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Show Summary
In this episode of the Real Estate Post podcast, Jacob Carroll shares his journey into real estate investing, emphasizing a strategic approach focused on townhouse investments. He discusses the importance of understanding tenant profiles, the appeal of single-family homes, and the benefits of managing properties remotely. Jacob also offers valuable advice for aspiring investors, highlighting the significance of thoughtful growth and building relationships within the real estate community.
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Investor Fuel Show Transcript:
Jacob Carroll (00:00)
⁓ So again, in this whole business, this is not getting rich overnight. This is about kind of securing your retirement, securing your financial flexibility, like whatever just gives you optionality in your life. And that was really important to us. And so in the beginning, I think a lot of, you know, investors, kind of, because we get excited after our first deal, we want to move fast and we don’t like pause andtake away what are the lessons learned, what are the mistakes I made from the first deal, and everybody falls victim to that to an extent.
Kristen (02:06)
Welcome back to the Real Estate Post podcast. I’m Kristen and I’m here with Jacob Carroll, who’s an investor who lives in San Diego, does a lot of business in the Minneapolis region. So thank you so much for being here, Jacob.Jacob Carroll (02:17)
Yeah, thanks for having me. Look forward to the conversation.Kristen (02:20)
So tell everybody kind of how you got into the world of real estate. ⁓Jacob Carroll (02:26)
Yeah, so, you know, prior to jumping on, we had a little background chat here and, know, I really have started my real estate investing journey. Meanwhile, maintaining a career, you know, in IT. so after having done that for so many years, you know, I need a little bit of a break from time to time. And I really like kind of hands-on projects. And I figured out through DIY and YouTube being that, you know, I’m pretty good.at managing small projects and light rehabs. And so my wife and I decided to start a small business where we buy individual residential real estate properties and I’m able to do light rehab work. And it ended up being starting off as more of a passion and then kind of morphing into a full-blown business where we have scaled our portfolio and kind of really.
focus on property management and the long-term, slow and steady, consistent growth of our portfolio.
Kristen (03:27)
Yeah, yeah, I love that. And you mentioned kind of like the DIY YouTube learning aspect of it. So getting started, like, how did you learn how to do anything? Are you just on YouTube all day?Jacob Carroll (03:41)
⁓ know, so, ⁓ our investor strategy really, you know, and, and my wife and I talked a lot about this before we got into it. You know, when you think of, you know, real estate investing, we wanted kind of, we’re fairly risk adverse. So we wanted a six inch bar to step over. And the best way for us to do that was to buy something that isn’t a total black box. We didn’t want to buy something that’s a mystery. And if you look at individual like residential real estate that’s out there, you’re.you could have a property that was built in the 1800s. You could have, you know, a very large scale property. And what we chose to focus on, our niche really is townhouse investing. And, you know, not only townhouse investing, but townhouses that were built the year 2000 or newer. So it’s not like we have, you know, really old electrical or really old plumbing. But we were, you know, kind of acquiring properties that were left roughly 10 years old. And so,
You know, those type of light rehab projects are really easy to research on YouTube, self teach. You know, I do have some family that, you know, are in the trades to an extent. And so there’s a handful of phone calls, hey, am I doing this right? ⁓ But there’s a lot that you can independently learn yourself. ⁓ you know, as soon as you start, you start building relationships in the real estate investing community, there’s a lot of people that really want to help.
And I’ve taken advantage of that and I’ve also do my best to give back to that community as well.
Kristen (06:01)
Yeah, absolutely. I find it to be a very inclusive community where people really do want to help. But if you’re on the outside and you don’t know where to start, you’re right that there’s a lot of scrappy ways that you can get this information yourself. So how did you land on the townhouse strategy?Jacob Carroll (06:20)
Yeah. So, ⁓ just in looking at like developing a buy box. So I’m, I’m a big proponent of the whole one rental at a time kind of ethos that’s Mike Zuber’s whole, you know, shtick. know, I’ve really kind of managed to curate our investing strategy, very similar to what they preach in one rental at a time. And so, ⁓ really we developed our buy box, right. And I kind of mentioned it before, but you know, within five minutes of our house,within five minutes of Lowe’s Menards Home Depot and a ⁓ small home format in townhouses just because prior to kind of upgrading our personal residence, I started in the townhouse. I’m like, hey, that’s pretty low hanging fruit, pretty easy to understand. And so we decided to start down that path. The first one that you purchase is always the most intimidating, but then you realize, okay, hey.
learned a few lessons from this. Also, I would say that for a lot of investors starting out and being scrappy about this, you don’t have unlimited funds. And so ⁓ you have to kind of look at your buy box. And that was also a lower price point. So as an investor, you have to come to the table with capital. ⁓ And that lower price point also helped us scale a little bit faster as well.
Kristen (07:42)
Yeah, totally. think it’s important to kind of know where you’re able to go rather than stretching yourself too thin, especially on your first few deals. What I like about your strategies, particularly also with one home per year, it’s that steady growth rather than that overnight skyrocket success. Can you talk more about that and how sustainable growth is important to you?Jacob Carroll (08:09)
Yeah, for sure. ⁓ So again, in this whole business, this is not getting rich overnight. This is about kind of securing your retirement, securing your financial flexibility, like whatever just gives you optionality in your life. And that was really important to us. And so in the beginning, I think a lot of, you know, investors, kind of, because we get excited after our first deal, we want to move fast and we don’t like pause andtake away what are the lessons learned, what are the mistakes I made from the first deal, and everybody falls victim to that to an extent.
⁓ I think in the first two or three years of operation, we did pick up, I wanna say, two to four units a year, and then in these last few years, and this happens to a lot of investors, your capital available gets squeezed, and you know what, you realize, okay, I can actually do smarter deals if I take my lessons learned.
and kind of apply those, be a little bit more selective about my rental property portfolio that I want to add onto. ⁓ And so that’s kind of where we’re just like, hey, if we can secure one to two rentals a year, you know, we think that that’s going to really achieve our, you know, cashflow goals and really our wealth building goals. And so we’ve just been very consistent about that. And we do that through monitoring that buy box that I mentioned.
on a daily basis and it doesn’t need to be complicated. It’s a simple filter that’s out on Zillow, right? This is the MLS. This isn’t some hidden market that nobody knows about. We do buy most of our deals off the MLS. ⁓ There have been, you know, as you establish yourself in the industry and you build relationships, people know what you’re doing, especially in your little sub market and they’re like, hey, I have a townhouse that’s off market. They want to get rid of it quick. I’ll give Jake a call, you know, and then we can.
Kristen (10:04)
Yeah.Jacob Carroll (10:05)
we can likely walk the unit and make a deal happen. And so that’s kind of been our strategy, our plan.Kristen (10:46)
Definitely, and you know since you’re so particular and careful about which homes you take on, like what do you look for? Like what kind of criteria do you go down when you’re looking for a good investment?Jacob Carroll (11:00)
Yeah, so I think what a lot of real estate investors probably don’t do enough of, and that’s really thinking about who your customer is, right? So for us, we had to figure out what our tenant profile is. And so as we started down this path of the business, ⁓ what we quickly realized is our ideal tenant profile that we’re really trying to suit towards is either a younger millennial that for some reason does not want to own,or they’re just looking for the flexibility of, I wanna live here for now, or it tended to be ⁓ kind of ⁓ an older, maybe like transitioning from, I’ve had the really large single family home, now I want to sell that transition into a rental so I don’t have to maintain a home. And so we do have a fair number of people that are nearing retirement or are retirees and they are just make.
really great tenants and you know so we really started with what kind of tenant do we want as we started really kind of figuring out this whole you know what kind of portfolio do we want to build we wanted to build it around our customer and that’s what we try to focus in on.
Kristen (12:12)
Yeah, how do you even drill that down? Like, how do you figure out? Because I think with real estate investing, a lot of people, they just know they want to do it. They know they want the money. But it’s hard to of drill into those specifics of what you want. How did you even come up with that strategy of like millennials and maybe older tenants?Jacob Carroll (12:33)
Yeah, so I think you have to look at, well, where do you want to own assets? And I told you we’re fairly risk adverse. And so we wanted to own assets in really nice neighborhoods, right? And because we’re doing all the self-management in…you know, we had decided to already move to a very nice area in the Twin Cities. ⁓ And because we were self-managing, we wanted all of our units to be fairly close to our house. And so we were really committed to, you know, building our portfolio in our own community that we knew was a great community, had great jobs, awesome schools ⁓ and really good employment. Right. And also a limited amount of multifamily. Right. If you look at apartments, as far as
competition
in the marketplace, comparing yourself to other available units and getting comps. These are some of the factors that we looked into. when you look at the rental market in this space and charge the price points that we are charging, which isn’t kind of your entry level rental, right? It’s, I would say a step above that as we’re doing, wanna say light rehab, so 15 to 25K and remodel for each of our units, obviously.
our portfolio was built around the 2000s, so we’re getting rid of lot of chrome gold, a lot of like dated accent lights and stuff like that. And so, you know, by doing those things, we’re able to charge a little bit more money and it just matches kind of our tenant profile. Okay, these are starting out business professionals or these are retirees that like a really nice home. And so it really just met kind of our community, our buy box strategy just kind of fell together.
Kristen (14:18)
Yeah, it’s a really, I mean, you’ve put a lot of thought into it. I feel like a lot of people maybe don’t put that much thought in, as much thought into it of like the actual profile of the person they want. ⁓ So I think that’s great. You’re setting yourself up for success for sure. And I would love for you to talk about, because I know that you’re very happy with these, you know, single family homes, townhouses. Can you talk about the opportunity there and what makes them so appealing ⁓ versus, you know, going all in with the multifamily?Jacob Carroll (15:29)
Yeah, so ⁓ a couple of things I think that make, ⁓ you know, single family homes ⁓ appealing to us and especially the townhouse format. ⁓ You’ll see real estate investors typically be on the opposite side of the coin when it comes to townhouse investing because a lot of ⁓ investors aretend to shy away from homeowner associations, which obviously play a big factor in these communities. ⁓ But as I mentioned before, we’re risk adverse. so that paying that HOA due, right, and being engaged with those homeowner associations to kind of better understand, are they making good decisions? How are their financials and things like that?
Those HOA dues are kind of like a bank account, right? We don’t have to as closely manage setting aside such large capital expenditure reserves because we know the exterior of our properties are taken care of through those prepaid dues essentially, right? So we don’t have as much risk when it comes to needing to install new roofs or new, know, maintaining the exteriors and things of that nature. So that tended.
to be like a really nice thing that, you we, ⁓ you know, are okay with kind of some of the rules and restrictions because it does help us get comfortable around the risk of, you know, investing in multiple homes. And, you know, it really helps manage the property management element of, you know, of the residential real estate investing world as well, right? I have to property manage what’s within the walls, not necessarily.
have to talk to tenants about not mowing their lawns on time or, you know what you’re doing, all these things, you know, and don’t get me wrong, we deal with a handful of complaints, right? But we, you know, we work with our HOAs, we ask for grace, we tend to be a good community steward and, and, and yes, you could, you know, go into a multifamily, but I really like the customer and I really like also, you know, who we’re buying from.
Our competition is different than small and multifamily or even multifamily. When you’re buying multifamily, you’re buying from a former investor. But as a small residential real estate investor, who are we buying from? Who’s our seller? That tends to not be a real estate investor. It tends to be a prior homeowner or a homeowner. And so there tends to be a different ⁓ level of competition.
market competition, it’s not investor competition as significantly. ⁓ that’s another reason why we stick to single family homes.
Kristen (18:17)
Yeah, that’s amazing. And you’re doing all your property management yourself as well. All of this on top of having a career in IT, you must have great systems in place to really juggle everything.Jacob Carroll (18:31)
good systems and I will say you really have to lean into your partnerships, ⁓ especially having decided to move away from Minneapolis and manage this all remotely about 2,000 miles away. We really had to have a high degree of confidence and depth in our bench of support partners, right? So you can’t just move away with one handyman and one painter. ⁓ We have…everything in place. Not only the systems like, hey, this is your, you know, tennis screening process, your new move in process, your move out process. ⁓ But we also have, you know, electricians, relationships with companies, know, garage door management, ⁓ you know, you name it, we have it in place. ⁓ And not only that, but we foster those relationships by being good communicators and
being good to pay and we try not to nickel and dime our providers because we know that they’re running a business just like we are. And so there’s got to be margin and respect of that margin for each partner in the relationship.
Kristen (19:39)
Definitely. Well, I mean, what you’ve been able to build is so impressive. Do you have any advice for people, advice you wish you knew earlier in your career that you can share with people?Jacob Carroll (19:51)
⁓ bet on yourself a hundred percent, ⁓ stay confident and humble, ⁓ make your moves kind of in silent, you know, just put in the work, be very consistent. and, and, you know, give, give everything a little bit of sunshine and time and, know, things tend to fall in place. be smart about things, ⁓ think through the consequences of some of your decisions, ⁓ and then get mentors along the way. Right.⁓ I didn’t do this all in a vacuum. I had other people that I partnered with that, you know, taught me along the way. So those would be some of my recommendations. Follow some good podcasts, right? You know, stuff like that.
Kristen (20:31)
Yeah.Absolutely, yeah. mean, your whole portfolio has, it’s really about thoughtful growth and really going through everything with a fine-tooth comb rather than just diving in and hoping it works. So I think that you’ve given such great information for people and kind of a different perspective also on single-family homes as well. I think that you presented that so well. So to wrap this up, tell everybody where to find you.
Jacob Carroll (21:04)
Yeah, you can reach out to us on Instagram at Bridging Tenants ⁓ or you can check out our website and you can see our small and mighty portfolio out on our website, bridgingtenants.com. know, we’re always here to ⁓ help the real estate investor community and you know, we love to give back. So we hope we can connect with some of your audience.Kristen (21:26)
Amazing. Well, thank you so much for doing this, Jacob.Jacob Carroll (21:30)
Of course, yeah, was blast.Kristen (21:33)
Awesome and thank you everybody for listening. Hope you learned a lot and got some inspiration as well and we will see you back next time.Jacob Carroll (21:40)
Cheers.
