6 Figures of Equity and Several Thousand in Cash Flow on his FIRST Vacation Rental

0:04Isaac welcome to living off rentals hi Kirby how are you great great it is it's an honor to have you here I am really impressed with all that you've accomplished over the years in real estate in general and we're specifically having this conversation to talk a little bit more about short-term rentals even though we're talking a little bit before this and there's so much that has led up to the success that you've had recently in short-term rentals and we're going to get into all of that but you know you're a part of the first vacation rental investment blueprint program that we're doing and I'm just like Blown Away by your first couple of deals here you kind of did two of them simultaneously

0:54And I wanted to do this episode to share what's possible even though this this isn't common I don't want people think like this is just the standard everyday deal that you'll come across as a short-term rental but it is possible if you take the right steps and that's why I I wanted to have you on here to kind of share how you've put these deals together and what's gone into it and you know they've created basically kind of a year salary worth of equity and thousands in cash flow per month which is just phenomenal for one fairly afford or you know per per property for Fairly affordable properties that you know are used as vacation rentals so before we get all into that though I think people only think I

1:42Have people with accents on this show because I just said Mark Wilton on who's from New Zealand but if you can share a little bit about where you're from originally and your background and how you kind of transition into real estate sure well first thank you for having me Kirby I'm really excited to be on your show especially now that I had just a couple of months back I had kosaki warm up for me that's great yeah I'm sure you'll upstage him here absolutely so a little bit about me I was born in Bulgaria and I moved to United States when I was about 24 25 had the entrepreneurial Spirit from early age my parents are entrepreneurs I tried and had variety of businesses the first one I started when

2:30I was around 11 much smaller scale but kind of the typical sales businesses and when I came to United States within maybe the first year I I realized that the way to go for me here will be through selling real estate so I went I took the license and I started in a commercial real estate firm where initially I was trying to sell commercial cont those they were not that popular back in the days on the Chicago Market they were just about starting this is maybe around 2005 so it's been quite some time since then and I was young energetic I felt like I can make a lot of money very very quick so I'm

3:19Like okay real estate it is little did I know it it was not that simple for Me Maybe other people find success very quickly I was not one of those thinking that because I was successful in Europe at early age with different businesses that I can duplicate this very very quickly here well timing timing of 2005 probably didn't play in your favor either that is correct more like 2060s when we started seeing the first big problems but you know honestly I put more than 40 hours the week in that business I was maybe probably doing about 60 hours the week and in my whole entire first year I made $3,000 I had to have another full-time job

4:07So I was putting something like a 100 hours a week just to kind of make it there figure out how much that was per hour that year you real depressed yeah I don't want to go into the scents in the Nickels let's kind of leave that for someone else my second year I was ready to kind of make it even more I was really h so I was canvasing like crazy cold calling and all that in my second year I improved my track record I made $7,000 and that's more than full-time and you know this is where perseverance comes into place and and this is where you have to pay your dues to kind of make it happen and of course you

4:55Doubt yourself and you start thinking is this good for me should I stay in that business should I not but I I really believe that one of the reasons why I didn't make it faster was I didn't have the proper coaching and I didn't go through the proper programs so I kind of had to learn it by trial and ER and in my third year I transition into residential rentals which was very very different I had a few friends that asked me to help them find a place commercial real estate was way more complic so for me the residential deals were simple and then I transitioned into residential rentals when the market was melting no one was really chasing those deals so I guess I had a thing for them I became top producer by

5:44The second month and I start popping tens of those and little by little I realized that while everybody else was chasing steel sales that were not happening I was killing it with rentals and as Tony Robin says it's all about timing so different strategies can take you to different places but it's all about timing within a few years I transitioned into residential sales and then I went into investment properties so now 17 years later I've closed maybe about 800 real estate transactions but my first two years I probably had two deals for the whole two years so yeah if your listeners and

6:32You you know if they want to make it in the real estate business I'll just encourage them to try and get more education and and just to stick with it if you stick with it long enough you'll learn what you have to learn and you can do really really well so from residential rentals and residential transactions I went into investment properties and for a while I was flipping properties with a partner who's my best friend you know him well so he been on the show before yeah yep heads up to him so we did about 50 together within a couple years and then little by little I realized that you know flips are great and you

7:21Can make good money with them the problem is that it's really not a business it's a job you have to find the next one and you have to find the next one and the real estate business is cyclical so there are Cycles where you can find a ton of properties and and Rehab them and flip them and then it gets more difficult and and then the margins get thinner but even if the margins are great you have to continually staying in the r race you have to continually just finding the deal working the deal financing the deal then rehabbing the property then selling it the full cycle even if you do it very very quickly still takes four or five months and then you got to do it again and again and again and even if you're doing it across multiple properties you just you're not getting wealthy you're

8:09Just being paid very well so you're not having a money machine so to speak and I realized that changes have to be made when into long-term rentals we sat down with wife long-term rentals I think about three years ago and I think that we went into the rentals as landlords very very late in the game because my biggest obstacle was my mentality of being a real estate broker because as a real estate broker or even as a flipper it's transactional you like that in out you make a big fat check at the end and off to the next one you don't have Equity you don't have money into it so very little risk very high reward it's

8:58Only Sweat Equity that that you're kind of putting into those and I for a very very long time I like that and then when you pop in 50 to 80 deals a year you can do really well the problem is that you have to continually perpetually do that you know and we went aggressively with my wife probably about three three and a half years going to Ros and I I kind of believe that we kind of caught the last train the the last car of the last train when it comes to still buying them at at a reasonable price where they can cash flow well so we bought multiple units different areas and being a landlord if you do things right can be great

9:47We realized one particular strategy over almost all other strategies that is extremely important and this is where my construction background came into play every single time we buy a rental property whether it's a long-term or now short term we believe in completely remodeling the place we kind of go all the way down to changing Plumbing electric agac unless of course if the property is in good shape so we don't have to do all that but this way we eliminate a lot of the management and a lot of the upkeep afterwards and it costed a a fraction of the cost to do it up front versus dealing with problems down the road I think this is where a lot of landlords get in trouble they buy the property I hear people I'm going to

10:35Buy this house oh easy $20,000 I'll rehab it and then I can rent it I have news for them they can do it for 20,000 but they'll be spending that much every single year after that so with that being said we did pretty good with the long-term rentals we decided to diversify ify and hedge the risk so we went into different classes of real estate different areas different type of tenants just to kind of have a healthy mix so to speak and plus I've probably rented maybe more than 500 units in the last 10 15 years so I was able to see

11:23What really works well for different landlords what areas they're strong what type of property where are the potential problems and I was also able to see different managerial Styles and I think that the reason why we did not go into being landlords earlier was just the fact that I've seen the good the bad in the really bad and I was like okay I guess I was not mentally ready to hop in that game and then going through different events meeting a lot of people kind of focusing on the future and to some extent being really financially independent if anything happens you still want to have your money machine so with that being said little by little

12:12There was a shift in our mentality and like I said we went into long-term rentals for us I know that different people go after long-term rentals and they want to make a specific percentage or amount per property and I still believe that even if the Chicago Market has a lot of disadvantages it's a relatively expensive market so you can do really well per unit our criteria is we don't want to make anything less than maybe six to 800 bucks per unit per month net after all expenses we consider that a good long-term rental time went on we added more units to the to the portfolio and little by little we

13:00Started opening our eyes to short-term rentals spoke with a few friends the idea crossed my mind before that I had a couple of specific conversations that kind of make made me lean a little bit more into them and then I learned that you have your program and since yeah we we go a few years back I know that you do really really well and that was the deter Factor for us to decide and and go and take your course and I I really want to highlight that the mentality in this is you never know everything it just no matter how successful you become no matter how many deals you pop like I've done 7

13:48800 real estate transactions probably about 80 to 100 rehabbing projects investment properties residential commercial deals it is very important to stay hungry so if you can keep that mentality and you can continue learning there was a period of time where I thought I know it all and I'm glad that this was not a very very long period so we realize that there are always people that will find a better way to do something and why do we have to reinvent the will we can come to you and we can learn the whole process so obviously we initially right away sign up for your course and we believe that was a great idea so I took it together with my

14:37Wife I think it was very beneficial to both of us where even if I've done so many deals they are very very different because I I I I'd like to think that being a real estate broker being a landlord being a short-term investor being a flipper these are still in the real estate business but there's subcategories and each one of those is an independent business so if you want to be successful at it it's you have to learn the ins and outs of the game and the more you know the better you'll do here's where strategies and and you know seminars or or

15:25Programs really come into play because they can condense information for you what probably took me 10 to 15 years to to learn on the real estate side as a broker if I went through a few really really good programs I probably would have learned in a couple years so yes you're paying for the program but man it's money well spent I mean just the first couple of nuggets that you get can save you thousands and thousands of dollars so as soon as we sign up for your program at this point we know how to run we don't have to crawl so as soon as we signed up we had a couple properties one by one under contract with the idea that we're gonna go and make those airbnbs yeah and and sorry if I could just

16:14Pause you there because I I just want to highlight a couple things that you've brought up because it's just been absolute gold for people who may not even understand how much value there is to what you've shared here because there's there's a few themes that I've noticed with with you you know in terms of hustling or staying committed I don't like the word hustle because I think it's it's way overused and I think people you know think that as long as they're miserable then they're going to be successful and that's not that's not it but you stayed you set an intention you know for what you wanted as a result of all this work and then you stayed committed to it even though your first year was $33,000 you know of income so now you're being rewarded for that really well

17:02Because all of that is cumulative all that knowledge it doesn't go away you know so you know you've learned all these different aspects and and like you I I fully agree I learn stuff every single day you can never know everything but you've tried all these different facets of real estate and because of that it's made you even better at what you're doing now with short-term rentals and you know I'm sure in your brokerage and with long-term rentals and and everything that you're doing within real estate so so I think that's one theme and then also like you mentioned that you paid attention to the people that you were working with you know when you were doing you know you leasing all these rental properties to you know renters or

17:51You know working with landlords and saw what what made you know good areas what what made good landlords and you use that knowledge and so I think that is super important too that that a lot of people don't don't do it's Nuance it's not like you can just go out and shoot a you know shoot a scatter shot and you're G to get a deal it's like pay attention to what differentiates a good deal from a bad deal and then go after those characteristics that are that equate to a much better deal and I think that kind of leads us into your short-term rentals because that their performance on these is just incredible but it came as a result of understanding some of these fundamentals I think yeah and just a quick plugin before I go back into the short-term rentals

18:40I think that a lot of the people that teach real estate and the different facets of the the real estate game I I really think they teach it the wrong way I actually or maybe I'm the one that likes to do things in Reverse but but I I always start backwards what a lot of people do is they see a property they think it's a good deal and they try to go and see how their strategy fits in that property where I go back in Reverse and when I say I we go back together with my wife in Reverse we already know what areas are good and we already know the different type of properties in those areas what

19:29We can get from them from the different strategies whether it's a short-term whether it's a long-term rental whether it's a flip whether it's just for me to sell it as a broker so we go backwards we already know the numbers and now we don't have to be like everybody else looking at hundreds and hundreds of properties we know which properties fit our strategy we have a crystal clear focus on the strategy that we want to utilize at the moment and we are only chasing those particular properties where we already know what we're going to get on the back end so we start with that knowledge and then we look for a property that fits that bill so to speak instead of finding a property that we try

20:17To rearrange the natural way of things to fit our strategy it it never works like that so to a big extent doing all these rental deals initially took me a long time to do so many rentals and you're not rewarded so good but when you become an expert in rentals here comes the bigger investors they start finding you and you start buying and selling buildings for them and then you hop into really really big deals and you sell multi-unit projects and you get rewarded on the back end for all these years that you kind try of put the Sweat Equity in but like you said absorbing all the knowledge about the market and the different facets of the game gives

21:06You an edge over other investors and once we accumulated all that knowledge we realized that short-term rentals can be extremely beneficial probably for us personally better than anything else we've seen and and that's why we decided to pursue those so we still combined the short-term rental strategy with other strategies that we have so I'll give you an example one of the properties that we bought in the western suburbs of Chicago we were able to buy it very inexpensively probably about 150,000 we put 880,000 in it as total rehabbing cost that takes us to 230 I believe that property now can easily sell for anywhere between

21:55360 and 380 so they gives you an instant $150,000 equity in the property but we did not go after the equity which was sufficient enough to consider this a phenomenal deal we bought it with the idea of having it as a short-term rental so then it becomes a double dipping because on one end you found a really good deal that instantly build about 30 40% Equity and in dollar terms it's probably couple years of salary for most people mhm it's taxed way better there's so many benefits to that game I'm sure most of the listeners know about them but having as a short-term rental creates a lot of opportunities because

22:44We've seen some very very strong bookings across you know our short-term rentals and at this point we believe that a short-term rental if you position it and ours are not vacational ours our situational short-term rentals I still believe that you can probably make three to maybe four times the money that you will get from a long-term rental out of one Airbnb so we subscribe to the wisdom of doing more with less I prefer to have one Airbnb then have four long-term rentals so for every one Airbnb I believe that you probably have to manage about four long-term rentals and

23:32I have nothing against the long-term rentals it's just not that easy to find so many and then to rehab so many and then rent so many and yes on the back end there is less management into the long-term rentals but why do I have to have 40 where I can have 10 and have the same the same outcome yeah and this is what kind of took us through their bnbs and you're and you're sitting in one right now you can see it's beautiful in the background so you can it and also it stays in in that condition which is absolutely stunning because you're it's being cleaned a couple times a week so you don't have you know rehab it yeah yeah the maintenance it's an ongoing maintenance so it constantly stays in top shape

24:21But the other appeal just like you said for us was huge that we can block it whenever we want to and we can stay the weekend or we can just come for one night or we can throw a party with our friends and family and one property has a really nice big backyard the other one has a great location we can walk to almost everything so makes our personal life a lot more interesting know that about it and then Keeps Us busy as well which is good we're utilizing a lot of strategies to minimize the amount of time that we put in it and thanks to you and your program we've been able to kind of shrink the amount of time that we do this but in a very professional and

25:10Automated way so their bnbs are really not taking that much time from our daily lives we can still maintain the other facets of of our business yeah that's awesome I told my wife we that I really screwed up that I should have made a requirement for the program that I get to stay for free at least a weekend in everyone's airbnbs because they're making these unbelievable properties that are all nicely rehabbed and just gorgeous on Airbnb so man I really screwed that up when I created this program but you did well you did well I I'm curious a lot of people ask me one of the most common questions I think that's that's Googled around short-term rentals is where does it work best and a lot of people think that

25:59There's just you know a couple locations where this is going to be Prime and that it's not going to work anywhere else and it everyone our properties sorry to to catch you off our properties are in the middle of nowhere yeah I mean really they're really are yeah so I mean how how did you what were you looking for when you determined location you know in the the suburbs of Chicago like what what was it that you know you were kind of what were the parameters that you were looking at all jokes aside we chose good locations there's no doubt about it we decided that we don't want to do anything in particular in Chicago per se just because of the in the city because of the heavy requirements and we also live in the suburbs so we wanted to minimize the amount of time that we spend in traveling

26:48And yes we do have support team we have maintenance people we have cleaning people and all that but still this is a business that you have to stay active and and and therefore especially in the beginning while you while you're learning the ropes so for that reason we decided to stick with the suburbs and when we decided to stick with the suburbs we started looking for areas where we believe a lot of people will go to obviously one area like that is around here because you have a constant influx of of people coming in people going out plenty of venues and we believe that anywhere around there that airbnbs are allowed because a lot of cities have a lot of restrictions you just have to do your homework and

27:38We believe that if we can find the right property around there it can be very very successful the other property we just saw a certain appeal for people that might want to get away from the city and want to go in an area where they can go around nature they can relax a little more so this was our thinking process there we still believe that vacation rentals are much stronger as an opportunity you can do better you'll have them full all the time but for us we realize that even if we do situational rentals we knew that probably our income is going to be less but we're also going to have less competition and that's exactly what happened so if our

28:26Strategy really really well it's not that we don't want to have vacational rentals we just decided that we're going to learn the ropes on a couple properties that are relatively close to us so we can actively manage them go through maybe a year of active learning go through all the cycles and all the seasonality and once we kind of learn it maybe we can we can put managerial team to take care of it as of right now my wife is the manager she's taking care is rockar y yep she's rocking it I'm just the one that takes care of the maintenance nice so to speak yeah and we have a deal I fix them she she rents them afterwards so it works really well for both

29:14Of us nice and yeah so we we didn't go the traditional way of thinking okay we only need an Airbnb in a vacational place cuz we personally have used airbnbs for a situational reason like we're visiting France or we're going to an event or we're going somewhere and we just need a place to crash and we did realize that there is definitely demand for that so we did not pursue a vacation rental we did situational rentals and like I said they actually beat our expectations by far we're very very happy with what we've been seeing so far nice yeah that's what I always tell people anywhere where there's people there's a need for short-term rentals because I

30:03Mean the vast majority of our rentals kind of I mean it's not technically vacation it like you said it's visiting family and they don't want to stay with family you know they just want to visit for the holidays but have their own place it's weddings it's funerals it's work it's all all the reasons that you travel to an area in any area where there's population you're going to have that and even when there's not where there's not population there's there's still demand because people want to get away from population so there's so much demand for it everywhere I Al I also think there are economical reasons why people choose airbnbs especially if you have a property that can host more guests at the same time our properties can host anywhere between 10 and 11 people at the same time and for that reason if

30:51You think about what will cost you to go in a hotel even a cheap hotel will be 150 bucks per night and you can't fit more than two or three people at the same time in that room so therefore to get to 11 you need probably about four rooms at an average cost of let's say 150 even if it's not an expensive hotel that's 600 bucks a night you'll do really really well even if you rent that Airbnb for 300 a night yeah so times 30 nights so you're coming at a fraction of the cost of a hotel allow all the people to stay together if they're a bigger family or even if they're traveling for business or work you know they can stay together help their you know camaraderie and they can do things together

31:40And people definitely like it yeah yeah so speaking of those nightly rates so you mentioned you created six figures plus of equity in each of your first two properties what does the cash flow project what what do the cash flow projections look like on on these so we decided to go a little more aggressive on the nightly rate so most of our nights are anywhere between three and 400 hours a night okay and we're we're projecting we didn't even go that much with sales numbers when it comes to overall sales we decided to go more than anything to focus on net profit because I I can't care

32:28Less about the sales I just want to see what it nexts so our numbers suggest that you know a typical Airbnb can make you a few thousand dollar a month net at the end of the month yeah at least in the in the suburbs of Chicago as long as you can manage it properly so like I said to us anything above 800 bucks a month will be considered a win because that's what you can do with a long-term rental and that's if you buy it right if you already have it right I mean 800 rental that's a great long-term rental so anything above that it's a pure profit and in terms of take home yeah this is take not 800 in rent but net

33:16Take that's after all expenses after taxes after maintenance after assessments after whatever you have after insurance if you're paying utilities so net net net just really what goes in your pocket so we believe that you can probably make at least three times that on Airbnb yeah yeah and your bookings already have have proven that I mean I know you're you're booked pretty solid for the next four months which is incredible yeah I mean with four months you can get probably if you're looking at total sales not just net profit because it's a little different but maybe within four months you can do the sales of what you'll typically get from a whole year of that property on a long-term rental

34:05So it's our numbers indicate that is roughly about three times so three times the sales and probably three times the net profit more or less yeah take AIT man yeah and and even if so like this is one that you have you know say 230,000 or $250,000 into and and it's worth you know 100,000 or so more than that or 150,000 more than that so obviously you have a a really nice property but even if you bought a property at 350,000 or or close to 400,000 TurnKey and you did this strategy you're still at mortgage rates today you're still cash flowing say say it's not 3,000 a month now it's down to 2500 or even 2,000 a month that's a phenomenal deal

34:54I mean that's absolutely and you know you don't have the equity in it but can you kind of I think probably the question that's coming up for for people here is how does one go about finding a property that you can put you know or create a $100,000 worth of equity and several thousand per month in cash flow sure so like I said the real estate business is very cyclical and the way you find deals today is probably good for now and maybe the next six months or best the next year and then you got to change the strategy so over the years we've changed we've tried so many strategies from direct mail from code calling from networking from doing joint ventures from

35:43Looking on the MLS from subscribing to different programs that give you access to different kind of properties we still believe that one of the strongest ways is networking and you just have to you just have to connect with a lot of people and you have to give them incentives to send those deals to you so just because I'm a real estate broker doesn't mean that I will not be willing to pay a commission or referral to someone that send me a deal same thing with actively looking on the ml one of the deals we found on the MOs Believe It or Not wow the other one was through person connection we someone told us that that property the owner might be willing

36:31To sell and we chased him for six months straight so he wanted to sell but was not quite there and then we stayed persistent we knew it's a good deal and then we kept going after it and kept going after it and probably I'm sure that there were a few other people that were talking to the same sour but they were just they faded away and we stayed until the end and one day when we connected with him again he was ready to go and I'm like okay let's do it today now so it was very very aggressive very quick we're ready to go finding deals is an art I believe but you can increase your chances by talking to more people obviously

37:20One strategy is being connected to a lot of real estate brokers and another strategy is going to different events and they don't have to be all real estate related as a matter of fact it's probably better if they're not because you're going to be the only real estate person on that event you can connect with a lot of people so if you go to let's say one event a week and you meet 20 new people at the end of the month you just met 80 people at the end of the year you met 960 people I can guarantee you that if every year you meet a thousand new people you will do at least a couple of really good deals if not more yeah so going to events networking probably the best way that I know a little oldfashioned probably you have to put a little more effort but I gotta tell you looking at the screen day in and day out is

38:08No different than that you're going to put the time one way or another so we think that being personable and knowing people creates residuals you can get multiple deals from one person yeah and that is very very important so try and befriend a lot of people that can find your deals and definitely when they bring you a deal make sure that they're happy as well so this is how we found the deals why we decided to remodel these deals is strictly based on our comfort zone I will not recommend people that are new to the business to take on on big rehabs one of the properties we had to do a very very heavy rehab and the other one was in very good shape so

38:57But the first one we pretty much had to we had to do everything I mean we even open the walls instulation Plumbing electric agback roof sighting You Name It We did everything I mean we only had the studs on the house and this can be very overwhelming and someone that is not very familiar with the process should probably start learning on smaller projects and once their knowledge and comfort zone expense can approach this so why we did a double dipping so to speak or double whammy is because we have so much background in in constructions and rehabbing so we were able to buy

39:46A property where other of people were scared to take on it because they knew it's a very very big project and once you kind of have to do everything going through the permits having the right contractors to to do the work I I do have actually my own team and I GC my own deals so it's a little different for me and and that's why we kind of went into them but like you said ideally the the numbers on airbnbs are so good that if you can find a property in area where especially if their bmbs are allowed it won't matter if you don't build the equity you'll still do at least two times let's say that you don't do 3x if you do 2x you'll

40:35Still do very very well on a property so with that being said I'd say that if you want to run with that strategy instead of crawling you're better off buying properties that are ready or near ready where with maybe just a few touch-ups here and there and maybe furniture and all that that you can kind of get them up to speed because even if you save a little bit of money when you buy them and you rehab them and you build some Equity you're still looking at a few months before that property can be operational in that time you can be you know cashing cashing in thousands of dollars in proceeds every month so at the end of the day for

41:23Some people it might it might be a about the same if they buy a place that needed more work versus a place that they can get up and running instantly especially if they time it well based on you know seasonality and all that yeah so if you want to buy multiple there's no way that you can buy rehab go through the permitting process then furnish them and all that if you're going to do all of it you'll be doing it one at a time so if you want to have more I say that you know if you find a good property in an area where you believe that the sales are going to be strong you can just keep getting the new ones and if you use the same bur strategy which is typically for long-term rentals you can use it for short-term rentals as

42:12Well you know you can go and refy them or you can sit on them for about a year even if you bought them in very good condition with the way that the market has been in the last few years you didn't even have to rehab them every single year the prices go up with 20% so inflation is getting you is kind of helping investors like us because you know even your loans are inflating and therefore you're making money on top of the money that the bank gave you you borrowed it at three and a half inflation is at 20 so you're making net 16 and a half% on out of people's money which is huge yeah but you're able to go and refinance within a couple years even without doing a rehab so you can use the birth strategy without

43:00Really doing the the first brrr you just kind of going into the the lastar which is refinancing and repeat and that's pretty much it so again it really depends on what your strategy is how quickly you want to move how many you want to have and and that kind of goes back to what is your plan what is your goal where do you want to get how far you want to go with this how much much time you want to put and what is the outcome so you got to start with why why you're doing it what do you want to achieve what's your reason for it and then again I guess starting in Reverse you know so yeah no that it's such a great point that you bring up there because it's it's very nuanced and I don't think people especially in the beginning understand

43:49The difference between what you're talking people a lot of people like well yeah I want all that equity and I want the cash flow and it's almost like like you're combining two different types or two different strategies together here because you can go out it and that's again why it's so important to get clear on those outcomes because if you say My outcome that I want is to get to Financial Freedom I want to leave my job as quickly as possible you can go out and buy five vacation rentals turn key you know as long as they're they're decently cash flowing vacation rentals which in a lot of places they are and you can get to Financial Freedom and you have to have a dime of equity you chose that the you know to to do deals that would create Equity as well so you're increasing your net worth while you're creating these streams of cash flow and

44:37That was a conscious choice but your strategy to find those deals now is going to be totally different than somebody else because you know I didn't realize in the beginning you don't just go and look at all the properties and try to convince sellers to sell them to you at a deep discount like there's you have no business doing that and doesn't work very well and you probably piss off a lot of people what you should do is focus on the 5% of properties that have problems like you're doing you know that need the full gut rehab where you can get them at a discount because you're actually doing a service for the person who's selling them because they have this burden that they want to get rid of and you're willing to take on all the work that's required to do it so you know so that's how you build the equity in but if you just want the cash flow then like you said you can go out and buy these turn key and they work really well to

45:26Create the cash flow so I'd even go and say that you don't even need five airbnbs I'd say that probably most of the people will be financially independent with two yeah I mean especially if they if they choose them well and they actively manage them so they don't offset the management obviously they have to have a little Sweat Equity you probably substitute your s with a couple maybe three and you know with that being said not not that difficult to achieve we were very conservative to begin with but again not so much because we also wanted to build equity is because like I said we've used different strategies over the years so at this point we're combining strategies so

46:15on one side what we've learned from renting helps us select the areas what we've learned from flipping help us find those good deals where we can build a lot of equity and now what we obviously learned from your course on Airbnb is how to do everything and there are thousands of little nuances I mean this business is a whole science so if you have to learn them one by one by one it will take you Years you'll make many mistakes you're going to leave so much money on the table it just makes total sense to go get the course and I don't want this to sound like a sales pitch your course is great I'll you afterwards thank but I since I I

47:03Know who you are as a as a person as a business individual I knew that that course is going to be great before I even decided to to book it so it was an instant decision for us and like I said you just learned one little thing I'll give an example you just learned the smallest thing just how to how to furnish the the place I mean I can tell the listeners is that just on Furnishing what I save on Furnishing I can probably buy a course five times maybe 10 times so with that being said I it just and if you want to run it as a business you have to know the ins and outs of the game you can condense and you can learn it very very quick so courses are definitely the way to go and from

47:52The strategies that we've learned in flipping you get those big chunks of money but you can run for many many months without income versus Airbnb gives you that income it's almost like the the Ubers of the of the real estate business you go to work today at the end of the day you go home with two 300 bucks so it's pretty much the same thing your house goes on the market today someone books the night or two in two three days you get the money in your bank account so you have a delay of maybe two three days and the money hits your account which is great as well versus obviously long-term rentals very very different than that so having different strategies you don't even have to have only one strategy but

48:40So far from everything we've tried we believe that we see the best results in airbnbs in short-term rentals yeah and I'm I'm curious how how you financed these deals because that's another big question that comes up sure so using my knowledge from the rehabing years we decided and we went with you can call it private money and some people go and and borrow hard money we did quasi like hard private money but in in all honesty it's like hard money loans so because had to go and remodel the properties and

49:29We wanted to use the burth strategy on those knowing that there is so much equity in them that was the proper strategy for those properties so we borrowed the money at a very at a higher interest rate we purchased them we also financed most of the rehabbing and then when we were fully done with remodeling the property we went to a bank and refinanced that loan we paid off the high interest loan and now we kind of have them with just a normal refinance loan we're still able to lock good rates which was great so we're not strangers to financing them with hard money or private money but that was trickly because we needed to do a heavy rehabing if I'm buying a turnkey property right off the

50:17Bet I'll just go to a normal bank and and try to finance it this way I see okay so it's in the long-term financing that you got then is that an asset based loan or is it like a conventional type loan it's like a conventional type okay it's like afterwards initially the hard money loan was asset based yeah and then after that we converted it into just a regular normal loan through a one of the big you know financial institutions and this way there are more requirements and more paperwork involved but the interest rate is lower I I'd say that even if the interest rate was higher it still wouldn't have made a big difference maybe to 300 bucks more per month

51:06In Grand scope of things you kind of have to do what you have to do based on your circumstances I mean I've seen this with clients of mine when they're buying their own properties so some can go FHA some can go conventional some investors have to put 25% down someone can go use their own money then remodel the property a little bit then wait six months to season it and then refy it the normal way so everybody's scenario is kind of different but the more open-minded you are and the more resourceful you are you can use different strategies for different type of properties depending on the type of deal that you get so yeah if we were buying TurnKey I wouldn't even think about you know having hard money loans but

51:55They definitely can be utilized very very well yeah yeah and it's funny you mentioned the long-term financing and and the rate not really making that huge of a difference it's today you hear people say because rates since the beginning of the year we're in 2022 they've gone up and so people like oh the rates have gone up a point and a half so I'm gonna stop buying or slow down buying vacation rentals and it's like your cash flow just went from $22,000 on a property to and you're G to stop by like that's no longer acceptable for me a month I'm actually really happy because there'll be more deals for people like let them stop that's okay if they don't want to buy them we'll be buying them a lot of people don't understand that even

52:445% interest rate is still so low in in Grand scope of things historically as well I also think that a lot of people haven't realized that that things have changed so they still look at the property as the asset and at the loan as the liability where in the last maybe 13 14 years the loan has been the asset and the property is just what's paying that asset loans at three four five% where you have inflation hitting 20% those are huge assets people are not realizing the inflating those loans you're paying them off much cheaper down the road at a preset rate so your payment never

53:32Changes so by the time you pay them off you'll be paying off with the purchasing power of that money you'll be paying them off maybe three four five times cheaper than what you bought them and not only your money four absolutely absolutely you're inflating also the money that the bank gives you so it just it's a great opportunity so even at 5% or even at 6% if you find a property that makes the proper cash flow to service that loan and you have net you have cash flow afterwards as long as there is positive cash flow I I still consider this a pretty good deal and you still lock in loans at five six% where you have inflation running wild and

54:21It's probably going to run wild for the next few years so right now it's still the perfect time to you're really buying the loans because those loans are the bank is giving you money actually to borrow from them I've never heard this anywhere and I've lived in different places there is no other place on Earth that the bank gives you money to borrow the money from them yeah that's exactly what's happening and just to kind of explain maybe that concept for people to understand so let's assume that you buy a property for a million dollars and let's say that you buy it as an investor and you have to put 25% down so you put 250,000 down and let's say you get it a 5% interest rate so next year with

55:09The inflation that we've been seen of around 15 20% and that's what we've seen in the last couple years prices of real estate have have been going up by 15 to 20% so next year you're going to have a property that is not worth a million point2 and of course it doesn't go in perpetuity but all you need is just a few years of inflation like that so now you have a property that is worth 1.2 million but you only have 250,000 of your own money so what is your cash on cash return well you put in 250 by the end of the first year you have $200,000 return because you were able to inflate the 750 that the bank gave you so you're having about 80% return on your money in one year I don't know many businesses that that can do that and that are on

55:58Top of that you're getting the cash flow on top of that you're paying a different you're in a completely different bracket how you pay your taxes through real estate Investments still so with that being said again focusing only on the interest rate doesn't make sense you kind of have to look at the big picture there's so many advantages to having real estate per se and then utilizing the right strategies double and triple dip so I didn't want it to go that and be that technical but now that you brought it up it's not only what you built in as far as Equity it's also the fact that you're inflating a loan that you got at three and a half% with an inflation rate of 20% so every single year you know the money comes back

56:46To you inflated and and you're getting a great return on top of that you're getting cash flow and on top of that if you able to refy you probably even pulled out all of your capital and therefore you're making money with no money in the property so at that point your rate of return is infinity because you don't have any of your own money so cash on cash is infinity and there are many many benefits to to do all that and in particular once you combine all these strategies especially with a good Air BnB you're getting probably the the return in one year of what people make in 10 or 15 years yeah so you're kind of accelerating the cycle and and

57:35It's like playing a video game how quickly can you get to the next level to the next level in the next level and you know short-term rentals as of yet are still one of the best ways that we found how how to play this game yeah and we've played different levels so far so you know this one obviously kind of gets you from point A to point Z very very quickly if you do it right yeah I'd have I fully agree with that and yeah you could tell that you have such a depth of knowledge with this when you when explain it that way because I think you know when people are starting off they don't fully grasp the whole picture like you said you got to zoom out and look strategically at it and look you know tactically at each deal as

58:24Well both you know you can't just focus on one or the other or else you kind of lose lose out on on one aspect so so I appreciate that explanation I think that's a great place to sort of end this conversation because I think we could talk for a long time and I don't want to take up too much your time but but I really like to talk I know you seem very shy and like you're not willing to share at all so no no I really appreciate it I know the community is really going to appreciate all the advice as well if somebody is listening to this and they want to reach out to you and maybe talk some more are you willing to talk to them even more sure sure absolutely what's the best way to do that probably the best way to do that is find me on Facebook Instagram

59:13Isaac Denon I think there is only one of me on on Facebook in the United States and that'll be a great way to connect nice awesome well thank again yeah go ahead yeah thank you if people can get one nugget because I always try to get one nugget out of every seminar that I take or every event that I go to a lot of people that at least approach me they ask me what is a good deal what should I buy they always want that hot tip whether it's a hot tip for just buying a property rehabbing a property Airbnb in a property I I I believe that I I shock most of them by telling them that the best tip I can get them is to get educated so they

1:00:01Have to start with the education to be able to even understand when a good deal comes their way so instead of me telling you this is a great deal do this do that and they go based on tips or they hear a little bit here a little bit there I I really believe that the best and most important thing is to start with the education and everything else will fall into place yes yeah I think that's great advice awesome well thanks again and we will yeah we'll continue to stay in touch and maybe we'll bring you back on when you have 20 of them and we'll see how your whole portfolio is doing sounds like a plan thanks a lot have a good one

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