$1M in Real Estate in Just 1 Year and How You Can Do It Too!

Ashley:
This is Real Estate Rookie episode 173.

Tyler:
The sooner you realize that everyone in this community wants you to win and wants to help you win, the more those people you put around you, the better off you’re going to be. Whether you have zero deals are a thousand deals, it doesn’t matter. Put people around you that are doing what you want to do.

Ashley:
My name is Ashley Kehr, and I’m here with my co-host, Tony Robinson.

Tony:
And if this is your first time joining us, welcome to the Real Estate Rookie podcast where every week, twice a week, we bring you the inspiration information, motivation that you need to kickstart your real estate investing career. Ashley Kehr, what’s going on? What’s new?

Ashley:
Well, I’m super excited. First of all, that we have one of our friends on the show today. Tyler Madden.

Tony:
Yeah. Tyler’s a good friend of both of ours. Ashley brought him onto the podcast first and Tyler and I got to meet each other in person in Denver. Then he now spent some time together at Maui, then again in Vegas. So love having Tyler on the show. And he’s got a really great story to share as well.

Ashley:
Basically. He’s stole all my friends.

Tony:
Very true.

Ashley:
No, but Tyler and his wife Zosia are the best they’re out of Denver. And so we had Tyler on last year and he’s going to talk about what he has accomplished in just one year. But before we get into the episode, I want you guys to go and check out the Real Estate Rookie YouTube channel and go through the videos. What do you like? What don’t you like? Leave us comments. We’d love to hear back from you guys because we’re be creating more and more content to add to the channel. And of course, make sure you’re subscribed so that you can get notifications when new videos are added.

Tony:
Yeah. And if you’re listening on Apple Podcasts, if you’re on Spotify, whatever platform you listening to the audio version of, please do us a huge favor, make sure you’re subscribed and you’re leaving reviews there. Ash and I were looking through some of the other top podcasts and we’re like, “Man, we’re not getting nearly as many reviews as some of these other podcasts.” So help us out if the show’s helped you in any way, shape or form, just leave an honest to interview and we’d appreciate it.

Ashley:
Yeah. We would love to hear in the reviews, especially how the podcast have helped you, which guests were the most memorable and really made an impact on your life? So let’s get into another episode that is going to be impactful and insightful for you guys with our friend, Tyler Madden. Tyler Madden, welcome to the Real Estate Rookie podcast. How are you?

Tyler:
I’m fantastic. Thank you for having me again. I’m super excited to be here with you guys.

Ashley:
We are so excited to have you back. So for somebody who doesn’t know who you are, and I can’t believe they wouldn’t know. But please tell everyone a little bit about yourself and also what podcast episode you were originally on for the Real Estate Rookie.

Tyler:
Yeah. So my name is Tyler Madden. I was on the Rookie podcast episode number 55. And at that point I did not have any intentional real estate investing deals. I had a accidental home that we turned into a rental and I was gearing up to really put my work in and pursue real estate. But I’m a general contractor. I have a retail-facing high-end luxury remodel company. And I so invest in multi-family real estate here in Denver, Colorado. So I’ve come a long way in the last year since we spoke last.

Ashley:
Well, I think Tony and I know a little bit of your story, but we’re hoping to really dive into a lot more of what you have accomplished in this full year. So since you’ve first been on, give us the backstory. What has happened?

Tyler:
Yeah. So last time I was on, I was really focusing on honing my mindset and getting into a place where I thought I was prepared and confident enough to really start investing intentionally. And then pretty much right after that, I was making offers on market, going for the low hanging for fruit, making offers on flips, making offers on buy and hold rentals. And we ultimately found a multi-family property. It was a four-unit property that we went and toured, and… Actually we didn’t tour it. We were in Hawaii and we had a realtor tour and show us the video. But we made an offer on that one.

Tyler:
We didn’t end up getting that property under contract, but we made a very strong offer, well over asking price. And then we made it pretty clear to our real estate agent, what we were looking for, what our criteria was. So he went and did a little digging and found another multi-family property. And he said, “Hey, it’s under contract right now. It’s more likely to fall out than it is. But if you go in with the same terms that you wrote that one, all cash, waiving your inspection, quick close, all those sort of things. He’s like, “If you go in strong like that, the agent told me that they’d much rather have your offer.”

Tyler:
So I said, “Well, I wasn’t looking for that one.” It was a three-plex. But we said, “Yeah, might as well. We need something.” So we got that one under contract and then a week and a half later, we get a call from the first property. They tell us, “Hey, our other offer fell through. You guys are the next ones. Do you want it?” And I just laughed at them because initially I was like, “Of course I want it, but there’s no way that I can do that.”

Tyler:
And then the more I thought about it, I said, “Hold on, is there a way I can do that?” So ultimately long story short, we ended up getting both properties, a three-plex and a fourplex under contract simultaneously amounting to a million dollars worth of real estate that we opted to buy at nine months pregnant. We were expecting a baby and we said, “Hey, if we’re going to do it, we’re going to do it.” So we went all in and now we’re on the tail end of one of the refinances of the birds. But yeah, that’s where I’m at. I’m in the thick of it.

Tony:
Yeah. So Tyler, you’ve obviously grown a lot this past year, man. So kudos you for really knocking it out the bar brother.

Tyler:
Thank you.

Tony:
But I want talk a little bit about some of maybe the lessons learned from this past year for you and in your business. So I don’t know if you want to go deal by deal, maybe just in general, but what are some of the things that you’ve learned that have been really impactful for you when you think about this three-plex or this fourplex?

Tyler:
Yeah, I’d say one of the biggest things that I learned is being a general contractor, it’s really difficult for me to justify paying someone else to do what I’m fully capable of. So on both of these projects, I’ve been extremely hands-on where I’ve hired out as little as possible in an effort to really juice these deals. And if we get to talking about the final numbers, you’ll see how well I juice them. But I dedicated so much time and I sacrificed so much more than I wish I would’ve… Let me take that back.

Tyler:
I don’t wish I would’ve done it differently because these will set me up in a way that a standard deal wouldn’t have, but I can’t foresee myself doing more deals in this way where I’m sacrificing all of my time just to make the deal the best that it can be. I’d say that’s my first lesson. Especially for rookies that are listening, it’s a great way to get a deal or make a deal the best that you can just so that you rip the bandaid off, you get in the game, that sort of thing.

Tyler:
But to think that that’s going to be something that you’re going to do for every project, for forever, it’s just not likely to happen. So I’d say that was one of the biggest lessons. And like I said, we bought these when we were nine months pregnant. I have almost a one-year-old now and I can’t justify doing this anymore. So that’ll be a different concept and a different mindset towards real estate investing where I embrace the concept of who not how. Instead of saying, how do I do it? It’ll be, who can I get to do that? That’s the number one low hanging fruit lesson that I would share with rookies.

Tony:
So Tyler, we spent a little bit of time together in Maui as well. We were at a Mastermind together. We spent some time out there and both of us were at these weird spots in our business where we weren’t quite really sure where we wanted to go or how we wanted to grow. And I do remember one of the things you said was that there was a big time commitment that was required in order for you to scale your rental portfolio. And when you thought about the life you wanted as a real estate investor, the actual reality wasn’t lining up because there was such a big time commit from you. So what have you started doing? How have you changed your business to better support the… I guess the time requirement that’s needed from you?

Tyler:
Yeah. So previously, my business and my real estate investing were two different things where my business is client-facing remodels, that sort of thing for homeowner clients and my real estate investing was my gig where, “Hey, I buy them personally. I work on them personally and I enjoy the benefits of them personally.” But now I’m growing my teams. Again, my business was just me for the longest time. I was self performing every, doing everything and that’s just not sustainable. So I’ve begun bringing people onto my team. I’ve got a couple of fantastic employees right now, and I’m getting to a point where I’m becoming more comfortable sitting in the leadership role rather than the… Even the manager role or the doer role.

Tyler:
I think you and I both experienced having to step up our involvement in terms of leading. And that was a big takeaway for me. And I’m learning more about how to embrace that role within my business. And then ultimately the separation between business and real estate. I’d like to close that gap and bring them under one effort where I’d like to start purchasing larger commercial multi-family under the umbrella of my business and allow my employees to take part in the fruits of those. So it’s not like, “Hey, go work on my personal property.” Have my employees do that sort of thing. But it was a mental shift again, embracing that delegation of tasks and having the trust that people are going to do things right.

Ashley:
Tyler, I want to go back to when you first started talking about what you’ve done in the year, you mentioned you bought a million dollars in real estate. So I think a lot of people right away are like, “How did you do that?” And also why did you want to do that? For your first intentional deals, you’re buying a million dollars at once, two different properties. So if you could go through and just explain how you made that happen and also why you weren’t afraid to all of a sudden spend a million dollars.

Tyler:
Going to start with the why, because I think it’s more important than the how. And honestly, big numbers don’t scare me because ultimately the math penciled out. It doesn’t matter if it’s $100,000-deal or a million dollar-deal. If you know what your analysis looks like, and you know that it’s relatively accurate, none of it is going to be perfectly accurate. But if you’re being intentional about making the analysis a super important part of it, I don’t care how much it’s going to cost, as long as I know that it pencils out. And money isn’t something that scares me. And I honestly, to change topic a little bit, I don’t do this for the money. I do this for the freedom.

Tyler:
I don’t care how much money’s in my bank account. I don’t care how much I have to spend if it gives me an opportunity to get the lifestyle that I want and the time freedom that I want. So it was just a means to an end, to spend a million dollars, I’ll do it again and I’ll spend more. So I think that’s the why. A lot of people getting started, they’re fearful of the dollars because they have a concept of, “Oh, I could lose it.” More times than not, you’re not going to lose it. You’ll just break even. So it’s not something that I was fearful of. And then the how, I would say, initially I was trying to figure out the same thing. I got two properties under contract, and I didn’t know how.

Tyler:
So calling around and talking to people that were more advanced than me or a few steps ahead of me asking them, “Hey, how have you seen this done? How would you recommend getting this done?” Ashley, you were one of the very first calls that I made when I got these under contract, and I asked you the same thing. But what we did, I’ll just break it down. We got hard money for both properties, so hard money in our case, they’ll lend up to 80% of the purchase price. And then my minimum requirement personally, based on the hard money lender’s requirements was that I put 10% in personally.

Tyler:
So on both properties, we had to put in 10%. And if you’re doing math along with me, that leaves a 10% gap. 80%, 10%, you’re only at 90% still. So I found a private money lender for the 10%. Ultimately that wasn’t a super hard sell. I had proven that, “Hey, I do this for a living. I have a track record of fixing properties. This is nothing that I’m unfamiliar with.” So it wasn’t hard to find private money. So the combination of those three, and then I funded personally my rehabs on both of them. And if you want to know where I got that money from, go listen to episode number 55, where I talk about HELOCs, because I think they are freaking amazing.

Tony:
I want to touch on the private money Tyler, but before I do, I want to go back to something that you said where you said that you weren’t necessarily intimidated by the big purchase price because you knew that the numbers still worked. And I think that not adopting that mindset is a mistake that I think a lot of rookies make, especially in today’s climate where you are seeing this upward pressure on home values where a lot of rookies are now sitting on the sidelines because they’re saying, “Ah, that house is worth 80% of what it was a year ago today. So I don’t know if I want to pay, I think I’m going to wait for this impending crash or for this next thing to happen.”

Tony:
And it’s like the people that are saying that are the ones that are going to be missing out. Because no one has a crystal ball on where the market is going. There are signs, there indicators and we can make educated guesses. But if you plan to be a real estate investor and you want to hold this thing for 5, 10, 20 years, who cares what the market’s going to do in the next 12 months. I’m looking at-

Tyler:
I’m glad that you said that.

Tony:
Right. Yeah. Because it’s a mistake that so many people make. And at the end of the day, the one thing you want to focus on is can I get the return that I want? And as long as that box is checked, who cares what the market is doing.

Tyler:
Especially with the rental concept of holding them, I’m getting into this, I don’t want to hold my properties as long as possible. I’m not trying to flip them. I’m not trying to get in and make my nut really fast. My turnaround is 15, 30 years on these properties. So quite frankly, I don’t care what the market does right now. As long as it gives me the immediate returns to at least sustain. I’m not trying to get rich next year. And if you are, go play with crypto. Real estate’s not your fricking place to be an overnight millionaire. It’s just the long and the short of it.

Tony:
Yeah.

Ashley:
Tyler, to get your hard money. What are some hoops you had to jump through to get money, especially this being your first intentional deal?

Tyler:
So I named my son after a hard money lender, my firstborn son. That was a requirement. Actually, now that I mentioned, that makes way more sense.

Ashley:
Is this the part of [inaudible 00:14:49]?

Tyler:
Now, that makes way more sense. My son’s name is Cash. So I was just making that joke. But the hoops I had to jump through, it was ultimately being a general contractor and having the hands-on experience of renovating at a large sale. It was a much easier sell than coming in as just a complete rookie that has no concept of how to run a job site, no concept of how real estate works, any of that sort of stuff. So fortunately my single family home that we turned into a rental that counted as a transaction. So most hard money lenders, they want to see that you’ve got transactions under your belt.

Tyler:
Ultimately, if you don’t have transactions under your belt, you can still get money from them. It’s not like they’re going to tell you, “No, go get a deal and come back to me.” They’ll just give you a little less friendly rates and terms. So I called around the hard money lenders. I found one that offered the rates and terms that we liked. I asked other investors, which hard money lenders they were using. And if they lended out of state or in other states, because a lot of the investors are all over the country. So the hoops, just doing my due diligence and sharing my experience was helpful. But there weren’t any that I was intimidated by like most rookies expect hard money lenders to be.

Tony:
I want to ask one follow-up question because you also mentioned that you used a combination of private and hard. So on that private money piece, where were you going? Were these aunts, were these uncles, were these the rich grandparent? Were they friends? How did you find those people to lend to you on a private money basis?

Tyler:
Yeah, so ultimately in this scenario I went to the place that I least wanted to because I needed to have things done in a hurry. So I went to my dad, I’ve never asked my dad for money. That’s not something that I like doing. I don’t like asking people for favors. And that created a situation where I had to embrace a different mindset where instead of asking for a favor, I had to convince him… I didn’t convince him, but display to him that this is just a good move for you.

Tyler:
Where he retired and has a great retirement, but he doesn’t invest. He’s afraid of the volatility. He’s seen so many people lose money, but for me, I had to make it obvious that, “Hey, that money that you have sitting in the bank, especially with inflation is not doing you any favors. So let me put it to work for you. Let me, let me borrow the money and make you more.” So we actually just paid him back and I would not be surprised to fed something where he’s asking me to invest. And the private money piece. That was just the first person that I reach out to.

Tyler:
It’s funny in the last few months, I’ve had more people reach out offering where I’m not even asking, I’m not looking, but more people via social media or via past clients of mine. They say, “Hey, I know you get into real estate. I have some money that I’m sitting on. If you’re taking on, I’d like it if I could be an option.” So now they’re not waiting for me to ask them. They’re actually saying, “I’d like you to entertain my money as the next one.” So it’s almost like I’m doing them a favor. So shifting your mentality, I think is super important on the private money piece.

Tony:
Tyler there’s a few really important things you pointed out there, man. So the first, let me ask you this question. How much work did your dad have to do on that private money deal?

Tyler:
Wiring that money must have been a huge pain for him. Actually, he delegated that to my mom. So my dad genuinely did nothing. He doesn’t even know where the properties are.

Tony:
Right. And that’s the point I want to make. When you are working with the private money lender, the extent of their work is vetting you as the person, maybe vetting the deal and then sending the money. And once that’s done, they sit back, they forget that money is even gone. And then a few months later they get their principal back plus all the interest that was due. That is the easiest return that they’re ever going to make.

Tyler:
I would wager that it is so much more common for those hard money or private money lenders to offer up more money to you on the next deals, rather than just say, “Nope, that’s a one-and-done thing. I’m just a one time lender.” As soon as they see how easy it is, and how effective it was that, “Hey, I just put my money somewhere else for six months or a year and I got more back.” They will offer you more time and time again. Once you get that first one, I guarantee you, what do they say? The training wheels are off where it just gets easier and easier. And you’re inundated with more and more opportunity to use other people’s money.

Ashley:
Man, holidays are going to be awkward for you after you find out that your dad breaks the news that he’s now my private money lender. It was a one-and-done deal.

Tyler:
Yeah. I don’t know. I’ve heard your episodes where you’re offering like 4% to… don’t you have a lender that you gave less than market?

Ashley:
I have one that’s 30… Oh, advertised over 30 years too.

Tyler:
At what? 4%?

Ashley:
But [inaudible 00:20:00]. No, that one I think is at five and a half percent, but. Yeah.

Tony:
Well, my private money lenders actually pay me to lend me their money. So I got both of you guys beat. Tyler, one of the thing you mentioned that I thought was really important was that you framed it as an opportunity for him. And I think that’s another thing that a lot of new investors forget is that they’re not doing you a favor. You’re not putting your hand out, asking for a favor. You’re reaching out to them with an opportunity for them to get a good return on their investment. And I think that’s a mindset change that a lot of new investors have to make, to be comfortable reaching out and presenting those private money opportunities.

Tyler:
And I think it’s really important if you are a rookie investor and you’re going to go start making these conversations happen and talking to potential private money lenders. Even if you don’t have the experience, it’s really easy to make the argument once you’ve got the experience, once you’ve got deals under your belt. But prior to having deals under your belt, I would say that use all of your analysis as your experience.

Tyler:
Use the hours that you’ve spent listening to this podcast and researching things and doing analysis and show them whatever you need to and say, “Hey, I’ve been investing so much time into this. And the knowledge that I have is not to be surpassed by the layperson.” I think it’s really easy to make that conversation. You don’t have to have the experience to start talking to private money lenders.

Ashley:
Tyler, I want to go into the actual number on the deal now. So the purchase, what the rehab looks like, and then the refinance. Do you want to start with the triplex?

Tyler:
Sure. Yeah, the triplex is the one that we’ve already got through the refinance and we’re in the process on the quad. So yeah, we can start with that one.

Ashley:
Okay. Just go ahead. And you can tell us the numbers of that. Yeah. This is your show, Tyler. You take the lead.

Tyler:
Oh, okay. Well, I don’t know if I’ve shared with you guys yet, but I do consider myself the unofficial co, co-host of all things rookie. So I am pretty comfortable doing that. I appreciate, and just let me have that title by the way.

Ashley:
Assistant to the co-host.

Tyler:
Okay. Okay. I’ll take it. Yeah. So for the triplex, the purchase price, we ended up buying it for $397,000. It was listed at 425,000. So again, these were on the MLS in Denver, a very hot market. So for those of you that live in hot markets or say, you can’t find deals on the MLS, I will prove you wrong right now. So not only did we get it under contract on the MLS, we negotiated it down 27, $28,000. So that’s where we ended up coming in, and then on the rehab, we ended up putting about 75, $80,000 into of the rehab.

Tyler:
And that includes furnishing all three of the units because we turned them into mid-term rentals for traveling nurses. But we can get to the why of that in a little while. And then yeah. So full complete gut job, we renovated absolutely everything. Being a GC, that’s the way that I force all of my properties to be, is I want to do it right one time. Spend the money upfront and then minimize the ongoing capital expenditures that come out of nowhere or any of the maintenance, because I just want to do it once and not worry about it.

Ashley:
And I got to see these properties.

Tyler:
You did?

Ashley:
This triplex. Yeah. I got to see it during rehab.

Tyler:
You need to come back and see it when it’s finished.

Ashley:
I did, I didn’t see the furniture in it, but I saw… Well, it was almost finished I guess, but although the cabinets weren’t in, the flooring had just been put in, and they were painting when I was there. Yeah.

Tyler:
You both saw it when it was completely under construction?

Ashley:
Yeah.

Tony:
Right.

Ashley:
Okay. So you did the rehab. How much did the rehab cost for the building?

Tyler:
We’ll call it $80,000.

Ashley:
Okay. And then, so how long did that rehab take? The full year?

Tyler:
Forever. It took so long. That’s another one of those things back to that lesson learned is it took longer than I wish it would have because I self-performed so much of it, but I also know the ins and the outs of every single aspect of that. And I will not have any problems with anything for the foreseeable future. So yeah, we literally closed with five days to spare on our 12-month term on the hard money. So it was to the wire.

Ashley:
And then what did the refinance look like? So you had an appraisal done and what were you able to pull back out of the property?

Tyler:
So we went through the appraisal process and it came in lower than we were hoping, it came in at $580,000. And we were hoping for something with a six. So we actually ended up reaching out to quite a few of our people in our network, whether real estate agents, other appraisers, people that could just help us look at this and submit a rebuttal to the appraisal team and the lenders. So we did that process and we gave them a lot of valid points and chewed apart that appraisal and they ended up coming back at $625,000. So we got them to come up, was that $45,000? Which was awesome. So 625, bought it at 397. I think that’s a pretty okay swing.

Ashley:
So I saw your letter. Can you share a little bit on your email, what was in that for everybody? Because I think that is valuable information of what you exactly said to help get that increase.

Tyler:
Yeah. So we didn’t just tell the lender, “Hey, we’re frustrated. We think it’s worth more.” We needed to have facts to stand behind why we thought it was more valuable than what they’re appraising it. And honestly, appraisers are people and they make mistakes and appraisers aren’t on always perfect. And you know what they’d put in their report, isn’t always gospel. You do have the opportunity to fight that. So in our email, after reaching out to three different agents here in Denver, friends of mine, to look it over and give supporting feedback.

Tyler:
We ask them to put more weight into the income approach rather than the comp approach, because for a multi-family, a three-unit property, it’s three, one bed, one bath properties, not a lot of those flying off the market to use as comps. So putting all that weight into the comps, it’s really tricky to justify. And then he had some miscalculations on the income approach on the original one. So we just asked to adjust those and then he gave a lot of… A lot of the other comps, he was giving inconsistent value to certain things, but it wasn’t consistent across all of them.

Tyler:
So that combination of all those things, we said, “Hey, there’s this, this, this and this. And here’s our supporting data.” And then we also asked him to use two other comps that we found that he wasn’t entertaining. So none of it was a complaint or none of it was me being heated and trying to argue, it was just me stating the facts and saying, “Hey, I’d like you to reevaluate this. And I’d like you to think about these things while you do, because we just can’t justify the price that you kicked back.”

Ashley:
Okay. So Tyler, you get the new appraisal back. What does that look like? What did you able to pull back? Did you recoup all your money? Did you leave some money into the deal? And then let’s talk about these mid-term rentals and what these are.

Tyler:
Yes. So we ended up, like I said, it phrased at $625,000. So we could take out… We found a portfolio lender and a portfolio lender is one who doesn’t sell your mortgage to Fannie and Freddie. So they’re not bound by the same rules of going only to 70% LTV. So we went up to 75% LTV. We got a new mortgage of $468,000. And that was more than enough for me to pay back my hard money lender, my private money lender. And then we ultimately got a check for about $100,000 and we had 121 into it. So left about 20, $21,000 in the deal.

Ashley:
That is not a bad bur at all.

Tyler:
And when we get to the cash flow part, I’ll tell you right now it’s 156% cash on cash return where I’ll have that money recouped in less than nine months.

Ashley:
That is amazing. Congratulations, Tyler.

Tyler:
Thank you.

Ashley:
So go into a little detail about why you decided to do a mid-term rental and how that differs from short and long-term.

Tyler:
I fell into that where we initially intended to do long-term rentals out of these units. And we said, “Hey, this area is not highly improved yet. It’s one of the few areas in Denver and surrounding area that isn’t redone.” And we saw that as an opportunity. So we ran our numbers with long-term rental rates, market rent, that sort of thing. And then it became pretty apparent as we started uncovering more things that cost more money that we got to find a way to make more off of these properties because we’re just not going to cut it. It would’ve been a way worse bur had we just stuck with the long-term rentals.

Tyler:
And it just so happens. Someone that follows me on Instagram has a property three blocks from there. I’d post pictures. And they’re like, “I know exactly where that is.” And they reached out to me. It’s their primary house and they Airbnb the basement of it. And he is like, “Oh, have you thought about this, that and the other? I do short-term rentals on my basement.” And he was telling me what he was making off of that. And I was like, “No way. That can’t…” I was like, “That was too good to be true.” So I buried myself in the numbers and the analysis. Run the numbers for what I could get on a short-term rental. And I was like, “I’m going to be rich. I’m going to be like Tony.”

Tyler:
And then we come to find out the city of Aurora has regulations on that. So I was like, “I’m not going to be rich like Tony.” So we found out the regulations are similar to a lot of cities where you can’t short-term rent, anything for less than 30 days. So you can’t have any agreements less than 30 days. So I said, “Cool, 31-day minimum.” And then we’re like, “Who the hell wants a place for 31 days?” And we’re literally a stones throw away from a major hospital complex. It’s a campus with a medical school and three hospitals on it. So we were like, “Traveling nurses, that’s who.”

Tyler:
So we ran some numbers, did a lot more research and figured out that traveling nurses and mid-term rentals pay somewhere between market rent and short-term rents. But you’ve also got the… I like it. We do three-month minimums. That’s usually what the contract length for our traveling nurses. I like it because we only have to get a cleaner in there every three months. It’s not three times a month or five times a month or whatever. So it just happened to be something that was a great opportunity that we didn’t quite acknowledge right out of the gate. But I think we’ll start pursuing more properties around hospitals because my God, it is not a bad deal.

Tony:
Tyler. So what do you think the revenue and cash flow numbers actually end up being on this triplex now that you guys are doing the mid-term rentals?

Tyler:
So on this triplex, we’ve actually had them rented for the last three months and our monthly cash flow with our new mortgage is going to be around $2,500 a month.

Tony:
Wow.

Tyler:
Off of these three units.

Tony:
Wow.

Tyler:
So-

Ashley:
That’s not bad.

Tyler:
Yeah. Not bad.

Tony:
Dude. That’s amazing man. And kudos to you for having the creativity to think outside the box. And I think some people wouldn’t have even considered the mid-term rental. Oh, I’m sorry, doing anything other than long-term rental, but even once you hit that first roadblock of, “Hey, it’s got to be 30 days.” You have the creativity to say, “Okay, we won’t go short-term. We’ll go mid-term and find a way to make that work.” Now, are you just renting these out on Airbnb? Or are you using something like Furnished Finder? Are you going to the hospitals? How are you actually finding these nurses?

Tyler:
So we’ve got it posted on both. Initially, we thought Furnished Finder was going to be the one-stop shop for people. We’ve got it listed there and then we listed on Airbnb be as well. And for whatever reason, we listed at different pricing on both ones, which ultimately, people started booking on Airbnb. And the more we think about it, the more we want people to use Airbnb. Because there’s a lot more involvement with Airbnb.

Tyler:
Furnished Finder is just transactional. They link you two up together and then they step away from the equation. Where Airbnb, you get the insurance through them, you get the leases through them. You’ve got a rating system and that’s just all more important than, “We’re not struggling at all to find people.” There are so many people looking for this type of property where we haven’t had any issues with that. But I think Airbnb’s going to come out on top just for the sake of becoming a super host like you, Tony.

Tony:
Awesome, man.

Ashley:
Actually, I got my notification this morning that I got [crosstalk 00:32:55].

Tony:
Congratulations.

Tyler:
What are you going to do with that? Are you-

Ashley:
I’ve had it for-

Tyler:
Are you going to get trophies and wear medals?

Ashley:
I’ve had it for a while now, but like, “Oh, you know what? This is… I think the first time, because it’s been a little over a year maybe, but this is the first time I’ve gotten the $100 Airbnb credit.” If you’re still super host for a year, they give you $100 gift card or whatever for Airbnb. That was the first time I think I got that unless I missed it before and never actually read through stuff, so.

Tyler:
I’m looking forward to that.

Ashley:
Anyways, back to you, Tyler’s.

Tyler:
No, we can talk about you guys.

Ashley:
Okay. So that is an awesome deal on the triplex and we’re really excited for you.

Tyler:
Thank you.

Ashley:
You guys have to go to Tyler’s Instagram too, and check out the photos of the property because it turned out beautiful. But let’s talk about the next one. The quadplex because I haven’t seen that one in person yet.

Tyler:
You probably don’t need to, it’s more the same. Unless you want to. The quadplex was fully… How do I put this? It had tenants that were not the highest quality tenants. So we bought both properties and we inherited tenants on all of them, so the quadplex was a… We bought it from a nonprofit who had very little regulation on who they let stay there, so took us quite a while to even get in there to be able to do the repairs.

Tyler:
So we honestly held that one for months. We had to do an eviction, we lost out on a lot of money from the person that ended up getting evicted. It was just a very bad situation, and as you can imagine, these units were in pretty poor shape, they weren’t taken care of. So we got in there and we gutted three of the four units interestingly because one person was receiving state assistance.

Tyler:
And we contacted the state and said, “Hey, what are your rental rates for this type of property?”

Tyler:
And his unit had been remodeled maybe six, seven years ago, and I’ll use finger quotes remodeled. It was like landlord special or property manager, cosmetic, nothing super nice, not the way that I would like it remodeled. But we reached out and one, the state thought that he was in a one bed, one bath, so they were giving him like, I don’t know, $850, $900 stipend, and we told them, “No, it’s a two bed, one bath.” And they said, “Oh, okay.”

Tyler:
And just a few months prior, they had increased the allowance worth of what they were paying people. So we got them to come up from 850 or 900 to $1,450 for his unit. So, we kept him in there, we didn’t remodel his unit, and it offset the cost… Well, subsidized some of the cost of the hard money throughout the process.

Ashley:
That right there is a great tip to check. If you’re inheriting tenants and they are receiving some kind of funding, is look into that and see if they are receiving the correct funding or maybe they are eligible for more based on the type of housing that you’re actually providing.

Tyler:
And I think that that’s something… Well, more times than not, it should increase with appreciation where if you’ve got a state subsidizing someone’s rental income, they’re not going to expect that they can always get a place for five years ago pricing. So it should increase year-over-year. Even if you’ve got state-assisted tenants, ask every single year, reach out to that organization and say, hey, did you increase your allowance?

Tyler:
And they have no problem writing checks, they have no problem giving you the maximum. With my experience, that is the most on-time payment I’ve ever received. It comes two days early every time. But I think that’s super important for people that are afraid of either Section 8 or state-assisted tenants, any of that sort of stuff. It can be the easiest tenant that you have quite frankly.

Ashley:
I just got a email the other day that the housing organization in Buffalo is opening up their list for housing vouchers for the first time in three years.

Tyler:
Oh wow.

Ashley:
Just crazy. Okay. So you kept this guy, what happened to the other units?

Tyler:
The other three, we went in and did our standard package where we dig deep and we fix everything. Instead of putting lipstick on it, we get down into it and we remodeled all three units, not down to the studs because it was plaster and I’m not taking plaster off, but essentially re-textured, fixed all the cracks of every square inch of the interiors of all three of these new floors, new kitchens, new bathrooms, you name it, everything visual.

Tyler:
We poured a bunch of money into that. We’re in the process of refinancing that one right now and our feet are against the coals right now because we’ve got until the 1st of May to get that refinance done. We still only have one tenant and I have painters there tomorrow painting the interior and then we have to do backsplash in the bathrooms, or in the kitchens. But those two things and then it’ll be done, ready to rent. But yeah, full remodel there.

Tony:
Tyler, what happens if you aren’t able to complete the refinance by that initial deadline?

Tyler:
I’ll say the soft deadline is May 1st. That’s when our 12-month… That’s when it matures, on the 12 month. We’ve spoken to our hard money lender, and we use the same hard money lender for both projects, so it’s not like we found a different one. We spoke to him, we asked him the same question, we said, “What happens if we have to extend? What if it’s a couple of days? What if it’s…” Because you can extend, but I think you have to pay 1% of the loan to extend up to six months I think, something like that.

Tyler:
And I was like, “Well, if I only need six days, I don’t want to pay 1% of the loan. That is a hefty amount.” So they told us that the hard deadline is actually the 15th and they were like, “We’ll have a lot of questions for you between the 1st and the 15th. But if you get it paid and processed or refinanced, finalized and closed before the 15th,” He’s like, “You’ll be fine. You won’t have to pay that.” So we’ve got a 15-day grace period, but after that, that’s where the 1% fee to extend comes in.

Tony:
And in terms of the refinance, are you going with the same portfolio lender that you use on the triplex or is it another lender that you guys have?

Tyler:
Yes. We ultimately would’ve loved to shop around a little more, but the fact that the person that closed on the most recent refinance already has all of our underwriting, and we’re trying to expedite this in less than 30 days. We just chose to say, “Hey, I really don’t care that I’m getting the absolute best rate. I really don’t care that we’re finding something that’s going to be best possible.” It’s really good still. But we went with… We know that they’re going to close, and what’s the fastest way to do it, is use someone who’s already got all your info.

Tony:
Totally.

Ashley:
And convenient that you don’t have to resubmit all your information and go through it again with somebody else.

Tyler:
It’s just a matter of updating bank statements for the most prior month. And it’s not everything from the ground up as anyone knows, any closing or refinance or anything like that, underwriting is just such a nightmare where you have to give them every piece of documentation you can come up with, and then explanations for all of that.

Tony:
Where did this $2 and 70 cents deposit come from back on April 23rd, 2018?

Ashley:
We need your mothers’ bank statement.

Tony:
You met a guy named Tim in Chicago… And All kinds of crazy stuff.

Tyler:
We went for the path of least resistance on the refi on this one.

Tony:
Well, Tyler, you’ve absolutely crushed it, man, in last year. I think Ash and I are both super excited to see the growth you’ve had, man. And-

Tyler:
Thank you.

Tony:
Last question before we go into our rookie exam, what’s… Nevermind. That’s in the rookie exam, so we’ll get there. Nevermind. I’ll hold off on that. So we’ve got a new segment, this wasn’t here last time you were on the show, but this is called the rookie exam where we ask the most difficult, most penetrating question you’ve ever been asked in your life, Tyler. Are you ready for this?

Ashley:
No calculators allowed. You have to do the math in your head. Okay?

Tyler:
Okay.

Tony:
All right. So question number one is, what is one actionable thing a rookie should do after listening to this episode?

Tyler:
Oh my God. Hands down, network. I think that is the most important thing that you can do as a rookie. That’s the most important thing that you could do as a intermediate or a pro or at any level. And actually, I’m glad this was the question, because when you said, “Hey, it’s really cool to see you. You’ve exploded over the last year.” And the only reason that I feel like I have is because I’ve put myself around people like you guys.

Tyler:
And you guys are doing the same thing, you’re putting yourselves around people that are bigger and better than you, that inspire and motivate you. And you don’t gain that when you’re a solo operator, you don’t gain that when it’s you against the world. So, the sooner you realize that everyone in this community wants you to win and wants to help you win, the more of those people you put around you, the better off you’re going to be, whether you have zero deals or 1000 deals, it doesn’t matter. Put people around you that are doing what you want to do.

Ashley:
And Tyler is a expert networker because he not only networks with people, but he forces you to be his friend.

Tyler:
That’s right.

Ashley:
But really, Tyler, you make genuine connections with people. You find things that they’re interested in and you make connections outside of just real estate too, so I’ve always admired that about you, you do a great job with that.

Tyler:
Thank you. I’m very passionate about the way you network. And it’s actually something that I’ll be speaking about at the Rookie Bootcamp Weekend coming up here at the end of the month. But networking for the sake of figuring out what’s in it for you or having an ulterior motive and not being genuine or not bringing anything to the table, I think there’s a lot of wrong ways to do it.

Tyler:
And I’ve always been a people person where I care about the connection that I make more than what comes from it where I do want to have authentic relationships and friendships, not just for the sake of, oh, I need to call them and ask for a favor. I was nice to them so they’ll do it for me. I really don’t care about that part. So I think the authenticity comes through and that’s what gets you to the next level.

Tyler:
And it’s funny, Ashley, I remember you explained the way that I friendship or the way that I network and gain friendships is, I think you said I weaseled my way in to friendships, but I think when it’s genuine and authentic, if you can’t help, but want to be friends with me, it means I’m doing my job.

Ashley:
You know what, Tyler, sometimes I hesitate and I praise you because I’ll explain like you’re really good at finding what other people like and connecting with them on that level. And I think back on that and like, we connected over turning our Zoom calls into a happy hour. So it’s like, am I saying that he thinks that I like drinking. So that was the connection he made with me.

Tyler:
Hey, those are your words, not mine.

Ashley:
Okay. So the next question is, one tool, software, app, or system in your business that you can’t live without.

Tyler:
Ooh, that one is tricky because I am historically not good at adopting things to make my life easier. I will say I am trying to change that and trying to systemize my business. The software that I use probably won’t… I’ll leave that out because it’s more of a general contracting software than something other real estate agents could take on. But I will say a task manager. Pick your poison and choose whichever one works for you. I know that there’s Asana and Monday and all sorts of those different ones.

Tyler:
I’ve got one that’s specifically catered to general contracting and construction and that sort of stuff, probably not for real estate investors. But I do feel like that software is something that you should look at sooner than later so that you can help it or have it help your business as you’re growing it rather than getting behind the times like I did and then it’s really hard to force all sorts… Years and years of doing things pen and paper or spreadsheet-wise, it’s hard to force that into a software when you’ve gone too far.

Ashley:
You also have your iPad too and your Apple Pencil you take everywhere too.

Tyler:
I do. It’s just because I like to doodle.

Ashley:
You adopted to technology that way.

Tyler:
Yeah. I definitely feel like technology is crucial and I still like writing things by hand. Honestly, you can look at… Like you said, I take my Apple Pencil and my iPad, even though it’s a computer, I still write by hand on it. It’s just something that makes things stick in my brain a little bit more. Even if you’re archaic, you could still get with the times and use some technology.

Tony:
All right. Question number three for you, Tyler. Where do you plan on being in your business five years from now?

Tyler:
Five years from now, my business, I am expecting that it has multiple facets. I’m not sure if we spoke previously about my business, the name or the concept, and I’ll share it now. The business name is Laurelless. And if you’re familiar with the term resting on your laurels, I don’t have laurels. Good enough is never good enough, and that’s a concept that I live by. Those are universal truths about everything that I do, no matter if it’s work-related, real estate-related or whatever.

Tyler:
How you do anything is how you do everything. And that is the whole entire premise behind my business. My business also is a very universal word that isn’t just Laurelless construction, Laurelless remodels, Laurelless XYZ, it can be anything. I want to expand my business into much more than just residential remodels, I want to expand it into, we mentioned earlier, multifamily commercial investing.

Tyler:
I want to have a portfolio under the business, potentially property management, development, ground up builds, custom builds, commercial work, pretty much any aspect of real estate investing and/or construction where those two merge. And then, honestly, you can dive into anything you want, whether it’s events, whether it’s coaching, you heard it here first, whatever it is. I just feel like that concept really, really exhibits what I stand for, the Laurelless name, and I’d like to put that in front of everything that I pursue.

Ashley:
Tyler, that’s great. And we know that you’re going to accomplish all of this, look at what you’ve done in a year.

Tony:
I would love to see the Laurelless name put on a brand or a line of mustache care. I think you could really find some headway there. And that’s from our producer, Eric, he threw that out there.

Tyler:
There’s opportunity there. I feel like there’s a hole in the marketplace-

Tony:
There definitely is.

Tyler:
… for bespoke mustache care. It’s all about beard care, everyone’s all about beards.

Ashley:
How are you going to spell that? It’s going to say Laurelless and there’ll be mustache Kehr, K-E-H-R.

Tony:
There you go.

Ashley:
Or that would be the [crosstalk 00:48:10].

Tyler:
I don’t know. If you bring enough to the table because you damn sure aren’t bringing a mustache out to the table.

Ashley:
Okay. Let’s move on to this week’s rookie rockstar, we have Jay Gross. He just closed on his best deal yet, a six-unit complex, each three bedrooms. Purchase price was $5,518, estimated rehab, 80,000. So he has about 8,500 into it and the ARV, $250,000. That is awesome. He has a cash on cash return of 55%. Congratulations, Jay.

Tony:
Sorry. Can we just comment on why that’s a crazy purchase price, $5,518. I was like, “How many units could you get over to you if you bought a bunch of those?” That’s wild.

Ashley:
Yeah.

Tyler:
That’s insane.

Ashley:
And with only an $80,000 rehab.

Tony:
Right, you know?

Ashley:
To go along with it.

Tony:
$5,000 in California might be able to buy, I don’t know, a closet, lumber.

Ashley:
The cheapest house I bought was 17,500, a duplex.

Tony:
Wow.

Tyler:
And it was a duplex.

Tony:
It was a duplex.

Tyler:
That blows you away.

Ashley:
I have to put like maybe 10,000 I think into it over the years, but the cash flow covered that 10,000. So really, I didn’t put any of my own money into it. Then I sold it three years later for 60,000.

Tony:
There you go.

Ashley:
That was a good deal too.

Tony:
That’s a good deal. It’s a good deal.

Tyler:
Not a bad turnaround. You guys got to invest in New York. Little town areas. Well, Tyler, thank you so much for joining us again. And we’re going to have to have you back again next year. We’ll make this like a yearly thing.

Tyler:
I can’t wait. I appreciate you guys so much. This platform is something that I am so passionate about representing and giving praise and kudos for all that you guys do for the rookie community. And I think there’s no two ways about you guys being super instrumental in my growth. So thank you for giving me a platform and allowing me to gain confidence and share my story.

Ashley:
You can pay us later. Tyler, why don’t you let everyone know where they can find out some more information and reach out to you?

Tyler:
The best way to find me is going to be on Instagram, that’s where I’m the most active. It is @tylermadden, just like it sounds. And my business is linked there as well if you want to see some of the shenanigans that we get into there. But I’m more active on the personal page. I’m still trying to bring back my MySpace page, so if there’s anyone out there that has access to that, I think there’s going to be a comeback coming.

Ashley:
I look forward to Googling that after this episode. Also, Tyler has a special announcement, he wasn’t kidding when he was going to make co-host. Tyler, would you like to go ahead and break the news?

Tyler:
Yeah, I would love to share that I will be the official co-host for the Rookie Bootcamps with Ashley. I am pleased and honored to be a part of that and share my experience with rookies out there that are trying to either get started or just oil their tracks and make it easier moving ahead if you’re already started. So, very happy to be part of the team. The unofficial, but now official co-host.

Ashley:
Tyler was a TA for a couple of the bootcamps, and now he’s been promoted to co, co-host. And he’s going to be helping me out on the bootcamp, so the next round of bootcamp starts the end of May. So I hope you guys can join us. You can go to biggerpockets.com/bootcamps to find out some more information. I’m Ashley @wealthfromrentals, and he’s Tony @tonyjrobinson on Instagram. And we will be back on Saturday with a Rookie Reply, but first, let’s find out what’s happening at biggerpockets.com.