House Hacking The Secret to Affordable Real Estate Investing

Transcription

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Daniel: Now, when I'm starting to advise young clients, I'm like, man, if I could go back, I love our story. I love the houses that we bought so much favour; they are incredible moments. But I also look at it like, man, if I could go back and have the first one be like a duplex or a triplex or fourplex, that all day because all the payments from the other units are subsidizing your mortgage or helping you to cashflow or helping you to build your savings or build your portfolio. Having a scenario like that at the start that's ideal.

Pete: Daniel Miller?

Daniel: Yes, sir.

Pete: How are you, man?

Daniel: What's up, man? I'm doing good.

Pete: Good, good. I appreciate it.

Daniel: Excited to be here.

Pete: Yeah. I appreciate you coming in. So I will do a little introduction and forgive me if I get some of this stuff wrong. So you've been in real estate for a long time. I want to say maybe 2005-ish.

Daniel: Yeah, I mean, 2006, November, 2006. So, almost 18 years coming up.

Pete: Wow. Yeah. So you went through the crash, the real estate.

Daniel: Yeah. The timing was impeccable.

Pete: Yeah. And then, so you have a really cool family, big family. You have five kids?

Daniel: Yeah, we have five kids. We've got four girls and one boy.

Pete: Four girls. And what are their ages?

Daniel: They're all ages eight to 18.

Pete: Eight to 18. Wow. Yeah.

Daniel: Yeah, yeah. It's super cool, man. I love it.

Pete: And the four girls are older? The oldest or?

Daniel: The boy is 10.

Pete: 10. Okay. Yeah.

Daniel: So he's the second youngest.

Pete: Okay. Second youngest. Wow. So every weekend you're doing sports and going here, going there, and playing soccer.

Daniel: Soccer on the weekends. And then we've been doing. The girls have been doing dance competitions. We've been driving down to Sacramento or Orville for a weekend.

Pete: Wow.

Daniel: So, yeah, it's been fun, man. It's a busy life. I wouldn't have it any other way. We love it.

Pete: Yeah, dude, that's super awesome. Well, I've known you for a long time and you used to be my youth pastor back.

Daniel: Like college pastor then, but yeah.

Pete: Yeah, that was back in early 2000.

Daniel: That goes way back. Yeah.

Pete: Yeah, yeah. I've known you for a long time, and you've been a good friend. We've definitely.

Daniel: Yeah, likewise.

Pete: Yeah. Stayed in touch. So I wanted to bring you on and talk about real estate and what's going on right now. And part of this is just telling your story of how you got into real estate. What made you want to get into real estate?

Daniel: Yeah, that's a really good question. We both kind of had a similar, I guess, transition because you were at Verizon when you started doing loans, and then I was at Verizon when I started doing real estate.

Pete: Yes, I remember.

Daniel: And so I think, having been there, I started doing customer service. I was just talking to people every day that was mad. Every person I talked to was mad about something. They were mad about their phone not working. They were mad about their bill being wrong. And so it put me into this development process of just learning to help people, number one, but try and depersonalize what people were going through instead of just immediately taking it on as my responsibility. I'm just trying to process and be like, okay, this person's having a bad day or is just going through something. Sometimes, when you work with the public, some people are just crazy. We got all sorts of people that came into the store. Obviously, in those moments, they just have so much. It's such a heightened moment of stress that they're going through. So, just trying to help people process with that, I think prepared me a lot for real estate. And then also just being on the sales side for a couple of years in the store was helpful too because it was so busy.

Pete: Oh, yeah. I know.

Daniel: Just constantly.

Pete: You and I share that same experience of dealing with very upset customers, customers coming in, and growing a little bit of a backbone. Not necessarily, but I know what you're saying and not taking it personally. Suppose they're not mad at me. They're not mad at you. Yeah. So that's helped in the mortgage space as well.

Daniel: For sure. For sure. Yeah, because we're working with people, and this is a heightened moment for them and there's a lot on the line with them selling their home or buying their home or refinancing. It's a huge financial moment for everybody in real estate and there's a lot of stress. And so I think the ability to kind of back up and not take everything personally that they're going through is really important. And I think it also empowers us to help people navigate those situations better if we don't take everything they're saying as a personal attack. If we're just like, oh, they're stressed, or they're confused, or they need direction or explanation. There are just so many ways to try and help people navigate the situation. And I think a lot of that comes from being in a retail environment with high pressure and stress.

Pete: Totally.

Daniel: Especially with cell phones.

Pete: Yeah. No, I know. I remember being at Verizon and experiencing that same thing, and it's not as bad. I don't think we have as bad people as mad.

Daniel: Oh, no. Nowhere near.

Pete: But there are high emotions.

Daniel: For sure.

Pete: And I definitely, your success, I know, is partly because of you just being so calm and so like, okay, let's figure it out. It'll help you out.

Daniel: That's what I've heard. I've heard I'm pretty laid back.

Pete: Yeah, I am too. I'm the same. Through that, you got and wanted to go into real estate. So, was real estate always something you wanted to do?

Daniel: Yeah, that's a good question. The thing that spurred me to go into real estate was around it because my dad's a lender, so I was around the industry per se. But being at Verizon, I started to feel a disconnect between what they wanted us to do and what I felt was right for people.

Pete: Got it.

Daniel: And so you remember these moments where it's like, "Hey, you're supposed to sell so many handsets like a month and so many contracts, so many renewals, so many new customers." And then, they started adding what we call KPIs or key performance indicators. So this is early days. This definitely dates me, gray hair doesn't help you either, but. So back in the day it was like camera phones were just coming out. And sending so many picture messages and text messages. They had plans for how many you could send every month. Obviously you remember this. It was like you're supposed to add these attachments to their plan where they send a thousand a month or whatever. And you had to sell so many accessories per every handset that was leaving the store. And they wanted like three accessories for every handset. It just got like so nuts, dude.

Pete: Yeah, yeah. Yeah.

Daniel: And I just started to feel like, I mean, obviously some people needed that, right? And so helping people understand the value in what they were getting. And text plans or accessories was really important. But at the same time, we would also help people who were older. We would have like 80-year-old grandmas walk in and they could barely make a call. Like honestly like they were struggling to power it on and make a call and they were going to keep it in their glove box in case their car broke down. And then managers would like sit you down and write you up for not hitting targets because you weren't selling enough tax plans or whatever. And I was like, guys, I was like, this doesn't make sense. I was like, "We're doing something for people that isn't in their best interest and we would just go around around." And I was doing like amazing volume as far as like how many people I was helping. But I wasn't hitting these things that they wanted, these targets. And it was just a disconnect that I felt between like corporate culture and just like doing what's in people's best interests. And I really just hit a boiling point where I was like, I don't want anybody else to like be telling me what is good for. What they want me to do that isn't in people's best interest. There was a. So I think that's what kind of started my process of like, okay, what else can I do?

Pete: Wow. So yeah, so 2006 and going through 2007, 2008, 2009, that was.

Daniel: That's so crazy. And I don't think I had really any idea of what was happening just historically that we were in the Great Recession, so to speak. So end of '06, the market had been super hot. I was really motivated to get out there, got my license and took my test. I think it was like a month and a half between when I started and when I took the test, passed the test and was like, gave my two weeks. It was like super quick.

Pete: Wow. So you put your two weeks in right after you got your test?

Daniel: Right when I got my license.

Pete: Wow.

Daniel: Yeah. Which wasn't a great decision.

Pete: That was a big step.

Daniel: No, it wasn't a great decision. I was just like, so done. Yeah.

Pete: How many kids did you have then?

Daniel: We just had one. We just had one at the time. And I think that was another factor that was really pushing me because realizing that I didn't want someone else to tell me when I could be home to be with my kids and as we were like building a family because you go into those seasons in retail hours, it's like they have blackout seasons where you can't ask for time off. Like basically November through January. And then you're just working extra time. You're working almost like a mandated like overtime back in the day. And obviously like you made good money at the time because the season was so busy, but I also just didn't like that feeling. I think part of that's like just being an entrepreneur.

Daniel: Like being someone who wants to like build something. You just like trying to work for like an hourly wage is really hard especially when someone's like, "Hey, be here at this time." And they're setting your schedule. I didn't want to do that the rest of my life. And so I think that was the other factor is like having a kid, I wanted to be able to be like, I want to be home on the weekends. I want to be able to go to their events.

Pete: Totally.

Daniel: I want to go to their soccer games. I want to go to their dance comps. Like all that. The thing that the life that I'm living now was motivated by that moment back then.

Pete: That makes sense. So then, so fast forward, you own Upward Realty?

Daniel: Yeah. I'm the broker of Upward.

Pete: And you're broker? Broker of record. And you ended up starting Upward, how long until you were in the business till before you started Upward?

Daniel: Yeah. So '06 to 2014. So it was about eight years.

Pete: Got it.

Daniel: That I was just a standard agent working under a real estate brokerage. I had some great brokers and then I had some virtual brokers that were not great. That were trying to get me to do stuff that was like just crazy. Crazy stories where like, I had a broker who also owned a. He owned an Escrow company and he was from Southern California and he was only charging me like 200 bucks a month. And it was like a hundred percent split.

Pete: Oh, wow.

Daniel: And I was like, this is great. This is amazing. And so I had left Venture at the time just because I was like, man, how do I make more money but put less time in? I'm always like, that thing.

Pete: Makes sense.

Daniel: We were trying to maximize the life. And so I was like, this is great. And then I was like, so what's the catch? And he was like, oh no, there's no catch. And I worked for him and then all of a sudden I had like two properties under contract and supposedly the thing that he wasn't saying was that he expected us to have all of our escrows under his escrow company. And so that was the catch that he didn't explain and said nothing about it to start. And he was like, he called me up, he was like, "Hey, he's like, why aren't these escrows like with my escrow company?" And I was like, what do you mean? I was like, these are the escrow companies, top companies that they chose. I was like, it was between buyers and sellers to choose. I was like, we can make recommendations.

Pete: Yeah, exactly.

Daniel: I was like, but they wanted to go this one because they're local. And he was like, he was like, listen. He was like, I'm not asking you. He's like, I'm telling you. And I was like, what?

Pete: Wow.

Daniel: And so he was like, they need to be there. He is like, or I'm not paying you. And I was like, I wasn't like crushing it at the time.

Pete: Yeah. It's a big deal.

Daniel: And like, yeah, having like two deals like that someone else is kind of like holding over you. Where they're like, "Hey, you get your clients to move escrow companies or I'm not have to pay you on two transactions." Was like a massive threat. And I made calls to other brokers I knew in town. I was like, dude, what is going on? Like, what am I have to do?

Pete: Wow.

Daniel: And they were like, you just need to do like what's right. And so I just told him, I was like, "Hey" I was like, I'm not have to do it. I was like, you can do whatever you want with like my commission. I was like, but I'm not have to make people do this. I was like, it's illegal. And as soon as those closed, he actually paid me out and I just left. Went back to Venture for a bit and then I started Upward, but I just really wanted to build in a real estate company where there was a connection between like our own effort and the reward. So as far as. I think just break that down to like commission, right? Where it's like I really. I always kinda wanted a better split as an agent and I understand that there's like costs and there's overhead and there's all those things that go into running a brokerage, which I'm a lot more aware of now than I used to be.

Pete: Yeah.

Daniel: And workers comp, there's always like very unfun things that you pay for. But at the same time like as an agent when you're generating all of your own business and then you're giving a large split to your broker, you're like, what am I doing? It just feels like there's a disconnect there.

Pete: Yeah, totally.

Daniel: And so that was my motivating factor for starting Upward or obviously for myself but then also for other agents that we'd be able to offer a really competitive split that was better than what most brokers could offer. Just so especially on the ones that they were generating because as an agent there's levels of like you're generating your own business. And then there's business that comes from your broker that they're generating through marketing and stuff and I get 50-50 splits on that all day. I totally get that.

Pete: Yeah.

Daniel: Because there's so much more upfront cost to that. But when you're building a business through all of your referrals and like your own personal network and then the broker is taking a bunch of that you're like, okay, that doesn't really make sense.

Pete: Totally. Yeah it makes sense.

Daniel: So I think that was like kind of part of what was in my heart in Upward, that we would offer that.

Pete: Yeah, so it's been like ten years now with Upward?

Daniel: Yeah, nine, nine years.

Pete: Nine years.

Daniel: Yeah.

Pete: Yeah, that's awesome.

Daniel: Yeah, so I'm loving it though.

Pete: Yeah, so the next question I have that I'd love to talk about is you know what are your thoughts right now on, there's multiple things going on with the whole real estate community just in general real estate with interest rates. There's so much that we could talk about on this topic.

Daniel: Right. Where do we even start?

Pete: Yeah. So let's just start about with our community Reading.

Daniel: Okay.

Pete: How do you think we're doing in Reading for real estate in general on home values and demand with maybe supply like what do you see out there right now and in real estate right now with in our county?

Daniel: Yeah, that's a really good question. I think we're still seeing really limited inventory, right? Really there's not very many homes available for home buyers and I think that's causing home prices to stay high. And I think that obviously it. Everybody kinda spread that link like three or four months ago where it was like, "Hey Reading's predicted to be like the highest appreciating city in the US." Right?

Pete: Yeah.

Daniel: And everyone's like yay, and like all the home buyers are like no, all the home sellers are like yeah.

Pete: Yeah, all the renters wanting to buy I was like no. 0:15:45.7

Daniel: Yeah. That's totally a very bitter-sweet moment, right? So it's like exciting as a home seller, but if you're buying it's also kinda like oh, that's really difficult. That's some really difficult news to try and process and to bear, so I think Reading is just kinda seeing a lot of, I think that we're doing really well as far as like the health of the real estate industry here but there is a lot going on. So there's like lots of random stats about like I think I was listening to podcasts last week and they were talking about how if rates come down by a half of a percent. So we're around seven right now, is that?

Pete: Yeah.

Daniel: Like around seven?

Pete: Yeah. Low sevens, high sixes.

Daniel: So if we come down a half a percent then he was saying that all of a sudden 2.8 million buyers can now afford to enter the market that were pushed out of the market. Now, and not to get like tuned to the weeds on it a little bit but it's interesting because obviously just because someone can afford to buy doesn't mean that they will buy.

Pete: Correct, that's.

Daniel: Right. It's not a given. It's like, okay, now they can afford it but like obviously with what's happened with our economy and inflation not everybody is have to be excited about purchasing a home. So you got to figure like this is kinda how I'm looking at the math. Like you figure if there's 2.8 million people that can now nationally afford to enter the market, how many of those people will actually enter? And one of the things that I thought was interesting through some other data I have researched or heard and I just always listening to real estate podcast. I feel like I can nerd out on it just probably too deep but they said that basically it's 60% more affordable for someone to rent a house than is to like buy a house or for 60% of people.

Pete: In general? Or in.

Daniel: Right, just as a general state general.

Pete: In general, in the US? Okay.

Daniel: Yeah, so I'm like then we kind of have to look at that and be like, okay, out of the 60%, and use that as a way to really kind of break down. Okay, like I think that would leave like 40% other people. Anyways, however, we look at the math. I think it's important to look at some of those numbers to really get down to like there's probably a million to a million and a half people that would enter the market at that rate.

Pete: Yeah, if rates get down.

Daniel: Does that makes sense?

Pete: Yeah. Yeah.

Daniel: So it's like, it's more affordable and then there's a percentage of those people again where it's actually like they would really want to make that decision.

Pete: Yeah. And let's say it takes a year for rates to get down a half percent. Conservatively, I don't see rates coming down quickly. I mean the feds met today and they're not really doing much for us right now.

Daniel: Thanks guys. Super cool. Really great.

Pete: Yeah, but let's say it took a year my point to that is but wages continue to go up though, because of inflation so that actually bridges the gap a little even more too. So wages are going up, rates fall and then actually, it actually bridges more of that gap between that 60% that you're saying of affordability versus rent versus what did do you say 60?

Daniel: Yeah. It's 60% like more affordable to rent.

Pete: To rent versus.

Daniel: Than it is to own a house.

Pete: Versus own a house and I don't know what that metric is basically, it's probably just payment wise.

Daniel: Just based on payments. Monthly payments.

Pete: Yeah, just payments. Yeah, just payments, but what's interesting in our in Shasta County. There's actually math that you can come out with and find out how many of our population actually qualifies to. Makes enough income to actually buy a home.

Daniel: Like the average house, right?

Pete: Yeah, so that calculation is you take the total number of population and they know over history, over time, what our percentage of homeowners are.

Daniel: Okay.

Pete: Out of the whole population, right?

Daniel: Okay. So it's not about affordability. It's just like this is out of the whole population. How many people own a house?

Pete: How many people own a house?

Daniel: Okay.

Pete: Yeah. And it's like 50 to 55-ish percent of the population own a home. And then they also can track household formations. How many new household formations?

Daniel: Got it.

Pete: Right?

Daniel: People moving out. Yeah.

Pete: And based on that percentage of ownership, how many people own a home, the new. Yeah. And a new household formation is what that is, is let's say my daughter turns 18, and she moves out of the house. That's a new household formation. Maybe she gets married.

Daniel: Whether she's renting or owning, it doesn't matter.

Pete: Renting or owning, it doesn't matter. It's all going into that statistic, right? So that statistic is 56, let's say, percent are homeowners and that's been the same for so many years. So, if we know how many household formations there are, we take the 56% of the household formations and say, here's how many people will be buying each year.

Daniel: Got it.

Pete: So, with those.

Daniel: So, 50% of the household formations, that's the number that we're taking that are going to be homeowners.

Pete: Yeah. It's like 16,000. And I could share that on the video. It's like 16,000 families make enough income to qualify. And there's. And it's also based on the average income in our county for the average population.

Daniel: What is the average income?

Pete: It's like 72 ish.

Daniel: Okay.

Pete: Yeah. Is the average. And then which, by the way, Shasta County is the most affordable place to live in all of California, Shasta County. Based on our average sales price and our average income.

Daniel: Right. As opposed to something like San Diego.

Pete: San Diego or.

Daniel: Which is the most expensive in the US.

Pete: Right. San Francisco.

Daniel: Right.

Pete: Yeah. So, those areas obviously the affordability is way. I mean, I would hate to be.

Daniel: Oh my gosh. That's insane.

Pete: Yeah. I mean, a renter down there, I mean, those poor people, they're out of the market. At least up here, I think that there's still opportunity to get in.

Daniel: Yeah. Renting down there is like, I mean, obviously it's hard because it's all like relative, right? So, it's like everybody here has really felt rents going up.

Pete: Yeah.

Daniel: So, they feel it relative to what they used to be, right? But then you look at it comparatively speaking to other cities like San Diego, where it's like I know people down there where they're paying you know $5,000.

Pete: In rent.

Daniel: To rent a three-bedroom, two-bathroom town house.

Pete: The housing in general.

Daniel: Its a townhouse and obviously it's close to the beach or something but it's like that's huge.

Pete: Yeah, the housing in general is just more more expensive.

Daniel: Right.

Pete: Yeah, when. I forgot, I was going to say something about that. Yeah, renters, it's a really difficult decision for renters right now because they're having to go from, let's say, in our county, $1,500 to, if you want to buy a home for $300,000.

Daniel: $2,500.

Pete: $2,500. Exactly right.

Daniel: Oh my gosh.

Pete: Yep. Yeah. $1,500 to $2,500. So, it's a hard and that's your 60%.

Daniel: And you gotta pay for everything that breaks and you gotta pay for. I mean, and that's the crazy thing. And I don't think that. The fact that there's such a vast gap between rent versus owning as far as affordability goes, I don't think there needs to be any sort of shame, in like if you're renting for the season that you're in.

Pete: Absolutely not.

Daniel: Just rent. That enables you to save money. It puts you in a better financial position long term. I feel like sometimes people in our industry can be such high pressure because they really want to close a sale. And I'm like, what are we doing? Let's look at people, what is actually in their best interest long term. Let's guide them in that direction. And if it's not affordable right now then that is totally fine.

Pete: Yeah, yeah.

Daniel: I think about, part of what got me into real estate when I was at Verizon migrating out was like we had purchased a home, renovated it, I mean when we got started, we did the DAP program.

Pete: You did the DAP?

Daniel: We did the DAP for our very first house it was like 2001 it was December, 2001 when we closed.

Pete: Yeah.

Daniel: And we got that it was a $35,000 DAP loan on $111,000 purchase.

Pete: Wow.

Daniel: Our loan amount. I know this is like. I feel like this makes me almost like a boomer where it's like I bought a house for like 5K and some blueberries or something. But so like the house, the loan amount was like $76,000 and we didn't have to pay back that $35,000 unless we reified or something. You know how it works.

Pete: Yeah.

Daniel: But just looking at it now, I'm like, oh my gosh, I can't believe we even got that because I know how hard even when, is it still around?

Pete: It's still around. Yeah. I was going to say for anyone that's listening, they might be interested. So, if you want to share what it actually is, go for it.

Daniel: Right. So, City of Reading, like basically you have to qualify based on your income. You have to have lower income than the average, which we did because at the time I was like working full-time ministry and like making like barely anything. And so, totally qualified for that. And then we had to go through like some educational programs where they talked to you about like amortization on your loans.

Pete: Yeah.

Daniel: How much like you know if you buy a house for 135 you've paid $300,000 for it by the time 30 years lapses just stuff like that like education pieces but that was really it, it was like and your house had to meet certain standards. And I think it's so similar now it's just hard to get, when you're in what I would consider now to be a seller's market where we have limited inventory, it's hard to get sellers to cooperate number one with the condition that the DAP program requires.

Pete: Yeah.

Daniel: Because they want to be in near perfect condition, so that you don't get in over your head which it can happen really fast.

Pete: Right, right, yeah.

Daniel: And so it's conditioned. And then you just basically pay that back when you refinance or sell the house. And what we didn't really know was happening is we bought it like a really great time, 2001, right before the first boom. And then we remodeled it, did some nice work to it, did pretty much everything ourselves except for carpet. And worked super hard. And then like within a couple years later, we sold it for like 170.

Pete: Wow.

Daniel: Yeah, so it was a humongous return. Then we took all of that, put it into another fixer and spent three months fixing that up. And part of what like spawned us to go into the next house was we actually had a raw sewage back up in that first house, in that DAP house. And like, we came home one night from church.

Pete: Was it septic?

Daniel: No, it was like on city sewer. But it's like one of these old, they're called like dam houses, just because they were built during like the Shasta Dam era when it was going up. And it was over there in the Magnolia district off of Shasta street near Willis Magnolia right over there. And the thing is that they have where they're called, it's like a shared line. So the city doesn't maintain that sewer line until it gets out to Magnolia. So it goes out from our house to the shared line, and then it goes out to the city. So we come home from church and we like open the car door. It was like at night and I was like, man, what is that smell? I was like, that's crazy. I was like, what is that? And the closer we're getting to the house like the stronger it's getting. And we opened the door and dude, I don't think I've ever felt so physically like hit with a smell. It felt like I was like pushed. Yeah, it was we opened the door and it was just like so bad.

Pete: Wow.

Daniel: And like this is a terrible story. It's so graphic. But like it basically like had raw sewage had overfilled the tub, the toilet and gone like into our hallway.

Pete: Wow.

Daniel: And we were just like, what do we do? We hadn't been married like super long. We were new homeowners, we were like what in the world? So it was a crazy experience. And thankfully at the time we didn't have kids because we had to stay in a hotel for three months while we fought with our insurance about them covering it or not.

Pete: Wow. Now I imagine you tell the story to many of your buyers.

Daniel: Yeah. I try to. I mean, like as it comes up, especially like more like on the west side is like.

Pete: Yeah, if you see a house that's.

Daniel: On the west side I'm like, hey, like you got to get like a scope of your plumbing. We didn't get a scope. We didn't even know what that was.

Pete: Stuff like that. Buyers are super thankful for like those experiences save people tons as a realtor. Yeah.

Daniel: For sure. Yeah. And that's the kind of thing that just sticks with you. Like you're never. I'm not going to ever forget that. Yeah. So.

Pete: So you took all the equity that was out the house and then put it in the.

Daniel: All the equity in this one, put it in the next. After we got that all fixed. Got it all resolved with our insurance. We went to this next house, did the same thing. That one had more problems. So we got it for like one. I think we had like 135. And we still kind of had to battle mold and water stuff as we owned it. And then eventually when I started real estate, we did a heat lock on that one, like pull money out to kind of support me and give me like a runway.

Pete: A runway for.

Daniel: Right. So that's how I was able to quit Verizon like cold turkey. I mean, looking back, I probably would have done a little differently. Just like maybe drop down to part time at Verizon until I started getting like sales happening in real estate. I just didnt know how hard it would be. And it was really hard. Like that first year in real estate was insane. I think I had like 10-12 escrows and I think I only close like two, because they were all falling apart for different economic reasons. People were losing their jobs. They just. I couldn't get escrows to close. And part of that's an experience. But the other part was just the economy. Yeah. So but yeah, so we put that money in that next house. And then we did that one other time. Sorry, two other times. So.

Pete: Wow. So a new homeowner, let's say that is wanting to get in the game. How much was your payment when you bought that first house? What was your payment that did you had to make? I mean, it was probably pretty low.

Daniel: It was so low because it was on the very first one with DAP.

Pete: But compared to your income, though, at the time.

Daniel: I don't even know if I was making like a grand a month honestly, like it was really low. So I think my payment was like probably like 500 or 600 with PICI.

Pete: But at the time it was probably scary for you.

Daniel: Oh, yeah, for sure.

Pete: It was probably scary because your income was 1500 a month, let's say. That's a big bite to swallow.

Daniel: It was huge.

Pete: Yeah. So thank you for sharing that story because I imagine there's a lot of people that will get a lot out of that story. I mean because we all have stories of how we got in to the real estate game and a lot of people are facing that. Getting into the real estate game whether. And by the way the dream for all program, the California program, you've heard about this.

Daniel: What do you think about that?

Pete: I actually think it's the best thing that the state has ever done for homeowners and the reason why is because it's kind of a genius move, the goal of the program is for it to be self-sustaining so what the program is and you know this but I'll just explain it but.

Daniel: It's great.

Pete: That the state of California last year they gave $300 million for first-time home buyers.

Daniel: Okay. And they went pretty quick like super quick.

Pete: Yeah, it went fast. Super fast, it was like three days and the money was gone. And the reason why it was gone so fast is because they give you 20% for the down payment. So like $300,000 home you're getting $60,000 was kind of like what you got. So it's actually the same exact what you got back back in.

Daniel: Its pretty much is.

Pete: Back in 2001.

Daniel: I think thats about it.

Pete: They gave you 20% down.

Daniel: It was.

Pete: The difference here is that the income limit so like that program that you got is still around but you can't make more than like 40,000 for a family size of three. Like 45, that 40 something thousand. This one from the state you can make up to 177 this is why it's such a big deal, you make up to 177,000 and get the 20% down.

Daniel: What do you think about that because it doesn't that mean that a bunch of people who technically would be able to qualify on their own would be stepping into the program and taking it from people who can't qualify for it?

Pete: Who still need. Can't qualify. Yeah, it's a hard move because who says that you can't or can't qualify from you know like someone that wants to keep their payment at let's say 30% but someone else is willing to go up to 40% and the one that can go up to 40% is technically needs it more than the person that got 30%.

Daniel: I just wonder how they came up with those numbers or how they decided that, these people at this income level.

Pete: Yeah, so what they did so because it went. Because it went so fast last year, it was gone like three days and all you had to do to qualify is, A, just qualify for the mortgage and 660 credit score and 20 or. And qualify income wise had to make enough income. But now they learned from last year and they said, okay, we're going to make it harder to qualify. And so the money doesn't last. Doesn't go so quickly. So it made it harder to qualify. And so that is the first time home buyer. You have to be a first time home buyer and you have to be a first generation homeowner.

Daniel: Oh wow.

Pete: And so first generation homeowner means that both your parents cannot own currently a home. Now, your parents could own in the past, but they cannot own currently. Now, if your parents are no longer here, when they passed, did they own a home when they passed? So they even, so the state.

Daniel: Really? So you can't have inherited a home?

Pete: Correct.

Daniel: Otherwise, you're disqualified.

Pete: So the state actually hired attorneys and background people to.

Daniel: To like research.

Pete: Double check the people that and.

Daniel: How long is it taking right now for someone to go through that process?

Pete: Well, to me it's just a couple questions, so like. Oh you mean for them?

Daniel: Yeah, yeah, yeah. So like for them to qualify for the program.

Pete: Yeah, so here's the process is, once they get pre-approved, it's going to open up I believe on the 3rd of April so you still have time to look.

Daniel: It's going to be flooded man.

Pete: Yeah. On the 3rd of April, it's a lottery. So it's not first come, first serve. Last year, it was first come, first serve. So now it's a lottery. So what you have to do is you have to get pre-approved through a CalHFA lender.

Daniel: Okay.

Pete: And once you get pre-approved through the CalHFA Lender, you can go on the website to find out or you can call me and I'll help you. But once you get pre-approved, then I give them a form from CalHFA, and then they take that form and they give it to CalHFA.

Daniel: Okay.

Pete: So the borrower has to give the form to CalHFA not the lender.

Daniel: Got it.

Pete: The borrower gives it to them. It goes into a hat, and they do a drawing. It's a lottery. And so this year, instead of $300 million, it was only $220 million. This is the beauty of the program. This is what I wanted to get at of why I think it's so great because over time it's going to be self-sufficient, just like the city of Reading is self-sufficient because what happens is they know over time, like, you sold your house. And when you sold your house, you had to.

Daniel: Pay them back.

Pete: Pay it back.

Daniel: Plus interest.

Pete: Plus interest.

Daniel: Correct.

Pete: Right. And so they made money on the program, and that money they then put into someone else that needed the money.

Daniel: Right.

Pete: Right. So the same thing is going to be for California. It just takes a few years for it to get it going, that they have to self-fund it. And then eventually it's going to be self-funded and it's going to grow. And the reason why it's going to grow is because this program, the buyer, the first time buyer that gets this program, they have to share the equity that they gained after they sell. They don't make any payments and there is no interest that they pay. However, they share the equity gain. Now it's not just.

Daniel: So they don't have interest.

Pete: They do not have interest. They do not have interest at gains. No, they just share the equity. Now, if they never sell, they never sell. They don't have to ever pay it back. Yeah.

Daniel: Does it always have to be owner-occupied or do you have to occupy it for a certain amount of time?

Pete: You can't move away and rent it, no.

Daniel: Okay.

Pete: You have to. If you move away and they find out, they'll ask for you to.

Daniel: Sell it. Liquidate it.

Pete: Just kind of sell it and pay them back.

Daniel: Like force a sale basically. Yeah, yeah.

Pete: Yeah. But with that and so you only share 20% and some people with a reduced amount of income can share a little bit less of the equity.

Daniel: Okay.

Pete: But that extra 20% when they're getting paid back and then refund the program for the next year. So eventually, let's fast forward 10 years, 15 years, this is going to be. I don't see the affordability problem going away anytime quick.

Daniel: No.

Pete: I see it getting worse. I mean what do you think?

Daniel: Yeah.

Pete: Unfortunately, I see it getting worse.

Daniel: I hate saying it, but I feel like it's not going to get any better.

Pete: And it's super sad.

Daniel: The appreciation of real estate goes up so quickly, but the increase in incomes doesn't catch up with how quickly real estate's appreciated. And so even though the market's slowing on appreciation, it's still not slowing enough to make up for what people need in income to get to close the gap.

Pete: Yeah. You look at areas like San Francisco and LA, I mean, the affordability gap is big compared to the population and so California, I think knows this. And so I think this is why they started going down this path.

Daniel: Yeah. It's a great program.

Pete: Yeah.

Daniel: I mean, if you can qualify, it's like, why not?

Pete: Yeah.

Daniel: I think what's unfortunate is like, it's so fun to watch shows on like HGTV and like all these like flipping shows and all these kinds of things that are happening is very entertaining, but it leaves this perception that somehow like it's really easy to make quick money.

Pete: Yeah.

Daniel: Right? And really the best thing in real estate is when you can buy it and hold it for a long period of time.

Pete: Yeah.

Daniel: Right.

Pete: Yeah. So true. So good.

Daniel: So just so being able to start at any point, not almost at any cost, obviously you don't want to be house poor. You don't want to over leverage yourself. But I think that when. As soon as you can start is when you want to start.

Pete: Yeah.

Daniel: Because that's how wealth gets created.

Pete: Yeah, so true. 0:37:46.3

Daniel: So, I think that we got really fortunate. Like, that's a humongous blessing that we got a house when we did through the DAP program. And then we put all that money in the next house and it appreciated. We reified so I could start real estate. And then, the next house we got was, like, a short sale in Hacienda Heights.

Pete: Yeah. 0:38:03.9

Daniel: So we were owning this when we had three kids in a three-bedroom, one-bath house. It was like, 1,100 square feet. It was starting to feel really tight. It was three young girls and one bathroom, it was starting to feel really tight and our agent of mine that was our agent that was a friend of mine she called me and she was like, "Hey, I have this listing in Hacienda Heights coming up and it's a pre-approved short sale and.

Pete: Wow.

Daniel: She's like, "The owners are going through a divorce and they don't want to mess with showings," and she was like, "It's four-bedroom, two-bath, 1616 square feet in Hacienda Heights and she's like, "Do you have anybody for it for 175?" And I was like, yeah. I was like, it's me. I was like, it's me. And I got the phone. I was like, "Hey Cole." I was like, "We are buying a house." She was like, what? So we figured it out, but we kept this house as a rental. And then we bought this other house, fix it up. And then two years later, I had remodeled all the bathrooms just slowly over time. I'm not a great handyman, but I can figure a few things out, make a few mistakes, but we'd kind of remodel all these bathrooms. And then we were able to sell it for $250 or something like that. And then we put that money into the house that we're in now.

Pete: Wow.

Daniel: And I think what's important in all these situations is just to be as prepared as you can. Like, be ready so that when an opportunity comes.

Pete: Oh, I love that.

Daniel: You can jump on it because, you can never really determine when the opportunity is have to come, but you can determine how prepared you are.

Pete: How prepared. That's so good. Yeah.

Daniel: And I feel like it's like even with buyers that I work with, it's like pulling teeth.

Pete: To get them to be prepared.

Daniel: To get them to talk to a lender. Like, "Hey, go talk to Pete, meet with him." Just know so you can get clarity and they're like, oh, we haven't found a house yet. It's always this constant struggle of trying to get people motivated to be prepared, but you can't really determine when those opportunities are have to come. You just can't, but you just have to be ready. You know?

Pete: Totally, I totally agree with that.

Daniel: And so we did that on that house and then the house that we're in now is just such a god story for us because we saw this house come back in the market. Scott Pewitt is a friend of mine. Was like, "Hey," it was his listing. He was like, "Oh, come look at this house with me." And I just wanted to preview it. And we were living this house for 250,000. This house, this is 2014. This house was on the market and it was a three bedroom, two bath, 2,700 square feet. And it had a detached shop that already had a full bathroom and an office in that shop. And I went there with Scott, kind of just for fun, just to look at it. It's on two and a half acres.

Daniel: It's in Northeast Reading. And we go and look at it and I'm like, "We're have to buy this house. You know?" And I told Nicole, I was like, "Hey, we're have to buy this." She was like, "What are you talking about?" And it was just the wrong season to be looking at an upgrade house for us. Complete wrong season. Real estate had been weird for us the last few months before that. It was just weird financially, but I was like, I feel we're supposed to do this. And we made an offer contention on the sale of our house and we had our house on the market for three weeks. It was like crickets. It was October, November. And we just couldn't get anybody to bite. And so I was.

Pete: You were in contract on the new house?

Daniel: We were in contract contention on to sell this one, to buy this one. And so we go back to the seller and I was like, "Hey, listen." I was like, "We love your house. I feel it's have to be our next house." And part of what made this house work in my mind, and even just talking to my wife was like, "Hey, listen, that shop, we're have to make that a guest house and then we're have to rent that out." So we're talking about how to be creative, right? How to find different ways to make things work. And that was it. I was like, if we fix that house up with the equity from this sale. We make that a rental. Now all of a sudden our payment's the same. Our net payment, when we rent that little guest house out is the same as what we're paying now. But we're on two and a half acres and we almost doubled our square feet, our square footage.

Pete: Wow. Pretty family.

Daniel: And she was like, for our family. And I was like, we can be there forever. It's be like a forever house. And she was like, I don't know. She's like, but if you feel like we're supposed to do it, she's like, let's do it. And she's like, if we're homeless, this is on you. She's like. Which I was like, okay. So I was just praying about it. The house was empty. I would just go over there and just be like, God, please if there's a way, make this work. And so our house wasn't selling the one that we needed to sell. We went to the seller and said, "Hey listen, I'm sorry, it's just not working out. We haven't been able to get a buyer." And she said, "Well, how about I just buy your house?"

Pete: No. What? I did not know that.

Daniel: She said, how about I just buy your house for cash? And because she needed to move to go be with the family. She said, "I'll just buy your house for cash." And she's like, "If I need to, I'll do some small renovations and I'll resell it in the spring or I'll just turn it into a rental."

Pete: No way.

Daniel: And we're like, okay. But there's a few things. There was some small termites, not termite problems, but section one problems, some repairs. And we're just, like, we can't do these repairs because the numbers have to be exactly this to make it work. And she was like, it's okay. And we were just like.

Pete: Oh, big time.

Daniel: We were like. It was such. For our family, it was such a God moment of his favor, blessing, all that kind of stuff. It was just crazy.

Pete: And you probably referenced that story. You probably go back to that story.

Daniel: Totally.

Pete: Other points in your life, when you have other struggles or other things, you're like, no, God, you did this here.

Daniel: Absolutely. Totally. Yeah. Those are these moments that you look back at your life, you're like, oh yeah, God was with us in that moment. And I can say that for me, I can remind clients of like, "Hey," when we're in scary situations like, hey, if this is the Lord, things will work out. If it's supposed to happen, it's have to happen. And if not, he has something better for you. We just have to stay in that place. And having stories like that where I feel God came through for us are critical. And I think as far as like, involving spirituality in real estate, it can get kind of sticky honestly. It can get really weird, really fast. Because you have. I think sometimes buyers can think like, oh God just wants me to benefit, but not the sellers.

Daniel: You're like, "Hey listen, I feel God wants to bless the sellers too." Not just bless you with the deal. We have to look at this from a perspective of everybody benefiting in this situation. And I think as agents and as lenders, I think we have to be careful too to be like, oh yeah. Like, God wants you to have this house. So I'm really cautious to tell other people like, "Hey, God is in this." I can say that for me because I know. I know my own story and my own experience. But sometimes you have to be careful because if you're like, "Oh yeah, God wants you to have this house, what if they foreclosed?" What does. You don't always know until a year or two down the road, if that was the right decision.

Daniel: And so I think you have to be really cautious and you don't want to manipulate people or get weird. But you always want to encourage people to pray about their decisions and have a piece about what they're doing. And feel good about it. So.

Pete: Totally. And I see that too. I've had clients that they just don't have like. And I can tell, I can tell when there's not a piece about whatever it is, and it could be like, I'm like.

Daniel: They're forcing it.

Pete: Yeah. Or it's the best deal ever. And I'm like, "Oh yeah, this is great." But then they're just like, yeah, I just don't know. It's not there, but I hear what you're saying. And yeah, you definitely have to be careful with that, but I'm.

Daniel: For sure. And I think even to like, when we're navigating moments of like, maybe this, like, I have a background, like pastoral leadership degree, this kind of ministry experience. To me, that's where some of this comes in for me as far as my own personal faith. But, even in navigating multiple offer scenarios, I think it's so easy to get caught up in just trying to win. Like, you just want to win. You just want to have the best offer. You want to get your contract accepted. And I think that that's important and I'm going to support buyers as far as they want to go.

Pete: Yeah.

Daniel: But a lot of times the advice I give is like, hey, listen, like, you need to figure out what number that you have a piece about.

Pete: Yeah.

Daniel: And what number you feel if you don't get it, that's okay.

Pete: I love that. That's so good.

Daniel: Because you got to go into it like, hey, the number's 435.

Pete: Yeah.

Daniel: And if we get it, we're stoked. And if we don't get it, we know we did the right thing even if the outcome isn't desired.

Pete: And then you and then you're talking to your client and you're like, hey, I need you to find that number for you.

Daniel: Yeah.

Pete: Yeah. But what is that number?

Daniel: And I'm usually like, hey, I could see these numbers, like here's the market range for this property in a multiple offer scenario and when we go above list price, I'm like, this is the more subjective range. This is not really science anymore. This is very subjective.

Pete: Yeah.

Daniel: This isn't like, oh, we're looking at all these comps that will determine how far above list price you can go. And I'm like, that's very subjective. It's more of the emotional part of your decision. How badly on a scale of one to 10 do you want this place?

Pete: Yeah.

Daniel: That's how far you go above list price. And I'll usually try and get a range.

Pete: I love that.

Daniel: Like, hey, I could see like, 5K to 10K above or something like that. And obviously too, you don't want people to be like, offer too much.

Pete: Right. Overpay for the home.

Daniel: Yeah. And maybe that's not the case as much right now, but like, during COVID that was constant. Almost every scenario we walked into was a multiple offer scenario.

Pete: Wow.

Daniel: Or it felt it like, right?

Pete: Yeah. Wow. Those are some amazing nuggets, I think that, yeah, that you just shared. Incredible stories too, great, incredible. So in the house that you bought, the last one that you talked about with that extra in-law unit, I wanted to talk about house hacking because you mentioned that you listened to a lot of podcasts.

Daniel: Right.

Pete: And one of those, you've told me before, but it's. Was it Big Pockets or?

Daniel: Bigger Pockets.

Pete: Bigger Pockets. Yeah.

Daniel: Yeah. That's kind of one of the biggest ones.

Pete: I've listened to a few of those and for the audience it's called Bigger Pockets. Yeah.

Daniel: Yeah.

Pete: And if you want to learn about house hacking, you listen to that podcast. So yeah. So let's talk about house hacking. That was your first house hack that you did?

Daniel: Yeah. Yes. Yep. That was the first one we did.

Pete: Yeah.

Daniel: And we even helped other friends and family do the same thing.

Pete: Doing the same thing. Yeah.

Daniel: Yeah.

Pete: I think more and more that families have to do stuff house hacking.

Daniel: For sure.

Pete: So can you give some examples of some house hacking that you've helped clients with or that you've experienced or that that can sometimes work out?

Daniel: Yeah, for sure. I think a good example is my brother and sister-in-law, I don't think they would care sharing the story, but they had seven kids, big family, which you, how many?

Pete: Eight of us.

Daniel: Eight of you. That's right. So you're familiar with the big family stuff.

Pete: Yeah.

Daniel: So they were kind of displaced from their house because during the car fire they were renting a house and then their owner needed to sell their house because of some stuff that had happened to him through the car fire, his business was deeply affected. So he actually had to sell the house that they were renting.

Pete: That they were renting.

Daniel: Yeah. So they were displaced. They had to move out and they were living with my mother-in-law and just trying to figure out how to buy a house in that moment.

Pete: Seven kids.

Daniel: Seven kids living with mother-in-law. And so we looked at. Man, I think that they said we looked at almost a 100 houses through six to nine months, just trying to find houses that would fit. The dream was a house on acreage, right? With kids, seven kids. It's like, you want them to be able to run around. And so we ended up finding something off 299 out there past Chester College, and it was just this house with a pool on acreage and it had this kind of neglected in-law unit. And so that was the sign, that was it. It was like, that's how we can make this work because we had done it ourselves and they knew about it. That was kind of what we were looking for, was something with the guest house. Because once you get up into looking at the range of houses on acreage, your price skyrockets.

Pete: Oh, big time. Yeah.

Daniel: And you're just paying for land, the houses are actually usually a lot worse.

Pete: Yeah.

Daniel: Like, we go out into areas like Palo Cedro and all these other places and you're paying for the area. You're paying to have an acre to five acres, maybe 10 if you're lucky.

Pete: It's a premium.

Daniel: It's a huge premium. Right. And it also means that you're have to have to do a lot of work to the house. So this thing was in major disrepair, super-neglected. And they took this thing on, you know?

Pete: Wow.

Daniel: And really made it affordable because of being in the house.

Pete: Yeah. And the home. So it had this in-law unit that they were able to remodel and then they got the rent for that in-law unit to help cover the payment difference.

Daniel: Correct.

Pete: So that they could afford the home.

Daniel: Yeah.

Pete: It's amazing.

Daniel: And that's the essence of house hacking. I think that's the ideal scenario. I have some other clients that I helped buy in the garden track and they were actually tenants at our house that were living in our studio and they wanted to buy. I was able to help them with their purchase. Basically, what we found a house, because I was like, guys, I was like, wait, now when you're. I'm starting to advise clients that are young. I'm like, man, if I could go back, like, I love our story, right? I love the house that we bought. So much favor, incredible moments. But I also look at it like, man, if I could go back and have the first one be like a duplex or a triplex or a fourplex, that all day, right? Because all the payments from the other units are subsidizing your mortgage or helping you to cash-flow or helping you to build your savings or build your portfolio. Having a scenario like that at the start, that's ideal. And like, didn't Fannie Mae just come out with something in the last year?

Pete: He did. Yeah. Yeah. So you can actually buy a fourplex or a triplex before this was what the rule was. A year ago you had to put, at least if you were have to be live in one of the units and rent out the other three, you had to put 20% down on a fourplex. If you didn't live in the unit, you had to put 25% down. So, FHA though says you can buy 3.5%, but that's almost impossible. And the reason why is because the other three units at 75% of the rent with. Sorry, the four units at market rent, at 75% of the rent has to be equal to or more than the mortgage payment.

Daniel: And how can you do that when you're putting 3.5% down?

Pete: Correct.

Daniel: Is it virtually unattainable?

Pete: It's very hard. Yes. It's very hard to do. So a lot of people couldn't do the FHA product. So Fannie Mae came out and said, "Hey, we're have to allow," because they obviously know we have a housing shortage, they know that we have a affordability challenge. And so they said, "Hey, you can buy a fourplex and only have to put 5% down and not have to have it qualified for the income, not have to have the income to qualify FHA." So you literally put 5% down on a fourplex. So I actually did the math on one of them in Reading that I saw for sale, a $600,000 fourplex. Each unit was two bedroom, one bath units. And you could rent, I looked it up, you could rent each unit for 1,300 or $1,400 a month for a two bedroom unit. So three units.

Daniel: It's like four grand or whatever.

Pete: Yeah. So if you live in one. Yeah. The payment was 4,300 bucks with 5% down. 4300 and then.

Daniel: All day.

Pete: And then the other three units you rent for $1,300, $1400, right? And so what is. Let's say 1400 bucks, it's 2800 plus another 14. 38, 40 or.

Daniel: 42?

Pete: Yeah. Something like that. Anyways, it came out to be where the one unit was actually less than. It was like a $1,000 $1,100 that you would pay for your house, for your housing, and for this is for a family. Like maybe they just are getting started and they have the ability to put the 5% down. And by the way, that 5% you can do as a gift for a fourplex.

Daniel: Oh, my gosh.

Pete: And you can do this at three-plex, two.

Daniel: It's so crazy.

Pete: So yeah. That would be an extreme awesome way for a house hack. And keep in mind, like, and I always remind clients when I'm talking about this is like, rent goes up too. And so if you factor that into your numbers, rent. You might not be cash-flowing a lot, maybe a little bit rent goes up to let's say 5% a year. And so you.

Daniel: Just have to manage it well, right?

Pete: Yes, exactly. To manage the property.

Daniel: People get stuck. Just like keeping rent the same, you have to build in these annual increases.

Pete: Correct.

Daniel: And I know it's not fun to hear for tenants. That's not, but with what's happening with inflation, you have to do it otherwise you're.

Pete: Yeah. Yeah, yeah. Yeah. So with that, in 5 or 10 years, you're sitting really, really, really good, you know? And then in two years, you save up another 5%, go buy another, place.

Daniel: Absolutely.

Pete: You do that.

Daniel: So yeah, everybody in that space, that's where I'm like, if it's a couple or they have one kid, maybe two kids, it's like, hey, if you can start like that, start like that. Because that foundation allows you to build wealth. Right? That income, it's just a humongous amount of leverage that you're walking into when starting your real estate journey, but yeah, that couple that I was talking about that bought in the garden track, they had the main house and then the back house was a small, full blown guest house ADU. And they decided to live in the guest house. And to rent out the main one. And it almost clears their entire payment.

Pete: That's amazing.

Daniel: And it's been a lot of work. Like, it's been a lot of managing people.

Pete: Learning, yeah.

Daniel: Managing the drama of your tenants and.

Pete: Lot of learning.

Daniel: It's not this is, you just walk in and it's easy. There is a lot of work that goes into passive income. Ironically speaking.

Pete: That's so good.

Daniel: There was a ton of work that goes into passive income.

Pete: Yeah. If it was easy, everyone would do.

Daniel: Oh, for sure. And I just wish it was called something else besides passive, because it's the furthest thing from passive.

Pete: From passive. Yeah. You've gotta stay up on it. Yeah. A bunch of rentals, you can't ignore your repairs or. Yeah.

Daniel: So we've kind of gotten into a little bit more of that. Last few years, we bought a triplex, renovated that and we bought it for a crazy good deal because the people who owned it hadn't been keeping up rents. We bought it in 2021 and the total rents for all three properties was $1,200 a month.

Pete: For all three?

Daniel: Yeah.

Pete: Holy smokes.

Daniel: It was like, it might have been 12 to 15, it was right in that range.

Pete: So like 300, 400 bucks for each?

Daniel: It's like 400, 500 bucks a month. And they were one bedroom, one bath. And one of them was big enough to convert to a two bedroom, one bath.

Pete: Wow.

Daniel: So we ended up doing that. And then we got from one unit what they were getting for all three. Just as an example. So I just think that sometimes properties just need to be managed well. And you have to stay on those yearly increases. Otherwise, you put yourself in a position as a landlord where you're not have to be able to take care of the things that are happening to your property or where you'll just have to sell it at a loss, like, those sellers did at the time. So.

Pete: Yeah. Yeah. Wow. Which creates more opportunity.

Daniel: It does. It does.

Pete: Because not everyone's have to do that, what you just said.

Daniel: True. That's true.

Pete: Yeah. Wow. Super good. And obviously, anyone that's listening, I think the content here is super good for a lot of buyers that want to get into the market. How can buyers get ahold of you?

Daniel: Yeah, so my number's super easy to remember. This is the benefits of working at Verizon is grabbing a number that was easier member. So 351-5555.

Pete: 5555?

Daniel: Super easy. All fives.

Pete: So I have you in my phone. But I don't know your number because it's just Daniel Miller and.

Daniel: Yeah, totally.

Pete: But that's awesome.

Daniel: And then social channels are danielmiller.realtor. So that's where I post real estate content, and my website is the same danielmiller.realtor.

Pete: Yeah. That's super awesome. Okay. So we're have to close with a couple more questions. So we talked a lot about the house hacking. If an investor called you and wanted to look at some opportunities today or find some great rentals or potential flips, any good ones out there that you know of right now?

Daniel: Good question. So I keep a running list, as a everyday I'm going through the MLS just for myself. And then just to see what else is, it's a good deal. So I keep a running list. I'm trying to think if there's anyone I can think of off the top of my head. I'd have to look at the list, so I don't remember exactly, but we did that with some clients that you helped recently. We closed on one on Park Marina.

Pete: Oh yeah. That was a good little.

Daniel: That was a great one. So that was around 360, 370.

Pete: That was like a house hack.

Daniel: It's exactly a house hack. And basically what it had was an attached ADU in a sense. So it was basically like a master suite, but it had its own entrance. And so they're have to rent that out separately or live in it and then rent out the rest of the house. And then they have plans to renovate a shop in the back into a full ADU.

Pete: Yeah. That's awesome.

Daniel: Which they made sure to check with the city before they close, if that was even a possibility or not. So scenarios like that are out there. I just think you have to be. We talked about, you have to be ready, you have to meet with the lender and know your numbers and then just be looking harder than I think most people look, you have to be vigilant.

Pete: Yeah. So an example of that would be you see a property and the pictures aren't very good, so you just kinda skip over it.

Daniel: Exactly.

Pete: So you want to look.

Daniel: Or like, if there's only one picture.

Pete: And you.

Daniel: Bro, that's a huge sign. It's a huge sign because it's an indicator that property's not being marketed well. If the property's not being marketed well, there's have to be lower competition.

Pete: Less people viewing it.

Daniel: Yeah. And this triplex that I mentioned to you that we renovated, we actually just sold it and did really well on it. But the reason why we had that property or had the opportunity to get it, I usually look a couple times on the MLS a day if I can, like morning and then afternoon. I looked at it after lunch. I saw it pop up. It popped up at 175 for a triplex on Olive Street which is in the Magnolia District. It's like the area that I've already been targeting because as a general thesis, my approach is I wanted to be within five minutes to both hospitals and the courthouse. And because I feel like it's high demand, there was great rentals for nurses, for people who are working at the courthouse. And I just love the area. We've loved our West side houses. We just have a lot of, like there's a lot of charm, a lot of character over there.

Pete: Yeah. That area is amazing. I love that area too.

Daniel: So I think the other part to pull that out is like, you want not only we be prepared, but you want to be vigilant. And you want to have an area almost pre-picked out if you can, a targeted area that you want to buy.

Pete: That you can be vigilant on.

Daniel: So that when that thing pops up, "Hey, this is art. " I don't have to wonder if this is in my buy box or not, I already have a preset, like a buy box so to speak. You want to have that set so that when it comes that you're ready. So it popped up one picture, I saw it for 175 and I was like, "What the heck?" I was like, "This is the craziest deal," because I think that's like, I don't know, 58,000 per unit.

Pete: Oh. It's way under. People are buying it 150 a unit or something.

Daniel: Yeah, and we're almost close to two a unit now, 150 to two a unit. And I was like, what the heck? And there was one picture and it said that there's no off, no showings, but they're doing showings subject to offering. So offers are subject to inspection.

Pete: Oh, I see.

Daniel: Which is common obviously with investment properties. They don't want to spook their tenants. All of the units were all occupied. And I was like, okay, I guess we're offering on this. And I just. I already had a pre-qual. I already had it ready to go because I had been looking for six to nine months.

Pete: Yeah. You were prepared.

Daniel: I've been looking. Exactly. I've been looking for six to nine months. I had my pre-qual ready to go. I saw that. I wrote an offer and I was like, "Cool." I was like, we're buying this thing and she was like, oh my gosh.

Pete: That's awesome.

Daniel: So that's not always great. I can do better at that with getting my wife more involved, but.

Pete: She trust you.

Daniel: I'm trying to work on that. She does. She does. And she's been amazing at being supportive and her perspective and working with your spouse, working with your partner is so important because she has a perspective that I need. I desperately need someone in my life like her because of so many reasons. Obviously, I love her as my wife but even just this example of real estate, I tend to be very entrepreneurial, very risk-oriented. If I didn't have her in my life, I'd probably be bankrupt. I'd probably have lost all my money because I tend to pull the trigger first and then ask questions later on some of this stuff. And then she really helps me to think through the details of something.

Daniel: She has a more, a longer term perspective that I really need. And I think that having someone in your life is important. That is important when you're in this and valuing their opinion enough to listen to it, even if it may not be what you want to hear. Even just as an example with this triplex, obviously she was supportive of us buying it and renovating it, going through all this process. But initially, I was like, "Well, the numbers are have to be so good to make this a short-term rental," like Airbnb or maybe midterm rental for nurses. Because at the time, like obviously COVID time, the short-term market for mid, or what we call midterm market for, what's it called? Furnished Finders?

Pete: Furnished Finders. Yep.

Daniel: So the midterm market was so strong, it's like you can get 1700 for a one bedroom.

Pete: Yeah. Furnished. Yeah.

Daniel: Furnished.

Pete: Yeah.

Daniel: Yeah.

Pete: Wow.

Daniel: And those numbers have come down post-COVID, they're so good, but they're not as exciting. But then I started doing math in my head. I was like, oh my gosh, we have three units, just furnished all of these, and we'll just crush it and she was like, "Well, I've really got a vision for having tenants here, long-term that would really appreciate it and would really enjoy living here," and that was hard. I was mad at first, if I'm being honest. I was like, just because I knew that the numbers weren't as good. But we ended up deciding to sell it a year and a half later. And having long-term tenants in there was way more advantageous for selling it than it was if we had tried to do midterm because midterm's very unpredictable. It's not consistent, they're only there for 30, 60, maybe 90 days. And you gotta go find someone new. So selling that to an investor is a lot harder.

Pete: Than a long term person.

Daniel: Right.

Pete: That totally makes sense.

Daniel: And we had long term tenants in there, leases through July and the investor was super-excited about that.

Pete: Wow.

Daniel: So, just that perspective and her perspective has just been so invaluable.

Pete: Yeah. That's awesome. I think that's an amazing way to wrap it up. That's awesome, that's a pro tip to have someone in your life that you trust and can help you.

Daniel: For sure.

Pete: Yeah.

Daniel: Yeah, absolutely.

Pete: That's cool. Daniel, thank you so much bro. I think we hit some really good content, really appreciate you coming in, man. That's super great.

Daniel: Thanks man. I really appreciate being here.

Pete: Yeah. Thank you.

Daniel: Love it. Alright. Awesome.

Pete: Yeah.