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In this episode, Mackenzie Shelton, a real estate investor, flipper, realtor, and team leader with the Prairie and Pine Real Estate Group in Nebraska and Iowa, shares her journey in building a successful real estate investing business. Mackenzie discusses how she and her husband got started with their first property in 2019, turning it into a cash-flowing rental with minimal upfront cost.
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Mackenzie Shelton (00:00)
And her son was, we’ll just say kind of a little bit of like a vigilante kind of anti-government type of guy. And when he, when he figured out that the government was going to take all of the proceeds from the sale, except for $5,000, he was like,forget this, like just buy this property from us for $5,000 and like you can have an opportunity to, you know, do whatever you want with it. It was definitely a property that needed some work in a small town called Griswold, Iowa, ⁓ which is a town of, I think of about like maybe less than 800 people ⁓ out in, it’s about an hour away from Omaha on the Iowa side. And ⁓ so I went to my husband and I was like, we’re buying this property. don’t really care what you have to say about it.
And of course he was like, yeah, that’s a great opportunity.
Dylan Silver (02:25)
Hey folks, welcome back to the show. Today’s guest, Mackenzie Shelton is a real estate investor, flipper, realtor and team leader with the Prairie and Pine real estate group in Nebraska and Iowa. She also helps other investors with their portfolios, especially incorporating the BRRRR strategy. Welcome to the show Mackenzie.I always like to talk about the first deal, especially when I’m talking to a realtor fellow agent, because we were talking in the green room before hopping on here. Sometimes it feels like there’s this division between realtors and realtor investors, right?
Mackenzie Shelton (02:57)
Yeah, absolutely. Yeah. So the very first investment that my husband and I bought ⁓ really kind of happened by accident. He always said that he never wanted to invest in real estate. I actually worked in property management before I got my real estate license. He saw ⁓ kind of all of the worst of the worst and the stress that I went through. And he was like, I want no part of that.⁓ And so then when we were kind of presented with this deal in 2019, I’ll kind of explain how wild it was and like how this kind of opened the door for us. So I was actually trying to help a seller sell her property with her son’s help. She was unfortunately moving into an assisted living facility, kind of was in a spot where she was needing to get financial assistance for all of those things.
And her son was, we’ll just say kind of a little bit of like a vigilante kind of anti-government type of guy. And when he, when he figured out that the government was going to take all of the proceeds from the sale, except for $5,000, he was like,
forget this, like just buy this property from us for $5,000 and like you can have an opportunity to, you know, do whatever you want with it. It was definitely a property that needed some work in a small town called Griswold, Iowa, ⁓ which is a town of, I think of about like maybe less than 800 people ⁓ out in, it’s about an hour away from Omaha on the Iowa side. And ⁓ so I went to my husband and I was like, we’re buying this property. don’t really care what you have to say about it.
And of course he was like, yeah, that’s a great opportunity.
Fortunately, he has worked in the construction trades his whole life. So we were able to do a lot of the work ourselves and we basically turn around and rent that property out. We’ve owned it since 2019. We rent it out for $700 a month. So it basically pays for itself every single year. It’s crazy.
Dylan Silver (05:44)
Howmuch ⁓ did you put into rehabbing that project?
Mackenzie Shelton (05:48)
Yeah,less than 10 grand. know, most of it was sweat equity. We kind of, you know, it’s an older home. So we kind of kept some of the originality of it and things like that. So yeah, it’s a heck of a deal.
Dylan Silver (06:01)
What would that home be worth today if it was listed?Mackenzie Shelton (06:03)
between 50 and 60 thousand so yeah.Dylan Silver (06:07)
I when people, I’m perking up listening to this. My ears are perking up. I’m thinking like, okay, you’re buying a home for 5,000. It could sell for 50, 60. How common is a deal like that? Maybe not 5,000, but can you find other deals in Nebraska or Iowa for 50 or 60?Mackenzie Shelton (06:22)
Yes, absolutely. ⁓ So my husband and I specifically on I was mentioning before we kind of got on here, like I’ve kind of helped people find their niche in, ⁓ you know, real estate investing. I don’t think, you know, I mean, probably all of your listeners know this. There’s not one size fits all. Everybody kind of has to figure out what works for them, their risk level, their comfort level, you know, what kind of work they actually want to put into properties and things like that.And my husband and I had been very fortunate that the very first property we ever bought, we kind of figured out what our niche was. And so we actually owned several properties in small town Iowa ⁓ that like the most that we paid for a property was actually just this past fall in October. And we bought that one for 85,000. And ⁓ we rent that one out for 1250 a month. ⁓ So there’s a lot of ⁓ deals to be had.
in small town Iowa and Nebraska. ⁓ As long as you’re about an hour away from like one of the major metropolitan areas, the rents tend to be quite a bit more than what you’re actually buying the property for and even the rehab that you have to do to it. So yeah, that’s been kind of the niche that we’ve found.
Dylan Silver (07:20)
Yeah.Where can you find these? I mean, can you find these deals listed?
Mackenzie Shelton (07:43)
Yeah, actually, most of the properties that we’ve personally bought have been listed properties. ⁓ There was one that we bought off market because we just knew somebody that was looking to sell it was a first sale by owner situation actually in the town that we live in. That was the one that we did the absolute most work to. It was literally just like a shell of a house and my husband and a couple of guys like base. mean, like I’m talking even the foundation was like missing pieces like they had to like go and rebuild the block and everything like that.⁓ That was definitely like one of the biggest projects that we’ve taken on, but you know, we bought that property for 35,000 and put about 50 into it. So still a still a really good deal.
Dylan Silver (08:22)
Now, I think folks are going to be listening to this and saying, wow, I can buy a rental property for 50 to 60,000, $80,000, maybe lower and put in some work into it. What’s some of the hurdles or bottlenecks that people might find, especially if they’re out of state investing in these areas?Mackenzie Shelton (09:17)
Yeah, yeah. So ⁓ typically, you know, most of my out of state investors are looking for somebody else to manage the property for them. That is the one really big gap in a lot of the small town areas is ⁓ if you’re not in a position to be able to self manage them, there’s really only a handful of rental property companies. They are definitely not, you know, there’s a few of them that are really great to work with. ⁓ There are others thatI don’t think I would even trust with my own properties and so I would never recommend them to somebody. So it is a situation where you either have to find somebody kind of boots on ground to be able to help you with a lot of those things ⁓ or figuring out how to kind of piece together some self-management skills. yeah. Yeah.
Dylan Silver (10:05)
On your own, yeah, from outside.think especially where we’re getting with AI and kind of interconnected nature of everybody, this type of thing may be more possible. I think, you know, the communication may be in many ways facilitated or coordinated. People might be able to use, you know, AI tools to do some of this, but then there’s other elements where you just can’t.
replace like for instance, you know, there’s an on-site issue a water leak something like this and you You need someone to be out there like basically tonight unless you have that person on speed dial that is going to take some level of you know, further coordination, right?
Mackenzie Shelton (10:45)
Yes,absolutely. Agreed. Yeah. So ⁓ some of my other investors that have ended up investing in small town Iowa or small town Nebraska, it has been really, really crucial that before we’re even really kind of getting to the point where they’re purchasing a property, we’ve identified some of those companies that can help at a moment’s notice. ⁓
and knowing that they actually do go to that location that you may want to buy in. Because that’s the other thing, know, some of these towns are very, very spread out. You know, there’s a lot of farm ground in between them and some companies are like, I don’t go to that location, you know, that sort of thing. I’ve even run into that as, you know, my husband is incredibly handy.
And there’s certain things that he’s just either not going to have the time to do, not going to be able to do, or maybe doesn’t have the expertise for. And so it’s like kind of finding that person in that moment to make sure that they go to that town sort of thing. So yeah.
Dylan Silver (11:43)
Now, I do want to pivot here, Mackenzie, ask you about BRRR, right? I think BRRR right now is a really successful strategy specific to right now. think over the last several years, it just became a little bit more challenging to be a flipper. I can’t speak for Nebraska and Iowa, but I can certainly speak for lot of areas in the Sun Belt.And, you know, when rates have changed and then you’ve also seen just this influx of new construction, single family, multi-family, but single family specifically, know, fix and flip just becomes a little bit more challenging because you’re competing with, you know, brand new homes that may be, you know, nominally more, but they’re brand new, right? And so, BRRRR strategy does seem to be something that may be more appealing to more people right now.
Mackenzie Shelton (12:30)
Yes, ⁓ definitely true in Nebraska and Iowa, more specifically in Nebraska because Omaha just saw such an increase in prices, you know, from COVID on. And then obviously with rising interest rates and everything like that. ⁓ I do have a few investors over the last like probably three-ish years.have been very successful with the BRRRR method. One of them in particular, they have bought several properties in Omaha and Council Bluffs and some of the small town areas. ⁓ basically they’re using because of course prices have gone up so much, they have a ton of equity sitting in their home. They’re using a line of credit against their own personal property, you know, buying these.
turning around, doing a bunch of work to them and then refinancing them and renting them out. They’re pretty much of the strategy that they’re hanging on to a lot of their properties. I have sold one of them for them and they actually did ⁓ a decent, they bought it and then two years later pretty much sold it after they did kind of the BRRRR method to it, rented it out for a couple of years and then made a decent profit on it.
That’s the other thing that we’re seeing in our area is that people just hold on to property for at least a couple years, they will turn around and be on the right side of that.
Dylan Silver (13:48)
Youmentioned something that I think should get highlighted. know, folks out there, and I think this applies in many markets, could use a HELOC, a line of credit against their homestead, to fund an investment property, refinance that investment property, right? Pay off the HELOC. They still have access to that credit.
Now they’ve got additional capital and then repeat the process and then they can still use that, that HELOC as well if they need it in the future.
Mackenzie Shelton (14:59)
Yep, absolutely. It’s a great, my husband and I have personally done this on a few flips that we’ve done, you know, that sort of thing. It is such a great way to ⁓ be able to not have to come up with your own cash, you know, per se, to be able to finance not only the purchase, but then the renovation costs as well. So, yeah.Dylan Silver (15:20)
Now, when people are waiting for the refinance portion of the BRRR, I’ve never personally done a BRRR, so I love hearing people’s perspective on this. How long from the time that they buy the property, you know, and that they’re owners of the property to the time when they can refinance it, how long typically is that duration?Mackenzie Shelton (15:42)
it just depends on the situation in the property itself. I have had people take, you know, only three or four months for the whole process, depending on how much work needed to be done and, you know, kind of where were they able to buy maybe under market value, that sort of thing. And then on the like the actual refinance part, that only takes about 30 days to complete from start to finish. It’s just like, how long does it take?from the time that you actually buy the property to rehab it, then to refinance it. So yeah, it just kind of depends on the situation. ⁓ The other thing that I personally really like about doing like a HELOC or a line of credit against your own property is you don’t have like super high interest rates, because basically it’s just an interest only payment that you’re making until the project is finished and you can refi it. yeah, the holding costs are very low as far as that’s concerned.
Dylan Silver (16:36)
Now, one of the, I’d say, more challenging aspects of any time you’re investing in real estate, but especially when there’s some level of rehab involved, is you have holding costs, but you may also have a primary ag strategy, especially if it’s a flip, and you realize, okay, well, this either isn’t selling as quickly as I thought it would, or maybe I can’t demand as much. Are you also seeing some level of difficulty with this when folks are looking foryou know, a buy and hold, so rehab and hold, or are all of those issues really assuaged and no longer an issue because you’re looking for a tenant, you’re not looking for an end buyer?
Mackenzie Shelton (17:16)
Yeah, so I would say part of the reason that the BRRRR method has been so successful in our area in the last couple years is because you’re not as concerned about like what is the end product and you’re you’re because you’re just looking to place a tenant you’re more concerned aboutDylan Silver (17:35)
That’s it.Mackenzie Shelton (17:36)
Like, okay, what’s my new mortgage payment going to be and am I gonna be able to make some sort of a profit every month? Like I said, some people that I have helped, they’re happy with just having $100 profit every month, right? And then there’s other people like myself who my goal is to be able to profit $500 on every single property. yeah. So I…Dylan Silver (17:58)
Let’s go.Mackenzie Shelton (18:01)
less risk adverse even than some of my clients are, which is totally fine. As long as I kind of know where their threshold is, I can, you know, advise them correctly. So yeah.Dylan Silver (18:10)
We are coming up on time here, Mackenzie, any new projects that you’re working on and then as well, what’s the best way for folks to get in contact with you or your team?Mackenzie Shelton (18:18)
Yeah, thank you so much. I’m actually working on two things right now. Not necessarily real estate investor related, but I am working on a real estate course that is for real estate agents who are either, you know, probably less than three years in the business or struggling with a lot of consistency in their business. And that’s going to roll out hopefully here in April if I can finish everything up with it.⁓ So you can always reach out to me on Instagram. It’s just Mackenzie Lee Shelton, L-E-E Shelton. Or you can find me on Facebook. I’m public on there as well. ⁓ And then I’m actually also in the process of writing a book. My other kind of ⁓ niche is, ⁓ I want to say motherhood and entrepreneurship and how you can kind of balance all of those things. So ⁓ I’m actually writing a book on how to…
not go crazy as a mother and a business owner and ⁓ Quit being you know such a control freak. That’s basically kind of what the book is about. So
Dylan Silver (19:19)
Mackenzie, thank you so much for joining us today. Thanks for your time.Mackenzie Shelton (19:22)
Thank you.
