Have you ever thought about what it would be like to be able to leave your 9-5 and live off the income from rental properties?Not sure where to start or what steps to take?I've got you covered.
I'm Kirby Atwell, former US Army officer turned full-time rental property investor
And I wish I could say the transition from full-time job in the military to living off rentals was an easy one, but there were lots of twists, turns, and roadblocks along the way.
In this podcast, I talk to all sorts of rental property experts who will help you avoid some of the same mistakes I made when I was getting started and ultimately equip you with the tools you need to live off rentals.
Alvaro, welcome to Living Off Rentals.Hey Kirby, thanks for having me.Excited to be here.
Yeah, I'm excited about this interview today.If you're listening to this today and you're kind of looking to buy an awesome, you know, super high cash flowing short-term rental, then you're definitely in for a treat.
And you're going to want to pay close attention today. I've had the honor of working with Alvaro for the past probably about a year or so with my first vacation rental investment blueprint program.
And he's now working on a second deal after getting a fantastic short-term rental purchased and set up and stabilized over this past summer.So kind of coming off that experience.
And so I thought this would be a great time to kind of get your perspective, get your advice and, uh, you know, opinion on how that all went.And Alvaro, I think, has a knack for finding really great deals that produce really amazing income.
So we're going to talk through how he's done this with the first deal.And then he's had a couple of near misses with his second deal.But I'm very confident he's going to have that very soon.
And we'll talk about some of those as well and what your goals are for the future.So I know your background is in digital marketing.It's not real estate.So I'm curious, you know, right after that,
What led you into real estate investing and specifically short term rentals?
Yeah, so it's an interesting story.So there's a couple things that led me to real estate investing.
So even though I'm in the digital marketing space, and I've been in it for, you know, over 10 years now, that wasn't actually my original intention is straight out of college, I actually wanted to work in the real estate space straight out of college.
However, I graduated in 2010.The housing market was terrible at that time.Very few companies were hiring.And so it just actually never really worked out in terms of trying to start a career in the real estate business.
But I never lost interest in real estate.And so it was always in the back of my mind of, hopefully I can do something with regards to real estate at some point.
And then the other reason is, you know, when it comes just to investing in general, you know, obviously, you know, you can invest in stocks and all that kind of stuff.
But the kind of like the thing that has always been challenging for me when it comes to stock investing, which I still do.
But the thing that, you know, has always bothered me as a business owner myself is that there's nothing that I can do on my end to improve the stock performance, right?
I just have to hope that, you know, the management of that company is making the right decisions.Whereas, And real estate investing, right, there's immediate things that I can do to improve the performance or properties and stuff like that.
And so having that entrepreneurial aspect, which is always very attractive to me when it came to real estate investing.So when I jumped in about a year ago, it was kind of just all those things coming together.
And it's been a really fun ride ever since. Awesome.Awesome.
And you're located in Southern California.I'm in Indiana, two very different markets and two different price points and cashflow and all that.So what was it, I guess, that interested you about my particular strategy?
Yeah, it made it feasible is really kind of the way to go about it.Honestly, before I came across your strategy, investing in short term rentals wasn't even on my radar, right?
I was thinking about long term rentals in certain markets and stuff like that.But I was just like, no way would I ever do a short term rental that is so competitive, you have to buy a million dollar home and do all this kind of stuff.
But then you know, when I came across your strategy, it just all of a sudden, you know, I realized, hey, there's there's this whole other market that is largely being ignored.And, you know, Kirby's the only one I've seen talking about it.
And so that kind of, you know, brought that feasibility aspect to it.And, you know, it's just been it's been really great learning about everything ever since.
Cool.Cool.Yeah.So so let's dive in then to your experience with your first property then, because it's not you've done it remote.It's not in your backyard.
So kind of can you share a little bit about what that what your experience has been like with this first property and where it is and and how you initially came across it?
Yeah, so you know what I would say for anyone that's doing long distance investing, such as myself, the main thing I would say is that, you know, no matter how much good advice you get, and I got plenty of great advice from you and stuff like that.
The first one, it's going to be scary. matter what.It's just such a weird and bizarre feeling being 3,000 miles away and investing in this property that you've never seen or visited or anything like that.
So just know that you have to be comfortable being uncomfortable.And I'm sure we'll get into this in just a second.But I'm currently working on my second deal and it's just so much smoother.I'm so much more calm throughout the whole process.
You know, that first one is just a nervous feeling being so far away.So just know that going into it.But, you know, through the systems that you teach, once you kind of get everything set up, it's pretty simple and straightforward, right?
At this point, I certainly don't feel overwhelmed in any way, shape or form. It's been a really phenomenal investment.
We've been really hitting our predicted cash flow that you know, before we even bought the property, we've been kind of hitting that number right on the head.So that's been that's been really great.
But in terms of kind of how I came across the property itself, I wish I could tell you that I spent a ton of time doing analysis on a specific market.And then, you know, I found Battle Creek, Michigan, and it's been and that's how I decided on it.
But it didn't it didn't go about that way.I kind of started doing that process.I was analyzing a bunch of different markets and I found some that I was very attracted to throughout the Midwest, you know, Ohio, Indiana, Michigan.
I was looking in Wisconsin as well.And the challenge I was coming across, though, was that I really wanted to do multifamily.You know, the numbers, as you know, are just always, always so much better. when it comes to a multifamily property.
But the challenge with multifamily investing is that, I don't know what the percentile is, but I would say at least 90 to 95% of the properties that come on the market, they have a lot of deferred maintenance.
Because they've been operating as long-term rentals for decades probably.And so the standards for a long-term rental are very different from the standards of a short-term rental.
And so everything that I was finding was just going to be a massive, massive project.And being 3,000 miles away, for me, I was looking for something that was at least relatively turnkey.
It doesn't have to be perfectly turnkey, but something that is a manageable project.I was not looking to do a giant rehab.And so I just got a little bit tired and stuck and frustrated at a certain point.
I almost even felt that I wasn't even going to find a deal at all. So then I kind of, out of almost like frustration, what I just ended up doing, I just did statewide searches of multifamily properties.I wasn't even looking at specific markets.
I'm like, I just want to find properties that are in a relatively turnkey condition.And then so that's how I came across my first property there in Battle Creek.To be 100% honest, I was not familiar with Battle Creek.I'd never heard of it before.
But then I started looking into it and analyzing the numbers and seeing what existed in the area was drawing people to that area.And everything really checked out.And the rest is history.I guess you could say it's been a really great investment.
And we really like that market and we're currently expanding in that market as well.
Yeah.And I want to get into the numbers here shortly, but I, I just want to reiterate a couple of things that you said, cause I get this feedback all the time.
It's probably one of the main sources of pushback for people who are just getting started or want to get started with this is they're like, well, I need to be close by.There's no way that I could buy something remotely and that I'd be able to.
You know, find it, buy it, set it up, manage it going forward, all that stuff remotely that just that's impossible.And it's a process.
Like you said, you were willing to kind of push past that feeling of being uncomfortable with it and just trust that it's doable.Obviously, you've done it.I've done it.
Lots of people that I've worked with have done it and lots of people that we don't even know have done it.Like it's it's a thing that that is doable.If other people have done it before you, then it is doable.So you got to start with that.
premise and work from there and say, OK, if it is doable, how do I do it?And I think you you did a great job of that.You're all the way on the other side of the country and did a great job of investing in a place that you never even visited.
I remember when you went there the first time after it was all set up and you had to stay in your own property after having never been there.You bought a property that you never walked through or had visited, but it turned out to be a great deal.
So I just want to kind of reiterate that point. So what were the initial metrics that you were targeting, like that were important to you?And then what did the numbers look like on on this deal in Battle Creek?
Yeah, so like I said previously, and this isn't technically a metric, but you know, it's still just worth reading.I did want something that was relatively turnkey.
And so this duplex, it's a duplex, upstairs, downstairs duplex, it fit that bill, right?It's not that it was perfectly turnkey.You know, we still had to put $30,000 in, you know, a couple a couple of upgrades.
But I felt that that was very manageable.And most of the upgrades that were done were cosmetic, right?So it's not like we had to, you know, change piping, electricity and like that.It's just cosmetic stuff.So very simple, at least for me.
So that was one.The other one was price points.I definitely was looking for something that was under $200,000.The main reason behind that also was just the comfort level.Like, I won't even say like, oh, I calculated that.
that was gonna be the best return.It was just kind of like a comfort thing because for this property, we did use our own money for the down payment and the rehab and all that kind of stuff.
And so just kind of being my first short-term rental, I was like, okay, I don't wanna go with a property that's $500,000 or something like that.Because again, being so far away, there's that nervous factor and everything.
So I kind of wanted to make it as easy on my mind as possible.When you're seeing all this money, leave your bank account for it. down payment and cosmetic rehab and stuff like that.So that's another factor.
And then also looking for healthy occupancy rates.And so you know, in the summertime, it's about 80 to 85% in the low season, you know, we're just getting low season right now.But we're actually still doing pretty good.
We're at about 40% occupancy right now in slow season.And so that's another factor that I was looking for some consistency right there.And then the nightly rates, you know, I figured that, you know, with the price points that
you know, we were shopping, and in order to get a healthy return, you know, the nightly rates, you know, for the units had to probably be somewhere between, you know, $100 and $200.
Obviously, it was higher than that than even better, but just kind of as, you know, kind of a metric of success, you know, if I could get somewhere between that $100 to $200 range, depending on the season, depending on whether it's the two-bedroom unit or three-bedroom unit, that's what I was looking for.
And luckily, you know, this property fit all those things.It was kind of meant to be.And actually, if you remember, I almost lost this property.So this property came on the market, I want to say, a year ago, actually, in October of 2023, I believe.
And I contacted the realtor, spoke to him.And it was just more of a nerve thing where I was asking all these questions.And I just wasn't ready to make an offer.I just got nervous.So someone else came in and made an offer.
But I told the realtor, I was like, Hey, if this deal doesn't go through, let me know, keep me in mind.And lo and behold, you know, he contacted me in December of 2023.
And he's like, Hey, you know how you asked me to tell you if the deal falls through?Well, it did fall through.So are you still interested?And I was like, Yes, absolutely.So we went from there.
So I was actually very fortunate because I almost lost out on this.
Yeah.And did you get a better deal because the previous deal fell through?Did you get cheaper than you would have?
I believe so.I mean, so when it first went on the market, it was on sale for $185.I was planning on offering $175.Like I said, I never actually made an official offer.I kind of just got cold feet because again, you have to
It's the whole thing about being uncomfortable investing from far away.So when it came back on the market again, and technically, actually, he never relisted it.He just contacted me directly, so no one else is making any offers.
I offered 165 for it, and he accepted that.
Yeah.165 for relatively turnkey duplex.I know people out probably where, where you're from and California are probably falling off their chairs hearing that because it's like a million plus dollar property out there, but it is doable.
here in the Midwest, especially in, you know, towns outside of the major cities.So let's talk through the numbers then in terms of your income and expense.
I've got the Vacation Rental Analyzer spreadsheet pulled up here that you initially, you know, put your projections in.
And we always talk about using very conservative projections just so that, you know, you kind of go into a worst case scenario and if the numbers still work and they're still appealing in the worst case scenario, you know, it's,
It's probably going to do even better than that, but you're still in a comfortable position.So what does that look like now at this point in terms of bookings?
Yeah, so you kind of like I alluded to earlier, we've kind of been hitting the nail on the head with with those initial projections.So we you know, the initial projection was a net cash flow of $3,000 a month.
And that's exactly that's exactly what we're hitting when you kind of like average things out, right.So in the in the busy season in the summertime, we opened up this property in April.So like just right before the busy season.
So we got you know, June, July, August and everything like that. We're a little bit above $3,000 in net cash flow.And right now in the slower season, we're like just below that right now.And so we're hitting that perfectly.
And in terms of the nightly rates for the individual units, so the downstairs unit is a three-bedroom, the upstairs is a two-bedroom.
And yeah, those nightly rates, again, they're working out pretty much exactly what we predicted right in the busy season.We're able to rent out the lower unit for $199 and the downstairs unit for $135.
And then in the slow season, you know, the downstairs, we're able to do $165 and the upstairs for $105.
So yeah, everything is working out exactly as planned, which is pretty remarkable because, you know, again, those are those are just projections and they can always be off.But like I said, they've been pretty much like 100% accurate.
That's awesome.That is awesome.Yeah.
And obviously you have higher expenses as a short term rental, but even with the higher expenses, you know, between the two nightly rates and your occupancy, you know, you're only projecting 59% occupancy on your, your projections here.
And between the two units, because it's a two unit, you know, you've got almost $300 a night of average daily rate.
So you only have to book this thing up just over half the year to hit your projection of $3,000 net cash flow after all your expenses, which is pretty incredible.I mean, so for people who are finding themselves in
of our issues a year ago where you know you feel very intimidated moving forward and you're looking at a deal like this you know it's just a testament to kind of trust trust your gut and trust the numbers because even if you had made a big mistake and now you find yourself
$1,000 less of net cash flow, that's still $2,000 a month of net cash flow on a just over $200,000 all-in property.
So I think for most people who are following the traditional rental investing model of that 1% gross rule, they're gonna buy a $200,000 property and they're gonna hope for $2,000 of gross rent.That's considered a solid long-term rental.
But what you're saying is you just bought a $200,000 property and you're getting $3,000 of net income after all your expenses, which is almost like, it's like a 1.5% net, which is just off the charts compared to that 1% gross rule.So that's awesome.
I think a lot of people probably listening to this who aren't familiar with Battle Creek or with short-term rentals are going, why in the heck would anybody rent a property
in Battle Creek, like, you know, if you're in Southern California, why would you go across the country to a place that most people haven't heard of, other than that they make a bunch of cereal there to buy a short term rental.
So what what who's who's been booking this out?What does that look like?
Yeah, so it's been fascinating to kind of learn, learn that part right there.So by far, the number one reason you know, we get bookings is for people attending some kind of events at the catalog arena.So for those who are unaware,
Battle Creek is where catalogs was founded and also post as well.So the nickname of Battle Creek is I'm serial city USA.One thing that catalog built there is the catalog arena.It's just a multi purpose arena for kind of honestly anything.
So we've had people show up because they're attending a pool tournaments at the catalog arena and arm wrestling championship, religious events, you name it.I mean, there's so many things that go on at that arena.
And that's definitely the number one reason that people are coming to our property.So that's, that's been great.And there's events there year round too.So that's also helpful. Number two was actually kind of a surprise.
I was not expecting this one is golfers.There's about 15 different golf courses in the Battle Creek area, either directly in Battle Creek or like just outside of it.And we get all ton of people coming to golf at Battle Creek.
So so unbeknownst to us, you know, it's a it's a golfer's paradise, I suppose.And some of them actually even come up for for professional tournaments as well.And then I would say number three, we get business travelers.
So like I mentioned earlier, you know, catalogs is there.So we get some people coming there, we get some medical professionals as well.We've had some contractors just doing work in the area.So you know, a decent number of traveling professionals.
And then I would say the third, sorry, fourth reason here would be weddings right now actually for the fall.
That's been our primary drive of people coming in this month and also looking for next month in November attending weddings in the Battle Creek area.
And, you know, a few, I wouldn't say that this is, yeah, I would say this is definitely number five, but I mean, some people are just coming to Battle Creek for vacation, right?
So we had some people actually come all the way from Ohio because they wanted to check out the biking and hiking trails in the Battle Creek area, which there are a ton of, and they're extremely beautiful.
You know, my wife and I were able to check them out when we were visiting there.
Back in June, we had some people that came over the summer because in the summertime, there's a baseball league in several parts of Michigan, but the team that's located in Battle Creek is the Battle Creek Battle Jacks.
And people love to go watch the Battle Jacks, come from all over the place, just to attend those games.
And so yeah, there actually are some people, again, it's certainly not a majority, but they're actually just trying to go to Battle Creek just to have a good time.
And it's so funny because I run into this same sentiment over and over again, like with people, you know, in the program or, um, who kind of get into this, this style of investing where they initially kind of, a lot of people feel like with short-term rentals, I need to be next to Disney world.
I need to be next to, you know, some huge national park or next to the beach. And what I highly recommend to people is to invest in these lower cost areas just outside of the main attractions, but still have local draws.
And so over and over again, I hear people be like, I never would have expected there'd be so many people coming for this reason or that reason. it's so affordable for just about anyone.
So you're going to get people to travel just for any random reason.
But then you have these local draws that you didn't expect, like the arena and the battle jacks and, you know, these different things that are just local attractions that bring people in and work and stuff like that.
So I think you followed the model and picked a location. perfectly aligns with that structure where it's super affordable but yet increases your nightly rate and occupancy by having these local draws and a decent population.
It doesn't have to be a massive city.So I think that's fantastic.
Yeah.And to add to that, I would say... Because I fell into that same trap too.
So like I mentioned earlier in our conversation, investing in short term rentals was nowhere on my radar initially, because I had that initial same feeling that you have to be in those super competitive markets, Joshua trees and like that.
And I was just like, I just don't want to do that.Sounds super stressful.It's super expensive. and stuff like that.And I think part of the trap that people fall into and is, you know, because they're, they're referred to as vacation rentals.
And so when you hear like the word vacation, your mind kind of automatically goes to a lavish vacation, like a really big vacation, right?But you know, people make small trips all the time, right, year round.
And I would actually say there's more people making small trips than there are people making very large trips, right.And so there's this whole market that you can serve that is out there.And most people are kind of ignoring it.
And it's an it's an amazing opportunity.
Yeah, that's a great point.And you mentioned Joshua Tree.To your point, if you are investing in an area like that, you better be on your game because there's thousands of short-term rentals there.And the average one has all the top amenities.
It looks like a super luxury high-end vacation rental. I'll put links to your, your listings in the show notes.So if you're listening to this and you want to check out Alvaro's listings, they pop, they stand out.
You did some, I can tell you're a digital marketer.You did some cool digital marketing stuff with it, with like creating a logo for each property and putting that on there. You didn't, I mean, you said you spent $30,000 to update these.
It wasn't like you put in every amenity.It's not like there's a lap pool in the backyard or pickleball courts or something like that.
It's a two-unit property, but it pops because you followed a system and you have some professional pictures and you did, you checked some boxes that made it look really nice, but you're also top of the rankings on Airbnb because
the competition just nearly isn't as high as all these mainstream areas that people flock to.So that's another side benefit to investing in an area that's a bit more affordable as well.
Yeah, and I don't know if this is something specific to my area or the Midwest in general, but for the competition that does exist, I would say over 50% of them, they're doing the bare minimum on their property, right?
They get like the cheapest furniture possible.And it's extremely too minimalistic, I would say.And they're taking photos with their phone.And that's about it, right?So if you just do a little bit more than that,
Not only is there less competition, you know, in general, but you're already just doing better than the competition that currently exists there.
Yeah.Yeah.And I think that is common in these smaller markets.It's just, yeah, you just don't have that level of competition.It's a lot of mom and pop people that kind of just wake up one day and they're like, I want to try out Airbnb.
So, um, the bar is not super high.So, Hey, real quick, we'll get back to the interview in just a second, but I just want to jump in and say, if you're inspired by what Alvaro is sharing here, cause he's done a fantastic job.
But if you're inspired and you want to do something similar, and you want to work with me in this program that he mentioned, the First Vacation Rental Investment Blueprint Program, that really is a step-by-step guide that lays out exactly what he's done.
It walks you through how to identify the right market, how to identify the right property, how to line up the financing, how to set up the property, even if you're all the way across country like he was.
then you can set up a call with me and discuss whether the program's a good fit for your goals.This has been some of the most fulfilling work that I've done because people are taking this information and literally changing their lives.
So if you're interested in the program, you can go to livingoffrentals.com forward slash call.That's livingoffrentals.com forward slash call.There's a short form.
You can fill out a few questions and then you get access right to my calendar and you can book a call with me and see if the program's a good fit for you. I think a lot of people also are curious around how you finance a property like this.
So what was your strategy for that?
So this one, we just went the conventional loan route.I thought about, you know, maybe going, you know, the DSCR route and using private money, but that was all new to me.And, you know, again, you know, first property, long distance, a lot of stress.
So it is very overwhelming at the beginning.And I was like, you know what, I'm just going to stick with what I know.And, you know, at a future date, I can kind of learn some of those other methods. So yeah, we just went the conventional route.
We paid for the down payment.We paid for the rehab directly ourselves.My wife and I, we had saved up some money over the years.And so that's the route we took for this one.
That's great.Yeah.Yeah.And I always tell people that if you're working a W-2 job and you can qualify for a second loan, conventional is going to be the best terms you can get.
So might as well go that route initially, and then you can get into more creative strategies as you go.How much did you pay for your furnishings?What does it cost to furnish a two-unit property like this?
We paid just over $20,000.I want to say it came out to like $22,000 or something like that.Yeah.So, so it wasn't an overwhelming amount either.Okay.Cool.
Cool.Yeah.I mean, that's, I think that's right on par with what you'd expect and how now, you know, you mentioned you visited for the first time after it was already furnished and listed.
So I think a lot of people would probably wonder how the heck did you get it furnished?
Yeah, I came in contact with someone who actually specializes in furnishing short-term rentals.I was introduced to her through the seller of the property.So actually, that's one thing I didn't make super clear.
So the person that was selling this property was also the realtor.So he was the listing agent.He was the owner as well.So he bought it. made some upgrades, and then he was selling it.
So I asked him initially, I'm like, Hey, is there anyone that you happen to know that, you know, specializes in furnishing short term rentals?And you know, being a small town, I'm like, I'm, he's probably gonna say no.
But lo and behold, yeah, I actually do know someone.So he introduced me to her.And she was really, really fantastic to work with.She has a great eye for design, very simple to work with.And she was able to handle everything.
I mean, honestly, I kind of just told her what we were looking for.We knew we wanted the properties to be themed.
So the themes that we came up with was that the downstairs unit is the Great Lakes Hideaway and then the upstairs unit we call the Mediterranean Oasis.And she worked with those themes and she absolutely nailed it.
And when people leave our reviews, 95% of them, that's the main thing that they talk about is just how beautiful and well furnished the property is.
Yeah.Yeah.And for $22,000, like a lot of people feel like I don't know how to design.So I can't get into this.I don't know.
I'm, I'm not like a, you know, creative person or they're like, I can't do it remotely, you know, because I, I need to be there and I need to be the one assembling furniture and stuff.I can tell you that part of the job sucks.
Uh, my wife likes it a lot more than I do, but Uh, you don't have to do that.Like lean into somebody who actually is trained experience has done this before and they're probably going to be way faster.
The product is going to be way better and it's going to alleviate a ton of your stress.So I love that, that you did that, you know, home stagers, designers, they're really good at this.So I think that's a, a really smart way to approach it.
So it's all set up and then your listings are going live.What about managing it?A lot of people will ask me about, you know, how do I manage a property?
They just assume that you need a professional manager that you pay 20 to 30% to, to manage the property, but you're actually managing it yourself, correct?That's correct.Yeah.Cool.So what does that look like?
Yeah, it's honestly pretty simple.And actually, by the way, you're right, I had the same feeling too.I'm like, Oh, this is gonna be so far away.I'm just gonna have to hire someone to do it.
But you teach right, a lot of great systems and processes that you can implement.And after that, you know, it's actually pretty smooth sailing.So yeah, there is a lot of initial upfront work.But once that work is in place, it's really smooth sailing.
So you know, for entries, We use some digital locks that we can control with our phone.So every single time someone new checks in, then we can update the key codes for that.
All the messaging that we do is through the Airbnb platform, and we have automated messaging in place there.That way, when someone books, they get an automatic message.When they check in, they get an automatic message.
When they're about to check out, they get an automatic message, right?So it's not like us manually sending messages. you know, all the time, that probably would get super, super overwhelming.
And then, you know, of course, then if they have any specific questions, you know, we'll answer them directly in the app as well.And then we have a handyman that we got in touch with that, you know, anything that needs to be
updated or addressed, you know, we give him a call, and he's super fast and responsive.So I just shoot him a text message, like, Hey, can you take a look at this?And you know, he's like, usually there the very next day.
And then we have a cleaner that handles all the cleanings for us.So the way we do it with her is that we just put all the bookings on Google Calendar that we share with her.
So we're, it's not like we're constantly sending her text messages, like, hey, please clean this, please clean that, right?She just knows when someone's coming in and coming out.
And so all she has to do is then send us the request to pay her, which we you through Cash App.So yeah, it's very simple, smooth sailing comes to managing it from a distance actually.
Wow.How much additional software do you have to have for that?What are you using to manage it?
I mean, no paid software.So we're doing everything through Airbnb.And then, like I said, I guess when you can technically say a software, like I said, we're using Google Calendar with our cleaner, which is free.
And then we're just contacting our handyman and our cleaner through text message.And that's pretty much it.So nothing extra that we have to pay for.Obviously, there are a lot of short term rental softwares out there that you can pay for.
And I'm sure they're fantastic.And I'm sure that once you reach a certain level, they actually kind of almost become a requirement.But for your first property, you don't need any of that, right?
Any everything can be done through free software for sure.
I love that.And I think, as you said, there's so much software out there.
People will spend weeks comparing a backend property management software that they feel they've been sold that you have to have if you're going to manage, especially from a distance.And the truth of the matter is, I think it actually hurts you
to go through the whole process of trying to set that all up and, you know, get real sophisticated and try to overcomplicate things from the start.Like, you know, I've been a huge fan and this is how we grew is grow organically as needed.
You know, every stage of your business is going to require something different.So don't bury your head in the sand and say, well, I'll never use any paid software, at some point, it might make sense.
But for your first one, like you're making three grand a month of additional income without a single bit of extra paid software on top of Airbnb, just using the Airbnb app alone to automate 90% of it.So I love that, that that makes so much sense.
So I guess I'm curious, How investing in short term rentals has impacted your life so far?Like, is, has it changed anything in terms of your day to day or your, your life overall?And then also, I guess, what's your, what's your goal from here?
Yeah, I mean, so it's really opened up my eyes, you know, to be 100% honest, just almost feels like the possibilities are limitless.
And, you know, right now, our main goal is to get to a point where we have enough short term rentals that are covering all of our living expenses.That way, everything that my wife and I earn is just, you know, the cherry on top, right?
We can either spend that we can invest that that's kind of goal number one.And you know, with long term rentals, I don't know how many long term rentals you would have to own to get to that point.I mean, I feel like you'd have to own like 30, 40, 50.
So, you know, initially, I never thought that, you know, a year into my investing journey that I would already be thinking about, oh, how can I how can I, you know, get enough real estate investments to cover all of my living expenses?
But I'm already thinking about that.And it feels possible, feels very feasible.You don't need a ton of properties.I mean, honestly, you know, we're working on our second one, which we can get into more details in just a second.
But you know, I think after a third one, if it has similar numbers, like we'll be good in terms of hitting that goal.And obviously, then we can hit, you know, ahead, our next goal, whatever, whatever that might be beyond that.
But, you know, that freedom and flexibility and knowing that's all possible is just really empowering.It's exciting.And, you know, it's a journey that I'm so grateful that I've been able to go on.
Yeah, you've done an awesome job.And you know, there's obviously, like, we try to help with the system, but it just takes doing as well.
And I think I don't want ever to come across as like, it's a get rich quick, easy thing, because you've put in a lot of effort.But what I always tell people is,
Short-term rentals are kind of like, it feels like a lot of effort, effort, effort, and spending money, money, money for the short-term to where you can hit this point where all of a sudden there's this inflection where now all of a sudden what you're spending turns off.
You know, you have your obviously recurring monthly expenses, but then it's just direct deposits coming in at that point.And then the effort level totally is inverse.
Like all of a sudden the income's coming in and your effort's way, way lower and it's, it's a lot more on autopilot to where you can kind of focus on the next one then.
And so I mean, if you think about starting a business or running long term rentals and creating $3,000 of net cash flow, it's going to require a lot more than just responding to
some messages and lining up the cleaners and, you know, handyman here and there.
It's, you know, like to be able to do this while you're working a full time job all the way across the country, I think is one of the things that gets me so excited about this strategy and about short term rentals and the possibility.
Yeah.And another thing too, and I did mention this at the very beginning, but it's just kind of worth repeating because it aligns perfectly with what you just said.
I mean, the great thing about short-term rentals is that there's actions you can take right now to improve your results, which, you know, when it comes to a long-term rental, you can't do that, right?
You got someone, they're locked in and, you know, you can't really change your monthly income at that point.But as an example, you know, we hit a period where things were going a little bit slow.
And I was like, Oh, man, like, we haven't gotten any booking requests in a bit.And so what I ended up doing, and you mentioned this earlier, is that actually end up creating logos for our property.
And because I noticed that no one no one else in our area was doing that.So I just wanted something to for us to stand out in the search results.And then instantly, right after I did that, we started getting more bookings.
And so it's like, it's just like things like that.There's there's leverage you can pull to improve results right away.And so that's just really empowering, for sure.
Such a great point.You mentioned, you know, the ones that you've looked at recently.I know you put in a couple offers recently.We analyzed some that I, I was super excited for.
I was going to like reach out and say, let's, uh, let's partner on these cause these are amazing deals.Can you share a bit about what you're targeting now and what you've, you've looked at and the property that you just almost recently purchased?
Yeah, yeah.So yeah, I'm currently currently under a purchase contract for a four unit also in in Battle Creek.
And so yeah, just trying to continue to build that, that multifamily portfolio, ideally in the Battle Creek area, not that I'm opposed to, you know, be getting another property in a different market.
But there is just the simplicity of already having your team in place and the economies of scale that come with that in the Battle Creek area.
And so this is a four unit, which is really exciting because not a whole lot of four units come onto the market.And like I also mentioned earlier, for the ones that do, usually they're a giant rehab project.
But this one is very similar in terms of the duplex where it's It's relatively turnkey.It's gonna require a little bit more work, but still nothing overwhelming.It's gonna be mostly cosmetic stuff.
So going from a two unit to a four unit, the income growth there is really exciting.And so what we're looking at right here for this one is a predicted net cash flow of $4,000 a month.And a couple of unique things to point out about that.
One, that's a very conservative estimate.It honestly would not surprise me if we ended up doing more than that. And you mentioned this earlier too, even if I'm way, way off by $1,000, it's still $3,000 in net cash flow.
So there's so much room in both directions that it feels like an extremely safe investment.And then the other thing for this one too, differently from our duplex, is that we're number one, using a DSCR loan for this one.
So that process has been a lot smoother because, you know, they don't require 30 years of tax returns and pay stubs and all that kind of stuff, which, you know, can be a real pain with the conventional loans.
And we're also using private money for the closing costs, the down payment, the repairs, the furnishings.So we're putting $0 down on this one.So when you see a predicted $4,000 of net cash flow and putting zero of your own money
Again, it's just crazy that that's even possible and feasible.It's something I never would have thought of a year ago, so it's something that we're very excited about right now.
I mean, for people who haven't done a lot of real estate deals or investing in anything in general, and I would pit a deal like this against almost any investment out there, find an investment where you can invest zero dollars and it will pay you, after all your expenses, $4,000 a month of cash flow going forward.
that's just cashflow.So, and you get big tax write-offs, you get the, you know, the depreciation on the asset every year for your taxes, you get appreciation.
So the assets going to appreciate, especially if it's performing like that, another investor would love to come along and pay more than what you're paying for it.You get principal pay down.So somebody else is paying off.
So you're counting it as an expense, but it's really, somebody is paying your mortgage every month.Your guests are so huge, huge benefits to that.And what's the price point on that? that?We're on a contract for 229 right now.229 for four units.
And that's a big difference.Because a lot of people I think would say, well, I've looked at $229 houses, and they don't cash flow 4000 a month.You're right.
Like that's why it's so important, I think to look at or be open to multi units, especially as you add more units, to a certain degree, like a two to four unit, four units are going to produce
significant income, even if it's a hundred bucks a night, that's $400 total on a $229 property.So that's awesome.I just love seeing that and can see why with only a few of these, you could get to a place of replacing your daily income.
then all that W-2 income is just cherry on top.I do want to just mention DSCR loans too because I think a lot of people aren't familiar with what that means.It's just a investment loan.So it's a loan that is based on the income from the property.
It's not based on you having a W-2.So anyone can go out and get one of these loans if they find a property that cash flows.
Because that's, it's based off the cashflow or the loan paying the loan servicing on a monthly basis, not your personal income.So I'm just wanting to clarify that for a lot of people.That's excellent.
So I guess last question, unless you have anything after this, but I just was curious, like if you could go back a year and talk to somebody who was in your shoes a year ago, what would your advice be for them?
Somebody who's just kind of wanting to get started at this point.
Well, so like I mentioned earlier, you have to be comfortable being uncomfortable on the first one, right?You know, it's going to get easier than that.But the first one, you know, there's going to be a lot of nerves around it.
But then number two, what I would actually definitely say is that at this point, I actually think it's a benefit to start with a long distance investment.
So, you know, I think everyone's initial inclination is like, oh, I want something nearby that way I can go over there and you know, if there's any issues and everything like that.
But the downside of that, and there's upsides, I'm not denying that, but I would say the downside of kind of insisting on investing in something in your backyard is that it doesn't force you to set up the operations to run it like a true business, right?
Because then you can always give yourself the excuse like, oh, I'm just going to go over there and do that.I'm just going to go over there and do that, right?
Whereas, obviously, when you're investing long distance, you have to have systems and processes and team in place in order to make it work.And so by investing long distance, you're forced to do that right from the get go.
go, which means moving forward, everything's just going to be a lot smoother from an operational standpoint.
So even if you are in a market that you are considering investing locally, I would actually say, you know, definitely consider investing long distance because just from from the systems and processes standpoint, I think it's going to really pay off in the long run.
And then, you know, the last thing I would say is, you know, what you mentioned a couple minutes ago is, you know, when you're evaluating, you know, what you should be investing in, you're going to do some comparing and contrasting.
And a long term rental, obviously, is going to feel a lot simpler.And in many respects, it is and people will be tempted to go that that simpler route.
But again, if you kind of get past that emotion of being a little bit uncomfortable and just go all in, I can assure you that you're going to be way happier that you went the short term rental route or the or the long term rental route.
Yeah, absolutely.That's such great advice.This has been great.I really appreciate you coming on and I learned some things that I didn't know that were going on.And to your point, your final point about investing remotely, I found that to be true.
I didn't think at first that was going to be the case, but as I've gone back over the last three and a half years of different people that I've worked with, I could say for sure that the people who have done the best in the program and made the most progress the quickest have been remote, which is counterintuitive.
You know, you'd think it'd be people that are local, but they're people who are investing remote, it forces them to follow the system.And you can make more traction in the areas that really are the highest and best use of your time.
So that's such a great point.So I really, I appreciate you coming on.I know a lot of people are going to get a lot of value out of all your advice today.So thank you very much for spending the time here.
Yeah, no, thank you for having me.And thank you also for everything that you've taught me.It's been an awesome journey.And I'm just really excited for what the future holds.Yeah, I was gonna ask you to I forgot.
So if people have further questions for you around your experience here, or maybe they want some digital marketing support as well.What's the best way to reach out to you?
Yeah, so I would probably say the best way to reach out to me is to shoot me a DM on Instagram.So my handle there is I'm Alvaro Barrios.There is another Alvaro Barrios that took that handle before me.So I have to have the I'm right there.
Or you can also go to alvarobarrios.com and you'll be able to find a form there that you can email me at.
Cool.Yeah, I'll put that link in the show notes as well so that if you are wondering how to spell his name, that'll be there and you can just click on it.So awesome.Well, thanks again for spending the time today.
Thank you. Hey, thanks again for joining us.If you enjoyed this episode, make sure you leave a positive review on iTunes and also head over to Facebook and join the Living Off Rentals Facebook group where the conversation will continue.Thanks again.
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