Nicole Heasley has been in real estate for 4 years and started out by house hacking single family homes. She has house hacked single unit homes with 3 rentals and in this episode, she will share how she went about doing this and why it was nothing out of the norm for her.
Nicole Heasley Real Estate Background:
- 4 years of real estate investing experience
- Currently owns 3 rentals
- From Boardman, Ohio
- Say hi to her at: firstname.lastname@example.org
- Best Ever Book:
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Best Ever Tweet:
“Start meeting people now, find that meetup and attend now. You need to know people.” – Nicole Heasley
Theo Hicks: Hello, Best Ever listeners. Welcome to the best real estate investing advice ever show. I’m Theo Hicks, and today we’re speaking with Nicole Heasley. Nicole, how are you doing today?
Nicole Heasley: I am wonderful, thank you guys so much for having me on.
Theo Hicks: Absolutely. Thanks for taking the time to join us. A little bit about Nicole – she has four years of real estate investing experience, and currently owns three rentals. She’s from Boardman, Ohio, and you can say hi to her at email@example.com. Nicole, do you mind telling us a little bit more about your background and what you’re focused on today?
Nicole Heasley: Absolutely. I graduated from Kent State University in 2015, and I got a job with a large REIT that owns, redevelops and manages outdoor retail shopping centers. So I was looking to move from Kent to Cleveland, and I didn’t know the area that well. I was gonna get an apartment, and a roommate, and my dad said “Why don’t you get a house, and let someone pay your mortgage for you, instead of paying someone else’s mortgage?” And I thought “Okay.”
I got an FHA loan, 3.5% down, and fortunately, North-East Ohio is a very affordable place to live. So for less than 5k I was able to get into a 3-bedroom house, and live near the Cleveland clinic, and some universities, and I rented out the spare bedrooms in my house for three years. And then of course, I was getting commercial real estate experience doing accounting work and short-term leasing for the REIT that I was working for… And I kept going from there.
The original plan was to pay down my student loans, but then once someone paid my mortgage for me, I was like “Can I find someone to make my car payment also, and maybe pay down a vacation, and put some money in my retirement account?” Once you get that first check, you’re kind of hooked.
So instead of taking that money and paying down my student loans – which I should have done, kind of – I went ahead and bought more properties. I bought two more properties over the next three years. Now I’m out of that house in Cleveland, so I have three rental properties.
Theo Hicks: Perfect. Are all three of those single-family homes?
Nicole Heasley: They are all single-family homes. One in the Cleveland area, two in the Youngstown area.
Theo Hicks: Let’s talk about the numbers on that first deal. So you got it for less than 5k down… What was the purchase price, and then maybe tell us — I know this is the house-hacking strategy, but typically when you hear of house-hacking it’s a duplex, so you live in the other one… Whereas here you’re kind of renting it out — people are all living in the same unit, basically.
Nicole Heasley: Right.
Theo Hicks: Maybe walk us through, for people who want to house-hack a single-family home, some of the things to look out for when finding roommates, basically.
Nicole Heasley: Absolutely. So it never occurred to me — I didn’t know that I was going to fall in love with real estate. Remember, I’m fresh out of college, I’ve got this accounting degree… I originally wanted to be an English teacher, but I figured out “Well, they don’t make a lot of money.” I had no idea what I wanted to do with my life, and I was just kind of following whatever doors I could kick open. So I had already been living with roommates in college for the past five years… What was another year or two?
So it didn’t seem weird to me to share a bathroom and a kitchen with someone, because I had already been doing that for so long. And I had also already lived with strangers before. You’d figure in a dorm you’re kind of living with a stranger, but also there was a summer where I was kind of between houses. My one friend was moving was moving out of our apartment, I was gonna move in with some other friend 3-4 months later… So I had to go to Craigslist and find some roommates and find a place to live for 3-4 months… And I didn’t die. I didn’t get scammed, or killed, or robbed, or any of those things.
I met the person at a public place, I scoped out their social media to make sure — they said they went to Kent State, so I made sure I saw some pictures of them around campus, or wearing a Kent State sweater, or have connections that are also at Kent State. I could have taken it a step further and ran a background check on them, but I didn’t go that far.
So I had some experience to rely on to tell myself “I can keep doing this, even though I’m not in college anymore.” And again, with the Cleveland Clinic nearby, I had a lot of nurses live with me, I had a lot of medical students live with me. I also had a teacher and a social worker. So I had just young professionals come and live with me. And same thing – we met at a public place, we scoped each other out on social media, I made sure someone was present when they came and saw my house for the first time. They usually brought someone with them to come see the house for the first time… And I never had an issue with it, not once.
You also wanna get the numbers, I’m sorry — so I bought that house for 108.8k, and I put 3.5% down. So I got them to pay for my closing costs. I didn’t pay the closing costs, I just had the down payment, really. So it was just that 3.5% down on 108.8k, which would probably be between 3k and 4k, I think.
Theo Hicks: Three-bedroom house… Obviously, you live in the master suite, I’m assuming…
Nicole Heasley: I didn’t. I took the smallest bedroom, because I could get more rent out of the two larger bedrooms.
Theo Hicks: That’s smart. So what were the two rents you were able to get?
Nicole Heasley: I started out at $525/month per room, utilities included. I did want the garage space. If I’m gonna buy a house, I want a space, because we get a lot of snow… I want a garage space. If I’m giving up the extra bedroom, I at least want a covered car. So whoever rented the other side of the garage paid an extra $25/month. And then everytime someone would move out once a year, I would up that number by $5/month.
So I think at the end I was making close to $1,100/month, and my payment was $1,000.
Theo Hicks: Perfect. That was my last question, what was the payment. So basically cash-flowing $100/month, while having free rent.
Nicole Heasley: Yeah.
Theo Hicks: So when you moved out, you had your room rented out, and the other garage space, and then what did you do from there? Had you already had those two properties, or did you house-hack again?
Nicole Heasley: No. The second property – it was funny, my dad also caught the real estate bug and he decided that he wanted to try to flip a house. And he did pretty good for his first flip, but he finished a lot later than he thought he was going to. So he finished around August, got it up on the market, someone buys it, then they decided that they’re gonna go buy a car, and they lose their financing. At this point it’s probably October and no one moves in October in North-East Ohio.
So he pulls it down from the market, because he doesn’t want people going on Zillow or the MLS and seeing 300 days on market. And he keeps telling me “You should buy this house, you should buy this house.” Well, I had loaned him my savings money to do the flip, and I said “Dad, you have all my down payment money.” So what he did was he added my name to the title, I took out a Home Equity Line of Credit on the property, and I paid him out with that. So that was property number two.
Property number three was actually the house that I grew up in. My dad was driving down the street and saw that it was for sale. We looked it up, the price was right, we went ahead and did 20% down, and just bought it conventional. It was already fixed up, ready to do.
Theo Hicks: So for the deal you bought from your dad – a single-family home again, and then you rented it out?
Nicole Heasley: Yeah.
Theo Hicks: What was the rent and what was your monthly payment?
Nicole Heasley: My monthly payment, because it’s a Home Equity Line of Credit is $250/month, and my rent is $740/month. Now, that doesn’t include taxes and insurance. Because it’s a Home Equity Line of Credit, it’s not all in one payment, like a mortgage would be. I think my taxes are maybe $35/month, and insurance is around $70-$75. So all-in — I’m getting about $350/month out of that house.
Theo Hicks: And then for the childhood home – that’s pretty cool. What did you buy it for? You said it was already turnkey, so you just bought it, rented it… What was the monthly payment and what was the rent?
Nicole Heasley: I bought that for 49.9k. That payment is $400/month, and that’s including taxes and insurance, and I get $875/month out of that, including pet rent, because she has a little Yorkie. Now, also, I am not including maintenance, vacancy… I always put away at least 35% a month for vacancy, for repairs and maintenance. My dad is my property manager, so he gets that fee each month as well.
Theo Hicks: You said $35/month?
Nicole Heasley: 35%.
Theo Hicks: 35%, okay. So 35% for [unintelligible [00:11:16].04] reserves, and then – how much do you pay your dad to manage the properties?
Nicole Heasley: 10%.
Theo Hicks: Okay.
Nicole Heasley: Pretty standard for the industry.
Theo Hicks: How do you find these deals?
Nicole Heasley: So the second house was a rental that my dad’s friend owned, and he was losing his renter and he was gonna get rid of it, and my dad saw the potential there. So he found that deal off-market. And then, like I mentioned, because my father is local, he saw the second deal just driving down the street, happened to see the For Sale sign in the yard.
What we’re finding now, now that people know that we’re doing this and they know that we’re doing it well, people are starting to come to us when they know someone who wants to get rid of the house.
We also have built up a pretty good network in the area – other investors, other agents, just from networking. So occasionally I’ll get a message from someone who will say “Hey, I saw this. It looks like something that you guys like to own. I just want to send it your way in case it interests you.”
Theo Hicks: Alright, so how did you build that network? Just by doing these deals? Or are you doing stuff outside of these deals, like attending meetup groups, and stuff?
Nicole Heasley: One, I’m on Bigger Pockets. I try to get on there every day, at least 15 minutes, chat on the forums etc. I started attending meetups in Cleveland, and then once I left Cleveland, I started my own meetup in Youngstown. I joined real estate groups on Facebook, and I just tell people, I talk to people about what I do. Now, since my 9-to-5 job has always been real estate, and it still is – I’m not at the REIT anymore, but I’m working for a company that produces property management software… So I’ve kind of always been surrounded by real estate people. And I just tell people what I do. I talk to them when I’m looking at a property, when I’m buying a property. I just talk to them about my activity, I tell them about the meetups. When I come into work the next day, “What did you do last night?” “Well, I went to a real estate meetup.” Sometimes I’d go to them on my lunch breaks when there wasn’t a quarantine.
Theo Hicks: Yeah, that’s really nice, because I know a lot of people who work full-time jobs and do real estate on the side can’t really talk about it at work, or are afraid to talk about it at work… So that’s nice that you’re able to do that.
Nicole Heasley: When I switched jobs — it’s such a part of my personality; if I didn’t talk about real estate, that would take up most of the things that I have to talk about… So I kind of felt things out when I interviewed for my current position, and they were really enthusiastic about my real estate endeavors… So that was a greenlight for me.
Theo Hicks: Perfect. So for someone who hasn’t bought a property before, maybe just graduated from college or just got out of high school, what would be your best real estate investing advice ever to that type of person?
Nicole Heasley: Start meeting people now. Find that meetup. If you can’t find one, if you can’t attend one in person right now, find a virtual meetup, start a meetup. You need to know people, you absolutely need to know people.
Theo Hicks: What’s one tip you’d give to someone who wants to start their own meetup? What’s the first thing that they need to do, or what’s one tip you have for them to create a successful meetup, that lasts a long time and it’s not just a few meetings and then it kind of fizzles out.
Nicole Heasley: Consistency. We hold ours at the same place, on the same date, every single month. It is the second Wednesday of every month, and it’s at a local bar/restaurant. We are there every single month, without fail. We try not to move it, ever.
Theo Hicks: Perfect. Okay, Nicole, are you ready for the Best Ever Lightning Round?
Nicole Heasley: Yes.
Theo Hicks: Alright. First, a quick word from our sponsor.
Theo Hicks: Okay, what is the best ever book you’ve recently read?
Nicole Heasley: I’m going to say — gosh, it just floated out of my head… Shoot, do you know Scott Trench, CEO of Bigger Pockets? It’s the wealth-building book.
Theo Hicks: Is it called Set For Life?
Nicole Heasley: Yes, thank you. Thank you so much. [laughs]
Theo Hicks: I just googled it.
Nicole Heasley: That book has been really helpful. It pushed me to make a job change… But I’m also going to say, for people who are quarantined, and they’re thinking this is the worst thing ever, and their life is over, and this and that – read the Diary of Anne Frank. If you wanna talk about being trapped somewhere, and being in a really dire circumstance… It could be worse. And you need that attitude adjustment.
Theo Hicks: If your business were to collapse today, what would you do next?
Nicole Heasley: Start rebuilding it. [laughs] I’d get on board with my network and I would talk to them and I would say “Hey, what do I do?” I have some awesome people in my life who would help me figure it out.
Theo Hicks: Well, I’m gonna ask this question and then I’m gonna ask a different one to kind of throw you off-balance a little bit… But I think you’ll be able to answer it. What’s your best ever way to give back?
Nicole Heasley: To the real estate community?
Theo Hicks: It could be that, it could be other communities, or something in general… But if you want, you can answer it based on giving back to the real estate community. It’s like charities, things like that.
Nicole Heasley: I think real estate investors are overlooked as an asset to the community, because when they fix up a property, they improve the value of that property, they’re also improving the value of all the properties around them. So I think that just by being someone who cares about their properties, you inherently give back to the community, by someone who makes sure that the paint looks good, that the lawn is mowed, that the roof is intact, that people have a safe, clean, habitable place to live, and affordable – that in itself gives back to the community.
That being said, I also try to just stay involved — when new people have a question about real estate, even if it’s a question that is asked all the time on Bigger Pockets, or that other people might get annoyed with, I just try to take the time and answer those questions… Because we were all new once.
Theo Hicks: Alright, so this is a unique question, which — I don’t know why I didn’t think of this earlier; I should definitely add this to the Lightning Round… What’s your best ever way to stay sane during the quarantine?
Nicole Heasley: Running. Getting outside.
Theo Hicks: How many miles do you run at a time?
Nicole Heasley: Usually around 3.5 to 4. I try to do that every other day. But I used to do a lot more, and I’m trying to use the quarantine to increase that… But taking on old hobbies that you’ve maybe forgotten about, or starting new ones. And Zoom meetings.
Theo Hicks: There you go. Alright, and then lastly, what’s the best ever place to reach you?
Nicole Heasley: Probably LinkedIn or Bigger Pockets.
Theo Hicks: Perfect. So you just search Nicole Heasley on LinkedIn or Bigger Pockets. Well, Nicole, thanks for joining us today and walking us through your journey through three rental properties. So we talked about your first deal that you did with the FHA, 3.5% down loan, single-family home; you rented out two of the rooms, as well as the garage space, and ended up moving out, and eventually renting out that third room. Then you gave us some tips on how to find roommates, some of the best practices for living with strangers.
Second deal was a house your dad actually flipped, and you were able to buy it by taking equity from your first deal to buy that, so we talked about the numbers on that deal. Third deal was your childhood home; you bought it with 20% down, and you also gave us some numbers on the reserves (you do 35% each month), as well as 10% for the property management.
We talked about how you found the deals… It sounds like none of the deals — maybe the first one was an MLS; I didn’t ask you how you found that one, but…
Nicole Heasley: Yeah, that was from the MLS.
Theo Hicks: Okay. So the first one – MLS. Second one was an off-market deal from a friend of your dad’s… And then the third one – it was on-market, but your dad found it by essentially driving for dollars.
Nicole Heasley: Yeah, he saw the For Sale sign. We weren’t looking on Zillow, or anything.
Theo Hicks: Yeah. And then you mentioned that now people are actually coming to you for deals because of the network you built up, so you gave us some tips on the things you do to build your network – Bigger Pockets 15 minutes a day, attending meetups, starting a meetup group, Facebook groups, and just telling everyone you meet what you do and your recent activity.
And then lastly, your best ever advice for someone who wants to get started, which is to start meeting people, start building your network now, and following the advice you gave about how you created your network… And your tip for a meetup group was consistency, so make sure you’re meeting at the same place, happening at the same time, the same day every single month, being consistent. You host yours at a local bar/restaurant.
Nicole Heasley: Don’t forget social media – Facebook, Meetup.com and Bigger Pockets. Any place that you can post it.
Theo Hicks: Perfect. Exactly, posting it to those sites, so you find people to attend. Alright, Nicole, I appreciate you coming on. Enjoy the rest of your day. Best Ever listeners, as always, thank you for listening. Have a best ever day, and we’ll talk to you tomorrow.
Nicole Heasley: Thanks, Theo. I had a great time.
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