Beth is a real estate broker and an investor who owns 9 properties. She got into real estate investing in 2002 and later in life married her Husband who also had a few properties of his own. Beth shares some insight on how investors should reach out when looking to work with real estate brokers to find the best deals. She shares how important it is for real estate brokers to pay attention to the inventory and constantly be up to date to find the best deals and instead of always handing them off, take advantage of them.
Beth Traverso Real Estate Background:
- Real estate investor and broker, owns 9 investment properties in the Seattle area
- Her team is projected to sell $67,000,000 in volume this year
- Based in Seattle, WA
- Say hi to her at http://www.bethtraversogroup.com/
- Best Ever Book: The Compound Effect
Best Ever Tweet:
“The main thing is for people just to believe they can do it, give themselves some credit to being able to handle challenges and be able to learn from others so they can better yet avoid those challenges.” – Beth Traverso
TRANSCRIPTION
Theo Hicks: Hello, Best Ever listeners, and welcome to the best real estate investing advice ever show. I’m Theo Hicks, I’ll be today’s host, and today we’ll be speaking with Beth Traverso. Beth, how are you doing today?
Beth Traverso: I am great. Thanks, Theo, for inviting me. Happy to be here.
Theo Hicks: Oh, absolutely. We’re happy to have you here as well. I’m looking forward to our conversation. A little bit about Beth – she is a real estate investor as well as a broker, she owns nine investment properties in the Seattle area, and her team is projected to sell $67 million in volume this year. She is based in Seattle, Washington, and you can say hi to her at bethtraversogroup.com. So Beth, can you tell us a little bit more about your background and what you’re focused on now?
Beth Traverso: Yes. So I have been a real estate investor since about 2002. When I first got it into real estate sales, I was still in my early 20s, and I had a business partner at the time that was a fantastic mentor for real estate investing. He had purchased several investment properties, and we were working together in real estate sales and had our first really good year. His advice to me was like, “I’m not going to let it go, you have to buy a rental house. Don’t buy any dumb stuff, just go out and buy a rental house,” and that was really, really good advice, got the ball rolling. It was tremendously helpful to have somebody to guide me. Back then we didn’t have all these resources we have today, so it was nice to have someone to walk me through what it takes to be a good landlord, what it takes to make a good investment, and just the confidence to know that I could actually do it and I could handle it.
So at that point, as I said, I had two houses in Seattle, and then I met my husband and he also had two houses in a suburb of Seattle. So we basically joined forces and took it from there. Then around 2008, we all know what happened then, the bottom fell out, it was a rough time for a while, and that stopped everything for a while. But then in the last few years, we’ve been able to jump back in and make more investments and focus on growing our portfolio.
Theo Hicks: So would you say that you’re a full-time broker and a part-time investor, or do you split your time?
Beth Traverso: Yeah, the vast majority of my time is spent on real estate sales. However, as time goes on and my career continues to grow and develop, I’m actually looking to shift a little bit more toward the investing, making that more of a primary focus. I’d say right now it’s the secondary one, but it’s really definitely where my interests are turning and where I want to be more in the future.
Theo Hicks: Okay, before we get into any specifics on your sales business and your investing business, what advice do you give to any real estate agents, real estate brokers who are focusing exclusively on just selling deals, but are not investing themselves? What advice would you give to them?
Beth Traverso: Someone told me way back early in my sales career that the money in real estate is in owning it, not in helping people buy and sell. If anything, that’s a vehicle to gain the income to use for investment. But really, where the real money is made, long term is in real estate investing. So my advice to any other brokers who are thinking about getting into investing would be to network with other agents who are doing that or investors who are doing that. We are in a unique position where we see a lot more opportunities than the general public might see. So we have access to better opportunities, and rather than pass those opportunities off to somebody else, why not take some of those opportunities for yourself?
In the real estate business, we don’t have any 401(k) or anything like that; this is my retirement. So starting sooner rather than later– because for me, it’s a long term horizon, and for me, it makes me feel more comfortable about my future being a sales-based, commission-based paid professional, to have that nest egg sitting there for me with passive income for when the day comes when I want to retire. I know I’ve got that, and that gives me a lot of peace of mind having that. So I would recommend more real estate brokers start focusing on that.
Theo Hicks: You mentioned about passive income. So creating a nest egg, but also having passive income. I’m assuming you’re not actively managing these deals yourselves… What’s your business plan for investing? What type of deals are you buying, and then what’s your ongoing involvement in managing those deals?
Beth Traverso: I have a great advantage in that my husband has a contracting background and he takes care of the management of the properties. So he is there to approve properties when they’re purchased. We look for properties that have upside potential, whether it be like a way to add additional income in some way… Anything we purchase, there’s going to be some opportunity to make improvements to raise rents or add something to the property that would increase the revenue. Because in the Seattle area it is very, very hard to find a contractor, handyman, anybody to do anything; they’re all way too busy, and the prices are really high.
So it’s been really valuable for us to just have him and his experience and resources and knowledge base and skill set to just go in there and handle ongoing stuff, too… Once we get things set up, it’s pretty much set and forget. We haven’t really had to have much need to bring in a property manager. At this point, we’re small fish, I understand, compared to a lot of people that are on the show. We’re not doing massive apartment buildings, at least not at this point, and everything’s here local too, so it’s easier for us to manage. So that is our ace in the hole, is that I’ve got him to help with these properties, and we have a lot of long term tenants too which has been really nice.
Theo Hicks: Of your nine properties, what’s the breakdown? Are those single families, duplexes, 4-plexes?
Beth Traverso: They are almost exclusively single-family, which is something that I’m looking to change as time goes on and going forward. They’re almost all single-family. One is a duplex and then one that we recently just purchased is vacant land, which is not typically something I would consider, but we got a really good price on it, and it was just zoned, so it’s a good development opportunity. So that’s where I’m starting to point my focus a little bit. We’ve purchased three properties in an area that was recently up-zoned. So again, the opportunity of adding value, increasing value – they include that. But yeah, it’s been mostly single-family. I’m just starting to branch into the multifamily or development realm.
Theo Hicks: How did you find the nine properties?
Beth Traverso: Somewhere off market, but almost all of them I found on the good old MLS, they were listed. Sometimes they fly under the radar based on how they’re marketed, and sometimes I find properties and I’ll talk to other investors that are like, “Wow, where’d you find that?”, like “It was right there on the MLS.” I’m just there looking multiple times a day, every day and so when something pops up, I’m fast to jump on it.
Theo Hicks: Interesting. So you said that, obviously, you’ve got the MLS. I know Seattle’s very competitive and you said that you’re identifying deals that when you buy them, other investors are like, “Well, how do you get that deal?” I know you mentioned you start–
Beth Traverso: It’s mind-boggling. I don’t know how I see it and others don’t, but also, I should mention that the most recent purchases I’ve made have been in areas that are outside of Seattle; still commutable to the big employers like Amazon and Microsoft. So it’s still in that really hot zone, but it’s in the outskirts. So in some ways, it’s an underserved marketplace, but still definitely within that. If you can commute to those employers, people are buying and renting in those areas. So it’s within that zone, but it’s on the fringe, in areas where people would not normally really be thinking about. If it’s in the city, Seattle itself, it would be really hard to find something that would fly under the radar because there’s armies of people out there, knocking on doors and doing whatever they can to find deals. So I guess that might be part of the advantage, is that I really understand areas on the fringe that may pose some additional opportunities for us as investors.
I feel like we’re a little bit ahead of the curve on that, but it’s definitely not so far on the fringe that it’s not going to bear fruit, because there’s plenty of opportunity right now. It’s also a very, very low rental inventory. In the Seattle area the cost is different than other parts of the country.
Theo Hicks: Okay. So I know the MLS, and especially since you’re looking at single-family homes, there’s a lot of them. It sounds like you’re buying them for rentals, you’re looking for property outside, but more specifically, and maybe you can use one or a few of the nine properties as an example – when you’re going through the MLS looking at deals, what are you looking at in order to narrow down the properties that you want to dive deeper into?
Beth Traverso: One that we purchased not too long ago was cash-only. It was not financeable to the masses, and the reason being that it also had mixed zoning. It could be commercial, it could be mixed-use, it could be residential, it could be any of those things, because it was in that area where the zoning was changed… And it was a house that have been used commercially for decades. So it didn’t have a kitchen, didn’t have a full bathroom, it was a rack full of junk, but the location was fantastic. It was at a state sale, so I knew that the [unintelligible [00:10:02].22], and we knew that the price point was one that would appeal to first time buyers or that whole segment of the market, but it wouldn’t qualify for financing. So I knew it was going to be a good one for us to purchase cash.
We did the BRRRR thing, the buy, rehab, rent, refinance scenario. We were able to buy it as is. We told them they could leave all the junk there. We disposed off the junk, gutted the place, remodeled it, made it cute, and we remodeled it in a way it could be used commercially or residentially. We actually have found a commercial tenant in there, so we’re getting really good rent on it for us. We’re getting about $1,000 a month positive cashflow, which in our area is a pretty good accomplishment to get that out of the chute, with prices being as high as they are.
When we got financing on it, we were able to get it appraised for $100,000 over what we had purchased it for. So we were able to recoup almost all of our money out of that deal and have the cash flow. So let’s say that it worked exactly according to plan, and now we have a really nice turnkey property that’s just cruising. The check shows up every month, they never call, it’s perfect.
Theo Hicks: Last question before the money question. So I’m not sure if you, as a broker, represent investors, but I think you would answer this question anyways… What advice would you have for an investor who wants to work with one of these investor-friendly agents? So what are some things that they should do when contacting agents in order to have the best chance at having an agent send them deals?
Beth Traverso: I would say that they need to be educated about what they need for it to be a good deal… Because sometimes I’ll be contacted and they say, “Here’s 15 properties. Can you analyze these for me? Let me know if you think they’re a good deal?” To me, that’s not a realistic use of my time. I mean, what are you looking for in a good deal, and what does it need to be to fit your criteria? So that’s the main thing is just to try to be educated and do some legwork on your own… Because I think probably they’ll cycle through agents a lot if they’re just going to be running them around non-stop.
Theo Hicks: I bet.
Beth Traverso: That could be a full-time job for one client, and a good agent’s just not going to have that capacity to do that and still make a living.
Theo Hicks: Solid advice. Alright, Beth, what is your best real estate investing advice ever?
Beth Traverso: I would say, give yourself some credit. You are capable of more than you think you are. Now I talked to a lot of people who are thinking about tossing their hat in the ring and getting started investing, and they’re scared of “What if we get a bad tenant? What if this happens? What if that happens?” and I would say, “You can handle it.” I’ve had almost everything happen over the years, from squatters to mold catastrophes to flooding to – you name it; natural disasters… You get through it, and you just have to be tougher than whatever adversity gets thrown at you and learn from it. Every time it happens, I learned something that I can implement and hopefully make it smoother sailing in the future.
The main thing is for people just to believe that they can do it, give themselves some credit for being able to handle challenges, and be able to learn from others so they can hopefully better yet avoid those challenges.
Theo Hicks: Alright, Beth, are you ready for the Best Ever lightning round?
Beth Traverso: I am.
Theo Hicks: Alright. First, a quick word from our sponsor.
Break: [00:13:14]:02] to [00:14:01]:07]
Theo Hicks: Alright, Beth, what is the best ever book you’ve recently read?
Beth Traverso: So I recently reread a book, The Compound Effect, Darren Hardy, and that book I love because it’s just about making small incremental changes daily, that put us on the right trajectory for success.
Theo Hicks: If your business were to collapse today, what would you do next?
Beth Traverso: Because I’ve got two revenue streams, if the real estate sales collapsed, I would just jump full-time into investing.
Theo Hicks: What deal did you lose the most money on and how much money did you lose?
Beth Traverso: Well, I purchased some homes in New Orleans, historic homes, and we purchased them right before Hurricane Katrina came, and we lost money on those ones. How much did we lose on those? Thankfully, the buy-in was pretty low, so we lost maybe $50,000. Nothing too significant, but I mean, that’s real money.
Theo Hicks: What is the best ever way you like to give back?
Beth Traverso: I like to donate to a local charity that helps families with special needs’ kids get physical and occupational therapy.
Theo Hicks: And then lastly, what is the best ever place to reach you?
Beth Traverso: The best place to reach me is anyone can email me at beth@bethtraversogroup.com.
Theo Hicks: Alright, Beth. Thank you for coming on the show again and sharing your wisdom on being a broker as well as being an investor. Just a few takeaways that I got – so we’ve talked about advice that you would give to other brokers who are currently not taking advantage of real estate investing, and that is that brokers don’t have the typical retirement packages you’d get from working for a corporate job, and so your real estate portfolio is your retirement nest egg. So a good strategy for agents is to use the money they make from their commissions to buy real estate.
You’ve mentioned that the money in real estate mentor is in owning properties and not in helping people buy and sell. So make sure you’re networking with other brokers who are investors, that are with other investors who are buying to help yourself get started. You also mentioned that, as a broker, you’re going to see a lot more opportunities than others would see. We had plenty of examples of that throughout the conversation. So instead of selling all those, maybe take a few for yourself.
We talked about your business plan. So your husband has contracting experience, so he’s the one that manages the properties that you invest locally, and you’re looking for properties that have upside, and again, we went over examples of that. You’re finding these deals on the MLS, and you gave an example of the fact that you look at properties that aren’t necessarily in the center of the hot zone of Seattle, but you’re focusing more on those fringe areas that the owners or the renters could still commute to the major employers. But since it’s on the fringe, you’re gonna be able to purchase those at a lower price point.
We talked about how you narrow down opportunity on the MLS and you gave an example of that estate sale, cash-only, mixed zoning, really good location. So just really knowing the locations and the area will help you out a lot.
You gave advice for investors who want to work with an agent. Really good advice. Don’t reach out to an agent without knowing what you actually want, so make sure you’ve got your defined investment criteria, provide that to the broker, the agent, so that they can help you in a more time-effective manner for themselves.
Then your best ever advice was just to give yourself some credit, realize that when you’re investing in real estate, those things that you are afraid of happening are most likely going to happen, and that you are capable of handling those. In order to set yourself up for success, make sure you’re educated, make sure you are learning from others to avoid making a common mistakes or making those mistakes that you’re afraid of making.
So again, Beth, I really appreciate you coming on the show and talking with us today. Best Ever listeners, thanks for listening, have a best ever day and we will talk to you tomorrow.
Beth Traverso: Thank you, Theo.
