How to TRIPLE Your Rental Property Income with Group Home Investing

David:
This is the BiggerPockets Podcast show 710.

Antoinette:
If my goal is to keep this property forever and have it produce the max income that it can, that’s first priority. It can never be to, “Oh, it’s not working out with the city anymore. Time to sell.” No, I committed to this property. We are in a relationship. I said I was never letting it go so I had to find something else. It was the only option to me.

David:
What’s up, everyone? This is David Greene, your host of the BiggerPockets Podcast here today with my co-host, Rob Abasolo, bringing another great episode that is both inspirational, tactical, and practical. And yes, that rhymed too.
Today’s guest is Antoinette Munroe who has a fascinating story. She started off as a short-term rental investor, and then found out the area that she had bought these properties was going to make it very difficult or even impossible to manage them. And what she did to pivot ended up making her even more money than she was making before. You’re going to love it. You don’t want to miss today’s show. Rob, what was some of your favorite parts of Antoinette’s story?

Rob:
I think it’s always really nice to see how quickly someone can learn to change their strategy. A lot of people go into real estate with just one strategy. They’re laser-focused, but they don’t really bake in the contingency plans. And it was just really awesome to see Antoinette. It’s not like she necessarily had a contingency plan, but she adapted. And because she adapted, she’s actually making a lot more money now. So it’s just very fun to dig into that story.

David:
All right. Before we get to Antoinette, today’s quick tip is don’t despair when things go wrong. Ask yourself how you can pivot. Oftentimes, there’s an answer just on the other side of your problem. And if you just think a little differently, it will jump out. Antoinette didn’t have anyone else that told her what to do when regulations shut down her short-term rental. She thought on her own because she listens to lots of podcasts. So fill your mind with information, fill your tool belt with tools, and when things go wrong, you don’t have to freak out. The answer is often right on the other side of a pivot.
That being said, let’s bring an Antoinette. Antoinette Munroe, welcome to the BiggerPockets Podcast. How are you today?

Antoinette:
I’m amazing. Thank you guys for having me.

David:
Yeah, thank you for being here. Now, I understand you’ve already been on the BP Money Show. That was episode 295 if anybody would like to go listen to your interview there. Before we get into your story, I just want to ask, what was it like being interviewed on the BiggerPockets Money Show?

Antoinette:
It was like my holy grail. I’m a finance nerd first. So coming from the FIRE movement, or that’s Financial Independence, Retire Early, Money was the show that I started with. And the majority of my adult life, I was just focused on making good money decisions and learning about what to do with the dollars that I had. So that was always dream number one, let me get on the Money Show and meet Mindy and Scott.

Rob:
You said it was your holy grail. But the keyword there is “was” because now, we’re on the BiggerPockets Real Estate Podcast.

Antoinette:
Absolutely, that’s what happened. I transitioned from just a smart money person to becoming an investor. And to make that transition, I had to switch to BiggerPockets Real Estate.

Rob:
All right. Antoinette, can you tell us a little bit about your background, a little bit about your portfolio, and give us a snapshot of your real estate journey?

Antoinette:
Okay. I’m originally from Miami, Florida, currently living in Orlando. I was the college graduate, five-year MBA program graduate to take the highest job offer just on that track of do all the things that you’re supposed to do. Go to school, get a degree, get a good job. Somewhere along there, I stumbled upon Dave Ramsey and so I adopted debt free. It was just trying to do all the right things and check all the boxes. That’s it in a gist.

David:
I relate to you, Antoinette. People think of me as a real estate investor, and I am. But they think of me first as that. I don’t think that was actually my origin story. I was a save your money guy long before I was an invest guy. I was passionate about not spending money on things. My mind was geared towards seeing advertisers trying to trick me into buying stuff, looking at when I was in a bad mood, why do I feel like I need to go spend money to feel better? I was always into the philosophy and the psychology of money spending.
I didn’t become a real estate investor till the second part of my journey. So I like hearing the people who stories start this way because if you have a respect for capital, you understand the work that goes into it and the energy that you put into building it. You will approach real estate investing way different than the person who’s like, “I’m tired of being broke. I want to have some money. Let me go buy a house and try to figure out how it works.” Would you agree with that approach?

Antoinette:
Absolutely. I was the smart money, anti-salesperson. A salesman could never get me to buy something. But I was a salesman by career, so it was just the two weren’t lining up.

Rob:
Yeah. I always appreciate the introduction to the Dave Ramsey thing, because it’s always a progression. It’s like you got to clean up the financial situation, get it right, figure out your philosophy, and then go to the dark side. It’s very rare that it’s like there’s someone like me and David that do so much real estate and then we’re like, “Ah, you know what? We want to go debt free,” and then go the opposite direction. But I agree, David. I think that’s such a natural projection.
So what was that moment for you when you decided to pivot into this, I don’t know, not the opposite direction, but in this world of real estate where you are getting more into debt for obviously the benefit of more cash flow and appreciation and wealth and all that stuff?

Antoinette:
I’ll say that starting off with Dave Ramsey and finding that it was a little too strict, I probably mixed in some Clark, Howard, and Susie to create something that could actually fit for me as someone just coming out of the college into first time career. I didn’t want to suffer so much. And I didn’t have debt, too much debt to dig myself out of. So I was able to find a nice blend that made it comfortable.
But when I found the FIRE movement, and that’s Financial Independence, Retire Early if you aren’t following that, they talked about the multiplier or identifying your FIRE number and then saving your way to that number. And when the math worked out, I think at that time I was making $50,000. So the thought of saving $1 million over the course of 20, 30 years still seemed so unattainable to me and so farfetched that I couldn’t wrap my mind around how I would save that much on the salary that I had. But I did understand money management, controlling expenses, budgeting, so I felt like my path to FIRE couldn’t be saving to $1 million but it could be eliminating my expenses so that I didn’t need money as much, and then I would have flexibility to choose a different job or do something else. So I didn’t approach real estate with the objective of being a real estate investor. It was to make a better expense decision around what the highest percentage of expense was in my budget, and that was the home.

Rob:
And remind us, what were you doing for your 9:00 to 5:00 job initially? I’m not sure if you mentioned about what was your career goals and your trajectory at this point?

Antoinette:
I was working for one of the largest beverage companies in the US. I was a sales manager going through their management trainee program, and the last role with them before I left the company, I was a region manager covering the southern half of the US. So it was a solid career with great growth trajectory, it just didn’t align with my core values.

Rob:
And remind us, what’s your why? Because you mentioned that =you’re doing the FIRE and that the real estate investing thing. What’s the freedom that you’re after through the FIRE movement in real estate?

Antoinette:
The why was freedom, simply freedom, but freedom to choose what I did with my time, freedom of choice, freedom to not be stressed about money or how much money I needed or had. So it was just freedom across the board to wake up each day and decide what I wanted to do with my time.

Rob:
I’m curious, do you feel like you’re there? Do you have it? Have you reached it or are you working on it?

Antoinette:
No, I do. I do. Thanks to real estate investing, I’ve hit my version of FIRE and I do feel free. I’m very anti-alarm when I wake up. I have to wake up naturally. And then I just choose what I’m going to do for that day unless there’s a project going on and I have to plan just a little more. But even still, if it’s a project, it’s something that I chose because I would enjoy it and it would be fulfilling in some way, versus I have to get up every day and exchange time for money.

Rob:
Yeah, this makes a lot of sense. You mentioned that you were doing the MBA track and everything like that. Did you ever anticipate this, that you would be in this, I don’t know, niche or asset class or career? Or did you always want to be in the corporate world and in the 9:00 to 5:00 landscape?

Antoinette:
I knew I didn’t want the corporate world, but I didn’t have any examples of how to not do that. So I knew in order to not go back home to Miami Gardens and live with my family, I at least had to go to college and get a job to be able to take care of myself. But that was the extent that I knew. I’m first-generation college. My sister went before me, so there weren’t examples of how to create a different life than the one that we experienced growing up.
So I was checking the boxes like, “Okay, go to college, get a good job. These are the things I’m supposed to do.” And at the moment of getting the good job, I knew it didn’t fit for me. And I thought initially that I wanted to be an entrepreneur, but I would try to start side businesses while working and it was still a time for money trade. And then I realized I really don’t want to be an entrepreneur. I really want freedom. I’ll be a freedompreneur instead. And so the focus shifted on, “Okay, what things can I do to eliminate my need for money and give myself time back?”

Rob:
Yeah. Was there anything specifically that you did? Because obviously there’s a lot of things that you have to do from a budgeting standpoint, some of the fundamentals that you have to implement to get your financial situation right. Did you have some system or was there some habits that you were working on early on?

Antoinette:
Yes. The very first thing I did with my first paycheck out of college was to sit down and create an Excel spreadsheet with that income. And that was the beginning of developing what I call my budget ABCs, which is to automate, balance, and have some control set for that money. From the very first paycheck, I was allocating what money would be for expenses, savings, 401(k) match, and then also what would I be spending. My goal at that time was to pay off my student loans and any debts that I had so that I could have the opportunity to leave the job if I wanted to and then go chase a dream. So budgeting was the bedrock of all of it, just key financial principles, not making any major purchases in those early years so I could set a solid financial foundation for myself.
Those first three years, the first two years I knocked out all of my debt or student loans, and then that third year I was able to put 50,000 in the bank. Three years out of college, I’m debt free, I have $50,000. So now, whatever choices I decided to make from an investment standpoint, I was prepared to do so. And all of the habits and things that I built over that time period of working through that budget ABC system made me… It gave me the financial control that I needed, that I didn’t know I would need, as I started getting into real estate investing.

Rob:
Yeah. I think this is a skill that for most people we pick up, especially short-term rental people where we get into a short-term rental and every month, the income is always different and you don’t know. And then there’s some months where the income is super high and you feel like you’re really crushing it, and then you got the slow season. And then if you didn’t budget correctly, it can really come and bite you in the butt. So it’s a really nice foundation to come in and actually have your finances relatively tracked, have your bookkeeping up and running from the beginning. I know that you found a lot of success in the short-term rental world, right? That was a big bread and butter for you.

Antoinette:
Yes. Short-term rental mixed with house hacking, equal game changer. That’s the formula. It’s that simple. I thought I was just going to get roommates. But I tested out Airbnb, it seemed simple enough so I just jumped into that. And within that first month, my mortgage was paid and I was also cash flowing 1500 a month. And it was just on renting two bedrooms out of my primary home. So at that point, I wasn’t a real estate investor. I was just a person that bought a property because that was the next good money thing to do. And then wanting to eliminate my expenses, I rented out rooms in my home because that was another good money thing to do. And then it turned into an entire business that I learned. I had to learn how to operate and then scale. So I’m an unintentional real estate investor, but it’s been working out really well.

Rob:
I love this so much. I’m so jealous, by the way. I started out house hacking in 2014. And Airbnb was around, but it was so new really at that time to me. I didn’t even know about it really until 2017, 2018. But I remember house hacking my very first house that I ever bought. We could not really afford it. Somehow we got approved for it. And I remember one of my really good friends, I convinced him to move up to my city to basically intern at the agency I was at. And he was like, “Sure.” And I was like, “Oh. Well, we’ll charge you 400 bucks a month.” And I remember getting that first $400 paycheck from… Oh well, not paycheck, but rent from him. It felt like a paycheck because I wasn’t making really a lot of money at the time. And I remember thinking, “Oh my God, my mortgage is 1100 bucks. I just got paid $400. I really just paid $700 this month. This is crazy.”
But I know that there are a lot of people, I’m so jealous of you that you did the Airbnb thing and you were actually able to make probably a lot more. I always call this supercharged house hacking. So was that a interesting experience or was it like did you embrace it from the very beginning?

Antoinette:
It wasn’t a… I did a test run. I created a listing, I turned it on, let three reservations come through, and then I turned it off just to test and see. But after that first reservation, I walked back in the house and it looked like no one had been there but I had $500 in my bank account that wasn’t there before. And so it was a no-brainer just from that first experience. So I went all in on it. I kept the family room and the master bedroom. They were on this opposite side of the house. I stayed there so I had a good amount of separation. I wasn’t sharing any spaces with guests. And I started in the winter season in Florida. So it was just combination of right time, right house layout, and the willingness to just go for it.
And I told all my friends about it and everybody gave me every reason why they couldn’t house hack or why they needed… That wasn’t enough privacy for them and, “I can’t share space with strangers,” and, “What about my kids?” But they thought more about the reasons they couldn’t do it versus, “What do I have to do to make this work?” And so that’s generally my focus when I’m approaching something. What do I have to do to make it work? Because I want to achieve this greater benefit at the end versus focusing on all the reasons why it might be uncomfortable temporarily.

Rob:
Yeah. I think that is, it’s really, it’s sacrificing that short-term comfort for long-term gain. I always had to of talk my wife and romance her into the idea of house hacking because obviously, privacy is important. But when we moved to LA, I got so tired of wanting to rent an apartment. I was like, “We’re going to buy this house. We can’t afford it, but if we house hack, we’re going to be able to afford it.” And that really panned out to be the cornerstone of my entire portfolio and journey. So you’re doing this house hacking thing and you’re crushing it. At this point, are you like, “Okay, I’m all in. I’m going to start buying Airbnbs.” What comes after that first house hack?

Antoinette:
After that, I happened to tell another neighbor about it. They had this gorgeous cabana on the lake behind their house, and we were over for dinner one day and I was just like, “You know how much money is sitting in your backyard right now?” And I told them about what I was doing with the Airbnb and then set them up on it, and we got really close through that process. And then, but they were real estate investors. They had multiple properties. So I looked up to them as, “I want to do what you’re doing someday.” And then they looked at me like, “Oh my God, I can’t believe you figured out this Airbnb thing. We need to do what you’re doing.”
So they started telling all of their friends about it. And anytime we were introduced is, “Here are these budding real estate investors and here are all the cool things they’re doing.” And I’d go home and be like, “I’m not a real estate investor, but I guess I have to figure out how to do this now.” Because at some of those parties, someone would approach us and say, “Hey, we have some money and we’d be interested in investing.” So I think that was the point where I was like, “Okay. I have to figure out what being a real estate investor means and how to actually do that since people are looking at me that way, and now there are opportunities that are coming from it that I don’t want to miss out on.” So I think that was the catalyst behind figuring out how to actually become a real estate investor and build out that portfolio. And of course, the first strategy that I learned about was the BRRRR strategy, so we start with that one.

David:
Yeah. So you went from short-term rentals where you had initial success, which had to feel good because like you said, you stepped in at the best time in the market before it was saturated. It was fish in a barrel to a degree. So you had a very good experience with real estate, and then you probably recognize you have a knack for it. So your confidence is feeling good. What caused you to switch into the BRRRR and some of the group homes you were doing? Why did you move to a new niche?

Antoinette:
Short term was going really well, and when I started, it was not regulated within the city of Orlando. Shortly after we started, new regulations started to come in. There were requirements for you to live in the home, which worked for us while we lived in that home. But as we wanted to scale out that portfolio, it started to get tricky. We would always have to have multiple units where there was a full-time tenant at one point with Airbnb responsibilities to be able to Airbnb any other units in that. And after a while it just got to be too much to juggle, or I didn’t think it would be sustainable long term because now there are too many players involved and I can’t directly control everything.
I also wanted to keep a small portfolio because a part of the freedom that I was looking for, man, I didn’t want to work every day. If I built out this huge real estate portfolio, I just created another job for myself. I didn’t want to take that approach. So I’ve always looked for the best and highest use of the property, and I’m also big on having multiple exit strategies. I know they tell you, “Pick one niche, focus on that, get great at it before you switch,” but that didn’t really work for me. I needed to be more nimble, so I would always try to understand how I could operate three different things in any property at any given time. That way if one thing didn’t work, I had something else or another thing to switch to.
So group homes became that third piece. I knew that I could BRRRR that house and I could just rent it out full-time. I was short-term renting so we had that strategy. But once you do short-term rental, it can be difficult to find something that’s going to produce equal or more cash flow than that. But the group home model became that opportunity. Short-term rental is maybe a 2X strategy versus long-term rents. But with group home, we’re talking 3X or more. That’s more of unlimited a bit earning potential with a different options and services you can offer there.

Rob:
Okay. Give us a little bit of a snapshot just so that I know where you’re at now with your short-term rental journey. How far did you get to short-term rentals? And then we’ll get into the group home stuff here in a second.

Antoinette:
We went to nine rental units. And at that nine, one of them was arbitrage, the rest we owned. And at that point, it was enough for us to live the lifestyle we wanted to without having too many hours per week of work. Solid cleaning crew, handymen, and you’re good to go. But with the regulations changing in Orlando, I wanted to switch to a different asset or change the portfolio a little bit so we could have a little more stability. Of course, COVID happening. Fortunately for us, we were able to switch to midterm rental during that period and not experience much of a loss. But with the changes of regulations experiencing a pandemic, you just start to understand that anything can go wrong whenever it’s ready to. So the more diversity that you can add to the portfolio or other asset classes that you can tap into that are a little more resistant to those events, the better. And interstate group home.

Rob:
Yeah, I love this. I think that the pandemic really did shake things up for a lot of people in real estate, and really the people that came out on top were the one that were willing to pivot and pivot quickly. Because when you go into an asset class with a single strategy, well, if that strategy doesn’t work, then you start panicking. It seems like you have done a lot. What drives you to think of all of the different creative strategies? Do you just like having safety in diversity, or is it just genuinely a curious thing for you to go and explore all these different asset classes within real estate?

Antoinette:
I think the fun in all of this for me is creating and exploring different things. And the moment I figured something out, probably like the day I started short-term rental, I’m thinking about the next thing already. And it’s just that’s the fun in it for me, exploring, experiencing different things, and just testing stuff out. I don’t think I’ll ever be able to stick to one set thing because I do have the shiny object syndrome. And I used to fight it and try to be like, “Okay, just focus on one,” but I could not. So now I allow myself three shiny objects at a time. That seems to work for me, but I’ll always be looking for something else.

Rob:
Yeah. And so you got to nine, which is really impressive. A lot of people work their whole career to get to nine. How were you even scaling up? Were you self-financing it? I know you talked about maybe working with some investors. What was your strategy? Because this to me, I think, getting from one to nine is the hardest part of the journey.

Antoinette:
Slow and steady. I would buy one property a year. Each of those properties would either be two to three units. When you buy a multi-unit property, that helps speed up the timeline on scaling. But I went really slow. And I would listen to podcasts and how quickly other people scaled and felt like I wasn’t a good enough investor because I wasn’t moving as fast, but it was what worked for me. I would just buy one a year, making sure it was two to three units. I would do the BRRRR strategy. I’m getting them old and ugly. I’m spending a couple months doing the rehab, then refinancing out. So it took a while. One property a year is not that much and it’s pretty slow. So in four years with a combination of two to three units, it’s pretty easy to build that size portfolio.

Rob:
Yeah. So you do this thing where you’re sailing, you’re going slow, you’re scaling up, you get to nine, you’re crushing it. And then all of a sudden you’re like, “All right, I’m going to try something completely different and I’m going to go into group homes.” Why the change there?

Antoinette:
I heard about it. I was working with a contractor at the time who was in the process of creating a group home, and they were talking to me about the process for getting licensed but also the earnings potential on that home. And for me, nine units was already enough. 10 was going to be my cap. I didn’t want a large portfolio. Once they explained to me the breakdown of the earnings on the property and the different services you could offer within that to continue to increase earnings, I felt like that was the next best use for a single family property because I was already at short-term rental. I started at what I thought was the highest earning potential for a single family home, and I didn’t really know how I would scale up from that aside from building out the portfolio and adding units.
So when I found out about group home opportunity, and I was like, “Okay, this solves that problem. I don’t have to have more units. I can convert the units that aren’t in the most favorable either location for short-term rental to this other operation style, I guess, and still make the same that I’m making on short-term rental, but in most cases probably 3X and do some good while I’m at it.”

Rob:
Yeah, okay. Explain to us the concept of group homes. I imagine, is this similar or is this the same thing as residential assisted living?

Antoinette:
Yes. It’s the same. And depending on the agency that you’re licensed with or the demographic that you service, the name would look different. So you’ll hear residential assisted living, you’ll hear assisted living for senior care, foster home. All of these different styles are the same. The terminology just varies by the state that you’re in and the agency that license you. For me specifically, I’m licensed in the state of Florida and I’m servicing clients with mental and developmental disabilities specifically. And within that, some of them may require nursing care. So not only do we provide the home care service, we also provide nursing services within that environment as well.

Rob:
Yeah. I remember many years ago when I was just a wee real estate investor listening to BiggerPockets. Someone came in and spoke about residential assisted living and I was like, “Oh my god, this is… It’s crazy.” It was mind blowing because the numbers seemed to work out. And I remember for me, I was just very nervous to learn the logistics and the actual, the run of show, the day-to-day operations. Did you have any experience at all before you jumped in, or what was the learning curve like for you?

Antoinette:
I did not, but that is not a deterrent for me, not having experience, and it don’t stop no show. So just a basic conversation with what they were setting up, they gave me the website for where to apply and so I just started on the application process. You are required to take a lot of online trainings, so learning a lot of it was on the go. I spent some time volunteering in a group home so I could see what the day-to-day operations were like. And that volunteer experience, I learned a lot about staffing, the nursing care that comes with that, medical supplies, all of these things. It is far more not passive than short-term rental and real estate investing. It is a big difference in terms of the level of liability and responsibility and work that goes into it, but it’s commensurate with the earnings that you could make.
However, I’m building out the business with staff in mind so that it can be run by management, staff within the home and not necessarily me running the day-to-day. So upfront, it’s a lot of legwork. It took a year just to get through the application and licensing process for the property. And so we’ll spend the next year just learning the ropes.

David:
So you own the business and the property. You’re not owning the property and renting the business to somebody else to run, correct?

Antoinette:
Yes. I own the business, and then the property is owned by a separate business and that group home business rents the property from it. But in the end, it’s all me behind it.

David:
Yes.

Rob:
That makes sense.

David:
I got you, yes. So you have businesses that you own and one of them owns the property, one of them owns the business. But what I’m saying is you’re not renting it out, the home, to someone else that’s running it. You’re running the business yourself. Clearly that’s going to be a lot of work. And like you said, it’s probably more work than a short-term rental. Is the money so much better in that space compared to the short-term rentals that it’s worth the extra work?

Antoinette:
Yes.

David:
Okay.

Antoinette:
Short answer.

David:
Right.

Antoinette:
For example, with the agency that I’m registered with, depending on the level of the client that you’re servicing, they’ll have medium, moderate, extensive one, extensive two. Each of those change. And at each level, so at moderate level, I’m making maybe $1,000 more per client. And I can have up to five clients in my home than I would on the entire property if I rent it as a short-term rental. When I go to extensive one or extensive two, let’s just say we add 500 for each level, and that’s times five. So by far in a way, it exceeds what short-term rental would offer, but you do have much higher expenses. I now have a full staff. I have nursing staff. We have food expenses and other expenses in the operation of the business. But even after all those expenses are removed, I’m still making maybe 2 to 3X what the property would do on short-term rental. And I’m not fighting with the city anymore because this is fully licensed and regulated and zoned for it.

David:
Yeah. There’s also a lot more regulations that protect residential assisted living facilities. It’s considered, I’m trying to think of the right word, what’s the Act that deals with Americans? The ADA prohibits cities and HOAs from saying you cannot use this property for this purpose, versus short-term rentals where it’s very popular to get a neighborhood full of angry Karens yelling at you, “Not in my backyard. We don’t want these here.” So it is protected, and that is a good thing to keep in mind, especially if it’s more profitable than a short-term rental. I would’ve actually thought that they were on par. So that’s interesting to hear the business is doing better.
But you’re a full-on businesswoman. You’re hiring people, you’re managing staff, you’re dealing with scheduling people, the attitudes that come from human beings which is something that we often don’t think about with real estate. But if you’re in the short-term rental space or the residential assisted living facility space, you’re dealing with humans, and humans are complicated people. They can make things hard. So kudos to you for taking on that challenge. Is this something you see yourself scaling to get a lot of properties, or is this more of a “I don’t need a lot of them in order to make good money doing this” type of a situation?

Antoinette:
It’s really a solution to another existing problem. I had regulation issues with two properties that were Airbnb. Converting those two to group homes solves my regulation issues but also increases the income. And then the income from that business can funnel into another asset class, whether it’s going into getting a multi-family. So I’m not walking away from short-term rental completely, just I have two properties that it no longer works for so I needed a new use for it because I’m a hold forever kind of girl. I’m never going to sell them. I’d be switching these two properties and then taking the income from this new business to move into multi-family, to step into short-term rental markets that don’t have crazy regulations that are true vacation markets. But it’s still not long-term. It’s being built to sell, created as an agency so that I could get what I need from it, offer a lovely product, take do some good in my community, and then move on from that business to chase something else.

David:
Can you share what some of those regulation problems that you had were with the short-term rentals?

Antoinette:
Yes. When I started with short-term rental, there were no regulations. And then a bit through that, the city of Orlando started to require you to apply for a license. And with that, you had to live on site and be on site whenever you host it, which if you’re approaching short-term rental as a business, having to live in the property means you can only have one. And having to be there when it hosts meant that the freedom you’re supposed to get from real estate investing, you no longer have because you have to be on site hosting.
Fortunately for me, the neighbors weren’t much of a niche issue because they were using the property for their friends and family to visit them. But the city alone just not understanding that short-term rental could add value versus taking away, there was so much concern about taking rental units off the market, transient people in the neighborhood causing issues, not recognizing that I’m also of the neighborhood and this is doing good for me. It’s keeping the property nice, which impacts the value of my home and others in the neighborhood. So I think sometimes the way the municipalities view short-term rental, they forget that the persons operating them are people in their city as well and there is some benefit for us, and then that trickles down to the other people that are impacted by us.

Rob:
Yeah, that’s very true. This is just a reminiscent of my TikTok comments and my YouTube comments of people that say the same thing and I’m just like, “They think we’re these big, big bad investors that are just throwing up cardboard boxes and being like, ‘Rent this for $200 and paint my house before you check out.’” And I’m like, “If you just chatted with me for five minutes, you’d be like, ‘Oh, you’re just a regular guy that just owns homes.’” It’s funny that the regulation and the narrative is so anti-Airbnb sometimes. So that that’s a really good perspective though, that yeah, you are part of that community and it’s building you up. And by doing that, you’re building up your neighbors up and then you’re building up your community. That is a narrative unfortunately that is very much washed out by a lot of the negativity that I see often.
Is that something that is bothers you at all or do you just keep trekking on? Or what are your thoughts on that? Because I’m always, this is something we don’t really ever talk about, but is it something that drives you or is it something that makes you stop and rethink the entire strategy?

Antoinette:
I don’t stop and rethink it. It makes me fight for it. Being an Airbnb host led to also being an Airbnb ambassador, and a part of that is being the voice to tell the other side of the story. I’ll attend the city commission meetings to make sure that they’re hearing the counter-argument and it’s not just a bunch of angry people in there trying to shut something down. I think it’s important to show the other side of the story and be present for those things, interacting with the neighbors. So I’m very active within the neighborhood as well and open about what those houses operate as.
And so they use the property, so now, they’re getting to experience it firsthand and see the other side for themselves. So now, they’re less likely to be at that commission meeting saying, “No, we want to stop this. Get rid of it,” because now they have one down the block from them, and grandma’s coming every winter and she can just walk down the street. So I think sharing the benefits of what the short-term rental opportunity brings to the community is an important part of it as well.

Rob:
Well, I appreciate you chiming in about that. I agree with all of that. And that is to me always a funny thing, is people still use Airbnb but then they’ll be mad about it. So I agree. I think being an active voice is you’re doing your part. And I’m glad to hear you come and say that on the podcast because this is something that we don’t highlight nearly as much as we should. You also mentioned a little bit on your group homes, that you’re doing good there and you’re helping out the community in that aspect. Can you talk about that a little bit? Is that an important factor for why you’re in group homes, or is that just the cherry on top?

Antoinette:
I think it’s important, period. I don’t think there’s any business I want to walk into and there’s not something I can leave behind that’s greater than what I’m getting out of it. The same approach with Airbnb, making it feel very homely and being beautiful and top quality, high end, it’s the same approach for the group home. I set them up as if I were setting them up as a luxury Airbnb, and then it just so happens that the person staying there is going to be a client receiving services. So I want to make sure that those clients are receiving the best home environment I have to offer.
Within that, it’s having organic gardens in the yard so that they can get some outside therapy as well, versus just being in the home all the time. Having access to organic food and produce, these are all little things that you don’t necessarily get in the assisted living space because it’s more like a boarding house or a little older and not as well kept. I want this particular subset of the community to be able to experience the luxuries that they may not otherwise have available to them. And I think that’s important as well.

David:
I’m curious. You caught an L when the city came in and said, “You can no longer do this or we’re just going to make your life so miserable it’s not worth doing.” And you had the idea to pivot in using the same properties for a different purpose. That’s not natural. People don’t just on their own be like, “I’m going to change the entire asset class of the property, go through licensing, have construction done so that it can be held up to license, get the permits for a new thing.” Where did you get the idea to convert into the new use?

Antoinette:
A friend of mine was in the process of converting one. And if the numbers work, that’s enough for me to dig in. So with the numbers that they were sharing me, it sounded like a home run. The properties had already been completely updated because they were Airbnb first, so they were ready to go. I just had to go through the paperwork. So it didn’t seem too hard. All the hard stuff was already done. Now, I just have to fill out an application, take a couple online classes. It seemed simple to me, and I know I’m minimizing what the process entailed, but I think if my goal is to keep this property forever and have it produce the max income that it can, that’s first priority. It can never be to, “Oh, it’s not working out with the city anymore, time to sell. No, I committed to this property. We are in a relationship. I said I was never letting it go so I had to find something else. It was the only option to me.

Rob:
Antoinette, it’s really impressive to hear about all the different ways that you’re thinking about these new ventures. And I know that hearing about some of the missteps or some of the mistakes that you’ve encountered along the journey is equally as valuable to our listeners at home. Can you tell us about one of your real estate failures in this space or just along your journey in general?

Antoinette:
I’ll say I fail pretty regularly, so much so that it is nothing to be afraid of anymore. I just accept it as if something’s going to go wrong, it will happen. But the one that got the ugly cry out of me, I’ll tell you about that one.
It was a property that I bought in 2021. I had a home equity line on one of the properties. And I was in the process of refinancing that home, and I was going to use the dollars to purchase this new home that I was able to get three units out of and what is ultimately becoming the group home. And maybe two days before I was due to close on the refi, and of course five days after that I would’ve closed on that new purchase, the lender notified me that the refi was not going to happen.
It turned out through underwriting now, although I did everything I could to be ahead of it. Prior to putting it in the application, we did a soft underwriting to make sure that everything would pencil out before we even went down this road. But when we got to the final stage of under underwriting to get to the clear to close, the underwriter found that the way my properties were classified on my tax return essentially made all of the rental income wash out. So even though the properties were owned by my business and that’s what the rental income was being paid to, it was classified… I’m sorry, the properties were owned by me, but on the tax return they had it under my business. And because my business was reporting a business loss, it wiped out my rents.
I didn’t know there was this error on my tax return because I trusted my tax accountant to be on top of these things. But in the process of going through that refi, they sent a payoff to the bank that had my home equity line. So not only did I lose the dollars that I would’ve got from the refi, my plan B which was to just go and use the home equity line, that just evaporated as well. I walked into the bank to get the check and I got told that the account was frozen and I could not because I had moved out of that property. And for that particular lender, once you move, you could no longer use your home equity line. I didn’t know that. I learned do the BRRRR strategy, get the home equity line, and you can use this thing forever. Well, not with this particular lender. So in a space of 24 hours, my home equity line was gone, my refi had fallen apart, and I’m three days from closing on a property that I have a $10,000 escrow deposit on and I have no money.

Rob:
Well, I don’t know. Obviously that’s tough in the moment, but what did that really teach you moving forward? Is that a mistake that you think will ever happen again, or do you feel like you’re pretty guarded from that ever happening again? Because sometimes I feel like that’s a value that that’s hard to keep in mind with this type of scenario.

Antoinette:
Particularly I couldn’t have foreseen it. I thought I had done everything I could to anticipate things that could happen by doing the pre-underwriting before applying for that refinance application. By working with an accountant and having my finances managed by a professional, I thought I was doing everything I could. So in that case it could happen again. Because you could be making your best efforts and checking all the boxes to the best of your knowledge and hiring who you think are the right people, but you don’t know that it’s wrong until it hits the fan. So it very well could happen again. I don’t think I could prevent things from going wrong, but definitely that taught me that I could get through whatever went wrong.

David:
That sounds terrible that it was three or four days before closing and the deal almost didn’t work. What did you end up doing to be able to save that deal?

Antoinette:
Maybe for the first 15 minutes, I just sat in the car and screamed and cried because I didn’t know what I was going to do. But after I had my crying fit, I shot my Hail Mary. I had been talking to my boyfriend’s mom about doing a self-directed and partnering with us on some investments, but it had just been conversations. We never moved forward with taking steps to set that up at.
So I called her, explained to her what had happened, and asked her if she would still be interested in partnering on some investments and setting up that self-directed. I explained to her the risk, basically everything that I experienced so far with money evaporating. I broke down the deal to her, explained to her that it would be my intent for this to operate as the group home and gave her the, “I’ve never run a group home before. Here are all the unknowns, but here are the things that I do know. Worst case scenario, this can go back on the market and we can recoup everything,” and asked her if she was in or out. And she said she was in.
So that was my Hail Mary shot and she saved the day, quite honestly. If she had not been willing to lend and create that self-directed, I was out of sources to tap. However, it was going to take two weeks to get the account set up and the money transferred. So I had to call my network to find hard money that could turn it around within two days. I found a guy. They taxed me heavy, charged me 10% to hold dollars for 30 days. But it was what I had to do at the time or the best thing that I could figure out as a solution. So I went into temporary hard money on a 30-day loan, paid a premium for that, started the process of moving over her dollars from her IRA to a self-directed IRA, and then swapped it all out at the end of 30 days.
So I was able to close in two days. I probably paid a lot more for the money that I had to use than I expected to, but it had to happen. For me, that property, knowing that it was going to be the group home in the end, it was the right location, the right layout, everything else about it was right, it was worth fighting through to make sure I got to see that to the end.

David:
Why do you think she trusted you with that money? It wasn’t just money she had lying around. This is her retirement she’s planning on. Was it your track record with money and some of the decisions that you made in your past?

Antoinette:
Definitely that. I think everybody that knows me knows me as the money person. I’m either tight with the money, you can trust me with the money and I’m not going to squander it. But also if I say I’m going to pay you back, I will pay you back. But I asked her specifically why would she? And she said that she had never seen anyone write their own mortgage before, and she was referencing the first deal that she saw me do. So just being able to see that process, she was just like, if you can figure out how to create your own mortgage and then refinance that out in 45 days, I think you can figure out anything.

Rob:
That’s awesome. So did you end up… Was that the last time you ever worked with her, or does she still lend on any of your deals?

Antoinette:
She still lends. We still have that self-directed setup with access to, but actually we’re in the process of teaching her how to achieve a version of financial independence for herself. Two months ago, we just purchased her her first investment property. It was a single family home that we found off market for sale by owner. We’re converting it to a duplex so that half of it can be longer midterm rental and the other half can operate as Airbnb. And so this will be her first investment so that she can get some cash flow coming in and possibly consider retiring a few years early versus having to wait until she’s 67.

Rob:
Wow, that’s really, really, really cool. Now, you’re in this groove of the group home. What is your trajectory? What are you wanting to do? You admitted earlier you have shiny object syndrome. From the sounds of it, it sounds like group homes aren’t really Antoinette’s last stop. Do you want to sit in this moment and keep going the group home route, or are you starting to already expand?

Antoinette:
I’m already, I view group home as a five-year plan for me. Within five years, I’m exiting, whether that’s a sale or just putting in a different manager to operate. But I’ve already achieved financial freedom so I’m molding my lifestyle of sorts. So with the income from the group home, I’d like to diversify the asset, get into the multi-family asset class, which we have not yet, whether we’re purchasing a multi-family or partnering with the operator to bring that Airbnb strategy to the table, buying vacation rentals and true vacation markets. But those markets will probably be identified based on where we want to visit. So now, these become second homes that we can use for lifestyle enhancement.
But while we’re not there, it’s still making money. But I think in the end, it’s just the last few things I’m going to do are going to sure up where we are financially with the portfolio so that I could focus more on living. I want to get more into health and fitness. I might become a herbalist. I want to make enough income so that I could spend more time just fully living life exploring and learning different things.

Rob:
That’s cool. That’s really cool. Do you feel that your group home portfolio is relatively recession-resistant? Is this an asset class that that would worry you less than maybe something like a short-term rental or any other form of real estate?

Antoinette:
It would worry me less on the renter variability. Leases come and go. With a pandemic happening, we now know that short-term rental can shut down completely. But with these homes, this is someone’s home. They live there every day. And generally once a person’s placed, they are there unless they pass or have to relocate because their family’s relocating to another area. But these are probably the most long-term tenant that you’ll have in a property. So it doesn’t have that variability that we experience in long, medium, or short term. They come. And if they’re having a great experience and being well taken care of, they’re probably there to stay.

David:
That is fantastic. I love that. And you got the right approach when it comes to how you build a good business, is you’re asking the right questions. You’re not asking the question of, “How do I make my own life easier? How do I make myself a whole bunch of money?” You’re saying, “How do I provide something for someone else that’s better than my competition?” And you realize that the money will follow. And that’s a key thing that I really want to point out, is it’s so easy for people to listen to these podcasts and think, “Oh, she’s making all that money. How do I do it too?” And then they do a terrible job with the business and it doesn’t work out and they say, “Ah, the Airbnb doesn’t work. Short-term rentals don’t work. Assisted living doesn’t work.” But they were just asking the wrong questions. So appreciate you sharing what it takes to succeed.
With that being said, we’re going to move on to the next segment of our show. It is the world-famous Famous Four.

Speaker 4:
(singing)

David:
In this segment of the show, we ask every guest the same four questions every episode. I’m sure you’re familiar with this Antoinette because I know you are a big BiggerPockets Podcast fan. Question number one, what is your favorite real estate book?

Antoinette:
This question gives me so much anxiety because I have to admit to the world that I’ve never read a real estate book.

David:
Rob just found a spirit partner.

Antoinette:
That speaks to the power of BiggerPockets because I’ve been able to do all this just listening to the podcast, participating in the forums. Legit, that was enough for me to start and build this portfolio and to be successful up until this point. But my favorite business book is The Seven Signs of Highly Effective People by Stephen Covey. And I love the first one, begin with the end in mind. That’s my philosophy. Anything I’m starting, I’m always thinking about what’s the end goal and using that as my North Star to make sure that I complete those goals.

Rob:
Okay, love that. Next question. When you’re not out there crushing your pivots and going into awesome real estate niches that you’re absolutely dominating, what are some of your hobbies?

Antoinette:
My favorite hobby is salsa dancing. It is like if you haven’t tried it, please go and do it. It is absolutely life-changing. It’s a great workout. It’s a brain clearer. If you’re thinking about too much all day juggling all of these properties, go get on the dance floor. It all goes away.

Rob:
Nice. Yeah, I’ve been trying to invite David out to go salsa dancing with me, but he never responds to my text messages.

David:
I don’t feel safe yet. We took a trip to Mexico. It was a big step for us. I feel like things went okay. There was no catastrophe. Baby steps. We’re making our way into salsa dancing.

Antoinette:
Let me know. When you finally try it, take me with you.

David:
Yes, the pivot queen. Does salsa dancing involve pivoting? It’s like are your hips pivoting a lot and that’s why you like it so much? Because you’ve proven you’re such a good pivoter.

Antoinette:
Yes, everything pivots.

David:
There it is.

Antoinette:
Yes. Pivots, twist, turns, all of it.

David:
That’s right. Did we see any salsa dancing in Mexico, Rob? I don’t think we did.

Rob:
We did not. No salsa dancing. Just salsa dipping, my friend.

David:
Ba dum tss. Very nicely done, thank you. It’s BiggerPockets writers for teeing us up. This is becoming like Saturday Night Live, people writing our jokes for us. That was good. All right, my last question for you, Antoinette. What call to action do you have for our listeners?

Antoinette:
Call to action is take action. None of the excuses you can come up with are valid. You don’t know what’s going to happen if you never attempt to make it happen. So don’t let not having read a real estate book hinder you. Don’t let not having all of the answers hinder you. Get clear on a few key things and start taking action. You’ll figure the rest out as you go along. And it’s never as scary in practice as you think it is before you take the leap.

Rob:
Well lastly, Antoinette, where can people find out more about you?

Antoinette:
I am newly on Instagram as @fearlessandfreefi. That’s @fearlessandfreefi on Instagram. And you can also find out more about me on fearlessandfreefi.com.

Rob:
What about you, David?

David:
Find me @davidgreene24. Very boring, very easy to remember. Just remember that unnecessary val at the end of my name, the E. Greene with an E. How about you, Rob?

Rob:
You can find me over all social outlets @robylt, R-O-B-Y-L-T. And lastly, if you listen to this episode and you’re like, “Wow, Antoinette has it down. I love this podcast. I learned so much about it. I’m going to pivot. I’m inspired,” can we just ask for a simple five-star review on the Apple Podcasts platform or wherever else you download your podcast? It helps us get served to all the masses, and all we want to do is help change other people’s lives and help them invest in real estate.

David:
Absolutely. Antoinette, thank you so much for joining us today. Do you have any last words for our audience?

Antoinette:
Yes. It’s been an absolute honor to give back to the platform that’s given me so much, so thank you BiggerPockets. Thank you, Rob and Dave, for the opportunity to share. I’m an open book sharing whatever I can. There are a ton of freebies on our website, and I think I’ll send you guys some links too for a couple freebies to share with the audience because for this, it’s a full circle moment just being able to give back from what I got. So thank you again.

David:
Thank you. And again, if you liked Antoinette’s episode with us, go check out her episode on BiggerPockets Money. It was episode 295. This is David Greene for Rob “Pivot” Abasolo signing out.