Why Buying a Second Home First Can Be a Smarter Path to Wealth

0:00Something that was really helpful to me was knowing my worst case scenario. So essentially, could I afford that mortgage payment every single month if no one ever rented it? And I could. I wouldn't have any money to do anything else, but worst case scenario, I could do it. And that gave me the confidence to actually try it. And then once you start to have that confidence, all of a sudden you feel a bit better about doing these things. So, the first one I actually found on Zillow when we were still in the UK and through beautiful things like Zillow photos and Google Maps and the aerial search on on Google, I felt like I had a good understanding of what that property was.

0:40And there were a few things that I really liked about it. One was it was really close to Bolton Landing, which is the town that we love so much in Lake George. The second was that the driveway I could see on the aerial photo went through trees and meant the house was really set back from the road. So to me, coming from a hospitality experience, hospitality background, that tells me there's like an arrival experience there, too, which is something that's important. The house itself is a chalet. So it's not a place that if you were shopping for your primary home, you might be like, "That's the perfect one." But for vacation, there's nothing that like screams, "I'm away from the everyday." More than like driving through the trees to a chalet in the center of the woods.

1:20So it had a lot of those — makes a house a chalet. By the way, I'm I'm very — I'll send you a picture and you'll be like, I know exactly what she means. But kind of like that Swiss architecture where it's the white stucco with the outline in the wood and like the peaked roof. You'll see it and you'll go, "Oh, I know exactly what you mean." So, kind of like — it look I mean I think it's like story book. It feels very storybook and like special. — and so I was showing my husband and he was like, I don't know. Oh, we're going to like buy a house, but we're renting and there's so much change going on, Katie.

1:53We're like the ying and yang of each other. And then and and this was right before American Thanksgiving. And I was like, well, if it hasn't sold yet, like no one's going to buy a house before Thanksgiving or by Christmas. Well, of course, it went off the market. They had accepted an offer. And I was so heartbroken, but I was like, whatever. Too much is going on. It's fine. And about a week before we were we moved home, it went back on the market, it was a 1031 exchange that had fell through. So literally the I think third day we were back in this country, we were touring that house, we were seeing that house before we even were touring apartments to be our primary home.

2:34— And the fourth day we made an offer that was accepted. And so it happened really really quickly. But it was just like that that situation of everything kind of falling into place. And the other thing I loved about the house is the original photos of it was not a place that I would choose to stay or I would pay money to stay. It was kind of like old mishm furniture, a lot of floral bedspreads, dim lighting. Like it just was like had a little bit of an ick factor to me.

3:06And I say that with the most the utmost respect because the former owners are still our neighbors and still like really good friends of ours actually. But I could see right away that like the structure and the architecture of this house had so much potential on it its own. If I could just strip away the ugly furniture, paint the walls a fresh white, give it a bit of like design, the house on itself was so special. And that's really what happened. And actually the former owners came over for dinner and they were like, "We love what you've done. This is exactly what like we always wanted to do." So that was really great.

3:41The second property was also kind of funny. We had been looking in the Fingerlakes. We had been we had made done we had done two trips to the area. It's a bit far from us in New York City about 5 hours each way. Two trips to the area, multiple offers made that were declined because we were kind of lowballing just to like test the market and see like have some learnings, right? And it wasn't working. It was like pushing a boulder up a hill and nothing was happening. And on a Monday, I had thought, you know what, we've been talking about moving to Saratoga.

4:12Saratoga is also a great short-term rental market. What if we did that next? And then we could actually see if we like it and then that home could become our family home. And I went on Zillow and there were two properties available and one was in a culdesac. And so right away I was like, I'm a little concerned about neighbors and like the opinions of neighbors with short-term rentals. The other one was on a corner lot in a great location. And so we went to see that property that Friday. So from Monday to Friday, we made an offer that night and it was accepted the next day.

4:47So that one happened super fast. And that's kind of a theme I've seen with like real estate investing for me is there are so many things in life that I push and I try and I try and I try and it doesn't happen. But for some reason these three deals have just kind of come together and I almost think that that's like a little nudge from the universe, if you will, being like, "Yes, this is the one for you. Go ahead." So that ended up working out really well. When they did the when they did the appraisal, I was looking for that word.

5:21When they did the appraisal of the property, it appraised like 20,000 over what we were purchasing for. So, like it gave us real confidence that we were we were making a right decision cuz all of a sudden I had the like, whoa, whoa, whoa. I've had four days to think about this. Maybe this is not the right decision. And that has worked out really well for us as well. And then finally this summer, as I mentioned, we had been looking in the Fingerlakes for a while. We had some unsuccessful offers. This property came on the market. It was one of the lowest pric properties that we had looked at, but everything about it because we had spent time in the area.

5:52I knew the area. I felt like this could be a really good purchase. And it had been an Airbnb. So, that was fantastic because I was able to read through all of their reviews — and see that nobody was saying like, "Oh, neighbors are really a problem or there's rodents in the house." Or things that like were harder to fix or change. If anything, it was like, you know, it wasn't super clean when we arrived. Okay, I can hire a different cleaning team. So, little things like that that gave me also confidence. But when we when this property became available, I was 1 month postpartum with our second child.

6:30So, we were like, I'm not going to get in the car to drive 5 hours with a three-year-old and a one-mon-old to make an offer and have our offer be declined because that was our experience. So, luckily, we had a real estate agent in the area who we really trust. He went out to the house, did a FaceTime tour with us. I was able to ask things like, "Are you smelling anything? Are you hearing anything?" like just the things the intangibles of when you're there. And we made an offer from afar. It was accepted. And so only after our offer was accepted did I actually go to see the property.

7:02I flew there on a flight to Rochester from New York City because that was faster than driving there. I rented a car. I spent two hours measuring every single surface and then I was supposed to fly back. But of course, as the airlines would have it, my flight got cancelceled and I ended up having to take my rental car all the way back on my own. And then we designed the entire home and all the renovations from afar. My in-laws have a very large garage, but the garage is about three hours away from the Fingerlakes. But we had everything that we ordered for the house shipped to them to act as our little like receiving center.

7:36We organized a moving truck to pick everything up in one go so that it could deliver on a specific date and time because as you know, closing is always in flux until the last minute. And just luckily our closing date that our agent had put in the contract happened to be in the middle of a week long vacation to the area that we had already booked anyway. — And so I was like, we are going to hit that closing date no matter what because we've already driven there 5 hours. We already have a rental. I enlisted my dad and my sister to come and help watch the kids while my husband and I furnished and renovated the entire home in seven days with a lot of outsourced help thankfully like painters, tylers, electricians, landscapers, you name it.

8:177 days, completely looked like a totally different house. And then about 5 days later, we were live on Airbnb and we had 10 weeks to rent that property before we were winterizing it. And we were booked at like 83% occupancy. Wow. So, it was just such a great way to see that like taking all those learnings from the first two properties, how can we do it more streamlined, faster, yes, more expensive because we're outsourcing things that we used to do ourselves. But the first two properties, we spent every weekend for like 3 or 4 months driving upstate 3 plus hours, doing all the work ourselves, and then driving back down.

8:56And that was with one baby at the time. Now we had two babies, so this was a bit more of like an approachable way to do it. — Yeah. Yeah. That's amazing. Wow. There there's so much crossover between some of your story and and the way we've done things and stuff and some of the lessons learned and the way we do things now. We we actually bought two DUP or we we built two duplexes in Florida that have a shared pool actually in the back and there's some economies of scale there. And so we went down there with our three three kids last year.

9:29Now we have four kids, but at the time we had three little kids and furnished them all and stuff and we also enlisted the help of a stager, homestager that could do all the heavy lifting for us and we could kind of give the vision and and be there. But it's a it's it's a lot a lot goes into it. — it's also like that mindset shift of like paying for things that you could do yourself. I can physically paint, but we needed to have everything.

10:01I mean, we were opening all the boxes, building all of the furniture, everything that needed to get done. It wouldn't have happened that quickly. And part of it, like I said, was we only had 10 weeks to make as much money as possible to like carry us through this winter season. And the other part of it was the two young kids in the 5-h hour drive. Like how many times did we want to be going back and forth? So getting comfortable with like paying to outsource and realizing like what you get in return. Like you said, you're flying to Florida. Flying or driving? — Yeah, we drove actually. — Drove.

10:32Okay. Yeah. With three kids like you're like I'm this is worthwhile to pay this stager to do it. — Exactly. Yeah. Yeah. At some point I, you know, I think part of the the benefit and the curse of thinking through the lens of efficiency is that as I'm like assembling end tables with a little Allen wrench, at some point I I, you know, had this epiphany of like this is costing me so much more than it would than I'm making by doing this myself. And so very early on, — I told my wife like, "Okay, I've put together enough furniture myself that I'm I'm never doing this again.

11:11Like there's other people that are good at this and this is what they want to do." And so let's pay them to do that. And so we we still like to be very actively involved in creating the experience, but not opening Amazon boxes and assembling end tables. So — Exactly. And also that just shows you then how much more you can do. Like when we saw that we could do this entire thing in seven days to me that probably is much more approachable to people who are also working full-time and are like I can't drive upstate every weekend for 4 months.

11:43And plus that was exhausting. Like you work all day for 5 days then you spent the two weekend days just like working like a dog for four months. You're just exhausted. Like at the end of it we didn't want to see the house. But I will say we felt the exact same way after the seven-day sprint. We were like, I still don't want to see this house ever again. Until like, you know, a few weeks go by and then you're like, I miss it. — Yeah. Yeah. Exactly. Yeah. Yeah. It one other thing you mentioned too that I wanted to highlight for listeners that maybe, you know, they're if they're just getting started, this could potentially come up for them.

12:16But when you were buying the Senica property, you mentioned how, you know, once you got it under contract, it was like, "Oh, wow." You know, like I didn't have time to process this or am I doing the right thing? And it's it's funny. I've done several hundred real estate deals at this point since 2011 when I started and I still feel that same mixed emotions. Like I typically it's initially it's like, "Yes, we just got another deal under contract." And then immediately followed up like, "What did I miss?" Like, you know, what am I is this a mistake? Like is there something that you know could happen here? And and I think that's so natural.

12:48And so for people who are getting started and are like so hesitant to pull the trigger on their first deal or like really nervous about it, know that, you know, that's just natural. Like you're making a big decision. But as long as you run the numbers first, you know, you know that this aligns with your long-term goals, you know, if you're buying it right, you can overcome a lot. — Kirby, I can tell you how valuable it is for somebody like you to say that. There's another host, Dave of the Bigger Pockets podcast, and similar like he has done a ton of real estate deals as well, and I heard him once say like, "Every single time I make an offer or I'm at the closing table, I still feel nervous." And hearing experts like the two of you say that just gives the rest of us permission to be like, "This is normal.

13:33This is how I'm always going to feel." Because you're right, like each time my offer is accepted, I'm like, "Wait, what am I missing? If the other if the real real estate investors don't want it. Am I picking up a dog here? You know, and it's like, no, you're not at all. Or maybe we're seeing something that other people don't or the timing just happened to be right. But I just think it's so valuable when you say that. — Yeah. Yeah. And I still get a professional inspection on every single one and, you know, I I want to uncover every every aspect of the the property in advance and do as much due diligence as possible.

14:06But yeah, you got to at some point pull the trigger and move forward though too. — and and have the confidence in yourself like what I think I am good at maybe is not like underwriting or you know the the kind of numbers thing even though I do think I'm good at that. But I think my kind of unique superpower if you will is coming from that hospitality background. And I think particularly with short-term rentals, the second that we open our doors to guests, we shift from real estate investor to host, we shift into hospitality.

14:38And I think if people have that in the in the front of their mind, they're going to do great with short-term rentals. If they are trying to nickel and dime and say like, how do we slash expenses and like like spend as little as possible but want to make as much as possible, that's not going to happen. I've seen in forums people are like, I don't need to provide shampoo and conditioner. People will bring their own. People have their preferences and they're going to bring what they like. And I'm like, you're missing the point. When people book our places, they're not doing us a favor.

15:11This is a transaction. They are paying me money and I am delivering an experience. And so when I first started out, I had a bit of that old school mentality of like, I'm going to provide you enough garbage bags to get you started and then you can go to the shop and, you know, get that for yourself. And I very quickly realized that people were getting frustrated with that. It usually ended up with me Instacarting garbage bags to them for way more money than if I had just put out more garbage bags to begin with. Same thing with like toilet paper, paper towels, all these re reusables, like renewable things that you provide to people.

15:47And it's like that book that recently came out I forget what it's called right now. Hospitality, something about giving people more than they than they expect. And it's those little things that like if you have like 10 extra rolls of toilet paper under the bathroom sink, most likely people are not going to stuff those into their suitcase and take them home, but they are going to feel a bit of a bigger level of taking care of. And quite frankly, my property in Lake George in the summertime can charge up to like $1,200 a night.

16:21It's a big house. It can it can fit about 10 to 12 people. But still, for that amount of money, these people shouldn't have to interrupt their vacation to go to the grocery store and buy a box of garbage bags. It doesn't make sense. So, I really encourage people to like think about what hotels do really well. How can we bring that into short-term rentals? But then on the flip side, there are a lot of things that short-term rentals can do way better than hotels. And having worked for hotel companies, I know the conversations that are happening internally, which is like, how can we do those things better for our guests because guests want them.

16:57So, let's steer into those those little superpowers as well, if you will.