2024’s Biggest Opportunities (and Risks!) in Real Estate Investing

Dave:
Real estate investing trends and successful strategies can be sort of hard to predict due to big economic market cycles. For example, short-term rentals burned very high in 2021, but then started to calm down. Commercial real estate was the darling of every investor until 2023 when things started to change. So the million dollar question most investors are asking is what is working in real estate today and what is it?
Hey investors, this is Dave. Welcome to the BiggerPockets Real Estate Podcast. If you’re brand new here, welcome to the show. If you’ve listened before, welcome back. Today, we are premiering our very first deep dish episode. It’s a brand new format where we will get into the nitty gritty of real estate investing tactics and dive deep into the tips, the tricks, the strategies that make successful investors, and hopefully provide with some lessons and things that you can go and apply to your portfolio today. On today’s episode, we’re talking to two BiggerPockets personalities giants in the real estate investing space. We have Ashley Care, who co-hosts the BiggerPockets Rookie podcast and Henry Washington who is a co-host of the On the Market podcast. He also is on this show quite a lot, and we’re doing this bringing on these two great investors today because although Ashley and Henry are investing on a scale that’s bigger than most of us, myself included, there’s a lot we can learn from their insights and experience.
And I know that there’s going to be a lot of lessons that they share in this conversation that you can apply to your own decision making today and stick around to the end because we have a new segment of the show called The Dish, which I think you’re really going to like. We’re going to ask Ashley and Henry to answer some really rapid fire, but sometimes personal and definitely revealing questions that are going to help you understand how these great investors think. With that, let’s bring on Ashley and Henry. Ashley, welcome to the show. Thanks for joining us today.

Ashley:
Thank you so much for having me. I’m so excited to be here. Excited on the deep dish.

Dave:
Yeah, this is like one of those old school Flintstones Jetsons crossover episodes. We’re excited that you’re here all the way from the Rookie show, Henry, you’re here all the time, but that doesn’t make us any less excited to see you. Thanks for being here.

Henry:
Thank you. Thank you for having me. This is super fun, man.

Dave:
Yeah. So we’re going to get into what’s working today, what isn’t working, but I want to help set the stage for everyone listening and provide a little bit of context. So Henry, roughly how many deals have you done this year and what are the buckets like short-term rentals, long-term rentals, flips?

Henry:
Yeah, so I’ve purchased about 20 some odd rental properties and just count doors because several of them were multis and I was just counting the flips here. 1, 2, 3, 4, 5, 6, 7, 8, 9, 10 flips so far this year.

Dave:
All right. Very nice numbers. 20 and 10, very nice round numbers. All right, that’s big time in it. Ashley, where are you so far this year?

Ashley:
So I am at two flips, one long-term rental and one short-term rental and one flip under contract.

Dave:
Oh, nice. Congrats. Is flipping new for you. I feel like you were not originally a flipper.

Ashley:
Yeah, I gone through flipping a house with James Dayner twice and the first time we did a whole series of here’s exactly how you flip a house and he showed me the whole rope. So this is the year that I went off on my own, but after his guidance I feel pretty comfortable.

Dave:
So did you start moving into flips because of market conditions?

Ashley:
Part of it was because of that, because even though interest rates have gone up, the properties that people are purchasing for primary residents in my market are selling faster and still selling for above asking and the numbers are making more sense. And if you were to go and buy a multifamily property right now, which that is my bread and butter is small multifamily. So one of the properties I did purchase was a five unit property, but there was very specific things as to why I purchased that. But yeah, the flips are new to me building capital from it and it’s just there’s great room in my market right now to do a flip,

Dave:
Henry, is your allocation of 20 doors long-term rental and 10 flips sort of where you want to be? Is that your ideal mix?

Henry:
Yeah, I would say on average we do anywhere between 10 and 15 flips a year, so we’re probably going to be on the right about that this year. And doors, I used to say I wanted to add 20 to 30 a year, which we are obviously have hit, but we’re slowing that down. I think when you’re buying value add, it’s fun to buy great deals and it is not as fun to stabilize those deals and you don’t start making money until you get ’em stabilized. So we’re doing some just slowing down on the buy-in so that we can optimize what we have in our portfolio.

Dave:
And Ashley, same question. You said your bread and butter is more rental properties, but you’re starting to flip now. What analysis did you do to figure that out that flipping was going to be a better tactic for you in this market?

Ashley:
Because it’ll take low capital for me to get started in it. So I’m using a private money lender and then for the purchase of the flips and then I’m using my line of credit for all the rehab. And a big piece of this is that I have a great contractor where I don’t have to micromanage and the flip is actually becoming more passive for me than actually getting a rental property where rental property, if I’m buying one, I’m adding value. So I’m going through the rehab process, which the rental properties are usually too small of scale for my contractor to want to take on. So that’s me finding different subs or that’s me having my maintenance person do that. And it takes longer because he’s trying to do maintenance requests in between doing the apartment turnover, things like that. Also the fact that I’ve done a ton of comping, comping, comping, comping, and I just consistently watch what exactly is happening in the market that I want to do a flippin.
I look every single day, I have spreadsheets galore for the property that I’m doing right now. I looking at every property that sold, but then I go back and I look at what was the list price, how long was it on market, when did it go under contract, when did it actually sell? And then I’m looking at all the comparables. Does it have a garage? Does not the square footage. But the big thing is in New York state you have to have an attorney to close and that’s where I’m investing. And so your close time could be 30 to 60 to 90 days depending on if you’re using a loan or if there’s contingencies. It can take a very long time. So if you are looking at what a property sold at, if it was 45, 60 days, it went under contract a big, the market can change. It can shift in that time period. So that’s why I like to go back and look at when did it go under contract because that’s when it was worth that amount to someone, not when it actually closed. So comparing a lot of that data to

Henry:
Man, what’s super interesting Ashley, is the reason that you are doing flips is because you’re kind of superpower is you’ve got this contractor that kind of allows you to be hands off and so you can essentially buy properties, get ’em renovated and you’re not having to put a bunch of time into it. So it’s like you can go now, maximize that part of your business. We’re the same way in the rental space. That’s why we bought about 20 rentals this year is we brought on a property manager who has been phenomenal with my properties and not only are they a property manager, but they’re also a project manager. And so I can go buy a value add rental property and just hand them the keys and they’ll go run the renovation, they’ll renovate it, they’ll market it, they’ll get a tenant in it and they’ll start cash. Yeah, I literally do nothing but close on it and then we get a rental property up and going. That is why we bought several more this year and some of the ones that are taking our time and that we’re having to stabilize are the ones where we didn’t turn over the renovation to and we’re doing it ourselves. So more of a lesson that we need to give them more of the work. So I can focus on the flips.

Dave:
We do have to take a quick break, but we’re going to hear about some specific deals from Ashley and Henry when we return. Welcome back to the BiggerPockets podcast. Let’s jump back in. So Ashley, I maybe just anecdotally hear a lot of investors, people in the BiggerPockets community who are moving from traditional buy and hold into flipping because it does seem like there’s good margins still right now. So I’m wondering if you can help walk us through one of the flips that you’ve done this year.

Ashley:
So I think definitely having some sort of advantage can make there be a good margin for you. So first of all, I have a very reliable contractor, so that right there is an advantage for me. Someone else may be doing the work themselves. That’s an advantage for them. They’re not paying labor. Someone may get a military discount at Lowe’s and be saying 10% on other material. So I think there’s different things you need to account for if you are going to decide, you’re going to flip as to do you have an advantage against other investors that you can make the deal work because of

Dave:
That? This is why I don’t flip because I have no skills or advantages.

Ashley:
There are skills in spreadsheets. Do not worry.

Dave:
Thank you for making me feel better even if it’s not true.

Ashley:
So there’s one property we bought, it’s a ranch house and it’s in a marketing number invested before, so I had to do a lot of market research, but my contractor is actually doing a flip right around the road on his own. So I had somebody that I could consult with and rely on as far as the market. So that was another advantage for me to take this property. Second thing was this property was a pocket listing. It was the person that owned it passed away. It was two daughters selling the property. They hired my real estate agent to list the property. She had called me and said, before I list it, do you want to come look at it? And I went and looked at it, I put in my offer, which was a little bit less than what they wanted. We negotiated a little bit and they ended up accepting it.
And so we got it for 161,000 and they had I think wanted one 70 maybe for it. So we got it for 161,000. The fact that it was a pocket listing was a huge advantage because we weren’t competing against anyone. It wasn’t actually on the MLS yet. So that’s one great way to find deals now is get in with real estate agents and get those pocket listings. So we got the property under contract. If we would’ve just sold the property as is and maybe cleaned it up a little, we probably could have sold it for 200,000. So we were already getting it below market value.

Dave:
Can you just tell me, Ashley, when you negotiated and put in that offer at 1 61, I don’t know if that was your first offer, but is this what you were doing comps and what were the comps telling you at that point was the value of the property?

Ashley:
So at the time of getting it under contract, the comps were saying about 1 75 to 180 5, but I never went and actually looked at the property my partner did who’s completely passive, and this was the first property he ever stepped into because I was out of town and he went and took pictures for me. So this is me. I knew I had to go a little bit lower because I hadn’t set foot into the property, but it was actually a bigger yard than was originally told to me. There was a bunch of different things that actually increased the value more and it had a second bathroom in the basement which added more value to it. But looking at the comparables, I thought at first it was maybe worth 180 5 around there. But then actually after when we closed down the property, which was probably 60 days later, then it went up to about 200,000 plus the differences that I had noticed from the photos and what the property actually was.

Henry:
And just to be clear, pocket listings are essentially off market deals, but they’re off market deals that come from agents. So they’re off market deals that could be on market deals if the agent talks that seller into listing it. But agents are typically the gatekeepers to these off market deals. So they’re like a hybrid of off and on market. So the best way to find them is through relationships with real estate agents and just ask them if they know of anybody looking to sell and it isn’t listed yet.

Ashley:
And this one we use dual agent. So my agent was also representing the seller. This was going to be her listing, but I had bought one previously from her last August where it was just another agent in her office had that listing. And I guess sometimes in their office an agent will go in and say, Hey, I got this property. Any other agent want to walk through and see if you already have a buyer? And so my agent took me through before they actually listed it. So there’s a couple different ways it can be done.

Henry:
That’s exactly how I’ve bought one of my best performing properties, which is an eight unit apartment building. The sale fell through and when the agent got noticed that the sale was going to fall through, he literally turned around in his chair in the office and was like, I’m losing a buyer here. Does anybody have anybody that might be interested in this property? And my agent called me within an hour. We analyzed it and put in an offer.

Dave:
It’s basically an off-market deal with none of the work, which is basically just the best of both worlds. But I think it’s important to remember that these things don’t just happen overnight. You don’t call an agent, you’re like, Hey, what are your pocket listing?

Henry:
Especially if you use that tone of voice, that sounds a little creepy.

Dave:
That’s the tone of voice I use in all of my conversations when I call random people, no wonder I’m not getting any good deals.

Henry:
Hey, what’s in your pockets?

Dave:
But no, I think realistically it’s like these things just take time. And so for anyone listening, if you’re trying to find pocket listings, you’re want to identify tactics that are going to work this year. It’s about building that relationship with an agent over a long period of time and becoming a reputable buyer. And that doesn’t mean you have to have the most money or you’re going to buy every deal, at least in my experience, it just means that you’re straight up and you’re honest and you’re not going to waste the agent’s time. Sometimes I get pocket listing, I’m like, I don’t have time to look at it this week. Even if I’m interested in buying, I can’t act on this fast enough or this one’s not in my buy box, send me another one. If you can become someone that they know that they can go to quickly and get a quick response for, they’re going to send it to you because that’s what’s valuable to them. Not that you have to be the most sophisticated investor in the world.

Ashley:
And that’s why it’s so important to tell everyone and anyone what you’re looking for because if you’re talking to your agent doing a showing and you’re saying, this is not exactly what I want, but this is, then it’ll be in the back of their mind. But even not even agents, just anybody in general. I bought in so many word of mouth deals too from people. So my sister’s cousin or I guess that would be her cousin too, if it’s your sister’s cousin, my sister’s husband’s cousin is wanting to sell a property. I thought of you because you talked about how you want a duplex or whatever it may be. And there’s always, that shouldn’t be your only lead source you rely on is waiting for someone to bring you a deal, but putting it out there, what your buy box is and what you’re looking for.

Dave:
All right, so it sounds like you got a great deal and then you had a contractor that you trust. So did you just turn it over to the contractor?

Ashley:
So what my process is is, and this is for doing rehabs on apartments too, is I go in first and I build my scope of work what I want done, and then I send the scope of work to the contractor and then or whoever’s doing it. So on this flip, he went in after me with my scope of work, he FaceTimes me and he’s like, okay, let’s go through. And how I do a scope of work is I go room room, I walk in the front door and I start there like hallway, closet, painted new doorknob, new hinges. I just go everything. And I move room to room. And then once I plug it and I’m literally using a piece of paper and then once I get back home, I go on to my nice Excel spreadsheet, plug it all in, highlight it by category, these art rooms have the electrical stuff, and then I send it to my contractor.
Then he’ll FaceTime me walk through or whatever. And on this one, this is where I rely on him for recommendations as to what’s going to be more cost effective or what’s a good idea I didn’t think of. So in this situation, the bathroom is so tiny, so he recommended we’re ripping out the tub anyways, so let’s take that drywall down, we’re going to tile it because we need to put hardy backer board up there. Let’s put a pocket door in because you’re ripping that all out anyways, so right there we make those changes together. Then I go in after we walk it together, update the changes, and then he builds me his estimate based off of that. And then another thing too is I give him my credit card so that he pays for materials because I want all the points. And then I’m also having some control over the cost of it too, where there’s no upcharges on the actual materials.

Henry:
That’s super smart. And I was chuckling when you were talking because I literally do the same thing. I do a scope of work when I first get to the project room by room, you’re nicer than me though, because you go back to your computer and you make it all look nice. I literally do it in my notes app on my phone. So I have one category that it’s called Entire house, and I’ll go, I want this color paint, I want this color flooring in all the major rooms and then all the individual stuff that’s based on just the rooms. Then I’ll add that to a room, and so I’ll just have it broken out by a room and my notepad on my phone, and then I just add my project manager to that shared note and I’m like, here you go. And then we send that to contractors. I don’t take that extra step,

Ashley:
Which is more effective to do that.

Dave:
Wait, I have a very newbie question here. I’ve never flipped a house. What is the alternative to going room by room that seems like the logical thing to do.

Ashley:
So when my contractor sends me back the quote, it’s by category.

Dave:
Oh, so it’d just be like Windows seven

Henry:
By trade?

Ashley:
Yeah, yeah. Or electrical, hvac, plumbing, cabinetry, millwork, yeah.

Dave:
Oh, I would never be able to understand that. That would make no sense. Yeah. Okay. Well knowing nothing else about it, I like your approach, Ashley,

Henry:
And people get hung up on that too. And that’s what I tell people. I’m like, dude, let them do their job. Their job is to by trade level of detail. So I let you do your job. I’m going to give you this room by room. If you have questions, come back to me and then we’ll sign off on it. Once we compare what I did to what they did,

Ashley:
You can go into a room and just be like, that doesn’t look right. And just write, fix baseboard heater. And then when you walk in, he could say it wasn’t plugged in or something. That’s why it wasn’t working.

Henry:
Baseboard heater. How northeast of you.

Dave:
So Ashley, would you say that these tactics that you’ve been using work well in this market in or really sounds like it would work in any market, but do you plan to scale up what you’re doing here?

Ashley:
No, I’m going to do maybe I got that one flip under contract and then I’ll probably do one more flip this year, and that’s it. Just very slow casual. I’m very low risk at things. I don’t want to be overwhelmed. And I think Henry does the same thing too, where he makes sure that he has enough money to pay his lenders even though he has the cash, he doesn’t use it and that I’m the same way. If for some reason a flip didn’t finish, I want to make sure I can either tap into the cash I have or use one of my line of credits to pay them back. I never want to have more hard money or private money out than what I actually can. I have myself to pay everything back. So I’d love to sleep at night and I don’t want to ever get stressed out or worried about money, so I move pretty slow because of that. I don’t scale as fast because of that and it makes me feel way more comfortable in the deals that I’m doing because I do have some wiggle room.

Dave:
So Great. Ashley, thank you. It sounds like just for everyone listening, we’re brought on Ashley and Henry to talk about what’s working in today’s environment. And this has been a super interesting case study here, Ashley, you have pivoted strategies pretty significantly. Not like you’ve stopped buying buy and hold, but you’ve picked up a whole new approach in flipping, and it does seem like this is something that can work for a lot of other investors as well. As I said a little bit while ago, I’ve heard a lot of people who are starting to move into flipping or at the very least more value add type of investing because it really has good margins in today’s market. So with that said, Henry, let’s switch over to you. Can we talk through one of your deals?

Henry:
Oh, I’d love to man. Let’s do it. All

Dave:
Right. What do you got in mind? I’m sure it’s value added because that’s what you do, right?

Henry:
Yes, yes. So like I said, we’ve done about 10 flips this year and we’ve got more coming. So flipping is working in our market and a deal I want to talk about is a property that we purchased, single family home, flip, three bed, two bath, just under 1500 maybe. Probably just at about 1500 square feet. And we were able to buy this one for $184,000. This lead came through direct mail. So we went direct to seller and it was a landlord, so this property was a rental property. The tenants had moved out and the house was just kind in shambles. They didn’t grade the property correctly and rain had started to push up against the house and kind of eroded some of the walls. And so they were getting kind of wetness and dampness and grossness and the seller had the tenants move out, walked in there and said, you know what?
I’m done. I don’t want to deal with any of this. And so we were able to come in, purchase it for 184,000. We’ve spent about $55,000 on the renovation so far. And when we underwrote this deal at an A RV, so a future sale price of $315,000 based on comps, and we were super conservative with that. So if you compare it to other properties that sold in the same neighborhood, this wouldn’t have been selling at three 15, wouldn’t have been the top of the market in terms of selling this property. So we’re pretty conservative in that underwriting and we bought it, I think the renovation’s taken about 60 days and just in that 60 day period, the property is now, we’ve listed at $330,000. So we had a few recent sales that have driven that price up, and so we’re able to list it still conservatively at 330,000. And so we’re estimating to make about a $55,000 net profit after commissions and subtracting our holding costs and all of the other ancillary fees. So I mean that’s pretty typical single family flip in my market and I think that’s why. So that’s

Ashley:
What’s working

Henry:
Right now? Yeah, absolutely. What we’re seeing is properties are still selling. Typically I think average days on market is just at or above 30 days here. And what we’re seeing sell is properties that are done well that are in desirable locations and that are priced reasonably. And so if you take that information and you use it in your underwriting, you’re able to make offers that allow you to buy properties and fix them up and land in that price zone where you don’t have to sell it at the tippy top of the tier in order for your property to make you some money. So that means we’re missing out on some deals because we’re offering less than maybe what sellers want at the property, but I’d much rather be conservative on that end so that the deals that I am getting, I don’t have to be so concerned about when it comes time to sell them, we underwrote them. So conservatively,

Ashley:
Henry, I have a question for you regarding your buy box of what you’re finding. Are you finding that anyone looking to flip, they should be looking at a certain affordability as in even if you get a great deal on a high-end home, would you do the high-end home or even maybe one that’s in a lower income neighborhood, is there a specific range of house that you’re looking for, like bedroom count or anything that you’re finding is kind of the sweet spot in your market?

Henry:
Yes, absolutely. So in my market, we’re still targeting the biggest buyer’s pool, which is the first time home buyers. And that first time home buyers pool typically wants three to four bedrooms between 1200 and 2000, 2200 square feet in that range. And if you can list anything under 300,000, it’s typically going to go pretty quick. And so that’s kind of the super sweet spot. If I can come in and get something for, I have another deal where I purchased it at 120, we’re going to put 40 in it, we’re going to sell it at 2 65. Those are going super quick because you’re under that $300,000 price point, which opens you up to more affordability and more buyers, and there’s just not a ton of that product on the market. So more buyers, less competition, that’s the sweet spot that you want to be in. So I like that first time home buyer pool.
Now you’re right, a great deal on a luxury flip that sounds awesome. It’s just when I’m going to do a luxury flip, here’s how I position myself. I have to be buying that property for such a good deal that I could turn around and sell it with only minor cosmetic updates and make money. And so when I’m underwriting those, I don’t go to my agent and say, Hey, Mr. Agent, give me the highest and best a RV you can give me on this property. What I go to my agent and say, Hey, what is the, I guarantee this property sales for this price super fast, no hassle. You stick it on the market for this price, somebody’s coming to buy it. Now, that’s typically not going to be your highest number that somebody may be willing to pay, but that’s not the number I want to underwrite a luxury flip at. I only want to underwrite them at the, what’s the, I know it’s going to sell for this price no matter what, and then I’ll underwrite it based on that. And so if I get a deal in that price range and it’s luxury, I’ll consider doing it because it’s really challenging to lose with those. I’ve done a couple of luxury flips like that, but I don’t make luxury flips my main business model for the risk factor.

Ashley:
And I think too, part of the risk factor, the couple flips I’ve chosen could all be rentals. So for some reason they couldn’t sell. I have a second exit strategy where I can go ahead and put financing on them and turn them into rentals. And that I feel like helps me feel like it’s not as huge of a risk because I have that exit strategy where if I was doing a high-end luxury flip, it probably would be higher to rent out what I needed it to rent out for to actually refinance it.

Dave:
Awesome. Well, it sounds like you both are finding pretty solid tactics to use right now because you both did flips. Can I share a deal that’s working for me? I feel like I need to give some voice to the buy and old renters out there. Alright, well actually, Henry, we were talking about this strategy the other day. I need to come up with a name for it, but here’s the basic idea. You buy a rental property that’s break even and I basically buy deals on market in the Midwest that can break even cashflow and then I opportunistically upgrade it over a reasonable amount of time, like a year or two years, and I still need an acronym for this. Henry, we came up with something really clunky and ugly the other day when we were talking about this, but it’s like basically buy, what is this? B-E-C-T-O-R buy even cashflow then opportunistically renovate. It’s the Bur tour, right?

Henry:
Bur tour?

Dave:
Yeah.

Henry:
No, that’s it’s

Ashley:
Not right. Will this be a session at BP Con?

Dave:
Yeah, yeah. It’s just going to be me talking to myself in a room where no one shows up, but the idea actually works. So I feel like because of the cashflow situation, it’s tough out there, but I invest in some places in southern Michigan where you can find deals that are under that cashflow, one or 2% on the market, but they’re under rented and they need maybe a cosmetic rehab and maybe a little bit better, a little bit more some structural work or just some more in depth upgrades. But within a year or two, what I found within a year, I think actually I can get that cash on cash return up to seven, eight or 9% just by upgrading them over time. And to me that is a good deal because if I can find something even above a 6% cash on cash return, I’m pretty happy.
I can’t find it very easily on market right away, but it takes time to stabilize deals and it’s basically what you would do with a bur, but I’m just not necessarily refinancing it. I’m just holding back some cash with these properties. They’re 200, 250 grand, so I’m holding back 25 grand, which I’m in a fortune position. I have that 25 grand I could just wait on and when the unit becomes vacant, I put the 25 grand in, I fix it up and then I get the deal that I wanted in the first place. I just happened to have wait nine months for it. So the upgrades are mostly cosmetic. So in this one that I bought back in January, we just finished renovation on one of the two units. We put luxury vinyl plank into all the floors. It was kind of this old really nasty tile.
The bathroom needed new vanities, new tile. There was some safety stuff in there too. I needed to upgrade a lot of the electric. We did actually new ceilings because there was some plaster problems in a lot of it and then upgraded some of the cabinetry in the kitchen. There was some other small stuff, but this wasn’t a massive renovation that took months and months and months. It was like two or three weeks and it got the rent in this unit from what was about, I think it was at 10 50 and we should get 1450 to 1500 now just making those upgrades. So we get rent up 40, 50% just by doing that. It’s kind of a no brainer. Yeah,

Henry:
Most of the rentals I bought this year, very similar. The way I’ve been underwriting these deals is I want them to be cash flowing, even just a little bit or breaking even as they sit when I buy them. And you’re able to then go in, make some minor updates and sometimes one of the deals that I bought this year, it was about, I think it was about 12 units and we literally just raised rents right to market rents. It’s just part of your due diligence in looking for deals is also looking for landlords who aren’t managing or keeping up with normal rent raises and managing their properties correctly.

Dave:
I bought another property, Henry, that the rents, I think this, it was a new tactic that I had never done. It was a different one, but the rent that they were charging was below section eight numbers. And so I was like, I could just go in and get a quality section eight tenant and get guaranteed rents from the government immediately. That’s just a great, that’s, it just makes so much sense.

Ashley:
I think looking for other ways to charge, add other revenue streams to your property too, such as in some of our duplexes we put in, we call ’em cages, but they’re storage units. So if they both have access to the basement and we build out the cages and charge them extra if they want one of the cages for storage, what I’ve seen done too is having a utility closet that has the washer and dryer in it. And if you want to use the washer and dryer, it’s an extra $50 a month and the door will be unlocked for you. And then if you decide you don’t want to pay the extra 50, then that door stays locked and you can’t access it. So trying to look of ways to get creative, like the buy and hold that we bought this year is a five unit has four residential apartments and then a commercial space downstairs.
The commercial space is gutted and it was for sale for probably a year and a half before I put in my offer. And it sat because nobody wanted to deal with this huge commercial space was an old restaurant. And so what we did was just ran the numbers with the four residential units and said, this is what we can offer you and we’ll cashflow without doing anything to the downstairs. So when kind of like Dave saving up for that big renovation, not putting all doing it right away, we have seller financing on that deal for four years. So we have the next four years to renovate that downstairs commercial space, get a tenant in there and then go ahead and refinance out from our seller financing. But you got to get creative with finding other ways to add revenue, even if that’s just raising the rent. And if you want to talk to your tenants too to see would you be interested in us replacing that old gross linoleum? Maybe not say it that way with LVP, we would increase your rent by $50 a month or whatever it is. Sometimes just doing a small little renovation can help you raise the rent too.

Henry:
Yes, I do a lot of the same things that you do in terms of property. So we bought a six unit and this six unit is, it was two standalone, two units and then a two units above four single car garages. And when I was underwriting this deal, I saw that the current owner when we walked the property was literally just using the four under units for his own personal storage. And so we saw that the deal cash flowed as it sat, not a ton, but just cash flowed a little bit as it said. So it’s paying for itself. And I immediately knew, okay, I can take one of these units and we’re going to add washers and dryers in them. And so people adding laundry to your facility can be a pain in the butt if you don’t want to manage a laundry mat.
But there’s also third party companies that will come. They will place washers and dryers into your facility and then they will come service ’em, maintenance ’em, collect the money and just do a revenue split with you. Sometimes it’s 50 50, sometimes it’s 60 40, you get the higher end and so that increases your revenue and then you don’t have to worry about buying and managing the actual equipment. So we’re going to do that in one of the garages and then we’re going to use the other three garages as storage and offer it as additional to increase the cashflow. Another thing we like to do to increase cashflow, Dave, you talked about section eight. I like going in and finding apartments that are maybe two bedroom apartments with a single car garage like townhouse style, and we can convert those single car garages very inexpensively to a bedroom. And when we do that conversion to a bedroom, we’re now able to get section eight to pay for a three bedroom property, which they pay more rent for three bedrooms than two bedrooms. And so we might go in and spend between three and $5,000 to convert a bedroom, but then we’re getting an extra two to $300, $400 a month rent through guaranteed section eight rent. So these are just some of the ways that you can be creative to add value to your property inexpensively. Yeah,

Dave:
That’s so true. It’s just all about getting creative and not trying to scale as quickly as possible necessarily. As Ashley was saying, if you’re using every single dollar that you have for acquisition, it slows you down on a lot of these ideas like renovating a garage or doing a cosmetic rehab or doing flips opportunistically. When you find these great deals, sometimes, especially in my opinion in these types of environments, it’s just better to hang onto a little cash and use it as opportunities arise. They’re not as obvious. They still exist and you just need to have some dry powder to attack them when they come along. We got to take one final break, but stick with us because when we return, Ashley and Henry are going to give us the dish on their personal real estate investing.
Welcome back to the show. I’m here with Ashley Care and Henry Washington. I now want to move on to our newest segment on the show. We’re calling it the Dish, this whole episode’s called the Deep Dish. We’re talking about getting deep into today’s real estate market. And now I want the dish, which is from you guys. I have some questions for you. It’s going to be lightning round style. I’m going to alternate back and forth between you really quick answers. Some of ’em are going to be about real estate, some of them are very stupid, some of them are going to be personal. I want to know from you guys, so Ashley, I’m going to start with you. First question, what is a real estate strategy you wish you could do in today’s market but won’t because it’s just not working for you?

Ashley:
I would say I’ve actually looked into this, run the numbers on it, but to own a luxury ski resort. So there’s actually a ski resort that’s for sale by me that has been vacant for a very long time and it’s like a thousand acres. And I would love to open that ski resort up again, develop townhomes and retail and all this stuff on it, but it does not make sense to do that right now in today’s market.

Dave:
Well, that just sounds awesome. Alright, Henry, I hope you figured that out. Ashley. Henry, what’s yours?

Henry:
There’s several things I wish I could try or I want to try, but one of the things being new construction, build to rent. I love to build a street, maybe five to six single family homes, sell off four of ’em, keep a couple, and basically get them for free because your proceeds from the sales pay for the two. There’s just a lot of time, effort and involvement that goes into that. And it’s not my bread and butter. And so I always have to weigh the opportunity cost of me spending that time in this new area. What does it cost me in terms of what I’m really good at? I’ve just never really found the time to focus on that, but it sounds super interesting to me.

Dave:
Yeah, I am with you on that one. That one sounds appealing to me as well. All right, Henry, we’ll go with you again. What’s your biggest weakness as an investor?

Henry:
My biggest weakness as an investor is organization and or lack thereof, lack of organization. So one thing I wish I was a whole lot better at is having better defined KPIs and tracking them consistently when I run a fairly small operation. And so I have to wear a lot of hats and what I’ve learned is that I need to hire people to do the things that I’m not good at instead of trying to make myself good at something I’m not naturally good at. And so those are some of the things we’re looking at in order to get better at tracking.

Dave:
All right. Ashley? Biggest weakness as an investor?

Ashley:
Mine would be leadership is my weakness, as in I don’t like confrontation. I don’t like training and I don’t like small talk. So for me to engage with people on my team, that is a big weakness. I would avoid meetings as much as possible, so I’ve really had to do a lot of self-development as to how to be a better leader in my business. For sure.

Dave:
Good for you for doing it. And thank you for sharing that. Ashley, third question, do you have a live, laugh, love sign in any of your properties?

Ashley:
This is probably worse because I don’t have any in any of my rental properties, but my first ever farmhouse that I moved into before I got married, that was the whole theme of the kitchen back in 2011. No.

Dave:
Yes, I did not know that when I wrote this question. That’s so good. All right, Henry, I don’t think you could top that, but do you have a live line, a live laugh, love in any of your properties?

Henry:
Oh, bro. I do not have a live love sign, but in my personal home, in my guest bathroom, we have a live left poop sign.

Dave:
Okay, I like that. That’s way better. Have you guys, there was a reel going around, I don’t know if it was real or fake, but on Instagram where some people in a short-term rental were counting how many live left love signs that they saw. And it was something like 25 in one short-term rental. Oh my goodness. And now this is what I’m picturing Ashley’s house as, it was just like everything at the entire house just had live, laugh, love all over it,

Ashley:
And it’s just like that old farmhouse style with a huge kitchen and then tons of other small rooms. So the kitchen was the biggest room and it just had sides throughout the whole thing. I think there was even over the one wall had the vinyl that you sticker you put up there too, that every landlord hates to have to rip off after the tenant leaves. I think I had one of those two.

Henry:
Did your kitchen have a sign that says kitchen? I

Ashley:
Think it probably said eat or farmhouse or something.

Dave:
Yes. Yeah, eat it. Definitely said eat. All right. Well, since they were calling this segment the deep dish, I need to ask one pizza related one. Henry favorite pizza topping?

Henry:
Oh, I’m so basic when it comes to pizza. I am sausage and pepperoni pizza all day long. That’s all I want.

Dave:
Can’t go wrong. Ashley.

Ashley:
Extra pepperoni, just as much pepperoni as you can put on there.

Dave:
We’re as boring as possible. Is it the little pepper? See, I love those little pepperonis that like the

Henry:
Curl up. Yes. They make the little cup of orange grease.

Ashley:
They hold the grease.

Dave:
Yes, exactly. It’s like a thimble of just pure, delicious oil. That’s my favorite pizza to egg. I don’t even eat the pizza. I just want eat chips of pepperoni like that. It’s so good.

Henry:
So here’s what you do. You take that oil and then you mix it with a little other cooking oil, and then you pop popcorn in it, and then you got pepperoni flavored popcorn.

Dave:
What?

Ashley:
Oh my God,

Dave:
Henry, next time I see you. We’re making that done. All right, last question for the deep dish here, Henry. This is actually going back sort of the old school BiggerPockets questions here. What is the best real estate book you’ve ever read other than your own? I see

Henry:
What you did there. The best real estate book I ever read, I’m going to give two. One being Jay Scott’s book, the book on Flipping Houses I used Just Call Flip. But that book was so detailed in terms of what it takes to flip a house. There’s so many costs associated with flipping a house and people really only talk high level numbers. You get a loan and you pay for the house, and then you get a loan and you do the rehab and then you flip it and then you make money. But there’s a ton that goes into it in between there, and that money has to come from somewhere. So it was really eyeopening to understand what it really takes to flip a house. And then Gary Keller’s book Millionaire Real Estate Investor. For me, that one just, it was like when I was researching real estate investing, everything I would learn was this puzzle piece. So I felt like I had all these puzzle pieces, but I had no idea where they all went in this big puzzle. And that book kind of created this frame for me to start, oh, that’s what they meant by this. And so it helped me piece together all these other pieces and make sense of what real estate investing was.

Dave:
All right. Ashley, same question.

Ashley:
I think for me it would be Chad Carson’s retire early with real Estate. It was when I was grinding so hard and I was in the nitty gritty of building my portfolio. And that book really had a great impact for me. And I think it’s just really simple to understand. It’s not that complicated to actually build some kind of wealth or retirement for yourself. And you can use simple strategies. You don’t have to go after the shiny object that’s happening right now is like you can just do the slow, boring buy and hold or whatever the strategy is you’re doing.

Dave:
Totally. I love it. And I love Chad’s philosophy too, and I think it’s next week Chad is coming on the show, so he’s going to be coming here and talking about his philosophy as well. Yeah.

Ashley:
Makes you tell him you had a fan girl on. Oh

Dave:
Yeah. I definitely will. And I’ll be talking about myself. All right, Henry. Ashley, thank you so much for sharing the deals and for this little lightning round. This is fun, you guys. I gave some real personal honest answers. I really appreciate it. Thank you all for listening to our first Deep Dish episode. Would love to hear what you think about it. So if you thought this was a good episode, please make sure to leave us a five star review. If you didn’t listen to last episode, I also announced to everyone that we have a new feedback form for people. You just go to biggerpockets.com/pod feedback and I will get that directly if you want to tell me what you thought of the show, how we could do better, what you liked about it, all that. And if you want to learn more about the strategies and tactics that we’ve talked about here today, always you can find more information on biggerpockets.com. So thanks again for listening. We’ll see you on Friday for a new episode of the BiggerPockets Real Estate Podcast.