Getting the Most Out of Your Live-In Flip with Tracy:

 

This week, Andrew interviews Tracy Royce on her live in flip in Phoenix, AZ. She shares with us some of the best tips and tricks on how to get the most out of your live in flip.

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Notable Mentions:

 

How to get in touch with today’s guest:

http://royceofrealestate.com/

 

Transcript of the show:

Intro: 00:03 Across the world. People have their housing costs taking away as much as half of their income. Have you ever thought of trying to change that? The good news is there is a way house hacking is real and we are here to show you how other people just like you have made it happen. Welcome to the house hacking podcast and here is your host house hacking expert. Andrew Kerr.

 

Andrew Kerr (08:48):

Awesome. Well, Tracy, thank you so much for being on the show with us today. I mean, I’ve been following you on Instagram probably for and a half. Yeah. And I’m just so excited to have you on. So, you know, before we really dig in, I mean, how are you doing for folks that don’t know you? Who are you, where are you calling in from in the world?

Tracy (09:07):

Hey guys. Yeah. So thank you so much for having me on I’m really honored to be here and glad that we could connect I’m I’m out of the Phoenix Metro market. That’s where I’ve always invested. I’ve been here for longer than I care to admit and the real estate investing world. And just to top level, um, of where I’m at, I’m a full time fix and flipper and landlord. I’ve been doing that, uh, on my own for about seven years. And for about a decade before that, I worked for other investors behind the scenes, doing everything from property management, helping them with their flips, learning about distressed real estate and then have since branched off on my own. So this is all I do full time.

Andrew Kerr (09:41):

Awesome. Awesome. Well, you actually, one of the reasons I wanted to have you have you on, besides just being a kick ass female real estate investor was the fact that she actually did a sort of house hack and also live in flip. Could you just touch on that really quickly for us? Give us a rough idea of when that was.

Tracy (09:58):

Yeah, it feels like a lifetime ago. I have lived with a girlfriend, um, in their condo in Tempe and got money together and decided to buy my own condo. Not too far from there got two roommates and I was able to cover, cover the mortgage with what the roommates paid. So it subsidized, or if not completely covered. And this was so long ago, Andrew it’s, it feels like a different lifetime. So you’ll have to forgive me if I don’t remember the exact numbers, but we all lived there for a while and I ended up reselling that one. I think I stayed there at least a year. And oddly enough, the ultimate hack was that I found out the neighbors needed to sell at some point and ended up purchasing that condo to flip. I didn’t live in that one, but I purchased that one, updated it and resold it as well.

Andrew Kerr (10:47):

Oh, that’s awesome. So I mean that first one, and I know this was a while back. Did you have to do some work to it while you were living in it or was it sort of pretty much in good shape where you and your girlfriends could move in and they would cover your mortgage from what they were paying in rent?

Tracy (11:01):

Yeah, it wasn’t in bad condition. It was a block house. Um, and with any sort of renovation, you always want to see what’s happening in the neighborhood. Right. And it’s hard not to fall in love with, I live in this house. I want it to look like the Taj Mahal or at least something off HTTV and invest all this money. But when you’re a young college student and you’re broke and you don’t have a lot of money, it’s like, you really have to look at the numbers. And luckily it just was a good deal. It didn’t need a lot to be retail ready. And so it was, you know, I didn’t have much experience at the time, but it was enough for me to be able to handle. So it really didn’t need a lot to go to market. And it was a hot market at the time too. So that certainly helped.

Andrew Kerr (11:43):

Yeah. That’s awesome. So one of the things that I actually is really interesting here, at least for me, and I think it will be for the folks that are listening in that was a condo that you lived in and you flipped, you bought the condo next to it. And I know from your Instagram account that you’re actually working on a condo right now. I don’t hear about a lot of people that are doing flips, actually flipping condos. You know, the typical flip is this single family home we’re buying it. We’re fixing it up. Maybe adding an extra bedroom. I mean, is that something that you’ve just done a lot of flips over your career that were specifically for condos or is that just something you’ve noticed there in the Phoenix area?

Tracy (12:19):

I am, non-discriminatory when it comes to product and flipping I’m all about the numbers. Certainly I stay away from certain product. Uh, it tends to lend itself towards a certain price point, right? And as the values and Phoenix have gone up really dramatically and cost of living, um, has gone up dramatically. But we just haven’t met that if people I think are surprised to know that condos have actually appreciated more during the last 10 years or so than single family residences. And there’s a lot of attractiveness to, I don’t have to maintain a yard. Um, there’s less exterior maintenance if it’s in a walkable area, which is kind of rare for Phoenix, but maybe in other parts of, uh, you know, the, the world where people are watching this from, if it’s in an area where people can go walk to groceries, I think people are becoming more attracted to that sort of lifestyle. And not just the dream of, I own a home, a lot of folks don’t realize how much maintenance and care and expense go into owning a single family residential house. And it’s not terribly dissimilar to when you’re an investor there’s so much that needs to typically be done on the exterior and curb appeal, pool landscaping in condos. It, you know, I really liked them because they tend to be quote unquote a little bit easier. And, um, it’s just a product that typically sells really, really quickly too.

Andrew Kerr (13:38):

Yeah. I know what the condo, you don’t really have to worry about the exterior. You just get to focus on the inside and then do that flip. And you’re good. I mean, I know I bought my first house at 20. I did a townhouse for the exact reasons you were mentioning was I didn’t want to worry about anything on the outside. I just wanted to have the inside of it. So I’m right there with you. And that’s pretty cool that some of that, that data that you found was condos have actually appreciated faster than the single family homes.

Tracy (14:02):

Well, similar to track neighborhoods too. Comps tend to tend to be a lot easier as well. Cause you’re going to have so many floor plans, right? So if it’s in a neighborhood that has a lot of resale activity, it’s a lot easier to say this is a three bedroom, two bath, you know, 1500 square foot, the last four just sold for this. So what’s my price per square foot. It again, it just has this efficiency about it. That makes it attractive as, as a fix and flip. Yeah.

Andrew Kerr (14:30):

Awesome. All right. So a lot of the folks that are listening are doing the more traditional house hack sorta like you buying the place, running out the rooms or doing the income suite or the ADU. And no matter whether you’re going to do the live in flip or you’re going to live in a place and be a landlord at some point, you’re going to do some renovations. You’re going to have to do maintenance work. Where are you going to be doing some serious upgrades? And that’s one of the reasons I really want to have you on as sort of dive in this expertise because you make a beautiful product. So, you know, what are some of your like high level, best practices? I mean, when you start looking for a property that says, Hey, this is doable. This is a property that needs work.

Tracy (15:08):

[inaudible], I’m always looking at what can I do to produce a beautiful product. That’s still consummate with the neighborhood in terms of value. Um, I think I’ve only ever fallen in love with like one property that I wished I had kept as a rental, just cause it was so stinking cute and it’s a wonderful area. Um, but other than that, again, it’s just about what is this in terms of design I’m even like, what does this house want to be? Not, do I not? What do I want to do with it? What’s consummate to the neighborhood. What’s on trend. What’s a little timeless as well. And they also look at how can I balance material costs with producing an outcome that looks very stylish, but still is on budget. And that’s the sort of middle ground that I play with to be able to put out something that is different than what most people are used to in that neighborhood.

Tracy (15:57):

I deal with in Phoenix, Arizona, medium price houses, like three 50 and under. So that’s, that’s the wheelhouse that I, I stick with. That’s the lane in which I keep my blinders on entry-level and medium priced homes. That means sad. There’s a lot of people that will shop whatever’s on sale at home Depot and put in entry level products for entry level homes. And I get it, you know, and we’re in a hot market stuff still sells, but if I’m putting my personal stamp on something, my whole idealization of a property is how do I balance a beautiful renovation and stay on budget? And a lot of that comes down to material costs. So I will take the time to find materials that either look more expensive, for instance, fixtures, okay. I’m not going to restoration hardware and buying my cabinet hardware. I’ll tell you that right now I am shopping on Amazon quite often in Wayfair and online, and even places like offer up in Craigslist, Andrew, you wouldn’t believe sometimes the people, things that people sell that are brand new, I’ve bought $500 faucets for a hundred dollars because one of his houses didn’t like the finish on it.

Tracy (17:05):

So that takes a little bit more time, but I’m also not a high volume flipper. I’m not trying to do a hundred properties a year and that model might not fit. You know, if you have listeners that aren’t doing a bunch of fixing and flipping and they’re doing one house at a time and it’s going to be a really longterm rental, they might want to tone down what they’re putting in the house because it just needs to be functional for the next 10, 15 years. I don’t know if I quite answered your question. I might’ve gotten a little bit of a tangent there.

Andrew Kerr (17:33):

I did. That is so awesome. So why don’t flip homes? That’s I take that same approach with my rentals. You know, if a two bedroom, one bathroom is running for $1,200 a month, I price mine at the same price point, maybe a few dollars less, but I always make sure I have a slightly nicer that way. When folks think about Lee’s leaving, you know, one it’s quicker and easier to rent, you know, we just had a one bedroom. We rented back in June during COVID-19. We had over 40 people look at the place in a two day period. Wow. In partly is we priced it. W when we rebuilt the home, we made it look nicer than everything at the exact same price point. And I love that. And I think that’s a great approach, especially if you’re going to house hack and you’re going to live in it. And maybe you have a spouse that really isn’t quite interested in house hacking, and you’re dragging them along. You know, that could be a great way to get those nicer finishes for a budget. So I love those little tips of looking at like Wayfair, Amazon Craigslist. Um, do you ever use the habitat restore and find any good finds there?

Tracy (18:35):

Um, I, I will use them. And in fact, I’ll donate to them as well. Um, to your point real quick, one thing. So like with my rentals, for people that are listening, that don’t want to do a really designer, look, you want something more timeless, maybe it’s a more appropriate word, think of a transitional design. So something that can sort of Teeter totter between, um, a couple different looks that people can still make their own. And I love what you said about making it just a tad bit nicer. So for instance, instead of putting a $50 faucet, that looks cool, but it has plastic parts and it’s going to break and you’re going to have to send someone out there to fix it. Think about getting a Mowen in faucet that costs you a little bit more, but it’s going to last because it’s, it’s built to last and be turned on and off a thousand times, um, people notice that, and you will have tenants stay longer because first impression is this is a nice house. It’s clean. It smells good. It looks good. It presents well. The expectation is that I’m going to need to maintain it, to deserve a house like this. And, and I don’t mean deserve and like, uh, um, uh, adversarial way, but in a way that people appreciate that, you know, if the house has stained carpet and old paint and it’s hodgepodge, somehow, I feel like it makes an impression on renters that it’s it’s subpar and you’ll probably have higher turnover.

Andrew Kerr (19:53):

Yeah. So there’s two pieces I really want to touch on and it plays on this sort of time and money versus the return. So, you know, the first one is I’ve actually seen you do some demo work on your Instagram account and do some small trim work and stuff. You know, how much time do you actually spend on your own doing renovations? And do you find that valuable or do you try to just go have fun every now and then, because to break up the monotony of finding the deals and shopping and trying to pick out stuff, or do you actually try to do a majority of the work yourself?

Tracy (20:24):

Heck no, you do not want me doing the work. Let me be very, very clear about that. Um, what works for me is I will do like, just like you said, every once in a while, I will do, um, some, some work, not much, but if there’s something like, for instance, like a fireplace DIY, or I want to do a cool feature, uh, something I, nothing really comes to mind. Um, I will do those things, but I also will do small things around the property because it keeps me on site. And I find I’m typically checking up on my job sites a couple of times a week, regardless, but as we get closer to the finish line, especially when finished work is about to be done, me doing these smaller DIY projects alongside the guys, as they’re starting to wrap up alleviates so many questions and oversight that can happen, um, that could have happened if I’m not there.

Tracy (21:19):

So, I mean, I’ve, I’ve seen things where like, okay, once we renovated the bathroom, uh, now the toilets to close were originally was to the tub. And I’m like, well, no, one’s going to sit this close to the top. We need to move this. And we need to trench out the line, move the toy. And the guys were like, Oh, I wouldn’t have even noticed that. So it’s important for you to be on site. And I tend to be a little bit more hands on, again, I’m not a high volume flipper, but doing little things like that keeps me around my sods and around my contractors. So as things are going down the line, we’re not only seeing an avoiding anything that could become a larger issue. It also allows me to see things as it progresses, to be able to point it out and make sure it’s done how I want it to be done.

Andrew Kerr (22:04):

Awesome. Awesome. So I want to come back to that, working with contractors a bit more in just a second, but the other piece I wanted to touch on is, you know, what’s, what’s the best place to spend our money. So whether we’re going to flip it or we’re going to renovate it, you know, in your experience, if we’ve got a small budget to work on a place, you know, should we put the money on the kitchen versus the bathroom, or if there’s multiple bathrooms, do we try to fix up all the bathrooms or just focus on the master? Like where can folks get sort of their best bang for their buck?

Tracy (22:35):

Yeah. So, I mean, it’s probably no surprise that the kitchen is going to be where you get your most ROI curb appeal. I think if you can spend a little to make a big impression also really helps because first impressions go a long way. I always think about, regardless of if it’s a little condo or a large house who most likely is purchasing this house and how do they live. So if I think it’s going to be an older, retired, affluent couple, do I think it’s going to be a younger family that wants to expand their family. I’m thinking, how are they going to utilize this house? And then I’m also sidelining, not sidelining. I’m also cross-referencing that with, well, what else do I see in the neighborhood? That’s really important. So it pains me, but in some cases, I’ve had houses to where they have the direct stud surrounds already installed.

Tracy (23:23):

And I want to rip all that out, put gorgeous tile, make it pop in the neighborhoods, just telling me you don’t need to do that. It’s not going to be worth your money. And so in some cases, things can remain in place because that is what’s normal for the neighborhood. And so I’ll spend a couple extra bucks getting designer fixtures and maybe flooring that looks like it’s six or dollars a square foot for not that price. And so, again, it’s balancing, how can you get the look and still put out a quality product that’s consummate to the neighborhood that also speaks to who is going to live here and how do, how do they live?

Andrew Kerr (24:02):

So for folks that are listening, maybe you’re driving and you, you know, the slip by you, Tracey’s mentioned this four or five times now. So I just really want to call attention to this. She really looks at doing the work and making it fit the neighborhood and the price point. And you know, you’ve mentioned that several times and I love it because it’s so important. And it’s so easy to let a rehab and renovation get out of control, or you start designing it to your own tastes, or you say, Oh, this, this is going to make it really nice. But it’s so far above what everything else in the neighborhood is. You’re, you’re investing more money than you need to, and that can kill your profit margin. So I love that. You’ve mentioned that so casually, so many times in just a few minutes, we’ve been talking,

Tracy (24:49):

Yeah, it’s in, when there’s so many shows that show you the before and after, and you finally get that first deal. And you’re like, okay, hard budgets, $20,000. Well, $35,000 later, you’re like, okay, we’re going to buy this $600 chandelier. I don’t care. I love it. It’s like, you need to keep your emotions in check and always just ask, you know, if there’s there’s a balance and I think it’s a little bit of an art and a science, just like you do with your rentals, making it a tiny bit nicer, but staying within budget and thinking, how can I attract the most amount of people for the most price and still stay on, on budget here. Yeah.

Andrew Kerr (25:29):

Yeah. So let’s, let’s go back to contractor. So you mentioned your, you don’t like doing any of the work, but you’ll do some, some small stuff. So you’re on site. So during those finishing stages, you’re doing that work. I mean, what’s your default, like how do you find some good contractors? And then, you know, is that your best rule of thumb is try to be there two to three times a week checking on the work?

Tracy (25:51):

Um, well let me be also very clear about the fact that I’m just not good at almost any of it, almost any of it, my friend. So like don’t ever ask me to hang dry wall or do electricity unless you want to like flush the toilet. And the doorbell rings. That’s, you know, I stay in my lane, um, finding contractors, you know, it, to make it a little bit more scientific. If, if I was to come to your city and I had to find a GC, or I had to find an electrician or a plumber or trade or sob, I would pick up the phone and call at least five of them. Okay. And I’m looking on Craigslist, Yelp Angie’s list, any of usual suspects asking for referrals, maybe looking at a local Rhea. So if I call five of them, one of them is never going to call you back.

Tracy (26:37):

Okay. Just assume that, um, one of them is going to call you and say, I’m so slammed or I don’t work in that area. I work in the East Valley. I only work in West Valley. And then I ask them, thank you so much for calling me back. Can you recommend someone in my area, three, you’re going to probably be able to get bids from, um, one of them you might not get a good feeling about, or they don’t call you back, or they’re a little unprofessional or they’re way too expensive. There’s typically going to be like one thing about them that just doesn’t seem like it’s going to be a good fit. And usually you can break it down to a couple after that that are, could be a good fit. And so when I find good people and what I mean by good people is they’re professional.

Tracy (27:18):

They’re communicative and they’re fairly priced. I am not looking for the cheapest guy on the block. Sometimes all those things match up and they are relatively inexpensive, but that is not my main focus. You will get what you pay for. And you will also deal with immature people that are unprofessional non-communicative and desperate. Ask me how I know that. So, so when you find these people, um, you know, sometimes you can work with them on pricing and they typically either are used to working with investors or they are not used to working with investors. So I don’t want to say it’s out of line to ask for a discount to say, Hey, I have three other houses backed up behind this too. I’m coming down the pipeline. If you do a good whatever painting job on this one, um, I’d love to have you look at this because I, as a, rehabber love to be able to pick up the phone, get you guys in line and know that it’s being handled.

Tracy (28:10):

That to me is very valuable. Um, to answer the other part of your question. Yeah. I’m usually checking on my job, my job sites, at least a couple of times a week, and the guys know that I’m pretty heavily involved in the oversight, meaning the design, um, layout, how things need to be placed. Like I’m a chandelier overlords. I’m like, no, not to, not two links. One link. Yeah. That’s probably a little bit too much for some people, but that’s what works for me. So if you aren’t in the business of wanting to do a higher design or you just don’t have the time you work a full time job, or you’re brand new to this, what I can say is maybe pay a premium to have a more experienced contractor and ask them a lot of questions. So, Andrew, one of the other reasons why I like to be on site is because I have no background in construction.

Tracy (29:03):

My parents were not in real estate. I, you know, started in Phoenix, not knowing anybody. And I’m still not an expert. I learned something new every day, but I ask a lot of questions. And so the tile setters, well, why are we doing it this way? Can we, can we do this? Um, the GCs, I ask a ton of questions and having that education is going to introduce you to the questions that you should be asking any contractor. Okay. So if you are hiring these things out, you don’t know what you don’t know, certainly podcasts like yours, bigger pockets, YouTube, any blogs, there’s so much out there that you can learn. And sometimes like I’ve had subs asked me a question I’ve had to Google it real quick. Cause I’m like, what does that mean? I don’t know. You know? So don’t be embarrassed at the fact that you just don’t know what you don’t know. Construction is, is a lot. And depending on how big of a renovation that you’re doing, but even a cosmetic one can still carry a lot of questions about it. So in terms of finding them, um, I talked about that in terms of managing them again, you were looking for someone that’s communicative, professional and fairly priced. And if you have to pay a little bit more for your first couple to get that education, I’m telling you it is more than worth it.

Andrew Kerr (30:20):

Absolutely. So then when you’re working with your contractors, I mean upfront, do you actually do a detailed scope of work? Do you have them sign contracts is a little more informal. What’s your approach, Ben, have you learned from past mistakes?

Tracy (30:35):

Yeah, of course. So I always have everything in writing sometimes depending on the sub, depending on the trade, it’s a little bit more informal and I just straight up tell him, I’m like, listen, I’m out in the field right now. I appreciate your time. Can you just text me what we talked about? Cause in 15 minutes, I’m not gonna remember all the details. I just need to have something in writing. And so sometimes it’s as simple as a text. In other instances, it is going to be aligned by line of everything that is expected to be done there, done date, budget, and then you work with it, stuff comes up, right. Construction is, is, is what it is. There’s stuff that comes up that none of us can predict. Um, but yes, I mean, I always have something in writing and I forget the other part of your question, but, um, yeah, with these guys, I try to make it as detailed as possible because I don’t want them. I try to make their jobs easier by being specific. Right. And if something needs to change midstream because of something we all didn’t expect. So be it. But in that I’m looking for someone that’s really communicative. I would hope that they also enjoy that I’m communicative and then let them do their jobs and it tends to flow a lot better along the way.

Andrew Kerr (31:48):

Yeah. That’s awesome. And great, great tips. I mean, how have you found it as a sort of solo female entrepreneur working in a very male dominated field and I mean, do you have any best practices or tips you can share with folks? I mean, we’ve got, you know, last season we had 14 of our 20 guests were, were female and that was something that came up a lot was they didn’t always feel comfortable working with contractors or they came across contractors that they felt didn’t sort of give them respect or the time of day or they felt they were just giving them a high bid because they were a female.

Tracy (32:22):

Yeah. And that’s something that I think too, Andrew is let let’s talk about that just for a second because I really don’t enjoy the phrase male dominated industry. Just think of the three separate words. So male. Okay. That’s one thing dominated, just think of energy that, that puts out like big and dominating and aggressive. And then industry. I mean, we typically say like oil industry construction industry. So you think if I was a female listening to this and I wanted to get into house hacking and I keep having that phrase reiterated back to me that it’s a male dominated industry, that in and of itself, I think it is a trope that can be intimidating. And I think it’s sometimes can be a pushback to more females getting into this because they think that there’s this barrier I have found when I show up and I’m ready to work, whatever capacity that means.

Tracy (33:18):

If I’m out in front pulling weeds, you better believe I’m out front, sweating my ass off to pull weeds. And if that’s what I knew at the time, but I’m going to be on site to make sure that things are done well, the contractor see that like, excuse my language. This bitch is ready to play. She’s not going to mess around, you know, and the contractors that don’t treat you with respect, get them out of your life, shake the tree, find another contractor. I don’t care what city you live in. You do not need that person so bad that they bring that energy to your job site. And I don’t care if you’re male, female, a couple, I’ve always put, you know, my Instagram and other places. If you have someone on your job site that has, that is poisoning the well, get them out of there.

Tracy (34:07):

Even if you have to pay a little bit more, um, just say, listen, you’re not even half done, but I’m going to give you 50% of what you’ve done. We’re going to finish. Thank you. And, and, and, you know, be well and be on your way. I always make sure that I’m working around guys. Cause sometimes we do work late on job sites to get to the finish line, right? I need to be able to feel secure around them. And someone always knows where I’m at, but regardless I do want to share because, and I’m so glad you brought this up. I think it’s important for, for females to hear this. And maybe their partners that worry about them being on job sites are getting into this, into this space. Is that the guys that I work with, I trust them. And if I left my wallet open and my keys on the countertop, I trust them being on late on job sites.

Tracy (34:56):

I’ve learned so much from them and we have a really good vibe. They respect me. I respect them. We have a lot of fun together, but that’s not to say I haven’t had a few contractors that are on the opposite. End of the spectrum. The issue with that looking back was it was my fault. I went against my usual vetting process because I wanted someone to start quicker and uh, you can always smell desperation. And when someone tells you, yes, I’m great at everything I can start tomorrow morning. I’ll be there at five o’clock in the morning. There there’s an issue. No one likes desperate people, regardless. There’s a reason why they’re desperate. So I tack that onto the end, because if you find again, communicative professional, fairly priced contractors, most of the time they care more about who is paying the bill. This one’s paying the bill.

Tracy (35:50):

That’s all they give a shit about. Okay? If I’m paying the bill, I’m showing up, I’m communicative. I’m letting them do their jobs. That’s all they really care about. They don’t care that you’re female or male or gay or straight or black or white. So if you’re listening to this and you are a quote unquote minority, and I say that with love, because I don’t want you to feel like that’s a barrier, then just know that there are contractors that you will drive with. They want to get paid. They want to be respected and they want more jobs. So if you can give and deliver that to them and give them respect and they respect you and you communicate and you show up and pay them and let them do their jobs, there’s not going to be a shortage of people that want to work with you.

Andrew Kerr (36:33):

That’s awesome. Yeah. Thank you for sharing that. I think that’s all really, really helpful, you know, and I think this is a great sort of segue into this. I mean, you know, you’re a solo kick ass female entrepreneur. I mean, put real estate aside. You’re just kicking ass all the way around. I mean, why’d, you decide to be an entrepreneur. I mean, did you have a corporate job for a while realized it wasn’t for you when you sort of got out of college and were young and I mean, what drove you to this?

Tracy (37:01):

Yeah. Thank you for asking. I really appreciate you saying that. Um, I worked before I branched off on my own. I worked for other investors for about 10 years okay. In the Phoenix market. And that was when everything collapsed. But the blessing behind that as I had gotten started right before the recession hit and had worked for one investor, um, as a private investor, he had a career with the municipality, but in his spare time had accumulated a couple dozen properties. And I used to rent a room from him and he knew I worked in real estate, um, Linden at the time. And he said, listen, I’m in desperate need of some assistance. If I could replace what you’re making, would you come work as a, as a assistant for me? And I love that. You know, I was so young at the time when I was doing the lending part of it, my heart was just never in that.

Tracy (37:52):

So started to work with him. Um, he referred me to another investor as well. So I started working with them. I started working with another, so I kind of like contracted my services out to private investors. And that was such a cool time because it was right before the recession hit and all of these guys did create a financing. So I used to door knock when it was 110 degrees in Phoenix, Arizona, and learned how to talk to distress sellers, learn about trustee sales, learn about Oreos, learn about creative financing and fixing and flipping and resale and property management. And then when the recession hit, I worked with one of the larger investment firms here, still private. And then after about a decade of that, I decided if I need any more time to learn the ropes, then something’s wrong here. So I just made the leap and decided to work on my own.

Tracy (38:43):

I think I’m not cut from a corporate cloth. Um, you, you know, I’d like to think I’m a valuable teammate, but there’s, there’s personalities that just thrive more on producing what you produce from your own efforts and not necessarily being in a cog in a wheel. Um, but for those listening that do have a job, there’s a lot of value, especially if you’re good at what you do and it’s stable and you ha you’re working with people. Um, you know, that it’s a good environment. There’s so much to be said about having stable income and benefits and taking a certain amount of your income. Instead of maybe going out to dinner 10 times a month, you go out two times a month and for a year you’re like, I’m going to save this money. And then I’m going to purchase a house or I’m going to wholesale a house or get into real estate investing while I have a W2 or nine to five job. So I’m very cautious about highlighting the allure of entrepreneurship because it’s tough, you know, it can be really heroin. Um, so with everything that’s going on right now, I just want to be delicate in saying, yeah, just go flip houses full time. It’s the way to go. You should be an entrepreneur. Everyone should be an entrepreneur. I’m not Gary V.

Andrew Kerr (40:02):

Yes, I, I, you know, so I think there’s a great, a couple of great things in there. You know, in one of them, I remember it was maybe a year and a half ago or two years ago on your Instagram account, you did a little bit of a debt free shout out. So, uh, you know, half our audience is using house hacking or they want to learn about half sacking as their first step into bigger real estate investing. And then the other part has no desire really to be a real estate investor, but they want to use house hacking to supercharge their personal finances, to rapidly pay down debt, to start maxing out their retirement accounts or to get to early retirement. So, I mean, w what’s your approach Ben, since then, and you know, what drove you to want to be debt free? Are you still with that mindset of wanting to be debt free outside of using financing for real estate acquisitions?

Tracy (40:57):

Oh yeah. I, you breathe differently. You behave differently. You make decisions differently when you don’t need something is as badly. I love what I do and I’ll continue to hustle as much as I want to, or as much as I don’t want to or move into something else. But when you don’t have lingering debt and I was there for a couple of different times actually, and having it paid off and making the final decision, I’m going to remain debt free. Um, this is my lifestyle. I want to be financially independent. I want financial freedom. Once you make decision, all of their decisions behind that are guided by what’s. The value in this is, is the cost of this worth me going into debt. I also did a recent post on Instagram where I had a range Rover and I go, Hey guys, check out my range Rover.

Tracy (41:49):

Do y’all think it’s rented? Or do you think it’s real drop, drop me a line? And comments went nuts. They’re like you leased it. This is real. Um, you know, some people were like, you don’t seem flashy. So I don’t think that this is yours. And it really boiled down to the fact that I’m like, could I afford something like that? Sure. However, buying a hundred thousand dollar car is just, it doesn’t fit the vision I have for my financial piece. Okay. That means more to me than going out and buying a new car, whether it’s a $30,000 car or a hundred thousand dollars car. And if you simplify it even more, it’s just like a new pair of shoes or a bigger house. There’s really this dream that sold to us of bigger is bigger, is better, more is more. And I think that that bubble, I don’t think I know that that bubble is being burst.

Tracy (42:43):

When people realize I have a ton of student debt, um, houses are expensive to buy and maintain. Uh, healthcare is going up. I don’t know if I’m going to have a job in six weeks or six months. And uncertainty seems to be around the corner. What can I do to make my, my dollar last longer? And I think younger people are starting to see, and maybe even older people too, that there is an appeal about being frugal. And I know it’s the F word, you know, no one wants to be frugal, but doing something different, it’s going to feel awkward for a little while. Your friends may Josh you for not going on these lavish vacations like you do, or like they do, but you can also find deals on travel. You can find deals on great cars. Like I said, listen, I’d get a range Rover.

Tracy (43:29):

If someone, if I could take it subject to, from a distressed seller, I do it tomorrow. There’s always caveats. So I don’t want your audience members to think how’s hacking or living with the fir re the, the, the fire method means living in poverty and not having nice things. I’ve also been very vocal about like, I want quality, expensive things. I just don’t like paying retail. So there are ways like Tony Robbins says, it’s about asking a better question. Not like I can’t afford that, Oh, come on now. You probably can’t afford that. But how, how can you afford that? How can I afford to house hack? How can I afford to become a millionaire before I’m 65? How can I afford, um, to have a lavish vacation? So it’s not about just frugality. It’s about being able to use what you have in such a way that you achieve more with what you have without completely having to live in poverty.

Andrew Kerr (44:27):

Absolutely. So then, I mean, that sort of leads me to a question, how do you spend your money now? Because obviously you were buying or doing flips, and then you started doing, you know, buy and hold properties. And then I saw on your Instagram, you’re looking at apartment investing, you know, what, what’s your sort of end goal that you’re trying to push towards? Or how do you, you know, high level summary of how you do your investing and where you like to put your money to build longer term wealth in that financial security?

Tracy (44:55):

Yeah. I keep it, I keep it really simple right now. So flipping is great income. It also brings me a lot of joy. I do like doing it. Um, I’ve changed the business of how I get properties that frees my time a lot and in my bandwidth, but I’m also moving. I mean, w what I typically do is, is out of flips. If there’s one that’s really juicy, meaning it has a lot of equity and it has great cashflow, I’ll keep those. So along the way, I’m fucking off rental properties. Okay. Now in apartment complexes. And I’d like to keep them 10 plexes and under, it’s not a different idea. It’s the same idea, just more consolidated. So what I’d like to do with that is by these four to 10 flexes, put my own, spin on them, make them a little bit more designer, make them potentially like a, uh, a or B plus product, and maybe like a, B or an upcoming scene neighborhood. And, uh, cashflow. I mean, cashflow is really going to be the name of the game, but, you know, I, I think a lot of people in our industry to Andrew it’s like, we’re addicted to doing deals. So it’s like, I’ll probably never retire, but I like having the bandwidth and the cashflow to say, no, thank you. That’s a great opportunity. Just not for me. And the other one being hell yeah. I can’t wait to do this. Let’s let’s get at it.

Andrew Kerr (46:13):

Yeah. So are you still at a point where like real estate is your largest investment, or do you also start to invest a little bit outside of real estate? Do like, uh, you know, uh, IRA or any other, uh, a brokerage account, anything like that?

Tracy (46:28):

Mostly real estate. The appeal about doing, um, IRAs or index funds is the study NES and the returns. If you invest in dividend stocks, you know, that’s great. But then I also look at, if I put my money in the streets, what I can get back in a return. And it just seems like if I keep my money moving, that’s a higher return. Um, that being said, you know, I don’t think that there’s anything wrong with doing these other things. It just depends on what that your individual listeners are looking to accomplish with what they have personally. I just feel like keeping my money moving in larger capacity gets me a higher return.

Andrew Kerr (47:05):

Yeah, that’s awesome. Well, Tracy, I am so glad you were able to get on today and sort of share your story experience of starting with a roommate style. How SAC going into the live in flip, and then now just talking a little about your, your overall career and where you’re at in life. It’s been a blast talking with you, but before we let you go, we like to ask all of our guests a set of final six questions. Okay. You ready for him?

Tracy (47:30):

Bring it

Andrew Kerr (47:31):

Right? What is your favorite personal finance resource? So that’s blog book or podcast,

Tracy (47:38):

Honestly, just Google. Google’s my best friend. There’s so many resources out there now. It’s hard to narrow it down to one. It just depends on the subject, but I, I would just say, you know, for anyone listening, if you want to get educated, just start with online. There’s so much out there. And so many people that want to see you succeed.

Andrew Kerr (47:55):

Awesome. So question number two, what’s your favorite real estate related resource and why you can’t default with Google because we’re in real estate. I know you have to have one or two good places you go to. I have gotten so

Tracy (48:08):

Much from just conversations with people about talking about deals. So either in my mastermind or other investors, you can only learn so much online when you’re in the thick of it. Being able to pick up the phone and say, Hey man, I’m dealing with this challenge, or what would you do in this situation? That tends to be an amazing resource. It’s just your local network of other investors that are doing deals in your area. So don’t be afraid to connect with people and ask questions and kind of all bring each other up.

Andrew Kerr (48:37):

Awesome. All right. Question number three, what’s been your favorite travel destination so far?

Tracy (48:43):

Oh gosh. Um, the last one I just went to before all this hit, I went to Taloon and I went to Ken Kuhn of which I had never been to either before. And I went down to Chichen Itza. Um, I swam in us a note. They, I got to practice Spanish. I was kind of just had an adventure. That’s the first one that comes to mind.

Andrew Kerr (49:05):

Yeah, my, my wife and I, when we had our honeymoon, we were down in Mexico and we went to Cheech and pizza and swam and one of the sea notes. But I specifically remember your Instagram photo from when you were down into loom about how you were like closing deals on the beach. So,

Tracy (49:19):

Oh my gosh. I remember that day. Yeah. I made friends with one of the guys there and we did a little Instagram post cause he was, uh, he ran a couple of businesses too in restaurants and he was making sure I was all good. And I was making phone calls and checking emails and having a Modela and closing, closing deals at the beach. That’s the way to do it. Right.

Andrew Kerr (49:37):

Awesome. Awesome. All right. So question number four. What’s next on your travel list? Post COVID-19.

Tracy (49:45):

I am supposed to go to Miami here in a few weeks for a mastermind group. I am hoping that that still happens particularly because this is a newer mastermind for me, and I want to meet my new mastermind fam and then there’s a design district there, Miami just as something so different than what we have here in Phoenix. So I’m really wanting to, to visit the design district. So hopefully that’ll stick.

Andrew Kerr (50:08):

Awesome. Yeah. I love Miami years ago in a previous life, I did international disaster response work and I did a ton of, I spent a ton of time in Haiti and you’d always fly back from Haiti into Miami. So I’d always spend a couple of days going out in Miami from the bars, the music, the food, the architecture, it’s an awesome city, just to fiber

Tracy (50:28):

And culture. Very and same thing with Mexico. I had, I mean, I was just so inspired after you come back from there. It’s just such a vibrant and loving culture.

Andrew Kerr (50:37):

Awesome. All right. Question number five. What’s your biggest bucket list item that you haven’t accomplished yet in real estate? Real estate life?

Tracy (50:47):

Oh man. Um, I’ll, I’ll keep it real estate. I’ll keep it professional. So I’d love to just take down, um, a really cool multifamily and put my own, spin on it and put my Mark on it. Awesome. I see that happening all the route around here in Phoenix and I’m like, okay, I’m ready. I want one of those.

Andrew Kerr (51:04):

Awesome. Awesome. And then number six, what is your favorite life hack?

Tracy (51:11):

Ooh, I have a good one for ya meditation own with all of this COVID stuff going on. I started taking sunset walks that helped ground me during the day, um, meditation, especially I think if you’re an, a type and you go a lot and you work a lot and I’m not any of those things, right? So if you are struggling with focusing or uncertainty or really anything just taking, even if it’s five minutes to do breathing technique techniques, and there is no right or wrong way to meditate, it’s really just focusing on being in the present, following your breath. You don’t have to levitate. You don’t have to do anything crazy. Um, that has been an amazing life hack for me and in a lot of ways,

Andrew Kerr (51:54):

Yeah. I actually have the Headspace app on my phone that I’ll use every single day. It’s amazing. Just even five minutes stressed in the middle of the day. Go use the Headspace app to help walk me through the little meditation is phenomenal. So great, great life hack Tracy. Thanks for being on again. Where’s the best place for folks to be able to find you if they want to look you up and learn more about you?

Tracy (52:15):

Yeah. I’d love to connect with any of you guys on social media. My handle across any platform is at race like rolls Royce, R O Y C E race of real estate. And I’d love to see your pretty faces there. I’m mostly on Instagram these days. Um, when I find 13 seconds to do anything else, I will be more on YouTube as well. I’m kind of reviving some of my socials on other platforms, but, um, yeah, at, at Raisa real estate.

Andrew Kerr (52:42):

Awesome. Tracy, thank you again so much for being on the show

Tracy (52:45):

To be here. Thank you so much for having me.

 

Be sure to check out our Ultimate Guide to House Hacking for a great overview of the different styles of house hacking and different types of tenant bases.

Check out the home page for “The House Hacking Podcast” here.