Live Let Thrive Podcast
Airbnb, PadSplit, Corporate Rentals, Arbitrage, and Live Let Thrive cover all the creative ways to rent out your properties to maximize profits. We also cover creative ways to buy properties. Come along for the ride and have some fun along the way!
Live Let Thrive Podcast
From Bankruptcy To Short Term Rental Millionaire w/ Alex Sabio
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Alex Sabio built five short-term rentals in the Smokies and Gulf Shores after filing bankruptcy in 2008. His first Smokies cabin - a four-bedroom with indoor pool purchased for $680,000 - generated $148,000 in its first year, a 50% cash-on-cash return. Using cost segregation studies to accelerate depreciation, he wrote off over $207,000 from one property to offset his W-2 income as a respiratory therapist, resulting in a $41,000 tax refund two years running. He and his wife Myka have paid zero federal income tax for two years while she retired from her healthcare job after their first three months.
The episode covers Alex's real estate journey from scams and foreclosure through 12 break-even long-term rentals, his pivot to vacation markets during COVID, and his 1031 exchanges that converted scattered single-family homes into high-performing short-terms. He breaks down the mechanics of cost segregation, explains why short-term rentals qualify for W-2 income offsets when average stays are under seven days, discusses self-managing remotely with virtual assistants and Asana workflows, and shares why he targets four-bedroom-plus new construction that can host multiple families at $1,000 per night in summer.
Work with us. Interested in professional management or consulting?
Myka — Sharebnb: www.sharebnb.com
Steve — Argest Rentals: www.ArgestRentals.com
Sign up for PadSplit with Steve's link and get a free 1-on-1 PadSplit strategy call with Stevie Stacks: padsplit.com/hosts
Myka's other podcast, Entrepremarriage — building wealth without losing the marriage: youtube.com/@Entrepremarriage
All our links: linktr.ee/liveletthrive
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Cold open
SPEAKER_00Welcome to Live Let Thrive, a podcast about the Airbnb life, the share economy, and everything in between. Here are your hosts, Micah and Steve.
SPEAKER_01Hello, hello, hello. And welcome back to another exciting episode of Live Let Thrive.
SPEAKER_04What's up, Micah? Man, I'm chilling, Stevie Stacks.
SPEAKER_01How you doing?
SPEAKER_04Doing good, my brother. I I um I took your advice. I got that audio book. Not I never split the difference. Oh man, man, that's the book. That's the book right there. I I've been negotiating wrong all my life. And at best, I've been a wimp negotiator. Well, you said wimp negotiator or something like that at best. I've been that. I've never been the one to actually win negotiations or get the best deal. You know what I'm saying? I've always been battling out of fear. So that's a great, a great book that you you mentioned uh on the on the podcast.
SPEAKER_01Yes, sir, man. Yes, sir. Yeah, never split the difference. That's a great book. Great book on negotiation tactics.
SPEAKER_04Especially right now. It's a buyer's market, finally. So especially right now, we can we can you know we can do some things. Yes, sir. Why what are we talking about? What is this show, Micah? That's so new what this show is.
Alex Sabio intro - healthcare professional turned STR investor
SPEAKER_01So 220, what? 228, baby. 228 of your favorite Airbnb, VRBO, share economy, fun stuff, podcast in the world. And today we have a special guest. Who we got, Stevie Stacks.
SPEAKER_04We have a special guest named Alex Sabio. I probably screwed that up, but he will he will correct me in a minute. Alex is a married father of four so from Southern California. He has invested in single-family homes, long-term rentals, and multifamily syndications, and currently focuses on short-term rentals. He is in healthcare and has a passion to help other healthcare professionals invest in real estate. Welcome to the show, Alex. How are you doing, bro?
SPEAKER_02What's up, guys? How's it going? Really excited to be here. Thanks for having me on. Good. This is a special episode because Micah did the intro today.
SPEAKER_01So yeah, I feel honored.
SPEAKER_04Feel honored.
SPEAKER_02There you go.
SPEAKER_01So you're in Southern Cal, man. So how how long have you been in the real estate space? And how many short term rentals have you gotten up to?
SPEAKER_02Yeah, you know, I started in real estate uh like early 2000s and made almost every single mistake out there. Um, started with a bunch of long-term rentals, and they were almost like revenue neutral. I didn't really make any money on it. Um, and at a certain point, you start, you know, wanting more for yourself, um, having different goals, and I wanted to really start expanding the portfolio, expanding, you know, my cash flow. And I realized with long-term rentals, it just wasn't getting done. You know, and at the time, I think I started really focusing in. I had, I think, like 12 single family long-term rentals, and uh thought about multi-family, and I tried to get into multifamily early 2020. And we know we all know what happened early 2020. Like the economy pretty much shut down, had a bunch of deals, and nobody really wanted to speak to us uh because we didn't have any experience in the multifamily space, and somehow just working hard and inver interviewing as many investors as I could kind of stumbled upon short-term rentals. So, anyway, started short-term rentals uh in like mid-2020. Uh, thought the economy was gonna fall off a cliff. Everyone thought it was crazy for investing out of state in short-term rentals. At the time, a lot of people that I worked with or here in Southern California had no idea what that was. Um, and currently we have five short-term rentals, um, and
First Smokies investment - buying sight unseen in Pigeon Forge
SPEAKER_02we're building two more.
SPEAKER_01Okay, okay, you said you're out of state. So you didn't invest in Cali. So, where did you uh start your start your short-term rental investment journey yet? Where you what market did you go to?
SPEAKER_02Yeah, so we went uh to the big market. So we went to the Smoky Mountains of Tennessee, and I'm gonna let you know that I had no idea where that was. Like people told me about it, and I said, What? Like all these city names sounded really funny to me at the time when people were told me about Pigeon Forge and Gatlinburg. I had no idea what that was, and even my family, co-workers, friends here in Southern California, they had no clue. Um, yeah, but that's where I'm at. I'm also in. Um, here's another funny story I told people. I'm finally getting a beach home that was kind of like a bucket list thing for me, right? And so people are like, Oh, wow, you started to make it. Where'd you get it? Like Newport Beach, Santa Monica, Venice. I said Alabama, Alabama, they said, I had no idea Alabama had a beach. What are you talking about, man? But yeah, I'm in uh Gulf Shores, Alabama. Yep.
SPEAKER_01Yeah, and then I tell people, man, those markets between I said any market between east of Texas and west of Florida, man, it's just opportunity down there because people don't think there's anything there. And you found a hidden gym that Alabama's a hidden hidden gym.
SPEAKER_02It's the redneck Riviera. It is, it is. It's pretty cool owning something on the beach. I mean, we really enjoyed it. Um, you know, I think the numbers are down a little bit from um the last two years, uh, but we're still making money, and it was like um just a bucket list thing for me, too, you know, just so that I could own something on the beach coming from where I came from. Um, that was inconceivable, right? To own something on the beach. And what I did is I actually 1031 Exchange sold all of my long-term rentals and bought three short-term rentals there in Gulf Shores.
SPEAKER_04So nice, nice. So you're in Southern California, right? Yes, and so how far are you from the beach in Southern California?
SPEAKER_02Well, I'm in the inland empire, so the inland empire is like uh about an hour east of Los Angeles, but I would say it's about two hours or an hour and a half is probably the closest beach.
SPEAKER_04An hour and a half, it'd probably take you a shorter period of time to get to Gulf Shores than to get to the beach from where you're at, right? In LA in California. I'm just saying because of the traffic, right?
SPEAKER_02Could be, could be. Sorry, I cut you off,
How the 1031 exchange works
SPEAKER_02Mike.
SPEAKER_01Yeah, yeah. Can you just explain something? Because you said you did a 1031. It's like for our listeners, can you explain what a 1031 is? And yeah, just explain what a 1031 is.
SPEAKER_02Yeah, I'm trying to not to mess this up. So uh correct me if I'm wrong here. So um, what was happening really, like we went all in on our strategy because we saw so much money. It was like having an ATM machine print money for us. And the thing is, we had our long-term rentals, they'd make like you know, two, three, four hundred bucks, maybe five hundred bucks a month, but every two years, you know, that tenant would move out and we'd spend five, ten thousand dollars fixing it up, and it really wasn't worth it. So we had some equity there built up. Like, for example, we bought one home for $120,000 15 years ago, it was worth $200,000 now. Um, not that much, like you know, the last few years where everything's jumping for, but for me, it was like, okay, it was time for me to sell. And my accountant said, Well, you're gonna have to pay taxes on that because it's gone up in value and you've made some income. So, what we did is we found a qualified intermediary, and we we wound up selling the house. So, when you sell the house, you don't have to pay taxes on it, just as long as you reinvest the money back into other real estate.
SPEAKER_01So, there you go, man. So, now you bought three in Gulf Shores, and then so I'm assuming you have two in the smokies.
SPEAKER_02We do, yeah, and we're building two more in the smokies, too.
SPEAKER_01Oh, you're building them, yeah.
SPEAKER_02Yeah, we got them under control, like uh, it's we bought brand new construction, and that's what I've liked doing there on the smokies. I've I have all brand new construction. Um, and we got them under contract. She it's been like December 2020, so they've really taken so long to build, and that's one of the reasons why I feel like they can't build fast enough out there, they just don't have enough workers, it takes them forever to build. So I got them under 2020 prices, and they still haven't closed yet.
SPEAKER_01So, oh yeah, because I was gonna ask you, isn't it a scary time to build right now?
SPEAKER_02It is scary, right? But the thing is, like, we got them at such a low price and it's gone up, like it's almost doubled from the purchase price that we got it under contract, and it's still gonna cash flow really nice for us.
SPEAKER_04Awesome, man. Yeah, now you had 12 long-term rentals.
SPEAKER_02Were those in California? No, well, okay, so the one biggest mistake I had is I invested in California. That's what I can tell you. Yeah, I you know, I work in healthcare and I bought a house here in California, bought it near a hospital I was working near, and I said, Hey, I'll rent it out to the residents or you know, the doctors in training. And that doesn't happen. I did I made almost every mistake in the book. I rented it out to the first person that had cash. I listed it in a newspaper. They showed up, I said, deposit $1,500, and they showed up with $1,495. And I that should have been a clue that they're gonna be an awful tenant right there. I said, okay, it's five dollars short. And then they proceed to be, you know, late every single month after that, had evictions and everything. And actually, I bought that in um 2008. I bought that in 2008, and it seemed like someone must have been watching me. Like the second I signed the documents to purchase that house, everyone said, Let's just crash the market. So, anyway, I always tell people I don't there's no fluff with me. I made a ton of mistakes. Um, wound up having um uh foreclosure, wound up filing bankruptcy from it, learned a lot from it. Yeah, yeah. This is how bad of an investor I was. Like at the time, uh my mortgage payment was like 3200 bucks, and I was renting it out for 2,000 bucks a month, and that's if they paid, right? That's if they paid on time. That's why I learned cash flow as king. You really do need to have enough cash flow, not only to cover the mortgage, but you need to have way more than that to so that way you can solve problems when things come arise, and that's kind of how eventually I landed into short-term rentals.
SPEAKER_04See, that's that's so we've always heard about SoCal, you know. It's it's it's hard to get people out if they are if they do stop paying rent, right? It could take up like up a year to get them out or or longer.
SPEAKER_02Yeah, I've heard those stories too. Fortunately, I didn't have that. I did have like um I paid them cash for keys at the time. It was like I gave them 200 bucks to get out, and they were so desperate that they took to the 200 and and got out, but that does happen here in Southern California, so geez, or California in general.
SPEAKER_04I think that's pretty um, yeah, not very favorable for landlords over there.
SPEAKER_02So there's a lot of equity to make though. That's the equity is the thing. Yeah, that's the big play. And for me, that wasn't my play. Like I said, I just had enough of that that one experience kind of bite me in the butt to say, you know what, I really need to focus in on cash flow. So I would buy like sixty to eighty thousand dollar homes like all over the US, like in Cleveland, Houston, Durham. I was in Huntsville, Alabama. That I really like that market for long term, but um, but yeah, I was in all these other markets.
SPEAKER_01Well, you sit man, it sounds like you've been through a lot of adversity, man. Like what you've just described, most people just throw in the towel. This real estate crap doesn't work. You're quitting. What made you like look at your look in the mirror and be like, okay, I'm gonna keep going?
SPEAKER_02Yeah, I didn't even mention my first ever deal was a
Why he kept going after foreclosure and a $16,000 scam
SPEAKER_02scam. I got scammed out of 16 grand, right? And my wife should have threw in the towel right there, like, you don't know what you're doing, like this isn't it. But for some reason, I I knew real estate was was the way to go. Um, my grandparents had invested in a lot of real estate in Los Angeles, like in the late 70s and early 80s. And for some reason, um, there's these sayings people, there's these things people tell you that just kind of stand out. And it's not like my grandma was telling me anything that I didn't know. I remember buying my first house here in Southern California and it went up a hundred thousand dollars. And I said, in one year, and she told me, she said, you know what? I never really made good money until I started investing in real estate. And this was it, like I said, she wasn't telling me anything I didn't know, but for some reason it really stuck out to me. Now, this is the uh most successful person that I knew, and she owned like multiple boarding care facilities. And I said, Hmm, maybe I just need to stick this through and I think we'll be okay. Wow, nice, nice. I'm glad you did.
SPEAKER_04That's what got you to live let thrive, right?
SPEAKER_02Right, right.
SPEAKER_04So healthcare, you're still in healthcare for a little bit longer, yeah.
SPEAKER_02About to make the leap, huh? Hopefully soon, yeah. My wife was also in healthcare. We're both respiratory therapists, we met in school, but like within the first three months of our first short-term rental, she was able to retire from her W-2 job right away. Like I said, we had a we knew we had an ATM machine and we already replaced her income with one short-term rental. And I'm a firm believer, you don't need that many short-term rentals to be financially free, you just need a handful. I know some people that have three that replace their income and living very comfortably.
SPEAKER_04So we know someone that did it with one house, right? 11,000 a month or one house. I mean, it's crazy. Oh wow, yeah. Kent He, he was on the show. Kent He is a bad mofo. Anyways, look him up. Uh, anyways, um, so healthcare that automatically uh we love hosting travel nurses, anybody in the in the nursing industry. We love they're our favorite guests, they stay for three months, they pay us good money, you know, and they give us no problems. So, do you do you host a lot of travel nurses?
SPEAKER_02I don't, I'm in like these vacation destination markets, yeah. Um, I I am looking, I I know COVID has um completely changed, and uh a lot of nurses' stipends have come down. But what I can tell you working in a hospital, like a lot of them, a lot of hospitals are really hesitant to hire right now. Um, and there's they're just staffing up with travel nurses. Um, because I think for them it's cheaper than hiring an actual person because you hire someone, you got to pay a pension, social security, medical benefits, and everything versus having a uh a travel nurse, right? Come in. I talk to the travel nurses all the time. All the time. I'm a respiratory therapist, and and I talk to them all the time. I'm trying to pick their brain, like, where could I buy a house where you think you'll rent, you know. So I guess California pays them pretty good over there.
SPEAKER_04So maybe that's maybe that's a good spot. Yeah, only if you only have them, yeah.
SPEAKER_02Yeah, especially the northern side. The northern northern California pays way more than the uh Southern California. I mean, Southern California, they're already paying a lot, but Northern California even more so.
SPEAKER_04That might be a good play, right? There, that's but they're not gonna try to rip you off and live there for for free, right? Right, hopefully not.
SPEAKER_02And you know what? I think you're onto something because the travel nurse they're already vetted, they've passed background checks. Um, and if you work specifically straight to the with the agencies, you could get in, you know.
SPEAKER_04Nice, nice. What agencies?
SPEAKER_02You know what? What's crazy is I join a lot of Facebook groups, and like I join like travel restoratory therapy jobs, and I'll just post on there, hey, I'm thinking about buying a home. And in this area, would you guys be interested? And when you'll find is there's all these different recruiters that kind of hit you up and say, Hey, uh, I'm with this agency and with this agency. And if you ever get something, let me know. So that way uh you could keep in contact with them. So that's a like a quick little tip there.
SPEAKER_04That's a that's a good to know because as far as right now, I guess furnish finder uh is the biggest thing that that travel nurses use, yeah. Right to find, you know, there was there was some other ones, uh, corporate housing by owner, there were some other ones that early on, but those are those are shit now because you have to pay a bunch of money and you get zero leads. I I jumped in what I did, I did one of those like about you know a few months ago. What the hell is this? Furnish finder is like 99 bucks for the whole year, and then you you get a shitload of travel nurses. I don't know, it's the best thing out there right now. That's why I was gonna pick your brain and see if there's anything better or any other any other ways to do it.
SPEAKER_02No, and it's not my specialty, so I I I just pick the uh nurses' brains and stuff. But what you'll find is like just the Facebook groups are actually like the biggest bang for your buck there.
SPEAKER_04So, yeah, gypsy travel nurse, that's one of the biggest ones. Um, so back to short-term rentals.
SPEAKER_01Oh, yeah, yeah, yeah. Going into the vacation rental market, like because most people, you know, the only thing I I I shied away from the vacation rental market starting off, which I probably should have gone in, was like the huge cash you have to put down. Like in places like Gulf Shores and the Smokies, what's like a cash on cash that you guys look for to invest over there?
50% cash-on-cash in the Smokies vs 20-25% in Gulf Shores
SPEAKER_02Yeah, I I love the smokies because I mean that one we've been easily going over 50. Those two properties we're going over 50 cash on cash return. And the one thing too is I make pretty good money in the hospital. Um, I tend to buy a little bit more expensive, and part of the the strategy there is um uh for tax reasons, right? I haven't paid taxes in two years, like all zero federal income taxes in two years, and so that's part of the strategy there. Uh Gulf Shores is a little bit less. I'm gonna let you know now, uh, at least for me. Uh, and it really depends on the property you buy in Gulf Shores. Like if you have an amazing view, if you have like a six-bedroom, I think those work extremely well where you could still easily make a 30% cash on cash return. Uh, I'm in the Gulf Shores, we're closer to 20 to 25% cash on cash return. And like I said, I'm really spoiled in the smokeys. And so, like, I've been beating my head, like, oh man, we're only making 20, 25. But you know, most people are gonna kill for that, right?
SPEAKER_01So now, what type of properties do you have in the smokies?
SPEAKER_02Um, well, we always focus in on uh more than four bedrooms. We we focus in on brand new construction. Um, and then the new. So my second one, I'll give you numbers, right? So my our second one, we have a four-bedroom, five-bath home with an indoor pool, and we purchased that for 690,000
$148,000 first-year revenue from a $680,000 four-bedroom cabin
SPEAKER_02or 680,000, but it generated us 148,000 in the first year. So how the how the hell do you not pay taxes? Uh well, uh, I'm not a CPA, but uh, so my CPA, her name is Amanda Hahn. She's Brandon Turner's from Bigger Pockets.
SPEAKER_04Oh, yeah, Amanda Hahn. Yeah, yeah.
SPEAKER_02Yeah, that's uh his CPA. I was remember listening to Bigger Pockets, and the I remember thinking there was all these political debates going on, and there was like, oh, that politician doesn't pay any in taxes. And you know, all these people were upset. And I said, Well, I don't want to pay taxes either. What the hell are they doing? You know, exactly. So I really I said, Okay, so my first big hire was a CPA, and I paid a lot for her. And I said, Okay, this is a consultation, but you know what, I'm gonna retain you. And every rich person out there has a tax strategy, and I don't have a tax strategy. And she's actually the one that kind of leered me into short-term rental. She was telling me, she said, Hey, Alex, you know what? To claim a real estate professional, you're gonna have to either buy more of these long-term rentals, or I have some clients that are investing in short-term rentals because it takes more time. And uh, and by the way, she threw in and they make a little bit more money. I told I tell her all the time, I said, You really should have started the conversation with my clients are making more money with short-term rentals and they get a tax break, and she would have hooked me in. But anyway, we use depreciation, we do a cost segregation study on our properties to help offset our W-2 incomes or my W2 income.
SPEAKER_01Smart man, yeah, thanks.
SPEAKER_04That is really cool, man. Because yeah, you're talking about you said it right. I mean, anybody can go HR block or do it online, do it yourself, and try to save as much money as they can, right? In taxes, but you said the big word strategy. None of them have a strategy, you know, and and just going to her and paying her, you know, good money, you saving you saving a lot more money than what's what you paid her, I'm sure.
SPEAKER_02Yeah, I mean, I remember when she told me how much uh she would charge me and my jaw dropped, and then she goes, Yeah, and that doesn't even include filing your taxes. I'm saying, What the hell am I doing here, man? I mean, isn't that what this is all about, right? So it's not about filing the taxes, it's about shouting anyone could plug in the numbers. That's the easy part. Anybody could do that, you could pay anyone that to do that, you could do turbo tax or whatever, but really it's changing your mindset, and you need to buy this because of this law that you can exploit or you loophole, whatever you want to call it.
SPEAKER_04So also what I heard uh you like four bedrooms and up. Why do you like the bigger houses?
SPEAKER_02Uh that's me, my style. Um kind of jealous of some of the people that have one bedroom sometimes because they're occupancies through the roof. But for me, like we host typically two to three families, and coming out of COVID, that's what we saw. We saw like there were multiple families that were staying there. Um, and when there's multiple families, you can charge a lot more. I mean, you're talking in the summertime, each one of our homes was uh generating like a thousand bucks a night, and when you're offsetting that between 12 people, um you know it's cheaper than staying at you know different places or a hotel, so and they get a better experience.
SPEAKER_01So that's what uh yeah. So all the listeners out there, I want you guys to really understand what he just said. If you if you're in a vacation rental market, it's better to go bigger like that because people are vacationing to that area. So that is one reason why I definitely want to look into that vacation rental markets because I'm in the metro markets and the cash on cash is nothing like you guys have. You know, the VR is like you pay to play, but you get it back. So I love the strategy.
SPEAKER_02It's interesting because I want to get in your market, you know. I think that's what we always do. We always think the grass is greener on the other side, but I think. I think diversification is really good, you know. Uh, like I could have kept going in the smokies, but I kind of wanted to diversify out. I'm here in Southern California. I wish I could figure out the LA market. I'm sure you've had tons of guests there that you know do something in these major metropolitan markets. But one thing with me is I'm so scared of regulation. That's kind of why I don't invest primarily in um Southern California or California. Like um my homes, like I'll give you an example. One of them, um uh in Tennessee. I mean, it's pretty lax, you know. I mean, for them to ban short-term rentals would be stupid, their economy would completely collapse. And we even have a Facebook group um that someone in our community created, and I know every single owner in my community, and we all help each other, so you're we're we're not having to worry about the neighbor next door complaining about us.
SPEAKER_01So see, and it's funny, you said you wanted to come to our market, and our market's trying to ban it, right? Grass ain't greener over here, right?
SPEAKER_04But um, but Nashville, I mean,
Why vacation markets over metro - regulation risk
SPEAKER_04I hear Nashville's pretty strict. Nashville, Tennessee.
SPEAKER_02Yeah, yeah. I'm not in Nashville. I mean, um, that's what I hear too. Uh Nashville. I'm in the uh the smoky is like two, three hours away. Um, so but yeah, that's what I'm hearing too with Nashville.
SPEAKER_04That's good, man. Um cool. So why all the plants behind you? Plants? I got plants on the other side. Oh, it's like a is it a really house? Yeah, yeah. Yeah, yeah. That's just a stupid question. Sorry about that. No, it's okay.
SPEAKER_02They're fake, by the way. Oh, actually, over here, this is uh on the window. This is my daughter. Uh, she loves uh like succulents.
SPEAKER_04So oh, nice.
SPEAKER_01I'll put those in my units, that's pretty dope.
SPEAKER_04Yeah, so you you had talked about um earlier. Well, you you did tons of mistakes, and you said you had revenue neutral uh properties, just properties that just made zero dollars, yeah.
SPEAKER_02Right. And I think um there people always want this spectrum where where can I put the least amount of money and make the most uh you know amount of money or with the least amount of work? It doesn't really work that way, you know. What I find is the harder you work, the more money you're gonna get. And so I would invest like in these turnkey single family homes, and they wouldn't make any money. If anything, I was losing money. I mean, it looked cool on paper that you had all these homes, but to be honest with you, at the end of the day, we're breaking even because, like I said, like a lot of times you might be cash flank a couple grand, uh like your whole portfolio, but you know, a year or six months later, someone's moving out, or you have an eviction and they're taking all your money back that you just earned. So, but yeah, we weren't making much money on those. At one point, we did buy some homes in Cleveland, we paid cash for them. I think they're like 50,000, 70,000 or something like that. So, no mortgage. We're thinking revenue's gonna be great, but that's the problem. You're gonna have your biggest cost, which is turnover.
SPEAKER_01Now, what if you would have turned now? Did you did you 1031 your entire portfolio?
SPEAKER_02Um slowly after, like really, like I would have done better if I did it, like right off the bat, and I should have burned the ships, burned the boats right off the bat, right? But initially it was like, okay, we we slowly got into it. Um, and then there was some markets that were we were kind of attached to. Like I had one long-term rental um in Durham, North Carolina, and I was renting it out to a nurse, and she'd been there for 15 years, and it was like one of my first investment properties, and it was cash flowing like three, four hundred dollars a month, and I really liked it. Uh, but the thing is, what I did is I did a calculation on return on equity. I was like, okay, we got like $150,000 in equity here, and it's generating us $3,000 a month in profit. And here I am in the smokies generating a 50% cash on cash return. So my mind's thinking, can I invest $150,000 and get a 50% return on this? So that's when I did the 10. That's when I slowly started like selling away a lot of my uh long-term rentals.
SPEAKER_01So have you ever thought about turning some of those? Like, I don't know if you have still have any, but would you have ever thought about turning some of those into short-term rentals as long as the regulations were in place and you were good? Because I mean, no mortgage if you're making what well, you still wouldn't make smoking money, you'd make like three grand profit a month. Yeah, you ever consider that?
SPEAKER_02Uh I did. Um, now looking back at it now, maybe one or two of them would have been okay. Um, I own homes in Cleveland, and here's the thing I'm the one
Cleveland Browns fandom and why he never visited his rentals
SPEAKER_02Asian Southern California Cleveland Browns fan you will ever meet, right? And I own right, right. You won't find it guaranteed. Put money on it. And um I'm upset every year, football season. So don't talk about football season. Oh my gosh, don't get me started with that. But um, but here's the thing like I own homes in Cleveland, and I'm a Cleveland Browns fan. I never wanted to go to Cleveland. Oh that's that was my that's the way I viewed it, and those homes weren't really in vacation markets. And at the time we were investing in vacation markets, so I wasn't even thinking at the time, like maybe rent to a travel nurse or do a corporate rental or something like that. And they were really in like C-class neighborhoods where I yeah, they didn't think they would thrive, so makes sense, yeah. The team doesn't do well, short-term rentals, probably not gonna do well. I don't know. I mean, even LeBron left, I mean, a couple times, right? But he's here in LA, man. I love LeBron, so I'm a big LeBron James fan.
SPEAKER_04Yeah, he's he's a bad dude, man. And uh, he's gonna be the first sports billionaire. Is he the first sports billionaire?
SPEAKER_01While playing, yeah.
SPEAKER_04While playing, while playing, yeah, yeah. Oh man, um, so four bedrooms for four. So that's that's that's the thing, though. You're you're doing the bigger houses, and you you say you're jealous of people doing the one-bedrooms, but I mean, why have a hundred one or you know, 20 one bedrooms you could have, or you could have one or a couple of four bedrooms pumping out the same amount of money or more. I mean, it seems like a better uh strategy.
SPEAKER_02Yeah, I think so. I think you're right. That's pretty much why I did what I did. Um, and at the time, because at the time I wasn't even thinking about scaling. Um, because we're self-managing our short-term rentals from a distance. Um, so I didn't want to have like 20 short-term rentals or 20 guests, right? At the time, I my mind couldn't think past that. I mean, now I probably can because we've scaled our systems. We started building systems. Uh, we have virtual assistants now that can help us with the process. So I wouldn't mind the one bedroom here and there. It's really about return at the end of the day.
SPEAKER_01So now I'm happy you said you scaled up your systems. So now what does your team consist of for you to run all your short-term rentals remotely?
SPEAKER_02Well, my wife retired, um, you know, and so she started doing a lot of the day-to-day operations like guest communications and stuff like that. Um, and we have a couple of virtual assistants. Um, and that's something new to us, right? Um, I tell people, you know, having um short-term rentals is much more of a business than it is real estate. And the the problem a lot of short-term rental hosts have, it's imagine if we all own kitchens and we're all cooks in the kitchen, but all of us have the menu inside of our heads, right? And the the problem with that is if you were to ever hire another chef, you're screwed because the menu is all in your head and you haven't written it wrote it down on paper. So now we use Asana and we have systems for everything. Like, hey, like uh once a week, check the door locks to make sure that the battery is above 33%. That's a really simple task that a virtual assistant could do. Or once a week, hey, check to make sure the calendars are in sync, or once a week, check to make sure pricing is okay. And you know, I mean, there's definitely all of this automation software that could help you out, but having another person in there, uh, like I said, writing that menu down, giving them the playbook uh makes it so much easier. And now we feel like we could blow the business up because now we have the manpower and the fact that we wrote the menu down. We feel like we can hire different people on here so that way they're successful and help us out.
SPEAKER_01Oh, you said Asana. I haven't started using Asana or Monday.com yet. But what I think someone's me.
SPEAKER_02Sorry.
SPEAKER_01Uh what uh what uh what other systems do you use to like run your day-to-day besides Asana?
SPEAKER_02Uh we use Guessy for Host. I know you guys uh pump them up. Um so we use Guessy for Host as our property uh management software. Um, we use price labs uh for our um uh what's called
QR codes at every hotspot - the hot tub video solution
SPEAKER_02dynamic pricing. Uh our cleaners have different types of um what's called systems to help sync our calendars so that way that's automated. Um and the one thing I do is I tend to put QR code. So I use something called flow code, uh, flow code.com. They're not paying me for that, but um, so what I do is like in these vacation markets, I'm gonna let you know right now when people go on vacation, they lose their mind, they don't know how to operate the most simplest stuff. So I'll have a QR code near wherever I say hotspot, like I'll say the hot tub is a hotspot because most likely the guest is not gonna know how to operate that hot tub, and so there'll be um a QR code that links them to a video of me operating the hot tub, and so that that's actually been very helpful for us. Uh, we find that you know that guests aren't calling us as much, and actually you'll see how many views you get. You're like, oh, people are watching our hot tub video or something like that. So maybe they thought it was gonna be something else altogether, right? And that's why they dislike the video.
SPEAKER_04So I mean, unless you're in you know, a little speedo, who knows what you're doing in the hot tub video, uh right. So I want to know, okay. And you know, you spilled your heart earlier. You said you went through bankruptcy, it's a tough situation, I'm sure. Um, so how'd you go from that to actually being able to buy houses again? I mean, everybody you do I mean, do you buy them cash or did you were able to get financing again? What happens after that?
SPEAKER_02I went to work,
Filing bankruptcy while working five to seven days a week
SPEAKER_02man. I went to work, right? And so here's the thing like I tried like penny stocks, I tried all these little things investing in the stock market. I wish I would have gotten crypto. I never got into crypto, I think I would have been okay with that. But you know, really, um, I I in healthcare, there's so much you could work as much as you want, uh, especially as a respiratory therapist. They were just always short staff, and that's the one thing with me. I'm not the smartest dude, but I have like a really strong work ethic, and there's no substitute to work. And so I would I was working five, six days a week, sometimes seven days a week. Um, and I was just pumping it out, and then I was getting myself ready, you know. So from like 2013 to 15, um, for five years, I was just saving up. Had I known what I know now, I would have just started buying earlier, but that's really what it was. I say saved up all my money, and real estate's very, very forgiving. Like, I had when I filed for bankruptcy, I'm gonna let you know that I I had all these homes, and some of them the banks didn't want. They're like they're upside down. I was like, please take them, and they're like, We don't want that crap. Like they're like, You owe a hundred grand on that, it's only worth 50 grand. I'm like, Oh, okay, I guess I'll keep it. But like I said, real estate is really forgiving. I kept a lot of those homes through the bankruptcy, and they went up slowly, uh um in equity over time, and so that's where the 1031 exchange came in.
SPEAKER_04So, yeah, and that was uh definitely a uh crazy time in uh in our economy because you know, 2008, everybody was turning all the keys into the banks, right? They ran out of key holders for all the keys, it's crazy, they didn't want them. Um, so now yeah, now those houses are worth the were a million. Uh well, we bought them in in Southern California.
SPEAKER_02Um, and and even that home that foreclosed on, like, had I kept it, it would have like doubled in value still. Like I said, it's really forgiving, even if I um like just paid the mortgage out or whatever, or even had I thought about vacation rentals at the time, because there really was no laws against it at the time because nobody heard about it in like early 2000 or 2010, somewhere around there. But I could I should have like flipped it into the travel nurses and stuff like that, but wasn't really thinking.
SPEAKER_04Yeah, yeah, it was yeah, no, nobody was thinking at that time. Um, so so you you said you went to work, you started saving money, you turned out you turned around your uh finances. Now, do you is that part of the strategy? You said you were buying um single family homes cash.
SPEAKER_02Yeah, I what we did is we've borrowed from our 401k um a couple of times. Uh, I think you could borrow up to $50,000 depending on your 401k. And so, like I said, we were working like crazy. I would save like one year I saved like 20 grand saving, right? Um, and um we borrowed 50k and we bought a house for 70k, and then we just snowballed it like it was you know, cranking out like five, six hundred dollars a month profit, and then it worked out pretty good, and then we wound up borrowing from my wife's 401k and kind of did the same thing over again, and then we started snowballing, and then I bought another one, kind of like the same thing. So nice and what do you feel about this current market? I'm always buying, I'm always buying, but I'm really cautious now. Um, that's the one thing. I'm really cautious. I have like a lot more knowledge now. Um, I would be like two years ago, you could have bought anything in the smokies and it would have cash flowed, and you can't do that anymore. There's no way, but the one thing is too. I mean, I'm I'm buying because part of the strategy is so that way you don't pay taxes. Like the first year we got a $41,000 refund, right? Even if the property just didn't make any money at all, the tax refund made it worth it. And we pretty right, and then the second year we got back pretty much the same thing, so it's like part of the strategy is okay, can I at least make a little bit of money here or two? I mean, I look for a minimum of 20-25 cash on cash return, but to be honest with you, even if we're around 15 with the tax strategy, it would be worth it.
SPEAKER_01True. Tax strategy is huge, man. Like, I was at my mentors conference about two weeks ago, and he's getting cashed out two million for his tax return. I was like, my god, what am I doing wrong? No, you you said something very important. You said now you can't just buy everything nowadays because you know, interest rates are sky high, you know, they got to be careful. What markets are you looking at and what kind of deals are you buying?
SPEAKER_02Well, it's interesting because I I'm pretty much financially free now, right? I kind of hit my goal. Um, a big part of it now is what else can I do? Can I help others along the way? And so that's the other thing I'm helping teach others kind of how to get into short-term rentals. A lot of them are medical professionals because they see me in
Scaling to hotels and motels - the next chapter
SPEAKER_02the hospital. So that's kind of the my passion project. Um, I could keep purchasing short-term rentals, but I think uh number one, helping others along the way and teaching them is gonna be my passion. But can I scale it up bigger uh in buying hotels and motels, like boutique motels? So that's kind of like where my next like um step is right now. It's way difficult though, way difficult. But you know, I think we'll get it done.
SPEAKER_01Do you now do you find that map? You brought it up, the difficulty. It is difficult. Do you find that as a safer investing model right now, with you know, interest rates being high and got kind of guaranteed cash flow over there?
SPEAKER_02I with me, I've inter I've interviewed enough people that own hotels and motels, and they tell me how much money they're generating. And I'm like, okay, I think if I follow their playbook, I think I can. And if you have enough room, I guess, rooms and and and um you know doors to help offset that, I think you're gonna be okay. If you buy it right, no matter what the deal is, if you buy it right and it's cash flowing, I think you're gonna be okay.
SPEAKER_01So gotcha.
SPEAKER_04Now I do I do um you mentioned something something cool. So you want to get with um with traveling, you know, uh, I'm sorry, just uh medical professionals, right? Yeah, and and and get bring them into the short-term rental world. And now I'm working on this thing. I need to get with you because I think we we have a good symbiotic relationship with this thing, and and it's called travel nurse house swap. And here's my here's my reasoning behind it because these travel nurses are flying all over the place, right? And and a lot of times, you know, there's like, hey, I only want to pay $1500 a month and have uh, you know, all bills paid, whatever blah blah blah. Yeah, and I'm like, you know, actually, over here, you can't even rent something for $1500 a month. I don't know how you're gonna get that. Well, he goes, Well, the thing is, I got a mortgage back coming to pay, I got an apartment back coming to pay, I got a condo back home to pay. I'm like, why are they renting these things out, man? And so, and so that's that's what that's what I was that's why I came up with that travel nurse house swap, yeah. Uh, where they could, you know, hop on there and rent out their places as they're traveling and doing their thing, and so it's still it's hard to get off the ground. A new idea is hard to get off the ground, but I need to work with you, I need to get with you. You're in the industry, let's do this, man.
SPEAKER_02Yeah, they need more education because whenever I tell them, they get scared, they're like, No, that'll want people staying in my house, and um, and then I tell them, Don't you want an extra three thousand dollars a month or whatever it is? But they're so worried about it. Like, what happens if you know the uh the sink you know clogs or whatever, and I need to call a plumber in the middle of the night. But the thing is, when you start showing them what you're doing, I'm like, hey, I'm managing this 2,000 miles away, then they start getting the light bulb when they start seeing other people do it. But yeah, it's really just I think it's an amazing idea because nurses tell me that all the time. I I have a home, you know, you know, because here in Southern California, they can uh a lot of places they're making two to three times more than what they're making back home. And so what they'll do is they'll they'll travel here for 13 months or something like that, and then go back home after that. And I know I know one nurse, he worked for half the year because he knew that he would work the whole year making the same amount of money. And so there's that whole six months where his house is empty, where he could easily be renting it out. But I think you're onto something there, man. It just takes a little bit of education for people, and I think uh people aren't. Here's the weird thing about medical professionals. I don't know if you guys don't know that they aren't thinking about stuff financially like this, and like I a lot, it's weird to me because there's a lot of doctors investing in short-term rentals in vacation markets. And for me, before like starting my journey in this, I'm thinking, oh, they're balling, you know, they're making like two, three, four hundred thousand dollars a year, you know. But a lot of them don't have that financial um background where they're not even thinking about that, they're focused on taking care of their patients, and so they never really set themselves up for like retirement or anything. But so the medical community definitely needs a lot more educating in that. So, and that's where that's where I'm trying to come in. I'm trying to just all I'm doing is just I'm just sharing my story, that's all it is.
SPEAKER_04Yeah, yeah, yeah. So, yeah, so me and you, we can we can do we can move mountains together, man. I know I know what Alex um says. So that's the thing, travel nurse house swap. I even made it where it sounds like hey, you know, uh a fellow travel nurse could stay at your house while you're over here, you can make money, and then it's someone you trust, it's in the same industry. Come on, let's do this. And they're still very hesitant, they're very hesitant. I might have a few that are like, Oh, it sounds like a good idea. It doesn't go past that, but uh this is new, and I know it's it's it's hard to get, I mean, you know, like Amazon off the ground, right? You said he sold books up first, I think. Right, but yeah, me and you should talk after the show. Yeah, yeah, let's do it. And also going back, you know, you say so many cool things on the how does how does the cost please break it down how the cost segregation works because I always hear like millionaires do this, billionaires do this, Donald Trump does this, he goes and buys a property, picks it apart with the cost segregation,
Cost segregation breakdown - $207,000 write-off on first property
SPEAKER_04pulls all the money back out, uses that money, adds debt on that, and buys another thing, and he never pays taxes. How does that freaking work?
SPEAKER_02Yeah, and short-term rentals are kind of special because there's a little bit of a loophole there. Um, not a CPA, so don't take my advice. Remember, I filed for bankruptcy once. So Alamanda Han. Amanda Handahan, right? So, really what we're doing is we're taking depreciation uh and we're using that to help offset uh our W 2 income. And short-term rentals are special because if you document it right, you can use those, uh, that money to help offset your W-2. Now, normally, with uh when you're trying to write off losses, uh, the IRS is gonna deem that as um as passive income, and you're not gonna be able to offset your W-2 income. The difference is with short-term rentals, you can do that because typically, if you're renting your house out for an average of less than seven days, you can use that depreciation to help offset your W 2. So here's an example, right? So I bought my first short-term rental for $625,000. I paid $1,000 to get a cost segregation study done. So what he did is he took all the depreciation and uh we're able to depreciate uh over $207,000 within the first year, right? And we don't have that much income from the short term rental. So what we did is we documented it properly. So where we let's say if you only made $150,000 in your W 2 income, you have over $200,000 writing uh use as a write off to help offset your W 2 income. So then It looks like you're not making any income. For me, uh, I like to claim single and zero at my W-2 job. So I like big tax returns because when I get big tax returns, I get to do big things at the end of the year when I get that big check. So, and it's kind of like a weird problem because now I take that $41,000 refund and I buy another short-term rental with it, do the same exact strategy, have more cash flow and have more tax deductions. But you're kind of in this weird spot where you have to keep buying homes. It's like this weird good problem to have, I guess. So, anyway, that's that's really what my strategy is in. That's awesome.
SPEAKER_01Who do you call to do a cost segregation on your property?
SPEAKER_02You got to get a cost segregation expert for me. Uh, my guy is Yona Weiss with Madison Specs. Uh, that's who I use. Uh, before I got into short-term rentals, I was studying a lot in multifamily. And when you look at multifamily and commercial buildings, that's the strategy. Everyone's buying these big buildings and getting like a million, two, three, four million dollar um, you know, deduction. Um, and they all talked about cost eggs. And so I took that same exact principle that I learned, and I went to short-term rentals and applied the same exact thing.
SPEAKER_04So no, now why the hell would the government let people do that? I'm just wondering. The government's not the brightest, right? Uh I figure a lot of people in the government, maybe they're they're into real estate, so they think, hey, this is a cool thing to keep us from paying taxes, you know. Uh why what what advantage, why do they want people to keep doing this? Uh cost say, how does it help? You know, how does it help the government?
SPEAKER_02I don't know. That's that's a good question because I wonder the same thing, right? But this is what I think. I think real estate makes the world go round, really, because when people buy homes, the plumber has a job, the electrician has a job, uh, all the county people have jobs because people are paying property taxes, surveyors, contractors, every like it employs so many people when someone buys a house. I set up a short-term rental, I'm at Home Depot 10 times like for the whole weekend, driving back and forth, buying stuff at Home Depot, Walmart. So there's it stimulates the economy when people buy real estate. So that's what I think happens.
SPEAKER_01I fully agree. Because I mean, if you're gonna the guy who's doing a cost segregation to get $40,000 back on his tax return, he's more than likely gonna go buy some more real estate. Government knows that, you know, you know, yeah, they know what type of mindset of individual they're dealing with. Now you go get into more debt, which now of course helps stimulate that economy. So, yeah, I I fully I fully agree with that as well.
SPEAKER_02Right, right, yep. And it's a loophole, right? I mean, like I said, I like politics aside, I don't give a shit with politics, right? I just like if Donald Trump wasn't paying taxes, I wasn't upset. I was like, Well, what's he doing that I need to do? Right. That's that was my mindset, right?
SPEAKER_01So hey, I'm the same way. When they said he wasn't paying taxes, who's his CPA? Right, let me call this dude, right?
SPEAKER_04Right. I was thinking about this today because there was there was some famous uh this guy went to city council and he's like a small business owner in some city, I don't remember, whatever. And he's and he's like, and they're playing the the sad music in the background or the emotional music in the background, and he's and he's actually saying, Please, you know, tax me more. I want to be taxed more so I can go and help the city and all this noble crap, you know. And I was like, dude, if you want to be taxed more, just pay them more taxes, give them more taxes. Why you want us to get beat up in taxes, you know, or other small business people in your neighborhood, you know, right? Why do you want them to go out of business because they're getting taxed to death? I mean, why I'm just thinking you should sorry, you should think like Donald Trump. And I remember in that debate, and Hillary was like, He has not paid taxes for five years or something like that. And he and he said, Because I'm smart.
SPEAKER_01I was like, Donald Trump voice, man.
SPEAKER_04Because I'm smart. But I mean, I mean, yes, but it does. I mean, there is a a reason why they give these tax breaks, is because it keeps uh people, yeah, you know, building new building more real estate, making more real estate, buying and renovating, and and then um stimulating the economy. It makes sense, right? So hopefully they don't um take these loopholes away, you know.
SPEAKER_02Right, right. Yeah, and that's what's crazy is that first short-term rental um that we bought went up over $300,000 within two years. Um, this is why you need to build systems and operations
Double mortgage payments for 18 months - the $40,000 mistake
SPEAKER_02too. Um, this thing was cash flowing pretty strong. I didn't even know it because I was making double mortgage payments for a year and a half. It wasn't until my bookkeeper was like, Hey Alex, why did you make $40,000 in extra payments to you know your mortgage company? I'm like, No, I didn't. What are you talking about? Like, I don't want my money back. But I set up like my automatic bill pay through Wells Fargo, which was my bank at the time. Um, and then I even set up the automatic bill pay with the mortgage company. And here's the crazy thing, I didn't even feel it. You know, I was making $2,600 extra payments, and I didn't even feel it at the time. Uh, we're just so focused. Um, but now we just did a cash out refinance, and so that's why investing in stronger markets compared to Cleveland, Ohio, which is like a depressed market, it doesn't really go up that much versus these hot vacation markets that just jump through the roof. We did a cash out refinance and we like pocketed X amount of money. I was like, there's no way I could have worked at the hospital and make this much amount of money in two years, uh, working overtime or anything like that. So I think that's where true wealth is built. Like, really, when your houses go up tremendously in value when they're in strong markets, then you could do a cash out refinance or 1031 exchange and have more money to do to buy more real estate.
SPEAKER_04So now is is a cash out refi a good idea right now with interest rates like seven, eight percent.
SPEAKER_02Yeah, remember I filed bankruptcy at one point, so don't take my advice here. So here's my take on it, right? So it cost me about $115,000, $120,000 to purchase my first short-term rental, right? So, and I have a 3% interest rate on it, good for 30 years. I'm like, cool, I'm set, right?
Cash-out refi at 3% - pulling $200,000 tax-free
SPEAKER_02And then my uh lender comes up to me and she says, Why don't we cash out $200,000 now and you don't have any money in the deal? And instead of the cap the property cash flowing $5,000 a month, it'll cash flow three thousand dollars a month, but you'll have two hundred thousand dollars with you and you won't have any money in the deal. You pretty much have a free house, like you pretty much did a burr. And people in commercial real estate do that all the time, right? And so, anyway, now I have more money to deal with to buy more properties that cash flow more and have more tax breaks. So, for me, in my situation, worked out great.
SPEAKER_01Strategy, it's always about strategy.
SPEAKER_04Beautiful. And a question is is on my mind is you went through bankruptcy. How are you setting up your business to to bankruptcy proof it? What are you doing? What what measures are you putting in place that you didn't the first time? Are you putting things in LLCs? How are you how are you setting things up so you won't ever go bankrupt again?
SPEAKER_02Yeah, probably not the smartest guy, right? So because everything's under my personal name right now, and we haven't done that part of it yet. Really, the reason why I filed for bankruptcy was because I wasn't cash flowing enough, and I just couldn't do it anymore. Like I was coming out $1,500 every single month to cover the mortgage, but now the strategy is more so buying strong cash flowing assets to where we don't have to deal with that stuff. So that's really what it's been. Am I protecting myself adequately? Probably not. All I have is like a nice umbrella and a little bit more insurance than than most people, but other than that, that's all I have. So okay.
SPEAKER_01I have a question for you with you, because I'm in the middle of uh I'm eventually in a couple year year or two. So I'm gonna start moving everything into different shell companies and whatnot. Now, with you having everything in your personal name, yeah. Um, aren't you do you get the best tax breaks with it all in your personal name?
SPEAKER_02Um, for me in my situation, yes.
SPEAKER_01For mine, I thought about you work at W-2, right?
SPEAKER_02I still work a W2.
SPEAKER_01Okay, okay, okay, go ahead.
SPEAKER_02Yeah, I'm a high, like a good six-figure income where I need to help offset my W-2 income. So for me, right now, in in my situation, it works right. And I this is what I get all the time from uh like I work with extremely smart people, I work with doctors who are a hundred times smarter than me, but they never want to jump into a situation because they want to know everything, all the protection stuff. And with me, I'm kind of just reckless. I'm gonna jump in there and I'm gonna figure it out. So that's my personality. I kind of jump in there and I'm like, oh, okay, maybe I do need to figure out the structure. Oh, okay, maybe over time I need to hire a VA, you know. So that's kind of my strategy. It's been just jump in there and then learn as you go. Um, so I'm in the same boat too. I'll probably I'm probably gonna start moving my stuff over into LLCs and to shelter stuff. I it's not that I'm oblivious to it, it's just for me and my situation, it's working right now.
SPEAKER_01See, and I'm happy you I'm happy you brought that up because that's the first thing most people who want to invest, oh, get LLCs for this, get LLCs. But it depends on your strategic situation. Like you know, hey, I have this high-end come W-2, put it on my personal so I can at least write some of this W-2 income off. So I'm happy you brought that up. So everyone get a real estate CPA to help you out so they understand your unique situation because everybody's different, but yeah, go ahead, Steve.
SPEAKER_04No, uh it's funny. I think you crack the code because you're like these doctors, they care so much about their patients that they're
Doctors overanalyze but what if
SPEAKER_04not even trying to get into something like real estate or whatever. But I think I think you you crack the code when you said they're they they overanalyze things out of fear, and I think a lot of it is they you know, the lawsuits. I mean, the you know, a lot of lawsuits happen at hospitals, right? So they gotta have this um expensive ass insurance to protect their asses in case they you know cut off the wrong leg or something. Um, so so that's that might be playing into the mindset of oh, I'm not gonna risk getting a rental and a slip and fall, and then I get I lose everything, you know. I I guess that that that kind of sums it up right there.
SPEAKER_02Yeah, by nature, they're very protective, they always want to waiver or you know, sign off, like if you're having surgery, you know, here, sign this consent so that way you know we're protecting ourselves.
SPEAKER_04They make people sign their legs and shit, right? They make them they make you you they write it in the market, and then you write in the market to make sure that we're operating on the right legs, right?
SPEAKER_02Right, right, right. And I think there's all these the questions I get, there's three words people always ask, but what if like it starts off, but what if it's like, but what if the market crashes, but what if there's a party, but what if I get sued, but what if, but what if, but what if there's all these but what ifs, and then I always flip it on them and I say, but what if it works out? That you got to really think about it. Because for me, it was extremely scary for me to invest in a short-term rental. At the time, I was putting every single dollar I had. We're in the middle of COVID, we didn't know whether the economy was gonna fall off the side of a cliff. But from that, I learned a skill set, I was able to start a business, I was able to learn how to scale the business. My wife was able to retire in three short months, and now I'm inspiring others to do the same. There's so many other good benefits that come with it, but we always focus on the first but what ifs, all the negative but what ifs, but focus on all the positives that can come with it.
SPEAKER_01So it not only focus on the positives, I'm so happy you brought that up. But what ifs? Whatever you run into in life that you put yourself out to out there for, the answer will come as soon as you hit that roadblock, and that's your learning experience. A lot of people are afraid of the learning experience. Once you hit the you can either look at it as a brick wall or a ro or a roadblock, it's up to you. If it's just a roadblock, you can get through it. Brick wall, if you look at it as a brick wall, you're just gonna be stuck there. But but what if there's a way around? Always have the mindset, man. I love your mindset.
SPEAKER_02Yeah, thanks. And remember, like I've been an awful investor, I've been scammed, I've had a bankruptcy, I've had a foreclosure. But to be honest with you, had I never gone through that, I wouldn't be here today. Yeah, you know, what if those long-term rentals worked out and the tenant paid on time the whole time? I'd probably still be uh a long-term rental landlord without that much cash flow. And so I had to go through all those tough times to get to where I'm at right now.
SPEAKER_01So imagine the guy going through a bankruptcy thinking it's all over. You can be that shining light, whatever you go through, you can be the you can be the guiding light for the next person, man. And it's awesome that you were able to go through that and keep it pushing. That's why I had to ask your mindset about how you just didn't throw it in the towel. You're like, forget it, let's just keep going. You know, your grandparents were you know, you saw your grandparents do it, so keep going. I love that.
SPEAKER_04Yep, yeah. We had another guy on the show that went through uh bankruptcy, also, you know, and he came out of it and now he's in jail. So it worked out for well, I didn't wait a minute.
SPEAKER_02I hope it doesn't happen to me, better. I gave tax advice that I shouldn't have been given.
SPEAKER_04Yeah, it ain't gonna happen to you, bro. It ain't gonna happen to you. Don't worry, don't worry. We love you if you're listening, we love you out there for protect your protect your you know parts. Um, so I'd love to derail the show. Sorry, Micah. Um, man, it's been a great episode. This has been a freaking phenomenal episode. I was gonna ask you some more things. What was I gonna ask you? I don't know, forgot. Um, Micah, I was gonna tell Micah some advice. He mica stop arbitraging and start buying. That's where it's at. He's been saying that you ever thought of arbitraging, Alex? Yeah, that's a good question for him.
SPEAKER_02I have, yeah. You know, I have good friends making a killing doing it, and I'm open to anything and everything out there. I live in Southern California. Peace, you know how many people travel here? I know so many people that arbitrage here in Southern California, but I'm just so scared, you know. I do need to figure that part of it out, and I'm cool with that. You know, I'll figure that part of it out. But do I really need to? Right? Like I said, like you could really be financially secure and free with just a handful of short-term rentals, and maybe you don't need to go through those headaches, and maybe your goals are just to live comfortably and have this. Because now my goal is really like let's just help others along the way. I have enough money to you know live my life.
SPEAKER_01And that is a good point, you know, because like you need to arbitrage. I mean, you've been buying in vacation rental markets, you know. What's the point? You know, and but if you do arbitrage, let me know because I want to know what your mindset is towards arbitraging when you've been buying. Uh, because I know people's mindset of when they've been arbitraging to when they've been buying. The people that I talk to, when once they buy and they've been arbitraging, they were like, Okay, forget this arbitrage thing, the buying. So let me know your mindset. If you do it, hit me up, send me a DM, text me. Yeah, let me know. Because I really want to know someone's mindset on that.
SPEAKER_02It's interesting because I know so many people that buy that are like jealous of people arbitraging. We just need to all come together, right?
SPEAKER_01I do both, so it's like right, right. Yeah, I once I started buying the correct way, I was like, I gotta get out the arbitrage phase. Uh yeah, that's what that's what it was for me.
SPEAKER_04Right, yeah. What uh one thing I and I I've told my I've said it on the show before that I do, you know, I do both as well. Uh arbitrage, uh, I buy you know properties and then I have my management, uh short-term rental management company, Argentist Riddles, you know, showing out on the show. And so and so one thing that's a big bonus for for being if you're gonna do arbitrage is getting uh you know a nice place, uh nice location that you think is gonna make some money, and maybe in a market you're not quite sure about, right? You're not quite sure about this market, you think it's gonna do good, you don't know. You get in there, and and this arbitrage is fucking printing money, like an ATM machine, like you said, and then you're like, okay, okay, I'm gonna I'm gonna work with this owner and I'm gonna buy this house from him. You know, it helps you get your foot in the door, get a relationship with this owner of this of this property, and then you can eventually buy the house or buy the one next door by the one because it it helps you do the the experimentation, the you know, trial and error, it helps you see if that market is viable or if that even that block, that city, whatever is viable for big profits, and then you can it gets your foot in the door and you can you can buy those properties, right?
SPEAKER_02Yeah, I think if I had advice for someone getting started and they don't have the money, um definitely arbitrage uh because once you you start, then you and that's the thing. I I I thought that the process was gonna be a lot more difficult than I thought. Um, and surprisingly, I'm like, there's all these apps now that kind of help you along the way automate the process, and now we have virtual assistants that do help you out. So the process winds for me, for my personality, it wind up being easier.
SPEAKER_01So one thing on that about if you don't have money, here's one to think about. If you don't have money and you arbitrage, because that this one came to me the other day. If you don't have money and you arbitrage, you're gonna have to spend some money to start it up, right? Yeah, and you know, you're gonna probably gonna use a credit card. What if you use those same credit cards to buy a house?
SPEAKER_02Yeah, that's a lot of credit cards, man. I got bad credit, so I got a Costco card that with a you got bad. How do you have bad credit? You're a millionaire, come on, man. No, no, no. You know, I made some bad decisions, you know.
SPEAKER_01You know, I'm just throwing it out there. I was wondering if people uh have done that because I have heard of people buying houses off credit cards, you know, just doing a bunch of cash. I was like, damn, man, yeah.
SPEAKER_02I I heard someone who had like 500 grand in a credit card. I'm like, oh my god, that to me that scares me, you know.
SPEAKER_04You can watch that credit that that credit card away, man. Whatever.
SPEAKER_02Yeah, they're in it for the points, I guess.
SPEAKER_01I don't know, but yeah, I'm I'm a points guy.
SPEAKER_02You are okay. Yeah, I that's one thing I need to figure out. Like, people always have all these uh questions for me, like oh what credit card. I don't have all the answers, dude. I'm just figuring this out as I go, you
Amazon business card and Chase points for restock costs
SPEAKER_02know.
SPEAKER_01Here goes one for you. This is one a quick tip for you if you want to like start saving money on your short-term rental business. Get an Amazon business prime card that gives you five percent cash back, and then also and then pay all your bills on a chase card. Okay, and what you do is it'll give you points for paying like your utilities, and then you go to Amazon to like order your restock stuff. It's only works if you use Amazon to order your restock stuff. You can use the points and then the five percent cash back for whatever's not available on the points, and then you can use that to get five percent back, and then you can pay for all your restock stuff, get it virtually for free.
SPEAKER_02Nice, beautiful, all these little tips and tricks, man. Crazy, dude.
SPEAKER_01You can get it for free. Like once you re-eliminate your restock feet cost, and then the only thing you're really paying is cleaning, it really helps your business.
SPEAKER_02Uh, yeah, that's something I need to figure out too. Because we're about to fire a cleaner right now, and I'm like, okay, I found another cleaner that I really like, but she's like, Oh, but you gotta provide everything. I'm like, I don't want to provide you nothing, man. I want you to do everything, you know. So I don't know.
SPEAKER_01But I found out uh, if you just have a true like because I'm remote as well, and you're remote, have it like a true Zoom interview and let them know your expectations and what your company goals are. I've got an excellent cleaning team now that I've did that. These two are straight up killers, and they've been doing a great job. So, yeah, man, that's tip for people on the cleaning side because yeah, I going through cleaners with a pain.
SPEAKER_02Yeah, you're paying. Yeah, luckily, this is probably the first one I'm gonna fire here. I've been it's crazy out there in the south. Like, I think to me, like a handshake still means something out there, and so I go out there and I meet them. Here's another like, okay, so they're big Tennessee volunteer fans, right? Uh my cleaners, and then and just before they played Alabama versus Tennessee, I texted my cleaners and I said, Hey guys, big college day game. I'm rooting for you guys. And I took a picture of me watching the game. Uh, you know, I'm like, I'm rooting for the balls here. And then, like, you know, when they won, I said, You better be storming the field, man. I'm uh, you know, I'm living through you, you know. So I create these like amazing relationships with them, it's really personal, and you know, I haven't had a problem yet.
SPEAKER_04So they beat Alabama, they took down the goalposts, and then they walked down the city and threw them in the river. Yeah, that's how they threw the goal post. Is that what they did? In the river, yes, it was crazy as shit, and then they just followed through, they just walked them out of the stadiums and then threw the goalposts in the river.
SPEAKER_02I guess they didn't know what to do with it, huh? I'd put it in the short-term rental, I guess. You know, put it in my backyard for their experience, shoot.
SPEAKER_04Oh man, man, Alex Sabia Sabio, Sabi, Sabio, Sabio, yeah. Thank you so much for hopping on, dude. I'm glad, I'm glad you came on. You you really opened our eyes to a lot of things, man. And and uh cost egg. I'm gonna look in the cost segregation, QR codes. Man, that's a cool shit. Uh you in the hot tub, that was weird. But other than that, you know, but I'll send you the video, man. Oh, okay. I'm drinking already, so it's all good. So healthcare. Um, yeah, I love it, man. You cover so much stuff, and I'm gonna get with you on that uh travel nurse house swap thing. We're gonna we're gonna make it happen, dude. We're gonna make it happen. We're gonna change the world. Uh anything you'd like to add, where can people find you?
SPEAKER_02Well, I'm on Instagram a lot. If you I'm under the real Alex Sabio, um, don't know why I chose that name, but um like a celebrity. There's another one, right? I like that. Right. And then uh I'm on Facebook a lot under Alex Sabio. I do have a uh community called Healthcare Professionals Investing in Real Estate. Uh we host weekly meetups uh where we teach people cost segregation analysis, and I'll have my tax person come on, and I'll have realtors from all over come on, uh different people who've scaled. Um uh anyway, different CEOs, I'll have them come on. But we have weekly meetups, so that's healthcare professionals investing in real estate. Uh love to have you join if uh you guys are healthcare professionals, and uh that's where I add a lot of value.
SPEAKER_04So cool, brother. Thanks for hopping on, and we will see you next time. Hopefully, we will do another episode with you, see how you're doing, and um, yeah, good luck.
SPEAKER_02Thanks, Air.
SPEAKER_04Thanks for having me on. See ya.
SPEAKER_01Man, another great episode, man. Another great episode. Learned a lot, man. He really drilled in some things that I want to do in the vacation rental space. Yeah, that was a really good episode, man.
SPEAKER_04Uh it's it's mind blowing, especially the uh the CPA taxes thing. That's that's the most critical, right? There, the strategy. You gotta have a strategy, and he pays he pays no taxes, he's making all this freaking money and paying no taxes, legally paying no taxes, you know. And it and it's just but he he and he said it, but you gotta keep buying, you gotta keep buying, you gotta keep buying, and it's a good problem to have, I guess, you know. And um, so he's out there looking for more deals every single year and does another cost segregation study and has all this money that he has got to go spend, you know. You don't want to be stuck with it, you gotta go spin it on another deal and do the same thing, you know, watch rents repeat. I've I've heard of this strategy, and I know that millionaires and billionaires do it, right? And so, um, so why can't we? Right, and and and I I love that dude, and um, and he's just he was probably the lowest he could be, you know, filing for bankruptcy, and then coming back from that and just um not quitting and and persevering and and just just being madly successful, and doing it in Southern California, be like, I can't be an investor in Southern California, you know. Blah blah blah, uh everything's so expensive. Well, he's doing it in Smoky Mountains, he's doing it in Ghosters, Alabama, he's doing it in other spots, man. So it's it's no, there's never any excuses, and there's never a bad time to start or a good time to start. It's always you can start anytime, you know. I'm saying, and well, the well, the good time to start is always so. I don't know. Great man, great interview. Uh yeah, I'm gonna I'm gonna connect with that guy. He always says, I'm not as the smartest dude, you know, I'm the smartest dude, but he's being modest. But that's what it is, man. If you if you do the right things, you don't have to be the smartest dude. You can surround yourself with the smartest people.
SPEAKER_01Exactly what you're supposed to do. Yes, sir, man. That was a really good episode, man. I hope he I hope he does dive into arbitraging because I do want to see that different mindset of people who buy and then go to arbitrage if they like it, don't like it, and then the opposite. You know, I've already known the opposite. So yeah, that's a really, really good episode. Um, I hope everyone, the listeners, you guys really dove deep to understand the different market types because the strategy with short-term rentals changes depending on the market you're in. We mainly talk metro market, the VR market is totally different space, and you can see how he's killing it in that market, man. He's making a 50% cash on cash return in the smokies. Think about that. He bought that house for 700 grand. That's insane. So, yeah, man. I hope uh you guys learned a lot from that episode and hopefully you guys uh find a market and go kill it.
SPEAKER_04No excuses, right, Micah.
SPEAKER_01No excuses.
SPEAKER_04Dream big sir. Share B, that's Micah's company. Argist Rentals, that's my company. ARGEST Rentals, hit us up. We're gonna do some business together. We love you guys. Keep listening. Uh, livelet thrive at gmail.com, livelethrive.com, all that fun stuff. Hit us up, leave some feedback, follow us, share us, like us, all that fun stuff.
SPEAKER_01Yes, sir. Remember to hit that subscribe button if you're watching on YouTube, and we are out.
SPEAKER_00Peace.
SPEAKER_01Later.
SPEAKER_00Thank you for tuning in to this week's episode of Live Let Thrive. Be sure to tune in next week for all the latest in the world of Airbnb and all that entails. Bye bye.
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