J Martin – Founder and Host of SF Bay Summit Real Estate Networking and Founder/Owner/Operator of JTM Real Estate Group, talks to Neil Henderson and Brittany Henderson, the hosts of The Road to Family Freedom podcast. J Martin talks about building a location-independent lifestyle, primarily using a portfolio of short-term rentals. J also discusses how he is able to travel year-round and operate his business, why he doesn’t use HOAs, how he manages communication, and how he funds his ventures.

Post-Interview Analysis

• Key Lessons Learned: Systems are the things that make businesses successful. Ask yourself how you would run your business if you were out of the area.
• How did they acquire their knowledge or what knowledge did they need to acquire? He used BiggerPockets.com, networking, books, and meetups.
• How much money did it take to get started? $12,500 is what it took J Martin to get started. Subleasing requires a deposit and for furnishing, he spends about $7,000 for a one-bedroom, including the fee for people to do it.
• How much time does it take now? He spends 3-4 hours a week.
• Could they do this strategy from anywhere in the world? Yes, he can and he does.

What you’ll learn about in this episode

• J Martin talks about traveling 100% of the year. 
• What was J Martin’s a-ha moment about getting into real estate? 
• What was the first piece of real estate that J Martin bought? 
• What were the numbers involved in J Martin’s first real estate venture?  
• When did he get involved in short-term rentals? 
• If you believe you can, you are right. If you believe you can’t, you are right. 
• J talks about giving up a portion of his cash flow to pay back a loan to his partner.  
• How many units is he subletting?  
• Over ⅓ of hotel and AirBNB stays are over 30 days. 
• J Martin stays away from HOAs. 
• What are the typical sizes of his real estate purchases?  
• How does J Martin go about furnishing?  
• What does it cost on average per room?  
• How does he manage the communication? 
• Look carefully at your lease terms. 
• How did J Martin find his VAs? 
• What are some places J Martin has enjoyed traveling to?    
• Are there any places J Martin would not go back to? 
• How much time is he required to spend on this? 
• When he was getting started with short-term rentals, what are the things he had to learn that made him successful? 

Help Us Out!

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Recommended Books

• Work the System by Sam Carpenter
• At Home in the World by Tsh Oxenreider

Resources Mentioned

• OnlineJobsPH.com
• SFBaySummit 2020

Connect with Guest:

• Website: RealEstateNomad.com
• Facebook: J Martin
• Instagram: Real.Estate.Nomad

*FTC Disclosure: This post may contain affiliate links. If you make a purchase after clicking on the links, Road to Family Freedom will get a small commission. We are dedicated to finding the coolest products for families looking to building financial freedom through real estate and we never recommend anything that we don’t love.

Our guest this week was speaking to us from meta gene Colombia. And while the connection was pretty good considering the distance involved, there's still some spots where the audio drops out still one of the best interviews we've had so far, but just wanted to give our listeners a heads up, enjoy.

What would I do if I were not in the country? And I think if you want to be location independent, I think it's a great question to ask yourself, if you have a business, or a job, or an obligation that does require you to be there, or you think it requires you to be there is to think about what would I do if I were outside of the country, most things could still be done.

I'm Neil and I'm Brittany,

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

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

Before we get to this week's show, I'd like to make you an offer. You can video chat with me if you like. It's something people do with me all the time. And it's completely free. Every Wednesday evening. This is a free strategy session done over video chat, anything and everything you want to talk about in regards to real estate investing. There's no sales call here. There's no ulterior motive, I'm not going to pitch you on mentoring program. This is really just a way for you and I to connect. I talk to real estate investors all the time at Ria meetings. But there are only so many meetings I can attend having a family and a full time job. And I prefer the one on one connections anyway, doesn't matter if you're brand new investor just starting out or an experienced investor, I can act as a sounding board or a deal you're looking at or maybe just answer some questions you have about real estate investing, head on over to road to family freedom comm slash connect and fill out the form there to schedule a call. I look forward to speaking with you. Greetings, friends and families. I'm Neil and I'm Brittany, you're listening to the road to family freedom podcast. Our guest today has built an enviable location independent lifestyle, primarily using a portfolio of short term rentals. He's overcome some incredible setbacks to get where he is. And he's the founder of the San Francisco Bay summit that's coming up in February of 2020. j. Martin, welcome to the road to family freedom.

No, Brittany, thank you for having me.

Yeah, I'm fine. I've been trying to I've actually been trying to get you for a while. So I'm glad to finally finally get to meet you face to face, so to speak. So the first question that's important to ask whenever you're speaking to J. Martin is where in the world is J. Martin?

Right now? I'm in managing Columbia for the next couple of weeks. And then heading to Mexico for Christmas.

Very good. So you are as your bio says you're homeless?

Yeah, you know, and I feel actually I almost feel bad for writing this now. Because I don't mean to make light of, you know, the homeless situation, a lot of people are having a tough time. Um, for me, I don't have a permanent residents. And again, I did write that so I apologize. But um, yeah, I don't have a permanent residence. So I travel 100% of the year, usually outside of the country, but also the United States. So I can share more about where I stay. But that's kind of the not having a home portion, which may not work for everyone, but it's worked well for me. So we'll get into we'll get into sort of your where you stay and geo arbitrage and all that towards the end. But I wanted to do you recall an aha moment for you when it came to real estate? Yeah, I think my biggest thing, someone introduced me to biggerpockets.com really popular real estate networking website. And then I went to my first meetup in person. And before I was kind of searching alone, and when I met these people in person and on the website, and I realized how many people were not just doing what I was doing, but doing a lot more, and has so much knowledge and things to share. That is really the what opened up my eyes. And what changed the whole course of my investing was getting networking with other investors. That was my aha moment.

I was gonna ask you, you were doing some kind of investing Previous to that aha moment.

You know, I was actually looking to buy my very first property which I was looking for a condo to live in. After networking, I found out about FHA loans and the four Plex for an FHA loan, and that I can basically buy an investment property with very little down, which is what I ended up doing on the very first property. So that to me, that tiny piece of information was a huge, huge I opener that I just realized from that You know, how much more could I have to learn if I could spend the time connecting with these other people who are knowledgeable, just like listening to podcasts like yours? Right, getting those tidbits of information that can really propel you forward?

Gotcha. Well, so let's, since you brought it up, let's dig into that first four Plex. Did you Was it a live in obviously was an FHA. So you lived in it, correct?

Yes.

Gotcha. break down some of the numbers for us what you what you bought it for how much you had to come to the table with, and you know, what the rental numbers and things like that work?

Absolutely. So this was a while ago, this was back in 2012. We closed I closed December 31 2012. And this is in the San Francisco Bay Area, which is pretty expensive. in general. However, I was living in San Francisco, I decided to move out to Richmond, which is not quite as nice and suck it up a little bit. I purchased for 379. It was a homepath foreclosure. It was entirely vacant at the time and a little bit beat up, I put $12,500 down, which I basically borrowed from my credit card. And I can elaborate more on that it's not kind of direct borrowing. but so did that borrowed some other money to fix them up a little bit. And then I think when we first rented them out, I think it was about 1200 1200 13 $100 a unit for four units. So that was bringing in over the 1% rule, you can say, if you're familiar with that, you know 1% of monthly rent to the purchase price. Now the rents are about 1800 1800 1800 2000 time has been a good two real estate investors in the San Francisco Bay Area both on on price and rent. So I've done a cash out refinance all my properties subsequently to purchase to get all the money out that I put in, plus a little bit extra than most cases.

And are were those rentals. Long term leases. Yes. So

back then I didn't really know about Airbnb, I still hadn't networked quite enough, or at least listened to the people I had networked with quite as much. So I was just doing Yeah, long term leases on that. And kind of long story short, I ended up doing this cash out refinance and purchasing some more properties. But it all came from nothing, you know, I had negative net worth, I really didn't have any savings in the bank. And basically what I did is I put, not encouraging everyone to do this. But I put all my monthly expenses on my credit card, and deposited my entire paycheck directly into the bank. I think I was even paying to be my rent with a credit card at that time. And basically, the point was to build up cash reserves for the downpayment as quickly as possible. So again, I don't encourage everyone to do that. But you know, this was a great time to buy, and in the long term, the property was going to work. So to me $12,000 in credit card debt 4500 wasn't going to kill the long term deal.

Yeah.

Were you using one where you kind of just opened it and had that like 0% interest for a certain amount of time?

Yes. So I do take advantage of balance transfer offers. Again, I want to be you know, everyone needs to be cautious with their spending file. And I think that the main thing is, can you use credit cards as a tool for investing or using them for consumer purchases? Honestly, I regularly keep credit card balances of 10s of 1000s of dollars in those balance transfers, I keep a diverse array of credit cards, they all have pretty large limits. You know, again, I go with a lot of different issuers, so I'm not gonna get cut off, there's always stuff available and to maintain good credit, and payments, of course, but that's for me, it's just another way to float something for my business, it's three or 4% per year, which is frankly lower than my mortgages and unsecured. A lot of them are business credit cards that aren't even on my personal credit report either. So it's not my personal credit. So again, not for everyone, but I think that you can use it as a tool. For example, would I rather borrow private money at seven 810 percent secured by real estate, or three or 4% unsecured?

And so to clarify what my understanding of what you did was you said, Okay, I'm going to put all my spendings all my food, my electric bill, all that onto the credit cards for a period. And then basically just bank all the cash from my paycheck. So you built up, you built up some credit card debt, but you also had cash to go to the table with to fund the purchase of the property exactly, because they require a cash down payment, you know, in some reserves, but you're allowed to have a certain amount of debt, right, as long as you fit your debt to income ratio and everything. So you know, to be honest, you know, 12 grand in credit card debt, it's

probably 10 bucks a month and payment is what it's adding to your payment to the dti. So you can talk to your you know, mortgage lender not trying to give advice on it, but that's how I that's how I got started and rolled up, you know, a lot of real estate from that initial downpayment from them.

Okay, so you went from long term rentals. When did you start getting into short term rentals? When did that sort of become your your second aha moment. Yeah,

you know, and I got to give a shout out to Al Williams and he had been encouraged. He's doing some short term rentals and some arbitrage stuff, he'd been encouraging me to get into it for a long time. This is why earlier I said, they can't just network, you also got to listen to the people you network with and take action, which is what I wasn't doing. So he basically encouraged me at the time, but I thought it was too much work. So I talked to other people who were doing short term rentals. And it's like, oh, I gotta be on my phone, 24 seven, I got to do this, and that, and I gotta go run and, you know, fix something that the cleaners didn't do. And at that point, I had decided, you know, I want to be location independent, I don't want to have to show up there, I thought it's too much work. What I ended up doing is started about five years ago, I think, was the first one. And what I said is, I'm going to try to do this without ever showing up to the property. Now, I actually lived in the apartment next door. So it wouldn't be challenging to go next door. But literally, nothing was wrong in there. You know, it could be something's missing or needs to be replaced. I was feel bad saying this, but I would not walk next door and go do it. Even if that would be quicker for the customer and easier on my business in the short term, because I could just walk over there and drop off a towel. But I wanted a sustainable business without me having to show up physically. So that was how I started the very first one. After the first couple of weeks, I was just like, Okay, I'm gonna pretend I'm not in the country. What would I do if I were not in the country? And I think if you want to be location independent, I think it's a great question to ask yourself, if you have a business, or a job, or an obligation that does require you to be there, or you think it requires you to be there is to think about what would I do if I were outside of the country? Most things could still be done? Yeah.

It's, it's interesting, because when I talk to people about real estate, a lot of people are like, well, how, you know, because we, we just bought a single family home in Fayetteville, and you know, we have sort of plans to do some different short term rentals and things away from where we're at, because Vegas is not a good market for these things. And people always are like, well, how can you do that you have to be there, you have to end and I'm like, you really don't as long as you have the systems and things set up, which is exciting that we we get to talk to you about that, because I think that's really where people, they're just they they sell themselves short, because I think they can't do it. Even in a in a single family homes situation. I actually talked to a real estate agent the other day that was like, you know, we'll Why did you buy in Fayetteville, how you're going to need this, this and this. And I'm like, it's cool. We have a team on the ground. You know, we worked with another investor that already has their team. And we're confident with that we're good. And you know, and she, she does stuff all around the country. So even coming from someone who knows that you can, she still gave me a little bit of pushback. And it was like, it's fine. You know, we've done our due diligence.

It's good, they're worried about you. You know, I think it was Henry Ford. They said, you know, if you if you believe you can't, you're right. And if you believe you can, you're right. And I think it's so huge in the business. I mean everything in life, but especially in the real estate business. And especially when talking about remote or location independent type work. With one just quick anecdote I wanted to share with you since I'm here in metazine, I'm going to be visiting a friend that I've met, who's also a US real estate investor, his name's Chad, because we always hear Oh, you can't do this remotely, you can't do this with kids. You know, I know, this is a show focused on the family location independence. So he's got four children that are all living here in managing Columbia. They've been here, I think for just over six months. Now, I saw him last year when I was here. And he was remotely in Kansas City, turning a hospital into an apartment complex. So you know, people say, Oh, you know, it's too hard to, you know, travel with children or find schools for them, or, you know, to do a flip project remotely, or convert, you know, into a different type of property. And he's doing all those things, you know, right here, and I'll be meeting up with him this week. So I just want to encourage anyone who's saying, you know, I can't do this, I can't do that. You can't. And it's all wrong. I was gonna use inappropriate word, but try to keep it a keep it private. It's all

Yeah, no, I mean, doing it from a country away, and people worry about it from a couple states away, or, you know, so that's interesting. That's really cool.

We're gonna have to get his name from you before we go as well. Because if we've got a real estate investor, who's location independent of the country with a family, we need to

put you in touch with him. Absolutely. You know, yeah. And my properties, you know, or the San Francisco Bay. I'm where wherever I happen to be in Colombia now. And my team that does all these operations is in the Philippines. So you know, when people say Yeah, I'm gonna be over here. I'm gonna be over there. I mean, I don't even need an internet connection now because they're doing all the work. But that's the basics of all right, if you're going to be independent.

Gotcha. All right, well, let's dig into your portfolio, you start off with the four Plex. And did you then buy another property for certain strictly specifically for short term rental,

I haven't ever bought a property specifically for a short term rental. And I just want to float out a word of caution. You know, regulations are changing a lot. And that will continue to change, especially on the local municipality level, in regards to under 30 days, and I can talk about over 30 days furnished, which is another option. But I would just be really cautious to purchase a property based on the short term rental income, I personally probably would not do it unless I was already operating the property for a significant portion of time, and had a plan B, that would carry that investment for it. If short term rentals no longer worked, just want to put out that word of caution. First of all, I bought, actually all of my properties before I started doing furnished rentals, short term rentals. So for those, the basic philosophy after I did that first one, by myself with FHA is I did cash out refinance, you know, fixed up, got it rented, the market was also moving up at this time, which I was, you know, fortunate, but that's also why I bought things that kind of bottomed out. And basically, for the next three properties I partnered up, did 5050 equity deals. And just to share, because I know a big thing about getting started in real estate is people also say, Oh, you need a ton of money. And again, in real estate, I think is the one place where if you can find a deal and bring something that makes a good return, there's almost always people out there, there's what $4 trillion out there, just in the US, I tried to find a home to return. So I think if you can bring that you can find the money. Um, so what I did is, you know, when a 5050 deal, I should bring 50% of the downpayment, they bring 50% down payment, and then we borrow 75, or 80%, from the bank, right? So let's say that 20%, that we should be putting down, I should be putting down 10%. Well, that's still a significant amount of money that is from my half. So what I would do instead is I would put down my lucky number 12,500, the same I put down on my very first property, and I would borrow the remainder of my down payments, more or less from my partner. So if I'm supposed to put in, you know, $50,000, I would put in 12,500, and then borrow, what is that 37, five, a little slow, right now, it's boring here. But math and but borrow, borrow the remainder of that portion, I think in notes that are about seven or 8%, personally guaranteed by me, so that they have a higher, you know, a good yielding payment that's going to come in no matter what. And then we also have this 5050 ownership of equity in the property. And again, that's money that I could borrow off my credit card and prepay with the cash out refi, which has its risks. But it was, again, the credit card to start that cash out refinance. So you get the money, you know, rolling back again, and then this structure with the ownership structure that allowed me to put a lower down payment that I would normally put,

that's what allowed me to purchase several more properties, especially in the day, you know, it's expensive, it's it's a little bit difficult to do. And so you're giving up a portion of your cash flow to basically pay back that loan. That second note to to your partner. Yeah, that's brilliant. I've never heard. I've never heard anybody doing that before. It's awesome. Yeah, I

think you know, the only caution there, of course, right, you're gonna have a higher debt burden, and you have to pay it regardless of whether or not the property performs at least how it was written for me. Now, for me, I said, Okay, you don't get out of pocket if necessary on one property I did. But the cash flow from the other properties is more than make up for that.

And then how many properties would you say you did that on?

So I have four properties, you know, three that I co own, and one that I own myself? We've done cash out refinance on all of them for right around or more than the cash put into them. So the there was a couple of single family homes that are on the same lot. And another four Plex to another duplex. Yes, it was just that I just kept doing the same kind of thing.

Gotcha. And are they all set up as short term rentals right now are some long term,

most of them actually are not. So part of what goes on in the San Francisco Bay is that there's rent control, and you know, if a tenant wants to stay there, but they can basically stay there. So we haven't had a lot of churn at these properties to kind of create that. Also, I actually did try one. So a lot of us just like to share this first of all, so a lot of my first rentals are actually subleases. So I rent a property from another real estate investor that I know using an apartment or several apartments, put furniture inside and then rent it out on another platform. So that's actually the budget Already are those sub leases, I have a few properties like that that first four Plex that I bought is by the train station. So even though it's a little bit like lower income neighborhood, it's still quick to get into Oakland, San Francisco. So I have three furnished units there. And then my handyman lives in one of the units. Another property, I tried it, and it was working, okay, not quite as successful as the other one, because it wasn't close to public transit. But here's something interesting, the market rents went up so high, that it was no longer really profitable to do the furnished rentals. In other words, the furnished income, you know, revenue did not climb as fast as the base market rent at that time. And so if you're going to do a sublease thing, that's important, because you know, market rents are going to be changing. Again, you can sign longer leases or other things or options to extend, it certainly increases to kind of mitigate that risk. In this case, we actually, you know, I co own the property. So what I do, and I get encouraged for other people who have businesses with related transactions, is we actually charge the market rent, the property charges market rent to the furnished rental business. So we kind of know, you know, what's the actual profit associated with the extra over market rent, not just the fact that you have a low cost basis and can make a bunch of money with rentals, right? Because you're already making a bunch of money without? Yeah, so it's kind of looking at that, again, it's just kind of a general business thing, right? But looking at really, where's your time and energy going versus the, the financial and other returns that you're getting out of it? Because if you're not really measuring where you're putting in your time and effort, versus the returns that are coming out? You know, it's hard to be location and time independent when you're, you know, if you're not focusing on the right thing. So that was important for us to break out, like, what is our hard work at the furnished rental company doing? versus just owning properties?

Gotcha. What you're getting with the properties that you own is the cash flow, plus the appreciation grass, but with the with the subleases, you're just getting the cash flow.

Yeah, that's true. In theory, and this is a little squishier the business as it becomes more profitable gains its own value, right. So a couple people that have bought and sold businesses of this nature, you know, first rental businesses and someone who just raised some money. So we can actually don't really focus too much of that it's mainly for cash flow, that I use to invest in other people's passive deals, just like yourself, right? You look for accredited investors. So I'm investor, I use a lot of cash flow from that furnished rental business to invest. You, I try to invest 100,000 a year in passive deals from that, from that cash flow.

And that's really smart. Because then you ever very diversified, sort of real estate investments you're not, you know, it's, you're kind of getting the whole smorgasbord of, of different options, which is cool.

So how many? You've got the four units that you own or co own? And then how many units? Would you say how many units do you? Are you subletting? Um, so

we have 220 2222 21? Maybe? I think they're adding one maybe this week? Yeah, so about 20, and three of those I own, so the other 17 are sublets. So basically, these are just people that I've met at other networking events over the years, you know, some of them become friends this and that, you know, they're remodeling some apartments that are available, like, you know, do you want them up precisely? Send them the money over, they don't have to do any work. You know, they know I'll take care of it. That's pretty much that.

And are those all in the Bay Area,

or the other on the San Francisco Bay, they're a little bit spread out, we basically have two regions, we have a Silicon Valley, so Redwood City, San Jose, and Mountain View. And then we have some of the East Bay in Oakland and Richmond. So kind of different different regions, not just geographically, but they're different like to kind of tenant base and you know, the people that are looking and things like that.

So your acquisition, as far as getting these sublease properties is just for networking. Correct. You're just you're just going to landlords, landlords that you've already met, you're not you're not reaching out blindly to limb. That's correct.

So that's the approach I've taken. I know people who have successfully just reached out on Craigslist, or zumper, or whatever it is. Yeah, I just talked to people that I know, some of them have heard it from other people. You know, like another friend said, Oh, yeah, maybe just talk to Jay, if you got a bunch of units, you know, I'll just list them all out, and focus on, you know, buying more properties and remodeling and things like that. So for me, it's been a really, you know, organic experience that way just again, from networking, and the primary difference in a lease is just the right to sublease. So people are always like, Oh, you have crazy contracts. And this this and that. I mean, you can always try to do that. But a lot of times the path of least resistance, you know, for for owners that understand at least they already have is to change the sublease. Basically. So that's the short story on how to get it done. I do know other for those interested in this type of subleasing business, I do know other people that have gone directly to, you know, strangers, basically owners, and they basically just show up in person, say, Hey, have a great credit score, I run a business where we're going to be, you know, having business professionals, you know, stay here for, you know, x to z periods of time, we're going to, you know, clean and inspect the place regularly, as basically like having property management for free, but with guaranteed rent. So that's, that's the pitch that he usually lays down and he's talking to owners. And guess what? The first one might say, No, the second one, the third one, the fifth one, but if every seventh one says yes, then if you want 10 units, you just got to talk to 70. So that's, you know, that's the story with with getting more units, basically.

Yeah, that's something that we've actually considered because so Las Vegas, short term rentals are a no go. But Henderson, which is kind of like a suburb of Vegas, but it's an entirely different city. They're being okay with

short term rentals. They're just legalized it. Yeah, with regulation,

which is cool. But you know, but there, it's not, you know, the houses are three to $600,000. It's not something that we really want to purchase right now. But we could, you know, we have the experience, and we're close enough to do some of the startup to get the systems in place, it might be an option for us. So I don't know if we're really going to, but we've kind of, you know, kicked that idea around is something that might be doable, but it would be that like, cold call, you know, unless we have a friend of a friend. So it's absolutely Neil would have to do, it's absolutely doable. I

need people who do I will say that, they've they've said that it's more helpful to show up in person when you're pitching that thing. So who's the scheduled appointment to view like, you know, to view the apartment, and then hope he'll pitch them in person. I know several people that do that. I know other companies actually, that I've tried just basically spamming text messages to every landlord on Craigslist. And so they did the lower percentage conversion, higher numbers, you know, higher volume game. So there's, you know, there's a ton of different successful methods that can work. The other thing I wanted to throw out, just because you were talking about Vegas, and I'm sure like many other cities, you know, we all think it's mostly vacation people and short term vacation rentals, actually the same dimension, owl was sharing a stat. And it was something I forget the exact number so like 33 or 36% of the night stayed in the United States every year, or for over 30 days stays for all the night stayed between, you know, hotels and extended stays and Airbnb is that about just over a third of them are actually over 30 days. And that includes cities where there's tons of tourists, because usually they also have other businesses, you know, maybe some tech companies, you know, maybe even those, those hospitality companies need people to come in for three months, you know, do some training this that. So pretty much every short term rental restriction in the United States of America passed by any city or municipality. The Arab Airbnb regulations are for rentals for under 30 days or under 31 days. There are some Hoa is that will restrict longer like six months. But the actual laws if you have a non Hoa property, are pretty much consistently you know, that 20 to 31 day period. So for those people who have faced this challenge, when you talk about like Vegas, you know, could be good, but that doesn't work. There could actually be opportunities for vacation rentals, and Henderson. And there could be opportunities for 30 plus day rentals in Vegas, which would be totally legal, and maybe the price, maybe the price points work a little bit better. So anyway, throw that out there. There's always different options and angles and approaches, I think to take on the business also.

Do you have any experience dealing with it? Because in the over 30 day market seems like your biggest issue you're going to run into is with the with an HOA that has its own covenants. Have you had you have any experience with dealing with that?

Here's my experience. I don't do it. Yeah, it was just, we just you know, can you find properties that make sense with an HOA? I'm sure or is it more likely for there to be some kind of problem or complaint, especially if you have a higher homeownership ratio in that building? I would say absolutely. Yes. So for me, and again, this comes back to that time, you know, headache, whatever trade off versus the profit we're going to get, if I can get 20 units that don't have an HOA, you know how it's time to I want to spend that one Hoa property even if there's one problem with one owner that lives two doors down. It doesn't matter if what we're doing is completely legal is probably going to be a problem. For a long time, so that one unit is going to cause us 50% of our calls, you know, problems with owners or whatever have. So things like that we just say no from the start and don't even deal with it.

We go back to what you are doing. I'm curious, these apartment communities that you're in, are they larger or smaller? Because I don't know what the Bay Area market looks like, as far as Yeah,

there's lots of it personally, this is because of the investors that I tend to work with have a certain like, net worth properties, they they typically purchase around six units, I would say is the average. And they're they're typically about five to eight. So it's not. So it's so you're not going into some, you know, 200 unit apartment community,

these are more of the, you know, six, it's a six Plex and eight Plex kind of thing.

Yeah, that's correct. Although I want to throw this out, actually, because I was on this tour at a conference. And we were touring these properties being constructed. And this guy's got maybe 300 units, he's finishing these loft conversions. And I basically was, you know, saying, Hey, you know, cuz he was talking about, hey, we're trying to lease all these things out, we think it's going to take us a year to get all these units absorbed into the rental market. You know, they're still doing some construction and stuff. And I was just like, Hey, you know, what if what if someone wanted to rent 10 units from you and get some corporate, you know, some good corporate people coming through here? and talk to my manager over here, you know, she's got just got 30 units, downloads, 10, you know, and so finding 10 people, she can find one you. So I think it's not that it can't be done this, but I do, because these are the people that I work with. But there's honestly large companies that do exactly that. In the residential space. It's, you know, this subleasing thing has been going on for decades. I'm not new to doing it, and others aren't either. There's legitimate traded companies that have been subleasing for corporate housing again, for decades.

How do you go about furnishing, furnishing? Like you're traveling?

Yeah, yeah. So what we do I have a handyman, but we've also had other people kind of do this, you know, kind of go for tech people just hire for the day, friends of friends, this is that, I don't think we do this the best. But I'll tell you what we do and why we do it. So right now we get everything from IKEA. So the main reason why is because everything for the entire apartment, from the kitchen, to the bedrooms, to the ends, everything can be purchased in one day at one store, not because of its amazing design. So we do try to do some things to make to make it look a little bit nicer. Given that it's IKEA, we don't just get all of the, you know, freshmen in college, you know, stuff. But basically, you can go real high end. And in certain days, it makes sense to have very expensive, well designed furniture. In our market, our price points seem high. But it's actually you know, so for example, in Silicon Valley, in a high season in summer, we'll rent one bedrooms for over $4,000 a month. And those are not remodeled, they're, you know, like vinyl countertops, white appliances. So they're not the type of buyer, or necessitate or paid back a super large investment on furniture, we found that to be extremely, extremely difficult, because this stuff never comes at the same time. So some comes in this day, some comes in that day. And then if you save that list, and try to use it again, three months later, some of those items are now unavailable. You know, some of them take now three months to ship, so it wasn't replicable. And it couldn't be done in a day. And so that was the main reasons. Another option that some people do I don't is though, go find someone who's moving out of their house and go buy everything in there and transport themselves set it up themselves. If you have the time and energy and you want to save cash, that's an option. Again, I do everything as if I'm not in the country because I'm not so that's that's what we do. Just a little quick tip. If you're gonna do it, you can go on IKEA comm add everything to your purchase list that you want to buy. And it'll give you a printout so that you walk through the store, you can pick up everything on the way and you can just give that list to anyone to go shop for you. So that's that's one way we do it.

That's like a treasure map for IKEA

for the bus. Hopefully they're not disappointed because the treasure at the end is just setting up all the stuff in the unit but

so what would you say on average it costs you per room to furnish a property.

So we primarily do suiting studios and one bedrooms, although I have some two bedrooms also. I think a one bedroom right now is running us about $7,000 including the cost of setup, pickup setup everything so I think it's about I think it's about 5500 in actual costs, and then 1500 in labor costs. And again, you know, Bear Bear is a little bit expensive. So it could lower for you. But that's, that's the basics of what we're doing on the one bedroom. So again, it's not high end kind of middle range. Yeah, about 7000 for a one bedroom. Yeah.

So how do you manage the communication and this with turnovers and you know, if something goes wrong plumbing issues, things like that, where does that system

where I was gonna say, I don't deal with any of that stuff, actually. So we do have pretty thorough standard operating procedures, right? So written procedures that my team in the Philippines, you know, operates with, and manages and adds to when necessary. So the basics of communication, we have a single email address that's used for our company that everyone can log into, stay at furnished home calm. And then we have number that also everyone can use phone numbers to, they can receive text messages, voicemail, etc. We're using line two right now, Li and E two. But before we write that down, we don't really love it, and we're probably gonna switch to something else. So unless you're just writing it down to put on the maybe not in your consideration,

and put it in the show notes for say,

it's one thing that Yeah, I don't recommend their reviews for the dropping, but there are many, it's a VoIP. So this is great for anyone who's location independent, right? If you want to voice over internet protocols, especially just internet based number, and even my regular number that everyone calls me on, is a VoIP number. No one knows the number of my SIM card. And that means that any country I go to, I can swap out my SIM card to get local data, whatever. And I always have the same number for everyone. So I recommend that to everyone. Anyway, those are the specific communication channels, right. So we have this email, we have this VoIP number. And then obviously, they have access to the various platforms to contact people, Airbnb, this and that, and that all goes to our email inbox. So now what happens, let's say, there's a clog, you know, so someone calls and says, Hey, the bathrooms clogged? What do I do? So there's a repairs portion, problems that we encountered on Repairs? And they basically have a list of questions, right? So if there's a clog, the first question is, okay, what's clogged? You know, so it's not draining? Is it just the sink? Or is it the tub? Is it both? You know, so a little bit of troubleshooting questions in there? And then there's a series of questions to basically say, okay, is this the owners responsibility? Or is this our responsibility, we're basically responsible for tenant issues, and landlords responsible for something else. So you know, most of our leases, the tenant is responsible, if they put something in there that clogs the toilet. If it's just a general plumbing problem, then it's the owners thing. So this is kind of the decision tree they could go through. But again, the communication channels, either through email or through text messages that line, and then whatever problem it is to look that up in repairs section, or if it's a different type of question, there'll be an SLP for that. If it's a new question, ask the other people, you know, in the company, if they're not sure, last resort, they can propose something to me after they've done research and asked me and then update the ESOP accordingly. So that's kind of the pattern. So flow through the process is go, research, ask and then update. And

so you, that's and that's the call, the the phone number goes through to your Philips, you've got a VA as virtual assistants in the Philippines. Correct. So they pick up the phone, they've got a standard operating procedure for them. And then if they come across something they don't, if they've never run across something, hey, this is new, then they reach out to you? Well,

the first step is they have to go look it up online first, is kind of like, you know, if there's, you know, for example, you know, there's some new issue that pops up, you know, gas isn't turning on or heater doesn't work, right, you can type in most common problems heater on Google. And it's usually gonna say your pilot light is out. Right? So so they can they can do that research first, then ask other employees, hey, have we ever had problems with the heater, that's not an SLP, although it should be there. And then lastly, they can ask me with a proposal on what they think it is what they think we can do. So they kind of asked me without a proposal, that's a problem. And if they haven't already done their own research, that's a problem. Because my time, in my opinion, is the most valuable. And so this shouldn't be bothering me with things that don't need to be bothered with. And they're very well aware of that. I told them when they were getting hired, like their job is to have me spend as little time as possible on the business. And that's what we're working towards, well, you know, being profitable.

Gotcha. Awesome. So It sounds like one of the benefits of any, I guess this is kind of obvious. But I want to point it out that one of the benefits of essentially doing the subleasing or, you know, renting from someone else is that you don't have to deal with a lot of the plumbing or those big problems, because that would be more on the owner of the apartment complex on their side, rather than on you. Because you're technically the renter. And that would be something if you were just like a long term renter, and something happened, a lot of times, they would go to the owner.

Exactly. And that all goes down to the lease. So I encourage everyone to, you know, look carefully, you know, at your lease terms, because that's what's going to dictate who repairs what, but yeah, that's typically what's happening. So if you're looking at this short term, furnished rental model versus buying, I mean, it's not apples to apples, once a business once you know, these long term investments that might also have appreciation. But if you look at them side by side, the amount of capital needed, you know, in some ways can be a lot less with a furnished rental business. Because you can just, you know, buy some furniture, make that back, you know, hopefully, within the first six months, you're ready to go for another one. And then you don't have big repairs coming down the pipeline, because that's what the owner is responsible for. But then on the other hand, it's hard to finance furniture, unless you're just going to put it on a credit card or whatever. Whereas, you know, when I look at the deals that I did in real estate, I actually still didn't put a ton down on the real estate that I purchased. So I always want to say like, hey, it's a really low cost way to get into real estate, which is true. But also just investing in real estate can be low cost. Anyway, I encourage everyone to keep their eyes open. And it doesn't have to be either or they can go together, they can be independent, in making our connections a

little bit, a little bit rough right now. So we but we I think we caught most of that. I want to I want to point out something that you that you've talked about that for people were listening to really, really focus on this is that part of what is so powerful of what Jay has done is it has forced him being out of the country has basically forced him to build systems to remove himself from his business, which has allowed him to scale because so many people get bogged so many business owners get bogged down in on the details and basically working in their business, not on their business, and their their business doesn't grow. How did you find your vs

Actually, I wanted to share as sort of the inspiration behind this because I was working in my business all the time, instead of on my business, I was answering everything, I just quit my job. And I'm location independent. But I went to the Grand Canyon down at the very bottom and Havasupai falls. And literally on the way out there to go camping with my sister, I realized I have to shut down my whole business, you know, because because I can't go offline for a few days, and still make revenue. So that was the moment that inspired me to get assistance. And I also wanted to share a great book, it's called work the system is in the subtitle, I think is how most small businesses fail. There's many different versions, including the real estate, I forget the author, but it's called work the system, and basically, friend and co land and started writing my procedures on the plane because I was so excited to get started on this. So that's what got me to the point of hiring. And then I encouraged you know, to think really about what you can outsource, you know, which is the things that you're doing on a day to day basis or things that would support that. And then the actual website that we use is online jobs.ph. So that's a Philippines only website. And what we've found is when we're hiring people from Upwork, or outsourced Lee or one of Fiverr, when most of the many sites is we really are focused on longer term permanent people and the Philippines tend to has the have the best price point for good English speakers. I feel bad because it's partially because we colonize them along with, you know, the Spanish Japanese. But one of the great things is that you can you know, like one of my employees just built a house, you know, and for what would be considered a very modest us wage, you know, as obviously goes much further in the Philippines. Yeah.

So, you know, people think about, oh, I want to travel more I want to you know, I want to be location independent. One of the real powers that beyond just Hey, it's fun, is that your cost of living is often lower, where you go. So can you talk to us a little bit about you know, some of the, the geo arbitrage that you've done places you've liked places that you would never go back to again.

There's less of those. But yeah, so my basis is basically making money at a higher cost area and then going to spend it in a lower cost area. It's also the reason that I haven't started doing Airbnb in these lower cost countries, it always looks like a great idea, but you just can't make enough money at the end of the day, because the prices are so low, in my opinion, there's ways to do it. But you know, for the amount of effort that's out there. So I've spent the most time in Thailand, probably about six months total now. So Chiang Mai is a really great digital nomad kind of hotspot, the weather's a little bit cooler, really great place to hang out. And then also down in the islands, Koh Lanta and some of the other stuff, stuff. So my third time to mention Colombia. So also, of course, Thailand has a very low cost of living. So back then I was traveling with my girlfriend. So now my spouse, but you know, we've been together for about a year and a half. While we're traveling together all the time, we would try to keep when we were kind of a little bit more on a budget, we would try to spend about $500 a month on lodging in Thailand. And then we would split it so to 250 USD a piece. And these are for places like, you know, a one bedroom by the beach, or, you know, like a nice studio in downtown Chiangmai. Or, you know, this or that. So, it's not like we were splurging last time in metazine, actually, I booked this six bedroom, like two or three bath house for 15 $100 a month. And I just invited my friends, family, everyone to come out and stay and I got, I think over a dozen visitors, my mom, my dad, my sister, cousin, real estate friends, my CPA came out and if you know, Linda wagon, so yeah, I think there's great ways to also mix your interaction with, you know, life and your family, you know, extended family and friends. Also, by inviting them to come out and enjoy some of that location independence. I was shocked. Actually, how many people came out so good. I think it can vary a lot. I think you can probably keep it under $1,000 a month as a single person and still live well, in many countries. And you can spend, you know, like anything, you can spend as much as you want. But overall, it's you know, it's much, much, much more affordable. Yeah,

that's cool. Chiang Mai is my like, it's on my the top of my bucket list.

It's a wonderful place. To give you some recommendations to

me, one of the books that we first read about was it called at home in the world like it's Tish oxen writer, I think is her name. But she took her family. And they did a lot of time. And one of the places that they went to was Chiang Mai and it just sounded like a really cool right up my alley as a nutritionist kind of healthy, you know?

Yeah, I think that Bali are the two big places that always hit and I think for that kind of like vibe, you know, chungju

any places not to get negative, but any places that you would not go back to?

You know?

That's a good question. I know, there's nothing really that like strongly pops into my head. I actually I've been what was it, Clark. It's by Clark Air Force. There's some place in the Philippines that was just like, actually like the Philippines. But I think maybe it was in Subic Bay. And it was just the time of the year it was like, Thai foodie, and is blowing trash and everywhere. So the beach literally is just filled with trash. And every you know, the cars just spewing out pollution. I love India, but the air pollution is getting really bad there. I think that's actually probably the biggest thing that's facing a lot of countries, you know, as much as tourism, population pollution, you know, plastic pollution, air pollution, it's real. When you go to these countries, it makes a complaint about you know, like the DMV laws and clean air and this and that, you know, when you go to New Delhi, it makes you really appreciate what we have, you know, in the United States, so,

yeah, well, that's really where to get political. I, you know, I oftentimes when I get into debates with some of my more conservative friends who complain about, oh, climate change, blah, blah, blah, and I'm like, I don't care like whatever, I just don't want my air quality to look like Beijing. You know, you show show him a picture of Beijing or New Delhi, you know, and, or, you know, Bangladesh where the, you know, the waterways are literally just completely clogged with you know, plastic like, just that's, I just don't want it to look like that.

Yeah, yeah, that's why that's controversial. Yeah, that's a real minimum standard is we don't want it to be like that for sure. Yeah.

Okay. So we're gonna run through our kind of make sure we've got our our four kind of big things covered. We know we know what it took your money to get started. We know that you don't How much time would you say that are you are required to spend on this? Yeah,

it's interesting. So I've gone as long as three months without talking to my manager. So without talking to anyone in business except for making payments, so to me, this is the holy grail, if you can die, and your business will still make money, then it's a real business, you're not just a solopreneur. So I'm proud to say, I haven't died. But if I did die, I think it would still make money. On average, I do review reports. So I have the financial reports, like a monthly package, and it's updated reports that show what's vacant, and we'll be coming vacant in various periods. Right now, probably about three or four hours a week. Because again, you know, I don't do it. But my team is doing to increase bookings, you know, any reservations stuff, any of the things you talked about maintenance calls, I don't have, I don't contact anyone through Airbnb, and I don't have the phone, the VoIP phone number installed on my phone, for whoever they're talking to. So that's really, I worked it out, actually, if it works out to about $1,000 an hour for that business. Because I because I don't spend very much time on it. And it's pretty attached.

Yeah, that makes sense. So you're really working on your business, because you're working on the business side, not in the business,

because you were talking about some people wanting to travel internationally, you know, and get to that point. Again, I encourage you to pretend you're out of the country today. And ask yourself what you would do to try to realize your goal before you get started on it. So I just wanted to encourage people to do that.

Okay, last question. When you were getting started, in the short term rental space, do you recall sort of the things that you really had to learn how to do that have made you successful,

it really comes back to getting a written process and procedure in place is absolutely the number one thing that led to success there. Before I was the only one who knew how to do these things, how to price how to respond. And of course, it couldn't be replicated consistently without me being a part of the process. Written, written, written, written.

Write that down. It's written.

Well, Jay, we could we could continue talking to you for about another hour. But we're running out of time. And I want to be respectful of your time. Thank you so much for sharing with us today. I look forward to meeting you in person someday, whether at the San Francisco Bay summit, or maybe I don't know if you ever make it out to the best ever conference, I typically make it out there as well. So I

want to meet him in Chiang Mai, meta gene are one of those places, screw the states.

Come out right now. I'll be here for a couple weeks. He's gonna go hang out with me in chat. I'll give you that introduction.

So the San Francisco based summit is coming up February 8, and the ninth of 2020. Can you tell us real quick, a little bit more about it? Yeah, you

know, I started this basically, because bigger pockets was not doing a conference. And so this is not a bigger pockets conference. But that's why I started it up and just invited everyone because I found the power of networking and wanted to do that more myself. So it's two days, we get a lot of great speakers together a lot of one on one networking, some happy hours, hangout time. It's just to build relationships. So yeah, it's in Oakland, February 8, and ninth, our website is s fb summit.com. And yeah, just encourage everyone to you know, go out to your local networking event, check BiggerPockets meetup.com. You know, go to conferences, something that's close to something far get different perspectives, come up with SFA summit if you can, but there's so many networking opportunities. I think that can take people so far. So wherever you're at, there's something there or start your own like I did, and got me some other folks. All right. And

if if any of our listeners want to reach out to you what would be the best way they could do that? Check me

out on Instagram is the easiest is real estate Nomad, easy to remember. I think there's the.in between each one but you'll find it if you search.

Alright. Jay, it's been really great talking to you. Thanks for your time.

Thank you both for having me. I appreciate it. No rating. Alright, safe travels with us.

Okay, that was Jay Martin. International man of mystery location independent. Short term rental. Extraordinary.

Yeah. So short term rent, well, not short, short term rental furnished rentals. furnished rentals is really what he called it and I think that's a good way to sort of talk about it because it's, you know, there are so many different kinds, you're just furnishing a place and it could be a short term rental, like Airbnb. It could be a corporate type rental traveling nurse, you know, you It's so it, there's a lot of different variations in there. And I think we do sometimes forget about that. And it's something that that is worth looking into. Yeah, for sure.

So, what was the key lesson learned for you from this interview?

Um, that j is cool. Um, I mean, I, I'm sure both of us would say it, like some systems are, are the thing that make the world go round, but make you successful in business? You know, we've, so many of the people that we have talked to this is one of the big things and we've really concentrated on asking people about this because even for ourselves and in our business, and you know, how the podcast is run, the process, the the system is, it's much smoother when you really have that in place. And maybe the biggest key is that, like, we should really have everything written down somewhere a little bit more concisely, because, you know, we're still working on getting some of that stuff really in place, even for our short term rental. For me, I

would say, I love the way he put it. He said, play a thought game with yourself and basically say, Okay, how would I run my business? If I was out of the country, if I was out of the area, even when you're actually in the area, start to sit there and do those things, because two things are going to happen for you. One is you can build a location independent lifestyle, but two, chances are, and this is very much in the sort of the Tim Ferriss four hour workweek vein, once you remove yourself as a roadblock, your your business will probably explode.

Yeah, yeah. And that's, you know, you're it's a great thought exercise, whether you want to be location independence, or, or invest in another location, maybe you still want to invest right next door, that's fine. You're gonna live a better life. If you're not working in that business, you might as well do that thought exercise first. And then make your systems from there and and then decide how, you know how much you want to do that outsource things. But if we could outsource all of the things that would take a lot of stress off of us, really,

and we've done a pretty good job. Yeah, thus far. I mean, we've really, we really, for our short term rental here, you know, it require it really doesn't require a whole lot of work. For us. The biggest thing for us is just the laundry. Yeah, that's honestly the biggest thing. We have to keep up the laundry. And that's,

you know, that's me. Yeah. I filled it sometimes do but yes, yes, that that is a big one for us. And the laundry services are for the amount of turnover we have, I don't feel like it's worth exploring that monetarily. Right now, it would cut into too much into our profit. So that's our one thing that we have to give on. And I think that's okay. And, and, you know, money.

Yep. $12,500 is what he got started. Again, he, as he said it caution, be careful. You know, one of the real leverage is a wonderful thing in real estate. But it cuts both ways. So just be careful.

Well, and that was, how much he spent when he bought a property when he was furnishing. And so like, let's say he's doing like the subleasing piece, you probably have to put some kind of, you might have to put like, a deposit down. So that's, you need that. And then he said, he spends about $7,000 for furnishing it. And that includes the fee for the people to do that. And that's for you know, a one bedroom studio type thing. So you know, like, let's say you want to do this in a larger capacity, a house, you might be looking at 10 grand to get started depending on you know, what you're getting, I mean, I feel like 7000 probably includes like, you've got one like the root bedroom stuff, and then living area and kitchen stuff. So if you add in a few more bedrooms, you're probably not going to have like $7,000 per extra bedroom. It's going to be so I don't know

yeah. It's fruitless low as like 4000 Yeah, a room Yeah.

I like how he does it, though. I mean, like, you don't need to really get it on the cheap and you don't have the time. It's I really feel like you could the IKEA thing is is a great way to do it. So knowledge what was can you remember that the set of key knowledge thing he really used bigger pockets and then meetups and like talking to other investors is networking. gets really where he got most of his

knowledge. He also talked about, you know, the thing he had to learn how to really write

stuff down. Yeah. And then he also had that book that we'll put in the show notes, the work the system book, and then we'll make sure that's that exact title. And then yeah, so and then time, he said, three to four hours a week. Yep, three to four. We have another interview. That's why we're going real fast. But that's okay. All right.

So last last value, and this is sort of silly. could he do this from anywhere in the world? No.

Yes, he can. And he does.

So awesome. All right. Well, that was Jay Martin. Thanks again. For his time, it was so great talking to him. We love, love those kinds of stories. We're doing this all again next week.

So let's hit the road.

I and if you like this podcast, we would really appreciate it if you take just a few minutes and leave a review for us on iTunes. It's really simple to do. Just go to road to family freedom comm slash review for links and instructions. Thanks for listening. We're doing this all again next week. Until then, safe travels.