getting older too, so there’sNot that old too. We’re like, yeah, but yeah, butThere’s only so long you can haul stuff up ladders. So I was thinking, hey, a desk job might be nice my day.Did that first cottage cashflow immediately or was it an immediate win for y’all when y’all purchased it?Yeah, we had a bit of timing on our side because we bought it or we closed on it in May. And then so we had about a six week rehab, so we were able to capitalize on the summer rent. So that first year, because we were able to go live starting in July, we were able to really capitalize on it being a great new little cottage. So we got enough rent from that half of the year to really for it to carry itselfAnd it’s right on Lake Erie. Americans come up to stay. We’ve got people that come on a regular basis to stay there. So no, it was pretty good. And then we get a cottage that we get to enjoy for kind of free, so the kids love it. And I think this year we’re putting in a sauna too and maybe a cold plunge. We’ll get that the trifecta of hot tub, gold plunge, sauna, repeatThe amenities arms race.When I was younger, my parents used to take us to Canada all the time and we would stay on lakes up there and stay in the cottages and it was like a big thing being from Buffalo was going up there to the beautiful lakes and staying there. We used to go to the garbage dumpsAnd watch the bears is still a big thing. Yeah, nothing’s changed.As somebody from Texas, I’ve never heard of anything like that before.You kind of just don’t roll down the window too low.My mom, she had a rally sport Camaro and the one time a bear bit the side of it and my dad never let her get it fixed. He always thought it was so cool, so she had to leave it in there.That’s a bear bite. I had to wrestle it.You’ve done your burrs and you’ve gotten your cottage. Have you done any other kinds of strategies besides the long-term rentals and the burrs and the short-term rental?So I guess along with that we have purchased a few buy and holds within there. One was a fourplex, so that’s kind of our largest, I guessIt’s got a commercially a commercial space as well.And are you guys self managing all of these?Yeah, so we also opened up property management company because people came to us and said, well, you’re doing great, so can you manage as well? And it’s difficult to work your way around tenants and all these kinds of things. So yeah, we do property management, we do short-term property management, so cottage property management in Muskoka and all over the place, all over Ontario. Then we got into Nova Scotia and we had a couple of properties in Nova Scotia we were taking care of and even into the states now. So we don’t own anything in the states, but we help a lot of people.We’ve done some and I think we found with our experience first with long-term tenants and then short-term our own and kind of getting those processes and just that whole kind of operations side of the business that experience under our belt and we would share with people the great success we were having and stuff like that. It just made it a real natural progression to start doing this for other people, leveraging everything we already had in place. So it was an easy kind of step to start hosting for owners as well.I was going to say, you mentioned the fourplex, which I want to just tap into for just a minute. How are you funding some of these types of fines and how are you finding these deals as they come? I’m sure everybody is curious. With the expansion,We found it, we looked at the numbers, we said, okay, how much can we make off of it? There was a backspace, we were very conservative and then we went and got a private loan for the down payment and bought it and didn’t really fix it up, did a couple of things and then transferred that private loan into a long-term private loan. So we bought the place for none of our money.Was it the same person that you took the short-term loan and then negotiated a long-term or this was two different people?No, it was the same person. So yeah, so we went into it with the arrangements for the loan could convert into long-term. Yeah, and I think that’s as you start or as we started doing the burrs using our own money, but then you do realize that once you get a bit more experience that it is possible to have creative. So similarly with the cottage, the area that it’s in, it is actually a bit tough to get conventional loans because there’s a lot of storms. It’s right by the lake. A lot of banks don’t like those, right? So we were able to secure private financing for that, which also included the renovation. So we basically went into that. I think after all was said and done, we spent about 10,000 of our own money on some of the furnishings to get it set up as an SDR, but the purchase and the reno was all a private loan, which after I think it was just a six month timeframe, we were then able to convert that into a conventional loan through a bank. So again, we just learned how to do these and as you’re networking and talking to different people and listening to podcasts, you hear these type of strategies and they’re not that difficult to really execute yourself.And that lender actually was very interested in what we were doing and once we started cash flowing, he says, oh my goodness. So first two questions he said, and can I do this because I want a cottage and do you want any more money?Do you want to do this again?You want to do this again because and how many can you do at a time? And I’m like, well, yeah. So it was interesting. So we’ve always been cautious, but that doesn’t mean we haven’t moved pretty quickly.Say I’m a rookie investor listening to this right now, how does somebody else find someone like that? They find someone that has the money, they find someone that wants to lend you more money after you’ve had a successful deal and also someone to loan you money long term that’s even harder to find as most people want to do it short term.So I think the key to where we were able to find money and make these relationships was through networking. So these were just tapping into our local real estate investment groups.
And again, you’re going to find all different types of people there, but we just naturally seemed to gravitate towards people doing what we were doing, but also who were a bit farther ahead and we took every opportunity we could to learn how they did what they were doing, but also share our goals. So I think that’s really important in anything you do. If you don’t talk about your aspirations or what you want to do in this space, nobody knows and therefore nobody’s going to potentially approach you or want to work with you. So I think us just being really open and transparent about our dreams and aspirations, but also talking about the successes we had was key to us slowly building those relationships and then you get referred to other people. So it was through talking to people, building our little network, and then people saying like, oh, you guys are looking to do something private, talk to so-and-so, right? So we just kind of flowed likeThat. Once you get known that you’re savvy enough to do it, then people come out of the woodwork and then you get to choose who you want to work with. And we kind of earnest down to earth people that have seen it before and they see that we know what we’re talking about. So it just works and people come together. But you do need to network.I think not only the networking, but the second piece is that you were actually talking about what you were doing and telling people what you needed and what you’re trying to do was a big part of that also.Absolutely. Yeah.Okay. We are going to take our final ad break, but we’ll be right back after this While we are gone, make sure you are subscribed to the Real Estate. Ricky YouTube.Welcome back from our break. So Brian and Douglas, you have a property management business you’re building in the short-term rental industry. Can you share some tips and tricks you’ve had on getting direct bookings?I guess tapping into our passions and expertise, again, as we got a lot more active in the short-term rental space, I really just went back to my roots of marketing and pr. So that was kind of my career path before this. And I really worked on growing our online presence. So that was making sure we had a great website and on social media, so we do a lot with promoting our properties online that way. And it was able to then translate into people approaching us privately to rent to our spaces. So there’s so much demand and competition on many of the OTAs that we always look for those opportunities to highlight our properties in different ways to attract people. We’ve also done different things with local shops and restaurants just to kind of do that cross promotion because we really want to be seen as a part of the communities where we have our rentals. I’ve also done giveaways and we sponsor a giveaway for our kids’ school silent auction. So it’s just little things we’ve done to really just add some of that authenticity to our business and show that our properties, we’re not just looking to make millions as an Airbnb host, we do truly care about the communities our properties are in and we want to give back. So that’s been a real driver to help with our direct bookings.And it’s also saying that the property, we’ve studied and believe in our product and we believe in giving the guests the best possible time and that kind of shows, and it’s not just about getting some rent, it’s about providing a product. And once you go, okay, it’s product first, then things start lining up for you because now you have your goals. And if you have a great product, the money will take care of itself in a way. I mean, you always have to have processes and things like that, but if you’ve got a great product, people are going to pay for that great product and they’re going to come back. And once they come back, they don’t have to go to Airbnb, they can come directly to us and we can have communication conversation and people do they want to come to us. And a lot of people call us up and say, Hey, I stayed at your cottage last year, do you have any other cottages? And we’re like, yeah, no, absolutely. And a lot of the cottages that we now manage for people have grown from there. Even some of the people that have stayed with us have turned around and said, I stayed with you. I’ve got a cottage. I’m like, really? Why would you be going to a different cottage anyways? There’s this book. Yeah, yeah, that’s right. And they say, because we want you to make sure that the customer has that experience and therefore we’re going to get booked more than anybody else. And it works.Just the few that you named I thought were really great ideas. The giveaways, I remember a long time ago, I used to help fundraise for a golf tournament and we would have somebody that would donate their cabin in the Adirondacks, and that was always one of the biggest things that everybody wanted to win. So that’s awesome that you’re doing at the school fundraiserWe do that we reach out to,Yeah,We’ve worked with influencers as well.Influencers andSimilar things.So to have them come in and they get to stay for free and take photos and then promote it,They take photos and videos and even there’s so many around here, there’s different travel companies and associations and even provincial stuff. So we really try to tap into all of that so that we can kind of be at the table too, so we know what’s coming. And with some of these other tourism companies, they need stuff to promote too. So I’ve been able to get on city websites and so on that doesn’t have to link to Airbnb.Yeah, you’d be surprisedHow many it can link to your direct sites.Yeah, we’ve been featured in newspapers, we’ve been featured and all kinds of stuff because we reach out and say, Hey, do you need anything because we’re kind of experts at this. And they’re like, absolutely right. So it does come. Brianne actually is, she works with a group in the United States. She actually teaches all this stuff for people that are interested in learning it.Well, Garrett, I’m curious on your side of things, as BiggerPockets, short-term rental expert, what are some of the things that you are doing that maybe you can give someone ideas to generate business and to really add to the amenities?I think one thing they pointed out that was a great thing that I do a lot in my local community is partnering with restaurants. We’re near lakes. We partner with Jet Ski rentals, boat rentals. We do some cross promotion between each other that we have discounts there. But one of them, they tapped a little bit into the influencer marketing, which it kind of depends on your market and what kind of stay you have. But I’ve had tremendous success with finding content creators in my area that are either in the travel scene or the food scene is actually one that’s very hits in similar niches, both kind of hospitality. And one of the biggest keys we’ve had is building up our email list. And a lot of people are not sure how to do this now that Airbnb doesn’t provide emails anymore when a guest book, you can get their phone number, but we have a QR code in every one of our units that is on a shiny silver placard, for lack of better words.
And it has our social media and it also has a chance to sign up for our weekly biweekly newsletter, but we offer ’em a 10% discount on their next state if they provide their email. And so there’s a few other tips and tricks on the email side that we can dive into all day for short-term rentals. But having just a simple QR code in your listing, especially if you have a bigger cabin that holds 16 people, these people, there might be quite a few people that submit their email for this 10% off. And you even can have a internet system that makes people use their email to sign onto your internet similar. A lot of hotels do as well too. So we’ve collected a lot of things like that and it’s become tremendous to build out over a year later. You can send out a marketing email to the same people and it might be time to go to your next property, or if you have a few cabins, then you’re obviously being able to market all of that to them and get that guest experience built up that they’re looking for.Capturing emails is big and there’s a lot, you’ve mentioned a bunch of them, but there’s a lot of strategies on doing that. We’ve actually got a booth, not the home show, the cottage show as well. I mean that’s all about capturing emails. So we do giveaways and stuff like that, and the people that sign up, we can walk out with a couple of hundred emails, no problem. And these are all direct people that are interested in staying at cottages or potentially renting out their cottages. But there’s lots of stuff that you can do.Yeah, I think ultimately it’s like anything, as an entrepreneur, you want to have real ownership over your business and your product. And that’s why we love the OTAs. They do bring in guests, but we don’t want to be totally reliant on them, and we want to have some control over the direction our business can go. Right?And that’s what a lot of people talk about as far as if your main business look at TikTok, for example, and when it did shut down as to do you have another way to contact your clients, your customers you’re following. And that’s why an email list is a great way to do that. No matter what your business is, you most likely rely on some kind of platform that you don’t have control over. So that email captures something that you can control. But before we wrap up here, Brianne, can you maybe give us an overview of your portfolio, so what you guys own right now and what the cashflow is on that?We currently own six properties. I think in total we’ve done nine deals, we have sold a couple. And then from a cashflow, I guess perspective annually or yeah, I guess monthly, we’re probably sitting at about 60,000. So with rental income, and then again with short-term rentals, it can be a bit cyclical. So in our busier times where some of those summer months are looking at close to like 150, 200, which is great. So always looking though to keep growing those. So that’s our goal as well. We don’t want to stay static there.And then Doug, what about the co-hosting business? How many properties are you guys managing and what do you make off of that? I just have no idea as to what is it worth, I guess, to actually go and create some kind of management business for co-hosting?Yeah, I mean, I think we’ve got what 30 right now that we’re managing, and some of them come and go. So we’ve got some clients that have stuck with us. We do bunkies up as well, and then we’ve got, I think we help some people out get started in the us so those kind of come and go as well. So it changes. I think it’s 30, and once again, it depends on the time of year, but I mean, some of our cottages make seven grand in a week in the summer in cottage country, but then they go to bed in the winter. But yeah. Brianne, what do you think we’re bringing inFrom a short-term rental perspective? So gross revenue, we’re hoping to hit 500,000 this year and as rental income. And then again on the co-hosting side, those properties, we usually make some varies a little bit, but on average our fee is 20%. Commission is kind of the standard we charge.When you say you make 500 gross revenue, what percentage of that is take home income? We all short-term rentals have a much higher expense. What kind of percentages are y’all landing in the income side?So on that it’s probably close, 15, 20% is take home.And are you guys still working your jobs brand? Do you still have your W2 job or have you guys fully integrated into being entrepreneurs?Yes, in case they’re listening. Yes, we do. And we love those companies and we’re never going to leaveIn case they’re listening. I loveIt. Yes. It’s actually six o’clock right now. You’reNot recording this at work right now. Well, Brianne and Doug, thank you so much for joining Garrett and I on this episode of Real Estate Rookie. Where can people reach out to you and find out more information?Instagram’s probably the fastest and easiest for many, so you can find us at Junction House pm or Junction House getaways. Those are our two handles. And on there you can then find our website and all the stuff to reach out. But yeah, we’d love to connect with other investors and real estate enthusiasts and short-term rental hosts, all of the things. Right.Well thank you guys so much for providing value to the rookie listeners today. I’m Ashley. And he’s Garrett, and we’ll see you on the next episode of Real Estate Rookie.