← Real Estate Rookie
Real Estate Rookie
45 Rentals and $0 Debt: The Money Mindset Shift That Made Me Financially Free
00:39:51
Loading summary
Transcript66 lines
- [00:00]
A
If you've ever told yourself I'm just not good with money, today's episode might completely change that story.
- [00:07]
B
Our guest, Liz Carroll wants believe the same thing, but she did the hard work to rewrite her money mindset and it helped her and her husband build a completely debt free real estate portfolio of 45 rental properties.
- [00:20]
A
Yeah. And Liz didn't come from a finance background. She worked in IT sales. She's proof that you can create financial independence by shifting how you think about money first and then how you use it.
- [00:31]
B
Whether you're buying your first property or you're trying to get control of your spending before you invest, this episode is going to help you bridge the gap between mindset and math.
- [00:46]
A
Liz, welcome to the show. Thank you so much for joining us today.
- [00:49]
C
Thank you, Ashley. Thank you, Tony, for having me. I'm very excited to be here and it's fun to think back of the rookie days because it's been a while since.
- [00:59]
A
Well, Liz, I want to start at the very beginning. You've said you used to think that you were bad with money. What did that look like in your life at that time?
- [01:06]
C
Well, for me, it looked like I had been bailed out on some credit card debt from my mom while got in a little credit card trouble in college, which today doesn't sound like a whole lot of money, but back then $1,000 with a maxed out credit card felt like a lot. And I'm talking about 1989. So this was a long. And then when I got married, you know, I had heard I wasn't good with money. I had heard that a lot growing up from what started when I was 12 and had some money stolen out of the ice rink locker, which I don't know why a 12 year old at that time was bringing $40 to the ice rink. But I had all of it stolen and I just felt like I wasn't good with money. I had made some money mistakes in losing money and or having it stolen from me and I just had heard you're not good with it. So I started to believe that. I started to believe that I wasn't good with money and I then proved it because I got into some more credit card debt and then I had some car trouble. And at that time, my fiance, now husband, this is, you know, we've been together 38 years now, paid for all my car repairs and I just was like, I don't want to be in this situation. I don't want to be the one who doesn't understand money.
- [02:29]
A
So when was that moment in time where you decided to take action and actually change things for yourself? And what were those first action steps you did?
- [02:39]
C
Well, you know, it really happened a little later in my life. So it was about when I was 30 years old that I just was like, I can't do this anymore. So we had already been real estate investors at that time, and I still felt like I wasn't good with money. And we had actually even built a big home. We had done so many, we had made many money moves at that time and we got a little ahead of ourselves. So I felt like I was on a treadmill that was on number five. And the speed, I just couldn't keep up anymore. And we had two little kids. And so at that time is when I read the book Financial Peace by Dave Ramsey and a co worker had suggested it to me. I had a great career, I was making good money. I just didn't feel like I was getting ahead. I felt like I was drowning. And that speed, I couldn't keep up anymore. So I needed to have some relief.
- [03:39]
B
Liz, let me, let me ask because when we talk about being bad with money or being good with money, smart financially, I think it can kind of take a different meaning for different people. So for you, how would you define the difference between someone who is good at money and someone who's quote, unquote, bad with money?
- [03:57]
C
Oh, I love that question. And it really comes down to your own personal thoughts of who, what you think if you're feeling like you're getting ahead, meaning you've got money in the bank, you have the opportunity to make money moves, or that you, as soon as the bill comes in, you feel like you can easily pay it to sud. The other thing is, is that you're investing for the future. I mean, there I grew up in a time that it was very important for us to put money aside for our future. Not that it isn't now, it's just that it was a little bit more ingrained at that time.
- [04:34]
B
And I think to add to that, and ash, I want to your, your take on this as well, but when I think about that for myself, I think there's like three buckets, right? It's your ability to cover all of your day to day expenses, your ability to have some money saved, whatever that number may be, for bigger expenses in the short term, right. You know, your emergency fund, saving for your, your first house, buying a car, like whatever it may be, those things that aren't necessarily day to day expenses. And also Having assets that build for your future. Right. So day to day living, bigger short term expenses, and then long term thinking. And if you're kind of checking all of those boxes and to me, you're in a good spot. Ash, I'm curious for you, like, how do. How do you define being good with money? Is it different from what loser or what I've said?
- [05:17]
A
Yeah. I mean, the biggest thing for me is just like financial security. And when that moment in time happens or an expense comes up where you're not panicking and feeling like the world is ending. And I think the first time that I really ever experienced, like, not having that feeling, when I finally felt like, you know what, I have a sense of security. I've been so good with my money. I was in Florida and I had changed, like our plane tickets somehow. And the way that I changed them, it ended up our flight home got canceled and I didn't realize it. And I went to check in 24 hours before our flight and we did not have tickets. And I called and it was going to be very expensive to fly our family home. And in that point in time, I realized, like, okay, I have savings. I can, you know, I don't want to spend the money on this, but it is okay. It is not the end of the world. And that right there was like, what I realized why I wanted to be financially secure and why I was doing certain money habits. To actually implement that, to have that security was for moments like that. And since then, there's been a ton of other times, like, you know, like a $30,000 tax bill one year, you know, like, there's all these things that will happen, and I don't want to have to stress about them. So that's like, what motivates me to be mindful about money and making sure that I have my reserves in place, that I'm spending within my means. But I'm also creating, you know, different income streams to support income coming in. So I think those are like the three big buckets for me is diversifying my income, you know, being good, you know, living within my means, and then just like having savings.
- [07:04]
B
Yeah. And as you mentioned this on the podcast before, but it's like, if you have the money to solve the problem, that it's not really a problem. And I love when you phrase it that way, because it's like, if the money's there and just spend the money to get it fixed right, and you can move on with your life. So, Liz, going back to your story, you know, you Talk about this point in your life. You got some young kids, you guys are making some progress. But I guess what, what actual steps that you take to convert yourself from that person that, hey, I don't feel like I'm good with money. So, like, okay, now, now I actually feel like I've got a good handle on, like, what were some of the tactical things you focused on to make that transition?
- [07:34]
C
Well, we sat down and we created a plan. Really, it came down to that. Now, I don't want you to think that it was some elaborate plan at that time. It was a yellow pad of paper when we wrote down three things that we really wanted. One, we wanted to live completely debt free. So that was number one. Number two, we wanted to college educate our children. We had two children. Our parents educated us, and we felt that it was our duty to do that for our children. And then three, we wanted to create enough passive income to be able to make work optional by the time we were 50. So this was when I was 30 years old. Our youngest was 2 at the time. And so that would coincide with, on a standard track, her graduating college at that time too. So my husband and I would, would then be able to decide what we wanted to do or maybe not be so pedal to the metal and we could lower the speed on that treadmill we were on. And so that's what it was for us. It was the three things that became our guide. Guiding our guardrails, right. That became our destination of where we were going. And then every little decision we were making going forward from that time, was it getting us closer to the goal. And again, those goals were simple. There were just three things that we wrote down that we wanted. We didn't really know how we would do it. We had already been real estate investors, and so it made a lot of sense that real estate would be part of that journey for us.
- [09:13]
A
Well, Liz, we're going to take a short break, but when we come back, I want to hear about that first rookie deal that sparked it all. We'll be right back.
- [09:21]
D
My assistant's great. He's also terrible because he's me. Turns out multitasking isn't a great business model. Belay knows real estate investors grow faster when they spend time closing deals not buried in admin work. That's why they built the Executive Assistant task calculator, a free tool that reveals how much valuable time and money you're losing every week. Once you know your number, Belay can match you with a US based executive assistant to take those tasks off your plate so you can get back to building wealth. You're just one assistant away from doubling your deal flow. Text biggerpockets to 55123 to download the free calculator today. You've worked hard to build your success. Now it's time to invest like an insider. With Lightstone Direct, you can invest side by side with one of the nation's leading real estate sponsors, a firm with over $12 billion in assets and nearly four decades of experience. This isn't crowdfunding. There are no middlemen, just direct access to institutional quality real estate, the same kind of deals that major funds and family offices invest in. And because Lightstone Co invests at least 20% in every offering, your interests are always aligned. Invest confidently. Invest directly. Visit lightstonedirect.com bp today.
- [10:29]
E
What if I told you you could forget everything you know about investment property loans? Because Host Financial is rewriting the rulebook, tossing out those pesky DTI restrictions. They focus on your property's income potential. No tax returns or personal income statements needed. Simple, efficient and tailored for investors like you. Imagine a lender that sees the gold mine in your property, not just the numbers on your paycheck. That's the Host Financial difference and they're approved in 47 different states. So your next big deal could be just around the corner, ready to unlock your property's true potential. Visit hostfinancial.com don't let old school lending hold you back another day.
- [11:04]
A
That's host financial.com okay, we are back with Liz and we talked about Liz's money story. But now we're going to go into Liz's rookie deal. So you started investing just three months after you got married. Tell us about that first deal I had.
- [11:21]
C
We got married in 1990. I was 22 at the time and we moved states so we moved away from California, moved up to Spokane, Washington and my husband and I at that time I had already taken a little real estate course at the community college after college. But the we were interested in real estate and we got up there and we were like kids in a candy store because things were so inexpensive comparatively to where we had moved from. And so my husband, they had these like throwaway newspapers that were called like the little magazine called like the Nickel Nick or something like that. And it was, he found an opportunity for us and we were like, what? How could that house even be? How could there even be a house for less than you could buy a car for? So we ended up buying a house where we Identified it. It was $13,625. And we, the owner was willing to carry the contract because that was the other thing. So the owner was willing to carry the contract and he needed 50, $1500 down. And we were like, we don't have $1500. I'm 22. I just that like previous week had turned 23. And so I called my dad and I said, dad, I, I, we figured out how we can pay you back within this minute time. So it was like three months we could get him paid back. And so my dad sent us the money for us to put the down and then we rented that house out. I, I can't remember the exact amount of rent, but it was like a one bedroom, one bath house. It was tiny and it was white with Pepto Bismol pink trim. It was the cutest little house. It was tiny. And so anyway, the tenant stayed in there. This is one of the first, the only houses that we've ever bought where the tenant actually stayed. And so he rented from us for 18 months or so. And then we, we put $900 into the whole property. That's it. And then we ended up selling it about 18 for $18,000. So we were, we thought we would done. So it was like amazing deal, right?
- [13:41]
B
So Liz, we talked about your personal finance foundation a lot, but as you go into this first deal, you mentioned, like, hey, we, we didn't have 1500 bucks to, to cover the down payment. As you've grown your portfolio, looking back, do you think it was a smart move to jump into that first deal, given that you guys maybe didn't have a whole lot of discretionary cash at the time, but obviously it worked out for you guys. Or looking back, would you have waited to maybe buy that first deal? And to give some context here, the reason that I asked that is because sometimes we do have folks who are in the rookie community who are looking to get started where there is a good deal that presents itself. But taking that deal down would maybe stretch them a little bit more financially than what they're comfortable with. And I think they're, they're asking themselves that same question, like, do we pull the trigger or do we wait until we've kind of built up this strong financial foundation? So looking back, would you have done it again? Did you feel like it was the right move?
- [14:35]
C
Well, I would say yes, I think it was the right move for us for sure. It was a little risky. In fact, our accountant, because we ended up doing a couple more deals after that. Our accountant set us down and was like, listen kids, he was, at that time, he was a middle aged man and we're in our 20s and the accountant's like, okay kids, I think you guys are getting a little far out there. You might want to settle down. And, and so, but we were, we were living very lean. I will tell you now that that was a long time ago. Our incomes were very different at that time. I think Dan was making somewhere around 36 of $40,000 and I was making 27, 22 or something like that. I mean it was ridiculous. So the dollar amounts are really different that we're dealing with now. We're adding zeros. But it's, it's, it was just a good thing for us to learn from. We cut our teeth. The actual risk was pretty low. Does that.
- [15:33]
B
And I think that's the key part of it is the, the risk associated because I mean we're talking about, you know, less than $14,000. Like you said, it's, it's a car payment. So the, the risk associated with that specific deal was low. But I think it's an important question because I think there are a lot of people who are listening that want to get started but feel like their current financial situation may be, maybe be holding them back. And there is some truth that like if you're, you know, if you're super upside down on every single bill you've ever had, then probably not. But if you're in a similar position to Liz, then maybe it makes sense. I think one follow up question to me because we're going to get into how you scaled your portfolio. But something you mentioned earlier in the show was that you and your husband made the decision to build your portfolio with no debt. And Ash and I talk a lot about Dave Ramsey and we agree with everything that he says on the personal finance side. We tend to disagree with them when it comes to debt on real estate. So why did you and your husband decide to follow Dave Ramsey not only for the personal finance but also for the real estate investing side?
- [16:32]
C
Yeah. Well, thank you for that because it was, it wasn't that way initially, I want you to know. So we were stay. We were following the personal for a long time. The, and really wanted to live debt free. And however, that didn't mean our real estate portfolio was debt free. So there was a time when we became debt free, meaning our mortgage free, meaning no car payments, all those kinds of things. However, we kept debt in the real estate side and that was, there was a time about A four year lag to where we made the decision that once we became personally debt free, we were also going to switch the real estate portfolio to being completely debt free. So there was a time that it wasn't like that. However, we sat down and decided very strategically that it's time for us to be debt free real estate investors because we were getting to that time in our careers where we were going to be stepping out of them. So we wanted to have that security of having a debt free portfolio since we were leaving our W2 jobs.
- [17:45]
A
When you made that decision, did you look at this as more an emotional decision or did you actually sit down and kind of run the numbers? So when I think of paying off a property, you know, I'm outweighing. Am I going to, you know, could I take this money and pay off this mortgage, I'll get more cash flow on this property or could I leave this mortgage on the property and go and take that money and go invest into another one? What was the reasoning, the thinking behind all of that? What did you actually ask yourself and what questions should a rookie ask themselves when they're deciding if they should pay off the properties or not?
- [18:24]
C
Well, for us it became flexibility too. It was emotional for sure. We didn't want to owe anyone anything and I would say it was more me than Dan, you know, when we, I really wanted to have a debt free portfolio and there were some deals that were coming along in this window of time back if you think about from 2010 to 2000. So there's a few things I kick myself on about that. However, I wouldn't change it for anything now to being a debt free real estate investor. So we did do math, but we also talked about the emotional energy associated with being debt free real estate investors. And there's another component also. It offers so much more flexibility when you don't have the debt on the properties. And that that has been really important to us also as being great and grateful landlords. Like that's important to us to have that flexibility.
- [19:25]
A
I think one thing too is like you have less properties, so you have less to actually manage. So if you would have kept those properties, kept out on them, went and bought more properties, that in a sense is just more work for you because now instead of 45 properties, you have maybe 100 properties. And it's more time, you know, more energy having to put into your portfolio. Even if you were to get a property manager, that's still asset management. Where in reality, if you are looking to pay off your Properties you could look at. Maybe it makes sense just to pay off the properties I have now. And I'd actually have close to the same, same amount of cash flow if I went and doubled my portfolio because I paid off all of these mortgages. So I think this is a great example and something we don't talk often enough about on the podcast too.
- [20:16]
B
Ash. It's a really, it's a really smart point, right? Because as you're talking, I'm thinking about this. It's like say, say that you went out and you built over the course of two decades, say you build a portfolio that's, I don't know, $2 million, but it's fully paid off, right? You put everything on like 15 year notes. You paid it down aggressively, took all your extra cash, paid it down. Now you have $2 million worth of fully paid for real estate. Even if you went out and say, maybe you refinanced and, or maybe even got like lines of credit for 50% of that, a million bucks, you took that million bucks. And even instead of going out and buying more real estate, if you just lent that money to other real estate investors, you still have your portfolio, still the same management, but now you're still earning some money on that equity. Like there's so many different options you have when you've got all that real estate paid for. And you know, we just interviewed Devon Kennard, who's a professional private money lender, and he was saying like, this is like probably the best return you can get in real estate is just lending money to other people. So if you can combine both of those, you know, paid off real estate, taking some of that equity and using it to go out there and lend to other people, you get like the best of both worlds.
- [21:17]
A
Now, Liz, I want to transition to actually the mindset piece of this. And you do a lot of mindset stuff and help other people, you know, get motivated with their money and in change how they think about money. So what do you see for maybe even yourself or, you know, rookie investors that are getting started, how should they plan for the future and kind of change their money mindset that way?
- [21:43]
C
Well, there's part of it is just the, the belief and being able to shift from believing. Like where I did was that I was not good with money and being able, I'm amazing with money now I like and it's not that hard. That's the other part that I think we all have to come together and notice. Notice how it's, it's intentionally difficult. Does that make sense like the, the, the marketing and things that we hear out there make it so that money's so complicated. And I think that money mindset and the money, the things that we do and as real estate investors, I mean it's not that much more than a fifth grade math education. So I think that's the part is, is so many people think I can't do that because I'm not good at it. Well, we weren't good at it either when we first started and we still make mistakes today. I think that' know also is that we took a break for a lot of a few years with our raising our children and then we've come back, we've tried all kinds of different things. When the mindset is like, what's the worst that could happen? And what is, am I willing to take that risk for the upside? So that's where it's like making sure you know your math. But also where is that? Where, where is that inside you? Like, what's the worst that could happen and would you still be okay? Like, I've coached many people that have had bankruptcies but then come back to do really amazing things. And so with money. And that's where I think that, that, that's where it's the, it's the knowing what to believe in yourself. And that's the mindset part. Yeah.
- [23:25]
A
For a rookie investor that's getting started. Now, what are some like maybe action items or different ways they should be planning for the future, whether it's just with their personal finances or with, you know, investing journey. What are things they could be doing to actually like plan out what they want their future to look like?
- [23:46]
C
Well, I think it's important to pause and really get intentional. I mean, I think that's probably been the secret sauce for us is that we were intentional all along and very mindful with how we were going to do this. And also we allowed ourselves to make some mistakes and we've made definitely mistakes along the way. The other thing to plan though is that we have always lived below our means ever since we've made that shift in 1997 when we created our plan. Since then, we have always lived below our means. And the other thing that we didn't do is we didn't take any money out of the real estate business. So that is, we stayed in our W2s long enough until that real estate portfolio was kicking out enough cash for us to step out of our IT sales careers. So we didn't try to get out too early. Does that make sense? So we kept the money in the business and let that money grow and that's what helped us pay down properties as well. So that's the setup.
- [24:49]
A
There are so many advantages to keeping your W2 job or still running your small business rather than just quitting and going full time real estate investor. First of all, you can get better financing on deals. You also have a better sense of security because you still have a W2 to pay for your expenses and you're not relying on that next deal coming in to actually feed your family. And I think, you know, a couple of years ago, the real estate there was a lot of hype, a lot of people talking about like it is possible to quit your job and become a real estate investor. And the deals were a lot better, a lot juicier, a lot more meat on the bone at that time. And now I'm seeing the shift of more it becoming harder and harder to actually leave your job. Even some people going back to jobs just to have that sense of security after those few years of really great deals coming in and people making a lot of money in the real estate world. And now it's just more difficult to do. And I think think that has to be rephrased that it is so much harder to leave your job. And even if you do find a way to leave your job and to live off your real estate income, that you really don't have that security blanket anymore. And I think that's something you need to think about is not only okay, I have X amount of cash flow, this covers my w, that covers my W2 job, I can quit now. But also like if a capital improvement comes up, if your child all of a sudden needs $7,000 in dental work, you know, like these things come up, is that going to be detrimental to you or do you want that extra blanket to be able to, you know, have that extra money and to build wealth faster? Really, if you were to keep your W2 job.
- [26:39]
C
Absolutely. And, and as you were saying that that's the definitely what I teach is, number one is we have to know the cash flow, the ins and outs of the household, what are the household finances so that you know that those are covered for sure as you go into real estate investing. I also coach that you need to have a safety net. I don't call it an emergency fund because I don't know about you, but I have never felt good calling 91 1. So I call it a safety net because I want to be able to take risks. And we have been able to do that because we did have that safety net built. And, and that is cash that's set aside in a high yield savings account. That's not cash. That's like in the checking account. And that is money that we set over to the side that is that that literal safety net. I think it allows us to walk some tight ropes sometimes, and we certainly did. And there were times when we didn't have that safety net. So if I had to look back, it's a whole lot easier with the safety net. So I would build that up for a rookie first before they left their, their W2.
- [27:46]
B
Liz, I feel like now might be a good time to tee you up for the future self, since we're kind of on like the mindset and the personal finance piece. But I guess what would be the best way for me to tee you up to go into that?
- [27:56]
C
I think it's important also to talk about we didn't talk about how we niched our portfolio, and I think I would like to talk about how that maybe is that part of that future self. What did we want, how do we want to exit our portfolio too? Because I think that's really important is that we went so we can talk about that.
- [28:13]
A
Yeah.
- [28:13]
B
Liz, you've got a really unique strategy and I want to share this with the listeners because I think a lot of people haven't niched down in the way that you have. So we'll cover that right after a quick word from today's show sponsors.
- [28:24]
D
You know you're in trouble when your assistant is also you imagine getting hours back each week so you can focus on growing your portfolio, not managing busy work. That's the reality with Belay. They match real estate investors like you with remote staffing solutions that save time and help you scale faster. Because the truth is, you're just one assistant away from spending your time where it matters, finding deals, funding opportunities, and closing contracts. Belay even created a free tool that shows you how much time and money you're leaving on the table by not delegating. Want to see your Number? Text BiggerPockets to 55123 to get Belay's free executive assistant task calculator. You've spent years making decisions that shaped your career, your family, your future. When it comes to investing, those choices matter just as much. That's why there's Lightstone Direct, a $12 billion institutional real estate firm, now giving you direct access to the same elite opportunities once reserved for institutions. No middlemen. And with Lightstone Co investing at least 20% in every deal, you have a true partner by your side. You've earned this seat at the table. Visit lightstonedirect.com bp today to learn more.
- [29:28]
E
Tired of traditional lenders holding you back? Host Financial is here to change the game. They've ditched the DTI restrictions and they zero in on what really matters. Your property's income potential. So no more chasing papers for tax returns or personal income statements. Think about it. A lender that values your property's worth over your paycheck. That's the Host Financial difference. Approved in 47 states. They are ready to help you make your next big move. Curious if you qualify? Just head over to host financial.com and find out. Stop letting outdated lending practices hold you back. That's HostFinancial.com where your property's potential meets unlimited financing.
- [30:04]
A
When the holidays start to feel a bit repetitive, reach for a Sprite Winter Spiced Cranberry and put your twist on tradition. A bold cranberry and winter spice flavor Fusion Sprite Winter Spice Cranberry is a refreshing way to shake things up this sipping season and only for a limited time. Sprite Obey your thirst.
- [30:27]
E
Black Friday Savings are here at the Home Depot which means it's time to add new cordless power to your collection. Right now when you buy a select battery kit from one of our top brands like Ryobi or Milwaukee, you'll get a select tool from that same brand for free.
- [30:43]
C
Click into one of our best deals.
- [30:44]
E
Of the season and stock up on tools for all your upcoming projects. Get Black Friday Savings happening now at the Home Depot.
- [30:52]
B
Limit one per transaction exclusion supply full.
- [30:54]
E
Eligible tool list in store and online.
- [30:57]
B
So we're back here with Liz and Liz, as you've built your portfolio up, you started with this, you know, $13,000 home, but I know as your portfolio has grown you've shifted your strategy to really focus on a very specific niche. So what is that niche and how did you land on it?
- [31:12]
C
Yeah, I think thank you for that Tony, because we have done all the things. We've had single family, we've had multifamily, we have done short term rentals, we've had long term. We find that we really like the buy and hold long term rental and we have continued to refine our niche in the long term rentals. So we found a product that we really liked and it was unusual. I would never ever thought this as a real estate investor in the beginning because we first were buying stick frame homes, but we have found we Live on the Oregon coast, Tillamook county, where we get a lot of rain. So we have found that there's a terrific product here for, for rentals, for workforce housing. And it feels like it's a win, win, win because it's a win for the tenants, it's a win for the employers, it's a win for the county and the neighborhoods and the, and us of course. But it's, we have standardized now on manufactured homes. So we look for a product of a manufactured home that is three bedroom, two bath which is terrific for families and that in the, in Oregon when we started this, it makes a lot of sense here because we get a lot of rain so they're lifted up off of the, off of the foundation. So it really does help because as a landlord, you know, water is one of your biggest nemesis. So that was a good strategy for us also because it reduced some risks that we would have with the wet, wet wood.
- [32:56]
B
Liz I again, we don't talk a lot about manufactured homes as an asset class or as a property type on the podcast. I'm glad that we get to chat about it here but I think there's maybe a stigma around investing in manufactured homes where people think that, you know, there's less appreciation or maybe the, the quality of tenant won't be as high as a stick built home. Have you found any of those stereotypes or stigmas to be true?
- [33:23]
C
Not here so much. One, they're pretty nice nowadays. So that's the other thing. It's not like we're. But I do know the stigma exists because you hear about it. It's like real estate or wheel estate. You know, these are not, these are not RVs. I want you to know these are manufactured homes. They follow the same requirement as stick frame. They're just built in a factory and then brought to the facility. We own the lot. It' not talking about these are, you know, in a park or something like that. These are in a neighborhood where we own the property and they are most often, especially in Oregon, they are deeded to the property. So they're no longer. It's not like we're moving them around where we invest now we do keep them undeaded to the property because we depending on where workforce housing is needed we can move them. But they are pretty nice homes. I would had that stigma myself until Dan and I bought a manufactured home as a weekend home for us. And I would have never thought it but I don't think anyone ever came to that house and thought that it was a Manufactured home.
- [34:38]
A
So now Liz, you've also put together a creative exit strategy on these properties. So what are you doing differently to unload some of them rather than just putting them on the MLS for sale?
- [34:52]
C
Well, that is important for us is like how are we going to exit? I think it's important to always go into this with the exit in mind. And that was one of the reasons we left multifamily. We had a 16 unit apartment complex. And I kept thinking in our retirement, how are we, you know, you can't just, you have to sell it as a one transaction. So what we wanted to do was Instead of having 16 units, we wanted to have 16 manufactured homes so that over the course of 16 years we could sell one a year or, or be able to have that extra cash and appreciation. These homes have appreciated too, by the way. I just want you to know that, that, that is true. They don't appreciate at the same rate, but the cash flow is so high. We buy them for cash flow. They rent so much for the same for a rental rental. They rent very much the same as a stick frame. However, the purchase price is less. So we go into it not thinking of appreciation. However, we have benefited from apprecia. The exit that we've used though is that we have wonderful tenants that have stayed with us for a long time. But these, our tenants might not have thought they could be homeowners. And so for several of them, we have gone to them and asked, do you want to stay here for long term? Is this where you want to be long term? And if so, we were willing to sell the property to you. So we've done three of those in Oregon here with our existing tenants that they never really thought they could ever own a home. And we educated them. Dan and I are both financial coaches and so we educated them on how they could do this. We structured their payments to be similar to their rent and now we hold the note. But they are buying the houses from us. So that has been really rewarding and it's a great, it's a great win for us too because those houses had appreciated and now we, we take that, that capital appreciation over time.
- [36:57]
B
We've only interviewed, I think a couple of other folks who have done like the, the lease to own as the landlord. But just give us like the quick mechanics of that transaction. Like if someone moves in and you know, they move into your unit, are you agreeing on a preset purchase price the day that they move in? Is it after a couple of years? Are you taking any like Big refundable, non refundable deposits. Like just what are the mechanics of that transaction?
- [37:21]
C
Yeah, these are tenants that have been with us for a while where we have said, you know, you've been paying us and this could be you paying yourself, you know, so that you own that. We do require them to. We walk through the opportunity and say this is the price, this is what it would be, this is how much we would require as a down payment. So we do take a down payment just like a bank would and then we structure the payments for their finances and that's how we do it. So we don't do it at the front because one we want to get to, we want to date first before we get married does that. So we don't do it up front. And we do quite a bit of the education and then of course the flexibility. So we had one tenant that we have sold a home to that wanted to restructure her loan and we were able to do that to meet her new finances. And that worked out really well for all of us. And it was one of those things, it feels so rewarding. And that's what I, I like to think about as legacy wealth. Because not only are we benefiting, but we are really helping lift these, our tenants up. We're really being able to help. This helps the community. I mean they become homeowners and, and that's a win for everyone.
- [38:42]
A
I think also too is that when that tenant came to you and you know, was proactive about I need to restructure it and came to you ahead of time before they're six months behind on payments and not communicating with you at all, whether it is someone paying rent or paying you a mortgage payment, that, that really shows like the difference in, you know, a quality tenant as to the one that's going to be proactive. I would way rather work with somebody to work out some kind of payment arrangement or change structure because they came to us first and were proactive about their money situation than being reactive and having to chase them down and then finally figuring out the reason or whatever it is or having to start the eviction process and then finding out the reason in court. So I think that also goes to show like how you're choosing, you're choosing the right people to actually do this with instead of just offering it up front too.
- [39:41]
C
Well, that also speaks to us as self managing because since we do self manage, they know us, they know we are the landlord, we are the owner of the property. There becomes a relationship also. So it's we stress Dan is particularly good about this is communication is key. We need communication. We need to know if there's something wrong with the property because we are very responsive in getting it fixed as a landlord and because it only works to keep the tenant. We have so many tenants in our history that have been with us for years, some decades. And that's where you really find that if you get that good relationship, that's it's a win win for everyone does that.
- [40:27]
A
Well, Liz, thank you so much for joining us today. We are so grateful to have you here today to share your journey, share your experience. Where can more people reach out to you?
- [40:37]
C
Yeah, I I hang out on Instagram so mindful money coaches.com not as active as I used to be there, but mindfulmoney coaches. Mindful Money coaches on Instagram. Mindfulmoney coaches.com on our website. So.
- [40:53]
A
Well, Liz, thank you again. Thank you for everyone listening today to this episode of Real Estate Rookie. I'm Ashley, he's Tony, and we'll see you guys on the next episode.
- [41:04]
B
Hey rookies, if you're watching this, we want you to apply to be a guest on the real estate Rookie podcast. That's right. Ashley and I are looking for amazing stories just like yours to be a part of our real estate rookie podcast. Now look, you don't need to be an expert. You don't need to have done thousands of deals. Even if you've done one deal, your story could help inspire the next listener.
- [41:22]
A
As a rookie investor. Especially if you just got your first deal. It is all fresh in your minds and you are the buyer, best person to tell your story, give your experience on how you got it done to help someone else get their first deal.
- [41:35]
B
So head over to biggerpockets.com guest if you want to be a part of our show again, that's biggerpockets.com guest and we'd love to have you on.
- [41:44]
C
Join Vanguard for a moment of meditation. Take a deep breath.
- [41:49]
A
Picture yourself reaching your financial goals.
- [41:52]
C
Feel that freedom. Visit vanguard.com investinginyou to learn more. All investing is subject to risk.