This week I stumbled on something very interesting – that you can buy a home from Home Depot. They’re literally becoming a home depot, if by home you mean <600 square foot ADU. (I personally would)
I found this interesting as it points to a greater trend: pre-fabricated housing. As investors this is something we should keep in the back of our minds. That listing with a huge lot could likely fit one (or two) ADUs. Think of buying a lot and being able to fit 3-4 of these ADUs!
This week we have the distinct pleasure of introducing you to James & Emily from Rethink The Rate Race! This couple is currently galavanting across Europe thanks to the portfolio they’ve built in Huntsville, Alabama.
How many doors do you have?
We have 9 doors!
What got you into real estate investing?
The appeal of quickly reaching financial freedom and controlling our portfolio along the way.
What market(s) do you operate in?
How would you describe your portfolio?
Small but mighty. 5 LTR & 4 STR. Mostly 1/1 units with young professional tenants.
We like this tenant base because they’re usually recent college grads that are transient or looking to move to a larger place at the next point of their life. This gives us a perfect opportunity to update units every few years and get back to or even above market rent.
Also, the floor rent on these units is pretty consistent because the next step down is living with roommates or with parents, and many people don’t want that and will pay a premium to avoid that.
What are you currently buying?
The occasional 1/1 or small multi family. We’re also looking for a single family or house-hack in our snowbird location. Our current portfolio of 1/1’s has been excellent and there’s typically less competition from investors or retail homebuyers because everyone is looking for larger units.
We also like small multi family so we can diversify our rental strategy across the same property with a STR and a LTR
Tell us about your biggest mistake in real estate?
Missing out on deals for not being creative enough with financing and offers. Otherwise, cutting corners on our tenant selection process to get a tenant in quickly.
The unit was a 3/2 that we closed on in November. In our area, it’s harder to find tenants for a larger space outside of summer as many people aren’t moving their kids during school year. This tenant had a job offer that covered the 3x but her credit score was bad, with accounts in collections, late payments, and a high utilization.
We were eager to get a tenant, so we accepted her excuses about an ugly divorce that tanked her credit score. There were other red flags that we should’ve noted as well. Unsurprisingly, this tenant had to be evicted a few short months later.
Tell us about your biggest win in real estate?
Taking a risk on two duplex units side by side for $50k each. We knew the path of progress in the city and got these units at a perfect time. The area has appreciated tremendously, and a couple of the units have become the perfect short term rentals.
Outside of real estate what else do you invest in?
Index funds (VTSAX & VGTSX). We are a little more active with our real estate management, and so it’s nice to have a very passive portfolio outside of real estate. Just set it and forget it.
Books people should read before investing
- Richest Man in Babylon
- The Millionaire Next Door
What advice would you give to a new investor?
Education is useful, to a point. You’ll have to take action with the information you receive for it to make an impact on your life. Don’t get into a loop of paralysis analysis and take action.
What do you wear?
Are you required to wear a uniform? Is your office pretty casual: jeans + hoodies? Do you work from home where the extent of your dress code is a presentable shirt?
Are you like Steve Jobs – wearing a simple black turtleneck. His reasoning being that it was one less decision to make allowing him to focus on bigger decisions – such as what kind of shoes to wear.
You might be like Grant Cardone who requires his employees to dress formally. Clothes that likely need to dry cleaned, ironed, and neatly hung on a hanger.
What happens when you finally become financially free? Do you wear what you’ve been wearing to the office? Do you dress down as you want to be comfy? Might you dress up to reflect your status as a millionaire on your way to a multi-millionaire?
Enough questions – let’s get back at it!
See you on Tuesday