Beginner Real Estate Investing: Renting Rooms, VA Loans, and Cash Flow Strategy

Duke Davila (00:00)
Don’t be afraid to give up your personal space or financial gain. Rent out a room. Rent out a room, buy a house, rent out a room. That is the quickest and easiest way. Even if you’re just renting an apartment, rent out a room. People always say it’s easy to borrow somebody else’s money, use somebody else’s money to make money. It’s way easier if you already have some money.

Michelle Kesil (00:03)
You

Michelle Kesil (01:56)
Hey everybody, welcome to the Real Estate Pros podcast. I’m your host, Michelle Kesil, and today I’m joined by someone I’m looking forward to chatting with, Duke Davila, who is a investor and a real estate agent. So really excited to have you on the show today, Duke.

Duke Davila (02:18)
Yeah, thanks for having me.

Michelle Kesil (02:18)
Awesome, let’s dive in. So first off, for those not familiar with you and your world, can you share what your main focus is?

Duke Davila (02:26)
Main focus is doing real estate mostly all single family, not so much multi-family, but more so around Huntsville. Everybody’s a shark. There’s investors everywhere. So I mostly end up helping a whole bunch of other investors either get started in real estate investing or try and gather and develop and build some more into their portfolio.

I also help a bunch of other investors with some of the things afterwards. Like there’s some of these DR Horton homes that don’t come with the TP holders and towel racks. So I try and help coordinate all that as well. Coordinate the contractors if they want to extend their back patio and just try and make it easy for my investors as well. So there’s a whole bunch of incentives on like new construction where they have like killer incentives. I think I just locked down this one deal where the all cash.

rate for this townhome was $40,000 less than if you financed. It’s all just about finding a great deal where it’s profitable for your investors. that’s more so what I dive into. Also help with veterans on military relocation because I’m a veteran myself. I can help them in a bunch of different avenues.

Michelle Kesil (03:36)
Awesome, and what markets do you operate in?

Duke Davila (03:39)
Mostly all northern Alabama. So Huntsville, Madison, Harvest. I’ve done a couple deals in Enterprise, Alabama as well, because that’s my hometown. That’s kind of where I grew up. So I kind of venture out that way. ⁓ If there’s anybody from like my old hometown that just needs some help, because I can make a drive down there. I got family down there, so that’s easy enough. Plus I got an assistant down there, my little brother, that can help me with any other things that I might not be able to do.

from a little distance. So it’s pretty easy.

Michelle Kesil (04:07)
and how did you get into real estate?

Duke Davila (04:09)
a divorce. actually was ended up with a whole bunch of marital debt. I had to find a way to dig myself out. So I ended up starting by renting by the room to help. I rented out two rooms in a three bedroom house and they were the two guys were able to cover my mortgage. And then because I didn’t have a mortgage payment, I was able to start paying off that debt.

And it pretty much just gathered from there. From there, after that debt was paid off, I just because you can buy multiple homes on a VA loan, I just went and bought another house on a VA loan because I saw eligibility left because not everybody knows you can just keep on buying VA homes back to back. You can even go over the cap of your eligibility as long as you put 25 % down. Even my primary residence now, I did a VA loan assumption.

And I didn’t use any of my eligibility. I kept the eligibility with the sellers. So I still assumed the loan, kept the eligibility with the sellers and was able to acquire another one because they had a lower rate. yeah, and then just it just kind of kept snowballing from there. I mean, I bought another house and rented out two of the rooms out of the four bedroom house and then I had a guest room and I just kind of lived a little bit uncomfortable for a little while.

I gave up some of my personal space for financial gain because I was willing to do that. I still wasn’t married or had kids. So that just kind of worked for me to be able to just keep the ball rolling.

Michelle Kesil (05:45)
Yeah, amazing. And so

Michelle Kesil (06:35)
What are some of the main keys that have allowed your business to be able to grow and run successfully?

Duke Davila (06:41)
big networking, ⁓ probably being.

Probably being extroverted, being able to socialize with a whole bunch of people all the time, trying to keep yourself likable. And just a whole bunch of networking, getting to know a whole bunch of people. So you always have a network of people that can, if you don’t know something, you know somebody that knows about it or can figure it out. That’s what I would think has been a big help for me.

Michelle Kesil (07:09)
Yeah, and can you expand on what type of networking do you do and what does that look like?

Duke Davila (07:15)
So even some of mine I Would say always I end up expanding on like trying to be with different friend groups making new friends. That’s why I even started doing personal training During the week because I’m also a personal trainer because that always consistently puts me in front of a new face and more conversations That you have creates more opportunity to be able and just have a conversation with

with somebody because you never know if they may end up needing some help with real estate or they may know of somebody as well. So just always kind of put myself out there hosting homebuyers seminars, finding, trying to find myself to be useful in more than one way with even just real estate. So I also try and assist people, veterans that may need help with their VA disability increases, just finding another way for

strike up a conversation because if I can help you make more money maybe you want to buy some real estate. ⁓ So you make some more money, I can make some money, everybody’s happy. So ⁓ I just try and make myself useful in more ways than one. So I feel like that’s been a help for me.

Michelle Kesil (08:28)
Yeah, absolutely. What have been some challenges or obstacles that you’ve faced in real estate that you had to learn and overcome?

Duke Davila (08:38)
⁓ probably just when I was a new agent, I mean, had some, this will be like, I’ll take this in a two part as a realtor and then as an investor. as a realtor, luckily I had some brokers that were super helpful, helped me out with my first three transactions and then things were pretty good from there. Luckily we have like a broker hotline. I can call if I have any questions with my brokers and get things figured out.

As an investor, I had a property where I used to rent out by the room. That was no bueno for me ⁓ because I made the mistake. I ended up having the person in the master in charge of utilities and then split it with the other roommates. ⁓ It was all good and fine until that person stopped paying me and then I ended up trying to like force them out and then they left.

and turned off the power. So then I had to get a hotel for a couple of people. Just so I can turn utilities back on the next day. And then I had to go clean up all the mess, you know, I have had being a landlord comes with a bunch of different. I mean, at times it’s good, but sometimes it can be bad. You always end up with some bad apples. You just got to.

Learn how to drive on. You have to learn to give people a lot of the benefit of the doubt all the time. And just be super personable with your tenants. People end up liking private landlords versus a property management company. They like that you’re a face that they can talk to and hopefully you can get, if something’s wrong with the house, you can get it handled right there away and immediately. I mean, I’ve had somebody not cut the grass and it,

at the house for like a whole year or something and it’s not even HOA and I got a letter from the city to cut the grass. Yikes. You know, it’s kind of stuff like that. But I’ve made it. I made it do each time. Just just fix the problem and then just drive on. You know, just keep some reserves in your account because there’s going to be good times immediately there afterward afterwards. You just fix it.

Bye.

Michelle Kesil (11:19)
Absolutely. And what are you most focused on solving or scaling to next?

Duke Davila (11:25)
probably, I mean, I acquired two properties within the last six months. So it’s probably, I had to borrow a little bit of money from my second mortgage, to close on one in December. No, to close on one in December. Oh yeah. Cause I had to pay for a fence and extend the back patio concrete, but this one, this place makes me a Kellen. and another one.

I had to borrow half, but that was because I wasn’t, I didn’t, I lowballed somebody on Zillow, you know, you go out there and lo and behold, it finally, it worked out on this one. I got real lucky and a great location. Already had a tenant in place. It wasn’t planning on moving. Didn’t have to do nothing. And I just made money and I immediately had $35,000 in equity in it. I was like, sweet, I’m good to go. So.

think that’s probably it. Maybe just coming up with some of the money sometimes. You’ve got to figure it out or sell something or move something. I think that’s it.

Michelle Kesil (12:25)
Yeah. And what are like your goals for where you want your real estate business to expand into?

Duke Davila (12:33)
I would say goal would be to end up getting my broker’s license. I’m two thirds of the way done with studying for my broker’s license. And I think, it would be to, to start my own, team, within Keller Williams Madison. feel like sometimes some people end up just needing to face somebody, somebody to help guide them, teach them, especially with me being more.

multipurpose with pretty heavy investing and and on the residential side for anybody looking to buy primary residence. I can help somebody out with all that. So that’s my goal. Probably. That’s where I want to scale to scale to probably 20 round of properties. I would like to just I feel like it’s my retirement. So if I can just invest all my money into that, I’m good with it. Maybe use like.

I asked chat GPT about one rental property and said if instead of putting it in your 401k you’d actually make more money over the course of 20 years buying this rental. So I cashed out and I just bought that thing. So I’m good with that.

Michelle Kesil (13:37)
Yeah, absolutely. And how did you learn how to invest and like the strategies that have worked for you?

Duke Davila (13:44)
Trial and error. I actually had a buddy of mine who owned two rental properties and I was finally deciding to rent out one of my houses and I asked him if he had a lease agreement and I still kind of use that lease agreement to this day. I’ve just done some little editing to make it work for myself and all of my rentals. So that’s what’s worked for me.

Michelle Kesil (13:46)
⁓ shit.

Yeah, what advice would you give to someone looking to get started as an investor?

Duke Davila (14:17)
Don’t be afraid to give up your personal space or financial gain. Rent out a room. Rent out a room, buy a house, rent out a room. That is the quickest and easiest way. Even if you’re just renting an apartment, rent out a room. People always say it’s easy to borrow somebody else’s money, use somebody else’s money to make money. It’s way easier if you already have some money.

Michelle Kesil (14:21)
You

Duke Davila (14:42)
I mean,

I’m able to use money for my second mortgage to end up investing. if you’re using like, this is just from my thought, using a private money lender may not work. If you’re using 100 % of funds to end up investing, it’s kind of hard to end up getting any type of profit margin. It just depends on the area. Around here in Huntsville, you’re not going to get that profit margin only using somebody else’s money.

because we are heavy with investors over here. So you either got to have the money for the down payment and that’s where you, because I don’t touch anything unless it’s give me a 10 % cash on cash. And that’s what’s worked for me. But I would say if you’re able to do that, save up, get into real estate, get your license so you can use your commission towards your down payment or lowering the price of the house. ⁓ If that’s something that you’re interested in as well, that’s a great way to…

kind of save some money and that’s more so why I ended up getting my license and then I just was like, ⁓ I like this. I’m saving money and I can make some money. So ⁓ I think that would be my advice.

Michelle Kesil (16:29)
Yeah, and where do you think most people go wrong or make mistakes?

Duke Davila (16:33)
not not being a verbal enough or communicating enough with their tenants, not vetting their tenants enough. Granted, life can happen. I, one of my tenants that I just kind of had to evict, he was a doctor and he had a 580 credit score because he just got a divorce. I was like, man, I get it.

He made $100 an hour. I was like, looks good to me. I was like, I get it. was like, life happens, people’s credit tanks. You just went through a divorce, but then more life happened. Then he lost his job and there was his mother’s caretaker. And then I think she passed away. Life got ahold of him. So it ultimately didn’t work out for the both of us. So sometimes you can’t vet for the future. I was good with that with even with lower credit because he made.

substantial amount of money. I was like, I’m good with that. So sometimes it’s just all about having great communication with your clients whenever it comes to the vetting process to try and wean them out. Because as a private landlord, you can let some more things go. And a lot of people want to give you more of a story of why this is happening and that.

But you can make more money because at least you’re the one that’s returning the phone calls. People are willing to pay more for a private landlord because you actually answer the phone or reply to their emails whenever they’re throwing in an application process. And I’ve kind of done that with a couple of tenants with kind of lower credit. I was like, hey, we’re going treat this just like a car dealership. I was like, if you got lower credit, your APR is going to be higher. And I was like, I’ll charge somebody else an extra $100 a month because they want to get in.

⁓ Because they tell me more about their situation. I was like, okay, well then I can understand that versus like if they have continuous evictions, you know, it was just based off of like maybe medical bills or something. Then it may potentially let that slide, especially if their income is there already. So, but that’s it.

Michelle Kesil (18:25)
Thank you.

Yeah, absolutely. That makes sense. Thank you for sharing all of that.

So before we begin to wrap up here, someone wants to reach out, connect, learn more about what you’re up to, where can people find you?

Duke Davila (18:43)
They can actually find me on Instagram. I am rentdurilter. I’m also with Keller Williams Madison over in Madison, Alabama. Or they can shoot me a text or give me a call. It’s 334-470-6266. So that would be a good way to find me.

Michelle Kesil (19:04)
I perfect well appreciate your time and your story. Thank you so much for being here.

Duke Davila (19:09)
All right, thank you much. I appreciate it.

Michelle Kesil (19:10)
And for the listeners tuning in, if you got value, make sure you have subscribed. We have more conversations with operators like Duke who are building real businesses and we’ll see you all on our next episode.