How a Couple Used a HELOC to Buy their 4th Rental Property

So from buying it four and a half years ago, our value has gone up $200,000. Now we walked away with a HELOC of $223,000. That's Kelly, a stay-at-home mom turned real estate investor who shares how she and her husband took out a HELOC loan to buy their next rental property. You just gave me $223,000. I'm going to hit the MLS right now. In this episode, you'll learn the benefits of using a HELOC. It's one more property that we could work on without having to partner or use any kind of lender. We're our own lender on this one. The unexpected challenges which sprung up with their new property. And this is the worst house on the street. And they just cut open walls and opened doorways wider and then just left things unfinished. And then we went into the garage and there was a chicken coop, or so we thought. And how they were able to keep their remodel project, $4,300 under budget. And just being scrappy shoppers. My husband's in there negotiating with Lowe's for a discount on appliances that are on clearance and haggling with people on Facebook Marketplace. And now we're going to dig into all of that and more. All right, so Kelly, welcome back to the podcast and can't wait to dig into a new rental property you have. And we have the opportunity to talk all the time. You're kind of the secret, the magic behind the YouTube channel. People don't know this, but Kelly makes our YouTube thumbnails, all the social media stuff you see behind the scenes, a lot of communication. So just thank you publicly for that, first of all, before we jump into this. Thank you, love working with our team. Have a great team. I want to dig into the details. I love the numbers of rental properties and you did this deal with your husband, Zeke, and y'all refinanced and you pulled money out and you did a lot of cool stuff we're going to get into. Maybe we're going to start with, tell us a little bit about your portfolio now, where you are as a rental investor before we get into this deal. Yeah, so we started about three years ago. You know, I'm a stay-at-home mom. We have two girls with special needs and I knew that going back to a W-2 job was not going to work for me. We were kind of a little bit at a crossroads because we love do-it-yourself projects and DIY and home improvement. And we've always been into that for the last 15 years. And funny enough, we invented a product and we're about to go down the patent road. And I was excited about the product, but I was really nervous about how much money it takes to get a patent and introduce a new product to the world. And I knew it would be a lot of money. So at the same time, I started thinking, well, what else can we do that gives us a second income without me going back to work full-time? Because that's just not possible with therapies and appointments. And I started researching real estate investing and I was scouring bigger pockets. Only a few episodes in, I heard you, I bought your book, retire early with real estate, read that front to back. And then I finally approached my husband and I was like, look, I am excited about this adventure with this product, but we need to have some kind of other income. And I know how much money it could take to go down this path and we could spend our entire life savings and more and have nothing to show for it. But if we think about real estate investing, I don't know if you've ever thought about it, but I've been researching before I presented it to you. At least if we decided to get out of it later, we would get something back. We could sell a property and you'd get something back. Where if we go down the path of this marketing of new product to the world, I hope it would work, but we could sink all this in and get nothing back. So that's kind of where it started, talking to him about it. And really I thought of it as, let's think of what's my passion, our passion, projects, home improvement, how can we turn this into money? So my brain first went to flips, but then once I started researching, I just realized that long-term buy and hold rentals would be a much better path for us. Just having something more passive for our lifestyle. Love the background story and I hope the patent thing comes back around, right? Maybe that'll be the end of the story, right? That was the thinking, you know, if we do this and we have some other income coming in, then maybe we can think about going that path. In the meantime, a few other competitors have come up or we've just learned that contractors would rather just hire people to do a job that a tool could do for you. So I'm kind of happy we didn't do it. I was really excited about it, but you know what? I'm more excited about real estate investing now. Yeah, you're into the entrepreneur life now. Like there's no turning back. There's always another opportunity. And what's cool about it, like I think every investor has a competitive advantage, getting to know you and Zeke better. It seems like your competitive advantage is, number one, you're willing to get your hands dirty. Literally, my hands are like covered in paint. You're willing to do work and you actually, both of you are handies. You've been painting on a house today. So you are willing to do that. You're also really good at marketing, which we're going to talk about how you found this deal and you just work as a team. So like, I think those are really cool for people listening. You know, you have to have a competitive advantage. Y'all definitely have that. I want to talk before we get into the deal about the money. Everybody understandably likes, thinks about where am I going to get the money to buy a rental property, especially when you talk hundreds of thousands of dollars. We had another episode with you in May of 2023, where we talked about, you know, more traditional rental. You bought a duplex, you put some money down that you had saved. Y'all had saved on your own. This one was a little different. You used a HELOC to buy another rental property. So can you talk a little bit about the origins of you getting a HELOC on your house? How much is it? Just some details about the HELOC. So my husband is a commercial lender. So we have always had a HELOC. That's just something that he has done with every property we've owned. He always likes having it in our back pocket, he said, or in case of a rainy day, in case something happens. So we bought this property about four and a half years ago when we started working on this deal. First off, it was my first off-market deal because we sent letters and bought this house without the use of a real estate agent and got a great deal on it. But with the market being how it is the last few years, some of our neighbors have been selling for astronomically more than what we purchased for. So we did have a small HELOC already to lean into, but with housing prices being where they are, my husband was like, you know what? We should increase our HELOC. We already have one, so it shouldn't be too hard to just redo it. We went to a local bank. It's literally right down the street on the corner. He actually used to work for a bank, and it used to be that one. It's now changed names, but it's just a little community bank. They don't even charge us to get the appraisal for our HELOC. They send someone out to do a new appraisal, and we were shocked at the value. So from buying it four and a half years ago, our value has gone up $200,000. And then, of course, we've paid it down a little bit since then. So with that extra line of credit, we said, let's go shopping. Some people might not have heard about HELOC. So it's a home equity line of credit. And so you bought this home four and a half years ago. This is your home you live in. One of the benefits, people who've lived in homes the last four and a half years is the market's appreciated. But if you live in a home, often you're like, well, I'd have to sell it to benefit from it. But HELOC is a way that you can basically tap into that equity that you have in your home. So you can just give approximate numbers, but what is the current value when you save your home that you live in? And then maybe how much debt did you have on a regular mortgage on the property? We bought our house for 318,000 back in 2019. It was valued over 500,000 today. The appraisers are a little bit different, I feel like, with the HELOC than with going to purchase a home. They are being conservative because they are concerned about what has happened in the market before. So we had neighbors selling for 550. So we knew we'd be somewhere over five. They came back, I think it was around 510 they valued it at. So the difference between what we had paid it down and then what they appraised it for now, we walked away with a HELOC of $223,000. Got it. So 223 is basically with a HELOC, you can write a check on it, right? You can draw on that. You don't have to, like they say, hey, all right, you can get up to 230,000 bucks and then you can, almost like a credit card, you can use it, you can pay it back, you can use it, you can pay it back. That's the cool part about a HELOC. And you still have your first mortgage on the property that you use to buy the property. And this is just a second mortgage on your home that you can access whenever you want. Is that right? Yeah, exactly. We figured we were borrowing from ourselves. It's one more property that we could work on without having to partner or use any kind of lender. We're our own lender on this one. So that was what we were excited to do. And it was funny because when we were signing the paperwork, we had to go to the bank and the guy said, okay, just so you know, in Illinois, you have three days if you want to back out of anything. So if you get out of here and you change your mind, you let me know. I said, get out of it. You just gave me $223,000. I'm going to hit the MLS right now. Yeah, really good. And walked out of there skipping. We're buying a property, let's go. One more question about the HELOC and then I want to get to the rental property. What are some of the details of like the interest rate and terms? You know, like when you get a regular mortgage, you get a 30 year fixed kind of mortgage. How does that compare with the HELOC? What I do like is if you get a new HELOC, they usually give you an introductory rate for like six or 12 months. That's a little bit lower than where it would be at. So they really want you to start using it and encourage you to do that. I think our rate was 7.74%. And after six months, it would have gone up like 8.025%. So they give you a little decrease for the first six, sometimes 12 months. Got it. Do you pay interest only for a period of time or is it automatically amortized like right when you get it? Right when you draw, it starts amortizing. Okay, cool. Every HELOC is a little bit different. Every bank does a little bit differently. But the main point is you walk out of there, you and your husband, you've got some money to work with. And not everybody's willing to do this. I take chances. You have to say, hey, do I want to do this? Do I not want to do it using my home equity? But the cool thing is you're out shopping for deals. So let's talk about that. You've got this $223,000 to go shopping with and you're sending letters, you're looking on MLS and you come across this house that you ended up buying eventually. But how did it come into your life? Like where did it come from? How did you find it? Okay, so I'm very mad about this because I have been sending mailers and things off the market. I was desperate. I was adamant. I said, my next property is going to be off the market. I'm going to find an off-market deal. And then I was still looking at the MLS. And of course I see this property pop on and I told my husband, look at this dump in Lake Zurich. He looked at it. And the nice thing about it was, so it was on the MLS but it was a Fannie Mae HomePath property. So it flat out said you have three days for people to come look at it before offers can start being accepted. So I knew it was undervalued just knowing which town it was and knowing what houses go for there. I knew it was undervalued. I knew it was going to get traction but it was really nice not to have to rush there immediately drop everything, call your realtor, get over there now because they wouldn't start accepting deals for three days. So I did really appreciate that. Again, so mad that I didn't find something off the market but I said, we have to go look at this. So of course we went the next day with our realtor went to go look at it. I walked in and was like, one, there was 15 other business cards on the counter. So you can just tell there's vultures. There's so many people coming to see it. So first there was the competition. Then I just looked around and I was like this neighborhood is so nice and this is the worst house on the street. And that is exactly what I want to find. It had been torn apart. It was clearly at that point we could tell someone who had been living there was in a wheelchair and they just cut open walls and opened doorways wider and then just left things unfinished to accommodate that. And then we went into the garage and there was a chicken coop or so we thought I'll get to that later. So there was a chicken coop. There was wire section. There was a sink very poorly flowing to the outside. You could tell an animals were like pecking at the floorboards. There was a dog or something in the rest of the house. I mean, this place is a dump and the smell, I cannot even, I want smell-o-vision to get it to you. It was a train wreck, but I just, I could see the potential. I was like, this is a very cute starter home exactly the size that we would want for our rental portfolio. A great town, great high school, great amenities. Everyone wants to live here. It's close to shopping that way and school is that way. A great library that way. I mean, really, it was perfect. It seemed like a great neighborhood and this was just the worst one on the street. Yeah, I had a mentor when we found properties like that that were in the right neighborhood, the right property but they just smelled bad. He said, they smell like money. He would walk in, he's like, wow, this is a good dog with fleas. This could be a good dog if you get this one all shampooed and cleaned up. So you had a good dog, didn't literally have fleas or maybe it did, but it was pretty rough. Yeah, it was rough. But I said to my husband on the way home, you know what, this is why we got into this. We are very handy. We love projects. This is the perfect size, a very manageable project for us to tackle for our first project. It's 20 minutes door to door. We know how to drywall, paint, flooring, clean it up. There's some things that are salvageable. We can do this. And that house deserves to be a house that people want to live in is what I said. It's such a cute neighborhood. Yeah, you saw the vision for the property. So from the house part, the location part, all checks, you know, you can do that. You still have the numbers to deal with. So what was it listed for? Like during that three-day window, did they have a price on it and say, hey, we're accepting bids? How did that process work? So they listed it at 215,000. And I knew that was under market for sure. And I knew with all those other business cards there that it would drive up. So we did end up placing an offer for 245,000. When you were looking at the deal, like you said it's a good neighborhood and other houses were selling, did you see higher values in that? What did you think the potential value for the property was at that point? So at that point, one had sold in November. So maybe four months before for 310. Now that one was really done up. Whether it was a flip or just a complete remodel, really nice kitchen and probably nicer than what we were gonna put in this for a rental. But we saw, okay, maximum it could be 310. So you figured, okay, if I pay 235, did you have an estimate on what your budget might be for repairs after looking at it together? Yeah, we put together a budget and we were about 35,000 at that point. Got it. So if you buy it for 245, put 35,000 in it, you got like 280 or so somewhere in there? Yeah, so this subdivision had a lot of houses with the same layout. So we looked at others and very conservatively we could say it was worth 275. Now that's just looking at Zillow, the ones with the same square footage and saying if those have no upgrades, just kind of as is 275. So we were trying to be there or just under there to be comfortable with, okay, we got a deal. We got it for under that, put in our sweat equity and that would be a comfortable number. And then seeing that 310 comp, what it kind of could be. But did you have any idea on the rent? Cause you knew you're gonna rent it at that point. Like what were your guesses on the amount of rent you could get? Yeah, we were hoping like 25 to 2,600. So strong rents in the neighborhood as well. Yes. Okay, so that kind of sets the stage. Cause I know a lot of people think that they see the numbers after, but it's always really interesting to hear like what were you thinking in your mind? Sometimes it's different than what it actually was in the end. So you went in, you made a 245 offer. What happened from there? They ended up having 12 offers on the deal. Ours was not the highest. They actually had some more than ours, but our realtor is persistent. She is awesome. She contacted the listing agent and said, look, if you have others, these are investors. I can bring other deals to you. And I think just her staying in touch that has won us deals in the past, just her calling. She says, you would be so surprised at how many people don't even call to confirm that they got the deal, let alone chit chat with them. And he said, all right, let's do it. So I really think just by her staying in touch, he made it sound like there was maybe two higher, maybe they had other terms though. We were coming in with an all cash deal using our HELOC, 30,000 over, and we could close in two or three weeks, whatever they wanted. So the no financing contingency made a big deal. So you had 226 on the HELOC. I guess you had some of your own cash as well that you're willing to put above and beyond that, right? Our own savings, yep. All right, so your realtor is persistent. Talk to them, obviously foreclosing bank, Fannie Mae was like, all right, let's work with this person. So you get it under contract. What was the process like between putting under contract for 245 to the time you went to close it? You know, we had tried to buy, I think it was a short sale technically a couple years ago. And we just saw that it could be so long and so drawn out and so many middlemen that it could sit there forever. The Fannie Mae process was actually amazing. They have a website for you to sign into. You can always see where it's at. They are very responsive. It was actually incredible. I thought there's no way they're gonna close in three weeks and they were absolutely ready to close in three weeks. The inspection was interesting. So we scheduled an inspection. Of course, we wanted to see what we were getting into. And Fannie Mae told us that they were willing to turn the water on just for the day if you're having an inspection and wanna see it on and they're willing to work with you. So we had contacted them about turning the water on and we were actually standing there in the house during the inspection when the city called us back and said, yeah, we can't turn the water on. There's actually a damage to the water main coming from the city into the house. So at some point, whenever the previous owners moved out, a neighbor reported water leaking and we came in and shut off the water. So the house wasn't winterized and water shut off because it's a foreclosure. It was first and foremost because there was a leak. So we're standing in the middle of the home going, oh shoot, this is gonna cost more than we thought. So there goes our budget. It could be anywhere from the house to who knows where the break is. And it was flooding the laundry room into the garage and a neighbor reported it. So the guy on the phone literally said, I remember this house, this was the problem. We go through with the inspection. Nothing else was too much of a surprise. We knew the house was filthy. We knew just dirty damage, things like that. They're saying, oh, this doesn't work, this doesn't. Well, that's fine. We're taking those out anyway. All the appliances need to go. Everything's just trashed. But the one thing we didn't know also during the inspection is there was a lot of mold in the attic that they came back with saying too. So again, we thought our budget would be shot. I think the inspection was a Friday. We had to decide by end of day Monday if we wanted to get out of the deal or not. And there's no negotiation. This is a foreclosure deal. So we thought about it over the weekend and my husband was kind of unsettled with this. He was Googling things. He's like, I've never done mold remediation. I'm allergic to mold. He goes, you're not gonna be helping me with this. He was looking up average costs of things online and finding that mold remediation in the entire attic could be anywhere from a thousand to $25,000. And then a water break, they said, we'll turn it back on once you have it fixed. Well, we don't know where the break is or anything. So he was very unsettled about it. I still thought we were getting a deal, but he's the money guy. So on Monday we said, hey, we can't close. We would still like to buy the house, but we cannot buy it at this price. So technically we need to cancel our contract. And we did fill out the paperwork as such. And we said, we could pay 225 because we think some of these repairs could be up to $20,000. We could still close on Thursday if you can take a lower offer. And they came back and said, we'll meet you in the middle at 235 and you have a deal. And we said, okay, done. So at least we had saved $10,000, but we still didn't know what this stuff was going to cost. Okay, so you take a chance. You say, all right, we're going to figure this out. You use your HELOC to close to buy the property. We move forward from there. And talk to me about, I think y'all did a really good job of just project management. Like I said earlier, you got your hands dirty. Were there any stories? Were there any interesting things? Like from the time you bought this property to the time you, we're going to show before and after pictures because I love the contrast of like the front of the house and some of this, that people can see this on YouTube and see it on our link to the show notes. But maybe just tell us a little background and some things that happened in the meantime. How much time do you have Chad? Yeah, some of the highlights. We had started out calling this the chicken house because of the chicken coop in the garage. And you could just tell that chickens were being taken from the garage through the laundry room. There was like a little gate to the backyard where there was a fenced backyard and just allowed to roam free. And there was peckings at, you know, you could just tell that the baseboards were destroyed and just, you know, hair and filth everywhere. There was a layer of sticky on everything is what I say. And then dog hair stuck to it is kind of how I explain the house. And again, the smell that you can't smell through the screen. Come to find out, there were no chickens at the house. The coop, the chicken coop in the garage that we thought, the mailman later told us who came by, they had a pet raccoon. There was no chickens. So the chicken house then became the raccoon house. So we don't know if there was a dog or there was chickens, but this was used to house a raccoon who presumably all that black hair stuck to everything throughout the house was the raccoon hair. One neighbor said they believe they would let the raccoon just run wild in the attic if it needed to get some energy out. So all the insulation was just torn up. Who knows if that's what the mold or if it's raccoon hair. I was so grossed out after I found out this when I'd been in the house for so long. The air ducts were disgusting. Like I said, just the layer of stick on everything with hair stuck to it. I mean, we'd pull out the dishwasher in the kitchen and there's like fan blades and dog toys and just all kinds of things everywhere. The washer and dryer didn't work. My husband pulls out the washing machine. The cord had been chewed through, like a raccoon chewed through the cord. So just nothing worked. The blessing in disguise was we were able to save the $10,000 on the unknowns after the inspection. I was racking my brain. We try to be very resourceful, right? Who do we know? Who can we call? Who's in our network? I remember going on a field trip with my daughter's class and one of the other dads there said, I own a local ServPro franchise. I ended up calling him on a Sunday and was like, hey, I just remembered you own this. Can you help us with the mold in the attic? Please tell us what it will cost. And he said, absolutely. I sent him over the inspection report and he's like, ah, you're probably looking at like $1,000 to $1,500. And I was like, thank goodness. That's way less than I thought it could be. We kind of became friends. In the meantime, we saw them at some birthday parties and things for the school. He ended up sending out his crew and said, I'll only charge you time and materials. And he charged us $400. I said, you've got to be mistaken. No, they remediated the mold in the attic for $400. And then the water break, my husband and dad ended up figuring it out. Thank goodness it was in the laundry room. Someone shot a nail through the water line. They pulled it out, replaced that section, and it was 100% free, just their time and energy. So we saved $10,000 and the repairs ended up costing us $400. Yeah, that's so funny. Cause sometimes, you know, there are deals I've done where I had the exact same thing. Sometimes you lose, you know, sometimes you win, but it's a pretty common occurrence where I'd see investors, you take a chance, you protect your downside. Like the thing that I love about this deal for y'all is you started with the location. You're like, this is a great location. To take a chance on a property, you might overpay a little bit, maybe have an extra 10,000 bucks in the property. But as people are listening to this, I want to just emphasize, like, you've got to take a risk and you'll use your resourcefulness, use your relationships, use your network to try to solve problems. That's what we do as real estate investors. But ultimately the risk you were taking was, I think we could handle the risk. Worst case scenario, we'll have a little bit worse deal. We'll pay a little bit more, but ultimately you figured it out. Use your smarts and your resourcefulness to do it. So you're cleaning up the house. You're getting the raccoon hair out. You're ripping out stuff. You get it cleaned up. Kind of a summary of the list of repairs. This was a big cosmetic repair, like flooring, paint, appliances, countertops. Is there anything else that I'm missing on the list of stuff you did? The wall repair was a lot because a lot of the walls had been opened up and just left opened and exposed. So we kind of had to put them back to where they naturally would be. Two bedrooms were opened up into one. So we put those back where it should be. And then all new paint, all new flooring. The problem was even like the baseboards and the doors, everything had a hole in it. Everything was scratched. So we really did. It was a lot of putting things back together. The windows were great. We were wondering if we would need a new roof with that mold situation, but we had our contractor friend come out and he's like, no, I think you'll be fine for a little while. The inspector confirmed that too. The kitchen was actually very salvageable. We saved the cabinets and painted them. The countertops, we salvaged those. They were granite and fine. A few walls with damage, we just covered with some shiplap and called it a fun accent, but it was covering raccoon scratches. The yard was a mess. They had a, I didn't even mention, they had a shed with a bar attached to it, like for parties. There was a big MGD sign on it. That all came down and underneath was a family of possums living there. So we had to relocate them. We had some squirrels living in the soffits. So it's just, it was not taken care of and the animals had taken over. This is like the petting zoo. I'm just imagining like raccoons with thumbs running around and possums and squirrels. Lots of fun there. Yeah, our contractor friend came into town for a week and we love him because he's willing to do this. He moved to Minnesota. My husband loves working with him. My husband took a week off. We had our friend Jason come into town. He was doing all the things my husband doesn't know how to or can't do and they're working together to make it faster. The soffits were just kind of beat up around the outside of the house. Also why we thought we might need a new roof, but thankfully the roof was okay. He went to go take one down and just a family of squirrels fell on him. So we're like, sorry about that. So many good stories. This is why you invest in real estate because you have these fun stories, but ultimately you got it fixed up and nice. And again, people can look at the before and after pictures. I think that does it justice. It's hard to describe it verbally. You did a wonderful remodel. You got it looking good. Let's talk about the numbers when you're done because ultimately the strategy here, back to your strategy is to buy and hold. It's a rental property and you like the location. So talk to me about what's this all said and done. What was the strategy from there in terms of refinancing and what does the value look like at that point? So we ended up purchasing for 235. Our renovation budget was 3,605. And I actually was so proud because I've been watching HGTV for years and I know you always go over. I was under by $4,300. I was so proud. We ended up spending about 32,000 on it. And that was, again, using our network for things that we thought would cost more and just being scrappy shoppers. And my husband's in there negotiating with Lowe's for a discount on appliances that are on clearance and haggling with people on Facebook marketplace. I feel like our renovation budget is like our challenge. Can we beat that number? So we spent 32. So our total investment was 267. It took us nine weeks to do the project. And then we did, of course, go to get a conventional mortgage on it. And the appraiser came. We originally anticipated just trying to be conservative. It would come in at 305 to 310, just having that other comp. In the meantime, the same floor plan did list while we were doing our project for 329 and they got it. So our appraised value came back at 330. We were shocked because like I said, comps were only 310 and 329. So I'm glad they thought we did a great job. Our sweat equity or forced appreciation ended up being almost $63,000. Once we paid back our HELOC, our carrying costs were about $5,000 in interest to carry that HELOC as well. First of all, awesome job coming in under budget. Like I can't remember the last time I've done that myself. I don't think, I don't know if I've ever done it, but that's pretty incredible. And so just to kind of see the big picture here for people who haven't heard of the BRRRR strategy, I know a lot of people have, but you bought the property, you remodeled it, you got it rented out. We'll talk about that in a second, what the numbers look like there. And then you went and you refinanced the property. And so part of the refinance was you got an appraisal at 330. Maybe you could talk about this, like typically I've heard anywhere from 75 to 80% of the new value of the property. It's like 70 to 80% of the value of after you fixed it up is what the new bank will loan you on a permanent mortgage. So in your case, how much did the refinance lender loan you? We kind of had two options. Since we didn't wait for the seasoning period of six months, we of course wanted to pull the money out right away. So they said they would either do 100% of the purchase price or 70% of the ARV, whichever is lower if it was under six months with no seasoning period. Our purchase price was 235, 70% of the appraised value was 231. So we ended up getting 231,000 back on that. Got it. So you can do it quickly. Maybe this is a good time to talk about the strategy with the HELOC. A lot of people ask, you know, on the YouTube channel, you see these comments come in too, like how do you use a HELOC? What's the best strategy? I always tell them my favorite way to do it is exactly how you did it, is you use it almost like as your own cash, but then you pay it back really quickly. Like you never want to leave it as much as possible. You don't want to leave a HELOC out there for six months, a year, five years. Like it's something that you use to knock down a deal. And then as quickly as you can and you do what you do, you refinance it with a long-term mortgage and you pay it back. So in your case, you pulled out 231. Your total investment was like 267 or something like that, almost 270. You had maybe 30,000 bucks or so, 35,000 bucks left that you had to invest in the deal yourself, right? Yep, we left 36,000 into the deal. Got it. It's a big picture. When people hear that, the big thing is if you were to go buy a property, like first of all, it'd be hard to find a property in this location that is below 310 to 330, right? Because that's the value of the property. If you could get a perfectly remodeled house and you could find it for the price, you'd have to put 20 to 30% down of whatever you bought it for. So like you'd have to put maybe 60 to 80,000 bucks down. So the cool thing is by using your sweat equity, by using the HELOC to buy it, by refinancing it, even though you had to leave some money in there, that's still a lot less than you would have had to leave in it if you just did a traditional make a big down payment, buy a property. So success, right? Check that off the list. You've got a nice property that's remodeled with not as much money in the deal as you could have. Yes, that's exactly what my husband, the numbers he looks at. He's like, if we were to buy it as is worth 330, rent ready, ready to go, if we bought a turnkey, we'd have to put 60, $70,000 down. So we only left 36,000 into the deal, pulled out the money, let's go do it again. Love it. Got it. And just for people keeping score, the total amount of money you had in at 267 was about 80% of the value of the property, which when I look at it, when I buy a rental property, the numbers I run, I always like to try to buy them 10, 20% at least, maybe 30% on a really good deal. But like, that's solid. That's like super solid to have 20% equity going into a rental property. Like you got it on sale at 20% off and now you get to buy it. And so let's talk about your rental. You estimated maybe 2,500 bucks in rent. Like what does the rental look like now that you've got all this done? Again, things also changed. It's a very desirable town and there were not many rentals. So we said, hey, let's shoot for the stars. We listed it at 2,800 per month. We ended up accepting 2,750 because the couple will mow the lawn for us. So we gave them a little discount to do that. So our monthly payment after the refi is 2,134 and that was 7.625% interest at that time. So hopefully in time we can refi if it continues to come down and then it rents for 2,750 a month. Okay, got it. So your payment of 2,134 is like principal interest plus your taxes and insurance has an escrow in it as well, right? You know, somewhere over 600 bucks you have leftover to pay for whatever maintenance you need to do, whatever vacancy you have to do. But you and I both look at a lot of deals out there for our members and people out there. I mean, any deal that's in this kind of price range that has a chance of having a positive cashflow, really good. And also with a 7.6% interest rate. So I just wanna say congratulations. Like that's, I think it's really cool to see the details of how you found it, how you prepared for it, how you and Zeke like worked really hard to pull together the budget and then you got it rented. Can you say anything else about the rental process for people who haven't rented a lot of houses? Like, was there anything tricky about getting it rented? Was there any screening tenants, finding the right person? Maybe just talk about that a little bit too. I actually love that part. I know people, you know, struggle with property managers or, you know, tenant selection, that kind of thing. I think it's really fun. It's like a personal adrenaline rush to find the best tenant. I put a lot of pressure on myself, but we went ahead and marketed it. And I did have a couple candidates right away who just, there was one thing wrong. There was one thing imperfect. And, you know, no one's perfect, but just one thing that left me a little bit uneasy. And so that was the one thing I can say is just be patient, wait for the right one. Don't settle for something that may not be the perfect situation for you. They will find something else. One of them, I will say that made me nervous. He was an attorney for evictions. And so I'm like, this guy is going to know exactly what he can and can't get away with. I can't, I'm sure they make decent money and he's fine, but I, that doesn't make me comfortable. So just a few little things that's like, you're probably fine, but I don't know. And we waited, you know, a couple extra days and the right couple came along. They were relocating from a different state. They can move in right away. They're very sweet. Since then we've gotten to know them a little better and the right one came along. So we were happy with that. And I remember exactly when you were talking about that. And even then you started getting prospects, but one of the things you did really well was you had written criteria. You're like, all right, here's my income criteria. Here's my background. And the ones that weren't perfect, sometimes, yes, there's a story, but there's also just like, ah, these numbers aren't meeting all of my criteria. And my feedback to you was like, yeah, just be patient. Like you're going to find somebody who can check all of those written requirements off. I mean, it was another week or two, I guess, maybe after that, maybe, or maybe less. It was a couple of days. I was feeling deflated. You know, I just, it was like my own personal challenge, just like beating the budget. I wanted to just get it leased up right away, but really you just have to be patient. And you know what? I listed it on one other platform that I hadn't already listed on and bam, the right person came along. So I was silly for not even listing there in the first place, but they came along. It worked out great. They have the potential to stay for multiple years based on their job situation. Similar to our other conversation that we had is that I like how you and Zeke are buying properties in neighborhoods that attract a lot of people. Like these aren't your normal rental neighborhoods where every house is a rental. Like it's pretty rare to find a rental, I guess, in the neighborhoods, my understanding for where you're renting. So when you do put a house like that on the market, people are like, oh, a rental in this neighborhood? Awesome. You're getting a lot of prospects and you're able to be pretty strict on your criteria. Pretty cool. And now you got it rented out. Now you can refinance it. As we're recording this in second half of 2024, maybe interest rates go down. Maybe you can get a 6% interest rate eventually. So you're in a good shape to now improve your cashflow as things go on. Yes, exactly. We figured if it works now, and we were just stoked with how it turned out. Like I said, we try to be really conservative with our planning, whether it's with the renovation budget or the ARV and things just change for the good. In the meantime, while we were working on it, some people think we're crazy because we were there every single night. I mean, the sweat equity is for real. We were there every single night. One of us was there from like 5 to 10 PM. And then all weekend, my husband was there just cranking through it. But we were really happy with this deal and the forced appreciation, the equity and then just the cashflow on it. I was like, this is our first burr. This is so exciting. Let's do it again. Yeah, you were posting pictures in the community, in the RPM community, and people are high-fiving you virtually and saying great job. So it's fun. When you can tie a deal with a bow like that, you put it in your portfolio. Now you have four properties and now you've bought a flip since then. We won't get into all the details on that one, but you thought you were gonna rest all summer and then you had a flip come across your desk. You're like, oh, let's go buy this deal, right? I know. If you look every day, you're just gonna find something. It was my own mistake. But yes, we're flipping a property, hence all the paint and everything. My husband really wanted to do this again. So I actually had to convince him that this one should be a flip and not keep it. He really wants to keep this one, but it's better off a flip. That's kind of an aside. How do you decide in your mind a better flip versus a rental? Because this other one probably could have been flipped. It had a little bit of margin as well, but how did you decide when to flip, when to keep? This one, honestly, is just not the size of house that I want. It's not as desirable of a town. It's a desirable town, but it's a little bit further out there. So just looking at like job markets, I know a lot of people work remote now, but there's just not as much around it. And it's just a big house. It's like a big family house, the size of our primary residence. So it's something that I look at as more of like a forever home. And I thought that finding tenants would be a lot harder for a size house that large. And honestly, I like our little 1,200 square foot house that we just worked on. This one is like 2,600 square feet with a full basement too, and a big old backyard. So I just thought it would be harder to rent. There'd be more vacancy, more maintenance in between tenants. And we'd have to rent it for a lot of money with where interest rates are right now that I think that'd be a lot harder to find. I liked my little 1,200 square foot first house kind of size. That's really smart. I have a very similar buy box for me too. Sometimes when I show my rentals, those little simple rectangle boxes are your favorite rentals? I'm like, yes. I don't want the big, huge house, the 2,500 square foot, 3,000 square foot with two heating and air units and lots of carpet to replace. I mean, that's a maintenance nightmare. Once you get in the rental business, you start thinking, all right, efficiency, replacement, maintenance. Well, congratulations to the two of you. It's really cool. And thank you for sharing the numbers. And I know lots of people are gonna get a ton out of this because there's so many details that people don't always talk about. So congrats. Good luck with your next deal. You got most of your HELOC back, so you're flipping- You're losing it again. You're doing it again. So is there any final advice you want to give people? Maybe people who are thinking about buying a fixer-upper, maybe they want to do like you've done using a HELOC or doing the DIY route. Any final advice you'd like to give people just to kind of encourage them along? One thing about DIY, I mean, some people hear it and they're like, oh, you're probably doing a terrible job. This was really my way of turning a hobby into a career. We have been working on house projects for 15 years since we've owned different homes and we just love it. And I thought, again, how can I turn this into a career? We hire out where it makes sense, but we always try to use our network because if you just tell people what you're doing or say, who knows someone that does roofs? We needed a roof on this property. I had two random quotes come in and they were like $17,000 and $20,000. My sister's boyfriend said, hey, I know someone and puts us in touch. The guy charged us like $11,000 for a new roof because we get the friends and family rate. And again, the guy who saved us on the last place, you know, I'll charge you $400 that I thought could have been $10,000 to clean up. So just put out there what you're doing and so many people are willing to help. It's always astonishing. I don't know, just don't be scared to do it. What's the worst that could happen? Kind of how I looked at buying a property as an investment. Worst case scenario, you sell it. You'll get something back. It's the real estate market. Love it. Great advice. And congrats again on your project. Do you want to let people know where they can connect with you? I know you're pretty active on Instagram and I'll put a link to those in the podcast description and the YouTube description as well. I'm just having fun with my Instagram. We're called the DIY Duo. We have people help us make decisions on the flip that we're doing right now in the last rental house. So we'll put polls on there. You know, should we paint this this color or should we put the shiplap on this wall or which lighting fixture do you like? So it's kind of fun to involve other people and get them excited about real estate investing as well. So this is like your Instagram version of HGTV, right? There we go. It's my own little HGTV show. I'm a wannabe. We got it. I'd rather watch yours all day long. So well done. So, all right. Well, thanks so much, Kelly. And I'll talk to you soon. Yeah, thank you. In this episode, Kelly shared that her renovation costs were over $4,000 under budget. But what we didn't cover was the details of how you actually create a budget or estimate costs for your own remodel projects. So in my next video, I chat with contracting expert, Don Maitzy about how you can estimate costs and put a budget together so you can keep your projects under budget and profitable. If you're watching on YouTube, you can click the thumbnail above me or you can click the link in the YouTube or podcast description below. See you in the next video.