Want to know how to buy your first rental property without money getting in the way? For years, Mike wanted to invest in real estate, but banks wouldn’t give him a loan. If you’re having the same issue, we’re here to help!
Welcome back to the Real Estate Rookie podcast! After multiple deals fell through during the financing stage, Mike Previtera realized he needed to work on his finances. So, he and his wife trimmed the fat from their budget and aggressively paid off bad debts. Mike even made changes to his lawnmowing business—raising rates and working extra hours to increase his income. Within one year, all of the hard work had paid off, as Mike was able to get financing for not only his first deal but also the deals that followed!
If your financial situation is holding you back from buying real estate, this episode is for you! Mike recalls the exact steps he took to get his finances in order. He also shares how he grew his network, which allowed him to find more deals and financing opportunities. Finally, he talks about some of his biggest investing mistakes—mistakes that YOU can avoid!
Listen to the Podcast Here
Read the Transcript Here
This is Real Estate Rookie Episode 361.
You can fail, you can make mistakes, but with persistence you will always succeed when it comes to real estate investing.
As always, I’m Ashley Kehr and I’m joined with my co-host, Tony J. Robinson.
And welcome to the Real Estate Rookie Podcast, where every week, twice a week we bring you the inspiration, motivation, and stories you need to hear, to kickstart your investing journey.
Today, we have a guest by the name of Mike Previtera and he’s been cutting grass for the last three decades, but he finally decided to get his financial house in order. Because of that he’s been creatively taking down deals left and right. Mike, super excited to have you on the show, brother. Welcome to the Real Estate Rookie Podcast.
Thank you very much, Tony. Ashley, it’s good to see you, too. Thank you. I’m very excited to be here.
I want to jump right in and I want to know, is there a moment in time where you decided that you would do anything to invest in real estate?
Well, it started when I was driving home from … Went back to college, was getting my degree, and halfway through my last semester I’m like, “Ugh, I cannot do this.” So, I tried to get started in real estate, but I found that I could find the deals, but I couldn’t keep them together because of my finances.
I had a deal that I found, Driving for Dollars. I negotiated a sale price on this house for $80,000. I knew I couldn’t get the deal together. It ended up, that fell apart and it was sold on the MLS for $120,000. Out of a fit of frustration, I was complaining to my wife. I’m like, “Nobody will help me.”
But then I realized, I was like, “Nobody will help me because I’m not helping myself.” So, that feeling of anger changed into this steel resolve where I was like, “I have to make some changes. I have got to get this straightened out. I have to get my finances in order.”
So, we just sat down with a notepad and we just started going through what we needed to do. There wasn’t a lot of big changes. We had already been, sort of frugal, but we were like, “Now what can we actually get rid of?”
So, we tried to stretch things a little bit further. We bought groceries in bulk. We would try to eat out one or two times less a month. Just a lot of simple, small things. Then we just took control of that. We reduced our credit utilization, started paying things off, and from there things really started to turn around, but it was all because just one day I just was like, “I have to get my finances in order.”
Mike, what did that timeline look at, from that day you decided to get your finances in order until the day that you decided you were ready to buy real estate and then when you actually purchased your first investment?
Okay. Well, there’s a little bit of a duality to that. That probably took a good year from the time I was like, “I’m sick of this. I’m getting it together,” to when I really felt really good about everything. But in that time I was still looking, doing all these crazy things, trying to find the deal, trying to find a deal.
I joined the BP and I got on the website, on the forums. I said, “Hey, I’m from Greenville. Is there any people from Greenville interested in talking about real estate? I’m brand new.” I got a message from a guy that said, “Hey, I’m not interested in being in real estate investing, but I do have a triplex in Greenville that I want to sell.”
I was like, “Ah, another deal I’m going to miss out on.” But this guy was actually very nice, and I made a huge mistake that everybody be like … Everybody that’s listened to this story go, “Oh, my gosh. This guy’s an idiot. Why would he do that?”
Basically, me and this guy, we had a verbal agreement that I was going to buy the house and he was like, “Okay, cool.” I was like, “But I want to fix it up before I take it to the bank.”
Dude, can I sell every single one of my houses to you first? I’m going to take every one of my deals to you first.
Yeah. So I’m like, “Yeah, let me fix it up.” He’s like, “Yeah, sure. No problem.” Thank God this guy was honest. So, it was months of me working in this house, doing demo, all kinds of stuff. I probably put 10, $15,000 in materials in it, and I had finally got it all together, and I was trying to take it to the bank, but it wasn’t done yet.
My loan officer at the bank said, “Look, we can’t finance a house. It’s not done.” I was like, “Well, what do you want me to do?” What we sat down and figured out is that the house, it’s a triplex, but as a duplex it would still work for the bank.
So, the loan officer, he did some sort of magic and he got it pushed through for me. So, I ended up with that, and like I said, then I was able to finish it. It took me another six months to finish it because I was still trying to get my finances in order.
So I was like, “Yay, I did it. I got my finances in order and now I have rental properties. I made it,” and then … But I’ve made other mistakes and we can get into that here in a few minutes. I got lots of stories.
Mike, dude, I love that. I don’t think I’ve ever met anyone that’s done work on a home before they actually purchase. I think you might be the first guest I’ve heard say that, but it worked out for you in the end, which is what’s most important.
But I definitely want to get into, Mike, what it looked like for you to actually get your financial house in order, because we talked about the defensive side of things where you’re trying to reduce your expenses, but I also want to focus on the offensive side, like what you were doing to increase your income.
We’ll get into that right after a quick word from our show sponsors. All right, so we are back from the break. Mike, you just walked us through how you did something we’ve never heard of before, doing work on a home before you bought it.
But taking it back a few steps, I want to go back to you getting your financial house in order. You shared with us that you stopped eating out, you were buying groceries in bulk, doing all these different things to decrease your expenses. But I always see that as one side of your financial picture.
Were you doing anything on the other end to play more offensively and increase your income as well?
Like you’d said, I do mow grass. So, I upped my prices like 10%, and I literally thought that I would lose 10% of my customers if I did that. I didn’t lose any customers. They were all like, “Oh, yeah. You’re great. We’re happy to have you. Happy for that.”
Then I decided, “Okay, if I’m going to do that, I need to push myself harder. I need to find more work.” My mother-in-law has said to me, “Hey, you can do anything for a season.” So, I just decided to push myself harder than I thought was possible.
I was getting up at 4:00 AM, working most nights until 9:00 PM. A lot of the nights, I mean I was mowing grass, sometimes on the weekends at 4:00 AM with headphones in, listening to BP podcasts. So, I increased my business. I basically, almost doubled my profit that I was making, and that was pretty much it, and I’ve done that for the last two years.
Mike, dude, we got to pause on that, man because you’re saying it real casually, but that is an incredible thing to do, and it’s a sacrifice that, unfortunately a lot of rookies are unwilling to make.
They have this goal of, “Man, I really want to get my first investment property,” but they don’t have the discipline to buckle down and do what’s necessary even though like you said, it’s only for a season.
So, if you can wake up at 4:00 AM, work until 9:00 PM and do that for however long you need to do, it’s only, whatever, three months, four months, six months, a year, but you’re going to benefit from that rental for the rest of your life.
So, when you think about the cost benefit of doing that, man, it’s crazy. It doesn’t even compare, but most people aren’t willing to do that. I just want to ask one follow-up question there, Mike. Did you have moments as you were going through that? Dude, that’s 100 hours a week that you’re working, if you’re doing that every day, pretty much. Did you have moments where you were questioning, “Is this even worth it?” How did you stay motivated going through that?
Yeah, there was many moments. A lot of times it would come late at night when I was out working and I was just like, “I’m just so flat exhausted.” I thought I had always been taking ownership of my actions, but like I said, I had the Bluetooth headphones in, and I would “read” listen to Audible books, and I listened to Jocko about … I’ve read Extreme Ownership three times. Well, I said, I may not have listened to it three times.
I read The Traveler’s Gift, and in there, that talks about, you persist without exception. Everybody persists, but how many people persist without exception? So, that’s what I would focus on, is just without exception just keep pushing forward.
I remember Brandon used to say things about getting a train started. It’s really hard to get it moving, but once it’s rolling it’ll crash through anything. So, besides all the mistakes, I just keep moving forward. It’s amazing how much you can get done when you’re always doing.
Mike, do you think you could sum up for us, if you’re a rookie investor listening right now, what are maybe three, four, five, 10 things that you could do, today to get your finances in order to be able to get that first loan on a property?
First thing I would do is the defense. Do you really know how much you’re spending? We would only eat out three, four times a month, but then we realized that was adding up to two, $300. I said, “Wow, that’s a lot.”
So, actually sit down and look at where every dollar goes. I know it seems like a long, tedious task. It’ll take you 30 minutes and it’ll save you hundreds, if not thousands of dollars. So sit down, do that. I lost the question, Ashley.
No, that’s okay. What are some tactics or some advice you have for a rookie investor that they can do today to get their finances in order?
So, that was the defense. Is there any other ways that you can save money? For us, another one was buying in bulk. Not only saving money, what can you do to earn a little extra? Can you go get another part-time job? There’s all kinds of people that are wanting work. Can you go to your boss and say, “Hey, if anybody …” Just go to your boss. Say, “If somebody calls in this weekend, I’ll take their shift. I’ll be ready.” Then you look like the person that’s the go-to person.
So, that’s what I can think of right now. So, that’s the best way to get your finances in order, is what I’ve seen from my point of view.
If you’re looking for deals, I mean everybody says focus on one strategy. Well, if you’re starting out, don’t focus on one. I did Driving for Dollars. Because I was mowing grass, I was driving around everywhere. I go, “Look at that house with the tall grass. Instead of mowing that yard, let’s see if I can buy that house.”
I did Driving for Dollars. I contacted a real estate agent and said, “Hey, I’m not really ready to buy, but I’m interested in small multifamilies. The next time you show this multifamily, do you mind if I stand in the background and watch what’s going on?” That’s how I got one of my other deals.
Another one was the lady. She was a real estate agent, and she lived two doors up. I would see her whenever she would leave and I was mowing her neighbor’s yard. So, there’s a lot of different ways that you could find stuff, but I would spread out and try as many different things as possible and then just go with what works.
After you get yourself established, then you can start going a little bit deeper into one specific type.
Yeah. I think, Mike, you gave some great advice there. Some of the basic things I heard you say throughout the episode that anybody could do today is just optimizing their time the way that you worked from 4:00 AM to 9:00 PM during the season that, you knew that you could make money.
Also, being able to increase the price of your business by 10%. That little bit spread out. So, even if you don’t have your own business, like you said, asking for those extra shifts, working more, and then sitting down and making a plan and having a budget. Just making sure you know exactly what’s coming out every month.
Then the buying in bulk, I really like too, and not eating out as much because you’re right, those dinners out, they do add up along with the DoorDash delivery fee, service fee, and the tip. Those can add up, too.
There’s one thing you had mentioned earlier that I wanted you to go into a little bit more was the credit card utilization. You said you had to fix that in order to get the bank financing. What did you actually do to optimize your credit card utilization?
Well, we did the debt snowball, and if you don’t know what that is, we did it. We took the smallest credit card that had the smallest limit. We had a credit card that had $1,000. So, we would take the money and we would pay that one down to where … We didn’t pay it off because we were trying to increase the utilization rate, so we would get that one down to 300 bucks. So, it was only 30% utilization on that card.
Then we went to the next card, and we tried the next highest card. We paid that one down to 30%, and that way we were able to get the utilization down low even though we still were carrying debt. Then once we got to the end, we started back over and then began to wipe them out, because our utilization was near 90% on every credit card, and it was a lot of money.
That was something else that we noticed in the budget, how much money we were wasting in interest. It was just like, “Oh, my gosh. If we had that money, that could go so much further to pay this bill.” Once we started doing that, you would roll it into the next one, to the next one, next one. Then by the time we got to the last big card, we’d made two, three payments and we were already below our utilization of 30%. Then shortly after that they were all gone.
Yeah, thank you so much for explaining that, Mike. That is such a key point into factoring in, especially for your credit. If you want to have a good credit to get pre-approved by the bank, they definitely do look at the credit utilization when your credit score is actually determined. So, I like that little breakdown you gave us. Thanks.
Before we wrapped up your different tips and tactics for investors to get their finances in order, you started mentioning, finding deals. What are some of the main sources that you have found deals for, or that you currently use that you could, kind of list out for us that everybody could use at this point?
I’ll go in chronological order real quick. I did a tax sale first. That was a disaster. We could talk about that if you want. Then I did, getting on BP saying, “Hey, I’m an investor,” and somebody came to find me.
But I have to say, my largest number, I did the Driving for Dollars. I was mailed out letters. I mailed this one guy for almost two years, and finally I got in contact with him and he finally was like, “Okay, yeah, I’ll sell you the house.” But right now my number one thing has been with real estate agents.
I’ve got a flip going on right now, and I also found my six-unit through, and that was two separate realtors. The six unit was the one I said, “Hey, can I tag along with you? I can’t afford this million-dollar property, but this is what I’m looking for. Do you mind if I just walk along?” Took her about six months and she found me something there.
The other one with the other real estate investor is just, I told her what I was looking for, and she did a lot of house flips, and she could see that I was moving forward with my triplex and things like that. I just kept touching base with her. One day she called me and said, “Hey, I got this house. Would you be interested in it?” I said, “Well Lindsay, why aren’t you flipping it?” She’s like, “I got five other flips going on. I am tapped out.”
She’s like, “You are capable of doing this.” I was like, “Okay.” So I said, “But I’m going to lean on you a lot.” She’s like, she’s fine. So I’m like, “I’ll text her.” I’m like, “Lindsay, what color should I paint the walls? You’re going to sell this. What sells the best? Lindsay, what color should the door be? Lindsay, what lights should I use?” So basically, I’m building her next sale for her.
Yeah, so that was a perfect example of a win-win, where this is something that’s working out for you and for the agent, and that was part of the reason they could give it to you, was that they knew there would still be that win-win factor counted in.
So, was this property actually going to be listed on the MLS? Was it a Pocket listing that you just got first dibs at, or does your agent actually do direct mail and things like that?
It came from an attorney in town, and that attorney has three real estate agents that he says, “If something goes in …” The person had died and the family was selling it. So, that attorney would go and call those three realtors and say, “Hey, I have this property.” She immediately called me within 15 minutes of finding out and said, “This is what’s up. Are you interested?” I was like, “Yes.” So, that’s how we did. That’s how I found that.
The power of networking and making connections. Because you knew that agent who knew that attorney, that’s how that deal got done. I couldn’t have gotten that deal just by me sitting here looking on the MLS, or looking on Facebook Marketplace, or anything like that because I didn’t have that connection.
It just goes to show how powerful connections can be in making those networking opportunities really happen.
You don’t even know how far your connections are reaching. I connected with one realtor and she is connected me with contractors, she connected me with this attorney. She has connected me with so many people I didn’t even know. So yeah, it’s amazing how just a little bit persisting with that, how far it will get you.
So Mike, one of the other things you mentioned was, you mailed some guy for almost two years. First it just goes to show the persistence you have with everything. But second, I want to know, what were you saying in these letters for two years? Was it the same letter? How often were you mailing it, and why do you think he finally responded to you after almost 24 months?
I don’t know if everybody could use this template, because not everybody mows grass, but my letters would start out something along, like I would say, “Hey, my name’s Mike. I own a business called Mike’s Lawn Service. I was mowing a yard across the street from your house, and I was curious if you wanted me to mow the grass. But if not, I would also be interested in purchasing this house.”
So, that’s what I would send out. Sometimes I would change it up. A couple of months later I’d be like, “Hey, I’m not really sure if you got this letter. Just checking, sometimes the post office is screwy,” trying to make a little joke.
Then one time I got one guy’s number and I said, “Hey, if you want me to quit sending me these letters, just call me or text me.” Then the guy texted me and I was like, “Ah, I got your number now.” But I think he got sick of me. So shortly after that, I think I put the seed in his mind that he should sell his property. That one went on to the MLS and I never got a chance on that one, but I was just like, “Ah.” But I was like, “I could have offered him the same amount and he could have saved some of those fees.”
Yeah, but it’s an interesting tactic, right? Yeah, I don’t have a lawn mowing business, but I have an Airbnb cleaning company. I’m thinking now, I could just say, “Oh, my cleaners were across the street from your house and hey, would you want to be a client? If not, I’d also like to buy your house.” That’s a really interesting way to use direct mail.
Mike, did anyone ever actually take you up on your offer to cut the grass? Did anyone hire you for grass cutting?
They had me mow it and then they had a realtor come out and take a picture, and it was on, on Zillow, and I was like, “What?” So yeah, I lost out on a couple of deals like that. I thought it was funny at the time. It’s just because they asked way too much. It was when everybody went crazy.
I was like, “I wouldn’t have offered them that anyway,” so it really didn’t matter. So, it was fun. I was like, “Well, at least I got something out of the deal.”
Well, Mike, we’ve talked about some pleasantries in the business, such as networking with your real estate agent, but you did mention a trigger word for me and Tony, and that is disaster. So, we have to know about it. So, can you tell us about the disaster that happened at the tax auction?
So, I normally don’t even count this as the start of my real estate investment because it was so awful. I’m like, “We’re just going to delete that from memory.” But it was a tax sale and I was like, “Yeah, I’m going to find a property.”
There was a couple of hundred of them, and I went through all of them, and looked at them, and I narrowed it down to three or four different ones, and I went and saw all of them in person.
I went to this one. It was a cute little house in a cute neighborhood, and it was just all grown up in weeds. I’m like, “Man, I can tackle this. No problem.” There was nothing on the door. It did have a padlock on the door. Went to the tax sale. I bought the house. It was for $10,500 or some meaningless amount.
I’m like, “Great. Got it.” So, I didn’t want to get fines or fees from the city, so about three days later I drove 30 minutes to the house getting ready to cut the grass and all that. I turned the corner, the house is gone.
I’m not talking like it was a mobile home and somebody moved it. We’re talking a brick and mortar house gone, the lot is scraped clean. So, I spent a couple of minutes circling the block, “Is this the right house?” Then finally I stopped and I asked. I was like, “Where’s my house?” They’re like, “The city came and knocked it down.” I’m like, “What?”
So, long story short, I got in contact, and I contacted the city and I was like, “What’s up?” What happened was, is apparently the people that had owned it, that were selling it, there had been a fire upstairs and it was no big deal. It wasn’t structural or anything. It was real small, but they had left it so long and let the property grow up so long that the city basically, condemned the house. But they would come by, and rip the flyers off the door, and tear down the yellow tape so it didn’t look like there was anything happening with the house.
So, I ended up … Now I know who to talk to. If I had contacted this department, I could have put a hold on that and said, “Hey, I just bought this house. Give me three, six months to get it all straightened around,” and they would have said yes.
Long story short, I ended up contacting a lawyer. I sold the house to somebody else. I made $1,500 out of the deal after all the lawyer fees and everything were paid. So, I count that as a win, but it was so horrible. I’m just like, “I’m not going down that route again.”
I can’t believe you made any money.
I know. That, by itself is crazy.
Well, it was because I bought it for 10,500 and it wasn’t anything I did. It was because the market was going crazy. So, I had this beautiful, freshly cleaned … It was zoned R2 or R3 lot, and I think the guy who bought it from me, he put a duplex on it.
You know, we actually had a guest, Donovan Adesoro, and Donovan told us. I don’t know if you remember this, Ash, but he said he actually prefers buying … As a builder, prefers buying vacant land than teardowns because there’s a cost to tearing down the structure.
Where Mike got that for free.
Yeah, you got that for free from the city and then you wholesaled the land. So, it sounds like a bad deal, but it actually turned out to be pretty good for you, man. I’m sure a little headaches and probably some sleepless nights, but not a bad outcome.
The city tried to charge me $7,000 for tearing it down. That’s why I had to get the attorney.
So, teardowns are not free?
Yeah. No, it wasn’t free. So yeah, it was a fun ride, we’ll put it that way.
And did you have to pay that, or no?
No. The attorney was like, “Look, he didn’t know,” and all this stuff. It went back and forth, but like I said, after the attorney was paid and everything was paid, I sold the house. I put $1,500 in my pocket and I was just happy that happened because it could have been far worse.
But it didn’t deter you from going on to the next deal.
Yeah, so the next one was the one you told us about, correct? The triplex.
Was the triplex, yeah. The next one was the triplex. There again, I make another stupid mistake and start working on somebody else’s property. Real genius.
Well, I definitely … Before you say any more, we’re going to take a short break, but I definitely want to hear as to the pros and cons of actually doing that, if you’re going to get in and start working on a project before you actually own it, because all that goes to my mind is the person deciding not to close, and now you’ve lost all this money, this time, this work, this material in a property. But we’ll be right back.
Welcome back from our short break. We are here with Mike who is about to tell us what happened on his triplex when the seller lets him into the property, early to start performing work to get it bankable. So Mike, tell us a little more about how that rehab went on the triplex.
Well, the unit was vacant, obviously. It was in horrible disrepair. They had done so many halfway fixes. I remember the bathtub. You actually had to step down to get into the bathtub because the floor joists had broke. Yeah, so instead of fixing the floor joists, they would put a 2 x 4 shim, and then lay plywood, and then it sunk some more, and then another ply.
So, it was like seven layers of floor. So, you would literally step down to get into the bathtub. Yeah, and then the floor was rotted in front of the kitchen sink. I, kind of fell through there. It also had a drop ceiling, which was covering up all of the … It had 10-foot ceilings, but it was covering up all the plaster and lath that had fallen down over the years.
I was like, “Oh, I need to take this down.” I pushed one of the tiles, and it must’ve just been hanging there. When I pulled on it, it was like a cartoon. The whole ceiling collapsed around me except for this one tile where I was standing directly beneath.
I was able to get in there and see some of the problems on the property. I contacted the owner and I was just like, “Hey, there’s some pretty major structural issues with this house.” By now I had gotten my degree with engineering, and I was able to go to the city planners, and I sketched it. I was like, “Look, this wall’s not bearing the weight. There’s no transfer,” ta-da-da.” I sketched it out on a piece of paper.
So, I think by me showing him all the problems that, that property had, that, kind of deterred him from wanting to try to take it back.
You’re actually leaving it in worse condition and he’s like, “You better take it.” Mike, before you go further, let me just ask, what made you trust this person that they would close on the deal? Why do you think they trusted you to, also not just completely ruin the property even more and then they’re stuck with something that’s worth even less?
I have no idea why they trusted me. I was starting out as a new rookie. I could have knocked the whole thing down for all they knew. But the reason why I trusted him was, one, I happened to find out that he was a pastor at the church in the town where he lived. Two, he had never really bought that property as an investment. He bought it to live there. So, he was an accidental.
So, what he was just trying to do is he was just trying to pass it on to somebody else and trying to help somebody because he saw that I was interested in it. I think that’s why he trusted me. I trusted him. It was, literally a verbal agreement. He came down and shook my hand.
You know how you get a sense of somebody? I guess, my senses were right. It could have been very wrong, but I believe that he would be a man of his word.
And this is the guy that you met on the BiggerPockets Forum-
… that this connection happened? Isn’t it crazy to think about meeting people online, what it transpires into, especially the BiggerPockets forums or just even on Instagram, meeting other real estate investors, how deep those connections can actually get?
Not that I recommend anybody listening do handshake deals like Mike. He is very fortunate it worked out. So Mike, during that time how much did you spend on the rehab and how much of your own time did you actually put into the property?
I probably only, I spent about 10 to $15,000 before we actually, officially sold the house and I purchased it, but a lot of that was structural. It was putting 2 x 10s, getting piers put underneath the house to lift it back up to correct level. I had my laser level out the whole kitchen.
At one point in time we only had two floor joists left in the whole house, in the whole unit, and luckily … Everything was rotted on this side, eight feet over, everything was rotted on this side, eight feet over. Then after that, after we closed on it, then I had electrical come in, I had plumbing guys come in. I had HVAC guys come in because I had learned over time that they can do it faster and cheaper than I can. It’s one of those who, not how-type things. So, I probably put 35,000 in that unit.
When I was working on it, I would only work at night because I was mowing grass all day. Fortunately, the guy that lived upstairs, he was a college student and he was staying over at his girlfriend’s house, so I never saw him, but his lease wasn’t up so he just kept paying his rent. Then the guy, or the lady that was on the other side, she worked third shift. So, I’d be rolling into work and she would be gone. So, I’d be spending all night hammering and sawing, just pretty much disturbing the neighborhood.
Every once in a while I’d open the door, look outside, make sure there was no police coming. That all ended very quickly when the guy upstairs moved out and then a new guy had moved in. That was 2:00 in the morning, and I’m in there shooting nails with a nail gun, and I hear him come down the steps and I didn’t even know he was up there. I’m like, “Oh, I’m so sorry.”
So Mike, it’s such a crazy story, man, $35,000. Say this deal were to come to you again today, what would you do differently knowing what you now know?
Well, first of all, I wouldn’t have started any of the work until after the closing table. I would have gotten my finances in order, like I said earlier, then I could have actually purchased the house before I began any of the work. I would have had it. I could have had that unit rented sooner, like six months sooner, which would have helped pay for all the work. I wouldn’t have had to do as much work as I did. I could have had it done faster, and it would have been done right.
It was done right, but it would have been faster and less work on me, and I could have immediately started collecting rent. I’m remodeling the upstairs unit in this triplex right now, and I didn’t hardly do any of the work at all. The plumber … It needed a new hot water heater. It’s on the second floor. The plumber was like, “Yeah, I’ll charge you 200 bucks to put in the hot water heater.” I was like, “200 bucks and you drag that hot water heater up the stairs? Deal.”
Yeah. Well, and that’s the value of getting those first deals done is that you start to learn. Right? Mike, seems like you picked up a lot of lessons along the way, brother.
So, I want to keep moving here because I hear that there’s an interesting story about your experience at the last BiggerPockets conference, the last BPCon. So, walk us through what was that.
Yeah, and again, it goes into the power of networking and you being at these, kinds of events and things like that. So, what happened at BPCon for you that was so beneficial?
Yeah, so get your little badge. It says rookie and all that stuff. So I’m going around, I’m telling everybody all these crazy stories, and I’m telling everybody. I was like, “You know, I got …” This is when my realtor had called me at BPCon and I was like, “Yeah, yeah, yeah.” I said, “We’ll look at it when I come back. Go ahead and just handle it till I get back. Put in an offer or something like that.”
So, I kept telling every single person that I knew there, “Hey, I got this coming up, but I need to find money.” I was at BPCon, so I should have looked for people that were specifically hard moneylenders, but yet another mistake, I didn’t look.
On the last day of the conference, I’m riding down the elevator, and just like everybody does at BPCon, you turn to the person beside you and go, “Well, what’s your story? And the guy says, “Well, I’m a hard moneylender.” I’m like, “Funny you should say that.”
So, I tell him this whole story about, my realtor gave me this property, all this stuff.” I gave him all the details. He hands me his card. It was from the eighth floor down to the ground floor. So, we’re talking a 30-second conversation. I met this guy and told him my story. Got the card, came home, sat down with the realtor, got my … We walked through the house and she told me that it’s going to need all these things.
I said, “I agree,” and all this other stuff. Called him up, and probably a week after BPCon, I was closing on the house. I couldn’t believe that happened. I was just like … The spending the money on that trip to BPCon made me a lot of money. So, it was worth every penny of it.
It’s always so crazy how a chance interaction can have this kind of domino effect in your life, and you wouldn’t even know in the moment, but looking back, you can see how the dots connect.
I think what’s important, and I think this is where the instruction is for the rookies. Obviously, BPCon is a great event and we encourage all you guys to go, but there’s so many other real estate events happening on a more local basis, regional basis.
Find those events, take the time out of your busy schedule to go spend an hour or two at the local real estate meetup, and take that next step of what you did, Mike, of just interacting with people. You could have been the guy on the elevator who just looked straight forward or looked down at his phone, but instead you made the decision, consciously to look to your right and say, “Hey, what’s your name? What’s going on with you?”
I think that’s the part where a lot of people get stuck, is that they go to these events, but then they, kind of retreat to their shell, or maybe they go with a friend who they already know, so they don’t meet anyone else, they don’t meet anyone new. But when you actively seek those new relationships and you actively seek to provide value to other people, that’s when the value starts to come back to you, Mike. I think you did a great job of explaining that for the guests here.
I’m just a outgoing person, but if you’re not, people love to talk about themselves. I’m a prime example of that. So, even if you’re an introvert, just turn to somebody and say, “Hey, how’re you doing? What’s your story?” Something like that, and people, a lot of times will be happy to talk about themselves. You don’t have to say anything, just let them talk.
I’m very introverted, where it’s actually very hard for me to go and be social in rooms of people I don’t know and put myself out there. But one thing I will do at conferences is I will be the first person in the lunchroom. So, I’ll be the first person at lunch and I will get my food and I will just sit at a random table, whether it’s by myself or if I’m with a friend or whatever, and then I’ll just wait for people to come to me because I don’t like that awkwardness of, “Okay, which table am I going to sit at? Where am I going to go? Can I sit with you?”
It’s not like anybody ever says, “No, you can’t sit with us,” but it’s still just picking what table. You’re looking at the options of, “I don’t know. Will this person feel bad if I sit here and not there, or whatever?” So, the first person in the lunch line, you get in, you get your table, and then whoever sits with you, they chose you. You are special.
Ash, we’ve been to so many conferences and events together now, and I’m trying to replay in my memory, “Have I ever actually beaten Ashley to the lunchroom?” I don’t know if I have. I feel like every time I walk in, you already are sitting down.
BPCon lunch, I have a photo of me, the only one in the lunchroom was me and Darryl. I think the only two people in there and ready to … We’re first in line.
Mike, so you shared a lot of amazing advice so far, and I think our rookies are going to get a tremendous amount of value from what you shared, brother. Truly, I just commend you on your perseverance, your persistence, and just being able to buckle down and make things happen, brother.
So, what I’d love to do is just know what is your advice for rookies who are looking to replicate what you’ve done?
The most important thing I can say is, first of all make sure you have your financial house in order, both offense and defense because it’s going to be very upsetting when you do find that deal and you watch it sail away because you can’t do anything about it.
The next thing … Let’s see, what else can we do? Just try to be more open. Tell people what you do, what you’re into. Find some way to make a connection even if it’s not real estate. I have people, right now, before this podcast that lent me money because they’ve been friends of mine for 15 years, and I’ve been talking to them for the past three years, to help me get my flip done even faster.
Also, be honest with people right upfront. So many people are false today. Just be honest with somebody. If you don’t know what you’re doing, say, “I don’t know.” I did that. That’s how I ended up with my six-unit. I told the realtor, “Hey, I’m not ready yet. I don’t know quite what I’m doing, but if I can just tag along.”
Now, everybody’s going to say, “Well, I don’t own my own business. I can’t just increase my prices.” Well, for me, when I hear somebody has a W-2 income, that’s their unfair advantage. They can go to the bank easier than I can. The bank looks at me and they’re like, “Oh, you might go out of business.” I’m like, “It’s not very likely I’m going to be fired by 50 people on the same day.”
From years of doing that, I knew some contractors just because I would be at Lowe’s buying railroad ties or timbers, and I just happen to see somebody’s truck out there and they would say, “Hey, can you bring me a load of topsoil so I can backfill this property?” That’s an unfair advantage that I have.
I mean, if you work at McDonald’s, how many people do you interact with a day? If somebody comes in and you can tell they got a realtor badge on or something like that, say, “Hey, do you do that?” Ask for their card. Then later on say, “Hey, I met you at McDonald’s and this is, kind of what I’m looking for.”
People will respect that somebody is looking for something like that, and that they’re honest enough to say, “I might be down here at the bottom, but I’m willing to work.”
Mike, this has been a phenomenal episode and I just want to finish up here with your overall numbers. So, tell us what is happening with the triplex as far as your … Just break it down real quick, what you ended up purchasing it for, what you put into it total, and what is it renting for, and what is your cash flow?
The triplex, I purchased it for $110,000. Everybody’s like, “Oh, my gosh, that’s so cheap,” but it needed a lot of work. In total, I’ve probably put $70,000 in it, and that was for remodeling the downstairs unit and counting the upstairs unit, which will be done here in two weeks.
I’ve already got a tenant that’s wanting to move in. So without that, let’s see, I got my numbers right here. The triplex will bring in $2,300 a month, and then after your PITI, taxes, insurance, maintenance, and CapEx, which I do 10% because it’s an older building, and even vacancy, my cashflow would be 1,458. Right now it’s $42, but next month it’s going to be a pure cash flow of almost $1,400.
That is amazing. So, how much are you spending, say when everything is all done and just renting out? How much time do you think you’ll spend a month focusing on managing this unit?
I probably only spend 15 minutes a month doing the actual management. I’m not counting when I come by in the summertime and mow the grass. The people that are there, they think I’m the maintenance guy. They don’t know that when they mail their checks who it’s going to.
So, I probably only spent about 15 minutes per month maintaining, doing actual office work as opposed to when I’m mowing, to make that same dollar amount I would have to work five hours and have 10 extra yards to do that. When I did that calculation, I was mad at myself that I didn’t notice it sooner.
So, that’s really beginning to push me even further and faster into, “I got to get out of this and work harder with the real estate thing.”
And that is such a great comparison as to looking at your cash flow is, what it is now, how much time you’re actually putting towards your properties, and then compare it to whether you have a W-2 job or you have your own business, what your time is, because a lot of time that’s actually why someone gets into real estate, is because they want that time freedom. Money is the first building tool because money gives you time freedom.
But once you have your basic foundation of your money that you need, your financial freedom, that’s when people start to trade, they want more time instead of money, and they start spending more money to buy back more of their time.
So, being able to understand that trade-off and tracking it very early on is such a good thing that you’re doing here.
There’s another, I wish I would have started tracking it sooner.
Okay. Well Mike, just to wrap up here, amazing episode. You can do anything for a season, is what we learned from you, and especially starting to hustle, hustle during the season that you can make money, if not all yearlong, but that might bring a little bit of burnt out.
Then how important it is to lay your financial foundation, whether that’s budgeting, that’s paying off debt, whether that’s increasing your income.
Then we learned so much about the power of networking, from using the BiggerPockets Forums to attending the BiggerPockets conferences. I love the piece that you said that, you don’t know how far your connections actually go, with your example of networking with your agent, and then all of the people that she has been able to put you in contact with.
So Mike, thank you so much. If you would like to learn more about Mike and what he’s doing in his real estate journey, you can check out in the show notes below on YouTube or your favorite podcast platform to find Mike’s information to connect with him.
And before we wrap things up here, I just want to give a quick shout-out to someone that left us a five-star review on Apple Podcasts. They go by the username of Smiley21, and Smiley21 says, “I’m so happy to have discovered the Real Estate Rookie Podcast. Ashley and Tony do a great job of breaking things down Barney style while also keeping the show entertaining with their banter and jokes. I hope to begin my journey this year in real estate, and this podcast has been so helpful and inspiring.”
So, for all of our rookies that are listening, that are watching right now, if you haven’t yet, please take a few minutes to leave an honest rating and review because the more reviews we get, the more folks we can reach, and the more folks we can reach, the more success stories we have. So, appreciate you guys taking the time to do that for us.
If you are having trouble getting started in real estate, make sure you check out the BiggerPockets Bootcamps. You can go to biggerpockets.com/bootcamps and check out which one may be best for you. Thank you, guys so much for listening. I’m Ashley and he is Tony, and we’ll see you guys next time. (singing)
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In This Episode We Cover:
- How to buy your first rental property when you can’t get a loan
- Finding deals, connections, and mentors through the power of networking
- Why hustling for a season could help kickstart your real estate journey
- How to lay your financial foundation before investing in real estate
- The BEST strategies for finding deals as a new investor
- The most common real estate investing pitfalls (and how to AVOID them!)
- And So Much More!
Links from the Show
Connect with Mike:
Interested in learning more about today’s sponsors or becoming a BiggerPockets partner yourself? Email [email protected].
Note By BiggerPockets: These are opinions written by the author and do not necessarily represent the opinions of BiggerPockets.