You can go to 10 states and get 10 different ideas of what a turnkey rental means. Seeing a need to create a benchmark for the industry, Kathy Fettke created the Real Turnkey Standards, a checklist that sets the tone for what turnkey means. If you didn’t know Kathy yet, she is an active real estate investor, licensed real estate agent, former mortgage broker and host of the Real Estate Wealth Show and Real Estate News for Investors podcasts. Join in as she talks to Moneeka Sawyer about the opportunities you can take in building passive income with turnkey rentals. She also shares her predictions on real estate investing opportunities for the rest of 2020 and beyond. Want to hear her step-by-step process of turnkey investing? Tune in to Real Estate Investing For Women – Extra as well and join Moneeka and Kathy there!

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Listen to the podcast here

How To Earn Real Wealth From Turnkey Rentals With Kathy Fettke

Real Estate Investing For Women

I am so excited to welcome back to the show, Kathy Fettke. For those of you who don’t remember Kathy, let me tell you a little bit about her. Kathy is the Co-CEO of Real Wealth Network. The bestselling author of Retire Rich with Rentals and host of the Real Estate Wealth Show and Real Estate News for Investors podcasts. She is an active real estate investor, licensed real estate agent, and former mortgage broker specializing in helping people build multimillion-dollar real estate portfolios that generate passive monthly cashflow for life. With a passion for researching real estate market cycles, Kathy is a frequent guest expert on CNN, CNBC, Fox, Bloomberg, NPR, CBS, MarketWatch, and The Wall Street Journal. She was also named among the top 100 Most Intriguing Entrepreneurs by Goldman Sachs two years in a row.

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Kathy, welcome back.

Thank you so much for having me.

Kathy, you’ve talked a little bit more about market research and what the market is going to be doing. I want to focus on your turnkey business. Could you tell us a little bit about how you got started with that?

It was back in 2004 when I was a mortgage broker and I learned about the business through mortgage brokering and many of the clients that I worked with were buying properties all over the country. I started to investigate that and find out why. It was simply because there was this word ‘cashflow’ that a lot of Californians don’t understand or don’t know what that is. It’s impossible. It’s cashflow but it’s of the negative variety. That’s what people understood. If you buy a property in California, you might breakeven or negative cashflow but it will appreciate so much that it offsets and makes it worth it.

The down payment alone is difficult for people to come up with to buy very expensive California property. I learned long ago that if I wanted this thing called cashflow, which is more of a sure thing than appreciation that it wasn’t going to be in California, therefore we’d have to get good at figuring out how to buy rental properties where I can’t drive by them, fix them myself if needed, or manage it myself in any way. That journey started in 2005. I also had Robert Kiyosaki on the Real Wealth Show which is my podcast and I was doing it way back then.

In 2004, real estate prices had doubled if not tripled in some areas. Kiyosaki came on the show in 2005 and he said, “I made all this money. I’m going to sell now while everybody else is buying because they think these prices are going to continue to go up.” What a lot of people don’t realize is that when values go up, that’s the time to cash in, take that money, and buy cashflow. That’s what I learned from him. I jumped on an airplane, went to Dallas because he said that’s where he’s buying, and he gave lots of good reasons. The job growth, population growth, affordability there, and infrastructure growth. I came back with five properties that cashflowed with what would have been a down payment on properties in California. That’s what started it.

I talked about that on the Real Wealth Show and people said, “I want to do the same thing. How do I do it?” I said, “Here’s the real estate agent I used. Here’s the property manager I used. Here’s the lender that I used, which at the time was me. Here’s the whole team. Here’s this turnkey process for you.” That was before the turnkey property was a thing but it’s packaged for you to make it easier, “These are the people I’ve worked with. I’ve had great success with them. Here you go.” That turned into a business where we still do that. We find teams that can acquire the properties or build them if they’re brand new, screen a tenant, and manage that tenant ongoing so that people from out-of-state can have it done for them by somebody local.

You have different teams in different areas so you’re not managing them anymore. Do you invest with each of the different teams that you investigate or they’re managing properties for you? How does that work?

We invest in a lot of them. Rich and I get busy. I’m embarrassed to say that so many times we haven’t had the time to build our own portfolio the way that we want to. Sometimes we’ll get ten amazing properties in Florida. We do a webinar on it and they’re sold out. I look at Rich and go, “We didn’t get one.” We have properties in Florida, Ohio, Pennsylvania, and California too. California is not cashflow, although I do have one Airbnb and that has been cashflowing. If you’re going to own property in California and you want cashflow, that is one way to do it, but it is more time-intensive for sure.

That’s a little bit more like a job. I know that you’ve got your checklist and all of this stuff for turnkey properties but I want to talk a little bit about the new construction. I’ve been seeing going through my email that I’m getting all these webinars about new construction that you guys are working on. Could you talk a little bit about that and why that is so exciting?

When I started investing out-of-state, there was so much limited inventory at that time. In 2005, everyone was buying real estate as you may recall so it was difficult to buy anything. There were multiple offers and everybody is competing. In 2005, I met with builders and said, “Can you save 10% of your inventory for our network at Real Wealth? You don’t have to worry about that. It will be for rental.” That’s how we got into it. Investors love new homes because they come with warranties. They’re brand new. Tenants love them, especially in COVID. They’re clean, got yards, people are moving out of apartments, condos, big cities and realizing, “We’ve got to this space. We need it since we’re now teaching, working, cooking, and entertaining at home.” The home is now the central focus of our lives these days. People are wanting to either rent or particularly live in a new home. They love that in this environment.

The thing that’s amazing is the cashflow is not that different because prices have gone up so much and there’s so much limited inventory in general. I can talk about why that is and why we’re in a V recovery in real estate. It makes no sense. I was at my Pilates class and the Pilates instructor is like, “I don’t understand how people can be out of work, and yet the housing market is taking off.” There’s a good reason for that. It’s a lack of inventory. Because the builders have not been building over the years, existing home prices have gone up but we’ve been able to work with builders who are willing to take a smaller margin to be able to sell in both investors. You can almost get the same return from a new home than an existing one in this moment. That’s not always the case. It’s definitely not the case years ago.

It was better to get an existing home, buy it in foreclosure, fix it up, get amazing returns, but that’s difficult to do now because there are bidding wars on properties. Once again, we’re doing what we did years ago which is going to the builders and saying, “Will you please reserve a percentage of your inventory for us?” Sometimes builders are done with a project and they want to get out. It’s expensive for them to hold shop at the development and that last 10%, they don’t want to deal with. They’d rather pick up and move the staff to their next project. We come in and say, “We’ll help you out. We’ll pick it up.” We get to be in these beautiful residential neighborhoods and own the tiny percentage of rental properties there. It’s great for the investor and tenant.

What markets are you doing that in?

We’re working with builders in Florida. This has been projected before COVID that people are looking for a more affordable lifestyle. They would love to be near beaches and a place that feels like vacation. If you’re retiring, you want to retire in a nice place but affordable. Where are you going to do that? Shockingly, you can do that in Florida. If you don’t want to be anywhere near the hurricanes, then you go inland a little bit. Don’t buy anything on the water. You can visit the beach but don’t live on the beach because you have higher property taxes and you’re going to have to deal with boarding up your house every time there’s a hurricane. If you buy or own property inland, then you’re not in flood zones. It’s just a bad storm which you have everywhere.

Real Turnkey Standards: Always get an inspection if you’re buying a property whether it’s turnkey or not, next door or not. Unless you are an inspector yourself, it’s worth it.

That area between Tampa and Orlando is the fastest-growing part of the country. It has been for the past few years. That has dramatically accelerated because of COVID as more people from New York City and bigger cities on the East Coast are finally making their dream come true of retiring in Florida because they can work from home. They’re maybe not retiring but they get to go there early. We’re seeing a mass exodus out of the high tax states of New Jersey and New York moving to a place where it’s more comfortable with this new normal. There are certain states that are more landlord-friendly and business-friendly. That’s a fact. Florida is one of those states. There’s no state income tax. They didn’t shut down during COVID. A little bit, but they opened up quickly.

People who are looking to get back to normal, they can do that more in Florida than New York, New Jersey, or California for that matter. Again, you’re seeing what was already in motion is a massive demographic shift to the Southeast and yet home prices are very affordable. These markets were off the radar, big builders were building in places like San Francisco and New York because they could make so much money on those high-end condos and Chicago and so forth. There’s still a lack of inventory with all this migration to Florida, Georgia, and Carolinas. Home prices are still within the $200,000 range. We think that the material cost is going up, we’re going to see prices go up over time.

Do you guys buy the properties or do you reserve them for your investors?

No. We’re simply a broker. We are with eXp which allows us to be a national brokerage. We have agents all across the country, they find us properties, and we work with the builders. I have relationships with a lot of builders so they do reserve that inventory for us. Normally, they don’t like selling to investors and don’t want investor neighborhoods but they’re willing to have 10% to 20% of their neighborhoods be rental properties. They don’t want somebody coming in saying, “I want to buy a property and make it a rental.” They know that we have worked very closely with the property managers and we have high standards for screening tenants. We have one company that will be managing those. It’s very professional and high-end so they’re more willing to do it.

You have one management company that any investor that buys in, they get that management company. That’s all completely handled.

You’re not required to use that management company but we do have some influence. It’s not our company, it’s one that we found. We interviewed them. We have a list of twenty questions that we share with investors. You can download that from our website at Real Wealth, The Property Management Investor Questionnaire. We want to know how many properties are you managing. How long have you been in business? How many people and staff do you have per property? How many evictions do you have? If it’s too many, you’re not screening well. If it’s none, I don’t believe you. How long does it take to evict and what’s your process? These are things that we want to know.

We want to see that there are great reviews, there are happy tenants, and those tenants are being cared for. We have a deep vetting process for finding property management. Even beyond that, if we have a few hundred investors that are using that property management company to manage properties and one of those landlords has an issue that they’re dealing with and they’re not getting a response from the property manager. If I call from Real Wealth and say one of our members is having these issues and that property manager doesn’t take care of it, they don’t want us to pull everyone and find a new property management company.

We have a little bit more leverage. They want to keep us happy. They want to keep us bragging about how great they are. That’s the whole beauty of referral-based businesses like Yelp. Businesses and Yelp will go beyond what they might’ve done in the past because they want great reviews. That’s what these property managers want us to do. It’s to review them and tell our members that they’re great. They better be great because if they’re not, they’re not on the list anymore.

One of the things you mentioned is that you’ve got a high standard for the property management companies. You also have a high standard for the properties that you get. You’ve got these construction properties that are all brand new. You’ve also got a checklist of everything that those properties have to have if you’re buying an older property, remodeled property, or something else for your clients too. Is that true?

We have a checklist. It’s called our real income property standards. There’s this thing called turnkey rental property businesses that popped up in Real Wealth. We were one of the first, as I said, to discover that and realize there are investors who want to buy out-of-state, but they don’t know how, don’t know who to trust. They want a referral from someone who has a track record. That didn’t exist back then so we created the systems to make that happen. This idea of turnkey popped up and anybody could say they had a turnkey business, but nobody defined what that meant. You might work with one turnkey provider in Ohio who’s mind-blowingly awesome and then that’s your idea of what turnkey means. You go to a team in Columbus and you’re so disappointed because they didn’t do the same thing.

That’s what we discovered when we were looking for these teams that could help us out. They all had different standards of what they consider turnkey. This one guy I went and looked at his properties and I said to him, “You got this from foreclosure. Foreclosures have a distinct look, feel, and smell.” Many times, they’ve been sitting for a long time. They can be vaguer if someone lived there. They need a lot of clean-up. I looked around this property and said, “What did you pay for this?” Turnkey was in his company name. That’s how I even found him. I said, “When are you going to do the renovation?” He goes, “What do you mean? We already did?”

I’m looking around and this looks like it came right from the bank. Things were broken, curtains hanging lopsided. It was awful. I said, “You can’t be serious that you’ve renovated. What did you do?” He said, “We put in new carpet,” something like that. I’m like, “This would definitely not meet our standards.” He goes, “That’s okay. I have a waiting list of people from out-of-state who will buy it.” I thought if they only knew, they have no idea what they’re buying. They saw turnkey but they have an idea of what that means. They never bothered to check, never got appraisals, inspections, or anything like that. That’s when we thought we need to define what turnkey means to us.

We called it Real Turnkey Standards and we have a certain amount of life left that we expect to see on roofs and on HPAC systems. All those big-ticket items that cost you so much money and blow all the cashflow that you ever earned on that property, it could be gone with one problem or one repair that you need on that big-ticket stuff. We want to make sure that there’s enough life left, at least the inspector says, “It looks like there are ten years left on the roof,” or so forth. Those turnkey standards are also on our website at Real Wealth.

We tell people, “If there’s anyone on our referral list that you want to work with, download those standards and give it to the inspector that you hire.” Always get an inspection if you’re buying a property whether it’s turnkey or not, next door or not. Unless you are an inspector yourself, it’s worth it. Get the inspection and give them the turnkey standards and say, “I want to make sure that they’ve renovated this to these standards.” If they haven’t, then that team doesn’t get to be on our referral list any longer or they need to fix it and bring it up to the level that we expect. Again, another reason to get an inspection is you can often get work done that you would have had to pay for later but the seller pays for it.

Do you help people to get that inspection like arrange all that and do all of those things?

We have a list of inspectors that we recommend. We’re legally allowed to give a list of three inspectors that have been recommended by our members but we don’t make the phone call.

Real Turnkey Standards: Right now, there is a short window for new construction. In 2021, there will be a great opportunity in pre-foreclosures and foreclosures.

How about financing? With these turnkey properties, what I found is that a lot of times you can do it like any of the hats. You put some money down, get a loan, all of that stuff.

What is amazing and I try to tell as many people as I can who feel discouraged that they’ll never get into real estate because they live in California or they live in a high price market and they think, “How am I ever going to come up with $100,000, $200,000 down payment or qualify for that massive loan?” What they don’t realize is these loans are like a car payment. If you’re buying a $100,000 house, your mortgage is $80,000 and your payment is $400 a month. People are shocked that they can qualify. Sometimes with low paying entry-level jobs, they can still qualify for these investment properties. It’s almost cheaper than getting a car because it’s amortized for 30 years whereas a car is amortized for 4, 5 or 6, whatever they’re doing these days.

The payments are low. My daughter was two years out-of-college working an entry-level job and she was able to qualify and she saved her money. She did not buy a car, expensive fancy drinks at Starbucks. She saved her money, and she was able to do it on a low salary because again, almost anyone can qualify. They’re looking for high credit. You can get up to ten investor loans with Fannie or Freddie. They’re conventional with these unbelievably low rates in the 4% arena if you have good credit and then you need 20% down.

If it’s a $100,000 house, you’re talking $20,000 and $80,000 mortgage, and then that income that that property generates, you get to add to your income. At least 75% of it or whatever the bank says so you’ve increased your income and you can qualify for more on the next one. Save that cashflow as the down payment for the next and do it again. I tell people, “If you have $200,000 cash that you are able to save, maybe you’re saving it for a down payment, you could buy ten rental properties, get that financing, have a $500,000 portfolio.” That might be harder to qualify for in a high price market because you’re having to qualify for the whole payment without the income.

What kind of income could people expect if they do that scenario? They do 20% down, they’ve got an $80,000 mortgage, what kinds of cashflow would they be looking at?

In a market like Florida or in parts of Atlanta even Charlotte where they are red hot. You can’t even imagine the number of people moving there every single day. There are waitlists. There are bidding wars so prices have gone up. When prices go up, cashflow goes down because you’re paying more for the property and rents don’t go up quite as quickly. They are going up but not as quickly as the home prices are. We’re seeing about 6% to 8% return on those new homes. On existing homes, homes that had been in foreclosure, have been fixed up, or a little bit older, you can get a higher return on that.

When you consider that you’re putting a down payment, let’s say you’re putting $30,000 down on $150,000 property and that property goes up in value of 5%. You’re talking about an increase in value of the $150,000 property, but you only put $30,000 down. People don’t realize that it’s the cash-on-cash return that matters. The cash you put into it versus the cash you’re getting out of it. When you include the appreciation on that, it’s phenomenal. I don’t know any other investment that has returns like that. You can double your money very quickly because of the cashflow you’re getting along with the appreciation because you’re getting appreciation on the whole thing, even though you only put money down on a portion of it.

Do you feel, Kathy, with your construction projects and all of that stuff that there’s a window of opportunity that might slip away from us? Do you feel like this is something that we can count on into 2021 and beyond? What do you feel about that?

It’s a short window. Prices are going up because material costs are going up. Labor costs and permit costs are going up. Lumber costs went up 60% or something like that and there’s such limited supply. Builders have been raising prices. It’s very all unexpected and you’ve got lower interest rates that allow more people to get into the game so to speak. The payments are lower. When you’ve got bidding wars, more people are being able to afford these homes. Bidding wars do one thing, they drive prices up. I do believe it’s a short-lived window. With that said, probably in 2021, there will be a great opportunity in pre-foreclosures or foreclosures.

Sadly, some people aren’t able to recover from this situation and aren’t able to keep their homes. There will be an uptick in foreclosure but I want to emphasize that it’s not going to be anything like 2009 in my opinion. If you’re waiting for the market to get flooded with foreclosures like they were and get this crazy, amazing deal, I don’t necessarily see that coming. There will be more opportunity than there is now but it’s the opportunity we need to have more inventory so that people can buy something that there’s something on the market. I don’t think we’re going to see prices go down. It’s shocking because if you talked to me months ago, I would have not been too sure about that.

I’m not sure what I said months ago but it’s a lot of, “I don’t know what’s happening.” When we thought, “This is unprecedented. Millions of people are losing their jobs every week. They may not get them back. They might, they might not but we don’t know how long this thing is going to last. We don’t know if we’re getting a vaccine. We don’t know if anyone wants the vaccine. What is happening?” You’re not allowed to work but you’re also not getting a stimulus check. It was confusing. Of course, add the eviction moratorium, foreclosure moratorium, and all of these laws that never existed before and change the rules of the game midway.

You’re like, “This is not what I bet on. It was very shocking. At the same time, we called all fifteen property managers from different cities that we work with. We got them on a Zoom call and said, “What are we going to do? People are losing their jobs. They’re receiving eviction moratorium so they might not pay.” All of the property managers came together and said, “Let’s help the tenants out. This is not their fault that they’re losing their job. They didn’t do anything wrong. They got fired. They got laid off by nothing that they did. Let’s help them.”

These property managers got together and helped their tenants find the stimulus packages they need, apply for the PPP loans. They give them a whole list of job applications, jobs that were available, and gave them payment plans. They reached out to help. The landlords and investors within our network were like, “We want to help the tenants.” We ended up having a higher collection rate during that time of uncertainty than ever. That was again, another shocking thing. During this time, this is not the same recession we’ve seen in past recessions.

It is weird. It’s nothing we’ve ever seen. We know the last recession was caused by housing and bad loans. That is not the case this time. The loans of the last ten years have been good loans, solid loans, good borrowers with high credit scores, job history, and down payments. They built equity because the values have gone up. There’s nothing the same about it. They’re locked into low payments. It’s a very different deal than before. We also came into this with a limited inventory already, then you have more people saying, “I’m not even going to walk outside my house and let alone let someone in it.” No one was moving and no one was selling.

Nobody wanted to get kicked out of their home. The home move to this new level of incredible importance where everything happens and it had to be a wonderful place. People were willing to do whatever it takes to make that payment, to pay their rent so they didn’t get kicked out or they weren’t in a situation where they’d have to pay it all in three months like, “I don’t have to pay it now but I’ve got to pay it all in three months.” That would be difficult. People have not wanted to move and they’re having their extra funds or the stimulus money they got to go to paying their rent.

That’s so good to hear. What I love is the encouragement by the property managers and also by your team to your members to support the renters so that everybody can experience success together so people don’t get kicked out and the landlord still gets eventually paid. It’s a team effort. It takes a village. All of us have to be on the same team for this collaboration to happen for everybody to succeed. I love that.

Retire Rich with Rentals: How to Enjoy Ongoing Cash Flow From Real Estate…So You Don’t Have to Work Forever

There’s so much talk about landlords versus tenants and this war between the two. We’ve got to work as a team, as you said, and care about these tenants who are hopefully taking care of the properties, our assets. We even would send birthday cards and gifts to our tenants.

Kathy, I knew that you’ve created a special link with some special stuff for my ladies and that is RealWealth.com/blissful. There will be all sorts of education. Why don’t you tell our ladies what they will find there?

On there, we have a list of fifteen different cities. It changes but under the Invest tab, you have to join. It’s free to join. Once you do it, it unlocks all this data on the demographic shifts that we’re seeing where the job growth is, which markets are going to recover the quickest from COVID and this situation, where are the areas that are most landlord-friendly, where if someone doesn’t pay, you do have the right to evict them. All of that information is under the Invest tab with a list of the different cities and all the data there, plus a list of the referral groups, the turnkey companies on there who we’ve been working with for years in many cases and have this rave reviews from our members.

That’s such a nice thing to know, “I’m going to work with this team that has 25 people who rave about them or 100 people,” or whatever it is. We also have a ton of information there on asset protection, tax benefits of owning real estate, how to get started, and financing tips. It’s all free in webinar form under our Resources tab. Under that tab, you’ll also find the list of lenders to work with. You want to work with a lender that understands investment property so we have a list of those people.

Again, one application and they can use that to get you qualified for up to ten loans with sometimes a little bit more paperwork needed but they’re great efficient lenders. I also have my podcasts, The Real Wealth Show and Real Estate News for Investors. That is a quick one that gives updates on real estate news. The Real Wealth Show interviews people who can share their success stories. Finally, my book Retire Rich with Rentals is on Amazon. On that, there’s a clear checklist of what you need to do to get started to build your passive income rental portfolio.

You have so many great resources. Thank you so much for that.

Thank you for letting me share it.

Everyone, check it out at RealWealth.com/blissful. Use that link so you can get any of the special content that’s on the site. Ladies, I am so excited about what we’re going to be covering in the next portion of this show in EXTRA. Kathy has shared all this amazing information so far. Thank you for that, Kathy. She’s going to talk about how to get started and turnkey with her, the step-by-step on how to do it. I know many of you ladies have been wanting to get into real estate. You have done so much research, but you don’t know the steps to take to get started.

Kathy is going to be sharing that with us in EXTRA. If you are subscribed to EXTRA, we’ve got more. If you are not subscribed to EXTRA but would like to be, go to RealEstateInvestingForWomenEXTRA.com. You get the first seven days for free. You can download a ton of content, see if it’s for you, and then you can stay subscribed or not. This EXTRA is going to be action-oriented. This might be the exact time to try EXTRA. Thank you so much for joining Kathy and I. I so appreciate you. I look forward to seeing you again next time. Until then, remember, goals without action are dreams, so get out there, take action, and create the life your heart deeply desires. I’ll see you soon.

Important Links

• Real Wealth Network
• Retire Rich with Rentals
• Real Estate Wealth Show
• Real Estate News for Investors
• Kathy Fettke – LinkedIn
• RealWealth.com/blissful

About Kathy Fettke

Kathy Fettke helps people build and secure wealth through cash flowing real estate. She is a real estate developer, fund manager, and educator.

She is a regular guest expert on FOX News, CNN, CNBC, Bloomberg, NPR, CBS MarketWatch and the Wall Street Journal, and was named among the “Top 100 Most Intriguing Entrepreneurs” by Goldman Sachs two years in a row.

Kathy believes we become more successful by learning from those who have done what we hope to achieve. As host of “The Real Wealth Show,” a featured podcast on iTunes she interviews successful real estate investors to share their secrets. She also hosts the Real Estate News podcast, and is author of the bestseller, “Retire Rich with Rentals.”

Real Wealth Network offers free resources and cutting edge education for beginning and experienced real estate investors. The organization also searches the country for high job growth markets. In those metros, they find highly rated property providers who offer “turn-key rental properties” to investors. Turnkey means that the homes are already renovated, with qualified tenants and experienced property management in place.

Real Wealth Network offers free education on tax savings, asset protection, self-directed IRA’s, 1031 exchanges, note investing, multifamily and commercial property, land development, syndications, crowdfunding and more.

Kathy and her husband Rich are active real estate investors in single family homes, apartments, commercial property, land development and homebuilding.

Many people struggle with starting in real estate because of money. They think that without it, they can never start their journey. But what if you can access money you never knew was available to you? Amy Bersamin, the Managing Partner of Sweep Strategies, has just the wisdom to help you tap into that so you can start purchasing real estate. In this episode, she sits down with Moneeka Sawyer to talk about using OPM, Other People’s Money, in the form of lines of credit—home equity, personal, and business. She helps you identify which ones to go after and the tools you need to be completely guided in using this unconventional tool. Follow Amy in this discussion as she shares more wisdom to help you get started on your real estate journey.

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Listen to the podcast here

The Surefire Way To Purchase Real Estate With Amy Bersamin

Real Estate Investing For Women

I am so excited to welcome Amy Bersamin to the show. Amy is passionate about helping people purchase real estate using money they never knew was available to them. She was in her twenties when she first bought her first house. It was not until after learning about using OPM, Other People’s Money, to purchase real estate that she was able to buy rental properties. Her vision is for young adults to get financial education and coaching so they can be well on the path to earning passive income shortly after entering the job market.

As the Managing Partner of Sweep Strategies, a financial education and coaching company that has changed the lives of over 3,000 people and families across the United States, Amy knows that having your own coach to help you with implementation is the key. Sweep Strategies specializes in one-on-one coaching tailored to your unique situation. Amy herself has coached clients so they were able to purchase rental properties within months of joining her program. Amy comes to us as a referral from Lorraine Conaway and I know that you saw Lorraine on the show. I love Lorraine because she comes to us with an entire network. She is a wealth strategist.

You see wealth strategies with stocks, financial planners, and insurance but I have never met anybody who does the whole wealth strategy where they take into account real estate. I was beyond delighted to meet Lorraine and introduce you to her. She wanted to introduce me to Amy because Amy is one of the partners in the network that provides the services for the wealth strategies that are set up with Lorraine. I’ve got Amy on the show. I’m so excited. Welcome to the show, Amy.

Thank you, Moneeka. I’m so excited. Thank you for having me.

I’m so glad. Amy is in Hawaii. Aloha.

Yes. Aloha, everyone.

Amy, can you give us the two-minute version of your story? How did you get into real estate and start doing all of this amazing stuff?

I was in my early twenties when my husband, who was my boyfriend at the time, said, “Why don’t we purchase a property with my parents?” I was like, “Okay.” We were renting so he suggested that so I said, “Sure. Why don’t we do that?” That’s my introduction to buying real estate. It was our first home. I want to say about eight years later, we purchased our own house. A few years later, we bought our second home. Those two homes became rentals, but we did not purchase them as rentals. It wasn’t until a couple of years ago when I came to Sweep that I learned how to use other people’s money to buy rentals.

I was so blown away because I didn’t know that I could do this. I’ll explain the specifics. I went home and I told my husband. I’m like, “I learned a way that people aren’t talking about how to go buy rentals.” I have to back up a bit because when we purchased a second home, my husband was like, “We’re going to buy this house. It’s going to be a vacation house. In a couple of years, we’re going to go in and rent it out or sell it.” I was like, “Why? This is our vacation home. Why would you sell it?” He’s like, “It’s an investment.” I was like, “No, it’s our house.” He goes, “Fine. We’re not going to sell it. Why don’t we rent it?”

I’m like, “What you’re going to have other people live in our house? I’ve heard horror stories about people damaging homes.” As you can see that’s why I’m so glad that you have your show for women because I was one of those women. If it weren’t for my husband, I would never have gotten into real estate because it’s more of, I want to say, a man thing because I do see that in a lot of my clients. The husbands are going to be like, “We want to buy a rental property.” I’ll look at the wife and they’ll be like, “I don’t think that’s a good idea.”

It’s so true.

I’m sure you see that.

All the time. Absolutely. That is such a great story because it’s so real. I remember the first time my husband brought to me that we should take a loan off his 401(k) to help with the down payment on our home. I was like, “Don’t touch your 401(k). That’s our retirement funds.” He was like, “Relax.” It’s so funny because I’ve been in real estate for so long by then but every time you hear something new and we’ve been so marketed to about the way the world is supposed to look. We don’t even realize that we’re taking it in and what it’s creating inside of us.

The horror stories of rentals so many people have heard that. I’ve never had one of those horror stories happen to me. It doesn’t have to be that way but that doesn’t make the news. Things being simple and blissfully easy doesn’t make the news. We hear about all this other stuff and it damages the way we feel about things and the willingness to experience and take a little bit of risk and grow our world becomes a little bit limited, don’t you think?

I agree.

Talk to us about other people’s money. What I love about this is I know so many people who are reading who are like, “I’m 23. I need to save for ten years because I don’t have a down payment. I can’t buy real estate. This isn’t for me now.” What I love is you’re like, “After college, use other people’s money and get started.” I’m excited about that. Talk to us about other people’s money. What is it, first of all?

OPM is Other People’s Money. People may know about private money and hard money, the money in the bank is other people’s money, too. I want to talk about lines of credit. Lines of credit are other people’s money. The power of it is people in their early twenties have to save for a while before they can even purchase a property. To put a down payment on a property you have to save for months. To even think of buying a rental with cash, that’ll take years. Here we can teach our clients a way to be able to use other people’s money and be able to go and purchase the rental that they want in a short time.

Tell us about the different kinds of lines of credits.

There are different types of lines of credit. One, a lot of people are familiar with because it is a home equity line of credit. A Home Equity Line Of Credit or a HELOC is tied to your home. Your home is used as collateral. If you do not have a home, no worries because you can use a Personal Line Of Credit or as we call it, PLOC. That is unsecured. You don’t need collateral for a personal line of credit. There’s also a business line of credit. That also does not need collateral. If it is under your business, it may not even show up on your personal. Those are the three that we focus on as far as the different types of lines of credit.

How can someone figure out which one to go after? Will they qualify and that sort of thing?

That’s what we do. What we do is we do an assessment. We look at a lot of things. When you start something it’s what is the goal? Why do you want to buy this property? Why do you want to buy a rental? What is the goal? I’ve heard anywhere from, “I have three kids. We have one house. I want to buy two rentals so I could have one house for each of my children.” For some people it’s, “I want to get a passive income.” We run the numbers for our clients that way we can make sure that they’re not over-leveraged. Everyone’s situation is unique and that’s why we do that.

Talk a little bit more about how that process would work. You basically would talk to people, do an assessment and you would tell them whether a HELOC, PLOC, or the BLOC is the best option. Home equity, personal, or business line of credit, is that true?

Purchase Real Estate: Who uses a line of credit to go buy a rental or a property? It’s a tool that you will need the proper coaching to be able to implement it correctly. Otherwise, it could be risky.

Correct. When they come to us and they don’t have a home, the HELOC is not the tool for now because we use the line of credit as a tool. If you use a line of credit as a tool to go and help them purchase a rental property. If they do not have a home and they can’t use the HELOC we would suggest a personal line of credit. If they have a HELOC, that’s easy if they have a home equity line of credit. Even if they don’t have a home equity line of credit, if they have a property that we can go and take a HELOC off that property, they can then use the HELOC. If they don’t have a home, it would be a personal line of credit, or if they have a business, it would be the business line of credit. It all depends on what they want to do. We run the numbers to see what is a good fit for them.

I know that I didn’t prepare you for this so you may not have the answer for this but what is the range and rates? I know a HELOC is between 3% and 4% at least for the beginning section and it goes up. What is the range or the rates you would you expect with a PLOC and a BLOC?

I’m smiling because you said, “Amy is in Hawaii.” Not only do we have sunshine almost all year long and nice weather but people want to buy properties in Hawaii because the banks have what we are calling promotional rates or teaser rates. The teaser rates could be low. They’re as low as 1.49% for two years. Moneeka, you should come in by your priority there and I’ll teach you how to take out a HELOC on it. You could go and buy more properties.

I know that on the mainland, they don’t offer that low of a rate. The average is about 4% to 6% depending on the banks and the credit also makes a difference. As far as personal lines of credit, I’ve seen them anywhere from 5% in Hawaii, but on the mainland, they tend to be higher. I have seen them on the mainland for probably about 14% and even 16%. We show them how to use the tool and how to pay off the tool.

It’s a tool. It’s a way to get us in and we can leverage what we do with it to pay it off and circulate it so we can use it again and again. I love that. Tell us a little bit about the way that you fit into Lorraine’s financial network.

We are so excited to be a part of this financial network because I don’t think there’s any company or a group of companies that can offer the services that the network is offering. What I mean by that is it is a one-stop solution. If you want to purchase a rental property, the network has a company that offers lending. There’s a company like our company that teaches how to use the OPM to go buy the rentals. There’s also tax because a lot of people purchase rental properties for the tax offset. Not only for passive income but also to offset the tax. There are other companies in the network that if you want cashflow there’s a way that you could get cashflow through real estate that you don’t own. That’s an option. There’s also insurance and legal.

A lot of times a lot of people have a financial planner and CPA, but do they talk to each other? Does your CPA talk to your financial planner throughout the year? Does your CPA talk to a lender that you choose? Normally, people will use a CPA for tax prep, not necessarily for tax planning. I’m so excited because now you can come in through any one of the companies and you would be able to utilize all of the services that would be available to you and all of us are talking to each other. I talked to Lorraine and I talked to the other people in different companies. It is so exciting because we are all under one umbrella as far as what’s available for people out there.

I love that too because it’s a one-stop shop. You go to one company and you’ve got a whole team of people who work for you that can communicate. They’re all on the same wavelength, each of them will understand a different aspect of the client and they can bring that knowledge to the team so all the tools are best utilized. That’s what excited me when I met Lorraine. I was like and I said this to her on the show, “Where have you been all my life?” It’s good stuff and I’m so delighted that we were getting introduced to you too, Amy.

Thank you. We talked about the mindset because everything is a mindset and how you’re educated? Because all we do is we educate. We educate and we coach. Everyone is so used to traditional ways of thinking and banking. Everything is traditional so we are non-conventional, because who uses a line of credit to go buy a rental or a property? Who does that? It’s a tool because it is a tool that you will need the proper coaching for you to be able to implement it correctly. Otherwise, it could be risky for you. It’s all the same with the financial network. It’s a different way of thinking. It’s a different way of looking at all of your assets and making them work for you and not waiting until you stop working or when you’re 65. It’s how can we help you now?

I love that.

When we talk about my passion I was in my early twenties when I first was introduced to real estate, but if I had known that something this was available to me back then, I don’t think I’d be talking to you, first of all. I am so glad to be talking to you.

I’d be on the beach over here in Hawaii.

I would not be here but I believe everything happens for a reason. I believe I’m supposed to be here talking to you and telling you my vision and my passion because when students, early twenties and young adults when they get out of college, most of them will have debt. They enter the job market and a lot of times purchasing a property is the last thing on their mind. It’s more about, “How am I going to pay my student loan?” “I’m working now. I’m going to go buy a car.” “I can get this credit card and I don’t have to pay for it until I’m going to make the monthly payment.”

If we can educate the young people after they enter the job market, teach them financial education, provide them with coaching and show them that they’re able to get passive income through rentals, whatever passive income they’re getting, they can use that to help them pay the debt. Maybe they won’t have to rely on their parents to pay for the student loan. I’m looking at it like, “If we can give them that solid starting point, think about how the world would be.” If we could introduce these young people to financial education, how to get passive income and how to take care of your taxes, all the way insurance, lending, and everything if we educate them. I’m thinking by the time they’re 40, they’re retired.

I’m with you.

Think of all of the problems that we have and how that could help them. A lot of times when I say they need financial education and coaching because we were young ones. Did we listen to our parents all the time? Parents, your readers and moms, we tend to want to pave the way for our children. We want to try to make life as easy for them as possible. That’s something moms do but a lot of times your children are not going to listen to you because they’re not supposed to. It’s a vicious circle. We didn’t always listen so why should we expect them to listen to us, but it’s human nature. If they can get professional education and coaching, the moms and the dads would be so happy. It’s like, “I don’t have to go in and force my child to listen to me to go do this, that I wish I had done twenty years ago because now they’re getting an education from professionals.”

One of the biggest questions I get from people is, “How do I get out from under my debt, student loans or whatever it is?” I am not a good person to talk to about that because I never carry debt. I worked all the way through college and stuff that. I feel good about the fact that now we’ve got someone on the team, the Wealth Network team that can talk about that piece. How to get out of debt? How to leverage other people’s money? How to balance this idea of getting out of debt and also building for the future? Both of those things are important. It doesn’t have to be one or the other. It can be something that you do at the same time.

Correct. We teach our clients how to use the tool, which is the line of credit and we teach them how to pay it off or how to pay it down. It’s like, “How do we help you use this line of credit to help you achieve your goal of getting a rental property, but let us help you pay it down so you can use it over and over again.” We can also look at your other debts because we can also use the line of credit to help you pay off your debt. You can use a line of credit to go buy a rental property, but you can also use the line of credit to help you pay your debts a lot faster.

In EXTRA, we’re going to talk about the three simple steps to get started and we’re going to talk a little bit more about the specific ways that you help people to buy real estate. I’m excited about those two things. I’m excited that we’re going to be talking about that in EXTRA. Before we move towards the end of this show, could you tell everybody how they can get in touch with you?

The easiest thing is you can go on our websites, SweepStrategies.com but they can also watch an interactive video and it’s sweepstrategies.com/idecide-amy We’re also on Instagram and Facebook but our website is at SweepStrategies.com.

I watched the video and it’s amazing. I love it so you guys should go check it out. Amy, are you ready for three rapid-fire questions? I did not prep Amy on this one.

It’s like going on a roller coaster and you didn’t know it was 200 feet high.

It’s so awesome. The first one is Amy, give us one super tip on getting started in real estate investing.

Purchase Real Estate: The first step in real estate investing is knowing where you are going to get the down payment, where it is going to come from, and who’s going to be your team.

The first step in real estate investing is where are you going to get the down payment? Where is the down payment going to come from? Who’s going to be your team? That’s important.

What is one strategy for being successful in real estate investing?

Not to be over-leveraged. That is one strategy and that’s why we run the numbers because our clients can see how much. They’re going to if there’s going to be debt. How much are they going to be paying for the deb and how much are they going to be getting as far as rental? Is it a mortgage that you have to pay? Is it the mortgage, property taxes and insurance? Are there maintenance fees? What about the monthly maintenance fees? We run all those numbers and they get to be able to see if it still a good fit? Are they over-leveraged or will they come on ahead?

Amy, what would you say is a daily practice that contributes to your personal success?

As women and most women tend to want to multitask all the time. That’s in our DNA. Sometimes I wish I have eight arms because we want to be able to do eight things at the same time.

You want to become an Indian goddess.

The one thing that I try to practice every day that’s helped me a lot is to focus on one thing at a time. When my mind thinks I want to do something else, I stop and I ask myself, “What is the one thing that you need to do now that’s going to make a difference?” Whether it’s I have to go take the laundry out of the washing machine and put it in the dryer or I need to finish my email now before I go and do another thing. I need to finish cooking. I need to finish listening to this podcast before I move on to the next thing. It’s focusing and I find that by doing that, I can accomplish so much more by focusing on one thing at a time and completing that one important thing that I need to finish before I go on to the next one. I feel I can accomplish so much more by doing that. There are days when I still think I have eight arms.

I agree with you on that. Focus is a real key to success for sure. Thank you so much. This has been so much fun. I can’t wait to talk more.

Thank you. You’re so much fun to talk to so thank you.

Of course. Ladies, thank you for joining Amy and me for this portion of the show. If you are subscribed to EXTRA stay tuned, we’re going to be talking about the three easy steps to get started using other people’s money and how specifically Amy can help you to buy your first rental property. We’re going to be talking about that in EXTRA so stay tuned. If you’re not subscribed but would like to be, go to RealEstateInvestingForWomenExtra.com and you get the first seven days for free.

You get this one for free and you can get as many as you for free and check it out. See if it’s for you and you can stay subscribed or not. It’s totally up to you. If you’re leaving any and I now, thank you so much for joining us for this portion of the show. I love having you here and I look forward to seeing you next time. Until then, remember, goals without action are dreams. Get out there, take action and create the life your heart deeply desires. I’ll see you soon. Bye.

Important Links

• Sweep Strategies
• Lorraine Conaway – Previous Episode
• Wealth Network
• sweepstrategies.com/idecide-amy
• Instagram – Sweep Strategies
• Facebook – Sweep Strategies
• RealEstateInvestingForWomenExtra.com