How to Retire Early and Build a Business Around Travel with Lee Huffman

Lee Huffman: 00:00

You have to have the patience to find the right deal. And in some ways, it really sucks just sitting there on the sidelines. And oh, it's been six months or a year or something like that since we bought a property. But if the numbers don't work, the numbers don't work. And you have to have that patience and say, Okay, we're only buying houses if they fit these criteria. I'm Neil. And I'm Brittany,

Neil Henderson: 00:21

we are a family on a journey towards financial and location independence. Each week, we interview successful real estate entrepreneurs about their chosen investment strategy, and rated based on how much money it took to get started, how long it took to educate themselves, how passive it is, and whether or not they could do it from anywhere in the world.

Brittany Henderson: 00:39

Welcome to the road to family freedom. If you like our show, the easiest way for you to give back is to leave us a rating and review on iTunes, head on over to road to family freedom comm slash review for links and instructions on how to do that we would be so grateful. All right, and that's out of us. Let's hit the road to family freedom.

Neil Henderson: 01:07

Our guest this week is a former banker who now writes about early retirement credit cards and traveled. He's also the host of the inspiring and endlessly entertaining, we travel their podcast. Well, welcome to the road family freedom. It's great to be here. We're glad to have you. So give us a quick story about how you got into real estate investing. Okay,

Lee Huffman: 01:28

back in 2006. Actually, actually, back in 2005, my dad was starting to get some problems with his health and everything. I was working a lot at the job that I had in corporate finance for a bank. And we sold our house, we decided it's time to sell the house. And we sold the house in April of 06. So absolutely perfect timing, good timing, literally, you know, three months later, everything started going down in prices. And when I sold the house, is it okay, well, I've always kind of been interested in your real estate investing. And as we were looking around for houses from my, from my parents live in North Carolina, where my brother lives, we came across a house that was like, almost perfect for them, but not quite. And at that point, it already had a tenant in it. And so we found the house that was perfect for them. And I said, Well, you know, I have a little bit extra money anyways, from the sale of this other house while I get that one too. And it sounds kind of kind of odd and rude, almost where you say, Oh, yeah, give me that one. Also, it's almost like getting a Big Mac and fries when you go to McDonald's. But you come in from California. And when you look at some of these houses and other parts of the other parts of the country, the prices are so cheap, it just you have a skewed perspective as far as what the value of homes are and everything and the rental property of I think it was about 112,000. And, you know, that was the that was the first one. And when my when my dad passed away in 2012, I turned the house that they were living in into my second rental property and then kind of accelerated since then.

Neil Henderson: 02:59

Okay, so you started buying single family homes in North Carolina? Yes. Did you have an intention at that time? Like, well, I'm going to become, you know, a real estate investor. And this is this is the path I'm on? Or was it sort of an accidental landlord? You? Oh, I'm

Lee Huffman: 03:16

not. I mean, I always like read about, you know, investing in real estate and talking about diversifying your portfolio. And, you know, for me for my retirement accounts, I actually invest pretty aggressive as far as stocks on all my accounts. Because I look at my real estate as my base of my bond portfolio. Yeah, that's going to be driving all the income. So that allows me to be more aggressive in my my stock portfolio, my IRAs and 401k.

Neil Henderson: 03:43

And did you go in with any sort of criteria that you're looking for, as far as minimum cash flow ROI that you were looking for on those single family homes and you bought them?

Lee Huffman: 03:53

At first? No, I was like, Oh, that's cool. Hey, but Pacey and pays for itself. And I've been thinking about, oh, there's repairs, and there's turnover and there's vacancy. You know, I was a total newbie, when I first started out, like everybody else, right? I didn't know anything. And back in Oh, six, there weren't websites like yours and bigger pockets, and all the other ones out there that I could really kind of turn to for that advice to figure things out. So I just kind of like, oh, okay, as long as it pays for itself. It's fine. And that was fine. That was fine for me. Because, again, literally, my car payment was more expensive than the mortgage, on the property. So okay, whatever. It's like a rounding error.

Brittany Henderson: 04:34

So we're is real estate taking you now? I don't know, how much do you still just have the two properties? or?

Lee Huffman: 04:41

Yeah, so I bought those two, in those six. And then, you know, between the recession happening, and like, you know, focusing on my career, getting married and buying our own home and things like that, it took a while before I had any more cash to be able to buy the next one. And with those, you know, it was a you know, either buying 100% in cash or getting bank financing. And then I had all these other things going on. And so it was getting the third one was on the list, but it was down the list. You know, and then so finally, our home was appreciating in value. And I we took out a home equity line of credit. And so that's when I was buying the third one in 2013. And basically did that one, as I was buying, I started doing a little bit more research as far as Okay, well, okay, well, I'll be able to buy more. But if I buy 100% in cash this way, how am I going to get my cash back out? How am I going to be able to buy the next one, I really don't want all this money like left in there. And then if I refinance it, I'm only going to get 60 70% of that cash back. that's a that's a big chunk of money that you're leaving in the house. And so the real estate agent that I worked with to buy the house wasn't somebody that worked with investors, she didn't really know much. And honestly, I really ever do much when I was buying that one. Because I was at that point, I was already kind of figuring out the parameters I was looking for. And I just happen to be searching on her website using her MLS search. And based on that, I'm like, Well, okay, my brothers in town, I need you to show him these six houses, because I'm going to buy one of them. That's basically that's basically the the extent of her job during that thing. And then the house that I did by the agent that was selling and representing the seller, I like the way he worked. I like the way he showed the photos on the MLS had a video in there, it was pretty professional. It is a little bit of a Podunk town in North Carolina. So it's a little bit different than what I'm used to in California. But he was, it seemed to me he was on a much higher level than a lot of the normal agents in that area. And so I started talking with him, and figuring things out from his perspective. And then I started talking to one of my lender buddies, and started getting into better parameters as far as Okay, how can we buy something distressed, fix it up, rehab it, refinance, and get a tenant in place, and then be able to pull the cash back out in a more advantageous way. And that's what we've been doing ever since. And so now, since then, we did four or five flips, which were kind of breakeven ish. And then we've added six more rental properties to the portfolio actually just finished the rehab on the ninth property total, the sixth one, since we've been doing this process this month,

Neil Henderson: 07:24

certain nine, nine total single family homes you portfolio now, correct? Yeah, gotcha. Okay.

Brittany Henderson: 07:29

And now that you you're doing this, What's your goal, your like, big goal.

Lee Huffman: 07:35

So my overall strategy is this, we use a program called delayed financing. And so with this program, you can have a maximum of 10 properties, you have loans in your name, assuming that you can cash flow them for underwriting. So you can do 10 of them in your name. And then we structured it so that way, I can put 10 in my name, 10 of my partner's name and 10 of my wife's name. And then now we can have a total of 30. Right? And then at that point, you're like, Okay, well, I've maxed out this one program. But that point, what we would do is we would kind of cold the herd so to speak, we find the ones that are the worst performing, or the maybe even have the highest equity component in it. And then at that point, sell those kind of free up slots in that delayed financing program, and then take that equity and 1031 into apartment building. And then at that point, now we have more slots, fill those slots, again, max it out to the 10 each, and then call the hurt again, and refinance. I mean, you reinvest into apartment building, just keep doing that over and over again.

Neil Henderson: 08:31

Gotcha. And do you ever sit down and do calculations? Like what's your what your return on equity is on the properties? That's something a lot of people don't consider when they're like, well, I've got the cash flowing, and my ROI is this. And then when when they sit there and they go, I've got 50% equity, and it's like, well, what's your return on equity now, because as you as the equity goes up, you're actually return on equity starts to go down eventually gets to the point where it's like, you might be better served moving equity somewhere else. Is that a calculation that you take into account?

Lee Huffman: 09:00

I haven't got into that yet. I mean, it's something that I share, especially with my finance background, and it's almost embarrassing to say that I haven't. But, you know, it's one of the things that this program is so advantageous the way we use it, that I want to max out the program first. And then at that point, start looking at other variables. As far as I think those type of calculations would be more based on when we're calling the herd. Yep, at that point, Okay, this one may cash flow, the better, but the return on equity is not as good as this other one. So let's sell this one instead of that one, and essentially going to be at some point, you're going to kind of stack rank everybody, based on some of the variables like your ROI, your cash flow, your ROE, all those different variables, and say, okay, which is which other ones were going to sell? You started No, six.

Neil Henderson: 09:46

And as you said, there, you know, there wasn't really bigger pockets wasn't really around, although it may have just been starting up. How did you go about getting yourself educated on real estate investing, when you first started off,

Lee Huffman: 09:57

back then it you know, it's like magic seems like Kiplinger's and you just different books. And even today, I still read the paper, actually, I kind of have a stack of papers I'm a little bit behind on but I still read the newspaper, I'm probably the last one of my generation to actually do that. But I just, I was read constantly and talking to people, and just always kind of picking somebody's brain. And then at that point, also, it's, unfortunately, lot of people don't do this, you learn something from somebody. And all you do is apply to that same scenario. But unfortunately, the world is very diverse. And so what you need to do is say, okay, the lesson I learned from this situation, how can I apply that lesson to all these other situations that I'm involved in? Because although this person had this happened to him, I'm never gonna be able to replicate that exact same scenario. So how can I apply that lesson to all the other different areas of my life?

Neil Henderson: 10:47

Yeah, I know, we talked about financing, we see you first financed those first couple of deals with the sale of your primary residence in California, correct.

Lee Huffman: 10:58

And that and that, and then I just, I had 15 year loans on them, basically put a big down payment on them, and then put them in a 15 year loans. Because at that point, I was like, Oh, I want to be able to accelerate the payoff. And I want to be able to pay these off on and a quick basis. But that decision actually kind of hose me down the line. Because, you know, when you're looking at that income ratio, and minimum debt service, those type of things, even though I was making good money at the bank, back in LA, once you start getting your primary mortgage, your car payment, student loan payments, any of those other type of things, any sort of credit card, minimum payments that are required, your debt service can kind of skyrocket, right? Especially if you're doing a 15 year loan versus a 30 year loan. And so that decision actually made it tougher to get loans four or five, six down the road. And now that was a problem. So essentially, what I've done over the last few years is I was listening to this podcast, and I think of the name of it off top of my head. But his name is Joshua sheets, and he had this episode, it was how to basically pay off your debt in like 10 years last and basically be financially free. And so that was probably about three years ago. And I started really kind of thinking about it maybe three, four years ago, and I really started thinking about it pretty heavily and ago, okay, how can I do things, you know, I make good money, you know, I'm pretty frugal by nature, these properties are cash flowing and paying for themselves. If I can accelerate the pay off of some of these debts, like you, especially those ones with a 15 year mortgage with a huge principal payments, I can kind of clear that off the books. And so that way, now, I can focus on these other properties that are much better on the cash flow side. And much better as far as when the underwriter is looking at my debt service. And so that's basically what I did I, I have three properties that are solely in my name, and now six that are with a partner. And so my goal is to basically path all the debt that's solely mine. And then let the let the cash flow of the six that we've done so far, let those kind of service the debt on those and that way, it's still my dad, because the loans are my name, but it's just like, just had like that mental break between, okay, these are my properties, everything's paid off. That's just solely mine. And then the other ones, that's where the dead set. So I want

Neil Henderson: 13:09

you to you briefly mentioned the delayed financing program. And I want I understand it, but I want you to clarify it for some of our listeners that maybe don't understand what you're talking about.

Lee Huffman: 13:22

Yeah, so it's, it's an awesome program. Essentially, if you, if you buy a rental property normally, either you, you can get a maximum of 70 to 75% loan to value. So if you buy $100,000 house, the maximum loan you can get is either between 70 to 75,000. And so you know, if you're buying something just traditionally, right that's on the MLS, you got to come in with a 25, you know, $30,000 down payment. So with delays financing, what you can do actually back up, and then say you buy something distressed, and you fix it up, and then you want to refinance it, traditional lenders say, Well, thanks, buddy will land on the bat the value that you bought it at, or you can wait a year, and then we'll then we'll do an appraisal. And, you know, if you're if you're in a hot market where you there's a lot of deals, you don't want to wait a year because you could be missing out on three or four or five deals along that path. And so with delayed financing, it's kind of like a special carve out and send a Fannie and Freddie product, where what you can do is you can buy it, rehab it, get a tenant in place, and then refinance it all within six months, as long as you do that, within six months, you can use the lesser of the appraised value 70% of the appraised value, or whatever is on the HUD. So on the HUD, essentially, what you're doing is you're buying it, and then you're including your rehab costs, and some of the other ancillary costs on your head. And then that way, you're kind of loading it up. And then that way, whatever the lesser of those two numbers are, that's essentially the maximum loan value you can do.

Neil Henderson: 14:55

And so it allows you to you're taking in whatever money you're taking in to buy it, rehab it, you're able to take almost all that money back out within six months.

Lee Huffman: 15:04

Yeah, essentially, yeah. So if you say you buy a property, it's 50,000. And you put $20,000 into it, right. And so you pay all that you write a checks, basically, for $70,000. For HUD, the obviously there's some other costs, but you know, we'll just focus on these two factors. And then now it appraises for 100. Essentially, you can get almost 100% of your dollars back. Because you're getting a loan for essentially $70,000 versus the appraised value of 100.

Neil Henderson: 15:31

And you mentioned that some of those early properties you financed actually using a HELOC. Is that correct?

Lee Huffman: 15:37

Yeah. So what I did is actually the first two back in Oh, six, I didn't have a home anymore, so I didn't have a lock, but I just had some cash from the sale of our home. So I basically bought them, and then refinance them right away to try to pull the cash back out. And this is more just traditional financing with that 70% loan to value. And so it was, it was tough, all of a sudden, it had a huge bunch of money, like locked in there, and you're paying retail prices for the home, you know, and so it's tougher to make things cash flow when you bought it for 112. And it's running for that one at the time, I think was running for like 850 or 900. And so it's a decent amount. It's covering the mortgage, and it's covering the property taxes and those type of things. But there's nothing in it for me other than just the principal reduction on loan. And I had a big chunk of change, you know, left in the property. So that was like less than ideal, right? Because not a, no matter how much money you have every if you keep doing those type of deals, and you keep leaving 2030 $40,000 in them, you're going to run out of money really quickly. Yeah, you know, and so with this delayed financing that I learned about in I think was 2013 or 14 from working with my mortgage broker. That way, you know, sorry, sounds way better, because now you can, you can basic force appreciation by buying something distress, you're improving the neighborhood, you're improving the house values around you, because now you taking something was like a blight on the neighborhood, something that was kind of run down and dilapidated. You're fixing it up. I mean, you're not making the Taj Mahal, you're not gold, plating everything, but you're making it nice you making it kind of fit into the neighborhood, you're fixing up the the outside the inside, you're making it really attractive. And my whole goal is always whenever we do the rehab is you want to improve it to the to the to the neighborhood, and maybe just that just a hair above. Because if it's just a little bit better, essentially, the goal is that you can have less turnover. So if if your property is a little bit nicer to all those around, and about the same price, most people gonna go well, I'd rather stay here because this one has x y&z amenities versus this other one that's maybe a little bit rundown, a little bit outdated, those type of things. So if you can reduce your turnover and reduce your vacancy, that's huge on your cash flow.

Brittany Henderson: 17:54

How much time do you spend each week on working on the real estate,

Lee Huffman: 17:58

all depends, when we're not working on a project, it's really just the a couple hours, were just kind of like maybe searching the MLS or talking to realtors trying to you know, wholesalers trying to find deals. It's either me and my partner's probably a couple hours. But when we're actually actively rehabbing a project, like right now, you know, with a lot more conversations happening with with their, with their contractor or with property manager, making sure the project is getting along. You know, I used to live in California. Now I'm in Nashville, we're closer, but still not in the same neighborhood as a properties in North Carolina. And so you're still doing the out of state, you know, still relying on pitchers. At least I'm close enough, where if I said you know what, I'm gonna come check on on everything that's going on, because I'm not quite sure we're making fast enough progress. It's, for me, it's an eight hour drive, I can leave in the morning be there by the afternoon. So at least like at least I'm a little bit better as far as proximity. But we have a pretty good team now or we're not worried about, you know, all those things. And so essentially, it just conversations, what's going on? What have you done this week, you know, How much longer do we have to go. And it's still pretty, it's still pretty minimal, even during these times. And then once and then we're sorry, once the project is done, then you basically turn to your focus on to the financing side, and we have a pretty down pat, as far as Okay, here's all the different documents I need. We keep all the statements downloaded, we keep everything ready. So that way, we just give them everything. And it basically, when you're going through the finance process, it's like a game of tennis, you can't keep on a hit the ball back into the other side of court, because you have your rate lock for a certain period of time. And if you don't get the loan done, then all of a sudden, I gotta pay extra for extending the rate and everything like that you just added costs are unnecessary. So anytime somebody asks you for a document, you want to be able to have that document back to them, as soon as possible that way, again, there, you don't want them waiting on you. You want all the documents to them right away that way they can keep working and get your loan done as soon as possible. So are there any you know, you're having to invest? Somewhat long distance? Are there any systems that you have developed to help you sort of automate your business at all? Really, it's, it's having a good team. That's number one. And then when we when we did the flips, we have a little more of a process in place where we kind of use some online source where essentially, we had them fill out every week, kind of okay, here's the progress. Here's what we did this week. Here's what we plan to do next week, how much of the of the budget that we spent so far? You know, the estimated date of completion was this initially, where do we stand on that day to completion? Now, are we ahead of time? Are we behind time, so we basically had a form that the NFL every week, and then send us some pictures as far as the work that was completed? And that was really the main process that we had.

Brittany Henderson: 20:50

You mentioned your team, what sort of people have you hired, if any? Or is this mostly just like your partner and your wife?

Lee Huffman: 20:58

Well, the team would be more of my partner, my wife, my wife, who basically just kind of along for the ride, you know, she she just said, Okay, here, do this, do this, and she'll do it for me, but she's not involved in like the day to day so to speak, but and my my partner he does, he's a real estate agent. So he does a lot of the searching for the MLS for for other properties, but I'm not the numbers guy. So I do, you know, the accounting and, and the tracking of people, those type of things. But as far as our what I'm saying our team, it's more of our property manager, contractors, real estate agents, new mortgage brokers, insurance agents, all those people that that kind of fill the holes that have expertise that we don't have.

Brittany Henderson: 21:39

So you have a property manager that that helps you run the properties once you're renting them out.

Lee Huffman: 21:44

Oh, absolutely. Like to me, yeah, you're spending your eight to 10% of your revenue you're having to that, but having them take care of everything, especially long distance is key to me, and it's money well spent. That way, they handle all the problem, I'm not getting phone calls the middle of the night, I like to sleep, you know. And so I don't want to I don't want to be taking calls at 2am and then trying to figure out, okay, who am I going to call and who am I going to get to do the replace that toilet or whatever, I don't want to deal with the garbage, you know, I got other things I gotta do. And even if I'm paying them a little bit, I can take the money, the time and create other money by either focusing on my other business, or I can take that time and talk to other investors, talk to other people as far as finding additional deals. And so that's, that's better spent your time of mine than it is dealing with day to day aspects of the properties.

Neil Henderson: 22:39

Now, how did you? How did you go about building

Lee Huffman: 22:42

that team? Okay, it's really, it's recommendations, like my brother was married to a woman who her family was building homes. And that second house that we bought, actually, her, her father built that house. And so from him, you know, his book really connected in that area. And so I started kind of reaching out to some of his connections to find like, kind of interview people to see if, if there was a connection between us. And for a while, you know, some of the people worked out well, and, you know, you gotta even if you have a good team, you got to always be finding that plan B, you gotta always have that, because a few years ago, we had a great property manager, she was always attentive, we became good friends even. And then all of a sudden, a screw came loose. And she decided to leave the country and take our security deposits with her. And painful lesson. But luckily, that we're supposed to be getting that money back from the department real estate, they're there, finish their investigation, everything and just get some money back. But it was a very scary moment when you know, seven $8,000 just disappeared. Yeah. And so we had no idea what was going to happen. And so you got to always have somebody else where it's like, okay, yes, I like who I'm working with. And if something happens, because it eventually will, they got to figure out where you're going to go next.

Neil Henderson: 24:08

So you invest long distance you said you visit, you know, you really only visit the properties. If there's maybe you know, some going on, you can send a two hour drive away. How long would you feel comfortable, completely stepping away and letting letting your system work for you?

Lee Huffman: 24:27

Like if you wanted to, you know, lead, you're traveling, you love to travel? How long would you feel comfortable saying, You know what? I'm going to work, we're going to take the family on a on a world tour. Now, how long would you feel comfortable doing that? Well, one, the wonderful thing about the technology today is you can be kind of contacted anywhere, you know, it's very rare that you can be connected somehow through email or Wi Fi, to take a Skype call or anything like that. So you don't have to do that. But as long as we're not working on any additional projects, and then needing to do the financing and things that nature, then it pretty much can just handle itself. I would say, even now, my property manager has authority, if it's up to a certain dollar figure, he just takes care of it. Right? And then lets us know that okay, hey, I had someone come out and fix the toilet, or, you know, we replaced X or Y. It's okay, that's just normal course of business. And, and that's what a property manager should should be doing. As far as I'm concerned, I like to be a little more hands on than some other people, I at least want to know like, okay, just send me a message, let me know that this happened. You have the authority to to make those repairs, I just want to know that they happen. So that way, when I get the rent check the next the next month when the positive happen. I know question why the money short?

Brittany Henderson: 25:43

What do you feel like is the most critical, critical skill that a new investor that's looking to work in your niche, the kind of burn method? In that vein, what do you feel like is the most important skill for someone new,

Lee Huffman: 26:00

actually, to skills, one being organized, because if there's so many moving parts of so many different components, throughout the entire process, if you're not organized, things can get like way out of hand. And next thing, you know, maybe you blown through the budget, or again, like you, you're not getting things to the the mortgage broker in time. And it's just delaying that entire process. And maybe you missed them the six month window, because everything was getting delayed and delayed and delayed. And so you gotta you gotta be organized. But a second, and this, whether it's your new or your experienced Pro is being patient. Because, yes, like, for me, like the last couple years, we haven't done as many deals, because I think everybody's been watching HGTV. And they think they can, they can do it. And they see the numbers and HDTV and they go, Wait a minute, I supposed to make all this profit. And I made like significantly less well, it's like, well, they don't include all the different costs there. And they're real estate agents. And so they, they factor in the commission into their profit. But you have to, you have to have the patience to find the right deal. And in some ways, it really sucks just sitting there on the sidelines, and oh, it's been six months or a year or something like that, since we bought a property. But if the numbers don't work, the numbers don't work. And you have to have that patience and say, Okay, we're only buying houses if they fit these criteria. And if they don't fit that criteria, don't buy it, don't buy a deal just for the sake of making a deal. And so you got to have that patience, and be it to be able to stick with your model, whatever the numbers that you want to work with, you got to have the right numbers, and you got to find the properties that fit that mold. And if they don't fit, maybe, if it's like, just just a hair outside of your of your parameters, maybe you make an exception, because it's been a long time and you need to put that money to work. Maybe you have investors that you're paying paying interest to our they're they're participating in like the the equity or the participating in like the cash flow, and they're getting a little antsy, maybe you know, maybe do something that's just outside of your border, but don't get grab something out of left field that is like nowhere near your numbers, it's going to throw off everything. And again, next thing you know, like you've left you 2030 $40,000 into a property, or you bought something that's not going to appraise for what you need it to, or it's a property that just the cash flow isn't gonna be there, you're not gonna be able to service the debt without kind of going negative on that on that one property every month.

Brittany Henderson: 28:26

Yeah, I mean, that discipline to

Neil Henderson: 28:29

Yes.

Brittany Henderson: 28:31

The numbers.

Neil Henderson: 28:33

And especially right now, with so many markets that are that are getting maybe a little overheated. There's not nearly as many deals, it's not like, it's not like back in 2012, where you could basically throw a dart at a dartboard and make money. Yeah.

Lee Huffman: 28:50

So it's that and, and interest rates are rising, you know, so, uh, deals that were awesome a couple years ago. Now you're like, it's kind of borderline as far as whether that's going to cash flow, we refined a property almost a year ago, and we refined the prior one a year prior to that, and the rate have gone up, you know, I think it was three quarters or even a full point. And so that property is not as cash flow positive as the previous one. And so you have to, even though interest rates are rising, I don't think a lot of the like the newbie investors are recognizing the effects of that. And so they're still buying properties with those lower interest rates in mind. And so when they go to refinance property, or when they go to try to sell that flip, they're going to have a moment. And it's going to be rough for them.

Neil Henderson: 29:41

Well, if you could hit a magic reset button and go back in time to the beginning of your investing, career, is there anything that you would do differently any systems that you put in place earlier, things like that? I just, I would

Lee Huffman: 29:55

have asked a lot more questions to my mortgage brokers sooner. And then I would I realized that some of these programs were available, you know that only later on when I figured it out. And so because again, I figured that out in 2013, or 2014, whatever it was, when I bought that that third property. And if I would have, especially during the downturn, when there were so many houses available, yeah, who cares about selling them, I would have been able to buy a lot more cheaper. And even if I hadn't got the the appraised value is as high as it would be today. just buying him so cheap, and the rents would have been increasing over time, would have been able to buy a lot more properties. And I saw, like, for a while I still that old school mentality, okay, I need to buy you traditional financing, or I need to pay cash for it, I need to have X number of dollars, or even need to have my own money, there was a lot of opportunity, if you find the right investors, whether it's your family, your friends, or just other people that you meet, that, you know, there's a lot of properties that could have bought through investor money to you know, because, you know, again, no matter how much you make them, and how much you have, eventually you going to run out of cash, and you're going to be able to do that next deal. And so having some investors that maybe you can talk to that are willing to either subsidize it for an interest rate, or subsidize it from a participation with you use their money to buy the property, and then you're taking a portion for your efforts, then that's a that's a great way to approach it as well,

Brittany Henderson: 31:26

sort of a rehash. But maybe we'll get even some more nuggets out of you. So if you were, you know, maybe presenting in front of a room full of of newer real estate investors, what are the top two or three strategies that you would recommend that people move forward with to be successful?

Lee Huffman: 31:47

strategies as far as buying rental properties? Or just real estate in general? Or what are what are two

Neil Henderson: 31:53

or three things that they could maybe implement in the next three months? Okay, yeah, long term strategy. You know, two things are, you know, we're Our primary audience, are people with families and full time jobs, you know, okay, I can be investing full time. Sure. And maybe they, you know, maybe they've got lack of time, they've got maybe fears and doubts about making a mistake and things like that. Okay, that's it. Sure. Sure.

Lee Huffman: 32:20

Yeah. So one of the number one things that we haven't touched on yet, is your credit has to be good. You know, none of these programs are going to work well, delayed financing, or other bank programs, if you don't have your credit, you know, in place. And over the next few months, there's ways to improve your credit, whether it's paying down debt, increasing your credit lines, to lower your utilization, putting things in place, so that way, you don't ever have late payments, there's a lot of things like that you need to do to make sure that your credit is good, because if you, if you if you have a lot of money, if your credit isn't good, you're not going to get alone. Most banks, they need your credit to be good, especially now we're kind of getting at the end of like the you know, economic cycle, we've had a lot of growth there, there's a lot of warning signs kind of floating around. And if you have some things like dings on your credit, specially recent things, you're going to be priced out of any type of loan that you're trying to do. So that's number one is making sure that your credit is good. That's a essentially probably one of the greatest assets people have, that they don't really think of as an asset is your credit, whether it's applying for a loan to be able to do delayed financing, buying your primary home and being able to save you half a point or full point on, you know, having a 740 or 760 FIFO versus a 660. You know, there's a lot of savings there. Or even like what I do a lot with the travel hacking, getting the best credit cards, that way you can you save money on your travel, so that way you can reinvest that money that you would have spent on travel into your into your business, whether it's buying more properties, or paying down your debt. So all these type of things, if you don't have your, your credit, game solid, a lot of these things are kind of a non starter for you. So that's number one. But to obviously want to educate yourself, whether it's listen to the podcast, I use this little radio all the time, and sometimes I I turn off the podcast and just kind of jam out a little bit on the radio. But for the most part, whether I'm driving the kids to school, used to be when I was commuting to work, or even now when I go for a run on the neighborhood, I'm always listening to podcasts to try to gain some sort of knowledge. You know, even if it's on a topics I've already kind of understood, understand, or it's something that I feel like I'm pretty high up on the knowledge level. Still, there's sometimes there's nuggets that somebody else does, you know, I hadn't thought about that. And so it's good to reinforce those lessons, or something maybe just forgot, because it's been a while since you've done that before. So always keep learning. But also don't let your learning get in the way of actual action. There's so many people that they are savant as far as the education but they're timid little mouse mice as far as actually making that first step and doing that first investment or putting in an offer on a deal. You have to find the right balance where you're educating yourself but actually taking that knowledge and actually doing something with it

Neil Henderson: 35:12

are real let's touch on the the travel hacking just a little bit because you have Lee has a fantastic podcast called we travel there. I've listened to a number of episodes and it is like a little bit. It's like a little travel guide from a local into various spots. I've listened to one for Austin and there's one for Arkansas there's a place in Bentonville, Arkansas, Bentonville, Arkansas. I was like I'd never heard of the space. Men bill. Yeah. So talk to us just a little bit about about your podcast, and travel hacking. Don't get into that, that will invite you back some other time for sharing details. But tell us a little bit about that.

Lee Huffman: 35:52

Yeah, so actually, I have two sites there's, we travel there calm, which is the the podcast. And so what I do is I interview local experts run the world to find out the best things to do in their city. And so essentially, my tagline is travel like a local. So instead of going to whatever city you want to go and, and going on Google and trying to find the best things to do or the best places to eat. I figured let's actually talk to a local and say, Okay, if somebody's coming here, one of the things that we really shouldn't miss out on or even if we want to do the touristy things, how can we save money on that or avoid the lines, and then one of the best ways to eat because, you know, I'm not much of a foodie, but I think I'm kind of turning into one a little bit after hearing all these really cool ideas of food from all these people I've talked to. So it's, it's really kind of been a fun adventure. Even for me even though I travel a lot. I'm learning about, like you said, cities like Bentonville, Arkansas that I've never thought about traveling to, or cities that I've traveled to several times like Austin, I'm learning about some cool restaurants or some cool things to do there that I hadn't known about before. Plus making meeting a lot of great people along the way. We have, again, big cities like Philly, small cities like Bentonville, there's another one coming off the top of my head, it's just an inside of Georgia. And it's all these cities that are just random. And there's international destinations, there's domestic locations. So it's really cool. And even if you don't want to travel, it's almost like you like you're living vicariously through these other people. And maybe it will inspire you to to travel to someplace new. And that's, that's really kind of the whole goal of the podcast. And then my other site is ball thoughts. And so that's

Unknown Speaker: 37:30

the ball head.

Lee Huffman: 37:32

And so what I do is on that side, it's more like a travel hacking, talking about credit cards and miles and points and, and how to use them to travel very inexpensively. Because again, if you're a family, you have a corporate job, all this, all these types of things. It can be expensive, you know, I have two kids, I have a wife. And if I had to buy four plane tickets, every time I want to travel someplace, you're plus paying for hotel and everything else, you're talking multiple thousands of dollars every time go on vacation. So by using the LM miles in hotel points, now you shaved off a significant portion of the cost. So you can either travel more, or you can have better travel experiences. Or you know, we're in a city. I normally wouldn't kind of splurge on this one meal. You know, we save so much. You know, Hey, baby, let's get let's get the flight tonight. You know, or whatever. Yeah,

Brittany Henderson: 38:22

yeah, that was kind of like with Hawaii. We when we went to Maui, we like Mama's fish houses like the big events. Yeah,

Neil Henderson: 38:31

yeah, we'll leave thank you so much for joining us. It's been great talking to you, those of you you how you have a you have like a book that you've written about travel hacking as well, having you are?

Lee Huffman: 38:43

Well, I'm working on a course it's going to be released here soon. It's a seven days to your dream vacation. And so essentially, it kind of walks people that are unfamiliar with how miles and points work kind of walks them through the process of kind of how to pick a destination, and then how to pick the right airline. And it's tell them how to get all the miles and points for those hotel and airlines. So that way you can travel for significantly less than than you normally would do.

Brittany Henderson: 39:08

Awesome. Well, hopefully by the time this this interview comes out on the podcast will, it'll be done and we can put a link in the show notes.

Neil Henderson: 39:18

And if people want to reach out to you, Lee, what would be the best way for them to find you?

Lee Huffman: 39:22

I'm most active. My bald thoughts on social media, whether it's Twitter, Instagram, Facebook, whatever, it's all the same handle everywhere. You can do that, or, you know, we travel there, again, the same handles and all the different social media channels. And, you know, I'm active all the time, got my phone with me, kind of 24 seven. And, you know, reach out to me there and I'll hit you back. All right. Well, great. It was great talking to you, Lee, thank you. Thank you so much. It's great to see

Neil Henderson: 39:49

you. Okay, well, that was Lee Hoffman, we thank him for his time. He's a single family home buy and hold investor and Wolf from travel hacker. Again, you can check him out at bald thoughts, or on his podcast we travel, they're both great places to go. I encourage you to check them out. So what? Let's start with the four values what how much knowledge Do you think Lee took to get started? This is a question better for me.

Unknown Speaker: 40:19

I don't know maybe? Well, I just it's hard because all of our guests really bring different sort of previous knowledge to the table. And I think being a banker probably set him up to understand some things better than your average. Joe just getting into it. And he and I know it seemed like he sort of just had learn about some things passively over time when he first got started. So he probably actually didn't have I mean, besides the sort of built in knowledge that his financial career afforded him, it didn't sound like he had a lot of knowledge. He just sort of jumped in.

Neil Henderson: 40:57

Yeah, I think he also. Yeah, I think it's a good point, you sort of jumped down he had kind of you sort of learn by doing a lot. And I think I would say I mean, if I had to nail down how much time he spent getting himself educated, I would say three to six months, just sort of seems like a fair

Brittany Henderson: 41:18

assessment. I think that's probably enough time for the for most people to be able to do the basics of buy and hold.

Neil Henderson: 41:27

Yeah. And then money wise, I would say, you know, he talked about when he first started out. He he had a pretty good chunk of change from the sale of his home in California that he rolled into, to his homes, homes in North Carolina. And it sounds like he bought them for about $120,000. So we're talking maybe 240? And sounds like you paid cash for them that you understood.

Brittany Henderson: 41:58

He said he has a mortgage on them too. Mortgage?

Neil Henderson: 42:01

Yeah, some money down? Did he put a lot but he said he put a lot of money down. So I'd say I mean, I would say good. A good. hundred thousand dollars is probably started.

Brittany Henderson: 42:14

Now it seems like less with the lane financing that I understand that right? Well, I'm still not sure that I get it.

Neil Henderson: 42:20

Yeah, well, I mean, it's okay, you're not certainly not the only one. I think now, he's able to use a little more creative financing. A lot of times what that delayed financing allows you to do is take that chunk of money and use it over and over again, you basically were able to, you know, use it to finance the purchase of a house and rehab it and then you're able to put a loan on it.

Brittany Henderson: 42:45

So kind of take it back out and take it back.

Neil Henderson: 42:49

Got it. And so as Alex and episode one talked about he you know, Alex is recycled that 70 same $70,000 now, almost six or seven times. So anyway, so I think hundred thousand dollars is probably a good, good number to say what he started off. So how much time does it take on the day to day to maintain his, what he's doing, I would say I mean, he had to there's two sort of phases to his businesses, the acquisition phase, which is when they're buying when they're buying rehabbing a place. And it takes a lot more time, it's obviously a lot more communication with the bank, you've got to be really, really on the ball with getting the banks the documents, because you've got only got a window of about six months to do the delay in finance.

Brittany Henderson: 43:37

So you got a good team too, as far as the Rita.

Neil Henderson: 43:40

And I would say he I got the impression we were talking about maybe 13 to 20 hours a week, probably during that. And then once it's up and running, it's more like, you know, if things are going to blow hours a week,

Brittany Henderson: 43:55

nothing too much. So yeah, that's nice. And then we've got that location.

Neil Henderson: 44:01

Do we nail him down on how long he would

Unknown Speaker: 44:03

not read? Ella? He kind of said, as long as he had Wi Fi? And it wasn't working on a project that kind of it? Definitely. Yeah, like as long as Yeah. So

Neil Henderson: 44:15

also also give give him the benefit of the downside. That's, you know,

Brittany Henderson: 44:20

that's probably true. If you've got a good property manager on the ground, you're not buying anymore, you're just going with what you have, as long as those people are doing what they need to do. Why would you need to come back? And if they have a question, and again, if you've got Wi Fi and cell phone service, good. Okay.

Unknown Speaker: 44:40

I'd say infinity. Yeah,

Brittany Henderson: 44:41

yeah. So, I mean, overall, I don't know that do we really do an overall sort of evaluation? Not all the time? Not really. But I would just say that this is probably one of the easier and summers respects.

Neil Henderson: 44:57

You know, it's it's, the way that leads got started is the way a lot of a lot of investors get started with one one single family home and they build it to a portfolio of you know, he's talking about he wants to get up to 10.

Brittany Henderson: 45:12

Total with with the partner,

Neil Henderson: 45:15

you know, it's a little bit of a, it's a somewhat slower method, but it's one of those methods where you can really kind of learn as you go and now I think it's, it's for somebody the heart, I think the hardest part is one, finding a market to do it in if you don't live in a market where it's going to make sense like in the market that we work in, or the market we live in. And then also it's just about building a team and finding a good team and keeping them on the ball. Cool. Well, thanks again for lead for sin bounties. Great talking to him is really great. And if you like this podcast, we would really appreciate it if you take just a few minutes and leave a review for us on iTunes. It's really simple to do just go to road to family freedom comm slash review for links and instructions. Thanks for listening. We're doing this all again next week. Until then, safe travels