Latest / Wealthy Woman Lawyer Podcast, Helping you create a profitable, sustainable law firm you love / Amassing Wealth Series: Wealthy Woman Lawyer® Holly Draper Shares How She Invests in Short-Term Rentals

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Amassing Wealth Series: Wealthy Woman Lawyer® Holly Draper Shares How She Invests in Short-Term Rentals · Wealthy Woman Lawyer Podcast, Helping you create a profitable, sustainable law firm you love

0:02
Davina Frederick: Hi everyone and welcome to the wealthy woman
0:04
lawyer podcast. I am Davina Frederick, founder of wealthy
0:07
woman lawyer, which is a coaching group for women law
0:13
firm owners who want to scale their business to $3 million.
0:17
And I'm here today with Holly Draper, who is a client and
0:20
friend. And she is the founder of the Draper law firm in
0:24
McKinney, Texas. They do family law, they offer family law
0:28
services exclusively. And if you want to, we're gonna let her
0:32
introduce herself a little bit. If you want more in depth
0:36
conversation that I've had with Holly before about our law firm,
0:39
you want to go back and check out the first episode that we
0:43
did together a few months back. So go look for that, because
0:47
there's a lot of great stuff there. But today, we're gonna
0:48
talk about something a little bit different. And so I'm
0:51
excited to have you here again, Holly, thank you. Good. Welcome
0:54
back.
0:55
Unknown: Sure. Thanks for having me again.
0:57
Davina Frederick: Okay, great. So why don't you tell us a
0:59
little bit about, just tell us a little bit about the Draper
1:02
firm. So everybody has context for sort of your business and
1:06
the scale of your business? And, you know, that kind of thing?
1:09
Sure.
1:10
Unknown: So I started my own firm Draper law firm back in
1:14
2000. And in 2008, beginning of 2009, there was a downturn in
1:20
the economy, legal Jobs were hard to come by. So this was
1:24
the, you know, catalyst to jump in on my own. I was true solo
1:30
for many years, and probably the first five years, you know,
1:34
there was a lot of stress a lot of am I gonna be able to pay the
1:37
mortgage, am I gonna be able to, you know, where's the next
1:40
client gonna come from, but eventually, you know, things
1:43
sort of took off, I now have four other attorneys working for
1:48
me, we have three paralegals to support staff. We do family law
1:53
exclusively. I started out as kind of general, whatever walks
1:56
through the door. But over time, I grew to love family law and
2:00
focused more and more onto that. And now I also do family law
2:04
appeals statewide in Texas. Our firm is unique, because we are
2:09
all virtual, we were virtual before virtual was cool. So
2:13
before COVID, we were virtual. We're even more virtual now. But
2:17
everyone works remote. And it's worked great. And I wouldn't
2:22
trade it for the world.
2:23
Davina Frederick: Wonderful. Yeah, you have a very unique
2:25
business model, which I, which I absolutely love. And one of the
2:28
things that you did, again, we cover this more in depth in the
2:31
other episode, but I just want to touch on it here. So people
2:34
kind of understand how it's a little bit different. One of the
2:36
things that that you did that was different from what I see a
2:41
lot of other solos do when they're growing, is you started
2:45
out by adding lawyers and you added lawyers, we've added
2:49
several lawyers over the course of a few years. And that sort of
2:53
is what catapulted your, your growth, and got you to that high
2:59
six figure revenue mark. And then we met and started
3:04
developing a really good marketing strategy for you. And
3:06
now you're in the multi year in multi seven figures, right. So
3:11
really, really tremendous growth. So proud for you. Talk
3:16
about that just a little bit, kind of what your thinking was
3:19
behind hiring lawyers.
3:21
Unknown: Sure, a lot of why I wanted to grow my firm and had
3:25
other people working for me was I wanted freedom. I wanted to be
3:29
able, my family loves to travel, I wanted to be able to take
3:33
lengthy international vacations and not have to come back to the
3:36
big huge pile of work, and not have to worry about the fact
3:39
that I was making no money during those two weeks that I
3:42
went to Europe. So by hiring attorneys, I had people who
3:45
could go to mediation, who could go to court who could do
3:48
everything that I could do, and who could continue to run the
3:51
firm, and everything that was needed while I was gone. And it
3:56
worked out fabulously well.
4:00
Davina Frederick: And all virtual so everybody's remote,
4:02
you don't have you have a space if you need a meeting, but those
4:04
things happen, virtually. And you started that from the
4:08
beginning. So that's wonderful. Alright, so we've kind of
4:10
touched on all of that. One thing I just want to ask you
4:13
really quick though is how many though at last count you said
4:16
you that your kids have been to 17 different countries. That's
4:19
probably up since I got that figure. It's probably like 19 or
4:23
20 Now, isn't it?
4:25
Unknown: I don't know we we try and count and then we always
4:27
forget and what about this place about this place? It's
4:30
definitely got to be over 20
4:33
Davina Frederick: Yeah, really, really cool opportunity for to
4:35
be able to take your kids at such young ages for them to have
4:39
this experience these experiences all ready to travel
4:42
and see different countries. So super exciting that I you and I
4:48
have already discussed your law firm. But I want to sort of what
4:51
I want to do today is I really want to talk about what happens
4:56
when you get to a point where you are making Making suddenly
5:01
your your cash rich, and you're getting money coming in. And
5:05
then you're starting to think to yourself, oh, my gosh, I need a
5:09
strategy like, what do I do with this money? I can't keep it in
5:11
the bank account, if I keep taking it, all of it, you know,
5:14
personally, I need some tax strategy, I need some place to
5:18
invest this, what do I do, because I think that is what
5:22
happens once people get over that million dollar mark, is,
5:28
now we're at a new level, and we're at a new level of thinking
5:31
about money, because up until that million dollar mark, you're
5:34
focusing on paying bills, maybe getting a bigger house may be
5:37
taking a couple of extra vacations a year. But when you
5:40
start to get over that, and you're making a much higher
5:43
personal income, as you are, what kind of thoughts went
5:47
through your mind about that.
5:50
Unknown: So I'm very much not a workaholic. And I'm not the type
5:54
of person that wants to work until I die. I have always had
5:59
an aim towards how you know, I want to be practicing law or
6:03
running my law firm, by choice, not by not because I have to, to
6:08
pay the bills and whatnot. So that has led to a lot of looking
6:12
for passive income streams, and, you know, other investments and
6:16
ways of investing so that I'm not doing the day to day work of
6:23
generating wealth and income. And I've done a lot of reading
6:27
and listening to podcasts and all those things about how
6:32
wealthy people do it and how they you know, it's smart people
6:36
are wealthy people don't work for money, they make money work
6:39
for them. Right? So it was figuring out, okay, now I'm
6:43
doing really well with my law firm, and what did we do to make
6:46
our money work for us so that we have freedom to whether that's
6:51
to you know, get a golden visa and live in Portugal, you know,
7:00
there are a lot of things, I want options. And by investing
7:04
wisely and creating passive income streams, that's gonna
7:08
give us freedom and choices.
7:10
Davina Frederick: So what are some of the ideas that you
7:14
considered when you started thinking about passive income
7:17
streams or multiple streams of income? I've always
7:22
Unknown: believed in investing in real estate. That was the
7:25
plan for a long time long before we were in the position that
7:28
we're in now financially, we started have assumed long term
7:32
rentals are that's what people buy to invest in real estate and
7:37
use where we live used to be able to buy a house for 100
7:42
grand and you know, put a little money into it. And you know, you
7:45
might rent it out and make 500 ollars a month. And but the
7:49
house would appreciate a little bit and you're getting a little
7:51
bit of income, and you're building wealth that way. We
7:57
ultimately ended up selling our long term rentals. And now we
8:00
invest in short term rentals, because I've found that it is,
8:04
there's a much higher income stream that comes from short
8:07
term rentals than long term rentals. It's a little bit more
8:12
intensive in terms of work. But if you have a good management
8:17
company, and you don't do the work yourself, then it's worth
8:20
it.
8:21
Davina Frederick: Yeah, yeah. So I want to has a lot to unpack
8:25
about this. I'm going to talk about, um, you're, at what point
8:31
did you decide to switch from long term to short term rentals?
8:35
Like, what was the year when did that happen?
8:38
Unknown: So we sold our short term rentals, probably in or not
8:42
our short term or long term rentals, in probably 2016 2017.
8:49
We sold them to put a pool in at our house at the time, and then
8:53
okay, well accumulate money, and we'll do it again. And we didn't
8:57
invest again until start looking at what we're going to invest
9:00
that and in again until about early 2020. So pre COVID, 2020.
9:07
And our first short term rental investment in our primary place,
9:12
we have done short term rental investing has been in Broken
9:15
Bow, Oklahoma, and we live in North Texas, and a lot of people
9:19
here were starting to invest there and we started hearing
9:21
about it for about, you know, maybe this is a good idea. So we
9:26
went up and it was a very different market then looked at
9:30
a bunch of properties found a great one that was a spec under
9:34
construction. If I knew then what I know now I would have
9:38
pulled the trigger on several of those properties because you
9:40
know, I could probably return to it now but that was where we
9:43
started our short term rental journey.
9:46
Davina Frederick: So why why was broken bow appealing you were
9:50
hearing about it? What kinds of things were you hearing that
9:52
made it appealing as a short term rental market?
9:56
Unknown: So it was appealing because it was close enough that
9:59
you could go check in on something or deal with a crisis
10:02
if you had to. It was also appealing because it's a very
10:06
year round destination. So a lot of beach places, okay, you got
10:10
three or four months of summer travel, and then nobody wants to
10:13
go there the rest of the year. And I didn't do a ton of
10:17
research to begin with, it was more just hearing things from
10:21
realtors and other investors that were local and seeing what
10:24
they were doing and thinking I'd like a piece of that.
10:27
Davina Frederick: Yeah, I think it's interesting that you say
10:29
that true, true confession, right? Like, I think people,
10:34
people often think that people who invest in other projects, do
10:40
research ad nauseam, and especially lawyers, but I often
10:45
find this the case when I have conversations with people is
10:48
they hear about something from a friend or relative or whatever.
10:52
And then they, you know, they check it out. And then they go,
10:55
oh, you know, let's try it. So for people listening, who think,
10:59
you know, I have to I'm not educated enough to know enough.
11:03
Sometimes your education comes through the doing, right. I
11:06
mean, you learn something with your long term rentals that way,
11:09
too.
11:10
Unknown: Yeah. And it's, I consider real estate to be
11:15
relatively low risk. Even if the market takes a downturn, unless
11:19
you're buying way at the top. Real Estate traditionally goes
11:23
up in value, and people are going to take vacations, and I'm
11:29
also a risk taker. I'm not afraid to take a risk and a bit,
11:33
you know, if it doesn't work out, then I learned my lesson.
11:36
But
11:38
Davina Frederick: yeah, you make another decision. Right? Yeah,
11:40
Unknown: I'll find something else to dry. She doesn't work
11:42
out.
11:43
Davina Frederick: Yeah. Um, you you also your timing, though,
11:47
really worked out? I mean, obviously, the pandemic was a
11:50
terrible thing. But it was also a really good thing for short
11:53
term, that short term rental business, right? Did you find
11:55
that to be the case?
11:57
Unknown: Oh, absolutely. If because we bought only did our
12:01
first property I mean, the market has gone through the
12:04
roof, we bought our first property. So when you buy short
12:08
term rental, if it's your first short term rental in a
12:10
particular market, you only need to put 10% down if you're doing
12:14
a second home loan, so you're putting a relatively minimal
12:18
investment down. So we put it down, you know, all in between
12:24
the downpayment and furnishing it. And all of our out of pocket
12:27
expenses, we probably put $80,000 into this first
12:30
property. In the first year, we net $80,000, in income from
12:37
rentals, and we sold it after 14 months, and we net 265,000 on
12:45
the sale. Wow. So we, you know, we had to do, you don't wanna
12:49
pay taxes on that gain. So then we split that into two
12:56
properties in Broken Bow, one that we put 10% down, and when
12:59
we had to put more down because you can only have the one second
13:03
home at a time. But you know, we contracted for one of those two
13:09
properties before it was even started. So it was just a slab,
13:13
basically. And so that one has gone up in value significantly
13:17
to both of them have the one that was new construction has
13:21
probably gone up 50% in value, since we bought it. The market
13:26
has taken a turn down from the peak. But COVID was driving the
13:35
people to want to go somewhere that they didn't have to fly. So
13:38
everybody in North Texas was driving to Broken Bow for
13:40
vacations, and then you're in a place all by yourself away from
13:43
everybody else. But that allowed a lot of people to get to know
13:47
about it. And with the growth in North Texas, it's booming
13:52
northern suburbs, tons of effluent people moving in here
13:56
all the time. Those are people who are going to want to get
13:58
away for the weekend. Those are going to people who are going to
14:00
want to you know, not just go to Europe for the summer, they're
14:04
also going to want to go spend a week at my broken bow Lake and
14:08
take the boat
14:10
Davina Frederick: so they gotta lake up there you got trails,
14:13
the forest, you know, there's some parks around there and
14:15
stuff like that. So it attracts people who like those outdoor
14:18
activities. Um, I have some questions about the your actual
14:23
deals, one of the things so one of the things that you said was
14:26
it's only 10% Down with your vacation home. I think most
14:31
people think I've got to come up with like after my first house
14:35
where I got the FHA loan, I've got to come up with 20% If I
14:40
want to buy another house, so talk a little bit about about
14:45
more of that of that and how you found out about it and you know,
14:49
all of that.
14:50
Unknown: So I connected with a lender who does a lot of Broken
14:56
Bow cabin lending. I've worked with a couple bowl and they both
15:01
exclusively are not exclusively but largely did that. And so you
15:05
want a lender who knows the market who knows what this
15:09
investment is like and all of that. With 10% down, it depends
15:16
a lot on how expensive is the property. So we have one that's
15:22
well over the conforming loan limits. So if you get over that,
15:26
then you have to deal with a jumbo loan. There's a lot more
15:28
involved with that. But you can still do 10% down and have a
15:31
jumbo loan. Obviously, interest rates are going up. It's a lot.
15:36
What more to consider with that. But so our second one, we had
15:41
to, because well, so we'll have numbers two and three, really,
15:45
number one was sold, we move put that into numbers two and three,
15:48
Davina Frederick: before you get into that lbs Why did you sell
15:50
number one
15:52
Unknown: we sold because the prices were going up so
15:55
dramatically. And even though our family enjoyed going to the
15:58
cabin, it was really about the investment. And we started when
16:03
we saw the price is going up and up and up. And we started asking
16:06
everything's for sale. Just what's the price point and when
16:09
do you know when to sell. So another cabin owner had given
16:13
him the formula they'd come up with, which was if you can net
16:15
more on the sale, and you can net in four years worth of
16:18
income you sell. So at the point, I heard that we weren't
16:24
there yet. But then when the prices kept going up, we
16:26
realized great, we're past that figure. And maybe we can turn
16:31
one cabin into two with really very little more out of pocket,
16:35
then it's going to build our wealth. So that and the 1031
16:39
exchange, which is deferring taxes when you're essentially
16:43
climbing the property ladder is a really, it's designed to help
16:50
people build wealth.
16:51
Davina Frederick: Right? Right. So now you had two cabins there
16:56
are at this time you had two cabins here and give us an idea
17:01
of kind of the property values and broken bones like when you
17:04
started and what they've sort of climbed to, because I think you
17:09
know, it's a it's a pretty wealthy community. In Broken
17:14
Bow,
17:15
Unknown: well, the cabins are expensive. The community itself
17:21
would be considered, I would say it would not be considered
17:23
wealthy. But this is kind of a tourist, the tourist piece of it
17:27
is high end. When we first started looking in 2020, you
17:32
could get a honeymoon cabin, one bedroom, one bath for somewhere
17:37
in the three to 350 range. Now you're looking 550 to 700 for a
17:44
honeymoon cabin.
17:47
Davina Frederick: The
17:49
Unknown: cabins that would sell for 750 in 2020 are now 1.5
17:54
million.
17:56
Davina Frederick: Yeah, it's a big jump. It's a big jump. So
17:59
where are you now? Do you have to have three? How many do you
18:01
have there? I know you have a third property, please.
18:04
Unknown: Yeah, right now we have two and then we have two more
18:07
that are under construction. So I'm hoping it for free, it's
18:10
don't continue to go up or we're going to have a problem because
18:14
we can't walk in those rates until you're getting pretty
18:16
close to it being completed. And if they were both specs, so we
18:21
weren't doing construction loans or anything, we just put down a
18:24
down payment and are waiting for them to be done. During that
18:28
time rates went from our interest rates on our last two
18:31
or two current cabins are 3% Three and a half percent and now
18:36
they're gonna be significantly higher for these two.
18:39
Davina Frederick: Yeah. And so you so that's gonna be for and
18:42
broken bone and you also have a property in Galveston, correct?
18:47
Unknown: Yeah, when we did our 1031 exchange of our first
18:51
property, I started looking started really researching other
18:56
locations because I felt like a we don't want to need to keep
18:58
our eggs in one basket and be we were having a hard time finding
19:01
a property and broken bow. Because the market was just so
19:05
hot. So I'd started you know, a lot of the, like 30 A in Florida
19:11
or Smoky Mountains, but they've gotten really, really cost
19:15
prohibitive and the markets are already super high. So I was
19:18
trying to find a market that was not quite so high that it would
19:22
be a good investment. So being in Texas that led us to
19:25
Galveston. We'd actually almost purchased a property there as
19:30
part of our 1031 Exchange. And the day we were going to close a
19:34
tropical storm hit and our contracts that we didn't have to
19:38
close to later that week. So we didn't close it under there was
19:43
quite a bit of damage done to the property and we panicked and
19:47
we backed out of that rut we want to deal with paying a
19:51
$10,000 deductible on storm damage every summer. But then
19:55
later we ended up deciding to get a condo because the risk
19:59
seemed a lot low. We're with a condo than with a house in terms
20:03
of storm damage. So right, we've got that late spring, early
20:08
summer, was pretty much once it got on the market, which took
20:12
longer than I would have liked. But it basically has been fully
20:17
booked the whole time. Now the problem with the condo, which we
20:23
enlarge, so we kept getting out bid on things. And so we
20:26
realized, if we want to get a property, we're gonna have to
20:28
pay cash. So we took a HELOC on our primary residence to pull
20:33
cash from our house and pay cash for the condo. But the idea
20:37
being then we would turn around and take out a mortgage and we
20:39
paid the HELOC. When we learned after the fact, if a building is
20:44
more than a certain percentage investment properties, then you
20:47
can't get a conventional mortgage on the property. So
20:52
that was that's done a little bit less than learning the hard
20:55
way. So now it's if we want that cash out, eventually we'll have
20:58
to sell it. But for now, we'll just keep running it out and
21:01
have income coming in from that. Yeah. And generally we'd like to
21:05
have mortgages on these properties not pay cash, because
21:10
for example, if you're buying a $500,000 property, and you only
21:14
had to put 10% down, and it's bringing in $50,000 a year,
21:19
well, if you're making $50,000 a year on your $50,000 investment,
21:22
that's pretty good. But if you're making $50,000 a year on
21:25
your $500,000 investment, because you paid cash, that's
21:28
not as good.
21:29
Davina Frederick: Yeah, yeah, it makes a lot of sense. Now
21:35
you're, I can see where you would be easier to get a
21:38
property manager to help you out with broken bow because you now
21:42
you've got multiple properties there. And then you got this
21:44
sort of low one out on Galveston, but I assume you have
21:47
some property management company that's helping you sort of
21:50
manage that or some some way to help you manage that
21:56
Unknown: with our with our first cabin, our plan was salt manage.
21:59
And we did that for almost a year. And it wasn't that hard,
22:03
but it was time consuming. And I finally reached the point I
22:06
realized, I'm trying to outsource everything else in my
22:09
life. Why am I doing this myself? Why am I the one getting
22:13
a phone call at 10 o'clock at night because the neighbors are
22:15
noisy. So we've ended up finding a broker, we have fantastic
22:20
property managers, they charge super reasonable percentage is
22:22
worth every penny, they pretty much handle at all. There's a
22:25
big crisis, they'll let us know and ask what we want to do. But
22:29
I really don't have to worry about those things that take
22:32
care of the maintenance, they'll take care of, you know, hey, we
22:35
recommend a deep clean or we recommend you power what we
22:38
powerwash the deck or whatever. And we say yep, go for it. And
22:43
they'll just charge it to our account. We have a property
22:47
management company and Yeah, listen to that I'm not thrilled
22:49
with so we're gonna be looking at you know, may look to switch
22:53
there, but I think we're spoiled by our fantastic one and broken
22:56
bow. Some short term rental areas, the property management
23:00
fees are very high. We had looked at, you know, we'd love
23:03
to have a place in a ski area. And Colorado is way overpriced.
23:07
You can't make money really, unless you're paying cash. But
23:11
so we looked in New Mexico, and property managers are 35 to 40%.
23:18
Davina Frederick: We can't
23:19
Unknown: do that you're not going to be a prophet. Yeah.
23:22
Davina Frederick: What so what give give an idea of a good
23:24
percentage for property management.
23:26
Unknown: So our property, our Broken Bow percentage is 18%.
23:31
And then our I think in Garrison, it's 23%. The
23:35
Galveston company had sort of a sliding scale, if you had a more
23:38
expensive property, your percentage was lower.
23:41
Davina Frederick: No Interesting. Interesting,
23:44
because they make more dollar wise. Yeah, right. What kinds of
23:53
what mistakes do you think you've made along the way? If
23:55
you had to do over you would do different besides, I would have
23:58
bought up a whole lot of property and broke.
24:01
Unknown: I would have started earlier. Yes, for sure. You
24:04
know, I do kind of regret selling the first cabin just
24:06
because it was a fantastic cabin, and we loved it and I
24:10
miss it. But from an investment perspective, it was absolutely
24:14
the right decision to make. I would have gotten a property
24:18
manager sooner. I did drop some expensive balls when I was
24:23
property managing it myself. We we had a couple issues where
24:27
there were double bookings because of some mistakes that I
24:29
had made with the software. And then we're trying to frantically
24:33
find other cabins to put people in and paying out of pocket to
24:36
put people up and that was the trigger that led to hiring a
24:42
management company was I right?
24:45
Davina Frederick: It would be a lot of work. I think that's
24:48
there will be a lot of work in managing short term rental
24:54
because you're if people were on vacation, and people are on
24:58
vacation, especially if they're paying a lot of money. Need for
25:00
something, they want things to be the way they want them. And
25:03
so it's a little bit more high maintenance situation, as
25:08
opposed to long term renter, they're just like whatever are
25:11
coming and go, you know, long term renters, you know, the
25:13
house is flooded, and you need to come fix this sort of air
25:16
conditioner brachii. But with short term, it's, you know,
25:19
stuff like you said, the neighbors make a noise, well, I
25:22
can't fix that, or those kinds of things. So they can't find
25:26
something when they get there. So there's always a sort of a
25:27
little nitpicky phone calls that I imagined we'd get on your
25:31
nerves so bad, just constantly people sort of calling you to
25:35
fuss about something that your your hours away, you get to
25:40
think about,
25:41
Unknown: yeah, and there's a lot more wear and tear on short term
25:44
rental than there is on long term rentals. So having somebody
25:47
who may even if you're self managing from far away, you have
25:51
people on the ground there, because you have cleaners, you
25:53
have maintenance people, you have to have the contacts, you
25:56
got the security guy, he's gonna go over and yell at the
25:57
neighbors. But I'm having a property management company
26:02
that's checking on the maintenance, making sure your
26:05
air filters are changed out when they need to be doing all the
26:08
things that have to be done more regularly than a long term
26:11
rental, or your personal house, which you take really good care
26:14
of. I found it to be worth every penny for where I am in life.
26:21
Now we know we have friends who aren't in the same financial
26:25
position we are and it's a stretch to buy a cabin, but they
26:28
did it because it's a good investment. And they need to get
26:31
every penny they can out of that property. So they self manage.
26:35
And it's certainly doable, especially if you had somebody
26:37
that worked part time or a stay at home parent or somebody who's
26:41
retired somebody who isn't working, right, isn't running a
26:45
law firm on the side, you know, at the same time, then it's
26:48
certainly manageable. You just have to make the right
26:50
connections and get those contacts.
26:53
Davina Frederick: Well, yeah. And if you turn it into, you
26:55
know, I know, there are a lot of people who turn it into their
26:57
sort of full time business. And they might go a little further
27:01
with sort of managing them themselves. If that's what they
27:04
do. They've got multiple properties, and they're managing
27:07
them all. But if you're looking at sort of growing wealth, and
27:11
it goes back to what you and I talked about all the time with
27:13
law firms is you you're really, you're not really wealthy, and
27:18
as long as you're tied to the day to day of the thing. And so
27:21
it's the same thing with any investment that you make. You're
27:25
not really wealthy, if you're tied to it day to day, and
27:27
you've got to be present, because true wealth is time,
27:31
time freedom, and the money to enjoy with that time, you know,
27:35
so what, what, what kind of, what do you anticipate will
27:45
happen? Yeah, there's a lot of discussion right now about the
27:47
real estate market, we already see home prices coming down for
27:53
sellers. In Florida, we still have really high rent, and
28:01
property values. I mean, everybody's getting their
28:03
property assessments right now. And you're seeing huge gains on
28:06
your property assessment. And so there are different opinions
28:10
from people saying some people say, Yeah, we're not going to
28:12
this will never fall like it did in 2008. And then other people
28:16
are going, wait, wait, it's common, you know, but I don't
28:20
personally don't think it will ever I don't think I think there
28:24
will be a little bit of a price drop as things sort of
28:27
normalize, because of the pandemic. And, you know, all of
28:32
that. But I don't think we're going to drop back down to where
28:35
people are going to lose tremendous value in their house
28:40
to the point where, you know, they're upside down. What do you
28:42
think?
28:43
Unknown: Well, I'm not actively trying to buy any properties
28:46
right now, because I do think the market is high, it has
28:51
already started to come down, I think it will soften a little
28:53
bit more, but because of when I bought, even if the market
28:57
softens, I'm never going to not be able to pay that mortgage,
29:00
I'm never not going to be able to be turning a profit. My
29:03
profit won't be as big as it was in 2020. But that's okay. And I
29:11
think it will be a good consistent long term investment,
29:16
I probably won't hold them on, hold them forever, because
29:19
eventually, you know, people like new and flashy and you get
29:22
to a point where either you're gonna have to renovate or
29:23
something to keep up. So I like the climbing the property
29:28
ladder, hold something for a few years, flip it into something
29:30
else or flipping into two other properties. I don't want to put
29:34
all my eggs in one basket, they're mostly all in one basket
29:37
right now. So, you know, finding other opportunities, try
29:42
connecting with, you know, a broker Bo or have connections
29:45
with realtors that can get things before they ever hit the
29:48
market from builders. And so that's how we've made a lot of
29:51
money by getting things that never hit MLS. So connecting
29:56
with realtors in other markets where we'd like to be a But
30:01
trying to remember, it's about the investment. It's not about a
30:04
place for our family to go, I think people get hung up on, oh,
30:08
I want this house on the beach, because I'm going to take my
30:10
kids there, and it's going to be all special and fun. If you want
30:13
that, that's great. I want to travel the world and go all
30:16
these different places, these properties are about
30:19
Davina Frederick: investing. Right, right. I think that's a
30:23
great point. Because I know that a lot of people will think of
30:28
investing well, you know, I'll I'll get something like I live
30:32
in Florida. And so the natural thing for people who's like,
30:34
well, let's go buy, you know, of each condo or whatever. And if
30:41
you can get in an area where we there are some areas that are
30:44
not great, believe it or not in Florida, for each vacations, and
30:50
then there are others that are fantastic. Of course, right now,
30:53
everything is high. And but I think people get caught up in
30:57
this idea of I'm going to have it we're gonna go and then we're
30:59
going to lease it out when we're not using it. And I think so
31:04
people can do that make it work. But I think there are a couple
31:06
of drawbacks that one is that you probably design it more for
31:10
your taste, as opposed to designing it as a vacation
31:13
rental for other people. And for me, my viewpoint would be well,
31:19
if it's my home. Like if it's my if it's my vacation home, and
31:23
I've made it nice. And somebody comes in and trashes it, I would
31:28
have more of a problem with that than I would if it's if it's set
31:31
up for being rented out. Did you have that when you were kind of
31:35
when the cabin was sort of yours, you were renting it out?
31:38
Did you have that kind of attachment, maybe you're not
31:40
like me and I have attachment to buy, like I did have
31:43
Unknown: some attachment to that first cabin. That's why I'm sad
31:46
still, that we got rid of it. But you know, we would realize,
31:50
for example, Spring Break of 2021, we went skiing in
31:56
Keystone, or Winter Park. And I realized we made more money
32:01
renting out our cabin in Broken Bow than it cost us to go rent a
32:05
big townhouse in Winter Park. So we were not ever going to use it
32:10
during that time. Because that's how much money we were going to
32:12
lose by not renting it out. So we were never going to go spend
32:16
Christmas there or Thanksgiving because those are high dollar
32:19
Labor Day weekend, you know, when the rate rates are high,
32:24
it's like I'm not I'm costing myself $3,000 If I'm gonna go
32:27
spend this time and my habit and it's not worth three, or I can
32:30
make 3000 By letting someone else do it.
32:33
Davina Frederick: Yeah, so really separating that out and
32:35
the emotional attachment and saying this is a business
32:37
investment. This isn't about our vacations, because, you know,
32:41
you you love to take vacations in a lot of other places, and
32:45
probably rarely vacation in the same place twice, because
32:49
there's only so many new things to see, right. Whereas there are
32:53
certain people who want to have a vacation home for their family
32:57
as your family grows, and they want to go there every year and
32:59
make it a tradition and there and that's not the same thing as
33:04
buying it for investment purposes, that kind of thing.
33:09
Are there some right now are you just kind of in the holding
33:12
pattern are there some you still sort of actively looking for
33:16
communities where it might be good, not broken bow, but
33:18
someplace else that might be good for real estate investment.
33:23
Unknown: I'm pretty much in a holding pattern, because all my
33:26
cash got sunk into Galveston. And, you know, once I was having
33:32
the other two that when you know when they're completed assuming
33:35
that everything goes through for both of them, that's going to
33:38
eat up any other cash to make those down payments. So it'll be
33:42
awhile to leave replenish the coffers and start looking but
33:45
even if I were sitting on cash, I don't know how actively I'd be
33:48
looking right now I wanna I want to, I think the market will go
33:51
down a little bit more. We'll wait for interest rates to level
33:56
out are back down a little bit. And then I would jump back in
33:59
but long term the plan is going to be to essentially flip one
34:04
into two flip two into four build up the portfolio without
34:10
necessarily having to use a whole lot of other cash.
34:13
Davina Frederick: Right because the money's already there. So
34:15
you've already started Yeah, wonderful. What what do you do
34:22
you think the well first of all, let me ask you this. What are
34:25
you forgetting them booked? Are you using like Airbnb? VRBO are
34:31
you doing other sorts of things social media. I know you're big.
34:35
You're big into social media and on Facebook a lot things like
34:39
that. Where do you think your rentals your market is coming
34:43
from?
34:45
Unknown: So with our first one when we self managed, I had a
34:49
family we had on VRBO we had an Airbnb and we had a our own
34:53
bookings, direct booking site. And I got a lot of business
34:57
because I would share about it on Facebook and It had Facebook
35:00
page and all that. I got a ton through VRBO. I got almost
35:04
nothing through Airbnb. But I've heard from other people who had
35:07
the opposite experience, especially I've
35:09
Davina Frederick: read recently, somebody had the absolute
35:11
opposite experience. So.
35:13
Unknown: And then now with management companies, the
35:15
management companies have their own booking sites, but they also
35:19
push it out to VRBO. And Airbnb. And I still have these, I'm not
35:24
very active about marketing them now periodically, but especially
35:28
with our broken mobile cabins, they're pretty much booked up,
35:31
if I noticed the weekend isn't booked or, you know, holiday is
35:34
not booked. And I feel like it should be that I might share and
35:37
you know, the local Facebook, business groups or whatever,
35:40
Hey, you want to go to work and bow for Thanksgiving? Or Kevin
35:43
still available? Things like that?
35:47
Davina Frederick: What advice would you have for somebody who
35:49
wants to start getting into this short term rentals?
35:54
Unknown: So there's tons of podcasts, there's and books and
35:58
ways of getting educated on it. And you know, you certainly want
36:02
at least a minimal amount of education for like, I'm pretty
36:05
savvy on money and investing and all that. So I didn't need to
36:09
dive in as deep as somebody who is not so sophisticated, but you
36:14
know, talk to other people in your area, see where they're
36:17
investing is there a, you know, like, in Georgia, people want,
36:21
who will invest in the Blue Ridge Mountains or in North
36:23
Carolina, I know, there's lots people who invest in the
36:25
mountains over there. There are little broken bows all over the
36:29
country, that are probably close to wherever anybody's living,
36:33
and finding what makes sense based on where you are and where
36:36
you can get connections. There's Facebook, there's Airbnb, and
36:40
some short term rental Facebook groups that are generic that
36:43
have 1000s of people in them where people share ideas and get
36:46
advice. There's Facebook groups that are specific to me, I'm
36:50
probably in five different broker bootcamp owners, groups,
36:52
and two different Galveston property owners groups. So you
36:56
always can find out ideas, find out about properties, find
37:00
cleaners, find lenders, by realtors, all the things that
37:04
you need.
37:06
Davina Frederick: Connections. I mean, I think that's really the
37:08
key is, like you said, it's, it's expanding connections so
37:12
that you can learn things that you might not learn from a book.
37:15
Because a book can tell you it can. I mean, I think it's
37:17
important people read books, I'm a big book reader, and listen to
37:20
podcasts. And podcasts often will lead me to connections with
37:25
people. So the idea of Facebook groups, that's a wonderful thing
37:30
that can come out of that is just connecting with resources,
37:34
because you might not even know what questions to ask. And then
37:38
you're in a group one day and somebody asks a question, and
37:39
you're like, oh, man, I needed to know that that was so great.
37:43
So really spending a little bit of time, probably doing that
37:47
without just jumping right into something and kind of figuring
37:50
out on the way down. Because even though you said that you
37:54
you did that you were having conversations with people before
37:58
then try and figure out where can I best.
38:02
Unknown: And there are services out there and some of its you
38:06
can get a certain amount for free like air dna.com. There's
38:11
mashvisor.com is another one, where you can find out
38:16
information about short term rental markets in different
38:18
places. And what you know, what does it look like in Broken Bow?
38:21
What does it look like in Destin? Florida, wherever you're
38:23
looking at? You can see these are what properties are going
38:27
for. It'll show you average daily nightly rates. How many
38:35
there are so you know, is it oversaturated? Is it? Is there
38:38
nobody here? Maybe there's a reason?
38:40
Davina Frederick: Is there a ban? I know in Daytona is
38:44
Daytona Beach is their government over there, Man they
38:47
wanted they got rid of spring break. They don't want them.
38:49
They barely want the bikers. And now they've got a ban on short
38:52
term rentals. And, and there are whole hotels on the beach that
38:57
are just boarded up from hurricane damage. And but they
39:01
don't, they've banned short term rentals, because they don't want
39:04
the community the floor, you know, the native Floridian
39:08
nature of the community to change. And they're wanting
39:10
enough housing for people there. And I know there are some, you
39:13
know, I was reading somebody recently in Arizona, where
39:17
they're like, hey in Sedona, Sedona is paying Airbnb hosts
39:23
like $10,000 to rent to local residents for long term and
39:31
trying to incentivize people because it is there so many
39:33
people are invested in Airbnb over the pandemic. And, you
39:37
know, whole communities are like, Well, how do we service
39:39
this when we can't we don't have affordable housing for the
39:42
people who live and work here. Right. So So you definitely need
39:45
to check. I mean, I bought something a condo in Daytona
39:48
which is just a little, you know, half an hour 45 minutes
39:51
from my house. I would really be screwed when the band came
39:55
through. Because then, you know, okay, well that didn't work out.
40:00
Unknown: So yeah, there's, and you can usually tell a lot of
40:02
places in Colorado have restrictions on short term
40:07
rentals. Hawaii does. And you can usually tell if you're
40:11
looking constantly on realtor.com. And I'm bombarded
40:14
looking at different places. And like, oh, man, this looks like a
40:16
fantastic deal. I guarantee you it's not short term rental
40:20
eligible, because if it were, it wouldn't be cheap.
40:24
Davina Frederick: Right? Somebody would already snap that
40:26
up. Right away, right? Secrets to sort of, you know, I love
40:33
decorating and that kind of thing. And I know you decorated
40:35
your first one. And then you hired people to interior
40:39
designers to help you do the others. Are there any sort of
40:42
tips on kind of like, what you want to have or not having short
40:47
term rentals? I've certainly stayed in some that are really
40:50
great, really cool. And then others that are like the
40:53
Hackman? Not this is not at all like what the picture look like.
40:59
About that? Yeah, I
41:00
Unknown: know, there's a lot of lists circulating around at
41:02
least in the cabin owners groups about like, these are the basics
41:05
that you should have, you should have X number of plates per
41:08
person, and, you know, this many bowls and all these things. And
41:12
we always like to include board games, and you know, activities
41:17
for families to do and because you're going to walk out in the
41:19
woods, you want some family bonding, usually, you know, a
41:24
beach with beach house, you want all the beach toys and the
41:27
boogie boards and things like that people can use even though
41:29
they're and they're generally cheap and but if they end up
41:32
missing, so be it because you know that billion dollars. I
41:38
think a lot of people in Broken Bow like having playsets at the
41:44
added or some sort of unique features like arcade games
41:47
inside pool tables are big Kevin has a shuffleboard inside.
41:53
Having an amazing views. You can add that if it doesn't exist.
41:57
But those
41:58
Davina Frederick: are things think about that when you're
41:59
buying a place Location, Location still matters. You
42:01
gotta have you know, absolutely. Yeah. And the way I heard
42:06
someone put it is that you're, you're really selling any
42:08
experience. And that's what why so many people look, you know,
42:15
these for Airbnb VRBO is because they're looking for an
42:20
experience, they can't get into a hotel. And so creating that
42:25
experience by having games having, you know, fun things and
42:28
stuff that you use, I, you know, we rented a mountain cabin last
42:33
year. And we got there and one of the fireplaces was not a
42:39
working fireplace at all. And the other one was like a down in
42:43
this really dark creepy basement, that you didn't want
42:46
to put a diamond. And so having that having your pictures match
42:53
your experience, I think probably comes into a lot too,
42:56
because you get some you know, we did not leave a good review.
42:58
There were many other little things to that made it kind of
43:02
creepy. Do you worry about security, or, you know, people
43:07
walking off with your stuff or destroying your property or
43:10
anything like that? Does that happen? I mean, does it happen
43:12
much.
43:13
Unknown: We haven't really had any problems. When we were self
43:17
managing we had, there was a guy in Broken Bow who he used to
43:21
work for a police department or sheriff or someone and he does
43:25
security and he monitored everybody get put some cameras
43:28
in their cabins and he monitors them. And they'll even know for
43:30
your guests. If you have any problems. You call this guy and
43:33
it'll take care of it. Periodically in the cat owners
43:37
groups, we'll see people will share a screenshot of somebody
43:41
that was snooping around a cabin and or somebody who was driving
43:44
off with the outdoor TV in the back of their truck or whatever.
43:47
But we haven't had any issues like that. Fingers crossed.
43:53
Davina Frederick: We stayed in one cabin where they had a hot
43:56
tub. And we're thinking oh great, a hot tub and a video
43:59
camera up facing the hot tub. I was like, and so they were you
44:04
know, understandably what they they probably had experience
44:07
with, you know, things happening, neighbors coming
44:09
moving up the rod, I don't know. But, you know, there's a fine
44:13
line between that you're still trying to create that experience
44:16
for your guests. But you even if you want to have you know,
44:19
security can get a little creepy if you've got cameras
44:21
everywhere.
44:22
Unknown: Yeah, I've seen a lot of discussions about the do's
44:24
and don'ts of putting up cameras where it's you know, you're
44:26
monitoring who's coming in and going, you're not monitoring
44:28
what's happening in the bedroom. You're not monitoring,
44:30
monitoring what's happening on the, you know, in the hot tub,
44:36
in the bathroom, all those things it's really just needs to
44:39
be strictly a security issue, not a spying on the guests
44:43
issue.
44:44
Davina Frederick: Yeah, I bet there's a lot of there's an
44:47
opportunity for lawyers probably around the whole short term
44:51
rental market it for many, many things. Have anything else that
44:57
you can think of before we wrap up that would be important for
45:00
people to know if this is something that they were wanting
45:02
to explore.
45:04
Unknown: I mean, I think it is, I don't think I know it is hands
45:09
down the best investments that we have ever made. And it's not
45:12
even close. You know, I spent 15 years leading up to that,
45:16
working and investing in my 401k and, you know, brokerage
45:21
accounts. And I've made more in the last two years investing in
45:24
real estate than I did last 15. Investing traditionally in the
45:28
market.
45:29
Davina Frederick: Wow, wow, that's a very powerful
45:31
statement. We'll we'll end it on that note, then, and get that
45:34
give people something to think about. If somebody wants to
45:36
reach out to you connect with you. How can they do that? Maybe
45:40
they want to find out about the Draper firm. How can they do
45:42
that?
45:43
Unknown: Sure. You go to our website, which is www dot Draper
45:47
firm.com. And there's a option there, you can contact me
45:51
through the website.
45:52
Davina Frederick: Awesome. Thank you. I appreciate you coming
45:55
back and doing another episode with me as always a delight. We
45:58
have many interesting conversations. So this one is
46:01
another word that we've captured for other people to listen in
46:03
on. So thanks so much for being here. Sure. Happy to do it.