$10K/Month at 25 Years Old by Buying $100K Properties

by NEW YORK DIGITAL NEWS


Soli Cayetano makes over $10K per month in passive income at age twenty-five by buying the rental properties that most investors actively avoid. These properties are often in overlooked markets that aren’t as attractive as San Diego, Miami, Austin, or Seattle, but they make her as much, if not more, money. The houses Soli buys are often $100K or less, meaning almost any investor reading this could come close to buying one.

In three years, Soli turned $50K into a $5M real estate portfolio, enough passive income to support her for life, and an online following constantly finding and funding deals for her. She started building her real estate portfolio right after college when lockdowns took away her chance to make any active income. After reading David Greene’s Long-Distance Real Estate Investing and listening to the Real Estate Rookie podcast, Soli scraped together every dollar she had and bought a Midwest rental that needed serious rehab.

Now, a few years later, she and her partners own dozens of rentals across multiple markets. As a result, Soli was able to quit her job, focus entirely on real estate, and achieve ultimate time freedom. But will her cash-flow-first model work out in the long run? David goes head to head with Soli in this episode to debate whether or not these “cheap” markets are a mistake to invest in.

David:
This is the BiggerPockets Podcast, show 815.

Soli:
The homes that we’ve been buying are primarily $100,000 and less. I started investing in 2020. Interest rates were about three and a half percent, and buyers flooded the market. Nowadays with seven, 8% interest rates, I think a lot of people have told themselves that deals just won’t work. Because of that, we’ve been able to make a lot more aggressive offers, less buyers in market, more deals for us.

David:
What’s going on, everyone? This is David Greene, your host of the BiggerPockets podcast, coming to you from Downtown LA at Spotify Studios where I’m joined by Rob Abasolo and Soli Cayetano doing a real estate podcast. If you didn’t know, we are the biggest, the best, and the baddest real estate podcasts on the planet, and I’m joined today by some talented real estate investors. Today, we interview Soli and we get into how she built a portfolio of properties all across the country using long distance investing techniques and got her start with cheaper price properties that made it easier to scale at scale. Rob, bring us to today’s quick tip.

Rob:
Today’s quick tip, find a way to keep yourself accountable. If you want to get into real estate, document the journey. You can do that so many different ways, but in today’s story, we talk about how if you document it on Instagram and you put it out there for the world to see, then you sort of have to stick to it or else people are going to ask you questions and you’re going to have to report back to them that you never actually did the thing that you said you were going to start to do. So go out there, start an Instagram account, document the journey, and let other people follow along and it’ll keep you on track.

David:
I like Rob being under a time crunch because he made a mistake on the quick tip, but he just kept rolling.

Rob:
Kept going, baby.

David:
For the first time, he got it in one take, everyone, leave a comment-

Rob:
The show must go on.

David:
… on YouTube and let Rob know how proud of him you are for not needing to be perfect. And since you did so great on that quick tip, Rob, I’m going to throw you another one. What’s something of value that people can pay attention to that will help them in their career?

Rob:
I think that’s a very good story in starting small. You don’t have to go out there and buy these mega, crazy expensive houses. You can go out, buy a more affordable house, get your reps in, and scale your way up accordingly, so that you don’t necessarily have to get into a big, scary purchase. I think getting into a purchase takes confidence, it takes courage, and it doesn’t mean that it has to cost $1 million. It can be a $100,000 house.

David:
Thank you very much. We’re going to get to the show shortly here, but before we do, make sure you listen all the way to the end because you do not want to miss the blood battle between Soli and I as we go head-to-head in a brutal fashion with Rob refereeing. Really in a terrible way, you should have stopped the fight many times. You just let it get out of hand.

Rob:
She annihilated you, that’s why.

David:
There you go, so listen all the way the end to hear how that goes. Let’s get into it. Today’s guest, Soli Cayetano has been investing for three years. She has 40 units across Ohio, Georgia, and South Carolina. Her strategy include BRRRRing, flipping, and affordable housing.

Rob:
Fun fact, Soli, I hear you’re going to write the foreword to David Greene’s book if he ever publishes an update to Long-Distance Real Estate investing, is that true?

Soli:
Is there one coming out soon?

David:
At some point, I am going to update it. It was the first book I ever wrote, so I’m sure it could have been written much better.

Soli:
I think the story is that I kept on tagging David in way too many posts and he got annoyed and finally said, “You can write the forward,” and I have a DM to prove it.

David:
Can confirm, Soli likes tag. She likes tag, she’s good at tag.

Rob:
We’re going to show it in the show notes, the screenshot, which is a legally binding, David-

Soli:
Legally binding.

Rob:
… Agreement. I don’t know if you know this.

David:
Every man loves this, the thought of having his screenshot shared for everybody to see. This is a very popular thing to get into.

Rob:
Well, before we get into your story, can you tell us in just a few quick points, what’s working for you in your current market?

Soli:
So, I’m primarily investing in Augusta, Georgia and it’s a lot more affordable market. It’s about two hours outside of Atlanta. I do have properties in Cincinnati and Aiken, South Carolina, which is right outside of Augusta. The homes that we’ve been buying are primarily $100,000 and less, so very affordable market. The one thing about high interest rates, a lot of people are sitting on the sidelines right now. So, I started investing in 2020. Interest rates were about three and a half percent, and buyers flooded the market. It was super, super competitive, so try winning a non-cash offer and it was almost impossible. And so nowadays with seven, 8% interest rates, I think a lot of people have told themselves that deals just won’t work, and so they’re just not going to even try. So because of that, we’ve been able to make a lot more aggressive offers, less buyers in the market, more deals for us.

Rob:
And do you feel like the deals are working at the price points that you’re currently purchasing at more than more expensive premium, mid-tier properties?

Soli:
I think so. I think that interest rates affect proportionally, they affect less the cheaper markets than the more expensive markets from just a dollar amount on a mortgage payment on a $60,000 mortgage it’s, I don’t know, maybe like 100 bucks if the interest rates go from 3% to 7%. But in the Bay Area where I live, if you have $1 million house and the interest rate jumps from 3% to 7%-

Rob:
It’s significant.

Soli:
… That’s probably like, I don’t know-

Rob:
Thousands of dollars.

Soli:
1,000, 2,000, $3,000, and so disproportionately the interest rates don’t affect the smaller markets.

Rob:
So, is that going to be more of a cashflow game going kind of the lower tier interest doesn’t hurt as much, versus the appreciation side of it, or are you still getting the appreciation side of that in some of these markets as well?

Soli:
So, I think we can argue on this, David, of cashflow versus appreciation a little bit, but I think these markets are first and foremost cashflow, but you can find good pockets of appreciation in certain areas. Those are my favorite areas to invest in, are the ones that have the path of progress, there’s a bunch of renovations going on, you can see that they’re about to turn from a class C to a class B, those are the neighborhoods that I like to invest in because you can get both the cashflow from the affordable markets and the appreciation from investing in strategic locations.

Rob:
That makes sense.

David:
Is your position that cheaper markets equal more cashflow?

Soli:
It depends on your strategy, but from a long-term rental perspective, I would say generally.

David:
What do you think, Rob?

Rob:
I guess it’s going to vary depending market to market, but for me, I’ve always been in the mid-tier side of things. I haven’t really done kind of the $100,000 purchases all too much. I’m actually doing one right now as a wholesale in Houston, Texas, but that’s meant to be more of a flip, not an appreciation play for me. So for the most part, my lane is mid-tier, usually all the houses that I’m buying are going to be $300,000 to $1 million and a few a little bit more expensive than that, it just kind of depends.

David:
And are you buying short-term rentals or traditional rentals?

Soli:
Of the 40 units I own, I would say five of them are mid-term rentals.

David:
Cool.

Soli:
I don’t have any short-term rentals. I transitioned all the short-term rentals to mid-term rentals just because the quality of the tenants for short-term rentals in a place like Cincinnati I feel like are maybe a little bit questionable, and then I have 10 flips going on right now.

Rob:
Nice. Actually, going back to what you were saying, I’ve got a buddy who does short-term rentals in very rural markets and he buys houses for $100,000.

Soli:
They do well.

Rob:
They do super well.

Soli:
The Airbnb I bought was $125,000. It was a duplex. We put in about $60,000 of renovation, $20,000 of furniture, so all in for just about $200,000, and I think on our best month we made like $10,000 of rent.

Rob:
Wow.

Soli:
Incredible, right?

Rob:
That’s crazy, and you turned that into a mid-term rental?

Soli:
Yes.

Rob:
Goodness.

Soli:
It was very cyclical. I think that during the summer months it was great. It doesn’t really get that snowy, but it’s not really a place people go in the winter that much, and so we’d have anywhere from 3,000 to $10,000 of bookings, but as a mid-term rental, we can get a steady five to $6,000.

Rob:
That’s so good. What’s the mortgage on that?

Soli:
That’s about maybe $1,700. So, cashflow is about $1,000 a unit as a mid-term, and it stays steady the whole year.

Rob:
I think that’s totally fair. Mid-term rentals really are the saving grace a lot of the times, especially if you are doing short-term rentals. You find out it’s a lot of work and then you don’t necessarily want to switch your strategy until you get a mid-term rental guest. I stumbled upon it on accident. I had a travel nurse come and book my place and I got paid pretty much the same amount of money and it was way easier. They never texted me, they never did anything.

Soli:
They’re great guests and we have a guy who is there for an entire year paying a mid-term rental price, but his home had some… I guess it burnt down or something. So, insurance claim rented the whole place for an entire year and we’re locked in at that high rent.

Rob:
Man, nice. So my buddy, his strategy is buy 100,000 to $150,000 homes more on the $100,000 side. His mortgage is always like, I don’t know, 800 bucks, whatever it ends up being, but he’s booked 90% because no one thinks that it would be a good investment to buy an Airbnb in these towns. And he’s like, “All right, I’ll just be the only Airbnb.” He’s booked like 90% and he basically grosses like 2,500 to 3,300 bucks a month. So, he’s usually cashflowing like 1500 bucks at a minimum.

Soli:
It’s not bad.

Rob:
It’s not bad.

Soli:
I would say bad. Most of my mid-term is cash around $1,000 mostly. Actually, all of them are in Cincinnati, and then long-term, when I bought at 3.5% interest rates, those are like three to 700 bucks, and now in Augusta it’s a little bit lower. We’re like 150, 250 bucks [inaudible].

David:
That’s what I was getting at. When we’re saying cashflow in cheaper priced homes, we’re not only talking about traditional rentals, we’re talking about short-term and medium-term rentals. I would agree with that, that you can cashflow much stronger on cheaper houses if you’re doing medium-term and short-term rentals. Traditional rentals, you end up usually getting a couple hundred bucks, which gets eaten up by CapEx and maintenance. That’s usually when I’m critiquing the idea that cheaper properties equal more cashflow, it’s because the cashflow gets eaten up by the property again, but if we’re talking about running them as a short-term rental rental, I don’t think that same logic applies.

Soli:
Unless you save up for maintenance and CapEx along the way too, or if you’re renovating this property, so that they are lower maintenance and all your CapEx have been replaced, then your 150… My 150 is after all reserves, all CapEx, all maintenance, all vacancies. So, what actually goes into my pocket is probably more like 500, but I’m taking out all of those reserves and putting them into an operating expense account-

David:
You’re keeping 150, right?

Soli:
And I’m keeping 150 into more of an owner pay account.

David:
So, that ends up being $1,800 a year. So over five years, you’re talking about $8,000 or something.

Soli:
It’s not life changing,

David:
That’s my point.

Soli:
But when you buy in the right markets and in the right neighborhoods in those markets, you do get that mix of cashflow and depreciation.

David:
Which is where the wealth comes from.

Soli:
Which is where the wealth-

David:
Once again, we thought we were arguing, but we’re really not. You’re seeing the same thing that wealth comes from the property going up.

Soli:
Yep.

David:
So, I understand that you had just graduated college when you started investing. What was your day job at that time?

Soli:
So, I started working in commercial real estate when I was a sophomore in college, pretty young. I just needed a paycheck basically, and I was helping lease office space for pretty big companies. And so, that was what I did sophomore year through senior year, and then when I was a senior, the pandemic hit, and that’s what really propelled me into real estate. So, I was a senior and I was going into a fully commission-based job as a commercial real estate broker, leasing office space, and nobody wanted office space in 2020. It was like a dying industry. And so, as I sat in my-

David:
Why?

Soli:
Why? Everyone was working from home, but I think as I was thinking about this, I could make $0 for the next how many ever years I was going into a profession that was maybe going to be crushed. And so as it lasted longer and longer, my school was shut down, college was shut down, work was shut down. We didn’t really know what to do, and I started thinking about how I could build some type of passive income, anything, so that if I got $0 of a paycheck for the next year, at least something was coming in.
What was really weird about the pandemic for me is I was always used to hustling and working two jobs, so in high school I worked at a coffee shop and I went to high school, then I went to college and got a brokerage job. So, I was working basically full-time and going to school, and so when the pandemic hit and school shut down and the world shut down, it just felt weird. I had all this time all of a sudden. I tried to cook, tried to… Everyone had their pandemic story about what they did and ultimately decided that I needed something more. So, I looked into real estate investing. I started my Instagram, I posted that I was going to buy a property, and that’s how it took off.

Rob:
Wow, so you started your Instagram account, which is really great, a lot of great content for anyone that’s looking to get into the world of real estate, and was it really more of a, hey, I want to document this journey, you’re pretty excited to just put it out there?

Soli:
Absolutely, I think a lot of people wait to start their Instagram until there is a story to tell, but for me it was just vlogging. I just wanted to one, maybe hold myself accountable, put it out there into the world. I’m going to buy this real estate investment property and watch me make it happen. And then secondly, I was really trying to find a community for myself. And so again, I was stuck at college, but everyone had pretty much gone home. So, I was literally alone, by myself, and isolated because you weren’t supposed to hang out with anybody. And so, my internet friends became my real friends and I talked to them, I completely changed my circle where before I was hanging out with commercial real estate brokers who don’t really prioritize passive income. They’re just always grinding and college students who are partying and not thinking about retirement age. Instead, I was surrounding myself with all sorts of real estate investors who were prioritizing delayed gratification and taking big risks in order to buy these rental properties, and that shifted my whole mindset. My whole circle changed.

Rob:
So then you decide, I’m going to buy a property in my backyard, get started small work, my way up from there?

Soli:
I lived in the Bay Area, California, and so homes there… I think the average home now is $1.5 million or something, and so I was thinking I had about $50,000 saved up from working for three years essentially.

Rob:
Wow, that’s good, that’s a lot.

Soli:
It’s not bad.

Rob:
It’s not bad at all.

Soli:
And I have a full scholarship from my college, and so I didn’t have any debt.

Rob:
Oh man, I’m jealous. That’s cool.

Soli:
Lucky me, I was a very lucky person, but I thought about, what could I buy in the Bay Area? Because usually what people think about is, if I’m going to invest, buy in my backyard, and I was like, “I can maybe buy a condo and then I would be tapped out from a debt to income ratio standpoint and I would have no more money, that would be it.” And so, as I started reading more of the Long-Distance Real Estate Investing book and thinking about how I could make my money go further, I thought maybe I could do the BRRRR strategy. In order to do that, I would have to be in a more affordable market.

Rob:
Cool, so the big shift in your mindset living in the Bay Area was just, “Hey, maybe it’s not as obtainable to live here.” You read this book, you picked up some of the principles that my friend David Greene has outlined and influenced so many people with, and was that scary? Was that like, oh, I could do it, was the book like, hey, man, this seems like a pretty clear strategy, why not give it a shot? What was that even doing your first investment out of state?

Soli:
I think I didn’t know what I didn’t know. So, I went into it a little blindly, but I did a couple things. So, I was listening to BiggerPockets Rookie a lot. It had just come out in about 2020-ish, and listening to just like everyday people buy their first rental property. And I think from that I was like, “If these everyday people can buy real estate, then why can’t I do it?” So, that was more of the confidence piece, and then I think the book was more of the tactical piece. So, how do you go out and find the market? How do you go out and build the team? How do you actually go analyze these deals? And so together, I think it was the confidence, mixed with the tactical that came together and was like, “I’m just going to go do this,” and a little bit of recklessness, just why not? Worst thing that could happen is I lose $50,000 and I’m just where everybody else is starting in probably graduating school with $0. So, I thought worst case scenario, it’s really not that bad.

Rob:
50,000 is a lot to lose, but I think that’s the right attitude. A lot of people get into real estate and they analyze all the things that could go right, but then they overanalyze all the things that could go wrong, and so that always stops them from doing it. Whereas I’ve always been the kind of person, and Brandon always used to say it so well, which is like, “I jump out of the airplane and I assembled a parachute on the way down.” And for me, that’s always how I got to the next property because I was like, “I have no idea,” but other people that presumably aren’t geniuses or all… They can’t all be smarter than me, maybe a couple of them, but they all seem like normal, regular people that are just good and consistent, and you really do have to be a little reckless, I think. It’s a slippery slope.

Soli:
That’s why I like to share on my Instagram too because I feel like a lot of people think about real estate investors and they think older, maybe male or something, but seeing people who look like them and who are younger them really adds a lot of inspiration for people that if I can do it, then they can do it. I’m a totally normal person, no one special, but if I can do it, they can do it.

Rob:
David, what do you say that you’re… On the spectrum of reckless… Following your gut, I guess would probably be a better way to say that, versus the analytics and data analyzation, do you find yourself more on one side, right in the middle?

David:
I’m not as reckless as I think I appear when I’m giving advice, I’m more strategic. I want to line up all the dominoes, I want to have a good idea what I’m doing. I want to know where the pitfalls are and how to avoid them. I know that it could go wrong and oftentimes it does go wrong. We’ve talked about that, but I don’t know that things going wrong ever catch me by surprise.

Rob:
Yep.

David:
That could have happened, I knew.

Rob:
That’s a good way to frame it, for sure.

David:
I don’t like to jump out of the plane and build your parachute on the way down because sometimes you don’t know where you’re landing. Even if you build the right parachute, you’re like, “Well, this is a market that sucks. Why did I succeed here?” And you kind of have to start over, but I do think that there could be benefit in parachute building. So you invested in a market, now you’re investing in different markets, but you learned a lot about the fundamentals of real estate investing in that additional market. So, there’s still value even if the properties themselves aren’t crushing it. You take that information, you go to another market where they will. Now, you can 10X how much money you made in the next five years that you made in maybe the first two or three. So, there is value in taking action, 1000%.

Rob:
I think it’s like… And half the audience is listening to you and they’re like, “Oh my gosh, I’m so glad you said that.” I’m also glad you said that. I think reckless is definitely the wrong term, but I think parachute building to an extent… But taking action, you’re never really ready to take action, much like you’re never really ready to have a kid, but then you have a kid and you figure it out.

David:
You’re never ready to go to the gym. I was like, “I could be in much better shape before I have to go.

Soli:
I think there’s something to putting your feet to the fire though, because unless you’re forced to figure something out, then you’re not going to figure it out. So, I had a really good connection in Cincinnati, which helped me choose that market, incredible market, glad I chose it, but I didn’t have any contractors, any property managers when I went under contract for my first property. But because I went under contract, I was like, “Oh, shoot, I got to figure that out,” and I figured it out. So, it really forced me to take the necessary action.

Rob:
Obviously, this is a big investment for you, getting started into it, doing all that kind of thing, did you have family to fall back on, family to help you, people in your sphere that were willing to co-invest or anything?

Soli:
At first, no. I think I was really adamant on doing it by myself more, maybe from a pride perspective. I don’t have any family members really who invest in real estate, don’t understand it. My dad’s an immigrant from the Philippines, my mom’s from the Midwest. She was a violinist, doesn’t know anything about real estate either, and so that was kind of the background that I came from. I came from very little money, and so all I knew is that I didn’t want to feel the insecurity of not having money, so I needed to go build myself a financially stable future.
So, that was sort of the family background from, I guess, a mentorship background. I had a couple of friends who invested in real estate and the person who introduced me to the Cincinnati market was a real estate broker, and he owned eight or nine rental properties. And so, that’s how I actually ended up picking Cincinnati. He was kind enough during the pandemic to jump on a Zoom call with me, show me the market, show me what areas to look at, where to avoid. He introduced me to an agent and that was in to that market.

Rob:
So, your broker sets you up with part of the dream team here, but how did you find the broker?

Soli:
So, we were actually working with him for a deal in commercial real estate. So, about six months before I bought my first property, it was November 2019, I flew out to Cincinnati for a big build to suit development that we were helping lease up and we toured the market. So, this is how I fell in love with Cincinnati. I went out there, we were wined and dined by all the developers. I think coming from California, California is I feel like maybe a little bit not super friendly to business owners and not really into people running their businesses her a little bit. But in Cincinnati, I was shocked. They were so encouraging of business. They invested, I think it was like $1 billion over the last 10 years. There was Kroger headquartered there, there was General Electric headquartered there. They were giving huge tax credits to incentivize business coming into the area, and it was such a lively city.
So, we heard all about the history of Cincinnati, how it used to be one of the most dangerous cities out there, and then they were having trouble recruiting talent, students to stay in Cincinnati. “I don’t want to be here in the city.” So, they invested like $1 billion to create a thriving… And I was like, “Wow, what a story and what a place,” there’s a lot of young people out there, the food is incredible. It’s very lively, and so from that I think… And I looked on Zillow and I was like, “$100,000 houses? What? That exists out here?” And you just don’t know because coming from the Bay Area, all I did was look at Zillow in the Bay Area and all I saw was $1 million houses. So all of that combined, it was the friendliness to business, it was the investment into the neighborhoods. It was walking around, seeing it was lively, and then seeing that the homes were about $100,000 and the rents were pretty high, all of that together kind of convinced me to invest there.

Rob:
That’s really cool, so you’re ready to go. You’re like, “I’ve got the broker, I’ve got the connections, I’ve got the dream team.” You mentioned that you came from more humble beginnings on the family side. When you went to your family and you were like, “I’m going to do real estate,” were they like, “Great,” or was there a little bit of, I don’t know, dissonance or tension even pitching that to the family?

Soli:
My mom actually followed me on Instagram and I think she thought it was fun because I feel like she’s always wanted be the mom where I call her every week type of thing. And so, I think she felt it was a good way to keep up with what I was doing in life was just to watch me on my stories every day. And so, she knew everything, every step of the way. She’s always been really supportive, and so when I got under contract on my first property and closed on it, I closed on it without seeing it and then I was like, “I should probably fly out there and see what I bought,” and she actually came with me for a few weeks.

Rob:
Oh, that’s nice.

Soli:
So, I think she’s really proud. She doesn’t know much about real estate, but she was really supportive of the journey. My dad, I think, doesn’t understand real estate investing that much, but he’s somewhat supportive.

Rob:
Well, you’re getting into this, investing into real estate, going long distance. Were there any strategies that you used to help keep yourself accountable? Because we were talking a little bit before the podcast, there’s taking action, but then actually holding yourself accountable to the action that you’re taking and getting into your first property is a huge step. So, how did you keep yourself accountable and actually create systems around that and all that stuff?

Soli:
So, to go back and set the scene a little bit, it was again, 2020. Everybody was super isolated, no one was hanging out with each other, and so that’s where my Instagram, I guess, family came into play. And so I kind of put it out there, here are my goals. I think my very early goals were, “I’m going to buy 45 units by 30 years old,” and I’m almost there and I’m 25, but I put it out there. I think I wrote that when I didn’t even own one rental property. So, to me it was putting out my goals, putting out my intentions into the Instagram universe, and that actually held me accountable for taking action. Even though I maybe only had 500 followers at the time, it was 500 people that I felt like I had committed to something and I wanted to actually show them that I’d follow through.

Rob:
I think on the podcast we have the opportunity to share our life and our investments and stuff, and oftentimes I talk about things that I’m doing and I don’t really like doing it because it puts it out in the universe and usually… When I talk about a house that I’m an escrow on, I’m like, “Oh, dang it’s going to fall into escrow.”

Soli:
You’ve got to close on it.

Rob:
And it falls out escrow all the time, and that’s why I’m like, “Dang it, I wish I hadn’t said that on the BiggerPockets Podcast or on the Rob channel,” but I do find that saying it out there kind of formalizes it, it makes it official that you’re actually doing it and people ask you about it. People are interested in your life and they want to know, “Hey, Soli, you said you wanted to do 45 units. How’s it going?”

Soli:
There’s a statistic from a study that was done and it was saying that if you think you want to do something, your chances of actually doing it are maybe like 1%. And if you commit to somebody that you’re going to do, it jumps up to like 60, 65%, and then if you have an actual accountability appointment set, then it jumps up to 95% likely to achieve that goal. And so for me, I was at least at that commitment level on Instagram, but for me, I felt like it was also my own accountability appointment set for myself that I was going to post every day and show up and show people I was taking action.

Rob:
And that’s why I always say David and I are going to do a Zumba class together because I want to put it out there to keep us accountable. Do you know what I mean?

David:
I thought we were doing Orangetheory.

Rob:
That’s fun too, you’ve got to stay in the orange. What did you feel like… So, that’s the whole thing with the heart rate, you have a green, orange, red, and you want to stay in the orange.

Soli:
I didn’t get that one at first.

Rob:
I only know because [inaudible]-

Soli:
You’ve got to stay in the Greene.

Rob:
… Five times a week. That’s right. Well, David, that’s right, you’ve got to stay in the Greene. That’s actually the name of his memoir.

David:
Greene Theory.

Soli:
Greene Theory.

David:
I’m starting a fitness bootcamp.

Soli:
I like that.

Rob:
So now that you’re on Instagram, you seem to kind of have the meteoric rise blow up very quickly. Did you feel the support relatively quickly or was there a ramp up time to actually build your audience and kind of take them through this journey?

Soli:
I think it took a little bit of time, but I do think that everybody loves to hear a good story from rags to riches kind of story type of thing, and so people were following me, I moved to Cincinnati, well, for maybe four weeks for my first property. I slept on the floor of a construction zone. I got food poisoning, I got my window broken into and through all of that, and I didn’t know how to do anything. So, I learned how to use a drill, tried to take cabinets off. People were texting me like, “You didn’t prime the cabinets.” And so-

Rob:
There’s always those.

Soli:
I was like, “I didn’t know you had to prime the cabinets, but thank you.” There was just a lot, I didn’t know anything starting out. And so my Instagram community, they were further ahead than me and trying to teach me how to be a real estate investor, and they were very supportive of I would have daily freakout moments on my stories and we became real friends. And so I think through all of that, I really felt like a true community. I had friends that were in real estate and those were my people. So then when I grew my Instagram, I really wanted to give back because they had taught me so much that now it was my turn. Now, that I had grown my portfolio so quickly, how can I turn around and teach other people how to do the same thing?

Rob:
That’s cool. You’re getting the help, a little reciprocity there between you and your audience because I’m sure you followed people that helped you through everything as well.

David:
So your portfolio today, do you own it yourself or do you own this with partners?

Soli:
So, I only own four doors by myself, and then afterward I had to take on partners to grow my portfolio. So I own the other… I guess, what is that? 36, some of them with one partner, and some of them with two partners. I really liked using partners to grow because I was really stubborn in the beginning doing everything by myself, but as I found partners, they really complemented my skills. So, one thing I was really bad at, we were talking about contractors, and how difficult it is to work with them. I was not fantastic at managing renovations, and so one of my partners actually manages all the renovations right now. And then on the deal hunting side, I was fine at it, but I wasn’t the best at it. And so, I now have another partner who does all of the acquisitions work, and that frees me up to do a lot of the capital raising work for our projects, which kind of coincides with social media and how I raise money on social media, so we’re all able to focus on the things that we’re best at.

David:
So, how do you guys split up the ownership?

Soli:
We just divide evenly.

David:
Evenly?

Soli:
Yeah.

David:
So, you have a partner that finds the deals and analyzes them, a partner that executes on operations with the rehabs, and then you raise the money that goes into the properties, and then how do you manage them?

Soli:
The partner who manages the renovations also owns a property management company, and so it’s-

David:
You pay his property management company to manage the properties?

Soli:
Yep.

David:
So, you’re sort of the capital raiser in this group, which is why you focus more on creating the content that you’re talking about, building a community because that’s where the money gets raised to put into the properties?

Soli:
Right, it’s all kind of symbiotic.

Rob:
That’s really cool. Instagram is a really great place not only to document it, but effectively you’re showing that you’re a hard worker, that you actually are doing this real estate thing, you’re sweating, you’re struggling, you’re succeeding. So, it always feels like it’s a really good place to build trust with potential investors and people that are partnering up. So, did you ever have people just reaching out organically or are you now more on the side of really pushing partnerships and finding investments that way?

Soli:
I would say most of them have come very organically. Social media is a really great way to nurture relationships kind of passively. So, I have a lot of investors who have followed me since the very beginning. They’ve watched me become what I am today, and through that they’re like, “Wow, I’ve been with you for three years.” They know everything about me, they know my cat’s name, my brother’s name, they’ve just been there through it all. And so, I think the credibility is really high, and so people will always reach out and say, “Hey, I would love to partner with you on a deal,” and I think I don’t really want very many active partners anymore. It’s just going to be-

Rob:
It’s tough.

Soli:
You have to be very picky with your active partners. So I can change the conversation to be a, “Hey, I’m not looking for active partners right now, but I am looking for passive partners if you want to be a passive investor inside my deals or passive private moneylender,” and that’s how I get a lot of my… Mostly through DMs, I would say.

Rob:
So walk us through the funnel, if you will, someone sends you a DM, you respond, you chat a little bit, obviously qualify I’m sure on the DM side of things. What’s the next step after that?

Soli:
So, I have them fill out a Google Form, and if you go to my bio, you will find that Google Form, and I’ve had a lot of people just copy paste it because it works. And so, it kind of acts like maybe a CRM, but a super simple one. I try to keep it simple, and it’ll ask them certain things. How much are you wanting to invest? Are you looking for debt or equity? What is your experience with private money lending? What’s your experience with real estate? And then from there, I have a whole list of people that I can actively reach out to one by one if I want to, or I have an email blasting where if I have a deal that pops up, I can say, “Hey, I’m looking for a private lender. These are all the details,” and blast it out to, I think I have 850 people on there.

Rob:
Nice, and obviously warm leads that have reached out. What does it take for you to hop on the phone and really chat with them? Is it like a dollar amount? Are you like, if they’re under 50,000, they go into this bucket, but if they have two to 500,000, then I make the phone call. Do you have a system for that?

Soli:
So, we try to have one lender for every deal, so it depends… Usually, they’re above $100,000, and so it depends on how many deals we have in the pipeline, where we jump how many calls we jump on, but we’ll usually ask for proof of funds to actually prove that they have the money and it’s liquid, and then we’ll jump on a phone call with them if it’s usually over $100,000.

Rob:
Do you get a lot of falloff from people when you ask them for their proof of funds?

Soli:
Not really.

Rob:
Really?

Soli:
I don’t find that people really lie about it. There’s a lot of people who want to invest under $50,000 and I think those are better suited for maybe syndications and I’ve done one syndication, so those are helpful to have those leads in the CRM, just in case I ever do one again, but I would say people are generally pretty honest about how much money they have.

Rob:
Well, I don’t even mean the honesty side of it. I just mean are they willing-

David:
Nervous about sharing.

Rob:
Yeah, because a lot of people get very finicky or defensive about showing a screenshot of-

David:
Bank statements, stuff like that.

Soli:
No, I think it just really comes down to the level of trust and them being with me for… I’ve raised money from friends of followers, and that’s a lot harder because there isn’t that inherent trust built in.

Rob:
Sure.

Soli:
They haven’t been watching me.

Rob:
You’ve got to pitch yourself.

Soli:
It’s actually pitching, right, whereas as if they are a follower and they know me and they’ve seen me and they’ve heard me talk, they’ve seen my face, they know who I am, they know I show up, then I think it’s a lot less of a pitch and more just a conversation.

Rob:
I’ve been in those calls before where it’s an acquaintance and they’re like, “Hey, meet this person. He’s got 200,000.” And I’m like, “Okay, sure.” And then they’re like, “All right, give me your greatest strength and your greatest…” I’m like, “This isn’t an interview pal, I’m sorry.”

Soli:
I just did one like that and I was like, “Wow, I forgot how hard this is,” when they ask for everything, your social security number, your bank statements, your assets, everything. And it’s like when you have that closer relationship… And you don’t have to be an influencer to do this. There are people who I know who have maybe even 1,000 followers, but they’re tight-knit. There are always people looking to invest their money who might just not have the time to invest their money.

Rob:
I think the warmest leads that you have in your system are always going to be friends and family that see you post on Facebook, Instagram, and that’s really how I got my first set of partners was just I was always talking about my properties and they reached out and they’re like, “Hey, I like your properties. How do I do this?” And I was like, “Well, let’s partner up.”

Soli:
My first private lender was my mom, and she reached out from watching me on Instagram, and I would never have thought to ask her for money or to invest in a property ever, but she texted me and was like, “Hey, I’ve been watching you on Instagram. How do I get invested in your next deal?” And I used to have all my money on my first property.

David:
Did you take your birthday money and just say, roll it into this and I’ll make a return on my own birthday money?

Soli:
A little bit more than my birthday money, but she still invested in that deal, and I think that’s kind of when everything clicked for me because I was stuck like, “How am I going to buy my next property without any money?” And then after my mom’s like, “I’ll invest with you,” I think it clicked, I was like, “Oh, I can use other people’s money,” and it’s a win-win. So, she takes her interest payment every year and takes a vacation off of it, and I love that. I’m like, “I get to fund my mom’s vacation and she gets to fund my real estate.”

Rob:
It’s cool, it’s a win-win

Soli:
Huge win-win, and then how it started is I started talking about private money on Instagram. People were like, “How did you buy your next property so fast?” It was maybe three months later, and I said, “Oh, private money,” and then it became a whole education process of what private money is and because a lot of people don’t even know that it’s an option, that education process is what brings people to actually ask you to invest with you.

Rob:
That’s awesome. Well, that’s an amazing story and I really appreciate you sharing it. Now, I’m really excited about this next piece of the podcast because it’s a segment that we’re calling the Battle of the BRRRRs, and you, Soli, are going to go head-to-head with my friend DG here. Soli, you’re team low price points in smaller markets, scale units, DG you’re higher price points in bigger markets, appreciation. So I’m going to ask you first, what are the advantages of each?

Soli:
So, I think that there are a couple advantages. One is the amount of reps that you’re able to take with smaller deals. So, you can buy a $1 million house or you can buy 10 $100,000 houses with the same amount of money and with every single deal you’re going to learn something new. And so when you are doing 10 reps as opposed to one rep, you’re learning 10 times the amount of lessons. So as a beginner investor, especially for me, I was able to do a lot of deals. I think I bought like 25 units in one year, and I learned an incredible amount from that amount of deal flow and all the lessons that came with it. If I only bought on $1 million property and whether it went well or not well, I wouldn’t have learned as much as I did.

Rob:
Very good, solid answer. DG, what are the advantages of each?

David:
I think Soli has got a good point, that when you’re doing cheaper real estate, you get in more reps, which there is value in when you’re learning in doing stuff, but once you’ve learned how to do it, you just need having value than just killing yourself doing $100,000 properties. The advantages of buying more expensive real estate is that A, it tends to be in markets with less supply but more demand.
So, we’re in Southern California right now, everybody wants to live here, which is evidenced by the hour-long Uber drive that we had to take to get three miles to the studio, weather is amazing, very difficult for them to build more real estate out here. We’re staying at a really nice short-term rental up in the hills. There’s nowhere else to build a house. It’s all filled up. So as wages increase and as people move into the area, but there isn’t anywhere to build, your supply and demand get off balances as what you really want as a real estate investor, you find that the prices are going to go up more in areas like that proportionally than in the cheaper areas, which tend to have a lot of land, a lot of areas to build, and there’s not a ton of demand. People aren’t falling over themselves to move into Cincinnati, Ohio like they would be to move into the best parts of Los Angeles or San Diego.

Soli:
It’s the San Diego of the Midwest. Have you heard that?

David:
That’s funny though. I wonder who came up with that.

Rob:
The Paris of the Plains.

David:
San Diego is a great example of a market that everyone wants to live in, and maybe Cincinnati’s the wrong example, but lower priced markets in general are that way because you can’t push prices higher because they’ll just build more homes, there’s plenty of supply. When the prices go up, say 20% on a $1 million house, that’s $200,000, on $100,000 house, that’s $20,000.

Soli:
But when they go down 20%, that’s-

David:
When’s the last time you saw San Diego real estate go down?

Soli:
San Francisco real estate has gone down.

David:
That place was completely mismanaged. San Francisco real estate has gone down, but I wouldn’t consider San Francisco to be like prime real estate.

Rob:
She got you there, she did name one. You said name one, she named it named.

David:
How much is it [inaudible]-

Rob:
Winner of round one, Soli. Two, what are the pitfalls of each in the short run and in the long run? Soli, you first.

Soli:
Should I defend mine or should I try to get his-

David:
You’d be better off to just keep attacking me and keep the attention off of your argument.

Rob:
This is the clip right here. This is the viral clip on Instagram.

Soli:
I think the biggest downfall is the risk. I have a lot of acquaintances, friends who invest in or who flip homes in the Bay Area. You can lose $100,000 on $1 million house and it’s just 10%, but when you’re investing in the Midwest and it’s $100,000, you have to price cut 10% to sell your house, it’s $10,000. And so, I’m a very risk averse person and I try to take minimal risk for maximal returns, and for me that means investing in lower cost markets because I can spread my risk amongst multiple different properties. And on any one of them, maybe I lose $10,000, but I’m never going to lose $100,000 because those properties are only worth $100,000.

Rob:
I like it. David, what are the pitfalls of higher price points in bigger markets in the short run and in the long run?

David:
Well, they’re harder to get into because more people want them. So, like we interviewed Jason yesterday and he was talking about how San Diego real estate where he is, it’s incredibly hard to get the thing in contract at all. So, your returns in the short term are often lower and it’s more difficult to get in because it’s more of a delayed gratification and where you win in the long run. And then it can also be tougher to find contractors that are going to work in those areas because they’re also in demand. So, pretty much every single element that makes real estate investing tough becomes tougher in the higher price markets.

Rob:
Fair, fair, fair. Soli, which of these strategies is better for new investors?

Soli:
Absolutely, I think the cheaper markets, even David agreed that when you’re a complete beginner and you’re trying to get reps in, you’re going to get more reps in a cheaper market. I also really believe that the risk is minimized because you’re not going to lose as much money as if you are potentially investing in a Bay Area market or a San Diego market and those price wings are like $100,000, $150,000. So, if you want to get reps in to learn more about real estate and minimize your risk, I think you’re better off in cheaper markets.

Rob:
Good answer. David, same question to you.

David:
Thank you. Rob, why did you adopt this accent when you’re [inaudible]-

Rob:
I’m a host now. I’m like a ding, ding, fight.

David:
You became British?

Rob:
Fight.

David:
I’d say the better strategy for an investor isn’t necessarily the price point. I don’t know that I would recommend that. It’s probably more the execution, so house hacking can work in expensive markets just like it can in cheaper markets. I’d probably lean away from flipping as a newer investor in general. So, I think strategies like rent by the room, house hacking, trying to add value to the real estate you buy, that’s a better strategy for a newbie. I probably wouldn’t tell a newbie it matters if it’s expensive or it’s cheap. I just think that’s irrelevant.

Soli:
I would agree with that partially. I feel like house hacking, if you really want to dip your toes into real estate and you’re in an expensive market, great way to do it because it’s minimal risk and you’re living in the house. And so honestly though, also turnkey rentals out of state are a really easy way to start as well, and you can do it in cheap markets, you can do it in mid-tier markets. I would say those are your best bet. No, you don’t like turnkey rentals?

David:
I hate them.

Soli:
Why?

David:
You can’t buy equity with a turnkey, you can’t add value or force equity with a turnkey. You usually don’t get market appreciation equity, you can’t force cashflow. All the ways that I look to add value to real estate usually aren’t happening, and you’re buying a property from someone else. You’re basically buying convenience and in life-

Soli:
Do you think though that beginners should always buy value add properties to start?

David:
I think everyone should buy value add properties. I don’t think you should take on a whole new development, but no, I’d rather see a beginner buy an ugly house with terrible carpet that smells bad for below market value and go do a cosmetic upgrade, than buy a house that a flipper already did that on and the flipper makes the $50,000 and they get in for maybe higher than market value and then they have to wait a really long time for it to appreciate. If they do it all, they can’t get out of it. I guess from my perspective, I’ve heard so many horror stories of people that got in on turnkey and couldn’t get out, that has put a little bit of a bad taste in my mouth for that.

Soli:
I’ve had a lot of friends start with turnkey just because they’re nervous and to buy turnkey properties just to feel like, “I’m comfortable with the real estate buying process. I feel like I have an in, in the market.” I just get comfy with that.

David:
They’re buying convenience.

Soli:
They are.

David:
But real estate investors shouldn’t be buying convenience, we should be buying value.

Soli:
They’re buying also maybe a little bit more confidence too. So once they buy one or two, then they switch to value add and they feel like they’re a little bit more ready.

David:
So, would you tell someone to go to 7-Eleven and pay $3 for a soda or go to Costco and buy $3 for a 12 pack?

Soli:
It depends on how many you want.

David:
It depends on how convenient you want it to be, but you’re going to make money by avoiding convenience.

Soli:
That’s true, I bought a BRRRR for my first property.

David:
That’s not turnkey.

Soli:
It’s not.

David:
Which is why you’re doing good now.

Soli:
But I was ready to go all in and I think some people aren’t ready.

Rob:
That’s fair. I wish we would’ve started with this, this is great.

Soli:
We can put this [inaudible].

Rob:
Question four. [inaudible], finish him. Final question, what is the largest number of projects you’ve had at one time?

Soli:
Renovation projects?

Rob:
Yeah.

Soli:
19.

Rob:
Dang.

David:
How many do I have right now?

Rob:
18.

Soli:
Yeah.

Rob:
Ding, ding, got himeth.

Soli:
Where are they, are they out of state and state?

David:
Three in California, three in South Florida, one in Georgia, but if you added up the number of the real estate, I would bet one of them probably costs more than the 19 that you had bought.

Soli:
Maybe true.

David:
That’s part of why I like it because it’s 1/19th of the work to get the same results.

Soli:
I can see that.

Rob:
I don’t don’t know if that’s real.

David:
You don’t think so?

Rob:
Hold on, you think buying one really big cabin is 1/19th of the work is buying [inaudible]-

Soli:
How base the rehab?

David:
I buy one property for 1.9 million and rehabbing it is less work than 19 properties because that’s what we said here is the largest number of projects you’ve had at a… Projects, you’re fixing it up, you’re doing 19 homes at one time, they’re all worth $100,000.

Soli:
This is where I think I personally maybe went wrong or maybe just too aggressive is I think I bought like 25 units in one year, all value add.

Rob:
Ooh, it’s a lot.

Soli:
It’s a lot.

David:
So, what if you bought one value add unit that was the same price as those 25?

Soli:
It’d probably be less work. I’d probably be less stressed.

Rob:
Well, now I don’t know who to give it to. So, we’ll just say that you tied.

David:
I say tie goes to the guest.

Rob:
Tie goes to the guest. I say the win goes to the guest.

David:
The fatality is owned, Soli Cayetano.

Rob:
Well, before we end here, Soli, can you give us a quick snapshot of your total units, portfolio net worth, cashflow?

Soli:
Sure, so 40 units, probably around maybe $5 million. I’m a GP in a syndication, that’s another $5 million, but I like to count that in my unit count.

Rob:
Sure, yeah.

Soli:
Of that, 20 are rented. My proportionate cashflow is around $10,000. 10 are vacant because they’re being renovated and 10 are being flipped. We have four or five under contract right now.

David:
And is that the portfolio value or is that your percentage of the portfolio?

Soli:
That’s the portfolio value.

David:
I got you, then you have your partners that you’re splitting that with, that we talked about?

Soli:
Yeah, some of them are mine, some of them are 50/50, some of them are 33%, so my proportionate portfolio value is maybe like two, maybe plus the syndication percentage.

Rob:
Very nice, that’s amazing. That’s amazing in three years?

Soli:
Three years, yeah.

Rob:
That’s crazy.

Soli:
I started with $50,000 and used other people’s money to build up all the rest of it.

Rob:
$5 million portfolio and a $5 million syndication, which is crazy. People work their whole lives putting all their money into their 401(k) to retire with 2 million bucks, 3 million bucks.

Soli:
I always think about it, if I stopped investing today and they all got paid off, then you’d have probably about two, $3 million of equity and… Well, probably more because appreciation will pump those numbers up and I think I calculated like $40,000 of rent too. It’s a pretty good retirement.

Rob:
That’s amazing. Well, awesome. Well, thanks for coming and sharing everything. Thanks for giving numbers for giving tactical steps on how to raise money. If people want to learn more about you, find you on Instagram or on Threads, YouTube, all of the above, where can they reach out?

Soli:
It’s lattes.and.leases. It’s pretty much on any platform, and then lattesandleases.com.

Rob:
Awesome. David, what about you?

David:
David Greene 24 on all social media and davidgreene24.com for my website.

Soli:
That’d be my advice to David. I think we missed that question, but you’ve got to change that.

David:
Change the name?

Soli:
David Greene 24?

David:
Mm-hmm.

Soli:
What’s the 24 for?

David:
That was my number in high school and it’s easy. What would you change it to?

Soli:
David Greene Invest.

David:
That would be a big difference from 24 to Invest.

Rob:
I think so, yeah, honestly.

Soli:
I feel like people who have numbers after their name only have numbers because David Greene was taken.

David:
Yeah, there was 23 other David Greenes. That’s not a joke [inaudible]-

Soli:
Pretty much, and so-

Rob:
I think you should be Thy David Greene.

Soli:
Thy?

Rob:
Mm-hmm.

Soli:
Or The David Greene would work too.

David:
[inaudible] Cheesiness would work for what people are expecting from me.

Rob:
Thy David Greene, the ultimate BRRRR investor.

David:
Just take a picture in a knight armor and just put that as my profile picture. Protecting investors from bad advice.

Rob:
You’re the knight shining armor of real estate, my friend. We got two minutes in and we’re going to end, baby. Sign us out.

David:
This is David Greene for Rob Cheeseball Abasolo, signing off.

 

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Note By BiggerPockets: These are opinions written by the author and do not necessarily represent the opinions of BiggerPockets.



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