4 Rentals in 7 Years with LOW Money Down (5% - 10% Down!)

Summary

Real Estate Rookie: Episode Summary

Podcast Information:

• Title: Real Estate Rookie
• Host/Author: BiggerPockets
• Episode: 4 Rentals in 7 Years with LOW Money Down (5% - 10% Down!)
• Release Date: December 18, 2024
• Hosts: Ashley Kerr and Tony J. Robinson
• Guest: Chris Young

---

1. Introduction

In this episode of Real Estate Rookie, hosts Ashley Kerr and Tony J. Robinson welcome Chris Young, an accomplished real estate investor who has successfully expanded his portfolio to four properties in seven years with minimal down payments. They delve into Chris's journey, strategies, challenges, and insights into building a sustainable real estate business focused on short-term rentals.

---

2. Chris's Real Estate Journey: From First Property to Short-term Rentals

Ashley Kerr kicks off the conversation by asking Chris about his initial foray into real estate.

Chris Young shares his early interest in real estate, influenced by his grandmother who owned rental properties. Despite having an engineering degree and an initial career in engineering, Chris sought a fallback by obtaining his real estate license. This decision provided him with essential knowledge about property acquisition, leading to his first purchase in December 2017—a primary residence in Los Angeles, purchased with just a 5% down payment.

[00:58] Chris Young: "I always knew I kind of wanted to end up in that space somehow."

Over the years, Chris transitioned from a long-term rental to discovering his passion for short-term rentals, which better aligned with his entrepreneurial spirit and desire for a more hands-on investment approach.

---

3. Developing a Niche in Short-term Rentals

Initially, Chris and his wife converted their primary residence into a long-term rental, practicing sweat equity by handling renovations themselves. However, seeking a more engaging and controlled investment led them to explore short-term rentals during the COVID-19 pandemic.

[04:46] Tony J. Robinson: "I think long term rentals are great passive income. But I got my real estate license because I wanted to be active in the space again."

Chris explains that short-term rentals allow for greater interaction with guests and provide opportunities to build unique experiences, drawing from his background in hospitality and client interactions in his engineering job.

---

4. Strategic Market Selection: Choosing Big Bear and Sequoia National Forest

Chris emphasizes the importance of strategic market selection in real estate investing. After attending BPCON in 2022, he and his wife evaluated various markets based on occupancy rates, average daily rates (ADR), and competition levels. They ultimately selected properties in the Sequoia National Forest area, a less saturated market compared to popular spots like Big Bear.

[16:47] Chris Young: "What would be a market that maybe we know a little bit something about that other folks don't."

Chris highlights the qualitative aspects of market selection, such as personal affinity and understanding of the area, which enhanced his ability to provide exceptional guest experiences.

---

5. Overcoming Challenges: Road Washout and Community Relations

Shortly after acquiring their cabin in Sequoia National Forest, Chris faced a significant setback when unprecedented winter storms in March 2023 washed out half of the main highway leading to the property. This natural disaster severely impacted their ability to host guests, resulting in a gross revenue of nearly half of their projected earnings for the year.

[37:12] Chris Young: "So it was basically like that until maybe July of that year."

Despite the financial strain, Chris and his wife maintained a positive relationship with the local community by demonstrating respect and reliability. Their reputation for maintaining clean properties and considerate hosting practices earned them the trust and support of their neighbors, which proved invaluable during the crisis.

[39:54] Chris Young: "We have a great reputation up here for how we treat grass and, and just the experience you provide and how clean you keep your properties."

---

6. Operations and Guest Experience: Creating Memorable Stays

Chris attributes much of his success to his meticulous approach to guest experience. By anticipating guests' needs and addressing potential issues proactively, he ensures a memorable stay. Examples include:

• Backup Entertainment: Providing games, DVDs, and a library area to accommodate potential internet outages.

  [43:20] Chris Young: "We make sure that we have games in the basement downstairs, we have a pretty large game room, which is really uncommon in this mountain market."

• Thoughtful Property Layout: Designing spaces that cater to various guest activities, enhancing their overall experience.

[42:28] Chris Young: "Just being thoughtful in that extra way."

Chris also discusses plans to add amenities like backup generators and continually reinvest in property improvements to stay competitive.

---

7. Advice for Rookie Investors

Chris offers valuable advice for those new to real estate investing:

• Engage with Lenders Early: Understanding your financing options and getting pre-approved can streamline the property selection process.

  [32:22] Chris Young: "Highly encourage you to talk to multiple lenders and mortgage brokers to get a better understanding of what you can afford."

• Set Realistic Budgets: Knowing your financial limits helps in selecting appropriate markets and properties.

• Leverage Partnerships: Collaborating with family or equity partners can alleviate financial burdens and provide additional support.

  [34:17] Chris Young: "Our first foray into partnerships was actually with family members."

• Continuous Learning: Stay informed about market trends, enhance guest experiences, and adapt to changing conditions to maintain competitiveness.

  [44:03] Chris Young: "Always constantly learning. Be a student of the game at all times."

---

8. Conclusion and Contact Information

As the episode wraps up, Chris encourages listeners to connect with him for further insights and updates on his ongoing projects.

[46:01] Chris Young: "You can reach out on Instagram at chrisyoungrei right now. We're working on a cabin that's under rehab that's pretty close to our existing cabin right now."

Hosts Ashley Kerr and Tony J. Robinson thank Chris for sharing his experiences and insights, highlighting the episode as a valuable resource for aspiring real estate investors navigating the complexities of building a rental portfolio with minimal upfront investment.

---

Notable Quotes:

• Chris Young [00:58]: "I always knew I kind of wanted to end up in that space somehow."
• Tony J. Robinson [04:46]: "I think long term rentals are great passive income. But I got my real estate license because I wanted to be active in the space again."
• Chris Young [16:47]: "What would be a market that maybe we know a little bit something about that other folks don't."
• Chris Young [39:54]: "We have a great reputation up here for how we treat grass and, and just the experience you provide and how clean you keep your properties."
• Chris Young [32:22]: "Highly encourage you to talk to multiple lenders and mortgage brokers to get a better understanding of what you can afford."
• Chris Young [44:03]: "Always constantly learning. Be a student of the game at all times."

---

This episode provides a comprehensive look into Chris Young's methodical approach to real estate investing, emphasizing strategic market selection, proactive problem-solving, and exceptional guest experiences. Aspiring investors can draw inspiration and actionable strategies from his journey to build and sustain a successful rental portfolio with low initial investment.

Transcript

[Ashley Kerr]

Can you turn a risky real estate investment into a success? Even during the Airbnb bust and the 8% interest rate, we're going to find out today. In 2022, there were historic storms and high interest rates, but we're going to talk about navigating many of those things with Chris today, our guest who has turned his real estate portfolio into a successful short term rent. This is the Real Estate Rookie Podcast. I'm Ashley Kerr and I'm here with Tony J. Robinson.

[Tony J. Robinson]

And welcome to the podcast where every week, three times a week, we bring you the inspiration, motivation and stories you need to hear to kickstart your investing journey. And I'm super excited today to have Chris Young on the Real Estate Rookie Podcast with us. Chris, welcome in, brother.

[Chris Young]

Thanks so much for having me, guys. Really appreciate it.

[Ashley Kerr]

Chris, let's start off with why you chose real estate. How did it come into your life?

[Chris Young]

Oh, man, that's a, that's a tough question. So growing up, I mean, I think I was always interested in real estate. My grandmother actually immigrated to the country and owned a couple rental properties as I was growing up, long term rentals. But I was that kid who, you know, was in college and I should have been studying for exams, but I was on Zillow looking at properties and saying like, oh, can I find a good deal? You know, had no money, no experience, but, but always knew I kind of wanted to, to end up in that space somehow. And so fast forward a few years, graduated college, got an engineering degree, got into engineering and my first job I wasn't super happy with. I think I ended up realizing it was the company, not necessarily the job, but as a backup, what I ended up doing was I ended up getting my real estate license. So I wanted to make sure that, hey, if I'm going to stay in this job, I don't want to feel stuck, right? So I wanted to give myself an out, a second option. So hey, if I give myself some time in this career and it doesn't work out, I know I could go into this real estate thing and do well. I still have my license, don't really use it, but what it gave me was the knowledge to, to understand the process of buying a property. So, you know, I bought my first property which was a primary residence in 2017, in December of 2017. And fast forward now we've got going on four properties now. And you know, I've really found, thanks so much. Really found kind of our niche with short term rentals that I just absolutely love.

[Ashley Kerr]

So, and how did you start to develop that niche of short term rentals? Like, what made you pick that strategy specifically?

[Chris Young]

So our first property, like I mentioned, was our primary residence. It was, you know, the typical worst house on the best block that you could afford. I mean, we were 25 years old and bought a house that was half a million dollars in la, which LA is one of the most expensive real estate markets in the country. A lot of people thought maybe it wasn't a great idea. You know, our mortgage was going to end up being almost twice what our rent was. So it was a big major expense. But, you know, so there wasn't as much, you know, going out and planning fun vacations. But instead it was, you know, how do I get the carpet out of the bathroom in this place? So we did a lot of sweat equity and, you know, turned that property into a long term rental. After having that property for about a year as a long term rental, you know, it did okay. And I just didn't feel like it was satisfying some of the creative side that I had, also the business side.

[Unknown Speaker]

Right.

[Chris Young]

I think long term rentals are great passive income. But I got my real estate license because I wanted to be active in the space again. I soon realized that I didn't want to be an agent necessarily. I think I'm a little bit too analytical to deal with hand holding for first time home buyers and things like that. That just wasn't my jam. But hearing about folks getting into this short term rental space and this is, you know, around Covid so 2020, 2021.

[Ashley Kerr]

Before you go on, I just want to make clear that your long term rental was too easy, that you needed to go into something else. Because I'm thinking of, myself included, all the people who invest in long term singing. You probably had the most perfect tenant. You didn't have to do any maintenance requests, they paid on rent and it was too easy for you and that's how you needed something else.

[Chris Young]

No, I definitely wouldn't go that far. I mean, we are lucky we still have the. And they've been pretty good. But I think I wanted to feel more control and kind of that entrepreneurship aspect. Right. I think there's something to short term rentals where it really is a business, right. That you're building, you're building an experience. And you know, growing up I worked in restaurants and kind of the guest experience and hospitality type of space. Even in my job now, I still deal with clients and with people. And that's one of my favorite parts of my job is the people I deal with. So with short term rentals, I wanted to be able to kind of get into a real estate space where I'm dealing more with people, spoke kind of.

[Tony J. Robinson]

More to what your interests were. And I want to talk about that transition to short term. But before we do, I just want to make sure I'm tracking. So you guys bought a property in Southern California. Did you initially live in it or was the goal initially from the beginning to run it as a long term rental?

[Chris Young]

Yeah, we initially lived in it. And so I guess it was kind of. We didn't know it at the time, but it was kind of like a live in Burr. Right. So yeah, we bought it, you know, 5% down. Conventional financing. We fixed it up over a couple of years. We refied and pulled all of our equity out essentially to move into a new primary. But we also had funds left over as a potential way to go into another investment.

[Tony J. Robinson]

So you said you bought it for about half a million in 2017. When did you move out and do the refi?

[Chris Young]

Yeah, so we moved out in December of 2021. So it was a couple of years. So we lived there for about four years.

[Tony J. Robinson]

Okay. And then like, what, what did that property appraise for in 2021 and how much capital were you able to access during the refinance?

[Chris Young]

Yeah, no, great question. So again, our down payment was probably 25,000. I think with the rehab, we ended up probably putting in about 35,000 over a couple of years.

[Unknown Speaker]

Right.

[Chris Young]

I mean, we moved in and didn't touch the kitchen. You know, it wasn't a, a get rich quick scheme or like, you know, oh, we're going to flip the whole property, then we move it. No, it was months and years of like, hard work.

[Unknown Speaker]

Right.

[Chris Young]

And just really kind of a lot of DIY, a lot of lessons learned. And so in December 2021, that's when we refied the property, appraised for 735,000. So we had 200,000 of equity appreciation. I actually wasn't super happy with that appraisal. I thought that was, that was undervalued. And yeah, that property is probably sitting at around 800, 810 in terms of value right now.

[Tony J. Robinson]

So appreciate you sharing those numbers. Yeah, the reason why I ask is because I think that is one of the best ways for a rookie to get started is to get into a property 5% down, put a little bit of sweat equity into it over the course of a year or two years, and then either convert that into a rental or sell it tax free to help you move into your next one. Right. And feel like we've interviewed a lot of people who've leveraged a similar strategy and it's a great lowcost way for rookies to get started today, especially as interest rates kind of fluctuate.

[Chris Young]

Yeah, 1000%.

[Ashley Kerr]

So let's move on to. You've done this live in Burr. Now you've got your renters and moving on to the next property.

[Chris Young]

Yeah, so we. That's our primary residence right now that we're going to be turning into a rental. Most likely we're considering selling it and just it being a flip.

[Ashley Kerr]

Did you kind of go about the same process looking for something that needed value add?

[Chris Young]

Oh, 100%. Yeah. Yeah. So our first initial property, even though we have renters in it right now, before we actually moved out and got renters in, I was actually in the process of adding an ADU on that property. So we had plans drawn up for it.

[Ashley Kerr]

Explain real quick what an adu.

[Chris Young]

Yeah. So an ADU is an additional dwelling unit and so that would create an additional income stream on the property so that we could rent out the main house, but as well create an additional dwelling at the back of the property and rent that out to another renter for additional income.

[Tony J. Robinson]

You said you started that process, you guys halted that process or.

[Chris Young]

We did. We did, yeah.

[Tony J. Robinson]

What's the thought process behind that?

[Chris Young]

The cost, I think for construction, I mean this was 20, 21. There was a lot of demand on contractors.

[Tony J. Robinson]

Lumber was like marked up 400%.

[Chris Young]

So there were a lot of things like that where we. And the laws are changing in California quite a bit as well now, where it's becoming a lot easier and a lot more affordable as well. And we were in a market where the laws were changing. We thought, okay, let's hold onto the property, we'll give it some time and maybe we'll come back to the ADU idea. But why not take that same chunk of money that we would use for the ADU and acquire another property? Because in California, it's a state that continues to appreciate like most states in the U.S. but if I have two properties that appreciate at 5% rather than just one at 5%, I'm going to have more wealth in the long term if I, you know, increase the number of properties I have, you know, at this phase of my career.

[Ashley Kerr]

So that was your thinking going forward to buying your next primary, Correct, Correct.

[Chris Young]

So that property had a few more bedrooms, also had a garage at the back of the property that was already halfway converted to an additional dwelling unit. So that property was great because at the time I had some family who my two sisters who were looking for places. Louisiana is very expensive to live in. So, you know, figured, hey, why don't you save some money? Come live, Come live with me. So that place had four bedrooms and then the additional dwelling at the back. So right now we're considering potentially doing co living on that property sometime next year.

[Tony J. Robinson]

Can you define co living for folks who maybe haven't heard that phrase yet?

[Chris Young]

Yeah, yeah. Lots of strategies here that I'm implementing, but yeah. So the co living would be renting out a property room by room. Right. So you're not just renting out the entire property. Running the comps on that. That deal. It wouldn't cash flow very well compared to, you know, with what our mortgage is now. But if we were to rent out each room and then also finalize the conversion of the garage at the back of the property as an adu, it would cash flow pretty well.

[Ashley Kerr]

Ricky is we are so close to hitting 100,000 subscribers on YouTube. If you haven't already, please head over to the real estate rookie YouTube channel and hit that subscribe button. We want to hit 100,000 subscribers by the end of the year, and we need your help. We're going to take a short break, but we'll be right back with Chris after this.

[Unknown Speaker]

This show is sponsored by Airbnb. Back when I lost my job in 2020, Airbnb is what gave me the extra income to work for myself. Look, I wasn't a big real estate investor then. I was just trying to take care of my family. And thanks to Airbnb, I've done so much more. Next time you're out traveling for work or on vacation or you aren't using your place, it can actually make money for you. That 80 you extra bedroom or additional property. It's an opportunity waiting to happen. With Airbnb, your home might be worth more than you think. Find out how [e-mail] host if you're in the landlord game, you know the importance of solid tenant screening. That's where Rent Ready steps in. Now, Rent Ready's got an important new feature, Proof of income verification. And get this. With Plaid certified reports, you'll see everything from income summaries to total earnings by month. So say goodbye to those gut check moments and. And hello to confidence in renting with Rent Ready. Rent Ready is included in your Pro membership at BiggerPockets. Now, if you're not a pro. They're offering a six month plan for just $1. You can't beat that. So visit rentready. Com, that's R e n T r e d I.com and use the code BPInvestor. That's BP like Bigger Pockets Investor to get six months of rent ready for $1. You ever thought about diving into real estate but got kind of stuck on where to start? I mean, of course you have. You're listening to this podcast. Well, we've got something that might just kickstart your Jo. Enter PropStream, your secret weapon in the world of off market properties. With over 155 million properties at your fingertips, Propstream lets you uncover hidden gems right from your phone, tablet or computer. Propstream's got over 120 search filters from pre foreclosures to bankruptcy, helping you find motivated sellers faster than ever. And with public record data and MLS sales, estimated accuracy of over 99%, you'll nail those comps every single time. They're even throwing in a learning academy to get you started on the right foot. Dive in with 50 free leads during their seven day free [e-mail] BP that's propstream.com BP like BiggerPockets.

[Ashley Kerr]

Okay, let's get back into it with Chris. Give us an example real quick. What would you rent out one of those rooms for compared to if somebody was renting a studio apartment in the same area?

[Chris Young]

Yeah. So the studios in Southern California probably range from 1200 to 1500. In at least some of the suburban markets. We'd probably rent it for somewhere between 900 and $1,000. So there'd be some savings for the potential tenants that would move into a property like that. Plus I think the other thing is there's just so much more education on co living within the last couple of years of people who are doing it at a really high level and providing just an experience for guests not too dissimilar from short term rentals.

[Unknown Speaker]

Right.

[Chris Young]

So there's a lot of crossover there that I think could really work for us.

[Tony J. Robinson]

I loved. You're kind of taking the, the short term rental elements and putting them into, into the kind of more traditional long term rental route. So you, you get the, the first primary, you set it up, move out, you're in the second primary. Have you, is that where you're currently at still right now? You're still currently at that primary, but you've also purchased some additional properties outside of that. So what were those other purchases aside from the Primary residences.

[Chris Young]

Yeah. So after we bought the second primary, you know, we made a decision. We wanted the next property to be a true investment property. And I think that was my way of kind of getting over the hump that we are investors, right? I think we had that mindset that we kind of. We fell into investing because so far, two of those properties were primaries, even though we had the mindset and the idea that long term it would be investments. And so that's when we were looking for different options. We attended BPCON in 2022, which is great. I mean, we were just starting in our kind of our investment career. And I think going to that event was so great because we met so many people who were doing it at such a high level in terms of real estate investing. The challenge was, though, there were so many different things to pick from. I mean, there's so many different things you can do with real estate investing, right? And I had a little bit of shiny object syndrome. You can ask my wife.

[Ashley Kerr]

We've all done this.

[Chris Young]

So I was like, oh, I still have my license active, so maybe I'll actually get more into that.

[Unknown Speaker]

Right.

[Chris Young]

We had gone to a few meetups where people were flipping and wholesaling. I was like, maybe we could do that for some side income. And then finally, I think we just had to decide what we were going to kind of focus on. And it ended up being short term rentals for a couple of reasons. One is, you know, my wife and I are both high income earners, you know, as far as W2s. And so the tax benefits of short term rentals are incredible in terms of different real estate investing options you have. So that was one, I think the second one was for personal use. And not a lot of people care about that, I think, in the short term space. But we were definitely of the mindset of, like, how cool would it be to have a property that, like, we can use, that we can make memories in, but yet it be an investment, right, where it actually makes us money and creates wealth in the long run.

[Ashley Kerr]

That's funny, because the first nice short term rental I did, because I did my Airbnb arbitrage, where it's like, go to my mom's friend's basement, pull out the furniture. And it's not a destination to go to. It's people who are coming to visit their grandma in the nursing home stay here. But when we first did our first a frame property in this cabin, it's so cool. We would go there sometimes before it was even finished, before we had furniture, we put air mattresses, and we're like, oh my God, this is gonna be so fun to build memories with the kids here. Whatever. We literally have not gone there once because it's like, well, if we block it off the go, we're gonna lose this money. Let's not go, or whatever.

[Chris Young]

So it's a catch 22 that is.

[Tony J. Robinson]

Kind of the rug, right? It's like you build a property that's so good that everyone wants it, it's a good problem to have. So you land on short term rentals as your strategy. And you said, this is a 2022 BPCons of all time. So what steps did you take coming out of that conference to actually go about buying that first one?

[Chris Young]

Yeah, so we had been looking at different properties probably for about six months or so in different markets. And as everyone knows, in 2022, that's when the interest rate started changing. Right. So when I was running numbers on a property in a mountain area like Big Bear in Southern California in February or March of 2022, the way I was running my numbers in August and September of that year were very different. Right. And so I think with the interest rates increasing, it kind of forced us to be more creative. Right. And really take a second thought about where we were investing and how we were investing. Everyone, I feel like, was very much attracted to the big markets, right? The Joshua Trees, the Big Bears, the Smokies, those were all the markets we were hearing about. But I couldn't help but think about what would be a market that we would have an advantage in.

[Unknown Speaker]

Right.

[Chris Young]

What would be a market that maybe we know a little bit something about that other folks don't. And so when I was looking at markets right after bpcon in the fall time, we were analyzing different markets and looking at where was there a good occupancy rate, a good nightly ADR rate for a short term rental, but yet maybe not as much competition. And that's how we kind of landed on our market.

[Tony J. Robinson]

You literally, like hit the nail on the head of like, the things that we're focused on in our portfolio right now as you look for new markets. Because so, you know, I'm in California as well, so Big Bear is a market a lot of people here know. And SoCal, why did, why did you think Big Bear is maybe a place to potentially go?

[Chris Young]

Yeah, I mean, so Big Bear is a great location from an investment standpoint if you take the numbers out of it on paper, Right. It's between Los Angeles, Orange County, San Diego, you've got tens of millions of potential guests and you don't need all of them. Right. You just really need 50, you know, 60 guests. That.

[Tony J. Robinson]

So let me, let me pause you there. Right. So you just named a bunch of different reasons why Big Bear could potentially be a great place. And every other of the millions of people who live in Southern California are thinking the same thing.

[Chris Young]

Thought the same thing.

[Tony J. Robinson]

And I think that's why there's so much inventory in some of these SoCal markets. Because we are so close to Los Angeles, we are so close to San Diego, we are so close to Orange county that a lot of people when they said, okay, I want to buy a short term rental, they went to these markets.

[Chris Young]

Markets.

[Tony J. Robinson]

What we're looking for now as we identify new places is we're looking at two different things, supply and demand. On the supply side, we really do want to focus on markets where the number of listings is probably sub 2000. Once you get above 2000 listings, that's when maybe there's a little bit more challenge there in terms of saturation. The other thing that we're looking at is what is the percentage change of listings this year versus last year. If there's a negative change and we're losing listings, that could maybe be a sign that there's some, some things going on that market that, that maybe we don't want to expose ourselves to. But on the flip side, if the percent change is so massive, there are some markets that are like 40% growth. Like is demand growing at 40%, you know, and is that sustainable? So we're trying to find that sweet spot there. And then on the, on the, on the demand side, we're looking at revpar change year over year.

[Chris Young]

Yep.

[Tony J. Robinson]

So for all of our Rickies that are listening, Revpar is a combination of your occupancy and your average daily rate. So we want to see a positive revpar change, but we also want to see a positive occupancy change because nationally and if you go, you know, like Air DNA is a big data aggregator for the short term rental space, but a lot of data tools and nationally a lot of places are seeing revpar increases, but they're seeing occupancy losses. So it means that they're less filled on a nightly basis, but they're just trying to charge more to make up for that downside.

[Chris Young]

Right.

[Tony J. Robinson]

I don't want to be in a market where there's less nights being booked. So we're looking for ADR growth and we're looking for Revpar Growth. And if we can check all four of those boxes, then it's a market that we're considering. And it sounds like even though I just laid it out in maybe a much more like formulaic and systematic way, that was a process you went through as you were looking at these different potential places.

[Chris Young]

Yeah. And one thing I noticed, like Tony, those are all great reasons, obviously, to find, like, a market that you're going to invest in. And the way I try to look at it is that's the quantitative side. But there's a qualitative side, I think too, how I invest and the properties that we try to choose. And one of the mindsets that we had going into picking this first short term rental, knowing that it was going to be a property that we were going to use as a second home, was if we made no money on this property, if we just broke even for not just a year or two, but like, period for the life of the time that we own the property, would we be happy with that?

[Unknown Speaker]

Right.

[Chris Young]

And that's how we kind of like, you know, looked at it when we bought the property that we did, which was a cabin in Sequoia National Forest. Sequoia National Forest is about three and a half hours from Los Angeles. It's an area that I used to camp a lot actually in as a kid.

[Ashley Kerr]

Would you say that was part of Your advantage?

[Chris Young]

Oh, 100%, yeah. Just knowing some of the sites and attractions.

[Unknown Speaker]

Right.

[Chris Young]

Because I think there's lots of investors. Again, we listen to a lot of great investors like Tony and Avery Carle and a lot of these folks who talked about drivable destinations.

[Unknown Speaker]

Right.

[Chris Young]

Especially national parks. And I love being outdoors. I love getting outside with my kids. And so I tried to think about where's the place that I would want to go and the qualitative side of Big Bear. And some of those markets that I personally just wasn't as much of a fan of is you're so close to other properties.

[Unknown Speaker]

Right.

[Chris Young]

You're wanting to get into nature and really embrace yourself into that. And I was thinking about it from the guest experience side, where you're trying to get away from the city, but I'm 15ft away from another cabin with who knows, you know, what type of guests are there that same weekend that I'm there.

[Unknown Speaker]

Right.

[Chris Young]

And so it was important for us to find a market that had properties that maybe had a little bit more privacy. Right. Because if you're trying to escape, we wanted to be able to provide that for our guests.

[Tony J. Robinson]

So you say that you land on this market. You said Sequoia National Forest.

[Chris Young]

Yeah.

[Tony J. Robinson]

Which I didn't even know that there was a national forest. Like I know sequoia, but like it didn't register that it was a national forest. But anyway, you pick, you pick Sequoia. Walk us through the process of actually finding the deal. And what did you see in that property make you say, okay, I think this might be the. For us to buy?

[Chris Young]

Yeah. So again, we had been looking at a few different markets, including the Sequoia market for several months. We go to bpcon, you know, we kind of muster up the courage where it's like we need to just do a deal.

[Unknown Speaker]

Right.

[Chris Young]

We had been surrounded by so many people and had so many conversations with people who were doing so many deals and just that inspiration that, hey, we can do this, you know, we're, we're, we're not just starting out. We've got one deal under our belt, you know, and it doesn't have to be a home run. I think that's one piece of advice I'd give to other rookies too is you don't have to become a millionaire on your first deal. Just get in the game. A single is enough.

[Unknown Speaker]

Right.

[Chris Young]

And so I think that helped me with my mindset of like having a deal that ran perfect numbers was foolproof. There was no risk. That type of investment doesn't exist.

[Unknown Speaker]

Right.

[Chris Young]

There's always going to be some amount of risk going into a deal and, and just getting the experience in and of itself. There may not be a dollar value to that. But my mindset was if I could get a short term rental and learn how to operate it, that value, even if we make zero money, the first year is going to be worth something.

[Ashley Kerr]

So you pay to go to college. So this is.

[Chris Young]

I paid a lot more to go to college than I did for my first deal, I'll tell you that. And so a few weeks after being at bpcon, we found this property that came on the mls. So it was a public listing that we found. The property had only been on the market for maybe a week or so. So it was a pretty new listing. Now this is a pretty rural area in the Sierra Nevada mountains of California. So you have Sequoia national park, which has some areas that have quite a few short term rentals that are pretty popular that anyone can look up. This area is adjacent to that area. And so it's not Sequoia national park, but it's Sequoia National Forest. Forest. So there's no tickets or lines to get into the park, but the attractions are very similar. You want to see huge trees, we've got those. You want to see big rocks and mountains and rivers, we have those as well. It's just not as crowded. And this is where the qualitative side came in. I personally love some of our national parks, especially in California. I hate going to national parks where I have to wait in line or I'm hiking shoulder to shoulder with other people. And I feel like I'm at Disneyland.

[Ashley Kerr]

Because it meets the purpose of being out in nature.

[Unknown Speaker]

Right.

[Chris Young]

So when we decided to go into Sequoia National Forest, we wanted an area that felt more peaceful, like an escape. So we find the property, we look at it, and we're like, wow, this is much different than the other properties we've been looking at. In terms of size, in terms of the quality of the property.

[Ashley Kerr]

And the price range is in good or worse.

[Chris Young]

I think good, good for everything but the price range. We were looking to be somewhere around the low to mid three for our first investment property. Another reason why we picked this market was knowing our budget, knowing what we felt comfortable with, and we knew we could get a lot more for our dollar than in some of the other more popular short term rental markets. But this was, I think it was listed for 425,000 on the MLS. We made an offer sight unseen, just based on the photos and based on the location. The big thing that we were looking for in this mountain market was how accessible is it for guests? What would the experience be like in terms of the architecture? And does it feel like a place in the mountains? I don't want it to feel like a house that's in the city that just happens to be rural. But does it feel like a true cabin?

[Unknown Speaker]

Right.

[Chris Young]

And then the third being views. I mean, I think that's a big thing in a lot of mountain markets. Whether it's a view of the lake or a view of a mountain peak. There's something about that when you escape out of the city and you look at something that looks like a screensaver.

[Unknown Speaker]

Right.

[Chris Young]

Thinking about the marketing side of that was huge for us. So this, checked all of the boxes, and even though it had only been on the market for a couple of weeks, most listings in this area are on the market for months. It takes a while for a lot of these cabins to turn. But we didn't want to risk it or try to really negotiate too much on price because again, we didn't need a home run. We just needed a single right. So we did negotiate it on price with with the agent I did represent us. So it was one of the first times I've used my license. Thanks. And so we used that and lowered the price point so we ended up at a at a price of $400,250 was the closing price.

[Ashley Kerr]

We're going to take one more short ad break and then we're going to.

[Unknown Speaker]

Jump back in Managing your finances used to be a pain. It was either useless apps or overcomplicated spreadsheets. But now with Monarch Money, managing your money is easier than ever. Monarch is the top rated all in one personal finance app. It gives you a comprehensive view of all your accounts, investments, transactions and more. Create custom budgets, track progress toward financial goals and collaborate with your partner and now get an extended 30 day free trial when you go to monarchmoney.com rookie unlike other personal finance apps, Monarch's simple, intuitive design makes it easy to set up, customize and use. You can even collaborate with your partner, family or financial advisor at no extra cost to get a joint view of all your finances. Customize your dashboard, notifications and budgets with a tap. After trying out Monarch for myself, I understand why it's the top rated personal finance app and right now listeners of the show will get an extended 30 day free trial when you go to monarch money.com rookie that's m o n a r c h r money.com rookie for your extended 30 day free trial.

Hiring your search is over. Really? There's no need to search. Match instead with Indeed. Indeed is your matching and hiring platform with over 350 million global monthly visitors and a matching engine that helps you find quality candidates super fast. Ditch the busy work. Use Indeed for scheduling, screening and messaging to hire top talent faster. Speaking of top talent, 93% of employers agree Indeed delivers the highest quality matches compared to other job sites. But why do I love Indeed? Because I'm busy and scrolling through 300 resumes is not helping my business grow, it's actually making it slow. With Indeed, I can hire faster and know I'm getting someone who can do the job. And listeners of this show will get a $75 sponsored job credit. To post your jobs with more visibility@inn Indeed.com rookie just go to indeed.com rookie right now and support our show by saying you heard about Indeed on this podcast. Terms and conditions apply. Indeed.com Rookie need to hire. You need Indeed Rookies. I'm telling you right now, it's not every day you find a game changer like Rent Ready. They're not stopping with just tenant screening. Nope. They've now rolled out Proof of Income Verification. So let Rent Ready handle the heavy lifting. With automatic checks on financial stability and earnings. Plus with Plaid certified reports, you'll have all the info you need right at your fingertips. Rent Ready is included in your pro membership at Biggerpockets, but if you're not a pro, they're offering the six month plan for only $1. How great of a deal is that? So visit rentready.com that's R E N T R E D I.com and use the code BP Investor. That's BP like BiggerPockets Investor to get six months of rent ready for only $1. Hey, listen up aspiring real estate moguls. I've got a secret weapon for you. Say goodbye to the traditional real estate grind and say hello to Propstream, the ultimate tool for finding off market properties. With a whopping 155 million properties in their database, Propstream opens doors you never even knew existed. Propstream also delivers public record data and MLS sales estimates with pinpoint accuracy, making comps a complete breeze. Ready to seal the deal? Propstream's got lead automation, skip tracing and top notch marketing tools to help you close deals like a pro. And the best part? They're throwing in a free learning academy to help you level up your skills. Try it out with 50 free leads during their seven day free trial at www.propstream.com bp. That's www.propstream.com BP.

Like BiggerPockets, we all have that one what if moment we push aside. Maybe it's the thoughts of everything you've worked for. Your legacy, your family's home, their security. The future you've built. Suddenly being at risk. It's not easy to think about. But having life insurance is one way to handle those what ifs. When it comes to life insurance, not all options are created equal. Most brokers offer one size fits all policies that can cost you more for less coverage. Select Quote does it differently. For nearly 40 years, Select Quote has helped over 2 million people find the right coverage. And here's what makes them special. Select Quotes Licensed agents work for you. They'll shop policies from top rated insurers and tailor a plan that fits your best needs and your budget. And if you need a large policy, they can help you save up to 50% compared to other companies. And if you're in good health, you might even qualify for same day coverage up to $5 million with no medical exam. The process is fast just 15 minutes could be all it takes to protect your loved ones and legacy. Get the right life insurance for you for [e-mail] BP Rookie Go to SelectQuote.com BP Rookie today to get started. That's SelectQuote.com BP Rookie okay, let's jump.

[Ashley Kerr]

Back in with Chris.

[Tony J. Robinson]

That's funny. Why? Why 2:50.

[Chris Young]

I think that's just what it ended up being. I don't know. I think it was one of those things where the sellers just wanted to feel like they got all. And it was one of those that I'm not going to let ego or pride get in the way. Sure. You want 250. Okay, that sounds great. So, you know, we, we got an offer accepted and went to go see it afterwards that weekend and we were in love. I mean it was immediately you walked in and you felt like this was like I knew the place.

[Unknown Speaker]

Right.

[Chris Young]

And again, from the qualitative side, I just know that this is going to be a business and if I, if I can connect with this place on an emotional standpoint and understand how someone would experience this place, it's gonna help me become a better host.

[Unknown Speaker]

Right.

[Chris Young]

And provide a better experience for the guests that come through there.

[Ashley Kerr]

I wanna definitely get into that part of it, the operations of hosting. But before we do, let's go back to you deciding that you're ready to purchase your next property. What did it look like setting that budget? Setting. Okay, here's how much we have for a down payment. This is the loan we're gonna get. Give us a little bit of insight for a rookie investor as you're ready to approach your property. What are your recommendations for the things you should do before you're going out and making offers to create your budget?

[Chris Young]

So first, I mean, if you're looking at a new market and you're looking at purchasing an investment property, highly encourage you to talk to multiple lenders and mortgage brokers to get a better understanding of what you can afford.

[Unknown Speaker]

Right.

[Chris Young]

And like I mentioned, in 2022 things were rapidly changing with interest rates. So our budget started changing a little bit in terms of what our purchase price could be. So we made sure that we had a mortgage broker that we were comfortable with in terms of the lending side. We had decided how we were going to finance that property. And so we ended up utilizing a second home loan or a vacation home loan, 10% down. So we wanted to get in with low money down, which you can do in most markets if it's your first property. As long as you don't have two, I think it's within 60 miles of each other, give or take. So you can't have two of those loans in the same market. But for your first property you can. So we knew that's how we wanted to do it on the financing side. But then we still needed to be a little bit creative in terms of furnishing the place because it had a couple of furnishings, but they were pretty old and most of it was empty. And the property we ended up purchasing, it was a 3,000 square foot, a frame style cabin. So for our first property it was, we definitely bit off, I wouldn't say more than we can chew, but we had a mouthful, a big bill. So in terms of furnishing, I mean we really had to get creative and running those numbers and then understanding, oh, this is going to cost quite a bit, we realized we couldn't do it just by ourselves.

[Unknown Speaker]

Right.

[Chris Young]

So our first foray into partnerships was actually with family members. So I had my sister who ended up investing with us a small portion for, for the down payment and the furnishing and then so she was an equity partner and then my grandmother actually gave us a small loan that we ended up paying her back within the first year that also helped us out with those furnishings. So we kind of had a debt partner and an equity partner that were both family members, which was good.

[Tony J. Robinson]

Yeah, yeah. And it's a great way to like bring people into what it is you're trying to build as well and maybe give them a taste.

[Unknown Speaker]

I just really.

[Tony J. Robinson]

You, you said something super important. I want to make sure I circle back to that. But you said one of the first things that people, people should do is just talk to a lender.

[Unknown Speaker]

Yeah.

[Tony J. Robinson]

And I couldn't agree with that more because I feel like so many rookies, they start investing all this energy into looking at deals and looking at markets and yeah, you know, they're looking at houses for half a million bucks. Six, six hundred thousand, seven hundred thousand. They get a pre approval and you're like, you know, you're Pre approved for $97, you know, so it's like, what did I do all this energy for? So knowing what you can actually purchase and then going back to your question earlier actually of like the market selection piece, that's such an important point because once you know what you're pre approved for, that might rule out some of the other markets you're even considering beforehand.

[Chris Young]

Exactly. We knew that we could afford up to, you know, 500,000 probably for this Investment property. But what we would get for, you know, that amount or less than we wanted to be under budget in Big Bear or some of those competitive markets versus this market, it was a night and day difference. And so. But also at the same time, we wanted to make sure that the data was there to support that there was the tourism, that we could get, the occupancy that we wanted. And so we kind of made the decision to go in a market that was less popular, not only to necessarily avoid some of the large competition, but also, I think, because we knew that doing a lot of the data research on the other listings in the area, it was pretty slim pickings if you wanted a good stay, a good vacation rental. A lot of photos were taken from phones, and phones not from this decade.

[Tony J. Robinson]

You know, the razor flip.

[Chris Young]

Yep, yep. The furnishings looked like they had been there for quite a while.

[Unknown Speaker]

Right.

[Chris Young]

And so we knew how, like, based on learning from, you know, experts that we have learned from over the last year or so about how to run a successful rental. I don't think there's a lot of successful hosts in this market that we would compete with. So we knew that it was, you know, kind of setting the bar low in terms of we just need to come in and have professional photos, and I think we're going to do really well.

[Unknown Speaker]

Right.

[Ashley Kerr]

Okay. So that's great how you were able to involve your family, get them invested in this deal, and you've got this partnership, you've got your properties. How does it go from here? Is it wonderful and bliss? Do you happen upon any kind of roadblocks now that you've got your properties?

[Chris Young]

Yeah, I would say we literally had some roadblocks that happened soon after. So after we went through furnishing this place, getting it listed, we were super excited. Got a lot of great feedback from guests right off the bat.

[Ashley Kerr]

That's always so exciting.

[Chris Young]

Yeah, I mean, that was my favorite part is this here from the guests of how well they experienced the cabin. But we closed in December and in March of 2023. So just a few months later, there were some historical winter storms that happened through all the west coast, but especially California. And so an immense amount of snow and then rain soon after hit a lot of the Sierra Nevadas in California, which resulted in the road going up to our cabin completely washing out.

[Ashley Kerr]

Oh, my gosh.

[Tony J. Robinson]

It was unpaved.

[Chris Young]

It was paved, the main highway, but half of it had washed out just because of the amount of rain. I want to say that the amount of rain was something like 15 inches within a matter of hours. It was incredible, the storm that had occurred. But unfortunately, what that meant was no guests that could come in. Right. So the worst case scenario that every rookie dreams of in terms of buying.

[Ashley Kerr]

An investment property, and especially something out of your control, it's not like it's your own driveway and get somebody to come in and fix it 100%.

[Chris Young]

It was the main highway, and so you could drive by and pass by, but you had to drive really careful. I mean, it was really sketch. And for a little while, we could have a couple of guests that could come through. They just had to kind of be escorted. But soon after, you know, the town put it to a close and they said, only locals, only, you know, residents can drive up this road. And so it was basically like that until maybe July of that year.

[Ashley Kerr]

So from March until July.

[Chris Young]

Yep, March to July, we had no guests. So we were paying for the mortgage and expenses pretty much out of our pocket. You know, one of the good things about it was we were able to go up ourselves and enjoy the property quite a bit and make improvements to the property as well. So it was ready to kind of come back as soon as the road opened. So end of July, the road finally opened conditionally. You know, guests had to show proof that they had a reservation for a cabin on the mountain. And just only a couple months ago is when the road finally got finished. So a lot of the attractions that were nearby, hikes, waterfalls, you could visit, trails, a lot of those, even within the last year, have still not been accessible or have been difficult to get to.

[Ashley Kerr]

Wow, I bet the locals loved that.

[Tony J. Robinson]

Yeah, they did.

[Chris Young]

They definitely did love having not as many Airbnb guests. And I think just to touch on that, there was a lot of friction right when it came to the locals and them not wanting guests coming up the mountain for safety reasons. And in most tourism markets, there's going to be that friction. One of the things that I've been really proud of is the reputation that we've built in our local area and community, because I always wanted to make sure that I had that respect of neighbors and make sure that we cared for them in a way that maybe they didn't think an investor could. So much so that our newest property that we just acquired a month ago that we're rehabbing right now, when the neighbors found out that we acquired the property, they said, thank God there was a long term tenant that was in there before and they had left the place a complete trashed mess. And so when they Found out that we acquired it. We said, you know, I reached out to them, let them know, hey, we're going to be doing some construction. Let me know if you have any questions or if it gets noisy, I'll reach out to the contractor. And she texted back and said, you know, we're so happy when we found out you guys were the ones that bought the place. You guys have a great reputation up here for how you treat grass and, and just the experience you provide and how clean you keep your properties. And so we're grateful to have you as neighbors. And so to hear that as an investor, a local, you know, person who lives there full time, to say that is, you know, incredible.

[Tony J. Robinson]

One, one last follow up question on the, on the road closure. Looking back at it now, obviously totally out of your control, but is there anything that you would have maybe tried to do differently, looking back on it now, have kind of come out on the other side?

[Chris Young]

Yeah, no, that's a, that's a great question. I don't think so. We, we maybe would have pushed, I think maybe some rentals to contractors who were up there. And we did have a few contractors that came in. The challenge with that is a lot of those contractors wanted a really good rate for an extended period of time. They were saying that, hey, this road's going to be, you know, under construction for the next three years. So we want to rent it for three years.

[Ashley Kerr]

Oh my God, two years.

[Chris Young]

I wasn't thinking that long for $1,000 a month.

[Ashley Kerr]

Oh my God.

[Chris Young]

But, but we had to make the business decision that, hey, maybe we could have a contractor come in for a month or two. But as soon as this road opens, based on the size of our property, it doesn't make sense for you to have one or two contractors here. I mean, this is a cabin that's meant for several families. Right. 10 to 12 people. And so we made the decision that was a little bit risky, that. Okay, we're pretty confident the road should open by end of summer, fall, maybe we can make it till then and then we'll get the normal expected rates that we had planned for.

[Ashley Kerr]

Yeah.

[Tony J. Robinson]

How much money do you think you lost during that roughly four month period?

[Chris Young]

Oh, so when we ran the Performa on the cabin, we were expecting within the first year to gross about 80,000. I think in 2023, we grossed about 42. It's almost 40,000.

[Ashley Kerr]

I mean, half of your prime season, March to July, I would think for that area.

[Chris Young]

Exactly. Yeah. Our prime is basically from May to September, so more Than half. Yeah. Is within that few months.

[Ashley Kerr]

So let's go to the operations piece. So what are some things that maybe you're doing differently than other hosts to really provide that wonderful guest experience?

[Chris Young]

Yeah, that's a great question. And like I mentioned, I think it being a second home for us, we're really able to be able to anticipate guests needs right before they need them. So knowing that if there are quirks about the property, yeah, it would be great to spend a bunch of money and have an unlimited budget and fix all of those things. But at the very least, I should be able to understand the property intimately, to be able to advise guests and anticipate those needs so it doesn't become a hindrance on their experience.

[Ashley Kerr]

Give us an example of that. So, like, are you updating the guidebook? Like, for example, at our one property, we have this stovetop, it's an induction stovetop where you. It won't turn on unless you actually have the oven or the pan sitting on it to get hot. So, like, I never knew that before this, and a lot of people don't. So, like, we have literally step by step instructions into our guidebook. So is that what you mean? Like, there's something quirky about your property, you're documenting it, or like, what are you doing to kind of ease those experiences?

[Chris Young]

Yeah, that's a good question. So I think some of the things we try to anticipate is like, for instance, being in a rural mountain market, there's no control over when Internet might go out or the power might go out. It'd be great to have a backup generator, which is something we plan to do at some point in the near future. But at the time we didn't. So we thought about, okay, if we were here and the power went out, what would we do?

[Unknown Speaker]

Right.

[Chris Young]

Well, you want something to entertain yourself. So we make sure that we have games in the basement downstairs, we have a pretty large game room, which is really uncommon in this mountain market. We make sure that we have DVDs if the Internet goes out. So maybe you can't stream your favorite Netflix show, but maybe you're perusing and you see, oh, there's that dvd. I haven't watched that movie in years. Or we have a library area where people can go and kind of read. It's this little nook that is very common on Instagram for a lot of guests to take pictures there. And so just providing different moments, I think, for guests to be able to experience the property in different ways. And we wouldn't know that if we didn't stay there and the idea didn't come to us of it'd be nice to, you know, you know, play a game with the kids downstairs or my wife, you know, wanting to get away for a little bit and read a book and have some of that alone time. We created spaces for ourselves as hosts and that is how I think we've been able to provide a different experience for guests. Just being thoughtful in that extra way.

[Ashley Kerr]

Yeah. Instead of thinking, okay, kitchen, living room, bedroom, bedroom, bedroom, bathroom. Like you're creating these little different studios in there. I guess.

[Tony J. Robinson]

I guess like a follow up question to that, like, what do you see as the Trends going into 2025, maybe that good hosts need to adopt to remain competitive because the landscape has changed. Right. And you know, I saw a stat maybe a year ago now and some change where 50% of the listings on Airbnb have all started post Covid.

[Unknown Speaker]

Right.

[Tony J. Robinson]

So there's been a massive influx of new people coming onto the platform. What are you seeing as the things that someone really needs to do from a management perspective to stay competitive?

[Chris Young]

I mean, always constantly learning. Be a student of the game at all times. Right. Learning from people who are doing it at a high level and then be able to translate that into your portfolio and your properties.

[Unknown Speaker]

Right.

[Chris Young]

So maybe my property, you know, in our market, it doesn't necessarily need a hot tub. Right. I think less than 15% of the properties up there have hot tubs. Whereas in other areas it's a necessity.

[Unknown Speaker]

Right.

[Chris Young]

To even compete. But learning from other hosts and knowing that, okay, this is an amenity we should add, that would provide an additional experience to the guests.

[Unknown Speaker]

Right.

[Chris Young]

Just constantly leveling up. I would encourage, if you're an existing short term rental owner, don't set it and forget it. I think there's so many different tech stacks and different systems that you can implement into your business as a short term rental owner, which is great, but don't set it and forget it. Continue to reinvest into your property, go visit it, make sure that you understand how the guests experience it and continue to improve that. You know, we have to continue to evolve as owners.

[Ashley Kerr]

Well, you convinced me. I got to go stay in my ap. Well, Chris, thank you so much for joining us today. Can you let everyone know where they can reach out to you and find out more information about you?

[Chris Young]

Yeah, I'm not super active on social media. I. I wish I was. But you can reach out on Instagram at chrisyoungrei right now. We're working on a cabin that's under rehab that's pretty close to our existing cabin right now. So I'll be sharing some more info to come on that property there.

[Ashley Kerr]

Okay, awesome. And thank you so much for meeting us in person. Appreciate you making the drive in the LA traffic.

[Chris Young]

No, so great to meet you both and to be here in person again. Super thankful for both of you. You guys have both had an impact on my real estate journey and. And we'll continue to learn from you both, I'm sure, for the years to come.

[Ashley Kerr]

Thank you. I'm Ashley and he's Tony. Thank you so much for joining us for this episode of Real Estate Rookie.