Want to know how today’s guest doubled her cash flow by switching from long-term to medium-term rentals? Sarah Weaver is a coach, speaker, real estate investor, and entrepreneur. She joins Zeona McIntyre for a deep dive into their book, 30-Day Stay: A Real Estate Investor’s Guide to Mastering the Medium-Term Rental. Sarah has found success investing and managing medium-term rentals, but that wasn’t always the case. In this episode, she shares her journey, her mindset going into deals, and different strategies that help her close them. The two also delve into property management, creative financing, furnishing, tenant relationships, and their experiences with medium-term rental properties. Plus, learn about Sarah’s retreat for investors, where she encourages them to live their life and enjoy the reaps of their investments. Tune in to this jam-packed episode to learn more about Sarah’s journey and get useful tips!
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Watch the episode here
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30-Day Stay: A Real Estate Investor’s Guide To Mastering The Medium-Term Rental With Sarah Weaver
Sarah Weaver and I are doing a show takeover. We wrote the book for BiggerPockets called 30-Day Stay: A Real Estate Investor’s Guide to Mastering the Medium-Term Rental. We’re here to do a deep dive into our book, some of her deals, and her mindset. This is a different episode, so this is a good one. Stick around to the end. We go into some creative financing. We talk about being a digital nomad and how she invests from thousands of miles away. We go into furnishing, which is usually a big question for a lot of people. This is jam-packed with good info. I’m excited to bring her on. Without further ado, let’s get Sarah on the show.
Sarah Weaver, welcome back for episode two with us.
Thanks for having me.
The main reason I have you here is because we wrote a book.
It was that easy.
It seemed like that. If I think back to the stressful times, I don’t think I was dying that much, but it happened so quickly. For readers, a timeline of a normal book is two years, and for us, we started talking to BiggerPockets at BiggerPockets Conference in October 2021. They said yes to us in December. We were writing in January, and we had it done by March. How was that for you? It was fast.
If I had a reality TV show, picture me two-handed on the keyboard, and then I would say something. I’d be like, “That was good,” then I’d write again. I love writing. As an extrovert, I thought, “I wouldn’t be interested in sitting in a room alone and writing books,” but the reality is I love it.
For me, it’s therapeutic. Writing a book was a spiritual practice. It was not only confronting all of these things. It was doubts, Imposter syndrome and, “Can I do it?” It was also vulnerability and depth. We both were like, “We cried in that chapter,” then recalling stories and laughing. It’s a beautiful experience. If anyone has an inclination to do it, even if you don’t feel like that many people will read it, your friends and your mom probably would. Maybe get out there and write yourself a book.
You need to applaud yourself because we got vulnerable in the book. We talked about where we came from versus where we are. As real estate investors, people focus a lot on like, “Look how many doors I have. Look how much cashflow I have.” We did a good job in the book talking about the true journey we took to get there. We both came from not much money, and we both had a lot of things that were not handed to us, yet we still made a choice. We are scrappy real estate investors that were like, “We don’t need a high-income or a double-income household to make this possible.” That’s the story that we’re trying to tell in the book.
I wanted to make it feel relatable and accessible for anybody, no matter where they came from. This is a fun thing that we could talk about a little bit. Where did we come from? We both grew up in different areas of the US, but we found out trucking along in St. Louis and a U-Haul that both of our moms had been cleaning ladies and how cool it is fast forward that we employ cleaning ladies in multiple states. I don’t know about you, but some of my cleaning ladies are mamas and they’re bringing their babies. It’s sweet for me to see that because I remember sometimes going with my mom to clean and watch a movie or something because she didn’t have childcare.
That’s exactly how I grew up. My dad worked for a home builder, and my mom would clean the new construction houses. Back then, we had TVs that were 2 feet deep and 1 foot wide. I could carry that by myself, and then my brother would carry our Nintendo 64 with the controllers and many cords back then. My mom would quickly clean a room, put my brother and me in it, and tell us what bathroom we were allowed to use because we were kids. We use all four bathrooms, and she’d be like, “You have to clean them again.” That was my childhood. I grew up playing on dirt piles and hanging out in new construction houses.
How do you feel that molded you coming from something simple? It’s different than having it easy, in a way.
I look at what my parents gave me and haven’t given me. It’s important to focus on what they have given me first. We’ll get to that. I wasn’t handed a silver spoon. I paid for college by myself. I had a job when I was fourteen, and I’ve worked ever since. My parents were supportive emotionally. My mom still gives me incredible boy and friendly advice. If I ever don’t know what to bring to a party, she’s the first person I call. She’s good at that stuff.
Am I going to have her look over my bookkeeping or my essay? Probably not. They gave me a lot of great soft skills, and lovingly, they also taught me what not to do. I didn’t want to work with my hands. My mom does actual backbreaking work. She cleans large 3,000-square-foot homes and has to carry all of her supplies and clean the house. She’s scrubbing floors on her hands and knees. My grandfather looked at me and said, “I want you to work with your head and not your hands.”
My parents showed me what not to do as well, and most of it was in the financial realm. I saw money come, but money immediately evaporated. They could never hold onto anything. When you’re a kid, you don’t realize that there’s something different. It took me a while to see. I don’t know that everyone else is struggling. It doesn’t look like that, and I wonder if there’s some other way. In high school, my mom and I both got into reading about wealth. It was great that she set me on that path. I took it far. It is sweet how you can grow with your parents. We think like, “They already know everything,” but as I’m getting to the age where most of my friends are becoming parents, I’m like, “We didn’t have anything figured out.” Why this topic? Why right now?
Medium-term rental is, hands down, the rocket fuel that was dosed on my portfolio. I own 19 units in 4 states. It’s eight properties. It’s only one single-family, and the rest are duplexes and fourplexes. My long-term rentals cashflow well because I was buying when interest rates were 3% and at market price or just below. I’m doing a little bit of value add in the renovation. It was working.
I don’t want to say anything negative about long-term rentals. Half my portfolios are long-term, and half my portfolios are medium-term. I realized I was not going to get where I wanted to go with long-term rentals fast enough. Where did I want to go? I wanted to replace my W-2 income so that I could branch out and be a solo entrepreneur. I looked at the clock, and I was like, “It’s going to take me five years to do this with long-term rentals.”
It’s not even that long.
My only flaw is impatience. Thankfully, I found the medium-term rental strategy because it doubled my cashflow on the nine units that I decided to furnish, and I was able to quit my job much faster.
One thing I want to point out is you bought your long-term rentals a while ago. When you bought them, maybe they didn’t cashflow that well, and it didn’t seem that exciting, but this is why we buy and hold because, over time, rents go up, and your mortgage doesn’t change that much. It does build in more cushion if you can hold onto it. You were able to renovate those with your dad and whatnot. You’ve got some time or room for them to grow without feeling like you need to add too much to them now.
I bought a single-family in 2017. I was using the rent-by-the-room strategy. I was getting $2,300 in 2018. What’s wild is that now that I’ve switched back to a traditional long-term rental with one tenant, I’m getting $2,400. I’ve only been able to increase rent by $100 over four years. What it was was being able to buy with little money down. I did the house hacking strategy for my first three properties, and that’s what made my long-term rental such a good deal.
I’m always telling people, “House hack if you can. That’s the first thing. Other than that, get creative if you can’t.” Let’s talk a little bit about mindset because it seems like that was important for you to include in the book. When you guys get our book, there are some little areas where we have little mindset check-ins and stop along the way. Tell us how that affects your investing now.
I’m glad you brought up mindset because people love to ask me like, “How did you do it? How did you go from 3 to 15 units in 93 days?” While that sounds like a great headline for a show, there’s a lot that went into it. People don’t like my answer because it’s the mindset. How did I do it? Mindset. They’re like, “How did you do it?” I’m like, “Mindset.”
What I mean when I say that is I made a decision that I’m a real estate investor. It wasn’t like I was doing this job over here, and then I also was investing in real estate. I started introducing and thinking of myself as a real estate investor and then started employing the habits of a real estate investor. I didn’t just analyze a deal a day or a week. I was analyzing 5 to 10 deals a day. When one strategy didn’t work, I pivoted to another. When a mentor told me that I was looking at too many markets, I listened to her and focused on 2 markets with 1 or 2 strategies. All of that came down to where I made the decision to be an investor, and then I did the habits that it required.
I feel like you got good feedback, too, because the universe was like, “I’m going to say no, and I’m going to stop you a lot of times before you made the change.” It wasn’t just like I woke up one day, got this perfect mindset, and like, “Everything is going to work for me.” It was like you were putting in offers all over the place, and nothing was working. Tell people a little about that period because I think there are probably a lot of people now with high-interest rates that are running numbers and can’t find things that work and are probably pretty frustrated.
That’s exactly the word I was going to use. If you are reading this and are frustrated, that’s exactly how I felt. My life was Instagram versus reality. For those of you that know that phrase. On Instagram, I was posting about van life, living in New Zealand during the pandemic while everyone was in the US and dealing with the pandemic. Everyone was like, “You’re lucky.” The reality was I was in a van somewhere beautiful, but I was in that van crying every time a deal didn’t work out. Every time someone rejected an offer, I was like, “Why is everyone else able to figure this out? Sylvia is going under contract, and Corey just bought another deal. Why me?”
I was sitting in my van and frustrated. I realized that every time I wrote an offer, I was going into it with, “This probably isn’t going to get accepted anyway.” It didn’t help at all. I got advice like, “You’re not going under contract because you don’t believe you’re going under contract.” My reaction to that was, “That’s not helpful either,” because I was frustrated. It’s like when you’re angry, and your partner’s like, “Why are you mad?” You’re like, “Err.”
If you are frustrated, know that it will work out and your frustration’s not serving you. There’s this great video that I like to show my coaching clients. They call it being above the line and below the line, “Was I living below the line?” I was playing the victim. I was pointing blame at everyone and the whole, “Why me?” What I realized is that every time I got an offer rejected, I couldn’t find a property, or whatever the challenge was, I had to step back and take what I call a 13,000-foot view and see, “This is happening for a reason. I don’t think that I should be investing in Ohio or Texas. The universe is telling me to focus here.” I listened to those signs and started seeing results.If you are reading this and you are frustrated, know that it will work out and your frustration's not serving you. Click To Tweet
Tell us a little bit about what you’ve bought since because people love going into the deals, and we do that in every show. I know you’ve picked up quite a few properties since. Let’s talk about those and how they all worked out.
You had me on the show back in February of 2021, and I owned three units. I owned a single family and a duplex. Since then, I have bought fourplexes and duplexes. I’m happy to go through how I finance them because that’s the fascinating part.
Let’s go into the first deal a lot. If there are some tidbits from the others, we can do that. Give us the rundown of how you found it, how much you paid for it, and all of that.
The first deal that I bought was from New Zealand. I was writing offers on things site unseen in one in a town I had never even been to and another in a town that I’d never visited this part before. I was writing offers in both Omaha and Des Moines. My investor-friendly agent texted me after I texted him a little push of a nudge about what I was looking for. I sent him my crystal clear deal criteria, and four days later, he sent me an off-market fourplex. It was owned by two commercial real estate agents that wanted to play flipper. It wasn’t working. It was a failed flip, in a way. I bought it from them.
The reason that I was excited about this particular deal is it was off-market. I knew I didn’t have any other competition, at least not yet, and I believed that we could convince them to accept a 3.5% FHA owner-occupied loan, which was in May of 2021, the height of the frenzy of real estate investors buying a lot of property as well as your residential buyers buying a lot of property. Not very many people were accepting FHA. The reason being is that FHA does have a couple of extra criteria throughout the inspection period. The bank requires it because it’s a federally backed loan. What that means for a seller is that it might not make it to close. If you are going to offer a 25% down conventional or all cash, those are a lot more attractive than a 3.5% down payment using an FHA loan.
We convince them they’re commercial brokers. We said, “This investor Sarah is serious. If FHA doesn’t work out, she’ll simply switch to a regular investment property loan. No problem.” To my agent’s surprise, they accepted that. I was able to buy a fourplex because one of the units was vacant. That would be the unit that I would occupy. The other three were long-term inherited tenants. The guys did a good job fixing up the property. The inspection was clean, they got the property almost completed, 2 of the units were completely updated, and 2 of them are partially updated. I was able to offer $320,000. They accepted, and that meant I only had to bring $12,000 to the table.
What had changed for you where you were like, “I know beyond a shadow of a doubt these people aren’t going to accept this offer?” Were you visualizing, writing it in your journal, and meditating on that? Sometimes I like to take the address, and I put my name and write my name with the address over and over as if I lived there.
I love that. I don’t remember exactly what I did as far as what gave me that confidence, but a lot of it, frankly was like false confidence. I’m like, “This is going to work. This has to work,” because everyone had been telling me that my negative attitude wasn’t getting me anywhere, so I went in optimistic. Don’t get me wrong. Sometimes it felt fake. I vividly remember I got an offer rejected. I liked this property. I said, “I’m glad that wasn’t accepted. That means I’m one step closer to the deal I’m supposed to have.”
Do you believe that now?
I do now, but when I was saying that, I was rolling my eyes. I was like, “This is the stupidest thing I’ve ever done.” They tell me that it works, and look, it worked.
You have these inherited tenants. This probably points toward you having done some renovations before. Omaha is not terribly far from your parents. It is kind of far. What made you feel brave enough to take on a place that was like partially renovated?
It was partially updated. The units were completely rent-ready, 2 of them were beautiful, and 2 of them were a little shabby. I didn’t need to do any renovations. It was essentially turnkey. It’s three and a half hours away from my parents. There wasn’t a way where I was going to say, “Can you go and renovate a kitchen?” My parents both still work full-time. This is true. This wasn’t false confidence. I knew I could do this. What gave the confidence was I joined a mastermind with other out-of-state investors, and they were doing it. I was like, “If they can do it, I can do it.”
I was able to pick up the phone and, “What do I do now? What about this?” I like to have people 2 or 10 steps ahead of me rather than 100 steps ahead of me because the people 100 steps ahead of you are your goal. That’s where I’m going. I want to be the investor with1,000 units, but they don’t remember how frustrating or scary it is to buy their first property out of state and, in this case, out of the country. I spoke to a lot of people that were 2 or 10 steps ahead of me.Have people two steps or maybe even 10 steps ahead rather than a hundred steps ahead of you. Click To Tweet
What about these markets? How did you find Omaha and Des Moines? They sound a little bit unexpected.
I have criteria for my market. We go into detail in the book, but I’ll quickly say them. I want to look at population growth, job growth, meaning there are more jobs, and wage growth, meaning they’re going to get paid more money so that I can increase rent over time. I want there to be a low crime. That’s important. I also want areas where I’m getting deal flow. I could be in love with Nashville, Tennessee, but if I don’t have an agent sending me viable available deals, it doesn’t matter that Nashville matches all my criteria. I had to have an investor-friendly agent in that market.
Let’s finish up that deal. You inherited three tenants, which sometimes is not great for people. We heard a horror story about that. What were you paying in a mortgage? What were you getting on the get-go? I imagine you swapped out some tenants and what you get later on.
I furnished the unit I was living in because I was living there and posted that on Airbnb. My plan was to have guests on the weekends. I stay at my grandparents’ house or go on a trip. I then had three inherited tenants. Fate would have it. The tenant below me left in the middle of the night. I have no idea what happened or why, but when good things happen, you don’t question it. I quickly cleaned her unit and furnished that unit, and put that unit on Airbnb. I had two tenants whose leases weren’t up for another 6 and 8 months. I tried my best to make nice to them. One of them is super pleasant and still lives there. She’s a fantastic tenant. The other one was incredibly rude.
He would send emails thinking that he was emailing a property management company in all caps and say, “THE LANDLORD IS AN ASSHOLE.” That was the subject line. I was like, “He has no idea he’s emailing me.” He was not pleasant, yet he paid rent on time. I went back to mindset and was like, “Clearly, this is an issue with him and not an issue with me. I’m going to keep depositing his checks and count down the days until I can send him a notice of non-renewal when his lease is up,” which is exactly what I did when he moved out and I furnished his unit as well.
The numbers on this, my PITI or Principal Interest Tax and Insurance, is $2,017. I pay utilities. Keep in mind with the medium-term rental strategy that you are paying utilities on the units that are furnished, and then I’m handling the lawn care because it’s a four-unit. It’s about $300 a unit and then maybe another $100 to $200 a month in lawn care. Those are rough estimates. Every month is different when there’s inclement weather. Those are the three units that are furnished, and they are bringing in $1,875 each. They’re 1 bedroom and 1 bath-unit. They’re making $1,875. My long-term tenant pays $830. It’s about $5,700 a month, and my PITI is only $2,017.
It sounds like that’s moved up a lot. When you first got started, you were like, “Can I do $1,500 or $1,550?” We’ve had some conversations about where I was saying, “I play with it.” It’s a little bit of the Wild West out there with the medium-term rentals. I would say like, “When a tenant leaves, let me try to list it for another $100 or $50 and see if somebody bites. It only takes one. If they don’t, then I adjust it.” Have you found that you’ve been able to creep it up? That sounds high.
Thanks to you. You gave me confidence. What I love about Furnished Finder is that it’s just a listing site, not a booking site. We can go in and put in any number that we want. If I want to list it for $2,200 to see if anyone will pay that, I can do that. That’s exactly what I did. What’s wild is I was looking back through my notes. When I first analyzed this deal when I was under contract, I thought I was going to get $1,250 for a furnished unit, and the numbers were still fantastic.
The great thing about doing owner-occupied is that it’s such great cash-on-cash. It does negatively affect your cashflow because your monthly payment is a little bit higher. Even with 25% down, I was looking at 37% cash-on-cash. What I ended up getting in reality now is $1,875. That happened quickly. I listed the first one for $1,250, then the next one for $1,375, then $1,675, and now I’m at $1,875 with no problem. It’s important to note that I’m at 97% occupancy in my three furnished units in that building.
The furniture makes a huge difference. You’re fortunate that you have this eye for design. That’s probably helped you. Tell us a little bit about furnishing your 1st and 2nd unit. As I understood it, the first unit you were in didn’t feel like you had a lot of money, and you had to scrap it together. What did you learn between those two?
What was great is I had had a turnover in my single-family that I had been doing the rent-by-the-room strategy. I had furnished partial of that house. My lovely parents or I like to call them my team, packed up that furniture from that single-family and drove at U-Haul for three and a half hours, and then dumped that furniture into the one-bedroom unit.
A lot of that furniture, thankfully, I already had owned, which saved me a ton of money. To your point, my next couple of units didn’t have furniture that I could just from my other rental. I did have to start purchasing furniture. What I found is that you have to make a time versus money decision. If you have a bunch of time, you can save money. You can drive all over town picking up $10 Keurigs. If you don’t have time, you click a button and buy an $89 Keurig on Target.com or Amazon.
It makes it so much quicker. What I’ve found is when I first started furnishing units, it could be two weeks of going around, checking out garage sales, and trying to time everything. In the last unit we furnished, we did it in 3 or 4 days. It’s super fast. You have to be a little bit strategic about checking the dates and making sure everything’s going to come in the window of time. Towards the end, you’re just like,” We’re waiting for this rug to show up.” I prefer the new stuff now. With the new stuff, if you buy it with the right materials, it can last a lot better.
You can now do a unit in three days. I did one in two days. I physically put in the furniture because I hired help. I had three guys meet me at the house. They were unpacking boxes. They were putting couches together. It was beautiful. I was like, “Why I hadn’t always done that?” and I was like, “I didn’t always have money.” That helps a lot, granted it is expensive. It was amazing. However, it’s important that we talk about all of the prep time that goes in before that. I talk about in the book that we have a Furnished Tracker.
My virtual assistant or I are tracking every product I’ve ordered and the expected or actual delivery date because things don’t show up, and you’re like, “Amazon doesn’t charge me for that because that doesn’t show up.” There is some admin that goes into the lead time before. What’s important is that if you time it right, your unit is vacant much shorter period. Before, that’s two weeks of your unit being vacant. Whereas now, if you have the prep time prior, you can make it so that your unit is only vacant for 3 to 10 days. That means the money is in your pocket.
We talked a little bit about community and how important that is. If you guys are looking for a community online where you can learn about Airbnb’s short-term or medium-term rentals that are furnished, check out Airbnb Investing. We have a community on Facebook. We also do meetups live in Boulder. I put fresh content in there every week. I do Facebook Live. If you have questions for me, post them there, and I will answer your questions live. Let’s talk a little bit about the vacancy and medium-term rentals because this is something I love. I personally have five long-term rental units. Even though they can be hands-off in certain ways where I have a management company that does it, I find that they’re slow.
It’s because I came from a short-term rental place, but I’m like, “If somebody has told you they’re moving out, why are we not marketing it now? Why do you want to wait to go see it when it’s empty?” I understand you need to see if there’s damage, but can we walk through the property now?” Everything happens slowly. I find that you lose 2 to 4 four weeks because of that. With a short and medium-term rentals, that doesn’t happen. Tell us a little bit about that.
I’m experiencing that with one of my long-term units. I handed it over to a property management company. It’s my only property that’s being managed by a property management company. It has been vacant for three and a half weeks. It is very frustrating. When they find me a tenant, they’re still going to charge me the first month’s rent. I’m like, “You should be losing money because you kept it.”
Why do I love the medium-term rental strategy? One of the many reasons is the vacancy. We keep vacancy low. There are multiple times when I will have someone move out at 10:00 AM and someone new move in at 3:00 PM. That means 100% occupancy for that unit. I am missing no money. The other thing that’s happened a couple of times for me is that the nurses are extending their contracts. For those of you that don’t know, most of my units are traveling nurses. They typically take thirteen-week contracts at the hospital. About 3 to 4 weeks before their contract ends, they sometimes get asked to extend and stay again or renew their contract. That has happened 47% of the time with my tenant. That helps me. I track everything.Why love the medium-term rental strategy? One of the many reasons is we keep vacancy really, really low. Click To Tweet
We are in a good hospital system. I will continue to buy medium-term rentals in Omaha. My tenants are happy and satisfied. The units are cute. They’re well-maintained. When there is a maintenance request, we take care of it the same day if possible. My tenants are happy, and they’re extending. That means no vacancy for six months, which means money in my pocket.
I found that it depends on how long they’ve stayed, but sometimes I like to put a day in between for surprises like you don’t know what you’re walking into. Especially if they have pets, sometimes it’s nice to have a day in between. I have found that there is much demand that you can very often have somebody come on the same day. It blows my mind when I think about these long-term rentals where they’re like, “We need to paint. We need to change the flooring.'”
I’m like, “Do you? Is it that different?” These people stayed for half a year, and I haven’t painted in four years. I don’t know if that’s always true. Maybe it’s the way people have always done it, but I like to question that norm. This has taken us back a little bit. To owner occupy this unit, you had to leave this van in New Zealand. How was that? You wanted to be a real estate investor, but moving to Omaha was probably not the highest thing on your list. Can you tell us about the sacrifices and how they worked for you?
It was a giant sacrifice. I cried a lot. I cry all the time, usually happy tears. A birthday card or commercial can make me cry. In this case, it was sad sobs because I was giving up a part of my identity. A part of my identity was that I was cool and lived abroad. I was in a van. I was this gypsy but also had a full-time job and was investing in real estate. I felt like I was giving up a part of my identity. That was hard. Not to even mention that it was sad to leave this beautiful country that had no COVID cases. It was paradise.
I sold the van for $300 left than what I bought it for fifteen months earlier. I lived in the van. That was an amazing purchase and another investment. I then moved to Nebraska. There were some personal reasons. I was ready to be near family. My grandparents live 45 minutes away from the property. My parents lived three and a half hours, which seems far, but that’s not far when you’ve been living on an island in the Pacific Ocean. There were some personal reasons that I wanted to move there. The thing that I could come back to all the time was this phrase, “Delayed gratification.” I was willing to give up a part of my identity and life abroad to move to a town that I had barely even ever been to and live amongst my tenants. Granted, I had my own one-bedroom unit, but my tenants lived in the building.
The answer was yes because everything is temporary. I knew that if I moved there and hated it, I would move again. If I moved there and hated it, I would suck it up for a year. The great thing about owner-occupied is that you intend to live in the property for a year. They’re not going to make you live there for 10 or 5 years. The power of the mortgage system in the United States is that you could house hack every year until they are like, “You’re done,” or you hit your ten conventional loans.
Sometimes they’re like, “We see what you’re doing here.” That’s powerful as an investor that’s willing to make that sacrifice. Am I on this show trying to convince families of five to move to Omaha, Nebraska? No. If you have a lovely situation and live in a cool place, I’m not telling you to move to Nebraska. That’s just my story. I knew that delayed gratification was going to slingshot me to where I was going, and I was right.
Let’s switch gears a little bit and talk about these events that you lead. We were talking about how important it is to have a community. Your events give people an opportunity to get together with other investors. Some people live in an investor desert. They don’t know how to connect with other investors, and people in their lives don’t care about real estate. I’ve had that at certain times in my life. Tell us a little bit about what you do at your events and why that might be good for somebody.
My company came out of a need I saw in the community, and it’s exactly what you’re talking about. A lot of people feel like they don’t have anyone to talk to. What do they do? They go to the people they trust, like, and know and start talking about real estate investing and start to get discouraged. Your uncle is like, “I knew a guy who owned a rental property, and it was terrible.” It’s a quick way to let self-doubt seep back in. I believe that you’re not meant to be lonely. This way we live, we all like to run off, get our own apartments, and live alone is not like the way that humans were designed. We were designed to be in a community with one another and have true connections. Social media, paired with the pandemic, has left a lot of people feeling disconnected and lonely.
The other phenomenon that I see happening is that we get real estate investors or anyone pursuing financial independence. They get it. They reach financial independence and go, “Now what?” My desire is to serve the investor community by giving them the connection they crave, the community they deserve, and some fun. If you are making even $5,000 a month cashflow, go on vacation. People tell me all the time, “You’re lucky that you get to travel. I’ve always wanted to go to Machu Picchu. I’ve always wanted to hike Patagonia.”
I always have to hold my breath or bite my tongue because I want to say, “Why don’t you? Buy the plane ticket.” The reality is that they are scared. I have tons of people asking me how I travel and how I do it. I’ll sit down and tell them about credit card hacking, how I find cheap flights, and how I travel, then six months later, I check in with them, and guess what they’ve done? Nothing. I realized, “I have to make it easier for them.” That’s when I started organizing trips. I’m taking 22 investors on 2 different weeks down to Patagonia to hike the W Trek. This is not a real estate seminar. There are no speakers or presentations. We are going to be in a community with other real estate investors. We can’t help ourselves. We’re going to talk about real estate investing, but it’s going to be over a beer after a long day of hiking, or I’ll be out of breath talking about cross-segregation.
My fit friends of mine will have a more breathful conversation. The point is that I want people to live. I heard a terrible story of someone that had an Antarctica trip planned for her 40th birthday, and she suffered a massive stroke at 39. I had someone who had saved up all their money, had retired early, and then their husband felt ill. My biggest urge for people is, “Don’t wait. Your life is meant to be lived.” I hope that people get that from my trip or on their own, and I’m passionate about helping people do this.
Community is important, especially for people starting out, women, and people that are just being told, “You can’t do that.” You do see many people on Instagram and TikTok that are doing it, and we’re not lying. You guys can do it too. It’s about finding those people, whether through meetups or events like this or conferences, which we go to a lot of those, and they’re super great for that. Check out Sarah’s events. How can people find it?
If they go to SarahDWeaver.com, they’re listed there. They also can find me on Instagram @SarahDWeaver. One of the things I want to bring up is the events are super cool. You’re going to have a ton of fun at the event, but I don’t do what I do for the event. I do it because of what I call the after-effect. What happens afterward is that people go back home and tell their boss that they’re exhausted. I had that happen. This girl’s boss now gives her flex Fridays. She gets Fridays off to focus on her real estate investing. What she’s decided is she still goes into the office, but she spends the first three hours on Fridays catching up on her personal admin, her inbox, and analyzing deals. She’s happier, and her boss is happy to keep her because he doesn’t want to lose her.
I also had someone who went home and had a tough conversation with their spouse that they were unhappy. I’m not giving seminars on how to talk to your boss or talk to your husband. Those are things I’m not necessarily qualified to do. What I do provide at the events is a sense of confidence. Someone said that she felt like she got her voice back. That’s why I do what I do. Also, the amount of offers that people write. They go under contract more. They experience more cashflow, which then gives them more freedom to be a better husband, parent, or friend. That’s why I do what I do, and that’s why the events are special.The more offers people write and get under contract, they experience more cash flow which then gives them more freedom to be a better husband or a better parent or a better friend. Click To Tweet
Go check out Sarah’s events because they sound great. Let’s switch gears. We’re going to do the end of the show a little bit differently because you’ve been on the show before. I don’t want to ask you the same questions. I want to do one deep dive into your favorite deal. Do you have any other deals you’re excited about that came later?
Let’s talk about my property.
Where is it?
It’s in Des Moines, Iowa.
What did you pay for this property?
How did you find it?
My investor-friendly real estate agent found it for me.
They texted it to you. Nowadays, you don’t have to do anything. They come right into your inbox. This means you laid the groundwork, built a relationship, told them what you’re looking for, and now whenever they see those properties, they go, “This makes me think of Sarah.” It does take a little legwork, but once you build those relationships, it can be profitable. What is it? Is it a quad or a duplex?
It’s an up-down duplex. It’s a 2-bedroom and 1-bath on the bottom and a 2-bedroom and 1-bath on the top.
One thing I love about this configuration is that it gives you options. I don’t know yet if you are doing short-term or medium-term rental but what’s cool is that short-term rentals generally work well on four bedrooms plus or those bigger properties because you’re trying to get heads and beds, charging per person, and you want to get two families if you can and charge a lot. In the slower times, maybe you rent out the two units individually, or you get nurses in there which they generally want a smaller unit. It’s nice to have a property that can change with the times and the real estate cycles.
What I did is I have a medium-term tenant on top. I furnished the top unit. That unit was vacant when I purchased it. On the bottom unit is an inherited long-term tenant.
Did you buy this off-market? Did it come on the MLS?
It was off-market.
What’s your PITI? What are you getting for rent?
The principal, interest, tax, and insurance are $884. I closed on April 8th, 2022. These are not 2017 numbers. This is 2022. The bottom inherited tenant, the market rent for her unit is probably $950 to $1,000, and she’s just below that.
That pays the whole thing.
She’s a little below that. She’s at $850 and has been a great tenant. I’m going to keep her in, especially since it’s fall in Des Moines. We’re going to go into winter. I’m not going to raise her rent. In the spring, I do plan on raising her rent. She’s a great tenant. That’s been going well. The top unit was vacant. I went in and furnished it. We listed it for $1,700, then I raised it to $1,850. Now I have someone moving in for $1,900.
Sometimes I buy deals that are good enough, and over time, they get good. I usually don’t buy crazy and knock them out of the parks. I get a couple of those, but it seems like your numbers are always super incredible. It’s great to see that. I also want to tell people that if you’re having a hard time finding this, don’t be strict about, “I told myself I’m going to have a 15% cash-on-cash return.” If you find a 14% or 13.5%, go for it because they get better over time. Your first deal might not be the crazy out-of-the-park one.” Sarah’s first deal, she’s still making $100 more than she originally made. It doesn’t have to be such crazy numbers, but this is cool to see that they exist out there even now.
Here is the funny oversight that I made on this property. I’m in the unit. I happened to be in Des Moines. I had bought something the week prior and was in town furnishing it. I was able to attend the final walkthrough. I had never done it myself before because I’ve always been out of state or country. I’m pleasantly surprised. It was my first time inside the unit. I’m upstairs because it’s an up-down duplex.
I’m in the vacant unit upstairs, and I’m looking out the window. My agent is with me, and I say, “Who owns the unit or the lot next door?” He looks at me and laughs. I was like, “I don’t understand.” He’s like, “You own it.” I didn’t realize that the property came with a vacant lot next door. I now have this vacant lot. I’m in conversations with the city. I’m going to sever the lots and build. For $180,000, I bought an up-down duplex that’s bringing in $2,700 a month in rental income, and it came with a vacant unit next door.
I bought a place with a vacant unit, and it ended up being a huge yard. I never did anything with it. I ended up selling that property later, but I remember looking into it. It can be complicated to do the building, but that could be such a fun adventure. I hope you do develop it. How did you do the financing for this place?
I have a partner with this deal. I did an equity partnership. I probably learned how to set it up from you. Thank you. What I did is I found someone who was willing to get the loan and bring the down payment and any repairs needed. We split equity and cashflow.
Did you find the deal? Did you pay for the furniture? Did you pay for anything? How did that work?
I tried not to pay for anything, but my partner is a very good negotiator. She was like, “You’re going to pay for furniture.” I was like, “That’s fair.” I found the deal, managed the deal, and paid for furniture. If we have medium-term tenants in both units, the bottom and the top, I also charge a management fee.
It’s important for people to see that even though a lot of people default to the 50/50 split, it’s basically anything you can negotiate. There’s no norm. Everything is negotiable. Get bold and see what you can get. That sounds great. It’s not always a perfect situation. Are there any downsides to this property? Is it pretty old? Des Moines has some annoying rental licensing that you have to jump through some hoops. What are some downsides, so people don’t go, “Sarah is so lucky.”
In Urbandale, Iowa, which is the suburb that my other properties are in, they have this licensing. You have to go through this in-depth inspection. It’s going to cost you money to have the inspection, and then they’re going to tell you things that are wrong with it. You have to fix those and pay for the inspection again. In Urbandale, Iowa, I am running into that. For this particular property, it is in a less desirable neighborhood. That’s probably reflected by the purchase price of $180,000. The safety of my tenants is something that’s important to me. I have added security cameras and flood lights. Thankfully there’s been no issues with safety, but it is a less desirable neighborhood. It’s not dangerous. I feel good about having that as a medium-term tenant unit, but it’s not the best part of town.
There is an ongoing plumbing issue. I did buy this completely turnkey. When you buy something turnkey, you could be buying something where someone cut corners, and that’s exactly what happened. I believe I spent about $700 figuring out what the problem was, and then I’m probably going to have to spend about $2,700 to $3,200 on resolving this issue. It’s not ideal. Because of the increased cashflow, that money is coming out of the bank.
There are reserves in the bank. I don’t have to take that dreaded phone call to call my partner and say, “We got a problem. We need more money.” There’s money in the bank. That money is coming out of the bank account. It’s all about mindset. I was able to get this property at such a low price because there are some issues that I’m going to have to deal with over time. In the scheme of things, if it costs me $4,000, there’s money in the bank, and that’s what the money’s for.It’s all about mindset. Click To Tweet
That’s why it’s important to have reserves, even if you’re sharing them between your properties. It’s always nice because there are always surprises. It’s funny when people buy a home, and they’re like, “I didn’t know I’d have to fix stuff.” I’m like, “That’s what it is. If you don’t buy a brand new home, and even if you do buy a brand new home, there’s always things.” Thank you much for your time. Do you have any parting words of wisdom for the readers before we wrap up?
Buy our book 30-Day Stay and then take action. I can’t tell you how many books I buy, and then they just sit on a shelf or courses that I pay for, and then I don’t go through the course. My hope is that you not only buy our book but take action, and you’re messaging both of us on Instagram, saying, “I did it. I have a medium rental now.” That is why we wrote the book. We didn’t write the book for our own enjoyment. We wrote it because we believe in this strategy. We want people to experience increased cashflow as we have.
If you guys are buying the book before November 10, 2022, we have a ton of cool bonus materials that you get. You get a spreadsheet on how to do some deal analysis. You’re going to get a furnishing checklist that helps you figure out what you need to buy for your unit. We have a couple of behind-the-scenes interviews we did, some with other investors, some just ourselves. We have a Q&A that’s going to be live that we’ll be doing in December 2022. We’ll be talking to anybody who pre-ordered the book. Last but not least, somebody can win a one-on-one with us. If you’re interested in the book, go to BiggerPockets.com/30DayStay. Sarah, thank you so much for being here.
Thanks for having me. I appreciate it.
That was Sarah Weaver. I enjoyed this conversation with Sarah. I had a bunch of notes over here. I was like, “Can we talk about inherited tenants? Can we talk more about creative financing?” Sarah’s done a lot in a short period of time, and because I know her well, we have a lot of crossover and a lot of things that we can bring up and talk about. Thanks for sticking around for a slightly longer episode. It was a great conversation. I hope you guys got a lot out of it. When you buy our book, please tag Sarah and me because it’s been fun to see all the different people, get on the radar, and build relationships with people who will be reading our book and asking us questions down the line.
Check out my Facebook group Airbnb Investing. That’s a great place to ask me questions about the book. I will be going into different strategies there. We do Facebook Lives, and then you have a great community all over the US chatting up with each other, asking questions, and answering questions. It’s a great group of supportive people. I highly recommend it. As usual, we always ask for a rating and review. If you like our show, the most powerful thing to do is share it with one person even that you think could benefit from hearing about medium-term rentals, learning about mindset, getting into financial independence, and anything like that. We would be happy to bring them into our community. With that, I’m going to leave you guys for this episode. Thank you so much.
- 30-Day Stay: A Real Estate Investor’s Guide to Mastering the Medium-Term Rental
- Sarah Weaver
- Episode 20 – Living The Travel Hacker FI Life W’ Real Estate Investing NOW – Not Later! With Sarah Weaverhow – Past Episode
- Furnished Finder
- Airbnb Investing – Facebook
- @SarahDWeaver – Instagram
- http://www.RentRedi.com – CODE: INVEST2FI
- https://www.Kapre.com/ – Use Our Code – Invest2