Is 10 Rental Properties Actually Enough to Retire?

Natalie Pilkinton (00:00) Hi everybody, welcome to Sugar Spice and Spirits podcast. I'm Natalie, got Mindy and Kelly and we're here today. Have you ever heard if you buy 10 rent houses you can retire? Well I'm gonna talk about that hopefully, dispel some myths and give you some great ideas and some tips to improve your retirement, boost your retirement bolster. Is that even a word? I don't even know. Kelly Williams (00:23) bolster? Natalie Pilkinton (00:26) But either way, if you have a retirement 401k, IRA pension, anything like that, this could also be an addition. And you can even invest your IRA into real estate. So we'll kind of cover some of those things and go into that. But before we do, let's start with our sip of the day. It is only 10 o'clock in the morning, ladies. What are you guys starting with? Mindy Price (00:47) Go ahead, Kelly. Kelly Williams (00:48) Oh gosh, so I start every morning with either coffee, a little bit of caffeine. And so I start off with my rehab and I don't have a really busy day. Well, I mean, anyway, so I digress. I thought I would try a little bit of Fireball in with my lemonade and tea rehab. Natalie Pilkinton (01:07) Tangent tax, that's a tangent tax, let's go. Okay. Kelly Williams (01:18) So I haven't take, we'll see how it goes. If I have a smirk or a you'll know it didn't. So I actually had, have my trusty shot beside me. let's see. I didn't make it really strong. Mindy Price (01:26) watching! Let's see, what is the verdict? What is? Huh? Kelly Williams (01:37) It's not bad. I could probably actually go a little stronger because I was like very conservative. It blends okay. It blends okay. But actually I could probably just do Fireball over ice and just sip it like we did. But like you said, it's still little early. So I kept it a little bit, you know, light this morning. Natalie Pilkinton (01:41) We're gonna see you you're Mindy Price (01:56) So speaking of it being early, as I was making my coffee in my Manage Like a Boss from Evan Happel's podcast that I was on, Boss Talks, I was like, huh, I know what kind of shot I need. I need a shot of B12. So I, at 10 o'clock in the morning, had a B12 shot. So yay, cheers. Natalie Pilkinton (02:18) Cheers. Kelly Williams (02:18) So you're the healthy one and I'm the one sticking alcohol in my rehab drink. That's great. That's a good impression. Natalie Pilkinton (02:24) Well, I got a new tequila, which it doesn't look so new. I've drank a lot. I've drank a lot of it. I'm trying to turn. I can't turn my wrist that way. Some Osada. Osadilla. It's 80 proof. It's tequila nejo. So I've got mine in my Puerto Vida Costa Rica shot glass. So cheers, ladies. Cheers to everyone out there for our sip of the day. Mindy Price (02:28) over a little bit more. Kelly Williams (02:35) What's all that? Mindy Price (02:48) Cheers. Natalie Pilkinton (02:51) I'm not doing the whole shot, but I'll slip on it during the show. you guys, Mindy, would you trust your retirement in real estate? Mindy Price (02:54) So she says. Kelly Williams (02:55) So she said. Mindy Price (03:05) What do they say? Trust but verify? I mean, being in the business and in the industry, I am a huge fan of real estate. Natalie Pilkinton (03:07) I'm Mindy Price (03:15) But I also, many of you don't know, but I had my securities licenses and there's a lot of things and disclaimers that you have to say. And while I feel like real estate is one of the most safe investments you can make, and I like the fact that it's tangible and you can drive by it and you can see it, depending on how you're investing, the way we invest is, I mean, I have some funds, but. when you can actually drive by and see it, you feel like it's a little bit safer. The other thing about real estate though, if you don't know what you're doing, if you don't have the right mentor, if you don't have the right coach, if you don't get in at the right time, you can lose absolutely everything. So that is just a piece of what I say. Natalie's like, why do you talk about that? But I'm always gonna be real. Do I love real estate? Is it something that we invest in? Absolutely. I also think. Natalie, that I love the fact that you're so focused on real estate as your career now that you are an entrepreneur and you are focused on building your properties and investing in different ways and helping others. This time in this market right now, it's one of those that seems like we've been waiting for it to turn and to be an opportunity. And here's the thing that stinks also with real estate is that one man's misery can end up being another man's gold mine. And so unfortunately when somebody does lose a home or does lose an apartment community or you just in any type of investment if you are in the right place the right time connected with the right people you could have an opportunity to do something for yourself. So do I love real estate? Absolutely. Do I like to be real with it? Absolutely. Have I lost my butt on a deal that I thought was going to go perfect Absolutely. Natalie Pilkinton (04:50) No, always keep it real. Like that's the one thing I do not, and I think we're all kind of the same in this, this Kelly, Mindy, that we're authentic and we don't like to blow smoke and we're not gonna just, just say stuff because in today's world, too many people lack the authenticity. They lack the realness. They say the buzzwords. What's going to be the hook? What's going to be the line to get them in? Kelly Williams (04:53) Thank Natalie Pilkinton (05:13) We wanna be real and we wanna share our experiences that have not been perfect, that have been flawed, what we've learned along the way, because if anybody out there says that everything's peachy keen and roses, definitely move on, because that's not the way it is. Kelly, when you hear having 10 rent houses, do you think that, do you get overwhelmed, or is that one of the things that you're like, you know, I can do that, that's manageable. What are your thoughts on that? Kelly Williams (05:39) So when we all first met and I started learning a little bit about investing, to have 10 houses, I probably would have said, you've lost your mind. Because what I think about with 10 houses is having to constantly go and check on it, having people call you because you're the landlord, having them call you because one thing or another, I do have some property, have some commercial and some residential. And I've had the experience with some not so great and knowledgeable renters who needed you to hold their hand for everything and that always kind of puts a bad taste in your mouth and I think, God, if I had 10 of those, I don't know if I could handle that. But I think like you said, if you get educated and you look at all the different ways of benefiting from the real estate, and I know you're going to go into that it's not just the rent benefit that you get from it. I think once you kind of get seasoned and learn about it. think 10 houses is really just a drop in the bucket. I mean, I've got one right now that I'm wanting to get rid of and the equity I've got in it. I want to get rid of that one and then get two more in its place. So there was a time when I thought, no way, no way. But I think as you learn and you move on and I know you're going to go into this more Natalie, that the more houses you get, if that's not your full-time career, I think that's one thing that scared me. was how do I be a landlord and dedicate the time needed to make sure that my tenants are taken care of, excuse me, our residents, I know we don't like the word tenants, that my residents are taken care of and their property is good, but still dedicate the time to my medical career. That was the balance that I had trouble with. But as I learned a little bit more, I realized that it's definitely doable. It's definitely manageable if you just follow the person in front of you who is your mentor who can help you out and help you manage that. It's definitely a great. place to head towards for retirement. answer to your question, long story short, too late, is yes, at one point 10, I would have said, no way, I don't want any part of that. Now 10 to me is like, that's a great starting point. that's, yeah, that's not so, not so overwhelming anymore. Yeah. Natalie Pilkinton (07:51) We're starting, but we are changing. Yeah. So, and really, like, this is my first class in my school. It's 15 houses for retirement. So, like, we're 50 now, Mindy. We don't have a retirement. What do you do? Where do you start? And this is just a hypothetical. Like, 15 houses and retirement? Like, that seems far away when you're at zero, the market, whatever happened to you. Where do you go? How do you start? Plugging in one rent house at a time. And if you plugged one in, and I'll get more in depth with this, every year, one every year for 15 years, and then at year 16 when you go to retire at the age of 65, you take that one rent house and you refi cash out, but you still hold onto the goose that's laying those golden eggs, and you refinance cash out. which is a non-taxable event and take that 150,000 in equity because of appreciation and equity pay down and everything else. And can you live on that 150,000? Plus social security and everything for a year, right? And then what do you have coming up next? You got house number two that you bought. And then at year 66, you refinance cash out. Mindy Price (08:56) wow. Kelly Williams (09:06) See you. Natalie Pilkinton (09:07) and you still hold on. So it's just a way of thinking. But once you start buying one, it's like Skittles, you you just don't stop at one or was it Lay's chips? You got to keep going. Yeah. Kelly Williams (09:16) Thanks for taking a chance again. Natalie Pilkinton (09:18) So it's one of those things, but it's a little slow. It's not like HGTV, flip this house, all bells and whistles and excitement. Because you can find, especially Mindy, you mentioned this, you touched on this market. you're in tune with the market, Kelly, you're in tune with the market with us talking. You know, the market's horrible, interest rates are horrible, know, foreclosures are on the rise. You see all this and you hear this and you're like, now's not the time to buy or sell It's still the time. People are still buying good houses. Now you may not get quite as much if you're going to sell now, but what are you going to do with that money? Like Kelly, you said you'd go buy two houses. So you'd go buy two investment properties. So you'd be doubling what you would get that appreciation when that turns. But there's also six ways you make money on real estate. And I know you ladies know some of these ways. What are some of the ways that you make money besides the initial equity capture when you buy? How do you make money? Mindy Price (10:17) Well, one that we always say don't rely on it, but it sure is appreciated, Natalie, is the appreciation if you buy it right, right? So, and you mentioned a couple of them just a while ago, as you were saying, different ways, not just the rent that you have coming in, but you are paying down and you do have more equity. And then that leads you to where you can do that cash out refi. So. Natalie Pilkinton (10:26) Yeah. Mindy Price (10:40) There's a lot of different ways that you can. think about depreciation and your write-offs and what you can do with those, which helps you on your taxes. There's the different ways that we just, we don't think about it, but it's there, but... a non-experienced person that fell into a rent house because a parent moved or unfortunately passed away or some familial situation. So they think they're gonna get a tenant, a resident in there and everything's gonna be sunshine and roses isn't always that way. And then they think that's it. They don't realize all the opportunities that they have to really capitalize on what is an investment. Natalie Pilkinton (11:19) Kelly, any additional thoughts on income? Kelly Williams (11:23) Just the, you know, like you said, we've learned that when you go into purchase and start looking for investment properties, you're not looking at that turnkey condo. You're looking at something that may be a little bit below the value of what, it's not something that I would move into, but it's something that I can look at. I can get a great deal on it. I can make some improvements. And then next thing you know, I've automatically increased the value. So number one, if I want to keep it for a while, you know, then later sell it, flip it, whatever, then I've automatically, yeah, have automatically increased the amount I'm getting out of it based on what I just put into it. And it was because I went into that. And I remember speaking to a lady, young lady who was trying to get her first investment property and the bank was not really wanting to give her the money to help her out. And I asked her what she was getting. She was buying, she was wanting to buy like a $400,000 condo. I said, okay, now look, I said, would you move in? Well, yes, of course. And what we learned is some of those investment properties that we went and looked at that were horrible, but were up for rehab per se, it was a huge difference. And the bank would have funded her immediately. So, you have to go with that mindset that you're not going in there to buy something perfect. You're going in there to build value, like you said, appreciation, may put a little bit of money in, but how much you get out of it. that was a, and that's the reason why I'm looking at possibly selling the rent house that I have now, because it's up in the 300s. I would rather get something that's a little bit less that I can fix up because there's, My daughter just bought a house and the one thing that scared her was what if I don't qualify? Because she kept seeing all these, you this house is back on the market because the person didn't, didn't, didn't qualify for the loan. And there's a lot of people out there for whatever reason, a lot of young buyers who just are not established well. And so they don't have the, the, the ability to get into their, their dream home. So they're going to maybe rent for a while. Well, who do I want them renting from? for me. But if I have a house that is over the value that what I think anyone can afford, then I need to get something that they can afford. So I think I just kind of jumped around there a little bit. the idea is to, for me as a renter, to make sure that I get something that I can always, with appreciation, get the money out of it, whatever I decide to do, whether it's for tie or flip, whatever. So. Natalie Pilkinton (14:10) Every time you say flip, my mind goes rub it down. no. Yeah, sorry. That's a little Bell Biv Devoe Yeah, so you make money with cashflow. Definitely that's the rent. You wanna make sure that you're covering your nut, which is when you start getting into the higher price points, the 300, 400,000, especially for the Houston area. Yes, we've got lower house prices. If you're outside of the Texas market, Dallas, Austin, Plano, you've got some different markets that are higher. Kelly Williams (14:17) Thank you. Natalie Pilkinton (14:39) Welcome to Texas, but we do have higher taxes, I'm sorry, higher taxes, yes, because of the flood if you're close, or hurricane, hurricane, hurricane down there, but you also have insurance property, so property, I can't talk today, principal, interest, taxes, and insurance. I didn't even finish this one, maybe that's the problem. So principal, interest, taxes, and insurance, so. Kelly Williams (14:47) hurricane. Little shot. Natalie Pilkinton (15:05) We pay a lot in property taxes. That's where my mind was trying to get me to. So property taxes and taxes are definitely a lot higher. We don't have state tax, we have property tax. So you wanna make sure if you are going to go this route, if you're looking at it, I have a meetup you can attend. It's on the north side, it's on meetup.com. It's in the Woodlands area, but. Principal interest taxes and insurance, you've got to cover that basis with the rent. So you have to make sure that your realtor or that whoever is running those comps, if you're buying them from a wholesaler, whoever you're buying from, you got to make sure that they're running those comps, that you're going to be able to cover all of that. And have a little bit of cashflow, save that cashflow. A lot of people open up a bank account for each property and just keep that money in there and run everything through there. So when you're calling a contractor out and... You're just running it all through that account, so you're good. So you don't even have to have an LLC. You can do it through a DBA, under an LLC, like a main umbrella, however you want to set that up. Loan pay down. Who's paying the note? Kelly Williams (16:10) Your tenant. Natalie Pilkinton (16:12) resident, right? So you're not having to come up with that because you've covered your basis, your principal interest taxes and insurance, your PITI. all that's covered and being paid by the tenant. So if you have 10 houses, when you have a vacancy, hopefully your cashflow will cover that vacancy. But your idea is to retain those tenants. I had tenants that stayed in the house 10, 15 years. When I got the house back, it needed a full rehab. But for 15 years, zero vacancy, hardly any vendor calls, like when I say vendor calls, any contractor calls for plumbers or electricians. But when I got that house back, it had been lived in. was a rough one. do a video on it. did a TikTok on it where I went through and showed it. Some people are like, my gosh, that's horrible. That's the fear, right? You get a property back like that. was like, I had 15 years of solid equity pay down from this tenant. I got the appreciation from this tenant living here. This, I don't mind. I've got a contractor to come in and clean it out. I've got a contractor to come in and make it beautiful. And then I ended up selling that property. But. Tenants aren't bad. I think the fear is having the connections when somebody calls me and something's broken. no, what do I do? How do I fix this? And if you're really that worried about it, you can have a home warranty and have your resident, have your tenant pay the deductible for anything that breaks. They may not like it. I don't like that because I like to take care of my tenants. I like to take care of my residents. So don't want them paying the deductible. If something breaks and it's not their fault, I don't want them paying for it. I want to pay for it and take care of it because I want my tenants to renew because I don't want to have a vacancy and have to be out $2,000 at the end of the year. When their lease is up, I want them to stay. I want them to sign again and paying, making them pay $200 here and $200 there impacts them a lot more than it does me. And for my bottom line, Kelly Williams (17:48) Thanks Natalie Pilkinton (18:04) It's better to keep them happy and keep the property maintained because also they won't call it in. They'll let that faucet leak underneath. You get back, your brand new cabinets are all rotted. Now that's also why I put the rubber mats on the bottom. You can buy them on Amazon. When you put in new cabinets in a home, put the rubber mats underneath if you're buying it or even if you're renting it. But loan payment. Mindy Price (18:29) Speaking of Natalie, I think it's important that we talk about who you put in your property. Of course, you want to abide by fair housing laws, but you want to make sure you're screening them. That is one of the things where somebody will get burned. because they didn't do that. And it's like a cousin's brother's uncle, somebody, oh, this is a great person. They can be a great person all day long. Doesn't mean they know how to pay their bills or doesn't mean they know how to take care of your stuff. And they've hopped from lease to lease to lease, but they have a great story. have the gift of gab. And so it's really important to make sure that you're going to screen your. potential tenants and that may be something that you're going to talk about here in a minute. But when you're focused on the tenants, I was like, you know, and, know, in residential property management, we like to call them residents, typically, you know, landlord, tenant. whatever is you call them the tenants. loved how you said that a while ago, Kelly. So everybody's like, why the different language? Well, depends on what side of the world that you're on. But screening is so important. I once worked with, and we all did actually, somebody who had quite a bit of real estate and they just kind of went off a gut feeling and they got really lucky. Like they don't have a nightmare story. So they're like, yeah, I don't need to worry about screening people. I've done well with this. Good for you. But do not teach people that because it's an anomaly that doesn't typically happen. You want to make sure to spend the extra money. There's a lot of people who have actually worked the system. You want to work with a reputable company because there are residents, there are individuals that they know how to show a fake pay stub, they know how to fake their bank accounts, they know how to fake who it is that they work for, all of these things. And so there are companies that you can actually work with that were created because of this. and it can help you and it can save you and you can, the application fee, you can have that applicant pay. You know, these things, you know, putting that deposit down, if they falsify their application, you keep their deposit and their application fee. That's on them. You're just running a business. And the thing to remember is it is a business. You're not doing this for friends and family, or you're not doing this as a hobby. And maybe if you are good for you, but if you are looking at this and Natalie, this is a... an episode about retirement and thinking about what you can do because of this financial freedom you're trying to create for yourself. The good that you can do and all the things you'll go into. This is running a business. It's not personal. And you you will have challenging times where somebody is going to call you and they have a hardship and you have to think about how you handle that. But you put parameters around whatever exceptions you are giving and you put things in writing. there's a lot of things you can do. And Natalie, I know you teach a lot of the folks this. about how to protect yourself if you were looking to get involved with investment property because you've seen a lot over the 20 plus years that you've dealt with this. Not only, you yourself coaching others and working for other firms, but literally seeing people with nothing go to 50 and 100 rent houses and the stories that they have. And you're a very acute listener. You're very good at that. And so figuring out what they did and how do you help them with that? You've written content about it. So I wanted to throw that out there because we could give you all of these things all day long, but if you don't properly screen the people that you are going to invite into your rental property, that could be a nightmare in and of itself. Natalie Pilkinton (21:43) Yeah, absolutely. That's a whole other conversation for another day and having the screen and what do you do and how do you like red flags. My mentor said never rent to contractors, never rent to family, and never rent to law officers, like LEOs or attorneys, like law enforcement, because they're above the law. Preachers are above the rental because they're ordained. And then family, because you're family, they don't have respect. So it's like those three things. So always have everything in writing and residents tenants, they're not scary. They're people they want to be treated with respect and treat them like you would want to be treated. And when they do not. reciprocate the respect and don't uphold the contract or the lease agreement because everything is in that lease agreement. It's simple, you're evict And it's nothing hard, it's nothing personal. you know, it's everybody has situations, but like Mindy said, you do your charity outside of your business and you can do your charity all day long like this will set you up to be able to do more charity, whether it's with your church, whether it's helping special needs, whether it's doing other things, setting yourself up for success. And I've seen so many people start their own charity. and foundations from their real estate that they've done and they've done it successfully. So we've covered cash flow, loan pay down from the resident or the tenant, appreciation Mindy you covered. Not only do you get the appreciation but you get the inflation. It's a hedge against inflation when it's an inflationary time you're also increasing rents which is a nice thing. We've seen homes go from around 153,000 to 335,000 and this is part of the plan of the 15 house retirement or 15-year retirement plan. So now multiply that appreciation across multiple properties and you can be a millionaire on paper. And then whenever you go to sell, you can actually cash that in. So it really is impactful. Not only are you, is, so I'll get into it on this next one, but tax advantages. I'm in my will house guys, if you guys can't tell this is my jam. But not only do you get those tax advantages. So Mindy, you mentioned that you covered it. CPA, you get that cost segregation, accelerated depreciation. If you're investing in multifamily, are they sharing that, that cost seg study with you? What are you accelerated depreciating? If you're buying car washes, you get so much more depreciation right now. So if you see all these pop-up car washes around, it's because you can accelerate that depreciation even more than other assets. And that's a CPA can help you with that. even if you have rental properties that you just purchased and your CPA is not familiar with accelerated depreciation. So there's a difference in the regular depreciation schedule of 25 years for blinds, 10 years for carpet. I know you wanna do it fast. You wanna keep your money in your pocket and you don't wanna give it to Uncle Sam. So if you end up selling that house within five years or 10 years, you're gonna have to recapture that depreciation, which you'll talk to your CPA about. Recapturing is not a problem because you're gonna buy another investment property you're gonna keep that money moving and working and writing off. So just know that it's not bad. Leverage. Mindy, Kelly, you touched on this leverage. So she couldn't buy a $400,000 house and you're talking like, you can go to the bank and buy each one of these houses, these 15 houses. for 10, 15,000 down, 20,000. Like you don't need, you can even buy them for zero if you find a steep enough discount. They're still out there. I know people are like, they're not out there. Yes they are, I just drove by one in the neighborhood over that's blue tarp that had a tree that fell through it. You can't see it until you write an offer on it, but you can't get in it until you write an offer. So it's one of those situations that it's gonna have to be an investor and it's gonna have to come in steep for that property to make sense. But if you go in, write the offer, fix it up, then refinance. You can even cash out, but refinance out. Put a resident in there, a tenant. And the rehabs are different. We're not even going there on what it is, if it's gonna be a rental or if it's gonna be a flip. Those are two different animals. leverage. You can't go and invest. Like, hey, I wanna go invest in this startup. Can I just put 10 % down and you give me 100,000, I give you 10,000? What would happen? Mindy, have you tried it? Mindy Price (25:59) they would laugh at you. That's why there was silent. Nothing would happen. That's why there was nothing to be said. Natalie Pilkinton (26:01) I'm Kelly Williams (26:02) Yeah. Natalie Pilkinton (26:06) talking to me. Kelly Williams (26:06) Well, and along, and I know this is a little bit different. If you, when you said the startup, a lot of people want to get into some of these franchises. I want to own a business. I want to own a business. You know, I want to start a Starbucks. I want to start a Schlotzky's. I want to, and I've done the same thing. And some of the, know, oh, for $300,000, well, the bank comes in and says, okay, well, blah, blah. But you think about the fact that yes, you, you opened up the Starbucks. but there's still the corporate component that has their finger in the pie. And at the end of the day, when you have so much of this money for the startup and the management and everything over time, that's one business. But like you said, I love what you said earlier that you can't look at having all these rental properties as I have, it is your business. It is like waking up, walking into your office, clocking in. And it is your business. So when you look at the opportunities with 10 to 15 houses versus one franchise that depends on the public to give their patronage and everything, your best bet or most efficient bet for success is going to be something that you completely can control. And that is your real estate versus corporate's always going to control. what you do, how you do for some of these franchises, your real estate that technically is your franchise. That is your baby and you have control over that. So it's, you know, for everyone that wants to be their own boss, it's not easy, but it is so much more doable and so have so much more opportunity for success. If you, like you said, follow the mentor, follow the pathway, learn how you can and can't do it. And it could change your life completely. Mindy Price (27:56) You know, different people have different. Natalie Pilkinton (27:56) But that's true, like Ashley Furniture. Are y'all on TikTok right now? Anybody? Like Mindy, I don't know if y'all have seen the Ashley Furniture guy, the rapper guy. He was rapping about Ashley Furniture. You need a couch. come in here. Get on my couch. Come sit on my couch. What do you think? I mean, he's so much better than me. But anyway, he's rapping about his furniture. He's selling at Ashley Furniture. And then like Gain and all these other people are like commenting on his and they're like, Ashley Furniture. I guess the local store come and go off, pop off King. Corporate came in and had to fire him. Now there's this huge firestorm over Ashley furniture. Well. his name's Chef Steph or whatever. He went over to Couch Co. Now he's rapping about Couch Co. Everybody's like, cancel your orders at Ashley and go to Couch Co. Couch Co, do you ship Couch Co? He's like, yes, we do. And you see their views at 1,500 on TikTok before they hired him. Now their views are at like 400,000 because they're posting him rapping about Couch Co. So. I'm just saying like that just goes with the corporate example. Like you don't really have control. So corporate probably came down and said this doesn't fit our brand and our messaging. We don't like this. So get rid of the guy. But within real estate, I will say if you cannot evict somebody, a mother with children, you know, or if you can't handle tough situations and tough conversations like that. you're gonna end up hurting yourself and end up in foreclosure, end up in a bad hurt because you're hurting your family. You have to be able to get those people out, whatever the situation. And you know, sometimes I've had to evict people in a situation and I'm like, you know, I know this is rough and I've worked with you through this and you need to find a solution and I'm not the solution because I can't put my family in jeopardy and danger to bankroll your situation with everything that's going on and I truly am sorry. I will pay your moving costs. but you're going to have to move. you know, sometimes there's those situations, I know somebody will end up having him on our podcast. He got himself in a world of hurt. And you know, there are ways that you can do it wrong. And if you can't do an eviction, hire a property management company and let them handle it. But if you can't even let the property manager do their job. Don't do it. Do not come into real estate. Invest in multifamily with a good solid investor like I think you were alluding to. He always expects what he expects. Trey Stone He's got a lot going on. What's the company named? Track asset management. They've got a lot of multifamily that they're doing. Is that the right name Mindy? Track record. Mindy Price (30:32) Track Record Natalie Pilkinton (30:35) but multifamily investing, can go that route and still reap the benefits of the cost savings and everything. Mindy Price (30:44) I want to back up really quickly because you were talking about leverage and then you talked about a property management company. We had another episode where we had Hillary on. You talked about TikTok. We found Hillary on TikTok. She's from the Philadelphia market. Is that right? Yeah, somewhere around there. And I'm going to be there in a Natalie Pilkinton (31:00) until the video ends somewhere up here. Mindy Price (31:05) three weeks, I'm speaking in Atlantic City and we're flying in there, I need to reach out to her. so one of the things that she said, leverage is great, but if you over leverage, you can be in a world of hurt, you can be one of those folks that end up in foreclosure if the market changes, and you don't have enough equity in your property and rentals are changing and they're going backwards instead of forwards, we don't hear that often. Natalie Pilkinton (31:09) You said... Mindy Price (31:28) but you do want to be prepared and you don't want to over leverage. She has a different way of looking at it. I can't remember the number, but if they can't put at least X down, which I want to say it's either 50 or 60 % on that property, they're not going to buy it. And they've been very successful in what they're doing. They've recently gotten into doing their own smaller multifamily. And then because she did such a great job with the properties that she had in that market, it's what she knows. they she had individuals come to him and say can you manage for me and so by accident they stumble into this amazing what is now an amazing property management company that they have working with individuals and one of the things that not only stuck with me was about the not over leveraging because you can do that getting too comfortable then also if you're thinking about turning a rental your first house or your baby and you're upsizing if you would or downsizing you're like i'll just turn it into a rental She'll meet with them and Natalie, I know you do this with your people too. You'll meet with them to figure out, do you have the chops to actually be a quote unquote, we don't like the word, but it is what people understand, landlord, or should you just go ahead and sell this house and then take that equity and take yourself out of that, what's the connection that you have with that house because it's so personal to you and then go buy two properties you never lived in or one property or whatever and turn that into a rental. if it's what you want. Some people just don't have it to where they see their baby getting messed up by the tenant, by the resident, and it's very upsetting to them. And then they never want to do it again because they don't give real estate a chance because they didn't have the right guidance. And I know that is something that you do with your people to really help them get in that mindset, Natalie, because they have to be in that. Natalie Pilkinton (33:10) There definitely has to be that detachment because I remember when I got my first rent house back, lovely couple moved and bought another home. But I'm like, there's a ring around the sink. But like, I don't get it. Why didn't they clean? Like that was simple to clean that, you know, and it's it was the little things, even though the house still looked great. I was like, but then as you grow and you get along, like you realize the business aspect and component of it. Like for me, you know, it just real estate has been life changing for so many people that I've known. I've seen even in the ups and downs like Dave Ramsey talking about leverage he lost to his houses. He had the banks call the notes and he couldn't cover him and I don't remember what the trigger was or what that was but that was back in the 80s and so there's there's some people that are very hard on real estate. Dave Ramsey is one of those for that exact reason and I Hillary is kind of one of those components of that. You want to make sure that you're not over leveraged, that you're not taking the deposit and you're putting it in your account. You need to keep that deposit in their account so that you can give that back and it's separate and everything. Like there's little things like that. Yeah, you don't want to strap yourself, but very easily you can get into properties, get around people who are doing it and use that the loans that are available. Even with DSCR, you can get in it and get in with very minimal down. But you do have to be able to absorb. the backslide, like we're filling a little bit of that backslide on the rinse right now. And even, think, I know my years are always wrong, but there was one point in the market where we actually backslid, you the market depreciated. And all these people that were in new homes, and I want to say it was in 08, they were walking away from the market. Like if you would have stayed in there two more years, instead of filling the paint of a foreclosure for the rest of your life, hang on, stay there, pay a little bit extra, absorb that payment, even though you could go find a house cheaper. Mind-blowing the financial decisions that some people make and like ideally like when I sit down with my clients Can you turn this into a rental? Do you have the chops and 99 % of the people don't but And I'm okay with that because I'm looking at it from their best perspective. Like, is it better for them to hold on to this for their future? Or is it better for me to get two listings? Like if I sell them and buy them a new home, help them with the transaction, and I can help them sell their home, then that's two transaction fees for me. But I also see it from their perspective, if they can hold on to that, I see the wealth building that they're doing. If they wanna pay off debt, they can always refinance cash. cash out, pay off that debt. But I also know that that's the resident that you've lived in and if you've lived in it to the past five years, you don't have to pay taxes. So there's different things that you have to look at bigger picture. If you've lived in it, Kelly, like you lived in your home and you sell it, you can take that and buy your two tax free or you can do a refi cash out, which is also tax free and buy another one. But your leverage point, what are the renters? What's the rent? You've got to weigh all of those, but also equity. I'll go ahead. Mindy Price (36:15) soon. Well, I just want to see if you were going to go here, because I know you're going to go into the other one. I want to talk about new homes and some opportunities that I'm seeing there. Natalie Pilkinton (36:31) So let me go through, so five is leverage, six is equity access. So over time you can tap into your equity. That's that refi cash out that is a debt. So if you own the house, like we're talking about year 15, you're gonna refi cash year one, it's appreciated. Simplicity, let's say 150,000. With the appreciation, the equity pay down, everything you can cash out. 80 % of that, whatever, say 100,000 you can cash out. So you take that and you, Mindy Price (36:31) Okay. Okay. Natalie Pilkinton (37:01) use it to live on, off bills, whatever. So the good thing about that is that's that equity pay down that's from the equity access, but that's a debt. And it's also helping you with your depreciation with your taxes, which people don't think about. And you're not taxed on that. Let that sink in. You're not taxed on a refi cash out. That is debt. That is debt on the asset and on your business. And then you could take and turn around and sell it if you wanted to, but you're going to lose that, know, refi refi cost. But this is what the wealthy are doing that they're not sharing with you or explaining clearly for you. So I think that that's so important. So let's talk about new homes because I have buyers that are going into new home communities. They're buying inventory. Had a guy reach out on TikTok. He's moving from Colorado. He's got a job. He wants me to help him. So I helped him. This is helped him find a house in Waller. It's an inventory home. I went to four five different neighborhoods looking at his price point. He's in the entry level price point for this area. So I'm like, let me see him. I'm out there. I'm going to every builder. I need this, I need this. And he's got a hiccup on his credit. So with this hiccup, like, is he gonna be able to finance? So we're working on his finances at the same time. We went ahead and found, I found an inventory home with the builder because he's moving here. If that home sells and we didn't tie it up under contract, we ended up tying it up under contract because they went down an additional $5,000. So this is already the cheapest house in the area. And it's the cheapest 3-2-2 when I say. So it's not like a... They have these homes now they do these little micro homes without garages and they and they're not condos But they're little homes and they're just smaller like a thousand square feet or you know, 1100 square feet Which is still a nice size home just no garage or parking out front. You don't have a place to store store stuff. So They have those that are cheaper, but not the style. But with this community, they're building the next phase, phase two, because this is entry level into this community. Phase two, phase three, they're going to go all the way up to phase eight. It's going to be even higher in homes because the area they're building higher in homes. This is off of Grand Parkway. This is where kind of where the Texans spill over for their stuff in Bridgeland and all that is going on, which is fantastic. But. they got an additional $5,000 off. Plus builders are adding 10, 15, 20,000. They're giving a certain concession amount to people. like it's like giving you a check, Mindy or Kelly, here's 20,000. What's more? Yeah. What's more important? Do you need help towards closing costs? Would you rather have washer, dryer, appliance packages, blinds, gutters, irrigation? Mindy Price (39:40) I'll take it. Natalie Pilkinton (39:50) Or would you rather have that, like wherever you wanna take that $20,000 check and allocate it in this purchase process, builders are giving concessions. They wanna move properties, they've got a lot built, they've gotta keep their crews working, their entry level into these neighborhoods, or they're exiting these neighborhoods. So there's a lot of inventory homes that are already built that you can take advantage of a lot of things. So if you're an investor out there, or if you're a new person, even if you just wanna get a deal on your home, there's neighborhoods that have homes pre-built. You don't have to pick out everything. You don't have to go through the fighting with your spouse. Just get it done, buy the package already complete, and you're good to go. I got a man with a builder. This home was on inventory. They discounted it an additional $5,000. We're about $30,000, $40,000 off from other homes and other neighborhoods in the area. I couldn't find any. could not find any in his price point. So he's moving into this home with already like 50,000 equity. Now I've got to get him close. He's doing everything. He says, no, this is where the disconnect is. Why a lot of people don't qualify. It's not because they weren't pre-qualified in the beginning. It's because they don't do what the lenders are saying. They're not giving full document packages. That bank statements is page one through six, even page six, which just has the FDIC logo on it. It's all of that aspect that's getting turned in in your loan pack. So whenever you're doing that, do everything they see and say and do it with a quickness and you might even close quicker. So I'm excited to see them. They're actually flying in on Monday. We're going to have barbecue. I was like, what do you guys want to eat? And they said, barbecue. So we're going to go have barbecue and we're going to go look at their home and take a look at it and they'll see how hard their drive is to the work. Cause he took a job here and the wife is going to have to find something to do. So, you know, I think it's, it's fabulous for them because he's set up for success. Kelly Williams (41:12) Mm-hmm. Natalie Pilkinton (41:42) not only is he gonna get certain things on his credit fix, his wife is gonna have the flexibility to take her time to find something she likes because they're not gonna be strapped in a home. They're paying what they were paying there in an apartment where they're moving from and they're getting into a house with a garage and neighbors are great. The neighborhood amenities are gonna be fantastic. So. These neighborhoods too, so HOA fees are going from like three, $600 to 900, 1400, like we're seeing these in the new home communities depending on the amenities. They're including fiber optics. So if you take out your whole internet package and everything, HOAs are providing that now. So that's coming just part of the service of what you get with everything. So anyway. Mindy Price (42:25) So Natalie, before you move on, because I wanted to bring that up, so you're talking about an individual person coming in, but there are a number of folks that I know that will go into new home communities and buy those inventory homes and they will turn those into rentals as long as there's not something in the HOA that says you can't do that. So you want to make sure that you understand. Natalie Pilkinton (42:42) Usually it's 820. rule like 20 % rentals, 80 % owner occupied is what most builders have. But there are builders that I'm working with that will definitely allow investors to come in. So working with both, whether you're retail or investor, there's lots of opportunity. And investors, they'll work with you too. Like you may not get the concessions, like that $20,000 check you get to spend, however, but they do give discounts for bulk. They give discounts for cash. They give discounts. You just got to know who you're working with. they're working with and what they need to move. Mindy Price (43:17) So just play this scenario with me. So let's say all things are equal, like with what you're doing with the gentleman that's coming in that you're having barbecue with, and you're working with an investor, and let's say they don't get the 50,000 off, they're getting 40,000 in concessions. Now that house can be priced at a very attractive rental rate for somebody that can't buy the house yet or doesn't wanna commit to buying. There's a lot of folks that just wanna be renters, and they appreciate that. Natalie Pilkinton (43:26) Yes. Mindy Price (43:46) And so they could go in and they could have it at a very attractive price point. Even if they put it at market, they're making more money on that house because of what they were able to buy it at. And we used to teach, of course you're not gonna go into the new homes. That doesn't make sense because of X, Y, and Z. You wanna find an older home that you have to rehab. You have to put all this work into it. And those scenarios work too. You could have a mix of both. I had a friend that was very successful in buying property and they had both. where they got in trouble was when they started buying higher end properties and they actually started working with oil and gas companies and they were getting the leases in thinking they were going to make so much money and then the market turned. So you don't want to get too aggressive with your plan and you want to think about and meet with people who understand this and learn, you know, the trials and tribulations of what they've been through. But Natalie, I think right now, because there are so many new home communities that are going up everywhere that there is that time where it starts to get a little overbuilt. and then you start to see these homes that are sitting or because the next subdivision over is running so many specials to get other people in. Now this subdivision that's only been around for a year or two is having trouble moving that inventory. So there is opportunity. It's just working with the right person in that market that understands what you're looking for can set you up for success. Natalie Pilkinton (45:04) Yeah, and as far as the person you were talking about, like, so when they, I've noticed when people change their plan, what works, and they don't have a plan B, they end up in a world of hurt or they deviate from what they know works. And not that I'm saying don't go for changes, like, because sometimes, inspect what you expect, the devil's in the details. And that is where I've seen investors go south is that, that. level of detail, they take their eye off the ball and then that's where like I've seen apartment deals like solid operators go south. on just one deal because they took their eye off the ball. didn't do the detailed rent analysis and unit analysis where they saw that these were Airbnb units already pre-furnished, that Airbnb was not the market where they went. They didn't do Airbnb, so they had 20 % vacancy of Airbnb that they weren't going to continue. I mean, that's a huge oversight on a very basic thing that you do. So you do have to be careful when you're switching what you do. also looking at new, so with all these new So we'll talk we'll talk the investor side of things right so if you're looking for the investor side Fantastic 80 20 typically for most places are they closing a neighborhood out? That's fantastic. That's when they want to wash their hands. They want to be gone Let's go. We're moving on to the next project. You can scoop in swoop in by two or three be done you're going into a new neighborhood, are they still going to build the amenities? What if things change? You've got to look at a lot of other aspects like if they can't, are they a big name builder? Are they going to be able to withhold a market shift? We're already kind of like, I think we're kind of at the bottom here at the trough of the market. Are they going to be able to hold on? Are they going to have another builder? they going to sell out and another builder that's going to come in and build lower end? So there's just different things like if you're going to buy and you plan on living there, plan to live there for at least three to five years because you're not gonna recoup or recap as long as somebody is building new homes in there. So that's another thing to take into consideration when you're buying new home. In my experience, when I've seen, because I've bought pre-foreclosures and I've driven lists, it's hard to get homes with equity that you can actually sell or move a home when you're competing against new homes still. So there's some caveats. There's always gonna be caveats in anything that we talk about with real estate, but huge opportunity, especially with this market. So bringing it all together, I'll wrap it up with a pretty bow. Mindy Price (47:26) Did you talk about all six ways? You want to sum them up? Natalie Pilkinton (47:29) I did, talked about all six. Do you remember all six waves? Mindy Price (47:33) I mean, I used to talk about them all the time, but I'll let you go. Natalie Pilkinton (47:35) you're so kind. I appreciate you. Okay, all right, thanks. Guys, repairs happen, bad tenants happen, just when they do, just roll with it. It's very important that you have your vendor list. Make sure you know who you're calling. If you don't have a good vendor list, you want to find vendors that are not the retail. You don't want the ones that come with the little booties on the hair and the booties on the feet when they come in the home. You want the ones that come in like chucking a truck or whatever, Joblo, except when it's roofing and it's hurricane season and you never pay a deposit upfront, especially on these flips. Like this is different. We're talking about minor repairs. and a home. So when you're calling you want them to pull up in their truck and be able to work. And if you guys need help with the vendor list, get in with a good real estate group in your area. You can go to Meetups, you can go to NAREIs and that's the National Association of Real Estate Investment Groups. You can go there and find some. Or you can go on Facebook, find contractor groups. And just be very careful on who you work with, how you pay them, and what they do. Like what you give them access to. Don't always trust everybody right away. Trust but verify like Mindy says I had a friend who just hired a contractor and they were great for the first First payment and the second payment, you know first third second third and by the third third they were harassing and Charges were filed on that person for harassment So you just got to be careful on who you're working with do your diligence? Where's the ZELLE payment going? Does the ZELLE payment match the name? If not, who is that Google that name see who they are There's certain things pay with credit cards if you can so you can dispute if they don't finish sure they don't do the job. Get everything in writing, get copies of their driver's license, and if you have a change order be sure to get that in writing. I can go on and on on that but I'm not going to because I think that's a topic for another day. So, estate can absolutely replace your income and you know I saw this when I went to Costa Rica just all the expats that live there that are looking to get to Costa Rica as fast as possible. All you need is a couple of rent houses you know that are performing you need your your second income, that's Social Security, your retirement, your 401k, and you can live in Costa Rica comfortably. Not that I'm trying to get you to move to Costa Rica. However, I heard Panama is great. heard, you can go all these other different places, leave Costa Rica alone. It's horrible. So when I say all that, if you're looking for a retirement, 15 houses can definitely be done. Just circle yourself with people who are successfully doing it. If you want information on my SKOOL I'll go ahead and post We haven't quite launched it yet, but I'll post it in the comments so that you can have it. Ladies, I know we're going to go on some real estate deals together and I can't wait till we actually buy some apartments or car washes or whatever it may be. That Airbnb level is next level, you know. I know we have friends that do international Airbnbs, but you can definitely do it in Costa Rica. Mindy Price (50:22) in a car wash. Kelly Williams (50:23) in Costa Rica. Natalie Pilkinton (50:35) So if you're looking for a home health non-medical, please reach out to Kelly. If you're looking for executive coaching, if you're looking for keynote speaker, Mindy is your gal. She won't disappoint or any other thing on that education next level team building, she can help you with that. And if you're looking for real estate coaching, real estate mentoring, or a good realtor that's your teammate, that's me, you can find us on Spill the Tea on our website, Sugar Spice and Spirits podcast. without you guys so let's go ahead and say cheers to you guys! Kelly Williams (51:10) to see you. Mindy Price (51:10) Cheers.