141. House Hacking: The Quickest Way to Get into Real Estate with Alex Murillo

Summary

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Episode Overview

Theme:
This episode dives deep into house hacking as the quickest path into real estate investing, told through the firsthand journey of Alex Murillo. Host Joe Jensen discusses how Alex accumulated 15 doors by the age of 26, starting with house hacks, leveraging primary residence loans, and ultimately expanding into out-of-state multi-family properties. The episode is packed with tactical insights, stories of both wins and costly missteps, and actionable advice for beginners—particularly younger aspiring investors.

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Key Discussion Points & Insights

1. Discovery and Early Mindset Shift

• Alex’s Introduction to Real Estate (01:00–03:30):
  • Stumbled into real estate investing while working night shifts in college and binge-watching BiggerPockets/Brandon Turner videos.
  • Became inspired by the “financial independence, retire early” (FIRE) movement.
  • Concerned about investing time and money into a traditional career he might not love, Alex saw real estate as a more sustainable skill and long-term asset.
  • “Every dollar you put in… is at least becoming a dollar in equity or two or three dollars in equity.” (00:00, Joe)

2. Choosing Knowledge Investments Over Temporary Trades

• Real Estate as a Lifelong Skill (04:16–06:05):
  • Joe stresses that expertise in real estate never goes to waste, unlike industry-specific skills.
  • “No one’s gonna be like, ‘I wish I didn’t know as much about real estate.’ … It’s a knowledge acquisition worth investing in.” (05:28, Joe)

3. Becoming an Agent and Proximity to Mentorship

• Building Skills & Mentors (07:00–10:00):
  • Alex got his agent’s license at 23, after seeing firsthand the wealth-building potential of real estate.
  • He joined a real estate team led by a mentor who owned 30 paid-off properties—a proximity that inspired Alex to level up (“...the proximity made me...kind of put pressure on me, I guess. I was like, dang, I felt the need to do more…” 08:48, Alex).

4. House Hacking 101: Strategy, Mindset, and Execution

• The Real Tactic (10:24–17:00):
  • Alex and his wife consistently used 5% down primary residence loans, moved in, rented other bedrooms (or units), then repeated.
  • Initial example: Rented out rooms to friends; even lived in a living room for a period while house-hopping to the next deal.
  • Key buying criteria: Only bought homes where projected rent would cover at least 1.25× the mortgage (12:45, Alex).
  • “I try to teach this to my first-time homebuyer clients…but most of the time it just doesn’t make sense to people.” (14:16, Alex)

5. From Singles to Multifamily and Out-of-State Investing

• Scaling Up (15:42–21:00):
  • Early homes were single-family with bedrooms or basement units rented; then switched to multi-family configurations.
  • Used 1031 exchange to sell first house (strong appreciation, $150k equity) and buy eight doors in Cincinnati, OH (two duplexes, one fourplex).
  • Chose the market through personal connections and market research on affordability/growth.

6. Hard Lessons: Managing Out-Of-State Properties

• The Unfiltered Truth (21:59–28:52):
  • Dealt with nightmare tenants, squatters, property manager issues, unexpected renovation costs.
  • Fired three property managers in OH before finding a reliable one: “I just assumed…all property managers were equal, which is not the case.” (27:06, Alex)
  • Renovation costs for each unit were $10k–$15k—unexpected after the 1031 exchange because that money can’t be used for repairs.
  • “I always wonder when people post ‘$0 down’ deals…how much is it gonna cost now that you own the property?” (28:55, Alex)

7. Long-Term Thinking, Risks, and Managing Fear

• Persistence Pays (30:33–34:11):
  • Renovations created $160k–$185k in new equity in the fourplex (bought at $265k; expected value post-rehab ~$425–450k).
  • Encourages holding properties long enough for appreciation and renovations to pay off: “If…they could just realize…those are gonna last…they’d be thankful they kept it.” (33:26, Alex)

8. Mental Shifts and ‘Gamification’ of Wealth

• Collecting Assets & Rep/Pivot Mindsets (39:01–45:47):
  • Real estate investing frames money and property as a “game of collecting playing pieces.”
  • The importance of “just taking action”—and building confidence through reps, not getting stuck in overanalyzing or waiting.
  • "You want more pieces in the game...houses or equity or whatever it is, because then you can stay in and collect more and more and more..." (39:42, Joe)
  • Encouragement to destigmatize buying property and to think bigger.

9. The Power of Partnerships

• Collaboration Overgoing Solo Fears (43:16–45:19):
  • Alex’s current flip succeeded because he was willing to split profits for support: “It just makes so much more sense to ask for help. I wish I had more help. Everybody does.” (44:20, Alex)
  • Reassurance to new investors: experience, reps, and partners beat doing nothing due to fear of “giving up” part of a deal.

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Notable Quotes & Memorable Moments

• On Real Estate Knowledge:
  "No one’s gonna be like, ‘I wish I didn’t know as much about real estate.’… It’s a knowledge acquisition worth investing in."
  — Joe (05:28)

• On Buying Smart:
  "I'm not going to buy that house even though it's beautiful and I qualify and it'd be dope. It's not going to be self-sufficient when I leave."
  — Joe (13:25)

• On Managing Out-of-State:
  "In Ohio, I've fired, I think, three property managers... I just assumed...all property managers were equal, which is not the case."
  — Alex (27:06)

• On Unexpected Rehab Costs:
  "I bought these houses with basically no money out of pocket because it came from the 1031 exchange... Now I've inherited this thing that does have expenses."
  — Alex (28:52)

• On Long-Term Value:
  "Every dollar you put in… is at least becoming a dollar in equity or two or three dollars in equity within your case here."
  — Joe (00:00 and 31:59)

• On Getting Started:
  "If you have people in your corner that are supporting it, then it makes it way easier..."
  — Alex (43:16)

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Important Timestamps

• [01:00] Alex’s origin story; introduction to real estate investing
• [06:05] Value of lifelong real estate knowledge
• [07:00] Becoming a real estate agent, mentorship, importance of proximity
• [10:24] The mechanics and mindset of house hacking
• [12:45] Buy-box criteria: rent-to-mortgage ratio (1.25X)
• [15:42] Transitioning from room rentals to separated units/multifamily
• [18:36] Selling the first house, 1031 exchange into eight Ohio units
• [21:59] All the "dirty" details: squatters, bad managers, rehab realities
• [28:55] Hidden costs of “$0 down” deals
• [31:59] Building forced equity and banking on the long-term payback
• [39:01] Thinking bigger; buying more, gamifying real estate
• [43:16] Partnerships for scaling and support

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Final Four: Rapid-Fire Personal Insights

• Dream Deal:
  Pay off primary residence; own properties free and clear due to a dislike of debt (46:26).

• Pivotal Book(s):

  • Rich Dad Poor Dad by Robert Kiyosaki
  • Set for Life by Scott Trench (47:06)

• Biggest Mistake:
  Not vetting the property manager—the most expensive lesson (47:39).

• Enjoying Life:
  Pickleball, backpacking, hiking, spending time with wife and dogs (48:11).

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Closing Thoughts

• Alex encourages listeners to reach out; both he and Joe highlight the abundance mentality within the real estate community (48:31–49:47).
• Key message: Don’t wait to get started, and don’t be afraid to ask for help—every action, even “messy” ones, compounds into options, equity, and experience.

Transcript

[A]

Yeah, you're spending that money. But like I like to say, you know, every month dollar you put into real estate, like it's not gone, every dollar you put in that is at least becoming a dollar in equity or 2 or $3 in equity within your case here. Welcome to the Real Estate Investing School podcast. I'm your host, Joe Jensen. My guest today is Alex Marillo. Alex is a 26 year old entrepreneur chasing financial freedom and real estate is started. Since buying his first house at 22, he's aggressively house hacked his way to 15 doors and several other real estate related deals. So man, you're young, you have done quite a bit in just a few years, which is really awesome. Excited to hear kind of what you've been doing, what your strategy has been, how you're able to collect so many doors so fast. But welcome to the show, Alex.

[B]

Thank you. Yeah, I, I mean it kind of gets out, I get out of touch a little bit. It sounds crazy talking about it now, but while I was doing it, while we're buying these houses, I was, I wasn't really thinking about that. I was just thinking like, what's the next one gonna be? I guess, like how soon are we gonna be able to find the next one? So, yeah, we bought our first house in 2019. Me and my wife were, we had just been married for about a year. I was 22, she was 21. And we were in Cedar City, Utah going to school and we got pre approved for a mortgage and there were like two houses in Cedar City that we could afford at the time.

[A]

One of those too. So at that time were you guys like thinking real estate as an investment? Were you thinking, you know, financial freedom? Were you just thinking you wanted to buy a house? Like, where was your mindset?

[B]

My wife wanted to buy a house. I was thinking real estate, financial freedom. I had seen. I was working a night shift job at a, at a like a girl's home in Cedar City.

[A]

Okay.

[B]

And well, my job was just sitting there all night and I would just watch YouTube videos all night long. So I was watching Bigger Pockets videos. I saw. That's where I saw Brandon Turner for the first time. From Bigger Pockets.

[A]

Yep.

[B]

And he posted like a five minute video on YouTube about how he was financially free through real estate by like 26 or something. 27. And it just made a lot of sense to me, I guess. So from that point on I was just like looking at houses, listening to podcasts, reading, learning as much as I possibly could within like it was probably like six Months to a year that I was just kind of absorbing information up to that point.

[A]

That's awesome. So. So you kind of. You basically just stumbled across it, Started just taking in as much as you could and then about it was, what is it a year later before you actually ended up buying anything?

[B]

A little under a year. Yeah, I watched that video and I, I started reading through all these blogs about the fire movement, the financially independence, retire early, something like that. And I went home because at the time I was really like kind of stressed out about school. I was a junior in college and I was like, I thought it was. I thought it was stupid that I was there. I guess I was like, yeah, I wanted to be an occupational therapist at the time at least. Like, I thought, I thought I wanted to be that. And I was like, what if I don't want to do that anymore after five years? You know, like, what if I. What if I last 10 years? And then I like really hate that job. Spent all this time dedicated to it and it just didn't make any sense to me. So I kind of took this idea back to my wife and she was like, I don't know, she was, she was just really supportive the whole time. She didn't really. She was like, oh, cool, interesting. Like real estate, financial freedom, you know.

[A]

Sounds like.

[B]

Yeah, yeah, she likes the sound of it. Like everybody does, right?

[A]

Well, it's one thing I talk about is talk about acquiring assets, like, you know, property acquisitions and things like that. I think about knowledge acquisitions sometimes. When I was first getting into real estate too, it's like, okay, I could go learn another skill. I just spent a decade learning sales and I learned a lot about alarm systems and like. And then I left that industry and I was like, I have so much wasted knowledge. Like, I don't need to know anything about this industry anymore because I don't use it. It's like, what a waste. And then I went and learned solar and I left that industry and now I know way too much about photovoltaic and blah, blah, blah, and like cells and like, and it's just this useless information. Then I was going to go, I was thinking of doing like some software sales because I had seen a lot of guys do really success on that. And I was like, okay, I know I can learn it. I've done it, you know, before. And. And I was like, I don't want to learn one more thing that's going to be useless in the next phase of my life, you know? You're talking about school it's like, man, people will pour hundreds of thousands of dollars, years and years and years into a trade that they might not even enjoy, like you said they might walk away from. And then it's like all this useless information, right? And I thought about with real estate, I was like, man, you're not going to find a person alive that is like, man, I got, I know too much about real estate because that's always a phase in every success, less successful person's path. Real estate's a part of it, you know what I mean? And no one's gonna be like, oh, I wish I didn't know as much about real estate, you know what I mean? I'm like, okay, that is a knowledge acquisition worsened, worth investing in. Because I'm always going to use that at every phase of my life and it'll pivot and it'll look different, you know, at different phases, but it's not, I'll be like, oh, what am I going to do with this knowledge? You know what I mean? It's like there's always a lot to.

[B]

Do with it, right? Exactly. It kind of just, it just never ends. Like there's. People are having success in a thousand different little parts of real estate and half of them I haven't even heard of yet, you know?

[A]

Yeah, for sure. And you're involved in quite a few different ways. So you're an active agent, right? So you're a real estate agent right now, is that correct? Yeah, yeah. Which is cool. So you have access to, you know, you know, deals and mls, you understand how to do contracts and you have a lot of like, intimate knowledge in the industry as far as, like the logistical side of, of, you know, deeds and contracts and things like that that a lot of investors maybe don't have. But a lot of agents don't know anything about investing either. But you know a lot about investing. So tell us a little bit about kind of your approach to investing, what, what your thoughts are on it. And I still want to figure out how you, you know, you didn't get 10 doors house hacking. Maybe you did. If you're doing multi units, tell us how you got up to 10 or 15 doors or whatever.

[B]

Yeah, so I got my, I got my real estate license in 2020.

[A]

Okay.

[B]

And at the time I had two houses when I got my license. And by then I had already like our first house was by then worth like a hundred thousand dollars more than.

[A]

It was paid for.

[B]

So I was like, that's just stupid. Like, why am I doing anything Else, Right. Any other industry. I didn't. I spent not very much money and made this gigantic return on this one house. So I was like, hey, I guess I'll just get my license because I also need to make money to pay my bills. Like that one house wasn't gonna. Or those two houses weren't paying our expenses.

[A]

Right.

[B]

So I got my license and I. I joined a team actually in Cedar City where I actually interviewed with the team leader. And he kind of turned into something of a mentor for me. He. I remember in our interview on my resume I put that I liked investing and he brought that up in the interview. He's like, oh, that's cool. I have like 30 houses all paid off. And I was like, like, it blew me away. So I was like, dang, I gotta, I want to work under this guy. I want to learn how he does business. And honestly, I never really asked this guy very many questions. I never really talked to him about investing, but I was in the same room as him, as he was doing other deals, as he was buying houses, building houses, and just selling houses, like retail. And just like the proximity made me. It kind of put pressure on me, I guess. I was like, dang. Like, I felt the need to, to do more and to like catch up to this guy.

[A]

Well, probably made it real. It wasn't just this abstract concept that's out there. You're like, wait, it's doable and it's right in front of me. Like, I should probably be doing it if it's that real and accessible.

[B]

Yeah, that's a good point. Like most people that want to get into real estate, it still seems like this unfathomable thing.

[A]

Maybe in another market or maybe in another city, or maybe there's all these excuses, you know, people I don't know, the right people I hear about online, but you're seeing a guy in your same city, in your same world, like in your same room. And like, oh, well, if he can do it, like, why can't I do something?

[B]

Yeah, yeah. Most people think it's for old people, right? Like, yeah, most 20 year olds are like, oh, I'll buy a house when I'm like 30. Because that's just. Because that's just what we're kind of bred to believe, I guess. I mean, I guess statistically I think the average person buys their first house when they're like 35 or something. I can't remember.

[A]

Okay.

[B]

In the US so yeah, it made it real for me. I had done two deals, so it it was already like, I knew I could do it, but seeing someone else at a whole different level just kind of like changed my perspective.

[A]

So what did you do with that changed perspective then to go from those two homes that you just bought as primary residences, lived in for a while, ended up leaving and renting it out to buy the next one, and kind of just the house hop thing.

[B]

Yeah.

[A]

But then what did you do after that?

[B]

So we did that. We're still doing that actually. Like, it's. That's. It just makes the most sense. Like, just. It's so easy to do, I guess, in relative to other aspects of real estate. Easy because you don't need 20 down on every house. So somewhere in there, my wife graduated with her nursing degree.

[A]

Cool.

[B]

And I told my wife, I was like, hey, like, look at this first house. I remember I did all the math and I added up, like the market values, and I showed her what our net worth was from those two houses.

[A]

Yeah.

[B]

And. And it was like 150, 000 or something.

[A]

Yeah.

[B]

And she was like. Like she was blown away. So she. She was on board from that moment on, and I was like, we're gonna try to do this as much as we possibly can over the next few years. So we just. As soon as we had 5% down saved up, we would. I was looking for the next house, and then we move into that next house. I would try to find a way to rent out as much of it as I possibly could. Like the second house we moved into, me and my wife, we lived in the master bedroom, and we rented out the other rooms to my friends.

[A]

Nice.

[B]

And the first house, we just had it as a. As a rental after we moved out, you know, and then we rented out the master bedroom where we were living in, because one of my friends approached me and he was like, hey, I hear all our friends are living in the same house. Like, can I rent a room for you? And I was like, yeah, sure. So he moved in to the master bedroom, and we were like, kind of. We. We were kind of homeless, a little bit. Like, we were living like, in the living room. That's where we were sleeping.

[A]

Nice.

[B]

And we were just. I was just looking for the next house. Like, what can we put 5% down on that is going to work, you know, that we can house hack, essentially.

[A]

So let's. Let's dive into those details then, like when you say it's going to work, you know, and like, you're looking for one that makes sense. What are you looking for? Like what is your buying criteria to make sure, like it's a good something you should buy as a primary that will make sense as investment when you leave or even while you're there. But like what do you look for?

[B]

I look for mainly rents. So I, I figure out, okay, this house as one unit. Like if I were to rent this house out to a family, what market rent can I get? And if I'm putting 5% down as a primary residence, what interest rate am I going to get so I can figure out what my payment is going to be and if the rent is at least 1.25 of like 125 of the mortgage payment, you know, like covers the payment plus some margin. And I'm like, okay, like we'll be able to keep that house once we move out.

[A]

I love that. And that's the way to do it because it's like people think about going and buying these primaries. A lot of people bought homes and then they didn't buy it with an investment mind at all. And then they go to try to leave and they like, oh, they can't sell it because they bought it, you know, they're underwater or, and they can't rent it and, and they're just like, oh, what do I do? This is a huge headache. And they're like, how do people buy houses? Like again and again and again it's like, well if you go in with that intention, like you were saying, like knowing, oh, I'm not going to buy that house even though it's beautiful and I qualify and it'd be dope, it's not going to be self sufficient when I leave. So that's not going to work for us because we're only going to be there for a year or whatever. So if you go with that mindset ahead of time, then it changes the places you'll buy, but it lets you actually keep moving on to the next bigger and better thing and collecting those assets.

[B]

Yeah, absolutely. So what they turn into these houses, it's, I try to teach this to like first time home buyer clients of mine as a realtor, but most of the time it just doesn't make sense to people.

[A]

I guess now they're just like, they just want the cute house in the nice neighborhood.

[B]

Exactly. Yeah. They just want, they, they see every house they're shopping for as their forever home. But in reality the first house especially, and then the house is following that one. They turn into trading pieces. Like it's literally monopoly, right? Like I'm gonna get into the house that I can afford that's gonna. That I'm gonna be able to keep, that's gonna go up in value. And at some point I'm gonna have equity in that house. I'm gonna be able to sell it, I'm gonna be able to rent it out. I'm gonna be able to take out a line of credit on it and use it to buy other houses, right?

[A]

Yeah.

[B]

So it's all just like, it's accumulation of these assets. And then in a few years, it does really doesn't need to be that many years. Like, it's been less than four years for me.

[A]

Yeah.

[B]

And you can start looking at those early houses you bought and be like, okay, like I can do a lot of things here. I can sell this and buy a multi family, you know, or I can refinance this, get all. Get all the equity out and keep renting it out, you know, all kinds of stuff.

[A]

So how did you get to 15 then? So you buy one and is it a single door? Is it a duplex or fourplex? Or your first one? Is it just a single family?

[B]

So first house was a single family. We rented out the bedrooms. Second house was a single family. We rented out the bedrooms, we moved out. The next one was a single family that had a basement. By this point, my wife was like, we need to stop sharing living spaces.

[A]

Yeah.

[B]

And I was like, for me, it was kind of fun because I had all my friends and my wife, like in the same.

[A]

No, his best of the wolf world.

[B]

So I loved it, honestly. But she was like, we need like our own space. This is getting depend. So then I kind of switched my strategy. I was like, okay, now I'm looking for places that I can separate. Either duplexes that are already duplexes, or 3, 4 units, whatever, or single family that I can section off.

[A]

Right.

[B]

So the next house was a single family with a basement, and it had a separate entrance. So I built in a little wall. I put a kitchenette downstairs in the basement. And we rented out the basement and lived upstairs. Nice.

[A]

So then you have four units with three. Three primary purchases. And these are all primary purchases.

[B]

Yeah.

[A]

And now you're at four units. And then what do you do after that?

[B]

So then we buy another house, same way, single family. This is where. This is where we are now. It's single family home, five bedrooms, and then there's this big open area that's they were using as like a sewing room, essentially the previous owners. So I came in and I said, this Is perfect. I framed in a door, added a little kitchen and created a mother in law unit.

[A]

Nice.

[B]

So me and my wife, we moved into the mother in law. So we have like a bedroom, a bathroom, we have the whole backyard and the garage. And rented out the five bed, two bath portion of the house.

[A]

Nice. And are you reading that out by the room as well? It seems that that's kind of like how you've been doing a lot of them.

[B]

No, this one I've kind of stopped raining out by the room just because it's just too much hassle, I guess.

[A]

Right. It's a lot more involved with turnover and lease leases and stuff like that. And it sounds like it's more involved in a headache than just one long term tenant.

[B]

So we rented out the five bed section of our house for 2,500 bucks a month. And they pay like 90% of our mortgage. And last year we actually sold our very first house.

[A]

Oh, okay.

[B]

So I was looking at this house. It was, yeah, it was a very first house. I spent a lot of time on the house, remodeling it, fixing it up. And we had like 150 grand of equity in this house and it was cash flowing like 200 bucks a month from the rent. So I was like the mentality of accumulate as much as we possibly can while we're young. Right. So I just like, let's sell it and buy some multi family. So we sold it. We did a 1031 exchange and we bought eight units in Ohio.

[A]

Okay.

[B]

And Cincinnati.

[A]

Wow. So these individual units or these like.

[B]

Multi family, two duplexes and one fourplex.

[A]

How did you get connected in that out of state? Because Utah's a long way from Ohio.

[B]

Yeah. So I had been thinking about investing out of state just because this is. I saw Utah home prices going up and so I was just kind of researching other markets. I was seeing what cities were growing, what cities had low cost of living, high rents, low home prices. And there's like a ton of cities that kind of fit that criteria. Honestly. Like it's. People are investing in every city and doing well in every city. So you have to accept that it's just a matter of like choosing one place and learning it really well.

[A]

Yep.

[B]

So I honestly, Columbus, I can't. Oh. I have one of my best friends, his wife is from Columbus, Ohio. And I was like, okay. I mean that coincidence enough, I guess I'll just kind of focus on Columbus for a little while.

[A]

And there we go.

[B]

See what the market's like. And I liked it. It was growing. It's still one of the fastest growing cities I think in the US and the home prices were super cheap. It was comparable to southern Utah like five years ago.

[A]

Yeah. That's awesome. So yeah, you're able to leverage your one house into eight different units, which is so awesome, and use a 1031 exchange. And so you didn't have to pay taxes and everything on the profits from that house. You're able to just roll it in, get all these other properties and. And now I assume you did your cash flow go up from $200 that you were making on it?

[B]

Yeah. So the, each of those duplexes, cash flow like 5 to 800 bucks each. Each.

[A]

So you, you took a property that was cash flowing, 200 bucks and your cash, you made it cash flow. I mean a couple thousand.

[B]

Yeah. So. And the fourplex, the four plex has kind of been a headache of mine. It needed a lot of work going in and I was like of the mentality that I could just figure it out and get it fixed up and rent it out. That's taking a lot longer than anticipated. But it's almost done and fully rented and that one will cash flow like about a thousand bucks when it's all rented.

[A]

Yeah. So let's talk about that a little bit because you know, sometimes let's talk about the dirty side, if you don't mind, you know.

[B]

Yeah, absolutely.

[A]

So these things don't always go smooth. It's like, oh, sounds cool. I'll sell a townhome or a little house in Utah. I'll go buy eight units in Ohio. Cash flow, thousands of dollars instead of hundreds. It's a dream. Easy peasy. Right? But yeah, let's talk about. So it sounds like the duplexes actually did turn out pretty straightforward and it was like awesome. What happened with the 4 Plex that made it a headache. How long has that headache been going on and has it been like any of it rented to self sustain or are you just bleeding this whole time?

[B]

Yeah. So something you don't hear about from other investors is how long it actually takes to take a house or a property that needs work and actually stabilize it. Plan on keeping it for a long time.

[A]

Yeah.

[B]

And how expensive it is. So I was like, oh, this house looks, this property looks great. Like this is. These are the market rents, blah blah, blah.

[A]

And it was vacant at the time of purchase when you bought it wasn't.

[B]

It wasn't vacant. I wish it was vacant honestly, because the tenants freaking sucked for the first while. And I was trying to keep most of them in there that were paying rent because. To make it self sustaining, like you said, like to at least cover the mortgage while I did renovations on the other units. But, you know, it. Tenants don't like to be kicked out, and they don't like to. They don't like people working on their apartment while they're living there. So these are just mistakes that I made while I was going through this. We had. There were squatters in the basement at one point, and that was a big. That was a big mess because they were like endangering the tenants. And it took forever to get them out of there. The basement flooded at 1.

[A]

How did you get them out of there? Did you have to, like. Because Ohio is not the most landlord friendly from my understanding. It's not the worst, but it's not like Texas where you bring a gun and they're gone. Like. Like how. How did you get the. The squatters out? What was that process like?

[B]

It wasn't that hard, actually. We kind of just. They had like mattresses in the basement and all this stuff. And we just threw all their stuff away, cleaned it out and put no trespassing signs. And.

[A]

And how are you doing that? Are you flying out to Ohio and doing this by hand? Are you like hiring a property manager who's doing the actual physical.

[B]

No. So I have. I've had property managers, which is another aspect that I made a lot of mistakes in. So I've. In Ohio, I've fired, I think, three property managers. Right.

[A]

It's so hard to find good property managers.

[B]

Yeah. I mean, you can't have too high of expectations because nobody's going to take care of your house like you would, you know.

[A]

Right.

[B]

But you at least want somebody that's gonna collect rent on time and if it's not on time, evict the tenant, you know?

[A]

Right.

[B]

So I had the first. I had one property manager. I couldn't get a hold of them for like two months, and I wasn't receiving rent. And they finally got back to me and they were like, hey, sorry, I just forgot about Erie property. Honestly, we just have so much going on. So I fired him because I was ridiculous. And I had another property manager that they just. They weren't making any progress. Like, I kept asking them to do things. I asked them to evict a tenant, and they just weren't doing it. So I fired them. I got a new one. And they. We finally have things like moving along with that fourplex.

[A]

But that's who is doing the physical, like, pulling the mattresses out, putting, you know, the do not enter signs and locks and stuff like that. Is a local property manager. Yeah.

[B]

And I mean, they have handyman and, you know.

[A]

Right. But they're, like, over or whatever.

[B]

Yep. So, yeah. So this one, I like them because they're responsive. That's probably their biggest plus. Sure. So I can call them and get. And get an answer kind of thing. So, yeah, property managers are probably the most important piece of buying a rental property, especially if it's not local to you. Yeah. And I wish I would have done more due diligence on that aspect. Right. Because I have a property manager in Cedar City in southern Utah for our rental properties here locally. And I kind of lucked out. Like, I got a recommendation from my mentor, and that property manager is awesome. Right. Like, they just did a really good job. So I. I just assumed, just naively, that everybody does their job correctly, you know, and that all property managers were equal, which is not the case.

[A]

No. So. So. So you had a headache with property managers. You had some squatters. Now you're trying to fix the property up, I assume, to get higher rents. Is that why you're wanting to pour money into fixing it up? And so the tenants aren't stoked about it because they don't want to pay higher rents and they don't want to live in a construction zone. Is. Is that kind of where the conflict came in?

[B]

Yeah, pretty much. Once I had. Once my property manager was, like, quick to post notices if somebody was late on rent. Like, you know, we got a couple tenants out evicted, like, within a month. It was just so easy. And then those units, we just remodeled them, and now they're rented for a thousand bucks each, you know, so it's.

[A]

How much were they renting for before the remodel?

[B]

Like, 500 bucks.

[A]

Okay, nice. So, yeah, definitely double your. How much did it cost to remodel a unit? I'm just. Essentially. Because it's like you're doubling your cash flow, but at what. What expense?

[B]

So it's expensive. This is the other part that, like. Yeah, I. I just didn't plan ahead for it, I guess, But I bought these houses with basically no money out of pocket. Because it came from the 1031 exchange. Right, right. So I was like, okay, I have these properties now, and for those that.

[A]

Aren'T familiar, when you do a 1031 exchange, you don't ever see a dollar of that. Like, that's part of the process. Like, legally you. None of that goes into your bank account. It's. None of it's cash that you can go spend on stuff or else you have to pay taxes on it. So it all just goes from this property into acquiring the new property, but you never see a penny of it and can't touch it or use it. So like you said, you're virtually, you know, no money out of pocket. But now you've inherited this thing that does have expenses.

[B]

Exactly.

[A]

That you can't use the 1031 to cover.

[B]

So I always wonder now when I see like people post on social media that they bought a property with $0 down, I always wonder like, okay, like, but how much is it gonna cost now that you own the property? Right. So I was 100%.

[A]

I'm just looking at this storage unit, house, warehouse deal. And like, it's. It's a wholesale deal. It's pretty cheap for everything that's coming. But it's like they're trying to sell it for like 250 or something like that, but it'll cost more than that in repairs to get it stabilized. You know what I mean? So it's like the purchase price, you know, it's not. Just cause it's low doesn't mean it's a good deal or below value if you have to pour more and more money into. And then it's harder to finance the rehab costs long term than, you know, you. Cause you can finance the property long term, but financing the rehab long term is a little more tricky. So, yeah, that can cost you a lot of capital.

[B]

Yeah. So it's just expensive. So I. Each unit has cost me about between 10 and 15,000 each to remodel, which.

[A]

Is still an awesome return though, because we owe 500 times 12. You're getting an extra 6,000amonth. You know, you divide that by the 15,000 you put into it, that's still a 40% cash on cash return. Where if you look at the straight investment numbers, it's like, hell yeah. Like that's worth getting, you know, spending 15,000 to get an extra 500. But it's still. That's. I mean, that adds up. That's $60,000 cash out of pocket for all four units, you know.

[B]

Yeah. Which I didn't plan for. Right. Like I said, I just assumed this. How this fourplex was just going to rent out. I was just gonna say, hey, rents are higher now and then. It was just gonna work out perfect. So I do. I was like, dang. So all. All my commissions For a while, I was just like, dang, I made this commission. I sold this house. Now I have to pay for this property. I could have done it different ways. Like, I could have borrowed money. I could have used a line of credit or something. You know, things like that.

[A]

Sure.

[B]

But I just. Even though I've accumulated all these mortgages and all these debts, like, I still don't like debt. So if I can pay for the remodel out of pocket and not be, like, adversely affected, really, then I'll do it.

[A]

Well, I bet you've now got a lot of equity in this place. I assume it's probably worth a lot more than when you bought it. So not only are you getting this 40% cash and cash return by doing the repairs, but, I mean, how much more do you think the property is worth now that you've fully remodeled it?

[B]

Yeah, I mean, I still have to remodel one unit, but once it's fixed up, it should be worth between like 425, 450,000.

[A]

And you bought it for how much?

[B]

265.

[A]

Yeah, so it's like, you know, a little bit of appreciation probably from market and stuff, but. But, you know, you rehab it, it's like, yeah, you're spending that money. But like I like to say, you know, every month, dollar you put into real estate, like, it's not gone. Like, every dollar you put in that is at least becoming a dollar in equity or 2 or $3 in equity within your case here. And so it's like, yeah, it might hurt a little bit, like, oh, there goes all my money. But it's not gone. It's sitting there in this equity bank account, you know, this equity savings account that is just waiting for you to roll it into the next one or cash out, refi or whatever you're gonna do, do a big line of credit on it, use it as collateral, leverage to buy something else. Like, there's so many ways to access it that it's. It's like the money's still there. And I love that concept with real estate. It's like, yeah, you know, invest till it hurts, but the money's not gone. And so you're not going to regret it, right?

[B]

Yeah, no, it's absolutely true. I think most of the horror stories I've heard from people that, you know, those people that tell you don't invest in real estate because, oh, I bought a rental property one time, and it was a nightmare. Like, I. Everything was breaking all the time, and tenants were tearing up the House. But it's. They. A lot of the times these people didn't own the house long enough or they couldn't hold on to it long enough to see the actual benefit of the house.

[A]

Yeah.

[B]

Right. So they, oh, you bought the house. Something always breaks immediately, right? So it's like, oh, I need to replace the furnace, needs a new ac, needs a new roof all of a sudden within the first year. So now you're, you feel like you're bleeding cash. Right. So you feel like you're just spending all this money and it's a money pit and you're gonna lose this money forever. But if that person could just realize, okay, I just, I have a new roof now. I have a new furnace now. Yeah, I have a new AC unit now. Those are gonna last 30 years for the roof, 10 plus years for the other things.

[A]

Yeah.

[B]

If I can just keep this house for like a few more years, it's probably gonna go up in value. I'm probably gonna be thankful I kept it. Right.

[A]

For sure. Yeah. No, that's awesome. I know. I appreciate you diving into kind of like the, the non pretty side of it, but I feel like I learned so much from, you know, because, you know, there's a lot of people like wanting to invest out of, out, out of state. If they live in these higher markets where there's not really cash flow. I mean, it's possible, but it's very difficult to find. And so like, oh, if I go buy out of state, it's like, okay, well that's great. Here's some of the things you're going to deal with. You know, can you find a good property manager? That'd be the first thing I'd say. If someone's like, hey, I want to buy out of state, what market should I go to? I'm like, do you have any connections to a quality property manager that you trust? Like if you do, like, that's the market you should go to. Like, that's, you know, like that will be a differentiator over anything else. You know, if you're trying to, if it's a cash flow market or whatever, over some perfect market, even if you just have feet on the ground, someone you trust and you know, family or friends or whatever that has some connections there that can be more powerful than some perfect metric on a spreadsheet, you know?

[B]

Right. Yeah, absolutely. If you, if you know somebody, it's really not that much scarier in my opinion than buying something locally to you, especially if you're new. Because if you're new to investing. It's like any, any purchase is going to be terrifying. You just, you're just afraid you're gonna make a big mistake. But if, yeah, yeah, if there's a market you can afford that will cash flow, that it looks like a good deal and you bring other opinions in. You ask other investors and they agree. And you have a good property manager like you, you have a pretty good foundation. You have a pretty good chance of succeeding with that property. Right.

[A]

So, so, so you've, you bought the three homes in Utah, you sold one, rolled it into the eight places in, in Ohio. And at this point you've only paid the 5% down on three homes, you know, besides the 1031 exchange, you know, so, I mean, which is funny. It's just like you're able to acquire so many units with such little down. And obviously you bought at a good time where you got that awesome appreciation of, you know, six figures buying in Utah during the pandemic or right before, whatever, you know, but, but that's super rad. So, so did you keep buying out of state or what was your focus after some of the winds and headaches of, you know, the Ohio deals?

[B]

Yeah, so I kind of, I kind of stopped there. I bought. Where am I now? So I have. So right now I have three houses in Cedar City, Utah. One of them is a duplex, and then my primary residence in Santa Clara, Utah, and then the eight units in Ohio. And now I've kind of shifted a little bit. I'm like, do I really. I don't know. I've kind of paused mainly because of that fourplex. Honestly, I, I kind of want to get it stabilized and rented before I try to buy more. I've done a few deals locally here in St. George. Like I bought a house subject to recently and I sold it on seller financing to, to another end buyer. So that, that was cool. That was. You mentioned you were talking about skill sets earlier. That's just like another realm of real estate that I've recently paid money to learn how to do. And it's. And it's paid off. Right?

[A]

That's awesome.

[B]

And so now I really like looking locally still because I, I think Utah is just a really cool market and I, I like being able to drive to a house and look at it. And once those houses in Ohio are all rented and stabilized, my plan is I might even sell a couple houses, pay them off or vice versa. You know, there's just like we talked about before, like now I have all these Trading pieces. Now I have, like, I have a lot of options now, so I can, you know, just decide. My, My opinion changes what I'm going to do next pretty much every day.

[A]

So, yeah, there's definitely a lot of options. Well, that, that's sweet, man. Like, I, I like seeing the good, the bad, and the ugly of it. There's so many different ways to do it. One of the most important thing is that you did do it, though. You know, you won because you were taking action and you didn't know you were going to be coming out as a king because you bought during a pandemic. None of us knew what was going on. You know what I mean? It was kind of like, you're actually a little crazy, but whatever, you know what I mean?

[B]

And.

[A]

And, you know, but then you kept taking action. You bought another one, and you bought another one, then you bought the floorplate, you know, and you just kept taking action. And. And it ends up working out because there's so many different ways to pivot and, and move and do things. And then, like, say you, like, I love you. All the different. What do you call them, the different playing pieces or trading cards or whatever, you know? Yeah, it's, like, cool. I can just move this around and do this and move that around and do that. Especially with, like, money. Once you start to realize if money is a game, you're like, oh, like, I can just take this debt, roll it into that debt, or pull out equity over here and go put that as a down payment over here. And you never even spent any. You're never even seeing this money, and it's all this, this game. But you, you, you want the playing pieces. You want more pieces in the game, whether that's houses or equity or whatever it is, because then you can stay in and collect more and more and more, which gives even more and more power and leverage, which is just awesome.

[B]

Yeah, no, I like that you. You think of it as a game. Once you get past the big numbers, it just becomes less scary. Right. So you. One of the biggest things people tell me they're scared of is they see a house and it's $400,000 or whatever, and that's, you know, that's an amount of money somebody most people have never seen, especially not in their bank account. Like, it's just, it's intimidating, right, to buy these big, expensive things, a house, and hopefully making money on it. Right?

[A]

Yeah.

[B]

So it's. It's just something you kind of have to, with practice, get better at and Become less afraid of.

[A]

Yeah, you really do have to, like, shift your paradigm a little bit. I was talking to a buddy of mine. He's like a young kid. He's. I think he's 23 now, but I've kind of mentored him through, like, sales and real estate and stuff like that. And. And I was talking to him like, he bought a house. He's been doing well. I mean, I think he owns, like, three or four unit. No, probably no five or more units already. And. And I'm like, dude, when was the last time you bought a house? And he's like, oh, it's like, been about a year because we've been remodeling this one and this. That. I'm like, you need to buy another house. And he's like, well, maybe like, you know, we'll get this one done. I'm like, dude, you. You need to not look at it like it's a big deal. Just go buy another one. And he makes a lot of money. He's doing really well. He's fine. But I'm like, buy another one. Buy another one. Like, it needs to just not be. This stigma of. This is the biggest decision in the world. And he has all the keys, he has the calculators, and we. He knows how to do it safely. I'm not just go say buy blindly. He knows how to do it safely. But even then, sometimes people still hold on to this concept of, like, well, that's kind of a big deal, right? I should maybe do like, one every couple years or one even every year. It's like, no, go buy another one. And then you found a good deal on that. You have extra money, dude, you need to go buy two right now. And he was just like, what happened? Like, yeah, just. If you need to make. It's not a big deal. You need to destigmatize and just be like, oh, I just need to be buying, buying, buying, buying. Even though, yeah, you're 23 or whatever, if your situation allows it, just collect assets and remove the stigma of it being a big deal. Especially once you've learned how to buy safely and, you know, leverage debt correctly. Once you learn the skills, it's like, remove the stigma and just go harder.

[B]

Yeah, I like that. That's actually something I've struggled with, like, to think bigger. I talk to people about what I've done, and they're like, you know, most people I talk to are like, they can't fathom it. But to me, I, you know, I. I look at people that are, like, doing. Buying 10 houses a month. And it's unfathomable to me still, you know, Like, I can't comprehend how that happens. So, you know, it. It helps being around the right people. Right? So that's cool that you were noticing that, telling him, like, you have the money, you can buy another house, because.

[A]

Well, the funny thing is, he bought a house that weekend while I was visiting him as I was like, on his butt. I'm like, a house. Buy a house. Like, okay, this one came on through a wholesale deal. He put an offer in. He closed on it, like. And it's like, there you go, dude.

[B]

That's awesome.

[A]

He's like, we might not have to have you. He's like, we might not allow you to visit that often for buying houses every time you visit. So.

[B]

But, yeah, if you have people in your corner like, that are supporting it, then it makes it way easier, right? Like, yeah, I. I have a. I'm partnering for the first time right now on a house in Cedar City that we're flipping.

[A]

Cool.

[B]

And honestly, if it was just me, like, I found the deal, and I was a little stressed out because I had a lot of the things going on. I was like, dang, I don't know if I can pull it off, but I think it's a good deal. So for the first time, I just asked for help. I was, you know, willing to give up 50% of the deal, and I found out I have a partner in Cedar City now, and he's pretty much handling it for me. Right. So I was like, dang. You know, it's just if you have people that you can ask, people that you feel comfortable, you know, it just makes it easier and less scary. You know, I think one of the big mistakes new people make is they're afraid to partner up because they somehow can't justify giving up part of the deal or part of the profit. Right?

[A]

Yeah.

[B]

So it's just. It just makes so much more sense to ask for help, because I wish I had more help. Everybody does.

[A]

Well, and it's like, you know, a part of a piece, a part of a, you know, pie is. Is a lot more than, you know, 100% of nothing. You know what I mean? Like, 50% of something is a lot more than 100% of nothing. And. And if it's like, if that's what's holding people back, it's like, that's a waste. And then the. The confidence is the real thing. You know, once you've had the reps, and you're like, oh, now I've bought a house, even if it was a partner deal and you only own half of it, then you buy another one. Oh, now I've done two. Three. You gain experience, you gain confidence. You have more leverage moving parts to do things the next time. And it's like, there's so much that comes from just reps. Whatever it takes to get those. Whether you're buying cheap places or partner deals, they don't all need to be these big, beautiful Airbnbs on the moon, you know, they can just be little random things. And you can learn and grow by doing it, you know?

[B]

Yeah. And as you're doing it, your paradigm just starts shifting on its own.

[A]

Yep.

[B]

So you do one house, and then you're like, okay, now you do one deal at one time, you finish it, then the next time, oh, maybe you have two deals approach you at the same time. It's less intimidating. Right, exactly. Your baseline just. Just goes up the more you take action and then just do stuff. So I really have enjoyed that part of this investing. Right.

[A]

I love it. Alex, we're gonna roll into our final four, but if people want to follow you or do deals with you or use you as an agent, what's the best way for people to get in touch with you?

[B]

I have an Instagram King Mario, Rei, or you can text me. My phone number is 435-339-7664.

[A]

Awesome. There you guys go. Listen to that again. Write that down. Hit him up and see what you can do. All right, final four questions. Alex, question number one. What's your dream deal or deal you'd hope to tackle eventually someday?

[B]

My dream deal, I would love to just pay off my primary residence, and that's partly a thing between me and my wife. Like I said, we. We've taken a lot of risks and actions, but we also don't really like debt. And a few of the people I've learned from, they found a way to pay off their mortgages. So we just want to have. Have properties and not have any debt.

[A]

There you go. All right, question number two. What's been one of the most pivotal books you've ever read or one that interests you right now, recently that you're reading?

[B]

Yeah. Reach dad. Poor dad is probably a popular one that you hear from a lot. That one, I read that, like, when I was first beginning to think about investing. I really like Scott Trench's book, Set for Life by Scott Trench.

[A]

There we go. Set for Life. That's right. Love it. That's a good one. All right, what is one of the most. And maybe we already covered this, but what's one of the most expensive or interesting mistakes you've made in real estate investing?

[B]

If I were to narrow that whole fourplex experience into one mistake, it would probably be not vetting my property manager. That cost me a lot of money, not just. Yeah, that would be it.

[A]

There we go. I always say that the VIP of remote investing is the property manager, and you're resounding that answer, so. I love it, man. All right, last question. What does Alex like to do to just enjoy life?

[B]

I love playing pickleball. I love backpacking, hiking, and just hanging out with my wife and my dogs.

[A]

I love it, man. Well, sweet. Well, appreciate your time. Thanks for being on the show. Any last words or thoughts you want to share with everybody?

[B]

Nope. I think I'm. I think I'm good. I. I just hope people feel comfortable enough to reach out to people like me and you. Like, I. I love answering questions, and I don't want people to feel intimidated to, like, reach out if they're starting.

[A]

Out, so I love it. Dude, that's awesome. I was just on a. This group performance training call today, and what one of the people. One of the attendees was asking, like, well, like, how do you find people that are more experienced to be able to, like, help you? Like, I feel like I'm bugging them and this and that and. And the performance coach asked. He's like, well, how do you feel when those people that know less than you reach out to you? She's like, oh, I love it. I love. I feel like, you know, proud of myself for knowing what I do know, and I love being able to help them. He's like, yeah, that's how the people above you feel, too. Like, if you come with an attitude of gratitude and you're just like, energy and excitement to want to learn and you're serious. Like, people love to help other people. And that just reminded me of when you were just like, dude, it's awesome. Like, reach out. I'd love to be able to help people. And it's so true. So, yeah, it's definitely an abundant game where I don't know what it is about real estate, but people just love to share abundantly, so don't be afraid to reach out.

[B]

Yeah, I like that.

[A]

All right, well, sweet. Without any further ado, this is Joe Jensen signing off for the Real Estate Investing School, reminding you you're never too young to get into the game.