From Single Mom (Working 3 Jobs!) to 5 Rentals in 2 Years

19:41Tony J. Robinson:What stopped you from just continuing to scale in St. Louis where you already had the team, you already had some processes and systems? What was the thought process to split off into a new market? Part of it was I didn't want to play competition with my property manager. And I know she probably wouldn't think of it that way. But I felt like if I did stay in St. Louis, one, it was getting more competitive as time was going on. That market specifically has gotten very competitive from a furnished rental for out-of-state investor. So I didn't really want to compete with her. I felt like I would keep asking her questions for contacts for landscapers and contractors.

20:25So I'm like, OK, I can go do this by myself in a different market.

20:29Ashley Kehr:I think that brings up a good point as far as like finding the landscape as the contractors. When you went into this new market, was that hard to build your team that you needed there on your own without using a PM? Again, I was very lucky just finding the right agent who was an investor friendly and out of state put me in contact with my handyman who in the smaller markets, they tend to do a lot more of everything. So he does my landscaping. He does my snow removal in the winter and general handyman stuff. And when the bigger items come up, because he's local, I just ask him, you know, who's the plumber I need or HVAC or an electrician for the if something comes up that's bigger than what he can handle.

21:17Tony J. Robinson:Well, Liz, as you're doing on this work to scale, the question that pops in the mind for me is how are you funding all of these deals? Was it plopping down 20 percent on the first one in St. Louis and the 20 percent on the second one in Iowa? Or was there some other form of financing that you were using to be able to scale in a relatively short period of time? I was lucky enough, I was working multiple full-time jobs. I work from home, which makes it a little more feasible. So I was banking some good money at the time. And by taking care of my personal finances before, my living expenses were fairly minimal.

21:54So I could definitely save a lot more of my paycheck than, you know, typical homeowners can. So on top of that, being in the Midwest when St. Louis, my single family was one hundred and sixty thousand dollars. So 20 percent of that is not as much as if I had to buy a four hundred thousand dollar property close to home. And in Cedar Rapids, it was one hundred and fifteen thousand dollar house. So the 20 % down is not as hard of a hit at those purchase prices. But I was buying in my own name at the time. I didn't have my LLC set up yet. And, you know, my debt to income ratio because of my jobs was still OK.

22:42Adding those two additional properties to my DTI.

22:46Tony J. Robinson:Let's just one follow up question for me, because you said you were working multiple jobs. like how many jobs were you working and how are you balancing all those with growing your real estate portfolio with being a single parent that feels like a lot for one person to kind of manage how are you juggling all those things effectively i was working three jobs and it was busy days uh thankfully i work in software so um just having so many computers out and and bouncing back and forth as needed was not easy, which is why it was planned to be a short term thing, really, just so that I could start funding some of my real estate goals at the time.

23:29You know, I would be able to at least keep my hours down to, you know, 830 to 5, 530, still be able to handle with all the household things and getting my daughter where she needed to go. And at the time, It worked, but it wasn't something I wanted to keep up for too long.

23:49Ashley Kehr:I think that just shows how bad you really want something. If you're listening right now and you want to get your first deal, you want to invest, what are you willing to do, even if it's for a short period of time or longer than you want to, what are you willing to do to actually get to that goal, to get to that point? What sacrifices are you going to make in your own life? I miss out on a ton when my kids were babies and everyone said to me, they're only babies once, they're only young ones. And I would feel so guilty, so guilty. But yet right now they're only eight, nine and 11. They're only that age once too.

24:31Ashley Kehr:They're only going to be teenagers once. And since I worked really hard when they were little, I have so much time with them now. And that was a sacrifice that I chose to make as a mother, but it has got us to where we are today. And I would not go back and trade those hard years. Like it has been worth it. And I just wanted it so bad that I worked all the time, all the time. Like I think about it now, I'm so lazy now. I used to stay up till three in the morning and, you know, working, working, working. And now I can't stay up past 10. But I think that is such a point to drive home to investors of what you said right there is like, yeah, you know, it worked.

25:19Ashley Kehr:It wasn't what you want, how you wanted to live at that point. But you made it work because you wanted to reach that goal of investing in real estate. Now, I just I knew it was going to be a short, short lived strain. Right. You have to choose your heart. And I would rather do it for a shorter time now than for the next 20 years working at a single job and still being able to struggle to take time off to go do school things with my daughter or anything like that and take vacation. So the goal is still to get to where I'm work optional and can choose that time.

25:53Tony J. Robinson:such an important point that both of you are making and one that I think rookies really need to understand because I think it's so easy to get caught up in like the tactical side of real estate investing. Here's this strategy or hey, use this kind of loan product or, you know, hey, ask this question and try and find this off market deal. But I think the piece that so many rookies overlook is the sacrifice and the discipline. It's like everyone wants the six pack abs, but no one wants to eat, you know, egg whites for breakfast every morning. And I think so many of the people who are listening would be further along in their journeys.

26:31Tony J. Robinson:If they could do simple things like, I don't know, wake up two hours earlier. So you have an uninterrupted block of time every morning to really focus on your business. Do like Liz and either work on really increasing your income or decreasing your expenses, or maybe even both. So you can save more money faster. So it's all of these unsexy things that we've all experienced as we built our portfolio that doesn't get talked about enough. And Ash, we probably need to make an entire episode of just like here are 10 unsexy things you need to do to buy your first real estate deal. And we'll get no one that listens to it.

27:04Tony J. Robinson:But those that do, they'll probably get it get a lot of benefit from it. But let's go going back to your story. So you move from St. Louis, you move to Iowa. What's for you next? Do you keep scaling in that market? Or what does your portfolio do from there? I like to say I do have shiny object syndrome. And I don't think that's necessarily a bad thing this early in my investing career. I'm still learning what I like about it and the different aspects that maybe I don't like so much. So after Iowa, I went back to St. Louis to get another duplex. And then with working so much, I saw what my tax bill was in one year and said, well, I'm not doing that again.

27:52So never thought I would get into short term rentals. But just for the tax benefits at the time, I went and bought a big property up in the Poconos, which are the mountains in northeast Pennsylvania, about an hour and a half from my house and went the short term rental route. and tried that. It's going pretty well. But then I also just did my first flip. So I'm doing a little bit of everything until I really find what I enjoy.

28:23Tony J. Robinson:Now, this is a really timely conversation because there was some legislation that was passed recently that impacts tax strategy for real estate investors. But Liz, can you explain like what was it about short term rentals that made you feel from a tax perspective, it was a smart move. So I had done my research at the time. So 2023, when I bought that property, bonus depreciation was at 80%. What that meant was I did buy the property. It was already fully furnished and fairly updated. I ran a cost segregation study, which allowed me to front load a lot of the depreciation on that property in the first year.

29:05So because I made so much in my W-2 job, the IRS considers short-term rentals as active income, though we all know all real estate investing is active income, but to the IRS, just short-term rentals count. So all of that front-loaded depreciation was able to be written off against my taxable income at my W-2 jobs. What that allowed me to do was essentially write off. In my case, it was about$84 ,000 of taxable income in one year with one property.

29:39Tony J. Robinson:You just gave yourself almost an$84 ,000 raise, right? It's insane how the tax code is so favorable to real estate investors, but especially real estate investors who have W-2 jobs and own short-term rentals because you do get the material participation and all the bonus depreciation. And just for folks that are listening, if you just go look up bonus depreciation, you'll find the most recent up-to-date information. But now, Liz said it was 80%. It's actually back to 100%, which is where it was in years prior. So lots of benefit there.

30:14Ashley Kehr:So we have to take our last ad break, but we will be back with more after this.

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35:15Ashley Kehr:Okay, welcome back. We are here with Liz. So Liz, what are some of the most common traps or maybe even red flags that rookie investors may miss when they decide to invest out of state? I think it's really doing the deep dive or getting the information from folks who do know, like a seasoned investor friendly agent in that area of where's the growth? Is there growth? Is there not? You know, what is bringing people to that area for the specific type of rental that you're trying to put on the market? If it's midterm rentals, I'm looking at the hospital systems in the area. Are there enough large hospital systems or is it just that one little country hospital that they really don't need that many employees?

36:11Is there development going on in Iowa right now? There's a brand new Google facility that's being built. So I'm housing a lot of construction teams in the house. So it's looking for that growth of what's coming down the line, maybe not necessarily what's happening right this moment, but you have to look forward to is it going to continue and get bigger or better? So I think that's definitely a red flag if people don't look beyond the here and now to see what could happen down the line. And nobody has a magic ball, you know, a crystal ball. But at the same time, you can predict a little.

36:52Ashley Kehr:I think that is such a great point. And I think that goes in is so true for many aspects of real estate investing. For example, partnerships, like instead of just looking at the partnership structure today and how it works, So make sure you're looking down the road and down the line to see if that is going to work in X amount of years too. And what are the different exit strategies to have? I think that's a very valid point. So I guess the next thing is what's been the biggest like life on lock for you or that has changed your life dramatically since you started getting started in real estate investing?

37:30I think the ability to work from my phone anywhere has really released me from the shackles of my desk that I'm so used to for so long that as nice as it is to work from home, I'm at a computer eight to nine hours a day. So the more I build my real estate portfolio, yes. Am I on my phone all the time? Of course. I have guests or inquiries coming through at all times, whether I'm on vacation or I'm out to dinner with friends. But at the same time, a couple minutes on my phone on vacation or at dinner is nothing compared to the eight to nine hours a day being trapped at my desk. So just the little glimmer of that at a larger scale to finally be able to walk away from my desk at some point is really that that aha moment that, yes, this is possible.

38:27Now I'm also over 40, so I'm not going to retire by 30. But at the same time, any of those extra years I can get is is a benefit. And I try to think and everyone says, oh, you're middle age. But at the same time, I've really only been working, what, 20 years of my life so far that I'm hoping I have 40 more to enjoy. So I've got plenty of time left that even if it takes me 10 years from now to really be self-sustaining in real estate and being able to walk away from work, it's still so much sooner than a lot of the population can who just work their job and go to work and come home.

39:09Ashley Kehr:Liz, do you have like a number or a time period where it's you're completely done working and full time into real estate? I actually just finally started thinking this through, right? I'm not a big vision person, but at the same time, I'm kind of just doing different things. My daughter just turned nine last week. And I said, you know what, when she graduates high school in roughly nine years, I would love for that time to be the time that I'm done. Whether it's being able to spend time with her, whatever she chooses to do, or that's the time I can go and travel for a month or three if I so choose, because I have nothing tying me really to a set location.

39:57Ashley Kehr:Or move to whatever college town she goes to to be closer. That too, yeah. That would be me.

40:05Tony J. Robinson:One last question for me, because you mentioned this earlier, and I just feel this one that we should go back to for the sake of the audience. You said that early in a real estate investor's journey there, there is some value in having a little bit of shiny object syndrome. And I think I agree with that because you've got to at some point try different things to know, hey, what do I actually enjoy? What's been the biggest benefit to you personally as a real estate investor to trying flipping short term, midterm rentals all within a relatively short period of time? I think I'm able to take some things I've learned and put it into the different strategies, which has really been helpful.

40:45I've learned as I just finished my first flip, I really do like that project based with a start and an end date in mind, which from a rental perspective, it's just ongoing, which has its own benefits and challenges as well. But I found out I really do enjoy the short-term projects from a flip. I mean, my flip took six weeks, so nothing too crazy. but at the same time I found that I do enjoy the the hospitality aspect of the short-term rentals that I didn't think I would I actually in the midst of a divorce last year was under contract for a motel and was really excited about that potential project that two years ago had you asked me that would have never been in my sights at all so yeah it's just learning more about myself, different things that I find I do enjoy and the connection between each of the different strategies.

41:47There's always some common threads in there that can prove helpful no matter what you want to do.

41:52Ashley Kehr:Well, Liz, thank you so much for joining us today on Real Estate Rookie. We really enjoyed hearing your story and what an inspiration to others and such great advice along the way too. So thank you. Thanks for having me. Can you let everyone know where they can reach out to you and find out more information about your journey? Mostly I'm on Instagram. I'm not a huge, I'm trying to post better on social media, but I'm not on as much as I should be. But I'm at Harlow Homes. So it's H-A-R-L-O dot homes on Instagram. And that's where you can usually find me. Well, thank you so much. Thank you, everyone, for listening today.

42:32Ashley Kehr:I'm Ashley. He's Tony. And We'll see you on the next episode.

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43:37Thank you.