[00:00:02] Speaker A: This is Short Term Rental Management, the show that is all about short term rental property management with your host, yours truly, Luke Karl.
All right. Yes, indeed. Short Term Rental Management. Happy to be here with Larry Murray. Met Larry recently at a conference. He was fantastic. Came up to me with a big smile on his face. Just so easy to talk to and so refreshing and. And happy and just a ray of sunshine. And I said, man, you got to come on my show. Let's come on the Short Term Rental Management show. He said, hell, yeah. And it turns out he owns a couple of short terms as well. So, Larry, I'd love to hear a little bit about your backstory, where you live, what kind of properties you have, and all that fun stuff.
[00:00:51] Speaker B: Sure, Luke. Well, thank you. Appreciate. Appreciate you having me on. That was Bigger Pockets conference was really awesome, and chance to meet you and Avery was one of my highlights. Definitely. I was hoping to do that and accomplish that task, so that was wonderful. So where do I come from? Hail over here in Baltimore, Maryland. Just right outside in a little town called Catonsville, and then live here with my wife and son. And I've been a firefighter for, what, 42 years now, and looking to try and retire as a career. It's been, let's see, October. Let's see. I guess I've been. I did this as a volunteer in Arkansas, and then from there I was also in the military. So I did it in the military while I was in Arkansas and then ended up getting a career firefighter job in Arkansas as well. This is my ties. This is kind of the backstory as to why I invest in Arkansas. So I was a firefighter in Arkansas for 11 years in the city of North Little Rock, and from there ended up moving up here to Maryland and became a firefighter in Montgomery County, Maryland. And I've been there for 24 years now. So pretty good run. We decided that we needed to try and do some a few years ago, I guess, back in 2018, and figure out what.
What we could do to earn a little bit extra cash. So we looked into the real estate world and we started getting online. I ended up finding a house down in Birmingham, Alabama. Investor was selling, and it's like, well, this looks kind of good. So my wife says, okay, well, we're gonna go check it out. So we jumped on an airplane, flew down to Birmingham, and it's like, hey, we got the run. Let's just go ahead and run by it. We know we're gonna go see it tomorrow. Well, trying to get there Was incredibly difficult. It was a war zone, to say the least. It was burned out, boarded up. It was a scary drive to get down in there. I was like, this is not where we need to be. The house itself didn't look bad, but getting to it was a war zone. So contacted the realtor and says, hey, this isn't going to work. This area is not for us. This is not what we're trying to do. We need to figure something else out. So she came up with several, several other properties to look at. And we went and looked around, put in an offer or two. We got beat by cash buyers. They pretty much crushed us. We're trying to finance 100, $150,000 property and they're just buying up cash. So while we were there, the agent told us we need to go speak to these guys and see what they have.
So called infinity banking concept. I'm like, this sounds interesting. So I found out that it was actually about life insurance. And I'm like, oh, this may not be for me, but the real estate agent was really, really good to us. So I was like, we're gonna go ahead and listen. Well, I got there and a gentleman's name is Joey Murray with Wealth Throughout Wall Street. Actually, Avery's been on their podcast. As a matter of fact, that's where I found you guys is through the Wealth Without Wall Street. So what they are putting out was basically a, what I call a whole life policy on steroids. You front load the policy with cash and then you have access to that that you can utilize to do other things. Now through the fire department, I've got deferred comp and stuff like that. However, I have no access to the cash. So in working with them and ended up getting a policy set up, fast forwarding that has actually allowed me to. Every deal I've been in now in real estate has actually come through that. That's where I actually funded it from. So that's where that whole backstory of getting down there into Alabama and stuff and learning about this and send this policy up actually set us free in the world of real estate.
[00:04:27] Speaker A: Okay, hold on. We're going to, we're going to work backwards here. We're going to go backwards and work forward to the life insurance. But okay, first of all, how did Birmingham get on your radar?
Let me go back in front. Listen, sounds like a lot of rabbit holes here. Is that, what is that? Would you describe? Because that's how I, that's how I operate.
[00:04:47] Speaker B: I, I.
[00:04:50] Speaker A: Find a little hole with A little tiny door and I open it and I squeeze my ass through there and I see where it takes me. And. And it sounds like you're a very similar kind of a guy here. Would you say that it was a rabbit hole situation?
[00:05:02] Speaker B: Oh, most definitely. How do we have any direction? We just kind of went for it and it's like, okay, what can we do? Started looking on the mls. Where can I find something reasonable up here in this area, up in the Baltimore region? It's very expensive. So I was like, I mean, the city itself is not. But you've got all the regulations and things. You got to be really careful with the city because it's a street by street type investing area. And apparently it is down there as well. But the price point was much better for us. So I just happened to find this through the agent and the numbers worked and it made sense to me. So it looked good on the mls, if you will.
[00:05:37] Speaker A: I see. And so the house itself, did you walk, you walk through the house?
[00:05:41] Speaker B: Yes.
[00:05:41] Speaker A: Original Birmingham house.
[00:05:43] Speaker B: We drove by it and we determined that that wasn't going to be where we need to invest, so we canceled that appointment to look at that particular house.
[00:05:51] Speaker A: But the house itself looked like it was probably pretty okay from the outside.
[00:05:55] Speaker B: Yes, it was at the end. It was a dead end street, that particular part. So at the end there, they did a really nice job with the pictures.
[00:06:02] Speaker A: Okay. But we've quickly realized that this was not an area where you wanted to be playing around with. And also, since you didn't really have any familiarity with the. Anyway, probably just was too much for you to, you know, for the comfort zone.
[00:06:19] Speaker B: Yep. It was a shoot, ready, aim situation.
[00:06:22] Speaker A: I got you. I totally understand that. And are you personally, when you mentioned a war zone, are you looking in general for something in a particular, you know, type of area or you. You go to lower income, high. Doesn't matter.
[00:06:36] Speaker B: I would be comfortable with C, A, B. It really doesn't matter if. If the numbers actually work. That's. That's kind of where we were, what we were looking at.
[00:06:44] Speaker A: But this. Would you say maybe a C minus or a D plus or something?
[00:06:47] Speaker B: Definitely a D or worse.
[00:06:49] Speaker A: Oh, wow. Okay. This is a bad area. Okay.
[00:06:51] Speaker B: It was a really bad area. Yes.
[00:06:53] Speaker A: Got it, got it, got it. So what year was this that you're getting beat out by cash buyers?
[00:06:56] Speaker B: That was in 2018, when we looked at that.
[00:06:59] Speaker A: Okay, so. But these were low dollar properties that people were just. I mean, how much was this house?
[00:07:06] Speaker B: I think it was like 125,000, something like that.
[00:07:08] Speaker A: Okay. That's not too cheap. Okay. And cash buyers were coming in, throwing their money around.
[00:07:13] Speaker B: All right.
[00:07:14] Speaker A: So then we discovered, just by accident, another wormhole that's deferred life insurance situation. Can you explain that to, you know, like, let's say I'm four years old, I have no idea what life insurance is. Can you explain that concept and then we'll get into how you used it?
[00:07:32] Speaker B: Sure. So basically, when you're dealing with life insurance, you've got a term policy which is, hey, I'm going to live for the next 30 years. And it's a really cheap policy.
And then if something happens to you, the policy pays out. This is a whole life policy. It means at some point it will pay out. When you die, it will pay out. So that's, that's the basis between a term and a whole life policy. Whole life. Go ahead.
[00:07:56] Speaker A: Just to stop real quick that the name of the policy is very simple for a reason. This is my whole life. It goes for my whole life. Right, exactly. I used to think when I first started hearing about these, it was a hole like, like, I don't know what it was, like a different thing. But now I realize that we've got it for a term. We can buy it for a term of my life, and at some point I'll be too old to cash out on it, or I can buy the whole life, which means I until I die. Right. Is that accurate? Okay. So. And the term is exactly what you said. You're buying a life insurance policy for an X number of years, and when that year comes, it's gone. It's very inexpensive. You're basically saying if I die between now and the end of this policy, I'm getting this much money and I'm paying this much in to get that much. But you're all in the dice on whether or not you're going to die before that's over or not. Right. So with the whole life, again, this one's much more complicated. I'd love to have a detailed explanation. You seem like a very intelligent man and I would love to hear your explanation as to a whole life policy.
[00:09:02] Speaker B: So I had had a whole life policy early on. Being a firefighter, you want to make sure that you protect your family so you never know what can happen. So in that process, I ended up getting a whole life policy on myself. Once again, it was very expensive. And you can build cash value in the policy. So as you continue to pay your premiums, there's Money that can be built up and you can have access to. That's just a general whole life policy. That's not what these gentlemen wealth of Wall street were actually teaching. They were teaching and they took that whole life policy and now it has been front loaded with cash. So for instance, if you're, if your policy is a $200,000 policy and your premium is $100 a month, that's what a regular whole life would be. And then from there now they've front loaded with cash. So we put on what we call a rider. So the rider on that might be like an extra thousand dollars a year. So by putting that extra cash on the front side, it allows the policy to grow much quicker. And, and then you're. Because this is a, this, oh, I guess I should mention this. It's also a mutual company, so you're part owner kind of thing. So you get the dividends. Whereas if normally when you went to, if you need money, you go to the bank, you pull your money out, you spend it, it's gone. In this, the whole life policy, the way that it's loaded up with the, with the cash in the front side, you can, you put that money in and then you can take a policy loan against it. So what that means is the money is not coming out of the policy, it's a loan against the policy. So the money that is in there is still earning compounding interest for literally the rest of your life. You're just taking over the debt in essence. So if I needed to borrow $20,000, I borrowed $20,000 out of this 100,000 or as $200,000 policy and then I would pay myself back. So I'm not from the, doing it from the bank. And like I said, if you do it from the bank, it's pretty much gone. You're just paying your monthly payments to the bank and you're done. In this case, since I've taken over the deb, I am paying myself back. However, since it's a contract with you and the, the insurance company, if you will, you don't have to make payments if you can't afford it. The first two years when I first got my policy, I was flat busted broke. I did not have any money to really make this happen as far as make premium payments to it. So that was part of the, the reason for going for this. The only two payments I made for the first two years were interest payments. I just paid the interest the first year, pay the interest the second year, and then the third year I was finally able to start putting some money back in and actually paying the policy back. But otherwise there's just a big hole there. And I didn't have to make monthly payments, so that was a big plus for me.
[00:11:36] Speaker A: So how is this different than say a mutual fund? It sounds very much like you're just investing kind of in your, in yourself.
[00:11:43] Speaker B: And they're pretty close. They're pretty close in what you're doing. I like this because it gives me an added benefit, like you said, of that because of my job. It gives me a little protection on the backside if something does happen.
Instead of trying to take a loan from a bank and having to, you know, spill your entire life, you know, your parents give you a dollar because of your birthday and you have to actually go write a dissertation as to why they gave you that dollar. You know, when you're trying to get a bank loan, you know this. I filled out a piece of paper and within five to seven days the money just showed up in my bank account. And I can use that to do whatever I can. So in essence, with this policy, you're taking over debt. It gives you access to cash, was a big thing. I've got a deferred comp and there's a lot of money sitting there I cannot gain access to. They tell you how much you can put in, they tell them how much they're going to tax you when you can take it out, all that fun stuff. So it's all government controlled where this gives you the ability to control your money.
[00:12:35] Speaker A: And you already had this before you got into real estate.
[00:12:38] Speaker B: I did not have it before I got into real estate. This is kind of why I got in. Because the real estate agent says, you know, you're getting beat by cash buyers, you need access to cash. Here's a way you have access to cash. So go listen to these guys. So I went in and listened to these guys and I'm like, huh, this is cool. And the other part with that is the Saturday before we left, we, we belonged to local RIA up here, real estate organization. And then down there that we asked if they had anything going on and they had a financial meeting that Saturday before we left. So we went in there and lo and behold, they were teaching the exact same thing. Talking about the infinity banking concept, infinite banking, whole life banking. There's, there's many terms for it, but in essence you're using a whole life policy as your vehicle to store cash. And then you gain access to that cash. You can take your policy Loans against it and then use that to purchase property. That's why they're. They're showing that to the. To the real estate investors.
[00:13:31] Speaker A: Is this something you're selling? Like, you're not selling or teaching this today, are you? Nope, Nope.
[00:13:36] Speaker B: I just use it.
[00:13:37] Speaker A: Yeah, I just use it.
[00:13:38] Speaker B: Okay.
[00:13:39] Speaker A: I mean, not that I would have been mad at you. I just was curious.
[00:13:43] Speaker B: I've been asked if they wanted to sell it, and I'm like, no, I'm not. I'm not that kind. I'm not trying to do that. It's just. It set us free. I mean, when we first got the policy, like I said, I didn't have anything I had. And you don't have to use it for just real estate. I used it to help my kids with some college, my older kids. I had gotten a truck. I had to borrow money to get a $6,000 truck. Like I said, I was broke, and that truck needed repairs. So I borrowed money against it and got my truck fixed. Then the mechanic says, hey, man, you got good bones here, but you probably should sell it While we've got it fixed up. So I sold the truck that I needed a down payment. So, yeah, I use that to get a down payment on a truck. Meanwhile, in there, it also had some appliance issues. So I had a washer and dryer break. Got new washers and dryers. Got my home inspector license. This is right before COVID and in that inspected my home was practice. Found out I need a new roof, so I had to borrow and used it for a new roof.
I ended up having an oven go out. I tried to fix the oven, Ended up being the circuit board, so ended up buying a new oven. Well, then the freezer went out, so I had to get. I had to replace all my appliances, so I use it for that. So I use this for everything but real estate. Estate. Initially, this is just trying to live, but it also freed up the ability for me to actually have some cash now. And I was able to start putting some money back in and have some available, Because I was like, I was taking over some of that debt. I've got a nice big hole in there right now, But I'm working on paying that back. But those first two years, if I borrowed that money from the bank, it would have been there. Meanwhile, all this money that I've put in has been earning, Compounding interest and has never, never left it. It's just continuing to grow and grow and grow.
[00:15:12] Speaker A: Okay. One thing that stood out to me is that you're trying, you're doing this to compete with the cash offers. But how do you get cash? Like, let's say I'm just a guy that sounded like you were fairly humble at the time financially. And now all of a sudden you've got this. It wasn't as simple as getting this policy, this whole life insurance policy. And then they gave you 300 grand to go buy houses with it, right?
[00:15:35] Speaker B: No, no. Working with the fire department. I work a lot over overtime. I average approximately a thousand hours a year of overtime. Just, just trying to do this, pay off bills, get the property, all that fun stuff. So that's, we funded, we had enough money. There's the rider for us. The rider is kind of when you put a dollar into this policy there you have access to about 70 cents the first year. The second year you got access like 80 cents. The third year, for every dollar, you got access to about 90 cents. And then after that, my break even point on this policy was three years. Some policies don't break even until five years.
So when you're putting this money in, you have access to a certain portion of it and that's where the rider comes in with that rider. Whatever you put in there, as soon as it clears, you have access to that. So my policy is pretty significant. And then I've got one on my son as well. So the idea is to have a series of policies and then you can borrow from those. But working at the fire department, working the overtime, that's how I was able to continue to fund this. We had enough to fund the rider for two years. And then after that I didn't really know what I was going to do. I had to figure it out. So we ended up buying some multifamily. I got an acquisition fee, put that in as a rider, ended up taking that money back out, ended up buying another one. And yeah, that. So the first two or three years, that was in 2018 when we got the policy and then when we hit 2021, no, 2020, I had a decision to make. We finally had some cash sitting there. We finally, we were able to decide, okay, hey, now we can jump in the game and start playing with some, you know, and purchase some property or we can join a group. So this is a big decision that we had to make right there in 2020. And we ended up deciding to invest in ourselves and actually get some education. So we joined a multi family group and, and then once we joined that multifamily group, we were able to start buying. We joined that in, that was November, November 10th. It was the Marine Corps birthday as a matter of fact of 2020. And then 2021. We entered our first deal in March 2021. So. And that was 172 door apartment complex that we became limited partners in.
[00:17:41] Speaker A: Okay. The whole life thing. Can you recommend who do I look into? Who's teaching this that I, you know, that you like that I could go look at.
[00:17:50] Speaker B: So the wealth without Wall street is the company who I ended up meeting with and they're the ones who are. They're one of the companies. There's several companies that are out there doing this through the multi family group. I've also met other people or another gentleman specifically who, who's doing this as well.
I've just got his name and number. I don't know what it's called.
[00:18:12] Speaker A: Okay, gotcha. So, okay, so hold on a second. At this point in time it sounds like we're right around 2020 and you get into this multi family which sounds like a syndication. Did you buy, did you own any, you know, investment single family homes? Anything of your own? Not yet, no.
[00:18:28] Speaker B: Had. Had nothing.
[00:18:29] Speaker A: And so. And who did you get into for multi family help?
[00:18:33] Speaker B: Rod Cleese Group.
[00:18:35] Speaker A: Okay.
[00:18:35] Speaker B: Cash flow. Yeah. Through multi Family real estate investing. So Rod Cleef is the, the gentleman who we joined there and through his.
Oh, absolutely loved it. The value in joining the groups is the. Is the network. That's where it is. I mean the class itself was very good. And we literally did. While we worked, we were learning the class and we did it. We'd read some stuff. We started doing it, read some stuff, start doing. Sent out mailers, made phone calls. I mean I was, I was trying to figure out as I was going through the program so we, I was looking on, on. Was it LoopNet? I guess it was. And I was looking and looking. I could tell you any property that came on or off anywhere pretty much in the United States while I was looking at every single day I'd be looking at that thing. Ended up running numbers, practicing, practicing, practicing the whole underwriting process. And then one just clicked. It's like wait a minute, what, what is this? This, this works. This is different than all the rest. So the numbers actually hit and once you run enough numbers you get an understanding and then. But that's what hit did with this one. So I found a 54 unit and ran that ended up asking another gentleman in that same group, hey, can you check these numbers out and see if I'm right? And he looks at it and says, yep, that looks good to us. So we ended up contacting, finding a sponsor, and that's a whole nother ordeal that we could talk about the whole multifamily world. But we ended up closing that deal. My first letter of intent to put in for property that I actually, you know, say here, this is me buying. This was, I think my. The LOI was 2.8 million. And of course I didn't have 2.8 million. We used other people's money to do this and this was a syndication, so. So we syndicated that one. So I was working.
[00:20:10] Speaker A: Look at you now. Hold on a second. I'm in multifamily. I own, I currently own eight apartment campuses.
You are making this sound way too easy. It is not easy.
The amount of time that you spent on this was massive.
[00:20:29] Speaker B: Yes.
[00:20:30] Speaker A: And the amount of stress and relationships and phone calls and insurance guys and I mean, this was, this was a huge. I would assume, I'm not speaking for you here. I would assume this was a huge undertaking.
So what I'm saying is, bravo.
You worked your rear end off, I would assume. And I would like to hear more about that.
And for anybody listening right now, what he did was not easy. Not easy. Again, I've done this nine times. I've sold three apartment campuses. I still own eight. And it is, it's extremely difficult. And it's also not all butterflies and rainbows all the time. And multifamily is extremely slow, slow, slow, slow. You need to plan to hold this thing for four or five years before you make a dollar. At least the way I do it.
[00:21:24] Speaker B: Right?
[00:21:25] Speaker A: And so I just wanted to slow you down real quick and give you some kudos there and let the audience know that what you did was extremely difficult. And we do. I love multifamily. I do, I do. I love long term rental in general, of course, the short term rental management. Here this episode is brought to you by Short Term Shop Plus.
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[email protected] that's sdsplus.com Every day I talk about how much I love long terms and everybody needs to do that as well. But am I right? Was it painstaking?
[00:22:36] Speaker B: It was. I immersed myself in the multifamily for a year. I mean, just every single day. And I'm talking burning the midnight oil and stuff like that, like you said, especially. And then once you find the deal, like I said, you're on the phone constantly. You've got to go. And first of all, you've got to get the deal. And then once you get into the pro, the process, then you find out there's multiple people putting in offers, goes to best and final. Had to get some price guidance from. From our agent, our broker that was down there. We had to go do our due diligence. We went there, walked every single apartment, took a lot of pictures, looked at the leases, ran all the numbers again. So, yes, it's. It's definitely a very painstaking process. Once again, I had that group. I made several phone calls. When I had to put in a letter of intent, I had no idea what it was. I didn't know what an LOI was. I had to actually pick up the phone and say, hey, I'm supposed to put an loa. What is this? What do I need to do here? So that's, like I said, the group itself, that's. That's where the networking really, really will allow you to break free and move forward. Because trying to do this on your own is pretty much impossible. I mean, I know that there are people out there and I've got a couple friends that. That do it, and they've done it on their own. But as far as moving forward, that. That takes a lot. So to. To close that deal took us a significant amount of time. We didn't close that deal. And that wasn't until August of 2021. The March thing, I had already found this one was working on it when we entered to the. The other pro. The other deal with 172doors in March, that was just a limited partner syndication deal where somebody from the group says, hey, we have this deal. We need people to invest. Would you be willing to invest? So it's like, sure. So we, we invested in that. But meanwhile we were still working on this one. It just took several months for us to. To actually get this thing to the finish line.
Best and final and everything.
[00:24:25] Speaker A: I'd like to break down the 54 unit, if you don't mind. Where is it?
[00:24:28] Speaker B: It's in Arkansas. Little Rock, Arkansas.
[00:24:30] Speaker A: Oh, so you're familiar with the area?
[00:24:32] Speaker B: Yes.
[00:24:32] Speaker A: Wonderful.
[00:24:33] Speaker B: That's where I was. And that goes back to what I referred to earlier when I was a firefighter in Arkansas for 11 years before I moved out here to Maryland.
[00:24:41] Speaker A: Okay. And this is not premeditated here, so I don't expect you to have all this stuff memorized, but I think you're probably going to do a pretty good job. Anyway, we were at two point. What? On the purchase price.
[00:24:50] Speaker B: We actually ended up buying it for 2.8 to 4.
[00:24:53] Speaker A: Okay. So let's do some math. 2824 divided by 54. We're at 52 a unit.
Yeah, 52, 523 a unit.
[00:25:05] Speaker B: Yep.
[00:25:06] Speaker A: Wow. Is this a class C minus? Where are we on that?
[00:25:11] Speaker B: No, it's a C. It's. It was definitely a solid class C.
[00:25:14] Speaker A: What's the rent per month, give or take right now.
[00:25:18] Speaker B: So that one I can't tell you that we've got. Once again, it's a syndication. So the gentleman from California, those guys handle all the financials and, and are pretty much running that side of it. I was more in the operation side of it, the due diligence, finding the deal, getting it where we needed to go. Gentlemen from Tennessee was also really heavy and deep into underwriting and getting this thing across the line. He was pretty instrumental in this.
[00:25:45] Speaker A: Okay, and did you go look at the asset?
[00:25:48] Speaker B: We did. We went. We went looking at it looked pretty good. We set up an appointment and walked every single unit.
[00:25:54] Speaker A: What's it look like? Pitch roof, central H vac window units. What's it got?
[00:25:58] Speaker B: No, H vacs are. They were up on the roof actually and on the roof. Had a roof over them. It was really weird. We actually had to replace one. Had to use a crane to get up there and replace it.
[00:26:08] Speaker A: The reg. The. The roof under the roof. The. The real roof is flat, I would.
[00:26:14] Speaker B: Assume in a couple of sections where it was. They.
[00:26:17] Speaker A: That's where the H vacs are.
[00:26:18] Speaker B: Yeah, they built some of that, you.
[00:26:19] Speaker A: Know, but it's central H Vac.
[00:26:21] Speaker B: Yes.
[00:26:22] Speaker A: Okay, that's great. And one unit. One one bedroom units?
[00:26:27] Speaker B: No, we got some twos and threes there. There's one of the. One of the buildings that's got some three be a lot of two bedroom.
[00:26:35] Speaker A: And what's the age of the asset?
[00:26:39] Speaker B: 70S I believe it was.
[00:26:40] Speaker A: Okay, cool, cool. What's the plan here? When. When did you close on it? Give or take. Like at least.
[00:26:45] Speaker B: So yeah, we closed that in August 21st. And of course the process of stabilizing it had some turnaround, had some units that we had to. To take care of. Had some Plumbing issues. We had to get squared away, had some trees we had to get taken out. There was a, a single family unit on the property as well. There was discussion of short term in it, there's discussion of long term and right now it's just a long term as far as that goes. And the plan was to hold it for 10 and then sell trying to refi between 5 and 7, get the money out, give the money back to the investors. The way this particular deal is set up is we have the, the general partner team, that's myself gentleman from Tennessee and then the group from California and then we've got the limited partners and we've got the, we've got a 8% pref. So we get 8% on the. For all limited partners and then from there we split the rest of that 70, 30. So I guess you'd say at every hundred dollars the first $8 is given to the limited partners and the other 92 split 70, 30 with the, the limited partner, general partner kind of great.
And then at the once we do the refi, get the money back once their money is out we do not write them out of the deal. A lot of places will actually write them out of the deal but we keep our investors in. We just do what we call waterfall or flip it and then it'll be 70, 30, 70 to the general partners, 30 to limited partners. And then when we come to the final sale we're going to sell it and do a split 50, 50 of the profits between limited and general partners.
[00:28:21] Speaker A: Wonderful. Look at you. So we do maybe plan to sell this thing in a couple years or maybe not.
[00:28:27] Speaker B: Yeah, like I said we're designed for like a 10 year hold and once again market you got to pay attention to what the market is doing. When we first went to purchase this thing it got got really interesting because the, the bank initially was going to let us have two years of interest only.
They were going to let us leverage it to 70% and I'm sorry to 80%. So then when they realized that we didn't live physically in the state then they said hey, we're going to change the terms. It took away our two years of interest only and they dropped it to 70% leverage. So we're going to have to raise more capital. We got that negotiated at 75%. That's how we ended up doing it. It's a long term debt. We didn't do any bridges debt or anything like that. So we did long term debt on it for 75%.
[00:29:12] Speaker A: Okay. And did Covid get any funky there on the financing or it was for us?
[00:29:18] Speaker B: No, everything like I said, Class C. Everyone pretty much paid. Like I said, we're stabilized the property. Not able to bump the rents a ton in there. That did slow that process down, I guess you'd say, a little bit.
So.
[00:29:31] Speaker A: Okay, great. Wonderful. Look at you. And then we went on to a larger property, which it sounds like you were not the GP or you were. What was your role there and how many units was it?
[00:29:41] Speaker B: So just a limited partner. So all we did is invested capital and then they were you, meaning you.
[00:29:46] Speaker A: And your wife and whoever else. Okay, yeah, yeah.
[00:29:49] Speaker B: Wife and I were just one of the limited partners putting capital into the deal.
[00:29:53] Speaker A: And you're happy with that?
[00:29:55] Speaker B: Was down in Texas, 172 doors, I believe it was. They ended up selling that way early. There's. I was supposed to be another 10 year hold and they ended up selling at 18 months. They were having problems stabilizing the property and everything. Basically somebody came in and rescued them, I guess. But we still made about 12% on our. On our investment.
[00:30:12] Speaker A: Okay, what'd you put into that? 50?
[00:30:14] Speaker B: We only put 25k into that one.
[00:30:16] Speaker A: Oh, great. Okay. And so you got back 23,000? Yes, 275 or something like that. Yep, got it.
Well, this is so much fun.
Normally I'm talking about like fireplaces and reviews.
[00:30:34] Speaker B: Right, right. We're getting there too.
[00:30:37] Speaker A: Oh, we're gonna get there. We're gonna get there for sure.
Any more on the multi family? Just those two buildings so far we.
[00:30:44] Speaker B: Did those two and then we found a third one. We ended up getting another one in Arkansas. That one was down in Hot Springs. So the other gentleman's name from Tennessee is Nick. So Nick and I ended up. We did send out mailers and stuff, found a few hot leads, went down and checked out about five or six different properties. We ended up coming up to this particular one and it's a 17 unit. And we ended up doing a handshake deal pretty much right there on the spot. Talk to the guy, negotiated a price. We'd already run our numbers and we ended up getting that one for about 650,000.
[00:31:12] Speaker A: And then. So this 17 unit, was that just you and Nick on that one or.
[00:31:15] Speaker B: No, he ended up. We ended up brought it in a money guy. So Josh. So the three of us, it's a joint venture on that particular one. Same kind of thing. Looking at holding that for seven to 10. But if the numbers are right, we would sell it.
[00:31:29] Speaker A: Okay, wonderful. Well, look at you. And you like the multifamily.
[00:31:33] Speaker B: The multifamily is good. I think the thing that really got me is when they, when you go through the classes, they say you can buy these things with none of your own money. You use other people's money, which to a point is correct. But on the other side of that, to be on the GP team, the banks made us put money in. So in both the 17 unit and the 54 unit. So as a limited partner I knew I was putting money in, so I already had deployed that capital. But in these I was trying to do it, putting a little to no money and that wasn't happening. I was not going to be able to be on the GP team unless I had certain amount of skin in the game based on the banks. So we had to. I've got more capital deployed in multifamily than I anticipated deploying. So that slowed us down and doing anything else.
[00:32:15] Speaker A: I hear you. Yeah, I hear you. And it is a very slow thing. It's very slow.
[00:32:19] Speaker B: It's a long term place. Down the road we'll end up getting money. Right now I'm really not getting a whole lot out of any of these, so just a little bit of quarterly stipend out of them, but that's about it.
[00:32:28] Speaker A: I mean, would you say it's fair that to say that in multifamily if you're breaking even, you're probably doing pretty good for the first several years?
[00:32:37] Speaker B: Oh, I would definitely agree with that. So the 17 unit, we went in there. We did not expect the full turnover that we ended up having. We ended up turning over that entire thing.
[00:32:45] Speaker A: Oh wow. How many, how many were occupied when you bought it?
[00:32:49] Speaker B: Well, we had one that was a down unit and then we had another that we actually turned. It was 16 units and then one of those 16 was down and then there was another building that we ended up turning into the 17th unit.
[00:33:00] Speaker A: So but building it was a single family or like some sort of retail?
[00:33:04] Speaker B: No, it was like, I guess it's like almost like a convenience store kind of setup type thing. Just like an office slash convenience store. So we ended up taking that turn into a full rental, renovated that. So we had to redo the one unit that was down and then we had to do that and then there was, there was a lot of capex. So we had, we had to all put in money to cover the capex. Everything from trimming the trees back. We redid the roof, a new parking lot to redo some H Vac systems.
Through this process, several of the tenants ended up leaving, and we had to get new. New ones in there. We ended up having literally a full turnover, the entire complex turnover. So you don't anticipate that. And of course, trying to stabilize a property, it's nothing that occurs. A lot of people say, hey, man, these rents are $200 low. So you can go and just jump into. You cannot jump them 200. You've got to slowly go. And the other thing is, will the area support that? You know, what's the median income with that medium income? Will it actually support those $200 extra, you know, a month type thing? It's like, you cannot just go in there unless you turn it over and bump those rents that high. We did not bump them that high. That property is basically stabilized. And we've had it, what, for almost. That was 20, 21. So, yeah, we're pumping on three years right now. So we've had H Vac stolen out of there, so we had to replace.
And I think we're getting ready to go cut some more trees again.
[00:34:28] Speaker A: So you're describing my multifamily life right now. I mean, this is exactly what happens to me every time I buy one. And it just. It is what it is. Everybody thinks it's so fun and sexy and it's not. And yeah, if you bump that rent, you're right about that. Don't read, don't believe what you read about the rents on the Internet. You bump, go in there, bump rents, 200 bucks, you're leaving, you're losing everybody. And like, like turning the lights on, on a bunch of cockroaches. They're gone.
And not that humans are cockroaches. I didn't mean it like that, but you know what I mean? Like, they scatter, they're gone. And I mean, even 50 bucks, you're probably gonna lose every. A lot of people because they get comfortable. They're. They're, you know, I mean, what is it at? Like, 87 of America is month to month, right? And this is the type of people in 17 unit in Little Rock that are probably month to month. And if you hit them with an extra 50 bucks, that's, you know, that's a lot. It's a lot. Now, at the same time, you probably can get the 2, 300 bucks more if you go in there and spend 7, 8, $10,000 a unit and turn the building. And that's a long, slow grind, too. First of all, you can't turn the whole building at Once. Unless everybody literally disappears. And if you do, it's expensive as hell and it's going to take you four, five, six months, you know, and you get contractors that don't show up and you got to fire this guy, hire that guy, and then the, you know, I mean, the permits and everything else. It's a lot of work.
[00:35:54] Speaker B: That all happened. We had to fire them. Property managers. Property managers, you've got to find the right ones and they, oh my goodness, they tell you a lot of things that they, that you want to hear. But when you get into to it, you actually have to manage your property manager. Don't, don't, don't expect for one second that they're going to go in there and manage that thing the way that you expected it to be done. You have to stay on top of them all the time.
[00:36:17] Speaker A: And it's an art form. It's an art form because property managers, third party property managers, they are used to being crapped on all day. They're getting crapped on by the tenants and they're getting crapped on by the owners. So, you know, it's, it's a very fine line between encouraging them to get things done the way you want them to be done and them just like listening to whatever you're saying and then it goes right out the other ear because that's what they hear all day long, like, oh, all this crap I don't like about my life right now. And then it goes out the other ear and they move on.
So it is a very difficult situation and I love property managers. It's a very hard job. But that's what I was going to ask you next. How are you managing these things? And it sounds like a third party and you've already had some turnover there.
[00:37:00] Speaker B: Yep. Everything's third party manager and family.
[00:37:03] Speaker A: And you've had to fire and rehire somebody else on a couple of properties or.
[00:37:08] Speaker B: Oh, yeah, yeah, yeah. We've had to fire different property managers, bringing other ones. We've had contractors that went in and they weren't doing the work or getting the work done that they said they were getting done.
So. Yeah, yeah.
[00:37:21] Speaker A: How did you determine that it was time to fire the property manager?
[00:37:25] Speaker B: We, they weren't knocking on doors, they weren't going out there and collecting the rents they were more interested in. And this is the other thing. A lot of single family property managers, they're used to, you know, providing tons and tons of fees. If people don't pay. There's a fee for this, a fee for that fee. Fee, fee. Where in the multifamily world they really shouldn't have all those that they are your tenants, not necessarily their tenants, but. And they don't treat them like that. So it's like, okay, this isn't happening. We need to do something different. And then going out there and trying to find somebody who's actually used to managing a 17 unit or a 54 unit is. It's tough. And then the other component is we're in what I consider the small multifamily. So you can't get the big property management companies that are really good at doing this. So this has been one of our problems, problem areas. So we ended up actually that particular problem. We didn't fire that property management. We ended up having some meetings with them and told them this is how we needed to operate and got them to change. What we ended up firing was the contractors that we ended up firing.
[00:38:29] Speaker A: Yeah, it is a very. You just nailed it. You're. You're my new best friend, man. You know, because even a guy like me, I got triple digit units in apartments in, in one town and it's hard to get attention from a property manager because my buildings are spread out.
You get 150 units in nine buildings. That's much less appealing to a big property manager than 150 unit building.
[00:38:59] Speaker B: Correct.
[00:38:59] Speaker A: You know, so that's where I struggle. It's like, well, I've got all these units, why can't I get anybody's attention? It's like, well to them they might as well be single family homes because they're running all over the place, you know, so you got to get kind of a smaller property manager. I think for, for me that was what was been a good fit over the years. And you know, if somebody in the 500 unit range is, is going to be more suited for some something like a 20 unit or a 30, 50 unit, something like that. At least that's been my experience.
[00:39:26] Speaker B: And, and when you're checking out the areas and stuff, you look around, you find property managers like oh yeah, we can manage, we can manage but you got to look at the infrastructure. You know, what do you have as far as contractors as you can use to, to work on the places? What do you have as far as property managers that can run them with experience and so on. So when you look at all those different things, when you're evaluating your property, you really need to look at who's going to run that and everything prior to purchasing it. Because if you go in there Shake the hand, you buy that thing, it's yours. And you better figure it out pretty darn quick or you're going to be down there yourself cutting trees and painting walls.
[00:40:01] Speaker A: You're exactly right. 202 million, $2.5 million asset and you're down there cutting trees because you have no choice, you know, so it's for me, it's like with the contractor thing or with the property managers having their contractors, I've always found myself in a situation where they weren't getting it done the way I wanted to and they weren't getting it done in a timely manner like I wanted them to. And so I'll go out and find my own guys and say this guy's going to do this job. And then the property manager's mad at you because they don't like the way that guy does the job and it's not their guy, you know, so it's just a never ending battle.
[00:40:34] Speaker B: Yep, yep. It's multifamily is work. It's straight up work. And to think that you're going to buy it and step back and not do anything unless you're a limited partner. If you're in a general partner, you really have to, like we said, manage the managers and stay on top of the contractors and really keep an overwatch of everything that's going on on the property.
[00:40:54] Speaker A: And it's funny you mentioned the fees because I actually just had this conversation with one of my managers a couple days ago. I think a lot of property managers and again, we love you, we love, you love property managers. If you're, if you're a long term property manager or third party property manager, come on the show, please. Love to have you guessed@stm gueststrmshow.com but what happens is property managers get almost trained to think, and I'm going to blame this on the landlords to think that fees are a good thing.
Late fees, specifically for me, I hate getting a late fee notification. To me that's just a not performing tenant. But again, we go back to the statistic about all these people being month to month. And it depends, a lot of it depends on the time of year, holidays, you're going to get some more late fees. And then also the current economy is a big part of it. In 2021, 2020, 2021, we didn't really have any late fees. Everybody was getting free money.
We were worried at the time that they were just going to straight up not pay their rent.
[00:42:01] Speaker B: Right.
[00:42:02] Speaker A: I never really had an issue with that. Because, you know, there was the eviction moratorium or whatever.
[00:42:06] Speaker B: Right.
[00:42:07] Speaker A: Luckily, I never really had a problem with that. But at the time, everybody was getting free checks from the government and rent was pretty well taken care of. Today, the economy stinks. So I understand, you know, that fees are probably adding up a little bit. But I do try to be honest with my property managers and I'm, again, I'm gonna blame this on the tenants because I think a lot of tenant. I'm sorry, landlords, a lot of, I think a lot of owners like that late payment fee. It's extra revenue.
[00:42:36] Speaker B: Right.
[00:42:37] Speaker A: And I understand that, you know, if you're running that kind of a business, but it's not the business I'm running. I want my tenants to be happy and thriving and not overwhelmed and overextending themselves and paying their rent and functioning and. And I think a lot of property managers have been trained by the other type of landlord that they want the 40 bucks, they want the 60 bucks late fee.
And I'm trying to stop that trend.
[00:43:02] Speaker B: That's where in the short term world we want to find ways that we can upsell here and there. Well, that's what, that's what they do. They, they like those late fees. So they don't. They're not out there knocking on the doors. I want my tenants trained where they're paying us first, then they can deal with all the other bills.
[00:43:16] Speaker A: We're on the same page then. I like that. Yeah, I like that. I don't want the extra 50 bucks. I want a functional tenant and a functional property. To me, that's just a better thing. I'm glad you agree. It seems like everybody else disagrees.
Let's slide into the short term thing. So what do you have there? I know you got a few single families and you got really, really cool properties. So let's slide into that.
[00:43:36] Speaker B: So we've got these. So we got these three. And then it's like, okay, we spent that year, we spent a year. We got the three multi families. It's like, okay, well, once again all that stuff is being managed and everything we need to do. What's our next step in this process? I was listening to Wealth About Wall street podcast numerous times. Ended up Avery was actually interviewed on one of their podcasts. And I'm like, we need to look into this short term thing because Avery's pretty impressive on there. And I'm like, I need, I need to find out more. She ended up writing a book. We ended up buying her book, taking a Look at that. So we started taking a look around saying, where would we like to vacation? Where can we find something that we could buy? And we ended up finding a cabin up in Mount Home, Arkansas. So that's, that's how we ended up in the short term world. We ended up buying. This cabin is a second home for us. So it's over the. I don't know, depending on who you talk to, how many miles away from your home. It is for us a 16 hour drive from here to there.
And then. So this cabin is sitting between two lakes. So we got Norfolk Lake and then we got Lake Bull Shoals. And in that process, there's people who go there. There's the Buffalo river, the White river, and then they stock this thing with trout and stuff. So they have the fish hatcheries and stuff like that. So I guess they called the trout capital of the US So a lot of fishermen go in there. So it's more of a. People travel there to fish and hunt and hike and camp and all that kind of stuff. So having a log cabin just made sense to me. It's like, this is really, really cool. It's on four acres. I'm like, wow, maybe we could build some other cabins here, that kind of thing. Build some camper things. My parents like the camp. They have his trailer. So I'm like, okay, I can build some camper spaces here. So. So we purchased this thing, and that was in 2022 when we got that cabin. So he's 2021 is multifamily. 2022 is the, is the cabin. We closed on that in February, and it took us about a month or so, a little over a month to get everything. We ordered a bunch of stuff from Amazon, and this is where Avery was instrumental in, in helping us get moving forward, looking at a book, talking to different people and, and trying to figure out what we needed as far as to. How do you outfit this thing? What kind of beds do you use? What kind of bedding, what kind of furnishings, what kind of pots and pans, what kind of silverware? Because short term rental, we're completely outfitting this thing from A to Z. So somebody literally brings their luggage and their clothing and they can stay there. They don't have to go have anything else.
They can go pick up some food when they get there, and then, boom, you provide this, this incredible experience for them. And that's where we are with the, with the cabin.
[00:46:12] Speaker A: So there's a lot of Arkansas going on here. Do you have a, a little spot in the heart for Arkansas.
[00:46:17] Speaker B: Well, like I said, I. I was. I was. I was in the Marine Corps down there. I was in the Air National Guard down there. I.
My stomping grounds are right outside of Fort Smith. It was over in Oklahoma, like I said. I was a firefighter in north Little Rock for 11 years there. So yeah, I got a lot, got some roots there. My parents still live in Arkansas. So Arkansas is a really cool state. You know they call it the natural state for reason and there are areas that are just horrible. Flat with rice patties and mosquitoes rice fields. So versus you get up in the. The Ozark mountains. It is incredible. I think you probably hear a lot of people talk about northwest Arkansas as being a really good place to. To invest. It's gor up there. Lots of property appreciating area. It's. It's going really, really well. I'm a little bit east of there. I'm kind of in the middle of the state, like due north. Just a few miles from the Missouri state line.
[00:47:08] Speaker A: Do you plan to spend more time there in the future?
[00:47:12] Speaker B: We go there several times a year. Matter of fact we'll go over there Christmas again. We'll probably drive over there again at least two, if not four times a year. That will actually go over.
[00:47:24] Speaker A: How far is this drive?
[00:47:25] Speaker B: 16 hours. We leave it.
[00:47:27] Speaker A: Oh my goodness.
[00:47:28] Speaker B: Leave about 7pm and then I drive through the night and then get there about 11 o'clock. Between 11 and noon the next day.
[00:47:36] Speaker A: You are this type of gentleman that likes doing that.
[00:47:39] Speaker B: Well, I work. I work 24 hour shifts so being up all night is something that happens periodically.
[00:47:45] Speaker A: How do you sleep? When do you sleep?
[00:47:47] Speaker B: When I get there or before?
[00:47:49] Speaker A: When I get there. Look at this guy. You're like a rock star.
[00:47:52] Speaker B: Take naps, you know, take naps here and there. So yeah, it'd be amazing what you can do on a 10 minute now.
[00:47:57] Speaker A: And she's cool. Do you take the kid? I don't know how old the kids are. Do you take them or is it just you and her?
[00:48:02] Speaker B: Yep. Yeah, so I got in a divorce back before all this real estate thing happened and that's. I ended up not having any and then you know, working forward.
So. Yes. So my wife, my son and I, we all travel. So they get to sleep while I'm.
[00:48:15] Speaker A: Driving and they enjoy the. That's a very long drive.
[00:48:18] Speaker B: Yes. Yeah. But when we get there, that's, that's the, that's the. That's the money.
[00:48:22] Speaker A: Why not fly?
[00:48:23] Speaker B: Let's see. St. Louis is probably the closest airport and Little Rock is the second closest airport. And both of those are about a three hour drive from there. But honestly, when I drive over, I usually take my tools and stuff and I'm working, I do a lot of work on the, on the cabin. And then we've also got, we'll get into it here in a minute. But also purchased a covered wagon that we have on the property, so I have to do stuff with that. And then we also got a. We just purchased another house at the beginning of this year that's going to be a long term rental about 17 miles away.
[00:48:53] Speaker A: Okay. Yes. And he just said covered wagon and we're going to talk about that. So just the two short terms. Is that, is that true?
[00:49:01] Speaker B: The two short terms? Right now you have the cabin and.
[00:49:03] Speaker A: They'Re on this same property.
[00:49:05] Speaker B: On the same property. I built two camper spaces right there on the same, same property as the cabin. So you can see a covered wagon and the cabin. You can see them in the same picture.
[00:49:15] Speaker A: And they're rented separately.
[00:49:16] Speaker B: They're rented separately.
[00:49:17] Speaker A: But how did that whole thing come up? I mean, how. We rent, why are we renting a stagecoach? It looks like a stagecoach, like a covered wagon. Where did you come up with wagon?
[00:49:25] Speaker B: Yep. So except my parents have, or they like to camp and they have a camper. So I built, built these two camper spaces, figuring that when we're there at the cabin they can just bring their camper up, plug in. And, and we got water, sewer hookups, all that fun stuff. Water, electric.
And then in this, there was another firefighter down here in, in Maryland that has a little podcast but ended up I'd seen these log cabinet or these covered wagons, but he actually found out where they were made. They're made in Topeka, Kansas. It's called Plains Craft Wagons. So Plains craft wagons. We ended up touring their facility where they actually make them and stuff handmade. It's all handmade. Small company, but I think we paid just under 60,000 for this. And I've got it set up like a camper. So there is actually a bathroom in it. It hooks up to the, the sewer, it hooks up to the water, hooks up to the electric. It has a H vac system in it. So it's got a mini split in there. So you got indoor plumbing. You got the mini split in there. It's got a bonnet that goes over, is actually insulated. And then there's the, the COVID on top of that. So we can heat it. We can Cool it. We've had people stay in it when it's cold. I've stayed in it when it was cold, and it stays nice and toasty. When it's hot out, it stays nice and cool.
Like I said, you don't have to go out to the outhouse. We actually built the outhouse right into it. So it's. It's really, really a neat stay.
[00:50:51] Speaker A: What are the financials on this thing? Was it worth it? Would you do it again?
[00:50:55] Speaker B: I honestly wanted to buy two of them and my wife says, no, we're gonna buy one, we're gonna buy one, we'll see how it does and stuff like that. So what I ran it is typically like a two night stay. That's where we tried to go with it. About 100, a quarter a night somewhere in that neighborhood. It's more of a unique stay. And where we are, we don't get a lot of bookings that book months in advance use. Ours are a lot of maybe a couple weeks in advance, maybe a month in advance. But most of our bookings are really quick. And what we found is we do a lot of one night stays. People are bouncing through mountain home. They're coming to check something out real quick and go on. So most of our stays are short term when it comes to the. To the wagon one night and two night type stays. So I was trying to.
[00:51:42] Speaker A: How much does this wagon cost?
[00:51:44] Speaker B: Yeah, we paid just under. Just. It was just under 60,000. Like 58, 7. 59. Right in the neighborhood to purchase it. Yep.
[00:51:52] Speaker A: And then you did this remodel, I guess is for lack of a better way to put it yourself.
[00:51:58] Speaker B: So we basically just took the.
We bought it with the bathroom and all that. We bought it just like that. It came with a queen size bed frame.
[00:52:08] Speaker A: The place sells it like that.
[00:52:09] Speaker B: And it came. Yep. And it came with two bunk beds and then it came with a table and two chairs.
[00:52:15] Speaker A: So it's a. It's a permanent camper is what it was built as.
[00:52:19] Speaker B: Yep.
[00:52:20] Speaker A: Okay, cool. What is the.
[00:52:21] Speaker B: Hook it up to the hitch my truck and drive it around if I need to.
[00:52:23] Speaker A: But what is the structure? What is the floor and the roof and the walls?
[00:52:28] Speaker B: It's all wood. It's.
[00:52:29] Speaker A: Oh, it's wood.
[00:52:30] Speaker B: Yep. It's a solid wood.
The. I think they said that the Amish make the wheels, but yeah, you can. It can be pulled with a team.
[00:52:40] Speaker A: Of horses if you need to stain it every few years or something.
[00:52:43] Speaker B: Yep, yep.
[00:52:43] Speaker A: Okay.
[00:52:44] Speaker B: And then they've got so. And then you just use some cleaner and clean the. The bonnet and stuff like that. Yeah.
[00:52:48] Speaker A: Does the roof have metal or anything? It's just.
[00:52:50] Speaker B: There's. Yeah, there's four supports. The arch supports that go over it and then. And then the bonnet. The insulated bonnet goes over that and then the. The main bonnet. Bonnet that covers that goes over bonnet.
[00:53:01] Speaker A: Meaning the thing that looks like a stagecoach.
[00:53:03] Speaker B: The canvas.
[00:53:04] Speaker A: Yep.
[00:53:04] Speaker B: The canvas goes over the top of it. Yes.
[00:53:06] Speaker A: Okay. Very cool.
[00:53:08] Speaker B: It comes all shrink wrap. They. They fold it all. Everything's folded down. They put a big shrink wrap on it and they delivered on an 18 wheeler. And then when we got there, we had to get it off. And that's where backed it up, you know, pulled it off with my truck and stuff. And then we ended up backing it in there. Some of it by hand and some of it by. We ended up hooking up a skid steer type thing and pulled it back into the spot and the gravel spaces.
[00:53:29] Speaker A: Would you do it again?
[00:53:30] Speaker B: I want to do it again, but it's a fun thing. But honestly, the financials aren't supporting it at this point to where I mean, it's breaking even, so I guess that's a win.
[00:53:38] Speaker A: So breaking even, what does that mean, breaking even? Because I mean, I would assume you have to pay cash for this thing.
[00:53:45] Speaker B: I actually financed it through a local bank.
[00:53:48] Speaker A: You're kidding.
[00:53:49] Speaker B: Nope, nope. I couldn't get anyone to finance it. The biggest problem on this was getting the financing. The insurance. Insurance companies don't know how to insure it.
They're trying to figure out how do we even insure this thing. So it's a rider on top of my cabin policy.
[00:54:03] Speaker A: I see.
[00:54:04] Speaker B: I ended up having to do that, which is the other thing. The cabin. We went over through over 20 insurance companies trying to insure a true log cabin. We've got a picture book where the log cabin. The logs are actually cut on Push Mountain, which is right there in Arkansas and used. And they show this entire thing being built and everything. It's a genuine log. Log cabin. It's. It's not where you put up. You know, the. Just a log siding on top of wood framing. So in that the. The insurance tends to be a little bit more expensive because I guess the re. If something happened to it to. To fix it would be a lot more. So that's where it comes from.
[00:54:37] Speaker A: Very interesting. Okay, talk to me about managing these short terms. It sounds like first of all, you love the cabin, which is wonderful. I just picture you there being so happy and Swinging hammers and never stopping to rest at all. And I love that, that. So how are we managing these? What we got management softwares, etc.
[00:54:56] Speaker B: Yep. So when we put this thing, we put it on Airbnb and we put it on vrbo and with that our, our primary management tool is going to be the.
What is it? The hospitable I believe is the one. Yeah. Hospital is what we're doing for our property management software. I use Price Labs to use the dynamic pricing to search the area. When we actually purchased here, there was 189 short term rentals in this particular area. Now there was, I haven't looked recently but before BPCons at the beginning of the year there was over 500 short term rentals in the area. We did notice a little bit of a down, downturn. We're down just a couple percentage points. I've got a 64.46 occupancy. We had a 66.53 last year. The first year we opened up we were at 4,167. So that's our occupancy rate. So we did have a little bit of a downturn but we've been weathering storm pretty well with, with that we've seen some start disappearing. So I'm not exactly sure where we are as far as the numbers, how many are physically right now. But yeah, so vrbo, we don't get as many. Airbnb is our, is our mainstay. That's where the majority of our stays come. Probably 80% come from Airbnb. It was a 5050 split at the beginning but VRBO has fallen off a lot like the Price Labs dynamic pricing. If somebody wants to do a direct booking, we do that through Hoofy and then the payments are made through stripe. We've got Touchstay is who we utilize for our guidebook.
And then of course the actual property itself we have an alarm system that we use simply safe on. We got ring cameras everywhere. So I can literally sit here in Maryland and I can see everything going on on the property, on the cabin or the wagon, all on the exterior.
With the ring cameras we've actually got stick up cams with pan and tilt so I can actually turn my cameras and everything sitting right here to, to see what's going on. We use the Schlage encode property locks so when, when the guest gets there it integrates really well with Hospitable. When they put in their, their stuff from Airbnb that links up with Hospitable gets their basic information. Even though Airbnb doesn't show us our. Their email address and stuff like that, it. It gathers that and then that's how our messaging goes back and forth. But the mechanism talks and finds out what the phone number is and basically it takes that and generates a random code for them to utilize.
And then the thermostat, we run that through Sensi. That's again just WI fi. We got Roku tv so any guest that goes in can just log in with anything they've got. And then we've. We had a insurance company, it just got really expensive. So we had like it was like 2400 a year. Went up to over 5000 something a year or almost six. And we end up going with a local company to our. To do our insurance now and then.
Yeah, that's, that's pretty much what we're using as far as all of our operations. All of our supplies through Wayfair and Amazon, most of it through Amazon and then our website stuff through wix. So those are all the different things that we utilize. I self manage this. So I have the apps on my phone. I can operate pretty much anything. If a guest gets there and say hey, I'm having a problem with the lock, I can open it for with my phone. Unless the batteries are dead. Batteries are dead. Then I got to send them to the key. So I got a key hidden on the property in a lockbox. We, we learned that lesson as well. So I was like, huh, we gotta have another way in.
[00:58:25] Speaker A: Yeah.
Any trouble finding cleaners in the area?
[00:58:30] Speaker B: So we've actually been pretty lucky. We had a cleaner in the area. We ended up being a friend. One of the police officers that lives there actually has some rentals as well. So he's helped us get hooked up with a lot of different people. And the first cleaners that we had we actually used the husband wife team. The husband did the handyman work and the wife did the cleaning. She had ended up moving to another job and it was unable to continue. But meanwhile she brought on a couple other cleaners.
We've been through several. I think we're on number six right now. I think this one happened to be. She put a. She was starting a new cleaning business and we reached out to her and. And she's been our primary cleaner ever since.
So not too bad. Honestly. We've been doing pretty well with that handyman. I've been through a couple of those and then let's see.
Yeah. And then pretty much I can just pick up the phone and make some phone calls to get done. When I need a pest company, I'll have them come in there, take care of what we need to there. It's a log cabin, you know, you're going to have some bugs.
[00:59:32] Speaker A: Yeah. Talk to me about that. You know, I mean, what's your operating procedure there as far as like, hey, there's going to be bugs.
[00:59:39] Speaker B: Yeah. So we, the biggest thing we've had red wasps up in that area. Red wasps are a big deal. So we, we went through, oh my gosh, how many cans of wasps killer and stuff. We ended up doing some research and found something called drone dust. And this particular pest company, they will actually use drone dust. And they, they put it on. There's a, it's a battery operated device with a big old long wand and they can actually spray this drone around. And what it does is the dust sits there, doesn't dry like the spray. Right. And then when the, when the wasps crawl through it, it actually kills them. And our wasp problem has gone down significantly since we went into that. Haven't had much of a problem. You know, fuel get in here and there and then we take care of that with the sprayer, fly swatter kind of thing. But I usually have my cleaners check it out, you know, make sure that's all taken care of. Vacuum the window sills, everything like that. And then if we haven't had a stay for, you know, two or three days, we'll have them go back in and just verify as far as the other bugs. They just come in and do a regular spray once a year. We haven't had a lot because we keep it so clean. We just don't have bugs. You know, if somebody wants to go and eat and you know, in the beds or something like that, in the crumbs, they're going to bring bugs and we tell them that in the guidebook it's like don't eat in the beds. You know, keep the, keep the food in the kitchen and you'll be all right.
A few little ants. Nothing, nothing significant. But honestly for. There's a couple places you can actually see through the wood and see outside, which we gotta, you know, once again, that's just part of that why I take my tools so we can, you know, fix things up. But yeah, if something occurs, guest lets me know. Usually pick up the phone, get, get an idea as to when they are going to be able to get out there. They try and get out the same day. But if that's not possible you know, let the guests know if there's something that we need to do. I can try and get my cleaner to go or if the guest wants to run, grab some spray or something and handle it. We can do that. I've had some people go in and spray before and I just have the guests go to dinner and I pay for their dinner while the. The company comes in, handles that. And when they come back, you know, everything's pretty much good from there. So.
[01:01:40] Speaker A: So the bugs are a recurring nuisance, but you've found ways to just deal with it.
[01:01:45] Speaker B: They're under control. Yeah. Yeah. We had somebody come in and say we had bed bugs. And once we got. We had to the cleaner capture one and it wasn't. It was a sprig tails. So they jump. Actually they said it was fleas. They weren't sure if it was. Was bed bugs or fleas. And we haven't had a bedbug problem yet.
We have.
[01:02:01] Speaker A: Hold on, let's back up. Fleece are also not. They're not bedbugs, but they suck bad. Can I say it sucks?
[01:02:08] Speaker B: Yeah, but. But we don't have a flea problem. We're not, we're. We don't have a. We don't allow pets in the, in the cabin. So there, there should be no reason for fleas unless somebody brings them with them. But they said they had. These bugs were jumping and they ended up being little sprig tails and sprig tails, they. They like water, like moisture and stuff.
[01:02:25] Speaker A: So it wasn't a fleet.
[01:02:26] Speaker B: A lot of rain and they were looking for. Or there hadn't been a lot of rain, I guess, and they were looking for the moisture. So they found that like by the drains and stuff like that in the two sinks downstairs. They. That's where they kind of found them. And then somewhere on the floor. Yeah, it ended up not being what they thought it was.
[01:02:41] Speaker A: Here's what again. I love my guests. I love you. I love you. Please book my houses.
If you're renting a house in the middle of the freaking woods and it's made out of wood, I mean, I'm almost expecting some bugs. You know, I think I'd be disappointed if there weren't a bug or two, you know, So I don't know. It's just. It takes all kinds, I suppose.
[01:03:01] Speaker B: Lots, lots of wildlife. We've had the raccoons come through, the skunks come through, the deer come through, foxes come through, cats and dogs, you name it. I mean, we see it all bounce through that property.
[01:03:12] Speaker A: Wonderful.
[01:03:13] Speaker B: It was a bunch of buzzards that came to one day, walked down the driveway, flew up on the roof of the garage and then flew to the backyard. We could see him in the front camera and then see him on the back camera.
[01:03:21] Speaker A: Well, you know why they were there? I mean, there was, there was food of some sort.
[01:03:24] Speaker B: I guess there had to have been. Somebody must have cooked out on the grill out front.
[01:03:29] Speaker A: Yeah. Okay. Man, you're a rock star. I want. Where, where's the future here for Larry? You're still working? We're not retired yet.
[01:03:36] Speaker B: Yes. So. So I've got, I've just completed my 24th year. Well, February, I completed my 24th year with the fire department here. And then the 25th, I'm looking at doing probably 2027 or 2028, putting in for the drop, doing two. So about six more years here. It'll be about 30, 31 years here and then with the other 11 elsewhere, it's like 40 something years total in.
[01:03:56] Speaker A: As a career, six more years you're going to do.
[01:03:59] Speaker B: Yeah, I think so. I like it. I love running calls. Still do it. I teach on the side as well. That's that overtime. Because I teach emt. I teach fire rescue. So we teach recruits, teach volunteers, teach high school cadets, teach all. That's, that's where all that overtime comes in. Like I said, about a thousand hours a year. So I'm wanting to cut back on that as my son gets older so I have more time for him. That's part of the reason for the real estate. We want to get that time, freedom, so I can be there for the games and things like that.
[01:04:23] Speaker A: And how old is he?
[01:04:24] Speaker B: He's six now.
[01:04:26] Speaker A: And how old are you?
[01:04:27] Speaker B: Me? How old am I? Yeah, Tomorrow I'll be 56. So I'm 50 years older than he is.
[01:04:33] Speaker A: Look at you.
You are an inspiration, sir.
You are. I mean, you're just crushing it. Like, you know, you're making me want to go out and go for a run and I already went for a run this morning.
I'd like to go for another one now because you're inspiring me and I, I love that. So when you do retire, you'll then be 62? Ish.
[01:04:55] Speaker B: Yes. Yeah. So we're at that neighborhood. We're still buying. I've got my eyes constantly open, like. So we just bought a single family house down there about 17 miles away. Little town called Cotter Boug. Worst house in the best neighborhood. It's a total gut job. So I've spent two vacations already working on gutting it. I got one more to go and then we'll start bringing in the contractors and doing that. I ended up that one was on a six month interest only loan and then at that six months I ended up taking a HELOC out of my house here and I just put that under mine so I don't have to bank. So we're just taking our easy on that one nice and slow. But I'm doing a lot of work on that and then we'll get that up and running. But if I find more, I'm going to purchase some more and, and keep on rolling. If I can run it as a short term, we'll run as a short term. If I can do a long term, we'll do it there. If I find a multi front family that pops up may jump in the middle of that. There's a lot of stuff starting to come on the market. I don't care about interest rates, it doesn't matter, you know, which. What matters is you got to run your numbers. If you take the time and really do your due diligence, make sure your area is right, make sure it's, you know, you got the growth, you got the appreciation, you got all the infrastructure to operate, you know, what you're trying to do. I can build a team anywhere, so it doesn't really matter where it is. I just need to, you know, the numbers need to make sense and you know, if, if I find another property in another state, so be it. I'll do that. We like to find some properties on a lake somewhere. Somewhere where, where we'd like to vacation and stuff like that. That's what's really cool about this. We get there and it's totally different from the city here. We're dealing with D.C. traffic and, and Baltimore traffic and it's just ugly. You get out there and you know, everybody's friendly waving, you see a tractor going down the middle of the road, you know, things like that. And you know down there we break out the gun and we shoot. Do some target practice here. We can't do that. Can't go into the backyard and just shoot a gun. Ain't happening. So at the cabin, not a problem.
[01:06:43] Speaker A: So, so we're gonna, we're gonna retire. It sounds to me like you want to retire, wind down, live a good life. You're not looking to like go crazy and have 70,000 units or anything like that. We're just living a good life and maybe a little more. Arkansas now Yep.
[01:06:56] Speaker B: Yeah, that's. We'll probably be here for about 12 more years till he graduates. And then from there, who knows where we might end up.
[01:07:03] Speaker A: I love it, brother. You're. You're an inspiration. So I'm going to recap what we learned today here on short term rental management with my boy Larry, who's my new best friend.
We learned that if you want to find a deal, you need to become obsessed with LoopNet, and that's multifamily obsessed with shopping. Let's put it. For lack of a better way to put it, you have to become obsessed with shopping. I agree with that. I agree with everything you said of the day. You need to run numbers constantly all night long for a year to figure out what you're doing.
Don't eat in the beds. That's a good piece of advice. We're gonna. We learned. We learned to not eat in the beds at Larry's house.
[01:07:41] Speaker B: Not in a cabin, anyway.
[01:07:42] Speaker A: Yeah. We also learned that interest rates don't matter. I agree with you, sir. I agree with you. Too many people. And I think we're finally maybe getting a little less stuck on that here. But it was. It was ridiculous there for a while. It just. It is what it is. It is what it is. You know, you can't. It's just. To me, it's like purchase price. I can't. Like, once I've purchased a home, the purchase price is dead and buried. I can't change it. Okay. I can't change my interest rate. So let's stop thinking about it. All right? And then Larry says, I can build a team anywhere. 100% agree there. So I love it. Learned a lot of valuable lessons today. Don't eat it in bed. Don't eat in the bed with Larry Murray, my dude, my stagecoach master. He's like the John Wayne of vacation rentals.
I love it. I hope you learned something today on short term rental management. Don't overthink it.
