Episode #78 – How to Accelerate Cash Flow with Short Term Rentals. Featuring Special Guest Jeff “Shecky” Schechter

 

Short term rentals are big news, and an incredible investment (if you know what you are doing). Tune in to learn the ins and outs of short-, mid-, and long-term rental investments.

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How to Accelerate Cash Flow with Short Term Rentals. Featuring Special Guest Jeff “Shecky” Schechter

I’ve got an exciting guest. We’re going to talk to Jeff Schechter, affectionally known as Shecky. He’s been my business partner for a couple of years. Shecky is my real estate partner with High Return Real Estate. He is an incredible partner. We have been through the wringer with our business and we’re excited about what we’ve got going. We want to talk to you guys about short-term rentals, Airbnbs, VRBOs, looking at tenants that are going to come in for 1, 2, or 3 days, and how much more profitable this can be in terms of cashflow. Shecky, welcome back. You were on episode 10. It’s great to have you back.

I’m happy to be here and I’m excited. You mentioned STR, so my question for you is, do you also want to talk about MTR?

Yes. Let’s throw out all the slang at our readers. They have no idea what we’re talking about.

By definition, this is the way we tend to look at it STR, meaning short-term rental. I consider anything that’s a few days, anywhere less than 30. That’s what you were saying, like the Airbnb and VRBOs, the people that want to come in for a weekend and that sort of thing. It’s almost like playing hotelier. The MTR is medium-term rental and it’s a market that we’re finding to be extremely profitable.

MTR is anything that I would call 30 days plus, but not enough to where somebody wanted to sign a one-year lease in an unfurnished place. It’s not necessarily their permanent home. It is a temporary home for a while. Those might be doctors that are on-call for a few months, long research projects, traveling nurses, and a lot of corporate relocation.

For example, I had a guy knock on my door who was going door-to-door trying to sell me an internet-based security system for my new home. He would happen to mention to me that his whole crew, none of them live in Nashville. I lived in Nashville. They got to put up at a furnished apartment, his whole crew. There were 30 or 40 of them.

For how long?

They were given six months. He said he would not go more than seven.

It’s fully furnished and they’re staying for a shorter period of time. You can charge more rent. You’re making more than you would’ve gotten a long-term tenant. I want to know about your experience with your Indianapolis residents that you converted when you moved to Nashville, instead of selling it, you converted it to a short-term rental. It’s been working out extremely well. Let’s also compare it if you had long-term rented it. Those are LTRs. That’s STR, MTR, and LTR. The only thing that changes is it’s either short, medium, or long-term. What happened? You fixed up this house.

I bought a crappy old boarded-up house in Indianapolis back in 2017.

It was a disaster.

Disgusting would’ve been a nice term. This property had not been lived in for several years. It’s boarded up with a dead squirrel halfway up the stairs. I was petrified at this point, but it was in an area that I thought was coming on. If you look to the left, you could see and hear gunshots. You can see all the cool stuff going on and some new builds and big rehabs.

It was right on the line, but it was in a good area that, in most towns, you’d call that uptown. A little bit North of downtown, but it backed up to a creek. It had a beautiful setting. This house got redone from top to bottom, all new siding, new systems, new everything, basically. I did save a lot of the old woodwork, which is the attraction to it. The home is 100-something years old.

The intention was it was going to be my primary residence in Indianapolis. As a lot of people know, our business expanded and a lot of good things started happening, which is great. After COVID, we did reinvent ourselves in some very good ways and started having more educational stuff and different offerings for investors, and more opportunities. It made sense for us to move into multiple markets.

 

Myself and another business partner ended up in Nashville. That was a while ago and it’s been great. At the time, I was like, “What am I going to do with my house?” This was in the summer, but the market in Indy was hot. I’m thinking like, “Great. I’m going to sell this thing. Pull all my chips off the table.” I had done the work I thought fairly reasonably. I thought I was going to pull $250,000 dollars in cash off the table.

Unbeknownst to me, the city had decided at the time that they were going to finally fix the sewage that kept getting dumped into the creek behind the house that’s been going on for many years. Now, it’s finally the time to fix it, so they got all these gears and culverts. They got everything dug up. I want to put the house on the market. They closed off all the streets. I couldn’t get any showings.

On a spiritual note, it’s like, God, the universe, or whatever you want to call it, I feel have my back. I wasn’t supposed to sell it. It’s not that I didn’t get any good feedback on the property from the few that saw it, but there were very few that could even get in to see it. I looked at the LTR numbers and it was a pretty nice house. I had redone the attic. I created a second master up there. I probably could have gotten $2,400 or $2,500 a month from a long-term renter.

You wouldn’t have had much positive cashflow. You would’ve had some, but it would’ve been pretty tight.

I’ve still got money owed on the property. I still got payment every month.

You got insurance taxes, maintenance, repairs, and all that.

Thankfully, my CapEx was pretty low because understand that all of it had been redone. I started looking at that and going, “I don’t know.” I then started researching the LTR and MTR numbers.

CapEx for the readers, that’s capital expenditures. On a real estate property, that would be all your major items for the roof, furnace, foundation, electrical, plumbing, and all those major items. If those are new, you have a very low chance of those needing to be addressed anytime soon over the next decade. When we talk about CapEx and he’s saying, “I won’t have many CapEx expenses.” What he’s saying is everything was updated and in good condition.

We know wear and tear are there, but that’s not going to be for a long time. He’ll probably have to address those items and replace them. CapEx is different than maintenance and repairs. Maintenance and repairs are all the little things that break and go wrong in a property that are $100, $200, $300, and $400. Those are your smaller type items. I had to make sure everybody was clear on that.

It’s good to clarify that. I started looking at the numbers in terms of STR and MTR and it made sense. The property management team that we were very involved with was already getting into it. I already knew a guy through real estate stuff in Indianapolis that was doing some STR and MTR stuff. I gave it to him to manage and it’s been great.

You pay more in management fees, but I had done Airbnb of my old apartment way back in the day when I lived in Austin. I looked at it and said, “I’m going to put additional money into my home,” which I didn’t want to do, but I ended up building a staircase from that second master in the attic. I put in a little coffee bar up there and I made it to where that attic could be a separate unit if need be with a separate entrance, Wi-Fi lock, all that stuff, and then the door on the second floor that leads from the second to the third floor, I put a deadbolt on it.

In this way, I had a choice. I could either rent out the whole house with two masters or, if I wanted to rent out the main house and then the attic separately, I had that option because I had a separate staircase on the outside. It was not cheap to build a staircase and cut into the roof line and all that other stuff. By the time I got done, it was probably $7,000 or $8,000 just to do that, in addition to my rehab costs of completely redoing the attic. There was some money put into it.

We ended up getting almost like a hybrid between an STR and MTR. Meanwhile, these were people that were coming from overseas and they were staying 30 days at a time and renewing every 30 days because they were doing some work. As most people know, Indianapolis’ nickname is the Crossroads of America. There are a lot of interstates that go through there. There’s a lot of clear housing, trucking, logistics, and things like that.

There are a lot of companies that are coming in and building out all these Amazon and other company-type warehouses. They’re building all the conveyor belts for a product that moves through there. This company was involved in that build-out and sent workers over to do that. They’ve been renting out my whole house, since the day I decided, I was going to do that.

What are you getting in rent?

Those rents are around $7,000a per month.

You’re talking about the long-term tenant, if you would’ve rented it out to somebody who lived there for 1, 2, 3 years, or whatever, $2,500 is probably on the higher end and you’re getting over $7,000.

Let’s be clear. There are more expenses.

I got it. We’re going to walk through that, but still, the fact that you almost tripled the rent.

Yes, the numbers are off the charts.

It’s crazy.

There are some distinctions there. Number one, I went out and bought a different insurance policy. That specifically spoke to STR.

Is that a premium?

Yes, it was a little bit. I found a pretty good deal with the relationship that we had and I shopped pretty hard. I got that done. On an LTR, a management company’s going to charge you 10%. On STR and MTR, you’re going to have companies that charge you anywhere between 20% to 25%. I’ve heard of some situations even charging as much as 50%. You got to understand that they’re going in and having to organize ins and outs of guests, all the marketing, getting new people in there all the time, washing sheets, and all the stuff that they’ve got to do.

It’s way more intensive on management. When you have tenants that are coming in and out that quickly, you can’t say, “They’re ripping me off. I’m paying that much more management out of the rents.” It’s a very intensive nature. If you want to do that yourself, that’s a lot of work. You got to have a lot of great systems in place to be able to pull that off on your own.

It’s because of experience, I did it right. I was living by myself in this big house. You can judge me, whatever, but I was enjoying it. You know the house pretty well because you’ve been there a few times where there’s a nice fireplace. I bought a big beautiful dining table and it was gorgeous. I spent a bunch of money on it because it’s like a showpiece. It is a service for twelve. I bought twelve matching chairs. I bought all the matching dishes and nice towels. I made it nice.

That’s an expense that people have to consider when they buy an Airbnb. In terms of staging, you’re furnishing the whole house from everything.

I bought more beds and all kinds of stuff like better towels. I didn’t use my old crappy bachelor towels.

Even plates and silverware, too, right?

Yes.

You’re talking about everything except your clothes and wardrobe.

It’s a little bit nerve-wracking because you go like, “God, I hope they’re going to renew again for another month,” because if not, where are we going to get the next bit of revenue? It’s not as consistent. I’ve been very lucky and very blessed in this particular case that the people that come and want to keep coming back. They don’t ever move out. They just hammer their employers overseas. They’re somewhere in Europe and go, “We want another month,” but it’s all done at the very last minute.

I do notice that there is more wear and tear. Every once in a while, they’re like, “We destroyed this towel. We ruined this pair of sheets and broke three dishes,” for the sake of keeping peace because these people are paying you a lot of money, you pay to replace them. They’re not even remotely cognizant of energy savings. When it’s hot, they got the air conditioner running 24/7. If it’s cold, they got the heat running 24/7.

You don’t want to trip over pennies to lose dollars.

I’m paying higher management fees. Even after all that and additional insurance, utilities, and incidental expenses, I’m still probably netting out about $5,000 a month net.

That’s profit?

That’s the net take after the property manager pays me. I still have a note on the home that I’m trying to leave out of the conversation so that people can be clear about revenue per se. Assuming that somebody owned the house outright, the net revenue would be $5,000. The net revenue on an LTR, if they were paying their own utilities and you’re only at 10%, it’s probably would’ve been $2,100 or so per month.

Will I take the $5,000 over the $2,100? Absolutely. It’s the same mortgage payment, but all the other stuff is different. I wanted to point out those nuances. As a result of this, in our world of real estate investing, we are becoming heavily invested in the STR and MTR models. Not just for our own portfolio but helping other investors with that as well.

There’s higher risk and more volatility. I feel like I had some blessings or some luck, whatever. There are a few things that the stars aligned pretty nicely. I can’t honestly say that that’s going to happen at every property. However, because of previous experience that I had in other markets and what we are also already doing in other markets, and some of the outreach marketing that we’re doing, especially in the MTR world, we’re starting to see some pretty nice results. That’s an avenue that is becoming more and more available to our more sophisticated investors.

With the STR (short-term rental) and MTR (mid-term rental) models, there are higher risks and more volatility. However, we're starting to see some pretty nice results. Click To Tweet

What do people need to look at in terms of the cost of getting either a short-term or a mid-term rental? What property price points do you think are appropriate? I don’t think you’re going to pick up a house for $50,000, then that’s going to work for a short-term rental.

I would never say never. It’s possible, but it’s not anything that we are going to participate in.

I don’t think that’s anything that we’re going to set up our investors with, either.

Everything’s got a market. If you went on to Airbnb and said, “I want to find a place that goes for $30 or $40 a night.” You can find that stuff. It does exist. I’m not saying there’s not a market. It’s just not a market we want to be in. To answer your question more specifically, there are things that we are looking for specifically. One, we want to be in nicer neighborhoods. We want anybody that’s coming as our guest to feel at home and safe. It is a guest because it’s not a permanent tenant.

The other thing is, as the realtors say, “Location, location, and location.” We are looking in areas that are near other things that they want to be doing both professionally and socially. For example, if you’re in Indianapolis, you want to be close to downtown where all the action is. You want to be in some of those cooler hips surrounding downtown where price points are higher. Those are the hip happening areas where all the good restaurants are and the cool coffee shops.

The other thing that we look for is the professional side. We seem to have guests that are, for example, one of the more popular buckets in the medical field. It’s your traveling nurses or doctors that are coming through a few months to work on a research project or something like that. We start looking, “The home that we’re looking to purchase, what’s the proximity to the major hospitals in the major medical facilities?” That becomes an issue. Those are things to look for.

When we go out and try and find a property for an investor and ourselves, we’re doing the same things. We don’t want to put an investor into something that we wouldn’t do ourselves. We’re very clear about that. One of the reasons why we don’t want to be in the $ 30-night thing either is because we don’t want to be there. Why would we talk an investor into going there? It doesn’t make any sense.

That’s the way it works out. The other thing for the investor is what are the things to look for because that’s the part B of what you were asking is, “What’s involved?’ If you’re going to find a property, no matter what property you’re buying, we’re in pretty much a tight market all the way across the country. Whoever you are reading this, the best advice I could give you is to get your ass preapproved, understand lending products, and understand what some of your tax breaks might be going in.

If you’re rehabbing a property and buying dishes, towels, and all that other stuff, those are costs associated with getting the property ready to be marketed. The more educated you are in that regard, the easier it is for you to make a decision. In other words, buying a property these days in a tight market, you’re better off knowing this stuff because now you’ve got more metrics to help you make a decision. It’s like, ” I can get this lender and this lending product and structure to the way I buy the property based on my own income and credit rating,” and things like that. In addition to that, “Here’s what tax breaks I need. Maybe, I’ve done some tax strategy up front.”

I go, “I know if I buy because of my income, where I’m at, and what I pay taxes in previous years, if I find a property that needs approximately say, $60,000 worth of repairs, rehabs, and set up for MTR and STR, and I was paying enough taxes that $60,000 is going to be a write-off. The IRS is paying for most of it. To know that stuff upfront is freaking awesome. When we put a property in front of them, that investor is going to be able to go, “I can make a decision in 24 hours. Go find me something.”

We try to help with the pre-structuring of that stuff to say, “Let’s get you armed and dangerous.” “Great. This makes sense.” “You probably need to be buying approximately $200,000 property that needs about $60,000 worth of readiness.” Readiness is going to tend to equal the property that it is. What’s the area? What kind of guests are we going to be attracting, etc.? Needless to say, the furnishings and furniture itself, dishes, towels, and all that are going to be different in a $200-night place, then they are in an $ 80-a-night place.

To further answer your question is a general rule of thumb, there are a lot of variances to this, but we figure approximately $5,000 in readiness costs per bedroom. In other words, if you got a three-bedroom house that you’re trying to furnish and get ready for STR or MTR. You were looking at probably about $15,000 to get all the furniture and got to pay people to buy it, put it in, stage it, and get it all ready. It’s not the cost of the furniture. There’s a lot of set work and all that stuff too. There’s a lot of labor involved in doing that.

 

In all likelihood, they’re not going to get anything under $100,000. You’re probably buying properties for $150,000 on up, in all likelihood. As you said, if you want to be in a good area or location and depending on how much rehab it needs, it’s going to vary the price. If we got a $150,000 house, what are the loan requirements?

This is my personal opinion. Everybody has their own risk tolerance, but you ought to be looking at using debt or lending. Real estate is the only asset class that you can invest in that the banks will loan you money, typically 80% of the purchase price or the appraised price. Why not take advantage of this incredible offering that banks and lenders are giving to us to utilize, leverage, accelerate our returns, and be able to get more assets under our control?

I don’t use cash for any of my properties. I might use cash to initially buy them. They need a lot of work and I’m not able to get lending, but overall, even if I use cash, I’m getting it back out as quickly as I can to put it into the next project with a refinance. We got a $150,000 property. What are we looking at? What’s an investor going to need to come up with cash-wise to make this happen?

It depends on the condition of the property.

Let’s say the property’s already ready. It’s turnkey ready and it doesn’t need anything.

That’s great. Those aren’t as easy to find, but let’s use that as an example. For a typical guy and a $150,000 property, if they’re putting 20% down, that’s $30,000 plus closing costs. Let’s say $35,000 in round numbers and it’s cash out of pocket. Let’s say it’s a three-bedroom home and we go back to our approximation of $5,000 per bedroom. There was another $15,000 in readiness. You’re up to $50,000 in cash that you’ve put into that property to get it ready to be marketed. That’s it. It’s pretty straightforward. I agree with you, by the way, about leverage. There’s no question that we are in an inflationary period. I understand. I’m being captain obvious.

At the same time, you’ve seen in the last few months, costs of food in some cases have been going up 10%or 12% a month, not a year. It’s this crazy stuff going on right now. If you think about it, even with interest rates, as of now, going up 5%, 6%, 7%, or 8% as opposed to 2%, 3%, 4%, or 5%, which were a few months ago. It’s still a number that’s significantly less than the inflation rate. If you’re going out and buying that $150,000 property and basically your notes for $120,000 or borrowing $120,000 at 6%. The inflation rate 10%, 11%, 12%, 13%, 15%, or 20% right now. The value of homes is going up like crazy.

Will that continue? That’s anybody’s guess.

It’s anybody’s guess, but you’re still way ahead of the curve, number one right now. Number two, you’re basically getting to borrow money. You’re paying the cost of not having to use your own cash or using somebody else’s money to have a cashflowing asset. How are you doing that with a stock? You’re going to go out and maybe you get a dividend, but you don’t have that control.

Let’s say worse comes to worst. Your manager sucks at STR and MTR and it’s not working out. “It’s too volatile. It’s awful. I bought all these dishes.” You still have a long-term note for a nice $150,000 property. You could still LTR it all day long. Think about that as probably the best advice I could give you because this is what also when we look at.

What would happen if everything failed in terms of STR and MTR? If you had to go LTR, would you still be able to service the note? LTR is going to be the most stable. It’s going to be the least profitable but the most stable. We live in very unstable times. This also speaks to different investors having different risk tolerances too. This is the time when you have to do a self-assessment. It’s something to think about.

We live in very unstable times. Long-term rental may be the least profitable, but it will be the most stable. Click To Tweet

I think that too. If you have more than one short-term rental, you’re going to mitigate your risks quite a bit by economies of scale. You’ve got five properties under your belt that are all short-term rentals. You could have one that has a bad stretch. It doesn’t rent up for a month. I don’t think that’s probably even possible, but let’s say that it doesn’t work and you don’t have anybody. You got four others that are generating nice cash-on-cash returns that are going to be able to more than cover that one when it goes through its down period. Whereas if you have one property, then you’re a little bit more susceptible to volatility. You don’t have enough assets to smooth out that volatility.

The more properties that you stack up in your portfolio, the more you’re going to smooth out the overall monthly cashflow. You’re going to start to see some consistency. Let’s say in this example, this property is for $150,000 and you’ve got $50,000 into it, and it goes up to $200,000. That’s your gain. That’s not the bank’s gain. Their banknote stays at $150,000. You doubled your money and on top of that, you have all the yield, meaning the cash coming in from the rent. You’ve got multiple streams of income on this property. In addition to the tenants that are paying you the rent, you’re amortizing in a sense, which means you’re paying down the principal balance of your loan. You’re now building equity or net worth that way as well.

There are so many ways to generate increases in net worth when you do this type of plan, especially when you utilize leverage. That’s why I keep pounding the table that you got to have real estate exposure in your portfolio. I get that it’s not that easy to come up with $50,000 as a new investor. The hardest part of investing, in my opinion, is going from zero or in debt to having $100,000 to work with.

I’ve said this before, going from $100,000 to $1 million is easier than going from $0 to $100,000. Momentum is a big part of it and the universe says, “You’re a good steward with the smaller amounts. I’m going to bless, increase, and give you more because you’ve proven that you have the ability to handle the smaller amounts.” What else should the investor be looking for experience-wise that they got to come up with the cash for the 20% down payment, stage it, management fee 20%, 25%, 30%, somewhere in that range, and then what?

Rock and roll, baby. We live in a very technology-driven world. I’m not necessarily good at tech, but you know me well enough to know I appreciate tech and what it can do. What’s interesting to me is the amount of tech that’s coming into the space of STR and MTR. I don’t mean platforms like Airbnb or Furnished Finder or anything like that. Those are more the marketing platforms for people or guests to see availability, but behind the scenes, there are all these great analysis tools. Number one, going out and looking at the algorithms of what all the competitors in the area are getting for a nightly rate. What are the hot nights? What are the cool nights? What does MTR look like? That one is the analysis tools.

There are also management tools that these management companies are using. They’re using the analysis tools, but they’re also using ways to help automate guest entry and exit with Wi-Fi locks. They’re also using it to organize and ping cleaning crews and all that other stuff. Also, they’re using it to create good invoices.

One of the things that I would also encourage investors to look for is, “Who’s the management team that you’re working with? Are they leveraging some of these tools? Are you getting nice, clear, concise invoices?” There’s a difference between the guy that owns 3 or 4 STRs himself as an investor and doing it for his couple of friends on the side because he knows what he’s doing and these are his buddies. I’m not saying there’s anything wrong with that, but like anything else, know who you’re doing business with. I have a great appreciation for companies that understand and leverage technology correctly.

As an investor, I want to have a solid invoice. I want paperwork. This goes back to your conversation about leverage in a full circle. If I have paperwork, invoices, and deposits in my bank to show, and it’s all going into my LLC, I can go to the bank where I have that account and go, “Look at what my LLC is doing. I want to establish a line of credit for my LLC.”

Now, I’ve got access to even more capital to do even more deals, but I can’t get that if I don’t have good management. If somebody’s randomly handing me the cash and not giving me good invoices and bookkeeping and things like that, I don’t have the same ammo to show the bank or any other lender. We are doing some of that stuff right now with some lenders here in Nashville. Since we have good documentation, it’s working out very well. To your point, starting off small and going, so we’re in that movement which is exciting. We’re moving into this hyper-growth mode right now. It’s very exciting.

How do people get started? What do they do to be able to do this? They can go out and do this on their own. I have a buddy that I play cards with. He’s got some properties that he paid $1 million dollars for in Gatlinburg, which is a pretty high-end type of destination play. That’s not the game that we’re playing.

Personally, I’m a more conservative investor and think that’s pretty risky to buy those types of properties. Those can draw down enormously if we get into some type of recessionary environment. What do they do to get started if they wanted to do this but don’t necessarily have the experience and don’t want to take the time to go out and source properties? How can we help them?

We have a program called Systematic Wealth that’s designed specifically for this. All you got to do to get started is do the foundational module. The foundational module has a number of different trainings but essentially, it’s there to talk about those two specific items as they relate to real estate 1) being debt and 2) being taxes. Each investor is different. Everybody that comes to us has different income, credit scores, risk tolerances, and things like that.

 

Different amounts of cash or investible dollars.

Even with the different amounts of income, they also may have different approaches to paying taxes depending on who their CPA is. I’m not talking about TurboTax or H&R Block. I’m talking about in this foundational program, you’re going to get a bunch of trainings but more importantly, you’re going to get three calls. The number one call is with Nicole, who’s been working with us forever. She’s amazing. She’s our investor relations gal. That’s a GO call, get organized. That’s to help you gather all your information and tee everything up.

From there, you’re going to have a debt analysis call with a debt analysis specialist. These are people within the network that we’ve associated with. That helps you to understand your own debt positions. Do you have equity in your home? What are you doing with that equity? How are you paying off credit cards? How could you be more efficient in terms of the way your current debt structure is? That’s the next call.

The third call which is probably the best of all of them is the tax analysis call. Within this module, we have a tool where we can feed your most recent tax return into a piece of software, again, technology. It’s not going to give you a full tax analysis, but it will identify the major areas that are opportunities for you to save on taxes based on your return. In addition to that, you are also going to get a call from a tax analyst or tax strategist.

It’s not a CPA. They may or may not be a CPA, but it’s not a CPA call. It’s a tax strategy call. It’s there to set you up and say, “These might be some of the ways that you could look at leveraging this information that came out of this software to facilitate keeping the most amount of money in your pocket and by paying the least amount of taxes to the IRS.” There’s nothing illegal about it. It’s very legal, but it’s leveraging and using the laws because they’re so complex and intricate that it’s gotten to a point where you pretty much need software to do this now.

All of the training and all three calls, all the tax analysis, and everything are in that foundational module. We charge $1,250 for it. It’s probably worth $20,000 or more in value. It was super cheap. We do it cheap because it’s not like a big profit center for us. We’re doing it because we want to get to your point or investors into a position where they can do things correctly. Honestly, to be selfish, if they’re doing things more correctly, they’re better customers for us. It’s a lot less aggravation all the way around.

People understand what they’re getting into. We end up being more profitable as we move forward into the later stuff where we’re getting into selling the properties and things like that. It’s a win-win for everybody. Any investors that want to go further beyond that and want to hire a tax expert and build out the full roadmap on how to do this strategically with different properties, and all that, you could do that. That costs more money to do that, but we’re not asking anybody to do that.

The beauty of this is the investor has access to this entire network or this ecosystem that they need all the way through, like the lenders, tax strategists, attorneys that can help set up LLCs, and all that stuff. It’s very exciting for us that we could have built this ecosystem for investors to help them be super successful.

You don’t have to do that program in order to get a property. You could do a transaction. I don’t want to make anybody think, “You have to go through all those calls in that program.” You could buy a property, but you’re saying that based on how you laid it out, that’s to their advantage to have that groundwork laid out in front of them before they go to purchase a property so that they can maximize all the debt and the taxation on that property.

When an investor reaches out to us, we have a call with them or everybody who reaches out to us. Typically, in that first call, we are making a distinction. I hope I don’t piss anybody off by saying this. I probably will, but we’re making a distinction. You are the person that wants to own properties and that’s okay. There’s nothing wrong with it. “I want to get a rental property. I want to have a tenant long-term, short-term, or whatever. I want to get in the game.” “Great.” That is what we call somebody that wants to own rental properties.

There is a big difference between somebody that wants to own rental properties and a real estate investor. Click To Tweet

That is different than a real estate investor. A real estate investor says, “Yes, I want to understand debt and leverage better. I want to understand all the different products, the ways I can pay off properties, when it makes sense to refi, and when it doesn’t. When it makes sense to pay down a mortgage? When it makes sense to go simple interest only? How am I structuring my taxes? How am I strategizing?”

There’s a big difference between going to your CPA at the end of the year and going, “Report on this.” They can’t change history. They’re saying, “I’m going to report on what you did. I’ll take whatever deductions we can. We’ll put it down on paper and send it off to the IRS.” There’s a big difference between doing that or somebody that wants to own properties versus somebody that says, “Prior to this year ending and all during this calendar year, what am I doing to minimize taxes?”

That’s real investing. I want to make that distinction. When somebody reaches out to us, we are trying to determine where they land on either side of that argument. It doesn’t necessarily mean that they couldn’t make a leap over here after they bought a couple of properties, there’s no question and plenty of them do, but this is more detail. If you don’t have the stomach for it, it’s okay, but understand that there are certain things that you’re not going to understand, and you’ll likely pay more taxes.

We’re out of time, but to get a call going, they’re going to meet with Nicole, our Head of Investor Relations, if they’re interested in at least getting started in the process. It’s HighReturnReal Estate.com/cashflow and that will allow you to book a call with Nicole. You can then discuss which route you want to go. If you want a transactional or buy a property or if you want to go through Systematic Wealth, either way is great. We don’t care that much.

In addition to that, you need to come to the table knowing what you want essentially or approximately what you want. We don’t have all this inventory that’s already purchased and under our contract or in our portfolio that we’re going to say here, “Pick from this.” You’re going to say, “I want to spend about this much on a property. This is my range. This is what I have for cash to put down and to stage it.”  

We will take that and our acquisition team will go out and find you what you’re looking for, and we will get it under contract and assign it to you. We have a management team that we have built out that is designed to help you not have to do management of the property, which I’m sure none of you reading want to manage the property. I can’t imagine any of you that would unless you’re trying to be an active investor and be hands-on, involved, and save money on the management fee, but I certainly would think that most of us have no interest in that. That’s how you get started. Book that call with Nicole and she’ll guide you through the process.

This is why you want to live below your means and be banking cash so that you’re in a position of strength when opportunities present themselves to accelerate your multiple streams of cashflow, like the short-term rental play here. We’re so excited about it, just telling you the inner workings. Our team is meeting every morning for an hour or more to dial this in and to expand our own portfolio.

This is the direction that we’re headed. Jack Gibson is headed with his own cash and Sheck’s headed with his cash. This is where we’re going. We see a tremendous opportunity over the next few years to accelerate your yields and put yourself in a position to create indestructible wealth. Thank you. Shecky, thanks so much for all your expertise. I appreciate you joining us and sharing. It’s always a pleasure to have you.

I love having these conversations with you. It’s great.

It’s fun. Thank you so much. Everybody, have a great day. We will see you on the next episode.

 

Important Links

• High Return Real Estate
• Episode 10 – Previous Episode
• Systematic Wealth
• HighReturnReal Estate.com/cashflow
• @IndestructibleWealth – Instagram