← Real Estate Rookie
Real Estate Rookie
Leaving Her W2 Job to Chase Financial Freedom with THIS Real Estate Business
00:46:56
Burned out at your W2 job? Tired of climbing the corporate ladder? Starting a real estate business could give you financial freedom, but is it worth giving up the security of a biweekly paycheck? This entrepreneur thinks so, and today, she’ll give you the blueprint for forging your own path in real estate! Welcome back to the Real Estate Rookie podcast! Melissa Shelton is not only an investor, but also the founder of Dear Valentine, a business that blends luxury, hospitality, development, and management. Quitting her nine-to-five job to become a full-time entrepreneur wasn’t an easy decision since she had worked tirelessly for many years to reach the top of her field. But, in the end, her “why” won out, and she mustered up the courage to go all-in on her dream! In this episode, Melissa will show you how to launch a “small and nimble” real estate business. You’ll learn how to set goals, grow your clientele from scratch, and build a business plan that keeps you afloat. But that’s n...
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- [00:00]
Ashley Kerr
Have you ever wondered what it takes to leave a steady W2 job and launch your own real estate company? Well, today's guest left her corporate career in the design industry to follow her passion and create something truly unique. She's now the founder of a luxury hospitality development and management company dedicated to crafting one of a kind spaces and unforgettable experiences for travelers with a love of design. In this episode, she shares her journey from the corporate grind to full time entrepreneurship, blending her creative expertise with bold business moves to redefine what luxury real estate can be. Get ready to be inspired and learn how she's building wealth while transforming the way we experience travel and design. This is the Real Estate Rookie Podcast. I'm Ashley Kerr and I'm here with Tony J. Robinson.
- [01:02]
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.
- [01:11]
Melissa Shelton
And we are so excited to be joined by Melissa Shelton on the podcast.
- [01:15]
Tony J. Robinson
Today, the founder of Dear Valentine, a company that again focuses on helping investors plan, launch and manage their property. So, Melissa, thank you so much for being with us here today.
- [01:23]
Ashley Kerr
Wow.
- [01:24]
Melissa Shelton
Thank you guys so much. I am very excited to be here. This has been an aspiration for me for a few years since I first came into the real estate journey. I listened to the rookie show and then I officially set it as a goal this year and it's happening. So thank you so much.
- [01:41]
Ashley Kerr
Well, we are just as excited to have you as a guest today and to learn about your journey. So let's start off with the beginning. What was your introduction to real estate?
- [01:51]
Melissa Shelton
The first time we, my husband and I, bought a property was in the fall of 2020, and I had always been interested in real estate. I actually went to school for interior design because I had a passion for flipping houses and remodeling houses and I wanted to learn a little bit more about that business. And I was really interested in design. So I got my degree in interior design, but then graduated in the middle of the recession. So never actually fresh out of school, never really started in the career that I thought I was going to be doing, which is what I thought I was going to school for. And then I ended up going into a sales role for many years. And in 2020, when a lot of us were sitting at home scrolling through our phones, trying to figure out where the world was going to take us next, I had my eyes set on a property that was not moving. It had been on the market all through Covid and they dropped the price. It went under contract, and then it was released from the. And then they put it back on the market for a little less than it was originally listed. And I told my husband, this is the one. We have to do it. It's such a good price. The mortgage rates are great. And so we bought it site unseen. And then, of course, we were able to get down to that city and see it in person and, you know, within the inspection period. But that was kind of our entry into it. And then I started listening to BiggerPockets, and the bug just bit me from there forward.
- [03:15]
Ashley Kerr
So what was that first inspiration that you decided to really get into to real estate? And did you already know exactly what your strategy was going to be and where you wanted to go with this?
- [03:28]
Melissa Shelton
Back in 2013, kind of the earlier days of Airbnb, I had a very small apartment in New York that was on a popular street in Williamsburg. For any of those who know, Brooklyn Williamsburg was really hopping. And so I started traveling a lot for work. I was working for a company that had me gone probably about 50% of the time. And so I started Airbnb, my apartment, to bring in some extra income. And then I started living with my boyfriend. We got serious and started living together, but I kept my apartment and pretty much was Airbnb being it full time. So that really inspired me to be a host, because I loved that. And these were the early days of Airbnb, where, you know, you would leave handwritten notes for all of your guests and, like, bottles of wine, and, you know, your guests would be coming from Australia and you'd give them this whole, like, spiel and you'd meet them and, like, it was just a very personal hospitality experience. And I come from the service industry. I worked in a restaurant all through college, some of high school, so some of design school. So for 12 years, like, my job, the way I made money was hosting people, was serving them and taking care of them and making sure they had a good time. So it's in my blood. And when I saw that I could do that on a small scale as an Airbnb host, I just really couldn't get enough of it. But New York banned Airbnb. I had to stop doing that with my apartment, and I basically took a Pause until around 2020, 2021, when we bought this investment property, and then we restarted in the hosting world.
- [05:00]
Ashley Kerr
Melissa, when you first started your real estate journey, was it your intent to quit your W2 job? And did you think you'd Be going into full time entrepreneurship outside of real estate, of just having this company too, not just as a full time investor.
- [05:16]
Melissa Shelton
I think your question is like, did I know all along that this company that I was going to build was going to allow me to quit my job? But the answer to your question is actually like, yes, of course. I've always wanted to quit my W2 job. I like, from the day I first worked a job in retail when I was 17 years old. Like, I didn't want to do that. So, no, I wasn't building this only so that it could become my financial independence and it could get me out of my W2 job because I did love the work I did. I was very well compensated. I had a really great team. I had built in a reputation for myself in my industry that as being, you know, a female leader was something that I was having a really hard time letting go of because I felt like I had fought my way to the top of the corporate ladder. And to just give it all up is, you know, something that I looked in the mirror and said, are you stupid? Why would you walk away from this senior role that you have? Why would you walk away from this big paycheck? And so, yeah, in a way, I wanted to create something that I enjoyed enough that it would give me the why to finally say goodbye to my previous self, which was so closely identified with my corporate career.
- [06:34]
Tony J. Robinson
Yeah, you hit on something, Melissa, that I just want to drill down a little bit. Like that last sentence of like, you identified your, you know, in a certain way as a W2 employee. And like, just think about when you meet someone new, you usually ask them, oh, well, what do you do? And what's our typical response is what we do for work, right? It's like, what is our profession? Right? And I think so much of our psyche is side of what we do for, for our day jobs. I even today, sometimes still, you know, and it's a, it's a thought that passes quickly. But even for me, sometimes I have this thought of like, well, man, you know, am I missing something by not climbing a corporate ladder anymore? Because I done it in the W2 space and I did it, I did it well. I climbed the ladder quickly. And I sometimes, even today as a successful entrepreneur, still feel like I might be missing out on something. This is really weird dynamic because I love working for myself. I don't ever have a desire to go back for a W2 job. But at the same time, we're so conditioned as people, as adults to climb a ladder that when you're not doing it, you feel that you're almost doing something wrong.
- [07:31]
Melissa Shelton
I believe, and I've had to evaluate this a lot because it took me a long time to get up the strength and courage to leave a really good career. Everyone in my role retired in my role. So the fact that I was leaving while still young, while at the top, was something that again, I looked in the mirror saying, are you stupid? Why would you do this? You know, it might, you might fail, you might not make money with this next venture. So I believe personally that my issues and concerns about no longer climbing the corporate ladder are tied to my desire to please people, my desire to be validated, my desire to check a box of accomplishment because I'm an ambitious person. So when you work in a career, you have the, let's call it the ladder, but it's the trajectory of various positions and the trajectory of increasing compensation. And those accolades and rewards that you get are depositing in your confidence bank every single day. If you're getting them right, which as ambitious people we are, we're going to fight until we get it. So when you now step out and you become an entrepreneur, you have to set up your own new goal system. What are the milestones that you're going to set up for yourself as an entrepreneur, as a, as a female leader, as a designer? Whatever your path is, write that path down as if it's a structured HR trajectory for a new company that you're going to work for. If you're a person who feels like you need that validation, which I am that kind of person. I know I am after many years of working in the corporate world. So then, then you can pat yourself on the back, you can put a employee of the year sign on your wall because you accomplish that in your own company if that makes you feel better. But I think those little things do matter to some people, like me.
- [09:21]
Ashley Kerr
Rookies, we want to hit 100,000 subscribers on YouTube and we need your help. While we take a quick ad break, you can go on over to YouTube.com esaterokie and make sure you're subscribed to the channel. Stay tuned after a break for more from Melissa.
- [09:39]
Henry Washington
Hey, Henry Washington here from the on the market pod. You ever get frustrated while hunting for off market properties? Well, you're not alone. Just ask Alex, a fellow real estate investor who was in the same boat struggling to find those hidden gems. Then he discovered Deal Machine. Now Alex effortlessly locates off market gems, leveraging Deal Machine's free unlimited contact Data powered by the robust databases used by 911 call centers. And it automates mail campaigns seamlessly. So you ready to revolutionize your real estate game? Like Alex, visit biggerpockets.com dealmachine Sign up for free and start transforming your property hunting today.
- [10:13]
Melissa Shelton
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 hello to confidence in renting with Rent Ready. Rent Ready is included in your Pro membership app, BiggerPockets. Now, if you're not a pro, they're offering a six month plan for just one dollar. You can't beat that. So visit rentready.com that's R E N T R E D I dot com and use the code BP Investor. That's BP like Bigger Pockets Investor to get six months of rent ready for one dollar.
- [10:57]
This show is sponsored by Airbnb. Fall is here and I've got a trip coming up soon. And while I'm enjoying the autumn vibes, my home will be earning me extra cash as an Airbnb. And the best part? Everything's managed right from my phone so it doesn't mess with my vacation plans or my pumpkin spice lattes. Airbnb makes hosting easy and practical. Whether you're gone for a weekend or a month, it fits right into your lifestyle. Your home might be worth more than you think. Find out how much@airbnb.com host all right.
- [11:28]
Tony J. Robinson
Welcome back to the show. We are joined by Melissa Shelton.
- [11:31]
Ashley Kerr
Melissa, outside of the mindset piece, what are some other actionable things you did? Do you make sure that you felt secure and confident enough to go out and build your own company? You know, did you have some kind of financial foundation, an amount of reserves? What are some of those other things that somebody listening could say, like, okay, here's things I need to think about before I actually decide to quit my job and take this leap into entrepreneurship, Right?
- [11:58]
Melissa Shelton
So first and foremost, yes. If you have reserves, it will help because you'll feel a little bit of financial security and you can look at your spending and budgeting and understand how much do I need every month and how long will it take me until I start making money in my new venture to be able to balance that scale. Like, I can tap into my reserves for six months or maybe it's just three months, or maybe it's just one month. But then what happens when you finish that reserve? What's the plan to build up the other thing? So the two steps that I took were, number one, I tried to save. It wasn't very easy because I also, as you can tell, I like nice things. So I would travel a lot and spend a lot. So that was hard. It was hard for me to save. But what I did was I put a plan together for how much money I could make in my new venture if it was structured the way I expected it to be structured the way I wanted it to be structured. And essentially I broke it down. Okay, if I have one property that's doing an estimated revenue of this much per year, with highs and low seasons, I can have this much of a average monthly cash flow. That average monthly cash flow from one property is going to be X. Okay, how many of those properties do I need? And then if that's, if I'm not able to get enough properties fast enough, what are other ways that I can supplement my income? Whether it's. Whether it's offering consulting or launching a digital product. I mean, all of these things are on my, you know, goal list for things I would like to do for Dear Valentine. But I basically built up a revenue plan to replace my W2 income.
- [13:32]
Tony J. Robinson
And I think that's. That's a super important point of not just relying on the cash flow from your portfolio to help you make that transition. I think that's where a lot of folks get stuck because they feel like it, hey, it's gotta be 100% of the money that I make from my. My rentals that allows me to step away. But sometimes that transition, it's a blending of different streams of revenue. So for all of our rookies that are listening, ask yourself, are there any additional skills, abilities, things that you have that are maybe somewhat related to the world of real estate investing that you can then go out and do to maybe earn some additional income? We've met people who do, you know, they start design companies. We've met folks who become agents once they leave their W2 job. People who get into lending. Like these are things that are maybe somewhat connected to real estate, but they're their jobs or side hustles that will allow you to get away from that W2 and continue to focus on building something for yourself.
- [14:24]
Melissa Shelton
I also think it's important to remember that if you're quitting your W2 job and we're assuming in this situation, it's A full time job, chances are you have strengths, skills, specialties that are, that you're good at. So maybe you can use one of those strengths or skills or specialties in a consulting role. Maybe you can work part time. You know, I think really like the biggest hurdle to get over is getting away from your full time corporate job or W2 job. Maybe it's not in a corporation, but getting over that hump is step one. You could still work part time if you, if you still need to. Maybe that's part of your revenue plan. Maybe part of your income is supplemented by part time consulting or part time marketing. If you're a marketing person. I would just say go back and look through what you've been doing the last two, five, ten years and clearly that's something you're good at if you've stayed employed. And how can you leverage that skill set to be part of your revenue plan? You don't have to completely start over. Your pivot doesn't have to be 180 degrees. It can just be a 20 degree pivot, you know, 20 degrees away from working for somebody else full time and putting your dreams on hold.
- [15:35]
Tony J. Robinson
I want to go back, Melissa, to that moment though, when you actually made the decision to say, I'm going to do this full time. And what would, what was it that happened leading up to that point to make you finally comfortable and confident to say that? Was it that you had the plan and you'd kind of mapped everything out and made sense? Was there something else? But like, how did you actually get to the point where you said today is the day?
- [15:56]
Melissa Shelton
Well, the truth is I wanted for a long time to build something that was my own. And I. There wasn't really like a moment that I had the courage to just do it, to walk away. And I think that just kept me in these roles for longer and longer. And I was building something and I was growing something and I felt the reward of the building and growing I was doing in the corporate ladder. And then I got pregnant and I, which I worked very hard for. It wasn't like on accident. My husband and I worked for many years to get pregnant. And then once I got pregnant, it was almost like, okay, we've achieved a milestone. What are we going to do once we cross this bridge? Right? So once we have our baby, then things are going to be different. And am I going to go back to work in the previous role that I've been in for all of these years, which required me to go international, travel international six times a Year and be on the road all the time. So having a baby really put that in perspective for me. And I guess you could say it was the why that had me tell myself that it was finally time. And then, of course, I had to start working really hard on the plan because I knew that it was something that I wanted to do not long after the baby was born. And so for that reason, I basically approached it like I do any big project. I just put together a plan, a timeline. What are the things that need to happen to make this happen for us? You know, what needs to happen with my husband's income, what needs to happen with my income? What do we, what do we need to cut? We sat down and, like, talked about cutting subscriptions, cutting manicures, like cutting the, you know, once a month massage or whatever it was that we were spending money on. Because at the end of the month you would add it up and you'd be like, wow, how did we spend all of this money on U Uber Eats, for example? Okay, maybe, maybe, maybe when I quit my job, we'll just agree to like, not go out to eat for a few months or only once a week or only once a month. And, like, were these sacrifices things that I was willing to sacrifice to be able to spend more time with my kid to build a company that was going to be a legacy for him, you know, like, yes. The answer was yes. I could survive without a manicure or, you know, a delivery burrito if I needed to know.
- [18:17]
Tony J. Robinson
For our rookies that are listening, I know we're talking a lot about that transition, which is maybe a little premature for the people that are listening. But I think the important part of what Melissa's sharing is that you've got to build a plan to be able to get to that point. And if you're just kind of flying by the seat of your pants, then maybe you never actually get there. But if you sit down and you map it out, there's a tremendous amount of value in doing that. I just, I just quickly want to share too. Like the, you know, I asked you, Melissa, like, hey, what was that moment when you knew and you said it wasn't really a moment, it kind of happened over time. For me, it was a specific moment. And I lost my job on December 23, 2020. Like, I'll never forget that moment. And it wasn't at that moment that I decided that I wasn't going back, but it was after I had applied to a few other jobs that I was very, very much qualified for And I didn't get them. And the last one, it was, it was a company that I worked for previously and I'd gone on and done a lot more since that job and had gained a lot more experience. And I applied for a role that was relevant, relevant to the experience that I had gained. And like, hey, Tony, we're so happy to hear from you. Unfortunately, we don't think you're a good fit for that role, but we can give you the role that you had when you left, which would have been a major pay decrease, a decrease in scale, decrease in everything. And I sat down, I was like, what am I even doing here? Why am I focusing on letting someone else dictate the value that I'm able to provide in the marketplace? Let me go try and do it for myself. And it was that moment I'll never forget when I got that email. I was like, I'm not going back. I was like, let me give myself some time to do that. So that was a moment for me. Ashley, what was it for you? What was that moment when you said, I don't think I want to work for anyone else?
- [19:53]
Ashley Kerr
Well, first I want to kind of piggyback off your experience because being an entrepreneur comes with its own challenges. And sometimes you feel like you're working 247 and you have to deal with the difficult tenants, difficult guests, whatever. But I don't know if you told this story or your wife Sarah told this story, but I think it was her. And she said how there was just this irate guest that was treating her so bad and she was so upset about it and she came to you and you said something like, it's our house. Tell them to leave. Like we'll be done with it. Tell her to leave. Tell her to get out of our house. Like you can do that. It's our house. And that right there was just like such a big thing to me as to like, even though there's like difficult guests, difficult tenants, like a long term tenants, a lot difficult to just say, hey, leave my house. But like ultimately it's your decision how you want to handle it.
- [20:49]
Melissa Shelton
You're.
- [20:49]
Ashley Kerr
It's not going to, you know, working for someone else if you make that decision and it's not what they wanted. Like then, you know, obviously that impacts you, that impacts how you grow, you know, climb the corporate ladder or whatever that is and puts that pressure on you. But I always think about that when I have difficult situations with people. And I really think that is such a valuable lesson too. And I Think for my, like, my experience as to kind of when that moment was. I can't think of a specific time, but I just think of the phone calls and the time and how my kids would be there and I would be trying to balance working for someone else and not being able to focus on them. And it comes back to that responsibility. I had that responsibility to the person I was working for to take their phone calls, to take care of the business that needed to be done. Because it wasn't me losing money, it was them losing money. If I didn't do it. Now, if I decide to put something off a day and I'm losing $1,000 because of it, that's my decision, and that's impacting me financially and not someone else. And I think that was like realizing that shift as I was building my rental portfolios, realizing I wouldn't. I don't have to do that for my own properties. I can make that decision that this moment with my kids is more important than that financial gain or if you're responsible to someone else, it's, you know, unless you're not a great employee, it's hard to make that decision of, like, you know what? You're, sorry, boss, you're going to lose $1,000 today. So that was a big realization for me, that part of it, yeah.
- [22:33]
Melissa Shelton
And for me, it was many examples of that over several years. And I mentioned earlier that we worked really hard to get pregnant. My husband and I did an IVF journey that was a little over two years long. And if you've ever done ivf, you know that scheduling is really tough, that you have to be at a clinic at a certain time on a certain day. And we did several rounds, and every time I was trying to accomplish a successful round, my work needed me. I was going to be in New York or I was going to be in Europe. And I was calling the clinic saying, can we postpone this? Can we change the date? And I remember bawling, crying, because we had to reschedule one of the IVF transfers because I needed to be out of town for work. And I just couldn't do it after that. You know, I mean, I knew that this was going to be a problem and that my child was going to always come first. But it started when we were trying to get pregnant. So I just knew by the time the baby does arrive, then it's going to just be even more important that I am able to control my own schedule.
- [23:41]
Ashley Kerr
Okay, so once you decided to pursue your company full time and You've made that transition. What does your day look like now? What are you doing on a daily monthly basis running your own company?
- [23:53]
Melissa Shelton
It's chaos. Okay, so we. We just launched our company in May. I resigned from my W2 job in May. So we've only been in operations full time with Dear Valentine for a little over five or six months. And I am extremely hands on because I own the company and I operate the company. And I want to make sure that I know exactly how every one of our processes is going to go so that I can create our standard processes and then eventually delegate them to the right person. So right now I'm very involved in everything. My standard day is waking up, spending a little time with my son in the morning, and then I hop in the car and I do site visits. We have several properties under construction that we're restoring and renovating to be these hospitality experiences, these design driven rental homes. So I go and visit those. I review contractor work, I do markups on plans, and the less glamorous part, I deliver supplies to properties that need more toilet paper, for example, because right now I'm wearing every hat and I love that. But eventually we will hire more people on our team and I'll delegate some of that. But this, like I said, this part has been really important for me to figure out our processes.
- [25:19]
All right, guys, we have to take.
- [25:20]
Tony J. Robinson
One final ad break, but we'll be right back after this.
- [25:24]
Henry Washington
Hey, Henry Washington here from the on the market pod. Ever feel stuck while searching for off market deals? Well, let me introduce you to Sarah, a savvy real estate investor who turned her fortunes around with Deal Machine. Sarah now taps into free unlimited contact data powered by the same databases used by 90% of US caller ID systems. She easily sends automated mail campaigns. And thanks to Deal Machine's new private investigator tool, Sarah can even track down those ELUs corporate leads. This powerhouse combo keeps her steps ahead of the market. Want to invest like Sarah? Head to biggerpockets.com dealmachine and sign up for free. Start turning hidden opportunities into your investment success with just a few clicks.
- [26:00]
Tony J. Robinson
Rookies.
- [26:00]
Melissa Shelton
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.
- [26:06]
Tony J. Robinson
Nope.
- [26:07]
Melissa Shelton
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. RentReady is included in your pro membership app BiggerPockets. But if you're not a pro, they're offering the six month plan for only one dollar. How great of a deal is that? So visit rentready.com that's R E N T R E D I dot com and use the code BP Investor. That's BP like Bigger Pockets Investor to get six months of rents ready for only one dollar.
- [26:42]
Ashley Kerr
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 for your extended 30 day free trial.
- [27:51]
Melissa Shelton
When BiggerPockets started podcasting, no one thought we needed a store. But then books. So many books. Bestselling books, Rookie books, Partnership books. We needed the best real estate bookstore ever. So we chose Shopify. Shopify is the global commerce platform that helps you sell at every stage of your business from the launch stage to the first order stage to the did we just sell out the whole store?
- [28:15]
Tony J. Robinson
Stage.
- [28:16]
Melissa Shelton
Shopify is there to help you grow. Whether you're selling real estate, books or retro clothing. Shopify's platform helps you sell everywhere, online or in person. Now speaking of online, did you know Shopify has the Internet's best converting checkout up to 36% better than other leading commerce platforms. And no matter how big you grow, Shopify gives you everything you need to take control of your business. And that's why we chose Shopify for the Bigger Pockets Bookstore. So sign up for a $1 per month trial at shopify.com bprookie all lowercase again go to shopify.com bprookienow to grow your business no matter what stage you're in. Shopify.com bprookie this podcast is sponsored by.
- [29:02]
Loral Road At Biggerpockets, we're always trying to find ways to help you maximize your buying power, which is why you should check out Laurel Road. Laurel Road's banking and lending solutions include student loan refinancing, mortgages, personal loans, student loan cash back, credit cards, tailored savings accounts, and more. Laurel Road's high yield savings account features zero monthly service fees. There are no minimum balance requirements, and it costs $0 to open. It's a great solution for the cash portion of your portfolio, so visit laurelroad.com pockets to learn more. Laurel Road, your partner on the road to financial peace of mind. Equal housing Lender Member FDIC okay, let's.
- [29:37]
Ashley Kerr
Jump back into the show.
- [29:38]
Tony J. Robinson
So Melissa, I guess maybe give us a little bit of overview of like how you're actually like what the actual model here is. So it sounds like you're finding kind of older historic homes. You're renovating those and then turning those into kind of like more luxury, upscale short term rental, maybe midterm rental stays. So now that you're, you're doing this full time, are you funding these purchases at the properties yourself or how are you? You know, I feel like that's a question for everyone's like, how do I buy real estate after I no longer have a W2 job? So what have you done to kind of solve for that, that challenge?
- [30:11]
Melissa Shelton
Yeah, no, thank you for asking this question because I think transparency is important and I think our demographic, like our age group is always like, how does he afford that? Or how does she afford that? Right.
- [30:23]
Ashley Kerr
The home alone house. The big question, what did the parents do?
- [30:28]
Melissa Shelton
Yeah, exactly. So basically what we did was we were able to acquire one property with self funding, with our own money. And then we knew that we weren't going to be able to buy several more properties. And so I had to kind of sit down and understand, well, what can I bring to the table and what do I need brought to the table? I can bring my business acumen. I'm really good at marketing, great at design, great at hospitality operations. The joy of hosting is running through my blood. So I can put all of that on the table. But I don't have the finances at the moment because I left my job. So I'm actually not someone who's a good candidate for a big loan right now. But we also use some of our reserves to buy the other property and we're living off of my reserves. So I need someone else to come to the table with money. So basically what I did was I started talking to people sharing with about Dear Valentine, sharing about the vision of it and what we wanted to do and, and people started coming out of the woodworks and another investor who had a property who he had not decided what he was going to do with it yet, it was a historic property. He heard about what I was doing and my vision and he said, hey, why don't you do that with my property? So that was a partnership that just kind of formed organically when he had a property that he needed to renovate and design and needed somebody to operate it and manage it. And I had the skills to do all of that. So that union was made there. And then that snowballed into other investors in similar situations where they had the capital, they had the desire to have these type of properties and this type of revenue, but they don't want to do the day to day, they don't want to design it. You know, they need to outsource all of that. So Dear Valentine comes on board and we basically take over. Once they acquire the property, we take over all of the renovation design, getting it set up, furnishing it, building all the systems for how the guests are going to, you know, experience the space, launching the website, everything that goes into operating it, we take over and do that.
- [32:28]
Ashley Kerr
Melissa, is this set up as your equity partner or is this a management fee or how is this structured, this partnership with these investors?
- [32:38]
Melissa Shelton
So it's two part fee structure. The first part is a services fee that we do for the investor or property owner based on the services of getting it started, doing the design work, launching it, ordering all the products, and then once the property goes into operation, we switch to a commission management fee. So we take a percentage of all gross revenue that comes through the property from rentals or events.
- [33:05]
Ashley Kerr
And then what if somebody else wanted to do this? What are some of the first steps to get into kind of creating a similar company? Even if it was just a small piece of this, what are things they need to do before they actually go out and get their first investor?
- [33:21]
Melissa Shelton
So again, I think look at your strengths and what you're good at and write those down and you know, narrow it down to just a couple things, right? Because if you have like you might be good at a million things, but if you're trying to appeal to someone, you kind of want to target their need. What is the problem that you can solve for them? So if you are great at design, then really play up the design element. You know, build a deck. A deck in Canva. Canva is free. C A N V A For those of you who don't know it, it's very easy to use. You can get a free account, you can download templates and build a design deck or a deck about you and just talk about everything you're good at and then start shopping that around to your network. And I firmly believe you don't get what you don't ask for. So ask for business. Ask for someone to take a chance on you. Tell them what you want to do and what you're interested in and see if they would be interested in partnering with you.
- [34:18]
Ashley Kerr
For my short term rentals, I managed it and ran our first one that we had for several years and kind of between me, my partner, we do odd things but it was poorly mismanaged because it was literally just a hobby for us compared to the other things we were doing and. But we eventually reached out to our one friend that was an investor. She had just bought her first out of state rental. She wanted to learn more. She had a full time W2 job and we actually hired her for a great rate because she was new to it and we paid her like a one time fee to learn everything. We said we're going to give you this amount of money upfront, you're going to learn everything what software we need, everything like that and we want you to actually set up the systems for us. And she still, I think it's been almost three years that she's been managing our properties and she takes a percentage of it and she's actually gone on and worked for, works for another company now with an even larger portfolio but she still charges us that lower rate as you know, like I don't know if it's because we helped her get into that, you know, that kind of element, that round realm of things. But it was such a beneficial thing for us as to finding somebody who was motivated, energetic, wanted to get into this and like taking a chance on somebody new that was just learning. And it's worked out tremendously well for us and for her too.
- [35:50]
Melissa Shelton
Absolutely. I mean get your foot in the door and just don't sign a contract that's more than maybe a year long. So if you need to raise your prices, you have that ability. But yeah, absolutely, get your foot in the door. And that was with us of course. I wanted equity on that first property that I partnered on and I actually asked for it when I put my proposal in for them to hire Dear Valentine, I put in an equity proposal that had a lower management fee and almost no startup fee. In terms of all of the design services and things like that. But that part partner was not interested in giving any equity in the property. So then I, you know, reworked that proposal and said, okay, well then I have to consider the risk here. I could design this beautiful property for you. You own the property. You could hire me for a year to be the manager. I could do all of this work to build up the reputation for this property, and then you could let me go as the manager, and you would be, quote, unquote, sitting pretty with this knight property that I put all this work into. So yes, of course I want equity, but in a situation like that, how could I then protect myself to be able to still have benefits from the property long term? And in this situation, I said, this is my foot in the door. This is my portfolio builder. I don't have the opportunity or the like. I don't have the ability to play hardball right now. I need to prove that I can do this. I need a proof of concept. So I made a deal on that one that was very good for both of us because I got to bring in a partner as my first partner and show future partners what I could do by doing it well on this one. And he got a good deal because he got me at my company at a low rate and at a discounted price, and he didn't have to give up any equity in the property.
- [37:38]
Ashley Kerr
Tony, I think you kind of had a similar start to partnering with people for your short term rentals.
- [37:45]
Tony J. Robinson
Yeah, the very first one that we did, you know, all the things that you brought to the table, Melissa, are the same things that we brought. But much like you, again, I just lost my job. It wasn't super bankable. All the money that we had saved up was like money to live off of. So we had a partner approach us potentially. And the way that we structured that very first partnership, we put up a little bit of the capital, put up 25% of the capital that was needed for down payment, closing costs and setup. The partner brought 75% and they carried the mortgage on that property. So we kept 25% equity that matched the capital that we contributed to the deal. They kept 75% equity, but then we also charged a 15 management fee to the property as well. So we get the capital that matches our contribution, but then we get the management fee for the day to day. And it since evolved, you know, from there. Now typically we don't charge management fees and we just kind of split the equity on these different partnerships. But I agree with you on that first one, you don't really have proof of concept yet. And you've got to find a way to build that up so that the future deals become a little bit easier for you.
- [38:47]
Melissa Shelton
Yeah. And just for those of you out there that are listening, because I remember before we really got into this full time, I would hear podcast episodes and just really wonder, okay, but how did you find that partner to buy that property with? Or how did you find that right property to go in on with a partner? So if you are really starting from square one and you don't have the equity to buy a property or partner on a property, you can find other Airbnb hosts who maybe are underperforming. And like, if you're really interested in design or management, if that's the service that you want to get into, you could go through Airbnb in your neighborhood or in your community or wherever you want to target and look for underperforming Airbnbs. And then you can send those people your pitch, deck your proposal and say, I've run the numbers. I think you could be doing this. This is a competitive property down the street that's doing X. And I feel like you could get there with these three changes. And I would be willing to do those for you at a discounted rate if you take a chance on me. I'm a new management company or whatever your proposal is to them. So I think there are ways to get in. I think it's hard to find the perfect property with the perfect investor who's looking at equity share and looking for a partner. Like, these are unicorn deals. And I know Tony has made it seem easy because he does so many good ones, but I found it to be really hard. So I think if you are also in that position, if you're listening and you're like, well, where do I even begin? Just shop around on Airbnb or long term rentals, like underperforming long term rentals, whatever it is you're into, just target that, you know, kind of bottom under the line and see if there's anyone who's interested in partnering with you so that you can take over and make their business more successful, which in the end will make them more money too.
- [40:37]
Tony J. Robinson
Yeah, two, two quick, just like tactical things that rookies can do to help go down that path, number one. And I'm thinking specifically in the short term side, but number one is find listings in whatever market you're focused on that have poor review scores. If you, you know, every single listing on Airbnb has publicly showing reviews and if you find anything that's below like a 4.6, that's a struggling listing and you can skip trace that owner, right? And you can use, there's different tools you can use like scrape address stuff, Airbnb, but use one of those tools. Get the address, email the owner, right? Call the owner, text the owner, send a mail piece to the owner. So that's one piece. It's just using Airbnb and property support reviews. The second thing, and we haven't done this, but I know other investors who have done this to great success, is they'll find properties that are currently listed for rent, like as a traditional long term rental, and then they'll approach those landlords and say, hey, you currently have this listed at 2000 bucks a month as a traditional long term rental. I can get you on average 6,000 bucks per month as a short term rental and go with that proposal. And I have two friends who have built a property management company here in SoCal focusing on luxury kind of almost oceanfront properties that were previously listed for rent that they just were able to convince the owner to turn them into short term rentals instead. So two tactical things that people can do as they're, as they're looking to get started. So Melissa, going back to you, if you again are rookie. Our audience are mostly consisting of rookies, people who are either just getting started, maybe have one or two deals. But not everyone wants to build a massive portfolio, right? Some people want to be able to walk away from their day job with a small but mighty portfolio. So what is your advice to the people who maybe don't want to build this massive portfolio but still want the ability to at some point achieve financial independence?
- [42:25]
Melissa Shelton
Well, I also don't want to build a massive portfolio. I have to remind myself every day that I don't have to be the biggest and the best, you know, because I'm so used to having that like ambitious drive that I'm kind of like just naturally hungry. And then I'm like, like, whoa, whoa, whoa, whoa. You quit your job to relax more, not to work more. So I have to remind myself that too. Okay, so advice to people who want to stay nimble but also want to achieve financial freedom. Find properties that are going to give you high returns or get yourself involved in deals that are going to give you high returns. And, and also be smart about your outsourcing and who you hire. Think about what the overhead costs are going to be because overhead costs are like balls and chain Balls and chains that will make you have to. They will make you have to work more, they'll make you have to bring in more revenue. So stay nimble as much as you can. And one thing that I have to tell myself is don't over offer, right? So like when you start a property, I want to offer massage, I want to offer private chef, I want to offer, you know, concierge service. There's all these things I want to offer. And then I look around and I say, oh, wait, I have to build all of that because I'm, you know, the only person in my company. I don't have a stat, a marketing team. I don't have like a programming team, I don't have a tech team. So if you make your idea too big or your service offering too big, you'll be drowned in too much work and too much overhead if you're trying to outsource all of that. And then you'll have to build a bigger portfolio in order to support the cost of your business. So stay small, stay nimble, try to do everything yourself. And then when you do start outsourcing, look at ways that you can bring in green help, like maybe interns, design school students, or, you know, local service industry people who want to get into hospitality. You know, just be smart about your hiring because when you bring on employees, that can also become very expensive.
- [44:37]
Ashley Kerr
Yeah, I really like the piece about your overhead. I every month I'm going through all the credit cards for all the companies and then I just do a brief overview of any recurring charges that are happening as to like, okay, do we really need all of this software and these subscriptions and things like that, especially the ones that we forget to cancel or something because we're going to try it out for six months, things like that. But those little things like, add up to so much and do you really need all of them or is Google Sheets going to work just as good to do that one simple thing? So I love that piece of the advice. But Melissa, we're going to wrap up here and I just want to say thank you so much for coming on today and giving this little mini masterclass and starting your own business, going into real estate and, you know, not just solely focusing on real estate, but developing another branch, another arm to the real estate realm. So thank you so much.
- [45:37]
Melissa Shelton
Thank you, Ashley.
- [45:38]
Ashley Kerr
Before we go, if you want to learn more about Melissa or reach out to her. Melissa, where can they find you?
- [45:44]
Melissa Shelton
So, on Instagram, we're Dear Valentine co. That is also our website address. Dear Valentine co and you can find me on Instagram at Melchell M E l S H E L and my website for consulting and other services is.
- [46:01]
Ashley Kerr
Melchelle.Com I'm Ashley and he's Tony. Thank you so much for listening. This has been an episode of Real Estate Rookie and we'll see you guys next time.