Cold open

SPEAKER_00 0:00

Welcome to Live Let Thrive, a podcast about the Airbnb live, the shared economy, and everything in between. Here are your hosts, Micah and Steve.

SPEAKER_02 0:11

Hello, hello, hello. Welcome back to another exciting episode of Live Let Thrive.

SPEAKER_01 0:20

What is up, Micah Man?

SPEAKER_02 0:22

I'm chilling, Stevie Stacks. How you doing?

SPEAKER_01 0:25

Oh man, doing good. The hectic host running around doing all kinds of craziness. Yeah, how you been?

SPEAKER_02 0:33

Oh man, I've been crazy. I'm just waiting for these last two units to get up. So just sitting back and waiting.

SPEAKER_01 0:40

Sitting back and waiting.

SPEAKER_02 0:41

Yeah.

SPEAKER_01 0:42

Cool. And we have someone with us today, hopefully, that can help us not be so hectic of a host, and myself, anyways. And it is a certain Andrew LeBaron. This is episode 172. Let me set it up first. This is episode 172 of your favorite Airbnb VRBO Home Away. Lyft, Uber, Share Economy Podcast in the

The funky wholesale property that became a $6,500-a-month Airbnb

SPEAKER_01 1:01

world. And we're coming at you from Fort Worth in Arlington. And we have a special guest, Andrew LeBaron. What's up, Andrew?

SPEAKER_04 1:07

Right on. So about what has it long been? About three and a half years ago, my business partner and I, Isaac Moore, we picked up a property wholesale, and we actually couldn't move the property. If you're familiar with wholesaling, I'm sure you've talked to a lot of wholesalers, people that pick up properties and wholesale. That's what we used to do full-time. And this one we actually took down. We actually bought the property. We bought it with creative financing. We bought it on a lease option to purchase with very little, actually, nothing down. We didn't pay anything down. We were helping the seller out. And uh we couldn't move it. It was a weird, funky property. So we're like, screw it, let's uh let's furnish it, let's put it on Airbnb, let's see what happens. And lo and behold, I got this lady bugging us through the app that I've never used before in my life, saying she's been willing, she's willing to pay 200 bucks a night for a week. And I was like, we can't even get 1200 bucks a month on this thing. How how I almost questioned it, you know, hey, how do you do are you sure? Do you really want to pay 200 bucks a night? Like I I was almost like, hey, let's let's talk about this, you know? And Isaac's like, no, man, let's set it up, let's go. And uh so we did, and we were we were we were gonna expect you know a back and forth. Well, this isn't done, this this is bad. This, you know, we were scrambling to get the rest of the sheets, the pillows, the you know, we just listed it just to see, you know. So we got an inquiry, she was gonna come in like in two days. So we had two days to scramble to get everything put together. Well, we did it, we were successful. Um, after that property, we started building a little empire, and we did the arbitrage thing for about six months. We downloaded a Udemy course by David Vu. Um, I bought all of Brian Page's stuff, and we were just learning as much as we could about it. And that was a three, that was three and a half years ago. And this was we we started doing it on our own properties. Um, we did it on our own properties before we did it on via arbitrage, and then we were so good at it, people's like, hey, can you manage my stuff? And I'm like, uh, I guess. So we started managing their stuff, and pretty soon we just had systems in place where it just became very seamless. It's a very robotic, very automated, um, yet without uh it has the personal touch system, and we coined it buy more time. So that's what we do. We help hosts uh all around the world buy more time. Um, we're not a big outfit, you know, we're a humble um outfit that's beginning to automate almost every facet of a business.

Structuring a lease option with zero down and a lien

SPEAKER_02 3:54

That is awesome. Congratulations to your success. But man, you said something that I have to ask about. You said you used a lease option to get into a deal and then you turned it into an STR. Can you go over what a lease option is and kind of break down that deal, how you got it, and how did you set up the lease option?

SPEAKER_04 4:14

Yeah, absolutely. So I offered cash for this property. I'll just tell you the numbers. So I offered $125,000 cash, I believe. Uh, and that would be cash close, quick, you know, uh no, no appraisal, little inspection. Uh I'd even put up some non-refundable earnest money. Okay. And the seller's like, absolutely not. I will not be doing that. I said, okay, well, what do you own the property? Uh she said she owed, I think it was like 180, something like that. It was like 185. I said, Great, let's do this. I'll pay 185. And she's like, What, you're gonna pay me what I owe? And I said, Yeah. And she was she was struggling. So um it was an FHA loan, and you can't take over payments on FHA loans. Uh what I what we do is create a financing. We we acquire lots of properties that way, um, multifamily, uh, apartment uh properties, we we do condos, single family residences, and we use that strategy. We use the syn the seller finance or sub two method where where we take over payments on the property and and we hold the deed, so we're equitable title owners. In this case, you couldn't because this was an FHA loan. So what we did was we did a lease with option to purchase. So it allows us to control the property without owning the property on paper, although we did put a lien on the property so that the owner doesn't get up and go sell it to somebody else, even with a lease in place. So it's like holding your thumb on title without being on title. You file what's called a memorandum of ownership and uh or of interest is what it's called. And it sounds really complicated, it's really not, it's just a lease with option to purchase. It's really just first right of refusal to purchase the property. Um, seller can't go out and sell it to someone else. So we did that with nothing down, no deposit, no lease deposit. Um, we we told her that with what we would have paid as a down payment or deposit, we're gonna go in and fix up the place. And we did. We bought furnishings, we painted, we uh made the place really nice. And um after we did that, we were in it for probably like seven grand.

Seven grand in furnishings paid back in two months

SPEAKER_04 6:18

Typical furnishing fees for us is about seven to ten K, depending on where you get your stuff and how good you are, you know, putting putting it all together as a package. So I think we're around 7,000 bucks out the door, but we got that back in a couple months, and it was just the numbers didn't make sense to me at all. And that's when I knew I was hooked.

SPEAKER_02 6:35

So so you said you just put a lien on the property to make sure she can't sell it, and then like, is she behind on payments or no? She's caught up on payments.

SPEAKER_04 6:44

She wasn't behind on payments, but she was struggling. She she's a landlord, so she had people in there, and she just didn't want to mess with landlord duties anymore. She just she didn't want to fix things, she didn't want to. I mean, this wasn't a beautiful property, so we needed to go in and fix it up a little bit. And uh, we really cut corners. In fact, we didn't even plan to keep it, we just wanted to sell it. It wouldn't sell because it's just funky, had a pool, had a fire pit, but it was it wasn't selling for what we wanted to sell it for. We're gonna sell it on terms, but we thought, okay, screw it, we'll just buy it um on a lease option. And we put the lien on the property, we put the filed the memo. And once we did that, we were literally on payment or we're paying the same amount that she paid the mortgage company. So we would use a third-party mortgage company um called West Star Pacific Mortgage, and we would make the payment to Weststar. Westar makes the payment to her mortgage company, if that makes sense. So that way she feels rest assured that we're not pocketing all the income, you know, that the monthly payments are being paid. Um, but she was happy with it, you know, she's fine with it. We literally paid nothing for the property, fixed it up, and it was ours. Um, on title, it didn't say our name on it, obviously. Um, what's even crazier about this is we put this up on Airbnb and we started getting hits. It booked out for the whole spring. Um, and we were netting anywhere from $6,500 to seven grand a month for a couple months. It was it was insane. It was insane. Um, some nights were $250, we had $285 one night, you know. It was just and I was like, there's this is an anomaly,

Selling the lease-option contract for $20,000

SPEAKER_04 8:26

you know. This isn't this isn't normal. Um, so we started recording what our earnings, and then I posted uh the our earnings and you know, legit earnings on bigger pockets. This is crazy. This is so crazy. I can't believe we did this. And we sold the lease option contract to a California buyer. Yeah, we literally sold the contract over to someone else, so they took over. Yeah, yeah, yeah. Yeah, which is what we wanted to do because we didn't want to stay in the deal. We sold it for 20 grand, so we made like about $40,000 total after a couple months, like three, four months maybe. Um, and we just sold we sold the contract to a new buyer, and he started making good money on it. He fixed it up and then he actually sold the property.

SPEAKER_01 9:10

Um, so a lot of meat on the bone to go around.

SPEAKER_04 9:14

Yeah, kind of complicated deal. I don't know if you guys get a lot of complicated, you know, hosts like me, but I I don't like I don't like I like to spice it up with some complicated telefinance, you know, crazy. Like we create notes, so but has nothing to do with buy more

Seven arbitrage units that died when Phoenix summer hit

SPEAKER_04 9:33

time. That was just our first deal, and it was it was that could be a whole nother podcast right there.

SPEAKER_01 9:38

I do need to pick your brain on all that. I want to do some sub two myself over here. Um that's what I can see the billboard now. We buy funky houses, you know. The houses that people don't want to live in, they're just set up funky, but they make great Airbnbs. There's a market for that. Big time. So so you had mentioned um, so you did uh arbitraging first. How many arbitrages did you have before you jumped into the management side?

SPEAKER_04 10:01

We had we had around seven arbitrages, we had about seven contracts, and we were crushing it, and we were like, hey, let's get more. And then summer hit, and then when summer hit in the Phoenix Valley, I don't know if you guys are familiar with Phoenix, but when summer hit, it died. It was about three and a half years ago. Um, we were barely making rent on some of these, and it was so funny. I can remember, oh my gosh, going to the landlord saying, Hey, you know, we'll play we'll pay a late charge. Can you you give us another 20 days? You know, he was just always asking for more time uh to make the payment. It was so funny. Um, but then uh we were just so unorganized because what we do is we crush in the spring, we make like triple the normal market rent. We wouldn't, we wouldn't allocate funds correctly. We wouldn't, we wouldn't, we would literally bank it. That's all we would do, and then disperse it to our individual accounts, and life was good. But we were terrible at managing that part. We got a lot of help later. Uh, I had a mentor that stepped in to help me out, and we decided that we were just going to manage instead of just arbitrage, we're just gonna manage for other people. We would obviously have it for our own, right? And those seven didn't include our own property portfolio, which we had about 10. So um then we just started growing from there. And it's funny, we leveraged that income to purchase just properties that we want to buy extra curricular properties that may not be STRs, right? Properties that might be long-term rentals. Um, I bought a sixplex in Dowtown Phoenix. Um, Isaac bought a home in North Phoenix, you know, it was it was freedom. It was so cool what we could do with it. And we just got so good at the systems that people kept bugging us. Hey, how can we? We were on, I was on Julian Sage's podcast recently, and he's like, So, so why did you decide to manage other people's stuff? And I'm like, Well, we were just so good at it, we just thought, why not? It's kind of a you uh it's kind of a waste of your own tools and software that we built from the ground up, um, which include everything from check-in checkouts to um inquiry, um, help, guest help, 24-7 guest help, um, even payout methods for vendors and everything else. So it's been a painstaking three and a half years, but um, I think we've learned a lot in the long run.

SPEAKER_01 12:18

So, so like, so did you continue to hold your

Switching from arbitrage to management for other owners

SPEAKER_01 12:23

arbitrages while you were managing for other people? And is that a good idea to juggle boat or or what?

SPEAKER_04 12:28

Yeah, so some some some of them we did. Some of them we just let go because the owners are like, ah, I'm good. I'll just take it on. Our original pitch was, for example, if you had a property for $1200, I'd come to you and say, hey, we'll pay $1250. But we'll also, it's kind of like the Brian Page method, right? We'll also uh improve it with smart home technology. You know, I'll fix up your bathroom a bit, I'll change out some of the fixtures and the lighting, and you get to keep all that when I'm done with this lease. I tried to set up a three-year lease. Most of the time they said no. It was either a one-year lease, you know, two years lease, maybe. Um, Isaac locked up one in Scottsdale, Arizona for a killer deal and not one cash flows no matter what we do. But it really just depends. Um, from there, we started just managing other people's stuff. And that that was actually a lot easier because there's no real expectation but to just take care of their guests really well. We ensured a five-star experience and we're not paying a landlord. So I'm also a property manager professionally. I'm a licensed agent. So that helped out tremendously. But really, it's kind of just on them. Um like the the client needs to come ready. Uh, they they show up to buy more time and we take over the reins. We do everything from inventory. You know, we ship inventory to your cleaner, your cleaner takes it to the property, puts it in the cleaning closet. Um, we have a checklist that, you know, when they fill it out electronically, pushes it to a database. In the database, um, we have a couple parsing systems that uh create a PDF tool that sends a report to the client saying, Hey, this is your inventory account. Uh, this is the damage reported. We're already on it, we already reported to Airbnb. This is the picture of the damage. You know, this is you know, everything we're like an Amazon meets property management um meets Uber, you know, all together. And you know, you need a runner, we got it, we got it taken care of. Um that part took forever to build. That part, that that was that was a pain. That was a royal pain. But when you build it and it's done, you're

Jotform checklists push to Airtable and auto-order inventory

SPEAKER_04 14:26

set. Um I threw a lot at you there.

SPEAKER_02 14:29

No, no, this is good, man. Um, you you said you have a database. Now, what are you using to say, hey, this is what's in the closet? What how does that data get base get pushed and then restocked?

SPEAKER_04 14:40

Great question. We use Jotform for data entry and it pushes to Airtable. Airtable is like my SQL meets Excel. It's a software um you could use for free for a little bit, then you got to start paying for it. Um, Airtable is the automation database. For example, I can create rules where if shampoo is less than X bottles in the cleaning closet, then an automatic message goes out to our inventory specialist that orders more. And they just make the Amazon order. We charge the client 10 bucks to make the order. It ships whatever they're low on. So we collect a list of all everything that they're low on. We take that list, we order it, we ship it to the cleaner. The cleaner then puts it all in the cleaning closet, locks it up, records that that has been placed. Client goes to their dashboard, they could see their inventory levels from wherever they're at.

SPEAKER_01 15:30

Oh, beautiful. Yeah, that's how that was one of the questions because you have you said over 30 units. How many units do you have total?

SPEAKER_04 15:38

Right now, for buy more time, we're 30. I think we're 34 units total.

SPEAKER_01 15:43

34 units, okay. And that's that's what I was gonna ask. I was like, okay, you're imagining that many units restocking. I mean, how do you how does that work? And you just explained it, you know, you use your buddy Amazon to to get everybody restocked and you keep inventory of it and they get a report. I mean, it's freaking phenomenal.

SPEAKER_04 15:59

We used to be like, we used to be like, we're gonna ship everything to a storage unit, you know, or to our garage, and then we'll ship it from there. I'm like, no, let's let's make the cleaners the storage units, right? Let's make the actual clients the storage units, right? So like there, there's another arbitrage, right? So we're like piggybacking on the cleaners or piggybacking on the owners. We have them sign indemnification waivers that you know they're responsible for the products, if it's damaged, if it's lost. So they have to cover that. We don't usually run into that, but uh, we also have their information on file where if they lose something or mess something up, we charge them. So everybody's accountable, everybody's on the same page.

SPEAKER_01 16:36

And that's what I'm wondering. If you're gonna send a whole box of supplies to them, how do you know that hey, you could have a couple from me, I'll take the rest of the how do you how do you keep track of that?

SPEAKER_04 16:44

So again, data entry forms. So they take it to the property, they fill the cleaning closet, they take an actual photo of the cleaning closet, which they can't take a photo from their photo library. The form requires them to take a photo live in the form, so they have to take it while there, you know. It doesn't, you can't can't upload an old photo. That doesn't work. So what form is that? Job form.

SPEAKER_01 17:07

It's a it's uh form builder. J-O-T F-O-R-M. F-O-R-M. All right, I'm gonna look that up.

SPEAKER_04 17:16

Yeah, yeah. So well, one issue we ran into is like cleaners were adding like when they clean the kitchen, there's like three different pictures of the kitchen you need. You need the front picture, you need a picture of some of the appliances and the countertops. They would pull up old photos, you know, they'd keep

Live-photo and geolocation widgets stop cleaner workarounds

SPEAKER_04 17:31

like an archive of old photos because they didn't want to waste time. You know, like I'll fill this out later. And I'm like, well, hold on. This is the same photo from the before and before before. So we fixed that by creating um a live photo widget. We didn't create the widget, we actually found it on job form, but it requires them to take a live photo. And then we were running into problems where they would submit the checklist at home after after they left the building, and we didn't want that. So we added a geolocation widget where we know when they submit it, where they submit it. So it's inside the form. So they fill it out. You know, if it says they filled it out at their house, then we dock them for it. And they know that, you know, that's not any surprise, like they know that if they're willing to pay the fee, great, you know.

SPEAKER_02 18:12

So my partner Norman's gonna have a blast with this episode. This is like right up his alley, man. So you you said something. So you said you'd have them take a photo of the storage closet because that I never thought to do, because I I've been doing all this take photos. I never thought take photo of the storage closet. That's smart idea.

SPEAKER_04 18:32

I'm it's really just insurance, right? So they and literally insurance. Um, if they if they steal, if you know, and they don't. I don't have cleaner, we don't hire people that do that. You know, people people are people, they'll do what they do, right? But you know, with that widget involved in the form, and it's there in job form. You can go, you know, pick it up today. It's job form is very cheap. Anybody can set this up. That's what's so cool. Like, I talk like it's this is amazing. It's like, no, like you could do this today. You could set this up and create your perfect uh checklist. But um, it's kind of like if if I have a cleaner show up and cleaner says, Oh, we're low on this, or we need to order more. But we just ordered 20 things of toilet paper at you know, 30 cents a roll. You know, where are they at? You know, we just ordered that. And then we look at the photos from before, we notice there's no toilet paper there. Well, I shipped like three boxes to you, Miss Cleaner. Where'd they go? And the cleaner's like, Oh, those were toilet paper, those are in my garage, you know, or whatever. Like, we everything's tight, it's a tight run ship. Like, you really can't mess up, you know, unless you're not paying attention.

SPEAKER_01 19:38

So that's nice. That's nice. Um, so another thing, uh, what because you said you said um you did say you started systematizing everything. What did you systematize for? I mean, you you talked about this, you know, the JOT form and everything. What system did you put in place so y'all weren't going running, you know, going crazy running all these units?

SPEAKER_04 19:59

Yeah, so I think well the biggest, the most important piece to this whole thing, if you're gonna manage property for someone else or even for yourself, is the onboarding form. It's a long, nasty form. It's disgusting. It takes like two hours to fill out. I'm gonna, I'm gonna bug you to death. You know, and I we have we have virtual assistants that do this with the client, but it's a long form. We ask everything from door codes, gate codes, alley codes, uh, we ask everything from, you know, do you have any preferences on cleaning the kitchen, um, chemicals that you want to use, you know, all this. We ask all these things. We get special instructions and we add it to the stupid lone 400-field uh onboarding form. It's it's insane. But after we do that, we don't bug you. You know, you see reports come in, PDFs come in, we get, you know, you and if you ever want to communicate with us, you can. We have a business text line, but it's it's very seamless. Um, I've got three uh cleaning companies. I got your main and two backup. I got three electricians, three plumbers, I got three handymen. I don't really use the electricians much, but we just want to be safe. I have three errand runners. Um these individuals they go to a vendor page and they we collect all their information and they get a unique Stripe account, a Stripe ID. So this is what this is the cool part. Let's say I show up to your house and I clean your property and I fill out the checklist. Once I fill out the checklist, it goes to one of our team members for approval. After it's been approved, and they click approve, I get paid. Wired the money directly. There's no automatic, there's no, it's automatic. There's no manual. Hey, let's let's PayPal this person, Venmo this person, Zell this person. It's automatic because I have a Stripe account as a vendor. We require all vendors to have Stripe accounts. So if you're a cleaner, you have to have a bank account because you can't have a Stripe account without a bank account. Everything's electronic. Um We don't manually pay people. Um, if there's, for example, in the in the cleaning checklist, if you say there's damage, like yes, there's damage, then you describe the damage and take a picture of the damage. Those three things say yes, describe, take a picture of the damage. Once you submit it, the handyman assigned to that property immediately gets the image, the description, the door code to enter, the phone number of the cleaner to contact,

Handymen auto-paid via Stripe when damage-repair forms submit

SPEAKER_04 22:25

if they have any other additional questions, they get everything. And they're told at what time frame to enter the property. And if it's immediate, which it usually is, because we do allow same-day check-ins, they go straight to the property, they're fixing it, it's done. Now, when the when the when the handyman's there, they have their own form called the damage repair completion form. So they have to fill out a form after they finish it. If they want to get paid, they have to fill out the form. Nobody gets paid unless you fill out the form. So they say, Great, doorknobs broken. One of the most common things, curtain rods, doorknobs, you know, these are common things, right? Doorknobs broken, came and I fixed it. Um, here's a picture of the proof, here's a description of how I fix it. Here's the receipt, here's a picture of the receipt that I bought a new doorknob, here's my cost for labor, and they put that inside the checklist. They click submit, we see it, we click approve, they get paid. So it's all automatic. Um if we click reject, we or we can edit the amount that we pay them, or we get on the phone with them and say, hey, this doesn't look like it's really fixed. Can you get more pictures? Usually we don't run into that, they're really good at what they do. But that's how we made it automatic. So our time, our time that we spend on everything is more on the guest. Our focus is on the guest, not not the not the silly shenanigans of you know, uh fixing things or inventory or restocking because your quality is gonna dip. It's on the guest. How do we take care of the guest? How do we make the guest love where they're staying tonight? Wow.

SPEAKER_02 23:57

Yeah, spending too much time is on operations. Yeah, you take away from the guest, you're absolutely right. Um, now now, are you only doing management now or are you still buying properties, or how's what's your journey? What's your day look like?

SPEAKER_04 24:11

It's funny you say that. I so we're really good at outsourcing Isaac and myself. So we have virtual assistants and Americans that work together to you know handle the day-to-day operations. So we're out doing our own thing. Um, Isaac's a lender, my partner's a lender. Um, and I like to buy multifamily. I'm I'm buying a 42-unit hotel here pretty soon. And it's just, you know, we get to do what we love to do best because the name we create is called Buy More Time. If I was a slave to my own time, you know, if I was a slave to the clock, I'd be a hypocrite, in my opinion. So I needed to create systems and team that loves to do what they love to do and the system that actually works so that I can get my time back. And that's that's why we built it that way. That's why we called our company that.

SPEAKER_02 24:57

So one thing, you said you said you're doing you buy more time. How do you source your lease option bills? And the reason I asked is because that's like such an underrated strategy in the short-term rental

How to source lease-option leads from wholesalers and agents

SPEAKER_02 25:10

space. Not too many people are using it. How are you sourcing your leads on that?

SPEAKER_04 25:14

So I contact a lot of agents, uh, wholesalers, and really, if you if you want to outsource the marketing on that, all you need to do is create an email marketing drip. You get any wholesale realtors in there, and you create, I would say, 30 templates and put them on loop. And the 30 templates you put on loop all talk about how you would love to rent to buy. If a property looks dilapidated or weird, I'd love to rent to buy and I'll pay you for that lead. And you just tell them, hey, you got got leads that don't work for cash, I'll buy those leads from you because all I do is rent to buy. I don't say lease option because people don't get it. You know, typically rent lease option sounds really complicated. That's an investor term, right? But I say I like to rent to buy. Now that's the most ideal way to set up an STR, in my opinion. I actually, even better than lease option is seller finance. If you can actually own the property with little to nothing out of your pocket, that's the best way. You could if you could lock that up, that's the best way. But a lot of people don't want to do that, right? How are you gonna go find a property that where they just hand it over to you? Um they're out there, but the rent to buy model is is so key. So I that's how I do it. And then when I approach the owners, it's very simple. I say, you know what? I rent out your property for a few years and then I purchase it. But I always have that option. If I don't want to buy it from you, I don't have to buy it from you. And if I don't buy it from you, you have a fixed up beautiful home. This is your home. You got a beautiful house, it's got smart home tech. I'll leave that there. You keep it. It's got you know, it's newly painted, um, it's got nice furnishings. I'll probably take some out, I'll probably leave some there. That'll be for that'll be yours. It'll be in better hands. You know, what do you say? And they're like, Oh, what's the catch? I'm like, that's it. There's no catch.

SPEAKER_02 26:58

So now I have a question on that. Since you're doing a rent to buy, um how how do you how do you bring the Airbnb and the short-term rental thing across to them? Or are they fine with it?

SPEAKER_04 27:10

Yeah, so it if I tell them I'm gonna do a rent to own, a rent to buy, they're pretty sure, you know, and they understand I'm an investor, they they understand I'm gonna make money. And I tell them, look, I'm gonna make money, I'm gonna rent your place out however I can so that I can make profit. There's no hiding it. I'm very upfront, I'm very in your face. You know, if I decide and if they ask, you know, you're gonna Airbnb my property, I say I might. I might. Yeah, absolutely. You know, I'm shoot, there's nothing to hide. Like I'm very, I'm very transparent, very open book. There's no schemes here. I'm here to make money. I'm a business owner. You're here, you're here to have a problem solved, I'm here to solve it. You need someone to make the payment, I'm gonna make the payment for you.

SPEAKER_02 27:47

Man, I love that. I love that. Like that, that that you're the first person 170 episodes in to come in and say that's how they're getting STRs is lease to lease option and rent to buy, lease to own. Man, because I I've been thinking, I'm like, man, if I can get a lease option deal, no money out of the pocket, only thing you're paying is furniture, you can't lose. Now, are you coming up with an agreed upon price when you do the rent to buy before you hop in the deal?

SPEAKER_04 28:12

No, I what I typically do is I mean, it's a negotiation, right? So, first let me tell you how I find these. I I like I said, I reach out to wholesalers and I reach out to realtors and I get on the phone with them. They're my marketers. I'm not gonna go out and find them myself. I'm gonna let them do that for me. So, properties that don't sell, I also have a filter on the MLS, or you could use Zillow, you could use Redfin, uh properties over 90 days on the market. If they're over 90 days on the market,

Seller-financed deals at 2% interest-only, $250 monthly payment

SPEAKER_04 28:36

you have to ask yourself, why are they not selling? I reach out to the agent or the owner, whatever, I don't care. Hey, I noticed your house is on the market for $200,000. It's been over 100 days. What's going on? Oh, you know, you gotta you gotta go through Jimmy's room to get to the bathroom. People don't like going through Jimmy's room to get to the bathroom. Or it's only a one bath, right? That's popular. Well, it's only a one bath house, right? Oh, you're you're not in your head because you know those are hard to sell. You know, two bedroom, two bath, three bed is your bread and butter all day long. Well, I love those weird ones, okay? Because I show up and I say, Hey, you want how much for the house? 200,000? What was the what was the offer that you most recently received? Oh, I got an offer for a hundred and hundred and fifty thousand cash, but we want two hundred. Okay, great. I'll give you two hundred thousand. I'll give it to you. I'll give you two hundred thousand. I give you your price, you give me my terms, deal. Uh you know, and they're like, that sounds good, you know. And I say, hey, at the end of this whole thing, what if we do this? What if I do a seller finance deal with you? You are going to net more than 200 grand. Okay. They're like, what do you mean? I say $200,000 is the purchase price. I will pay 2% interest only. Okay, on $200,000. I'll pay $10,000 down, $5,000 down, whatever it is, and I will fix this up. I'll make it beautiful. I'll, I'll, you know, I'll make the home just absolutely gorgeous. And at the end of a 60-month period, I'll pay off the balance. So I pay $5,000 down on a $200,000 house. I owe $195,000 on it for five years. It's not amortized. That principal balance ain't going down. It's just paying in, I just pay interest on that. If you look at an interest-only calculator, it's very low. So my monthly payment on this thing is like only like $250 a month. And that's a seller finance deal. It's interest only, guys. And I do a lot of people. Oh, yeah, you cash like a monster. So let's say this. So at the end, so I'm only out $5,000 to buy the house. I pay $250 a month because I'm only paying 2% interest only on this house. Now, principal balance at the end of five years is still gonna be $195. Sorry, you know, I don't I don't get to lower my principal because I don't want to pay principal. I don't care. I care about cash flow. So at the end of the five years, let's say the house is only worth $100K. You think I'm gonna get a loan to buy that house when I owe $195? Absolutely not. So I'm gonna go to the seller and say, hey, market's crazy right now. I wish, I wish I could buy this home, but as you know, the appraised value is only $100,000. Will you give me a 36-month extension? And a lot of times they do it. But if they say, no, no, I'm taking it back, I'm like, great, no problem. Thank you so much. And I give them this beautiful home. Okay, I give them this beautiful product of a house, and they're excited, they're happy because they got a new house out of it. So I took care of them for five years, and they get this house back, and I cash flowed like a monster for 60 months, right? So I need it a lot. That only works for homes free and clear, though. Get it? Yeah, okay. So it's gotta be free and clear. I'm paying interest only on these properties. If it's not free and clear, the lowest you could pay is the mortgage amount, right? So because they owe a mortgage on it, yeah.

SPEAKER_02 31:49

That's that's nice level right there. I love that. I love that, man. And then you walk out with all this cash if they say no, it's a win-win situation. It's a win-win situation.

SPEAKER_04 31:57

They're happy and they know this before they even sign up. Look, I'm like, hey, if I decide I don't want to buy this in 60 months, you're gonna have this beautiful property. I give them a list of references. Here's all the people I've done this with. You call them all up, they they're expecting your call. If you want to verify, I got ML, I got transaction history as well. You want to see HUD statements? I got HUD statements. Um, these are real transactions. Um, I'm taking care of your property. You're literally, you're you're literally getting a rehabbed property. It's just taking five years for it to get rehabbed, that's all. That's what I tell them sometimes. Like I'm rehabbing your house, right? But you better believe I'm gonna make money on. You better believe I'm gonna make money on this property. And there's there's just no hiding anything. Now, how often do they say yes to these offers, right? Well, these offers that that's best case scenario, right? Worst case scenario is I gotta put a little bit more down. If I gotta put a little bit more down, a lot of times I like to borrow cash. So I go to my private lender, I say, hey, they want 30k down. So I borrow cash from him, I don't pay any interest payments to him at all. I just have to refinance or I need to get out of the deal, sell the deal within 24 months, typically. And I pay him 20% on this money. That's where it gets really complicated. Need a whiteboard, but you're literally out none of your own cash. Wow.

SPEAKER_02 33:08

Have you been on the bigger pockets podcast? Not yet. But if not, yeah, we need to get yeah, you need to get on there. You're you're you're kicking it, man. Cool.

SPEAKER_04 33:20

So white first, we're investors first. The short-term rental thing was second. It was like we're already investors, we're already buying properties. You know, how can we maximize our ROI? Well, short-term rental is is where it's at. If you're in the right area and you have the right product, right area, right product, right team, you can crush this market.

SPEAKER_01 33:38

So so, real quick, on the one more question on the uh on the rent to own and stuff like that. Why why do you choose five years?

SPEAKER_04 33:46

It's an easy number. You know, I you know what's funny? I'm actually undercutting myself for doing that. What I should do is, and a lot of my what I'm doing now is I say 120 months. I never say years. Years is intimidating, guys. So I tell the seller, and and listen, sellers are used to months, 12-month deal, six-month rental, 12-month rental, 18-month rental. They like to hear months. So I'm gonna speak in their language. I say, hey, look, this property needs to be fixed up. You're obviously struggling here. I'm gonna take over. I'm gonna pay exactly what you pay on the mortgage, I'm gonna fix all this up. If I don't fix it up in 30 days, then we will rescind the contract. I will actually put a clause in the contract stating that I will rehab or paint or whatever in the first 30 days. So you see the improvements happening. I want you to be aware that I'm fixing your home up, okay? And at no cost to you because I'm paying the price you asked for. Okay. So I say months and I shouldn't say 60 months. I should start high, 120 months. For the seller carry stuff, I'm doing 120 months. I just locked up three parcels with houses on them for um 60 months because I should I I should have said 120. He only did 60. So, but that's at 2.4% interest, and I got three properties out of it.

unknown 35:02

Oh wow.

SPEAKER_04 35:03

Now, this is not in an area that I could Airbnb. I'll be honest, and that that's another thing too, guys. I want to Airbnb everything. Why? Because I get triple the market rent. Heck yeah. But these are not, this is in Tonopah, Arizona. If you look that up, it's in rural podunk, out in the west. You're almost kissing California, you're in the desert. Um, Bill and Melinda Gates bought like a ton of land over there to build a smart city someday. Everyone's like, someday it's gonna be there, but right now it's not. So, but these three properties, there's only one tenant in one of the properties, the other two are vacant, but that one tenant already pays the amount that I owe the landlord or that I owe the seller every month. So he's gonna take care of it. So, like, it's a shoe-in for me. Now I'm just gonna cash flow the first 60 months. Life's golden, you know.

SPEAKER_01 35:49

Oh, I love it, I love it, man. Um, let's go back to the to the STR world a little bit. You mentioned VAs and you mentioned something interesting. VAs working with Americans. So, first, how did you go about finding your first VA

Vetting 150 to 200 VAs to find the ten who stay

SPEAKER_01 36:04

and what was the learning curve on that? Because we're we're hired, we hired our first VA and and it's a learning curve. And what advice do you have for people hiring and training VAs?

SPEAKER_04 36:13

That's a great question. I we've been through over probably 150, 200 VAs over the years. We've been through a lot. That's a revolving door because we didn't know what we were looking for. We now have a sound check test. We have multiple quizzes, we have three interviews. Um, we put them through a probationary period, we have a 60 or 30 month, or sorry, 30 day, 60 day, 90-day probationary period. We dangle the carrot at the end of the 90 days. If you make it through 90 days and you are great and you're a five-star team member, we're gonna give you a dollar raise. You know, we're gonna we're gonna help you out. And with all these checks in place, it's been so much easier to find the right person, the right candidate. And now I know who I'm looking for. Um, here's a good tip. I go on Facebook and I post in all these VA groups. There's a ton of VA groups, okay? And I post I post a link. I say, hey, if you're interested, fill out the questionnaire and the link. Well, the questionnaire, what they don't know is it's really long. So I'm already weeding out all the people that are not serious, right? So they fill out this questionnaire and it's really long. Once they fill it out, then it's scheduled a Calendly event, okay, for an interview with me. And I talk to them, I say, Hey, I I see you answered all these questions. We put them through a different scenario. So that's a scenario interview, okay. Um, if they pass, I have them fill out a whole new questionnaire. It's a really long one as well. And then I do a panel discussion with me and two other uh members on our team, my partner and one other. And if they pass that, then it's the final, you know, typically it's three or four people that we choose from. And all the most of the time, if we reach the consensus that these people made it through the first two interviews, we want to hire all of them. Right now we're at, I think we're at like 10 people. So we have 10 VAs. Um they all speak very well, they all have downloaded on their computers something called Grammarly, which is a software that auto-corrects their speech when they type in inquiries. We use a PMS called Your Porter. Um Yeah, we love your Porter. Um it's coachy sometimes, but they're pretty darn good and they're really cheap. They're really good. Um they need to have a i um they need to have an i5 processor or newer. They need to have a laptop that is in good working order. We we don't require, but we recommend two screens for all the different systems. Um, obviously, your porter. Um, sometimes they want to have another monitor open for Slack when they communicate with us and vendors and everyone else. Um, we used to use Voxer, we don't anymore. Oh, yeah. Yeah, I really wish Voxer was uh Slack had a Voxer um option, but it doesn't. Um but yeah, that's how we syndicate all of our stuff, or that's how we find VA. Sorry, that that was what you asked. That is a tough, that's an art, by the way. If you could if you can find the right talent, that's an art. You know, that takes time. You really need to be have a great perspective, or you need to perceive who you're going to hire. You need to know who you're gonna hire before um they even interview with you. If you don't know who you want, then and and you've probably hired your first one. I'm sure they're gonna be great. What's gonna happen is you know, you'll hire someone else because you're growing, and you'll realize oh, this new one's like 20 times better than the one we just hired. You know, I'm sure they're all gonna be great. They're they're you know, people um people in the Philippines are my favorite. They're they're my favorite. I don't know if you're choosing people from the Philippines.

SPEAKER_01 39:39

Yeah, yeah, Philippines.

SPEAKER_04 39:40

We we uh I visited the Philippines a couple years ago, my partner did as well. We took the family, beautiful place. We got to meet our team, wonderful people, incredibly smart people and dedicated. That's why we choose them. They're very well spoken as well. And yeah, they're just they're cutting-edge individuals.

SPEAKER_01 39:59

So, what do you look for? You said what you know, you know what you want, what you're looking for. What are you looking for in a VA?

SPEAKER_04 40:05

I'm looking for someone who currently has a job. Okay, don't look for someone who isn't unemployed.

SPEAKER_03 40:11

Oh wow.

SPEAKER_04 40:13

That's another trick. There's a lot of tricks to this. Man, we this could be like a four-hour episode.

SPEAKER_02 40:18

Um, I love that.

Only hire VAs who already have jobs and have stayed years

SPEAKER_04 40:20

So, my first question in the interview is like, where are you currently working? If they say unemployed, I don't even want to interview them. Oh, I don't even want to talk to them. Okay. Now, the another question is how long have you been where you're at? And if they say something like five years, I want to talk to that person. I want to talk to that person. Okay.

SPEAKER_02 40:38

You're the second person to say that. That that is a great gym, right there. Yeah, but go ahead. Definitely.

SPEAKER_04 40:43

Yeah, no, no, no. I uh so we ask that. Um, I I typically ask them scenario questions inside the questionnaire. I I ask them, you know, one of your team members is being very unruly. Um, they're treating you very poorly. How do you respond? I like to see how they how they act, how they respond. One thing I will say about, and this this is not this is not a knock on the people in general, this is a culture thing, right? And they're the Filipinos are my favorite people. In fact, a lot of times I choose them over Americans, right? Over over my own people, right? But one thing that I really struggle with with these individuals in the past is they want to perform so well that they won't tell you what's wrong. And they won't say anything. And that's a big no-no to me. So that's another question. This is a pitfall you might guys, I hope you won't run into now that I tell you. Whenever you hire somebody, ask them, um, let's say something's wrong. Are you going to hide the fact and solve it yourself, or are you going to tell the team? If they if they say I'm going to hide the fact and solve it myself, you need to you need to talk to that person. It doesn't disqualify them to be hired, but you need to talk to that person and say, that's a big no-no. We disclose we're a meritocracy. Meritocracy means you're you're you're paid on performance and your merits, meritocracy, your merits, right? So everyone's on the same playing level. Nobody gets their feelings hurt. If you mess up, you call it out. Someone else messes up, they call it out. We all mess up, we call it out. We get better. Um that that's probably the biggest thing I run into with the with the Filipino people is they don't they don't tell you what's wrong. And that's actually that's actually great that that's like their only weakness, honestly. Like they want to fix it themselves, you know. What a what a beautiful thing. But you need to know at all times because their fix might be the wrong solution. Um, people that are employed, people they don't need to have degrees, but they've been employed with the company for a long time. Question them, why do you want to work for us if you're so happy where you're at? Because I'll I'll throw this question at them. I'll say, you know, it sounds like you love where you're at. Why on earth would you want to come work with me? You have no idea who I am. And they'll tell me, Well, I feel like I've hit a plateau. That's probably the biggest rebuttal I get. I feel like I hit a plateau. Um, my company doesn't want to pay me anymore, even though I perform. I love hearing that because I want them to grow with me. So, but yeah, that's that's who I hire typically.

SPEAKER_01 43:06

What do you start them off at, like pay pay wise?

SPEAKER_04 43:09

I it depends on experience. If they wow me and they're very good and their skills and aptitudes are very high, and they've been with the company for a long time, I'll probably be at six or seven bucks an hour start.

unknown 43:20

Okay.

SPEAKER_04 43:21

Um, if they're if they're entry level, it's probably four dollars an hour. I don't go below four dollars an hour. I try to, and and there's other companies that go like three dollars an hour, two fifty an hour. I I don't like to lowball people because if if I'm not paying you well, you're not performing well. You're gonna perform. Um it's gonna be equivalent to what you're being compensated. You nobody works for free. And when people give me the BS, when I ask the question, what motivates you? And they don't tell me money, I'm shutting that off. You know, like you ain't talking to me because you just wanna be part of something. I hate that. I hate when they say that. It's like, no, I'm here because I want cash. Okay, I want to take. My family, right? There's a bigger why. It's not just because money. I want to take care of my family. So usually you'll you'll you'll sift through people that that say the BS, and that be the same BS that they're using in the interview, they'll probably use down the line. So you don't want that. You want to hear someone say, Listen, I love hanging out with my family. In fact, whenever I get weekends, we go to the beach. Um, the way I do that is I perform excellently with the company I'm in and I'm paid very well. And that's what I want with buy more time. I want to be paid very well. I'm gonna reach for something and help this company grow, but I want to be paid well. If I hear that, I'm all ears.

SPEAKER_01 44:35

And so that that's I guess that's one thing. Like if we were like, well, we don't want someone that already has a job because you know they got it. How are they gonna work two jobs? You know, they're how they're gonna do our stuff. Yeah, and so so you tell them, okay, we're gonna hire you, but you got to quit your job. You no moonlighting.

SPEAKER_04 44:52

Yeah, but I mean that think about getting a corporate job at Wells Fargo or Chase Bank. You know, you go over there and say, Hey, I'm at Chase Bank. I work for Wells, by the way. Yeah, they ain't gonna hire you. It's like, great. If you're gonna work for Chase, you're leaving Wells, you're working for Chase. Um, it's the same thing with us. Now, here's the deal. We we actually just found out one of our people had two jobs and her performance was kind of slipping, and that's how I'll know. Look, I'm never gonna stop a woman from working two jobs, especially if she's a single mom with kids. Like, look, work two jobs, work eight jobs, work 20 jobs. But when I see performance slip, right? When I see performance slip, we're gonna talk. And I want to get them to the point where they don't need to work two jobs. Look, I'll pay you more. Like, let's let's let's create some goals, okay? And we make them submit goals, we call them wigs, wildly important goals. And let's get you to the next level. Because as we earn more clients, as we earn more properties, you know, we started off with 10. Well, now we're at 34, so we're growing, you know. Um, if we if you if we get more people, or excuse me, if we get more clients, you get paid more. It's that simple. You know, everybody gets a bump. Everybody's everybody's gonna grow with us. We're not gonna leave you down and we grow. No, it's we all grow together. Um, we also we use something called Time Doctor that monitors their screen so we know if they're active, we know what their mouse is doing, we know what web pages they're going on. You know, when you're on the clock, you work with us. You know, you don't work with um Facebook, you don't work with Amazon, you don't work with any other job. We had another guy that we let go some years ago who was working with a competitor company. So crazy. So he was basically taking all of our trade secrets. Hey, he was giving the ball to the other team. Like, here, this is what we do, you know, you might want to use this. And I'm like, Oh man, what? So yeah, I found out because he was using it, it was so crazy. He was using our own database, our airtable database, to collect, and this is kind of dumb on his part. He should have, if he's gonna be sneaky, he's gotta be sneakier. But he was using our own Airtable database to house his clientele information. So I'm looking through this clientele, I'm like, who is this? We don't have any people, we don't have any clients like this. Like, we don't have any clients over here, over there. I come to find out that he's working with another company, and anyways, I called the CEO of the other company. I'm like, hey, um, I got this guy, you know. Well, first of all, I said, Hey, do you know this guy? He's like, Yeah, yeah, we've hired him. I'm like, how long has he been with you? Um, six months? I'm like, six months. You know, like so no, we have a we have an employee code of conduct. You can't work for competing companies, you know. You need to put in the time while you're here. If you're gonna work multiple jobs, we can't we can't stop you. But once performance slips, we're gonna talk. Um yeah, we have an incident tracker, you know. That's a full-time job, guys. That's a whole nother game. You know, when you hiring one VA is very different than hiring two or above, you know, one VA, totally different. Two or above, it becomes a chore. So that becomes its own like system, you know.

SPEAKER_01 48:08

Wow. And then you mentioned your VA is working with Americans. You kind of mix them up. How does that work?

SPEAKER_04 48:14

Americans are the salespeople, the sales and relations people. So they're the ones that bring people in the door, they'll reach out to you. We have one lady named Tracy, she's wonderful. Uh, she hops on all the discovery calls. So if you are you fill out the questionnaire and the questionnaire for the Calendly, right? You guys use Calendly. So you fill out a Calendly, you can add questions. One of the questions is do you uh own, manage, or operate any short-term rental? If the answer is no, then we're just gonna send you another link that says, Hey, um, why don't you set up a time you can do a coaching consultation call with us, it's paid. If not, you know, go out, find that property, put it on a contract, do what you need to do, bring it to us. We just handle those that are up and running. If you're up and running, then we're ready. You know, if you're brand new to this, go learn the ropes, figure it out, set your expectations, and then come to us later. So what they do is they they get on the onboarding call and the discovery call, but we have VAs in the background that are there taking notes, filling out forms while they're on the call with the potential client, if that makes sense. So it's not just her on one call. On the call, we got probably two or three people in the background, and they're all doing separate things. One person's entering stuff into the database, another person's starting to begin syndicating the listings in the reporter.

SPEAKER_02 49:30

So we have a little world machine.

SPEAKER_01 49:36

It's took you took years to develop this, right?

SPEAKER_04 49:39

Yeah, it took it took a while, like about three and a half, four years. You know, it we've been through our ups and downs, we've lost people to competitors. Um you know, we we've we've messed up on management. We have, you know, sometimes we we've been without cleaning a property in between turnovers, and that was terrible because these are high-end properties. Oh yeah. You know, this is this is years ago. We're we're we don't do that now, but um it's been it's been bumpy, y'all. It's been it's been really bumpy. But that's what it takes to get where you're

Best and worst scaling advice: software over headcount

SPEAKER_04 50:10

at. Yeah, is if you stay the course and keep going and grinding, you'll get there. You know, it's really just a game of who's gonna stay, who's gonna leave, you know.

SPEAKER_01 50:19

It's uh two-part question. What's the best advice you could give to someone as they scale? What's the best thing they could do, and what's some of the worst things they could do as they're scaling?

SPEAKER_04 50:31

Okay, the best advice is get incredibly cutting edge software that allows you to scale, but the worst advice is deciding that you need to hire more heads to get more done. And that's not the case.

SPEAKER_02 50:49

I like that one.

SPEAKER_04 50:51

A lot of, and that was a big mistake we ran into. In fact, um, there's another company that's very similar to us. The CEO reaches out to me for advice, and I give it to him. He's a friend of mine, and he's like, Hey, I'm gonna hire someone just for marketing. Hey, I'm gonna hire someone just for cleaning management. Hey, you know, I said, first of all, a lot of the software that you have can do all of this. A lot of it can do all of this. If you can have software replace people, do it. And it's not a knock against the people, it's just efficiency. Less human error, less variables, you're gonna have happier clients. It's just how it is. Now, that does that mean your porter fails? Absolutely, it does. I especially when you're syndicating crap to VRBO, that drives me insane. Oh man, how about that, man? Like they dropped the ball on me so many times. I'm like, come on, guys.

SPEAKER_02 51:35

Yeah, I have a call with the director who just decided to cut your porter. So, yeah, that that dude, I'm in the same boat. That's that's a pain.

SPEAKER_04 51:46

That's frustrating. So, so software has always been a hiccup in this game of STR. Always. Um, you want to be very resourceful with your software. For example, if you have the ability to collect email addresses of your guests, do it. Do it, put it inside of a database. If you're using an email sending software, send them uh email every quarter. Look, there's only four quarters in the year. They have four emails a year, say, Hey, we love that you stayed with us. Come back. Okay, come back. If you reply to this email letting us know that you'll come back within the next you know year, we'll give you 10% off your stay. You know, keep your occupancies high. So there's so many tricks to that trade, but I would say number one advice is make sure you get cutting edge software. So let's say you're at 10 properties and you're making really good money and you're curious what CRM you should you should focus on. Well, if you have a goal to hit 50 plus properties under management, focus on a CRM like Salesforce. Focus on a CRM like HubSpot, focus on a CRM like um, oh, what's that other one? Now these are CRMs, these aren't PMSs. Yeah, there's other PMSs out there. Like PMSs, you can use guesty, you can use your porter, you can use hostfully. Um, there's one out there that's ridiculous, and it's actually here in Arizona. It's absolutely it's the steroids, it's the it's the Hercules of PMSs. It's actually so ridiculous that there are companies using what's that? Is it Z Vu?

SPEAKER_02 53:18

What's the name of it?

SPEAKER_04 53:18

No, no, no, no, no, no, no. Let me get it for you. Hold on.

SPEAKER_02 53:21

Yeah, that sounds interesting. Powerful, man.

SPEAKER_04 53:24

Oh, it's in Chandler, Arizona. What is it called? VRMS. I'm gonna type in VRMS. It does long-term, short-term. Um drive me nuts if I can't find it. Streamline, streamline VRM VRMS. Look up Streamline, type in Streamline VRMS. This guy, um Anthony Corzo, his last name is Corzo. I think it's Corzo, left Intel, okay, and said, I'm gonna make a beast of a system for property owners, for short-term rental

Streamline VRMS - the beast PMS for 50-plus units

SPEAKER_04 54:01

owners. And over it's been in it's like over 10 years ago, he did this, and it's just the beast of the beast of the beast. It's really expensive. He used to charge like 10k just to set everything up. Now he doesn't. Now, now they they charge, I think it's like a thousand bucks a month minimum. Minimum. So you have to have volume. You can't do this on like if you have 10 or 20. Like you gotta you gotta have volume. I think minimum is like 50 units. So they're willing to work with us. I just didn't want to pay the fee because I could do it all myself, patch, you know, patching everything together. But it is it is the beast system out there.

SPEAKER_02 54:37

Streamline VRMS. Okay, I'm yeah, you're gonna look into that thing. Yeah, that is awesome.

SPEAKER_01 54:43

That is that is cool that you said that, you know, that that is tempting, and I've seen other, you know, um STR hosts try to try to do that. Yeah, I'm just gonna hire someone for this, hire someone for that, hire someone for that. And it reminds me of an old um San Walton quote that I that I heard back in the my Walmart days. If you're if you have enough employees, then you're overstaffed. And I was like, that's pretty freaking interesting, man, right? Because you're not having them do enough. You're not putting it in the world.

SPEAKER_04 55:14

Well, we had an issue with downtime. So we have these we have these um virtual assistants that are that they wouldn't be doing anything on their screens, and we had downtime. I was like, hold on. So then we created a system where we have projects, extracurricular projects, that when they're done answering guest inquiries or or client inquiries or questions, start working on projects. So now we're so efficient, we run so efficiently that we can finish projects. What took us a month, four weeks, and now it takes us two weeks to do, you know, cut it in half because they're doing something else during downtime. That's the thing, too. Optimize your people to work on different projects to make your business better during downtime because there are there are downtimes.

SPEAKER_01 55:56

Golden advice going on right now. Dude, this is being awful.

SPEAKER_04 56:01

My passion, funny enough, is not in short-term rental management. This is what's crazy. I only built it to scratch our own itch so that we could build a team around managing our own stuff. My my passion's in creative deal structure. So I love creating creative deals, you know, like nothing to load down, no payments for 12 months, full price. Like we've done some wild and crazy deals. That's my true passion. But buy more time was built so I could buy myself more time to do that, you know, create systems to manage the short-term rental management.

SPEAKER_02 56:32

Dude, see, I I'm trying to get into creative financing because I've been doing burr. I did a Burr, I loved it. You know, you don't barely any money out of your pocket or none. Uh, and then I was like, Man, someone. The reason why I was looking into the creative financing thing, because someone emailed me this deal and she's like, Hey, the owner wants to go. We're giving you everyone a lease option. They can you can do a lease option on the property. I'm like, heck yeah. And she was like 10k down. I'm like, what? Brand new neighborhood, right in this neighborhood that I wanted. So I offered, but someone ended up paying cash for it, but nothing, but it just sparked my mind like I could get a bunch of properties doing that, you know. So it's definitely on my on my plate to do that, man.

SPEAKER_04 57:13

What I would have done with that one, I would say, great, I'll pay 15k down. But in in the case of this property, I don't want to do a lease option, I want to take ownership of the property and I'll sell our finance deal. So I'll say, hey, I'll pay more, but I need I need to take ownership. Then I go to my private lender and say, hey, 15k for this property, I'll give you 10% on that money, and you can get it back in 24 months. And then all the income, I push it over to my private lender, and he gets the first income. It's called a waterfall loan. So they get all the income. I don't make any income until he's paid in full plus his 10%. So none of my own money was used. So kind of a crazy deal. Now, I did a lot of those when I was broke. I did a lot of those when I was broke, but you know, you get to the point where, like, for example, the market's crazy here in Arizona, the market's crazy in Texas, the market's crazy in Florida, market's crazy in conservative, a lot of conservative states, and they're doing really well. I really kicked myself that I didn't do more of these like three, four years ago, because right now they almost doubled in value. Imagine having a seller finance deal you borrowed 10K for from a buddy of yours who had some sort of insurance claim and wanted to make some cash on his money. You know, it's like, hey, you got a car accident? Cool, you got 20 grand. I need 10 of that. I'll give you 20% on that money. Use that 10k, put it down, buy the property, make sure he gets paid back his money ASAP through the rents, and then after he's paid off, you take all that money, and then after two years, you sell it and make double the value of the property. That's where my passion's at.

SPEAKER_02 58:43

If David Green or Bigger Pockets is listening, this needs to be your next guest.

SPEAKER_04 58:50

That's where it's at. I actually bought Brandon Turner's book uh a long time ago, um, purchasing properties with little to no money down. You remember that one? He actually he built it, and Joshua Dorkin would give him so much crap when they were both on the podcast. And that's actually a big reason why I'm here. Bigger pockets is huge. Like I years ago, I started listening to that podcast, that in Epic Real Estate and Jay Massey and all these guys, right? Jay Oh, I love Jay. So I love all these guys, and I'm like listening, I'm like, I'm getting pumped, I gotta get into this. But he he Brandon Turner talked about no money down. What I learned from a mentor after I told the mentor about it, the mentor's like, you know, we can make these deals even better. And he would just tell me, I'm like, how do you do this? There's people, get this, there's people taking down property with no to little money down, and they're creating with someone up else's cash, um, senior living centers out of these houses that earn 7k a bed. I don't know if you've ever heard of this before, but they earn seven grand a bed, and there's 10 beds in these properties making 70k a month. You know, like, and of course, you got to fit a tight box, right? It's got to be at least 2,500 square feet. You have to put sprinkler systems in it. So there's a little bit of upfront investment, not crazy, but if you negotiate $5K down and you borrow another $25k to make it where it needs to be, you can make you can make that money back in half a month, you know. But anyways, I drew it.

SPEAKER_02 1:00:27

I'm going all in on a leap top shit or a pop. Wow.

SPEAKER_01 1:00:31

So you you teach this to people, the the the creative financing?

SPEAKER_04 1:00:35

You know what's funny? I don't I don't teach it officially. I never really liked coaching. Um I have friends that beg me to do it, and I'll just help them. The only thing I ask in return is that you bring me a deal. You bring me a deal, I'll pay you for the deal, I'll teach you, I'll walk you through the deal. Um, I use a third-party um mortgage company called West Star Pacific Mortgage. They know me by name. Um, they manage all of our notes that we have. I create notes. You know, you buy a property seller finance, you put very low to nothing down. Um, you create a 60-month note. I you can take that piece of paper, you can sell that paper later too, if you want. You're like, ah, I don't want to wait for my money at the end. I just want to sell it. Or um, yeah, so I do teach people if they if they bring me deals, you know. If you want, if you if you want to if you want me to teach you how to do these deals, just bring me the deal. I'll do the deal with you. You'll do a 50-50 split, or I buy the deal from you, or I'll just help you over the phone, man. Just talk to me, you know, we'll we'll do it. So nice. I'm not your guru, man. Sorry, that was your question. I'm not your guru.

SPEAKER_02 1:01:34

I'll bring you some deals, man.

SPEAKER_04 1:01:37

I'll get you the deal. That was easy, dude. We bought a property in Lubbock, Texas, Isaac and I. You guys got to talk to Isaac more, too. He's a he's a good dude, good cat. Yeah, yeah, he's cool. Um, we bought a property in Lubbock, Texas. We needed to pay like 10k down, so we borrowed the money for the 10k. We bought it for like 90 something thousand. We're such idiots because we flipped it out for like 130k. We made some money. Wasn't crazy. Property today, that was only like two and a half years ago. Property today is worth like 380 right now. Yeah, I know, right? You know, we totally missed. We totally missed. But hindsight's 2020. Now that I know the formula, right? I know that the wholesalers and the realtors are bringing me the deals. I know where the private capital is to fund the deals. I know that now I'm able to capitalize, or I'm able to fund my own deals, but I still leverage as much as I can to reduce my risk and to help my private lender. Um, and in the meantime, buy more time's just running, managing these short-term rentals. And we're just we're continually building um that foundation so that we can automate everything. It should be one well-oiled machine.

SPEAKER_01 1:02:43

So here's a question I like asking every now and then when there's like a heavy hitter like yourself. Come on. Um, let's say a scenario where someone just like scooped

Dropped in a strange city with no money - the four-hour work trade

SPEAKER_01 1:02:54

you up from where you were, dropped you in a city you don't know, no money, nothing in your accounts. What do you do to start surviving and thriving?

SPEAKER_04 1:03:03

So, first thing I would do is I would find a more rural area and I would ask in exchange for lodging, I will do work on their house. I will improve their house. I know how to tile, I know how to roof, I know how to do whatever needs to be done. I would exchange work, they buy the materials for four hours a day. Okay. I'm only I'm only gonna put in four hours a day, but I get lodging. Um, and I I try to slip in food too, you know, throw me some food, throw, throw me, throw me some dinner, throw me some breakfast. Let's say I had no money, okay? Yeah, it's only gonna take me, you know, after I have my lodging, I'm set, I'm I'm golden. Now I got the rest of the day. I have the whole day to find me a deal. Okay. I have all day long. What I'm gonna do is I'm gonna find five, five real estate agents, five of them. And I'm going to call all these agents on Zillow and I'm gonna find out if they have any pocket listings or if they know any properties that aren't selling. What's not selling out there? I'm gonna show up to the seller's house with the agent. I'm gonna say, I'm gonna put on a contract for full price. They're gonna drop their draw, then they're gonna pick up their job, and they're gonna say, Yeah, we want your offer. I say, full price. I'll give you, I'll give you the price you want, you give me the terms I want. And they're gonna say, Okay, sounds good. We lock it up. I either sell the deal for 5K, 10K, or I keep it. Now you said I don't have any money. That's really easy. All I do is I get a smartphone and I post this on Facebook. I say, hey guys, I got a deal for 3K down. You can have a 2200 square foot home and your monthly payment's only $1,400. It rents for $1850. Who wants it? Done.

SPEAKER_01 1:04:39

You be at the library typing because you don't have to.

SPEAKER_04 1:04:42

I got the library. I smell really bad. My clothes have holes in them. I'm about to go do some do some work on a house, but I got this really great deal. Shoot. In fact, I probably do better than I'm doing right now. I'm lazy. Like when you're you're hungry, sky's the limit. You can do whatever you want to do. You can change the world when you're hungry. When you're when you're full, you ain't gonna do nothing. You know, I don't know.

SPEAKER_01 1:05:05

So hey, just just don't mess with the farmers' daughters, all right?

SPEAKER_04 1:05:08

Hey, that's that's a great song, brother.

SPEAKER_01 1:05:15

Oh man, this has been a great episode, man. We love it, we love it. Oh man, so so where can people find you?

SPEAKER_04 1:05:23

Find me on Facebook, guys, or just email me, Andrew at buymore time.com. Just like it sounds. Andrew, my name and D R E W at Byb.

SPEAKER_01 1:05:36

Cool. And that website has everything there if you need, you know, more people to manage your properties and get, you know, ask you ask you questions like we did. Right.

SPEAKER_02 1:05:45

Yeah, I just sent that to you.

SPEAKER_01 1:05:47

Yeah, man. You got any more questions for them, Mike?

SPEAKER_02 1:05:49

Man, that was it, man. It's like every time we get a guest on, they hit right with what I'm trying to do, and you hit right the nail on the head with the lease option. Like the nail on the head. Head when you start talking about that's why I had so many questions. As soon as you start talking about that, I'm like, oh we start taking notes. It's been awesome to have you on, man. This has been a great time. Um, good luck to you in the future, man. You're killing it. So I know we we're gonna see hear you on the Bigger Pockets podcast. Hey, that would be cool.

SPEAKER_04 1:06:18

Hey, appreciate you guys. Thank you so much. Keep doing what you're doing. It's people like you that get us fired up and get us at it, going at it, and taking massive action. Look, if I didn't listen to a lot of these dudes on the on, like if I didn't listen to Max Maxwell, Jay Massey, Bigger Pockets, you know, all these all these people, if I didn't hear them, Epic Real Estate, Matt Terrier, you know, um, Joe Fairless, I actually used to be the coordinating uh podcast coordinator for Joe Fairless. Funny enough. Sorry, yeah. So I'm actually on the Joe Fairless podcast too. If you type it in, but that's a long time ago. My first deal was a duplex. I bought on an FHA deal. Anyways, if it's not for people like you, honestly, there would be a lot less action takers. So you don't know what you're doing. This is incredibly valuable, like incredibly valuable.

SPEAKER_01 1:07:03

It's funny because people tell us that, you know, hey, y'all, you inspired us to to get our first deal, get our first. Well, now we got 20. Like, damn, and our guests, our you know, our our our listeners inspire us to get off our asses and do more, you know. It's it's like a reciprocal thing, you know. It's it's so we're learning more than we're you know putting out there, but it it's just oh man, we love it. Yeah, we appreciate guests like you coming on and just sharing and and just opening up your soul to all of our listeners, man. It's been great.

SPEAKER_04 1:07:31

Awesome, guys. Thank you so much.

SPEAKER_02 1:07:33

Thank you, man. Yeah, have a good night, man. Thank you for coming.

SPEAKER_04 1:07:36

Hey, you too. Reach out anytime if you have questions about lease options or whatever. Anything created, I got you.

SPEAKER_02 1:07:41

All right, we'll do.

SPEAKER_04 1:07:42

Sounds good, guys.

SPEAKER_02 1:07:45

Later, that was man, that was powerful, dog. Like, I'm I'm I'm about to go all in because like I was like, I need to get deals where I can still get equity. He he he hit the nail on the head. You gotta do lease options because I'm like, nobody's doing that, and he's doing it with no money out of his pocket. Like, dang you can't beat that. Go ahead though, man.

SPEAKER_01 1:08:06

I'm getting some text quiz text messages about you know, about people trying to hit me up doing that with my my rental house in Hearst, you know, the one I uh that I'm getting some work done on right now because the the previous tenants left. Now I got new tenants coming in. And um, but I'm getting tons of text messages. Hey, I saw you have the house for rent on Zilla, blah blah. How about how about we, you know, we what we do, we rent it for we can rent it for 12 months and then we'll buy it from you full price, you know. And you know, they put a renter in there while they why they rent it for me for 12 months and then they sell it, you know, they try to sell it to that person, whoever the I don't know, whatever their their deal is, you know. But it's like kind of leads I'm getting lease option text messages. So and one of them I responded to I was like, hey, is a so why would I do that when I could sell it for you know a buttload of money right now? And they didn't say nothing, but yeah, that was my you know me.

SPEAKER_02 1:08:54

I'm like, dude, if you because like we're calling these places and trying to arbitrage it, like yeah, that works, but you still have to come out of month pocket, out of out of mutt out of pocket with the money. Yeah, you do the lease option, man. That shit, dude. That was like you can't beat that. And I know a bunch of wholesalers and uh realtors, so I'm about to yeah, I'm tapping into my network right now.

SPEAKER_01 1:09:17

Adam Johnson, he also does that. He he was on our show, yeah.

SPEAKER_02 1:09:21

Yeah, because I know he does, yeah. I know he's real big on sub two as well. Sub two yeah, I didn't know he was doing lease option as well.

SPEAKER_01 1:09:26

That's that's I'm sorry, I meant yeah, sub two, where he's like, you know, he has the house for five years, and the whole five years he's doing the Airbnb on it. So yeah, so there's there's people doing it, and it's kind of the same approach. He fixes it up for the person, blah blah blah. You know, either he buys it or what doesn't buy it. But um, man, that's this is cool. This is the that's what's cool about real estate and you know, short-term rentals. You know, it's it's just creativity, it's all it is. There's there's no limits, there's no freaking limits.

SPEAKER_02 1:09:52

There is no limit, see, and that that's what I'm learning, man. Just that's why I love this podcast, man. We just keep learning shit, learning shit. Now I'm like, I gotta apply it, you know what I mean? So I gotta apply it. That that's man, that's what that was that was some game changing shit right there.

SPEAKER_01 1:10:07

So yeah, that's a great episode, man. Where can people find us?

SPEAKER_02 1:10:10

Man, you can find us at live let thrive.com, email us liveletrive at gmail.com, follow us on Instagram. You can follow me at Micah Artist on Instagram, Steve at Steven Shay Swarthy. You can follow uh live let thrive on IG as well. Thank y'all for continuing to listen. We are an episode in our episode, we're in the 170s, man. That's crazy. That's crazy to think about. They said the average podcast doesn't go past episode nine. Oh, wow. That is crazy. Yeah. So thank y'all for continuing to listen to us and uh hit us up. Got any questions? Hit us up on Instagram, send us an email, man. Thank y'all for continuing to listen. We are out. Peace later.

SPEAKER_00 1:10:52

Thank you for tuning in to this week's episode of Live Let Drive. Be sure to tune in next week for all the latest in the world of Airbnb and all that and kills. Bye bye.