Real Estate Investing School Podcast

Episode 170: REAL DEAL: How to Buy Your First Property as Newlyweds

Date: June 27, 2024
Host: Brody Fawcett
Guest: Tyler Bennett

Episode Overview

This episode of the Real Estate Investing School Podcast’s “Real Deal” series explores how newlyweds Tyler and Shea Bennett bought and “house hacked” their first property near Utah Tech University. Host Brody Fawcett (Tyler’s brother-in-law) dives deep into their creative financing, DIY renovations, partnership structure, and the mindset for couples getting started in real estate. The conversation is packed with actionable advice for first-time investors, especially young couples navigating their first deal with limited resources.

Key Discussion Points & Insights

1. Context and Background

• Life Stage: Tyler and Shea had been married 1.5–2 years, living in a basement apartment and expecting their second child.
• Motivation: Wanted to live close to college campus (Utah Tech, formerly Dixie State) to tap into high rental demand, with an eye toward future income and flexibility.

2. The Deal: Property Details

• Finding the Deal
  • Spotted a “For Sale By Owner” sign around the corner from their rental ([03:01]).
  • Couldn’t reach seller—Brody’s mom persisted and established contact, leveraging relationships to secure the deal.
  • Seller had higher cash offers but chose Tyler & Shea due to emotional connection and persistence:

    “I know for a fact he had higher offers, all cash... because he had met you guys, because he had met my mom... he was emotionally attached to that, and he did a huge favor." — Brody ([14:01])

• Purchase Overview
  • Purchase Price: $450,000 ([07:54])
  • Property: Split-level single-family home, 4 bed/2 bath, detached garage ([03:01])
  • Remodeled before purchase; main home in “good shape” ([05:33])

3. Strategy: House Hacking and Creative Use

• Initial Goal: Live in one unit, rent the rest.

  • Chose split-level for flexibility—divided into two units at the stairs.
  • Added a bedroom and kitchen in the basement (converted laundry room) ([05:33])
  • Later added a third unit by converting detached garage:
    • Major expense: new garage roof, running plumbing, electrical work, framing walls ([07:21], [11:43])
    • Did much of the work themselves with family help:

      “We did a lot of it by ourselves... your brothers are handy, so they taught me a few things.” — Tyler ([07:21])

• Rental Strategy:

  • Targeted college students/newlyweds as renters ([04:34])
  • Flexibility to rent by the room if needed.
  • Preference has been to rent to couples or smaller households ([16:05])

• Numbers:

  • Mortgage: Just over $2,000/month ([08:00])
  • Current Rent Collected (while owner-occupying): $2,500/month ([08:16])
  • Future Rent (after moving out): Estimated $1,700–$1,800 additional, creating strong positive cash flow ([08:32])
  • Total Rehab/Conversion Costs: ~$40,000, mostly on garage conversion ([11:43])

4. Financing & Partnerships

• Loan Used: FHA, 3.5% down payment (~$15,750) ([05:33])

  • Tyler & Shea paid full down payment; Brody’s parents (in-laws) contributed real estate commission to closing costs, with all further expenses split 50/50 ([08:48])

• Needed Co-Signers:

  • Young with no credit or work history—Brody’s parents co-signed, becoming equity partners:

    “We split all the costs 50/50 and we've been doing this together, which has been nice.” — Tyler ([07:26])

• Benefits for Both Sides:

  • Allows young buyers to qualify for owner-occupied loan with low down payment.
  • Partners split costs, risk, and upside.
  • Parents gain equity and passive income with minimal up-front investment ([18:58])

• Quote on Creative Structure:

  “That’s partnerships in general... it literally is a win for you and it’s a win for them and it’s, it’s amazing.” — Brody ([19:55])

5. Forcing Appreciation

• Conversion of Single-Family to Three Units ([05:33], [07:21]):
  • Strategic use of split-level layout and detached garage.
  • Added kitchens, bedrooms, laundry, and maximized rentable space.
  • DIY approach kept costs down (used friends, family, inexpensive materials).
  • Significant cash flow potential and increased property value, with strong renter demand due to college proximity.

6. Negotiation and Seller Relations

• Relationship and Persistence: Emotional connection and communication convinced sellers to choose them over higher, all-cash offers ([14:01], [14:54]).
• Flexibility with Sellers: Initial contract at $480,000, but appraisal came back at $450,000. Seller reduced price because of goodwill.

  “We wouldn’t have been able to do it if they didn’t drop it...” — Tyler ([14:54])

7. New Deal Preview

• Tyler & Shea just closed on another property (not main focus of episode)—used seller financing with a 5% down payment, interest-only payments for a year, and a 15-year balloon (“30-year amortization, 15-year balloon”) ([01:37], [09:47], [09:51]). Demonstrates their growing confidence in creative deal-making.

8. Mindset and Advice for Couples

• Communication and Alignment:

  • Spouses should both be engaged, exposed to education, and set shared goals:

    “It’s what’s helped us so much... One motivated person as opposed to like a...power couple dual front. It changes everything.” — Brody ([25:16])

• Being Willing to Take Action:

  • Jump in and problem-solve as you go. You can always back out if the numbers change during due diligence ([22:22]).
  • Lean on partners/spouses with complementary strengths (Tyler more passive, Shea more aggressive/persistent with follow-up):

    “Sometimes I’m just along for the ride and trying to keep up…” — Tyler ([22:22])

• Creative Sourcing:

  • Telling people in your network you’re looking to buy brings you opportunities:

    “Just put it out there. Tell people you’re...wanting to buy a house, and people will bring you options, whether they’re good or bad.” — Tyler ([26:59])

9. General Takeaways

• Creative financing, partnerships, and DIY can put home ownership and investing within reach for young, resource-light buyers.
• Emotional connection with sellers—and persistence—can overcome competition and even compensate for lower offers.
• Buy strategically (close to a college, flexible layout) to maximize long-term cash flow and appreciation.
• Leverage family for co-signing and skills, but structure partnerships thoughtfully for shared upside.
• Couples should educate themselves together and communicate openly to align on risks, goals, and methods.

Notable Quotes & Memorable Moments

• “We wouldn’t have been able to do it. We just didn’t have the credit history…being first time homebuyers gave us that 3.5% [down payment] which makes it doable…”
  — Tyler ([00:00])

• “You and my dad spent some late nights over there, I know that for sure.”
  — Brody ([07:21])

• “If you can partner to get started I mean, it’s awesome. So put us three years ahead of where we would have been.”
  — Tyler ([20:22])

• “A lot of times you just gotta jump in and try and figure it out...if it doesn’t end up working ... you can always back out... Just trying to jump in and figure it out as you go, I mean, that’s something I feel like you’re good at. Your mom’s good at. Michelle is just a go getter.”
  — Tyler ([22:22])

• “You can create these win-win scenarios because of that...[Sellers] make decisions emotionally all the time. We probably should make them more logically than emotionally, but…there’s nothing wrong with that.”
  — Brody ([15:18])

• “One deal is setting you guys up and it’s paying for... the rest of your life. And you do a few more, you’re financially free.”
  — Brody ([28:50])

Important Timestamps

• [03:01] – Spotting and securing the FSBO deal
• [05:33] – Property specs, initial rehab plans
• [07:21] – DIY renovations and cost-sharing structure
• [08:00] – Mortgage and rental numbers
• [08:48] – Down payment and expense split
• [11:43] – Rehab costs and garage conversion
• [14:01] – How relationships won them the deal over higher cash offers
• [14:54] – Seller drop in price after appraisal due to relationship
• [18:57] – Details on partnership, co-signing, benefits to both parties
• [20:22] – How creative partnerships put them years ahead
• [22:22] – Taking action, problem-solving, spouse dynamics
• [25:16] – Spouse alignment & education
• [26:59] – Networking brings deal flow
• [28:50] – The power of one good deal for long-term wealth

Where to Find Tyler

• Instagram: @tylerbennett_realtor ([28:36])

This episode offers a masterclass in creative first deals, partnership structure, cash flow maximization, and the importance of teamwork and networking for newlyweds—or anyone—getting started in real estate investing.