Robert Abasolo (00:03:05):
Between that and my other AirBNB that I had just launched, I wasn’t paying a mortgage. My mortgage on that house was about $4,400 a month or something like that, which, again, is sizeable. I think at that point, it was about the 25% of our income thing, and over the course of owning that house in LA, I have made between 180 to 200, we’re probably closer to 210 now in rents. That’s how much I would have paid to a mortgage had I not house hacked, and I’ve been able to roll that, let’s call it $200,000 into the portfolio that I have today. It’s really just catapulted, me to where I am today, so it’s all because I wasn’t paying a mortgage. That’s a very practical example. If you can save your monthly mortgage and use that to invest, I always think that’s a really great starting point.

Trey Lockerbie (00:03:51):
Now, what’s the difference between a house hack and just having a lot of roommates? For example, my wife and I were married for a whole year and we had three roommates. Is that a form of house hacking would you call it, or is that just simply renting it out to other people that you don’t know?

Robert Abasolo (00:04:05):
No, that’s a house hack, man. A house hack very simply is, you subsidize your mortgage by renting out a room or a space in your house. It doesn’t even have to be a room if you don’t want it to be. A really popular form of this is having a roommate and renting out your room, the origins of AirBNB was air bed and breakfast. The air in that means air mattress and people would put air mattresses in their living room and rent it out for 20 bucks a night, and I really appreciate that.

Robert Abasolo (00:04:31):
So if you look at my house in LA, for example, that studio that I was telling you about wasn’t even really much of a space. It was like a crawl space that the previous owner converted into what’s called a bonus room and we were renting that out. We were able to make, I think on that one, two to $3,000 a month just out of the $4,400 mortgage that we had, so it’s not a technical term. No one’s really mandating the terminology, but I think someone pays you to live on your property for any amount of time while you live there, that’s a house hack.

Trey Lockerbie (00:05:02):
Sticking on the idea of those early days, I was reminded about this book that Daymond John wrote, and it’s called The Power of Broke. When you’re starting from scratch, it can be a huge advantage in the long run because it teaches you to be scrappy and resourceful. But I’m actually curious if you’ve found yourself in a position where you’ve needed to relieve yourself of those tendencies in an effort to scale, because sometimes it can be ineffective over time.

Robert Abasolo (00:05:29):
Oh man, this is the struggle of my life. If I’m being completely honest, this is a thing that really is the greatest bottleneck of my current, I don’t know, life stage, and when I was getting started, I didn’t have a ton of experience or money. If you watch the content on any of my platforms and you go to the comments, a lot of people are like, “Oh, it must be nice to be a trust fund baby,” and this and that. I’m always like, “Oh, man. If only you knew that my parents were immigrants. My dad was a doctor in Mexico. He left that behind and worked minimum wage for most of his career just to support us. I didn’t come for money and I had to pay for my own college with student loan debt, so I was really broke.” I was always made fun of by all of my friends, not for being broke, but for being, well for being broke, but in the sense that I was always trying to get a deal. They were always like, “Oh, here he is trying to get the free meal.”

Robert Abasolo (00:06:21):
If a conference let out and they had ordered food at my company, for example, I would always be standing in the meeting room waiting to get the leftover sandwich or whatever. So people were just always like, “Oh, Rob’s a deal, guys. He’s always trying to get a deal.” So now I’m still just so cheap. I made a video about this on my YouTube channel not too long ago called The World’s Brokest Millionaire. It’s really talks about how if you’re a really good millionaire, you strive to be broke. So what this means is, that you strive to be broke because instead of spending money on yourself, you’re always trying to funnel that back into your real estate business or whatever entrepreneurship ventures you have. Before that, though, before my income had grown with my real estate portfolio, I was just always broke. Then I actually started making money and I just funneled my brokenness right into all my investments. I feel guilty spending any money on myself, and it’s something that I am working on, to be honest.

Robert Abasolo (00:07:13):
I don’t have to treat myself this way. I can order the avocado on my salad for 1.50 and not cringe so hard, but for some reason, I’m still fighting that broke mentality of, “Oh, it’s 500 bucks. I shouldn’t spend that.” So recently, I’ve started making more strides in understanding that, you know what? When it comes to AirBNB, for example, I’ve got 16, well, I guess now I actually have 36 units because I just closed on a motel, but at a certain point you don’t have time to scrutinize every single expense and it actually costs you more money to do that than to just pay the first available vendor to get your AC fixed, because if you don’t do that, you’re going to have to refund the guests their entire stay, and it always ends up being a wash. So little by little, I’m trying to work on just spending the money on convenience and spending the money on a quick solution versus trying to get three vendor quotes and waiting a week before I make any decision. Does that make sense?

Trey Lockerbie (00:08:06):
It does. They say time is money, right?

Robert Abasolo (00:08:08):
Mm-hmm.

Trey Lockerbie (00:08:08):
That’s what I think a lot of people overlook. Sometimes they spend endless amounts of time researching something just to get a discount, and you’re like, “Well, you could have just saved yourself the time. It might be worth more.”

Robert Abasolo (00:08:18):
It just happened to me, man. This is a really great example, okay? My pool filter broke and my home warranty is supposed to cover that, and so I paid the $65. They came out and they sent someone out and the person said that it was broken because of a faulty installation, whatever. He didn’t even look at it. He just wrote that up, and so I have spent the last two months fighting my home warranty company to fix this dang part. Honestly, the part was 500 bucks and we have not used our pool at all, and we’ve been very frustrated about not using the pool.

Robert Abasolo (00:08:53):
Finally, literally, a week ago I was like, “You know what? I’m just going to pay the 500 bucks.” I felt really dumb at that moment because I was like, “Well, the result was the same. I paid $500. Had I paid it two months ago, then I would’ve been able to use my pool for two months, which would’ve contributed to the happiness that was our life because we used the pool all the time.” So that was a lesson for me that I was like, “All right. You know what, man? Why am I fighting over … ? If you just value your time and you assign an hourly rate to your time and you start to think about that, I spent 10 hours fighting this insurance company or the warranty company and I was out a lot of money just in my time.

Trey Lockerbie (00:09:28):
I can relate to that feeling of being broke, especially when you’re building your dream. I actually have this memory where I’ll never forget I was driving home and I literally had $0 in my bank account, and I’d really love to dive deep into the trenches here and give our listeners a visceral idea of what it felt like to be in that position when you were just starting out. Hopefully, you weren’t as broke as I was at that point, but can you describe a moment in time where you were both full of hope and then also full of doubt and uncertainty?

Robert Abasolo (00:10:01):
It was a very long time before I was full of hope from a financial standpoint. Coming out of college, I had worked a few internships in the advertising world. I was a creative copywriter and my wife’s a teacher, which, they make great money. So I think when we first started our jobs, I was making, oh, man, I want to say $40,000 and negotiated that up from 38,000, and I was like, “Woo-hoo! I’m rich!” Oh, because that was my first real paying job, and my wife was making about 42 because she was a specialized teacher. We thought, “Oh, $80,000 roughly, we’re good. This is great.” But when you start stripping away taxes, I think we were contributing 1% of our income to retirement savings, you start taking away the $1,000 in student loan payments and the $1,000 in mortgage costs, and then anything unexpected, I think we were left at the end of the month with $1,000 of “discretionary income,” we weren’t saving.

Robert Abasolo (00:10:58):
When you don’t make money or you don’t have a lot of money left over, you can’t save it because you’re scared to. You feel like moving it over to your savings account makes you more broke even though it’s all in the same place. I remember this one time my wife was transitioning from being a nanny, which she was right before she got her teaching job. She went from that, which was paying $15 an hour or something to being a salaried teacher. We were like, “Okay, this is it. This is what we needed.” Thank goodness, because we had a lot of credit card debt at that point. I think we had 16, $20,000 somewhere in there and high-interest credit card debt, by the way. I remember the way that the financing worked with all that or with the payroll is they weren’t super clear on if my wife was going to get paid in two weeks or in four weeks.

Robert Abasolo (00:11:45):
That was a big deal for us because the student loan payments came in on the 15th of every month at that time. I was like, “Hey, do you know? Do you know? Are you going to get paid in three days? Hey, are you going to get paid in two days?” She’s like, “I don’t know. They won’t answer the question. They don’t really know.” I remember her mom was visiting that day on the 15th. She flew in to come and see us, and I remember that was the day she was supposed to get paid and we were laying in bed. I had just woken up and she was looking at her phone and she checked the bank account and she was like, “Hey, I didn’t get paid.” I was like, “Oh, no.” I was like, “What are we going to do?” I think we had, at that time, 100 bucks in our account or something like that. So not quite what you were going through, but not super far.

Robert Abasolo (00:12:25):
It’s effectively the same thing. We had enough for a couple of Chipotle burritos, but I remember that the next two weeks were the longest two weeks of my life because I was so petrified. I was like, “Literally, if there’s an auto payment on my credit card or if there’s some bill that I have on auto-pay that I have forgotten about we’re going to overdraft and we’re going to have to pay the $25 fee,” which we didn’t have. That was real hopelessness for us at that point, because I was just like, “How do I get out of this?” Advertising copywriters make good money as you go up the scale. You can jump up from 40 to 50 to 70 to 90 to 100, but it was going to be years, like a decade.

Robert Abasolo (00:13:00):
I remember thinking, “Oh, man. The day I make $100,000 I’m going to be set. It’s going to be so great,” and that was tough for us. But I think the real shift when I finally was like, “Oh, this is it. I think I figured it out,” was when I rented my first AirBNB apartment. I was doing what’s called rental arbitrage. I don’t do that much now, but that’s how I got my start. Basically, we had just bought a house in LA and we had our apartment lease that we were in and we were going to have to pay $2,000 to break it, which was a lot of money by the way, for us at that time as well. I was like, “We can’t afford the $2,000, so let’s just throw it on AirBNB.” I was like, “I’ve heard of this thing that you can rent your house to strangers apparently, and they’ll pay you.”

Robert Abasolo (00:13:40):
My wife was like, “Are you sure? Are you sure that’s going to work?” I was like, “No, definitely not. But we can’t pay the $2,000.” Our first reservation came in and it was for 1,500 bucks and our rent was $1,800, and that was for a two-week reservation. I was like, “Oh, my goodness. If I get another two-week reservation, I’m going to make $1,200.” That was a life-changing amount of money because that was our student loan for the month, our total loan balance on that. I was like, “This is crazy,” and then the day before they were going to check in, they canceled their reservation. I was like, “Oh, my goodness. We are screwed.” Within an hour or two, another reservation came in that was 1,600 bucks. It was $100 more for that same day. I was like, “Oh, okay,” and that was the day I told myself, “I’m going to be a millionaire from AirBNB.”

Trey Lockerbie (00:14:31):
I love that. Let’s go into some of these things you’ve thrown out there, these terms, so rental arbitrage, house hacking, AirBNBs, long-term rentals. You’ve even talked about land hacking. I’ve learned from you now about that. I’m curious where you recommend people would start. If there is any roadmap, I know it’s all dependent on preference, but as far as any asymmetric opportunities, where do you find those the most?

Robert Abasolo (00:15:00):
I like people starting in a way that subsidizes their life, and there are a few ways to do this. One really powerful way to do this would be through a second home loan, and there are specific criteria that you have to follow. But an example of this would be with the second home loan, you can put down a 10% down payment and you can get into a property. Now, in order to do that, though, the criteria and the guidelines say that you have to occupy the property for a portion of the year. Most underwriters will dig into the guidelines and say that that is going to be between the two and three-week mark, so you have to stay in your property between two to three weeks a year. Now, there are a lot of people that live in an area that travel a lot. So let’s say you live in LA, well, there’s Mammoth, there’s Big Bear.

Robert Abasolo (00:15:47):
If you’re a skier, you’re going to be spending a lot of money on AirBNBs going out there, but hey, what if you could just buy your own AirBNB out there? You could buy your own house. A lot of people will say, “Well, I don’t want to buy the house because I’m only there for five weekends a year and it doesn’t justify the actual expense of the mortgage.” So for those people, they can actually use it as their second home, but anytime they’re not there, they can actually rent it on an AirBNB and not just break even, but make a lot of money. I know a lot of people that make between 50 to $100,000 a year of gross profit in those towns for example. I don’t have anything out there, but that’s just a really good example, or for me, Josh Tree.

Robert Abasolo (00:16:24):
I was living in LA and I wanted to build a tiny house in Joshua Tree, so I built a tiny house out there. It’s only two-and-a-half hours out there. I get to visit it. I get to enjoy it and I can let my friends and family stay there, and that is my second home, that is one of my second home. I was able to do that and I can justify buying that home because other people will pay the mortgage on the AirBNB for me, and I get to make a really decent profit on that property too. So I think that’s a really powerful way to do it. If you’ve wanted to buy a vacation home, but you run through that same exact, I guess, the dissonance of, “Oh, I don’t want to have this mortgage over my head,” that’s a really great example of how to get started in the AirBNB world and start cash flowing and actually get to use it for your own personal lifestyle.

Trey Lockerbie (00:17:03):
Let’s talk about cash flow, actually. So a lot of people get into this game, I think, for that exact reason to just have extra disposable income or have it cover your mortgage, as you said, but how do you rank the importance of cash flow versus the appreciation when you’re approaching a real estate deal?

Robert Abasolo (00:17:19):
Yeah, definitely. So there’s a sliding scale on this. Okay. So, again, there’s no right or wrong, there’s what’s right for you at the moment that you’re in. I think for most newbie investors for most people getting started, what is 100% the most important thing is cash flow, and there are a couple of reasons for this. Everyone wants to make a little extra money and that’s why we’re getting into real estate. So if want to make 1,000 bucks a month, you want to buy a place. If you want to buy a place, make 1,000 bucks a month. You’re not really as focused on, “Oh, well it went up $5,000 in value this year because it’s “paper money,” it’s not really liquid. It’s there in the house.”

Robert Abasolo (00:17:56):
You have the equity, but it’s not something you can actually cash in without doing a cash-out refi or a HELOC. We can possibly get into that later. So cash flow is really important because people want to make that side income. Cash flow is also very important for most newbie investors because most people that are getting into real estate have one dream, they want to quit their 9:00 to 5:00 job. They want to leave their W-2 job so that they can just be their own boss. They can be an entrepreneur and real estate is a very clear way to do that. So when you’re making $50,000 a year, for example, like I was at a certain point, well, it’s not hard to figure out how you can make $50,000 a year in my niche, on AirBNB, my tiny house.

Robert Abasolo (00:18:37):
The tiny house I was just telling you about in Joshua Tree, the first year grossed $83,000 for the year, the profit, after all of my expenses, after all of my property taxes, cleaning fees, repairs, everything, $57,000. Now, my management on that is less than an hour a week because it’s new construction and a lot of stuff doesn’t go wrong. It’s really, really great. If I had told younger Rob, “Hey, you’re going to be making $57,000 a year doing not a lot for this little house that you bought, you’re going to make more doing that than this job that you went to college for,” my mind would’ve exploded. I wouldn’t even have believed you. It would have to be me telling younger me and being like, I time traveled here because it’s not something I could comprehend when I was younger. So when you start thinking about that newbie investor, they start dreaming like, “Okay, how can I make 50,000? How can I make 60, 70, $80,000 a year with real estate so that I can quit my job?”

Robert Abasolo (00:19:34):
So because of that, every time you add a property to your portfolio, every time you add units, more doors, you’re starting to math everything out and say, “Okay, that’s an extra 200 bucks a month. That’s an extra $1,000 a month,” so you’re just focused on how you can get from zero to $10,000 a month. That always seems to be the magic number for a lot of people because not only do they want to leave their job, but if they can make six figures, it’s a really great achievement. So $10,000 a month, you can do that. But there comes a point where if you’re a real estate investor and you’re a pretty good one and you’re like us, you’re like me, you’re cheap, then at a certain point, you cover your expenses.

Robert Abasolo (00:20:11):
Even if you start making more money, you don’t necessarily want to spend it because you’re a good real estate investor that’s cheap, broke, and frugal. So for me, there came this point where I was like, “Well, here are my expenses and I don’t really want to pay myself from real estate.” So I did everything I could to not use my cash flows to supplement the growth of my portfolio. I think a lot of people that I know they’re usually pretty strict on their budgeting in real estate. Most real estate investors, I really respect that we as a community, thrive on brokenness because we just want to keep chipping away at the dream. So at a certain point, what becomes more important in my mind is appreciation.

Robert Abasolo (00:20:48):
That’s why I say this is a bit of a sliding scale because you start off on the left here, a cashflow that’s so important, but as you grow in your journey and as you progress, let’s say linearly, that little slider starts moving over and moving over to the appreciation side, because you quickly realize that cash flow makes you rich, but appreciation makes you wealthy. I’ll give you an example of this. I worked my butt off for the last five years to build my AirBNB portfolio, and I got my cash flow up to about $25,000 a month, probably more now, but just let’s just use that as the benchmark. $25,000 a month times 12 is $300,000 a year, which is amazing. It’s so cool. I did that. I tripled my salary just with AirBNB. Now, consider this. In the last year if you take the appreciation of all of my properties, all 14 of the units, 15 of the units that I had, they all appreciated $400,000.

Robert Abasolo (00:21:42):
So I actually got $100,000 more added to my net worth from the appreciation of my AirBNB properties, than the actual cash flow of it. So it’s not about one or the other, you want both, but there becomes a moment where it’s like, “Okay, 25 grand a month, that’s really cool. I’m going to stash that away. I’m going to keep investing it.” But then you look over and you’re like, “Oh, my goodness. The actual value of my property is actually I’ve made more that way.” If that happens over the course of your portfolio, your portfolio in 30 years is going to be worth double, triple, it’s going to be worth so much more. Ideally, you get both, but what’s really going to add to that final net worth number if that’s something that you’re adding to is the overall appreciation. So it’s a little bit of both, but one becomes more important in the end once you realize that the generational wealth you’re building comes from appreciation.

Trey Lockerbie (00:22:30):
I want to touch on what you just said there about not using your AirBNB income to supplement your lifestyle. You chose to reinvest it. I was talking with this guy named Adam Cecil, and he had these two phrases, growth mode, and harvest mode. I really liked that concept, because there’s probably a certain stage where you’re building and you’re building and you’re just reinvesting and reinvesting and you don’t really feel the difference in your lifestyle. Then as soon as you turn on harvest mode where you can let these things autorun by themselves, that’s where you see the freedom kick in or the wealth effect go into play there. Was that your experience?

Robert Abasolo (00:23:07):
Yeah. Yeah, definitely. This goes into the whole me being self-imposed brokenness, I guess, is the best way to put it. I didn’t have to be this way, but growth mode for me the last five years is where I’ve been at, like growth mode. How do I grow? How do I grow? How do I grow? Then the harvesting component of it’s the way you grow is by taking the money and using that to reinvest. I probably could have paid myself a little bit earlier, but for whatever reason, I was able to be so frugal and live off of my W-2 income that for me, it’s really cool to grow your monthly cash flow. That was a really cool thing for me, and I really liked that. The fact that I could get to $25,000 a month and not ever actually take away from, that was a cool thing for me. That, to me, has been a great joy to be like, “Yeah, that’s a number I’m really proud of.”

Trey Lockerbie (00:23:57):
It’s funny you say that because I was talking to Jim O’Shaughnessy and we were talking about that. I think it’s a Harvard study about immediate gratification, and the best investors seem to have this gene where they’re able to put off the gratification. You were staying in that self-imposed brokenness for longer knowing that one date down the road it would pay off. That’s the mentality I relate to because I was always, in my 20s starting my business being like, “I don’t care how hard it is now. It’s going to be easy in my 30s. I’d rather have it be hard now and easier later than the opposite.”

Trey Lockerbie (00:24:26):
So when we’re talked about passive income though, I’m curious how passive it really is. For example, I looked you up on AirBNB. I noticed all your properties are very highly ranked. You’re a super host. My wife doesn’t stay in any AirBNB with less than 4.9 a rating. So it seems like it takes a lot of work to maintain that. You’re getting comments and you got to be really communicative with your guests. Talk to us about the actual work that goes into these properties to maintain a status like that.

Robert Abasolo (00:24:58):
Yeah. There are some people and some gurus in the space and stuff like that are like, “Yeah, it’s completely passive,” and it’s not. It’s not totally passive, but it can be pretty close. I think it’s like at the end of the day, if you hire a property manager, for example, for your long-term rentals, that’s completely passive, but you are going to pay a management fee on that. For short-term rentals, it’s the same way. I could hand my properties over to a property management company. They’re going to charge me anywhere from 20 to 30%, which is significantly more than a long-term rental, and it is because there is more work. I’m a big advocate of self-managing because I think that you can automate enough to understand the business and enjoy the business. So when I was first getting started, I was messaging guests. I was texting my cleaners. I was arranging everything.

Robert Abasolo (00:25:44):
I was ordering supplies. That kind of stuff does work when you have one property, but as you start to scale and grow, things start slipping through the cracks pretty quickly. So for me, what I found is there are things I can automate, so I was able to automate, for example, my messaging. So instead of sending a message to my guest when they confirmed a booking, when they checked in, to check in on them mid-stay, to check out, to leave a review, that’s five messages that you’re going to send to one guest. If you have, let’s say, 10 guests in a month, that’s 50 messages to one property. Now, if you have 10 properties, that’s 500 messages that you’re going to send. So what you can do is actually use a property management system that will basically template, a response or templates like a check-in message, or template like a checkout message. So you obviously want to tweak those to be in your voice and everything like that.

Robert Abasolo (00:26:33):
That was one thing where I was like, “Oh, my goodness. I didn’t know you could do this. This is amazing.” Another component of my short-term rental business that I was really in the weeds on was changing the prices of my property. I was like, “Oh, you know what, I’m not being booked this week, so I’m going to drop it down to $99 a night.” “Oh, hey, you know what? I think there’s a festival coming up in a month, I’m going to jump it up to $300 a night.” “Oh, shoot. Someone just booked my place for $99 a night yesterday for that festival, because I didn’t really think about the festival until after they booked. I could have made an extra $500 there.” That’s the pricing dilemma that a lot of hosts go through. You can actually work with an automated dynamic pricing tool that will give you the optimal price for your AirBNB given the supply and demand of the market on any given day.

Robert Abasolo (00:27:15):
So if they see that it’s the season where everybody is coming out to LA, for example, it’s the hottest season in LA they know not to drive those prices up because supply is probably going to be pretty limited. That’s one way that I was also able to automate my business. Instead of having to leave reviews, which is something you have to do with every guest, I’m able to automate that through the same thing, a property management system where not only can it just auto-generate the review for me, but it’ll also send them a message and say, “Hey, if you enjoyed the stay, will you please leave a review for me?” You can automate your supplies. If you set up an Amazon Subscribe & Save subscription, you can automate paper towels and toilet paper to be delivered every single month. So you can also automate communications with your cleaners.

Robert Abasolo (00:27:55):
If you don’t want to be texting your cleaners through the right property management system or through the right product or service, you can actually pay, I don’t know, $10 a month or something like that and it will shoot over a calendar link to your cleaners so that it syncs up with their calendar and they know when people check in and check out, they can get an email sent to them. They can get a text sent to them. So really I don’t ever hear from my cleaners unless something is wrong. If something is broken, if something is super dirty, if something needs maintenance or repair, they’ll let me know, and at that point, I’ll deploy a handyman to go fix it. So just in all of those things that I talked about, you can cut 80 to 90% of the time wasted, the time spent doing all of these things, and yeah, you got to have a human element for 10 to 20%, but it’s worth it because then you don’t have to pay 20 to 30% to a property management company.

Robert Abasolo (00:28:46):
On $83,000, I can’t tell you exactly what, $83,000 is roughly off the top of my head, $25,000 in management fees. If I was going to pay someone a 30% fee, that’s a lot of money. I would rather just make that and spend 10 to 20% of my effort managing that property. So it’s starting to make less sense for me now, I’ll be honest because I have my YouTube channel. I’ve got Host Camp, my mentorship program. I’ve got my actual properties, Bigger Pockets, and businesses that I’m starting, so it doesn’t really make as much sense for me to be doing that. But when you’re starting out and cash flow is important to you, then you better be self-managing because that can make or break how successful you are in your first couple of years.

Trey Lockerbie (00:29:28):
That’s incredible. I had no idea you could automate that much of it. That’s fantastic. Well, while we’re on the topic, why don’t we go through a couple of the characteristics of what makes a great rental property. You’ve got, what you were just describing there are opportunity costs, and when it comes to real estate there’s endless amounts of opportunity costs. You can look at any state, any country, any city, it’s like, how do you whittle down the universe? How do you zero in on somewhere that is going to be a good outcome?

Robert Abasolo (00:29:55):
So there are four main places that I find myself investing in. There are national parks, state parks, vacation destinations, and eclectic towns. Now, I don’t really have to talk too much about national parks or state parks. We all know what those are, but the reason I like them is that they’re nature’s Disneyland. You don’t have to market the Grand Canyon. You don’t have to market the Smoky Mountains. Smoky Mountains, it’s literally eight hours away from half the U.S. population. 13, 14 million people visit the Smoky Mountains every single year. That’s over a million people a month, just over. There are 3000 rental cabins in the Smoky Mountains. So if you really look at how many people are visiting every single year compared to the actual supply of cabins, there’s a discrepancy. So that seems to be the case in a lot of these national parks and state park areas.

Robert Abasolo (00:30:42):
So that’s why I found myself investing in Smoky Mountains, Joshua Trees, and stuff like that. But I also really like eclectic towns. Eclectic towns, I don’t have a lot of properties and these yet, but this is my next strategy moving forward. But they’re these small towns that just have some draw to them, like something magical about them or something enchanting about them. A really great example of this would be Eureka Springs in Arkansas. It’s this little small town that’s very touristy. It’s this long one or two-mile road, and there are all these little shops. I just went to another place right outside of Denver. I think it was Pueblo and the same thing, it was pretty much identical to Eureka Springs. Julian outside of San Diego. It’s this cool little town where people go apple picking. There are really great pies. The people love taking photos in the fields, all that stuff. Outside of Austin or Dallas, there’s Waco. It’s right in between, so Waco has been popularized by the late, great Chip and Joanna Gaines. Obviously, it wasn’t super popular before that show and it’s growing and it’s exploding from a tourist standpoint.

Robert Abasolo (00:31:43):
People go there, they did all the marketing for you. You don’t have to do it. So these eclectic towns have some reason for people to go to and you don’t have to market them. Then lastly would be vacation destinations. So these are going to be your beach towns, your lake towns, your mountain towns, anything where people are just going. They’re going to hop in their van with their family and drive, or tourist destinations like LA would be a tourist destination because there’s Disneyland, and there’s also Hollywood, Orlando, Disneyland. I’ve talked about mother’s Disneyland, but some would prefer to just go to the human species Disneyland. So that would be the four areas that I think determine, those are good jumping-off points, I think if you want to start getting into that AirBNB or rental property game.

Trey Lockerbie (00:32:27):
Now, I’ve been tempted with other stuff too, like RVs or Turo, even where you can rent out your car, or I know some people-

Robert Abasolo (00:32:34):
I’ve done it.

Trey Lockerbie (00:32:34):
… just have a fleet of cars now. So what are your thoughts on actual real estate, rental properties versus RVs, Turos, et cetera.

Robert Abasolo (00:32:44):
Yeah. So there’s a company called Outdoorsy and they’re the trailer RV version of AirBNB. I haven’t actually done it. I would like to do it, but I have nowhere to park the RV, but I think it would be really fun. I’ve been wanting to do it for a while, not because I have a strong desire to, but what I like to do is make information accessible to people as much as possible, and that’s a big passion of mine. Just being on the Bigger Pockets platform, I get to talk to a lot of people and teach them how I did it, or YouTube or TikTok or Instagram. I like to teach people, and so with something outdoorsy, for example, I want to do it just so I can be like, “All right, I’ve failed so that you don’t have to,” and I think it’s a really cool way to do it. I’ve done Turo before. Turo was a little bit more of a grind for me because I only had one car.

Robert Abasolo (00:33:28):
When I rented it out, I was having to bum a ride from my wife and then I’d have to Uber when she wasn’t around, and ended up being a wash. Then I got two cars and whenever I rented one, I needed the other. I had a truck and a Prius. I was like, “Oh, these are going to be great options.” But it always landed on times where I needed one or the other, so I figured out to really scale on Turo, you probably want three cars and just a car outside of it, your personal car and you can rent them out, and that’s where you could really start making money. I think it’s a really great business. It’s an interesting business. If you’re somewhat of a car fanatic and you like to have cars but you don’t want to pay for them, that’s ultimately what the sharing economy comes down to, in my opinion. The reason I have AirBNBs is because I like to have properties that I don’t have to pay for.

Robert Abasolo (00:34:10):
I bought a $3.25 million luxury house with David Green and it’s an amazing dream come true, and I don’t really have to pay for it. Other people are paying for it. Outdoorsy, if you want an Airstream, an Airstream is going to cost you between 50 and $80,000 to buy. If you don’t want to pay that, you can just rent it out to people when you’re not using it, and guess what? You’re not going to be using it for 99% of the year, so if you can make a little money, great subsidize it. If you want to have a truck in a Prius, I did, great. You can rent those on Turo and at least break even on those, or if you want to have a Ferrari or a Lamborghini, I know people that do that too and they make really great money on Turo because they rent out their stuff for $1,000 a day, so it’s a really interesting way to subsidize it, I think, to really scale that. There are some obvious issues here.

Robert Abasolo (00:34:55):
There’s the depreciation of your car. It’s not an appreciating asset, which is why I always end up going back to my first true love, real estate, buying things that are an appreciating asset. Anything on wheels is not really an appreciating asset, and that’s where there’s a little bit of dissonance with some of the things I say on my channel and the tiny home community. I always talk about, “Hey look, my tiny home in Joshua Tree is on a fixed foundation, and because it’s on a fixed foundation with a fully permitted structure and it’s got the certificate of occupancy and all that, it’s a real living, breathing piece of real estate. A tiny house on wheels is just a really nice trailer that’s going to lose value over time.” That makes a lot of people mad, but you know what? I can’t make everybody happy, but all to say anything on wheels is a depreciating asset. It doesn’t mean it’s not a good business, but it’s not necessarily something that’s building wealth other than the argument of saying, “Yeah, you use your cash flow to invest in other things.”

Trey Lockerbie (00:35:47):
Yeah. I love that point. I used Turo as an excuse or a way to justify the purchase of the car I own today, thinking, “Oh, well, I’ll pay down some of this just by renting it out.” Then the first time I had it listed and someone rented it, I freaked out. I was like, “I don’t want them driving my car.” I just pulled off of it. I couldn’t do it. I want to ask you about regulations as well because Lake Tahoe near me is one of these places that you would probably be a dream AirBNB rental place but I think they cracked down on it because at certain points you don’t want the whole town, I guess, developing AirBNBs, which makes sense, right?

Robert Abasolo (00:36:22):
Sure. Yeah.

Trey Lockerbie (00:36:24):
So where are the most owner-friendly areas to invest for AirBNB purposes?

Robert Abasolo (00:36:29):
I wouldn’t say there’s a particular place, but I definitely think areas that are in the national park, or state park category are going to be those places because you got to understand national parks, they make their money on tourism. So if they limit the accessibility people have to lodging, which is usually very limited in these areas, then they know that they’re going to be cutting off a large part of the tax sellers that we pay to them. So the Smoky Mountains is a really great example of this because the entire economy is boosted literally by 13 million people going there to visit. The handymen there get paid from all the short-term rental operators. The contractors get paid from there. The cleaners get paid from there. Literally, every aspect of that economy is boosted by short-term rentals.

Robert Abasolo (00:37:18):
Now, of course, there are regular residents there, but those residents are often vendors or subcontractors for short-term rental operators. So if Sevierville, Gatlinburg, Pigeon Forge tried to limit that, they would effectively be cutting off the income of all of the residents that live there and depend on that income. I think these vacation destinations are a really great place to pay attention to because typically, if they do impose some regulation, there will still be ways not around it, but ways to comply with it. Joshua Tree’s a really great example of this. It was the Wild West out there for the last five years or so, but now they’ve imposed regulations that only allow an owner to own two properties out there, and so that cuts back on how much you can do. But now if you the rules, at least you can play within those guardrails.

Robert Abasolo (00:38:07):
I actually think sometimes it’s a little scarier to play in a place that hasn’t even regulated it at all, because then all of a sudden it might say, “Oh, you know what, we ban everything, and then you’re like, “Oh, shoot. I have a whole portfolio here.” So personally, my investment strategy is, that I just diversify the heck out of my listings. I’ve got 14, 15, oh, I guess, I said, I’ve got 35 listings or so, so that 20-unit hotel, but outside of those, we’ll call it 15 listings. I live in the same state as one of them, and they’re all over the place, literally four or five different states. I’ve just diversified so that I know, “Hey, if Joshua Tree really just completely lays down the hammer and they don’t want me to be in short-term rental operator there, okay, I’ve got a couple of options can. Convert to a long-term rental, sell it, whatever, but at least I’ve got 14 other units across the country that I can rely on to make up the slack.”

Trey Lockerbie (00:38:56):
I just thought of something. I haven’t heard this talked about really at all, so I’m curious if you have real estate in the major metropolitan areas, LA, New York, et cetera, just skyrocketed in the last few years. It seemed overheated, to begin with even before that, but there’s a lot of talk of that just because of the money supply that was introduced, et cetera. Part of me is curious if the amount of AirBNBs out there is contributing as well. One source I found said it was 700,000 total AirBNBs in the U.S., and you got to imagine most of those are in major metropolitan areas, I would think. I’m not really sure, but maybe a lot of them given that they have the attractions you mentioned earlier. I wonder if that takes away the supply and then boosts the real estate around it. Have you ever had any discussions about that with your guests?

Robert Abasolo (00:39:42):
My TikTok comments have certainly had discussions with me. You know what? I think looking at the numbers, it has a little bit smaller of a percentage than people make it seem. I think no, one’s really on the same page here, A, when they’re against me. Half of my TikTok comments are like, “You’re causing housing prices to skyrocket,” and then the other half is like, “You’re decreasing property values.” I’m like, “Can y’all just talk and agree on what you’re mad at me for?” Obviously, it’s going to contribute to taking some housing stock out there, but it’s a pretty small percentage. The last report I read was closer to the 1 to 3% mark, which is obviously not insignificant because 1 to 3% of the housing stock is really, really, really high, but relative to the amount here, but it’s not really quite as, I don’t know. I think the there’s a little bit of an agenda there sometimes with bringing down hosts and they’re like, “You’re ruining neighborhoods and taking things.”

Robert Abasolo (00:40:37):
I’m like, “I don’t know, man. My neighbors, they like it, because they all AirBNB too,” because when you think about the common person in a neighborhood like mine, for example, in LA, we were just trying to make an extra couple thousand dollars a month. That’s literally what both of my neighbors are doing. They both also have bonus spaces under their house and it’s like they make a couple thousand dollars a month from it and they love it. I think that most AirBNB operators are doing that. For me, I don’t invest a lot in metropolitan areas, honestly, sometimes for this reason, because I think it’s just easier to say “I invest a lot in glamping stuff,” for example. No one can really get mad at me for opening a glamp site. It’s a cool tent out in the middle of the desert, or a cool tree house, or whatever. I’m not really taking any supply away from people, So people are usually less mad at me for starting a glamping site, and the same thing with new constructions.

Robert Abasolo (00:41:25):
I built my tiny house in Joshua Tree. I guess you could argue that “it was taken from here,” taking that stock, but I built it for myself. So for me, the niche that I’m always trying to target is, “What can I build so that I just own it and I’m not going to rile too many people up over it?” then I also try to be in a place where there is already like a need for more short-term rental housing like the Smoky Mountains, for example. There are 3000 cabins, a million people go every single month. There’s just not enough supply. So for me, I’m always like, “Okay, can I invest there and contribute to the tourism economy there?” That economy is very friendly to it because that’s how they make their money. I don’t know if there’s really a right or wrong answer here, but I do at least give it thought.

Trey Lockerbie (00:42:06):
That’s really interesting. All right. I have a silly, but a deceptively serious question to ask you.

Robert Abasolo (00:42:12):
Perfect.

Trey Lockerbie (00:42:13):
When it comes-

Robert Abasolo (00:42:13):
I take time.

Trey Lockerbie (00:42:14):
When it comes to AirBNBs, how important is adding a hot tub?

Robert Abasolo (00:42:18):
I feel like my you know POV here and you just want to rile me up, but it is important. I hate hot tubs because they are just the thing that everybody wants that everyone gets mad about, that causes the most issues, so look reports say, all right, reports do say you make more money every single year with a hot tub. You can add as much as $39 to your ADR, your average daily rate if you have a hot tub. With that said, you must ask yourself how important is that extra $39 a night, because oftentimes, the hot tub’s going to break.

Robert Abasolo (00:42:48):
It’s going to flip the breaker. It’s not going to heat up fast enough. It’s going to be a little green. There will be one leaf in there. There will be a guest that doesn’t know how to use it and they break it, and a lot of refunds will come out of it. But most of the time it’s like a net positive thing, but man, if you look at the side of my head here, I’ve got a few gray hairs and they’ve all come from hot tubs, from the maintenance and the mitigation I’ve had to do with hot tubs.

Trey Lockerbie (00:43:12):
I love it. All right. I want to shift gears a little bit and talk about the financing side of real estate. I want to ask you what are the most common, or actually, maybe least common hacks when it comes to financing a rental property? One of our co-hosts Robert I know bought a property with zero cash down, I guess, after refinancing, some appreciation, there’s some these workarounds that some people find and that I find fascinating. Do you have anything like that already have experience doing something like that?

Robert Abasolo (00:43:42):
Yeah, I’ve done a few creative solutions. One way would be similar to what you were talking about. I’ll use my LA house for example. I’ve got a home equity line of credit on that thing for $120,000. If I actually redid the application or whatever, I think my home equity line of credit would be closer to half-a-million dollars. So if I can’t qualify for a home, I know that I could take out a HELOC and just use that to buy a property, rehab it, and then go and do a cashout and get that money back. That would be one way to do it. Another way to do it would be what’s called a DSCR loan, a debt service coverage ratio. That’s where they basically, instead of qualifying you based on your DTI, your debt to income ratio, and qualifying you off of your income, they’re qualifying you based on the projected rental income of that property.

Robert Abasolo (00:44:27):
So if I am self-employed like I am now, it’s a lot harder for me to get a mortgage from a bank conventionally, but with the DSCR loan, they don’t even look at my self-employment. They look at the projected income and they say, “Okay, this property will cover the debt service, so we’ll lend to you on that.” Another way would be what, and my favorite way, how I was able to scale up pretty quickly and that’s OPM, other people’s money. Partner with people and they can pay and acquire the property, and your payment to the partnership is sweat equity. For my first two partners that I ever worked with, I used to put myself out there on Instagram and say, “Oh, I’m doing these AirBNBs. Look at this. This AirBNB made $2,000 a month. It’s a dream come true.” I was very proud of the small successes I was having in short-term rentals, and I would have people reach out and say, “Hey, I see that you’re making good money here. This is very lucrative. How can I get involved with this?”

Robert Abasolo (00:45:16):
I’d say, “Well, hey, if you can buy it, I’ll help you find it. I’ll do all the communications with the realtor, and the appraisals. I’ll furnish it and I’ll manage it and I won’t pay myself back until you get paid back fully.” That was back when I started. The terms of that are a lot different now, but a lot of people, they really liked that. So I was able to get into several properties from those types of agreements and it was just using other people’s money. Now, if you’re starting out, you may not be able to negotiate a 50/50 equity split on that. You might have to start small. You might have to take 25% equity and they take 75 and you have to pay them back first before your equity vests. That would be one way to do it. But for me, I’ve really found partnerships and joint ventures and other people’s money to be a very successful way for me to scale up pretty quickly.

Trey Lockerbie (00:46:00):
Let’s talk about the appreciation side of things. How should people think through the values of their property or properties in general now that mortgages are finally rising and rising rapidly? Say they’re trying to get into the market, and they’ve been watching it and now mortgages are going up, where are the values going to go from here, I guess, in your opinion?

Robert Abasolo (00:46:19):
Yeah. Look, everything is very cyclical, obviously. Historically speaking, we have peaks and then we have dips, and the only way that you can ever circumvent that, or the only way you can never really beat the dips and, I don’t know, be successful in real estate is to invest consistently and not have a two to three-year trajectory. A lot of people think real estate is a get-rich-quick scheme and it’s like, “Oh, I’m going to make money so fast. I’m going to be a millionaire overnight,” that’s not true at all. You have to think of real estate as the long game, just like your stocks, just like your 401k portfolio. For example, if you invest $1,000 a month, every single month for a year and you make a 10% return on that, let’s just say perfect. Let’s say an average great year, whatever, you’re going to make 120 bucks on that. That’s not really a lot of money.

Robert Abasolo (00:47:11):
It’s not going to make you super, super rich. But if you do that for 30 years, that is going to grow into millions of dollars, and real estate is exactly the same way. You can’t really get into it expecting, “Oh, man. I’m going to make so much money today, and then in two years, I’m going to triple it in four years.” It’s not bad for goal setting, but if your exit strategy is three to five years from now, you’ve already lost the game. You have to think of your exit strategy 20 to 30 years from now because that’s the only way to ever “time the market,” by having more time in the market. So I think for people that are looking to invest right now, there are a few ways to do it. But at the end of the day, you just have to work a little harder for your deals. Do you know what I mean?

Robert Abasolo (00:47:50):
Interest rates right now, I think they came down recently and they’re around six, six-and-a-half percent for investment ones for investment ones down from seven. I’m sure it’s going to go back up here pretty soon. But with that said, you just have to work harder for a deal and you have to negotiate harder for your deal and you can’t overpay. If you really examine the behavior of people, it ends up being a wash in a sense, and I want to clarify that a bit. Two or three years ago, there were a lot of people that were saying, “Oh, we’re in a bubble. I’m not going to buy it now. It’s the top of the market?”

Robert Abasolo (00:48:22):
Well, interest rates were three, 4% and now home prices might be softening a bit, but now the interest rate is higher, and because the interest rate is higher, you’ll technically spend more money in interest, but you paid less for the house. It’s the same thing. If you had just invested both times, it’s the same thing, and so instead of trying to time the market and really be very precise, the best thing you can do is never overpay. Never spread yourself too thin. Have reserves to cover any storm and just do it consistently forever. That is it. That’s the secret. That’s the really obvious secret that a lot of people just don’t really think about. It’s like you might have a good deal, you might have a bad deal every so often, but if you really strategically think about it consistently, the good deals will typically help mitigate the bad deals that you might have over the course of 30 years.

Trey Lockerbie (00:49:14):
I want to provide a little math breakdown here because just to add some context. I heard that the average home price now in the U.S. is $500,000. So if you’re looking at a $500,000 home and you had a 2.8% interest and assuming you’re financing 400,000 because you’re putting 20% down, you’d end up paying around $200,000 in interest over 30 years, so a total of $700,000 at the end of 30 years. Now, at a 5.8% interest now, assuming you’re still putting 20% down, the home price would have to be $375,000 to get that same $700,000 net cost over 30 years or a 25% decline in the home price. Do you think we’re nearing something like that? It’s a similar question, but I guess what I’m trying to ask is, that this isn’t like a 2008 scenario where the market is overheated and there’s going to be a big collapse, but we are seeing where interest rates rise. Do you think there’s going to be that decline or does the demand and the lack of supply keep propping it up?

Robert Abasolo (00:50:17):
Yeah. I wish I knew that answer 100% simply because if I did, then I could really make some very smart decisions. I’d rely on the fact that understanding there are dips and there are peaks and I’ve invested a lot in the peaks, but I’m actually looking to invest more right now. I think that honestly, the number breakdown that you just gave us exemplifies my point. So like you said, if it goes down 25% to 375, the interest is still basically the same. That one component of looking at this equation is, that you have to have a better deal today at a higher interest than a year ago, the first interest rate you gave, but that’s looking at it one way. But I think the other way to look at it is lessen the interest that you’re paying overall in what that house is going to be worth in 30 years.

Robert Abasolo (00:51:12):
So it seems scary when you put it that way like, “Oh, my goodness. I have to spend 125 grand less in order to pay the same amount of interest like, “Oh man, this is a bad deal. But the question you have to ask yourself is, “What will that house be worth in 30 years? Is it going to be worth double? Is it going to be worth triple?” Probably. The equity will still be favorable, no matter the difference there in price. As far as where we’re heading, I’m not really sure. I would like to think that A, the actual pricing is softening, because we did get into a moment there where people were just paying, especially in the Smokies, 50 to $200,000 over because they were like, “Yeah, this is it, the glory days.”

Robert Abasolo (00:51:50):
I was like, “No, man. Don’t ever pay $200,000 over that,” and rarely makes sense in any economy. But where I think things are going right now is at the end of the day, there’s a one really big problem in the U.S. and it’s supply, just straight up, it’s supply. We’re not making houses fast enough. The houses aren’t there. People are buying houses, and so that makes me feel a little better because if I felt like we had a housing overage, I guess, instead of a shortage, then it’d be like, “Uh-oh. What are we going to do?” The fact of the matter is everyone is still competing pretty aggressively just to get into an investment property or just even their own primary residence.

Trey Lockerbie (00:52:29):
You mentioned bad deals a minute ago. I just have to ask, have you ever had a bad deal, and if so, what did that look like?

Robert Abasolo (00:52:35):
You know what, man? Not really. Actually, let me clarify. A lot of my properties have been acquired over the past five years and the cash-on-cash returns on a lot of those properties have been between 30 to 100%. It’s really crazy. My tiny house is a really great example of it. Glamping is another great example of it. Spending $3,000 on a tent and making 80 grand on it, it’s insane. Nowadays, today, I am targeting deals that are 20% cash-on-cash return, which is a lot less than what I was getting before in the glory days. Right now, with the way interest rates are, I might be getting a 15 and then in an apocalyptic scenario, like a 10% cash-on-cash.

Robert Abasolo (00:53:12):
So in my mind, if I had told younger me, “Oh, it’s at 10%,” I would’ve been like, “Oh, God. Don’t show me that’s a horrible deal.” But now that I’m a little bit more seasoned in the investing world, 10% is still really good. 10% is like, if I can get that, it’s like that’s the gold standard. But if I can double it with the short-term rental or 1.5 with a 15%, I’m so happy with that. The younger me would’ve said, “That’s bad.” Today. I’m like, “Eh, it’s not as good as I had it, but it’s still a relatively good return,” so that’s what I consider bad. Anything less than a 10%, I haven’t had any of those yet.

Trey Lockerbie (00:53:45):
That’s a really interesting point because you often hear the stock market’s performance on average is, I don’t know, anywhere from six to 10%, depending on if it’s adjusted for inflation, a number of other things. So it sounds like in your worst-case scenario, you’re coming down to that stock market level performance or settling for that, which is interesting to me because you would expect that you would want to be striving for those 20 or 30 or even greater percentage yields because it’s an illiquid asset. So you don’t have that luxury of being able to pull your money in and out. It’s like, say as you do at the stock market as easily. Is there a consideration there? So in an environment like this where we’re getting into that 10% range, does part of you at all start thinking about the stock market a little bit more?

Robert Abasolo (00:54:28):
Only because of the dip in the stock market, because right now would be a great time to get into the S&P 500, which I’m maxing out my 401k because I’m self-employed. I got an S corp, and I have a retirement account through that. I max that out. I pay as much as I can to the S& P 500. It’s the only one I really care about. They’ve done the due diligence to get all the best numbers there. So I’m like, “Yeah, I don’t have to research it.” Same thing with crypto. I want to buy a lot of cryptos right now because Bitcoin is so cheap. So to answer your question, should I be thinking about it? Yes. In order to just diversify a little bit, but no, in the sense that the stock market is really illiquid in certain capacities.

Robert Abasolo (00:55:08):
Sure, you can sell your stock and get that money back. But the capital gains that you have to pay on that are going to be crazy; whereas, on real estate, there are a lot of tax strategies that you can enable to where you may not have to pay taxes because you can defer them through 1031, for example. So there’s just so much more tax gymnastics that you can play, I guess, with the real estate game and how you do things. I think that enables me to grow my wealth a lot faster through leverage. You can do a cash-out refi with real estate. If your house appreciates a million dollars, you can go out and get 75% of that if you own it outright. You can get a $750,000 home equity line of credit, you can do a cash-out refi and do the same thing.

Robert Abasolo (00:55:47):
You can’t really do that with stocks and crypto in the same capacity. You can stake your crypto, I guess, but then if it goes down in value, I think it’s called being liquidated or something like that, you could lose a lot of that crypto. That stuff’s not really going to happen in real estate. If I do a cash-out refi and there’s a correction and the house is no longer worth that, I still have the money that I took out of it. So personally, it makes sense to diversify and I am, but there are just so many more tools available to me through real estate that I’m really putting a significant amount of my time and effort into that.

Trey Lockerbie (00:56:22):
I have a question about 1031 you just mentioned. Is that the thing where you sell a house and you have a year to reinvest it in order to not pay capital gains on that or any tax on it? Is that what you were referring to?

Robert Abasolo (00:56:34):
Yeah. Yeah. It’s a little less than that. It’s 45 days, I think.

Trey Lockerbie (00:56:37):
Okay.

Robert Abasolo (00:56:38):
So basically, let’s say you buy a house, we’ll call it. Let’s say you buy it for half a million and then it appreciates two a million, and then you sell that house, you have a profit of $500,000. You would have to typically pay capital gains on that $500,000 profit. Now with 1031, you can take that $500,000 profit and basically go and reinvest it in another property and defer that tax that you’d have to pay. Now, if you sell that property, then you would have to pay those taxes unless you use the profits and the money from that to go in 1031. Again, I don’t want to talk too much about it because I’m not a tax expert. Make sure you consult your tax expert. There are a lot of limitations. There are definitely things that you have to keep in mind when you do it, but from a simplicity standpoint, it’s basically moving your tax bill down the line through real estate.

Trey Lockerbie (00:57:25):
I’m curious about this. We won’t go into details necessarily, but generally speaking, when you’re setting out to acquire all these properties and create a portfolio, is it best to set up some kind of trust or you can get LPs or GPS involved and create your own LLC, is that typically how you would think about entering into almost like setting an entirely new business? Is that how you think through this kind of portfolio?

Robert Abasolo (00:57:50):
Yes and no. There are a lot of legal strategies there. I will say if you’re interested in learning more about this, we did a podcast interview on the Bigger Pockets Real State Show with an attorney named Brian Bradley, I think, and he talks about all the types of trust. There are domestic trusts, there are international trusts, and then there are hybrid trusts. There’s just different ways to register your properties to give you different levels of protection, depending on how much you want to spend to protect yourself. So I don’t know. There are a few different strategies there that I am not legally qualified to answer, but I’ve got a trust for my personal situation that typically doesn’t apply to a lot of people as well.

Trey Lockerbie (00:58:28):
I want to go back to what you said earlier about loving to teach. What is it about you that makes you want to teach other people all these things that you’re learning, and learning as you go, you’re teaching as you go as well/

Robert Abasolo (00:58:38):
I didn’t have anyone to teach me. There wasn’t a YouTube channel called Robuilt at that time. I was listening to Bigger Pockets and the reason I know so much about real estate is because of what I learned from the podcast as a listener, not even as a host, just as a listener, what I learned in the forums and getting in there and connecting with people, but there wasn’t a lot of literature on short-term rentals. A lot of the real estate world and education out there is just general real estate education, long-term rentals, and multifamily syndications, so I really I struggled. I had to learn stuff the hard way, man. I really did. So I always tell people that I learned the hard way, so you can learn the easy way. So I’m really transparent on my channel about how much money I make, if I’ve lost money, what properties I have, and where I buy them, I’m transparent to a fault.

Robert Abasolo (00:59:26):
I probably will be a little bit more protective of certain information because it’s becoming more of a privacy issue at this point, but I try to teach everything. I wear my portfolio on my sleeve, if you will, because I just know what it’s like to be a lonely short-term rental operator. I had my business partner, but aside from us in the trenches together, there weren’t a lot of people to communicate with. There weren’t a lot of people to learn from. Short-term rentals are a little competitive. Everyone’s nice to each other, but they’re like, “Don’t worry about where I’m investing. I’m not going to tell you anything,” and a lot of people keep stuff close to their chest. For me, I just think that there’s enough out there for everybody, and if you win, I win. Do you know what I mean?

Robert Abasolo (01:00:03):
So it’s a really great testament to me to just teach people because it’s also just very touching and moving that people reach out to me and say, I’ve had people reach out and say they’ve quit their job because of starting the short-term rental business that they learned from my program or my channel or anything like that. When people send me those DMS or emails, I’m really moved by that, because I’m like, “Great. I’m so glad I could do that for somebody, because I didn’t have someone to really do that for me in the short-term rental space.” Now, obviously, real estate like Brandon Turner, and David, obviously influenced me a lot, but I didn’t have a mentor. So if I can play that role for somebody, then I think that’s pretty gratifying.

Trey Lockerbie (01:00:40):
That’s amazing. You mentioned Bigger Pockets, which has become this massive show. What was your story about becoming a co-host of Bigger Pockets?

Robert Abasolo (01:00:48):
My Super Bowl bucket list. If you could send Rob to the Super Bowl in his respective world, what would that be? It was to be a guest on the Bigger Pockets Real Estate Show. When they reached out to me, I want to say it was about a year ago. Dude, I was through the roof. I was like, “Oh, my God. I’m going to be on the Bigger Pockets Show. This is crazy,” because I already had my YouTube channel and it was relatively established, but this was just such a new level of pride that I could possibly be showcased on a show like that. I was really excited and I had all my things prepared and I was like, “If they asked me about YouTube, I’m going to say this. If they asked me about that, I’m going to show you this.” I had it all prepared and it didn’t go anything according to plan.

Robert Abasolo (01:01:30):
I remember being like, “Wow, man. Now, I really beefed it on that one.” At the end of that episode, Brandon Turner was like, “You know what, Rob? This was an amazing episode and I think some lives will be changed based on what you said.” I was like, “Oh, okay. Thanks, man.” I was like, “No, he’s just saying that because I didn’t do a good job.” I had a lot of people that reached out to me immediately after the show aired, and a lot of people followed me. A lot of people sent me nice messages about, “Man, I didn’t know you could do this and all that stuff. Tony Robinson, another co-host on the Rookie Show was like, “Bro, you killed that.” I was like, “Oh, man, really? Thank you so much. I really needed to hear that.” That was my story.

Robert Abasolo (01:02:05):
I was like, “Okay, I guess that’s my thing. Maybe they’ll have me on some other time.” I was shooting a pilot for HGTV back in October and we were in the final negotiations for that. I was just like, “Yeah, okay. It’ll be cool to have a show,” but there were some complications there I think. Then I got a phone call that same week and they were basically like, “Hey, would you be interested in possibly filling in for Brandon Turner?” I was like, “Me? What do you mean? What do you mean fill-in? Are we talking about the same Brandon Turner? Then we’re talking about me? I don’t understand. Can you just give me a little bit more context?”

Robert Abasolo (01:02:42):
They’re like, “Ha-ha. Yeah, we like this and that,” and I was just flabbergasted. I had no idea what was in store. I just couldn’t believe it. I got that phone call and I was like, “I don’t want a show.” A show would’ve been cool, obviously. They didn’t end up picking it up, by the way, so that’s fine. I wasn’t really bummed even 1%. I actually didn’t want it after they called me. I was like, “Oh, my God. If I could do Bigger Pockets, that is better than a show, because it’s like I’m actually talking to people that need the advice versus people that are just, I don’t know, watching my show on some random Southwest flight.”

Trey Lockerbie (01:03:16):
Of the guests you’ve had on that show to date, does anyone stand out to you, that’s made the biggest impact on you, that you’ve learned the most from? Have you walked away from an episode yet being like, “Wow, that was really something?”

Robert Abasolo (01:03:28):
Yeah, there are a few. We did a show with Ed Mylett not too long ago. I just thought that that was, oh man, that guy is a smart man. He had a lot of great wisdom to say. He was one of those people that, do you ever have a podcast guest that’s so good that you forget that you’re doing a podcast? Then they stop talking and it’s your turn to talk, and you’re like, “Oh, that’s right. We’re doing a podcast?” That’s how it was with Ed Mylett where I was like, “Oh, that’s right. I should talk now.” That was a really, really, really great one. This actually will sound very cheesy, but it’s genuinely very, very true. We did a show with Brandon Turner. That one just came out and that was my first real in-depth conversation with him.

Robert Abasolo (01:04:04):
It was all about social branding and how to use that for your benefit in the real estate world and stuff, and I thought that was really cool.” I was like, “Wow. He is exactly who I had hoped he would be,” and it was just very, I don’t know, it was really cool to be in the room with Brandon who helped pioneer this space. Do you know what I mean? I thought that was really cool. We’ve had a lot of guests on the show and really, I would say half of them have that effect on me where I’m like, “Oh, that’s right. I should talk,” but they’re just so good. Everyone is so good that comes on the show that it gives me a little imposter syndrome if you will.

Trey Lockerbie (01:04:34):
Yeah. You just described my exact experience as well. The shows imposter syndrome through the roof. Man, Rob, this was so much fun. I could do this all day with you.

Robert Abasolo (01:04:42):
Same.

Trey Lockerbie (01:04:43):
This is so fun. I’ve learned a ton. I really know very little about real estate and I’ve really enjoyed this conversation, scratched a lot of itches I’ve been curious about for a long time. So I know our audience is probably similar in some way and they’ll get at a lot of value out of it as well. So before I let you go, you did share a couple of resources already, but I’d love for you to share maybe your favorite books, maybe the services. You mentioned the property management system. If you have any recommendations of stuff like that or, obviously, Bigger Pockets, your YouTube channel, or any other resources you want to share?

Robert Abasolo (01:05:14):
So I would say real estate books would be David Green’s book, BRRR, the Buy, Rehab, Rent Refinance, Repeat book is really great. That one actually applied to me a lot as an AirBNB host because it talks about building systems and how to do it out-of-state and how to hire contractors and everything. It’s actually more applicable to AirBNB than you think, considering it’s a remodeling book. I don’t read a lot, to be honest. I watch a lot of content. So if you want to follow me along on my ADHD entrepreneurial journey, you can go over to the Robuilt channel on YouTube. You can follow me over at Robuilt on Instagram. Host Camp is my AirBNB mentorship program, if you’re interested in learning about that, hostcamp.com. For some of the tools that we talked about today, PriceLabs is one that I use for dynamic pricing.

Robert Abasolo (01:05:59):
Guesty For Hosts is one that I use, that property management system that I use. Obviously, in the Bigger Pockets forums if you actually want to connect with people and learn about what other people are going through, you can go and talk to people, and connect with people there; Bigger Pockets on Instagram and on YouTube. Oh, man. I don’t know that I may have over-promoted literally everything on this planet, but ultimately, I think if you’re looking for a foundation in real estate, consider listening to the Bigger Pockets Real Estate Show. We talk about everything and everyone, and we talk about all the different asset classes and niches and everything like that. So I think if you’re looking for a way to dip your toes in the water, that podcast will do it.

Trey Lockerbie (01:06:36):
Fantastic. Well, Rob, congratulations again on all the success. I’ll be following along. I love the YouTube channel. It’s highly entertaining. I highly recommend it and let’s do this some other time. I appreciate it.

Robert Abasolo (01:06:44):
Please, have me back on. I’ll be on anytime you want.

Trey Lockerbie (01:06:48):
All right, everybody. That’s all we had for you this week. If you’re loving the show, don’t forget to follow us on your favorite podcast app. If you’d be so kind, please leave us a review, it really helps the show. If you want to reach out directly, you can find me on Twitter @TreyLockerbie and don’t forget to check out all of the amazing resources we’ve built for you at theinvestorspodcast.com. You can also simply Google TIP Finance and it should pop right up. With that, we’ll see you again next time.

Outro (01:07:11):
Thank you for listening to TIP. Make sure to subscribe to Millennial Investing by The Investor’s Podcast Network and learn how to achieve financial independence. To access our show notes, transcripts, or courses, go to theinvestorspodcaster.com. This show is for entertainment purposes only. Before making any decision, consult a professional. This show is copyrighted by The Investor’s Podcast Network. Written permission must be granted before syndication or rebroadcasting.