S6 E13 | Red States

I know why you're here, you sneaky little person. You want to learn about real estate? I'm the queen of real estate. Good. In this episode, we're giving you some legendary bullet point pro tips on how to become a gazillionaire in real estate.

I'm so jacked about how the season's going. I mean, we got a name rebrand, better and better. We added an A. If you're gonna add something, that A's.

And now we're talking real estate, real estate investing specifically. And we're talking with one of the greatest real estate investors of all time. I mean, Brittany Faith Turner. Got a question. Let's say I want to get into real estate, because I kind of do, actually. I want to start buying a lot more real estate. All right, great. And I want to figure out, like, how do I pick? There's so many cities to choose from in the United States of America. How do you pick a city to start buying real estate in, Brittany?

Well, it matters what you want to do. So tell me, what kind of real estate investing would you like to get into? Jeremy Alexander Newsom.

I want to buy single family housing under $300,000 I can put a little bit of work into and then rent it out and then refinance my money out of it, keep the house, and then keep doing it.

Okay, great. Where do you live?

I currently live in Laguna Beach, California.

Okay, great. Do you want to do it around there?

Nope.

Awesome. Well, you should move around where you're going to do this. Anytime you are especially semi new and going to be renovating something, you need to be near it. Thinking you can just have a team in South Carolina and you live in California and it's going to go well is a fool's mistake. A fool's mistake. And that's the biggest difference with this lesson sponsored by. This lesson is sponsored by. Hey, we're here for you. Always teaching you everything you need to know.

That's right.

Suffering.

No, whatever. You cannot go walk on the job site of and tell the contractor so nicely on the phone, why are you not here? Get here now or you're freaking fired. If you're not here in the next 30 minutes. If you cannot do that, your job is going to be twice the budget and three times as long.

Yeah.

With some liens on it.

Yeah.

So that is my experience, and that is my experience of all of my friends. So you need to find to live.

Near where you're going to rehab.

When you're six years in, you will have Built crews, you will have built networks, you'll have built partners. You can start going farther out. But when you are new, don't you dare think that you can do a renovation project. Not right next to you. It's gonna go well.

It's not sound advice though.

Yeah, it's just not. So.

So let's pretend I could pick up and move to anywhere I wanted to. What would be a city I would move to?

I mean, Nashville, Tennessee is a great place to be investing, but why? So I really wanna teach you the ethos of picking. So he said he wants a rental property. Well, who do you wanna to. Do you want to rent to college students? Do you want to rent to doctors? Are you running to Airbnb type rental? Are you doing a long term rental? All of these questions matter because they're actually different businesses. When you are learning how to be a real estate investor, you can't just think you're going to do this type of deal and that type of deal you'll never get good. You will get your butt handed to you so quick and or you will leave millions on the table because you don't know what you're doing. Each one is a different type of business. I was teaching a class to GeForce the other day and just within a matter of an hour I wrote out 78 different ways to be a real estate investor.

Wow.

And so it's like saying you want to be a doctor, which path is right for you? I don't want to be calling the ear doctor for my foot problem. And so you don't same thing for you. So you really need to do well in real estate. You've got to pick a type, you got to pick a strategy. And based on your risk tolerance and your access to funds, there are different specialties that will make your path to wealth quicker. So the way you just picked to become a real estate investor is a pretty solid plan. Not super risky, not crazy, cash heavy, but you probably either have a good job or a good income to be able to do what you just said. Because you said you want to buy, renovate.

Refinance, repeat. Right. So that's the BRRR method. And so if you actually think you can keep refinancing, how many do you.

Want to do a year or.

Yeah, sure.

Three.

Three even. To be able to buy and keep three houses, you have to show that you can qualify for that. You have to show that you have experience with rentals. You have to have a certain amount of money down to even get the loans on Those types of properties. So if you don't have any money and any credit, then you're not going to be able to do that strategy. You're just not unless you have a private money lender that wants to do these with you. But I promise you right now, if you're going to keep them long term, they're going to make all the money. So until you can get your own bank loans, that's not a good strategy. So really taking the time to learn this stuff is super helpful. I do have a course on this, like, just learning which one. You should start studying of the 78 types based on what you've got and your risk tolerance. So picking location. What am I trying to do? Who am I trying to reach? How am I trying to. How long am I trying to own? Would dictate all of those things. So, Nashville, Tennessee, why are people coming here? You want to pick cities. You always want to pick red states. Why do you want to pick red states?

That's probably a tenant thing, if I had to guess.

I mean, it's an everything thing. It's a zoning thing, it is a permits thing, it is a tenants thing. Everything sucks in blue states. Just going to say it. You probably figured us out by now, listeners, but those blue states are so difficult. I have friends that have called me saying homeless people have taken over my $3 million property in California and I am not legally able to get them out.

Crazy.

Screw that. Yeah, this is America. I have to pay the mortgage, I have to pay the water. You're not even allowed to turn the water off on them.

It's wild.

What?

Wild?

No, no. So don't go there. It is possible to make money in those. But if you're trying to actually make money and do well and be successful, especially if you're new, we're going to pick red states.

Okay.

And then you're going to look for places that have multiple reasons that people are visiting them. So you don't want just the beach. That makes it more volatile. You want to have really good colleges, you want to have tourism, you want to have a medical reasons. You want to have lots of different kinds of jobs. You don't want to just pick a place that is a military base, because that's really ebb and flow. You really want to have a lot of economic stability. So if one thing tanks, the other thing's still holding it up. And so with real estate, you want to always have three backup plans for every single thing that you buy. Because if you don't, you're going to realize plan A and B are going to fail at some part of the cycle. You're going to miss it, or you're going to hit some weird thing. And so it's super important have those backup plans, because your one hope plan is going to end up biting in the face. You bought something thinking you can Airbnb it forever, and then the rules change.

Do the numbers still work if you do other things with it? So you really do have to think through those strategies. So my picking of locations, I've had friends just buy a house and say, I'm going to turn into an Airbnb. Well, why does somebody want to visit that area? Yeah, you literally bought in the boondocks on a busy road with an ugly piece of crap. No experiential house, just because it was cheap and you thought you could make it, make it in Airbnb. You have to run the numbers. And so with Airbnb, people want experiential most of the time. Why is that house unique? What makes anybody go there? Can that person afford your house? You know, Nashville, you think you can have a house and it's not going to be bachelorette parties? Oh, we say no to bachelorette parties. Cool. You just said no to everybody. You're going to get bachelorette parties. So how do you bachelorette proof your house? That has to actually be a strategy in the way in which you buy furniture. So, again, knowing your target audience and what you're trying to do is critical for picking that location.

Yeah, well, you said tourism. Like, how would you know if there is tourism? Like, how are you. How are you picking that?

Great question. What is the area known for and is it. So there's. There's places in the north east where people love to go to those beaches, but they're only very few months of the year because they get really cold. And so you would understand that people are going there to fish or people are going there to sail. But even if there is tourism, can you make it only surviving on those several months a year? Or can you just pick somewhere that's warm all year round, that people want to go all year round? And so you don't have just that seasonality that's really affecting your rates. Even in Nashville, it is like dead. Airbnb is dead. November, December, January, February, completely dead. We are crushing July, August, September, October, because that is Bachelorette season. It's wedding season. People love to get married here. So it's. It's just a whole thing. I mean, the. We look at the year of income on our Airbnbs and it's like $50,000,0000. It's crazy. So just being able to weather the highs and lows of seasonality is a big deal for Airbnbs.

Well, speaking of, I mean, what are some. What are some pros and cons with Airbnbs? Because this is. I feel, I think people probably know the pros. So I would say this. What are pros that people probably don't think of? And then what are the cons? Has to be a lot of them.

Yeah, there's a lot of cons. Pros is you can write off your furniture, you can write off your lawn care, you can write off a lot of the things that are on your house.

Yeah, that makes perfect sense.

There's a bunch of. Because it is an income generating asset and you have to have certain things like toiletries. And for me, I like that my house is professionally cleaned all the time. All the time. And so it stays in really good maintenance. I have a manager of each one of my Airbnb and they handle the repairs. Oh my gosh. The windows leaking. Because I don't live in one place only all the time. And so having a property manager deal with the.

You got multiple houses.

I have a lot of houses. I have so many dang houses.

Yeah, you're house rich.

Just dealing with the maintenance on my properties is really nice to have somebody else handle that. So I had one house when Airbnb first started. Between the lot and building cost, I was in it. I mean, I built it myself. I was in at 500,000. And that house generated $279,000 in one year.

That's wild.

Three years in a row. Between 275 and 279.

Whoa.

Then Airbnb got a lot bigger and that house went down to like 50,000 a year. That's still a decent income.

We say Airbnb got bigger. We mean, there's so many more demand.

Yeah. So many more people.

More supply. More supply.

More supply. Yeah. So Airbnb really is different than it used to be. It's a lot less profitable right now, I would say, than it used to be. There's just a lot more people that have them. A lot more competition. So if you have a basic house, you're not going to make it. Huh? You have got to be experiential for why that person is going to that city. What makes them want to be in your house and take the Instagram pictures and show it off to Their friends. Yeah. I have a friend that crushes with her really, really insanely experiential house she makes. She goes wild with the coolest stuff in her house. She's like a legend. And I've had her come and consult on the island and consult on my Airbnb. Tell me, tell me how to do what you do.

That's fun.

She's so good.

Well, what about a vrbo? How come no one ever does that or talks about that?

It's difficult. It. It's more clunky. It's not as easy to book. It doesn't have as good of technology.

Really.

Yeah, it is.

Booking process for both, I think the renter and the host is so much more difficult.

I mean, I haven't even logged on it.

Yeah.

Ever.

Yeah, it's.

Airbnb just crushes this market.

Yeah. It feels like aol, huh?

Wow.

Or Yahoo versus Google. It just feels not as intuitive.

So we got Airbnb manager. You're cleaning your house a lot. You're writing off the furniture, which is all nice.

I've got tons of it. Still is way more. It brings in way more income than a rental.

Okay.

Hard rental on average, so brings in more money. Yeah. I have one house that as an Airbnb, it made 10,000 for the month on average. It's a tiny house. And then as a full time rental, it brings in five. Okay, so half on that one. It used to be that Airbnb, the math was four times rent. Four times.

Whoa.

Yeah, that was the average. And if you didn't get that, they're doing something wrong because it is more work.

Yep.

It's marketing, it's management, it's problems. People doing weird stuff. Sometimes your furniture, like, so it is more work, but four times rent really made it worth it.

So those are, those are probably some of the cons of then, right? You mentioned like the furniture people.

Yeah, the cons are.

People don't treat your property very nicely all the time. I will share a story with you. Full of pain at this gorgeous house here in Nashville. Amazing home. And I could see through the ring camera because, you know, they were ringing the doorbells. Like, I don't know how this person rented my house because this looks like a teenager. A long story short, they did not go through Airbnb, which is annoying. My property manager let them go through some weird channel. I used a stolen credit card and 15 to 20 teenagers.

Shoot.

Rented my house the day before New Year's to get buck wild in that house. And they left Just weed and ashes on all my beautiful brand new, awesome furniture. Custom, all the stuff, antique rugs, just weed everywhere. And the cops had to come and evict them because we got so many complaints from the neighbor. I wasn't in town. And so that's one of the issues is people can do shady stuff. They can use stolen credit cards, they can wreck your things and then they can just cancel things on their credit cards. Like we have chargebacks all the time on bookings where people just wasn't as good as I wanted it to be charged back. And you have to like fight the credit card company. So those are arguments that you'll have. So I do recommend, I mean Airbnb, you're. You're really not going to get deposits very often. You're not going to get your money back as the host. But it is the better of all the platforms to go through. So I have created a couple hacks. If you live in your Airbnb too, if you house hack, which is something I've done since I was 24, is have your own special sheets, your own special.

Utensils, your own special plates, your own special bed. I don't actually share like my bed. I've got different locked off rooms.

Yeah.

To where people are not in my room. Especially with a kid you're not. You don't want to share that over and over again and feel like your home is a hotel. But if you build a cool enough, big enough house and you can have a condo inside the house, that thing can generate a lot of money.

Yeah.

So I've made millions on my Airbnbs. Between the income from the rental and then just being in these trending up neighborhoods that I always invest in that has just holding onto them long enough. I mean right now I've got one I built. I built it for 225.

Whoa.

I just saw the zestimate. Is 1.4.

Good for you.

Yeah, I know it was awesome. But I built like freaking 30 in that neighborhood, so I wish I had kept them all.

Yeah.

Would have been awesome. But I didn't have the ability to get the financing. Like I was just telling you that Burr would have been awesome.

Yeah.

But that is probably one more tip for picking your location. I always pick in trending up areas, which means you're going to have problems in the beginning. There's going to be crime, there's going to be some junky houses around, there's going to be some rough patches. But if the neighborhood's perfectly done, then your equity Is going to go like this.

Yeah. Really slow.

Yeah. But if the neighborhood is spotty and going up because it's five minutes to downtown, then you are going to be able to go boop. Fast, like, way faster. Because it's still turning. There's a lot of equity done. And you just hope other people are still going to keep investing in that area. And for me, I didn't hope. I just did it all myself. I'm not waiting for y'. All.

No, no, that's the quote.

Like, that's buy the whole neighborhood. Yeah.

Learning about that was amazing. How you had that vision and saw it through, but also like the, you know, the media company and just creating a whole new Persona. I mean, just fantastic thought. Incredible idea.

Thank you. Thank you.

So fun. I mean, there's a lot there. There's a lot there. So the thing I'm going to, like, harp on for a second, trending up. I mean, that's obviously the goal. How can you spot that?

Like, how?

What's the secret?

So you need to be next to something cool.

Next to something cool. Okay.

Downtown or a really great park or whatever. Whatever the draw is for that area, like the beach, if it is in an area that normally should be somewhere people want to live, but then it's kind of just not been invested in a long time because of crime or people just. People make up stories about areas all the time. And I'm like, that's just dumb. Oh, it's never going to change. Yes, it will. It absolutely will change. And so some people call them checker neighborhoods, where it's like, bad spot, good spot, bad spot, good spot, bad spot, good spot. Definitely invest in those areas because all the bad spots are going to become good spots eventually if people are investing in that area. So I can spot them. Follow the Whole Foods. You should write that down.

I am.

They are also big on investing in trending up areas. And so I bought a 20 acre piece of property.

It was called Stab City. In this. This little apartment, it was 74 duplexes on 20 acres. But whole Foods built themselves right outside. Our biggest problem was that we had like 90 groceries carts in our parking lot every day. Literally 90. I'm like, take them back, people. Take them back. They'll never take them back. So. But yeah, I bought that and sold it for like $5 million more like two years later in a flood zone. But I knew that we could demo it. And just because Whole Foods built there, everybody else will want to be around it because they're like, oh, they're smart. But Whole Foods does so much more data analytics than I have time to do. So if I just follow them, then everybody else is like, oh, if Whole Foods is there, I'll follow them. So they're the leader. But they picked that spot because of their really big data analytics.

So that sounds. That was a great tip.

Follow the hipsters, follow the artists.

Yeah.

Follow the gay community. Typically. They are really great at spotting, trending up areas. I know. It's a. It's just a whole thing. So those are, those are my biggest tips on how to identify areas that are going to go up. Definitely invest in those and you will get not only a delta of money from enhancing the property, but the area will continue to now be worth what was a $300,000 neighborhood will be a $400,000 neighborhood.

Yeah. So appreciating pretty quickly, right? That's. Those are awesome tips.

Thank you.

I feel really good about that. I like those a lot. So let's imagine I want to, I don't know, buy some of these houses, but again, I'm kind of new. Newer. Ish. Any chance you could walk me through at some point, like the loan opportunities that I could get or the I.

Sure can advantages in the next episode?

Oh, we'll see you there.

If at any moment during this podcast you've been inspired, but you're thinking to yourself, dang, I sure would love someone that's already there to kind of pull me across that finish line. I got you. I can do so much to help you radically shift and alter and expand your money, your mindset, your growth, your impact. Pop over to jeremynewson.com might update it to Jeremy J. Money News, but Jeremy with two Rs. Jeremy newsome.com and reach out to me. Let's have a conversation. Let's see if I'm best suited to give you the most amount of impact, the most amount of money, the most amount of wealth. Just really change your life so that you can become a true and powerful force for good.