Ep58 Nomadic Lifestyle Meets Real Estate Investing: Lessons from Sarah Pell

[00:00:00] If you're working, save some money. Don't spend every dime. And don't think about debt as bad because not all debt is bad. And you can definitely do great things with leveraging debt. Just be smart about it.

[00:00:13] From cornfields to high rises, office to industrial, houses to hotels, and every other asset class in real estate, we cover the people, the projects, and the profit. Welcome to the Investing in Iowa Show.

[00:00:25] This show is for go-doers, action takers, and business owners. It's for people like you who are sick of Uncle Sam taking a huge bite of your apple. If you're looking to get ahead of what's taking place in Iowa, learn who is doing what and how you can get in on the action. You're in the right place.

[00:00:44] Hosted by Neil Timmins, an Iowa native who has been involved in over $300 million in real estate right here in Iowa. Recording in studio from West Des Moines.

[00:00:54] Here's your host, Neil Timmins.

[00:00:58] I've got Sarah Pell here on the show. Sarah, welcome.

[00:01:00] Thank you for having me.

[00:01:02] I'm excited you're here. For the audience's sake, who are you? Where are you from? What do you do?

[00:01:05] Yes. So my name is Sarah Pell. I am originally from pure South Dakota.

[00:01:10] And I went to college at the University of Sioux Falls and became an elementary ed teacher.

[00:01:15] And so I taught ELL and then my last year kindergarten.

[00:01:21] And that lasted four years until my husband, who I met in Sioux Falls, he was a journeyman electrician.

[00:01:28] And he went on the road and came back and said, I want to keep going on the road.

[00:01:32] And so we were just getting married. And so I said, OK, I'll go too.

[00:01:36] Fortunately, there's always a teacher shortage. So that was coming back to my mind.

[00:01:39] I can always come back and teach. That'll be fine.

[00:01:42] And it's been six years. We did not go back to Sioux Falls.

[00:01:46] We've been coast to coast. And I've done odd and end jobs since then.

[00:01:51] Some substituting, but mostly just customer service based.

[00:01:56] And sorry, rewind. He was always into real estate.

[00:01:59] And I was just teaching and doing my thing and no real interest.

[00:02:03] And so when we left Sioux Falls, we had long term rentals and they were managed by a property manager there.

[00:02:10] So we were doing that again, didn't really pay attention until we got married and we combined finances.

[00:02:17] And then that's when we started to look at our property manager wasn't being so great with our properties.

[00:02:22] And so with that, then I turned to short term rentals and listened to BiggerPockets podcast and heard Avery and Luke Carl and just all about cash flow.

[00:02:34] And I was like, that's what we need because these properties are not cash flowing.

[00:02:39] And but yeah, that's about me.

[00:02:41] So I went from teacher to now a short term rental host with.

[00:02:46] Yeah, I don't know, maybe someday going back to the classroom, but I don't know.

[00:02:50] Right now we're still nomadic.

[00:02:51] Yeah, you have been multiple places, not just here in Iowa.

[00:02:55] So tell me a little about that journey of being a nomad.

[00:02:58] And then I want to tie that into investing and where that next property came from.

[00:03:03] Yeah.

[00:03:04] So like you said, six years, our first big trip away was Las Vegas.

[00:03:10] So we were there the first time nine months and then COVID hit.

[00:03:15] And but yeah, so that was great.

[00:03:17] And then we've been down like Florida, Georgia up.

[00:03:21] We've been to Tennessee, Michigan, all the way to New York State into upstate New York.

[00:03:27] But yeah, like I said, we've made the whole trip just this last winter.

[00:03:31] We were in Phoenix.

[00:03:32] So that was really nice.

[00:03:33] I like that.

[00:03:34] So we try to go south for the winter, of course, just being in a camper.

[00:03:38] And then we both have family up north.

[00:03:41] So like I said, I'm from South Dakota.

[00:03:42] He's from Minnesota.

[00:03:44] And last year we were in Sioux Falls.

[00:03:46] And then this year he has family in Des Moines.

[00:03:49] So I was like, why don't we try Des Moines?

[00:03:51] It's a bigger city.

[00:03:52] Let's just check it out.

[00:03:53] We've not really spent much time here.

[00:03:55] So that's how we ended up now back in Des Moines in May.

[00:03:58] We got here from Phoenix.

[00:04:00] Okay.

[00:04:01] So third party property management company handling things out of Sioux Falls.

[00:04:05] Sooner Larry decided buying another property.

[00:04:07] Talk to me about that next property.

[00:04:09] Yes.

[00:04:10] So we had a duplex that was managed.

[00:04:14] And then when we went on the road, we bought a fourplex.

[00:04:19] And so that was in a C-class neighborhood.

[00:04:22] So we've learned a great deal until things start going wrong.

[00:04:26] And then your $200 cashflow gets eaten up pretty quickly.

[00:04:30] In capital expenditures or just maintenance.

[00:04:32] And then the property management.

[00:04:34] And then, so we had that one fine.

[00:04:36] And then a duplex came along in a little bit better area.

[00:04:39] And so we bought that as well.

[00:04:41] Where were those located?

[00:04:43] Let's see.

[00:04:43] In Sioux Falls.

[00:04:44] In Sioux Falls.

[00:04:44] So those all were in Sioux Falls.

[00:04:46] Managed by the same property manager.

[00:04:48] Older home.

[00:04:49] Sure.

[00:04:49] The first one was a 2005.

[00:04:51] That was great.

[00:04:52] Right by the hospital.

[00:04:53] And it's always been our shining star.

[00:04:55] So it does really well.

[00:04:57] But just this past or last year, actually, we decided to sell the fourplex and the duplex.

[00:05:04] When we were back in Sioux Falls, we were doing the lawn care just because we were there.

[00:05:09] And just every day or every week when you're looking at these properties,

[00:05:12] it's just like, this could get done.

[00:05:14] And this is.

[00:05:14] And then, and insurance actually in the duplex skyrocketed.

[00:05:18] So we went from like $1,500 a year to they wanted $6,000.

[00:05:24] Duplex?

[00:05:25] Good heavens.

[00:05:26] So we, and we were thinking about selling regardless.

[00:05:29] So we didn't really shop around.

[00:05:31] We use a broker and he was like, listen, this is what I'm getting.

[00:05:35] Like you can look yourself.

[00:05:36] And we did, but not as much.

[00:05:38] So that ate our cash flow like right now.

[00:05:40] So we're like, okay, so maybe let's just sell.

[00:05:42] So we did.

[00:05:43] So we sold the one duplex and the fourplex.

[00:05:46] And we actually 1031 exchanged into a condo in Orange Beach, Alabama, which I skipped over to.

[00:05:53] So we had bought in a condo as well.

[00:05:55] And now this is our second condo in the same building.

[00:05:58] Same area.

[00:05:59] Okay.

[00:05:59] Yes.

[00:06:00] And so we just have now the one duplex, the 2005 in Sioux Falls.

[00:06:04] That's doing great.

[00:06:05] And now change obviously our parameters for when we buy another rental,

[00:06:09] just like looking at newer and thinking about that rather than just,

[00:06:13] hang, this is a great deal.

[00:06:15] Yes.

[00:06:15] But really the whole picture.

[00:06:17] Yeah.

[00:06:18] We conversed a little bit the other day.

[00:06:20] My position is that C-class is a extraordinarily challenging class to be in for residential.

[00:06:26] So as long as you can buy them right, you can sell them right,

[00:06:28] but it's tough to make money in that interim.

[00:06:31] You have to, your management has to be dialed in.

[00:06:33] Hey, Iowa investors.

[00:06:34] This is Ava Bauckamp, chief of staff at Legacy Impact Investors.

[00:06:38] Have you thought about adding real estate to your portfolio,

[00:06:40] but don't have the time or desire to play landlord?

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[00:07:00] They just share in the income, appreciation, and tax benefits.

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[00:07:14] Yeah.

[00:07:14] And actually, just in August, I took over management of our duplex.

[00:07:17] Okay.

[00:07:18] Because like you were talking the other day, third party is really hard and no one cares like you do.

[00:07:22] And so we've actually been through two property managers.

[00:07:25] The first one, like, yeah, it was robbing us blind at the end that I was like,

[00:07:28] this has to stop.

[00:07:29] Like, we bought investments for like investment.

[00:07:32] And right now we're paying people to stay at our place.

[00:07:36] Like, honestly, it was bad.

[00:07:37] So I was like, we need to pivot.

[00:07:39] We found this other smaller mom and pop.

[00:07:41] So I was like, great.

[00:07:42] He had 600 units.

[00:07:43] So I say smaller, but it was a one or two man, yeah, operation compared to what we had.

[00:07:49] So it was great.

[00:07:50] He was like looking at cost effective, whatever.

[00:07:53] That was great.

[00:07:53] But then as he got bigger, things started to just change over the summer.

[00:07:57] And I just said, with me being able to manage short-term, why can't I manage long-term and just

[00:08:02] getting around the right people?

[00:08:04] And oh yeah, I manage remotely my long-terms.

[00:08:06] So just took over that.

[00:08:08] And so that's been going well.

[00:08:09] We had to find a tenant.

[00:08:10] So that was a bit of a learning, but yeah, it's been good.

[00:08:13] Tell me about Alabama.

[00:08:14] So you buy a condo down there.

[00:08:15] Now you bought a second condo.

[00:08:17] How did you end up?

[00:08:18] Were you physically there?

[00:08:19] How'd you end up in Alabama?

[00:08:21] Yes.

[00:08:21] No, it was not.

[00:08:23] I didn't even know Alabama had beaches to be quite honest.

[00:08:26] So that's pretty bad.

[00:08:27] It's just, yeah, right there on this panhandle, the start of it.

[00:08:31] So as I had mentioned, yes, with the long-term rentals,

[00:08:35] Cale and I were working in upstate New York.

[00:08:37] And I was actually working on the construction site with him cleaning,

[00:08:41] which they were paying $50 an hour to be a cleaner.

[00:08:44] And I was like, yep.

[00:08:46] Yeah, it was incredible.

[00:08:48] With that, we had a lot of time because you're cleaning.

[00:08:51] So I listened to podcasts.

[00:08:52] So like I said, Figure Pockets, heard Avery and Luke Carl

[00:08:55] talking about short-term rentals, talking about self-managing

[00:08:58] from a distance, a lot of their portfolios in the Smoky Mountains.

[00:09:02] They live in Florida.

[00:09:03] And so I was like, this is great.

[00:09:04] We're going to make all this cash.

[00:09:06] I was like, we are losing.

[00:09:08] So I was like, we're going to be winning.

[00:09:09] Like I can do it.

[00:09:10] I was thinking like, gosh, like other like grandma and grandpas,

[00:09:13] mom and pops do it.

[00:09:14] Why can't I?

[00:09:15] Like I have a phone.

[00:09:16] I said, I would like to go.

[00:09:18] They have a brokerage, a realty company.

[00:09:20] So I was like, I'd like to go with them.

[00:09:22] Like they obviously work with investors.

[00:09:24] They're investors.

[00:09:25] They know what's up.

[00:09:26] So we did.

[00:09:27] So I reached out and we started to look at Destin market,

[00:09:31] but just what our price point wasn't,

[00:09:34] we weren't finding that because

[00:09:36] what year was that?

[00:09:37] Sorry.

[00:09:37] Yes.

[00:09:37] This was 2021.

[00:09:39] Sorry.

[00:09:40] 2021.

[00:09:40] 2021.

[00:09:41] So unfortunately COVID.

[00:09:42] So prices were going crazy.

[00:09:44] So yeah, we were just looking in Destin.

[00:09:46] You couldn't get like on the beach condos

[00:09:48] for our price point.

[00:09:50] It would have had to been tier two

[00:09:51] and we wanted tier one.

[00:09:52] So we just moved up the coast.

[00:09:54] So short term shop,

[00:09:55] they only work in certain markets.

[00:09:57] So the next was Gulf Shores,

[00:10:00] Orange Beach, Alabama.

[00:10:01] Look there.

[00:10:02] And yes.

[00:10:03] So we found lots of options that had that price point.

[00:10:07] And yeah, that's when we started looking,

[00:10:09] but no, their realtors are all great

[00:10:11] with working with remote investors.

[00:10:12] So they go.

[00:10:14] So if we wanted to say,

[00:10:15] Hey, we really like this property.

[00:10:16] First of all,

[00:10:17] we'd ask and make sure it meets our criteria.

[00:10:19] And then we'd say,

[00:10:19] can you go walk it?

[00:10:20] So they go and walk it and film it and everything.

[00:10:24] So never set foot the day

[00:10:26] or the week we closed

[00:10:27] is the first time we went there.

[00:10:28] And it was nice because it was 4th of July.

[00:10:31] So like, it was a great time,

[00:10:33] but yeah, we always joke,

[00:10:35] you get so much for night.

[00:10:36] So it's like, we can never go back.

[00:10:38] No, during 4th of July.

[00:10:39] But yeah, it was really cool.

[00:10:41] So we got to do that.

[00:10:43] But now we've been multiple,

[00:10:44] but no, never since.

[00:10:46] Okay.

[00:10:46] For hot.

[00:10:47] So now you have two there in Alabama.

[00:10:48] Yeah.

[00:10:49] What else in the South?

[00:10:50] So I do rental arbitrage.

[00:10:52] Okay.

[00:10:52] And rental arbitrage is renting long-term.

[00:10:57] So a 12 month lease from a landlord

[00:10:59] with their permission to sublease it on a nightly rate.

[00:11:03] So Airbnb,

[00:11:04] Verbo.

[00:11:05] And so I got into that strategy

[00:11:07] because the condos require,

[00:11:10] so Kayla and I's income,

[00:11:12] we don't qualify for a vacation home.

[00:11:14] We only qualify.

[00:11:16] So the 10%,

[00:11:16] we don't qualify for that.

[00:11:18] Yeah.

[00:11:18] You're referring to a 10% down mortgage

[00:11:20] on a vacation home.

[00:11:21] Yes.

[00:11:21] Yes.

[00:11:22] So we didn't at the time qualify just,

[00:11:24] and so we have to do the investment route.

[00:11:27] And so that's 25% down.

[00:11:29] So that's a big chunk of change.

[00:11:31] And yeah,

[00:11:32] we didn't know what we didn't know.

[00:11:33] We didn't know about like private money

[00:11:35] and just different avenues.

[00:11:36] So we saved everything.

[00:11:38] And I even cashed in my small retirement

[00:11:41] for my teaching.

[00:11:42] But yeah,

[00:11:43] so we saved.

[00:11:44] So we were like,

[00:11:44] I fell in love with hosting.

[00:11:46] So I was like,

[00:11:46] I want to keep doing this,

[00:11:47] but it's going to take years

[00:11:50] maybe before I can save up

[00:11:52] to buy another one.

[00:11:52] 25% down.

[00:11:53] It's not a birth strategy.

[00:11:55] You're putting 25 down.

[00:11:56] If you're going to execute,

[00:11:57] you're going to save

[00:11:58] until you can get another 25% down

[00:12:00] to do it.

[00:12:01] And so the arbitrage

[00:12:02] is a way to really shortcut that.

[00:12:05] Yes.

[00:12:05] And just through education again,

[00:12:07] but we have them in Palm Harbor.

[00:12:09] I have one single family home arbitrage.

[00:12:11] And then the other,

[00:12:13] I just got in Largo, Florida,

[00:12:14] just in August.

[00:12:16] And then we do arbitrage as well

[00:12:18] in two other units

[00:12:19] in Wilmington, North Carolina

[00:12:21] that I got hooked on

[00:12:22] or hooked up with a partner.

[00:12:24] I first was co-hosting for him.

[00:12:26] And then he said,

[00:12:27] Hey, I have these units.

[00:12:29] Would you like to go in on them?

[00:12:31] Because they're giving away the lease

[00:12:33] or I always say selling,

[00:12:35] but anyway, so I said, sure.

[00:12:37] So that's how now I have

[00:12:39] four arbitrage units.

[00:12:41] And then, yeah, we just three, we own.

[00:12:43] So everyone wants to know

[00:12:44] how in the world

[00:12:45] you've got Alabama,

[00:12:47] Cup, Florida, North Carolina.

[00:12:48] How in the world do you manage those

[00:12:51] remotely while here in Iowa?

[00:12:54] Yeah.

[00:12:54] So that's a great question.

[00:12:56] And with technology.

[00:12:58] So right away, like I said,

[00:13:00] the short-term shop mentors are huge.

[00:13:02] Yeah.

[00:13:02] People you can get around are huge

[00:13:03] because they literally taught me everything.

[00:13:06] Just getting a proper management software.

[00:13:08] So there's OwnerRes, Guesty, Hospitable.

[00:13:11] Just getting one of those,

[00:13:12] even if you have one.

[00:13:13] So using that

[00:13:14] because that's going to do

[00:13:15] your automation of your messaging.

[00:13:17] So I don't have to even think about it.

[00:13:19] I just have messages come in

[00:13:21] that keep that response rate high as well.

[00:13:23] So I get super host status.

[00:13:25] And then they're able to integrate

[00:13:28] Vrbo and Airbnb calendars.

[00:13:30] So I never have double bookings

[00:13:31] as well as I can see all the messages

[00:13:33] on both those platforms

[00:13:34] in this one property management app.

[00:13:38] And then it'll also do my smart locks.

[00:13:41] So all my smart locks are connected.

[00:13:43] So the code goes out.

[00:13:45] I don't have to worry about changing the codes.

[00:13:47] And then the cleaning app as well.

[00:13:49] Turno, I sync that with Guesty.

[00:13:51] So now my cleaners are hooked up with,

[00:13:54] they can see when a reservation comes in,

[00:13:56] when they need to clean it.

[00:13:57] If it cancels, that automatically notifies them.

[00:14:00] Checklists are internal as well.

[00:14:02] So cleaning checklists, photos,

[00:14:05] and then Price Labs is a pricing strategy,

[00:14:08] a dynamic software.

[00:14:09] So I use that just for my pricing.

[00:14:12] But yeah, everything's on my phone.

[00:14:14] Obviously it's handy to have my laptop,

[00:14:15] but I can do everything I need to

[00:14:17] just right from my phone.

[00:14:19] True or false?

[00:14:20] The total, the success,

[00:14:22] the win failures in this space

[00:14:24] ultimately comes down to the cleaner.

[00:14:26] True, yeah.

[00:14:27] Cleaner's huge.

[00:14:28] Yeah, I often tell them that you are my VIP.

[00:14:31] I give them a little extra at Christmas.

[00:14:33] I always, if someone says something

[00:14:35] about their cleaning, I let them know.

[00:14:37] Yeah, I mean, they're,

[00:14:39] yes, they take care of the cleaning.

[00:14:40] But then I also, in my interview process,

[00:14:42] I make sure to ask,

[00:14:43] are you okay with light maintenance?

[00:14:45] Can you change a light bulb?

[00:14:47] Are you okay changing my batteries?

[00:14:48] Air filter.

[00:14:49] So just having them do little things like that too.

[00:14:52] But yeah, and then I need to know,

[00:14:54] are you going to be the same cleaner?

[00:14:55] Or if you have a team, are the same people?

[00:14:57] So we know when items are missing or damaged.

[00:15:00] But yes, my cleaner is everything.

[00:15:03] So when you get a new place,

[00:15:05] either buy it or arbitrage it,

[00:15:07] I suspect you're down there,

[00:15:08] you're sourcing furniture.

[00:15:09] How's that furniture piece work?

[00:15:11] Yeah, we would have a team.

[00:15:13] So I always have a cleaner or a handyman

[00:15:15] if I'm not there right away

[00:15:16] to acquire this property or a realtor looking.

[00:15:19] And I'm asking them for measurements

[00:15:21] of all the rooms.

[00:15:22] So I want to gather what I need.

[00:15:25] Is it a king bed, queen bed?

[00:15:26] Yeah.

[00:15:26] And then everything like that.

[00:15:28] And then I use Amazon and like Wayfair.

[00:15:32] The South though has a great store

[00:15:34] called Old Time Pottery.

[00:15:35] And I wish we had it.

[00:15:36] It's literally like Michael's

[00:15:37] and Hobby Lobby combined.

[00:15:39] All right.

[00:15:39] It's huge.

[00:15:40] It's like a Walmart size.

[00:15:42] So when I was in Alabama

[00:15:44] and they have them in Tampa,

[00:15:45] so I was able to pull some furniture source from there.

[00:15:49] But if not,

[00:15:50] then I will ship it to my handyman or cleaner

[00:15:54] and my handyman would assemble it

[00:15:56] and then furnish it.

[00:15:58] Then I use Google presentation

[00:15:59] and by room,

[00:16:01] I say what I want in each room in the design.

[00:16:04] So then we'll just go from 80% to completion

[00:16:08] and just finish the rest that way.

[00:16:11] So that's what I'm doing.

[00:16:13] So yes, they're charging for that,

[00:16:15] but I found a lot of designers

[00:16:16] charge five grand plus furniture.

[00:16:19] So if they're charging me 2,500,

[00:16:21] it's about the same,

[00:16:22] but then I get to touch it

[00:16:24] and make sure everything's put.

[00:16:26] So yeah, that's how I do it.

[00:16:28] Furnishing remotely is have them start it

[00:16:30] and then I finish it.

[00:16:32] That's great.

[00:16:33] All right.

[00:16:34] So you've landed on your,

[00:16:37] I believe your first property here in Des Moines, right?

[00:16:41] Yeah, that is correct.

[00:16:42] Tell us about that.

[00:16:43] Yes.

[00:16:43] My husband is a journeyman electrician.

[00:16:45] He wants to get away from that a little bit,

[00:16:48] wearing his tool belt.

[00:16:49] So we, when we first met,

[00:16:52] he actually was house hacking.

[00:16:53] So he bought a rental in Sioux Falls

[00:16:56] and was, he actually gutted it and redid it

[00:16:59] and then rented out to college buddies

[00:17:00] and different things.

[00:17:01] So he's always like that.

[00:17:04] He did a fix and flip in Sioux Falls too,

[00:17:06] several, I guess when we were together,

[00:17:08] but I was never very interested in that.

[00:17:10] Like I said, I was doing my own thing,

[00:17:11] but yeah, so in Des Moines,

[00:17:13] we got a fix and flip.

[00:17:14] We took, like I said, mentorship is huge.

[00:17:16] So we went to LA in June and did Amy Majuri.

[00:17:21] She was part of Fortune Builders.

[00:17:22] So she did a two day fix and flip.

[00:17:25] And so that was amazing because this is all new to me

[00:17:28] and I knew it was going to be a big learning curve.

[00:17:30] So I just, yeah, we were able to do that together

[00:17:33] and really see calculators

[00:17:34] and like scopes of work and all of that.

[00:17:37] So since then we've been working and it's funny,

[00:17:40] it seems like it like takes forever,

[00:17:42] but it really doesn't like,

[00:17:43] so yeah, now we got this property.

[00:17:45] It's in Des Moines by the Capitol area.

[00:17:48] It's a three bedroom, one and a half bath,

[00:17:51] thousand square feet, two stories.

[00:17:53] So we were looking more for cosmetic

[00:17:55] just because we're getting our feet wet again.

[00:17:58] And this is the first time we're hiring

[00:18:00] mostly everything out.

[00:18:02] So before my husband was, did it all himself

[00:18:05] where now I'm like, I want to run this as a business

[00:18:08] just because we've met other people.

[00:18:10] And we just, yeah, we want to run it as a business.

[00:18:12] We want to make it successful and not DIY everything

[00:18:15] because that can take a lot of time.

[00:18:17] So that's what we're doing.

[00:18:18] So very cosmetic.

[00:18:19] We're opening up one wall in the kitchen

[00:18:21] and then new flooring, new kitchen, new bathroom,

[00:18:25] paint, and just a few outside repairs on the wood siding.

[00:18:29] But yeah, it's really cute.

[00:18:30] It has a front porch.

[00:18:31] It's right by across from a park.

[00:18:32] Our vision is, I guess I envisioned like a starter family,

[00:18:35] someone like that.

[00:18:37] So yeah.

[00:18:38] How did you end up?

[00:18:39] Talk to me about the economic structure.

[00:18:41] How did you finance it?

[00:18:42] What did that look like?

[00:18:43] How did that all come together?

[00:18:44] If you're a house clipper, execute the burst strategy

[00:18:46] or do double closings and are in need of money.

[00:18:49] Little Guy Loans is your go-to lender

[00:18:51] here in the Des Moines area.

[00:18:53] Time is money.

[00:18:55] Loan approvals in 24 hours.

[00:18:57] Closings in five days.

[00:18:59] Little Guy Loans was founded by Neil Timmons,

[00:19:02] an investor just like you.

[00:19:03] Since he has been in over 10,000 homes in Des Moines,

[00:19:07] there's never an appraisal.

[00:19:09] Houses, multifamily and commercial property loans

[00:19:12] up to 1 million.

[00:19:13] Check out www.littleguyloans.com.

[00:19:17] So we found this actually just on market too.

[00:19:19] I feel like some people like to know that.

[00:19:21] So yeah, we're trying to build our funnel,

[00:19:23] but yeah, we found it on market.

[00:19:25] And so yes, how we are financing it.

[00:19:28] So just to break it down,

[00:19:29] we purchased it for $104,000.

[00:19:32] And then our rehab budget is $50,000.

[00:19:37] And then we want to exit in five months.

[00:19:39] So we have five months holding.

[00:19:41] And so we use a hard money lender.

[00:19:44] They're covering the rehab as well.

[00:19:46] And then they're,

[00:19:48] I don't know if we want to get into a degree,

[00:19:50] but they offered origination

[00:19:51] and then an interest rate.

[00:19:54] And then we,

[00:19:56] with Aime and Majuri,

[00:19:57] we joined her raising private money.

[00:19:59] So we've been learning about that

[00:20:01] and using other people's money,

[00:20:02] which has been huge.

[00:20:03] I've done it with some of my arbitrages,

[00:20:06] which have been really nice.

[00:20:07] But we found a private money lender

[00:20:10] and she is going to be our gap funding.

[00:20:12] So she lent us $40,000.

[00:20:14] So she'll be gap funding plus some reserves.

[00:20:17] All right.

[00:20:17] So just for the audience's sake,

[00:20:19] what is gap funding?

[00:20:21] Just your closing costs.

[00:20:22] So is what I'm under.

[00:20:24] That's what I would assume.

[00:20:26] The closing costs,

[00:20:27] but you got a little more.

[00:20:28] So I would say.

[00:20:28] Yes.

[00:20:29] Thank you.

[00:20:30] Yeah.

[00:20:30] So the gap funding is ultimately,

[00:20:31] so you end up with no money into this deal.

[00:20:33] That gap funder is in presumably second position

[00:20:36] or maybe you've signed.

[00:20:37] Yeah.

[00:20:37] Second position lien that we signed promissory note

[00:20:40] and then insurance and she's on title.

[00:20:43] Okay.

[00:20:43] Yep.

[00:20:43] No, it's total sense.

[00:20:44] So you got a second mortgage ultimately in the biz.

[00:20:47] They call it gap funding,

[00:20:48] which is exactly what you just had indicated.

[00:20:50] Mm-hmm.

[00:20:51] Okay.

[00:20:51] Cool.

[00:20:52] And you've got five months budgeted there.

[00:20:55] And the goal is to do this over winter

[00:20:56] and get it to the market as soon as you can,

[00:20:59] rolling into 2025.

[00:21:01] Yeah, exactly.

[00:21:02] Yep.

[00:21:03] What are you hoping,

[00:21:04] what's the ARV,

[00:21:05] the after repair value?

[00:21:07] Yes.

[00:21:07] Or are you guys hoping to sell us at?

[00:21:09] Conservatively,

[00:21:10] we did 204,

[00:21:12] but we've seen all the way up to 215.

[00:21:15] But in our numbers,

[00:21:16] our calculations,

[00:21:17] of course,

[00:21:17] we always like to be worst case scenario.

[00:21:19] Sure.

[00:21:19] Exciting,

[00:21:20] good,

[00:21:20] look good.

[00:21:21] I'm excited to hear how this comes full circle.

[00:21:23] I am as well.

[00:21:24] It's fun seeing everything.

[00:21:26] Mm-hmm.

[00:21:26] Yeah.

[00:21:27] Yeah.

[00:21:28] What are you most excited about in 2025?

[00:21:31] So this past year,

[00:21:32] I've gone to a lot of conferences

[00:21:34] and just joined some mentorships.

[00:21:36] So I think just applying all my learning to 2025,

[00:21:41] just thinking back in this year,

[00:21:43] I've done a lot as well in learning and growth.

[00:21:45] But yeah,

[00:21:46] I think continuing expanding my,

[00:21:48] I co-host too,

[00:21:50] so property manager,

[00:21:50] so maybe getting some more clients there,

[00:21:52] as well as,

[00:21:53] I do love short-term rentals.

[00:21:55] So if that's buying,

[00:21:57] maybe doing some creatively with,

[00:21:59] or arbitrage again would be great.

[00:22:02] And then we would love to double the fix and flip.

[00:22:06] So can we get two transactions next year,

[00:22:09] or maybe even three?

[00:22:10] So see what this can bring

[00:22:12] with having one under our belt

[00:22:13] and then continue to expand that

[00:22:16] and earn more active income as well.

[00:22:20] You've got some tremendous nuggets.

[00:22:21] We've talked about gap funding,

[00:22:22] which I don't believe we've ever covered in the show.

[00:22:24] You mentioned co-hosting.

[00:22:25] Darson Grantham may have mentioned that

[00:22:27] very early on in our series here,

[00:22:30] but let's talk about co-hosting.

[00:22:31] What is that?

[00:22:32] And where do you fit in?

[00:22:34] Where does the other co fit in?

[00:22:36] Yeah, no, that's great.

[00:22:37] So co-hosting is actually an Airbnb term.

[00:22:40] They came up with it.

[00:22:41] It is property management essentially,

[00:22:44] but I do not have a license.

[00:22:46] So I'm not in a licensed property manager.

[00:22:48] And the difference is,

[00:22:50] so a co-host, I don't take,

[00:22:52] so if I'm working with you and you're the owner,

[00:22:55] I don't take the funds from the reservation into my account.

[00:22:58] It goes into your account and you pay me,

[00:23:02] where a property manager,

[00:23:03] they keep the funds

[00:23:04] and then they give you the owner distribution.

[00:23:07] So that's what it is.

[00:23:08] But with co-hosting,

[00:23:09] you work off a percentage per booking.

[00:23:12] So I get a commission of that,

[00:23:13] but I'm dealing with guest management,

[00:23:16] setting up your listing

[00:23:17] if you need that,

[00:23:18] optimizing your listing

[00:23:19] if it's been struggling,

[00:23:21] scheduling the cleaners,

[00:23:22] hiring cleaners if need be,

[00:23:24] maintenance and do everything.

[00:23:25] I do have different packages

[00:23:27] and different things.

[00:23:28] And I'm very small,

[00:23:29] so I'm willing to work with owners.

[00:23:31] I always tell them that

[00:23:32] if you want something customized,

[00:23:34] we can do that.

[00:23:35] But essentially, yeah,

[00:23:36] it's a property manager,

[00:23:37] but I'm a 1099 employee.

[00:23:39] Really?

[00:23:39] What it sounds to me like,

[00:23:40] you probably do everything you do for yourself

[00:23:43] in your own property

[00:23:44] and the co-host,

[00:23:45] they just have to bring the property.

[00:23:47] Yes, exactly.

[00:23:48] Yep.

[00:23:48] And that's why I have to tell them,

[00:23:50] I treat your property as my own.

[00:23:52] I really do.

[00:23:53] So I won't ever do anything

[00:23:54] that I wouldn't feel comfortable with

[00:23:56] because I'm taking it very serious

[00:23:58] as an owner myself.

[00:23:59] Like I know the asset

[00:24:00] and like maybe saving

[00:24:02] and everything you've worked for.

[00:24:03] So I need to make you money

[00:24:05] and be successful and not,

[00:24:07] yeah, just treat it well

[00:24:08] and make sure guests

[00:24:09] are treating it well too.

[00:24:10] Can I assume you do this anywhere?

[00:24:12] Yes, I do.

[00:24:13] Figure itself based on your expertise

[00:24:16] in doing this remote.

[00:24:18] Yeah.

[00:24:18] So I actually just have a client.

[00:24:20] I signed her.

[00:24:21] She's in Pensacola.

[00:24:23] She actually found me on Airbnb.

[00:24:25] I'm not sure if it's rolled out yet,

[00:24:27] but I signed up for Airbnb co-hosting

[00:24:30] a while back

[00:24:31] and I set up my profile

[00:24:32] and then forgot about it.

[00:24:33] And she just reached out last month

[00:24:35] and I was like,

[00:24:36] oh yeah, let's talk.

[00:24:37] But yeah, I've never,

[00:24:38] I've had phone conversations,

[00:24:39] but I've never met her.

[00:24:40] I've never stepped foot in her property.

[00:24:42] But yeah, so we just got that live going now.

[00:24:45] And yeah, like obviously I'm always up front

[00:24:48] that I am remote.

[00:24:49] And so I could go to your property.

[00:24:51] That's something I can do.

[00:24:53] But yeah, just knowing that I'm remote.

[00:24:54] And so that's how I roll.

[00:24:56] You're active on social media.

[00:24:57] I always put an outtremendous content

[00:24:59] relative to exactly what you're talking about

[00:25:00] is investing, being in no mess.

[00:25:03] Yeah.

[00:25:03] Like you guys have been for so many years

[00:25:05] in investing remotely

[00:25:07] and how you manage that whole world.

[00:25:09] Yeah.

[00:25:09] Yeah.

[00:25:10] You cut out great content.

[00:25:11] Thank you.

[00:25:12] I appreciate it.

[00:25:12] Yeah.

[00:25:13] Social media can be tricky,

[00:25:15] but yeah, it's good.

[00:25:17] I feel like we don't really know any other way.

[00:25:19] So now it seems so easy,

[00:25:20] like where I know sometimes people are like so daunting,

[00:25:23] but you really just have to have the right team in place.

[00:25:27] And if need be,

[00:25:28] I mean, make one trip to go see it or something.

[00:25:32] Zara, are you ready for the final three questions?

[00:25:33] Yes.

[00:25:34] If you had one piece of advice for your 20 year old self,

[00:25:38] what would it be?

[00:25:40] To financial literacy.

[00:25:41] It was what I struggled with.

[00:25:43] So many of us,

[00:25:44] just my parents didn't share.

[00:25:46] They didn't talk about money.

[00:25:47] It was just,

[00:25:48] I was always told don't ever get a credit card.

[00:25:50] So I actually never got one until I was 28

[00:25:52] and I had to piggyback from my husband.

[00:25:54] But I would just say financial literacy,

[00:25:56] like if you're working,

[00:25:58] save some of the money,

[00:25:59] don't spend every dime.

[00:26:00] And don't think about debt as bad

[00:26:03] because not all that is bad.

[00:26:05] And you can definitely do great things with leveraging debt.

[00:26:10] Just be smart about it.

[00:26:11] So I guess,

[00:26:12] yeah,

[00:26:12] that piece of try to find financial literacy as soon as you can

[00:26:16] and just learn how to save and manage your expenses

[00:26:20] and live below your means

[00:26:22] because it'll be temporarily until you can go to where you want it.

[00:26:27] But yeah,

[00:26:28] that delayed gratification.

[00:26:29] Two books that changed your life.

[00:26:31] So it's of course,

[00:26:32] Dave Ramsey,

[00:26:33] financial piece.

[00:26:34] My mom did sign us up for that

[00:26:36] and that literally changed my life.

[00:26:38] So I would say him,

[00:26:39] I can't think of his book,

[00:26:40] but yeah.

[00:26:41] And then I recently just read,

[00:26:44] and I know so many people say that,

[00:26:45] Rishad,

[00:26:45] Poor Dad.

[00:26:46] But it's a really great book by Robert Kiyosaki

[00:26:49] and just like it,

[00:26:50] how you think about,

[00:26:51] yeah,

[00:26:52] working and like money

[00:26:53] and just,

[00:26:54] yeah,

[00:26:55] a good life book,

[00:26:56] I feel like.

[00:26:57] If you were cast away on an island for a year,

[00:27:00] you can only get three pieces of data about your business each and every month.

[00:27:03] What three things must you know every month to know how your business is running?

[00:27:07] This is a hard question.

[00:27:08] I would say obviously profit loss statement.

[00:27:11] I would say photos like condition of the property.

[00:27:15] And the last one,

[00:27:17] probably reviews.

[00:27:18] I'm thinking of short-term rentals.

[00:27:20] That's where my head goes.

[00:27:21] So I would say those.

[00:27:22] Sarah,

[00:27:22] I've asked tons of questions.

[00:27:24] We could talk for hours.

[00:27:25] This is great.

[00:27:26] What is one question I did not ask that I should have asked?

[00:27:30] How to protect yourself.

[00:27:31] Yeah.

[00:27:31] The short-term rentals.

[00:27:32] Love it.

[00:27:33] Let's do it.

[00:27:33] Okay.

[00:27:34] So I would recommend proper insurance.

[00:27:38] I know it can be spendy,

[00:27:39] but especially for like rental arbitrage,

[00:27:41] they do have a package and that's great.

[00:27:43] I spend $120 a month on this insurance,

[00:27:48] but I have pools and that gets me a little scared.

[00:27:51] You hear horror stories like anything.

[00:27:52] So I think that would be great as well as they cover like bed bugs.

[00:27:55] They cover storms,

[00:27:56] damage like that.

[00:27:57] So I do have that,

[00:27:58] but a lot of property management softwares also offer a guest protection,

[00:28:03] which I think is really nice.

[00:28:04] Airbnb does have the $1 million coverage,

[00:28:07] but I like the damage protection on the property management side,

[00:28:11] just because you can submit claims easily and your guest doesn't even need to know about it.

[00:28:17] I'm curious on the,

[00:28:18] where you have guest protection available as an offer to the clients through these management

[00:28:24] platforms.

[00:28:24] Is that a revenue stream for you?

[00:28:26] Do you get a piece of the money?

[00:28:27] You can upsell,

[00:28:29] which I do on one of my clients for my co-hosting,

[00:28:32] but the others,

[00:28:33] I don't.

[00:28:34] Their packages,

[00:28:35] I think are like $10,

[00:28:36] 25 and 45.

[00:28:37] So a lot of times the guests don't even notice and I don't really upsell it just because.

[00:28:42] Sure.

[00:28:43] Yeah.

[00:28:44] Proper protection.

[00:28:44] There's no doubt.

[00:28:45] You have to have that.

[00:28:47] I can imagine that is a giant thought and concern for people when,

[00:28:52] or if they're considering entering that space.

[00:28:54] Yeah.

[00:28:54] What happens if they trash my house and all my furniture and all the things that are there?

[00:28:58] Yeah.

[00:28:58] It's just a great way.

[00:28:59] And especially with arbitrage,

[00:29:00] like I said,

[00:29:01] it's not your own property.

[00:29:02] And so just making sure and ease the owner's mind as well as myself.

[00:29:06] But I also too,

[00:29:07] with the owners,

[00:29:08] I offer each month like $200 in maintenance.

[00:29:11] So give them a little incentive.

[00:29:13] Like I'm a little bit better of a tenant because I'm not your traditional tenant.

[00:29:17] So I'll take care of the leaky faucets and stuff like that.

[00:29:19] That's a great tip right there.

[00:29:21] Love that.

[00:29:22] Sorry.

[00:29:22] I appreciate you being here for people.

[00:29:23] They want to find you.

[00:29:24] They want to follow you when they want to connect with you.

[00:29:26] Where can they go?

[00:29:26] What should they do?

[00:29:27] Yes,

[00:29:28] of course.

[00:29:28] So I am on Instagram at Sarah underscore Pell underscore.

[00:29:32] And then we do have a website,

[00:29:34] which is a great resource.

[00:29:35] www.cpvacationhomes.com.

[00:29:39] Links are below in the show notes.

[00:29:40] Sarah,

[00:29:41] thanks for being here.

[00:29:42] Thank you so much.

[00:29:43] Thanks for listening.

[00:29:44] If you're enjoying the show,

[00:29:45] may I ask a favor of you?

[00:29:47] Naturally,

[00:29:47] subscribe so you never miss an episode.

[00:29:49] But would you rate and leave an honest written review on Apple Podcasts?

[00:29:53] Does a lot for us here at the show.

[00:29:55] And I appreciate reading your thoughts.

[00:29:58] Great guests make for a great show.

[00:30:00] If you know of another island who would be a great guest,

[00:30:03] or you yourself have interest in being a guest,

[00:30:06] well,

[00:30:06] get on our radar.

[00:30:08] Visit Investing in Iowa to fill out an application or recommend a guest.

[00:30:13] And if you want to connect with me one-on-one,

[00:30:15] go LegacyImpactInvestors.com.

[00:30:19] Click on the Invest With Us button in the top right corner.

[00:30:22] And there,

[00:30:22] you can pick a time for the two of us to get on the calendar and connect.

[00:30:26] Until next time,

[00:30:27] keep investing in Iowa.