← Real Estate Rookie
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- [00:00]
Ashley Kerr
One of the fastest ways to get into real estate is house hacking, a small multifamily property. But what if your first house hack also came with a leaking porch, a $3,000 electrical issue, and a car breaking down right after closing?
- [00:16]
Tony J. Robinson
Our guest today, Steel Evangelisti, didn't let any of that stop him. At just 22 years old, he's two deals deep and showing a whole lot of hustle.
- [00:30]
Ashley Kerr
This is the Real Estate Rookie Podcast, and I'm Ashley Kerr.
- [00:33]
Tony J. Robinson
And I'm Tony J. Robinson. And, Steel, welcome to the Real Estate Rookie Podcast. Thank you for joining us today, brother.
- [00:38]
Steel Evangelisti
Hey, what's going on, guys? How are you?
- [00:40]
Ashley Kerr
We're so excited to have you on today. Steel, why don't you start with telling us a little bit of your background and what your life was like before you started investing in real estate?
- [00:49]
Steel Evangelisti
Yeah, I think that's a great place to start. So when I was about 15 or 16 years old, I had roughly $1,000 worth of bonds saved up from my grandparents because they were super old school. And every birthday, every Christmas, they would give me these bonds. And once I turned 16, I'm like, okay, I'm time to cash it in. Took all the money from that. It ended up being right over $1,000, and put it into a bunch of stocks. And, like, at the time, I was just putting in the hypes. Hype stocks, a bunch of Apple, bunch of Tesla, whatever you can do. What's called a custodial account, which is, like, where your parent allows you to buy. Buy stocks pretty much on their behalf. And that was, like, my first introduction into investing. Long story short, I. I played around with the stocks for a little while, got introduced to real estate, and said, dang, this is actually a pretty sweet gig. Once I got into it a little bit, I couldn't stop it. You know, everyone calls it the real estate bug. Once I had the bug, I could not get rid of it. And the last five or six years, it's been crazy. The amount that I've learned, the amount that I've, like, experienced has been absolutely nuts. And it's been a wild ride.
- [01:57]
Ashley Kerr
So let's go over that first deal. How did you find it? Where did you find it? And kind of go into the details of that.
- [02:05]
Steel Evangelisti
It was somewhat easy. I mean, throughout my entire college life, the three years that I was at Pitt, I was constantly checking Zillow, checking anything that was on the market, even, like, some Facebook groups, seen. Seen what was out there, because I knew once I graduated and got hired for a Full time job that I would be house hacking immediately, as soon as I could. So then once I got hired on right after graduating, found this place in the town that I grew up, which is super easy when you do that because you're, you're very familiar with the market, with the prices, and even if you don't care that much, you know where the nicer areas may be. So knowing now it was super comfortable to get into a house, especially when buying your first home can be wildly overwhelming. So at least having an idea that I'm buying a good place in what I felt like is a good neighborhood, that that allowed me to do with some comfort that like a lot of people probably don't have. So anyways, this first deal, it was a two unit, I house hacked one unit while doing like a live and flip kind of situation and rented out the other one. So then you're getting the, you know, the benefit of having a renter over there while also getting the real estate experience, getting to flip it and then eventually moving out and running it all together.
- [03:18]
Tony J. Robinson
And was this property just listed directly on the mls?
- [03:21]
Steel Evangelisti
Yeah, this was an MLS listing. I found it on Zillow. I like took so much pride and joy in this when I first found it. Looking back now is so stupid, but I was so dialed into looking at Zillow as soon as something came up. So when this house popped up within two minutes I texted my agent and said, we gotta get over here. Like this is $20,000 undervalued. We went over that night, saw it, put the offer in the next morning. They, the sellers wanted to hold off on accepting our offer. They were hoping for a little bit of competition. And after our time of, time is of the essence, ran out pretty much like the deadline on your offer, I went to my agent, said how can we get them to move? Because we knew they didn't have any offers, any other offers in yet. And she said, hey, let's just knock our price down a little bit and put the pressure on them to make a decision. If they're going to keep playing around, then they're going to keep losing out on money. So I end up getting it for five grand under, under what I was originally offering. And I was like, oh, this is even better. This is a great buy in the first place. Now I'm getting it for five grand less. Sweet.
- [04:24]
Tony J. Robinson
Yeah, that's a good agent. I love that tactic. Like, hey, we're just going to keep decreasing our price every X number of days until you say yes. And they can just literally see the money drifting away. What about the financing side still? How did you, how did you structure the financing for this first purchase?
- [04:40]
Steel Evangelisti
So leading up to purchase in my head the whole time I'm thinking I'm going to do a 3 1/2% FHA loan. That's what everyone talks about on Instagram or TikTok or whatever. In reality, if you want to buy a place that's a fixer upper, you're probably going to have to go conventional. FHA has a lot of restrictions on certain things. Just because they don't want to finance a place that you know, has a lot of work to it. It's a little bit of a liability from them. It's just a, you know, it's stricter way to get a mortgage for a house. Once I realized that, I decided to go with the 5% down conventional loan, did 3% seller assistance which is towards your closing cost. And that was a very affordable way for me to get into my first deal because obviously I just graduated, didn't have a ton of money in the bank. It was just everything that I, I made in high school and in, in college in like the first month of you know, full time paychecks once I, once I was done steel.
- [05:31]
Ashley Kerr
Can you talk about that seller assist, what is that and how did you get it?
- [05:35]
Steel Evangelisti
Yeah, that's like my favorite strategy for as an agent. Now for buyers who are trying to get into their first time home or even if they're just trying to keep some money in their pocket, it's basically a chunk of cash that the seller is willing to take off of their proceeds from the sale and put towards the buyer's closing cost. So if you bought a house for $100,000 and you got a 3% seller cyst, the seller is willing to take $3,000 and put it towards your closing cost. Essentially money in your pocket rather than coming down purchase price. Because if you're paying that over 30 years, it's not going to change that months that much for your monthly payment. But getting it right up front is, is usually more valuable depending on your strategy. But for most cases that's, that's what the situation is.
- [06:18]
Tony J. Robinson
So still you did a live in flip slash house hack. What was the rent situation and how did you increase the income on the units?
- [06:26]
Steel Evangelisti
Yeah, so when I bought the place, only one of the two units was currently rented out. They had it at $600 a month which as is was undervalued by about 300, $350 so I walked in day one, got a renter into the the unit that was vacant for $900. So that's immediately 900 bucks more than what the previous owner was making. I moved into the unit that the tenant was currently living in. Had to do the dreaded like kicking them out kind of situation, but gave them, you know, a 30 day notice, which is tough, but they were on a month to month and you know, it's just something you have to do. They, they were super respectful about it. They cleaned the place up, honestly better than I probably would have. It was absolutely spotless. Moved in there, it took me about six months to flip the place, but that was working a full time job and doing everything myself. I did all the work myself, didn't outsource anything.
- [07:21]
Ashley Kerr
Did you have any construction experience or Is this a YouTube university story here?
- [07:27]
Steel Evangelisti
Yeah, disclaimer. Absolutely none at all. I went to school for marketing. I grew up like in the sticks. So like, like, you know, I know how to use tools and everything, but didn't know anything about construction. But when you're in a house that you own, the risk is very little because if I mess something up, it's like, okay, it's my house, I can do that. Day one went into my, my bathroom. It's a two bedroom, one bathroom for each unit. Went in and demolished the whole thing. I just said, well, you know, you can't go wrong here. If I'm ripping down walls, ripped everything up. Within two weeks I had the whole thing renovated. And what's so nice about the Internet now is like I could watch tutorials on how to do full bathroom renovation. Walked in and did it in under $1500. Everything, tile, drywall, trim, new tub, shower walls, everything.
- [08:18]
Ashley Kerr
You know what steel? I'm only about a three hour drive away. You're h two weeks for a full bathroom renovation while working full time and learning as you're doing it all is actually pretty good.
- [08:32]
Tony J. Robinson
Pretty impressive. Yeah, man.
- [08:34]
Ashley Kerr
And for all under fifteen hundred dollars too.
- [08:37]
Steel Evangelisti
Yeah. Which is like so lucrative if you're trying to keep money in your bank and if essentially if you're poor, that's the best, best way to do it.
- [08:44]
Tony J. Robinson
I think there's like another hack now beyond YouTube University. And I've been thinking about doing this or at least testing it out. But if you, if you have chat GPT, they have like the, the voice mode where you can show chat GPT your camera. And I've tried it with like random little things, but I wonder if you could like just show chat GPT Hey, I want to renovate this bathroom or I want to install this tile and I wonder if it would literally like talk you through step by step on how to do it. I haven't tested that theory out yet, but I guess if you get another live in house hack or flip steel, you you let us know and you test it out.
- [09:21]
Steel Evangelisti
I'll definitely do that.
- [09:22]
Ashley Kerr
We're going to take a quick ad break, but when we come back we're going to hear more from Steel on the unexpected renovations for his first property and how he financed his second deal. We'll be right back.
- [09:37]
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- [11:20]
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- [12:02]
Ashley Kerr
Okay, let's get back into the show with steel. So what ended up being your biggest challenge on this property as far as renovations go?
- [12:12]
Steel Evangelisti
Yeah, the biggest challenge is definitely anything that you weren't expecting to do. When I bought the place, obviously I had an inspection done. And what you love about inspection is they tell you everything that's wrong about the place, even if you're personally not going to be too concerned about it. So you have this whole list. They give you a report that says X, Y and Z need to be done asap. Then there's another list of things that need to be done within the next couple years and then just some other maybe cosmetic things. I begin my renovations and taking care of the items that I felt were the most pressing. And then within a month or so, I get hit with the first storm of the year of my ownership and realized that my front porch roof is leaking right where it lines up with the house. And this was causing rain to come inside of my siding, drip down into the window that was right below it, and then into my house. Pretty much like flooding my whole first floor because of this whole porch roof. $3,000 later, cash up front that weekend, Ripper comes over, takes care of it, drains my bank account. That's done with. Next day, right after the roofer's done my car, my car breaks down. I take it to the dealership for them to do a recall. If anyone doesn't know, recall is pretty much, you know, the company, the car manufacturer paying for a repair. I took it to the dealership and the mechanic left my car door open, drained my battery. He went to go jump my battery and had the cables flipped, which then fried my whole computer system in my car and ended up being an $800 bill. But you know, they covered it for me. But I'm like, how is this even possible? I buy this house, we're into it a month. I spent all my money on this bathroom, just spent three grand on this roof that I didn't know was an issue. And now my car is like completely shot because the mechanic hooks my battery up wrong. It's like just, it was the perfect like eye opening moment for like landlordship. I'm like trying to get tenants in the house. It's just absolutely nuts.
- [14:21]
Ashley Kerr
It definitely shows you how important it is to have reserves in place and to expect the unexpected to actually happen. So steel, let's go into deal number two. So you're 22 years old and you've already hit deal number two. Where did you find this deal?
- [14:38]
Steel Evangelisti
Again, not proud. This found this one on Zillow. I like to take pride in my like off market deal finding abilities. That's like part of the reason I became an agent because I was finding so many houses and I'm like, man, if I had the money, this would be cash flowing like 1500 bucks a month, just like wild numbers. But like I can't afford it because it's a $500,000 house. Find this one on the market. It just got forgotten about by, by people, by investors. Got it for 240, 000. Did the exact same strategy that I did for the first one 5% down conventional loan with this one specifically I did a did where the seller covered my transfer tax. The city of Pittsburgh has kind of high transfer taxes. It ends up being like 5% in total. So 2, 2 and a half percent per party. Obviously didn't want to spend that on a $240,000 house up front because it's still poor. I don't have a lot of money. And at some point you max out the seller concessions that you can get the seller credits like that 3% I was talking about. So this is another strategy to get the seller to help pay some of your upfront closing cost. And then you get into a deal as cheap as you can, end up being like 17 grand up front again to this house. Given the situation that was, that was pretty solid in my opinion.
- [15:59]
Ashley Kerr
And for yet $17,000 down for a $240,000 house is pretty good. What, where did the 17,000 come from? Was this just from saving?
- [16:09]
Steel Evangelisti
The great thing about house hacking is it's pretty easy to save, especially when I was done with my renovations. I was just, you know, pocketing almost all of my income from my job. Also sold off like any possessions that I had that like I didn't care about. Like I had a snowmobile I sold as like 2 grand and just kept saving up. Something that they don't tell you when you're trying to bounce from house hack to house hack is you need somewhere to live. So I needed to have both apartments income to. To help my DTI so I could buy another place so quickly. Had to move back in with my parents for two months, which is like who wants to do that after you're already moved out?
- [16:48]
Ashley Kerr
Hey, the sacrifices, man. Yeah, my mom welcomes me back home. I free meals.
- [16:53]
Steel Evangelisti
Well, they ended up kicking me out. They kicked me out. So then I had the. Luckily my girlfriend's house is like 10 minutes from mine. So I went over to their house for another like six weeks and I said okay. Every week was like a thousand dollars I just got to put in my bank because like they fed me, you know, all I'm paying is for gas to go to my job. End up getting the save up roughly 30 grand. At that point I said okay, this is enough to where I'm comfortable buying a second place. Ended up getting this one. Have the same tenant. Pretty much inherited the tenant that was upstairs, kept him there, had to move the the first floor tenant out, which again, like if you've never done that, it's not the most satisfying feeling in the world to have to kick someone out. But he was cool with it. He kind of wanted to leave anyway, so it worked out nicely.
- [17:39]
Tony J. Robinson
And how are the cash flow numbers across your portfolio today still?
- [17:43]
Steel Evangelisti
Yeah, I mean so my first property I have at a 7.35% interest rate. So to cash flow on that is not easy. But luckily it's an affordable market. In my hometown, I get roughly 300 to $400 a month. I set aside a lot for Capex because it's a. It's older home. Something about the northeast is our homes are crazy old. This one's from 1924, so like you have to put away a ton of money for Capex. I have something every month that's going wrong with it. The second property, again, super old home, but the previous owner took care of a lot of the major items as new water heaters, new furnace, new roof. It's a brick home. It's really solid. Still, things go wrong. So I put put away a lot for Capex right now obviously doesn't cash flow. With me living in it as is, it would break even about $2,400 a month of income. Once I'm done with it, I'll get 28 to 3,000 of income, which will be about 400 again of cash flow. And that's at a rate of 6.75%.
- [18:47]
Ashley Kerr
You know, the, the cash flow is good, especially in today's market. And the thing that I'm really focused on though, as you're telling this, is that you're 22. And one thing that I have really learned, like I started investing 10 years ago, is that the value of your properties 10 years from now is significantly more valuable than the cash flow that you got over the years. And I'm just thinking you will be 32 years old in 10 years and what those properties will be valued at and you know, how much your mortgage will be paid down by then in those 10 years and what the equity will be in the home. So congratulations on getting started so young.
- [19:31]
Steel Evangelisti
Well, thank you. And like huge shout out to like principal pay down. If you're not doing that. That's like I do an extra $100 a month towards my principal. It changes your, your interest that you pay over time by insane amounts of numbers. And also your loans, it changes by like five to seven years even if you do $100 a month.
- [19:50]
Ashley Kerr
Yeah, that's great advice. And another one too is like pay every two weeks instead of every month because if you pay like your mortgage payment, like half of it a little bit early, it will reduce your interest paid over time too. Okay, so before we kind of close out here, Steel, what do you wish more rookies knew about house hacking?
- [20:12]
Steel Evangelisti
House hacking does not have to be buying a duplex. It doesn't have to be buying a quadplex. I know to some people that's less than desirable because like, who wants to, you know, be a landlord to some tenant next door? A lot of people like to have their privacy. It is a big sacrifice that you have to do. And like we were saying earlier on, you sacrifice for the greater good. In the long run, house hacking can be as much as living in your parents house, renting out a unit, renting out a room in your house, having like your best friend pay you some rent, even to just hang out with you. If you have a boyfriend or girlfriend. I charge mine $700 to live in mine. That's house hacking. It's just a way to cut down on your monthly payments that you're making. Towards your pretty much for everyone. Your largest bill every month. And it's super lucrative because if you're gonna try and cash flow $700 a month or a thousand dollars a month, that's gonna be very difficult to do. But if you have someone helping pay your own living expense, it's pretty much doing the same thing. And then you get to put more money in your pocket, more money in your bank account, and, you know, work towards what probably everyone here is listening to is trying to do.
- [21:22]
Ashley Kerr
Well, Steel, thank you so much for joining us today and coming on to the real estate rookie podcast. We really appreciate you sharing your journey. Where can other rookies reach out to you and find out more information?
- [21:34]
Steel Evangelisti
First place I'd go to is Steel sells Steel City on Instagram. That's my real estate account. We have an insane goal of me trying to hit $10 million in sales by the end of the year. Just started like a video blog for that, just to see how the journey is going. So hit me up there. Obviously, can DM me. I'm in bigger pockets too, so you can find me there.
- [21:54]
Ashley Kerr
Well, still, thank you so much. And I'm Ashley and he's Tony. And we'll see you guys on the next episode of real est Rookie.