WIIRE 014: Scaling Quickly? Focus on these 3 Things with Amelia & Grace

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10/10/22 • 20 min

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Welcome back to episode 14 of the podcast. This week we’re going to focus on how to scale your REI business quickly. This is another question we hear quite often from our followers on Instagram and since we each scaled our businesses quickly, having gone from 0 to more than 20 units in only one year, we’ve learned some hard lessons along the way. We’re sharing our best tips and practices for scaling quickly.

For Amelia, the realization of needing to scale quickly came when she purchased her first triplex on her own, had it rented out, and it was cash-flowing well. She had been bitten by the REI bug and turned around and purchased her next property rather quickly. She used the money to purchase her triplex from her first deal, which was a flip. She had planned for her next buy to be a buy-and-hold, so she already knew what she was looking for in the market.

We frequently talk about how real estate investing really isn’t hard. It’s actually a simple concept, but can be hard to put into place. However, at the same time if you can do a decent job and have a decent product it could bring you a lot of success.

Grace realized she was going all in on REI when she realized that it could literally be an end to a means and allow her to quit her job. Two deals in, Grace and her partner (Brandt) decided they were going to keep buying and not let a lack of funds stop them. They would find good deals, and the money for each buy, along the way. They did each of their first 10 deals very differently but her first most people would find the most interesting. Keep in mind they have never sold any of their properties. It was a BRRR and they put down 20% bank loan and then used cash to pay for the rehab.

Grace’s second deal was two duplexes and was split evenly between herself, her boyfriend, and her sister. They paid $255,000 and they convinced the bank to let them put 10% down, drastically reducing the amount of cash they would need to pay upfront to get this deal. Eventually, Grace began to get super creative with her financing so she could continuously purchase value-add deals so she could re-access the capital out of it to pay off private money, etc. Simply said, Grace got scrappy with her financing and it has definitely worked out in her favor.

We both have decided to see our goals and design how we want our future to look around those goals. Then, we go for it. For both of us, real estate investing is “passive”. We have built out our systems and put them into place which allows us to continuously move the needle forward.

Another way we have been able to scale so quickly is to find good partners to work with along the way. With constant buying, the money will eventually run out and in order to continue to scale we have figured out ways to not use all of our own money to tackle every single buy. When we first met a year and a half ago, we decided to partner up, and look where it has brought us! Partnering can be absolutely amazing if done the right way.

One more important detail when it comes to scaling is financing. Grace used different lenders for her first three buys and has since stuck with the 3rd. It is a commercial lender which means their terms aren’t as favorable but the financing is easy to get. Plus she got in good with this lender by building a relationship with them and proving to them time and time again that she will under-promise and over-deliver on what she says she can/will do.

Amelia has also built a good relationship with her lender and while they do still occasionally ask for her tax returns, they also know the level of return they can expect from her.

Best Practices for Scaling & Building a Relationship with Your Lender:

Be flexible/easy to work with
Perform well: under-promise then over-deliver
Show them you’re a professional, don’t be a mom-and-pop shop
Have a strong mindset
Know your buy-box (good-deal criteria)
Spread the word - you never know who is looking to sell a property!

That’s all for this week! Thank you so much for listening, we really appreciate you all so much and we will catch you in the next episode!

Resources:

Grab our MTR Starter Guide

Amelia has also built a good relationship with her lender and while they do still occasionally ask for her tax returns, they also know the level of return they can expect from her.

Best Practices for Scaling & Building a Relationship with Your Lender:

Be flexible/easy to work with
Perform well: under-promise then over-deliver
Show them you’re a professional, don’t be a mom-and-pop shop
Have a strong mindset
Know your buy-box (good-deal criteria)
Spread the word - you never know who is looking to sell a property!

That’s all for this week! Thank you so much for listening, we really appreciate you all so much and we will catch you in the next episode!

Resources:

Grab our MTR Starter Guide

Previous Episode

WIIRE 013: Common MTR Misconceptions Debunked with Amelia & Grace

Welcome back to another podcast episode! This week we’re sharing the top misconceptions about midterm rentals that we commonly hear and going to debunk each one of them for you! Not allowing yourself to get caught up in these common misconceptions could actually get you ahead of the game just by knowing how to tell apart a fact from fiction about midterm rentals. Let’s get started!

The List

Myth #1: The units in midterm rentals must be luxury or extravagant.
The Facts: Keep it simple: clean, safe, comfortable, and affordable. For the most part, traveling professionals are only in this space to sleep so their needs are low and they are trying to keep their costs that way too.

Myth #2: Midterm rentals are only for traveling nurses.

The Facts: Recently a teacher who was brand new to the area moved into one of Grace’s midterm rentals because he didn’t know exactly where he wanted to put his roots down yet in his new local area. Amelia has housed all sorts of construction personnel, solar panel and wind turbine contract technicians, traveling corporate employees for companies like Starbucks, and more. They are only working 1-3 month contracts and don’t want to live out of a hotel for the entire time so they choose midterm rentals that suit their needs.

Myth #3: MTR tenants are always the best tenants.

The Facts: While this might generally be true in 95% of cases, there is still that 5% of tenants who have been problematic renters. (Throwback to episode 13 where Amelia dished about her tenant who caused her internet to become suspended!).

Bonus Myth #4: Midterm rentals only work in large cities.

The Facts: Cedar Rapids has a population of about 120,000 people and Grace lives in a town of about 1,000 people and MTRs are absolutely successful there. Amelia has a MTR in a lake town and her cottage is going to be an MTR for the winter when travel slows down for the season. She put up the listing on FurnishedFinder and within two hours her MTR tenant had paid their deposit and booked the unit!

Bonus Myth #5: Short-term rentals have a higher vacancy level.

The Facts: In reality, our midterm rentals typically were near 0%. We both work our business to keep our vacancy levels as minimal as possible where a tenant moves out and a new tenant moves in within a matter of hours, allowing for just enough time for a good cleaning and turnover.

That’s all for today friends, thank you for joining us! Catch you in the next episode!

Resources:

Enroll in MTR Profit Academy
Join the Property Management Academy
List your property on FurnishedFinder

Next Episode

WIIRE 015: Midterm Rental FAQs with Amelia & Grace

Hello friends! Welcome to episode 15 of the Women Invest In Real Estate podcast. This week we are super excited to be fielding some FAQs that we often receive from our followers on Instagram. We’re going to answer some of these questions and hopefully help you out on your REI journey.

The FAQ Lineup

When purchasing a property, should a mid-term rental work as a long-term rental first, numbers-wise?

Our take: Absolutely. It should definitely function as a long-term rental first, at least enough to where it's going to cover your mortgage, your insurance, your property taxes, and your utilities. At the very least, you want to break even.

What is the difference in amenities/supplies in an MTR as compared to an STR?

Our take: We each provide a ‘starter pack’ of items such as paper towels and toilet paper, but in the long term we don’t provide these for the entire stay. We consider what they need to have a comfortable first couple of days while they get settled in, move in their clothes, buy groceries, to have a nice day.

If you know you could get $X for midterm rental, what would you pay for the property?

Our take: We want to cash flow $200-400, or ideally as a long-term rental. As a bare minimum, we consider the 1% rule when analyzing deals.

Where should I list my midterm rental and how do I find tenants and comps for monthly MTR rates?

Our take: FurnishedFinder. You can check out comps and find tenants all in one place. We also recommend AirBNB to help fill gaps between bookings as well.

What value do you use for vacancy when running your numbers in MTR versus LTR?

Our take: Amelia uses 8%, for MTR, even though we've found that it's significantly less than that. But again, she runs her numbers very conservatively and she also has some gaps in between bookings (maybe a week or two here or there) which adds up. Also consider that some banks, when you're underwriting larger deals like five+ units, they'll usually actually require a 10% vacancy in your underwriting. They simply want to see that the property still functions even if there is up to a 10% vacancy for the year.

Do your units have washer/dryers? We have no room for hookups and I'm pretty sure it will be a hard pass for some people, with others expecting cheaper rates.

Our take: You pretty much answered your own question. We recommend checking out FurnishedFinder for the specific area you’re considering and see if there are listings available that don’t have hookups for washer/dryer and it will show what is available. If they're all available right now, that means people don't want them. If they're not available for another two or three months, it means they are getting booked, so you could probably go for it. For Amelia, her units don't have washer/dryer, but there is a washer/dryer in the unit in a shared room. However, it is a hard pass for some people to not have a washer/dryer in their unit, and that's okay.

We also recommend taking a play from our friend Britt’s playbook and getting creative by offering a laundry service for an upcharge. Our friend Jess got creative by offering pet care because she lives on the premises and works from home. This is a game changer for travelers with pets, especially traveling nurses who work long hours.

How do you get a hold of insurance companies to offer your an MTR for insurance claims?

You actually can call the adjusters at insurance companies. They have a department that's called a re-homing or re-housing department, and insurance companies will place displaced families in your units and pay for their housing. This is also an option to offer to local realtors to offer to people who have sold their houses and are still in between homes.

If you want to dive deeper into what we just touched on in this episode check out our MTR Profit Academy, which gives you the A to Z on how to start a midterm rental and successfully rent it out.
Have more questions? We would love to hear them! Shoot us an email or DM us on Instagram.
Thanks for tuning in, we’ll catch you in the next episode!

Resources: