Whitney Nicely has a background in selling dump trucks but eventually transformed herself into a full-time real estate investor and broker. On this episode of the InvestFourMore Real Estate Podcast, I talk with Whitney about how she got into real estate investing with rental properties, learned how to buy many more properties with lease options, learned to flip houses, and even invested in multifamily apartments.
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How did Whitney go from the dump truck business to real estate?
Whitney’s family has been in the trucking business since 1939. They expected her to take over the business, but she got tired of diesel fuel and decided she liked houses a lot better. Her family had also invested in real estate, but they were very conservative. They liked to buy rental properties with cash, and that is also how Whitney started. She and her brother bought two rentals with cash, but they were not happy with the result. She realized that, if she purchased rentals with cash, it would take decades to create the passive income she wanted.
How did Whitney start buying more houses with lease options?
Whitney is from Tennessee, where housing prices tend to be a little lower. She buys most of her houses for less than $50,000, but banks do not like to provide loans for low-value properties. Whitney learned how to reduce the amount of money she puts into a deal by using lease options, and she also learned how to get more money out of a deal.
Whitney finds a seller who is willing to lease option a house to her. She then pays a down payment for the lease option and rents to another tenant who pays her a bigger down payment and more rent. Whitney will typically get $5,000 down payments on houses that she buys for $35,000. The lease option pays her $750 in rent every month, and the tenant has the ability to buy the home from her for $60,000.
How does Whitney find her best deals on houses?
Whitney does not buy homes from the MLS but instead uses direct marketing to find motivated sellers. Whitney finds motivated sellers using Facebook, bandit signs, direct mail, and many other ways. She has coined her business Whitney Buys Houses. Whitney has bought houses for less than $5,000! While Whitney does not use the MLS to find deals, she is a broker, which saves her money when she sells homes.
How can you get in touch with Whitney?
Whitney does offer coaching programs for people looking to learn how to lease option. You can find her at WhitneyNicely.com.
My new book is out and on sale!
My book: How to Buy a House: What Everyone Should Know Before They Buy or Sell a Home, is available in paperback and on Kindle. The Kindle version is only $2.99 right now!
[0:00:14.0] MF: Welcome to the Invest Four More real estate podcast. My name is Mark Ferguson, and I am your host. I am a house flipper. I flip 10 to 15 houses a year. I own 13 rental properties, with a goal to buy 100 by 2023. I’m also a real estate agent. I’ve been licensed since ’01, I run a team of nine, and we sell close to 200 houses a year.
So on this show, we’d like to interview house flippers, landlords, and the best real estate agents in the business. So stay tuned for some great shows. If you want more information on my rentals, on the numbers, how I buy properties, check out InvestFourMore.com.
[0:00:58.8] MF: Hey everyone, it’s Mark Ferguson with Invest Four More and welcome to another Invest Four More real estate podcast. I have a really cool guest on for today’s show, Whitney Nicely who used to sell dump trucks which is pretty awesome, I’ve never had anybody on the show who did that, she also flips houses, has multifamily properties, works with lease options, just doing a ton of different things in real estate.
Great to have you on the show Whitney, how are you doing this morning?
[0:01:25.0] WN: I’m doing great, I’m on my second cup of coffee so we should be really fiery for this interview, thanks for having me.
[0:01:31.0] MF: No, thanks for being on it, actually just filled up my second cup too. Awesome. I’d love to get started hearing about what you did before real estate so if you sold dump trucks, you know you’re going to have to talk about it, how did you start doing that and what happened in that career?
[0:01:47.6] WN: Well, we’ll go all the way back to 1939 in this one. That’s when my great grandfather started this dump truck company in Knoxville Tennessee. I got to tell you, I look really good for being in business for almost 80 years.
I’m the fourth generation entrepreneur, we weren’t called entrepreneurs when my great grandfather started, we were just small business owners or that trucker guy. My papa trucked and now my mom is running the truck company and I was in line to run the truck company but I just like real estate a whole lot more than I like trucking you know?
There for a while, the Diesel fuel and the tires and the exhaust and all that stuff smelled like money but then it started to smell like diesel fuel and old tires and exhaust and it just wasn’t as much fun anymore. I started to pay more attention to how my family was doing real estate investing and they are very traditional, old school cash, buy and hold, hope and pray it starts to make money and just wait on mailbox money.
They didn’t really have a strategy or a plan and I needed a strategy and a plan and I also, I bought two houses with my own money and I was out of money and I couldn’t figure out how I was going to be able to keep buying houses if I didn’t have any money and that’s when I learned about lease options.
I went from two houses, I think in 2013 to 18 houses now. I really need to recap that because I think I might have 19 houses now.
[0:03:25.5] MF: No worries, I lose track sometimes too but that’s a good thing if that’s happening.
[0:03:31.8] WN: It’s going the right direction too. I figured I had to buy houses without putting my whole life savings or lack thereof into real estate and how to make some pretty sweet money doing it.
[0:03:43.8] MF: Right, that’s great. When you bought your first two houses, you said, did you pay cash for those?
[0:03:50.3] WN: I did, I actually split it with my brother because neither one of us had enough money to put into it and we bought the first one and started renting it immediately but I still didn’t have a plan or a strategy, I didn’t know what an exit strategy was.
I didn’t know how to calculate rent versus what we were making and when I figured out some formulas, it was going to be like 115 years before we started really making enough money that we didn’t need the truck anymore. Clearly, that wasn’t going to work, I joked that I didn’t have 15 minutes much less 115 years.
That’s when I really got into investing hardcore and one thing that we did is when we were buying those two houses, we kind of accidentally bought some land too and we spent about 1,500 bucks on a piece of industrial land in the city of Knoxville and now, almost immediately after we bought it, we started renting the driveway for 250 bucks a month. It didn’t take very long before we had all of our 1,500 back but now, one of my brother’s’ buddies needed some industrial land and he rents it from us for $500 a month.
We’re collecting 750 a month off a 1,500 investment and…
[0:04:56.8] MF: Are you going to do some more land investment?
[0:04:57.7] WN: How many of those can you do? Yeah, exactly. Land is so much easier than houses and a lot of people overlook land but there’s no roof, there’s no plumbing, there’s like no overhead, it’s amazing, the insurance on it is crazy cheap and it makes almost more money than a lot of my houses.
[0:05:17.5] MF: Right, that’s a great point and I actually bought some land last year and thinking about doing a subdivision, didn’t end up doing it because of the hoops I had to jump through with the county to get it approved. There’s a lot of people who buy land and like you said with industrial land, if you can use it for parking or storage, you can get pretty good rents for it.
[0:05:37.0] WN: Yeah, absolutely. The driveway that we split with our neighbor, it used to be a road and I was downtown flirting with the county codes guys and you know, I was telling them that I just bought this land and they got to digging into it and they’re like, well actually, that driveway is yours, your neighbor’s driving on your driveway, you could probably rent them that driveway.
[0:05:57.6] MF: Oh Nice.
[0:05:58.4] WN: I had it surveyed and they were right. I went and this is a fortune 500 company like on the Naz Deck like take your symbol and I just walked up in there and said hey, I think I need rent and they’re like who are you?
You know, at first they were kind of like yeah, you’re cute little real estate girl, sure we were driving on your driveway, you’re obviously confused and then they called me two weeks later and then they were like, yes, Ms. Nicely, we found out that we are driving on your driveway and we’d like to pay you rent for that. They changed their tune a little bit after they realized that I was right.
[0:06:35.6] MF: Wow, that’s funny. Well that’s not a bad little investment then buying that land. You said you bought your houses for cash and I keep saying that because I get a lot of people who email me, who leave comments saying how they’re scared to use loans, they’re scared to use leverage. You know, they want to pay cash for everything, kind of the Dave Ramsey model.
To me, it seems almost more risky to tie up your cash especially like it sounds like what you did tie up all your money into properties when it’s not easy to get it out you know? It’s not always easy to sell a house or to refinance it. Did you try to refinance those properties at all to take your money out?
[0:07:15.6] WN: No, I don’t like banks. I don’t want to borrow any money from banks. I want to stay like Dave Ramsey, completely away from the banks. I have a couple of conspiracy theories on it but we don’t have to go that deep into it but I just don’t want to go to the banks, I don’t want to refinance, I don’t even like using hard money lenders or private money lenders or you know, whatever, I don’t want to do it.
When I hear a lot of people that want to pay for houses with cash, it makes me nervous too because a lot of times, they don’t know how long it’s going to take them before they actually get their money back and when they start making money.
You know, they don’t have the formulas, they don’t realize that it could take five, six, seven, 15 years even though they are making monthly rent but they haven’t got their initial lot back. It makes me super nervous and because this people working usually nine to five’s or maybe they inherit a bunch of money and they pay retail price for these houses just because an agent told him it was a good deal.
They don’t have any numbers to back it up. It makes me so so nervous when people say that because I’ve been in those shoes you know? I paid cash and you’re absolutely right, it’s way more risky to have all your money tied up in something, especially if you paid retail for it, how are you going to sell it and make any money?
You’re barely going to be able to rent it and make any money.
[0:08:46.6] MF: NO, that’s a great point and I’m curious to hear, you know, I’m an agent as well and so I have no qualms with you talking bad about us just to get that out, that’s fine. But in my experience, I would say 90% of agents don’t understand investing. Rentals or flips and…
[0:09:05.4] WN: Well that’s because it wasn’t required on the exam.
[0:09:07.7] MF: Right, well there’s very few investors out there who actually do it the right way so they have no real experience in it. I see so many people who listen to an agent and say well I think this is a good rental or think you can flip this but yeah, I mean, if you’re going to invest in real estate, you need to know it yourself, you can’t rely on agents or lenders to tell you what to do.
[0:09:26.3] WN: Definitely don’t watch the TV shows, you know why that stuff looks easy on TV? Because it’s TV. If they showed how difficult it was or how many struggles there actually were, they show that they made 10 or 20,000.
Yeah, but what were your taxes? How much did you really make there? Probably not much, not enough to have your own TV show about it.
[0:09:49.7] MF: They usually leave out carrying cost.
[0:09:51.7] WN: Yeah.
[0:09:51.8] MF: Insurance. Selling cost or sometimes, some shows do show cost, some don’t. Yeah, it’s very misleading. All right, you went from having this two houses, bought for cash, renting them out, realized how it was not the best return on your money, how did you transition into other types of investing?
[0:10:11.8] WN: So, on the first house that we bought, we started renting it, our tenants stayed for about seven months and then they got a job transfer to Kansas or somewhere and they just up and left and I was so grateful that they just up and left because in the six or seven months that we bought that house, rented it, I had learned about lease options.
We had about 30, let’s say 35,000 in this house and they were paying us I think seven or 750 a month for rent. Not very good, right? But we were okay with it because that’s just how our parents, our aunt and uncle, our grandparents had always showed us that you just buy real estate and get rent and that’s all fine.
When I learned about lease options, I put the same house out on the market and like three or four weeks later, I had multiple people giving me multiple different option fees to move in and I think the guy that actually moved in gave me $8,000 and he’s buying the house for like 60 something thousand?
Now, he’s been in there for probably close to three years and he’s probably never going to buy it but last august, his two years came up and he gave me another $5,000 to extend him for another 12 months. This august, I’m going to have to say dude, what are we doing here? Do you want to give me another five, do you want to keep renting it? Are you going to leave? I mean, what’s going on?
But he gave me 8,000, last year he gave me five so I’m up to 13,000, he’s paid me I think 850 a month so I get more in a rent to own than I do in a regular rental and he gave me 13,000 upfront. I’m almost free and clear paying myself back on this house, what was going to take me like seriously close to 14 years is going to take me four or five years to get all my money back.
[0:11:58.8] MF: Very nice.
[0:11:59.1] WN: And if and when he just keeps paying me off, that’s fine, if he ends up going to get a mortgage, that’s fine. You know, I’m going to definitely double my money on this thing and in the meantime, he’s taking care of all the repairs and improvements and everything.
[0:12:14.8] MF: How did you go from those first two to buying more with this lease option strategy?
[0:12:22.5] WN: I started just telling everybody that I was buying houses and I had, I’d bought two but I started telling them, you know, I was out of money, I needed to get creative and that’s when I learned about lease options, I went and spent about a week every month in Jacksonville with Ron Le Grant to learn what I was supposed to be doing.
I ended up finding a bunch of tired landlords, people that just didn’t want to be landlords for lots of different reasons and telling him that I would — once their tenants were gone, I would start taking over their payments and they wouldn’t have to worry about any of the landlord headaches anymore. I would take it on.
I did, in 2014 I did 14 of those deals where I just took over somebody’s payments.
[0:13:04.0] MF: So doing subject two deals?
[0:13:06.0] WN: My attorney doesn’t like subject two. Very similar but it’s actually a lease option, the title doesn’t transfer which doesn’t send that red flag up at the bank. I’m just a glorified tenant.
[0:13:17.0] MF: Okay, got you. So you’re not technically buying it, you’re leasing it from the landlords, taking over their payments and then are you doing another lease option to other people?
[0:13:27.2] WN: Yes, I’m doing a sandwich lease option. When I get my lease option with the landlord, with the seller, I do record it so I cloud the title which puts me in line to be next to buy it.
[0:13:38.9] MF: Okay.
[0:13:39.6] WN: Anything goes wrong, I’m next in line.
[0:13:42.3] MF: Got you. What has been your best way for finding this landlords?
[0:13:48.8] WN: Well I’m from Knoxville Tennessee and Nashville Memphis get all of the national attention for real estate investors, Knoxville’s kind of the little forgotten about brother. But there’s a good old boy’s club in Knoxville and I clearly didn’t fit that, I didn’t fit it when I was trucking and I don’t fit it in real estate.
I couldn’t break in to Knoxville or Knox county proper. I actually went one county over and started telling everybody over there, I buy houses, I can take over your payments, I can buy this house, I can get rid of your tenant, I can do this and that and the other.
Really, talking. Flapping my jaw, telling everybody I could that I buy houses and you would be surprised at how nice it is that once you say that 10 times a day to 10 different people, after three or four days, how easily it rolls off your tongue and then you can start saying it on Facebook, you can start running ads, you can start putting bandit signs out.
You don’t feel as bad because you start to own it, you start to really work it and you start to make it work for you. I mean, I don’t have any fancy software, I don’t have a whole bunch of people that work for me, I’m a one woman show and I just tell everybody, I buy houses, do you know somebody that has a house they don’t want anymore?
Sometimes it’s the easy stuff, the simple stuff, we want to make it complicated, it really doesn’t have to be real estate, it is not complicated, it’s only as complicated as you make it and honestly sometimes agents are the ones that over complicate it.
[0:15:23.9] MF: Yup. Cool, have you branded yourself? Do you have a fancy name for your business or you just kind of trying to stay low key?
[0:15:30.6] WN: Whitney buys houses.
[0:15:31.8] MF: Okay.
[0:15:32.8] WN: that’s the name of my firm, that’s the name that I advertise everything under, that’s where I am all over the place, we’re pink and white so you’re definitely going to get Whitney when you call Whitney buy’s houses. Whitney’s going to come by the house, Whitney’s going to make you the offer, I’m the whole thing.
[0:15:51.2] MF: Nice, that’s good because I mean, I’m not sure about how it is where you are but you know, I’m in Colorado, one of the hottest real estate markets in the country and I probably receive three to four postcards a month from people trying to buy my houses and there’s bandit signs everywhere and they all kind of look the same.
All the postcards kind of blend in the same and if you can brand yourself like you did with the Whitney buys houses, you’re going to remember that. That’s great. I think a lot of people kind of miss that — there’s a lot of competition out there and if you can somehow brand yourself so that people remember your name, that’s a huge advantage.
[0:16:27.8] WN: Well, the other thing is too, most of those I buy houses or we buy houses people are wholesalers, they’re not actually investors. I’m doing a whole rampage on that on Facebook live today and wholesaling isn’t investing. Wholesaling is getting the property under contract and flipping it over to an investor who is really going to flip the property.
Most of those bandit signs, most of those postcards are either from wholesalers or big investor companies where as I set myself apart that I’m a local girl buying local properties, I’m really going to buy it, I’m not just going to hand it off to somebody.
People like that, people like working with people, not big fancy people up in Ivory Towers and not people that are kind of come in and cut you off at your knees and you know, steal your house and hand it off to somebody else so they can make millions on it.
They like to feel like they’re involved in your process and part of your upswing.
[0:17:22.5] MF: No, that’s very true and we do the same thing because we do some direct marketing and I don’t wholesale myself, I buy everything and then flipping right now but almost all the postcards and bandit signs I see are from wholesalers and I actually buy a lot of properties from those wholesalers but do you actually mention it in your marketing and buyers, that’s just something you talk to them when you’re talking in person that you let them know about?
[0:17:47.1] WN: No, I tell them in person. I’m very specific, like if I do put bandit signs out, it will say looking for three bedroom, two bath in this zip code or you know, this school district or I’m looking for 10 acres with the farm house on it.
I’m very specific and when you’re specific, it’s weird, you think you want to open the door and take anything and everything but when you’re specific, you actually get what you’re wanting like if I really want to go buy a bunch of farm land and in my county, it’s easy to go buy farm land.
All the farmers are called. Also, the people who don’t have farms will call and say, they’ll apologize, they’re like, I don’t have a farm and I saw that your sign said that you only buy farms but I have this house and I don’t want it. Then you get to turn it into a real one on one conversation so that you’re not just shotgun blasting the whole market, you’re sniper shooting, you’re talking to somebody and when you make them feel special or like you will bend the rules to buy their house even though you want a farm house, it just totally changes the — not really the psychology but the attachment to you.
You’re going to work with them, you’re going to make an exception for them. They are special and people like to be special.
[0:19:08.9] MF: No, that’s great. I imagine too that sets you apart from other people putting bandit signs out to say we buy houses and they all look the same and they’re very generic where as if someone see something that says, I want a three bedroom, two bath ranch.
That’s somebody who is looking for a certain house, they’re not just you know, a wholesaler or investor trying to buy up a bunch of houses, maybe it’s a homeowner who is looking for a specific house.
I bet you, it gets you more calls too.
[0:19:35.8] WN: It really does because they’ll say that and I talk directly to them. I have a three bedroom two bath rancher. I hadn’t even thought about that house. I should probably call this people.
You know when I put a sign out that says I buy ugly houses, sometimes people don’t want to admit they have an ugly house.
[0:19:52.7] MF: Right.
[0:19:55.4] WN: Or they’ve had two or three people come look at their ugly house and they’re kind of beat up over it and it hurts their pride, they just don’t even want to talk about it. If you can fluff them up a little bit and help them out a whole lot. Then they’re going to work with you and they’re going to recommend you and they’re going to keep feeding you leads.
[0:20:16.1] MF: Yup, for sure. I just saw one bandit sign that said, we buy moldy houses. That was pretty creative but at the same time, I think they’re really limiting their target there.
[0:20:24.8] WN: Yeah, okay. In Tennessee and I started buying in Georgia also, we got a bunch of rednecks around here and if you start using big fancy real estate terms, they just completely gloss over what you’re looking for you know?
You have to speak on their level and I’m not saying you have to dumb yourself down but most people speak on a third grade level. If you’re talking with your fancy real estate diploma and all these big terms, you’re not going to talk to the real people that needs you.
That’s why the bandit signs need to speak regular English instead of real estate English.
[0:20:57.2] MF: Right, nice. You also have been flipping houses as well right?
[0:21:03.7] WN: Yeah, I flipped my first one in 09 with my parents, it was one of their rental houses. My mom started buying houses in the 70’s. I am that kid that grew up in a real estate investor family. I told so many people and they’re like you know, I want to do this for my kids.
I’m like, well then you have to actually get started. You have to actually buy something because I remember being a kid and going to the mail box and getting rent money, I thought everybody just had money in their mailbox every month. I didn’t I know we were different.
My kids, when I have them will never know anything different than just money coming in every month because we own these houses. My mom’s first house that she bought had some hoarders in it and they paid rent every month and so it wasn’t a big deal until I graduated college and need to spread my wings a little bit and we thought, well we got this house. Let’s go see what’s going on over there.
Turns out they were destroying the house. They left very kindly and we went in and flipped it. That was the first house that I flipped and it was disgusting but we turned it into something beautiful and I fell in love with the process of flipping but I also fell in love with the house. So they didn’t make any money because I just moved in and started paying a very itchy for it but they had a happy daughter and if everything was going to break, I was going to call daddy to come fix it anyways and it might as well be my landlord and it just worked out for everybody.
I definitely got the bug to start flipping but that was in ’09 and I didn’t flip my very own house by myself until 2014 and oh baby, doing that first one by yourself is a learning curve but you know I’ve gotten better, I’ve learned a lot of lessons and now I really try to do just lipstick on a pig kind of flips. So I’m not gutting kitchens anymore, I try not to gut the bathrooms but oh my gosh I got this one last week and it’s got poop just flowing out of two of the toilets.
So we’re going to have to do two bathrooms there and the kitchen, the water in the refrigerator has ruined the floors and the subfloors. I don’t think the floor trusses are bad but we’re going to have to pull the whole kitchen on it. So I am going to end up gutting the kitchen and two bathrooms this year even though I didn’t want to. I thought I was just going to pressure wash it and mow it and call it good but I’m not so yeah.
[0:23:18.8] MF: Well those happen.
[0:23:20.8] WN: Yeah, I have flipped two here in Georgia this year and I haven’t touched them.
[0:23:25.1] MF: Oh nice.
[0:23:27.2] WN: Just put pictures up and they sold and other people are flipping them. So I’m either the laziest flipper in the world or the best.
[0:23:35.7] MF: Nice. What’s your biggest challenge with flipping? Is it finding the contractors, getting repairs done, is it selling the properties? I know every region is different so I’m curious what it’s like there.
[0:23:46.0] WN: It’s the timeline. You know when you’re out and you’re getting started, finding the contractors is a big deal but once you have them, if you treat them nice, if you’re good to them, if you pay them on time, if you don’t give them the run around, if you have a plan and all they’ve got to do is execute it, they’ll be amazing for you and anytime and every time you call they’ll be ready to work with you because they get chased around on so many other deals or flippers that they like knowing that you are going to pay, that they know what you’re going to expect and you need to know that they’re going to do a quality job whether it’s a little dinky flip or a big fancy flip.
You need to know that they’re going to be able to go both ways and not drag you on. The hardest part for me is because I don’t have a fulltime crew. It’s fitting in on their schedule. So the house that I was telling you that we got the toilets and the kitchen that we are going to have to tear out, I got that house two weeks ago.
I’ve had to wait on my guys. Now I did have another little crew over there cleaning it out and specking it out and getting some prices so it hasn’t been a total standstill but I definitely lost two weeks on my flip and that is the absolute hardest part. We can tear out a house in a day but it’s going to take a week or two to put it back together. So I’m going to be in this thing for a month before I can start looking at some money.
[0:25:13.4] MF: Right, I have the same problem. I’m going to have 20 flips going at one time here this week and buying another one.
[0:25:18.7] WN: Good grief, oh my gosh.
[0:25:21.0] MF: Yeah, I flip a little crazy kind of managed contractor.
[0:25:23.4] WN: No way, I don’t want to do 20 a year, holy smokes.
[0:25:28.2] MF: Yeah and waiting for them to be done with one project to another is a little stressful but it’s fun too. When you’re selling your flips are you using an agent and putting them on MLS or how are you selling them?
[0:25:37.7] WN: I’m a broker and I try not to pay anybody else. I am kind of like the anti-realtor-realtor. I like to keep all that money to myself and the way I do lease options, if I put it on Zillow, Craig’s List and Facebook for a week or two, I’ll have as many leads s I need without putting it on the MLS and splitting commissions and you know, doing all of that other stuff.
[0:25:58.7] MF: Okay, no that makes sense. I did not know you’re an agent until just now so you’re a broker.
[0:26:04.6] WN: Yeah I am a broker in Tennessee and in Georgia for Whitney Buys Houses.
[0:26:09.5] MF: Very nice. Now you also are doing multifamily investing as well, right?
[0:26:15.3] WN: Yes, so my brother and I are in on the houses. My brother is a very silent partner these days. Last April he called me and he’s like, “Oh my gosh Whitney, do you know we have 15 houses?” and I was like, “No, surely we got more than that” and he’s like, “How did we get this many houses?” so he’s very silent in my house buying adventure but here in Georgia, I have started buying houses just by myself but the multifamily stuff is with my husband because I needed that strong W2 to actually go to the bank and get that mortgage.
So what we did was I had a house that was free and clear and we borrowed a line of credit against it to get the money for the down payment on our multis. So we’re still in three apartment complexes for no money and they’re cash flowing very, very well and we expect to pay them off, I think we got a 20 or 25 year AM on them but we should pay them off in eight or ten years.
[0:27:10.1] MF: Nice and how big are those?
[0:27:11.9] WN: Well they’re all very small. So we have a triplex and we have a five unit then we have an 11. It breaks down to a six, a four and a house on one parcel so it’s actually 11 and I’ve got to tell you, I love my triplex. My triplex came straight from Craig’s List. It was a tired landlord who was living in Florida. They were renting each unit for 450 a month and as soon as we got it, the people left or whatever. We had a good bit of turnaround but now we’re renting it for 550 a month per unit.
So we’re getting a lot better cash flow on it that way and we only paid 92,000 for it. In our area, that is really good return. The five and the 11, we actually bought those at a foreclosure and what’s weird was it was foreclosed by a little community bank and they stayed on the market for about a year before the bank reduced their price and it just happened that they reduced their price the weekend that we were in apartment buying boot camp.
So we put our deal out for the whole the class to use the whole weekend and it just keep getting better and better and better, our cash on cash return. I don’t know the numbers, my husband completely nerds out on that kind of stuff. I just know that we had some crazy money coming in every single month and it’s allowed me to stay home.
[0:28:35.2] MF: Very nice so you’ve got your multifamily, are those all local, close to you?
[0:28:40.8] WN: They’re in East Tennessee. I’m in Knoxville and when I started I went one county over so they’re in that county and then our triplex is even one county further away but I love East Tennessee. It’s home sweet home to me and I’ll buy just about anything in three counties in East Tennessee and then I got this other random piece of land that I bought on accident. So I have to say all of East Tennessee because it’s in the middle of nowhere county but those were really smooth deals too.
So I’ll buy anything with a deed. I used to buy anything with dirt on it but now I buy anything with a deed. I don’t want any more trucks.
[0:29:20.2] MF: Oh, so you got your multifamily, you’re flipping houses, you’ve got your lease option deals going, you’re also a broker, what are your goals for the next year or two? Is there one type of investing you are trying to focus on and build up?
[0:29:35.9] WN: Yeah, here in Georgia my step kids live in Georgia so I’m here more often than I care to admit but I’ve been buying since I’ve been here. I’ve been here since January and we’re in May now and I’ve closed on three houses and they are ugly little crack houses. So when you are standing inside, if you can get inside, two of them I have never been in but I imagine because from what I can see from the outside that when you are standing in there, you can see outside through the cracks and the floors and the walls and the ceilings and all of that stuff.
So they are crack houses so they’re like an egg, they’re cracked and the first two that I bought, I’m in them with no money. I had them owner financed both of them for 6,000 apiece and the first one I sold had been on fire but it was actually the pretty house out of the two. So if you can imagine that being the pretty house, that’s how ugly these things are but I put it on the market for 15,000 and the neighbors agreed to give me 12,000 with 5,000 down.
So I called my seller and said, “Hey instead of you on refinancing this thing for 6,000 over the next three or four years, what will you take cash right now?” and he said, “3,000” so I took that 5,000 that the neighbors have given me and I gave him three of it. So I’m in this house positive already. I’m renting it for 300 bucks a month. They still owe me $7,000 so the seller actually have the second house I was looking at and again, I had it for 6,000 over a couple of years.
And I call them and I was like, “how much will you take for cash on it?” he said, “Well how about 2500?” so I already had 1,500 after I paid closing cost from the first house and they’d paid me rent for the first month. So I had 1800 bucks free and clear and I knew that May and June I’d get another 300 bucks from the first house. So I agreed to give him $2,500 and I cashed him out. I took the 1800 that I had left over from the first house and I put 700 bucks with it.
Bought the second house for 2,500 and it is so ugly. It needs to be torn down. It’s absolutely a disaster but I am going to put a big pink “Whitney Buys Houses” sign out front and use it for advertising and also I’ll be full hole on both of them in June when I get my rent for the first house. So I am trying this ugly crack house model and I’m really liking it so far. With the second house that I bought, I used it in a Facebook ad and I said, “Hey I buy ugly houses”.
Blah-blah-blah, call me if you got something and I end up buying another house that was actually gorgeous and I ended up giving them 5,500 for it which I had to come out of pocket and they had some back taxes they owed up to I think it was a thousand dollars and I paid their closing cost. So I’m in my third house for $7,000 but I have started marketing in it already and people are offering me anywhere from two to 5,000 to move in and paying me 500 bucks a month. So I expect to have all my money back in about six months and I’ve got it on the market for 29,000.
[0:32:48.2] MF: Nice.
[0:32:48.4] WN: So these little deals, I’m going to try to do 17 of these in 2017.
[0:32:54.1] MF: Nice, it’s interesting hearing how different the markets are obviously in Colorado our medium priced, went for a 110,000 to 270,000 in the last four years. So the cheapest house that I can buy is about 80,000 maybe if I am really, really lucky. So that’s crazy that you can get them for that cheap. Is the market increasing there at all or is it the same house of market there?
[0:33:21.5] WN: So I am definitely in, I’m in Rome, Georgia when I am buying these and it’s small town USA and most houses are a 100 and a 150 here but I’m not exactly in a war zone but I am definitely not in the neighborhood that you want to be in, not the neighborhood that I would live in. I don’t let my dogs walk through these houses. It’s nowhere that I want to be at night but other people are ready to do these deals and if I can do them, I see other people doing mobile home deals around here.
But nobody is doing these house deals like I am so I am playing in my own little sandbox here and if I can stay on the lower end, I can do a lot more deals and probably make the same money as if I was buying the hundred, the $150,000 houses because I am still only going to get 10 or 15,000 down and there’s less people around here that have that versus have 5,000 to buy a $30,000 house that will be worth 50 when they fix it. So I am definitely on the lower end of the market here.
But in Knoxville, I’ve got all pretty houses and I just wanted to try something different so I am trying the low end and so far I like it. Now if we come back in November, I might have a different tune but right now I do like it.
[0:34:40.3] MF: That makes sense and I see a lot of people get hung up on. I know everyone that owns a property that I don’t want to live in but like you said, everybody’s got different things that they need in a house, they have made these family or their work and I think it’s kind of silly to say you don’t want to buy a house that you would never live in because we’re also different and some people might want to live in that area, maybe it’s not ideal for them but yeah, you are still providing housing.
[0:35:09.1] WN: Exactly and that’s a really selfish way to look at things. I mean as a real estate investor, you’ve got to realize that you are trying to get to the top and this house that I have right now, one of the ladies that is looking at it wants to be a real estate investor and this is going to be a great way for her to get her foot in the door and if I can go out and get deals and then turn them over to her, we can have a great partnership going. She can get her goals accomplished, I’ll get my goals accomplished, she’ll be making money, I’ll be making money like oh gosh, that really tears me up that somebody would say that.
[0:35:44.2] MF: Yeah and I can understand if you are buying from a certain price point of houses in certain neighborhoods for kind of the quality or for any reasons but yeah, I just don’t like the idea of never buying a house that you wouldn’t live in for that reason alone but anyway, you’ve got your goals. What’s going on with your flips, your rentals, anything else happening? What if people want to work with you, get in touch with you, what’s the best way to do that?
[0:36:08.3] WN: So I’m coaching and I have been coaching for about a year and I coach on these options. I coach on the pretty house business so going in retired landlords or people that inherited properties and they just want some monthly money. They don’t really need a whole cash out settlement, I teach that and I’ve got a whole program dedicated to that and maybe by November I’ll have this ugly house program where I feel like I’ve got it under control or at least I’ve got a plan in place.
But for right now, I am teaching the pretty house business and I actually have a student in California and she’s buying in Colorado. So I think it is awesome that we are having this conversation, she’s doing lease options in Colorado and I understand there’s a lot of issues, a lot of red tape which that in Colorado. Have you ever tried them?
[0:36:53.1] MF: I have never done them and actually as an agent, the real estate commission here is extremely negative towards lease options. They pretty much tell agents that you should not do them and if you ever do a lease option to be extremely careful and everything has to be done by an attorney. So yeah there is a lot of pressure not to do them in Colorado.
[0:37:16.9] WN: Well I do everything through an attorney. I teach my students to do everything by attorneys. I am not an attorney, I am a real estate matchmaker and I am not training them to be attorneys. I absolutely agree with that, close everything through an attorney no matter what state you’re in. An attorney or a title company, or somebody that’s overseeing the whole process to make sure it’s all good on both sides.
[0:37:40.0] MF: Yep, I complete agree with that but yes as far as specific rules in Colorado, I’m not sure exactly how that is different from other states but I do know there is a lot of pressure put on agents not to do them that’s for sure.
[0:37:52.6] WN: Well sometimes I feel like the pressure comes from it being an off market weird situation and they have a hard time regulating it and getting paid from it. It’s like pot, you all can smoke as much as you want out there because it’s good and they’d figured out how to make money off of it. When they figure out how to make money off lease options that will be good.
[0:38:13.3] MF: Yeah, it’s possible but we don’t have any taxes on real estate transactions which is nice here and yeah, I don’t know. It’s hard to say why they do it. I think I know the most lawsuits come from lease options real estate wise. So I think that kind of puts a negative spin on it but I really haven’t looked into it enough to know the exact what’s going on with it.
[0:38:36.2] WN: Man I love it though, oh I just love it.
[0:38:39.1] MF: So what’s the best way for people to reach out to you and get in contact with you?
[0:38:42.7] WN: My website is Whitneynicely.com. I’m also an auctioneer in my auction companies, Nicely Done Auctions. I am heavily licensed, I told my husband when we got married that I was going to take a break from getting licenses and we’ve been married for about a year and a half now and I am starting to look into what I want to get certified again.
[0:39:04.0] MF: Well do you use your auctioneer license?
[0:39:05.7] WN: About once a year. I do a lot of referrals on my auctioneer’s license. My partner in auctions, he has a TV show on the DIY channel, Texas Flip and Move. So we get a lot of deals from that, we get a lot of deals from people who want their 15 minutes of fame from being on that show and I do the backend behind the scenes auctions stuff and he does the TV show so maybe next year I’ll have my own TV show.
[0:39:33.4] MF: Nice, very cool. Well Whitney great job going over what you’re doing, how you’ve learned to do it and progress your career. Any parting tips or advice for people who are looking to get into the lease option business and follow what you’ve done?
[0:39:50.4] WN: I would say keep going. A lot of times my students get stuck when they hear a bunch of no’s so I am doing a video for them this week. I am actually doing a 40 Facebook Live in 40 days challenge to reach 4,000 people and that’s Facebook.com/coachwhitneynicely and so it’s all on my public page and I am doing a 10 to 15 minute video every single day weekdays for the next 40 days and one of the topics this week is How to get past the No.
[0:40:19.9] MF: Nice, that’s great. I know it’s like a salesman job where you have the right attitude and you think about it as the more no’s you get, the closer you are to getting a yes. So actually getting a no is a good thing.
[0:40:32.6] WN: When I started and I was getting a whole bunch of no’s before I really got in the rhythm of it, there is a Babe Ruth quote and he said every time you struck out he just moves that much closer to a home run or something like that. So I really leaned on that when I was getting a bunch of no’s and now I don’t even hear the no’s. I’m just like, “Yeah, whatever next” I don’t even want to work with you anyway.
[0:40:54.5] MF: That’s the way to do it. Awesome. Well Whitney thank you so much for being on the show, great job, a lot of great advice and really cool hearing your stories and how you’ve progressed your real estate career. I’ll have show notes on how to get in contact with you and all of that and yeah, thank you for being on it and hope you had a fun time.
[0:41:14.1] WN: Thank you Mark, I had a great time and anybody has any questions, it’s Whitnenicely.com.
[0:41:18.7] MF: All right great, thank you so much and enjoy your week.
[0:41:22.2] WN: Thank you.