DIY Real Estate Hacks That Will Save You a FORTUNE on Your Deals

Ashley:
This is Real Estate Rookie episode 311.

Shaun:
If you’re changing out outlets and light switches and your ceiling fans, you’re saving thousands of dollars. My biggest project that I would do for DIY work is hands down recessed lights. I even have a video where I’ve done a bedroom in one hour, and I’ve had that same size bedroom quoted by an electrician for $1,500 labor. So, I define that now as $1,500 for one hour’s worth of work.

Ashley:
My name is Ashley Kehr, and I’m here with my cohost Tony Robinson.

Tony:
Welcome to the Real Estate Rookie Podcast, where every week, twice a week, we give you the inspiration, motivation, and stories you need to hear to kickstart your investing journey. Today’s episode, Ash, is just a little different than what we usually do. First, I’m in my new studio, so I’m looking like a little Batman-esque with the dark vibes going on right now. I got to finish off with the lighting in the background, but second, our guest today, Shaun Kelly, first, he’s got an amazing story, but he’s a DIYer, and he built his portfolio, which is several properties flips, Airbnb’s, long-term rentals, but he built that portfolio on the back of teaching himself as a complete newbie how to renovate and rehab properties.

Ashley:
We also go into partnerships, and so Shaun is a DIYer, and how he is going to incorporate that into his partnerships. How do you structure that? We break down a couple examples of different options he has to really bring value to the partnership, but also be rewarded with equity or a cash payout. So, we give a couple examples. So if you are in that situation of either wanting to do some DIY, and add in that sweat equity, or if you are willing to partner with somebody who’s going to be bringing that to the table, this is episode to listen to as to different options you have as to actually putting together that structure.

Tony:
Now, as always, I want to give a quick shout out to someone that left us a five-star review in Apple podcast. This person goes by the name of Alyssa A. Alyssa says, “Favorite podcast. I’ve been listening to Real Estate Rookie for the last year, one of my favorite podcasts for being a newbie in real estate. Always have the best guests, inspiring stories and advice.” Alyssa, we appreciate you. For all of our rookies that are listening, if you haven’t yet, please just take a few minutes, leave us an honest rating and review on whatever platform it’s you’re listening to. The more reviews we get, the more people we’re able to reach, and the more folks we can reach, the more folks we can help.

Ashley:
This week’s Instagram shout out, I want to give out to Ashley Wilson at Bad Ash Investor. Believe it or not, if you put in ChatGPT, it actually mixes up our bios, and tells us that we’re one person. So, Ashley is an investor out of Pennsylvania, and she shares a lot about the multifamily industry. She recently put together an Apartment Addicts Summit that she’s hosting in Houston, Texas this September. I’m going to be the MC of it, so I’d love to see you guys there if you want to check out at Bad Ash Investor. She also does a couple of funny memes every once in a while too about what it’s like to be an investor in today’s market, too.
Shaun, welcome to the show. Thank you so much for joining us. Do you want to start off with telling us a little bit about yourself and how you got started in real estate?

Shaun:
Yeah, definitely. By the way, thank you so much for having me, and for sharing all your knowledge. Just the motivation and everything has gone such a long way in my life, and I’m sure so many other people, so thank you. This really started all the way back in 2010. I’m not going to go year by year, but a long time ago, I really got into real estate, because it sounds really cheesy, but I was watching a lot of HGTV. A lot of fixer upper was coming on, Flipping Vegas, all these other shows, and I was like, “That seems like what having your money works for you looks like, rather than you working for your money.” So, right then and there, I knew I had my future set on real estate. Fast forward, a long time, I went to four years of college, so my outlook on this was the safe route.
I was going to go to four years of school, get the highest paying job. I don’t care if I even like it, just whatever pays the most, and then I’ll use that money to fund real estate. Just how I was brought up, and how both sets of my parents work, they were divorced before I was born. They knew how to stretch a dollar really far, and they knew how to be very safe with their money. So, I was using that same perspective. Let me go to school. Let me play the safe route. Get a high-paying job, and fund the real estate. Well, it took until 2015, so it took five years to get my own primary house, me and my girlfriend at the time.

Ashley:
So, is this five years after college?

Shaun:
No, so this is five years since I knew I wanted real estate, so basically right when I graduated college.

Ashley:
Okay.

Shaun:
I got that first house. Here it is. I’m making a little bit of money. Now, I’m buying that first thing. Rather than an investment, I’m buying a liability. The things that they say to watch out for, I was going for that. Then it took another four years of saving up, and during that four years, the jobs I was getting, none of them required degrees in the first place. For one, I went back to Whole Foods to bag groceries, and while I was looking for a high paying job, because I didn’t want to accept just anything. Then a year later, it was like, “Let me go work in the mortgage industry.” Again, it did not require a degree, but it was now more a little bit real estate related. That whole time, I could have just jumped straight to that mortgage industry, and got paid the same rate.
So from there, finally made up a little bit of money to be able to buy my very first investment property in 2019, so eight or nine years after wanting my first deal. Now, I have two long-term rentals, three Airbnbs, and two flips under my belt, so nine total investment properties from 2019 to the day.

Ashley:
Now, Shaun, you’re portraying it as to nine years. It took you so long, but what would you have done differently to do it in a shorter amount of time, or do you actually look back and like, “This was actually the right path for me?” We just had Chad Carson on who’s launching the book with BiggerPockets, Small Mighty Real Estate, where it’s just a slower pace. You’re building a smaller portfolio, and you’re a lot more conservative. So looking back now, how do you feel about your journey thus far?

Shaun:
It’s definitely hard because it’s working out, and so it is hard to say I would’ve done things differently, but I think I could have been years ahead. I think that first thing would’ve been there’s plenty of jobs that would’ve paid enough to start getting that first investment property, especially the houses I was looking at in the markets were starting at $100,000. So, it’d really just be saving that $20,000 chunk to get the 20% down on a house, and now thinking about that could have been a year to obtain that $20,000 rather than eight or nine years to obtain it. Then using that money to snowball, because now I’ve seen the power of the snowball effect where you have one, and then you could get more and more.
So, I had started that snowball effect with years ago, I do wonder what would’ve been different. Nothing has been easier now either. So, I could have already gone through those hard trials, and I don’t know the saying, but all those hard parts a long time ago, maybe I would’ve been a little bit more comfortable now. I don’t know if I would’ve done things differently. I’ve made friends in college and so on, and I use a lot of those skills that I’ve learned in school in different aspects of my life, both professional and personal. So, it’s hard to say, I guess.

Tony:
Ashley, I just want to add to that, because I think it is something that’s… For anyone that’s entrepreneurial, probably something that they struggle with is always measuring themselves against this ideal version of themselves, I guess. I know we’re going to have Ben Hardy on the podcast here soon, but he wrote a book called The Gap and the Gain. It was just… If you guys haven’t read, it’s a phenomenal book. I think honestly one of the best books I’ve read recently, and just really a mindset shifting type book to read. But basically, the premise of this book, the Gap and the Gain, is that most entrepreneurial people, real estate investors included, they’re always looking forward towards like, “Man, what else do I still need to accomplish?”
But if they take the time to look backwards, and measure where they’ve already gone, there’s so much to be grateful for there. So for you, Shaun, even though you feel like, “Man, I didn’t need to go to college. I didn’t need to do this,” I’m sure the 2010 version of yourself would be so thrilled with the 2023 version of yourself, because you’ve accomplished so much, and done these things that the version of you at that point probably couldn’t even have comprehended as a possibility.

Shaun:
That’s such a great point. I actually have people around me telling me that we need to practice more gratitude in our lives. So, I definitely… I have thought about how if I look to where I’m at now, where even my very first, I’d do some YouTube channels, and mess around with that. The very first time I made a dollar online period, I almost teared up. I was like, “I made a dollar on the internet. I didn’t have to work a retail job, or talk to anybody really.” SO, it was just like now knowing… If I could go back and look now, I would be proud of myself, I guess.

Tony:
That’s so funny, man. I have a similar experience. The first time I made money not through a W2 job, and really more as an adult, but I had a website called My Best Basketball Shoes. I just wrote a bunch of long articles about the best basketball shoes in the market, and I had Google AdSense on that website, so I get pennies every time someone clicked on an ad. But like you said, the first time it came through, you’re like, “Oh my God, I did it. I figured it out.” I think I actually still own that domain. I got to go back, and check to see if that’s still lurking around. But anyway, Shaun, going back to you, man. So, you go on this journey. You’ve got two long-term rentals, three short terms, and you said you’ve done two flips so far.

Shaun:
Two flips with a third one under contract now. So, it brings us to nine with a 10th one on the way. I have the shiny object syndrome where the two long-term rentals happen back to back. It happened in the same exact market, really like two blocks from each other, very similar styles. Then boom, Airbnbs were on the horizon. They were coming up, and I had moved, and so one had caught my attention, and got that one. Then sure enough, two more Airbnbs hit after that one, and then again got like, “Okay, I have enough of these squirrel, and then I look over here, and now it’s doing other things,” so flipping houses.

Tony:
I just want to comment on that, because it’s something that we see time and time again with so many guests come onto the podcast is that the first deal takes such tremendous effort, time, energy, but the second one always comes exponentially faster than the first. You said you had the first idea in 2010. Then the first investment came almost a decade later in 2019, but here we are four years later, and you’ve done almost nine or 10 deals. It’s just crazy how that flywheel starts to get spinning, and the momentum starts to come. I know we’ll talk about this a little bit later, but I mean, just how much easier is each subsequent deal for you, Shaun?

Shaun:
Tremendously easier. Even that very second property happened the day after we got a tenant locked in the lease on that first property. It was almost right away. All the pressure had had left. I remember when I first bought that property, I was overanalyzing every deal I came across, and I thought I had it toned down right perfectly. Found this property, did a little rehab to it, and I thought the rents would be around $1,100. So, the neighbor comes over, and he’s contemplating renting out that property for his stepdaughter. I remember we told him, “It’s 1,100 bucks.” He was like, “This place was renting for 750 a few months ago,” and my heart sank into my stomach.
I was like, “Did we just misjudge this whole thing that would completely put us underwater?” Sure enough, boom, 1,100 bucks in rent. So, we got exactly what the market was telling us we could get. From there, we knew, “All these years of overanalyzing has paid off.” Now, my process did work on that first one, so it’s probably going to work on the second and the third and so on. So now, I use the same exact calculator that I’ve used, the BiggerPockets calculator, and now, each one is it’s become simple.

Ashley:
That really helps you build your confidence when you’re so unsure. You’re analyzing, analyzing, and then it’s confirmed. You got exactly what you projected to get in a deal. As for you, it was the rent. You talked about you have these processes that you’re going through, and each deal has gotten easier and easier. Can you touch on what parts of your business you are doing? Are you doing the acquisitions? Are you doing the property management? Are you doing the rehabs, and then also what you have outsourced to?

Shaun:
A lot of this has really changed over the past four years, and in a really, really eye-opening way but… Starting back on these first properties, really on all the properties, I touch everything. I DIY every property. Easily, 90% of the work is done by me or my wife, or one of our family members will be in town, and we’ll put them straight to work, but that’s where our real value comes in is putting these projects together by ourselves. That goes back to being how safe I was taking these nine years to get to where I was on my first investment, being safe, and doing the projects yourself. Maybe not from a construction or quality standpoint, but from a money standpoint, you can save easily 50% by not hiring out labor to somebody else.
So, every single house we’ve done has had quite a transformational remodel to it, and each one we’ve tackled with just the help of YouTube channels, and just going in there and busting down walls. This whole thing started when the very first project really just needed a bathroom remodel. So, that was an easy launching point. We just remodeled the bathroom, maybe overdid it a little bit, but we got the 1,100 rent like we wanted. Then the next property was, “Okay, let’s build a bedroom wall here.” That was a secondary living room to add a new living quarters, and then let’s paint some more of the walls, and add flooring. So, it was just a little bit better.
Then that next Airbnb that hit, it was a full-blown gut. This place was trash. It was almost falling off the cliff, and we turned that thing around, and we ended up actually selling that property. From there, that was what I always called my pride and joy, because we spent months of just hard work busting this thing out. It was in the mountains. It was an experience, and it was this whole thing. Then it just, “Okay, we can do this.” That was the hardest one, full gut, so then we just kept going.

Tony:
Shaun, let me ask, because it sounds like you graduated with each property in terms of the level of complexity that the DIY rehab required. Do you think that you could have jumped into that third property with the experience you had initially, or did you have to take those small steps to get there?

Shaun:
I had to take those small steps. If I had jumped into something like that, there’s no way I would’ve bought that property. I mean, it was mildew, and it was so intense that there’s no way. Even when I was in the midst of that as it was happening, I thought it was a little bit over my head quite a bit of the time. I definitely needed those learning steps. During those two or three years until I got that first one, it was a lot of watching YouTube videos on construction, and working on my own primary house too. So, there was quite a bit of work and knowledge and education that went into this whole DIY process.

Tony:
Ashley, can I actually ask you? I just want your opinion. Shaun just naturally figured this out like, “Hey, I want to start small, and scale my way up,” but you also see the inverse where sometimes rookies, I think, are too afraid of a job that maybe they could figure out. What do you think is the right balance of knowing how big of a rehab job to take as a new investor?

Ashley:
For me, when I took on my first big rehab, I had a partner as a security blanket who knew construction. Even if he didn’t, he was fairly confident that with YouTube or just trying it, he could figure it out. So, I think for me that we were willing to take on more stuff because I had somebody with experience. Even though he wasn’t 100% knowledgeable, and there was tons of things we had to redo or things like that, the fact that he had some construction experience, where if it was me that had no construction experience, I would’ve been way more hesitant as to what I attempted to do. So, I think what really builds your confidence as to what are some things you have tried to do that you knew nothing about, and then you build from there.
So looking at a rehab, say you want to go in, and you want a DIY. Have you ever done a project with your dad? Have you ever watched somebody do something? So, it could be something as painting. Painting is something that easy to attempt at. You need paintbrushes. You need rollers. You need paint. So, Googling what kind of paint you need to purchase. First of all, what’s the best for a tenant-friendly apartment, things like that? But when you actually go in and paint the apartment, you have an idea of what to do. If you’re me, it’s going to turn out horrible. There’s going to be spots that aren’t completely covered, and your business partner will be frustrated trying to fix the poor job you did.
But if you continuously do that, you’ll obviously most likely get better at it. But attempting little things like that, and see how they go for you, I think is a really great starting step, something that you can make a mistake on that can easily be fixed. For example, painting the wall, it doesn’t turn out great. You can put another coat on it, or you can paint it another color. So, I think just going along those guidelines as to, “If I attempt this, and it does not turn out well, is it actually going to be more expensive for somebody to come in and repair and place it?”

Tony:
I think an important point to add to that too is that… This is something that I’ve always struggled with, because I wouldn’t consider myself a handy person by any measure. I can paint walls. I can do some basic things, but I’m not laying down flooring. I’m not doing electrical work. I’m not installing tile. A, I have no interest. B, I don’t think I’d be all that good at it. I always struggled with that early on like, “Can I really consider myself a real estate investor if I’m not good at the DIY stuff?” It was this mental block that I had to get through to say, “Although it’s a good path for some people, Sam Zell wasn’t laying tile in his apartment complex as Grant Cardone’s probably not out there putting down LVP.”
So, there’s certain levels to being an entrepreneur, but I do think it is a good way to start, but I just want to call it for the rookies that are listening that feel like, “Oh my God, I don’t know if I can do this.” It’s not always required, but if you do have the skillset, it’s a good thing to have in your back pocket.

Shaun:
I think… I hear this a lot too, where a lot of people don’t know how to do something, or they might be a little frightened to get in there. Once they mess something up, it could be more expensive to go and repair it. That’s a great point. How I saw it was, for me, I was probably better suited to do those skills than go in cold call, and door knock, and do the things that might get a better deal. So, by doing these DIY things, they force a good deal, because I’m cutting out that person to do that labor. So instead of finding necessarily a super great off-market deal where there’s a desperate buyer or something, my skillset comes in where I can go in there, and now just DIY stuff, and squeeze the profit from that end of it.

Ashley:
Shaun, you have a YouTube channel where you share your DIY stuff you’re doing too, right?

Shaun:
Yeah, correct. It all started where I just wanted to document the journey of me doing something that I loved so long like, “I’m finally doing it. Let me put this on camera.” It was my third or fourth video that really popped. So from there, I was like, “Wow, you give viewership.” I wasn’t making any money, but you can get some viewership on here, so let me just keep documenting it and get better at it. So, I do try to teach people how to do some of these projects, and at the same time, I’m now getting paid through YouTube to just record projects that I’m doing anyways, which sometimes forces me to do better projects or overdo something.

Ashley:
Because everybody’s watching.

Shaun:
Yeah, it’s going to make a better video too, or I better do this right, because I’m being filmed. I love… That’s a new aspect I’ve been doing now. Well, it’s not new, but it’s what I’ve been doing with this real estate investing, and it’s really helped double that income. I actually probably make more through the YouTube than I do in recurring revenue through real estate, and so it’s just a huge way to boost funding my real estate now.

Ashley:
That’s such a great thing, because you’re able to take what you’re already doing, and monetize it in a different way, and just have a different income stream.

Tony:
We talk all the time about the importance of documenting your journey as a new real estate investor. I’ve shared the story many times that before I became the co-host for this podcast, I have my own podcast called Your First Real Estate Investment. I had zero deals when I launched that first episode, but I was just interviewing other investors about their journey of buying their first investment with the goal of helping other people get their first investment. Shaun, you’re doing the same thing, where you are just sharing your journey of DIY-ing your own investment properties, and bringing people on that journey with you. So, the point is you don’t have to be an expert to create content.
All you have to do is document your own journey. I think the more people can understand that, the easier it becomes for them to create that content. Guys, all of the rookies that are listening, I can tell you that the more you share your journey with people, the faster your business will grow, because you’ll find more deals. You’ll find more funding. You’ll find more team members. Just everything you need for your business is easier when you have a larger network of people to connect with. So, do exactly what Shaun did. Document that journey, and it’ll definitely pay dividends for you.

Shaun:
Hands down. I’ve actually gotten two deals with an investor who found me through my YouTube channel, and he just happened to be in this area. So, we’ve gone through one flip, and then now one long-term rental together, and he found me through this channel too. So, it opens so many doors for you, more than just the money and the documentation of your life, but it is that simple. Just document.

Ashley:
Can we touch on that partnership for a little bit? Because Tony and I are releasing our book Real Estate Partnerships, and I think one of the hesitant things is, “Where do I find a partner?” You found your partner on the internet, and they ended up being somebody local. So, can you just give us a real brief breakdown of how that connection started, and how you structured your partnership?

Shaun:
Definitely. I have a second YouTube channel, which is about how to become a real estate agent in North Carolina, so how to pass the test. Every student who’s in this area for the most part watches me or one other YouTube channel, because those lectures can be pretty dry. So, they go onto the YouTube, and I can put up flashy pictures and videos. So, this guy ended up working in the same firm that I do as a real estate agent, and he just reached out and said, “Hey, we should grab some coffee. I invest in the area,” so we grabbed some coffee, and he told me a story. Then it was a week later, he shows me a deal that he found, and it was off market. So, my one off-market deal came through him.
We became investing partners on a few more deals or one other deal, almost another deal. It’s really just grown into a friendship and this investing relationship, which has been really helpful, but it’s because of that YouTube channel.

Ashley:
How did you protect yourself going in with someone you recently just met, and what did that structure look like? Did you guys create an LLC? Did you do a joint venture? Was this a handshake deal? Give us the inside look to the partnership.

Shaun:
This was an LLC deal, so we did go into it together formally, but I also knew that he had a big reputation. He was experienced, so there was probably a little bit less risk on my side than for him who maybe just saw me as an influencer, “Hey, sign up for my course.” I don’t have a course, but I think there was more risk for him than there was for me, so it was quite easy for me on that point. Then the deal that we locked in, I think what he saw in me was that I could actually put some sweat equity into this property. So, his side of the deal was more like he found the property, and it was a really great deal in Charlotte, North Carolina.
It was actually probably the best deal I’ve ever done as far as the buying side goes. It didn’t end up the best deal, but how he found such an affordable house in that area was great. He had found that deal too, which, again, less risk on me. I knew that deal would work even if we went way over budget. So, I would add the DIY stuff. He would transact the buying side and the selling side. So, it was almost a perfect fit.

Ashley:
That’s pretty cool. I think one hesitant thing is you meet someone online you don’t really know, but I think it’s really cool that they were in your market, and also, you verified and looked at what their reputation is with other investors in the area. So, have you done any other partnerships besides this one?

Shaun:
I have done one other part. I’m in a current partnership right now with another flip. So, my two flips are in partnership deals. Actually, this is probably a question or a thought for y’all. I’m excited to read that book, because the whole DIY thing is great, but to really be able to scale, I am somewhat running out of cash to be able to use on my own. So, that’s why some of these partnerships have come up. In these partnerships, me as a DIY-er means I put in a lot of sweat equity in these deals, and so trying to figure out how to structure these deals to where it’s not necessarily 50/50 in the outcome because somebody’s putting in tremendous amounts of work during the two or three months of working on it.
I’m not sure if your book touches on that or not, but either way, looking at how to structure a deal in the future is definitely on my radar.

Ashley:
Shaun, we would love to answer that for you, but you’re just going to have to buy our book. The answer is in there. No, I’m just kidding. So in this partnership, are you both putting in the same amount of capital?

Shaun:
Yes, same amount of capital.

Ashley:
Okay, and then you’re the only one that’s actually doing any physical labor doing the sweat equity.

Shaun:
For the most part. I would say the first house, I partnered with the partner… The partner I partnered with, the guy, he had a GC that he’s worked with in the past, so it was basically me working alongside a GC, which was a horrible experience.

Tony:
Wait, can you elaborate on why? Why was that such a horrible experience?

Shaun:
There was just so much miscommunication, so much double work. He went through the house, and quoted things in the beginning, and then he ended up doing things differently that then caused me double work. For instance, we were going to replace the panel doors with six panel doors, something simple like that. I had painted all the door jams, and painted the entire house, and the next thing you know he’s ripping out all the door jams, all the doors. Then he replaced them back with the same exact doors that were already in the house. It doesn’t make sense to me, and so then I had to go… Then he also hired a drywaller to come back.
He didn’t tell the drywaller the specific walls to touch up, so the drywaller had free ranged the whole house that I just painted. So, I had to paint the whole house twice, and it’s a lot of work. It was just really… I was the painter and the electrician basically, but I ended up becoming the trash man, the painter, the electrician, and everything else that was small and ticky-tacky, but it added up to a lot. So for a deal like that, it really doesn’t make sense for me to do that necessarily again in that same way. But if there was a way to get maybe a payout or pay for my time or something, it would be a little bit more enticing, I think.

Tony:
Can I ask a clarifying question about the structure for that specific partnership? The person that brought the capital, was it an equity partnership between the two of you, where you were sharing in the profits, or was it a debt partnership where they just basically gave you a loan?

Shaun:
No, so it was an equity partnership, so we both put 50% into the property. We paid for it cash. Then we would fund all of the materials and the GC work and everything 50/50. Then on the backend, we would get paid 50/50 after he took his realtor fee out on the backend.

Tony:
Gotcha.

Shaun:
Which again, I wouldn’t mind the realtor fee that he takes out in the back, because he found the deal. He should get some incentive for finding that deal for sure.

Ashley:
You’d most likely have to pay that to somebody else anyways too.

Shaun:
Exactly. I am a licensed realtor, but I don’t really transact for other people or even myself. I’ve never done a selling. I’ve never sold a house myself. I’ve always hired somebody to do that, because they could do it far better, I’m sure.

Ashley:
The first thing that I think of is, “Okay, if you have a dollar amount saying…” For easy math, say you’re each putting in $50,000, and you’re each getting 50% of the equity in the property. I think you need to actually build a scope of work for yourself of what you’re going to be doing as far as the labor, the DIY stuff, and say, “This is what my time is worth to do that,” and say, “I think…” Say it ends up being $10,000 or whatever, so now you have 60,000 into the deal, and your partner has 50,000 into the deal, and then break it out like that. So, maybe now you have a little bit more equity.
You have 55% instead of 50 or something like that, because you do want to value doing that, and you’re still probably going to be saving your partner money than if you were to go and just hire out a contractor to do that. Plus, you have great incentive because the better job you do, the better your payout is going to be is having that equity interest. That is one thing why I have loved to partner with people who bring that sweat equity is because they’re way more motivated to get a project done than most of my contractors, or they’ll do a better job, because there is some end goal.
So, that would be my recommendation is to build a scope of work of what you’re doing, and put a dollar amount to it. It’s not that you’re going to be… You could set it up so that when you sell the flip house, you’re getting that 10 grand, and then you’re splitting the profits 50/50 too. So, that’s another way you could structure it.

Shaun:
I like that a lot. I need to do that more ahead of time. I think I try to maybe please people too much, or if I find a deal, I’m still not super experienced to where it’s like, “Yeah, this is guaranteed to work. Will you come on with me?” I feel like me adding that sweat equity is part of my sales pitch, but I get so burned out after two months on each of these properties. I think every single one of them, there is a burnout period, and it becomes like, “Man, I’m doing all this for nothing or for 50/50.”

Tony:
Here’s the only thing I’d add to what Ashley said is that I think oftentimes, especially for new investors, they undervalue sweat equity. They don’t understand how much work actually goes into the sweat equity piece when it comes to a partnership specifically, because think about the person that’s bringing the capital. All they have to do is sign some documents, wire some funds, and then wait for the project to finish. Whereas the person that’s doing the sweat equity, they’re showing up to the job site every day, every night after work maybe, and they’re swinging hammers, laying tile, doing all this work. There’s a lot that goes into actually doing the sweat equity.
So if I were you moving forward, especially given now that you’ve done this successfully a few times, I probably wouldn’t bring anyone in as an equity partner anymore, and I would structure every partnership as debt. So, you would this person, “Hey, you’re going to get whatever, say, a 12% annualized return on your money. So if you give me $100,000, and I hold it for a year, you’ll get back 12. If I hold it for six months, you’ll get back six, but it’s a fixed rate of return.” I would say, “Hey, I’m not going to make any payments to you during the life of the loan. You’ll get paid once I finish this flip.” Keep it as simple as that.
That way, they get the guarantee of a fixed return, but you still get to keep all the upside above and beyond that 12%, which is typically a pretty healthy amount. So, they still get a fair return on their investment for being the private money person. Then you get to really recoup the majority of the equity there ,because you put in all the sweat and all the hard work.

Shaun:
I absolutely love that. After doing this now talking about it so much, I do have people now who are like, “We have extra money laying around,” and they’re not people who I know would actually go into a house and work on it, or they might be too far away. So, that’s perfect is doing a structure like that.

Ashley:
The last thing I would add too is I think this is really forgotten is to who is the person that’s doing all of the computer work, I would say. Who’s getting all the bills from the contractor? Who’s paying the credit card charges? Who’s writing out the checks? Who’s doing the bookkeeping? Who’s getting the insurance on the property? Who’s getting the utility switch in the name like doing some of the acquisition stuff, because that portion of the asset management, I think, is sometimes forgotten as to that is something that somebody is putting sweat equity into the deal too.
So if that’s something you’re doing or maybe the partner is, I think that’s something definitely to take into evaluation, because that is giving up some of your time, and that can be a headache sometimes. So, just a little piece to factor in there too as to who’s doing that.

Shaun:
That’s a good point. While we’re on this too, by the way, I love DIY-ing the work, and that’s also why I go into some of this is I do find joy in that. My wife does too, so we go into these projects super excited to knock them out. So, it’s not all complaining on my side, but that’s definitely something to look forward to and why I’m excited for that book too.

Ashley:
Well, it’s even better when you get paid to do what you love. Let’s go into some of the DIY that you guys love. Can you maybe give us some of… Do you have some tips for rookie investors that are starting out to DIY?

Shaun:
I’ll go with some of the ones that I believe people think are the easiest. I have a DIY project that I absolutely love. I’ll save that for last of course. Like you were saying, painting, I think anybody can paint a wall. Even you, Ashley, you can paint a wall. You can always fix it if you can’t pretty easily, but they have these Greco X7 magnum sprayers. I mean, these things will make a paint job last an entire day. So one day, you can paint an entire house with prep work included, and then two or three days, you maybe do some of the trim work and touch-up work. That’s by far one of the biggest savings you can do.
For instance, that flip, what I did with that partner, we did have that GC quoted at $7,000 to paint a 1,500 square feet, three-two house at $7,000, which included materials plus the GC fee of 18%.

Ashley:
Wow, 18%.

Shaun:
For the GC fee, yes.

Ashley:
Oh my God.

Shaun:
They hire other people to do that. So, you can do that in three to four days, even if you’re not experienced. To me, after materials, $7,000 in less than a week is a really good return on my time. That’s a project I’m going to take, and I would recommend other people to do.

Tony:
Shaun, just even for myself, I’ve never painted an exterior of a house, so I have no idea what I might spend in materials. But for you to buy enough paint for a 1,500 square foot property, how much do you think you might spend to do that?

Shaun:
For the entire interior, I would range it from about 1,000 to 1,200 bucks, which would include all the caulking and taping and then your actual paint itself. Then for an exterior, you’re looking at maybe another 10 gallons of paint, so another 500.

Ashley:
Don’t forget the full body suit too when you’re using the paints, right?

Shaun:
I don’t wear that. I end up looking like a bum of snowman. [inaudible 00:36:15].

Ashley:
I did have a paint [inaudible 00:36:18] at one time, but I was so bad at cleaning it out that it just gunked up, and I completely ruined it, because I wouldn’t take the time to… Sometimes I would dump it off at the barn, and have the guys spray it out in the milk house or whatever for me, but it definitely ruined a paint sprayer by laziness of not wanting to clean it out.

Shaun:
Mine’s starting to drip out of the actual machine itself, the motor, so it’s lasted. I think all 10 of these properties, I’ve used it or nine of them, and then my own primary houses too.

Ashley:
Wow. Awesome.

Shaun:
I’ve used it a ton of times, and it’s only 300, 400 bucks, and it’ll save you thousands.

Tony:
So, I was going to say so your all-in material cost is less than two grand, so you’re saving at least $5,000 by doing it yourself.

Ashley:
How long is it taking you, say, for that same example, the 1,500 square foot house? How long would that take you?

Shaun:
It takes three or four days, one day for prep and the bulk of the painting, and then another second and third day for just touching up the edges, and cutting in. Then you may have a day way down the remodel where you touch up stuff, but you’re talking less than a week.

Ashley:
But to save $5,000.

Shaun:
Yeah, which to me, when you’re first starting out, I mean, and you’re cheap like me, that’s huge.

Ashley:
Okay, cool. That’s a great first step. What other ones do you have for us?

Shaun:
I would say one that I think people think is really easy is laying floors. You touched on this earlier, Tony. Laying down floors is a lot of work on your back and your knees. To me, it’s terrible, but it is a way to save 1,500, $2,000 a house. I don’t do that anymore. I’ve done it for a couple of bathrooms, but I stopped doing it because I was able to find a couple of people that can do that same job for a dollar a square foot. So now when you start weighing your time versus how much you’re paying for something, that laying floors on a 1,500 square foot house would easily take me a week, and I would save $1,000, $1,500 to do it.
Now, you’re looking at the painting. That’s a lot better return. It’s $7,000 a week of work versus now $1,500 for a week of work. I’m going to hire that flooring out if somebody’s going to do a lot better quicker, and I could work on other things.

Ashley:
A dollar a square foot, I think I’m paying right now 350 a square foot to have it installed.

Shaun:
I know. No one’s going to think it’s good quality, but it’s good. It’s great. It’s worked for a while.

Tony:
So, how did you find this person? Say I’m a DIY-er that wants to eventually start sourcing things out. How are you finding these subcontractors to do this work for you?

Shaun:
I had a guy come in who actually does paint and drywall first to come quote, and he quoted me close to 250. So, I called my dad who had his primary house done just recently. He was like, “We just had it done for 1.75.” He heard me on the phone while I was with the flooring guy. The flooring guy was like, “I could do it for $1.75.” I was like, “Okay, cool.” Well then I had a guy working downstairs on something, and he heard our conversation upstairs, and when that guy left, he was like, “I could do this floor for a dollar square foot.” So, it was just someone overhearing, someone overhearing. So, it was basically an auction or a pricing warrant.

Ashley:
Cool.

Tony:
I guess let me take it even one step further back. So, how did you find that guy that was downstairs? How did you initially… Was it a Facebook group? Was it a referral? Just in general, what sources have you found that are best to find some of these subs?

Shaun:
Definitely off Google, I would say, is where you’re going to get your best pricing, and actually where you get maybe I’d say even more of a reputation, even though not branded on Google, but you have word of mouth of your neighbors and people on Facebook groups. That’s my biggest one is going to local Facebook markets or pages. So, you go on there, and you can just go to the search and see like, “Hey, I’m looking for a tile guy,” so you just search in tile or drywall or floors, and you’ll see what other people’s recommendations are. So, that’s where I’m typically going now.
They’re still licensed and insured typically, but you don’t have to pay for all their branding and all their marketing that they’re offloading back onto the customer. That’s my biggest resource now. So, that guy that was downstairs was actually a guy we hired for tile. I went to Google, and googled like, “What’s a good square foot for tile price?” So even with him, it was negotiating him to be able to have him come in and do the tile, and he overheard me talking about the floors. He’s just the overall general guy now.

Ashley:
Okay, so we talked about painting, flooring. What about things like electrical? Electrical is something I would be scared to touch.

Shaun:
I’ve heard both of you talk about electrical and plumbing. It’s out. You’re not touching it. To me, those are my favorite things. They take less time. They’re actually less dirty once you get the toilet out of there. You stay cleaner. You stay less sweaty, and they’re really strategic. So, electrical is by far my favorite. I don’t know how much I should talk about how much I do that on my own properties, but I’ll say very basic level. If you’re changing out outlets and light switches and your ceiling fans, you’re saving thousands of dollars, and it’s actually extremely easy to do.
Again, usually you’re in the air conditioning, and it’s pretty simple work. My logic, my take on all of those things is you can wire things exactly how you found them. You don’t need to be an electrician to wrap a wire around the screw. If you found it that way, to me, my logic is it’s going to still be safe to rehook it back up that way. I know so many electricians are going to watch this, and just scoff, but if it’s worked… These houses I buy are from the ’70s. If it’s worked for 50 years, I don’t know why it still necessarily wouldn’t. Again, I’m sure so many people are going to disagree with that, but leading to electricity too or to build onto that, my biggest project I would do for DIY work is hands down recessed lights.
They’re extremely simple to do. I have videos. There’s videos all over YouTube on how to install recessed lights. I even have a video where I’ve done a bedroom in one hour, and I’ve had that same size bedroom quoted by an electrician for $1,500 labor. I define that now as $1,500 for one hour’s worth of work. So if you already have a light switch in your house, if you already have a ceiling fan or light fixture in your ceiling, you just break that off into these junction boxes for your recessed lights. I mean, it’s the simplest thing. It sounds complicated. It sounds scary, but you’re not building a rocket here or anything. Again, so many videos on how to do that.

Ashley:
Shaun, let me ask you this. If you’re putting up a new drywall, and you’re putting in a recessed light, do you have any tips as to how to know the location of that recessed light when you’re drilling in the drywall? Is it basically just measuring, or is there any cool tint?

Shaun:
That’s the hardest part by far is how to know where things go, but there’s a website. It’s completely free. It’s recessed lights blog spot, something like that. But if you google recessed light location, there’s actually one where it’ll give you a calculator, and you plug in the dimensions of your room, and whether you want four lights, six lights, and your pattern, and it’ll plug in the dimensions for you, which is really cool. Then I adjust those a little bit based off of if there’s kitchen cabinets in the way. Usually, I want them a little closer to the wall than what this calculator gives you, so that way it just bounces more light around, but there’s a website that can guide you through that.

Tony:
I just want to ask one question, because we’re going through all these tips, and you’ve shared a ton of the experience you’ve built up, but what was your actual resource, Shaun, for learning all of these things? What was your best resource for identifying the right steps to do all these DIY tasks?

Shaun:
It’s 100% YouTube. Now, I think the benefit of me also creating a YouTube channel was I would watch other YouTubers on how they would install recessed lights, for instance. Then as I’m doing the recessed light installation, and videoing it, I’m still even watching more and more resources so I can teach people those resources. I think that’s a value of the channel, or what I’m trying to do there is compile a bunch of other professionals, and then I come off as a professional, but I’m rounding up everybody else’s experience into one direct video. All of that has helped me to where I feel confident, and just able to do these better than maybe somebody who’s done it the same way they’ve always done it for dozens of years.
I’ve gotten that a lot. Even working alongside that GC, there were other people in the house, and a plumber was telling me that he’s… Don’t buy plumbing products on Amazon or other places. He’s like, “Go to your local plumbing supply store. They’re built different.” To me, it’s like the manufacturing number is the same on that mow and sync as it is this sync and that sync. To me, it’s the same product. I don’t know, but I think a lot of people are set in their ways, and having YouTube and being able to see a combination of everybody’s experiences and strategies then gives me the ability to do the best of those, and not be scared to do it.

Tony:
Now, Shaun, I’m big on the Airbnb space as well. You mentioned you got a couple of those. Do you have any DIY tips specifically for the Airbnb side of things?

Shaun:
For Airbnb specifically, build your own furniture. I mean, I think I’ve heard it so many times that people buy stuff on Wayfair. Now, I don’t know what y’all’s experience are with that, but I’ve had nothing but broken furniture on Wayfair, and both from outdoor… Well, I don’t know if I should namedrop companies like that, but I just stopped buying stuff pretty much from anywhere, and started building most of my furniture because I can build it to fit an elephant. My beds aren’t going anywhere. They look really good. It’s stained wood, and these are really simple straight line things to build.
Nothing has a curve on it. Everything is just… There’s no fabric on my stuff. So, it’s just straight lines, regular pine wood. All the instructions are all over Pinterest, and you can go step by step on pictures, and build your own furniture.

Ashley:
I bet it’s a lot sturdier. When we built our house, we did all of our furniture that wasn’t like a couch or whatever from the Amish. It was all just local-made furniture. I mean, my God, that furniture compared to some of the stuff we have bought for our Airbnbs, the quality difference and just how sturdy they are is really incredible to me. Even just going to local furniture stores or big box name furniture stores too, the difference in quality is really incredible.

Shaun:
Some of the only bed frames we’ve bought on Amazon were ones where we’ve had guests complain that they made noise. The ones that we built, again, they’re not going anywhere. So much glue and bolts on those things. They’re staying. Now, moving those out someday will be a pain, but…

Ashley:
Just take a chainsaw.

Shaun:
Yeah, seriously. I built one from my primary house here in the guest bedroom, and I didn’t glue it, and bolt it. I just screwed it in knowing that we might have to take it out of the room someday. Sure enough, it was the first one to start wobbling. So, I just did it like I did the others, and made it foolproof.

Ashley:
Awesome, Shaun. Is there any other last minute tips you wanted to give us on DIY?

Shaun:
The one other thing that I’d like to do on all my properties, and it goes both interior and exterior, is just adding wood accents. So, it goes with building the furniture of Airbnbs, but it’s, again, so simple. You’re talking about straight lines. Go to the store, and buy a one by three or one by four, stain it, slap it on your mirror in your bedroom, and it changes those simple frameless mirrors in your bathrooms into this custom elegant looking mirror. It costs 10, 15 bucks depending on your tools you have, and it completely transforms the space, or wrapping post outside. That’s a big one I do on every property now.
I build my own cedar mailboxes. These are super cheap, affordable projects. Really, all of these that I do are ones that I buy before I’ve even closed on a property. If I know inspection’s good, we’re closing on this. We still have a week or two. I started just loading up on these projects, so I’m ready to install them whenever I get the house.

Ashley:
That’s awesome. Well, Shaun, thank you so much for sharing this all with us. We really appreciate having you on. Can you let everyone know where they can find out some more information about you, or they can reach out to you?

Shaun:
I’m all over YouTube. My channel is Kelly Concepts. Definitely drop a comment down, and let me know what you think about some of these projects. That’s the best place to reach me.

Ashley:
Awesome. Do you want to do our rookie rockstar, Tony?

Tony:
All right. So today’s rookie rockstar are Brandon and Danny Tilson. You guys might remember them from episode 293, which is actually one of our most popular episodes on the rookie YouTube channel. Brandon and Danny say, “This is the first property that we bought, and this property has started us on our way to financial freedom. There are tons of ups and downs during the process, but we can officially say that we done with the renovation. They put in all new flooring, the kitchen, the bathroom, gutters. They replaced the windows. It took five months just to get the windows in, but it’s all done,” but the numbers are…
They bought it for 64,000. The rehab was 23,000. So, they’re all in for, what is that, about 87,000 bucks. The ARV was $110,000, and they’re able to rent that property out for just over $1,000 per month. So, Brandon, Danny, kudos to you both. Excited to see this project come to conclusion.

Ashley:
Shaun, we have one last thing before we let you out the show is the rookie exam. So, what is one actionable thing a rookie should do after listening to this episode?

Shaun:
I definitely think, like most people say, go out there and get your first deal. My first and second deals were not even close to the best ones. The second one really far from it. It might be my one breakeven four years later, but go out there, and lock in that first deal, and quit overanalyzing everything.

Ashley:
What is one tool, software app, or system in your business that you use?

Shaun:
The biggest tool I use is amazon.com. Hands down. They have this list that you can build on there, where you can compile your entire shopping list for all your lights, doorknobs. I mean, you name it, anything for a construction project. Then you could watch those prices as they fluctuate over the course of building a house, Black Friday and so on. So, you could lock in some major deals through Amazon.

Ashley:
Lastly, where do you plan on being in five years?

Shaun:
I pivot with this every month. I’m in the property management business now, and sometimes I’m like, “Why did we get in the property management business?” But I really ultimately… My dream is to have a really nice lakeside house here on Lake Norman, so I want to get to a place where I’m generating… My goal is $1,000 a day in real estate income, or just income in general through mostly passive means, and then getting my lakeside house here in North Carolina.

Ashley:
Oh, that sounds fun. Well, Shaun, thank you so much for coming onto the show. We really appreciate it. I’m Ashley at Wealth from Rentals, and he’s Tony at Tony J. Robinson. We will be back on Saturday with a rookie reply.