291: Living for FREE at 22 and Planning to Retire by 30 with Rentals w/Ryan Hughes

This is Real estate rookie episode 209 or 1.

All throughout college, looking into buying a house. And at the, at that time, I was definitely in analysis paralysis. I'm like, oh, I'm too young. I came with 100 excuses. And then once I got to that opportunity, I'm like, I've been doing this for five years. I was already leaning towards just, all right, it's time. And then with my dad, which I wasn't expecting. Yeah, let's go check it out. I was like, all right, that's it. That's my sign. We're making this happen. Whether we like it or not, we're making this happen.

My name is Ashley Kerr, and I'm with my co host, Tony Robinson.

And welcome to the Real Estate Rookie Podcast, where every week, twice a week, we bring you the inspiration, motivation, and stories you need to hear to kickstart your investing journey. And we are back with another amazing guest for today's episode. Today's guest is Ryan Hughes, and Ryan's based out of South Florida. Actually. South Florida.

West Palm beach, wherever that is. In Florida.

Yeah, somewhere in Florida. But anyway, he's from Florida.

West side, maybe. West.

Yeah, maybe somewhere on the west side. But he's got a really cool story. And, you know, we love the Ricky podcast because so many of the stories are so relatable, and our guests are doing things that pretty much every single person listening can implement in some way, shape or form. And I think Ryan's episode today about house hacking is a great, great example of just super simple steps you can take to get started as a real estate investor.

Yeah. And just the way he's been able to network with people and really rely on their expertise. But it's not like, oh, please help me, please help me. It's like you're an experienced contractor in this skill set. Like, what do you recommend? Like, being genuine, I think is like the really big difference between Ryan and a lot of other people asking for, you know, someone's help with something. And he is super genuine, and he actually takes that person's advice too, instead of just wasting their time. But one of the things I really like Ryan, too, is at the end of this episode, he like, breaks down as to how his personal finances have changed since he bought his first deal until now, today, and then what his, like, long term goal is too. It's pretty cool and inspiring.

I also really loved how he talked about how he got connected to his agent in South Florida and just kind of how that, how that whole relationship spawned so many other connections that have benefited him as a real estate investor. And I just looked it up. Our producer dropped it in the in the chat and I just looked up on the map but West Palm beach is actually in South Florida. But funny enough it's on the eastern side of Florida, not on the west side. So what have anyway little nugget for today's episode. So just a little bit of housekeeping. Want to give a shout out to someone that lets us say five star review on Apple Podcasts. This person goes by the username welcome Home and welcome Home says I am thrilled in all caps to write a five star review for Ashley and Tony. I just closed on my first property and I'm truly looking forward to placing tenants and I would not be here without all of the guidance, tips and strategies provided by Ashley and Tony. I am so grateful for you to welcome Home. Congratulations. Those are the kinds of things we love reading in the forums and the in the podcast reviews and Facebook group is people taking action with what they learn on this podcast. So if you have not yet taken a few minutes to write us an honest rating review, please do. The more views we get, the more folks we can reach. And the more folks we can reach, the more folks we can help. Just like this person. Welcome Home. So appreciate you all.

Yes, thank you guys so much. It really does make our day when we get the little email alerts every I think they come every week, every other week, showing us what the reviews are and what they say. And we really appreciate it very much and appreciate everyone being genuine.

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If you're serious about scaling your portfolio, you need two good data and good deals. Lennar's Investor Marketplace gives you both. It's full of new rent ready homes in markets across the country. Each property comes with verified rental comps and local insights. You can see potential returns, compare markets and make offers, all without leaving your desk. It's like finally having the homes, the data and the financing all in one place. Head to biggerpockets.com Lennar and see what's live right now. That's biggerpockets.com Le N N A R Please consult your own legal and tax advisors to evaluate the risks of any real estate transaction.

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Ryan, do you want to start off with just telling us a little bit about yourself? And I got into real estate, definitely.

So I'm 25 years old. I bought my first property just out of college when I was 22. Graduated May and bought it August. So I didn't waste too much time. I've been kind of investing in real estate as long as I can remember because when I was growing up, my parents were getting into Financial Freedom and Dave Ramsey and Financial Peace University. So they would kind of get me involved here and there and ask me questions, hey, this is what we went over. This is kind of what we learned from it. So I got involved that way. And then when I was about 14ish, my dad decided to take the leap as a new investor and get into it. And so he bought two properties. And when he bought them, they were, they're really cheap, so he could afford it by himself. But he wanted us kids, because I have a little brother to get into it as well. So when he did that, he was like, I know you have a little bit of saved. Obviously I see your savings account if you want, like, here's an opportunity to invest. And this is what that means. And he's like, basically every month I would sit down with you, this is the percentage you would buy in. So this is how much you would earn. And as long as I can remember, the first of every month, we are getting our $25 a month. $25 a month. So it was really cool to see that. And then right around when I was graduating, my dad decided to sell the properties. And when he did, that was enough to pay for my last semester, year of college. So it was cool to kind of see that full circle.

Ryan, did you ever calculate what your cash on cash return was? Was your dad actually giving you a good deal or.

No, I did not. I definitely didn't. I didn't know anything about that. Honestly, I don't know if he did. At the time we were just like, I would go with him to the property and do the work as well. So we didn't hire anything. He self managed. It was as simple as could be.

Right. You know, you, you mentioned that it was your parents going through the Dave Ramsey, you know, I don't know, like the Financial Peace University and, and kind of drinking that Kool Aid. Now obviously Dave Ramsey is opposed to debt. So like how did you kind of square like the idea of Dave Ramsey with becoming a real estate investor? Because Dave Ramsey's whole methodology is you can't be a real estate investor. You got to pay for everything in cash. Is that the route that you all went down to get started where you're paying cash for your, your deals, at least the ones you did with your, with your dad.

So that was to your point. That was a very hard struggle for my dad, for myself, and it still kind of is a little bit for me. And he, he financed them, but he did go as much down as he could he did use, I think a 15 year fixed. So we did kind of follow that Dave Ramsey route because that's kind of all we knew at the time. And then now that we've got into it more, it still conflicts a little bit, but we kind of lean. We use that as a loose guide. Dave Ramsey. And then outside of that, we focus on just investing.

I love Dave Ramsey for like the paying off debt part, but then once you've done that, as far as his investing advice, I feel like that's where a lot of real estate investors like, yeah, sorry Dave, I don't need you. But that was my personal situation. And so like, I like his advice for paying off debt, like using the snowball method, all of those things and putting yourself in a great position. But as far as investing, I think it's very hard for people to really grow wealth without using any kind of debt or leverage to rapidly grow wealth. And in, I think too with Dave Ramsey is like, he has a ton of other different income streams rather than just real estate investments or investments like his own media company and everything like that. So if you like, it's a little difficult to compare apples to oranges.

And I feel like with every person you have to look at, you know, it like, did Dave Ramsey build wealth? And the same with, he's teaching everyone else to build wealth. And like you said, Ash, like, no, he didn't, he didn't snowball his way to being this ultra super rich guy. It's because he built this, this extreme amount of active income through his media company and now he's able to kind of stash his, his, his, his cash into real estate. But even so, it's like when you, when you think about like the really big players, whether it's real estate or any industry, really, they all leverage debt in some capacity. Like, I just saw an article about Donald Trump. You know, regardless of what you think of Trump's political beliefs, you know, he's done some smart things on the business side. And he, he had this office building that he owned in some downtown city, camera which city it was, and he refinanced it for $100 million. They were able to pull out $100 million on this one deal, you know, and that's all debt, you know, but, but it's, it's, it's tax free and he's got his tenants paying it down. So I think once you get to a certain point, being able to leverage debt smartly is what really allows you to, to grow and scale at a, at A at a quick rate.

So, Ryan, you talked, you talked a little bit about how you struggled with that. So was that like something just like you had a hard time sleeping at night, like just knowing that, you know, you could potentially get into deep debt or what was kind of your, your mindset there? Why did you decide to still continue on with using leverage?

So I 100% agree with everything you said so far and that that's the hardest part was I definitely struggle with the mindset of I want to do this myself, I want to get out of debt, I want to make sure I'm, I can, if something were to go wrong, I can handle these by myself, no big deal. But just like you said, you can't scale that way. And that's what started getting into my mind slowly. The more I listened to this podcast and other resources I read, like how, how much income and how much extra would I have to do to be able to cover. Cover every single property myself was so much more work, so much more time consuming versus leveraging that debt, leveraging those opportunities.

And we, we've talked about this in the past too, Ashley, where it's like if, if debt is something that you're struggling with, there is a way to, to minimize that, right? Maybe even if the bank is offering you, you know, a 10% down loan or three and a half percent down loan, if you're going owner occupied, put up 25, put up 30, put up 40 and say, hey, I'm never going to have less than 60% equity in any of my deals, right? Like that. That's my benchmark. And if you buffer that or you give yourself that breathing room, then you're, you have more flexibility if there's ebbs and flow in the valuation or with whatever happens with your property. So there are some ways, I think, to kind of offset that fear around the debt as well.

That's such a great point, Tony. And when I first started out was any BR strategy property that we did, it was always 70% you would pull out. And it definitely made brrrrs harder, you know, only pulling out 70%. But I, that was like a really good way for me to transition from Dave Ramsey to getting into debt again for real estate investing, actually, I kind of did it simultaneously. So Ryan, with your, your background, so your dad sold the investment properties he had, you went to college. What happened from there as far as did you take on, did you only, you know, get debt for real estate? What kind of happened after college?

Yeah, definitely. So quick side note to the BRRRR like you were just telling that story. I did my first BR ever about six months ago, and I was conflicted with that idea again. How much debt do I cover? And I had the option to do 80% versus 75% loan to value. And because I was nervous, I did 75% and left some money in the deal. If I would have did 80%, I would have been able to pull everything out and then some. So I still struggle with that, like I mentioned, but after college or throughout college, I was very fortunate be able to graduate with no debt in schooling. However, I was. I was ready to buy that house. I was ready to go for it. I was excited. I was looking for it. So one day I was just. I like to run. And I was running through this small neighborhood near my house just north of Atlanta. And I was just running. I saw a for sale sign. I was like, okay, that's interesting. I'm gonna. When I go, I'm gonna trot down that address. And then I got home, I let me run the numbers. So I was. I was using the bigger pockets calculator, running the numbers, and I'm like, this actually works? I'm like, but I'm only 22 years old. I don't have a ton in savings. Just barely graduated. Just got my job. So I called my dad, and I'm like, dad, is this crazy? And he was like, let's go check it out. Let's see. And sure enough, we did. And it happened so fast. I think I was running on like a Saturday and put the offer in by Sunday. My dad came up that afternoon. We saw it. It was just so fast. I didn't even know. I was like, this is actually happening. Like, oh, my gosh.

So we've heard of driving for dollars, but I think this is the first time we've had a guest that was jogging for doll. Like, what a. What a cool way to. To kind of get to know a neighborhood even more intimately than you would if you were. If you were driving. R. I guess just like one. You know, I. I think that for so many Rickies that are listening, they. They've listened to the podcast, they've read the books, they've watched the YouTube videos. But even if a good deal presented itself, they would have too much fear to actually move forward. Because that first deal for so many people is the scariest.

What.

What was it about you? Or, like, why do you think you. You didn't have any hesitation moving forward?

I think because at that point, I had been all throughout College, looking into buying a house. And at the opportunity at that time, I was definitely an analysis paralysis. I'm like, oh, I'm too young. Oh, I came with a hundred excuses. And then once it got to that opportunity, I'm like, I've been doing this for five years. I was already leaning towards just, all right, it's time to. And then with my dad, which I wasn't expecting. Yeah, let's go check it out. I was like, all right, that's it. That's my sign. We're making this happen. Whether we like it or not, we're making this happen.

So walk us through that period of time when you've seen the house and then you're making the offer. What were the action steps that you took during that time to actually get this, you know, offer in?

But definitely. So from when I made my offer, I was calling a family friend I had or my friend of my parents that was an agent talking to him. Hey, do you know the area? Hey, what do you think about this? Do you know, investors in this area? This is my end goal, is this is going to be an investment property. What do you think? Okay, you know, do you know any good handyman? Do you know any good kind of getting connections from him? And they had great recommendations, great advice, great opinions. Is there any way I can figure out the last time this roof was done? Is there any way. Oh, you can go to this website? So I was, as an engineer by day, I was deep in the analysis. I was running numbers every hour. I was calling people left and right, and I was making as much information in front of me as possible to make this decision. However, once I finally. We got our offer accepted, actually, I'll step back a hair right before we put in exactly at asking, because I knew it was a good area and I knew that this market was definitely going to appreciate just because I saw so many big businesses coming into the area. And then they came back to us, the seller, and said, hey, we had three offers around the same. We want you and the two others to offer and another offer, your best and highest. So we actually went over asking, in that case, not by a lot, about 5,000, but went over asking because I was so into this area that I knew I from running the neighborhoods, from walk into city hall and all these places, I knew this was the right area. And then from there, I got as much information as possible, got my inspection back. I was like, well, this deal is off the table. Too many things, too many pages. And I was back at, okay, what do I do?

So. So did you. Did you actually end up moving forward with that? Because I guess the thing I wanted to bring up is that you said you went in over asking, and I think there is a common misconception or that any time you go in over asking, you're automatically getting a bad deal. So what. What made you feel comfortable? Or how did you support your decision to go in over asking?

Definitely. So I did end up taking that and closing on that house, which was awesome. Worked out great. So that house in itself has 100 different stories. So we did end up closing on that house, which when I went in at. At asking in the first place, I was like, oh, my goodness. Like, this is already a little bit obviously high. I thought the exact same thing as you just said. I'm getting scammed. Like, I'm. I'm giving them exactly what they want. And I've heard David Green talk about a hundred, 100 times, if you offer and they accept right away, you're too high. So I was like, this isn't a good idea. And then when they came back and wanted more, I was like, oh, my gosh, are you serious? This is. I'm like you said, I'm losing out. But I just saw the market. I didn't care about the house. I didn't care about the lot. I saw the area, and I knew that area was going to do very well. Very well. So I was. I was like, you know What? I think 5,000 today, we were much, much more, five, 10 years down the road. And it ended up being way less time than I thought because that property is worth about double what I bought it two years ago.

Wow, that's amazing. But my. My first question that I have is the financing piece of it, because you said that, you know, you didn't have a ton of money saved up. So in that short time period of when you looked at the house with your dad and then you put in your offer, what did you do to figure out how you're actually going to pay for the deal?

So I went, as I would say, this whole deal is as relatable as possible, is on market. It was through an agent. It was. I went to the biggest lender, Rocket Mortgage, just as plain and simple as it could be. My dad, his properties were through them. So when he called and kind of gave a recommendation, I was able to skip a little bit. They were like, okay, we don't have to go through as much paperwork. I think because of the recommendation, they gave me like $500 back at closing, which is an awesome, awesome benefit. Especially, like I said, when I only had so much saved up, that helped a ton. And I got approved for a good bit over, because at the time I just graduated, I didn't have a lot of responsibility and I was just starting as an engineer, so I was getting paid a decent salary. So I got approved for more than that. And I was going to just wrap, closing and everything into the loan. So I didn't have a lot to come down. I think I put 3% down conventional. So again, as relatable, as easy as possible.

I have. We've been hearing more and more, Tony, about conventional loans and doing 3%. We just had another guest on the podcast that was talking about this too, where, you know, we were so used to hearing the FHA loan three and a half percent down as being the lowest, but now we've been hearing about this 3% conventional. So, Ryan, how did you hear about this loan product or know that it existed? Did you hear it somewhere and tell the lender, this is what I want to do, or did they kind of tell you this is what the product we have for you?

Yeah, by talking to everybody about everything. In all honesty, I asked my agent at the time, our family friend. Hey, so how are. How are a lot of your clients closing on deals? Are they coming in cash? Are they. How are they strengthening their offers? What do they do? Are they putting in these contingencies? Same with the lender. How are you guys giving most of your loans for someone? Myself, my situation, just out of college. I obviously have enough to put the down payment of three and a half percent fha. And he was like, oh, no, don't do three and a half percent. You could do three percent. I'm like, since when? How is that? And he's like, oh, we're offering 3% conventional. So you also don't have all the rules tied to FHA like you normally would. It's just a simple loan. I was like, I'm going to. Honestly, I was kind of saying I'd lean on you. You're the professional in this space, and I'm just coming to you for all my questions. And he was like, no. He's like, trust me, this will work out very well.

And so did it.

It did, because I moved out about a year later and this is when I moved to Florida.

Well, just this really quick on. On the mortgage. On the mortgage side of the lending side, I think it's so important. And we've talked about this so many times. Before Ash, but it's worth repeating is that you, when you're working with the lender, just always let them know what your goal is and not necessarily what kind of loan product it is that you want. Because had you gone to that lender and said, hey, I want a three and a half percent FHA loan that I said, okay, cool, right, here's three and a half percent fha. Right. But if you said, hey, I want the, the lowest down payment, but I also want the, the, the type of debt that is most attractive to the seller. And for a lot of sellers, FHA is not as attractive because there are so many hoops you have to jump through. And when you go to them with your goal that that's how you get the best loan product for your unique situation. Because like you said, it's the lender's job to know all of the different levers that can be pulled and it's your job to give them the end goals they should be working towards. I think you did a great job of that and as you shared the story, but I feel like you probably haven't shared it in a while. But it's worth repeating about like the, the property you close on with the line of credit, you know, you know which one I'm talking about.

They gave you like a 90 day unsecured line of credit or something like that?

Yeah. So it was a 90 day unsecured loan to actually purchase the property. We, Joe and I, my one business partner, we were both getting lines of credits on our investment properties and we're at the closing table, closing on our line of credits together and we had already needed this, these funds for something else. Like they were already being used, our line of credit money. So we were telling the loan officer about this deal and I actually had the bigger pockets calculator report. I'm like telling them about everything and he's like, how are you gonna pay for. We're like, oh, we don't know yet. And so he's like, well, you know, if you don't find a private lender here is, you know, I could offer you this. And what it was, was a 90 day unsecured loan. It would be for exactly what I needed at the closing table to close on the property in cash. And then we would go ahead and refinance with long term financing with that same bank. So that's what we did. We had our appraisal done, I think like three days after closing. The only thing we did was add a fridge in there, got the Appraisal done and we were actually able to do a more than perfect burr. We pulled out more money than we actually needed to to actually pay off that 90 day unsecured loan. So, yeah, it worked out great. But that was all just like not telling him what we wanted to do. Just like, here's what we have and then him telling us what, you know, our options are. So we never. I never would have thought that would have been, you know, a scenario at all that would happen.

Yeah, Tony, that's a, that's a great point. And until you just specifically said that example, it didn't click with me. But that's how I do everything. I approach everything. When I have a contractor, I'm like, hey, I'm kind of thinking this is the best approach for this, but you're the professional, so give me your opinion. What are your thoughts? And they're like, oh, I like your idea. I didn't think about it, but this is where we're going to struggle. I'm like, okay, awesome. Like, that makes sense. What if we did this then? And the same with the lender, the same with the agent. Hey, I'm looking. This is what I found from my research. One of the better neighborhoods or better areas to be in. But you live in this area, you're from this area. What do you think? And they're like, oh, this is, this is a good neighborhood. But this one's up and coming. It's lower, but this is where they're putting all this money. And I found so many resources, so many connections, so many different aspects that I never, ever would have thought of new ideas that just never would cross my mind. When I first did my bur or this live in burr that I did, I was like, okay, it's a 3:1. Okay, we'll keep it a 3:1, yada yada. And after talking to people like, why would you keep that at 3:1? That layout doesn't make any sense. Make it a 2:2. And I was like, you could do that? Like that's, that's available. Okay. And so that's what we did.

Ryan, I think we can end the podcast right here because what you just said has tremendous value for anyone listening. And I feel like Tony and I have always restricted it to lending, but you are 100% correct. It goes with all elements of, like, you know, asking other people for their expertise. And I think, like, if somebody actually doesn't know what they're doing, you can find that out too. Like, if, you know, this is the way to do the plumbing issue and you ask them, well, what's, what do you think is the best way? And they tell you something that you know is 100% incorrect and you know not to go with them. So I think there's kind of two sides of that. But yeah, that's great advice you just shared in all elements of all people you're, you know, connecting with and networking with, you know, relying on as professionals is asking for their expertise and what they actually have to offer because it's almost impossible to know what everybody can, can give for you. As much as we want to think that we're real estate investors, we know exactly the lending we need, we know exactly what we want from the real estate agent. Things like that. There's so many things people are capable of or the knowledge they have that we don't, we don't know.

100.

I've had my home security system for quite some time now. And the best part, half the time I forget it's even there. It's just quietly doing its job, keeping my place safe while I get on with life. If you're wondering what I use, it's Simplisafe. And it has been solid from day one. What makes it different is how proactive it is. Most systems only react after someone breaks in. That's like opening an umbrella after the rain stops. Simplisafe helps stop trouble before it starts. Its AI Cameras can spot a potential threat outside and real live agents jump in, talking through the camera, letting the person know they're on video, that the police are on the way, or even flipping on a siren or spotlight if needed. It's protection that actually prevents problems instead of cleaning up after them. That's why I've stuck with it all these years. It just works quietly and confidently, like the world's most polite bodyguard. And right now is a great time to get started. 50% off any new system. For a limited time, go to simplisafe.com host again that's simplisafe.com host because there's no safe like Simplisafe.

If you're serious about scaling your portfolio, you need two things. Good data and good deals. Lennar's Investor Marketplace gives you both. It's full of new rent ready homes in markets across the country. Each property comes with verified rental comps and local insights. You can see potential returns, compare markets and make offers, all without leaving your desk. It's like finally having the homes, the data and the financing all in one place. Head to biggerpockets,.com Lennar and see what's live right now. That's biggerpockets.com Le N N A R Please consult your own legal and tax advisors to evaluate the risks of any real estate transaction.

I've had my home security system for quite some time now. And the best part, half the time I forget it's even there. It's just quietly doing its job, keeping my place safe while I get on with life. If you're wondering what I use, it's Simplisafe and it has been solid from day one. What makes it different is how proactive it is. Most systems only react after someone breaks in. That's like opening an umbrella after the rain stops. Simplisafe helps stop trouble before it starts. Its AI Cameras can spot a potential threat outside. And real live agents jump talking through the camera, letting the person know they're on video, that the police are on the way, or even flipping on a siren or spotlight if needed. It's protection that actually prevents problems instead of cleaning up after them. That's why I've stuck with it all these years. It just works quietly and confidently like the world's most polite bodyguard. And right now is a great time to get started. 50% off any new system. For a limited time, go to simplisafe.com host again, that's simplisafe.com host because there's no safe like SimpliSafe.

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Let's get back into the deal part of it. So you've just your offer is accepted when you've upped the price and now you're getting into the inspection. So what did that look like?

So it was for a person buying their first house. I get, I don't know, a 50 page report and I'm like I might as well throw it in the trash because that is so many pages. That means everything's wrong with the house. I might as the house is going to fall down tomorrow. That was my thought because I didn't know what I was doing, and there's so many pages that are coming with this report. I'm like, there's gotta be a lot wrong. And then the more I look at it, broken light switch, plate on the wall is hanging. I'm like, oh, dude. I'm like, I can go out there with a screwdriver and fix all this in an hour. I'm like, okay, okay, this isn't as bad paint chipping. I'm like, that's. That's nothing. And then you have, like, deck not properly braced to the wall. I'm like, a little bit serious. I can't do myself. So then I kind of went through a line by line with my dad, with our agent, with all of these different people, and just kind of asked like, is this a big deal? And they're like, no, not necessarily. And so I was like, okay, let me. The things I can't fix. Let me just go ahead and ask for those back from the seller. So I slowly kind of talked myself off the ledge, and then other people talked me down as well. And then I went to my agent. I was like, here's the things I can't do. Let me submit those and see if we can get any of those repaired. And he was like, why'd you do that? He's like, submit everything. I'm like, everything? They're not going to repair everything. He's like, yeah, but if you shoot for 100 and get 75, you were only going to ask for 50, and they were going to give you 30. He's like, so you're way better off by doing that than throwing out a few. And sure enough, we got way more done than I expected by throwing everything and them going, you know what? I can't really bring it down that low and fix a majority of the things.

I think that's the. The power of the inspection. And that's why I love the inspection process. And it's so funny, Ryan, like you said, when you get. When you get, like a thick inspection report, that it scared you. But for me, it's almost the opposite, where it's like, man, now I have all this ammo that I can use as the buyer to negotiate and like you said, get a credit or some of these things repaired by the seller.

Tony, do you have an example of that happening to you recently where you've gone and gotten an inspection and you had to use it to renegotiate the deal?

Pretty much every property that I buy, except for, like, our new construction stuff, pretty much every property that I buy whatever comes up. The inspection report. Even if we're going to gut the house anyway, we still ask for. For credits. Like, we closed in a house. I flipped. We just. We just recently finished. And I don't know, I think we end up getting, like, an extra, like, $10,000 off the purchase price from the information that was inside of the inspection report. And, like, one of the things that we used to do, we don't do it as well anymore, but when we were buying a lot of stuff off the mls, we would have our. Our handyman be at the property the day that the inspection was happening. And as the property inspector was going through the. The property, like, notating everything that was broken, our handyman would be right behind him, creating a bid of what it would cost to get those things repaired. So now as soon as we get the inspection report, report back, we already have a bid from our handyman, and we just give that bid to the seller and say, hey, here. Here's a projected cost. Either you can credit us this amount, or you can fix it all yourself. And that was, like, a tactic we used quite a few times as we were going through the negotiating phase.

That's genius.

Yeah, a good technique of having an actual estimate, too, when you're going and asking instead of just saying, you know, here's all the things that have to be fixed. You know, can we get $5,000? But if you actually have an invoice for. From a contractor or a vendor, that shows how much it's going to cost. Because really, locking up a deal is. They have to. Were you pending at this point, Tony?

Yeah.

Yeah. So when you're pending, it kind of leaves a ding on the property. If a property goes pending, then all of a sudden back up on the market, too. So I think that you do have, like, some, you know, negotiation there just for that reason alone, too.

And to your point, now that I've gotten the first deal under my belt, now that I've gotten the second deal under my belt, two completely different strategies. I think the exact same thing. And I'll call the inspector ahead of time after I've already scheduled them. And I'm like, hey, I need you to find everything. I'm like, everything. And he's like, all right, man, I got you. I'm like, no, no, Everything. If it's his less than 50 pages, we're going to have to go back. And so I think the same thing now.

So, Ryan, this was. This first property was a house hack. How long did you live in there? Before you ended up getting your second property.

Yeah, definitely. So I. That first property is a house hack on steroids. So it was a three and a half bedroom house I rented to all my college buddies. My brother just started going to college, so I rented to him. And at one point, I think we had seven people living there and everybody paying rent. Other than my girlfriend at the time, my wife now, and myself, everybody was paying rent. So she. We're living in a very nice area, lots to do near Atlanta, and we're getting paid every month. And she. She herself couldn't realize it, or she realized it, but she didn't like, fathom like, how this is happening. And I'm like, look, we have so many bedrooms, are renting them all out. And then even we had a very large utility room that we had a buddy that come over the weekends and he would just stay there and rent the weekends.

So it was in the utility room?

Yeah, it was huge.

It was like a college house for sure.

It was like a bedroom in itself. It was a big room. But yeah, he definitely did and it was a great time. We stayed there for about a year here and a few months, and then my wife got a job down in Florida. So I was like, this is a perfect opportunity to push me out of this house and get the next one. And I did the same thing I do. And we found an agent that we didn't know anybody down here for the most part or in the area we were moving, called an agent, asked, hey, what is, what are the areas? What do we do? What do you like? And I was trying to set up that house in Georgia to finish painting new flooring, and my wife already moved down, so she. I was calling the agent, texting her addresses. She's touring all the houses and facetiming me throughout all the houses. And she's telling me like, I'm not going in that one. I'm like, please, this one's the best one. And then the agent would call me, he's like, the area is not good. We're not going to do that one. I'm like, okay, that's good advice. And then it came to the point where I was asking him so many questions, he's like, you know, I know a couple people that you might like to talk to. Ended up being a couple of big time investors down here and hit it off right away. And one of them actually ended up being my mentor. So that was an awesome little stepping stone.

That's so cool. One question I do have is when you Bought this first house hack. Were you dating your wife then and, or was that like, part of the appeal is that, you know, you started dating because you own this house.

So that's a fun little story. I told you that first house had a million million stories since it was runnable. I was dating that girl at the time, with my wife, now my girlfriend at the time. And we, I told her, let's go, we had dogs and let's take her for a walk. Let's enjoy the outside. So we walked to the property like this kind of a cool house. And she's like, yes. Like, yeah, okay. And then I'm like, let's go check out the backyard.

Did she think anything?

She had no idea. We, we already went under contract, but we haven't closed and she had no idea because it happened so fast. She worked nights, so I didn't really get time to talk to her about it. And we went in the backyard and she's like, oh, this is really cool. I'm like, yeah, it is cool. Especially now that it's ours now. And she just kind of looked at me like ours. I was like, yeah, we just, we just went under contract on this house and she didn't know what to think. So it was really cool to like surprise her with the whole house.

Yeah, you know that, that's a great thing to surprise your, your wife with is like your first investment property. The first time I bought something big without my wife, my girlfriend at the time knowing I bought a BMW and she was, she was not super happy about that. So surprising her with a house would be way better. Just a, a couple follow up questions. Ryan, you, you, you said that you house hacked that first property. But just for, for our rookies that are listening, that may not be familiar with what that phrase is or with what that strategy is. Break down the, the strategy of, of house hacking and how you said you were able to essentially live for free.

Yeah, definitely. So house hacking is getting more and more creative, I would say. But the original like thinking was to rent a, or own a duplex, triplex, quadplex and rent out the units that you weren't living in. That was a great benefit because you could have your housing paid for, but you can also afford, afford to get a financing deal on a typical finance on that property because you can show income for those properties to counteract what it would cost. Then it turned into renting out your rooms like myself at a three bedroom. And it was perfect because each bedroom had its own bathroom. Then there was also a Half bath for all guests, so no guests use anyone's room. Everybody had private bathrooms so I could rent it for more. So I rented out every single bedroom and the laundry room, other spaces. And I was able to actually pay enough to pay for my mortgage, my utilities and then some. And I made money every month. And then now I've thought myself to renting out an RV in like my backyard for people to rent that and not actually rent my unit. So there's been a couple of creative things I've seen out there that I've really liked with house hacking.

Yeah, I think house hacking is a great strategy, especially in today's kind of higher interest rate environment, to get started as a real estate investor. If you have that additional space and you know, sometimes there's the knock around like, you know, sharing space with people and all this, that and the other. But it's like if you set it up the right way, it can, it can really be a good strategy. And then one other follow up question. You said that when you and your wife moved down to Florida that your agent kind of became the person that connected you to your mentor and everyone else that you needed. How did you find that agent? And, and why were they so willing to just kind of plug you into their network? Like what would, like, what did that dialog look like for you to get tapped in?

Like that?

Yeah, so like, like I've been doing the whole time. I basically, I took advantage of the opportunities that were out there in terms of I went to Zillow, everybody at Zillow, and some of the listings will say schedule a tour this afternoon. I click schedule. And he called me and from there I just had a conversation and said, hey, this is what I'm looking to do. Where are you from? What areas do you like? Do you like where you originally grew up? Do you see opportunity? What do you think if I did this with this property and then once I started to ask him questions that were less about the market is when he was like, okay, look, you're a knowledgeable guy. Let me start sending you to people I know, really close to me that I trust with answering your questions. Okay, that'd be great. Started talking to them and they would connect me with someone else or they would be able to answer my questions and started forming connections with people. I knew a ton of people before I even stepped foot in the state because I just been calling and calling and talking and asking questions and hey, when I get down there, I'd love to take you out for dinner for Just an appreciation for all your time. And just answer my phone call. That's as easy it was. Just answering my phone call is more than enough I could ask for. I know you're busy. And then they would keep answering my phone call and then I'd. So I just found out that more and more people enjoy talking about what they already love to do. And it's same thing when it came to asking professionals, plumbers or handyman, what is your recommendation? They're like, no one really asked me what I want or what I care about. They just want me to come over and do the job. And then they pay me and then I'm too expensive. I'm like, no, I appreciate your time. And they would end up giving me a friend's business card, giving me their business card and wanting to keep calling me or talking to me. And I closed on this house down here. And then me and my agent just went golfing last weekend. So we're still really close now. Is really cool relationship to build.

I think that's really awesome advice too, is to like how you can provide value and also not take too much. But then you're like building out a relationship with that person because you find those similarities and the things they really do involve. And for your example with the contractor, I'm saying, like, nobody really asked me what my recommendation is or what I should do. Like, I think that's so funny because I see that oftentimes when I send contractors to tenants, the. The tenants know what is the best way to fix something, even though the plumber has been doing it for 30 years, you know, so I can see that. That frustration. But I want to, I want to ask about the overall picture. So now that you've done your two investment properties, your first one in Atlanta, your second one in Florida, how has your financial picture changed? But just doing those two deals, how has. You know, when you. Before you bought that first property to right now, what has changed as far as your personal finances?

So that's a great question. I. When I was coming into college and then graduating college, I would say my idea of what was expensive slowly started to change. Was one, one concept that it took me a while to grasp. And then moving to Florida, everything's expensive and very hyperinflated. So it was like, I realized now a very small property is going to cost $500,000, while in Georgia it's going to cost half that. And you're like, okay, so you start getting it. It's more the location. Okay, the location is the Important part, not necessarily the house itself. And then you start to kind of evolve more and more or myself at least my mindset that, okay, if that's obtainable because of my location and everybody wants to be there, I just have to buy in the right location. Okay, let me look for different locations that everybody maybe will start to move to. And then that's what I started to juggle with more because those are more obtainable for myself. But I do as I realize that things get more expensive, get more valuable. I want to start in somewhere that's obtainable, that if something were to go wrong, I could handle it and then slowly progress and maybe go to multi, small, multifamily and progress into that and that stretches, that uses debt a little bit more leveraged and then maybe get into a more desirable area and do, I don't know, a fresh build or something along those lines. And, and I want to be able to tap into all areas of real estate just as a whole because I love learning about it and it's just, it's complicated. So it makes me think. But at the same time it's so much more fun because I enjoy it and because it makes me think I'm never wasting time. I'm always growing as a person and I get to meet so many great people. So it's, that's, that right there is what I'm always looking to progress, but because I can meet new people and get into new markets and do new things.

I love the, the, the last thing you said, Ryan, about meeting new people. I think that's been one of the most fulfilling things for me personally about becoming a real estate investor is just the, the network of people, the, the relationships that I've built, the, the conversations I've been able to be a part of, all because we share this passion for financial freedom and entrepreneurship and building a legacy. And it's like when you, when you get connected with people who are on the same wavelength as you, it's like you, you unlock this part of life that some people never, never find, man. So I love that I, I want to take us to our rookie exam, Ryan. But before I do, just, just one follow up question because I, I know this is something that might be swirling around in the minds of some of our, our rookies that are listening. When you house hack, it means that you're living in, you know, at least the way that you did it. It means that you're living in, in one bedroom and then your other two, three, however many bedrooms you have are occupied by tenants. What have you found as maybe some of the. If you had to give someone some tips or advice on how to manage tenants when you literally are sharing the same kitchen and living room and everything else? Like, what are some. Some things you can give to folks who want to go down that path to make it smooth?

Oh, that's a fantastic question. I was super fortunate that most of them were my friends, so just college friends that moved in that also want to be in the area. But I'm not gonna lie, it's stressful because not everybody's clean. Not everybody cares about your kitchen. For example, my own brother would leave the stove on all the time and, like, melt our utensils. I'm like, dude, I'm like, what are you doing? I'm like, can't be too mad at you. You're my brother. But come on, man.

So things like that happen all the time, and you just kind of. Kind of keep going and you keep pushing through or keep doing your thing. And part of it that always helps is, this might sound a little bad, but in the end, you got to be like, well, he did burn my utensils, but he did pay me every month for burning my utensils, so that still makes a little bit easier.

I think back to, like, my college days and, like, how different it would have been for me if I owned the house that people were living in, Especially if that was my first. First investment property. Oh, my God. I would have been so anal. Like, oh, I would have been crying. You put a ding in the trim. Oh, my God. There was one summer I lived in a frat house because I was taking summer classes, and I was like, mom, either you can spend this much money for me to stay in the dorms for six weeks, or I can save my boyfriend's frat house with him and five other guys for this amount of money. And she's like, fine, you can stay in the frat house, but don't ever tell your father I let you do this. So I lived with these guys in this frat house for six weeks over the summer. And it was like, other than that, I'd always lived on campus, and so it was definitely, like, an experience of, like, sharing the kitchen area and just, like, you know, whose stuff is whose. But I always found it interesting how they actually picked the rooms as to who got what room. And they had a competition, so each of them picked something they were good at. So, like, one was video games, one was basket. Like, one on one basketball, whatever it was. And then they had a contest, and, like, whoever ranked the best out of all of those got first pick and then second, and it was, like, a score.

That is genius.

I know.

I always thought that was, like, such a great way, like, if you are house hacking with friends, to, like, come kind of pick who gets what room or whatever.

Yeah, that is genius. I love that. You know, I, I, I, I don't know if we've ever had this situation, but, like, like an eviction, when you're renting by the room, like, you know, when you're house hacking and you're renting by the room. Like, I don't think we've ever had a guest that had to evict someone from, like, a house hack like that. So, yeah, I don't think we've ever had anyone. So maybe there's just something about, like, sharing a space where you get, like, a better group of people, you know? But it would be kind of awkward to evict someone from the room next door.

Yeah, exactly. Hey, I will help you move out, but I go past the front door. That's my limit. That's all I stopped. You're not friends anymore.

You put locks on the, the kitchen cabinets, the fridge. Like, you're renting that, or they release us that room. You're. You can't get into the bathroom, everything.

No bathroom, no kitchen.

All right, awesome, Ryan. Well, let's. Let's go to our rookie exam. We've got three questions that we ask every single guest. So our first question, Ryan, is what's one actionable thing Ricky should do after listening to your episode?

Call an agent. Go to real estate meetups. Reach out on bigger pockets. Just meet people, make connections and meet people. If you're not looking to buy right now, that doesn't matter. Just like you said, one of the best parts about real estate is meeting people. So you can do that for free.

Right now, Ryan, what is one tool, software, app, or system in your business that you use?

I'm a, as an engineer, big in the numbers, like I mentioned, so I'm a huge Excel guy. Everything's Excel. I'm like, wait, let me think about that. And I go knock out a little calculator. I go do a spreadsheet. Something down to when I was financing my car. I had a million different things on one spreadsheet.

Pretty soon, Ryan's going to be selling these spreadsheets as a side hustle. Everyone's going to reach it out. I want, I want those spreadsheets. Yeah.

All right, last question for you where do you plan on being in five years? Ryan?

I've always told myself since my teenage years that I'm going to retire from 9 to 5 by the age of 30. Always told myself before I had a plan before I bought my property. I'm going to retire by 30. So I hope I'm full time in real estate by the time I'm 30 and I hit 10 plus units by that time.

Well that's awesome.

Yeah.

And we can't wait to listen to you on the OG Real estate podcast as you get closer to that goal. Well Ryan, we're going to take it to the Ricky request line. Today's question is from Jonathan Eluzer. If you guys have a question you would like us to answer, you can go to biggerpockets.com/reply or you can leave us a voicemail at 1-8885-ROOKIE or leave the question for us. In the real estate rookie Facebook group, Jonathan's question is what's a better option to purchase a flip or long term hold such as a rental, HELOC or hard money. I currently own my primary free and clear but I'm scared to put it up as collateral or take out a mortgage on it. Can you all give me any advice on using either a HELOC or hard money for purchasing? Thank you very much. So Ryan what would be your advice.

Especially right now with rates as crazy as they are, HELOC has ink they are a variable rate so they're increasing. I would lean a little bit more away from that and as primary residence. Like when I had my first unit my first goal was to house hack it so I didn't have a major overhead cost and then get out of it as fast as possible. So that could be a rental. I got in extremely low and especially in this case you would have little to no cost owning it free and clear. That means the cash flow would be one of the best performing units you have. So I would lean towards moving to a new unit or owning a different primary residence because you could get in very low and making that your new best performing asset.

Yeah, I think my take on it would be is if you are going to do a flip is to get a HELOC on your property because that's definitely going to be cheaper money than hard money is getting that that he lock and that's what you use to fund the deal to rehab it and then when you sell it pay that he lock back. As far as a long term buy and hold you either going to get debt on the rental or you're going to get debt on your primary. So your debt is going to be cheaper on your primary. So you look at it as when you run your numbers, can your tenants in your investment property pay that mortgage for you that's on your primary residence and kind of look at it that way. And then also what's the risk? Like worst case scenario, can your W2 cover that mortgage payment? Can you put a, you know, save up six months reserves in case it is vacant? So look at those worst case scenarios as to like how bad does it really have to be for the bank to seize my primary residence? And then maybe even, you know, you're not taking out the full amount of the value of your primary residence too as you're doing a smaller amount. So you still have a lot of equity left in the property too.

I think the only thing I'd add to that is, you know, everyone's going to have their own risk tolerance. But if I were taking out a HELOC on my primary residence, I would only want to use it for a short term project. So I would probably lean a little bit more towards using that money to fund a flip where I can be in and out in a few months versus a long term buy and hold where you know, you like Ashley said you got to kind of rely on the cash flow from your, your rental to pay that off. And I feel like most folks I talk to, they're using the HELOC in those kind of short term situations where they can quickly pay it back and, and be done with it. But ultimately Jonathan's whatever, whatever feels best for your unique situation and I think.

You'Re in a great situation, Jonathan too. And congratulations having your primary residence, Brian Clear, that's, that's a, a goal of a lot of people. So congrats to you. Well Ryan, thank you so much for joining us on this week's episode. Can you let everyone know where they can reach out to you and find out some more information about you?

Yeah, definitely. So a college buddy of mine and I started a YouTube a while back at Two Bros and a Budget and pretty much on everything from TikTok to Twitter to YouTube with that title.

Okay, awesome. Thank you so much for joining us. I want to give out a quick shout out to this week's Instagram social media account you guys should be following. And this week it is at Anna K cpa. If you guys want to know real estate advice for taxes, for bookkeeping, please give Anna a follow. That is at Anna K. CPA follow for all real estate investors, especially rookie investors that are just starting out. She does a lot of reels and information for people just starting out as to what you need to know about taxes, bookkeeping, accounting in general. Thank you guys so much for listening. I'm Ashley at Wealth From Rentals and he's Tony at Tony J. Robinson and we will be back on Saturday with a rookie reply. So make sure you get in your requests@biggerpockets.com Reply.

Hey rookies, if you're watching this, we want you to apply to be a guest on the Real Estate Rookie Podcast. That's right. Ashley and I are looking for amazing stories just like yours to be a part of our Real Estate Rookie Podcast. Now look, you don't need to be an expert. You don't need to have done thousands of deals. Even if you've done one deal, your story could help inspire the next listener.

As a rookie investor. Especially if you just got your first deal. It is all fresh in your minds and you are the best person to tell your story. Give your experience on how you got it done to help someone else get their first deal.

So head over to biggerpockets.com guest if you want to be a part of our show again. That's biggerpockets.com guest and we'd love to have you on.