Turning Her House into a Part-Time Rental Property (Makes $2,000/Month!)

0:00Have you thought about financial freedom, but you don't know where to start? Well, today's guest is going to show you the path that she took to build the lifestyle she wanted, starting off with listing her property as a short-term rental and then getting a multifamily to house hack. And throughout this episode, you'll learn what it means to sacrifice for your goals. You'll learn the mistakes that rookies typically make, but more important, I think you'll walk away with an action plan and the inspiration to do it in your own way.

0:31This is the Real Estate Rookie Podcast, and I'm Ashley Kerr. And I'm Tony J. Robinson. And let's give a big warm welcome to today's guest, Ashley Perry. Thanks for having me. I'm excited to be here. What was the moment in time when you decided that you wanted to pursue financial freedom? I think it was something that I've kind of always been striving for most of my life. I just didn't have a name for it and didn't know exactly what it looked like. But throughout my career, I was always looking for the next cool job that could kind of give me that freedom. And being a product designer, I, in working in tech, being able to work remotely has definitely started that journey towards financial freedom and what that might feel like.

1:17And especially around COVID when everywhere kind of went remote and I was able to move from San Francisco back to Denver, where I'm from, I started really getting that jonesing for my flavor of financial freedom, which basically means being able to work wherever I want to, work on whatever I want to, and explore all the different creative projects and ideas that come up for me at any given moment. Would you say that financial freedom is more of a number to you? Do you have a number goal you want to reach or is it more of a lifestyle goal? I think it's more of a lifestyle goal. I grew up in Colorado.

2:04I really like being outdoors and going on adventures. And there's a lot of places that I haven't gotten to see yet. And I would like to be able to go to those places, but also be able to make money at the same time and not have to stop making money to go do those things. And so I've just been trying to explore what that means. I would say numbers obviously come into play when I make a certain amount of money at my job and it allows me to do things like real estate investing and have adventures. And that is a specific number every year, every month. And it's more so like, how can I start supplementing some of that income that I get with my W-2 job to kind of start balancing it out of when is that point that I can kind of switch over.

2:58But I don't necessarily want to make all of my money from real estate. I want to have lots of different ventures. And I think that's what's cool about pursuing financial freedom is that it does have a different definition to different people, right? For some people, it's just, hey, financial freedom means I have this much in my brokerage account, and then I'll feel financially free. To other people, it's, you know, my business produces X amount in profits and that makes me feel free. And for others like you, it's more so on the lifestyle and how it feels and what that experience is. So for all the rookies that are listening, just know that your definition of financial freedom doesn't have to match mine or Ashley's, right?

3:35It can be your own definition. But now if we talk about you actually transitioning into investing, your first experience as an investor who came from listing your own home on Airbnb. What were the pros and cons of doing this? It was definitely a journey. The first con, I guess you could say, is just preparing my house. It's something that I was thinking about doing for a very long time. But when I fully decided to go all in, I was between jobs and wanted to extend that time between jobs as long as I could. and to me that meant putting my house up for you know short-term rentals to maximize the amount of money but that also meant that I had to get my house ready go through literally every drawer closet etc to make sure that it felt like an Airbnb home but it's also my primary home so I couldn't hide everything, but I did my best.

4:36And also one of the hardest parts was having obviously to leave every time somebody was going to come stay. And so I had to start being strategic about when I made my home available. I didn't just make it available whenever I was leaving. I decided to make it available and decided to leave at the same time. So going to stay with my parents who live only like 15 minutes away from that place or my best friends who live almost the same amount of distance. But having to move all of my pets at the same time as well was just a lot. And it was definitely something that prompted me to explore different investing opportunities.

5:24Ashley, that's so interesting because a lot of times when we hear about folks renting out their home, it's usually like additional space. And, you know, we've interviewed folks that are renting out their spare bedrooms, or maybe they've got a basement, maybe an ADU in the back, but you were taking the actual space that you were living in, that you lived in, and you rented that out and then you left yourself, which I think is a unique approach. If you had to like ballpark, how often, you know, like across an average year, were you having to leave your place? Was it like every weekend, you know, multiple times a month, or was it maybe once every couple of months?

5:59I, so I basically decided 2024 was going to be the year to try this Airbnb. And so I started in January. Um, I kind of just made it available, uh, and like made every day available just to see if anyone was even interested in it. And I got a booking for a weekend, like a long weekend. And I just left for that amount of time. And then slowly after that, people started booking pretty quickly because I had it open and they definitely started booking in the summer. So I had to start blocking off days and deciding like, oh, I want to be in my home for this period of time and I don't want to leave. So at first I had no strategy.

6:46and as the year like progressed into summer I would say that I was leaving my home at least half of the month and sometimes it was a little chaotic and by the later in the year I was being a little bit more strategic of only blocking off like two weeks or a weekend here and there and deciding to do that but over the course of 2024 I basically was out of my house for half of the year So let's look at the numbers on this. When that very first booking, first of all, how exciting was it to get that notification that you got a booking for your very first one? But what did the numbers look like? So like that first month, what was your mortgage payment and how much did you bring in from renting out your property?

7:33So my mortgage was roughly$2 ,500. it's been roughly that since maybe the first year after the first year of my mortgage which I got in 2020 so I have a really great interest rate and then that first booking I think it was three or four nights I can't remember exactly but I made$866 from just that one booking just that weekend Yeah, I have a nice house and decent amount of bedrooms. And they were definitely coming to go skiing, even though I'm not anywhere near the mountains, but they made it work. So you were probably more affordable than actually staying right at the mountains. Correct. And it was probably difficult to even get close to the mountains at that point.

8:24That's really cool. Okay, so now that it's been, you know, a year and a half later, are you still renting out that property? So I rented out that property for all of 2024. I decided for 2025 that I didn't want to leave my house and wanted to start looking for other types of ways to make income from real estate. And I actually had one random booking happen in like June of this year that somebody was able to do. It was like an Airbnb blip. And honestly, it was really hard for me to get my house ready for literally just like four days. But last year, doing it half of the year, I made almost$24 ,000 just in one year, which felt really amazing.

9:17But and obviously, I would have loved to continue doing that. But this year, I didn't and then decided to look for something else. And as of this month, I am renting out my house for long-term because of a second property that I purchased, but that I'm renting it out for 3 ,500 now. So with my 2 ,500 mortgage, I'm making a thousand dollars a month starting this month. Ashley, I just want to commend you. And I think that a lot of our Ricky listeners will hear two parts of your story. They'll hear the$24 ,000 you made and say, wow, that's a lot of money. They'll hear you were not living in your own home for half the month and say, that's not something that I could ever do.

10:01I think those are the two takeaways. So I want to really stress to everyone that's listening, the sacrifice that you made was a sacrifice that was unique to your situation. Not everyone's going to be able to sacrifice in that same way. But what we all can do is identify what sacrifices can I make in my life to get me to the point where if I just buckle down for the next 12 months, I can then completely change the trajectory of my financial and my personal life based off of this one decision. So if you're thinking and you're hearing Ashley's story like, well, I've got six kids. I can't pack us all up and leave for half the year.

10:38Totally fine. But ask yourself, what are the other sacrifices you can make to put yourself in the same position? Exactly. I've definitely had to make a lot of sacrifices with all of these different decisions. But it's definitely about deciding which ones you can live with. And sometimes you have to try it and see if you can live with it and decide that you can't. Thinking about wholesaling or flipping your first property, but not sure where to start? The truth is deals don't just fall into your lap anymore. You need to go out and create opportunities. That's where PropStream comes in. With PropStream, you get instant access to over 160 million properties nationwide.

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14:07Baseline is giving BiggerPockets listeners an exclusive$100 bonus when you sign up at baseline.com slash biggerpockets. So Ashley, how did you even decide it was time to buy a second property? Were there certain metrics or goals maybe that you set up for yourself as to when I reach this savings amount for a down payment, I'm going to buy the next? What did that process look like? Honestly, it was a little spontaneous this year. Obviously, I've been interested in real estate investing and have learned about lots of different ways that you could finance your rental properties and your next properties.

14:47but this year around the summertime I was just deciding that I wanted to buy a second property it felt like a big audacious goal that honestly I wasn't even sure that I could accomplish I didn't really know my numbers I have a HELOC on my last home that I knew that I had that amount of money I could use I also have savings from other investments that I could use but I really had no idea what that translated into of like what I could actually buy and afford. I decided that I was going to wait until this winter to really dive into it. But of course, I mentioned to my friend that's a real estate agent that I was going to be doing that.

15:30And she was like, well, what are you looking for specifically? And I was like, well, I'd really like to have a rental property that's two to four units so that I could owner occupy. And she was like, do you know how much you can afford? And I said, I have no idea. So she, of course, connected me with a lender and I figured out what I could afford. And honestly, in Denver, I had no idea what that even meant. Like that number, the top number that I was given was 750 ,000. And I was like, it's Denver, you know, how much could you really afford with 750? And will I even be able to find a two plus unit property for that amount?

16:15And so of course I started looking immediately just to see what was in that price range. And I found something that was literally down the street from my parents. And it seemed to have a lot of land, which was something that I was looking for. And the possibilities started, um, started blooming in my mind. And of course me and my mom went to go look at it because I always need to have support when making these types of decisions with my real estate agent. And soon after we were like, maybe I should really like look into doing this. Seems like the numbers could work. So started that process pretty quickly.

16:52So when you're looking at this property, you had mentioned your criteria was more than two units you wanted to purchase. What other things did you have in your buy box that made you want to look at this property? Like I said, two plus units, this was a duplex. It also had, it was a fairly small duplex. So the actual units were pretty small and the land was around half an acre. Also looking at zoning. So that's a big part of my process is looking, what are you able to build on this land? What could it become? Things like ADUs, even commercial property, like commercial property, having a storefront at some point, or even building more units.

17:44So those are all things that I'm looking to do at some point and looking at the zoning and seeing if it's even possible was something that I was interested in. And then of course, could I live in one of them was something that really, that's, you know, one of my biggest criteria. So let's talk about the numbers of this deal. As you're, you know, you put in your offer, walk us through that moment. What's your offer? Would you get it for? Was there already tenants in place? What were the rents? And how did this deal end up? So first off that first deal, I did go under contract with it, but a bunch of things kept coming up and I honestly fell through on that deal.

18:25I decided to fall through on that deal. And then I soon found a second property in a different area of town, still in the Denver metro area that I became extremely interested in. It's also a duplex. It's also on a half an acre. Sorry. It's also on a half an acre. The duplexes are much larger. They also had tenants in place when I toured it. There was tenants in both units. And there's also a three-car garage and a couple of storage sheds on this land. And then it's zoned for up to 13 units, depending on how big the property is. Right now it only has two and the size of the property allows for seven.

19:15So that was exciting for me. And then, so numbers wise, I believe they had it listed for$7.25 and I gave an offer for$7.10 with also 17 ,000 seller concessions for a two, one buy down. And after a little bit of back and forth, they actually accepted it at that number. And I was elated, obviously, and started moving forward with that process. Congratulations, Ashley, on getting that deal secure. But two things you mentioned that if you would mind explaining for our audience, you mentioned seller concessions and two, one buy down. Can you just quickly define both of those things for Ricky's who may not be familiar with those phrases?

20:03Definitely. So seller concessions is generally something that the seller will pay to the buyer for things like a two, one buy down, which I'll explain in a second, or possibly putting money towards fixing up certain things on the property, et cetera. So it's just another leverage point when you're making an offer of what you could ask. And especially I believe in the market that we're in today, especially in Denver, asking the seller for more could potentially, you know, be fruitful for you. And a 2-1 buy down is money that the seller gives to essentially drop your interest rate for the first two years.

20:51And so for the first year, it drops by two percentage points. So I got my interest rate at 6.99. So the first year it'll drop to 4.99. And then for the second year, it drops 1%, which is 5.99. Yeah. And it's an incredible tool and resource for buyers right now to still make deals cashflow in the short term. I think still for everyone that's listening, don't think like, oh, great, cool. I'm going to get this deal at 4.99 % because it does go back up to whatever rate you locked in at. So make sure that the deal still works there, but it gives you some additional cash flow in the short term. And then on the seller concession side, and Ash, I'm curious what your take is on this as well.

21:31When you're negotiating as a buyer on a piece of real estate and say you get your inspection report, there's things that come back, whatever it may be, but you're negotiating during your due diligence phase, you can ask for a reduction in price, or you can ask for a credit back, right? Where to Ashley's point, you're getting, I think you said$17 ,000 as a credit at closing. I almost always prefer to get the credit because it limits or reduces the amount of cash you have to bring to the table. And we've interviewed folks in this podcast who, because of the credits they've received, have actually gotten paid at some point to buy a piece of property, which is crazy.

22:07I think the only way that actually decreasing the purchase price will be helpful is if you're paying in cash, maybe if you're super worried about property taxes, I don't know, whatever it may be. But Ashley, for you, would you prefer credits or reduction in price? It depended if I was the buyer or the seller. So as the seller of the property, I would prefer a reduction in price if I'm selling an investment property. So I would rather it be at a lower price for an investment property I'm selling. and that if I am the buyer of the property and I'm using a loan, I would rather the seller credits because then I'm still getting a loan for the amount of the property.

22:55Why would you, as the investor selling, why would you want the reduction in price versus the credit? Because I want the, well, I guess it wouldn't matter. I was going to say because then it's reported that the sale is lower, but I guess you would write off as the credits anyways. it's not like I would pay tax on the seller credits. See, I was thinking like, okay, say the property is 100 ,000 and they want 10 grand. So I'm really only selling it for 90, but it's reported that I'm selling it for 100. But I would assume probably when you get the closing statement, there would be some way to write off that 10 ,000 credit, but maybe not.

23:38But that's actually a good question. Who knows the answer? Please put in YouTube content. I don't know the answer to that either. Yeah. Yeah. Because that's what I was thinking is like, okay, the, the price is the price being reported is a hundred thousand, but I am giving them a credit, but what would I, how would I report that on my tax return is do I then give them a 1099 that I gave them a 10 ,000,$10 ,000, right? Like we'll have to, we'll have to bring Amanda Hahn and Matt McFarland back on to, to give us the insight to that. And I think I think as a seller too, especially like say, say if you're a flipper, even as a flipper, you definitely, in my mind would want to give the credit as opposed to reduction in price.

24:16Because if you're reducing the price on a property that you're selling, well, that's only going to negatively impact your, uh, your, your, uh, ARV on the next property that you try and sell. Exactly. Right. Like you'd be pulling down your own comps value and you see the bigger builders do this all the time, right? Where they'll never go from phase one to phase two and decrease the price, but they'll give you a massive credit at phase two to make sure that when they go to sell phase three, they still have prices that they can increase. So anyway, lots to think about there. So appreciate getting your insights there.

24:50But you also mentioned that you inherited tenants with this property. And I think for a lot of rookies, that can also be somewhat of a scary to step into, especially as maybe like a first time landlord. So how did you interact with those tenants and how did you go about introducing yourselves and managing that relationship? Honestly, it's very scary. I first, I mean, I met them both when I did the walkthrough the first time. And obviously I didn't have, I wasn't sure if I was going to be putting an offer in or anything like that. One of the tenants was super knowledgeable on the property and her unit and was also willing to, it was almost like she was selling the property herself.

25:37And that I thought was hilarious, but she was really great. And it was a lot of really useful information from her. And then the other tenants, they weren't, they kind of just, you know, left us alone, weren't as social. And it's also really difficult because you get to go through and see how they are keeping the property. And it is hard because it feels like an invasion of privacy, obviously, but I had a lot of insight into how each of them kept the property and what might, you know, be an issue when taking it on and having to renovate it. And so when I ended up actually, well, first off during the negotiations, I definitely took into account what might go wrong.

26:27And so thinking about both of these tenants, their leases were up at the end of August, so last month. But in Colorado, there are tenant laws that depending on when you're told when your lease won't be renewed, you still get up to 91 days to stay in the property. So I had to take that into account. And also if, say I would have to evict at some point, that was a big concern. And we ended up negotiating money going into escrow from the seller side, just in case I have to evict at some point. But if I don't end up having to do that, that money just goes back to them. So hopefully I don't have to, I really don't want to, obviously.

27:09And so before I got the property, which I got about a week ago at this point, one of the other tenants moved out, the one that was very social and selling the property, she moved out and the other tenants are still there. And so I basically had to learn a lot about how tenant laws, obviously in Colorado, they do they lean a lot towards the tenants, rightfully so, and had to learn a lot about what that meant and what I could do and what I needed to do because I actually want to live in that unit when they move out of it. And they also have access to the garages and the sheds. So like right now in this unit, I just have a carport and I have, I do a lot of DIY and I'm going to be renovating this property.

28:01And so I like have nowhere to put all of my stuff. It's very interesting, but I had to do my due diligence and introduce myself. I tried to make sure I'm trying to make sure that everything is documented as much as possible. So like emails and text messages. And also if I have to like put a paper on their door, making sure that I take a picture or it's recorded and noting when I have conversations with them. It sounds, to me, it's hard because it feels very cold, but, and I'm not a cold person. I'm very kind and understanding, and I want to be helpful in whatever way I can be. But having to do all of this documentation is to protect both of us, honestly.