Podcast Summary: Real Estate Investing School Podcast

Episode 116: REAL DEAL: Forcing Your First Deal (December 21, 2023)

Episode Overview

This “Real Deal” episode dives into the practical details of Trevor Stackhouse's first real estate investment. The episode highlights how Trevor—despite being new to the field and facing a high-priced market—creatively structured his deal to achieve strong monthly cash flow and set himself up for repeated success. The conversation strikes an encouraging tone, focusing on actionable strategies and lessons for first-time investors.

Key Discussion Points & Insights

1. Background and Introduction to Trevor’s Deal

• Trevor’s Profile: First investment deal, 24 years old, recent student of the Real Estate Investing School, brother-in-law to the host.
• Deal Snapshot:
  • Purchased property for $295,000 (originally listed at $300,000)
  • Initially a 5 bed, 3.5 bath; converted to a 7 bed, 3.5 bath
  • Monthly mortgage cost: $1,600
  • Monthly gross rent: ~$2,800 (after conversion)
  • Monthly net cash flow: ~$1,050 after utilities and expenses
    ("After everything's said and done. It's right around 1050. That bring in a month." — Trevor, 02:18)

2. Creative Financing and Seller Negotiation

• Down Payment: Used a 3.5% down payment (~$11,000)
• Renovation Credits via Escrow Holdback:
  • Seller agreed to provide $10,000 toward renovations plus a $5,000 purchase price reduction.
  • Trevor completed the renovations himself for around $6,000–7,000, pocketing the leftover funds.
  • The process involved extra administrative steps—escrow only releases funds after confirming completed work—resulting in slight delays but significant savings.
  • "I just did them all myself… ended up costing me about six grand… I actually ended up pocketing the other four grand that I didn't even spend." — Trevor, 04:19

3. Value-Add Strategy: Maximizing Rental Income

• Conversions: Turned a large unused living area on the lower level into two additional bedrooms.
• Rent-by-the-Room Approach: Especially effective in a college town location. Each added room rents for about $425/month, increasing gross rent by up to $850/month.
• DIY Renovation: Trevor utilized his skills and sweat equity to minimize outlay and maximize ROI.
• Permitting and Simplicity: Only non-load bearing walls added, so permitting was not a major issue.

4. Navigating Market Timing and Perceptions

• High Market Purchase: The property was bought during a market peak, leading to skepticism.
• The host shares his own experience: Bought and flipped a similar property across the street for significantly less a few years earlier.
• Host Insight:
  "It just goes to show, it's not even about like the purchase price as much as like, how you finance it, what you do to get creative on it." — Host, 06:41

5. Managing Fears and Taking the Leap

• First-Time Jitters: Trevor openly discusses the anxiety of his first big investment and wanting extra reassurance.
  • "It was scary because, you know, it's the first deal." — Trevor, 09:26
• Overcoming Doubt: Relied on the knowledge from real estate school and logical analysis rather than fear.
• The Power of Action and Learning: Now feeling confident and already looking for the next property.

6. Scaling Up and Building Equity

• Forced Appreciation: After renovations, had the property appraised at $400,000 (about $120,000 in new equity).
• Next Steps: Planning to leverage this equity via a HELOC to fund future deals without needing extra personal cash.
  • "One deal, 11,000 bucks, and I'm going to be able to get… a new home every single year, and not spend a single dime out of my own." — Trevor, 12:37

7. Advice for New Investors

• Just Start: Main regret is not starting earlier.
  • "The only regret I have is not starting earlier… Just to go for it and get that first deal and just make sure you're creative with it." — Trevor, 13:24
• Creativity is Key: Look past the obvious and see how to make a property work; deals are “created” not “found.”
• Invest in Yourself: Consistent self-education—books, resources, and environments (like studying at the library)—help build a foundation for success.

Notable Quotes & Memorable Moments

• "You create deals. Right? Deals aren't just made for you. You got to go out and create them." — Trevor Stackhouse (07:20)
• "You were definitely living off less than $1,000 that month. I know that." — Host, joking about Trevor’s frugal Maui vacation funded by rental income (11:36)
• "Even now I live up north. I have some friends here up north. And so I pay rent every month, but I don't actually pay rent. Right? Like, I get a thousand bucks a month. I pay my rent from that thousand bucks and still pocket the rest. So it's pretty awesome." — Trevor Stackhouse (11:40)
• "You just, at the end of the day, you got to go for it… Start as fast as you can because, I mean, it's not… going to get any easier moving forward, and it's probably not going to get very much harder, so you might as well just start right now." — Trevor Stackhouse (13:13)

Timestamps for Key Segments

• [01:34] — Trevor breaks down his initial deal structure and numbers
• [02:59] — Financing strategy and how seller credits were structured
• [04:28] — Renovations, escrow holdback, and out-of-pocket spend
• [07:47] — Value-add: adding two bedrooms; details on conversion
• [09:10] — Facing fear and first-time investor anxiety
• [11:05] — Passive income in real life—using rental cash flow to live for free
• [12:45] — Forced appreciation, equity gains, and building for future deals
• [13:13] — Parting advice for first-time and young investors

Connect with Trevor

• Instagram: @trevorstackhouse11

Tone and Highlights

The episode is informal, supportive, and practical—highlighting the power of education, creativity, and sweat equity in real estate. Trevor’s journey offers a relatable blueprint for aspiring investors, and the host’s family connection adds a casual, motivational flavor.

Bottom Line:
Trevor’s story showcases the importance of creative deal-making, prudent self-education, and taking action—especially for first-time investors. Strategic negotiation, leveraging seller credits, adding value through room conversions, and capitalizing on market appreciation were all key to turning a “scary” first deal into a springboard for future investing success.