Overcoming Fear in Real Estate: Top Tips for Investors

Stephen Schmidt (00:02.805)
Welcome back to the show where we interview the nation’s leading real estate entrepreneurs. It’s your host, Stephen Schmidt, and I’m back at it again with my new friend, Joe Rivera. And we’re going to be talking about some real estate today as we tend to generally do since this is the Real Estate Pros podcast. If you’re joining us for the second, third or hundredth time, welcome back. We’re so grateful that you take the time to listen to the show. And if you’re joining us for the first time, we appreciate that as well. I know this is about to be a regular on your podcast listening schedule.

and we’re going to bring a ton of value to you guys today. Joe has been in the business for the better portion of the last eight years investing in their first property in 2017. He’s the short-term rental king. We’re going to be talking about all different types from short-term, long-term, and everything in between. Just before we get started, remember at Investor Fuel, we help real estate investors, service providers, and real estate entrepreneurs 2 5X their businesses, which allows them to build the businesses they’ve always wanted to allow them to live the lives they’ve always…

With that being said, Joe, welcome to the show today.

Joe Rivera (01:04.652)
Hey, thanks for having me.

Stephen Schmidt (01:06.561)
Man, I’m super excited to talk about today’s topic, but before we get started on all that, could you just share a little bit about yourself, how you got started in the biz, and what got you to where you’re at today?

Joe Rivera (01:15.662)
Sure, I got started as you mentioned in 2017. I was working a nine to five job and was just looking for something else to do into long term growth to expand my 401k and got into real estate by buying a fourplex. And then we bought some duplexes after that and our fourplex turned into a section eight house.

which we discovered were not Section 8 owners, sold that in 2019 and went down and got some beach condos right before the pandemic, which turned out to be pretty interesting. And I managed those and fell in love with short-term rentals and, you know, kind of just stuck with that model. We sold those during the height of COVID and bought a few more in different areas of

the country and I managed those and now we have some long-term rentals here in Texas that we’re trying to grow as well.

Stephen Schmidt (02:25.335)
And you’re in the Fort Worth area, right? Awesome. So let me ask you this. What do you like about short-term rentals that differentiates it from some of the other plays in real estate?

Joe Rivera (02:27.149)
Correct.

Joe Rivera (02:34.749)
You know, what I like about the short-term rental is being able to take essentially just a standard house and making it a home that you can share with anybody, right? What we like to do is we like to take a short-term run or take a house, find a market that we’re going after within the bigger market. So we find an avatar.

And we design based on that and go after that niche within short-term Reynolds, right? So for instance, we have one down in Fredericksburg, Texas that we designed for women 35 to 45 years old, girls getaway trips, because Fredericksburg, Texas is known for girl trips, right? Here in Texas, in Louisiana and Oklahoma, a lot of…

Stephen Schmidt (03:26.507)
Really.

Joe Rivera (03:32.512)
A lot of female trips are down there. So we designed it for that category and that niche and have done very well, right? So it’s fun to take that kind of home, you know, a standard three bedroom, two bath and go, okay, we’re going to go after this market and then go execute it, right? My wife does the designing and, you know, we work together to make this house a home and share it with people.

Stephen Schmidt (04:02.477)
Yeah, that’s super interesting that you guys have a very specific avatar too in terms of how you’ve actually like built that out. I think that’s something a lot of people miss just in a

Business sense of not having an ideal person. I think I talked to a lot. Well, I don’t think I talked to a lot I know I talked to a lot of realtors for example, right because we’re more on the vet in the investing side of real estate but you know as naturally pops up I talked to a lot of realtors and You know, I always ask him the question like who’s your ideal candidate and they say anyone who wants to buy a house and I’m like, cool I’m like, well my uncle wants to buy a house and they’re like, that’s awesome. How would I get in touch with them? And I’m like

Well just to clarify, first off, he’s 64 years old and was in jail for 30 years and he doesn’t have any credit. would that be a good fit? He’s looking for something like in the 250,000 range. And they go, well, no, no, no, he can’t buy.

And I go, so you’re looking for somebody that can actually buy a house too. So let’s maybe niche that down even more specifically and find the exact avatar that makes you the most amount of money is the least amount of stress on you. And let’s focus on that from a marketing perspective, right? And that’s obviously like a fictitious example. My uncle isn’t actually like that, but so I guess it’s interesting. How did you come about with building a specific theme? Cause standing out in the short-term rental space is also something

Joe Rivera (05:19.489)
You

Stephen Schmidt (05:29.027)
crucial to be able to actually keep your house rented out.

Joe Rivera (05:32.29)
by all means. So the first ones that we bought, we just did the shotgun approach of we want everybody, right? Much like the realtor example you gave. And so we discovered very fast. You don’t want it. We don’t want everybody. Right. Because when you want every when you go with the I want everybody approach, you get everybody and your short term rental takes a bigger beating.

than you really wanted to have, right? So after we sold those beach condos, we learned that we really needed to go after a market, within a market, right? So on our next short-term rental, we did create an avatar, we got smarter and learned how to do this a little, you know, a little bit better, which we’re always learning on how to tweak and twist.

in the short-term rental business because it is an ever-growing business. The competition is in some areas really extreme.

Stephen Schmidt (06:44.195)
And so how’s the competition in that area and when you started niching down, how did that start affecting things for you in a positive way?

Joe Rivera (06:51.191)
So in that area, I think we, down in Fredericksburg, we stand out a little bit just because we do cater more female focus, right? So that did open up and expanded our occupancy rate above what was happening around us, right? Which was nice.

now the market is shifted down there. So now we have to reevaluate our game plan and our design, if you will, on that market, right? So that’s something that we’re looking at now to grow because it is becoming more fierce. You’re getting properties that are essentially getting pickleball courts. I don’t think there’s one down there, but it’s getting to that, you know.

Keeping up with the Joneses. It’s constantly keeping up with the Joneses, which you’re never going to win. Right. So. It helped us. Now we have to evolve because that market is evolving. Right. Because now they have luxury hotels that are going in. So now we have to step our game up because the Waldorf is going down or they’re building a Waldorf down there and they built this four star luxury hotel down on Main Street. So.

Yeah, we’re going to have to step up our game as well.

Stephen Schmidt (08:18.915)
Yeah, 100 % because ultimately you’ve got to adapt to an ever-changing landscape, right? So what does long-term vision look like for you in this space? Do you plan to have an army of short-term rental houses, property management, or what does that look like for you long-term?

Joe Rivera (08:25.485)
Correct.

Joe Rivera (08:35.105)
Yeah, so for long term, I would love to have a portfolio in different markets, right? So we have one in Fredericksburg, Texas, then we have another one in Pitch & Forge, Tennessee. And I would like to grow and be able to have different experiences in different markets and be able to offer a portfolio for our past guests and future guests to kind of pick and choose from, if you will, right? Go,

I love the experience here and you know, I’m planning on going here next so I’m gonna go, know, let me check out their place, right? So the goal is to grow it. The goal is to also grow the co-hosting business and you know, help other property managers or help other investors, you know.

with guest communications, maintenance issues, revenue management and growth, you know, make their investment profitable as well.

Stephen Schmidt (09:40.355)
Sure. Yeah, 100%. Love that. What are some of the things that people should consider if they’re wanting to get into that same space?

Joe Rivera (09:50.094)
into short-term runnels, you have to realize it’s not a get quick rich game anymore. COVID has ended. So that gold rush is no longer there. This is a long-term play. There’s a lot that goes into it. You don’t realize how expensive it is to decorate a full house until you have to decorate a full house.

Stephen Schmidt (10:19.149)
Sure.

Joe Rivera (10:19.999)
You’ve spent maybe 10 years decorating your house, right? I’ve got to do, when I do a short-term rental, I’ve got 10 days, right? So that cost, that time, it’s the first time we did it, we didn’t realize what it took, right? Because you don’t think about it over a lifetime, you have accumulated all these items that makes your house your home, right?

Stephen Schmidt (10:23.533)
Right.

Stephen Schmidt (10:47.191)
Right.

Joe Rivera (10:48.033)
We’re doing it within a two week timeframe. So that was the biggest shock. And I think that’s what most people don’t realize is, you know, the average room, how much it costs to decorate the average room.

Stephen Schmidt (11:03.139)
Can you break some of that down and tell us a little bit more in depth on that?

Joe Rivera (11:06.775)
Sure, so like on average, when we do our evaluation of a house, we look at it and go, okay, each room is gonna cost us anywhere between eight to $10,000 to decorate, right? And that’s how we build out our poor forma of the house, or when we evaluate it. So.

Stephen Schmidt (11:27.139)
Now you just you did just say eight to ten thousand per room right including bathrooms and bedrooms

Joe Rivera (11:32.215)
Correct, yes.

Yes, because in some areas, it’s an average, right? Like the living room is going to cost you more than a bathroom, right? All of it, right? Couches are not cheap. You can get a cheap one, but you’re going to buy it a few times, right? So if you invest in the quality of your furniture, it lasts longer. It doesn’t show the wear and tear as much either, right?

Stephen Schmidt (11:40.643)
Mm-hmm.

Right, couches, TVs, yeah.

Stephen Schmidt (11:53.379)
Sure.

Joe Rivera (12:05.165)
You know and then the artwork and things like that go into it and then you know bathrooms You know the towels are not cheap, you know, you got you want to buy more towels than You actually need right so the you have three sets of towels in a rotation per bathroom Right. So there’s one that’s currently being used one. That’s for the the next group of guests coming in and then you have

backup as well right so just like the hotel industry they have three sets per guest right so you know that stuff adds up and you don’t realize it until you get into it then you start buying all this all the items right the shampoos the conditioner the female products the the towels and bath mats and all the things shower curtains and

You know, there’s a laundry list, right? You gotta think of everything, right? And then, you know, what we do is when we decorate, we’ll come and stay as our own guests because inevitably you’re gonna forget something, right? You’re gonna forget the forks, a knife or whatever, right? So we like to stay and, you know, be our own guest.

Stephen Schmidt (13:08.045)
right.

Stephen Schmidt (13:18.157)
Sure.

Stephen Schmidt (13:21.944)
Right.

Stephen Schmidt (13:28.675)
That’s a really smart way of circumventing having people hitting you up at 10 o’clock at night saying, hey, by the way.

Joe Rivera (13:36.652)
Right. Which, you know, I will say we don’t really get those late phone calls, right? That big misperception of, the toilet broke kind of thing. You get those during the day, right? Because people on average realize it’s a business and that you have, you know, a life as well. Right. Yeah, you have.

there you go, operating hours. Now, you if the AC goes out and it’s 110 degrees outside and the house is 98 degrees, you’re gonna get a phone call, right? But very few and far between.

Stephen Schmidt (14:15.955)
Right, sure, but few and far between.

In your experience, what are some of the mistakes that you see people that are newer to the business making that are easily avoidable?

Joe Rivera (14:32.301)
Well, I think the biggest one that I see is that whole shotgun approach of we want everybody to stay at our short-term rental, right? That’s the number one. And then shortly thereafter is the quality of pictures that they post on Facebook or, or not on Facebook, but on Airbnb and VRBO. You know, it’s fine to take a cell phone picture for about a month.

But if you really want to do this long term, you have to get professional pictures. It just makes a huge difference. And you can tell the level of operator from who does a short term, who does a phone picture as opposed to who gets professional pictures.

Stephen Schmidt (15:14.381)
Yeah.

Stephen Schmidt (15:20.245)
Right? You know, it’s funny you mention that because I’m actually looking at taking a trip to Colorado here at the end of the summer before the kids get back into school. And I was looking at short term rentals on Airbnb with my wife the other night and we were scrolling through and I found this one house and all of the pictures were so professionally done. I was like.

Are we looking at a place that they’re trying to like give us an overview of where we’re staying or are they trying to create house art with this? This is almost ridiculous. Like the way the sink was positioned and like a picture of the art on the toilet and I’m like, man, it really definitely is making this house stand out to where I remembered enough to bring it up on a podcast three days later. But sometimes that’s the game.

Joe Rivera (15:46.509)
You

Joe Rivera (15:52.674)
Yeah?

Joe Rivera (15:57.773)
Well that’s it yeah

Joe Rivera (16:05.215)
It that that is the game that is 100 % the game right you want to turn looks into books right so look.

Stephen Schmidt (16:12.451)
That’s a great, say that again, say that again. I wish I had like a boom.

Joe Rivera (16:16.775)
It’s turning looks into books, right? So, you you looked at that house, I bet you spent longer looking at those pictures than you did on any other pictures for any other houses in the area, right? And that’s the goal, right? And that’s why you have professional pictures. So they get that sink just lined up just right. The lighting comes in just right. The bedding looks perfect, right? Now the trick is, is having it look the same way when you show up as the pictures.

Stephen Schmidt (16:46.965)
Right, sure.

Joe Rivera (16:47.841)
right? So, you know, that’s why you have professional pictures, you turn looking into bookings. So

Stephen Schmidt (16:55.659)
I like that line. That’s such a great line. Did you come up with that? Okay, so that is a thing. Okay. All right. Well, it’s going to give you some credit for that incredible line. So yeah, it’s funny. To your point though, that house, it stood out to me the most. It actually, I’m a little bit of a weird consumer. It actually annoyed me, so I clicked off of it after looking through finally the kitchen and stuff. Because for me, I need simplicity. But I’ve also…

Joe Rivera (16:58.899)
I did not. I will not take credit for it. Yeah, yeah.

Stephen Schmidt (17:24.939)
gotten to a point to I think part of that is because it’s not just about me, it’s about like the accommodation factor. Like I got, I got a ton of kids, you know what I mean? So when I’m looking for a place, I need to know how many bedrooms are there actually? How many beds are there actually? Is there a pack and play for the toddler or the baby? Is there this and there that, you know? So, but, and in all fairness, like when I find houses that have some of those amenities that I’m looking for for myself specifically, it means it gets hearted.

Joe Rivera (17:32.45)
Right.

Stephen Schmidt (17:52.533)
right and goes on the list of a potential option and I think that’s a that’s a clear miss to your point of people not really truly reflecting the energy of the property and there’s been times where I’ve been on a trip with folks where we I think the the most recent

shenanigans was an Orlando stay where we were expecting to go into a spot that had four bedrooms and X amount of beds and whatever and we get to this house and there were seven of us that were staying there. None of us related to each other and we get there and there were three bedrooms and three beds in the entire house and when we booked it it was supposed to be like four bedrooms and have eight beds and so we get there like

This is like completely not anything close to what the listing portrayed, to where several of the guys had to go get a hotel room together and stay there overnight.

Joe Rivera (18:52.117)
Right. And that makes, you know, the experience that just starts off the whole experience badly. Right. Your your vacation does not start off on the right foot. Right. And that’s not our goal. Right. Our goal is so that your vacation starts off on the right foot and we portray the correct house. Right. And, you have seven people. All right. Well, we have enough betting for that. Now, you know,

If you do a guys trip to our house, that would not work.

Stephen Schmidt (19:25.251)
I think most guys looking would probably be turned off by how it’s decorated and everything though. So I think that would be far and few between of people booking it for that, right?

Joe Rivera (19:33.198)
Yes, yes, yes, yes, it wouldn’t really match. Now I will say though, Fredericksburg is a great guys trip. There’s a bourbon trail down there. If that’s your thing, bourbon, it’s got a great bourbon trail with some really popular bourbons, but it’s mostly for wine and girls trips. But, you know, yeah.

Stephen Schmidt (19:58.189)
totally make sense. get it. In your experience, what has been the greatest lesson you’ve learned from being in the business?

Joe Rivera (20:07.565)
You know, I’ve done a lot in a short amount of time with a few properties that I’m not afraid.

of any property. I’ve never done a burnt down house, right? A house that was on fire, but I’ve tackled some serious plumbing issues, right? Excavating completely underneath the house kind of situations all the way down to the main, you know, which would intimidate a lot of people, foundation issues, things of that nature. At this point, you know, there’s…

Stephen Schmidt (20:24.355)
Hmm.

Joe Rivera (20:51.669)
Having the courage to go through it is probably my biggest.

lesson, right, to just believe in myself and go through it and do it. Just do it.

Stephen Schmidt (21:02.499)
Was there a point where you didn’t?

Joe Rivera (21:05.771)
I think in the beginning, right? In the beginning, and probably even before we purchased our first property, right? Having the fear of all the things that’ll go wrong and, you know, the financial struggles that you go through with the, you know, the surprises that happen held me back for a while.

Right? Until I just ripped off the bandaid and then did it and just was like, whatever comes my way, I’m going to just, just figure it out. Right? and being able to just figure it out. Right? It, there’s nothing scary.

Right? There’s no, there’s nothing scary about any of this. Right?

Stephen Schmidt (21:56.301)
Yeah, I like to look at it from the perspective of like in the grand order of the cosmos, which is what I like to say. You know, in the way the universe works, right? I always ask myself a question when I’m dealing with the challenge of is this gonna really matter in five years? And some things do.

And those are important things to pay attention to. Like I think a big one for a lot of people, 52 % of people according to stats that I’m going to probably get fat checked by the internet and shredded apart by, know, 52 % of people getting divorced and that get married. I mean, it’s a, it’s a real easy thing to say that marriage is the problem because, know, you can’t get divorced without getting married. at the same time, there’s some benefits to that too, right? And, you know, I think a divorce is something

Joe Rivera (22:49.612)
Right.

Stephen Schmidt (22:50.863)
that does matter in five years, right? Doesn’t mean that you’re lesser of a person or anything, but it can very much so matter in five years and sometimes even in ten. And that’s the second question that I ask is if it doesn’t matter in five, if it matters in five, will it matter in ten? Right? And I think when you look at it from that perspective, most things really don’t matter.

Joe Rivera (22:53.269)
yeah.

Joe Rivera (23:06.497)
Yeah.

Joe Rivera (23:11.709)
I would, I get where you’re going. And I agree. Yes. no, I agree. I agree. Right. Look, at the end of the day, there’s, there’s no problem in real estate that you can’t overcome. Right. And it’s not life threatening. Right. Right. I mean, when you rehab a house, you know, you get it down to the studs. And if you got to go underneath or whatever, you know, foundation issues or

Stephen Schmidt (23:13.995)
In terms of problems, in terms of problems.

Stephen Schmidt (23:29.665)
Right?

Joe Rivera (23:41.282)
you know, or if it’s an easy, you know, use the term loosely, an easy project, you know, there’s still always a challenge to it, but you get to go home, right? At the end of the day, you go home, right? And then you get to wake up in the morning and figure it out, right? So I look at it that way, is, you know, am I going to be able to go home from this and tackle it tomorrow?

Yes. Will it matter? Will future Joe thank me for what I’m doing today? Yes. Let’s just get it done. But I didn’t start off that way. I was very timid and very scared of all the things that could go wrong. And it held me back from even just getting started.

Stephen Schmidt (24:37.283)
Sure. Yeah, totally understand where you’re coming from there. So if you had to go back to the beginning and start everything all over again from scratch, but you were able to take all of the knowledge that you’ve gained over the last eight years, what would you do different and what would you do the same?

Joe Rivera (24:52.461)
well, I probably would go faster. and I’d say yes, a lot more. I would definitely have said yes and taken a lot more risk. and, been a lot more aggressive on a few different decisions, and opportunities that came my way that I was too scared to take off.

Stephen Schmidt (25:23.299)
Can you give us some more context for that, or do you need to keep it vague?

Joe Rivera (25:23.469)
Right? So, no, no, it’s fine. When we first started doing this, I had a chance to purchase a house in the same town I was living in. It was a historical home, but there was so much potential. But I was so scared of it because it had a pool that…

just was nasty with cracks every which way to Sunday and foundation issues. I mean, there was just a laundry list. All I could see was all the problems and I couldn’t see the potential of the house. And so because of that, I chose not to do it, which is a huge regret because that was a huge opportunity missed.

I would be a lot further along than I am today if I would have taken that step. So that’s the one that really, in the beginning, that is a huge regret.

Stephen Schmidt (26:40.813)
Hmm, interesting. It’s always fun to talk to people that have been doing it for a while, because almost all of us have that one deal that just like, just makes us itch. Yeah, I have a friend of mine that’s a wholesaler who ended up taking a property under contract. It was like his second deal, and he was new to the business.

Joe Rivera (26:50.753)
It does.

Stephen Schmidt (27:01.729)
didn’t know what he was doing. And this was actually a pretty decent sized property here in my market, which isn’t a crazy expensive market in Wichita, Kansas. And he locked it up for 1.1 ended up assigning the contract for 1.2 and the investor went in that he sold it to. And after he did a couple little things to it, the property was then worth like 1.6. And my buddy is like, I could have assigned this

Joe Rivera (27:25.513)
Oof.

Stephen Schmidt (27:30.563)
for 1.3, 1.4, and the investor even told me, he’s like, I still would have bothered even if you did it at that. And all he did was make a tweet, didn’t even put any money into it. And so my buddy now in the back of his head thinks to himself, he’s like, I literally lost at least 100,000. He made 100 grand, right? Which like, let’s just like focus on that for a second. That’s still amazing, you know?

Joe Rivera (27:41.297)
Ugh.

Joe Rivera (27:50.315)
Yeah, that’s very good. Very, very good. Very good.

Stephen Schmidt (27:55.031)
but he also lost a hundred grand minimum and opportunity cost. Exactly. So that’s, that’s his deal that makes him itch still to this day.

Joe Rivera (27:57.312)
Or more. Right. But you.

Joe Rivera (28:04.107)
Yeah, but you know what? I look at it this way, too. I go, OK, sure, that’s money lost, right? But the education. Right now, so, OK, money comes and goes, right? If money comes and goes freely, you know, you know, the education that you learned or he learned that I learned, we’ve all probably learned from those mistakes, if you will, was

Stephen Schmidt (28:15.939)
100%.

Joe Rivera (28:34.027)
you know, probably, yeah, more than the money, right? So…

Stephen Schmidt (28:34.349)
Priceless.

Stephen Schmidt (28:39.419)
I just spoke to your point there. I just spoke with a guy who went from zero to 350 doors in the last four years. Like I started four years ago, I 350 doors. And we talked about that same exact thing that you just said right there. It’s not about, most people think a dollar in, three dollars out. And he goes, but realistically, you can’t calculate the total lifetime value of an ROI.

Joe Rivera (28:49.413)
wow.

Joe Rivera (28:57.505)
Mm-hmm.

Stephen Schmidt (29:04.931)
without factoring in the time, potential relationships, and everything else that goes into it that you’re not considering from just a visceral reaction.

Joe Rivera (29:13.813)
Right. And, you know, I agree. I don’t really have anything to add to it. I agree 100%.

Stephen Schmidt (29:19.779)
I love it man. Well tell these fine folks where they can connect with you more if they want to follow you or they want to connect with you see what you’re working on. Where should they go for all of that Joe?

Joe Rivera (29:31.285)
Sure, I do a lot of posting on LinkedIn. So you can find me, Joe Rivera, on LinkedIn. That’s where I do all my posting on the short term rentals and what we’re doing there.

Stephen Schmidt (29:45.901)
There you go folks, we’ll go follow him for more and I hope you enjoyed today’s episode and hope you got as much value out of it as I did. Thanks for being here Joe, we’ll see y’all in the next episode.

Joe Rivera (29:56.674)
Thank you so much.