Can You Boost Cash Flow by Mixing Rental Strategies?

Intro [Music] hey everyone this is Jenny for the Colorado Springs real estate investing podcast and I am joined today with my co-host Leah Leah how's it going good how are you Jenny I'm super excited to talk with our guests today how about yourself yes I'm also excited yeah so we have on the call Greg and Heather and they are investors in Colorado Springs um you guys might remember Greg from and ask the investor uh probably a couple probably about a year ago now I'm guessing um that we had him on and him and Heather have been able to execute their plan strategy and they've acquired six units in Colorado Springs over probably the last year or so so that's you know extremely um awesome and productive so I'd love to kind of dig in and talk a little bit about how you guys did that welcome hi yeah thanks for having us we're excited to be here too so tell us a little bit about your investing strategy yeah so I guess real Multifamily Investors Short and Medium Term Rentals quick the the 30 seconds we lived in Colorado house out a little bit West of Woodland Park I'm in the military got orders to live overseas so I had to figure out what to do with it and wanted to keep it and ended up becoming accidental landlords so that was our first property uh and that was back in 2018 so when when Real Estate was still doing well and figured that was working well still wanted to expand our portfolio so it bought a couple turnkeys and then found out that we were going to move back to Colorado this past winter so we really wanted to house hack and this was back when when it's super hard to find a property but Leah helped us out she hooked us up found us a duplex so we moved into that and our house hacking that uh then sold that first house we had in Colorado and with the proceeds for that wanted to put it towards you know more properties and same thing uh Leah helped us find a fourplex so really our strategy is uh looking in the future trying to be financially independent so trying to build up as much Capital as we can now and then when it gets closer to when I'm going to leave the military and actually need cash flow I'm gonna see where we're at and reposition there to more cash flowing properties right now build Capital to build cash flow for Financial Freedom and I think you guys are doing a fantastic job of being able to maximize the cash flow in Colorado Springs which you know over the past year has been pretty tight um and it's just you guys are putting in the effort um you know understanding that there's going to be a little bit more you know sweat involved uh to get to this higher cash flowing opportunity but I think once you get these stabilized I mean it's going to be um absolutely phenomenal and you'll be able to do a lot more with a lot fewer properties um as opposed to like myself I'm just you know kind of getting these long-term like here and there properties that is going to take me a lot more properties to uh to to get to where you guys are now so um yeah so let's kind of dig into it so this one is a really unique property as you mentioned you bought a fourplex with Leah not too long ago tell us a little bit about the area the the offer process you know all that because I think you guys got this kind of as we were coming off the the hump of everything just being absolutely insane yes right in that period where like interest rates were starting to creep up uh but properties were still really hard to find so we had been looking for I think a few weeks with Leah and she she showed us this one and I remember looking at it like running the numbers like it was going to be going to be pretty close because I don't it wouldn't have cash flowed it would have would have taken a while to like really stabilize and then I asked Leah like because it was it was an offer that was turned down by someone else it was asking like why did it turn down and what they were going to do with it and she said they were planning on doing midterm rentals I was like oh like that that actually could work and if if it works out like that like that'll solve all the the cash flow issues and then we'll be fine but it's located kind of on the the northish side of the Springs yeah uh Academy Woodman area which is really really good area and lots of stuff going on up there and see what else about it so it's built built in the 80s which is a lot newer than than the first duplex we got it in 1905. so it needed like just a cosmetic makeover I think structurally it was doing okay and then yeah the offer was real easy because it was already uh in the process with the previous buyer so we basically just stepped in there like inspection was done really no major issues with the inspection um and yeah the only thing was it the units were just a little bit outdated that's great yeah so um I think what I is so unique about this property is I was really surprised um because Leah had told me previously that you know it was going to be a midterm rental strategy and then come to find out you guys were able to short-term rent it um so yeah tell everyone a little bit about how that process went and how you guys were able to kind of Mark your territory in a sense for the uh the uh 500 foot distance rule yeah so if like people don't know in in the springs you can short-term rental if you're uh if it's your primary residence or if it's not your primary residence it can't be within 500 feet of another short-term rental um and there's other yeah it has to be zoned appropriately too right yeah right not easy and there's other other four plexes right in that same little little area uh they're doing midterm so like there's there's no like someone will have to have done a short term there so on an off chance I checked and it was it was eligible so no one else is running a short-term in that exact spot that worked out so you guys just immediately essentially filed the the paperwork to get your short-term license for that property yep yep get that locked in so we can we'll we'll see so right now we're trying to do I think we're thinking too short term and two midterm uh but we'll give it a year or so and see how they work out where I end up doing some combination of those that's great yeah we don't we don't hear those stories too often because I feel like um you know with that 500 foot rule and the zoning rule like it tends multi-families tend to be kind of clustered um together in Colorado Springs is what we've noticed so it makes it really really difficult so you guys have kind of the golden ticket and great job for thinking to to explore that option um yeah that's that's pretty amazing um so so it sounds like you guys had a one property coming vacant soon um after you purchased it is that what you guys are planning for or how did that process go yes when we first bought and you're gonna have to know me because I was I was gone for this but it was it's going to be one unit vacant when we closed and then two becoming vacant Within 30 to 60 days and then one you know like eight months after okay and that would have been perfect you know like want to be vacant do the do the renovations complete that then the next one will be vacant just kind of stagger them and it worked out kind of like that so the first one was vacant right yeah the first one she left early so we had one vacant right away and then the other two tenants because we had told them you know we're not going to renew leases so they were trying to find a place sooner than later uh they asked to break their lease early which was fine so we let them do that I think it was only it was less than a month and we ended up having three bacon right off and then this last one I think will probably uh become vacant a little bit earlier than than usual or been expected but it'll work out because by that time we should have the other three finished okay so staggered slightly but not not perfectly good good enough yeah as you know nothing ever goes according to plan in real estate so far for the course on that um how did the renovation for the the Renovation Process: Decorating and Quality of Finishes for STR vs MTR vacant unit you know upon purchase how did that go well if it came open up and then um our contract in our Orlando started the demo and just really just started as soon as we could get in we started the renovations and then picking everything and then I helped with that one a little bit and then I let Orlando take over it yeah so a little bit more background on that I was I was in North Carolina when all this happened so for the sale of our old house the purchase of this one and then to start in in planning of of all the renovations it was all all Heather back here that's great so Heather were you more of like a a project manager or were you actually in there doing stuff too like painting and both then I realized I don't like construction work so I just wanted to keep getting stuff because I'm a horse trainer so I like horses and stuff you did so well though I I stopped in to see the progress and I was like gosh they they were getting to work I think it was like day two after closing Heather you were sending me pictures of like the cabinets that we said needed to go and I was like geez they're getting busy quick yeah just Greg because Greg gave us a timeline and I know that if it sits empty we don't make money so it's trying to get it as fast as it can and keeping Orlando supplied with everything that he needed and then I needed to sit down and figure out like the design aspect of what I wanted to do to set us apart from any other like midterm and short term in the area and so it was which which that was a little difficult because it's trying to keep it neutral but also give it some personality to make it set I get from the crowd that's in there already did you design the units yourself yes wow okay well we'll definitely show some photos in the show notes but I mean it's beautiful so yeah great job on that yeah you didn't did a really good job so it like structurally nothing wrong with it and then all the the updates are just nice and simple looks really clean yeah they were pretty easy I think you knocked out some cabinets yeah and took out the floor so it wasn't really wasn't too difficult at all you know cosmetic stuff and they did so good on it and I think the only Splurge that we did that we didn't have to do was the appliances like we could have kept with the white appliances but for my midterm I'm trying to go on the higher end because it is a longer stay and it is more money so it's trying to keep them looking higher end than our short-term rentals yeah I I agree with that I mean I think a lot of people would disagree with me in terms of thinking that you know when the opportunity arises definitely put in stainless steel but you know just a very small amount more than your standard white or black appliances and it just you know really stands out to tenants and I think it makes your unit more attractive to people so yeah I agree with that as well if people are spending the money for the midterm per month like they want they want it to look nice like and I think and we go to an appliance place and we get all of our appliances like over half off it's a used appliance store so this wasn't too outrageous but it was just enough to where I mean if I walked in I would be like like okay this is worth the money yeah that's great so what's um tell me a little bit about the process of getting that unit up and running are you guys using Operations of Rentals, Vacancy, Property Manager um Property Management house that vacancy been so yeah where we're at now we've got one one unit fully renovated and we finished it a couple weeks ago and it's just now starting to have Tenants come into it but yeah yeah we're using Property Management can we say that oh yeah absolutely yep we're using hostian and your guys's recommendation great and they've been they've been good so far uh but yeah like everything else fairly straightforward get the the unit done up and then turn it over to hosty and they they finish setting it up like they made all the oh like the Airbnb listing all the listings and all the the sites that it's on and then like they pretty much take care of everything so it should be Hands-On for us at this point with that one yeah that's great we're running the one behind our house and it's it's doable and I think if our schedules weren't so unpredictable we could we could manage these ones we might in the future but right now it would just be too much for us yeah there's a good bit of distance between where you're living and and this particular property um so yeah that could you know that's a lot more difficult I think running up there instead of just you know hopping in your backyard and taking care of whatever for your for your duplex so that makes a lot of sense and um you know like you said you're you're setting this up for the long term so I think putting those processes in place now you know one you'll just kind of be able to set it and forget it once you guys get the other three units up and running yeah have you had a lot of activity um in this one unit so I mean it it really just came live you know like two or three weeks ago oh okay and yeah so far we've had one one two or three nights today and then one Fortnight Fortnight that's starting tomorrow great so one one so far and then one coming up yeah real soon okay and we going into the slow season that for the shirt the short term it's a little more not as because in the summer with their one behind our house we were booked all the time yeah but we knew opening in the slow season that it would be a little of a hiccup and a little slow so it's but as long as it's bringing in something that's yeah and I think that you all have reasonable realistic expectations of that um you know that there is a seasonality aspect to to this model I think you know in the long run um will help will help level said on that as well um so then you mentioned the other two units um soon came vacant after this first one are you guys in in progress of renovating those two units right now yep so luckily like those two are on the opposite side of the four Plex so it's not it's not as big of a deal to renovate but we got demo done in both of those uh we're prioritizing one to get that one ready to go first and I don't I haven't seen it in a while so yeah all the demos done the primers starting to go up on the Walls Flooring gets delivered today um so it's it's going through and then with Black Friday sales a lot of the stuff is cheap to buy right now so are you gonna um keep the same kind of like schematics um for your first unit and just apply those to the other two yeah yeah because it's easier that way and so it's basically it'll be the same Furniture same color schemes um the difference is the white appliances but everything else will be exactly the same we re we read through the bathrooms in these so they got all new tile and new bathtubs oh wow that's really one change like the bathroom in the first one was was fine this one yeah another another thing but bathroom's pretty pretty well done at this point so yeah it's just floors and finishing up the walls and countertops yeah it's great and they do so well with their costs because I think we I think we estimated like 25 000 on um each unit but you were well under that especially the Furnishing so I looked like when we finished the first one like added up all the numbers is like 7 000 to furnish everything which is super cheap wow yeah they do so well you have to finding deals I was real busy doing all the deals whatever's left over is my horse money so you're incentivized that's great so yeah tell us a little bit about if you if you have any like Secrets Budgeting Tips for Renovations and Furnishing um for being able to keep everything you know so tight within your budget because I I am terrible at budgeting for renovation so I would love to learn um you know your secrets for that well we it's really so with our appliances it's a used appliance store and it's right off of Powers and we really get everything half off or less and then because we go to them so much and evolve so much we get a discount there I found a really good countertop place that's cheap like for the countertops I think it was 1700 and it's real granite wow and this was all Heather too I was yeah so it's just me yeah the flooring place I find it on it like on the deals like they had it for what was it it was like 130 a square foot okay that's really good yeah so it's really just finding it and then when I go into the places I just say hey look I'm a real estate investor we have a lot of properties to get done what's the deal that you can give me because I'll be back yeah and so it's really just doing that and yeah and our flooring now I think are not our flooring but our countertops for 1600 for granted and with the backsplash and also they they um have pretty much stolen my amazing contractor um so I'll just have to say that I'll text him like are you too busy with Greg and Heather or can you do anything else yeah yeah one of them will have them through them through the rest of the winner [Laughter] come on because yeah because the other person leaves in January January February she'll leave that will be started but yeah it's really just finding deals and going to Goodwill we go to Goodwill a lot and like Ross and Marshalls and since you since you have like multiple of the same unit do you stock up like if you see like your flooring for example do you buy enough flooring for all the units and just kind of store them no with this one because we didn't have available units to store the flooring um the first unit I bought the flooring just for that and then with this one I because there are two units opening up off the flooring for the two units but like last night we went to like other stores and they're having like cheap stuff for sale so we've stocked up for all three units on that so yeah like the little like decor and stuff like that where it's it's hard to find just like find things at a reasonable price to put in there and we'll piecemeal it and you know we got like our front room's all full of stuff for the four Plex there's a bunch of stuff behind us the TV just waiting to go TVs stuff like that so as deals come up we've been buying and keeping them so you guys will be busy this week we're recording the week of Thanksgiving so you guys will be uh doing some Black Friday shopping I think yeah I have like I go through my certain websites and like Bed Bath and Beyond they've had like crazy amount of sales so I've stocked up for the two units to be on because it was just stuff it was just stuff that was super like they had 12 by 12 pictures for like three to eight dollars two of them wow so yeah so it's just it's just taking the time and I'm lucky enough that with my job being the Airbnb in the back that I have time to like search which which all of it is is a lot of searching and taking the time and then I go to Goodwill at least once or twice a week Ross once or twice a week March so it's just making the time to go see what's on sale yeah I mean but that results in significant savings from the sounds of it and especially since you can extrapolate it out to multiple units too I think um you know you're definitely being benefited um by taking that time to to do all that so that's fantastic um yeah so I mean well I'm like extremely excited to kind of check back maybe next year and see you know once everything's been renovated and and going for a year or so um what you guys are thinking in terms of um or what you guys are seeing in terms of of your performance but I know we were kind of budgeting a little bit based on you know your renovation for the first one and then you're you're anticipated um Revenue per unit tubing medium term to being short-term um and you know just to kind of run through that you guys are guesstimating maybe about 3 500 a month per unit on the short term side and 2 900 a month per unit on the midterm side yeah and we'll really have to see because uh I mean that would be like an average annualized uh and we just pulled that from Air DNA so it's yeah that's the best guess yeah the uh a year from now exactly and then um since you guys are using property management for that I know they have different tiers based on short-term or medium terms so you guys are you know accounting for that as well but um yeah I'm really excited to see kind of how this pans out with a year worth of data um and yeah I'm excited for you guys and and thanks so much for coming on and sharing your story and your tips and tricks um for those out there that are looking to get into the same thing and um yeah I'm excited to follow back up with you guys on this one yeah that's too I think it's good having at least one done up so we can see how that goes but if it's anything like how it was last year for our the place right behind us I think this summer will be you're really good for it yeah I think so and you like you said this this fourplex is in a really good area for traveling professionals so I imagine that will be the majority of your clientele yeah and then the uh the midterm short-term mix I'm interested to see how that works out too because yeah like midterm sounds like the way to go it's a little bit easier uh but I just don't know how many people are actually out there looking for for midterm units well I think the fact that you guys are able to snag your license um for a short term on this that's totally worth the experience experiment in my opinion so but yeah that's that's the other thing too like if it's if rents are way higher with the short term then maybe just go all short term yeah we'll we'll see yeah and that was my goal in getting that permit because I knew that 500 foot roll and as soon as we closed on it that's when we started the permit because I'm like if there's no one around like there's another unit being renovated right next to ours or like a cross and it's like let's go ahead and snag this permit so we can snag this area before someone else decides very smart yep well thank you so much Leah do you have any like final words on on this property um I'm just excited to see how it does um Greg and Heather are so awesome and they just do so well so I'm just excited to be along the journey with them yeah awesome well thanks everyone and if you have any questions feel free to email me Jenny envisionrea.com or Leah Leah envisionrea.com and we'll see you soon thanks everyone all right thank you [Music] yes [Music]