David and Rachel Sugg are living proof that you don’t need to start with a ton of money to build a life of freedom through real estate.
In this episode, they share their incredible journey of walking away from their W2 jobs and building a rental portfolio that gives them both financial independence and the freedom to travel and live life on their own terms.
They break down the creative strategies they used to maximize income on each property—like converting single-family homes into sober living group houses, running short-term rentals, and house hacking.
You’ll hear how they got started with very little capital, how they identified good deals in the right neighborhoods, and how they built a relationship with a lender who helped them scale.
David and Rachel are not just investors—they’re problem-solvers. They’ve figured out how to stretch every dollar, find opportunities others overlook, and build a business that supports the life they want.
https://rentalincomepodcast.com/episode528
Thanks To Our Sponsors:
Ridge Lending Group - Making investment Mortgage process simple and stress-free.
MidSouth HomeBuyers – Turnkey Rentals In Memphis & Little Rock. Instant Cash Flow On Day One. (Priced between $100,000 to low $200's)
In this episode, they share their incredible journey of walking away from their W2 jobs and building a rental portfolio that gives them both financial independence and the freedom to travel and live life on their own terms.
They break down the creative strategies they used to maximize income on each property—like converting single-family homes into sober living group houses, running short-term rentals, and house hacking.
You’ll hear how they got started with very little capital, how they identified good deals in the right neighborhoods, and how they built a relationship with a lender who helped them scale.
David and Rachel are not just investors—they’re problem-solvers. They’ve figured out how to stretch every dollar, find opportunities others overlook, and build a business that supports the life they want.
https://rentalincomepodcast.com/episode528
Thanks To Our Sponsors:
Ridge Lending Group - Making investment Mortgage process simple and stress-free.
MidSouth HomeBuyers – Turnkey Rentals In Memphis & Little Rock. Instant Cash Flow On Day One. (Priced between $100,000 to low $200's)
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:00):
The inspiring interviews with today is Top Landlords.
Speaker 2 (00:04):
This is the Rental Income Podcast and.
Speaker 3 (00:08):
Now damnly David and Rachel tell me what your rentals
have done for you.
Speaker 1 (00:14):
So our rentals have given us the ability to leave
our previous jobs. We have the freedom to travel. We've
been able to do a lot of traveling over the
past eight years since we reached that spot where we
let go of our other jobs and really just given
(00:36):
us the freedom to just have time, you know, to
be there for family, to be there for friends.
Speaker 2 (00:44):
There's very a lot of flexibility.
Speaker 3 (00:46):
And how many rentals do you guys own?
Speaker 1 (00:49):
So currently we have twenty five rentals and that's a
mix of single family, multi family, but just one triplex.
We have several duplexes and then we have a commercial
building as well.
Speaker 3 (01:05):
David and Rachel didn't come from money, that didn't start
out with a bunch of money. They're just normal, everyday
hardworking people that saved their money and started buying rental
properties and eventually got to the point where their rental
income replaced their W two income. And on the podcast today,
we're going to walk through their story and figure out
how they did it. Joining us on the podcast today
(01:26):
from Jackson, Mississippi. Our David and Rachel Sugg will take
a quick break to thank our sponsors. We'll come right
back and we'll talk to David and Rachel. It's a
lot of work to find a really good rental property,
and when you actually find that property, you want to
make sure you're working with a lender that can get
that loan closed. The lender that I recommend is jay
(01:47):
Lee Ridge from Ridge Lending Group. She's a nationwide lender
and her specialty is helping investors finance rental properties. She
has a ton of loan programs and she can find
something customized to you for your situ situation. If you
want to find out more or you're ready to get
started today, just go to Ridge Lendinggroup dot com. That's
our Idge Lendinggroup dot com and MLS four two zero
(02:12):
five six. Are you thinking about investing in rental properties
but maybe you don't know where to start. My friends
at Midsouth Home Buyers make it simple. For over twenty
three years, they've been selling fully renovated, turnkey rental properties
in Memphis and Little Rock. We're talking new roofs, plumbing,
electric kitchens, bathrooms, everything is brand new and done right.
(02:36):
And here's the best part. Every property comes with a
well qualified tenant in place before you close. That means
you get cash flow from day one. Plus Midsouth continues
to professionally manage the property for you after the sale,
and they back it up with two powerful guarantees. You
get a one year total maintenance warranty and a lifetime
(02:59):
occupant and see guarantee. Personally, I've bought five properties from
them and I couldn't be happier. If you want to
talk to someone that's been through the process, feel free
to reach out to me. I'm happy to answer any questions,
or if you're ready to get started, just go to
midsouthhome Buyers dot com. That's midsouthhome Buyers dot com. I mean,
(03:20):
you guys have a real incredible story, and what I
love about it is that twenty five rentals isn't a
huge portfolio.
Speaker 4 (03:30):
It was.
Speaker 3 (03:31):
It really hard to get to where you guys are today.
Speaker 1 (03:35):
It has been it has been work, you know, We've
had to really put everything into it. But early on
we realized that we wanted to have properties that we
could do put to higher and better use, meaning much
higher cash flow than a traditional rental. So we really
just started focusing on that, you know, and the different
(03:58):
things we could do to not necessarily build a huge portfolio,
but just to have more cash flow.
Speaker 3 (04:05):
Right, right, So tell me more about what you guys
are doing. Tell me, like how you're finding properties and
increasing the cash flow.
Speaker 4 (04:15):
Primarily getting properties through our network. You know, we do
direct mail. Sometimes we've done some Facebook ads, we'll do
some door knocking, but most of our deal flow comes
from from our local community. They know we close, they
know what we're looking for, and so they send us
deals it might be a good fit, and we we
try to take them down if the numbers make sense.
Speaker 2 (04:33):
As far as.
Speaker 4 (04:34):
Increasing cash flow, you know, shared housing or group housing
or temporary housing, it's typically like double the cash flow
that we would get on a long term rental. And
so we'll furnish something and we'll put either on like
an Airbnb platform or a traveling nurse platform or our
sober living business and double or triple cash flow that way.
Speaker 3 (04:54):
Now, when you guys started buying rental properties, did you
have a lot of money saved up?
Speaker 2 (05:01):
No? No, no, we had.
Speaker 1 (05:05):
Zero really, I mean we were living on very little
I mean we were we were making enough money to
support you know, our own expenses, but no, we we
started with little to nothing. I mean we had some
credit and basically use that credit to start, you know,
doing some marketing and getting some deal flow. And then
(05:26):
we also use that credit to get involved in mainly
one group of real estate investors that was started here locally,
but it's nationwide. So we went on a cruise and
we didn't really have any money to do it, but
we did. And doing that was probably one of the
best decisions, well one of the best decisions we ever made,
(05:49):
because it really kind of opened our eyes to the
possibilities and we made a lot of connections. And you know,
on the first cruise, I believe at the lender that
has now primarily lent most of our money to us,
And that took a few years of building that relationship,
(06:09):
but didn't it wasn't immediate.
Speaker 2 (06:11):
But you know, so, yeah, we didn't have much.
Speaker 3 (06:16):
And you're self managing everything today, yes, okay, yes.
Speaker 1 (06:21):
We've kind of built out our own management. It's not
just us doing it. We have we have a full
time employee and he handles maintenance and a lot of
the management part of it. And then we also have
a lady that helps us with the group housing on
the women's side of things. So it's not just us today.
You know, for a while it was us, but we've
(06:44):
as we've run, we realized we had to have help.
Speaker 3 (06:46):
So now, looking back on it, do you feel like
you had to make a lot of sacrifices to get
to where you are today?
Speaker 4 (06:55):
Me personally, know, I mean my backstory, you're coming from
a life of addiction on the streets and near death experiences.
This was actually a really I mean, it was a
it was a come up. So no, I mean it was. Yeah,
to other people, there were tremendous sacrifices, but house hacking
or you know, renting out rooms for me, no, it
wasn't that big of a deal. But some people just
(07:17):
can't imagine doing that.
Speaker 3 (07:18):
Yeah, so you guys house hacked in the past. Was
that kind of when you were getting started?
Speaker 1 (07:26):
Yeah?
Speaker 4 (07:26):
So I read a book was the richest man in
Babylon And he's got one of his things is, you know,
make your house a source of income. That's just always
been one of my guiding principles, even before I really
fell in love with real estate. Investing was like, how
how am I going to make this thing pay for itself?
Speaker 1 (07:42):
Right?
Speaker 4 (07:42):
I mean, I know, you know, as we underwrite tenants,
we know they're supposed to spend a third of their
income towards housing. And I'm like, man, if I figure
out how to get my housing paid for, I'm doing
better than ninety percent of the population. So that's always
been a goal of mine.
Speaker 3 (07:55):
Do you guys still house hacked today?
Speaker 2 (07:58):
We do so.
Speaker 1 (08:01):
Early on when we first got started, we'd purchased, actually
David purchase purchased the house we live in and there's
an attached apartment behind it, and we lived in the
back apartment. We fixed it up. It's an efficiency, very small.
We lived in that apartment and rented out the main
house for about a year when we were really when
we decided we were going to do this full time.
(08:23):
So we did that for the first year, and then
you know, as we grew we ended up moving into
the main house on our own and rented out. Now,
the back apartment is an income producing apartment that consistently
is rented for sixteen hundred dollars a month, which pays
for you know, pays for our living expenses. You know,
(08:43):
we're in Mississippi and the living expenses are definitely a
lot lower than some areas.
Speaker 2 (08:49):
So but yes.
Speaker 3 (08:52):
Would you say that's one of the keys that not
having to pay rent or mortgage to get in that
by the house hack? Do you think that was kind
of a shortcut to get to where you are today?
Speaker 4 (09:06):
I don't even know it was a shortcut or the
only way. I mean, I wasn't going to go traditional.
There was just I wasn't going to get a bank loan,
didn't have people throwing money at me.
Speaker 2 (09:14):
I mean it was the way right.
Speaker 1 (09:16):
Yeah, yeah, and it you know, I would say it
was a sacrifice, I guess earlier on, but now we
just look at it like, wow, how I mean, we've
thought about moving several times, and we're just thinking like
why would we do that? You know, like doing these
things has afforded us to be able to go travel
and do the things we really want to do and
(09:38):
not be tied to this huge mortgage and those expenses.
Speaker 4 (09:42):
And not being you know, other people have different tools
at their disposal, whether it's a high paying job or
wealthy parents or inheritance and those that's just not our story.
And so taking what God's given us and said, all right,
what can we make out of this? What's the And
like she said that the highest and best use we
have out of any project or any opportunity. And that's
one of our guiding principles is what has He handed
(10:03):
us and what can we do with it? And stop saying,
well if I had this instead, so just taking what
He's given us and making the most out of it.
Speaker 3 (10:11):
Well, let's kind of walk through how you did it.
So how did you get started? What was your first property?
Speaker 4 (10:18):
First property I bought was a burned up house in
a Class C neighborhood, like right on the edge of
this little restaurant village in Jackson, Mississippi. So is there's
some restaurants and some cool tourism stuff happening about two
blocks away from this kind of Class C area. And
it was right in the middle of the great, you know,
the Great Recession. It was twenty thirteen. House prices were
(10:41):
super depressed and there was an investor that needed to
get rid of something or the city was going to
tear it down. And I bought it on a day
that I don't even think I had money for closing costs.
He just wanted it off off his books, and I
was going to pay him three hundred bucks a month
for six years, and I paid it off in about
eighteen months.
Speaker 2 (11:00):
Through house hacking.
Speaker 4 (11:01):
I fixed up rooms and rented out to guys that
I was working with in the restaurants or I knew
for my twelve step work.
Speaker 3 (11:06):
And this is before you guys were married, This before we.
Speaker 4 (11:09):
Were married, and before I was real even thinking about
real estate investing, and this was just I needed a
place to live and God was handing me something. I
was trying to make the most of it.
Speaker 3 (11:18):
Yeah, so that's pretty awesome. You bought your first property.
You really didn't have a plan. It sounds like at
that point you just thought, you know, this makes sense, right,
all right? So then you get that property, you're house hacking,
you're living free. And then when did the light bulb
(11:38):
go off that well, if this is making money, maybe
I can buy more and make even more money.
Speaker 4 (11:46):
You see what there was a company or in town
that was selling tax to link with properties. They would
buy properties at tax sale and they'd turn around and
sell them to entrepreneurial fixed uppers like me, and they'd
finance them once more super depressed. I bought three houses
just because people were asking me, do you have any
more houses for rent in the same in the same neighborhood.
So I bought a couple more, and at that point
(12:07):
I started running into trouble like title issues or insurance
issues or how do you how do you create a lease?
Speaker 3 (12:13):
And then so you but you were at a total
of four properties at this point, and then Rachel, when
did you get involved?
Speaker 2 (12:23):
So I got involved at that point. So David had
purchased four properties.
Speaker 1 (12:30):
We met, we were dating, and then he started talking
to me about this real estate stuff.
Speaker 2 (12:36):
And at first I was thinking, Oh, I.
Speaker 1 (12:41):
Just thought there's just no way, like I don't know,
it was just so foreign to me. And but the
more we talked about it, and the more I got
involved and really started seeing the numbers and what was happening,
it was kind of it was just like, Wow, this
is you know, we could do something with this. And
David started at that point, really started focusing on wholesaling
(13:02):
and getting interested in that and researching that. So we
were literally in my apartment at the time and making
handmade signs, you know, to.
Speaker 2 (13:11):
Go hang around the area.
Speaker 1 (13:13):
And we did that and le and behold within I
don't know, a couple of weeks, thirty days, David got
a call, got a house under contract, turned on and
wholesaled it and made I don't know it was a
twenty or thirty thousand dollars wholesale fee, and we were
just it was like, wow, okay, this is this works.
(13:34):
And then honestly, from then on, you know, we really
just both kind of went all in and went on
this cruise, met a bunch of investors, started hearing about
short term rentals, and just started slowly amping up what
we were doing. And twenty seventeen is really when we
started kind of really one hundred percent in. You know,
(13:56):
bought several properties every year, and we're just kind of
in a we were growing pretty fast.
Speaker 3 (14:02):
And were you still buying the same types of properties,
the C class properties that needed a bunch of work.
Speaker 2 (14:10):
It's changed a little bit.
Speaker 4 (14:12):
We were very particular about the areas we buy in,
so I mean, I like to buy the worst house
in the best area.
Speaker 2 (14:17):
You know, Rach.
Speaker 4 (14:18):
When I focused in this little fonding area of Jackson,
there's restaurants, there's cool old houses, a lot of people
want to be here, so I try to find, you know,
in that area the most beat horse there is kind
of thing. But but a lot of other cashloan blesss
kind of look in some other class C or D
areas and we stay out of those hardcore areas.
Speaker 1 (14:40):
Yeah, up to this point, we actually have sold off
some of the like some of the first ones that
David bought, we eventually started selling those just because you know,
we're not going to buy. For example, we decided like,
We're not going to buy a property that I'm not
comfortable going to by myself, you know, and there are
some areas in Jackson that yeah, I don't you know,
I would not I'm not going to go. So you know,
(15:02):
we did kind of change our standards, and then we
started realizing, you know, we get a much better quality
tenant when we have better quality properties and better neighborhoods,
and it just it makes the management of it a
lot easier.
Speaker 3 (15:14):
So today you have some single family properties that you
rent out long term, and then it sounds like you
also have some sober living houses.
Speaker 1 (15:26):
Right, so we have we at this point, we only
I think we have maybe six that are long term
just standard rentals, and then we have nine properties that
are all the group housing sober living, and those are
houses where we have two beds per room six hundred
dollars a month per bed and most of our houses
(15:49):
are standard three two. We have one that's a five bedroom,
which is great because you know, we can have ten
people in there and it's zoned to where we can
have ten people living there. But all of it, like
David was saying, most of our properties are in this
one area of Jackson that works for the sober living
(16:09):
and then also works for the short term rentals because
we have a med school that is literally less than
a mile from all of our properties and that brings
in people from all over that need short term furnished
housing that are coming in to work at the med
school for to do a rotation or you know, different things.
Speaker 2 (16:27):
In that field.
Speaker 1 (16:28):
So yeah, short term rentals and sober living are the
two main sources of income at this point.
Speaker 3 (16:36):
And the sober living this is someone that's maybe gotten
out of rehab, their rebuilding or their life and they
just need a place to live as they're getting back
on their feet again. Yes, yeah, so six hundred dollars
of bed and you have two beds in each room
and in some of the properties you have. It's a
five bedroom house, so you've ten people paying six hundred
(17:01):
dollars a month for the house, right, that's really really awesome.
And then is there like a house manager? I mean,
with that many people, it just sounds like there's potential
for problems. Like have you had many problems with just
different personalities?
Speaker 1 (17:21):
I mean, we've had some, but it's not what most
what you would think. Because I was I was nervous
getting into it. I just wasn't sure, you know, what
we were going to be dealing with. And the longer
we've done it, honestly, you know, we found that it
has been much easier. It's gotten much easier as time
has gone on, because you know, we have people that
(17:42):
have been in the houses since we opened them. They
don't want to leave. And when we have people that
are there for a long term, they basically run the
houses for us. You know, they have some experience, they're
doing well, and they keep an eye on stuff and
let us know what's going on. But then, like I said,
we have we have help. It's not David and I
(18:03):
getting all the phone calls. You know, we have a
male and female that help with both sides of.
Speaker 3 (18:08):
That, And do you have a connection with like a
rehab center that's feeding people to you as you have
turnovers here?
Speaker 4 (18:19):
We have several and that's part of our business and
business development as we reach out to these different treatment
centers and let them know if we've got beds or
let them know if a nonprofits given us a scholarship,
and we're looking for people that don't have a way
to pay. But yeah, we're constantly reaching out to about
seven different treatment centers and maintaining communications with lond know
we're doing.
Speaker 3 (18:37):
Yeah, that's an interesting, interesting niche. So how many sober
living houses do you have.
Speaker 2 (18:43):
Though? We have not nine.
Speaker 3 (18:45):
Sober living right, and then you also have some other
short term properties.
Speaker 1 (18:52):
Mm hmmm, so we have we have nine, well actually ten,
ten short term rentals and then and those are all
all one and two bedroom furnished places. Most of the
short term rentals are duplexes, so both units are used
as short term rentals. And then yep, so the nine
(19:15):
sober living and that's a total of sixty beds. So
we have thirty beds for men and thirty beds for women.
Speaker 3 (19:21):
So that that really seems to be this secret sauce
for what you guys have done is you've found properties
and found ways to just make incredible cash for out
of it.
Speaker 2 (19:36):
Mm hmmm, yes, yes, that's all we've had to do.
Speaker 1 (19:41):
I mean we wanted to pretty quickly get to a
spot of financial freedom, you know, because we have things
that we want we want to go do, you know,
And so that was really the goal is just to
when we buy a property, we look at it as
you know, what what box does this fit in and
what is this going to do for a us? Cash
(20:01):
flow was on a monthly basis, and you know what
does it require to get it to that point?
Speaker 3 (20:05):
What a great business. Sixty beds paying six hundred dollars
a month. That's thirty six thousand a month just from
the sober living plus their traditional rentals and the airbnbs.
And remember David and Rachel are also house hacking, So
I mean, what a what an incredible business and very
well done.
Speaker 2 (20:24):
Well.
Speaker 3 (20:25):
If anybody wants to reach out to David and Rachel,
I've got their contact information on the website. You can
find it at Rental incomepodcast dot com. Slash episode five
twenty eight. I'd like to thank jay Lee Ridge from
Ridge Lending Group for sponsoring today's episode. If you're looking
to buy a rental property, whether you're just getting started
(20:46):
or you want to add to your portfolio, reach out
to jay Lee. She's a nation wide lender. She has
a ton of loan programs and she can find something
that works for you. If you want to find out
more and just go to Ridge Lendinggroup dot com NMLS
for two zero five six. Thank you so much for
checking out the podcast today. Make sure you hit the
(21:09):
follow button. I put out a new episode every single Tuesday,
and if you're following the show, you'll get notified when
the next episode comes out. My name is Dan Lane
and this has been the Rental Income podcast
The inspiring interviews with today is Top Landlords.
Speaker 2 (00:04):
This is the Rental Income Podcast and.
Speaker 3 (00:08):
Now damnly David and Rachel tell me what your rentals
have done for you.
Speaker 1 (00:14):
So our rentals have given us the ability to leave
our previous jobs. We have the freedom to travel. We've
been able to do a lot of traveling over the
past eight years since we reached that spot where we
let go of our other jobs and really just given
(00:36):
us the freedom to just have time, you know, to
be there for family, to be there for friends.
Speaker 2 (00:44):
There's very a lot of flexibility.
Speaker 3 (00:46):
And how many rentals do you guys own?
Speaker 1 (00:49):
So currently we have twenty five rentals and that's a
mix of single family, multi family, but just one triplex.
We have several duplexes and then we have a commercial
building as well.
Speaker 3 (01:05):
David and Rachel didn't come from money, that didn't start
out with a bunch of money. They're just normal, everyday
hardworking people that saved their money and started buying rental
properties and eventually got to the point where their rental
income replaced their W two income. And on the podcast today,
we're going to walk through their story and figure out
how they did it. Joining us on the podcast today
(01:26):
from Jackson, Mississippi. Our David and Rachel Sugg will take
a quick break to thank our sponsors. We'll come right
back and we'll talk to David and Rachel. It's a
lot of work to find a really good rental property,
and when you actually find that property, you want to
make sure you're working with a lender that can get
that loan closed. The lender that I recommend is jay
(01:47):
Lee Ridge from Ridge Lending Group. She's a nationwide lender
and her specialty is helping investors finance rental properties. She
has a ton of loan programs and she can find
something customized to you for your situ situation. If you
want to find out more or you're ready to get
started today, just go to Ridge Lendinggroup dot com. That's
our Idge Lendinggroup dot com and MLS four two zero
(02:12):
five six. Are you thinking about investing in rental properties
but maybe you don't know where to start. My friends
at Midsouth Home Buyers make it simple. For over twenty
three years, they've been selling fully renovated, turnkey rental properties
in Memphis and Little Rock. We're talking new roofs, plumbing,
electric kitchens, bathrooms, everything is brand new and done right.
(02:36):
And here's the best part. Every property comes with a
well qualified tenant in place before you close. That means
you get cash flow from day one. Plus Midsouth continues
to professionally manage the property for you after the sale,
and they back it up with two powerful guarantees. You
get a one year total maintenance warranty and a lifetime
(02:59):
occupant and see guarantee. Personally, I've bought five properties from
them and I couldn't be happier. If you want to
talk to someone that's been through the process, feel free
to reach out to me. I'm happy to answer any questions,
or if you're ready to get started, just go to
midsouthhome Buyers dot com. That's midsouthhome Buyers dot com. I mean,
(03:20):
you guys have a real incredible story, and what I
love about it is that twenty five rentals isn't a
huge portfolio.
Speaker 4 (03:30):
It was.
Speaker 3 (03:31):
It really hard to get to where you guys are today.
Speaker 1 (03:35):
It has been it has been work, you know, We've
had to really put everything into it. But early on
we realized that we wanted to have properties that we
could do put to higher and better use, meaning much
higher cash flow than a traditional rental. So we really
just started focusing on that, you know, and the different
(03:58):
things we could do to not necessarily build a huge portfolio,
but just to have more cash flow.
Speaker 3 (04:05):
Right, right, So tell me more about what you guys
are doing. Tell me, like how you're finding properties and
increasing the cash flow.
Speaker 4 (04:15):
Primarily getting properties through our network. You know, we do
direct mail. Sometimes we've done some Facebook ads, we'll do
some door knocking, but most of our deal flow comes
from from our local community. They know we close, they
know what we're looking for, and so they send us
deals it might be a good fit, and we we
try to take them down if the numbers make sense.
Speaker 2 (04:33):
As far as.
Speaker 4 (04:34):
Increasing cash flow, you know, shared housing or group housing
or temporary housing, it's typically like double the cash flow
that we would get on a long term rental. And
so we'll furnish something and we'll put either on like
an Airbnb platform or a traveling nurse platform or our
sober living business and double or triple cash flow that way.
Speaker 3 (04:54):
Now, when you guys started buying rental properties, did you
have a lot of money saved up?
Speaker 2 (05:01):
No? No, no, we had.
Speaker 1 (05:05):
Zero really, I mean we were living on very little
I mean we were we were making enough money to
support you know, our own expenses, but no, we we
started with little to nothing. I mean we had some
credit and basically use that credit to start, you know,
doing some marketing and getting some deal flow. And then
(05:26):
we also use that credit to get involved in mainly
one group of real estate investors that was started here locally,
but it's nationwide. So we went on a cruise and
we didn't really have any money to do it, but
we did. And doing that was probably one of the
best decisions, well one of the best decisions we ever made,
(05:49):
because it really kind of opened our eyes to the
possibilities and we made a lot of connections. And you know,
on the first cruise, I believe at the lender that
has now primarily lent most of our money to us,
And that took a few years of building that relationship,
(06:09):
but didn't it wasn't immediate.
Speaker 2 (06:11):
But you know, so, yeah, we didn't have much.
Speaker 3 (06:16):
And you're self managing everything today, yes, okay, yes.
Speaker 1 (06:21):
We've kind of built out our own management. It's not
just us doing it. We have we have a full
time employee and he handles maintenance and a lot of
the management part of it. And then we also have
a lady that helps us with the group housing on
the women's side of things. So it's not just us today.
You know, for a while it was us, but we've
(06:44):
as we've run, we realized we had to have help.
Speaker 3 (06:46):
So now, looking back on it, do you feel like
you had to make a lot of sacrifices to get
to where you are today?
Speaker 4 (06:55):
Me personally, know, I mean my backstory, you're coming from
a life of addiction on the streets and near death experiences.
This was actually a really I mean, it was a
it was a come up. So no, I mean it was. Yeah,
to other people, there were tremendous sacrifices, but house hacking
or you know, renting out rooms for me, no, it
wasn't that big of a deal. But some people just
(07:17):
can't imagine doing that.
Speaker 3 (07:18):
Yeah, so you guys house hacked in the past. Was
that kind of when you were getting started?
Speaker 1 (07:26):
Yeah?
Speaker 4 (07:26):
So I read a book was the richest man in
Babylon And he's got one of his things is, you know,
make your house a source of income. That's just always
been one of my guiding principles, even before I really
fell in love with real estate. Investing was like, how
how am I going to make this thing pay for itself?
Speaker 1 (07:42):
Right?
Speaker 4 (07:42):
I mean, I know, you know, as we underwrite tenants,
we know they're supposed to spend a third of their
income towards housing. And I'm like, man, if I figure
out how to get my housing paid for, I'm doing
better than ninety percent of the population. So that's always
been a goal of mine.
Speaker 3 (07:55):
Do you guys still house hacked today?
Speaker 2 (07:58):
We do so.
Speaker 1 (08:01):
Early on when we first got started, we'd purchased, actually
David purchase purchased the house we live in and there's
an attached apartment behind it, and we lived in the
back apartment. We fixed it up. It's an efficiency, very small.
We lived in that apartment and rented out the main
house for about a year when we were really when
we decided we were going to do this full time.
(08:23):
So we did that for the first year, and then
you know, as we grew we ended up moving into
the main house on our own and rented out. Now,
the back apartment is an income producing apartment that consistently
is rented for sixteen hundred dollars a month, which pays
for you know, pays for our living expenses. You know,
(08:43):
we're in Mississippi and the living expenses are definitely a
lot lower than some areas.
Speaker 2 (08:49):
So but yes.
Speaker 3 (08:52):
Would you say that's one of the keys that not
having to pay rent or mortgage to get in that
by the house hack? Do you think that was kind
of a shortcut to get to where you are today?
Speaker 4 (09:06):
I don't even know it was a shortcut or the
only way. I mean, I wasn't going to go traditional.
There was just I wasn't going to get a bank loan,
didn't have people throwing money at me.
Speaker 2 (09:14):
I mean it was the way right.
Speaker 1 (09:16):
Yeah, yeah, and it you know, I would say it
was a sacrifice, I guess earlier on, but now we
just look at it like, wow, how I mean, we've
thought about moving several times, and we're just thinking like
why would we do that? You know, like doing these
things has afforded us to be able to go travel
and do the things we really want to do and
(09:38):
not be tied to this huge mortgage and those expenses.
Speaker 4 (09:42):
And not being you know, other people have different tools
at their disposal, whether it's a high paying job or
wealthy parents or inheritance and those that's just not our story.
And so taking what God's given us and said, all right,
what can we make out of this? What's the And
like she said that the highest and best use we
have out of any project or any opportunity. And that's
one of our guiding principles is what has He handed
(10:03):
us and what can we do with it? And stop saying,
well if I had this instead, so just taking what
He's given us and making the most out of it.
Speaker 3 (10:11):
Well, let's kind of walk through how you did it.
So how did you get started? What was your first property?
Speaker 4 (10:18):
First property I bought was a burned up house in
a Class C neighborhood, like right on the edge of
this little restaurant village in Jackson, Mississippi. So is there's
some restaurants and some cool tourism stuff happening about two
blocks away from this kind of Class C area. And
it was right in the middle of the great, you know,
the Great Recession. It was twenty thirteen. House prices were
(10:41):
super depressed and there was an investor that needed to
get rid of something or the city was going to
tear it down. And I bought it on a day
that I don't even think I had money for closing costs.
He just wanted it off off his books, and I
was going to pay him three hundred bucks a month
for six years, and I paid it off in about
eighteen months.
Speaker 2 (11:00):
Through house hacking.
Speaker 4 (11:01):
I fixed up rooms and rented out to guys that
I was working with in the restaurants or I knew
for my twelve step work.
Speaker 3 (11:06):
And this is before you guys were married, This before we.
Speaker 4 (11:09):
Were married, and before I was real even thinking about
real estate investing, and this was just I needed a
place to live and God was handing me something. I
was trying to make the most of it.
Speaker 3 (11:18):
Yeah, so that's pretty awesome. You bought your first property.
You really didn't have a plan. It sounds like at
that point you just thought, you know, this makes sense, right,
all right? So then you get that property, you're house hacking,
you're living free. And then when did the light bulb
(11:38):
go off that well, if this is making money, maybe
I can buy more and make even more money.
Speaker 4 (11:46):
You see what there was a company or in town
that was selling tax to link with properties. They would
buy properties at tax sale and they'd turn around and
sell them to entrepreneurial fixed uppers like me, and they'd
finance them once more super depressed. I bought three houses
just because people were asking me, do you have any
more houses for rent in the same in the same neighborhood.
So I bought a couple more, and at that point
(12:07):
I started running into trouble like title issues or insurance
issues or how do you how do you create a lease?
Speaker 3 (12:13):
And then so you but you were at a total
of four properties at this point, and then Rachel, when
did you get involved?
Speaker 2 (12:23):
So I got involved at that point. So David had
purchased four properties.
Speaker 1 (12:30):
We met, we were dating, and then he started talking
to me about this real estate stuff.
Speaker 2 (12:36):
And at first I was thinking, Oh, I.
Speaker 1 (12:41):
Just thought there's just no way, like I don't know,
it was just so foreign to me. And but the
more we talked about it, and the more I got
involved and really started seeing the numbers and what was happening,
it was kind of it was just like, Wow, this
is you know, we could do something with this. And
David started at that point, really started focusing on wholesaling
(13:02):
and getting interested in that and researching that. So we
were literally in my apartment at the time and making
handmade signs, you know, to.
Speaker 2 (13:11):
Go hang around the area.
Speaker 1 (13:13):
And we did that and le and behold within I
don't know, a couple of weeks, thirty days, David got
a call, got a house under contract, turned on and
wholesaled it and made I don't know it was a
twenty or thirty thousand dollars wholesale fee, and we were
just it was like, wow, okay, this is this works.
(13:34):
And then honestly, from then on, you know, we really
just both kind of went all in and went on
this cruise, met a bunch of investors, started hearing about
short term rentals, and just started slowly amping up what
we were doing. And twenty seventeen is really when we
started kind of really one hundred percent in. You know,
(13:56):
bought several properties every year, and we're just kind of
in a we were growing pretty fast.
Speaker 3 (14:02):
And were you still buying the same types of properties,
the C class properties that needed a bunch of work.
Speaker 2 (14:10):
It's changed a little bit.
Speaker 4 (14:12):
We were very particular about the areas we buy in,
so I mean, I like to buy the worst house
in the best area.
Speaker 2 (14:17):
You know, Rach.
Speaker 4 (14:18):
When I focused in this little fonding area of Jackson,
there's restaurants, there's cool old houses, a lot of people
want to be here, so I try to find, you know,
in that area the most beat horse there is kind
of thing. But but a lot of other cashloan blesss
kind of look in some other class C or D
areas and we stay out of those hardcore areas.
Speaker 1 (14:40):
Yeah, up to this point, we actually have sold off
some of the like some of the first ones that
David bought, we eventually started selling those just because you know,
we're not going to buy. For example, we decided like,
We're not going to buy a property that I'm not
comfortable going to by myself, you know, and there are
some areas in Jackson that yeah, I don't you know,
I would not I'm not going to go. So you know,
(15:02):
we did kind of change our standards, and then we
started realizing, you know, we get a much better quality
tenant when we have better quality properties and better neighborhoods,
and it just it makes the management of it a
lot easier.
Speaker 3 (15:14):
So today you have some single family properties that you
rent out long term, and then it sounds like you
also have some sober living houses.
Speaker 1 (15:26):
Right, so we have we at this point, we only
I think we have maybe six that are long term
just standard rentals, and then we have nine properties that
are all the group housing sober living, and those are
houses where we have two beds per room six hundred
dollars a month per bed and most of our houses
(15:49):
are standard three two. We have one that's a five bedroom,
which is great because you know, we can have ten
people in there and it's zoned to where we can
have ten people living there. But all of it, like
David was saying, most of our properties are in this
one area of Jackson that works for the sober living
(16:09):
and then also works for the short term rentals because
we have a med school that is literally less than
a mile from all of our properties and that brings
in people from all over that need short term furnished
housing that are coming in to work at the med
school for to do a rotation or you know, different things.
Speaker 2 (16:27):
In that field.
Speaker 1 (16:28):
So yeah, short term rentals and sober living are the
two main sources of income at this point.
Speaker 3 (16:36):
And the sober living this is someone that's maybe gotten
out of rehab, their rebuilding or their life and they
just need a place to live as they're getting back
on their feet again. Yes, yeah, so six hundred dollars
of bed and you have two beds in each room
and in some of the properties you have. It's a
five bedroom house, so you've ten people paying six hundred
(17:01):
dollars a month for the house, right, that's really really awesome.
And then is there like a house manager? I mean,
with that many people, it just sounds like there's potential
for problems. Like have you had many problems with just
different personalities?
Speaker 1 (17:21):
I mean, we've had some, but it's not what most
what you would think. Because I was I was nervous
getting into it. I just wasn't sure, you know, what
we were going to be dealing with. And the longer
we've done it, honestly, you know, we found that it
has been much easier. It's gotten much easier as time
has gone on, because you know, we have people that
(17:42):
have been in the houses since we opened them. They
don't want to leave. And when we have people that
are there for a long term, they basically run the
houses for us. You know, they have some experience, they're
doing well, and they keep an eye on stuff and
let us know what's going on. But then, like I said,
we have we have help. It's not David and I
(18:03):
getting all the phone calls. You know, we have a
male and female that help with both sides of.
Speaker 3 (18:08):
That, And do you have a connection with like a
rehab center that's feeding people to you as you have
turnovers here?
Speaker 4 (18:19):
We have several and that's part of our business and
business development as we reach out to these different treatment
centers and let them know if we've got beds or
let them know if a nonprofits given us a scholarship,
and we're looking for people that don't have a way
to pay. But yeah, we're constantly reaching out to about
seven different treatment centers and maintaining communications with lond know
we're doing.
Speaker 3 (18:37):
Yeah, that's an interesting, interesting niche. So how many sober
living houses do you have.
Speaker 2 (18:43):
Though? We have not nine.
Speaker 3 (18:45):
Sober living right, and then you also have some other
short term properties.
Speaker 1 (18:52):
Mm hmmm, so we have we have nine, well actually ten,
ten short term rentals and then and those are all
all one and two bedroom furnished places. Most of the
short term rentals are duplexes, so both units are used
as short term rentals. And then yep, so the nine
(19:15):
sober living and that's a total of sixty beds. So
we have thirty beds for men and thirty beds for women.
Speaker 3 (19:21):
So that that really seems to be this secret sauce
for what you guys have done is you've found properties
and found ways to just make incredible cash for out
of it.
Speaker 2 (19:36):
Mm hmmm, yes, yes, that's all we've had to do.
Speaker 1 (19:41):
I mean we wanted to pretty quickly get to a
spot of financial freedom, you know, because we have things
that we want we want to go do, you know,
And so that was really the goal is just to
when we buy a property, we look at it as
you know, what what box does this fit in and
what is this going to do for a us? Cash
(20:01):
flow was on a monthly basis, and you know what
does it require to get it to that point?
Speaker 3 (20:05):
What a great business. Sixty beds paying six hundred dollars
a month. That's thirty six thousand a month just from
the sober living plus their traditional rentals and the airbnbs.
And remember David and Rachel are also house hacking, So
I mean, what a what an incredible business and very
well done.
Speaker 2 (20:24):
Well.
Speaker 3 (20:25):
If anybody wants to reach out to David and Rachel,
I've got their contact information on the website. You can
find it at Rental incomepodcast dot com. Slash episode five
twenty eight. I'd like to thank jay Lee Ridge from
Ridge Lending Group for sponsoring today's episode. If you're looking
to buy a rental property, whether you're just getting started
(20:46):
or you want to add to your portfolio, reach out
to jay Lee. She's a nation wide lender. She has
a ton of loan programs and she can find something
that works for you. If you want to find out
more and just go to Ridge Lendinggroup dot com NMLS
for two zero five six. Thank you so much for
checking out the podcast today. Make sure you hit the
(21:09):
follow button. I put out a new episode every single Tuesday,
and if you're following the show, you'll get notified when
the next episode comes out. My name is Dan Lane
and this has been the Rental Income podcast
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