The Biggest Advantages Turnkey Can Offer You

Hey, it's Mark Podolski, the land geek with your favorite niche real estate website, www.thelandgeek.com and I'm really excited for today's guest. But before we talk to our guest, I'd be remiss if I didn't properly introduce my co host. You know him, you love him. Scott Todd from Scott todd.net landmodo.com yeah, see, we even got like a, like a cheering session. And most importantly, if you're not automating your craigslist and your Facebook postings, posting domination.com thelandgeek Scott Todd. How are you, Mark? I'm great.

How are you?

I'm good, I'm good. You ready to get some hipster real estate advice?

I'm ready. Let's go.

He seems hesitant.

Of course I'm hesitant.

As you should be.

Why wouldn't I be?

As you should be.

As you should be.

The name is.

God's sake.

Our guest is Ali Boone. If you've ever been on Bigger Pockets, she's everywhere. It might as well be Bigger Boone.

I'll put that in, I'll pitch that to them and see what they say.

Yeah, I mean I'm sure the Josh's wouldn't mind that at all. Josh and Brandon.

So.

But she owns Hipster Investments dot com. And what is Hipster Investments? They are a matchmaker. They connect you, the investor to companies who work with some of the coolest hands off investing opportunities they know about. Currently they're working with turnkey rental properties. All the work, rehab, tenants, management are all done for you. All you have to do is buy the property. Don't worry, we help you through the due diligence. Ali Boone, welcome to the podcast. How are you?

Thanks for having me. Can you be my new hipster salesperson? That was a great entry.

Yeah, I'll submit my resume after the podcast.

I'll have the crews look it over.

Yeah, yeah, of course. I'm good that way. So Ali, let's just skip the pleasantries. Okay, let's rewind the tape. And how did you start dominating bigger pockets and become the hipster investor that you are today?

That's a loaded question. You know, honestly, the short version, it was completely by accident. The quick summary of my background. I used to be an engineer up as an aerospace industry and I decided to start investing kind of on my own and through Explore. Actually secretly. I was trying to find a way out of corporate. But in the midst of that I started investigating real estate. I started doing some investing on the Side, and I found this turnkey model. I had never heard of it. Then everybody suddenly started wondering why I was what I was. I wasn't swinging hammers. I wasn't doing all this complicated stuff that typically comes with real estate. And so I just kind of started telling them, and they're like, well, hey, I want that. Like, my mom's friend bought one, my cousin bought one, and it kind of. I was sending so many people the turnkey route. I was finally approached at one point and said, you know, listen, if you'll get your real estate license, you can actually, you know, work this side. I was like, well, I guess I'm kind of doing it anyways. This will be a fun side gig to my engineering job. And it picked up so much, I started a blog long time ago. I don't even know if we got more than, like, one blog out. But then biggerpockets found me when they were a lot smaller. I started writing for them, and everything spiraled out of control in a good way. And here I am. So kind of my position, what I like to tell people, because real estate can be a little intimidating. I just tell you what I like, who I buy through. I'm actually the worst salesperson on the planet. So really, I just share experiences. And I think people find a little bit of comfort in that of, you know, it's not your typical real estate experience. So I just tell you what I know. I make no claims one way or another and go from there.

Scott Todd, what are your thoughts?

I have many, Mark.

Many.

So. So turnkey. You're buying. You're buying these properties, you're rehabbing them. You're doing everything. You're putting a tenant in there, and then I'm buying it from you almost.

I'm actually not the turnkey provider directly. I connect you with the guys who do exactly what you say. So I work with the crews who vet those guys, because there's turnkey providers in a lot of markets. There's a lot of turnkey providers. Some are good, some are bad. So we really dive in, try and sift through everybody, and then connect you with the ones that we seem to like.

Is this like a Jason Hartman model? Like, platinum investment? Is that what Jason does?

I think it's Jason Hartman. I think it's.

Yeah, Jason Hartman.

I don't know what they do, but I think it's similar.

I'm gonna vox Jason be like, tell me about Ali Boone and hipster investments.

He's probably gonna be like, who's that?

No, no, he'll know. So everyone knows you, Ali, go ahead.

So I go, I buy this. You connect me with somebody that's done all that work. What type of yield am I making? Like, what are we talking about?

It kind of depends on where you're buying. So at any one given time, we're working in several different markets. And actually now we're working with turnkey providers on a secondary model, which is where you fund the distressed property and the rehab up front. And so you're kind of combining the BRRRR strategy, the B R, R, however many Rs are in that strategy with turnkey. So you're getting the same financial benefits, but someone else is doing the work for you. And so on those, you're actually making significantly higher returns because you're able to force appreciation on the top standard turnkeys. Right now you're looking between 7 and 9% on average, occasionally a 10% cap rate. And that's just cap rates. So that's without financing. That's not your cash on cash. It's not like it was a few years ago, I'll admit that. But there's still returns out there.

Okay, and so whom is this really best for? Who are your people, Allie?

Who are my people? Well, part of my job, I've kind of deemed myself like an emotional support animal. I've. In all of this, I've tried to work with everybody. But what I found is because I'm the smiley gentle face compared to a lot, I kind of support you on the emotional side. So I attract the newer investors. It's the people who maybe either don't have the time or the skill or the whatever to do all the hammer swinging. The maybe they wanted to get in real estate or do something smart with their money, but they didn't have time or they were too nervous. And that's kind of where I fill the gap because you don't have to do much more than your own due diligence and managing the manager, so to speak, on these. And I can be there for you on the emotional side if you're a little nervous or whatever. So I definitely attract the newer investors for sure. Once they get good at it, they kind of leave me behind. Wave buys, they build their portfolio.

So you're kind of like Property Brothers meets Dr. Phil.

Totally. And with long hair.

Yeah, with long hair.

Yeah. I'm not as pretty as the Property Brothers, but, you know, I got. I get the long hair part.

All right, what is some of the worst advice you see or hear given in turnkey investing given in turn.

Well, the worst advice related turnkey investing is not to do it everybody. It seems like everyone who insists on buying locally or wants to swing the hammers, they're like oh my God, turnkeys are bad. And, and I'll be the first person to tell somebody if I think they should not buy a turnkey because I don't think they're for everybody. If you have the skill to do otherwise, if you're in a market, you can buy yourself. I don't think you should buy turnkey at all. So the worst advice I hear is not to buy turnkey because it's really situation by situation and you know, whatever and then, oh, and then the other. Well, I don't know if this is bad advice, but the other misnomer misconception is that you can be a hundred percent hands off and you should not be 100% hands off. All the hard work is getting done for you, but you should at least keep your brain involved and like I said, manage the manager, so to speak and make sure things are running because people are like, oh, I'm hands off, I don't have to deal with any problems. Well, it's rental properties be available to handle problems or fire manager, hire a new one or whatever. So I'd go with that one.

Interesting. Scott.

Todd, I see the wheel.

I'm still stuck on this. I'm still stuck on this on the return, right? Like I will admit it, I'm like a yield snob maybe, right? Like do.

Yeah, but Scott, it's not for you because you and I are, this is not for us because our yields are so high. This is for the person who's sitting in the cubicle at Procter Gamble dreaming of being the person on property brothers swinging the hammer, getting a house, building long term wealth and they ain't going to be able to do it. Or the plastic surgeon whose time is so valuable they're not going out there to the crew and this is a way for them to get involved in, you know, ultimately what's, what's a great real estate play. So yeah, it's not for us, but.

It'D be good for you though, Mark. Right? It would be good for you though if you wanted to invest in, if you wanted to invest in like a house or something. Right? Like you know, like because you don't want to swing a hammer.

No, but I wouldn't. The yield is too low for me. We're snobs, but that's because we're in this world. Imagine if we weren't in this world. See, this is where Ali's getting the value.

I will tell you one, one of the things that does that I do find interesting about this piece is the fact, Mark, that the monthly income, the net does not end until you sell the property. Right. Like, you know, once you have that cash flow rolling, you own the house. Essentially, you're right, you're building long term wealth. And so, you know, the cash on cash today at that number might be low. But then when you look at the overall, I guess with the depreciation and the fact that you got tenants paying down the debt, then it's really more than 7 to 10%. Right. And that's kind of going, you're getting those not really quadrants.

Let's go through the four quadrants. Right. So Ali, what are the four quadrants that people love in real estate? Why we invest in real estate?

Cash flow.

Cash flow.

Are we talking the cash flow quadrant?

Yeah, well, cash flow, appreciation, appreciation, tax, depreciation.

Depreciation and tax. Yeah, and tax. Right. So you're getting in those four quadrants without taking the huge amount of risk in time and capital to do it on your own. Right.

Well. And if I can throw something in, I would say the turnkeys are excellent ideas for three categories of people. Number one, kind of like you guys mentioned, the people who are never going to be in this industry, who are not in this world and they just want to put their money somewhere other than their 0% interest bank account. So that's number one, because if you are in this world, you don't need turnkeys at all. Number two, if you are in the world and let's say you're flipping or you're burning or br or whatever you're doing, if you're whole, whatever you're doing, like if you're doing things by yourself, you can't scale as fast because it's taking your time and whatever. So like I've told people, if you're flipping or burring over here, you can fill some time gaps over here with turnkey if you want, just because then your money sitting around is not making 0% while it waits on you to finish this deal. So you can make it a temporary thing, you can do whatever, but it can fill some gaps if you don't have place for the money because of your time. Or the third group is the brand new people. Maybe they're planning to get in real estate, maybe they're planning to flip. Planning whatever turnkeys are really good at teaching you the basic fundamentals, due diligence, numbers, market analysis, all that. Because there's turnkey providers and markets I won't touch at all. So because of all the hard stuff getting done for you, it leaves you the time to learn all the basics. And I think anybody flipping, burring, more advanced stuff, you've got to learn those fundamentals because the people who go just flying off into flipping or burying. Yeah, some people are going to be able to do it, but there's a good chance that you're missing the fundamental education because you're so busy with rehabbing and the advanced concepts. So new people who will never be in real estate, real estate people who need to fill the gaps while they're busy with their other stuff, or brand new people planning to get in real estate who just want to learn the fundamentals, Buy one turnkey, maybe two, learn what you need to do and then go advance yourself off if that's.

Hey, Mark, just, just for those that don't know, like the, the burring that Ali's referring to, it's B, R, R, R and it's buy, renovate, rent and then refinance.

And then if you want to have the last R, repeat, repeat.

Yeah. So if you want to add another R. So basically it's a model that they talk about on bigger pockets, by the way.

I've never heard of it, but I'm sure it's a site out there.

I wish someone would come up with a better acronym for it because brrr. People are like, what are you saying? And I'm like, r, R, R, R. We need a new acronym. If I had a vote.

Until we get on the biggerpockets podcast, guy, we're not going to even mention as a site.

Yeah, they won't let me.

I'm not sore about it at all.

You're not allowed on it either.

Yeah, I know. You know, I think it is interesting. So, you know, coming from your engineering background and knowing what you know today, is there anything you would have done differently when you first started out in real estate investing?

The only. The major mistake that I made was one of my. I say this is my, one of my absolute best traits, but it's also one of my worst, is I'm super gullible, actually. And so when I've had a property manager, like I feel like property management, it's all on the property management side. There's like a life cycle to the property manager. They're great for some amount of while and then all Of a sudden, they just are a disaster. And when the disasters have stopped, I'll say, hey, you know, haven't heard from you in a while. Having a hard time getting ahold of you. Like, I already know something's up and I'm gullible. So when they say, oh, you know, I've just been busy, so sorry, things will get better, I'm like, okay. And they never do. And so I've in the past let property. Bad property management go for too long, and that can get very costly. The tenant quality can get bad. The evictions just. I went on Zillow one time, I was bored, and I was looking at values of my properties that I bought, and one said it was for rent. And I was like, my properties for rent? That's weird. The tenants have been out of it for like three or four months. I had no idea. So I would say it's really. That's why I try and work with people is like, it's not hands off. Like, you've got to keep an eyeball on everything. Should never trust property management for long periods of time. And so that would be. I don't even want to call it much a mistake. It's pretty gentle as far as mistakes go, but just I could have afforded to do a little more due diligence, probably.

How long is the cycle for your typical property management company before they sort of lose interest?

Well, I've got great ones now. They seem to. They might last a little longer. I think the really good one that fell off, I think it was maybe about three years. It kind of depends on how they're structured because if they're newer property managers and they. The biggest problem I've seen is when their company grows huge. They don't. It's like any company. If you grow too big too fast, it can oftentimes be the downfall. Same with property managers as they get so many properties and then they think they can automate everything, which they can. But then the automation isn't a human either. And so it's. It's usually kind of growth problems that. Or they just start hating their job, which, quite frankly, I wouldn't blame them. I don't want to deal with tenants because I'm gullible. So I would not make a good landlord at all.

Yeah. Yeah. That's interesting. I don't know if you know about our model, but we have no rehabs, no renovations, no renters, no rodents. Because we buy a piece of raw land we own or finance it, and then we have like this cash flow coming in without any of the headaches of typical real estate.

That's amazing.

It's great. But I do think it's important for our audience to recognize there are other models. And as Jay Massey likes to point out from time to time, we don't get depreciation in raw land. That being said, nevertheless, you can invest self directed IRA or QRP and you know, get your appreciation tax deferred or tax free through those vehicles. Scott Todd, any other thoughts before we get to tips of the week?

Are you still pondering yields? I still see the wheels.

No, no, no, I look, I do, I do. Like, like, I like, I see these houses, right, like, and I've never really gone down the avenue of exploring this path, but I've seen houses that, they may not be the best house but I think they're kind of like that middle, middle income. Maybe if it was like an apartment, but it might be a C class, right. But I see these houses like in, I don't know, Columbus, Ohio, Cincinnati, Ohio, something like that, right, like middle America. And you know, it's rented out, it's earning 10, 12% annual cash on cash, including the management. And you know, you can buy one of these things for like, I don't know, 50, $60,000 that could easily be a, like a retirement cash play or something. Boom. And then you've got this income coming in for forever, right. You know, so I don't necessarily think it's a bad thing. I think that it's, man, I hear 7% and I like cringe. I'm like, man, isn't bitcoin or the stock market better than 7%? But you're not getting, you're not getting that, that forever cash either.

Yeah, yeah. And I kind of, you know, there's a lot of people who advertise they'll put like the 10 year projection of 3% a year in appreciation, which I would never do one of those because in my opinion it's just misleading. In case it never happens. But to the point of it, the tax benefits are huge on residential single families or even residential multis. So the tax stream with depreciation, all that is huge. Then you've got your equity build. All of my, when I bought all my turnkeys in Atlanta when it was about to boom, they've all over doubled in value. Like that's not going to happen today if you buy. But they're, you know, the appreciation is, it's real but like you said, it's really, it's A long term play. That's why the BRRR plus turnkey model that we've been working with has been so, so popular because it kind of puts a little more bang in your buck right off the top versus it just being the long term play. So it's like a little extra bonus at the beginning. But yeah, it's definitely more long term, like short term. It's not going to do a ton for you if you're. At least not if you're using a mortgage. Yeah, but it's better than bank accounts at.001%, so.

Agreed. Yeah, there's just so many avenues that you can do with real estate markets. It's amazing how you can, you can like there's so many different models, there's so many different ways. But you know what, Mark? You never ever get to experience that unless you take some sort of action. Right.

No, it's true. I was wondering, Ali, do you ever think like, is crowdfunding going to replace turnkey at some point? Am I thinking about it wrong?

No, it's a, it's a valid. I wouldn't think so. Because just owning your own property, real property, it's just got benefits that you're not going to get elsewhere. And you know, at the end of the day, owning real property beats inflation. Like, inflation is actually your friend if you own real property. I just, I don't think it's gonna go away. I was actually asking all my crews if turnkeys were gonna go away with where prices are right now. Because in 2009, 2010, 11, 12, I mean, turnkeys were just flying off the shelves. My very first turnkey property was this really cute, amazing, freshly rehabbed two story house in Atlanta. $55,000 that rents for a thousand a month. Like absurd. And so when people ask me now what return do you get? I'm like, no, I'm not telling you because that'll just be a tease because you're not going to get it now. But so I was wondering, like, I'm in the turnkey business now, what's going to happen to my business when prices are sky high? And the reality is they're just always going to be available to some degree. It's very different today than it was in 2011, but I don't think real property options are ever gonna be able to go away. It's just, it's too solid of a currency to. Especially, you know, when times get a little shaky. Real estate's always gonna be there. It can't go anywhere we'd all be living in, like, tree houses, and then it would still be real estate because we'd just be investing in treehouse. I mean, we have to live somewhere, so.

Yeah, absolutely. Absolutely.

I would love.

Mean, I love that show. Like, Treehouse Builders. You know, that guy comes.

Treehouses are bigger than my entire apartment. It's absurd. They have more amenities than I do.

Yeah. You know what? I think we have a new business. Treehouse Turnkey.

I'm down.

I mean, you could rent that thing 750amonth.

Oh. I mean, we'd have so many running models, it'd be great.

Oh, yeah, Scott, that's another model. We need to talk about the Airbnb reno. We don't have time. Scott, I can't hear you. I lost your audio.

We. I said we need to. We need to. We need to end this call right now and start taking action.

Mark. I know you know, Ali, you're laughing. Scott will wire funds, like, by the end of the call.

Oh, that'll be great. I'm totally am.

He's not. Afraid so. All right, well, now we're at that point in the podcast. Ali, we want to put you on the spot. Your mentorship has been great, but we want one more piece of advice. A tip, a book, something actionable, where the art of passive income listeners can go right now, Improve their businesses, improve their lives. What have you got?

Okay, so people probably heard me say this, but this is my number one go to. Over technical advice, over book advice, over anything. At the end of the day, my number one piece of advice is do not take advice from people you would not trade shoes with. And if you turn that around, take advice from the people who are doing what you want to be doing or who are living the lifestyle that you want to live. Kind of like we talked about, there's a million different things you can do in real estate. All of them involve different levels of work, different levels of risk, different return levels. I mean, it's. The whole spectrum is covered. So to help figure out what you want to do in it or what you're good at, find people who. I mean, if you want to work on your properties and whatever, go find those people. If you want to be like me and be a total beach bum and not do anything possible, go take advice for me or somebody else. Like, because there's so many people trying to pitch things and sell things and convince you that you shouldn't do turnkey or that you should do turnkey, you'll never hear me say you should do turnkey, because I don't think everybody should. And so find the people who resonate with you the most and who are actually doing what you want to accomplish, because a lot of people try and sell it to you, but they're also working behind a 9 to 5 desk. So it's like, do you really want to take advice from that person who's not doing anything related to what you're trying to accomplish? And if you combine that in the rest of your journey, research, educate, talk to people, whatever, think that's what has absolutely taken me. Exactly where I want is I found the people who are doing exactly what I wanted to do, and I took their advice.

Great, great advice, Scott. Todd, what's your tip of the week? That's me. Tough one to follow.

First of all. First of all, I'm with you. I just want to be a bum, right? Like, yep, in a good way. Like, I don't want to be the hobo on the street. I want to be, like, you know, enjoying life, working when I want to. Like, you know, just squeaking out the day. But, Mark, here's. Here's my tip. Check out this website. It's Hushed.com. s u. I'm sorry, h u s h e d.com Hushed.com. and basically, it's a. It's an app, and it's also a service that you can get for your phone. Believe it or not, they have it for Apple and Android. I'm surprised people even, you know, buy Andro, but people, people.

I have an Android.

You're breaking up. Can't hear you. You're breaking up.

We can't hear you. How did Allie get on this podcast again?

Yeah, she wasn't vetted, clearly. That's a new question. What kind of phone do you use, Mark?

Right, Right. Yeah, that's a vetting question.

So check this out. You can. You can, you know, use this app. It gives your phone a secondary phone number. So, look, I know a lot of people, like, when they're starting out their business or whatever, they'll maybe use Google Voice. And Google Voice is a free service. Yeah, Google Voice is a free service. But you know what? It. It's kind of weird. It's kind of weird the way it works. You know, you have to have this other app, and, you know, this is another app. I know. But essentially, this gives you, you know, custom voicemail for every phone number. You can have multiple phone numbers, not just one Google Voice. And it's not bad if you just sign up. It's like and you need it. It's like five bucks a month. Not bad.

That's not bad. That's a great tip.

Second phone number, then you can filter out the code.

Well, yeah, yeah, exactly. Which Allie you. This might be perfect for you.

Oh, my phone number. Anywhere. People all the time are like, how do you run a business and you don't have a phone number? I'm like, very easily. That's what emails me.

That's kind of a hipster thing to do, don't you think, Mark?

Well, actually, hipster does have a phone number now, but secretly, I'll tell you, if you call it, it's gonna go to a voicemail and say, leave us your email and we'll shoot you an email because we're too busy having fun.

There you go.

Perfect.

So that was our hipster secret.

But yeah, yeah, I mean, my tip of the week is gonna be learn more about ali boone@hipsterinvestments.com we'll have a link to it hipsterinvestments.com and, you know, I think it's a tremendously valuable service that, you know, everyone should look into. Unless you're like, Scott and I, you're a total yield snob. But if you're not, this is phenomenal. And the day will come again when the yield will go up. I mean, we always know the economy is going to cycle. And so absolutely. I mean, it's great to learn that. And, you know, hipster investments, you know, it's so funny. Like, I was watching like a comedy show and the woman was like hipster or homeless, like, she'd play like this fun game in San Francisco. So you like that? Yeah, yeah. So that's kind of cool. But I do want to remind all the listeners, today's podcast is sponsored by the most incredible software solution I know of called Geek Pay.IO. it is the only set it and forget it solution. You're a landlord and you got to collect money on an automated basis from your renters. Use GeekPay IO right. One time set and forget it. Your borrowers can call you up and say, hey, what's my current balance? No, they can go online and see what their balances right. They can make a prepayment ach. If the ach fails, it charges the credit card on file. It's really, really hard not to get your money using Geek Pay IO. I also want to thank the listeners and the only way, the only way we're gonna get the quality of guests like an Ali Boone from Hipster Investments Dot com. You got to do three little favors. You got to subscribe, you got to rate, you got to review the podcast. Send us a screenshot of that review to supporthelangic.com we're gonna send you, for free our $97 passive income launch kit for free. There you go. So please do that. And. Are we good? Ali? Ben, Are we good?

We're good. Oh, and reach out to us, because we're super friendly and we love talking to people, and we don't charge you anything, so why not?

No, I mean, for me, this might be a free therapy session. Actually, I'm just gonna call Alan.

Well, like I said, I'm basically an emotional support animal, so therapy, whatever you need, that's what I'm here for.

Yeah, I mean, like, hey, I'm working with this guy, Scott Todd, and I. I just feel like, you know, he wants to just be on the boat all the time.

Couples therapy. We do that, too.

Wait, Scott, I can't. I don't have your audio.

I don't know why this thing keeps up. Mark, one thing. She's a great support person, but you can't find her phone number.

Oh, shoot.

Those Android people are slick.

They are slick, aren't they?

I don't. It's so antiquated. I don't know. Let's see. How does someone get me on my Android?

Yeah, yeah, they got. You got to send up a smoke signal first.

I think it's like. It's like those old. Like.

You remember. Mark, did you. Okay, wait, wait. Mark, you. You know that thing, like that dialing thing, right?

Yeah, my grandparents had one of those.

The phone. You know what we're talking about? The phone?

Yeah, it was like a rotary dial.

Mark. I hated getting to the last number and then messing up.

That was the worst.

You would have to, like, hang up and do it all over again. And then the best line was this. I have a long distance call. This is a long distance call. Shut up. It's a long distance call. Remember those? Like, the long distance calls were big deals.

Long as his calls are crazy. It was like. It was unbelievable. Like, it was almost like a. Like, I remember my grandparents would call and, like, you could, like, set a timer for, like, two minutes. Like, they were getting through that thing so fast. Okay, hope you're all well. Love you. Bye. What just happened? Grandma and grandpa. My mom's like, it's a long distance. Florida. It's a long distance call. Like, we take all this stuff for granted. All right, anyways, Scott, we're good, Allie. We're good.

We're good. We're good, Mark.

All right. Are we gonna do this in front of Ali Scott, or are we just gonna.

Oh, we're just gonna. We're just gonna, like. Yes, Mark. You know what?

She's like this podcast. All the listeners turn one really fast.

One, two, three. Let freedom ring.

I did it.

Let freedom ring.

Let freedom ring.

See, you did it.

Am I in the group? Am I approved?

Now you're in.

You are approved.

Nice.

All right, all right, thanks.