From Amish Upbringing to Building Financial Freedom Through Real Estate

0:00The normal chart from Reynolds, they're just not cash flowing, just way too high prices and not like not high enough. I mean, the occupancy is there, but if you pay like with the home prices that high in in those vacation areas and with so much competition, they just don't cash flow. So, yeah, when I heard about your program and after seeing what we did with the Brewster property, it was like we know it's possible in to do it in such a small town because we were successful in there and like you were saying, like we didn't eat I was actually kind of surprised how good that property did just because like people asked like where the property is when we told them, they were like like that's a pretty small town to have STR in.

0:49Like it is, but people travel for all kinds of reasons. So, and then yeah, just your program, seeing you talking about having multi-family and having like multiple sources of the income and only like one roof, probably one furnace and like cut down the expenses and have two or three incomes coming in from the same property really intrigued me. So, that's so that's kind of why I got started. — Yeah. Yeah, and you jumped right in and I I remember it was about a year ago when when we saw each other at Ru Con and you you shared the deal that you were considering in Canton at the time that you ended up purchasing.

1:31How'd you how I guess how'd you narrow down to that market and that property and what was it about the the deal that really appealed to you? — So, I have kind of wanted something local. So, I'm managing most of it by myself. So, I wanted yeah, something local and that's about Canton's about 45 minutes from me. So, I was just keeping the area or keeping my eyes open on the MLS and Zillow and realtor.com just for places within like in maybe a hour hour and a half radius from me.

2:04And yeah, so I came across that property and with being a three unit it really I was really intriguing to me and so yeah, I def I looked more into it and let you go over it and yeah, so that's why I pursued that one. — Yeah. Yeah, and can you kind of share the the specifics of it of like, you know, what you purchased it for and what you you know, kind of were planning to put into it and what you were projecting in terms of cash flow and that sort of thing. — Yeah, so we bought it for 345 or I bought it for 345 and I used private money for the down payment which was with private money exchange money and then also the furnishings and so it was the property was got rehabbed before I bought it.

2:52So it was ready to it was ready to go except I did some exterior landscaping. So I put probably 25,000 exterior and that I used some of my own money, but the the furnishings and the down payment closing costs I used private money for and yeah, gave 345 for it and expect for so far I just listed it last October, so we haven't gone through a high season yet, but projected for like 3,400 cash flow per month on average.

3:31— Yeah. Wow. Yeah. Yeah, I know we're coming up on the high season. It's it's tough time to list in October, right? Going into the the winter season, but but you know, the summer tends to to make up for it and kind of evens out, but 3,400 bucks in net cash flow, that's that's phenomenal. So for people who are listening to this that don't really understand kind of what he just described. So, one of the big push backs I get from people a lot of times is like, "This sounds great, but I don't have a huge savings for the down payment." You know, you need typically 20 to 25% for down payment and then costs for, you know, furnishing costs And so, what what a lot of people that I work with do and and what Tony's done is to get a DSCR loan for the

4:20initial Who'd you use for the DSCR loan? — Visio Lending. — Visio Lending, cool. Yeah, so Visio Lending. So, you know, obviously Tony doesn't have like a a massive portfolio, but you can go out anyone can go out and get a DSCR loan as long as the property is going to cash flow, which obviously this this property, a turnkey, really great three-unit property is going to cash flow well. So, so got that for 75 to 80% and then went to a private lender, which who'd you use for a a private lender?

4:54Was it just somebody that you had a relationship with or how how'd that work? — Yeah, it was so I didn't have like a really good relationship with him before this. But he's a local guy. He's actually a farmer in the local area and he's just when he was I guess when he was younger he started lending out money and he's just built a nice portfolio of private money that he lends out to people. So, yeah, I just got connected with him. My cousin actually did a deal with him that he did private money through him, too, that he connected me with him and yeah, that's how just built a relationship with him and yeah.

5:34— That's amazing. Yeah, and that's that's how it works. A lot of people are like, "Well, I don't know anyone who's super rich." Or I don't like or they'll Google private money lenders. That's not generally where private money lenders come from. It's just like a friend of a friend, like you said, who just, you know, has They They They have savings, like he's been a successful farmer, like you know, a lot of times people are working in a job and they have a 401k that they want to that they put money into over the years and they want to self-direct and invest it into real estate or an IRA. So, it can take a ton of different forms, but it's super attractive to someone to make a double-digit return on that money, on, you know, their their private money funds that they're going to lend out.

6:17So, you could give Yeah, do you know I mean, can you share what you paid in terms of interest rate for the private money? — I actually just pay 7%. It's like It's amazing. So, in our community, so he's actually a Amish farmer in that community. They kind of have They actually kind of have their own banking, also. So, it's called a helping fund and it's for young Amish families that maybe don't have credit and stuff harder for them to get a loan to buy a property or build build a house.

6:49So, they have the Amish community have what they call a Amish helping fund and that's actually I think that's where he had most of his money invested and still has some in there, but there he only gets like a four or three or four percent return. So, he was like a seven or eight percent return is really good for him. So, I mean, I was like, "Well, that's amazing for me. Like, you can never get private money for that low of an interest rate anywhere else." — That's incredible. Yeah. Yeah, especially for a a secondary loan that's private money, too.

7:24generally what what you see is people are investing in mutual funds, you know, so their average return is 8% or so. And so, then you can offer them a fixed 10 to 12% return for the private, you know, to to invest in your deal and it's really attractive, you know, to make a higher fixed interest return. A lot of times they're getting payments on a monthly or quarterly basis. Do you pay them out monthly or quarterly? — monthly. — Monthly. Okay. Yeah, so so now they have a stream of income, that private money lender has a stream of income, which is really attractive compared to a mutual fund where it just sits in that account and they can't touch any of the growth.

8:01and so it's it's like a win-win for everybody. And and a lot of times they'll be in a second position, you know, second mortgage position on that property. So it's a secured position on a property that's cash flowing really well. You bought well. It's going to appreciate over time. And and so it's a win-win all the way around. And so again, like I hear so many people like come up with reasons that they can't do this and you just did it with $0 out of your pocket other than you paid a little bit for landscaping out of your pocket and and everything else was covered by other people's money, but yet it's still going to cash flow several thousand dollars a month, which just that's amazing.

8:40— Yeah, and I actually — So what oh, go ahead. — How we ran our numbers I actually ran my numbers with the private money being 10%. So it's like it was still be a great deal at paying 10% for private money. If it if you have to pay 10 or 12% for private money, it still that would have still definitely been a good deal for me. It's just I just got fortunate enough to find somebody that yeah, took 7%. So but it would have still been a great deal the other way, too. — Yeah. And now that you're you know, he you have an established relationship with him.

9:16You've been paying him for, you know, many months now. Is has he expressed interest in in doing other deals with you? — I haven't talked to him about really doing any other future deals, but I'm guessing he probably would definitely be yes. — Yeah. That's what I tend to see a lot is but with myself included, like almost every private lender I've ever had tends to come back and say, "Hey, you know, I've got more money now that I've been putting aside. Can Can I invest more with you cuz it's a better return than they can get anywhere else?" so, as long as you do what you say you're going to do, which you know, that's kind of a prerequisite for anything, but obviously that's that's what you're doing.

9:55So, I'd love to hear maybe some of the things that have gone right and then some of the lessons learned. So, maybe we'll we'll start with some of the challenges or or things that have come up that were kind of lessons learned that you're going to maybe try to do different next time. — Yeah, for me next time, one thing like I'll probably get actually more private money just because like I got it at such a great deal and that because like I used a lot of my savings up. Could kind of put me in a pinch there over the winter months.

10:28So, like going into the next deal, like I'm not going to be afraid to finance everything. Like that I can possibly can and get like try to get several of my dollars into it just so I don't take my savings and invest it in the deal. So, yeah, I don't restrict restrict restrict myself. Other I mean, there haven't been major major hurdles, just little things. Clogged pipes every now and then, but like and in our Brewster property had a furnace go out and but like nothing crazy, no guests wrecking the place or anything like that.

11:07So far, it's been really good, actually. — That's awesome. Do you guys screen your guests pretty heavily? — Yeah, I try to make sure Yeah, try to make sure they have a at least one or two couple five-star reviews. If not, try to collect a security deposit or at least confirm that they would be willing to pay that security deposit if they would damage anything. — Yeah. Yeah, that prevents a lot of bad actors from from booking your place.

11:39So, that that makes sense. So, yeah, I think that's smart from a perspective of borrowing enough cash flow to get you through, especially if you're you know, the timing of it was tough because you're going into a slower season where revenue isn't as high. Now, you're going to kind of refill those coffers with all the profit from from the summertime, but yeah, it does make it pretty lean during the the winter months. So, beyond that then what what what are some of the the positives?

12:12Like what are I guess I guess there weren't too many too many negatives. So, where where do you I guess what's the goal from here after going through this experience? What are you focused on? Is are you buy are you looking to buy more in the Canton area? Or what's what's now that the dust is settled from this one and you've got a good rhythm going, what's the next step for you? — Yeah. I mean I'll go back into the things that happened.

12:44One thing that we did have happen to us we have a no pet policy. It wasn't major, but somebody brought a pet and some people I know are like really cautious about Air Airbnb with that their air they have a supposedly insurance and like if they actually ever pay out. And like we just called them, we just like told them what happened and the guest didn't like they initially said it was a service pet, but it wasn't. They didn't have any proof or they didn't answer the questions that we asked them. So, we just told Airbnb and like we got paid out without any problems.

13:18So, like just to put confidence in people like they do do their job. Like they do try to the host happy also. But, yeah, just — Yeah. — And then, yeah, just So, I'd like to in the future here, I'm still looking in the Canton area. And also also like looking in kind of that same hour and a half just around me. Probably like up towards Canton, but maybe like up towards Akron near up Yeah, up to Akron.

13:53Kind of in those surrounding areas. The Canton Hall of Fame is supposed to be getting some major improvements. They're actually getting a big water park. So, I'm really excited about that. So, that Yeah, I'm definitely look still looking in that area. And if I if I find another great deal in that area, I'll definitely pursue that one. — Nice. Nice. Yeah, we we've had the same experience with the Airbnb air cover or, you know, the host insurance. Did did the pet cause damage or they just paid you out of pet fee?

14:29— It was No, no huge damage. Just extra cleaning fee. So, that's what they paid out. — Nice. Yeah. Yeah, they're pretty good as long as you have evidence of whatever it was, you know, which I'm sure that your cleaners could take pictures of the extra cleaning required and hair or whatever. They're pretty good about paying that out. So, that's great to hear. It So, So, you're still looking around the you know, within driving distance to continue to build the portfolio.

15:01What was I'm curious what your goal originally was when you got into this? And then, you know, has that evolved at all since you started? — I'd say like my goals are still pretty much same that when I started. My goal is kind of to buy one or two properties per year. Eventually build up so I I can quit my full-time job and just do managing. So, I take care of my own lawn care, kind of do my own handyman work. I'm still young enough, I don't have a family.

15:3224 years old, so I still have extra time and yeah, don't have a family. So, I still do that do the managing part, the handyman work and so yeah, something get something local so I can still do that. But yeah, build up so I can do that stuff full-time and quit my quit my job. Just kind of my goal and was my goal to start off with and kind of just still is my goal. — That's awesome. What what do you do full-time? — I work in a custom cabinet shop.

16:05— Nice. That's yeah, so you you've got the some some good skills that I'm sure you learned from that to be able to to help operate your your properties and and do some of the more hands-on things, especially like you said, while you're younger and still have time and smaller portfolio. I'm sure over time you'll you'll grow that the systems to where you don't have to do, you know, a lot of the hands-on stuff, but that's what I love about this this business is just that that the systems can grow organically with you.

16:39So, like if you want to in the beginning to increase your your net cash flow and net profit on a monthly basis, do some of that stuff that's more hands-on, you can and it's it's not like there's no one telling you you can or can't. But then it also lends itself really well to as you scale and you have, you know, 10 properties here in the near future you can easily hire somebody else to to step into that that role of the handyman and and do some of that stuff as well. So it it lends itself well to all different sizes, which is cool.

17:14— Yeah. Are you So, are you still considering I know we talked a little bit about Florida at some point. Were you Are you still considering looking at properties down in Florida? — Yeah, eventually that's somewhere I'd like to invest to in also just going down there almost every year for vacation. I would definitely like I like to have property down there being able to like use it yearly also as vacation. Don't always have to rent a house when I go down there.

17:46But yeah, and if I could find the right kind of the right market find the right property I'm definitely keeping my eyes open in that market, too. — Yeah. Cool. Cool. Yeah, I think it's smart to kind of build economies of scale in one market first and and focus especially if in your backyard it can work well and then expand you know, especially in a warmer climate that you can use as well, which is what we've done down in Florida as well and it's worked out really well. So, that's great.

18:18I I feel like I I see a lot of myself in you and in terms of when I was younger, you know, I was really interested in you know, personal finance and real estate in my 20s, but I've noticed a lot of people aren't you know, it's a lot of people just kind of like jump into the normal job and then it's like they get halfway through their career and then they it's like they have a wake-up call where they're like, okay, I'm going to be stuck doing this forever if I don't change something up and it's like they're living paycheck to paycheck. Their lifestyle has increased to what you know, that to to basically have no margin and so they have this like moment where they're like, okay, I need to figure out a different way and that's when they get into real estate investing.

19:04I guess for anyone who's in the stage of wanting to get started with this whether it's in their 20s and they're just kind of getting started in in their adult life or they're halfway through their career and wanting to transition into this. What advice do you have around, you know, getting started in this? — I mean, like we were just talking about earlier, I have like I did I have I'm not special like I only have eighth grade education. So, it's just a like a fact. Anybody can do it that has the willpower.

19:35It's just And if you have Yeah, if you want to like there's nothing that can stop you if you want to you just you do have to put the work in, put the effort in, but like there's nobody that can't do it. And for me it's just one of my whys is just like my goals is like not just try to like make enough money just like to help me so I can make my payments. Like I also want to be a blessing to other people. Like why do I just want to make enough for myself if I can make enough so I can like bless others with it, too.