How to Build an Entire Portfolio

Ashley:
This is Real estate rookie episode number 402.

Tony :
So Ash, have you heard of this thing called the Domino Effect?

Ashley:
Yeah. A domino can take down the next one that is one and a half times its size and it compounds its ability to take down larger sized dominoes.

Tony :
And today’s rookie guest built his portfolio using one deal to take down the next and the next, the next.

Ashley:
My name is Ashley Care and I’m here with Tony j Robinson.

Tony :
And welcome to the Real Estate Rookie podcast where every week, three times a week, we bring you the inspiration, motivation, and stories you need to hear to kickstart your investing journey. And today we have Rob Scowl on the podcast. Now Rob and his wife are both teachers in southern Maryland by day and they’re creative side hustlers by night. Each deal has helped them towards the next one and exposed Rob to a variety of strategies when it comes to real estate investing. So Rob, welcome to the Real Estate Rookie podcast.

Rob :
I appreciate you guys having me on. Thank you for having me here,

Ashley:
Rob, to start this off, we are very interested in how a used car and a puppy Playdate turned into a real estate deal for you and your family.

Rob :
So it was one of those things just kind of, we were looking around on Zillow of course, and trying to figure out where we wanted to buy this vacation house. We’ve always wanted a vacation house kind of in the woods or either by a lake or something like that. And we looked at a whole bunch of different areas and we realized pretty quickly that the capital we had on hand wasn’t going to be enough to put a down payment for a lot of these houses. But luckily we had a paid off truck. So I sold the truck on Carvana and then took that cash to the guy that we’ve bought used cars from and bought a used car for part of that money and kept the rest for the down payment. And as we were talking to him, we were talking about the different markets that we were looking at and one of ’em was Deep Creek Lake, which is in western Maryland.
And at the same time we were looking for a puppy too, because we have four dogs and love dogs and more dogs is always good. And he said, well, my brother actually has some puppies up in Deep Creek Lake. Why don’t you go check out the puppies? And that’s when my wife looked at me and said, well, we can also look at real estate too. And so sure enough, we went up to Deep Creek Lake, we saw a house that was basically from basement to the ceiling with mold. That was the first house we looked at. It got a little spooked by that. It was really our first time buying anything other than a primary residence. But we still tried to get it under contract. We had the inspection back, the inspector actually called us and was like, no, no, no, no, no, don’t do this. And then luckily through that we found a great real estate agent and that’s how we actually got our first true, I would say, investment property under contract.

Ashley:
So during that time, what kind of led you up to getting interested in real estate investing?

Rob :
Honestly, I think at that point we didn’t know we were real estate investing. We just knew we wanted a vacation home. We knew we saw people in our circle of friends that were more ahead us financially and had vacation homes and things like that. And we just thought that was the thing that we could do to be at that place too. So it really wasn’t until I started listening to BiggerPockets that I really had any clue about investments and I didn’t listen to until after we bought this home, well after we bought this home. So at that point we had no clue we were getting into investment. Did

Ashley:
You have any skills or experience with buying property or anything that could have translated into here’s the value we’re bringing to the table when you were looking for that first property?

Rob :
Our first home we bought, I was really involved throughout the process. I was just curious and really wanted to know, and we had a great agent that walked us through it too, and an amazing loan officer that really kept us in the loop the whole time. And I just was curious throughout the whole process. So I asked a ton of questions when that was happening and it made me feel a little bit more confident when we went to go to this next one. And what I realized too pretty quickly was the way to get these things done was to keep asking questions and to keep kind of pushing and asking why and it can lead to those good outcomes.

Ashley:
And what about your wife? Why was she excited about this besides just having a vacation home? Was there any skills or experience or value she

Rob :
Added? She’s a contractor’s daughter, so she is someone that always loves a good project. Our house is always some sort of project going on, whether it’s building vans right now she’s starting up a flower garden that she wants to do cut flowers for the nursing homes around here. So she’s always doing something. And that next project felt like that vacation home and that was her laser focus and it was she can see the good in any kind of house and say this is how we can do that. And so that’s what skills she definitely brings to all of this.

Tony :
So Rob, were you guys specifically looking for value add opportunities, properties where you could go in and do some renovations or that’s just what happened to present itself to you?

Rob :
We knew we couldn’t afford something that looked nice, and so the only way we can move forward was something that Carrie felt she could turn into something better. We didn’t realize it was a value add At the time we watched HDTV, we watched those kind of things where we knew about a fixer upper and being able to flip things but not to the point that we were like, we can add value and make this thing this much more valuable.

Ashley:
So tell us the outcome of this first deal.

Rob :
So the first deal was one that was in a community that was lakefront basically. So it wasn’t a lakeside house, it was just lakefront. We got under contract for $215,000. We actually didn’t see it. The agent called us and said, Hey, this is about to come on the market, I think you’d really like it. And this was before everyone was doing virtual tours. Do you want me to go do a cell phone tour and see if you like it? And sure enough, he went and did a cell phone tour and we got under contract that day and we didn’t actually walk into it until, I think it was like five days before the closing or something like that. We never saw it in person. So then basically once we got in there, Carrie came in the first day that we had it and she started renovations and it wasn’t anything big, it was more cosmetic stuff than anything else. We added some bunks to the bunk to one of the bedrooms, so it’d be more B friendly. Added some bathroom stuff too. And we probably put about $5,000 in materials and God knows a hundred and some odd trips to the lows in the Walmart in the meantime. And then we ran it as an Airbnb for about nine months and then after that we got tired of having it as an Airbnb and our vacation rental.

Tony :
So what were the big pain points for you on this project, Rob?

Rob :
I think the biggest was management. And I don’t know if it’s unrealistic expectations of management of property management or we had a different idea of what it should be managed. I put a lot into the social media aspect of it and actually, but we did a lot of branding and stuff and tried to make it as fun and as inviting as we possibly could. And then we just felt that the management wasn’t really pushing it out there as much as we thought they could. We were getting a lot of the bookings through our own social media, the cleaning and stuff that we signed up for through them, just wasn’t get reviews that would say there was hair all over the shower tubs and stuff like that. And then when we would go and check it out, it felt like we were just kind of cleaning up everything when we got there, whether it was cleaning up the grill or just making sure all the things that were not taken care of by the property managers. We felt obligated to do it. So it became more vacation, it became more of a job when we were going up there every month or so.

Ashley:
With this experience that you’ve had, what would you do differently when vetting a property management company for a short-term rental

Rob :
Call around? We just picked the first person, I’ll be totally honest. And we picked the person that was through our realtor. I think listening to BiggerPockets now, I realized that one of the things that if I were to invest in short-term rentals, again, I would make sure there’s a lot of property management companies in the area. There was really only three main ones in Deep Creek Lake at the time. So even if you didn’t choose these people, you still probably were getting similar service from someone else. And they took a lot of those independent cleaners into their groups and they manage hundreds of different properties around that lake. So it would be vetting myself, making more calls, trying to find more independent people to come in and being more confident in myself to be hands-on with it because I think it’s that passive idea that I can just hand it to this property management company and I’m all done. And I was completely wrong with that. And I think what I need to do is find the right people, keep checking up on the right people and make sure that they’re doing what I’ve asked them to do.

Tony :
So Rob, if I’m tracking the story here correctly, you guys found this property on Deep Creek Lake, renovated it, started using it yourself, rinsing it out when you’re not using it, but then became a little maybe disillusioned with the process. So what did you guys end up doing with it? Did you sell the property after all or what happened with it?

Rob :
We did. We did. So in February of, I guess it was actually January, January, 2020, so right before covid, my wife and I decided that we didn’t want to deal with it anymore. We just got through the ski season kind of, and we said, well, let’s go ahead and sell it now. And called the agent and he said that it would give us, so we called the agent and we went ahead and listed it I think around like 2 65. And within two days we had a full price offer and settled literally on Valentine’s Day of 2020. And then two weeks later, everything just stops around the whole world. And I got to say, this is probably one of my, I wish I would’ve found BiggerPockets earlier for this kind of deal. I think I would’ve sat on it longer because that same property in 2021 sold for $465,000. So it increased $200,000. And they did because we did so much stuff to it, they didn’t have to do anything when they sold, they actually removed the hot tub from it, took the hot tub with them and still sold it for $200,000 more.

Ashley:
I want to hear a little bit more about what life was like BB before BiggerPockets and what your W2 is doing everything that was going on in your life as you’re starting this first short-term rental. We’re going to take a short break and for everyone listening, thank you so much for taking the time to check out our show sponsors. They are what keep the show alive along with you guys, so we appreciate the rookie community so much. We’ll be right back. Okay, we are back with Rob who just demonstrated how Hallmark movies with puppies and vacation homes can be real after all. So we’re going to be talking about what life was like for Rob and his family during this time. He sought out this first vacation home. So Rob, what were you doing during this time period? Were you living in a van down by the river? What was life like for you?

Rob :
So we were both teachers. So Karen and I met, actually talked about a Hallmark movie Karen and I met at the school where we both taught, we were both second grade teachers, the only two second grade teachers. And so our whole time that we’ve been together, we’ve gone to work every single day together and it is great, we love it. And still she’s here every day with me too. Now that we’re both not teachers teaching’s hard. I mean plain and simple teaching was just hard and I don’t think we ever thought of getting this investment property, this rental property as a way to get out of teaching, but we saw it as a way to make some more money to supplement what we weren’t making in teaching and maybe get a free vacation every once in a while to our property because we can’t afford that when you’re teaching.
So it was a lot of, I’m not saying trying to make ends meet because we weren’t scrambling every day to make mortgages and things like that, but it wasn’t easy. It was a lot of hustling and we had a kid in daycare, we’re trying to have a life that we want to enjoy with each other. And on top of that teaching, it’s so emotionally draining and so hard on you emotionally. It’s tough. It was tough to do everything and feel like you’re really enjoying life except for the summers when you head off. But those go by quick.

Tony :
So Rob, I’m curious because you said that you were teachers, which means that you guys have stepped away from that profession, but you also just mentioned the teachers maybe weren’t the highest paying profession in the world. So I guess just financially, how were you able to set yourselves up to step away because you sold the one rental that you had, so what had happened in the meantime?

Rob :
So we did a lot of side hustles and that’s kind of what we’ve always done. Even before we had the investment, daycare was really expensive. I like to go fishing. So we started a charter business. I got my guide license in here in Maryland on the Chesapeake Bay and on the weekends, every Saturday and Sunday I would take clients out that I actually found on Craigslist, believe it or not, which sounds a little sketchy now that I say that.

Tony :
I want to make sure I’m tracking there. So you found people on Craigslist who you then put on a boat with you and drove out into the middle of the lake,

Rob :
14 miles out into the middle of the Chesapeake Bay. And honestly, I’ve met some of the nicest people ever. There was some weird stuff too, but I met some of the nicest people ever doing those charters too.

Tony :
So what were some of the other side hustles? You had the charter business, was there anything else you jumped into?

Rob :
So one of the biggest things was we realized pretty quickly if we could stay in the classroom basically and make more money, that was one way we could make more money too. So I did as many continuing education credits I could, which would move us over on the pay scale. I also got my national boards, which is the big certificate that you can get or certification you can get in teaching. That moved us over on the pay scale. And then like I said, my wife loves construction stuff and we actually built out a vintage camper was the first thing we did. We took a 1963 camper and I wouldn’t call it a flip, I don’t know how much we actually made from it, but it was a fun thing to do. But then that led to building out camper vans and stuff like that as well. So camper vans are super neat and we actually have one in the driveway that’s for sale right now and that’s something she does that’s just amazing

Tony :
Looking. Do you guys have a YouTube channel about that? She

Rob :
Does. She has one she hasn’t posted in a little while just because she hasn’t been building a van in the last few months, but it’s called Van Life with us on YouTube and she documented the whole build every single day was a short and then did some long form stuff too.

Tony :
Super cool, man. You guys are just made for modern media. The camper bands are such a popular niche on YouTube and I have a friend of mine, him and his wife, they actually sold everything and moved into a camper van for two years and they got a million followers on TikTok now because of what they did there. So

Rob :
We’ve always thought about doing something like that every time we get in there and we are going on a trip or something like that. It’s a nice simple life and that’s what we try to live around us too. The fact that we have four dogs though makes it so we can’t live in a camper van. But the idea and the feel of that life of being able to pick up and go where you want or just be able to enjoy being outside, that’s what the kind of life we want in the camper van. Let us do that. The first one we actually built, we built because our son said he wanted to go see Mount Rushmore and it was during Covid and RVs were so expensive and it was kind of before camper vans took off. And I just said, let’s buy an RV and then flip the RV when we’re done with our trip.
I thought that would make sense. And Carrie said, why don’t we just buy a van and I’ll build it out? And I was like, oh gosh, sure, let’s do this. And so we built that van out. It was a 2015 ProMaster. We built it out ourselves, everything, I mean like a complete house inside even a shower and drove it all the way out to South Dakota and all the way back. And then when we got back, we sold it two days after listing it to a couple in Colorado that flew out that next day and drove away with it down to Louisiana. I mean it’s been crazy

Tony :
And I love hearing that story, Rob, because there’s so many different unique ways to fund your down payment for your real estate. We had a guest on a few episodes ago and he was getting new Teslas under contracts like pre-delivery, Teslas under contract for a hundred bucks, whatever it was, he take delivery and then just resell those Teslas for a premium. He made like 60,000 bucks doing that over the course of a few Teslas. So we’re talking $400 into the deposits and you’re able to make 60 grand on the backend. I don’t even know a real estate investment that can do that. That’s insane. So I guess at what point then Rob, did you start to make the transition back into real estate as an actual investment vehicle? After getting burned a little bit on that first short term

Rob :
When Covid kind of not ended, but when schools started opening back up, we were then again looking for that property that another piece of land or somewhere to build in the cabin, in the woods kind of deal. And at the same time we were looking for rentals too and just kind of started that search. The cabin in the woods property kind of came first and we bought a piece of land for I think it was right around $25,000. And we had the big dreams of going ahead and building out this tinier home. Like we were talking about a simple life with the van kind of thing. We only need 700 square feet, we don’t want to have to rent this thing out, we just want what we want on there. And realized pretty quickly that the lot we bought had a septic and well in place, but it was only basically one small spot that could fit the house. And that spot wasn’t a spot you wanted a house. So we had to do a lot of calling and cold calling to the neighboring lots and finally got them to agree to sell us that lot. And so we had both those lots now, which totaled about two acres and we were able to put the house in a different place. And so that was kind of our next foray into it.

Tony :
So what really started to click for you about real estate investing as you kind of reentered yourself into it?

Rob :
BiggerPockets, I mean a hundred percent. I didn’t know what it was before that. And once I realized we were doing real estate investing by having that short-term rental, ATD Creek Lake and hearing other people’s stories and especially honestly on the rookie podcast because on the main podcast there was a lot of verbiage and conversations going on that just were going over my head to be completely honest. And I felt like you guys packaged it in a way that made sense and I just felt like if these people can do it, and this has always been what we’ve said, if this person can do this and not putting someone down, but they’re just like me, I’m the same as them. If they can do it, I can do it too. And so that’s what really pushed us back towards that real estate side of

Tony :
It. I love that comparison, Rob, of like, Hey, if this person did it, I’m sure I can do it too. But I think we see a lot of new investors, rookie especially who maybe the fear and the hesitancy still hold them back a little bit. I guess. Were you feeling that at all? Maybe What’s your advice to rookies who were in that same boat right now?

Rob :
I feel it all the time still. We’re talking about buying a big farm right now and it’s scary and it just is. And I think you got to trust your numbers one. I mean that’s one of the most important things. And you got to trust your vision you have for the property. And luckily I feel pretty comfortable with numbers and I really trust Carrie and her vision she has with properties and some days it’s great and some days both of us are on the same page and we’re really up on a property and we feel really comfortable about it. And one day one person’s down and the other person’s up and some days we’re both down. And just understanding that that’s part of it. And if it was just everything’s easy and everything roses, then everyone would be doing it I guess.

Tony :
So Rob, I loved your explanation of getting past that hesitation, that fear, but you also mentioned like, hey, there are days when both of you guys are feeling down, right? I guess what’s helped you overcome some of that inaction that a lot of rookies find themselves falling victim to?

Rob :
I think the biggest thing is understanding that a lot of people think you have to do it right to get started. And I had a lot of FOMO at the beginning of, I felt like I wasn’t doing it right. I felt like I was listening to people on BiggerPockets and people that would come on as guests or even just people in my real estate circle that were doing so much more and I felt like I was just missing out and I felt like I wasn’t doing it the right way. And what we both realized is we kind of sat down and talked about what our needs were and what our goals were with this, and we realized we don’t need to have a hundred doors, we want to make it right for us. And so we started seeking out other paths other than just super scaling and having boutique motel. Well that does sound fun, I’m not going to lie, but that might not be for us right now. And what was for us at the time was single family homes and kind of just hitting base hits. And when I freed myself from being able to think I had to make it right and perfect, a lot more opportunities opened up. I wasn’t just looking at everything, it was more just focused on what I felt was the best path forward, not just the right path forward.

Tony :
Rob, you bring up such an important point, and I feel like we got to pause on this for a bit, man, because I think what holds a lot of people back from really achieving success is that they don’t take the time, or not even the time, they don’t have the discipline to focus in on one thing. We’re 400 episodes into this podcast, Robin, every single week my shiny object syndrome is just going off because I’m hearing all these different stories from different people and I feel like what’s allowed me to be successful so far is that I have had the discipline to really focus in on just one strategy. I’m not hearing your story and then turning around and looking to flip camper vans. I’m not hearing this other person’s story and trying to get my first self storage. I’m hearing this person’s story and trying to house hack new construction. There’s so many different things, but it’s being able to realize that you’re probably never going to be able to try everything. And I think the sooner we can accept that, the easier it becomes to really focus in on your specific niche, on your specific lane and get really, really good at that one thing. And then success becomes easier after that and

Rob :
It feels right too. And so for me, doing your strategy or Ashley’s strategy or anyone else’s strategy, I may learn things from it, but it might not be the right fit for me personally, personality wise, or even for my long-term goals. Our goal is to use this to build up equity, to have retirement. I probably shouldn’t be buying houses in downtown Baltimore right now then because that’s more of a cashflow market and you’re not going to see a bunch of equity growth. So that’s what I think a lot of rookie investors need to see is that you don’t need to go, like you said, go after everything or go after the biggest thing. You need to go after the right thing for you. And it takes a lot of failing to get to that right thing.

Tony :
It does. It takes a lot of failing and a lot of discipline. And last thing I’ll share on this topic, I recently read a book, it was called 4,000 Weeks and it’s a productivity book, but the basic premise of the book was that you can’t be productive until you realize that you’ll never be able to do everything. And it’s that realization that gives you then the freedom to truly focus on the things that are most important. And it’s the same thing here, right? You got to realize that you can’t take down everything. So Rob really enjoying this conversation and like we said earlier, it all starts with that first domino and your first domino led to a bigger domino, led to a bigger domino. So I’m excited to see where this goes from here. But first, for all of our Ricks that are listening, if you’re enjoying the show, please do consider giving us a follow on whatever podcast player it is you’re listening on.
If you’re on YouTube, be sure to subscribe and turn on notifications and share it with a friend. One of the best ways to discover a new podcast is getting that trusty recommendation from a friend. So if you’re enjoying this episode, if you’re enjoying the real estate rookie podcast, share it with the friend and we’ll be right back after a quick word from our show sponsors. Alright, so we are back with Rob. And Rob just walked us through first obviously how he’s laid the foundation and kind of stumbled into real estate investing, but more importantly how he’s been able to really focus in on the asset class strategy, the niche that works best for him and all the creative side hustles he’s been using to make this whole thing work. But Rob, I want to get into this land deal and how you’re kind of combining the land with the burr. So from the sale of that short-term rental, what came next after that from a real estate investing perspective?

Rob :
So we still wanted something in the woods or near a lake, so we decided we were going to start looking in other areas where we could buy some land and possibly build a smaller house, not necessarily a tiny house, but we weren’t looking for 200, 300 square feet, but 800 square feet to kind of keep it that intimate feel and also keep the payments down. So we didn’t have to short-term rent it if we didn’t want to. We wanted the ability to do it if we wanted to, but didn’t have to if we didn’t want to do that. And so we settled on an area called Madison, Virginia, which is just north of Charlottesville, Virginia, and got a property that we just found on Zillow and it had well and septic in place and we got it under contract for $23,000. So the cash from that sale of the cash from that sale of Deep Creek Lake went right into that property.

Ashley:
And what made you want to decide to go after land?

Rob :
So at that point we’ve built two houses, two primary residence. We built one on an island down here called St. George Island. And after a not so great neighbor that lived next to us, we decided to sell that one and build with the same builder. So we understood the building process and we weren’t afraid of buying land and doing that building part. So we understood the steps it would take to get that done. We knew that we could add value to it, we probably would have a little more equity and if we did it ourselves and looking around at the cabins that were available, we saw that the prices were going to be good when it was finished. So that was the step we took.

Ashley:
And tell us a little bit about those steps of working with a builder doing the development. What’s the process or the phases you have to go through for

Rob :
That? The very first thing was of course, settling on the house and stuff like that, which actually went pretty quick. It seems like land sales, especially ones that are paying cash. We were able to close it in 14 days in Virginia, so it wasn’t a long closing at all. And during that whole time we’re closing, we’re just calling different builders and right away we realized that there’s kind of a stumbling block in this area of Virginia, a mountain that runs down that area of Virginia and some builders work on one side of the mountain and other builders work on the other side of the mountain and they won’t, the crews won’t come over. So it really limited what we thought was going to be 10 builders or so that we could interview it limited down to about five. And then the scale of our project was too small for a lot of people as well. But so the first part was really just interviewing as many builders as we could and figuring out which one fit our project and fit our personalities the best too.

Tony :
I want to get into how you were sourcing and kind of vetting these different builders, but one question first, Rob, what did your due diligence look like on the land to confirm that you’d be able to build out correctly?

Rob :
They had all the plat information and stuff like there and permits already pulled. The lady that owned it before actually put the septic in well in as well. So there wasn’t a ton of due diligence that we needed to do. We made sure the well was good. We had a well test, they performed a septic test on it as well. Even though there wasn’t a house there, they were able to test the tank in the drain field. So we were able to do that kind of stuff and we thought we understood where the house was going to be and that it was going to be in an okay place. But once we started meeting with builders, we realized that we were kind of mistaken a little bit

Tony :
In terms of the city allowing for any kind of structure or being able to turn that into a short-term rental. Was that part of your due diligence process at all?

Rob :
Of course. And so the city had pretty lax and it’s actually the county of Madison County had pretty relaxed building codes and this was in a little neighborhood as well, and they didn’t have any HOA restrictions or covenants. So we did that due diligence first to make sure that there was nothing in those HOA bylaws that said you couldn’t rental it because that was the biggest, that would be the one sticking point. We wanted to be able to have that option if we decided to do that.

Tony :
So going back to the builder piece, I know you said you started interviewing these different builders. Two questions there, and I’ll ask the first piece first, but are you going to the builders with the plans that you’ve already had an architect draft up or are you working with these builders to help identify what those plans should be?

Rob :
So the first thing we did was what everyone wants to do. And you go online and buy those online plans and you think you can take those to the builder and they’re going to say, we’ll buy the lumber package and we will have that built in six to eight months. And that’s what we did first. We make the mistake everyone else makes, and we have a great builder here and he makes it so easy that we thought that’s how we could do it. We quickly realized that that wasn’t going to work, especially because a lot of those online plans aren’t built to the codes for each one of those states. So if you’re getting an online building plan, it might not be the right code for Virginia or Maryland. And so we quickly realized that we would say instead of these are the plans we want, we would say this is the concept that we’re looking for.
And give the builder the freedom to kind of say, I can do this, or these are the ways that I could do this, or kind of riff off of that instead of just going in and say, this is what we want, can you build this? And when you ask that, they’re going to say no instead of going in there and saying, this is kind of our concept, can you help us get close to this or near this or what can we do to make this happen? I think asking for help, that’s going to get you a lot more opportunities to work with someone.

Tony :
So then the builder would take it to their internal architects, drafter, whoever to actually bring your vision down to plans that could be built.

Rob :
Exactly. Exactly. And so we talked to a few different builders and tried to get ’em down to a plan that was similar and we settled on one builder and we lovingly ended up calling this plan and this look a jacked up double wide, it’s like a double wide trailer and then it has the cantilevered roof. It’s a really popular design now, but we called it the jacked up double wide, that builder. We liked the builder’s sense of humor and all that kind of stuff, and we liked what his plans were and we saw a lot of good reviews from him too. And he was on the right side of the mountain. So that was the builder we went

Ashley:
With Rob. What was the outcome of this property?

Rob :
So right away we had the builder on there, we realized the house we wanted or really any house over about 700 square feet because of where the septic tank was, because of where the drain field was and because of where the well was, we weren’t going to be able to fit a sizable house on there. We had over an acre of land. But because all that was taking up most of that and there were setbacks with the neighbor, setbacks with the roadway, it kind of put us in this one little box of an area without really a driveway or anything.
And so we could either accept that or I could call the neighbors that had vacant lots and see if they would sell us their vacant land. And that’s what I did. So I started calling around to the neighbors and there was one right next to us, and after probably about a month or so of calling her, she finally agreed to sell us that for $7,500 actually. So we were $30,000, $30,500 all into it. And we had two and a half acres at that point. And so then we did a boundary line adjustment and removed the boundary line between the two. So that was another step we had to do according to the county to make it so we could build on the other lot and they could be part of the same property. And then we started pulling permits and doing all that kind of stuff.
And then the builder kind of ghosted us at that point for some odd reason. I’m not sure if it was a financial thing on his end or it was when lumber prices were skyrocketing, it was tough for him to get clients. And I think it just got really difficult for ’em. I don’t know if our project just wasn’t big enough to really make it worth it or not. So we got it to this point where we had a driveway installed, we had the boundary line adjustment removed or we had the boundary line removed. And so we had this two and a half acre lot in Madison, Virginia that we wanted to build a house on, but we just again, lost steam on it and just looked at our options and decided what to do next.

Ashley:
Yeah, that’s crazy about getting ghosted by the contractor during that time period.

Rob :
And he responded to us after a while and it ended fine, but it definitely, he didn’t want to, his timelines were a lot different than our timelines and our timelines were still reasonable, but I think he didn’t want to do it in that 12 month period. And then the prices just kept escalating even more than the lumber costs were escalating. He just kind of priced us out of wanting to do the project, which it happens. I get

Ashley:
That. Yeah, definitely. But it’s also, you definitely lose momentum. You think you have your builder lined up, your contractor ready to go, and then it hal it halts the project. Yeah,

Rob :
We drove up to the lot after that happened and we pulled in the driveway that they just put in, and Carrie and I both looked at each other and said, it doesn’t feel right anymore. I think that’s one of the biggest things you look at it and it didn’t feel like we wanted to move forward the project, the project wasn’t going to bring us any joy. It was just going to cause us more stress. It already caused us a bunch of stress at that point. So we stopped and looked at what was the way to get out, was the way to get out to grin and bear it and put a house on there and then sell it that way, or could we sell the land as it is right now with a driveway on it with the boundary removed, a two acre lot in Virginia in a prime area? Could we sell that for more than we had in it? And so we did decide to end up selling that.

Ashley:
And did you make money on

Rob :
It? So we were all in with the driveway $40,500 and we got it under contract for $69,000 and it settled for $69,000.

Ashley:
I don’t know about the stress and the headaches if it was worth it to you, but

Rob :
I think it was, I think it taught us a lot too. It taught us that things can change and that builders can change their mind. And to really start, I think one of the biggest things, forming relationships and forming business relationships with builders that are in the area that you’re looking to build is one of the biggest things. We have builders here in southern Maryland that would never do that to us during that process. They would tell us upfront if they were super busy and they maybe not be able to do the project, but yeah, they would never do it during the process. So

Tony :
Rob, what’s your advice given this experience for a rookie to really find and vet a good builder if they want to go to the new construction route?

Rob :
I wish. I think one of the things we did the first part, right? We talked to as many people as we could, but we were kind of limited on who we could talk to based on the area we chose. So I think really understanding the area you choose first to make sure there’s a plethora of builders in there, and then talking to those builders and then moving forward with someone that you get a lot of good reviews from, which we didn’t really dig into is past as much and really understand who you’re getting into business with. And then we probably could have been flexible too on timeline and cost and maybe understood a little more that that’s what was going to happen. But I think the biggest thing, it’s just it all comes down to vetting your area and vetting the people you’re working with. But

Tony :
Are you going to, I don’t know, Yelp or Google or where are you going to source the builders?

Rob :
No. So Facebook marketplace, believe it or not, that’s one that I’ve looked at. You can look at different contractors in the area. One of the ones that we contacted right away was our agent that helped us purchase a property. And she was great. She actually gave us some great recommendations, but they’re all bigger builders that don’t want to deal with the 800 square foot house. And so then was, my wife was actually the one that was doing a lot of the calling to all the different builders that were listed on Google and it just making all those calls and then following up because you may make that first call and they’ll say, yeah, let me get back to you with some numbers and you got to call back a week later because they never call back. So if you could get a contractor, a builder that calls back or picks up the phone consistently, that’d be a very rich contractor or builder, I feel like.

Ashley:
After this land deal, what was the next domino that you were tackling?

Rob :
As we had the land deal going, we had a domino in place. So we started, that’s when I really brought Carrie into the BiggerPockets world and talked to her about what I was listening to and kind of told her about the fact that I would really feel comfortable doing a rental myself and managing myself. And I pitched to her as, and she’ll have a really good project to do, and so she loves a good project. And so we started looking locally. We were spooked by Deep Creek Lake. We were a little bit leery of Madison, so we realized we needed to look locally and we looked in areas that had the schools. I’m a real estate agent as well. So we looked in the area that a lot of people that are moving to the area want to move to and picked an area in Leonardtown, Maryland actually, and started looking for rentals in that area.

Ashley:
Okay. Rob, do you want to tell us a little bit how this property fits your buy box and some of the details on it?

Rob :
Definitely. So our goal right now and our goal of these long-term rentals that we’re looking for are staying in the school districts that a lot of people that are moving to the military base that’s around us want to be in. So we’re looking in the leonardtown area, and this one actually was in the Leonardtown area in a neighborhood called Bretton Bay, and it was an estate sale, which is another good opportunity for someone like Carrie who loves to do projects because a lot of the times they’re in need of some updating and especially since it was a 1966 home, so it was a little bit on the older side and we got it under contract for, I believe it was 2 91 and then put 15% down and I think we’re $20,000 in renovation costs to us. And then we’re renting it out for 26 50 a month right now.

Ashley:
Just to go back to all of your deals, how were you able to fund these deals? We know you had the domino effect of using some of your money from the other deals, but were there any other sources of funding that you had to tap into?

Rob :
So we actually pulled a HELOC on our primary residence as well for some of the construction funding. And we felt pretty comfortable doing that because we do have a good amount of equity in here. We didn’t take a HELOC to the max that we possibly could. We just took a little bit of a line of credit just to help with those things and make us feel more comfortable. And the nice thing was is when we did sell the land out in Madison, Virginia, that helped kick back to the HELOC and that felt more comfortable too. So that was really the main way that we were able to feel comfortable going forward. And I think that’s been the big thing for us is we don’t want to feel like we’re too stretched in any of this. We’re just looking for the long-term play here. Not really just trying to grow as fast as you can, fast as I can, feels a little more risky, and I’m a little more risk averse when it comes to this kind of stuff.

Ashley:
Okay. Rob, can you tell us a little bit about this market and why you decided on it and maybe why somebody else should invest in the same market?

Rob :
So I decided on it just because it’s local to me and I was comfortable with it, but honestly, it’s actually a kind of strange market in a lot of ways from what I hear on the Real Estate Rookie podcast and the bigger podcast, we’re pretty rural compared to most areas. And it’s surprising because about an hour and a half south of DC and about an hour and a half south of Baltimore, so we’re near some metropolitan areas, but St. Mary’s County is specifically what I would call our market. We don’t even have a specific city to say, you want to invest in Leonardtown or you want to invest in California. St. Mary’s County only has 120,000 people living in it. So we chose it because it’s local and we chose it because as teachers, we understood what parents were moving when they’re moving in the area where they wanted to be. And now as a real estate agent in the area too, I kind of feel really comfortable in making sound decisions about where the right place to put our money is, especially for long-term rentals.

Ashley:
So it was definitely an advantage for you knowing the market, having some experience with it, being close to home. What if somebody was investing out of state into that market? What are some of the advantage advantages you see in that market?

Rob :
I kind of like it because there are some different opportunities throughout the area. Like there’s Waldorf, which is in Charles County, which is still part of southern Maryland that’s seeing more growth from people commuting from dc. And so there’s a lot of opportunities for homes that you can either buy in, do the long-term rental kind of piece of people living in DC or people are commuting to DC or commuting to Andrews Air Force base. But then also you could do more stable markets like down here in Leonardtown where you’re pretty much, I’m not going to say guaranteed the rent, but a lot of times with the military people that are moving to the area, they have a base housing allowance, and that’s like a monthly amount they’re getting every single month. That really makes them attractive tenants to have in there because you know that since they’re part of the military, they’re going to be able to pay that rent on a regular basis for the most part.
And then two, there’s other areas that are just really seeing a lot of equity growth. So if you’re someone that’s looking for more equity growth because of it being that area that a lot of people are moving to because of the military and because of DC and the capital region around Maryland getting more crowded and more expensive, it’s that satellite area that people are, what is it? The path of progress. The path of progress is definitely coming down towards us. So it’s just a really neat area to be a part of right now. And then being a rural area, I’m sure you guys go to rural areas, it’s also just beautiful. We’re on the Chesapeake Bay, we’re on the Patuxent River in the Potomac River too. It’s just a gorgeous area to be a part of and get out on the water and go fishing and crabbing and just be able to be out there and enjoy nature.

Tony :
Yeah. Well, Rob really appreciated everything you shared today and love getting into your story. Brother, before we wrap things up, I actually want to give a shout out to this week’s rookie rockstar, but also since we did this, but it’s good to highlight all the amazing things happening in the Ricky community. And this week’s rockstar is Darwin, Louis Pitts, and Darwin says, Hey all. I just wanted to introduce myself and share a photo I took of my first property that I just purchased after years of prepping and saving, I was finally able to jump in. So Darwin, congratulations. Those are the kind of stories we love hearing. And if you want to share your story, jump into the real estate rookie Facebook group. We’re in the BiggerPockets forums, share your story. We might just give you a shout out.

Ashley:
Okay. Well, Rob, thank you so much for sharing your experience, your journey, some lessons learned, and also your success with us. For everyone listening, if you love this episode, please give us the thumbs up. If you’re watching on YouTube or if you’re listening on your favorite podcast platform, please leave us a review. We love this episode with Rob talking about his Hallmark movie on his first short-term rental deal, and also how Rob had amazing exit strategies where he wasn’t locked into one path for each of his deals and was able to make money on those exits. So Rob, thank you so much. If you want to learn more about Rob, you can check out our show notes or the description below, and we’ll have Rob’s information. We can find out more information about him and also reach out to him. My name is Ashley and I’m here with Tony, and we’ll see you guys next time on Real Estate Rookie Podcast.