Kirby Atwell Real Estate Background:
- Recently left his role as the CFO of a national non-profit to go back to investing in real estate full time, with a focus on vacation rentals
- Recently sold an 11-unit apartment building that he purchased, and fully rehabbed and stabilized it
- Portfolio consists of 80 flips since 2011 and purchased about 28 long-term rental units (mostly single-family homes) that were recently sold off to focus on short-term rentals
- Currently owns 10 Airbnb listings, one long-term rental, one passive investment in a 250-unit apartment, and the 45-acre farm experiential short-term rental
- Based in Valparaiso, IN
- Say hi to him at: www.livingoffrentals.com
- Best Ever Book: Effortless
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Ash Patel: Hello, Best Ever listeners, welcome to the Best Real Estate Investing Advice Ever Show. I’m Ash Patel, and I’m with today’s guest, Kirby Atwell. Kirby is joining us from Valparaiso, Indiana. Kirby recently left his role as a CFO for a national non-profit to get back into real estate investing full-time with a focus on vacation rentals. He has done 80 flips since 2011, and has numerous long-term holds and invested in the syndication. Kirby currently owns 10 Airbnb listings and a 45-acre farm, which is an experiential short-term rental.
Kirby, thank you for joining us, and how are you today?
Kirby Atwell: Ash, it is great to be here. I’m a huge fan of the show, so I am honored to be on.
Ash Patel: Well, thanks for being with us. Before we get started, can you tell us a little bit more about your background and what you’re focused on now?
Kirby Atwell: Yes, absolutely. So originally born and raised in the Chicago suburbs and decided after high school that I wanted to join the military. And my dad said, “Well, if you’re going to join the military, you might as well try to go to West Point and be an officer, because they have it easy,” because he was enlisted. So I applied to West Point, got in through the backdoor through football, spent four years there, and then was commissioned as a military officer. And while I was in the military, I picked up Rich Dad Poor Dad, which is the start of many people’s real estate investing careers… And it just really resonated with me.
So that book turned into doing a deal right away. I’d just read it, and saw there was a house across the street that was for sale, went across the street and bought it. I didn’t have any clue what I was doing, but I was in El Paso, Texas, which was a very affordable market at the time. So that got me started, and then I just started reading every book I possibly could and doing a lot of self-education around it. And I knew when I got out of the military, this is what I was going to do. So fast-forward to 2011, when I got out, I jumped into real estate investing full-time, and not really having a W-2 now to get conventional financing, I thought, “Well, flipping is the way to go.” So I started a flipping business, and we flipped about 70 properties from 2011 to 2016.
And at that point, I looked up and I kind of reviewed my finances and realized that we’re making millions of dollars in gross revenue, and I have nothing more to show financially than when I started in 2011.
Ash Patel: Except a big tax bill.
Kirby Atwell: Yes, yes, exactly. Exactly. So I was like, “The whole reason I got into this was financial freedom.” And mind you, we were being invited to speak on stages and people were saying, “Oh, you’re so successful. How are you doing all these flips and making all this money?” And we had an office and staff, and all this stuff that looks like success. But from a actual asset standpoint, I was in the same position.
So I realized I needed to switch my strategy from flipping to owning rentals. So I started buying in—basically, the BRRR strategy, buying rental property, single-family houses. And I found out about this veteran program where they give vouchers to homeless veterans, for them to get in the houses. And it’s very similar to Section 8. And being a veteran myself, I felt I had a rapport with the vets and could understand some of the issues that had sent them into homelessness… So I started doing that and scaled that initially, and it was great. It was a great program, it worked really well in the South suburbs of Chicago where it was affordable, and the rent rates were high enough to make it work. And then we moved to Indiana, and the rent got cut by a third of what it was in Illinois, for the program. So it just didn’t work anymore. And that’s when we really shifted gears and discovered the cash flow that can come with vacation rentals. That’s what we did afterwards.
Ash Patel: What year was that?
Kirby Atwell: So that was ended 2017.
Ash Patel: So Kirby, all these years that you’re in real estate, you were working full-time?
Kirby Atwell: No, actually. So in 2011, I jumped in full-time to real estate.
Ash Patel: Okay.
Kirby Atwell: And I did real estate full-time until 2017. So I was just running my own business and then I was involved with the non-profit prior to coming on staff there. And I was asked to come on initially as a CLO and then eventually, CFO. It was a non-profit that helps veterans start businesses. So eventually I did that for several years, and eventually went back to doing real estate full-time now.
Ash Patel: Alright, so you found short-term rentals in 2017, huh?
Kirby Atwell: Yes, exactly. And I have not looked back.
Ash Patel: You know, on the surface, it looks easy; a lot of money, but there’s a lot of challenges as well.
Kirby Atwell: Yes.
Ash Patel: Tell me the whole story. How did you get into it? How do you scale it?
Kirby Atwell: Yes. So I’ve been hearing about short-term rentals and it really intrigued me, especially hearing the numbers. I was like, “I’m always looking for markets or investment opportunities where there’s some sort of disparate — there’s not a perfect alignment of supply and demand. I think that’s where opportunities live.”
So we were moving across to Indiana anyway, we were buying a house on the lake; of course, we’re going to target a nasty house that needed a full rehab. So we’re rehabbing it anyway, and we said, “Let’s just turn the basement into a one-bedroom apartment and see what we can do.” And we did it. In the first three months, we paid three-quarters of our mortgage. It was over the summer, and we just rented it in the summer. The cash flow was crazy.
So I said, “Let’s scale this.” So we started buying single-family homes in the area then, and scaling them. But because it’s such a high cash-flowing strategy, you really don’t have to do as many deals, because my goal is to do the least amount of deals possible and get the highest amount of cash flow. I don’t want to manage 100 deals if I don’t have to. So that’s how I got into it.
Ash Patel: Are all of these properties in a lake community?
Kirby Atwell: They are, they’re—Michigan City, which is—
Ash Patel: Okay.
Kirby Atwell: —the Southern tip of Lake Michigan. And I get that question a lot about the right location for vacation rentals. And I don’t think there’s any Airbnb guru out there who would name Michigan City as the mecca of Airbnb activity. It’s seasonal, it’s a town of 30,000 people, and it’s extremely affordable to working-class area. There are million-dollar houses along the beach, but there’s $50,000 houses downtown, too. So it’s a Midwestern city. So I think, again, there’s a lot of opportunity in there between the million dollar and $50,000 houses to get something, and there’s a lot of draws between the beach and the outlet mall and the casino and wineries and stuff like that. So a lot of people come visit, but there’s just not nearly enough Airbnb as the hotels for them.
Ash Patel: And then off season these houses are just shut down, winterized?
Kirby Atwell: No, they rent all year round, and that’s what I was surprised at, too. I looked at the calendars of other Airbnbs and I looked in the off season, and people were booking; in January, in February, in March… So every weekend is booked up for sure. Most of them are long weekends in the off season. And then we’ll get some weekly rentals as well. But the way we look at is as long as we can at least break even in the winter, in the summer is when we just kill it; we make all our profit in the summer. But we usually do better than breakeven in the winter, actually.
Ash Patel: Can you share some of your numbers and then some of your challenges as well?
Kirby Atwell: Absolutely. So it’s like a typical house that I’ll target in Michigan City – and it has gone up a little bit recently, because all prices have gone up. But I’m looking for something under $100,000. So some of them I bought around the $50,000 to $75,000 mark, and they needed full rehabs. I actually have one property under contract now that’s $24,000, and it is a disaster, but it’s going to be a great short-term rental. So I’ll put in anywhere from $50,000 to $150,000 into these properties, and make them nice, and then refinance out all my capital through the BRRR Strategy. And usually, I can get all of it out with a 75% loan-to-value refinance. And then they rent for—in the summer, I’m grossing usually around anywhere from $4,500 to $6,000 per property; and then in the winter, it’s right around $1,500 to $2,000. So obviously, you have to pay your cleaners out of that, you’ve got to pay the utilities. So there are more expenses than a typical rental. But when you’re making cash flow like that, compared to that same property would rent for $1,100 if I was renting it long term, the one that makes $6,000 in the summer.
Ash Patel: And is that $6,000 a week, or for the summer?
Kirby Atwell: Per month, each.
Ash Patel: Per month, okay.
Kirby Atwell: Yes. For the summer a month. It starts to pick up in March, a little bit more in April. And then May through end of October, it’s pretty much booked out.
Ash Patel: So you’ve got Michigan City cornered. Are you looking at other locations?
Kirby Atwell: I think a lot of investors go through this as they grow. But my mindset has evolved a lot to where I’m more concerned about lifestyle now. And I have two young kids, a one year old and a four year old. And we’re looking at more kids and I want to spend as much time here as possible. So like I said, I want the biggest return for the least amount of properties, the least amount of headaches. Every property has a set of management tasks and you can automate a lot of it. So my intent is to — all my properties are within walking distance; I used to have 26 long-term rentals as well. I’ve sold them all off except for one. So I just have a smaller portfolio, but it’s enough to pay all my bills with all the passive income from these properties. And they’re all right in the same area, so it’s extremely easy for me to manage. And I really have no interest in expanding to a new market. We are, like you mentioned, growing to our own property here, because I think there’s a ton of opportunity around this idea of building a glamping site or experiential short-term rental site.
Ash Patel: Good for you, mission accomplished; you got your financial freedom. You mentioned earlier you bought the nastiest house around. I think somebody should tell people before they get married, “If you marry a real estate investor, you’re going to buy a nasty house.”
Kirby Atwell: Absolutely.
Ash Patel: Speaking of which, what did you tell your wife when you bought a 45-acre farm? And tell me the story behind that.
Kirby Atwell: She wasn’t interested in real estate at all when we got married, but she knew — I was already an investor and everything, so she knew what she was kind of getting into. But she has really picked it up and run with it. So she’s been the driver for a lot of this stuff. So I probably would have stayed in the lake house, but she said, “Let’s move out to more area for the kids and stuff.” And then I started thinking about what’s the opportunity if we’re doing this on a small scale with one rental in our basement, could we do it with 20 rentals on some land? So I started with 10 acres and a house that we rehabbed. Once we were done with the rehab, we bought the 35 acres next door. And now we’re refinancing the entire 45 acres with the house into a VA loan, because there’s a house on it. So you can finance the house and it just happens to come with 45 acres that you can build a whole bunch of tiny houses on.
Ash Patel: So are you renting that out now, or is that your residence?
Kirby Atwell: It is our residence and we rent it out. We post it on Airbnb at kind of make-me-move type price. Like if you want to come stay here, it’s kind of in a super high price point. And we’ve had several bookings for our own personal house. So there’s weekends we’ll mark off where we’re going to travel anyway, and we’ll book our house here and people can stay on the farm.
Ash Patel: What do people do when they come to a 45-acre farm?
Kirby Atwell: They pet our chickens and they ride around on four wheelers. We just had a great family come; it was only a couple and their small child… And they just wanted to get out of the city. It’s working professionals from Chicago, working long hours, and they see a farm with farm animals, and we’ve got a great garden, you can pick your own vegetables outside, and people want that now; I think more than ever, they want that. So it’s going to be a lot more than that. Right now, we’re just renting the house. We’re in the process of building out the property, working with the county on getting a variance for the land to see what we can build on the land, and we’ve restored 100-year-old barn as well. So we’re going to be able to have weddings or events in the old barn as well.
Ash Patel: I love that experience; that makes me want to rent that out. So what’s the challenge on getting tiny houses built? Zoning issues, approval from the county or the city…
Kirby Atwell: Yes. Basically, there’s a variance process and that’s the challenge with doing this, because every county is different. So based on whoever’s elected and sits on the county board that approves these things, is whether you get approved or not. So it’s not like a black and white, check these boxes, and you’ll get approved.
So there’s different levels, and we’ve been doing some exploring of our own, staying at other glamping sites… And really, I think the route that we may go, because a lot of counties don’t want to see permanent structures built really close together, basically violating the planning rules that they’ve set out, or getting around the planning rules… But they will approve a campsite. So if you’re going to set up tents, the glamping canvas, big tents with king-sized beds and all that nice stuff that comes with glamping, you can do that just from May through the end of October, and it’s considered a campground. And then you can also set up campsites for people who bring their RVs or whatever if you want to do that route.
It’s a little bit more difficult, I think, to get permanent structures approved, but we’re working on that because that’s ultimately what we’d like, is to build cabins or tiny houses; and you can sometimes build them on trailers, and then you have them certified as an RV. So even though you could cover up the trailer and make it look like a permanent structure, technically, it’s built on a trailer, so it’s not a permanent structure. So we’re ultimately wanting to get the highest density approved, that they’ll approve, and then also the most permanent structures that we can as well so we could rent year round if they’ll do that.
Ash Patel: So it’d be like a mobile home with a skirt around the bottom of that trailer?
Kirby Atwell: Yes. Exactly.
Ash Patel: Yes.
Kirby Atwell: Exactly.
Ash Patel: And glamping, is that glamorous camping? Is that what it stands for?
Kirby Atwell: Exactly.
Ash Patel: Okay.
Kirby Atwell: Yes.
Ash Patel: I love how you just find opportunities in just every way, everything you do; that’s great. What are the challenges are you looking at right now in your business?
Kirby Atwell: I’d say the biggest challenge is the county right now; we’re just trying to navigate through that. I don’t think that people should start with this strategy, because it’s been a lot more capital intensive than I initially thought between rehabbing the house, getting all the land. This house was vacant for 15 years before we bought it, so the land was all overgrown, the barn was about to fall down; it needed a lot. And we hadn’t taken on a project like that before. So I would say start with very cookie-cutter Airbnb individual properties if you want to get into vacation homes. Build up enough passive cash flow to where it supports you to where you can jump into more of an experiential project like this.
Ash Patel: What experiential places have you stayed at?
Kirby Atwell: There’s a great one that we just stayed at, which I never would have paid this type of money to stay in a tent… We wrote it off as market research and justified it that way, but it’s $350 a night plus tax. So it ended up being almost $400 a night to stay in a tent. And it’s called The Fields of Michigan, and it is just an absolutely gorgeous glamping site. They have 19 big canvas tents, king-sized bed and a bathroom in the tent. It’s on a blueberry farm; they have this big barn where they serve you this gourmet breakfast, they light your fire for you, they give you a champagne when you show up… Basically, you’re in nature, but not having to deal with one issue that comes with being in nature; they’ve taken it all out basically, so you can just enjoy it while you’re there. And it was just so relaxed. We got massages in the woods… It was amazing. We’d go back, we’d pay it again. So it was a great market research trip for us.
Ash Patel: That is wild. Kirby, what is your best real estate investing advice ever?
Kirby Atwell: I would say, it’s probably not common advice, and there’s a lot of great advice out there that people give, but I would say always look for inconsistencies in the market. Your biggest returns are going to come from areas of the market—and this is in investing or just in life in general– anything that’s not commoditized. So I’m always shying away from — if everyone has the same information, you’re buying properties off of Zillow, or you’re doing anything that’s turned into a commodity, you’re probably going to struggle. Basically, it’s whoever is going to pay the highest price or whoever is just going to hustle the hardest is going to win in that game, and that’s not the game I want to play.
I want to find markets or opportunities like Airbnb, where it’s hard to know — you look at comps on Airbnb, and there’s some listed for 150, some listed for 300. You don’t know how many nights it actually is going to book up, so not a lot of people are willing to do it because it’s hard to run the numbers and hard to know, is this going to work out for me? So there’s a huge supply and demand issue there. There’s not nearly enough supply for the amount of people that want to stay in Airbnb, so your returns are exponentially higher. So if you can find new areas of investing like that, I think it’s the same in relationships or in your day job or whatever, places where it’s not commoditized, I think that’s a great place to be as an investor.
Ash Patel: That is great advice. Kirby, are you ready for the Lightning Round?
Kirby Atwell: I hope so.
Ash Patel: Alright, here we go. Kirby, what’s the best ever book you recently read?
Kirby Atwell: Yes, it’s a newer book, actually, by Greg McKeown. It’s called Effortless. He wrote Essentialism, but his new book is Effortless, and it’s awesome. I read it twice, actually.
Ash Patel: What was your biggest takeaway from that book?
Kirby Atwell: It’s all about the difference between linear work and residual work, basically. Linear work is, “I do X today and I get paid for X today.” Residual work is, “I do X today, and it pays me day after day into the future.” So now I try to think through that lens in everything I do. Airbnbs, or just real estate investing in general, is a great example of exponential or residual type of work. You set up a property once, it pays you forever; so I try to do that with everything I do. I’m trying to set up systems where it’s not like I’m just doing a task that I paid for once, and the payoff is just so much better. So I highly recommend both.
Ash Patel: Thanks for sharing that. What’s the best ever way you like to give back?
Kirby Atwell: My company is called Green Vet Homes, and I set it up in 2016 when I started doing rentals. The intent behind it was either I was going to rent a house to a homeless veteran or I was going to donate 10% of the profit to a veteran-related cause. So now that I’ve gotten away from doing the homes for homeless veterans, since it doesn’t work over where I’m at now, I donate 10% in a lot of different ways. There’s some that align, this program called Vetcation where you can give free vacation rentals to veterans and they vet the veteran as to their need. There’s scholarships that I’ve contributed to… So veteran causes is something that I’m really big into.
Ash Patel: That is great. And Kirby, how can the Best Ever listeners reach out to you?
Kirby Atwell: If you go to livingoffrentals.com, that’s my website where I talk about all the things that I’m doing. I’ve got a YouTube channel there, a podcast, so I think that’s is the best way. I’m also on Facebook. You can just look me up, there’s not too many Kirby Atwells out there.
Ash Patel: Awesome. Kirby, thank you so much for sharing your entire story from West Point of flipping houses, taking care of vets were some of the great causes that you’ve done, and giving us an insight into your short-term rental business, your vacation rentals. So thank you again for joining us.
Best Ever listeners, thanks for joining us, have a best ever day.
Kirby Atwell: Thanks, Ash.
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