One Rental Property Saved Me From My 100-Hour Workweeks

0:00Elijah Ray:Most people wouldn't move into a tiny house in their own backyard. Today's guest did exactly that at 26 years old. So he could split his house into two units, rent both of them out, and have his tenants cover his mortgage and most of his bills. He did the renovations himself, went through an eviction, rented to a family member, and came out the other side with a completely honest take on what landlording actually looks like when you're in the middle of it. Elijah Ray bought his first property in Portland, Oregon in 2023. He converted a single family home into two rentable units, lived in a tiny house he parked in the backyard, and spent two years learning what real estate really costs you, not just financially, but personally.

0:46Elijah Ray:This is the Real Estate Rookie Podcast. I'm Ashley Kerr. And I'm Tony J. Robinson. With that, let's give a big warm welcome to Elijah. Elijah, thanks for joining us on the Rookie Podcast today. Hey, hey, thanks for having me on, guys. So I want you to take us back to 2023. You were 26 years old. You'd been learning from bigger pockets. And what finally pushed you to stop learning and to actually buy something? I was ready. I basically, I knew I was ready when I knew I didn't want to keep on renting. And I just wanted to, like, live in my, like, dream, basically. So I just kind of thought, I was like, you know what?

1:24am I okay with working a bunch? Am I okay with working really hard and getting to this goal? And I mean, turns out I was, I ended up just applying to a bunch of jobs and just grabbing two of them and working a hundred hours a week. And basically just a second that I had two years of paychecks of both jobs at the same time. Yeah. Like basically just when I, when I got to the point of having my jobs, both jobs at the same time for two years, that's when I knew it was time to kind of jump in and start looking. And I found my real estate agent. And luckily, I got the house that I have now. Although I had to put in a lot of offers and see a lot of like, kind of crusty homes before I saw mine.

2:06It was a process, but definitely worth it. Elijah, we'll talk about the house you end up finding in just a moment. But I, I just want to make sure I didn't misunderstand what you said or mishear what you said. You said you were working 100 hours a week. Yes, I was sleeping at like, at my like Amazon job. So basically I worked a night shift security job and then during the daytime I would work an Amazon job on my breaks every second I could I would take a nap like on the like Amazon van like shelves and stuff like it was like pretty pretty crazy um but yeah I was working 100 hours a week it was hard had no social life like I was eating like rice like every single day it was actually pretty hard but it was like worth it like I knew like my money was stacking up and honestly it wasn't really the money.

2:48It was just, I knew I needed my paychecks to say a certain number to get a certain price of a house. So I did like the calculation and stuff from the stuff that I learned. Um, so yeah, it was really, it was tough. Elijah, let me, let me ask him because I think a lot of people, they want things in life. All of us want for something, but very few people are willing to do the required amount of work to actually make that happen. And when I hear working two jobs, you know, sleeping on my lunch break, that that's someone who is willing to do the work. What was it that gave you not only the motivation, because I think a lot of people can find that initial motivation, but what was it that gave you the ability to stay disciplined and consistent long enough to actually get to the goal?

3:37Because I would imagine there had to be days when you're like, man, is this even worth it? Like, what am I doing? How did you push through those moments to actually achieve the goal of getting the capital set aside? I would say the hardest moments were when you wake up from a nap and you're still at work. So definitely, I know, I definitely know that feeling of like, okay, when the motivation is gone, other things have to push. And the thing that pushed me, which is kind of hard to say, but was seeing my friends and family around me not achieving the goals that they set and also like living lives that were like kind of mediocre you know what i mean nobody owned their own home like which is fine like some people don't have a goal of owning a home but they don't own their own home they're working a job they don't necessarily like my goal was to buy my house so i can rent out some of it so i don't have to work a job so like i definitely was just like motivated by that freedom like i was kind of tired of working so much and like with no result you know what i mean So I kind of just, you know, was pushed through with just thinking about my goal day in and day out.

4:37Like every single week I'll sit down and look at my goals on paper and work backwards. And I was like, you know what, I can't wait for that life. It's going to come. So I'm just going to keep on pushing and keep on working. And I'm going to get that house, even though people are telling me it's impossible. I just was, yeah, just motivated by that future goal in my mind.

4:58Elijah Ray:I think that's really interesting because a lot of people go the opposite direction. They look up to and are motivated by people who are living the life that they want. And, you know, they see the cars, the houses or whatever, whatever that may be traveling with your family and things like that. But you actually took it the opposite. You looked at people around you and use that as motivation as I don't want that to be my life. and I find that interesting because when I quit my very first job I quit because I was not making enough money and the one of the CPAs that was a partner at the firm said to me I'm unhappy with what I make and I'm a partner that's just how it is and that right there was a light bulb moment for me is like okay you just reassured me I'm making the right decision because I don't want to be here another 30 years and have regrets that I'm having right now.

5:50Elijah Ray:And I want to get out now. And so I think that, you know, sometimes we look at what we want in life, but also it can also be a huge motivation of what you don't want your life to turn out to be. And that can use that as a driving factor too. Yeah. I think it's like more motivating to look at that. I mean, it's kind of like hard to look at it that way, you know, looking at people around you that have what you don't want. it's kind of sad, but it's more motivating. Because yeah, if you look at people with nice cars and houses and stuff, like we all want nice stuff. But when you look around and see like the reality of people around you that are not quite living the dream that, you know, the life that they dreamed of, it really is motivating.

6:30Because you're like, I don't want to, I don't want to look up, you know, when I'm 90 years old and be like, what did I do this whole time? You know, so I'd rather work really hard, have no sleep, maybe be a little bit, you know, lonely or, you know, like just in the grind 24 seven, but I ended up with a life that I, you know, dreamed of. So definitely worth it. Definitely worth it. Elijah, tell us a little bit about the deal you actually found. How much, how much capital did you have to save? What was the purchase price and like, what did it cost you to actually get into that deal? Yeah. So I, you know, the entire two years of working the two jobs, I was actually deeply in debt.

7:05Um, not deeply, but I bought a car. I just got to have like a divorce. So I had to buy like a car. I didn't have to, but I bought a car because we shared a car at the time. I also got like a surgery and it was like 13 ,000. So I was like in debt a little bit. So the whole time I was basically paying off debt while stacking money, but I'll say the first year there was no money in my pocket type of deal while I was working all those hours. Now the second year around, I was actually saving up for the house. And at that point, I believe that I had to have 13, like$13 ,500 to get my house. And my house was 333 ,000.

7:42I think it was that little like 1 % rocket money, like mortgage situation that I ended up getting. And yeah, like it honestly kind of sucked though, because the house that I got was a single family. so I couldn't use like the rental income you know in the deal and kind of show like hey this is more income I had to fully just use like my income and what I had to bring towards the table so yeah just like 13 ,000 nothing too crazy but it I mean definitely was a heavy pity for me at the time but not too bad. Elijah you said rocket mortgage one percent are you saying a one percent down payment? Yes yeah so that's what I've never heard of that before well yeah talk talk just about this yeah so it was a terrible interest rate so 7.5 interest rate but it definitely was uh one percent which was really awesome um and uh yeah i was honestly that was the one part about buying a house i really hated it seemed like the numbers kept on moving around a bunch like i had no clue in that region but luckily in the end i had enough and it was about 13 000 um but yeah it was it was a pretty good deal um the area was not too bad the houses i had to see before seeing mine, like, were like, tear, like the walls were missing.

8:58There was, you know, you know, rotten racks in the like walls. Like there were so many terrible like homes I've seen before this one, because my price range was super low. Like I said, 333, but here in Oregon and Portland, like that's like an okay, like price for a house, but it seemed kind of like I really was more so like being able to afford closer to like 300 and under, but luckily since I had the second job, I was able to get a little bit more.

9:23Elijah Ray:Now, this was a single family home, but you actually converted it into two units. So was that kind of the plan going into this? Or did you decide to do that after you purchased it? Yeah. So that was like one of the big things that I learned when I was doing all my research, because the whole reason why I even thought to get a house to turn into two units and live in a tiny house in the backyard is because I wanted to like house hack. So I learned about the house hacking thing. I was like, OK, basically, when I went around and looked at houses, I was always looking for things like a garage or a attic or a basement or anything like that.

10:00Now, the house that I ended up getting, it does have an attic, but it wasn't like something I can like convert. But what it did have was like a really weird like back room area like that was about 400 square feet. And it had a door to the outside. And it really was originally like the last owner's bedroom. And like the back door was like just like a side door. But the second I saw my house, I was like, yeah, I'm going to put up a wall here. And that's going to be a unit back there. I'll add a kitchen, I'll add a bathroom. and then I went out the front, which was like, just, it was so amazing. So perfect.

10:31When I was even telling my realtor, she was like, I don't know about that, but I was like, you know what, I'm just going to do the thing. And it's going to work out. I had to make it work out because I could not afford the full mortgage alone. Cause I definitely did not want to keep on working a hundred hours after I bought my house, you know? So. And Elijah, once you actually closed, how did you fund that renovation of, you know, partitioning off that, that other unit inside the house? Was Was it from just, again, money you had saved up? Was it through the loan? Was it some other form? How'd you fund that?

10:59Yeah, so I actually did like pay with credit cards initially. And actually I got really like, just for the basketball loan, I paid like with a credit card. It was like$6 ,000 to pay a dude to plummet and all that kind of stuff. And I actually immediately found some idea at my house. So I was doing YouTube for like, now it's been about 10 years, but I've been doing YouTube for a while. And I made a video on like how I was buying a house and when I actually did. And somebody reached out that lived here locally that I've been actually messaging back and forth, like as a homie on Instagram. He's like, hey, I saw that you got that spot.

11:35Like I would love to rent that thing. And this was before I even put up a wall or added a kitchen. I was like, hey, I don't have a wall up or a kitchen in the bathroom still being renovated. Are you sure about that? He's like, yes, I'm kind of in a position where I need to like move like today. So I bought my house and I think within one or two weeks later, somebody was already back there renting it out. So yeah, it worked out perfectly. I just had to get like the money to get the bathroom aid because like I don't want to share a bathroom. You know what I mean? Yeah. I just want to say it's like, you know, some people will call that luck and maybe there's an element of that.

12:06But it's like, think about all the hard work that went into putting you in the position to be able to capitalize on that person. And it's like the two years of working 100 hours a week, the courage to actually go out there and find the deal, to be sharing your journey on YouTube for all the time to kind of build that platform. And when the opportunity presented itself, you're able to capitalize on the way that there was a win-win. Yeah, like what are the odds? Like they would come from my like YouTube, like it's just, it was so perfect. I loved it. You might be the first rookie guest that we've had that found a tenant through their YouTube channel.

12:40Yeah. I'm endlessly surprised that the first that we have on the show, even 700 plus episodes into it. Okay. You fund the renovation with credit. You get a tenant in there pretty quickly. What percentage of your mortgage are they able to cover? Yeah. So at the time, my mortgage was$2 ,550. And right when they moved in, they were paying$1 ,200. of dollars so it was like a pretty like almost half you know what I mean like it worked out pretty well um and then but the thing is though I didn't charge like for uh utilities or whatever so I did like have to like pay that out of my pocket and I learned that after a year and a half I raised it up to$13.50 and I kept it there um just because like yeah I realized like the water like you know when somebody's not really paying their own utilities it seems like the electric and water bill are just like it was just crazy high so i was like you know what 1350 sounds perfect um and then i slowly kind of kept on renovating it uh like i separated like the yard to make it slowly made it bigger and bigger yard for them and myself you know luckily we both had our own driving spots i added like cameras and gates and the new fence and i slowly renovated the whole place um but yeah it was pretty good like getting like pretty much half of the mortgage uh from that immediately you know.

13:59It worked out really well. You know, here in Portland and where I'm at, that was a pretty okay deal. So luckily, yeah, it worked out.

14:07Elijah Ray:But you didn't actually stop there. You ended up putting a tiny home in the backyard and then renting out your unit that you were living in. So what did that cost and how did that process work out? Yes. Oh my gosh. This is like so crazy the way that like my house has always been configuring different ways. Basically, yeah, like I, okay, so I bought a tiny house. It was$1 ,000. It was really like an old food cart I found off of Craigslist. And I've always wanted to do the tiny house living, like always. So I put in my backyard and I'm not going to lie to you, I had it back there for like a year without really touching it because I didn't know how to plumbing.

14:48I didn't know how to do electricity and all that kind of stuff everybody was saying like legally you can't like connect it to your house I didn't know about all that so I kind of had it sitting in my backyard for a little while but then my sister she has two kids she's like a single mom and she was looking to kind of start a new life so I was like you know what what if I just said you know what let me just move into my tiny house get things rolling there actually get it plumbed get electricity so I put like an extension cord and like I just got like like the hose from my backyard and like plumbed it that way like I was trying to find DIY ways to live in that thing so she can move in here because this is a two-bedroom house and while the dude in the back was living there she lived up here with her kids and um basically yeah I just lived back there for a little bit my sister ended up finding her place on her own and moved out and um I actually had to hop back in here and renovate this place like I did everything on my house like new outlets paint job floors like everything you could think of I've renovated in this unit at that point and then I found some new tenants and that's when um the eviction happened I never I never want and I don't even know if it's technically an eviction because we did go to court and all that kind of stuff but I like never really like received any money from it like they kind of just left like kind of free without like paying kind of deal and they just they ended up just leaving um and uh yeah but it was pretty tough because I never wanted to evict somebody.

16:10That was one thing I was like, I do want to, I like the landlord lifestyle. Cause I get to, you know, live off the rents and stuff like that. I live in the backyard for free essentially. But when it came down to, um, evicting them, like I felt really bad, but I was just like trying to work with them and they just weren't wanting to pay me. And, um, yeah, so they ended up moving out and I renovated this place again. And, uh, I actually asked the guy who was living in the back to move up here so I can renovate that space back there. It's just a whole lot of renovations that I keep on doing over here.

16:43But yeah, and I pretty much just ended up having him move up here. And while I was still living in the tiny house in the backyard, and that's when I hopped in the back unit and renovated that because it had like a really big issue where like the ceiling looked like it needed some love and the floors and the walls, everything. So I spent about six months renovating that back unit. And yeah, it was looking really good. And tell me why the second I was done with the renovations back there, that, you know, guy who moved back there to the front, he ended up putting in his notice. So I was like, oh my gosh.

17:19So I spent six months renovating the back unit. He got his notice. So he left and I was like, okay, now I got two empty units. I got my tiny house in the back. What do I do now? And that's, you know, what happened a couple months ago, I ended up just saying, you know what, I'm going to sell my tiny house and live in the entire space, turn that back room into a bedroom with a walk-in closet as a kitchen and just live in the entire thing. So that's kind of where I'm sitting at right now, but it definitely was a process. I think I learned from that eviction, like, I don't really want to be like a landlord, at least a landlord that lives on site because it was extremely awkward walking past them every day.

17:57You know what I'm talking about? Like, like it was, it's just like, like. That was actually my question, Elijah, is like, evictions are always tough, but it's even tougher when it's a house hack eviction. So knowing what you now know, is there anything you would have done differently on the front end, like either tenant screening or anything like that? What lessons did you learn going through that process? I got to say, I was like, I want to honestly say I was a little bit desperate to get tenants in so I know that alone like no desperation would be great because I looked past a few things like they sent me their like they basically said they had they both didn't have it was a couple they both didn't have a job but they had like this large amount of money in their bank account and they showed me a screenshot and later after looking I'm like that is like the fakest screenshot I've ever seen in my entire life I don't know why I just let them slide into my house like that But there was that.

18:53So I would probably like, like, I would probably want them to have a job. Like, I think that that was my one thing. Like, why did I let people that don't have a job and like the screenshot of their money and their account didn't look right? Nothing really looked right. But I kind of let things slide by. So I would say the number one thing that I would have changed is just simply like, actually looking at the paperwork and not just letting the very first person that looks at my house take it. So yeah, that whole situation with I would honestly would blame myself for that eviction because even their credit scores were like it's like extremely low like everything i kind of let pass because i needed somebody to move in here and they were paying$2 ,100 so i was like yeah like that sounds good to me you know i did like no deposit and everything too so i was like just give me the 21 and we can call it you know what i mean i did do a three-month lease though so luckily it wasn't like a full year or anything um but yeah i was like I need that$2 ,100 because I renovated so much in here right before they moved in.

19:50And yeah, I messed up, but you know what? It's all right.

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22:00Elijah Ray:Okay, welcome back. So we're going to get into the parts of the story that usually don't make it into the highlight reel because I think that's truly where the real education is. So, Elijah, you went through your eviction and kind of told us what happened and kind of what you would have done differently. So now let's talk about the stressful, the expensive, and the emotionally draining part of this. for a rookie who has never been through one, what do they need to understand about evictions that nobody actually tells you up front? Yeah, I would definitely say even before being a landlord, I'll look into it because I actually was looking into it while going through it.

22:38Now, I don't know if this is the greatest thing to say, but I did use chat GBT throughout it because I don't know any lawyers. I couldn't have, I even was looking up lawyers and they wanted like a heavy penny before even getting started and it was just so i basically just kind of looked up everything like in the moment i luckily figured it out and stuff and went down to the courthouse and you know left the thing on the door like there's so many different very specific steps that i learned along the way like you can't just you know knock on the door text them you know i mean i was definitely trying to stay level-headed and just like honestly understanding where they're coming from because they were telling me they're going through things and i understand that but I'm also like, I got bills to pay.

23:18You know what I mean? We're all about to be evicted if you guys don't pay, you know what I mean? So, so it's, it's that serious. So yeah, I definitely had to learn along the way on what exactly legally happens at that point. And honestly, one thing I didn't look into too much, but looking back, I should have looked into was help for the landlord in that position, because I know that there are things, especially here in Portland, Oregon, that they could have like helped me out rather than like me trying to like kick them out and stuff like that, like trying to get to it. So there's probably more research I could have done in that moment.

23:55But yeah, I'll just learn along the way and just try to keep my house because that was my main thing, you know?

24:02Elijah Ray:Yeah. Since COVID, there's so many programs and organizations. Well, at least in New York, not necessarily help the landlord, but we'll give financial assistance to the tenants. So like I'm going through an eviction right now and things recently changed a little bit since the last eviction I did maybe two years ago, I think. So my attorney is going over it with me. But basically for them to even get assistance, they have to like be served. They have to get their court date and they have to actually attend court and get the notice that they are being evicted before they can actually go and get financial aid.

24:43Elijah Ray:So what a lot of people are doing is taking advantage of the system by, okay, I'm not going to pay. I'm going to, like me as the landlord, I have to pay all the legal fees. They have no cost to them. And then they just go to the court day, get their thing, and then they get the financial aid and then they pay their rent and then they get to stay. so there are different programs out there and I think the best thing you can do is like educate your tenants on ones that actually are proactive before you have to actually go through the whole process but um that's like that's New York specifically I don't know the state yeah it's tough because like we wanted it would be great if it was both like great for both you know parties you know the tenant and the landlord it's tough it's a toughie you know eviction in general it's hard.

25:29You know, I get, we all go through hard times, you know, but it does suck when one person kind of has to pay the other person's way, you know, but hopefully everything goes good with it. I think another unique part of your story is that, I mean, obviously you had the eviction, you had the one tenant who was there for a while that seemed to work out well. And you also had family. How, how was that dynamic being basically a landlord to your sister? Like, like, was there any friction there? Is there anything that you can teach rookies about renting to family specifically oh that's a really good question because that was actually something i learned a lot about before even buying my house just family in general i have a lot of family members that are always going in and out of housing and stuff like that and i definitely needed to you know know a lot about all that kind of stuff going into it but yeah luckily my sister my older sister she is like the closest person i am in this world she helped me out with many of my renovations here financially like honestly i would say like she pretty much owns half my house like pretty you know for the most part because she really helped me out a lot with every like even physically helping out like she helped me renovate everything in this house almost so um luckily when she was here living in the house things were okay i think it's just a little tough because her kids were young like really young at that point so things would get broken a lot like a window got broken i had to pay like 700 to fix it so like it's kind of tough because there's like a maybe a little bit of resentment there but luckily me and my sister like communicate really well and so like you know what like can we can we work something out over here because I don't you know got it to to fix this thing or that thing but um I did learn a lot though like she definitely told me like hey this stove needs to be replaced or this fridge needs to be replaced or whatever the case may be and I got on I think I listened a little bit more to my sister because obviously a tenant is going want better and nicer you know things in the house and whatnot but my sister was like open and honest about what needed to be done around here and my sister actually paid me like the full amount before like three months before even moving in so they're like money wise it wasn't wasn't bad or anything communication was there everything was there i would think the hardest part there was like being so like close like literally living in the backyard while she lived here that was probably of the hardest part because like I like my alone time and you know her and her kids are very social but outside of that no like I would say everything was good luckily like I've heard the horror stories online though of like you know a family member moving in and they just stopped paying rent or you know whatever the case may be but yeah luckily everything went really well.