From No Time or Money to Doing 6-Figure Real Estate Deals (With 8 Kids!)

0:00What if you spent 15 years doing real estate deals without ever realizing you were actually a real estate investor?

0:06Real Estate Rookie:That's literally what happened to today's guest. She's been buying off-market properties, living in them, fixing them up, and then selling them for massive profits for over a decade, and just recently figured out there's an actual name for this.

0:22Welcome to the Real Estate Rookie Podcast. My name is Ashley Kerr.

0:26Real Estate Rookie:And I'm Antonio J. Robinson. Let's give a big warm welcome to Beth. Beth, thanks for joining us today. Yeah, thanks for having me. I'm excited to share. Beth, give us the real quick version of who you are and what does your life look like day to day? I am a mom of eight and we are a small scale farm in Michigan. My husband, Tommy and I, we do a lot of different things, homeschooling, running different on-farm businesses. But I guess I've realized recently, like you were mentioning, that we've kind of been unintentionally flipping farms, which is not a typical real estate niche that you see, but it's what we've been doing.

1:04So I figured might as well share our story. So you had said that you had always dreamed about investing in real estate. And what was stopping you? Even though you find out later on that you actually were an investor the whole time, why didn't you intentionally become a real estate investor? Money, mostly. I got married very, very young. We had our first baby at 20 and 23. And so definitely we're just scraping by beans and rice. We did manage to save up enough money to buy our first house that we lived in. And that was pretty much all that we could stand to afford at the time. And we just, we didn't have extra income to invest in properties.

1:52And I kind of let that stop me for a really long time and used, you know, all of my eagerness to invest in real estate to just learn as much as I could. And thankfully I did because eventually I realized you don't necessarily have to have a bunch of money to be able to invest into properties or to make money off of real estate. But that was the primary roadblock. And then, of course, as our family grew, we have eight children. So as more and more of them came and we started homeschooling, time was a huge factor for me, not having time to figure out what deals were there. That was a big one too that I had to work through.

2:31Real Estate Rookie:Beth, I mean, you just hit on probably the two biggest challenges for most rookies who are listening is either A, a lack of capital, B, a lack of time or see some combination of both of those. And yet you've been able to still invest in real estate. Why, why weren't those things actual hindrances to you building a portfolio? Well, and I, I mean, we're self-employed and this is kind of the same problem I see with people that want to start a business. They have these limitations, but really what your limitations are is that they're just, they're opportunities. They're opportunities to problem solve and to find alternatives.

3:08And I think that I had been put into this box of like, when you buy real estate, you have, you know, a traditional job that you get financing for, and you go, you know, through a real estate agent. And it was just it's this very kind of box of like how a transaction works. And over time, I just realized like, there's 100 different ways to buy a property, both in finding the property and also in financing the property. And once I got deeper into learning those creative methods, that's when things really started to move quicker for us.

3:44Real Estate Rookie:And you hit on one piece, right? It's just like getting over that mental hurdle of like, hey, there are other ways to put the deal together and to finance it. But I think the other piece is the time component. I talked to a lot of aspiring real estate investors and they oftentimes find themselves stuck in this loop where the reason they want to invest in real estate is because they want more time freedom. But yet the reason they haven't started investing in real estate is because they don't have enough time. And when you break it down to them like that, it's like, okay, well, something's got to give.

4:11Real Estate Rookie:Either you're just never going to have the time or you've got to find the time to be able to eventually get the time. You have eight kids, which is a phenomenal achievement. I lost my hair after my first one, so I can't imagine having eight times over. Um, how, how did you find the time amongst growing a family to actually do what is necessary, not just to, to go out there and find the deal, but to do it in a creative way as well? How, how did you find the time? Well, I think it's more about adjusting what I thought the timeline for investing in a property was going to look like, because it wasn't a quick process.

4:46I mean, this is like 15 years of really just this whole entire journey. And that's from learning to making the first deal in the next one. So it's not that I necessarily found more time to do it. It's just that I what little time I did have, I was consistent with. And so, you know, I probably would spend two years underwriting properties and looking at deals before I would find one deal. Whereas other people, it's like, well, you have to make an offer every day for 30 days. That's not the pace that I moved at. And, you know, slow and steady does move the race. So like you have to eat an elephant one bite at a time.

5:22All of those cliches are there for a reason. So we haven't done a crazy amount of deals, but I'm constantly kind of looking at things. So that way we are moving even if our progress is slower than what people think it should be. Now explain to us what a live and flip is. So what is the strategy that you have been doing over and over again? So live and flip. It's really fun, by the way, when you have eight kids and you are buying a property to be your primary residence and then you are doing renovations and updating it in order to increase the value and sell it for a higher price. And that is basically a summary of what it is.

6:06So all of the properties that we have flipped have been ones that we have lived in as our primary residence, made improvements to. Sometimes they are major, massive improvements. Sometimes they're not. They're just cosmetic paint and things like that. And then we're selling them for a profit. What is the typical timeframe that you're staying and living in these properties? And are you taking advantage of not paying taxes on it because it's been over two years? Yes. So literally the first three that we did unintentionally ended up being right at that two to two and a half year mark, which is the sweet spot.

6:41You want to be there two years to avoid capital gains on your profit. But again, that was not intentional. That was just kind of how life moved us. So our first property was it was two and a half years. Our second one was two and a half years. Then we had one that was a bit longer. We were there for five years. And that one did need a lot more work. But the gain on it will be when it sells a lot higher too. And then our most recent one, we were there for just over a year, about 14 months to closing. So that was a unique, shorter one.

7:18Real Estate Rookie:Beth, are you guys doing the renovations yourselves? Are you hiring it out? Did you have that skill set of renovations beforehand? I'm just curious, like, like how, you know, why are you living there? How are you managing the actual rehab? Oh, yeah, we're doing it because we're crazy. And you know, what's what's a little more chaos? Yeah, I would say 99 % of the stuff we do ourselves, we've definitely hired out things like major electrical overhauls. I'm trying to think gutters, just because we don't have the equipment for it. There's a handful of things that we will hire out. But anything that's cosmetic, flooring, trim, that's all in our wheelhouse as far as skill set.

7:56And of course, the more you do it, the better and more confident you get at it.

8:00Real Estate Rookie:But was it in your skill set to begin with? Or was it a skill set you developed as you guys were going through this process? And if the latter, how did you start to build that skill set? Because there are a lot of folks who are listening who like the idea of, man, I can get into a flip, you know, like a live in flip for less capital. And I can live there for a few years and really take my time. But I don't know how to swing a hammer. Right. So how did you build that skill set? Yeah, I would say we did have the skills. Um, both of us are fairly handy people. The, the, again, everybody has challenges though.

8:28If you don't have the skills of being handy, um, lean into whatever skills you do, did have, we were handy, but we were also doing it with, you know, a bunch of little people at our feet. So we had to gain the skill of doing it while, you know, we had a bunch of people there and keeping it safe because a work site isn't necessarily family friendly. So even though we didn't have the challenge of not being handy, there, there were still other things that we had to work around. So don't let that discourage you. Now, we're going to take a short ad break. But when we come back, I want to talk about the money on these deals.

8:59So how much were you able to profit living in these properties for a couple of years to five years? We'll be right back after a short word from our show sponsors.

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11:51Real Estate Rookie:If you want to do the same, visit biggerpockets.com slash retirement to learn more. Okay, welcome back. We are here with Beth. So Beth, these live and flips that you had done, give us the numbers on them. What was the average amount that you would make on a property tax-free? And then what would you do with it? Was this money you rolled into the next property? Would you invest it? Would you blow it on a Lambo? What would happen? Oh, we're definitely Lambo people. They do really well on the farm. No. So our first primary residence, we bought for$104 ,000. We sold it two and a half years later for$134 ,000.

12:31So there really wasn't a gain in that when you factor in, you know, realtor fees and that kind of thing. But all of the money we did get back, our down payment and such, we did roll into the next property. And that one did have a decent gain on it. We bought it for$150 ,000. We did not do really very many major renovations. I painted the entire house for sure. And we put in some flooring in the basement in a finished area that was like, it was finished. It just didn't have flooring. So that one we ended up selling for$215 ,000. And part of that we reserved for savings. Part of that got rolled into the next one, which was a, this was kind of like an in-between farm property.

13:19We bought a little 800 square foot house in town. That one, I think we paid 65 ,000 for. And we did some massive renovation on that one. I was pregnant with our fifth child at the time. And I always joke that we 800 square feet sounds crazy, but like we never had the 800 square feet because one entire room was like materials in the chop saw and, you know, all of that kind of stuff. And that one did not have a massive gain. That was, I think we sold for$89 ,000, but we lived there. So it's kind of one of those things where if you're flipping a house that you don't live in, your holding costs are a lot higher.

13:59But even if you don't profit much, you still basically lived for free for the year. So that was fine. Next house, we had bought for$166 ,000. It is currently on the market right now for$450 ,000. It is not sold yet. So I can't say what the gain is going to be on there, but like it will be in the low force. I'm pretty confident in it's just waiting for the right buyer. And then the last one was we bought it for 320. We lived there for 14 months and sold it for technically 450. It says $460 ,000, but they had a$10 ,000 concession, so$450 ,000. So that one was pretty close to that second one as far as gain.

14:48I think really after realtor fees, we walked away with like$65 ,000 in profit, which I thought was great for a year's worth of... And is that after your rehab costs too, the profit of the 60? Yes, it is. Yeah, that's great. In a year, extra 60 bucks, you lived in the property.

15:07Real Estate Rookie:Beth, let me ask, because you rattled off quite a few properties and we got the understanding of how you're buying one or using the proceeds from one to help you purchase the next. But how are you actually finding all of these deals? Because you mentioned a lot of them are farms. I'm just curious, what's your pipeline for acquisition? Yeah. So that was, again, another thing. Unintentionally, I realized we had formed the habit of buying off-market properties. So four out of those five properties were off market deals that I found. Definitely strongly prefer that for multiple reasons. But a big reason why we gained so much on those was just because we bought at a very, very good price.

15:50when you're buying off market, there's just there's a lot more potential to negotiate. I think getting something that is lower than what you would have on the MLS. Even right now, the market's kind of hard where we are, which we're feeling with the house that we have listed on the market right now. It just takes longer. So off market has been our go to for finding things.

16:11Real Estate Rookie:So what is your actual process for finding these deals off market? Because I think for a lot of investors off market is kind of like the holy grail of getting better deals, right? Like once it hits MLS, oftentimes there's a premium associated with that. So are you, yeah, just walk through your process. How are you finding these off market? Yeah, I'm not, I mean, we're not big time. So we're obviously not sending mailers or having people cold call people. They all have been found in different ways. So the first one was Craigslist, which is like, I don't even know if that's alive anymore, but it was at that time.

16:43We found it on Craigslist and yeah, the couple needed to move out of state and didn't want to list with a realtor. Sometimes people don't want to list with a realtor just because they don't like them or they had a bad experience and that was kind of their story. So that was how we found that one. The next one was on Facebook Marketplace, which was kind of a unique story. It was actually the daughter-in-law of the family that owned it that was listing it for them. And then the third one was, um, I had been, we had been looking for property and I had put it out there like into the world, into the, you know, online space and posted, I think it was a local Facebook group was where a lady saw that I was looking for something and she reached out to me based on my posts.

17:34But I had told friends and family, you know, just it's better to have multiple people listening and looking for stuff than just me. And then the final property where we're at currently was a pocket listing from a local realtor. So she had, I had seen it sell and I had tried to buy it when it sold and I knew it was getting flipped. And so I was able to connect with the realtor that they were using to kind of guide them through their, you know, decision-making process of their flip and get it from them before they finish the project. So you actually bought the property before they finished flipping it?

18:08Yes. So that one is a, it's a, it's a crazy story. It was actually a tax auction that we had bid on and lost. And that was the first time we'd ever attempted to buy that way. And they had, it was a total hoarder situation. It ended up being an actual blessing that we lost it because it would have taken us. I mean, they took 14 or 15, 40 yard dumpsters worth of trash out of the house and barns because it's a farm and it's just so much stuff. We're still finding trash in the yard. But the investor that bought it on auction came in and I mean, they had it cleaned up in a couple of days. Like they just had way more manpower than we would have had.

18:53and by the time we got it and you know negotiated buying it it was kind of a blank slate the house had been gutted down to studs and it was kind of the perfect situation because yeah there was a lot of work to do but it was like kind of the fun part of the project putting it back together so but that getting this financed was a challenge because it wasn't you know a financeable house in traditional terms we had to negotiate seller financing just to get it closed and they would have had that issue with anybody in the state it was, but I think they realized that was their best option.

19:28Real Estate Rookie:So, well, but first let me say, uh, I did check and Craigslist does still exist. Um, and they're actually hiring right now, which is crazy. Um, so if anyone wants a job for a network engineer, uh, Craigslist is looking for one, but, um, but going back to, to the financing piece, cause that was actually one of my questions. Like you, you mentioned early on that you didn't have a ton of capital to, to go take these deals down. Um, how have you guys structured your loans in a way to actually get your proof? Because I think you even mentioned before we started recording that at one point you had like three loans going at one time.

19:59Real Estate Rookie:Like you mentioned seller financing. What other levers are you pulling to help you actually get qualified for these properties? Yeah, that has taken a lot of creativity and just patience. So we have had traditional loans. Um, we are property that's for sale right now that we bought for one 66. We did take out a, um, second mortgage on that as a down payment in order to buy the next property. That was the best way to get financed for that. Um, and then we had to have a co-signer on the loan as well. My parents, thankfully we're willing to co-sign on our, our crazy ideas. And then with this property, we had to get seller financing, which they did not want to do.

20:44But I think they just they realized, like I said, that they didn't have another option. Nobody was going to be able to finance it if the house wasn't livable, which it's not when it's gutted down to studs. And so that was kind of a route for that one. And then now that it is livable, we have refinanced it in an agricultural loan because it is a farm. and that is a little bit more unique when you have property and you can base the loan off of the income of the property and the income potential of the property versus having to do like a traditional home mortgage. Tell us more about this. We've never talked about this before.

21:21This type of loan product, I think we've touched on like USDA loans in rural areas, but never like an actual agricultural loan that is based off of the income of the farm. Yeah, there's a company, I think they're Midwest based, Greenstone Farm Credit is their name, but they are the one that the loan is through. And yeah, they will base things off of like, you know, depending on the acreage, we have 40 acres here. And I would say out of the 40, probably 35 of it is what's considered tillable or usable land. They also factor in the value of like the barns. Is there a well? Is there, you know, different things that are going to help make the farm work or, you know, make income and things like that.