Real Estate: What it Takes to Run an 11-Unit Rental Building...in Another State
Episode Summary
Ever wondered what it takes to get into the real estate investment game? Our latest guest, Allison M., has all the answers. Today she talks to Allegra about how she and her husband went from losing $30K on a failed real estate flip, to owning and running an 11 unit rental building in another state.
Episode Notes
Ever wondered what it takes to get into the real estate investment game? Our latest guest, Allison Mackalik, has all the answers. Today she talks to Allegra about how she and her husband went from an initial investment in a duplex, to owning and running an 11 unit rental building in another state.
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Transcript
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A lot of women asked me all the time, how did you figure out your strategy? Should I do colleges or single family or house hacking? It's like sometimes you just gotta jump in and figure it out like we did with that single family of like what we wanted what we didn't want to the point where we were so crystal clear that we did not see the triplex before we bought it.
This is Allegra Moet Brantley and you're listening to the coffee and coin podcast where women talk wealth. I'm the founder and CEO of Factora, a company on a mission to lead 1 million women to 1 million in net worth. Because when women have more money, we'll have more power to be the change we want to see in the world. If you're ready to hear real women share their real numbers and investment journeys and have a sneaky feeling you should be doing a little more with your money, you are in the right place. Just sit back, relax and turn me up.
All opinions expressed by Team Factora and podcast guests are solely their own and do not necessarily reflect the opinions of Factora Incorporated. This podcast is for informational purposes only and should not be used as the basis for investment decisions. Team Factora and podcast guests may maintain positions in the securities or investments discussed in this podcast. Welcome back
to another episode of Coffee and coin. I am here with Alison M today. Welcome Alison.
Hi, Allegra. Thank you.
This is not your first time on the pod. And I know it won't be your last. Last time she was here talking about fertility and numbers around that. She's a mom of two under three. And before this podcast episode got started, she was telling me all the baby things and really just the few things that you have to have, which I so appreciate as I go into this foray of motherhood. But today, we are here to talk about real estate because she has been crafting a pretty awesome real estate portfolio over the last few years. And I think we often talk about real estate in terms of one single family home that someone buys and then lives in and then moves out of and rents either as a short term or long term rental, which is an incredible strategy. I've applied that three times over. But Alison has just purchased and a leaven unit apartment complex. And today she is going to share all the numbers that go along with just that. So basically, we have talked, you know, one at a time acquisition of real estate doors, but this is how she just went into a large multi unit complex and we want to get right on into it. So for a little context, Allison, can you introduce yourself and tell us tell us a little bit about you? What do we need to know?
Yes, huge fan of Factora, obviously huge fan of Allegra. I am a sales engineer by day. Yeah, happily married for this is our eighth year of marriage, we've been together 11 years, we have two kids under three, which is crazy. We've done IVF we had our last baby through IVF. And yeah, I started Factorain 2019, right before my son was born, and then just dove in from all in instantly,
which we love. And you've been such an incredible community member, I think the best members of Factora community are the ones who go out and do creative wealth building strategies, and then come back and teach the other women how to do that. And you have been so open and sharing with your portfolio and your different strategies. And so today I want to get into your real estate investment. So kind of talk to me about how you got started into real estate so that we can kind of build a history up into this 11 unit apartment complex. You just acquired.
Yep. And it started in 2018. So we were moving to Dallas and we sold our Austin house for $50,000 profit. So we had $50,000 I wish I would have kept that Austin house because it'd be worth over a million now. But we sold it for 450 in 2017. And we moved here where we live now in Oak Cliff. And my mom had been flipping houses for a while with pretty great returns. I didn't know anything about anything and just kind of trusted her blindly, didn't ask questions didn't do anything at all. The comps that she pulled were, unfortunately a little off and the house was a little bit too big. I think we all got X added because we had this $50,000. Looking back, it was a really great learning experience. Um, at the time we lost $30,000 Lost it when we sold, and it was just oh my gosh, it was a huge wake up call, I was pregnant. And I was just like, I cannot believe that I just blindly trusted someone, I didn't look at the number, I didn't look at anything. So that's actually what pushed me into Factora to begin with, because I still had this passion for real estate. I just didn't know what to do or how to do it. So started teaching ourselves started, you know, getting pretty crystal clear with our strategy. What do we want to know how to baby, then COVID hit. And we over that time we had been saving, saving. And it's this kind of counterproductive? It feels like but it's actually kind of easy to save when you have a baby, because their expenses get more as they get older. But you're just at home all the time. Like you're not going out and then COVID and you're just like, wow, I have I have some cash. So my husband's friend is a real estate agent here in Oak Cliff. And he said, Hey, I know you guys have been saving, you know, for a while now almost a year. We have a great investment opportunity for 165 in South Dallas, would you like to go? And I said, Let me run the numbers. Let me get in this. I just come off factora. I was like, Yes, let's go. Let's get deep. And BiggerPockets has one of my favorite rental property calculators and their education section on their website. And it was pretty good. So anyways, the numbers looked good. And we closed on that house the single family on September 11 of 2020. And our cashflow we charged 1650 a month. And all in our bills were about 982 at the time. So that has just been growing and growing equity wise, we didn't really we had to put some money into it for the freeze that happened in Texas with the pipes. And then it had about probably 20,000 Total we put into it. But equity was growing so fast, so fast. We were like okay, we have a great winter, fine. All of that changed in August. And I'll get to that in a minute of like horror stories of tenants, even good ones that you've had for over a year. But we'll talk about that in a minute. So from there, we have the single family. And then I started saving all my bonuses, because I knew that I wanted more that we wanted more. And we just started living off of our base salaries and then all bonuses went to our next down payment. And we decided Texas was no longer a market that we could cashflow because houses were getting so crazy expensive. So my husband started googling second tier markets. And I've talked about this with the factora I've talked about this on the corporate workshops in Slack. There are websites that essentially tell you the up and coming markets, and we wanted cashflow. We had our equity plays, you know, here in Texas, and my husband went to school in Alabama so we started calling friends. We found a real estate agent and she was investor minded. And then she got us a triplex and it looked great numbers looked great. Again, bigger pockets ran the numbers. And we got the triplex when Davey was a week old be closed. So that was last July. So that was September that was 2020. Then we did another 120 21. And then I taught myself essentially commercial real estate for the apartment that we closed on in January of 2022. So it's almost like every year is our strategy right now. We want to increase that to two this year, but that's where we've been to date.
Okay, I want to recap this for listeners. So you have two houses around Dallas area, the one you live in and then a single family home. Is that correct?
We also have a third that we bought with my mom back in 2008. Teen we did go ahead with that 20 member we lost 30 We had we put that into another house in relat. So we do have a third.
Okay, and then from there you picked up a triplex and another triplex
Nope. Just one triplex in Alabama last July in 2021.
Okay, and now in 2022. You went all the way up to an 11 unit apartment complex. And where's that located?
Same place in Birmingham, Alabama.
Amazing. So a few things that I want to mention here. One being that it's obvious there's progress you've made from starting with something that is just for one family and getting one tenant in to getting a triplex which obviously requires getting three tenants in and now an 11 unit apartment complex, where you need 11 tenants to keep it filled. So I just think that's worth mentioning because I don't want people I don't want listeners to think Well, I mean, that's like way above my paygrade and it's like no, no, she has progressed into this way. If each experience and I'm sure there's a lot of valuable learnings from that. So before we get into some of the learnings, let's talk numbers. So with this most recent deal, can we break that down? How much does a 11 unit apartment complex in Alabama cost? And how much of a mortgage did you get? And what kind of cash flow are you expecting?
Okay, so one thing to keep in mind, anything above four doors automatically by law has to be a commercial property. So our real estate agent, she's an investor minded one, the one Her name is Shannon in Alabama, she sent us a five door the other day, and I loved it, the numbers looked great. But I told my husband, I don't want to do another commercial right now. It's just a lot of paperwork, it's a lot of work. It's a lot of work. And it's a lot longer process. And you have to have a lot of reserves in the bank. And I was like, let's No, if it had been a four and under, we could have done a residential loan. And that is a lot easier to get. And a lot just like your overall,
this is actually really important to pause on for listeners, if you're buying anything under four doors, you can use a regular mortgage. So the same kind of mortgage that you would use for a single family home and anything over four doors, it's commercial, and it just requires a lot more because you are a lot more risky to the financial institution that's loaning you money. Because obviously, there's a lot more to it, right? It's more expensive. There could be more vacancy, there could be more issues, and they want to make sure that they get their money paid back.
Yes, insurance is almost triple. Keep that in mind. For anything commercial. I have a lot of learnings that I'll share. So okay, getting into the numbers. When she first approached us with this 11 unit. I was like, There's no way we just closed on a triplex. There's no way I don't how could we ever afford this? Because basically all of our like, how savings had just gone, literally in July. And she came to us with this in August. And that's how long it takes. So came to us in August, and we closed the end of January. Wow. So yes, it's a lot like I was saying a lot longer process a lot more paperwork, just a lot more vetting on both sides. Oh, no, what I was gonna say. So another thing with residential is you can buy it in your name, right? So you can take out more loan in more debt in your name. And then usually what we do is we then move it to an LLC to protect it. With commercial, you cannot do that you have to buy it with a company with an LLC. So luckily, we had gotten all our LLC one and Alabama one in Texas completely done for the triplex were like, Okay, this is becoming pretty serious. We need to start protecting ourselves. And so we opened up a series LLC for the Alabama properties. So that way, when we were ready to pull the trigger, we had an LLC, and we looked like a legitimate company to the bank.
And a series LLC is basically kind of an umbrella one where you can have little self contained LLC is within it. So you're opening up an LLC per property, I'm assuming
Exactly. We have a right you know, our the name of our LLC a the name of our LLC B. Yeah. And that's how it is for taxes. That's how it is for property manager. That's how it's broken down.
Yeah. Cool. Well, so tell us the numbers. How much did this bad boy cost?
Yes, I wrote it all down. Okay, so the asking price was 610,000, which remember, this is in Birmingham, Alabama. And 11 unit in Texas would probably be 2 million, even a friend was looking in Waco, and it was like 1.2. So it's just a very big difference. That is an upcoming market. Like I said, there's two Amazon plants going in, and the next three years. So it will but we're getting in early because that's part of our strategy, right? Like that's where we are right now. So with commercial, we had to give more earnest money that we didn't know as well. So earnest money is when you have to basically put up the cash that you want to go through with this and in case something falls out, you typically lose the earnest money, you can write it in that you can get it back but with commercial there wasn't really that option of getting it back. And usually for our residential properties, even triplexes we put down about 1000 This one required 6000 Okay, just like money outside the loan, here's my $6,000 that we want to do this. So right away, we were like, Huh, okay, we have to really want this. Then we got the appraisal and it actually appraised for 620. So we're like okay, we already have, you know, 610 Now we're at 604. It appraised for 620. Fantastic. Let's keep moving forward. inspection was great. We knew that we will have to do probably a full Renault on one of the apartments. But one out of 10 It's pretty good. Another plus was that our property manager for the triplex already managed the property. So there were a lot of things that swayed us to make this huge jump essentially that I don't know if they weren't in place if we would have done it. So our
property manager for your triplex also managed this building? Yeah, that's very convenient.
Yes, yes. And her and our real estate agent, our friends, and so it just kind of worked out. So LaWanda is our property manager, she was giving us the lowdown, most of these people have been there five, six years, there's 100% occupancy with a waitlist. So there were a lot of things that we were looking for. And a couple of our checklists for homes are, we like, if we do multifamily to already be rented, and then do all new, you know, when we come in place, it's just easier for us that we found, you can actually look for properties like that, that already have renters in place. We also really pay attention to the air conditioning, the roof, and the water, the heater essentially, everything else is like okay, but the roof, that's a big ticket item. So anyways, all of that, then we looked at our numbers, we needed to put 20% down to make the numbers work. And we needed at least a 20 year loan commercial, like she did put down 30% with anywhere from five to 10 year loans, we could not make the numbers work. So I had a newborn. And I remember thinking like this is just isn't gonna work, we're gonna lose our $6,000 of earnest. I don't know what we can do that I don't know why. But maybe I listened to a podcast in Factora or BiggerPockets, or something. And I was like, I'm gonna make a spreadsheet, and I'm going to call local banks. That's what I'm going to do today. When the baby's sleeping. I called 18. I have a spreadsheet 18 of credit unions and local banks in all of Alabama, all of Alabama. So timeline, remember, August, September, we started doing appraisal that was delayed because of COVID. Then we started doing, you know, inspection, different things like that moving along, because we're in it at this point, I confirmed our bank, December 4. Wow. That's how long it took to figure out a bank that we wanted to work with. I was at a Christmas market with my mom. And I remember walking and talking to our guy, Luke, that's our banker now. So another thing we learned with commercial is that no one wants to give you a commercial loan. But once you have a commercial loan, then everybody wants to give you a commercial one. It's like this weird thing that they make it so difficult. And then when you're in you're in
chicken before them, which ones come in. Exactly,
exactly. Another thing that helped us was our W twos were both w two workers. Honestly, I don't know how we would have gotten a commercial loan, if we weren't, we probably would have had to have a lot of money in the bank if we weren't w two.
So then what ended up being the financial numbers and the timeline that you had to use for the commercial loan.
So we ended up with this bank 20% down at 122,000, the loan amount was 488. And then we did a 4.5% rate interest rate for 20. Year. And with all of that the monthly payment came out to $3,171 a month. Insurance is 472 and taxes were 379. So some important call outs there are insurance on our properties here in Texas like our single families, it's like $112 Compared to 472. But another big difference though, taxes are way more expensive in Texas than they are in Alabama. So it was kind of like a wash for us. The rent when fully rented is 6840 however, we got a new renter moving in there. I think today actually and it's going up 160 So it'll be the flat 7000 for the month, but these numbers are based on the six eight forro we have lawn electricity, there's like a light pole we have to pay for and we have to pay for trash and then we pay our property manager 8% And so all said and done cash flow per month, if nothing breaks, is $1,706.80
love it, but going up $100 As of today.
Yes, going up, potentially $160. Well, well, property management fees. Yeah. So let's just call it 100 bucks.
Okay, so 11 units are netting you on a good month with no issues an additional $1,800 to your income. Yes. Amazing. And what were you willing to have done the deal for like what was the numbers that made it work for you made it worth it?
I think the fact that we knew that it appraised already for more than we purchased it for the world games are going in right down the street. And there's Starbucks being built. And there's hotels for the first time in this part of Alabama. So it's just going to keep increasing. Honestly, it's probably already at like 660, maybe even in the last couple months, I mean, looking at the projections of the city, we looked at that. Also, if we could not get more than $122,000 for the downpayment, we could like that was it, we were like we cannot go above. So that's why we had to look at 20% down. Another thing, too, is some of the units are section eight. And so we were looking at the state of the world COVID. And then now with Ukraine and everything. And we were thinking, Okay, if everything goes bottom up, at least half will get money from the government. And we can still make the bills at the very least. So it felt like a safe investment.
Yeah, that's interesting I that I didn't know that part. Okay, so I love this. I also love that you've basically created a little team in another state that you don't live in. So before when you said you found an investment minded realtor, I want to dig into that, because I think it's really important, something we teach, in Factora is oftentimes a real estate purchase is going to be the largest purchase of your life. And it boggles my mind that there are people who buy from real estate agents who have never purchased a home on their own and or aren't actually investment savvy. I mean, this is a lot of money. And this is a lot of, there's just a lot of moving parts when it comes to real estate, that I think it's extremely important to have a investment minded realtor who can help you with strategies, who's been there done that when you run into roadblocks and kind of if you think about it, anyone could just get a license and be a real estate agent without having a hand in real estate themselves. So that works. For some people, that would not work for me. I really like to work with investors themselves that are also my agent. And then you said that this person has a contact that is a property manager for both your triplex and now the 11 unit apartment building, so that's helpful too, because now you got a little team going. And I'm assuming the property manager takes care of all the maintenance and she has that covered?
Yep, everything. Yeah. I'm a big believer in like the universe and the secret of the universe and putting out there and we had a list of people from our friends who live in Birmingham, you know, my husband was a school there. And Russ, literally, we were driving to Moab. I was super pregnant. And he was like, I'm just going to call this lady her name is Shane. I'm just going to call her. That's how it happened. Like we didn't use the people that were recommended. We just kind of met this woman talk to her sort of building this relationship. And she was like you said an investor as well. She owns I think 18 different properties all over Birmingham. She gets the market she understands the market. She understood what we were looking for in our triplex. Like we we had a checklist, essentially of what we wanted. We got very crystal clear. A lot of women asked me all the time, how did you figure out your strategy? Should I do colleges or single family or house hacking? It's like sometimes you just gotta jump in and figure it out like we did with that single family of like what we wanted what we didn't want to the point where we were so crystal clear that we did not see the triplex before we bought
it. Wow. That is impressive. Have you now have you did you get to see the apartment complex before you bought it? No. So when was the last time that you were in Alabama? Have you seen your properties?
Yes, we have seen our properties. We saw our properties in September for the first time that was when we saw the triplex and we drove by the apartment. And then we were recently there. I guess in February, my husband wanted a photography trip to take with a buddy to Gatlinburg and then we drove through Alabama on the way home. And so we got to look in the apartment, we got to meet a lot of the tenants, we went and checked on our triplex. And we decided that our next property in Alabama is going to be a duplex or a triplex where we can have one of the units to stay because we're going to be going down there at least twice a year. And it's a tax write off. So you know, that's that's, that's basically what we're looking for next. And we're gonna slow play it, we have some time.
I love it. I want to touch on what you just said about garnering experience is really the only way to learn, right? And so, so many people asked me to well, how did you identify your strategy? And it's like, well, I identified what I thought was my strategy. And then I actually started to do it. And if it didn't work out, I pivoted right like we thought that we were on to something we were going to buy all single family homes a two car garages with a certain layout and We were going to do split properties and renovate the garage into a second door. That ended up not being our favorite strategy. We tried it, we learned we moved on. And so it sounds like that's what was your experience with the flip and losing money and then saying, all right now, let's pare this back, take our learnings, lick our wounds and figure out what we do want to do. And I also love that in your story, you're going bigger, bigger, bigger, but now you're already saying, we're going to go back to a triplex. But here's our strategy, we want to check on our properties and be there twice a year, and use it as since we already have the tax write off. That way, we can get a very affordable building where we keep on unit to ourselves. Like, there's just you never know what's going to open up until you get started. And that's really what I think I'm trying to say, in a non poignant way.
No, no, I think that's so important. I mean, that's the number one question I get, truly from anyone, male, female, all ages, just how did you know? And it's like, you don't write like, kind of like having a baby, you don't know what it's gonna be like, but like you're in it, and then you can pivot and you like, we like to fail fast. You know, like, okay, that's not working. Let's go, let's go. Like, I don't have a lot of patience by nature. But I kind of use it as a superpower of like, okay, I can just sit here and think about this for the next six months, or I can make a decision. And worst case, like truly the beauty of real estate, why we love it, let's say worst case, and we have to offload a property and we haven't owned it in for two years. And we're gonna get capital gains. We sell it, we pour it into another property and get a 1031 exchange. No taxes. Boop, we try again. Absolutely, yes. And it's not like I'm this real estate guru. It's like, I listen to bigger pockets every single week, like I'm constantly learning, I'm obsessed, right? Like, I'm, I love it. I could talk real estate all day. But I also put in effort to learn and learn and learn because we have these goals, you know, and this is part of our life strategy. Like, we want to be able to have completely paid off properties in the next 15 years of what we own now. So it's like, whatever we buy, it's going to be 15 years out. And we want to be able to give properties to our kids, we want to be able to sell and like that's our retirement, you know, so we're pretty aggressive. And it's it's not like it's this crazy, hard thing. It just seems so hard when you haven't gotten in it. Does that make sense? Like, it seems impossible. And then you're in it and you're like,
oh, wow, okay, yeah, when impossible becomes inevitable via doing. And that story you told about not wanting to lose your $6,000 earnest money, but also not being able to make the numbers work if you had to put 30% down instead of 20. And you couldn't find the right financial instrument to do so. So you took it upon yourself and you called 18 banks around Alabama. That is what makes a savvy investor, someone who goes above and beyond when they hit a roadblock. And that's why I know that you've been so successful and will continue to be and I think so many people have a lot of fear that things are gonna go wrong. But that's not the right mindset to have because they are going to go wrong. It's just what are you going to do about it, you're going to persevere, right? So if you have the spirit of I know, I'm a go getter, and I'm going to persevere. Investing is like, going to be the most fun thing you do, because you will hit those challenges. But you can also solve for them. Right? So I want to pivot now to talk a little bit about your goal, because I know you have a big goal of a certain number of passive income that you're earning for your family monthly. What's that number? And what will it open up for your lives?
So I in my very first Factora Wealth Circle, Christine was my facilitator. And we were talking about, you know, this big, crazy goals, B hags and I was like $10,000. And I didn't even know what that meant. Like, I just knew that I had done our monthly bills. And what we were bringing in is about 10,000 a month, and you know, before taxes, and I was like, if we could do that with real estate, we could do anything. Granted, I had no idea how to do that where to even start but that's just been my number like my post it every year for my goals. Like we have date nights where we check in it's like, it's just always been $10,000. And when we get there, it will have to go up but like right now we're laser focused on it. One thing too, though, it sounds like oh, we have 11 you have 17 doors like it's easy to get, you know, you should be at 10 It's not that easy, right? Like things happen every single month like things break. People get evicted. They stop paying, you know, there's in this business of people there are things outside of your control that you cannot control essentially. So, we are at about 3030 Sorry, 33,200 right now, right if nothing goes wrong, and we've been at this now since for about two years. So if we look at that
you're at 3300 out of your 10,000 goal. So you're 32% to go.
Yes, yes, exactly, exactly. And it's taken us two years to do that. Well, two years,
two years doesn't seem long. And 17 doors seems impressive. But to your point, some people might think 17 doors, you know, you should already be at 10,000 goal, and it does take a while. But the thing you have to remember about real estate is what Allison already shared that her Property Appraised for more than they bought it for. So she already had equity built in. So as the years go by, and as the debt on those assets go down, and inflation allows the rents to go up and some of your fixed carrying costs, like the mortgage stays the same, that monthly net amount is going to increase. So obviously, it sounds like you guys are still in acquisition mode. But even just what you have, like it's not going to stay that your 11 unit apartment building is $1,700 per month, obviously, you just got a new tenant and it's going up $100 plus, and then that will keep happening as all the tenants turnover or resign. Basically, what I'm trying to say is real estate is inflation hedging, which is pretty freakin awesome. Because if you're buying these assets with fixed debt instruments leveraged at like a mortgage at a fixed price, then rent goes up and the costs stay the same. I mean, not taxes, not insurance, necessarily. But your loan pay back to the bank.
Yeah. So for example, that I mean, that's a great way to explain how we got the $122,000 down payment for that, right, because we don't use outside partners at this point, we did a cash out refi on our South Dallas house. So we bought it for 165. And within a year, almost a little over a year, it is appraising already at 260. And we haven't even owned it for two years yet. So we are starting to leverage our existing properties to then buy new properties with it. So our mortgage went up to 1300. But then our rent also went up, you know, to 7095. So it's like we're still making profit on it. But now we can start using that in a more creative way. Because then get other properties. And you know, we're gonna have, we just signed a new lease. So like I was saying the downside of real estate, our tenant just stopped paying in January of this year, like just stopped. So he owes us $4,500 in back pay. So it's like, those things suck, and you have to be prepared for them. And they suck. And that would be enough, I think, to pull some people out of the game completely. But you know, you have savings, our goal is to basically three months of rent for each property that we own. That's our next immediate goal, because a lot of it was wiped out when he just stopped paying, there were some pretty heavy eviction rules happening during COVID where you couldn't evict just things, you know that you you don't really have any control over. So all that to say though, the house has increased so much, even when we sell so our new loan is for 187. Even when we if we decide to sell next September or what month we're in April, I don't know where I guess we're in April, if we decide to sell next April, it'll probably appraise. I'm not kidding you just how crazy Texas is for probably like 310 320. So even in the short term, you're like, Oh, you have to keep thinking like, Okay, our strategy is long term, right? So if we do sell it, we'll sell it for another property, like we would never just sell and be like, whoo. But it's okay for the short term hits, because we're going to make over $100,000 on it. And we've already used 40,000 of it for a down payment on another property.
Yes, and you'd be experiencing the same thing in any asset class. No asset class just goes up perfectly without issues. If you had a lot of money in the stock market, there is always going to be short term volatility growth stocks are taking a massive hit right now and people are freaking out. But you shouldn't be worried about your stock portfolios price today, if you aren't looking to extract from it until 1020 30 years from now, because that short term volatility will get lost in long term growth. And that's the same thing you're talking about with the real estate market. Like you're having short term pains with tenants and non payment and issues but your property appreciation is going up behind the scenes and you're able to tap that in order to buy additional real estate and then This is why I'm so focused on women understanding investing, and having more of their income go towards assets, because then you can tap these assets when you need to. Otherwise, if you don't own assets, if you just earn from a job and spend from a job, there's there's no ability to get creative when you want to do something differently. You know, like, it's a cash in cash out mindset. And we don't want that for women. We want a cash in keep it and grow it mindset. And how do you do that? Well, you have to buy assets. And sometimes you need to leverage debt instruments to do so. But debt is not bad debt without a plan is bad. Yep. And then talk to me a little bit about how you're purchasing. Or no, just talk to me a little bit about why you have LLCs, and how you're doing this as a married couple, and you've not utilized partners yet. Is that correct? And would you be interested in doing so?
Yes, so we do it as a partnership. It's just something amazing and fun that my husband and I do together, and we work really well. And we've become addicted to real estate together. We do it we both own 50% Each and LLC. That's how we work it out with our stuff. And then we do LLC to protect us because we do have our primary and we don't and our kids, you know, and if something bad happened on one of our properties, it burned down or Someone got hurt, you know, God forbid, then we want us to be protected at the very least, and not like go bankrupt. So that was a really big shift. Last summer when we were like, Okay, at this point, we had, you know, a property in roulette with my mom and then the property in South Dallas. And we were like, we want to do this, like we have a newborn baby one week old. And we want to do like we're doing this, we need to get really smart. And so we basically hired lawyers, and we got LLCs. And we did it the right way. Because this is what we are now we are real estate investors. And I think just kind of changing your mindset. It's very empowering and cool to the second part of your question in terms of partners. So we have, like I said, a very, very focused strategy. And it changes in terms of how big and how small but it's very much like we want to knitted places in Alabama. Another market we're looking at is Memphis. And then possibly Tuscaloosa another like second market, we don't necessarily have to see the property, everything is by the numbers, we're looking at at least 10%, like year over year growth in terms of you know, it's all in the bigger pockets strategy. And we need at least at least 500 cash flow to like make it worth my time. Essentially. We've toyed with the idea of partners, we have learned people have a lot of opinions, and there's a lot of fear. And there's a lot of, but when we move them and I'm like I don't have time for that get out of here, like keeps going. So it's like if we could find very like minded purchase very hard, right? So I do think that would jump like get it going faster. But to date, it just it's not in the cards for us. You know, there is probably a perfect investor out there. Honestly, somebody who just trusts us explicitly. But when you start having thoughts and opinions and like that's not really what this game is like, I don't need to see the property, I don't need to whatever. It's all in my numbers. And that's really hard for people, especially first time investors. So that's where we are today.
It's so true, I think first time and that well actually, I saw a great meme recently, that was basically like the difference between a $500 client and a $50,000 client $500 Client wrote an email being like before I send the money, I just want to get on one last call, because I need you to understand this is a big investment. And I want to really understand the return on on what this will get me $50,000 client just says check sent thanks. You know, that reminds you of the first time investor versus the very comfortable investor because when you're doing something for the first time, it is scarier. And there are a lot of mental obstacles you have to work through. But it sounds like the reason you're enjoying investing with your husband so much is because you're already partners in life and you kind of have a flow and you're going and I totally get that. But yeah, you could definitely do some syndication deals where you're just saying money in no opinions. Yeah out.
So that's a book I just got, I listened to a whole syndication podcast on bigger pockets and I was like that's interesting. And I love everyone who talks and I'm going to submit our story to on bigger pockets by the way, and I'll give
you a shout and we're gonna we'll link to bigger pockets today. For listeners. bigger pockets is basically a really great resource for anyone who wants to start with real estate investing in a small way or really big way, as Alison mentioned, they've got cashflow calculators, they've got a lot of free resources. They've got books, podcasts, webinars, all of it. So they're a good real estate resource.
And I just love how like you learn something about being creative or flipping or a lot of people have changed their strategy. So it's like, this is where we are right now. But, you know, the more we learn, it's like, I taught myself commercial on maternity leave. Okay, like, what's next? You know? So? Yeah, even with like, crazy renters and evicting and you know, just stuff that happens. We are so laser focused, we have our strategy. And we're just so excited. Like, I'm just ready. So if you want to hear like our immediate plan, yes, yeah. Our immediate plan right now, like I said, is to build up three months for each property. So it's going to take probably a probably probably four to six months for each one to have that where we feel comfortable.
Just to clarify for listeners, when you say you want to build up basically, she's saying a three month emergency fund that would cover the carrying costs of each property, right, because her strategy changed, right? They didn't maybe think they needed that before. And then they just experienced a tenant that owes them, I don't know, four months of rent. And so you want to make sure that you can pay that from the property itself, instead of you know, from your personal savings. So are you building that up just with the additional cash flow from the tenant? Or are you and your husband personally contributing to those savings?
Nope, we're gonna use it completely by the houses. Got it? Yep.
So you'll just not take the cash flow to your income, you'll let it stack up in the bank account until you have three months per property. Yep, exactly. Okay, what else is in your? What else is in your near term strategy? I love that one.
So that's gonna take us, you know, four to six. And it's kind of hard for my investor heart, because I constantly want to be like, let's go. And I'm like, No, I need like, that was a huge learning, right, like $4,500, that's enough to cover the rent for months that he didn't pay, right. So I don't want to do that. Again, it was very stressful, not going to do that again. So that's immediate, then we this year 2022. Our plans are to sell Rolette, our rehlat house, we bought that one for 230,000 in 2018. And concerts currently, like as of this morning, like 400,000 405, we're going to sell it. So that doesn't have a huge cash flow. It's like 200 bucks a month, when all said and done. Again, Texas, the equity, that's equity play, Alabama is our cash flow, play Texas equity. So when we sell that, we want to get another multifamily with some of the profits. And then we also have been seriously talking about selling down are completely paying off the loan for our triplex. And that's a little crazy, right? Banks don't want you to do that. Because they want your money. But we only owe 107 on that one. And right now, we're about right now. And we're about to put another wrench on it right now. It's 1850 a month. So we'll be at 2000 within the next month. So just to have that, you know, from the money for mellette, you know, another like, basically $200,000 cash or 20, sorry, 2000 cash flow from that. And then we'll use the other half of it to buy new property to potentially another 1000 cash flow. Like that's 3000 right there. Yeah, that's
huge. So that's huge. And basically that strategy for listeners, what she's saying is, she would use the appreciation from one house to actually pay off the loan on another so that they own it outright, so that they're not wasting money, paying a mortgage that's really high, at the beginning of a mortgage, you're paying a lot in interest, and only a little bit in that in principle, so this way, she'd clear it out. And then they would get all that cash flow. I mean, they still have to pay taxes and insurance, that's an annual thing. But when you don't have the mortgage, which is typically your highest costs, then you allow for a lot more cash flow from the tenants to come directly into your income. So I love that idea. And that's how a lot of people do it. They let their properties appreciate. And then they did they look back at their portfolio and they say, You know what, this is appreciated enough that we're gonna consolidate. So it's less properties, but it's higher cash flow potential, because you're using one property to pay off another.
Exactly, exactly. And then the other piece is either with ourselves Dallas house, so that's after we sell rehlat That's going to be the only one that doesn't really fit into our immediate near term strategy. So it has a huge garage. And I actually was inspired by the open house, tiny home podcast, either putting a tiny home in the back or transforming the garage. It's huge into a studio. So making that duel Yeah, so that is going to happen this year.
I love it. You've got so much good real Estate going on. This has been so fun to talk to you about I, I just love women who are go getters and fearless like you are, I mean two babies under three. And she's like, Yeah, I taught myself how to be a commercial real estate investor on my maternity leave, like, what else was I gonna do? And even just hearing you say, you looked at one of your properties this morning, and it's currently at a $400,000 market value. I mean, that's what you start doing. When you're investor minded. Like, I love to look at my comps. It's just for fun. You know what I mean? I'm not planning on selling some of my houses at this point in time, but I like to see them go up in equity, because I am sitting in a very hot Austin real estate market with investments in different zip codes, and some of them are depreciating at 10%, some even higher, that's amazing. And so this is why I want so many more women to believe that they can do this stuff, listen to Alison's story. She's not only done it, she's doing a lot of it. She's loving it. She's having setbacks. It's not all success, but she's gonna continue doing more of it. Because she wants $10,000 a month in passive income from her family. And she's only 32% a goal. And I know she's very motivated by a big goal. So Alison, thanks so much for being here. If there's one thing you could say to people who are just thinking about real estate investing, but not maybe sure any, any advice for them to get started, besides checking out bigger pockets as a great resource?
Yeah, I would say, you know, Factora, we have the real estate slack that we all talk on all the time, I think it's important to surround yourself, like your partner or girlfriend or whoever, like that wants to talk about real estate with you. Because if it's just you in your head, you're not going to do anything, you know, like, you're just gonna be like, I don't know, I don't know, circling, I have accountability partners that I check in with now. Even Factora women, non Factora. Women, I think it's just so important that, you know, it's like, you're the you're the make of your six friends or whatever. If you want to even start looking at real estate as like a possibility. You need to find a real estate person to like, start changing your brain. I think you just have to get over that initial fear. And for real estate, it's, I feel like it's a lot, right, because there's a lot of big downpayment, a lot of that money is going out. But you have to just start familiarizing yourself with this stuff and get comfortable, like we talked about with Specter, get comfortable talking about your money, yes, get comfortable talking about real estate, yes,
go find a real estate investor agent, they'll be happy to talk to you because they would love for you to be a client down the road. So they'll share knowledge. Definitely come into the Factora community. There are so many women, doing real estate deals, partnering with each other learning from each other. The whole point of our wealthy women community is to crowdsource our experience, our resources, and our knowledge. And then of course, bigger pockets is a really great free resource to and Yeah, listen to podcasts, listen to books, but to Allison's point, don't just listen, talk, because talk is what's going to lead you to action. And that's it for us. Thank you so much, Alison.
Thank you. I can't wait to come on again. Who knows what will happen next year?
I can't wait. We're gonna keep sticking with this real estate story and see how far you track along that $10,000 goal.
Okay, okay. We'll have like a celebration podcast when I hit it.
Oh, yeah, absolutely. Well, I will talk to you soon. Bye. If you enjoyed this episode, come join us in a well circle. It's our live online 12 week, course and community where we teach you how to create a personalized financial plan alongside hundreds of other women building wealth. It will change your life and your money for good. You can apply at factorawealth.com forward slash wealth circle. That's factorawealth.com forward slash wealth circle. See you in the next episode.