The 2-Year Blueprint for Buying Your First Rental Property (Starting from Zero)

0:00Ashley Kehr:A lot of people tell themselves they'll invest when they make more money. Today's guest was a college freshman working midnight shifts at H &M when COVID hit and she got furloughed. That moment lit a fire. She went from no real estate knowledge to a house that fully covers her$3 ,300 mortgage. She is going to show us that the path to your first deal is actually a personal finance story before it is a real estate story.

0:24Tony J. Robinson:And look, what I love about Mimi's story is that it's not about finding some secret market or getting lucky on a deal. She just built a system. She stuck to it for two years and that put herself in a position where investing was the natural next step. So if you're trying to figure out how to get from where you are today to your first deal, this episode is a blue.

0:48Ashley Kehr:This is the Real Estate Rookie Podcast. I'm Ashley Kerr.

0:51Tony J. Robinson:And I'm Tony J. Robinson. And with that, let's give a big warm welcome to Mimi. Mimi, thank you for joining us on the podcast today. Super excited to have you. Of course. Thank you for having me. I've been listening to BiggerPockets for years, so probably like everyone else, this is a dream come true.

1:05Ashley Kehr:Well, Mimi, you were a freshman in college working midnight shifts when COVID hit and you got furloughed. Walk us back to that moment in time, what actually changed inside you? Yeah, so I've always been the type of person who's trying to find a way to make money. I started working when I was 16 through like a summer youth program in New York. And that led to me working at H &M my freshman year in college. I like not worked with a friend. She got me the job. But I remember being like, okay, like, this is my life now. I have this going on. I was an international studies major working at H &M. And then I got furloughed.

1:45And, you know, my mom and I lived together when I was in college. I stayed in the city just to, you know, not have to take out loans after I graduated. So when that happened, I was like, hmm, everyone tells you go to school, get a job. But what happens when a life event causes you to lose your job, right? Now you're like, oh, like what's going on? And thankfully, you know, there are all of these things that happened where, you know, people weren't getting kicked out of their homes right away. Like, but it just still was a shock to me as a person who was always independent, even though I live with my mom.

2:21So I was like, okay, like, how can I get into making money? How can I support myself and not rely on what I've been told my whole life with the whole get a job, you're secured, you're good.

2:31Tony J. Robinson:So what happened from there? I mean, you get furloughed and like, what's your what's your next step to try and rebuild that independence? So a lot of YouTube videos on, you know, how to make money online, how to start a business, investing in stocks, financial freedom. And that led me to actually starting in an e-commerce business. And a lot of people knew me for my hair. So I sold kits with like hair products. I made like a Shopify website. I did a quiz where people could pick out like the color that they wanted, their hair type, and I'd recommend something. And throughout that year from like 2020 to 2021, I grew my email list to about 5 ,000 people through that quiz.

3:10I was making pretty good money from that business. But the thing is like once real life started again, and I had to go to school, it was really hard to be shipping out boxes by myself. So I stopped. But I also changed my major to advertising and PR just because that was like the closest thing we had to marketing and digital marketing at my school. I literally took a winter class and put it on a credit card just because I didn't want any delays to my graduating. And all in all, that paid off because I landed an advertising job at AWS or at Amazon, actually, eight months before I graduated college.

3:50Tony J. Robinson:Wait, Mimi, I just want to pause here quickly because for a lot of folks listening, sometimes the biggest obstacle to them getting their first deal is coming up with the capital to fund that purchase. Through this e-commerce shop that you were running, just ballpark, you said you ran it for, well, I guess, remind me how long you ran it for and how much revenue and potential profits you actually made from that side hustle. Yeah. So I ran it for about a year. I was not that great at business, so my financials weren't great, but I knew there were weekends where I'd make$2 ,000 from that business.

4:23Like I have Shopify, like videos that I've taken of like all of the, all of the sales. And a lot of that was just through trying out influencer marketing. TikTok was pretty big at that time. So I just tried out different things.

4:36Tony J. Robinson:That is amazing. And how old were you at the time? You were still in college when you did that. Yeah, I was maybe going into my sophomore year of college. So like 2021, somewhere around there. Yeah. That's incredible. And you know, the reason I pause on that is because so many people who were listening again, the financial piece is sometimes that biggest hurdle. And if you as a sophomore in college could figure out a side hustle to make 2000 bucks in a week, and obviously, you know, there's some costs associated with that, like not on net profit, but if you could go out there and generate, you know, four figures in a weekend, well, then for the folks that are listening, there's not a whole heck of a lot of excuses around why we can't start something to start working towards that.

5:14Tony J. Robinson:So you get this actual career now, once you graduate, you're working at Amazon. Do you start up the e-commerce store again or kind of what's the pivot from there to get you back on the path that you were hoping for? Yeah. So I knew that when I graduated, I wanted to be making at least 75K. I would journal about that and everything. And so when I graduated, my base salary was 63K. I got a sign on bonus year one and year two for about 30K. So to be honest, like that first year I was making six figures. I just did not use that. Like I when I tell you I did not see that 30K because immediately when they gave it to me, I put it in my high yield savings account and left it there.

5:59I fully lived on my base salary both years. And that's how I was able to kind of come up with the money that I did to buy my home.

6:07Ashley Kehr:Now, Mimi, how did you do that? Because it is so easy to have that lifestyle creep, to have that money sitting there and tap into it. What are some maybe, you know, characteristics or habits that you implemented at a young age to be able to stay diligent to not spend that money and not to increase your lifestyle? Yeah. So I got a roommate. I know a lot of people who, you know, as soon as they make some money, they might be like, I don't want to live with anyone. But I got a roommate. I did not buy a car. I made sure to live somewhere where public transportation was, you know, close by. And I just was really intentional about what I wanted to do.

6:48I knew the goal was financial freedom, building wealth. I knew that for me, my first path to that was buying a house. During that time in COVID, when I was looking up building a business, all of that stuff, that's when I came across Bigger Pockets, Meet Kevin, all of these different people who are investing in real estate. and I was like, okay, like this is my path. This is what I'm working towards. So I'm going to stick to that. And something that I always talk about is like having a season of focus. Like those two years were my season of focus. And to be honest, that first year, I kind of got a little depressed, not because of what I was doing, but just because it was, you know, post-grad, you're realizing that life seems like it's just work and home, work and home.

7:34And I was like, okay, like I don't like the that I'm living in, I want to live in inner city DC because I had moved to Virginia. And so I lived in DC and I lived in a sunroom because I knew that to me, like where I lived was not super important to me, but I wanted to be in the city surrounded by more people. So it's kind of like just choosing the things that align with your life and then sacrificing, or I don't want to say sacrifice because that's not the narrative that I want to give, but like just having something that you're really intentional about. And if you're not happy with the way things are looking, it doesn't mean get your mind off or step off of the path that you're going towards.

8:12It just means changing things to still make your goal work. But you might be living in a sunroom for a year just because you want to live in downtown DC.

8:22Tony J. Robinson:But Mimi, I don't think sacrifice is necessarily a bad thing, right? It's like, I think if more of us could sacrifice in the short term, right? To your point, you said season of focus. If more of us could sacrifice in the short term, I think the long term prospects of our happiness and our fulfillment would be so much higher because typically we can't get to that pinnacle without some level of hard work and sacrifice in between. So I don't think we should shy away from that. If anything, I mean, you did sacrifice, right? And it worked out for you. So sacrifice is a good thing. It is. It is. I think that sometimes when people are thinking about building wealth, they think, oh, now I need to survive on ramen.

8:59Now I need to give up my social life. I can't travel as much. But that's what I mean by like kind of focusing on one thing. I guess it's perspective, right? Some people are like, hey, it's sacrifice. But I'm like, no, you're not sacrificing anything that you want because you're still intentional about what you want to do with your life. But, you know, you might be giving up this one thing.

9:23Ashley Kehr:Now, Mimi, a lot of our listeners are living paycheck to paycheck and may think that it's really hard to save$2 ,000 a month, which it could be. What maybe mindset shift did you have or, you know, what are some recommendations that someone could be doing today to be able to save that amount of money a month? Again, generally, just the way that you're looking at things. So a lot of people or women in general, because like I'm always speaking to women, oftentimes we don't sit down and think about what we want. It's like someone told us that that's just not possible. Right. I mean, what a lot of people are like, oh, hopefully I can do this.

10:02And I'm like, no. Yes, fully. If you want to do this, this is what you need to sit down and get clear on that vision. So if saving two thousand dollars a month is something that you want to do because like for me I want to retire early and the compound interest calculator does say that I need to be saving two thousand a month to do that. I'm like, okay, where do I want to be and how can I make that happen? And so right now, if my job is not giving me the amount of money that I want to make that happen, okay, now I know what I'm working towards. And now I know that I need to spend a good maybe two to three months refining my resume, refining the way that I interview so that I can get a job that will allow me to save that$2 ,000 a month.

10:41I knew that, you know, I want to retire early. So maybe for me, it was sitting down and saying, I'm not going to be spending any of the extra money that I make through bonuses, through work. Even if I have a bit of extra through that base salary that I am spending, I'm going to put it aside because I know that I want to buy a house. And buying this house means that my living expenses are low and I can be saving that too. Like, you know, just thinking. And sometimes people want that instant gratification. My journey took five years, five years of figuring out, oh, a job does not mean security. okay next step is making a job that gives me this amount of income so that I can put aside the money that I need to buy a house and just making it happen and I personally waited two years after I started a job to buy my home but I searched up so many programs and knew that if I graduated and got a job in my field I could use that as like proof of income to buy a home too if I wanted to so just different things to make it work because you are intentional about making it work.

11:43Tony J. Robinson:Now, Mimi, you set a two-year deadline before you actually want to start looking for your first deal. Why two years specifically? And I guess maybe even more importantly, how did that specific timeframe kind of change how you managed your money during that time? I said two years just because I knew that two years meant no excuse. Like two years meant, you know, I've had two years of work history because I was still dilly-daddling on, okay, should I do this? Should I do that? There's so many different ways to build wealth, right? And this was just my path. So two years was my, hey, when you get here, there's no excuse.

12:19Like you have the history, you have all of these things that you need to be able to make it happen. So when it came to managing my money to make sure that I would get to that two-year goal, I would do funny things. So sometimes I did slip up, right? Where maybe I had a month of credit card spending. So I would call my credit card company and say, hey, I want to lower my interest rate. I would like you guys to lower my limit because I know that when my limit is above this amount, I'm going to be spending on the credit card. I did that for bills. I was kind of the crazy frugal friend. And when I would meet people and we'd go out and they'd be like, oh, hey, can we go to a restaurant?

13:04I'd be like, actually, that's not in my budget today. And some people are scared to tell people that, but I mean, it's true. It's not in my budget today to go out to a restaurant. And I'm going to be honest about that. Can we go do something else? And nine times out of 10, the something else was lower cost and it was still just as fun, right? So just things like that and not being afraid to tell people what I'm working on. Because sometimes when you do tell people what you're working on, it makes it more real. And people are like, oh, that's a girl with a vision. So I understand and I'm going to respect that.

13:36Nobody ever gave me any crap about saying, hey, that's not in my budget right now.

13:41Tony J. Robinson:I love that. And I love the crazy frugal friend. You got to go grab that Instagram handle because that's super marketable for the people that want to follow in your footsteps. Okay.

13:52Ashley Kehr:Well, Mimi, you did everything right on the saving side, but getting to your first deal was not as frictionless. And I want to hear about that because I think there's a lot of rookie investors that assume once you have the money, the hard part is over. After the break, we're going to get into what the deal actually looked like and the mistake you almost made. We'll be right back.

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17:02Ashley Kehr:Let's talk about what the search looked like and how did it not go exactly the way you thought it would or had planned. I guess first I want to know about you. You came in dead set on a duplex or a home with a walkout basement. You wanted a classic house hack setup. So what happened when you first started looking? Yeah. So when I first met with my real estate agent and told her what I was looking for, she said, in this area that you are looking at, you probably will not find a duplex. But if you want a house hack situation, you'd probably find a single family with a walkout basement and a lot of people, you know, that's the footsteps that they follow in if they're looking to rent out part of their homes.

17:47So that's what I was looking for. We searched a lot of homes. Some of them were, I don't want to say out of the price range that I could afford, but just because you're pre-approved for$500K doesn't mean you should be spending$500K, right? You got to run the numbers and see what makes sense depending on like the rents you can get in the area and all of that stuff. So I looked and I found a few places, but then when we did the inspection, things did not turn out. And I knew that I didn't want to get riddled with all of these expenses and having to fix so many things because I'm also still working.

18:23I want to get people in the house as soon as possible so that my rent can start being covered right away or my mortgage can be covered right away. So those were some of the considerations that I was thinking of as I was searching for home. I put in an offer. That one didn't work out. Put in another offer for a home that actually ended up being in the same exact neighborhood as the house that I closed on. And I really love this neighborhood too. I was like, oh my God, I love this neighborhood. It's close to the train, which means that I can get more people who don't have cars, yada, yada, yada.

18:57But that house didn't turn out. Someone ended up outbidding me. And finally, when I found this home, we did a first inspection, but the gas wasn't turned on. So we were like, hey, gas is not turned on. We'll do this preliminary inspection with what we have, but we want to come back and do another inspection. And so we let the sellers fix up some of the things that they found in that first inspection. But then I was like, hey, I've done an inspection before. And I just feel like what this person or this first inspector covered did not hit all of the things that I've seen in other inspection reports.

19:34So I actually ended up calling someone else that was recommended to me by a different real estate agent. And they were a bit more thorough. And those people found a few things, like they found that the roof needed to be replaced. I needed to replace the water heater. The crawl space had some issues. And these were all things that if I had went into blind, I probably would have, you know, crapped myself because I'm like, oh, my God, like I did not want to deal with all of this in the first place. But that's why it's important to run the numbers and to really kind of just play around with different scenarios.

20:12I knew that this home was big enough for me to be covering my mortgage, to do different things with it. Like if I wanted to Airbnb the room downstairs, I could do that. If I just wanted to house hack, I could do that. And I ended up deciding to house hack and just live in the place because I could not find that walkout basement situation that I was looking for in the first place. Right. So, yeah, I thankfully had enough money saved up after I closed to be able to do these repairs. But if I had gone into it blind, like I would not have loved coming in and finding out that I had to do all of these things versus getting that second inspector to come tell me everything that's wrong with the house.