5 Rentals and 4 Flips WITHOUT Needing a W2!

Clay White has done the seemingly impossible. He’s bought five rental properties, completed multiple flips, and done it all in the past fifteen months with high mortgage rates. To make it more impressive, he did it WITHOUT a W2 job at just twenty-three years old! So what sets Clay apart from ninety-nine percent of other investors? As you’ll hear in today’s episode, he went through an almost comical amount of failures, but how he solved them makes him an elite investor. If you think you missed the boat on real estate investing, Clay proves that you couldn’t be more wrong. He not only built an entire rental portfolio in one of the most challenging times to invest but did it with no consistent income, no experience, and in a market you’ve probably never heard of. If you can follow Clay’s advice, mimic his ingenuity and tenacity for problem-solving, and are willing to put up with small failures to achieve massive success, you, too, will be able to build serious wealth, no matter your timeline, no matter your age, and no matter your job. In This Episode We Cover: How to invest in real estate even if you’ve got little money (and no job!) Returning a house after you bought it (yes, you can do this!) Why bringing in a partner is an excellent idea for your first real estate investment Clay’s straightforward solution when you can’t find the right licensed contractor Cash-out refinances vs. HELOCs and when to use each to pull out equity Why you should always overestimate your home renovation costs And So Much More! Links from the Show Join BiggerPockets for FREE Let Us Know What You Thought of the Show! Learn How to Flip Houses with “The House Flipping Framework” Find Investor-Friendly Lenders The Rookie’s Step-by-Step Guide to Home Renovation Projects Connect with Clay Connect with Henry Connect with Dave (00:00) Intro (01:04) Refusing To Get a 9-5 (04:23) Buying (and Returning!) a House (07:58) Home Run Second Deal (12:54) Rebuilding a Duplex (16:52) Using Equity to Flip a House (26:38) Final Flip Numbers (27:49) A Flip Goes Wrong…Again (31:04) Financing Deals (33:13) Buying Even MORE Check out more resources from this show on BiggerPockets.com and https://www.biggerpockets.com/blog/real-estate-1042 Interested in learning more about today’s sponsors or becoming a BiggerPockets partner yourself? Email [email protected]. Learn more about your ad choices. Visit megaphone.fm/adchoices

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:00Dave Meyer?

  Do you feel like, given everything going on in the investing climate, that you missed the boat on real estate investing? Well, today's guest bought his first deal only 15 months ago, experienced pretty much everything that could possibly go wrong in his first year of investing, and he's still building a great portfolio at super affordable prices in what he calls small-town America.

• 0:27Dave Meyer?

  Hey, everyone. It's Dave and I'm back here with Henry Washington. Henry, what's up, man?

• 0:32Henry Washington?

  What's up, bud? This is a doozy.

• 0:34Dave Meyer?

  Yeah, this is a very fun conversation that we're going to be having with investor Clay White from Manhattan, Kansas. He started in real estate last year with very little capital and honestly, not much more than a desire to avoid a corporate nine-to-five job at all costs. But he's become an agent and his own general contractor, and he's surviving in the business on what seems like pure hustle. So let's get right into this conversation. Here's me and Henry with Clay White. Clay, welcome to the BiggerPockets Real Estate Podcast. It's great to have you here.

• 1:09Speaker 02

  Nice to be here.

• 1:10Dave Meyer?

  It's good to see you again. I actually had the privilege of having lunch with Clay and his mom at BPCon. You had like won some sweepstakes for private lunch, all of us together. It was a lot of fun.

• 1:21Speaker 02

  Yeah, it was.

• 1:22Dave Meyer?

  Well, I'm glad to have you here now because I was very intrigued by your story when we were having lunch together. Let's just start at the beginning. I know you graduated from college a few years ago. So can you just take us back to when you were graduated and trying to figure out what you were going to do and why you sort of picked real estate?

• 1:39Speaker 02

  Yeah, I mean, I had no idea what I was going to do, to be honest. But everyone else was graduating at the same time, and it seems like they were all going out, finding their nine-to-five. So I figured... You know, that that must be the thing to do. So I followed suit. I went out and I applied everywhere. I got a job offer to go down to Houston, Texas and work a nine to five. But that day that job offer came in, I was like, wow, you know, is this, is this really what I want to do for the next 40 years of my life? You know, I just, I've always been an entrepreneur. We did a whole bunch in college and I almost, I almost felt like I was selling out by taking that. So I said, no way, can't do it. So I turned it down, got my real estate license.

• 2:23Henry Washington?

  Like, literally, this is what people go to college for, right? To get the big job opportunity. Out of state even, like you get to go and join the workforce. Like, like, how did your parents feel when you made that decision?

• 2:38Speaker 02

  You know, I think they were pretty supportive at that point. So

• 2:42Henry Washington?

  We got different parents, bro.

• 2:46Speaker 02

  But no, I went to college with a high lofting goal of getting a good job and going into middle management for the rest of my life. I was convinced I was middle management material. I was going to have an awesome life and that's what I was going to do.

• 2:58Dave Meyer?

  Well, it's so funny, Clay, because I think a lot of people, they start that job, realize that they hate it and then try and find a way out. But you were just like, no, uh-uh, not even starting.

• 3:09Speaker 02

  I couldn't do it. I couldn't do it. I felt like I was selling myself short.

• 3:13Henry Washington?

  What gave you the confidence to know you could figure it out outside of turning down that job?

• 3:19Speaker 02

  Well, I read the wrong statistics for sure. I went online and I looked what real estate agents earn and I read somewhere they made $80,000 year one. And I was like, ah, that's got to be so easy. This, this is, this is perfect. I'm going to knock it out. No problem.

• 3:35Dave Meyer?

  All right. Well, tell us what you did next. Like you, you made this decision and how did you go about actually getting into real estate?

• 3:43Speaker 02

  Yeah. So I used to paint houses as part of an internship in college and I had an old buddy of a buddy several years older than me that got into real estate. And I figured, hey, you know, apparently they make great money and that's just such an easy job. You know, it's a no brainer. So I called him up. I had a few questions for him and he was like, sweet man, like, let's get you down for an interview. And I was like, awesome, done. So I walked in a few weeks later after I got my license, applied and got hired on with him. And I sold houses for probably three months. I want to say I got hired in March of 23. And then around June, I was like, wow, these people are getting steals. Like, why am I not doing this?

• 4:23Henry Washington?

  I mean, you're telling the story that a lot of people who have jobs in the real estate industry tell is that they realize, hey, these investors seem to be getting the the the long end of the stick on all these transactions I'm working on, right? How do I go from where I'm at to where they are? So how did you make that jump? What was your first dealer?

• 4:45Speaker 02

  Yeah, so I I read a few news articles and I figured I know everything there is to know. This this has got to be super easy.

• 4:52Henry Washington?

  Yeah, for sure.

• 4:53Speaker 02

  For sure. So I saw a $20,000 home pop up in a market 30 minutes away from where I live. Said it's a no brainer, walked right through, offered him $17,000.

• 5:03Henry Washington?

  Gotta be a winner.

• 5:04Speaker 02

  I mean, it's cheap enough. What could go wrong? But this thing was filthy. The old owners just left. Um, I ended up buying it for $17,000. I figured this is all I'll ever need. So I liquidated all of my investment accounts that I had to buy this sucker cash. And I I bought it. I closed on it and I went out there with just those big old contractor bags of Walmart trash sacks to go clean out all the trash. And I I showed up and there was a condemnation sign on the front door. But when I looked down, I I realized this was a home condemned in May of 2023, when I was purchasing it in July of 2023, which means that it was not disclosed. The sellers had pulled it down.

• 5:45Speaker 02

  And then they even found it. The city had, because I called the county immediately. I called the city and I was like, hey, what's going on, guys?

• 5:51Henry Washington?

  All right. So Clay, you said there was a condemned sign on the door. So what did that actually mean?

• 5:56Speaker 02

  So in this particular situation, it means that nobody should be living there. So this was a home that's been vacant for a year and they kind of catch you on it. So first it was overgrown grass that needed to be cut and then the front porch rotted out and that front porch is would actually condemn the home. It makes it a safety hazard. And when they have that excuse to go in, then they'll go through and nitpick that whole house. So the only way to bring it up to livable condition is to then fix that 30 page document that the city wrote out.

• 6:20Henry Washington?

  Okay, yes. In my area, they call it red tape. So if they red tag your house, that basically you have a laundry list of things that they make you fix before they'll give you a certificate of occupancy. So they, they basically had a condemned slash red tagged house and no one told you until after you bought it. Congratulations.

• 6:37Speaker 02

  Yep, I was stoked. I knew this was the perfect deal for me. So I was like, wow, I didn't know what to do. City said, there was nothing I could do since, you know, it was condemned months before. If it was condemned the day I bought it, they were, would have been a lot more lenient on fixes and whatnot. But I went back to the title. I said, I would love my money back. Luckily, they were able to reverse this.

• 6:59Henry Washington?

  They did. You returned a house?

• 7:01Speaker 02

  Yeah.

• 7:02Dave Meyer?

  Oh, my God. I have never.

• 7:04Henry Washington?

  I've never heard of that.

• 7:05Dave Meyer?

  All of the years I've been doing this, I didn't know you could return a house.

• 7:09Henry Washington?

  I didn't.

• 7:10Dave Meyer?

  I mean, it's just like, like Nordstrom or REI, one of those stores that will just take returns like no questions asked.

• 7:16Henry Washington?

  He's like, look, I got my, I got my receipt. You know, I don't know what the problem is.

• 7:20Speaker 02

  Yeah. I mean, it was actually pretty easy.

• 7:22Dave Meyer?

  Well, because it's kind of like, is it the title's responsibility to, like, that should have been on your title report, right?

• 7:28Speaker 02

  Yeah, it should have been there. And then I had about $1,500 worth of fines I was owed to the city that they also didn't disclose.

• 7:35Dave Meyer?

  Does that house just revert back to the previous owner? How does that work?

• 7:38Speaker 02

  It went back on market.

• 7:40Dave Meyer?

  Wow. Okay.

• 7:42Henry Washington?

  All right. It's time for a break, but we'll be right back with more from this week's investor story in just a few moments.

• 7:49Henry Washington?

  New Zealand's at the top of my travel list. I'm picturing a slow evening soaking in the hot pools at Hammer Springs while steam drifts over the water. Then a cozy dinner by the fireplace, looking out at the Southern Alps. I'm dreaming of getting to explore the country like I actually lived there, taking in the best scenery, sights, smells, sounds, and tastes. But while I'm away, my home doesn't have to sit empty. It can be working for me. I could list my space on Airbnb for a little extra cash. With the Co-host Network, a local co-host can create my listing, manage my reservations, message guests, offer onsite support, and even handle design and styling. So I get to enjoy starlit hot pools and fish and chips, knowing my guests are being cared for

• 8:35Henry Washington?

  every step of the way. Find a co-host on Airbnb.com/host.

• 8:40Dave Meyer?

  Trying to get started in real estate investing or wholesaling? The hardest part is finding and talking to motivated sellers before everyone else does. That's why new investors are using PropStream. PropStream gives you access to over 160 million properties nationwide, plus simple AI tools that help you find better deals faster. Use pre-built lead lists like pre-foreclosures, vacant homes, and cash buyers, then let the PropStream intelligence assistant help you analyze properties and estimate opportunities in seconds. And now with PropStream Connect, you can do more than just find leads. You can actually contact them. You get free skip tracing, including LLC and corporate contacts.

• 9:22Dave Meyer?

  You can launch dialer campaigns, use click to dial with AI prompts, automate follow-up marketing, and send postcards, all from one platform. No experience needed. You'll also get accurate comps, built-in calculators, and step-by-step training through PropStream Academy, so you know exactly what to do next. Start your free seven-day trial and get 50 free leads at www.propstream.com/bp. That's www.propstream.com/bp. Do you ever notice how every passive investment somehow turns into a very active lifestyle? Active spreadsheets, active phone calls, active stress? Here's a better question. What if you could buy brand-new construction homes,

• 10:06Dave Meyer?

  10% below market value, in the best markets across the country, without making real estate your second job? That's exactly what Rent to Retirement does. They're a full-service, turnkey investment company handling everything for you. In some cases, investors get 50% to 75% of their down payment back at closing, plus interest rates as low as 3.75%. They've partnered with BiggerPockets for over a decade, helping thousands invest smarter. If you want to do the same, visit biggerpockets.com/retirement to learn more. Here's why savvy real estate investors are obsessed with bonus depreciation. It lets you take that rental property or commercial building you own and depreciate most of the cost against your income legally, 100% higher.

• 10:49Dave Meyer?

  Compliant. That's instant cash flow improvement. Cost Segregation Guys is the number one firm nationwide specializing in identifying these faster depreciating assets in your property. They've completed tens of thousands of studies across all 50 states from remote cabins to apartment complexes. So if you own investment property, this is a no brainer. So visit costsegregationguys.com/bp for your free proposal and find out how much you could save this tax season.

• 11:22Henry Washington?

  Welcome back to the BiggerPockets Real Estate Podcast. We're here with Clay White from Manhattan, Kansas.

• 11:27Dave Meyer?

  Okay, so false start on your first deal. What, what do you do next?

• 11:33Speaker 02

  Well, you know, I was pretty defeated for a second, but I realized I'd never heard of anybody buying a condemned home, at least accidentally. So I figured it couldn't be that common. So I jumped right back in. I had already liquidated my savings account. So, you know, that money had to be spent on something. So my second deal, first deal, I bought with a partner, with a buddy of mine from college in October of 23. We purchased it for $35,000, got put 20% down, took a loan out on the rest. And we, I was in the middle of reading the bur book and they said, hey, interview everybody, do everything. So this is a town of 20,000 people or so. So we had six legitimate property management companies.

• 12:18Speaker 02

  We sat down, interviewed every single one of them, same day. We asked them all for different ideas on the house, contractor recommendations, rent estimates. And at the end of that day, I found just the most spectacular property manager. I hired her contract on for the job. And the day after Thanksgiving, so about a month later, it was completed. I turned it over to property management and she had it rented that Tuesday for $275 over our rent estimate. So it was, went shockingly well after the first one.

• 12:48Henry Washington?

  So you hit a foul ball on your first deal and then hit a home run on your second deal.

• 12:53Dave Meyer?

  Clock to digger.

• 12:56Henry Washington?

  So where did this deal come from? How'd you find it? Like, talk to me about that.

• 13:01Speaker 02

  Yeah, once again, on the MLS somehow. First one was wholesaler that listed on the MLS. This one was just a bank foreclosure that was having, having trouble selling, you know, that that area is a big VA area and FHA area, which means a lot of those loans are not, any distressed property is not going to close with those loans. So it's me and the two other investors in that town fighting for these deals and they obviously weren't interested. So bought it right off the MLS.

• 13:27Dave Meyer?

  You know, now looking back on it, is that pretty normal in the market you were operating on where these kinds of deals are available?

• 13:33Speaker 02

  Somewhat. So we have two markets. We have the main market where I live and then this little satellite market of about 20,000 where that pretty generally is, is the case. You know, anybody purchasing a home in that area is going to be military, which is buying on a VA, which is super, super stringent as far as, you know, the criteria and condition of the home. And then the same thing with any FHA loan. And it's not a, it's not a ginormous town. So there's not a ton of investors going around. So, I mean, you really are in a dogfight with like three other people and that's it.

• 14:02Dave Meyer?

  Yeah, I remember you mentioning something like that when we were having lunch and I was like, man, I should move to this town. I like the idea of this low competition.

• 14:10Henry Washington?

  One of the things we've talked about before on this show, or a lot of people have talked about is if you can't get into your first deal by yourself to bring on a partner. So it sounds like this is somebody you knew before you guys did a deal together. How did you know you needed a partner for it? And then how did you structure it?

• 14:25Speaker 02

  Well, the house was $35,000 and I had $25,000.

• 14:29Henry Washington?

  Okay, okay.

• 14:30Speaker 02

  So I was destined to make it work.

• 14:33Speaker 02

  No, it worked out really, really well. I initially went to the bank on the first one and I was 22, working 100% on commission with just a little bit of money. So they told me no. And I tried again at the second and third bank who also told me no. So I figured I'd need a partner.

• 14:50Henry Washington?

  That's good, man. And what I want people to realize this is like, first of all, like, I think the reason you had success early on is more about your mentality and your mindset approach to what you were doing versus the tactics. Yes, you Good tactics, but a lot of people A wouldn't have said, you know what? Screw this corporate gig that's going to pay me a bunch of money in Houston. I'm going to go be a real estate agent. And then to jump into a deal and fall flat on your face and to get back up and say, okay, I'm gonna do this again. And then to find a deal that you couldn't do on your own. Banks would say no. And then you just said, okay, well, I'm gonna go find a partner. Like, a lot of people would have quit along that journey and just thought, well, this isn't for me,

• 15:34Henry Washington?

  or I can't do it because we hear it all the time. I can't get a loan, so how am I going to do this? So I think that that mindset is huge for new investors. It's a good example of the kind of mindset you need to be successful. So in your partnership, did you just structure things 50 50? Like, do you have a role or does he have a role? Like, who does what?

• 15:53Speaker 02

  No, it was it was a true 50 50. We figured we were both learning. We both might as well do everything and we'll all learn as we go. So every single property manager interview, every single contractor interview, every single city inspection, we both went to them. We both sat back, we both asked questions and we both learned and absorbed as much as we could because obviously we didn't know. I read a few books and thought I had it.

• 16:15Dave Meyer?

  And did you have it?

• 16:16Speaker 02

  Not even remotely close.

• 16:19Dave Meyer?

  But it's still like the deal worked out, right?

• 16:21Speaker 02

  Worked out shockingly well, still have it.

• 16:23Dave Meyer?

  Okay, so I mean, I remember a little bit from when we discussed this earlier, but what did you do after that first deal? Because I remember you, you just have been taking on a little bit of everything.

• 16:33Speaker 02

  Yeah, a little bit of everything. So after that, through both of these properties, I was renting with six other roommates. And I figured maybe I don't need six roommates at this point in my life.

• 16:44Dave Meyer?

  How many bedrooms?

• 16:45Speaker 02

  Five.

• 16:46Dave Meyer?

  All right.

• 16:46Speaker 02

  So it wasn't terrible. It wasn't terrible. But I figured it was probably time to get my own place. So in January of 24, I purchased a duplex in the town I live in. I had the backside was rented for 650 a month on a long term lease. And then the front side was completely vacant and once again distressed. But I was able to get it on a portfolio loan in house with that same bank. So they didn't care on the condition. They knew I'd fixed up one, so they hedged their bets and figured, hey, he may do it one more time, which I was so excited that they gave me that loan.

• 17:21Dave Meyer?

  And how are you, how are you financing the rehab?

• 17:24Speaker 02

  Out of pocket. So at that point, I had liquidated all my investments and I, you know, I felt like I would go in embarrassed and timid to say, hey, please take my money back. I'm gonna, you know, I'm backing down here, but I wasn't willing to admit that and going with the partner and getting a loan on the first deal meant I still had a little bit left and I did most of the work myself. So it was just a cost of material.

• 17:47Dave Meyer?

  How heavy of a rehab was it that you did the work yourself?

• 17:50Speaker 02

  You know, it wasn't ideal, I'll say. We ended up redoing most of it. This was a home that somehow it passed inspections, but this is a 1910, you know, tiny little thing that was Laugh-In plaster on paneling, on drywall with just coated. They just, anytime anybody moved out, that's two more loads of kills on top of everything. So I pulled it all apart and essentially to the Laugh, we replaced the windows, we replaced floor joists, we replaced flooring, paint, trim, countertops, cabinets.

• 18:24Henry Washington?

  Oh, so you built a house?

• 18:27Speaker 02

  The framing and the foundation was there.

• 18:29Dave Meyer?

  Nice. And so that was, I guess, at the beginning of this year. Are you, I assume you're still living there because it was a house hack, right?

• 18:35Speaker 02

  So I am not actually. I sold a lease until August, so I figured I'd, you know, make a little bit of money off of it. So I tried to look for a long-term tenant, realized that that is not enough to cover my mortgage at all. And I didn't, you know, traditionally want to be losing money on that. So I tried to Airbnb it and I realized I'm not that kind of person. I'm not a Airbnb person myself. So I went on, I tried to find a big company. They weren't super interested. So I just went on Airbnb, looked up a unit that was as close to mine as physically possible. And I found some lady that had nine of them just like mine. So I made a fake reservation for her, asked her if she'd be willing to come check out my

• 19:18Speaker 02

  house and give ideas and potentially manage it. And she walked through, loved it, and she's been managing it since May 3rd of this year.

• 19:26Henry Washington?

  That's so smart.

• 19:28Dave Meyer?

  Oh my God, what? That's such a good trick. So you didn't know this person beforehand, right? You just-

• 19:35Speaker 02

  Fake reservation.

• 19:36Dave Meyer?

  Dude, that is some hustler skills right there. That's pretty good.

• 19:40Henry Washington?

  Yeah, man. That's a hustling mentality. That's awesome, man. Like- Again, that mindset of I'm going to figure this out. Like, that's the very first lesson I learned in real estate. It's the very first lesson I learned in entrepreneurship in general, but in real estate, because my, my first deal, I didn't think I was going to be able to buy it. I'd gone a bunch of different routes and couldn't find the money. And my then unofficial mentor, I called him to say, can you buy this house? Because I told this guy would buy it, and I don't think I can. He's like, look, I'll buy it. But if you want to be successful in this business, you got to figure it out. This is your, you know, first entrepreneurship lesson. Go figure out how to get this done. There's a million ways. We just don't know the way that's going to work yet. And, uh, you know, that, that mindset will carry you far. So that's super cool, man.

• 20:22Dave Meyer?

  So I can't wait to hear what comes next. There's just a lot of twists and turns. We're only a year into your investing career right now, Clay. So what, what did you do after, after the Airbnb situation?

• 20:35Speaker 02

  Yeah, so I had a, we hit the home run on the first one. And I was flush with cash after that duplex. I was loaded. I got my first rent check and I was $400 richer after throwing $25,000 into two different deals. And I bought a meal and I realized I was out of money. Yeah. So luckily, we aced that first deal. We bought it for 35. We spent $21,000 on the rehab. So we were all in for about 56. Took it back to the bank and we reappraised it at 137, which was so much better than we were expecting, for sure. So we had that $80,000 or so in equity. We were going to do the cash out, but decided, you know,

• 21:18Speaker 02

  at those small local banks, they work with you so, so, so well. So they actually just used that equity in the property on a line of credit for us. So then we purchased a flip in April of 24 off that line of credit.

• 21:30Dave Meyer?

  Henry, why are you celebrating over there?

• 21:32Henry Washington?

  Because that's literally what happened on that, that same story I was just telling about my first deal. Like, I, I did a burr, but except for the refinance, I pulled a line of credit and used that line of credit to help me continue to grow. And I think that, like, the burr with the H at the end, like HELOC instead of, uh, refinance?

• 21:51Dave Meyer?

  Burr.

• 21:52Henry Washington?

  Burr. It's a, it's a good tactic because refinances are great. And in certain situations, you need to refinance, especially if you bought it on like hard money or private money and you're paying a hefty interest rate. But if you're not, You don't have to refinance. You can get a line of credit because refinancing is selling your equity. You're selling it to yourself, but you're selling your equity. And so when you refinance, then you end up getting a new mortgage at a higher rate. And so refinances also hurt your cash flow because your debt service is now more. When you do a line of credit, instead, you don't get a new mortgage. You keep your cash flow and you get access to the money, just like you would have had access if you refinanced it. So I think it's a good tactic in the right situation.

• 22:35Dave Meyer?

  Now, Henry, just for everyone listening, what is the right situation? Like, do you have any simple advice on when you refinance versus look for a line of credit?

• 22:44Henry Washington?

  Yeah, I think you should refinance if you need the cash, right? So if you need the cash because you used a high interest rate loan to buy the property, yeah, you gotta refinance and get out of that high interest rate loan. If you have a plan for the cash outside of real estate, you know, sometimes people are refinancing because they need the cash to go do something, live life, whatever that is. Like, if you need the cash right now, then yeah, you can refinance. But if you don't necessarily need all the cash right now, but you want access to the money so that you can buy your next deal, a HELOC works well because now you're not paying interest. When you do a refinance, you're paying interest on that money you took out right away because you have a new 30-year fixed rate mortgage typically, and your interest is front loaded in the first

• 23:29Henry Washington?

  seven to 10 years anyway. So you're paying interest on that money that you took out versus with a line of credit. If you don't need to use that money right away, well, now you're not paying any interest, but you have access to it when you need it. And then you only pay interest on the money that you use off the line of credit. So in his case, he had about 80 grand. If you only use 20 to buy your next house, you're only paying interest on that 20 instead of paying interest on the full amount you pulled out on a refinance.

• 23:53Dave Meyer?

  So back to your story, Clay. You, you pulled out a refinance. And what was the deal again? Sorry, I got, I lost it in our discussion of HELOCs.

• 24:03Speaker 02

  Yeah, so it was a flip that we purchased at the very, very end of April of 24. Bought it for 52.5. We had about 60,000 in planned repairs, because this was all with a general eight-week holding cost. Just I figured, you know, what could go wrong?

• 24:22Henry Washington?

  You figure that a lot.

• 24:23Dave Meyer?

  Seems to be a theme here, yeah.

• 24:25Speaker 02

  I pretty generally figure there's gonna be zero hiccups and it's gonna go perfectly smooth all the way. But we got this roof replaced, I got the sewer replaced and I went to go hook up the water. We got, I called the city, they came out, they hooked it up and they turned it on and just left. And luckily my contractor was there and he goes, hey, you know, your water's like not shutting off just outside the home. So he grabbed the city guy, he had him shut it off, he walked in and I had about four inches of water covered my entire home. Just completely flooded it and that was, that was one, which was pretty rough, which obviously that causes a little bit of rot. And we already had all the sheet rock was getting moldy, which means some of the studs behind was getting moldy.

• 25:08Speaker 02

  So I had a, two studs underneath a window that were completely rotted. And we, we went to go replace them, which seems more than fair, that's, that's something you should do. But the, the bad news was the neighbor next door was also getting a roof replaced. And he just so happened to see our two window studs out in the front yard when we cut him to go replace them. And he goes, well, that, that is a structural. The city inspector said that is a structural on our exterior load bearing wall. So you, you cannot do that. I know it's small, but according to code, they shut us down. Said you guys need to get a licensed general contractor here and figure this out. The only bad thing is this is a town of 20,000 people. We, we don't have a bunch of licensed general contractors.

• 25:53Henry Washington?

  You are the licensed general contractor.

• 25:54Speaker 02

  Yeah, kind of. I was like, fair enough. So I, I called every licensed general contractor in that town. And this is two studs under a window. So keep in mind, so half the people didn't respond to me.

• 26:05Dave Meyer?

  Yeah, just not a big enough job.

• 26:07Speaker 02

  Yeah, not a big enough job. I only had three people look out and said, it's not worth it. I had one guy that said, we could use his permit to do it, but he wants 20% of the total job. So the cost to fix these two studs would be 20% of my $60,000 reno budget.

• 26:25Dave Meyer?

  What?

• 26:26Speaker 02

  Yeah. And I was like, I can't do that. And so, yeah, it was rough.

• 26:31Dave Meyer?

  That's extortion.

• 26:33Henry Washington?

  I've never heard of anyone going through every problem in real estate investing in their first two years.

• 26:40Dave Meyer?

  All of them.

• 26:41Henry Washington?

  Yeah. You literally had all of them, other than a fire, it seems like you've had all the real estate investor problems.

• 26:47Dave Meyer?

  Well, we don't know. We haven't got to the end of the story.

• 26:49Henry Washington?

  And on a second note, coincidentally, Two Studs Under a Window is the name of Dave and I's new LLC for our property we're gonna buy.

• 26:57Dave Meyer?

  Oh, can you imagine the logo that we're gonna create for this? Just two handsome dudes.

• 27:06Henry Washington?

  Sitting under a window. Two studs under a window. What do you know? What a small world.

• 27:11Dave Meyer?

  I can't wait to make that the actual name of our LLC. Well, okay, before we hear the resolution of this story, Clay, you know, you've talked about doing a BRRRR rehab. Like, are you pretty handy yourself? Like, what gave you the confidence to do this flip as, if I'm counting right, your third deal?

• 27:30Speaker 02

  So, you know, other people do it, so I figured why couldn't I? I'm not exceptionally handy.

• 27:36Dave Meyer?

  What's going on?

• 27:38Speaker 02

  It tracked in my head for sure, but no, I'm not particularly handy. You know, I love to be hands-on. I do what I can do. But the first deal, we had a rock star contractor. This deal, I had a rock star contractor and pretty generally since then. I was just super lucky, just hitting ace in the holes. And I've had one fantastic contractor for the last six months that's been lights out for me. And then we have another guy who's done incredible work, too.

• 28:04Dave Meyer?

  So, wait, how did this story end? The one with the two studs under the window?

• 28:08Speaker 02

  So, luckily, this is Kansas, so it's not a super big deal. They're not coming after you for everything. So, I bought a $295 prep course online, did it in two days, went in and took my state exam, and I got my general contractor's license.

• 28:27Dave Meyer?

  It's funny because Henry was joking that you, you were the only guy in the 20,000 person town who was the GC and it turns out you are the GC now.

• 28:36Speaker 02

  Somebody had to.

• 28:37Henry Washington?

  This is the most fun starter story I think I've ever heard.

• 28:40Dave Meyer?

  Yeah, talk about hustle mentality, man. That is super cool. So wait, so I, let me just ask 290 bucks. How long did it take?

• 28:49Speaker 02

  Well, it's based off of your hourly sort of, just like a real estate license is, but all the general contracting exam is how you locate it in a book. You know, it's not based on true knowledge in the sense of the word. It's can you read a code book? It can't, can you understand code and how do you find that? And it's a four hour licensing exam. So all that textbook was, was hey, here's where everything is. Here's how you find it. Go get your license. So that, that's really all it was.

• 29:14Dave Meyer?

  Well, that, that, I mean, it's great for this story because clearly you didn't need to be super sophisticated to fix this one problem that you had. But that makes me even more surprised to hear that you found great contractors in Kansas because the barrier to entry seems comically low. So good for you on finding good contractors. Did it take a while to screening people?

• 29:35Speaker 02

  The first one wasn't terrible. So we, we just interviewed every property manager and asked every single one of them from contractor recommendations. Two of them came up with the same name, met them, seemed relatively honest. And I was like, sweet. And he, he knocked the first one out of the park. Then I went through a few rough ones. And the nice part about having your GC license is you don't really need, you know, the grade A contractor is going to charge you two or three times as much. I need some exceptionally handy people and I'll manage it myself.

• 30:05Dave Meyer?

  That's a very good recipe for success there. So after you've fixed the two studs under the window, how did that deal finish out for you?

• 30:13Speaker 02

  So, um, as of right now, we're, we're not going to be falling behind. We're still anticipating about a $25 to $30,000 profit on that. At current margins, but you know, this is still, it, it went on two or three months longer than it should have been. And it's a loss in that sense, but we're going to come out unscathed.

• 30:30Henry Washington?

  That's called real estate investing.

• 30:32Speaker 02

  Yeah.

• 30:32Henry Washington?

  So, so tell us again, remind us the numbers. What'd you buy it for? How much are you all in? For and what are you expecting to sell for?

• 30:37Speaker 02

  We bought it for 52.5. We're going to be in for just over 60 at this point and we're looking to list about 149. And depending on how that goes, you know, most of the buyers in our market are going to be VAFHA. So we're anticipating, you know, they're going to ask for five, $10,000 in closing costs and then obviously commissions on top of that.

• 30:56Henry Washington?

  And are you, are you representing yourself as an agent on that deal?

• 30:59Speaker 02

  I am, I am.

• 31:00Henry Washington?

  Okay. So that's, so you're, you're making slash saving some money. Yep.

• 31:03Dave Meyer?

  That'll help a little bit.

• 31:05Henry Washington?

  We have to take one final break, but stick around to hear more about how Clay is making deals work right now.

• 31:12Dave Meyer?

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• 31:57Dave Meyer?

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• 32:12Henry Washington?

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• 32:57Henry Washington?

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• 33:12Dave Meyer?

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• 35:45Henry Washington?

  which at my age is about 20 minutes. Then stroll the neon lit canal in Dotenburi as the sun goes down. And in the night with Okonomiyaki sizzling on the griddle at a tiny counter. Here's the part I keep running the numbers on. While I'm over there, my place back home would just sit empty. Instead, I could list my space on Airbnb and put a little extra cash toward the trip. With the co-host network, I could hire a vetted local with hosting experience to create my listing, manage my reservations, message guests, handle onsite support and even help me with the design and styling. I get takiyaki straight off the grill, my home stays cared for, and I bring in some extra income to put towards my next bucket list vacation.

• 36:27Henry Washington?

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• 36:35Speaker 03

  Hey, let's jump back into this week's investor story.

• 36:38Dave Meyer?

  All right. Well, after that one, what deal did you do and what went terribly wrong?

• 36:46Speaker 02

  Pretty much. I I bought a $20,000 home in May of 24.

• 36:53Dave Meyer?

  I can't believe you're saying this in 2024. $20,000 home. That's unbelievable.

• 36:57Speaker 02

  $20,000 home. It was not worth $20,000. I'll tell you that.

• 37:01Speaker 03

  So you overpaid.

• 37:02Dave Meyer?

  Really? You overpaid. You've overpaid.

• 37:04Speaker 02

  Overpaid significantly, significantly overpaid after events unfolded for sure. But this was a home that I tried to buy in like November of 23, but it was going through government foreclosure and then they wouldn't get back to you. And then it all went pending and how those government deals work is that you are just so far on their back burner for six months. And then all of a sudden they're ready to go and they needed all your paperwork and documents yesterday. So this is something I offered on in November that I bought in May. And $20,000, we figured I would have about $65,000 in there. But when I walked in and the living room was still fine, but in the kitchen, all the sheet rock had just

• 37:45Speaker 02

  fell right through the ceiling and it was just on my kitchen counter now and the back bedroom also caved in.

• 37:50Dave Meyer?

  Oh, my God.

• 37:51Speaker 02

  Which is not not ideal for the most part.

• 37:55Speaker 03

  Typically not ideal. That's correct.

• 37:57Dave Meyer?

  Yeah, I don't, for the most part, I don't think there's any situation where the house caving in is a good situation.

• 38:03Speaker 02

  Pretty much. And I found that there was termites, which weren't so bad. They retreated, but there was terrible grading. So I had mold on all of my sill plates and a lot of the studs back there. Termites had started eating through the framing. So all the exterior walls were essentially non-load bearing. So the rafters was holding up the roof and I realized that when we got in to get the roof replaced. And with the roofers walking around there, they also broke the sheet rock in all of the back bedrooms. Because there was just, there's nothing, there's no support back there. So we had to put a pause on that, go through, replace all the sills all the way around the house and a lot of the studs and framing. A lot of the floor joists. So that way we could get up and then also patch the roof.

• 38:46Speaker 02

  Once we got the roof done and replaced, we went back up before we re-sheet rocked over. And we noticed we had about eight cracked rafters because the home could not support the weight. Of everybody working up there.

• 38:59Dave Meyer?

  Oh, from the people. Oh, my God.

• 39:02Speaker 02

  Yeah.

• 39:02Dave Meyer?

  Yeah.

• 39:03Speaker 02

  So it was not ideal, but we got them all passion replaced, had to completely remove them, which is not fun. We ended up going through, it lasted two months. So we may, and then we listed two or three weeks ago, but finally got it all done. We ended up going $22,000 over budget. I anticipated 65 and I think, or we're at 86. So we're all in at about 108 on that property. Right now we're listed for 149. So still, it should work out. There was a lot of cushion.

• 39:33Dave Meyer?

  Yeah.

• 39:33Speaker 02

  Lot of cushion on a $20,000 home.

• 39:35Henry Washington?

  Hidden bases. Man, the lessons you're learning are invaluable just through all these pitfalls. Like it probably feels like you're going through the wringer and you are, but they don't all go this way. And at some point, I think these things should start to balance out. If you're learning lessons about the properties you're buying, things should start to balance out. So it sounds like, you know, you're flipping homes. Is that what you're continuing to do now? And if so, how are you sourcing these deals? And how are you finding the money?

• 40:02Speaker 02

  Yeah. So as far as the money goes, at that point, I had a little bit of track record, even though they've been super chaotic. Somehow they got to the finish line and somehow they all made good enough money where I was a decent bet at that point.

• 40:15Henry Washington?

  Where you want to keep doing it? Yeah.

• 40:17Speaker 02

  Pretty much, pretty much. So I went back to the bank and said, hey, I'm so excited. I'm ready to get another flip. And they said, I'm very happy for you, but you're still 22 and you're still in commission and there's no way we're giving you that money. So I went back with my first partner and they told us the exact same thing. They said, hey, that equity's done. You know, good luck. Keep it rolling. So at this point, I still, I knew I wanted to keep going and they always say, go, you know, find the money, you know, you can't just give up, you know? So I went to my parents and I said, hey, would you guys want to do a deal with me? It's only going to cost, you know, X amount of money. Just throw some cash my way. It'll be

• 40:57Speaker 02

  awesome. We'll all be super happy. And they also said, no, they said, you're not that kind of bet yet. Good luck.

• 41:06Henry Washington?

  And your parents have real estate investing. Experience, right?

• 41:09Speaker 02

  They do.

• 41:10Dave Meyer?

  I love that. I mean, I feel bad for you, but I kind of love that.

• 41:14Speaker 02

  Yeah, they do. And they've had some rentals back where I'm from. So I was like, okay, okay. I went back to the drawing board and I said, you don't even have to give me money. You don't even have to give me money. Just put two of your rentals up as collateral on a line of credit for us. And that they did agree to since it wasn't money coming out of pocket. So they put up two rentals to give me a line of credit to keep going.

• 41:34Henry Washington?

  So your parents pulled a line of credit on two of their rentals? And so when you needed money, I assume you had to go to them and say, hey, I need X. And then they would pull the money from the line and give you access? Or did you have direct access to pull from their line?

• 41:49Speaker 02

  So I have direct access. So we set up an LLC together and structured an agreement. And now it's pretty much, it's still through my bank that we pull everything from, which is super awesome and convenient.

• 41:59Henry Washington?

  That's super creative, man.

• 42:01Dave Meyer?

  Yeah, good for you. And is this, is this where you stand today? Is that the last deal you've done?

• 42:06Speaker 02

  No. So I've bought in two flips since then, a triplex, and I'm buying a commercial building on Thursday. So we're getting there.

• 42:15Dave Meyer?

  Oh, my God. And how are you financing all those?

• 42:17Speaker 02

  Um, so the nice part about how they go is, uh, one, it goes off the line of credit. We purchase them on the line of credit, fix it up on the line of credit. And then anything we're going to keep, it gets turned over and amortized on its own individual loan, which replenishes the line of credit. And then obviously all the flips just pay it off and keep going.

• 42:35Dave Meyer?

  Wow. Super cool, man. I, I was waiting for you to say like, you became a loan officer or like a fighter pilot or something else in the middle of this, uh, this crazy story. But Clay, this has been super fascinating. And just everyone out there, like, this is such a good example of how you could make deals work in 2024. Obviously, there are hiccups here. You don't have to be buying $20,000 deals, but Clay's finding a way that works for him. And honestly, man, I gotta say, I really respect your attitude. You're coming on this show, talking about your wins, your losses, and have a great attitude about it. To me, that just signals that like, you're going to be very successful at this for a long time. So you bought all these deals. We're gonna have to have you back on soon, man, and hear how the rest of these stories go.

• 43:18Speaker 02

  Yeah, I'd be excited.

• 43:19Henry Washington?

  Yeah, man. Can't wait to hear more about this in the future. And you are the inspiration for Two Studs Under a Window LLC for Dave and myself.

• 43:28Dave Meyer?

  Yeah, we'll make you an honorary member. You're on the advisory board, all right?

• 43:36Dave Meyer?

  So Clay, thanks so much for joining us and telling us your story. If you want to connect with Clay, we'll put his contact information in the show notes below. Henry, thanks man for being here and joining us on this fun discussion. And thank you all so much for listening. We'll see you next time.

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