House Hacking Blunder to $2.7 Million in Small Multifamily

Ashley :
This is Real Estate Rookie episode 403. House hacks are a great way to share your space and to cut living expenses, but can also be a recipe for disaster when your dinner plans don’t go the way you want it and affect your tenants. My name is Ashley Care, and welcome to the Real Estate Rookie Podcast, where three times a week we give you the motivation, inspiration, and stories you need to hear. To get started in real estate investing today we have Sean Reel. Sean and his wife Perry have grown a portfolio of five small multi-family units to 2.7 million in assets across two states, including Utah and Kentucky by creatively finding ways to use their properties. He did experience some strain on his first house hack deal, and we will hear how that turned out for him as a first time landlord. Before we get into today’s show, if you want to be on this episode and tell me your horror story, go to biggerpockets.com/reply. Sean, welcome to the show. Thank you so much for joining us today.

Sean:
Thanks, Ashley. Great to be here.

Ashley :
Yeah, so kind of tell us a little bit about this first property. You moved to a new city, and kind of give us a little backstory of where you were in your life at that time.

Sean:
Sure. So I was a civil engineer at the time and I was living in New Jersey. I moved to Salt Lake City around March 1st, 2020, and we were in the office for two weeks and then everybody went home to work remotely because Covid started, and in the beginning I realized that my 40 hour per week job I could essentially do in 20 hours per week. So I was like, what do I do with all this time? And I started playing video games. I was playing Call of Duty, Counterstrike, shooting games, and then I looked in the mirror after a month. I was like, what am I doing? I’m just wasting my time playing video games. So I started realizing that I had money for the first time in my life. I was a pretty new employee, and I decided to research investing. And after going through a few podcasts, I actually found the BiggerPockets Real Estate podcasts. Started listening to Brandon and David just started going to the basketball hoop shooting, listening to two hours of podcasts, and then I heard about the 90 Day Challenge, started that and found an agent and essentially bought a house as the short story in Salt Lake City.

Ashley :
So how long after this move did you buy this property?

Sean:
So I moved in March and I closed on June 18th, 2020.

Ashley :
So pretty much within that 90 day timeframe.

Sean:
90 days, yeah.

Ashley :
Yeah. Okay. So what goes on in this horror story so far? It seems like you’re doing pretty good. You’ve moved to a new city, you’ve given up some of your video game time, you’ve done your research, you don’t have analysis paralysis. You took action on your first property, and so tell us a little bit about that property.

Sean:
Sure. So it was a triplex. It is a triplex still in Sugar House, which is a little bit south of downtown in Salt Lake City. I remember I wasn’t sure where to buy. I was looking all over the Salt Lake Valley, it’s relatively large, and found this triplex that clearly had below market rents and clearly needed some work. I had no experience at this time either. I just decided I was going to do it learn along the way. So I bought it with a conventional investment loan through a local lender. I couldn’t afford it myself, so I had to pull in a partner who was my cousin who was interested in real estate investing. So I was unable to purchase it myself and had to pull in funds that way. And there was a tenant living in the upstairs unit who I had to kick out essentially because it was a primary residence loan as well, which allowed me to get a better rate. And so I started house hacking in this triplex right from the beginning. They allowed me to, I essentially was paying about five, 600 bucks a month just to live there because the other people were paying for my mortgage as well.

Ashley :
What would you have paid if you were renting that unit yourself and you were a tenant there? What would you have paid in rent to live there and now you’re only paying 500 bucks a month?

Sean:
Sure. It would’ve been about a thousand to 1100.

Ashley :
So quite a great savings there, about 600 bucks and your cost of living expenses you’re able to save. Now, before we get into the horror story part, and maybe this actually has something to do with it, describe how you got your cousin to partner with you and how you were able to structure that deal.

Sean:
Sure. So I essentially reached out to him. I said, Hey, I’m looking to invest in real estate. He knew me growing up, so he trusted me. He knew I was an engineer, I knew how to run numbers. So I essentially presented him with the deal. He said, sure, let’s do it. It wasn’t actually that difficult. I had a pretty good relationship already. Relationships are very important in this industry, and I felt a little guilty at first because he was family. I was like, what if I fail? But I knew he was in it for me. He trusted me. And so it ended up working out for us in the long term because I was willing to kind of put in the work as well. It was a bit of luck. The market went up, but other than that, yeah, he provided 60 grand towards the down payment. I put in 40 grand that I had saved up, and we actually structured it to be he paid, it was a $450,000 property and we did 60 divided by four 50 was his percentage of the property, which is not actually fair, I don’t think anymore. So we have since restructured it to be a 50 50 ownership. So that’s how I pulled him in. He didn’t know much about it at all, which is why he was willing to accept that sort of ownership expense. It was about 15% him, 85% me.

Ashley :
And that’s the thing with is it doesn’t actually have to be fair, especially when you’re first getting started and it’s your first deal, there’s definitely a benefit. I did the same exact thing. My first deal I gave, the other person had it way better off than I did, but I wanted that experience. I wouldn’t have taken action without having the partner because I didn’t have the money. And then you can always restructure too down the road, or you can create a new LLC that has a different structure. As long as your operating agreement doesn’t state you’re set in it, you can renegotiate your operating agreement to change that. So that’s the wonderful thing about partnerships is that you don’t have to be locked in forever being in that same percentage. If you both agree, you can go ahead and change it.

Sean:
I was just going to say that’s why the relationship’s good, because we have that honest dialogue between each other, and I was willing to realize, okay, this was very unfair for him at first. He gave a lot more than he got back. So we restructured that after about two years.

Ashley :
So you have the property, you moved in, the person in one unit moved out, and where does the story go from here?

Sean:
Sure. So I moved in about August. I moved in with my parents for two months, gave her some time to move out. She did. I moved in and my now wife moved in with me at the time, and we started renovating the property together and cutting down some things that didn’t need to be there, retiling, some backsplash. And then at one point, this was about November, been there for about that five months now, and I had never had a sewage system before. I grew up with a septic tank kind of in rural New Jersey, and my dad always yelled at us whenever he put anything down the sink, even the smallest little speck of food. He’s like, put it in the trash. We have a septic system. It’s going to destroy it. So for the first time in my life, I had a garbage disposal and I was just going crazy, putting full oranges down there, full lemons, you name it. Just turning it on.

Ashley :
This is so relatable to my life too. My dad was exactly the same, and we never had a garbage disposal ever either. Yeah,

Sean:
It’s just so satisfying what you just hear, it churn, it all disappears. You don’t never have to worry about it. So one night I was making pasta and I didn’t actually have a colander. It was a pot with a strainer on it, and as I was straining the water out, it fell out and all the pasta spaghetti fell down the drain, and I was like, all right, whatever. This is what the disposal’s for. So I turned it on. It started going down, and then it all stopped and it filled up with water, and I was like, I thought it was supposed to go down. I was supposed to turn it up. And then over the next 24 hours, pretty much there were like eight series of all the water, slowly draining. I would try running water, forcing it through again, it would fill up eight separate times. I put dawn down there with boiling water. I tried everything, YouTubed, everything. And eventually after that eighth time, I think I put a lot of dawn down there and I turned it on and it all went down and I was so happy. I was like, oh, we just worked our way through it. I started dancing in my kitchen immediately. I remember so happy. And my phone starts ringing and my tenant downstairs is calling me instantly, and I’m like, what the heck? So I picked up my phone and she’s like, our ceiling is gushing water.

Ashley :
Oh my God. Maybe your first thought is like, oh, I’m too loud. They’re hearing me dancing, but oh my gosh, gushing water. What is your initial reaction with that as to you’re in this moment, talk about an emotional roller coaster. You’re in this moment of happiness, you think the problem is solved and now you have an even worse problem on your hands.

Sean:
Yeah, this was the first big problem that happened too, that I’ve ever experienced. A ceiling just ripped apart over their bathroom, which they use multiple times a day. So yeah, I ran down. I just saw a gaping hole in the ceiling. They were looking at me, what the heck are we supposed to do? We live here. So I had an industrialized mop. I just started mopping, sweeping. I had no idea what to do. Again, I have no experience this time. I don’t know. They’re asking me questions. I have no answers. How much is this going to cost? How do we fix this? I don’t know. So I just started cleaning up, starting to dry it. I remember I put a space heater up in the ceiling. There was a huge hole, and they’re like, is that going to start a fire? I was like, I don’t think so, but I don’t know. So

Ashley :
Let me ask, when you’re all this water is gushing down, is any of the food that you put into the garbage disposal coming out of it too? Is that the cause of it?

Sean:
All of it.

Ashley :
So just noodles,

Sean:
Noodles, whatever else was in there before. Who knows?

Ashley :
Oh my gosh.

Sean:
What happened was the old people had a PVC pipe going into a stainless steel supply line that went then into an a BS pipe, and that stainless steel pipe must have been there. The house was built in 1911, and it must have been there from the original construction, and one of the joints just exploded. There was a huge hole in the stainless steel that it took pictures of.

Ashley :
Wow. Okay. So you’re trying to mop it up, not really sure what to do. You can’t answer any questions. Where do you go from here? Who is your first phone call? Who are you trying to contact? Where you going from there?

Sean:
I had a handyman, luckily, who was referenced on the inspection report that I got. So I called him up. I had used him previously for I think one thing, and I called him. I was like, have you ever experienced this before? He’s like, yeah, we do this all the time. This is like my life. So that at least appeased sort of some worries. Initially, I also called the insurance company. I had no idea how much this was going to cost. I ended up calling insurance. They came out to get a quote, and at about the same time, the tenants turned to me and said, Hey, I think we want to move out and end our lease early.

Ashley :
So you have a lot going on right now. You have your tenants ready to leave now you’re going to have a vacancy. You don’t know how much you’re going to have to spend to repair this. So we’re going to take a short break and when we come back, I want to find out as to how much the damage actually was, what happened with your tenants, but most importantly is if this happens to someone else, how a listener can learn to deal with this and how to handle it appropriately. So we’re going to go over that and the outcome of this property when we come right back from this break. Thank you guys so much for joining us back again here with Sean, talking about his property. But before we get back to the outcome of what happened during this horror story, I just want to thank you guys so much for taking the time to check out our show sponsors. It really means a lot to us, just like the rookie community, the show sponsors help make this show possible. Sean, tell us how did you end up finding out how much it was cost? You left us with, you called the insurance company. Your tenants are saying they’re moving out. Where does it go from here?

Sean:
So the insurance guy came, I think it was next day. They were pretty good about that, and he looked at the damage and he’s like, honestly, I think you should just try and fix this yourself. You could file a claim. It’s going to be a lot of paperwork, but I don’t think it’s going to be that bad. I was like, what? Really? I had no frame of reference to even work with. And then, yeah, so about two or three hours after the hole in the ceiling appeared, the tenants came to me and they said, yeah, we want to terminate our lease early. We don’t feel safe here. There might be asbestos in there, and I have some lung problems. And I was like, you know what? Okay, fine, go for it. We had planned to renovate the unit at some point in the future. We just didn’t know when. So if they were going to give us a four month headstart, we said, sure, let’s go do it. So instead of getting insurance, I had the handyman come up. He looked at it and he’s like, I think I could do that for about four or 500 bucks. And I was like, okay, I can handle that.

Ashley :
What was your deductible on your insurance policy? Do you know where you would’ve had to pay that anyways, upfront?

Sean:
I think it would’ve been at least a thousand.

Ashley :
Yeah, so either way, you would’ve been paying it if you ran it through the insurance, so it didn’t really matter at that point. Yeah,

Sean:
Exactly. And the insurance guy was honest with me, and I appreciate that

Ashley :
Instead of having to go through the headache of doing all the paperwork just to be told that it’s your deductible anyways. And having that claim too on your policy.

Sean:
Yeah, on the record for sure.

Ashley :
Okay. So with your tenants, I’m curious as to did they just start packing their on there or did they actually take some time and find another place and then move

Sean:
Out? They were gone in about a week. I think they had really wanted to leave before then anyway, so it kind of worked out for them. And the good thing is we knew we wanted to renovate it. My wife and I, and we were going to put it off later, but we just took this as an opportunity to say, Hey, let’s do this now. Let’s start scraping the paint off the wood floors and bring that beautiful wood out. Let’s start renovating the kitchen. And we started demoing the bathroom instantly. So we actually, we didn’t fix the hole in the ceiling for about two months because we were renovating the bathroom and we weren’t sure exactly, we needed some sheet rock to put up there, and it was a whole process. So we used this kind of as a catalyst to start our renovation down there. What

Ashley :
About the emotional factor in this? Did this kind of scare you at all into continuing your real estate investing journey? Like, man, I lived right here. I was upstairs. I was able to run downstairs and at least assess the situation, but if you buy another property, you’re not right there. Did you have any of these kind of fears going on? And what about Perry too? What was she thinking in this moment, your wife?

Sean:
Well, absolutely, that was probably the lowest point of my investing career, honestly, not just the financial portion of it, but also realizing that I had these two people’s livelihoods and living experience that I was responsible for, and I just put a hole in their ceiling. So I felt terrible about that. Honestly, the second they called me and I ran down there, just all this weight just dropped on me and I could feel that, and that was a heavy, that is something that as a real estate investor, you do have to deal with and learn how to cope with and figure out ways to these things are going to happen. I found out. And you need to figure out how to, I guess, emotionally handle yourself while you’re emotionally dealing with other people because people have emotions and they’re real and they’re going to get mad at you.

Sean:
And they were definitely mad at me for putting spaghetti through their ceiling, and I had to figure out how to deal with that and then move on from that. And it was shifting from that. You have to go through that emotional reaction initially. That’s just how we are as humans. And then you take a step back and you separate yourself from the situation and you say, okay, there’s a hole in the ceiling. I need to fix that. There’s tenants that need to move out. I need to renovate or get it rented out. And you just start looking at it objectively. And once you can sort of identify that problem, the problems that exist and the solutions for them, all of that fear starts to subside because your ignorance goes away about the whole how you’re going to get out of the situation. And that exact thing happened during this scenario. It was just all immediately, oh my goodness, these poor people, my poor house, my poor future, what am I going to do? And then it all works itself out. Honestly. That’s the mentality you have to stick with when these things happen because they’re not avoidable. They are going to happen and you’re going to be responsible for them. So you have to figure out how to adjust your emotions to get through them.

Ashley :
That was great, Sean, right there. And I 100% agree of being able to control your own emotions and how you to the situation and how it affects you and understanding how it’s affecting people that are living there that is their home, and having that responsibility, that weight on your shoulders because there is that gray area of like, well, if they lived in their own home, they wouldn’t have it fixed immediately either. But there’s just that fine line of they’re living in a property where they’re paying to have somebody else take care of those problems, and that’s part of the reason that they’re living there so they don’t have to take care of those things. And creating that urgency of wanting to get repairs done timely and making sure it’s a great living experience, but also the cost of it coming up as to how much can you handle because you were planning four months later to actually do the rehab. So that kind of puts a constraint on your budget as to was that a problem for you or is something difficult to overcome? As far as we weren’t planning to spend the money for the rehab for another four months and now we have to cough up that money right now.

Sean:
It ended up not being a problem. I had a decent job, a pretty good paying salary at an engineering firm, so I had enough money. I probably didn’t have as much as I wanted to, but the money came in a weird way, whether I had to put in more labor, I hired some people for some things then okay, I didn’t have enough money for it, so I had to do it. And that was the nature of this entire property is like, I want to pay people as much as I can so I can save my time, but I’m also just starting out. So I knew I had to put in that sweat equity to get it to the point that I wanted to. So it was that balance throughout that entire renovation when it was so technical in the bathroom, I had to have somebody do the plumbing for the bathroom. I didn’t know or waterproof the shower, I didn’t feel comfortable doing that, but scraping the wood floor, it was just labor. I could do that.

Ashley :
How much time did you have into this rehab, and then how much did you end up paying out for the rehab?

Sean:
So the time into it, it took me about three months of actually renovating. How much did I have to pay out? Probably about five grand of it in total. I paid a handyman, just he would come maybe Tuesday, I’d pay him for his hours. He would come Thursday, I’d pay him for his hours. And I had that relationship with him. He was fitting me in between the jobs that other jobs he had. So I did really make it work, and that allowed me to budget it appropriately too. I was able to just take it over time instead of having just a big contract upfront. I didn’t know exactly what we wanted to do and what needed to get done. So that helped at least do it sequentially.

Ashley :
And then during that timeframe, you obviously had to pay more for your mortgage, or was there still another tenant in place in the third unit that was helping covering your mortgage?

Sean:
I did have to cover that. Yeah, so that was a hit for sure. But the good news is the coming full circle, we were renting it for about, it was $900 before they moved out, and when we finished the renovation, my wife and I, it became a $1,400 rental unit.

Ashley :
Wow, $500.

Sean:
Yeah, the price of the damage to the ceiling, essentially. So I’d like to pull that. That comes full circle at the end. Yeah,

Ashley :
We have one month’s new rent could cover the cost of the increase. Okay. So what happens next? You overcome this obstacle of the noodles coming out of the ceiling and you’re finishing up the remodel in this triplex. Do you have it refinanced at all or do you just keep your current loan on it?

Sean:
I didn’t refinance yet. I ended up refinancing later that year. We finished about February of 21, and my wife and I refinanced in November of 21. When we were able to pull, the market went crazy over that time, as everyone’s familiar with, we were able to pull a lot of money out and figured we want to invest it more and more properties. At that time, we started figuring out what do we want to do with this? Do we want to stay in Salt Lake? Salt Lake’s very saturated and the prices are really high. So I started listening a lot more to the Real estate podcast and I heard David Green talk about Louisville, Kentucky once, and my wife at the same time was making a list of low price, high rent properties, areas around the country, and Louisville was on her list as well. So things started to line up with that. And so we started researching Louisville properties and she bought a property in Louisville that we split equity on, and we ended up moving there and started renovating the triplex that we had just bought there.

Ashley :
So did you buy two properties there or the triplex was the one that you bought first?

Sean:
We bought a triplex and then we ended up buying two more before we left, three months later. So in the course of three months, we essentially bought three properties.

Ashley :
So on this triplex, before we move forward, I want to know what did it actually appraise for when you were done and did you keep all of the units as long-term rentals or what was your strategy on them?

Sean:
Sure. So when we refinanced and refinanced for six 70, we had bought it for four 50 a year and a half earlier. So we were able to pull out about $120,000 from that refinance, which literally changed my life. If you think about it. That was the first time I’d ever seen six digits in a row in my name. So that amount of money will change your life. And so at about that time, we were deciding what to do next with our real estate endeavors. That’s kind of why we ended up getting the refinance too. We knew we were going to get some more cash, and so we were researching new markets to go to because Salt Lake was a bit saturated and the prices were high. So at about the same time we were doing this knowing we were going to move out of Salt Lake, we also were beginning to investigate Airbnbs and the potential income increase that you could get.

Sean:
And we were researching Salt Lake and it actually fit all the boxes. It was a tourist destination. They had skiing in the winter, amazing hiking in the summer, and festivals all throughout the spring and fall and things that would draw people there. We were near downtown. We were near the University of Utah near Westminster College and Sugar House fitting all the boxes. So we said, let’s try it. So my wife got me short-term rental, long-term Wealth by Avery. Carl and I read that and it was all clicking. It made sense. So we ended up hiring a management company knowing that we were about to move to Kentucky. I haven’t really gotten to that yet. We’re going to buy an investment in Kentucky and rent out the unit that we were living in as an Airbnb as sort of a trial run. The other two units in the property remained as long-term, and we tried this top unit out as a Airbnb to see if it worked. We wanted to keep the reserves coming in from the guaranteed.

Ashley :
So when you moved, were you managing these yourselves or did you hire property management?

Sean:
I knew the tenants well enough in the long terms to keep them as my own management, but we didn’t know what was going on with Airbnb. So we hired a manager to set up the listing, get the photographers, communicate with guests, automate the check-in instructions, things like that that we didn’t know at all. Avery warned me not to do that in the book, and I should have listened to her at first. It was kind of good to see what they were doing while we were at Kentucky and see what they were doing wrong, essentially, which was a lot of things, which I can get into. But after about four months of using that management company and just finally deciding to listen to Avery, we fired them and just took over management. And once we did that, life got so much easier because we had a sort of standard of care that we were willing to give to these people, and they were not giving that to them.

Sean:
They were worried about all their other properties as well, which happens with management companies for Airbnbs, which is part of the game, I guess you just have to, you’re one of their people. But once we were able to take it over, Airbnb automates all the instructions. They make it very easy, and every now and then we have to respond to something through the app. But we’ve been doing this for two years now, and it’s been rather easy. Sometimes we don’t even know when somebody’s going in and out of the house, we completely forget, and it’s purely passive income in that regard.

Ashley :
If anyone wants to check out Avery’s book, you can go to the biggerpockets.com and check out the bookstore and her book is available there. Okay, Sean, we’re going to take a short break. When come back, I want to talk about some of the markets. So you had mentioned that you found a market from David Green and also your wife and compared, and they matched and you analyzed it and it turned out to be a great market. So I want to give other people the opportunity to find out about some markets that might fit their buying criteria. So we’re going to get into that when we come right back from the short break. Okay. We’re back from our short break. Thank you so much for sticking with us and checking out our show sponsors. We’re here with Sean, and we’re going to be going into how he found his market and giving us some insight in case this market would fit you and buying criteria. So Sean, you mentioned you had heard David Green talk about this market. Your wife had this on a list of different markets she was interested in investing in. So tell us more. What did you find out when you started analyzing?

Sean:
Sure. So we found out that a lot of the properties in this Louisville market were all meeting the 1% rule just on Zillow pretty much. So that was the first criteria that we were looking for, for everything. So if everything was meeting it, then we knew we could find a way to make it work. We had just refinanced our property in Salt Lake City, so now we had all this cash and with the rates where they were about 3.5% and time on our side as mid 20 year olds, we just decided to go for it and know that we would figure it out along the way.

Ashley :
Yeah. One quick, can you just describe what the 1% rule is for anyone that doesn’t know?

Sean:
Yeah. Oh, the 1% rule is if you look at a property’s price, if it’s $300,000 and on a monthly basis it pulls in $3,000 per month, that is a property that meets the 1% rule. It’s sort of just a first filter that investors use to filter out properties that they want to buy. So if it were at 2,500 instead of 3000, it would not meet the 1% rule.

Ashley :
So with this market, you’ve found this out, are there any other criteria that you’re using to analyze the market? Besides the 1% rule,

Sean:
We looked a little bit at population percentage increases, and it was sort of towards the high end. I forget exactly what we were looking at at the time, to be honest, after we saw the 1% rule and we knew that we had to make, we didn’t know how long the rates were going to be the way they were. And as you could tell from the Salt Lake one, I don’t really have that much analysis paralysis. I kind of just go for it. And that was the mentality with this as well. My wife was into it. She was so on board with this real estate stuff once she saw that big check, but not to say that that’s all that’s there, but once we saw how it was working for us, we decided to just go for it and no, we were going to figure it out along the way. So in all honesty, the answer is no. We just looked at the rent that it was pulling in with the property price and knew we could afford it.

Ashley :
And you mentioned you bought what, three properties at once there or within one year. So how were you able to fund those properties?

Sean:
Sure. So every single property that we own is some sort of creative ownership situation. We don’t own anything individually because it just wouldn’t be able to afford all these properties. And B, once I found out that the Salt Lake property was helping both myself and us and our partner, I realized that we could help people in our inner sphere to grow their wealth as well grow their investing portfolio. So on one of the properties, my brother is an investor with his friend and my wife and I on another property, it’s another friend from college and my wife and I, and on the other property we have another investor as well, and now our job has gone from now we don’t live there anymore, so we actually have a manager there who takes care of our properties, which is a whole nother can of worms I get into, but now we manage the manager and we manage our investors, and that’s kind of how we’ve become investors in this way in the true form. We manage these relationships now.

Ashley :
So you’re the asset manager now,

Sean:
More or less? Yeah, we’ve worked our way up to that spot.

Ashley :
Yeah, that’s a nice position to be in asset manager and investor relations and talk about having the benefit of having a little piece of the pie compared to no piece of the pie. Sometimes it is better to partner with others so that you can get started in real estate and start to propel yourself rather than waiting to save up your down payment. You get one property and waiting and waiting and waiting again to save up for the next to get the next property, and instead partnering with people so that you can get that little bit, little bit, little bit, which starts to add up to a lot and getting started sooner rather than later. As we’ve seen, you’ve already built a ton of equity just in your first property where if, think about it, you would’ve waited even longer until you had all the money yourself. You probably would’ve been buying that property at six 50 instead of the four 50 when you took action now. Yeah, so that’s awesome. Now in this Kentucky market, what’s next for you guys? Are you still planning to invest more there? Are you looking at other markets?

Sean:
Sure. So we are no longer looking at Kentucky. We’re fine where we are there. We want to go back to Salt Lake City is our next move. We actually live in Denver right now. We moved there once we got married. We have a lot of family here, but we have the system set up in Salt Lake City to have more Airbnbs. So we’re looking at duplexes, triplexes near that existing Airbnb that we have to grow that portfolio. We are dead set on growing that portfolio because we know it works and works really well.

Ashley :
And that’s the awesome thing is sticking to something you already know and having that business, that process, those systems all set up where it’s so easy, and I think it can get boring and mundane almost as to, you can probably buy a property there in your sleep. You can get it operating in your sleep, you know how it goes. And then there’s all this shiny object syndrome like, oh, that looks really cool, maybe we should go there. But when you stick to, you know, build such a great foundation for yourself, and that’s what really builds wealth, just repeatedly doing the same thing over again. And if you know exactly what you have to do in the Salt Lake market, that is great that you’re going back to that foundation you built and just continuing to make it stronger and stronger and stronger in building your wealth. Sean, I want to ask about the roles that you have with your wife, Perry, as to in your business. You said you’re doing investor relations, you’re doing asset management. What are the roles between you two in your business today?

Sean:
Sure. That’s a great question. So I was doing a lot, this is up until about a month ago, I was doing a lot of the management relations and communicating with the manager. We actually had a boutique manager and he was texting us directly and I was doing a lot of that communication and we realized that we were doing the wrong thing. She was working with the investors more, and I was working with the manager more, but I get a lot more caught up in that stuff where she’s able to just instantly objectively look at things and just be like, okay, we’ll fix it this way. So last month actually we switched it where she’s now taking care of all of those management communications, even Airbnb communications, I was doing most of it. She started handling that so that I can now focus on buying new properties and bringing those to new investors. She would show me in the evening, she would show me a new property on Zillow. She’s like, this one just came on, can we buy it? And I’d be like, oh goodness, I can’t even imagine adding something else to my plate right now. It was just weighing on me so heavily

Ashley :
Because especially when you get a deal in front of you, you have no, you just have to analyze it quick. You know what, I was going to go to bed, but somebody just sent me a deal. Now I got to kind of look real quick.

Sean:
Yeah, there’s just too much. There’s too much for me to handle. So that’s a testament to setting up the systems that we, in Salt Lake City, we just have these systems in place. We don’t really ever have to worry about anything, but so we’ve switched that and now we’re, I guess a lot closer to actually buying our next property. That’s our next move is to buy this property in Salt Lake City. We toured one when we were out there last week. We’re not going to buy it because half of the house is falling away from the other half. That’s a different story, but we’re about to buy one very soon, and now I feel more comfortable. We know that the Airbnbs in Salt Lake City work, so I’m much more comfortable presenting these to investors now. I can show them what’s worked in Salt Lake City and Sugar House and why it’s also going to work for this property right down the road. It makes it easier.

Ashley :
And what would you say has built that confidence in yourself as to I feel confident I can go out and give somebody an opportunity to give me money and invest with me, and they’re going to be making money off of it, that this is a great investment for you. How did you create that confidence of, I feel, okay, especially you started out as a new investor in your first deal, you brought on a money partner. So maybe give some tips and advice as to someone listening who has that fear of that confrontation of asking someone to invest with them, ask them for money. How did you build your confidence to do that?

Sean:
So to be honest, it’s because I’ve seen spaghetti fall through my ceiling that I now have that confidence where people know that I’ve been in the quote trenches and know the things that can go wrong. That’s what people really fear is ignorance is fear, and people just don’t know how bad it could be, how good it could be. You have to present those things to people, and if you have gone through the worst possible scenario where spaghetti’s falling through your ceiling, maybe not worse, but people can relate to that and they know that you have that experience that they can trust even more. So it’s dealing with those things. It’s dealing with a $6,000 water bill on a property in Kentucky that came out of nowhere that we have no idea how it got there. Things like staircase that was falling apart on another property in Kentucky, we didn’t even talk about that because I’ve just been at this point now where we know how to handle those things. We’ve gone through the horror story of spaghetti falling through the ceiling. It’s not going to get worse than that. So that’s how I frame it to people. I’ve been through the tough stuff. To know how to handle it

Ashley :
Right there I think is such a great attribute. If you are looking to invest with someone as ask them, how has your investing gone? And if you hear that it’s all roses and gold and glory and nothing has gone wrong, then first of all, maybe they haven’t gone through anything difficult yet. So they will have no idea what to do when that happens. But if they’re completely honest with you as to these things happened and this is what I did and this is how I overcame it, and you know what, moved on. Yeah, that’s great advice there, Sean. So thank you so much for joining us today and giving so much great advice, your lessons learned and how you overcame things. We really appreciate you coming onto the show today.

Sean:
Fantastic. Thanks for having me. This is great.

Ashley :
If you’d like to learn more about Sean, his information will be in the show notes or in the description. If you’re watching on YouTube, make sure to hit that like and subscribe button. If you’re listening on your favorite podcast platform, please give us a follow. And before we leave this week, we want to give a shout out to Kendall, this week’s rookie rockstar. So Kendall says, I am delighted to share this news. I successfully closed on this brand new rental property in South Carolina. This is my eighth rental property, and I’m so impressed for the effort of my team so far from the search of the deal of the ideal property to negotiating favorable terms. It’s been a rewarding journey. So congratulations, Kendall, that is awesome on your eighth rental and being able to outsource a lot of the work to get that deal to a team and building out your team. And we’ll see you guys next time. My name is Ashley. Thanks for joining us on the Real Estate Rookie Podcast.