Episode 18 of From The Nest Podcast by Building Bluebird
We finally closed on Balkan and can get started on the repairs ASAP. The goal is to get this place rented in 45 days - We discuss this rental property purchase in episode 9 of From the Nest Podcast - listen to the podcast and check out the show notes here.
We worked on some of our repairs required for the sale of our Drummond flip house - this included regrading the back of the house to slope the topsoil away from the house.
We dug up some hosta starters and improved the curb appeal at our rental property we call Woody - check out the intro to this property here. We made sure the bring the kids along to help, specifically Thomas, so he could start to learn sweat equity with the house that will pay for his college education (learn more about this strategy here).
Interview with Jenn McMurray of Bachelorette Pad Flip
We are so excited to have Jenn McMurray of Bachelorette Pad Flip on the podcast today!
Jenn is the owner of Bachelorette Pad Flip and is a real estate broker in Arkansas by day and real estate investor by night! Jenn got in to the house flipping business to pay off her $70K student loans and successfully accomplished this after 5 years. Since then she has continued to grow her wealth through a total of 8 flips and 2 Airbnb properties.
How did you get into real estate investing?
I've been officially investing for almost 9 years, but I say I've been in real estate since birth. My dad owns a real estate brokerage, so I was at job sites & open houses before I was at preschool! I got into real estate investing accidentally. I was broke (grossing [not net!] $24K/year) and needed a place to live. All I could afford was a very beat-up fixer upper for $75K. That was the first domino that caused a chain reaction over several years.
How did you leverage investing to pay off all of your student loan and what tips do you have for others who want to do the same thing?
For me, the key to my success was utilizing the capital gains exemption to my benefit. I knew the only way I could touch that $70K in student loan debt was to throw large amounts of $ at it-- and fast. So I started by doing live-in flips so I could avoid capital gains, and I could net as much as possible. From Flip 1, I split my profits: half for down payment/repairs for the next house & half to pay on my student loan balance. Within 5 years, all of that $70K student loan balance was wiped out!
Tips: Be on the right side of interest. When you have student loan debt (or medical debt or whatever), you're on the wrong side of accruing interest. By doing live-in flips, you're accruing equity and paying down principal which can help when you sell. This strategy isn't for everyone: it involves great sacrifice, annoyance, frustrations, but it offers some of the greatest benefits. I simply would not be where I'm at right now without leveraging the capital gains exemption to my benefit.
(Read the full blog post here).
You have flipped 8 homes and have dabbled in the world of Airbnb - what is your favorite investment strategy and is there any areas you are planning on getting into?
Single family homes under $200K in the "Big 4" of my metro area is my sweet spot. One of my chief requirements is that I can buy, flip, and sell and keep it under $200K.
That keeps me in the first time home buyer bracket AND real estate investor/landlord bracket. I like to have my flips open to the largest pool of buyers. I've only done one that fell over The $200K threshold.
Learn more about Jenn’s Airbnb experience here.
Tell us about your most recent flip, the Orange Tudor?
How did you find this house?
Direct Mail Marketing
How did you calculate the ARV and determine your renovation list?
This is never a popular answer b/c it's not helpful to people just starting out, but experience. I know what my subs will charge for certain jobs. I know how much I'll have to pay for flooring, etc. As I do my initial walk-through, I make an extensive list of what I know has to be addressed. I'm able to calculate the time frame pretty accurately to then budget for holding costs. And as a Real Estate Broker, I know the market extremely well and know reasonably what it'll sell for. Calculating gets easier when you get to the point of using the same subs over and over, and same sources for products.
Often times there is so much you would “like” to do, but you have to pick and choose to stay on budget and hit your profit goals, how do you choose what to include in the renovation?
I always start with the big ticket items b/c that's what tends to scare buyers the most. So the HVAC, roof, plumbing. I get home inspections on my flips, so I know going in what condition they're in & if I need to budget to replace. The next thing I address is what I know will appear on the home inspection report: wires not in a junction box, no GFCIs in wet areas, broken garbage disposal, etc. The last thing is fun stuff-- if I have any $ left on the budget. Maybe a fun accent wall, or new barn door etc. I also focus my spending on kitchens and bathrooms.
What was your favorite part of the project?
As with them all, they all have headaches and surprises. But this one stayed on track for the most part. But the best part of this flip was the neighbors. They were incredibly supportive & encouraging of the project- which is NOT always the case.
Are you using conventional financing or do you find financing in other ways?
This varies greatly. My most common route is either a commercial loan or I have a line of credit at the bank. Being single & self-employed, traditional secondary market lending isn't in the cards for me. I've partnered with my Dad before on some flips, and he will sometimes front the purchase in cash. It just depends on the house, the scenario, the urgency, and the goal.
Learn more about the Orange Tudor flip here.
Starting your own business is challenging, can you share one challenge you faced while getting started in real estate investing and how you overcame it?
The behind the scenes stuff. Taxes, insurance. Trying to budget for those increased expenses that aren't covered since I'm not a salaried employee, all the while working a feast or famine career.
Where do you see yourself and your business in 5 years?
Florida house bought and slowing down the feverish pace. Flipping is not my main hustle- nor do I want it to be. It's a means to the ends that has worked well for me. But I never want it to dominate my life forever because it is so intense & stressful.
What advice would you give to new investors who are first starting out in real estate investing?
Do NOT abide by the rule: go big or go home. Just go home if that's your motto in flipping. You don't have to flip the huge house. You don't have to flip the gut-job house. You don't have to design it over the top. I see that most often in rookies- they tackle these houses that honestly should be bulldozed because they see that on TV. Or they pull-out all the stops on the design. For your first flip (or even your 2nd), stick to a lipstick flip...preferably a live-in flip that awards you some flexibility WHEN (not if) you screw up.
Tip of the Week…
Chris: Mulch can be ground in different ways. If the mulch is thick and chunky, it is typically only ground once. If the mulch is thinner, it will have been ground up two to three times. Playgrounds have bigger chunks of mulch which is the thicker grade mulch and is generally cheaper since it is the least amount of work. Flower beds usually are a little thinner and have been ground up 2-3 times.
Lindsey: When laying your mulch around your home, be careful to keep it only on the foundation and not on wood siding where it can speed up wood rot and allow insects to easily get into the wood.
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