$4K/Month & Financial Stability From Rentals

Ashley:
This is Real Estate Rookie episode 372. Today’s guest focus on live and flips and how losing a job didn’t even phase them due to the legwork they put in for their real estate investing journey. My name is Ashley Kehr and I’m here with my co-host, Tony J. Robinson.

Tony:
And welcome to the Real Estate Rookie 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. Now for these guests, we’re going to get into how they chose their markets and the nitty-gritty of how they got started. But first, Kevin and Julia, welcome to the Real Estate Rookie Podcast. Super excited to have you guys on the show today.

Kevin:
Yeah. Thank you. This is a huge honor I think for us, and we’ve been listening to you guys personally and BiggerPockets for a very long time, so we love it.

Julia:
Many years now. Thank you guys.

Tony:
Well, now you guys get to give back to the community, which is a goal for a lot of rookies listening. So Ash and I, always say what makes this show so special is stories just like yours. Stories of folks who are just normal, everyday people getting started. And with that, right, we understand that this journey you guys have been on can come with some challenges. So can you share a moment that’s maybe had a really big impact on your lives and your investing journey?

Kevin:
Yeah. So I mean the biggest thing was being laid off from the “safe” corporate job that everyone’s told you should get out of school, and it turns out it’s not so safe no matter what the job is. So luckily we had some strong, or a strong but mighty small but mighty portfolio that was able to financially hold us through that time and not put us in any detrimental positions and give me the time to find the job that made the most sense.

Ashley:
What about the other people around you? How were they reacting to you being so calm, cool, and collected, I guess, about being laid off?

Kevin:
Yeah. I mean, it was coming from all sides. I think a lot of our family doesn’t necessarily understand the real estate or are heavily involved. They’re very supportive of it, but they all thought, “How are you going to pay these mortgages? We got plenty of questions there. Are you guys okay? “And a lot of it comes from a caring place, of course, but it’s a question of we’re okay. It’s like the houses are going to keep paying for themselves, plus we’re getting more. I know Julia was getting questions from her family, “Everything okay?”

Julia:
It’s like do you need to sell the house or is Kevin depressed? I’m like, “Kevin’s fine. Don’t worry. We’re okay.”

Kevin:
It’s funny. Honestly, I want to do real estate. I wish I didn’t have to go back to a full-time job. So it was a nice stepping stone to see what it would be like doing a full-time.

Ashley:
Tony, you had a very similar experience to this story.

Tony:
I was going to share the same. We’re like the band of unemployed brothers and sisters on the phone. I mean, Ashley, yours was optional. You chose to leave. But for me, I got let go on Christmas Eve 2020, and I know what was going on in my life at the moment was that we only had, I think three active Airbnbs. We had a couple of long-term rentals at that point. Not a big portfolio by any means. So what was going on in your lives when you unexpectedly lost your job?

Julia:
Well, this is funny actually. Well, it’s sad, but funny. Kevin, it was the day after his birthday. So he got the email on his birthday, “Everyone’s got to come in tomorrow for this 9:00 AM meeting in person,” and it’s just a pit in your stomach all day on your birthday. And then he goes into work, and as you guys heard from the intro, our last name is Winthouse. So Kevin was the last meeting of the day. So we had to wait in office all day just knowing that this meeting was going to come. So that was going on at that moment in time.

Kevin:
And then at the same time, we knew we were closing on our first hard money deal. So we knew that we were in the process under contract, no contingencies for finances. So we had to close essentially. So maybe two or three days later after losing my job, we were-

Julia:
At the closing table.

Kevin:
… at the closing table with a big hard money loan.

Ashley:
Good thing you got your approval before you lost your job.

Kevin:
Yeah. Luckily because it was hard money and an independent person, they weren’t too concerned. They knew our previous flipping history, so it wasn’t a big deal to them at least. And we pulled it off so it all worked out.

Ashley:
And Julia, what were you doing at this time in your life?

Julia:
As we said, Kevin had this nice cushy engineering job. Everyone said it was the safe thing to do. So at that time, earlier that year, I did a career change. We’d recently gotten married. I had left my job and I got asked to co-found a software company with a former colleague of mine. So that’s what I was working on, no income coming in, but really hustling between the real estate and making that work out. So it was a big lesson learned not to rely on the corporate empire and why it’s important to really build out your own wealth and side income.

Tony:
Yeah. Guys, I think just one thing I want to highlight for all of our rookies that are listening is that there’s no job that’s safe. We’re recording this in February of 2024, and there’s massive tech layoffs happening from all of these big companies that people have dreamed to work for forever. My mom was a state employee, she worked for the government, which a lot of people think is the pinnacle of safe job. And in 2008 when the great recession happened, my mom got furloughed.
So it’s like it doesn’t matter where you work, who you work for, no job is safe. So the safest thing you can do for yourselves, for your financial future is to build something independent of your day job because you’ll never have full control over that. But as you build this real estate business, that’s something you can control at least to an extent.

Julia:
And I hope if there’s one thing that people take away from our experience with Kevin’s layoff is that’s why having that real estate, small but mighty portfolio in the background was just so important and what really stabilized our life at that point really.

Ashley:
So let me ask you, what did financial stability mean to you? Why would you say that when this happened, you were laid off, that you guys felt okay, it’s not the end of the world. What was your financial situation that you felt comfortable with?

Julia:
Yeah. I think what was important for Kevin and I as we were growing our portfolio is growing sustainably. We never took on more than we can chew. We always had that element of calculated risk that we were taking on. So that stability during that time is we knew that our portfolio, each house is independent of the whole portfolio, each of them cashflow. We have our reserves personally. We have our brokerage accounts. We really just made sure that we laid the proper foundation before going into that recent hard money deal that we just alluded to before. So just that sustainable growth over time I think really helped us.

Kevin:
Yeah. I feel like a lot of people you read online or on social media, how they put everything they had into something. And don’t get me wrong, some people it works out and good for them, but it’s a very, very risky situation. So for us, like Julia said, we had our savings, we had a cash flowing portfolio, which included reserves for each of those properties.

Ashley:
For your reserves, what did you feel comfortable with? Do you want to share some of the numbers with us as to what was your monthly cashflow compared to what your income was from your job and what that difference is, and how much you had saved?

Kevin:
I can get into each individual property, but big picture, our total cashflow, at least for principal taxes and insurance, so not yard maintenance and things like that, that is about $4,000 of cashflow. And then after that, all our houses are fairly newly renovated, even though they’re 100-year-old homes. So we know we have very low maintenance costs in general, we try to keep maybe 10 to 15,000 at all time in the real estate account, just in case your furnace blows in the middle of winter and you need a new furnace or.

Julia:
Which happened, by the way.

Kevin:
Sure. It should happen.

Ashley:
That happened to me this year too.

Kevin:
Yeah, it’s a painful reality, but yeah. So I mean in terms of numbers, about 4,000 and then that cashflow we also knew could cover our rent. So at this time, we were renters ourselves. It made more sense to rent out all our homes and go rent from someone else. So that cashflow would also cover our personal rent if needed. I mean, it was definitely $4,000 can make it very tight after food and everything. And luckily we had savings of course, but generally speaking, that’s-

Ashley:
Okay. Awesome. What is your portfolio made up of?

Julia:
So we started with a two family home. We used my first time home buyer for that. The second home that we purchased was a single family home, first time home buyer and Kevin’s name. And then the third one is another two family home. That’s just your typical investor, 20% down. And then the fourth home that we purchased is a single family home with hard money.

Kevin:
So total value, it’s about $2 million in property. Total revenue is about 166,000, and like I said, 4K in cashflow.

Ashley:
Well, you guys, that is amazing. Congratulations. We’re going to take a short break, but when we get back, I want to know what market you guys are in and how other rookie investors can get started in that market too. Okay. And we are back from our short break. So Kevin and Julia, where are you investing in right now?

Julia:
We’re in Providence, Rhode Island. And I guess to give further context of how we even ended up there. Back in 2019, we were living in Boston, Massachusetts, and we were trying to figure out, okay, we really want to take the jump into real estate. How the heck are we going to do this? So we were looking from everything from all of greater New England. We thought about, “Well maybe we’ll get a primary residence and rent out.” There’s a barn on the property. We’re like, “We’ll rent out the stables and all of the stuff.” We really thought of all the different options, but ultimately we came down to house hacking because we learned about leveraging a first time home buyer.
At the time too, Kevin’s job was hybrid, so he needed to be able to commute back into Massachusetts. So when we found Providence, that was only about 50 minutes outside of Boston. So it really worked out perfectly just for our personal life and for our investing journey. And the appeal to Providence really is all our properties are centered around Providence College. So we loved being insulated by the school, 10 minutes from downtown, and so much money went into really building up that smaller city and made it a really great destination for people. So that’s how we found Providence.

Kevin:
Yeah. And I mean we’re big believers in investing in our own backyard are relatively close. We want to be able to see street to street. One street over can make a huge difference, if you’re not, don’t have boots on the ground or have someone you trust there. And we didn’t have that. So being close by was important to us. Boston was just simply too expensive for our risk, at least. I know people do it successfully, but for us it was just a little too much. And then Providence was a little more in our price range and rents still justified the purchase price.

Tony:
Can we talk, what was the price difference between Boston and Providence? For the portfolio, you bought $2 million worth of real estate and Providence, what would that have costed you in Boston?

Julia:
Yeah. So our first property we bought for 339,000. And then if we were to get a two family in Boston, that could have been a million, easily.

Kevin:
About a million. And then the rents are a little bit better here, but they definitely don’t cover the mortgage, whereas down there the rents were high enough to cover the mortgage and some.

Tony:
So you guys have gone through a few properties now you’ve got some single families. Sounds like you did a little bit of maybe you have a bigger rehab job with the hard money loan. Of all these properties that you’ve taken down so far, which house has maybe given you the biggest challenge or presented the biggest obstacles?

Julia:
They all have their special little unique thing that makes them a challenge, but I guess probably our first property we’ll say, the two family home.

Tony:
And what one so challenging for you guys?

Julia:
You know what it is, new investors on the block. We were 26 years old. Innocence is bliss. You walk into something and you go, “We’re just going to paint the cabinets, throw in a shower door and it’s going to be just lipstick on a pig.” And then ultimately we got in there and you’re buying 100-year-old house. The electrical is just dangerous and plumbing is just old piping, all of this stuff. And we’re really big believers in saving, just eliminating headaches. If we can future proof the property by doing those foundational upgrades upfront, that yielded us a really big return in the long run. So I would say that was probably why it was a big obstacle, but-

Kevin:
And we knew it was 100-year-old house, but I think a lot of people think your inspection covers all this information, but at least in our area, what we found is the inspector just looks generally speaking, does the house look like it’s going to fall down? They’ll make some notes. But they don’t look at the detailed electrical. They say maybe hire an electrician to look and maybe we should have hire a plumber to look higher. They just tell you to hire a specialist essentially. So just because the inspection looks good, doesn’t mean much, but ultimately it’s 100-year-old house that needed to be gutted.

Tony:
So your first project was 100-year-old home that needed to be gutted, is that’s what you guys are sharing?

Kevin:
Essentially, yeah.

Julia:
And we were living there.

Tony:
Yeah. No wonder this is the biggest challenge. That’s a big job to take down on your first one. I’m on the West Coast so that we don’t get as many 100-year-old homes where I’m at in SoCal as you do on the East Coast. But I know Ash, I think you’ve got some stuff that was built the 1800s or something like that. So it is more common on the East Coast. So when you think about lessons learned maybe from going through that first rehab, what were some of the big things you walked away with like, “Okay. We need to do that differently next time?”

Kevin:
So I took on a lot of the rehab stuff. I went and got my GC license and honestly learn through YouTube University, as I call it. I mean a couple big things. One, you can learn how to do a lot of this stuff yourself if you want. At the time we didn’t have the money to be able to hire out, and so it was really just on us to do it. I will say though, as we started to collect rent and rebuild our reserves, after that project, we learned that it’s just not feasible for us to do everything ourselves. We started to have to hire out certain jobs. I got good at tiling, for example, and I’ll still do tiling, but when it comes to drywalling, I’m not a drywaller. I’ve learned very quickly. Professionals can do it significantly faster than I can. So that was a big one. And then honestly, every house we look at now, I just go in with the mindset that everything’s going to have to be replaced, and if it doesn’t, great, we save that money. But it’s just preparing for the worst and hoping for the best.

Ashley:
What are three things that you think of off the top of your head are this is what a rookie should know because these are things that can cost you a lot of money that aren’t obvious? Are there different things like how you had mentioned, you get your inspection report, but it’s not seeing inside the walls and things like that?

Kevin:
Yeah. I mean, biggest things I look at now on a property is electrical and plumbing. Just because it’s old electric, doesn’t mean it’s necessarily bad, but when you start to get to 100-year-old electric, it’s not just old, but it’s unsafe. And then there’s issues where the tenant, or if you’re living it in yourself, you can’t turn the light on and the microwave on at the same time, and that’s something you’re going to get callbacks or you’re going to get a… Yeah.

Ashley:
The breaker’s going to trip and they’re going to say, “I have no electric.” You’re going to send out an electrician and be like, “All you had to do is just to flip this.”

Kevin:
Exactly. Or some of those breakers we had in that house were before the standard breakers we have now not fuses, but they weren’t safe breakers that we have now, so it may not have even tripped. So yeah. So just knowing your electric is either in great shape or if it’s not in good shape, getting that replaced. And then a third one… You have a third one? Maybe tenants, we luckily inherited a great tenant.

Julia:
She’s still with us too.

Kevin:
She’s still with us. But hearing all the, I guess maybe horror stories, you never know who you’re-

Tony:
Horror stories. Who you’re going to get.

Kevin:
You never know. And I think we lucked out, honestly.

Tony:
I definitely want to dig into the tenant screening piece here, but I guess one last question on the rehab portion, now that you’ve done this a few times, I know a big question for a lot of rookies here is how do I estimate rehab costs when I’ve never done this before? So what’s your recommendation to someone who’s brand new, maybe just like you, they’re thinking, “I’m just going to slap some lipstick on this pig and we’re going to be fine.” How can I project rehab costs as accurately as possible?

Kevin:
Yeah. I mean part of it, the truth is just getting a little bit of experience. You don’t have to be an expert, but a little bit. When I say a little bit of knowledge, meaning you need drywall and spackle, you don’t just need drywall, but going walking the property room by room, writing down. And then on our most recent one, I just went onto Home Depot and added in each room what I needed for that room, and then I doubled the cost just for labor, and then I added it all up and then I added another maybe 15% on top of that, maybe 20%. And that got me almost exactly to the dollar on how much it costs.

Tony:
Yeah. Ash, you liked that strategy as well. Just filling up your shopping cart?

Ashley:
Yeah. Just going on the website and actually just adding things into there. And actually now Daryl’s built out this whole spreadsheet where it just links all of the materials we always use, especially for apartment turnovers, and you can just click, there it is. But I did want to add too to how Kevin said doing the electric and the plumbing, looking at those two things are so important as to, there’s a lot of little simple things that you can do YouTube University for to learn about, but an example is the breaker box. Are there fuses or are they actually breakers in the electric panel box? Because if they’re fuses, you’re going to want to get those switched out. So being able to, even if you’re just taking a photo of some of the things you’re seeing in the house and you have no idea this is how it’s supposed to be, take the photo, ask your dad, ask your neighbor. Just ask somebody. Because a lot of times just that photo can say a lot. If you’re seeing corrosion or stuff like that around the electric panel, that shouldn’t be happening.
Then also taking pictures under all of the sinks where the plumbing is underneath too, looking for leaks. Going down in the scary basements where they hide the dead bodies and taking pictures of the piping down there. Is it pax? Is it PVC? Is it galvanized pipe? I once had this property where there was a galvanized pipe coming out of the property, and the insurance company wouldn’t insure it because they didn’t want that type of pipe coming out of the property. So lots of different things that you can slowly learn just by taking so many great photos when you’re just doing a showing for a property and asking questions.

Julia:
Yeah. And I just want to add two things. When you’re in the basement, and especially with electrical, you can see if someone stapled the wires up on the beams properly. And if they look like a professional did it, when you see it, you’ll know you know. And something else that we do and to our properties is we have this little plug that you can just put into any outlet. It’s maybe $15 if that, but it shows if it’s GCFI, so you can see if it’s updated electrical or not, just from there.

Kevin:
Yeah. It’ll tell you if it’s grounded or not, which means it may be 100-year-old electric knob and tube or something.

Ashley:
Yeah. James Dainard, when he goes through a property, he always looks at the hot water tank, the electrical panel, the furnace, to see if there’s a sticker of who installed it or who last maintained it too. And if he is planning to change the electric or do something like that, he’ll contact those contractors first. If everything was done, like looks good correctly, but if it’s not a great job, he knows not to use those contractors too.

Tony:
So let’s talk a little bit about tenant screening. We touched on this earlier, so sounds like I’m assuming Kevin, Julia, you both are self-managing. Yes. Okay. So what is your process for screening tenants? Both, I guess the ones that are inherited, if you are doing any screening, and then if it’s a brand new listing that you got to find the tenant for yourself, what does that process look like?

Julia:
Sure. This is quite funny because we just did this weekend, we had a show, a property. But our process typically, and we found that it’s been most successful for us, is posting on Zillow. We’ve done Facebook and all the other things, and we’ve just found that the highest quality lead for us really comes from Zillow in our area. So what we do is we list the property, great photos of course, and with a really good description, and someone says, “I want to inquire about this property.” I just thank them for inquiring. We have a Google form, “Please fill this out and please send me your phone number. I’ll give you a call.” So typically from that Google form alone, you’re going to weed a lot of people out because some people are like, “Too much work. I don’t want to do this.” Or they’re really hopeful, that they’re going to fit the criteria, or sometimes you get lucky and they’re a great qualified tenant.
If that’s the case, I give them a ring and I say, “Hey, listen. I know it’s weird getting a link like that from a stranger that you don’t know, whoever this landlord is, I just want to put a face to a name. My name is Julia. I’m going to just ask you a couple questions just to verify what’s on this form, and if this both feels good for us, we’ll schedule a tour and we’ll get you into the property right away.” So then if that works out, we schedule the tour and I try to be as personable as I can during the tour and really make them feel welcome, open up to me. I ask casually, “Why are you moving? Okay. Would they be able to give you a reference? That’s awesome. Perfect.” Let me talk to you a little bit about the landscaping, utilities, et cetera, and answer any questions that they have. And then from there, if they’re still interested, if I still feel like it’s a good fit, we’ll do the credit and background check and just verify everything and go from there.

Tony:
How long does that process usually take from the time that you’ve listed until you find a tenant ballpark, how much time is passing?

Julia:
It really depends. So for example, just this past weekend, we just went through that whole process with one of our single family homes. We put it on Zillow for maybe three… It was a day, sorry, it was a day. And then Saturday they toured it, sent their credit and background check. We sent them the lease and it happened, what was it? Maybe two days total. But we have other houses that it takes a little bit longer, and if you’re off season, so for example in the Providence area, usually people’s leases end May 20th to 31st, somewhere in there just to give a little lapse in time for turnover. And then new leases start June 1st. So right now is a really hot time to list your property and you’ll get everyone’s looking, if you’re off market or the leasing schedule, it could be a little trickier.

Tony:
So one follow up question for me. I know you said that you guys try and focus around Providence College. So are you going after the college kids and if so, are they renting by the room or are you doing full room or full house rentals? How does the college play into your rental strategy and the tenant screening piece?

Julia:
Sure. So one side of the school is definitely the party side of the school. We are not on that side. We typically get a lot of the graduate students or young families that just went to the university or just decide to stay in the area because of jobs or what have you. So we have majority young professionals, I would say.

Kevin:
Yeah. And we are open to students. That was something we always said. Worst case we could always get students, and I know a lot of people are scared of students, but keep in mind, I mean, at least at this school, a lot of their parents are paying the rent, so you’ll get the rents, so that’s great. And then if they party and damage it, you have a good security deposit. It could obviously be worse, but usually a hole in the wall I can fix.

Ashley:
Yeah. I think something that you guys seem to have down pat is that you have a system. You know what you need to do for every application that comes in, and that is so important and can make it so easy to make sure you’re not violating fair housing laws by sticking to the same, here’s my rental criteria, you miss it. Yes, you’re approved. No, maybe you need a co-signer, things like that. So I highly recommend it. Anyone listening, if you don’t have some rental criteria or a checklist that you follow for your screening, start writing that out and figure out each little step that you need to do, then it makes it even easier to hire out, to have a virtual assistant to actually do that process for you too.

Julia:
No, I was just going to say, it’s a data-driven business, whether good credit, three times the rent for your income, all of that stuff matters, and you really have to detach yourself from the emotional stories that people are going to tell you. And of course you have a heart, but at the end of the day, it’s not personal and you can’t take that personally if you have to turn someone down because they simply can’t afford it or whatever the situation or circumstance that they’re in.

Ashley:
Okay. We’re going to take a short break, and when we get back, I want to hear about a few things that you learned about investing that ended up being different from reality. We’ll get into that and hear about some of your strengths after this quick break. Okay everybody. Welcome back. We are here with Kevin and Julia. So was real estate investing exactly what you thought it was going to be and why not, or why has it been?

Kevin:
Definitely not what we thought it would be, but at the same time, I want to say it’s so much better in other ways. So I think social media puts a lot of facade, we’ll call it over what real estate investing could be. A lot of people are like, “Quit your 9:00 to 5:00, jump right into it,” without even thinking. And that’s just not reality. That 9:00 to 5:00 does help you build your portfolio to a point, but it takes time. A lot of people are counting doors, I have 1,000 doors, and in reality, they’re just a part of a syndication that is great in everything, but it’s a lot different than having three doors that are great cash flowing properties.
So I think at first we really wanted to quit our jobs and grow our portfolio as fast as we could to live that life, but we quickly realized we could get there the same way that other people have just with having, I guess you’d call it the small and mighty portfolio. And that has worked really well for us. It does get frustrating when in theory, I guess we have six doors, six units, but that can be just as powerful as 100 doors depending on the market and so many other variables.

Julia:
Cashflow.

Kevin:
Cashflow, yeah.

Tony:
I think the social media piece that you mentioned, Kevin, is super important because it’s so easy to see this perfect story on Instagram, TikTok, wherever, and think that everything’s always rainbows and butterflies. And I hope Ash and I at least do a good job of sharing our personal ups and downs and failures and things that don’t go according to plan. Because it’s true that there’s a lot of success that can be had with real estate investing, but sometimes it feels like you’re banging a head against the wall and you’re like, “Man, why can’t I figure this thing out?”
So I think for all of our rookies that are listening, it’s important to hear those failures because when they happen now, you don’t feel like you’re someone who will never figure this thing out. It’s part of the journey as those ups and downs guys, so I appreciate you calling that out. What about the management side? What other, I don’t know, misconceptions have you seen about managing tenants and trying to be a good landlord?

Julia:
There’s so many, and I might get a lot of controversial feedback for this, but I really-

Tony:
That’s our favorite kind of view.

Julia:
Yeah. But everyone will tell you online or friends and family, “Don’t tell them you’re the landlord. Just say you’re the property manager. Don’t say that you’re the owner,” and all of this stuff. But I just find so much value in creating a relationship with my tenants. Now, I’m not saying you got to be best friends. I’m not saying go over for tea and all of this, but when you’re involved and you’re friend, being friendly with them. I care. I care that I provide good housing for you. I care about your job, I care about your dog, I care about your pregnancy. So I remember these things when I talk to them and when I follow up with them, when I see them on the property, I say, “How’s your job going? I know you were up for a promotion, to how to work out.” And my tenants really appreciate that.
And we always say, if times are hard for them, we want to be the first bill that they pay. Or if something breaks, I don’t want them to be like, “Julia, that’s scary landlord. I’m not going to tell her this.” And then all of a sudden mold is going through the walls. I want them to feel comfortable telling me when things go sideways. So I feel like we have done a really good job of balancing that.

Tony:
Yeah. I think it’s true for any leadership position. I have team members on my team and the different businesses that we run, and I feel like there’s obviously a balance you want to strike there. I think you always want to make sure that they respect you and the role that you play, but you should also respect them and make sure you’ve got an understanding of what’s going on in their lives. And like you said, when that foundation is strong, when issues do arise, whether it’s something that you want to talk to them about that’s a little sticky or something they want to bring up that’s a little bit sticky, when that foundation of trust is there, it makes handling those issues so much easier. And that’s true landlord to tenant. That’s true boss to employee. That’s true parent to child. It’s like any relationship, when that foundation of trust is strong, conflict resolution is so much easier.

Ashley:
Tony, real quick, I noticed that you didn’t give the scenario of Airbnb host and guest, and is that because Sarah’s always zooming in on photos to find out.

Tony:
We crack the whip when it comes to Airbnb guests like, “Hey, do your checkout instructions. No question asked.” I think that relationship’s a little bit different so quick. So that’s just more like customer service, but I think about the other relationships and it’s that way.

Julia:
Tony, I was just going to add, I have a tenant that their lease is up in May, and I had reached out to them because the situation they wanted to extend, but we couldn’t. But she at least felt comfortable coming to me and saying, “Hey Julia. I don’t want to screw you over. I know my lease is up on this date. This is the problem I’m facing because of my exam or whatever the situation was.” And I said, “Great. I’m so happy you came to me. So now I can prepare. Okay, now I know that I’m going to have a vacancy. It’s not just going to sweep me out from the rug under me. And I could say, okay, what’s your criteria for another rental? If I see something, I’m more than happy to be a referral or send you something that I come across. Or if there’s a landlord in that area I can connect with, I’m so happy to do so.”
And I think when you have that relationship, that could have been such a headache that, “I want to extend my lease for three more months. You can’t do it. And now it’s a problem.” We completely avoid the conflict that way.

Ashley:
Now, Kevin, after hearing Julia’s role, I’m going to assume your role is more like mine where you’re not having to talk to anybody or answer the phone?

Kevin:
Yeah. Julia does a great job with the tenants, and I’m very nice to the tenants. When I am to talk to them, it’s fine.

Julia:
They love Kevin.

Kevin:
Yeah, they love me. That’s what they tell Julia at least. But yeah, I would much prefer to be behind Stessa doing the numbers. I’d much prefer doing a renovation or managing contractors or whatever the case is. I love that side of the real estate, but luckily it works in our relationship where Julia likes the other half.

Ashley:
Can you explain what Stessa is real quick? And is there any other software you’re using too?

Kevin:
Yes. Stessa is just your bookkeeping essentially. You can upload all your receipts, you can send your accountant a big tax packet at the end of the year. You can track of property information. I think they just started doing property management as well, or rent collection I should call it. For that though, we are using RentRedi, so we’re splitting the two. We find RentRedi now has a little bit more features for that rent collection, but Stessa still has all the numbers side of things.

Julia:
Stessa is a nice mobile app too. If he’s in buying something in Home Depot quick, he prints up the receipt and just can do it from the car and it’s uploaded and done.

Kevin:
Yeah. And it helps me keep track like a renovation project. Almost all these houses have had renovations, it keeps me accountable for where is our budget? Where did that go? Because you can categorize each thing, and I’ll tell you at the end of the year, our accountant, who I’m sure appreciates that it comes in a nice bundle and I certainly appreciate not having to go back through these receipts, open up a shoebox.

Ashley:
Yeah. I love both of those platforms, and if anyone listening is a BiggerPockets Pro member, you get access to both of those through being a pro member. And you maybe have to pay $1 if that, I think, but it might actually be free tied into the pro membership. But Stessa, I love it because it’s also like a asset management tool. So it’s not property management software per se, but it seems like they’re trying to get there. But you can track your insurance and it will alert you like your insurance is about to expire, make sure you have renewed it, things like that. So I love it as an asset management tool too, Stessa and Tony’s mind is still blown because Stessa is assets spelled backwards. Okay. So Kevin and Julia, what is next for you two?

Kevin:
Yeah. So we’ve done the single family, we’ve done the two family, we’re honestly listening to BiggerPockets a lot and getting some inspiration. I think where we’re going next is probably something a little bit bigger, but nothing crazy. Call it our buy box is hopefully something in that 8 to 15 unit. We like the idea of condensing the portfolio or not having a ton of single families. I will say single families rent very easily. So if you find a good deal, we’re still open to those and if someone else finds a deal, take it down if the numbers work. But we want to try and grow into that slightly bigger property.

Ashley:
And where do you guys see yourselves in five years? Do you have any goals set? And it can be outside of real estate too.

Kevin:
We’re looking just this week.

Julia:
Yeah.

Ashley:
I have the same problem. It’s so hard for me to look down.

Tony:
You guys have touched on it a little bit. Trying to scale up, which I think is a super fair goal. And I guess when you think about that idea or that goal of getting larger properties, what’s that next skill development that you feel you need to focus on? Because it’s like you’ve got the rehab piece down, you’ve got the tenant screening piece. What’s that next skill that you feel you need to really sharpen to continue scaling up?

Kevin:
I mean we’re starting this with the hard money, but getting the private money, getting the maybe hard money, the different creative financing type ways to pull down these deals. We don’t necessarily have multiple millions to go and buy these huge commercial properties, but I know there are ways to go about it and many of these ways you guys have brought up on previous shows and just learning and ultimately executing those for one of these bigger properties. So I think a lot of that’s going to come with networking, finding the deal, of course can come through networking.

Julia:
I’d also add, that kind of project, I don’t believe that we would self-manage it because it’ll probably be out of state. I mean, we’re looking to diversify our portfolio. So on Saturday actually we have a tour in Connecticut, so we’ll have to figure out that outsourcing that property management piece too. So that’ll be another skill that we’ll have to hone in on a little bit more.

Tony:
Let’s talk about the networking a little bit because I think that’s an incredibly important skill for people to learn, especially as it relates to being able to raise private capital and maybe taking down some of these bigger deals. Like you said, you don’t have millions just sitting in a bank account for yourself, so you’ve got to be able to at some point tap into other people’s money. So what does that look like? What’s your goal for building that network, for getting out there and meet and meet potential money partners?

Julia:
So our goal is to go to one meetup a month now that we’re here in Boston, and we like to go in with an intention. Something that we’re needing right now is different sources of capital and finding those private lenders. So we’ll go to these meetups and you can sniff out in the room who’s there for what and really engaging with those people. But also being open-minded to anyone that you speak to at a meetup and how it could be a symbiotic relationship with one another.

Ashley:
Well, Kevin and Julia, the last thing I want to highlight is your partnership. You both very well clearly defined what your roles and responsibilities are in your partnership, and I think that’s a huge part of what makes a great partnership, is each knowing what you are responsible for, but better barrette actually taking responsibility for it. So Kevin and Juliet, thank you so much for joining us on this Real Estate Rookie Podcast. I’m Ashley and he’s Tony. You can check us out on social media in the link below in the show description and we’ll see you guys next time.