90: BRRRR & AirBNB to 41 Units with Shelby Osborne

Although many individuals start out their journey to financial freedom through real estate investing on purpose, some discover it accidentally. For the case of our guest, Shelby Osborne, she didn’t realize the power of passive, rental income until she moved away from her first primary residence. For six years, Shelby served in the Military in Washington State. Not too long after acquiring her first property (not for investment purposes), she was restationed to Fort Bragg in North Carolina. Instead of selling the home, she decided to rent it out and it turned into a great asset for her. Shortly after that, she decided to pursue real estate full time by investing for herself, as well as being a top producing agent her first year, winning Rookie of the Year for Keller Williams North and South Carolina. Up to date, Shelby owns a total of 41 units which consists of a variety of AirBNB Arbitrages and multi-family rentals. Shelby prefers using private money lending as it helps her be more creative with her deals. She also finds that being creative with BRRRR (Buy, Rehab, Rent, Refinance, Repeat) allows her to do more business more successfully. Although being self-employed has its own challenges, Shelby realized that she didn’t want to be an employee for the rest of her life, and pulled the trigger (pun intended) to growing her business. Some key takeaways from our conversation with Shelby: 1) “Who knows you, likes you, and trusts you.” Many investors make it sound like private money is when random people blindly and willingly give you money to invest. In reality, it’s about finding people who know, like, and trust you with their money. It’s about creating win-win situations and making sure the private lender is knowledgeable about what you are doing and what’s happening with their money. And if you structure deals properly, not only will you create favorable terms, but you open yourself up to repeat business for future investments. 2) You can always buy cheap, but you can’t always cash flow or obtain financing. Many investors are attracted to sub-100K markets—and that’s great—but it doesn’t always work for long term buy-and-holds. Banks and other lenders typically don’t like to lend on properties worth less than $100,000 due to the little return they would be getting on their investment (the investment being financing your deal). As a result, you may be stuck with a great property that will negatively impact your bottom line because you couldn’t get financing. 3) Quick tip for investing in military markets: The property prices/values and market rents are usually determined by what the military’s housing budget is for their veterans. A simple Google search will usually provide this information for you. From there, you can assess whether it is a market you want to pursue and begin assembling your team. As an added bonus, military markets can provide solid cash flow and insulation against market downturns and recessions. Shelby Osborne’s Key Terms and Definitions: 1) BRRRRNB: The BRRRR strategy listed above with the caveat of implementing an AirBNB short-term rental, as opposed to traditional long-term rentals. (Pronounced Burr-En-Be). 2) Pentaplex: Multi-family residence consisting of five units (e.g. duplex, triplex, quadplex, pentaplex). 3) VHA: Variable Housing Allowance. The government’s compensation for active service member’s housing expenses. 4) AirBNB Rental Arbitrage: Strategy in which you rent a unit yourself, and with the landlord’s permission, sublet that unit through AirBNB as a short term rental. In other words, you act as the AirBNB host without owning the property. 5) 1% Rule: Metric that states that the rental income you receive from a property equals 1% of the purchase price. 6) Delayed Financing: Strategy in which you purchase a home with cash up front (which may or may not include the rehab costs) and then “cash out” a portion of the equity from the property. Similar to a traditional “cash-out refinance,” but you don’t finance the property in the first place because you purchased outright with cash. This can potentially allow you to bypass a typically required seasoning period for lenders. If Shelby could go back and talk to her 16 year old self, she’d tell her, “Read more and care about things that actually matter.” An unexpected benefit of real estate investing, Shelby said, was being able to turn life into a fun game. All of a sudden work becomes a puzzle, and Shelby loves solving puzzles. When Shelby’s friends looking to get started in real estate ask her for advice, she simply sends them her file of listed action steps. So reach out to Shelby and get that PDF! Shelby recommends using Audible so you can learn on the go. She recommends reading The Miracle Morning by Hal Elrod and 12 Rules for Life by Jordan Peterson to help you mentally prepare for the journey ahead. If you’d like to get in touch with Shelby, visit: www.fivepillarsrealty.com or follow her on Instagram @realestatewithshelbyosborne