Teacher to Six-Figure Real Estate Investor with This Quick Flip Formula

0:00Happy Thanksgiving, everyone. I'm Ashley Kerr and welcome to the Real Estate Rookie Podcast. Today is the eve before Thanksgiving, the biggest party night of the year. But if you're not out partying, I hope you're analyzing deals or spending quality time with your family. Today, we decided to do a rerun of one of our favorite episodes from the past year. And today's guest is a rookie investor, Laura Sides. So you may be familiar with this episode, but it is worth a re-listen. Laura was a teacher who went to become a six-figure flipper. So there's lots to learn from Laura, and I hope you enjoy this episode and have a wonderful Thanksgiving.

0:46This is the Real Estate Rookie Podcast, and I'm Ashley Kerr.

0:50Tony J. Robinson:And I'm Tony J. Robinson, and welcome to the 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. So welcome to the show, Laura. Super excited to have you with us today. Well, we are excited to have you, Laura. So let's start off with what were your life circumstances and motivations that made you want to start investing in real estate? So I didn't even know that I was going to be a real estate investor. I didn't know investors. I have absolutely no entrepreneurial background. So this is still kind of new and exciting to me even three years in.

1:26We went down to Florida with our kids mid-pandemic after being a stay-at-home mom, and we brought Rich Dad, Poor Dad. And I was sitting on the couch reading quotes out to my husband, and I was like, oh my God, babe, there's a whole other world out here. And it honestly was a light bulb moment because we didn't have any investing history. And we came back from there, and we're like, and everything changed. That's awesome to have that epiphany on a beach too. So once you decided that you want to start investing and what were some of the things you did to kind of start your research and navigate the world of real estate investing?

2:09It was more, I didn't even think of it still as an investor. I was just thinking, how can we use the money that we have and put it to work? Because I was like, hey, we don't actually have to work for every dollar. Like we were raised to believe in school and all that. We can take the equity that we have in our primary house and put it to work. So I'm like, let's come back from Florida. We'll take a HELOC out on our house. We'll use that as a down payment on a condo in Florida. And he's like, okay. So I started just making connections with people who knew more than I did. And at that time, that was our mortgage broker friend.

2:44And he helped, you know, do a preapproval. And then he hooked me up with a small local bank to do a HELOC. And they put$100 ,000 on our house,$100 ,000 HELOC on our house. And we were talking to property managers about condos in Florida, when I ended up pulling my trash cans in one day, and my neighbor across the street told me she needed to move. Well, that worked out pretty convenient.

3:08Tony J. Robinson:Yeah, no, what a what a connection of fate there for you guys to be chatting at that time. But Before we get into like the neighbor and how that kind of played into your first year, Laura, Laura, you said something that I think is super important for our rookie audience to remember, but you said you started working with people who knew more than we did. And then, you know, you said you had one friend that was a mortgage broker. And I think that is such a, such an important first step for rookies because you can listen to the podcast, you can watch the YouTube videos and obviously you'll, you'll get a certain sense of what the roadmap is.

3:38Tony J. Robinson:But when you have like an actual conversation with someone who's done the thing that you're trying to do. It makes it feel more real. It makes it feel a little bit more achievable. And it doesn't feel as this, you know, this big of a scary leap that you initially think that it is. So just what an important first step to take. And I want to make sure I highlighted that for the rookie audience as well. So we didn't talk about this yet, Tony, but you were actually a huge inspiration to me, you and your wife, because you guys looked like normal people. And this was three years ago. And And I had, from my personal, I didn't have a business Instagram at that point, so I wasn't talking about my investing journey that didn't exist, but I was watching you.

4:15And you sharing your journey was truly such an incredible inspiration to me and how real you guys were. And that, hey, if you can do it, why can't I do it?

4:25Tony J. Robinson:I very much, very, very much appreciate that. But I think you hit the nail on the head, Laura, that we're just normal people. And all of the real estate investors that we look up to are just normal people who've figured out the process that you need to follow. So as long as you have the courage to jump in there and try, that's like the most important thing. And you just seem, even from this brief conversation, I can tell that you're like, you're a person with like a bias for action. So let's get back to the story with the neighbor. So you're out there taking out your trash. How does that lead into you potentially getting one of your first real estate deals?

4:57It was like a life-changing pivotal moment. And I knew how much we were pre-approved for. And guys, I knew nothing about how to finance anything. I knew I had a$100 ,000 HELOC and I knew we were pre-approved for whatever. I don't even remember what the amount was for this condo in Florida, what I thought. And she is the owner of the house that's walking down the street. And we had been friends for years. We had owned our house for 10 years at that point. So I knew she kept up with her house, but I also knew she had owned it for 40 years and she was having health struggles and it was mid pandemic.

5:27And she's like, I need to move and I don't know what to do. And I'm like, well, tell Ms. Sherry you meet with a real estate agent. She's like, I did, but they want me to clean up my house and repaint it. And I can't do that. And she said, I want$300 ,000 for it. And I just want to move. And I'm like, I'll buy it. And she said, do you want to ask Glenn, my husband? And I was like, no, no, no, he'll be good with it. I go, just to be clear though, you could get more if we put it on the market. And she said, I really don't want to do that. And I'm like, I'm here for you, girl.

5:58Tony J. Robinson:Yeah. And I think it highlights something important. Ashley, We talk about this a lot on the Ricky podcast that for a lot of off-market transactions, the motivation is just not the purchase price. It's not just the financial component, but part of it is the convenience of selling. And for her, she's been there for 40 years. The idea of having to go through, get this place cleaned up, repainting stuff, and it's more than what she was willing to do. And she would be willing to take a haircut on her purchase price in order to get the convenience that she's looking for. So for all of our rookies that are listening, when you're searching for those off-market deals, you want to listen in the way that Laura was for like, hey, what is the actual motivation?

6:37Tony J. Robinson:What's the pain point? And can we solve this so it's a win-win situation? I mean, just look at society today. DoorDash. The convenience of paying$20 for a cup of coffee just to have it delivered, you know? So there's lots of things people will pay more for for the convenience, but also give up money in a sense of not selling it as much for the convenience of getting rid of it, too. At the time, I was talking terms with her before I even knew what terms were. I said, you know, we can be flexible about when you want to move. If you need help moving, I can help you. You're downsizing. Ms. Sherry, take what you want and leave the rest.

7:15And I think coming at it with that level of compassion and meeting her where she was at was just really what she needed in that time. Like you said, Tony, she didn't need top dollar for her house. She needed loving, compassionate perspective. After this conversation, what were kind of the steps that you took besides talking with her that kind of led you to getting the deal under contract? So maybe a rookie investor has the same situation, but they have no idea what to do next. How do you get the contract? Do you need to get a real estate agent? And kind of walk us through behind the scenes of what that process looks like.

7:50This is a first deal, guys. So everyone keep in mind, I had no real estate knowledge whatsoever. So I don't know if this is the steps, but this is how it went. So I ran back in the house and I called my mortgage broker and I'm like, you are not going to believe this. And he's like, Laura, you get that house under contract. And I was like, Google, what does it mean to get a house under contract? And then it was like Pennsylvania state contract. And I printed that off. And I was like, sign here, Ms. Sherry, you know, and was it legit? We thought it was. So it was almost like a napkin contract. No escrow.

8:23But, you know, it was more just like people meeting each other where they were at. And so our mortgage broker knew exactly what my plan was, and he was okay with funding it. And then we were going to use our HELOC as the down payment. He was going to take care of the rest. And then the HELOC made the HELOC payments and the mortgage payments, and it covered our renovation. so it was really it was incredible so we got under contract we helped sign up you know like set her up with movers we helped her figure out where she was going to go like a 55 and older community and then we got to work yeah so now to the exciting part so you got the deal under contract you closed on it and now you're going in did you do any kind of rehab estimates before you actually closed on it, do any kind of due diligence with this property?

9:12We knew that it was in pretty good shape. And it was, it's, we live on a street where the houses are all the same model. So I knew what I was working with because we live in one of them. I had just started making contacts with subcontractors. I'm like, I can play the general contractor on this. So once she moved, we did all the demo. We got a dumpster pulled into the demo. And then we had subs come back and put it, put most of the things back to work. We'd put our kids to bed across the street. bring the Wi-Fi monitors over and like scrape floor up. You have to do those things to know what you don't want to do in the future.

9:45So getting the confidence to actually, you know, find the contractors, talk to contractors, hire them, like how did you figure out who to even call and like who you need to get in first and then to get in second, things like that. I don't know that the order went as smoothly as I mean, we got it done really fast. It was in six weeks because we just hit the ground running. So I don't know if I could consult on order at that point of my career, because I remember my father-in-law being like, why'd you do the floors before you paint it? I'm like, let's go. Let's go, everybody. But it was just kind of like this delusional confidence that, hey, if we can do this, then I know we're going to make money on the back end.

10:26Let's just figure it out. And the way we found contractors is just leaning on other experienced agents that work with contractors in our community or Nextdoor or Facebook community apps and just asking like, Like, hey, who's reasonably priced? Want to work with small businesses? Stuff like that. And keeping a close eye on them. And that's how a lot of our contractor relationships started.

10:44Tony J. Robinson:So Laura, did you know going into this deal that your plan was to kind of rehab and flip it? Or when you got it under contract, were you still trying to determine what the best exit strategy was for the deal? We definitely considered the long-term rent. And it probably would have been a good idea. But we knew nothing about BRRRS at that time. or, and since we had kind of conventionally financed it, how to finance out of it and all that kind of stuff was not even on my horizon. Today, should we have kept it? 100%, we should have. But I think it all worked out. We knew like our plan was to flip it.

11:17And in the six week renovation, we bought it for 300 and we sold it for 465.

11:23Tony J. Robinson:In six weeks? It was a$35 ,000 reno. It was incredible. Six weeks,$35 ,000. I mean, what did you budget for your renovation? Was it more or less than the$35 ,000? I didn't know much about budgeting for anything. I just knew that when we bought it, there was going to be enough room and we're going to just get our feet wet type of thing. I'm like, we're going to make money. I don't know how much money, but we're not going to lose here. Let's figure it out as we go. The delusional confidence is really what got me through. But that is great, right? I mean, you know, quick back and napkin math. you bought it for$300, put$35 into the renovation, tack on some closing costs.

12:03Tony J. Robinson:I mean, you guys probably netted close to$100 ,000 maybe on the deal somewhere in that ballpark. You're right. Absolutely right. Yes. Fantastic. Well, you are a shining example of just jumping in and taking action. So I love that, Laura. Thank you. Well, we're going to take a short ad break. But when we come back, we're going to ask Laura about her next deal and the conversation and how she made that happen. So we'll be right back after this. Do you ever notice how every passive investment somehow turns into a very active lifestyle? Active spreadsheets, active phone calls, active stress. Here's a better question.

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15:36Tony J. Robinson:Find a co-host at Airbnb.com slash host. Okay, we're back with Laura. And real quick, if you haven't already, make sure you check out our YouTube channel at Real Estate Rookie. We are trying to hit 100 ,000 subscribers. Okay, so Laura, you already told us about your home run first deal. How did you find your next deal? It came as unexpectedly as the first deal. So because this flip was directly across the catty corner across the street from our house, and we had lined up the moving company for her and helped her box up her things, I was really surprised one day when I saw that she had a friend over loading boxes into his van.

16:18And he was an older gentleman. He had a cane, and he was carrying these big boxes out to his car. And I said to my husband, I'm like, let me just go over and help him. Like, maybe they need a little help here, you know? And we were friendly, so it wasn't intrusive and it was well-intentioned. And I get over, I'm carrying like the third box out and he stops me and he goes, are you the one buying this house? And I was like, I am, you know? And he goes, well, I have a house for you. And I remember thinking, oh my goodness, is this how this works? Like people just come to you. And I remember, and then I also thought like, act like you know what you're talking about.

16:54I didn't, right? I was like, oh, you do? Tell me about it. And he goes, it's three bedrooms, two bathrooms, right outside of Bethany Beach, Delaware, which is a very popular beach town on an acre. And I'm thinking in my head, there is no way I can afford whatever he's about to say. But let's ask. I'm like, how much do you think you want for it? And he said$200 ,000. And I was like, oh my gosh, we hadn't even bought our first flip yet. I ran back to our house. My husband and my father-in-law were in there. And I was like, guys, we're buying a beach house. and they're like that's not part of your plan what are you doing and I'm like we are pivoting we are definitely buying this place and that's how the second deal came about that was a little bit of a shiny object syndrome there for you is that pivot so during this transition what were what was kind of your game plan with this property once you figured out like okay I can purchase it this is what I'm going to do.

17:50I said to him, I was like, hey, do you think you can wait until, we hadn't even bought our flip yet, but I was like, hey, do you think you can wait until I close this house? Because I didn't know anything about financing or creative finance. And I was like, then we'll use this money to buy your house. And he was like, yeah, sure. No problem. Let me know when you're done. So that was the plan. And then at the time I was like, all right, we're going to quickly renovate this place. We'll set it up as an Airbnb and we'll put a property manager in place because I knew nothing about running Airbnbs.

18:20So we did. We renovated the profits, took the profits from our first flip, used them as a down payment, cost to renovate, cost to furnish, put a property manager in place, and then immediately started cash flowing. That's awesome.

18:34Tony J. Robinson:Yeah. And I just want to say what a great strategy to use active income from flipping. You can flip, you can wholesale to generate active income, and then using that to go out and buy passive income with a semi-passive income, I should say, with a short-term rental. I feel like more people should maybe leverage that strategy to build up the capital that they need to take down those next deals. I got to just hang out with you more, Laura, and just catch you in these conversations because what a great way to find your deals. They're just falling into your lap right now. It's been life-changing, truly.

19:11And what you said about using the capital, because I knew that like we didn't, I really, it turns out that I really enjoy flipping and we've got a great system down now. But at the time when we quickly made that first hundred thousand dollars, and I don't know if you guys can relate to this, but it really didn't feel like our money because all of a sudden I made two and a half years of my teaching salary in six weeks. And we're like, oh my gosh, what do we do with this? Because you know how quickly you could use it on yourself, cars, a house, right? Like lifestyle creep. You mean you didn't buy a Ferrari?

19:44I haven't thought about it. But we're like, how can we put this money to work that will work for us? And then the universe was like, well, how about a short-term rental in Bethany Beach, Delaware?

19:57Tony J. Robinson:So Laura, tell us a little bit more about this beachfront property in Delaware. So as someone thinks to buy a short-term rental, a lot of times the recommendation is, hey, do some market research first so you can feel good about the market you're going into, do a little bit of analysis on the property to make sure you feel good about the underwriting. So there's like some layers there. It feels like you just kind of jumped in. So what was it about that deal in that city that made you feel confident to lock it up before you'd even finished your flip? This is kind of two tier, because if you rewind to like our actual lifestyle at home, the life that we built in our primary residence, our cars, you know, is very affordable.

20:37and my husband does a great job keeping it that way, that we're not in any debt. So when we picked up this house, we're thinking, hey, if we can use rental income to just slightly offset the cost of it, then we can also use it with our family and our kids and share it with our family members and just have it be a beach house for us. So it was kind of twofold. And I didn't even realize at that time, appreciation, tax benefit, or just how well it would do as a rental. And now it pays for itself in a year, five times over. It makes me probably five times what it costs me to own that house in a year now because we got it so affordable.

21:17And because the money that we used as the down payment and the renovations wasn't debt. It was money I quickly made on the flip. We wrapped it in. And now the appreciation on that property plus what it saves us in taxes and the rental income and the enjoyment that it brings my kids and us is just, We never thought we would have a beach house. This was crazy. So I don't think that I did all the due diligence that everyone does. It was just a blind faith that this is going to work. And it also works really well with our lifestyle. Was there anything that did come up that you weren't expecting, like maybe permitting or an issue that did happen that you wish you would have done due diligence for kind of going into a new market?