Real Estate Investing for Beginners: How Rental Properties Can Build Financial Freedom

Josh Yeatts (00:00)
You can put, three and a half or, five percent down as a just coming in you’re buying something that, like I said, if I had started out, if I’d have known the starting out, I would have rented out rooms and in my house and made that mortgage payment and saved the money I would have been using for a mortgage to buy other rental properties.

Cody Crabb (01:50)
Welcome back to the Real Estate Pros Podcast by Investor Fuel. I’m your host, Cody Crabb, and today I’ve got Josh Yeatts with me. Josh is a buy and hold investor in Danville, Virginia, building a rental portfolio with the goal of creating enough freedom to step away from his day job. Thanks so much for joining us today. I really appreciate it, Josh.

Josh Yeatts (02:08)
Yeah, glad to be here.

Cody Crabb (02:10)
So the very first thing that you mentioned as we started to talk today was kind of what your goals were. I found it interesting because a lot of people when they come on this podcast, they talk about like what’s your strategy, what’s your plan, what’s your what do you do? But one of the first things you mentioned to me was like why you’re doing it. So I’d love to hear a little bit about your background and kind of the why behind what you decided to do.

and how you got into the real estate business.

Josh Yeatts (02:38)
Okay, sure, yeah. So like I had said, we had talked about I, I grew up in a household where my family owned a mobile home park. So I was always around tenants coming, paying the rent. And I would have to help out with anything broke, I would have to help with it and mowing the grass.

All these different things that I would be involved with and I saw it firsthand, but originally I didn’t want to have anything to do with it. I didn’t

Cody Crabb (03:08)
It’s

usually one or the other, isn’t it? I knew what I wanted to do since I was a kid or I will never do this forever, yeah.

Josh Yeatts (03:16)
Right. So I kind of ran from it. But, as I got older I started, you know, having children and I have six kids, one in the Marines, but I have five little ones at home. All five that are at home are under the age of eleven. And the more I thought about it, I was like, I really just want to have something that allows me to, if I want to go to the beach for the week, I don’t have to

Ask a boss like, hey, can I have the week off? I don’t have to, try to finagle, my work schedule and lose hours at work. I just wanted something that, I could say, hey, it’s not necessarily that I’m not working, because obviously there will be times where I need to step in and do certain things or even acquiring new properties, I need to be able to,

do the negotiations on that. But I wanted something I didn’t have to clock in, clock out every day. And that’s I’m pretty close to being there.

Cody Crabb (04:12)
That’s great. I love it when I talk to people who kind of do the goal first and then work backwards from there. They’re like, Well, I want my life to look like A, B, and C, so I have to do, what do I have to do to get there? So when you picture real estate giving you this freedom, what’s the finish line? Is it just having the

the ability to say yes and no to what you want. I mean, what do you see as that finish line?

Josh Yeatts (04:34)
Well, the more I’ve kind of gotten into it, the more I’ve actually grown to love it, surprisingly. So I actually enjoy owning rental property now. I enjoy going to the closing table and getting the keys to the next property, even fixing it up. I feel like I’m putting my stamp on it, my blood, sweat and tears into it, and then, turning around and

buying the next one. I don’t know that there necessarily is a finish line, so to speak. One of my goals is to take these properties that I have and be able to hopefully divvy them out to six children at some point in the future and they can

take over the reins and hopefully they won’t be as hard-headed as I was.

Cody Crabb (06:07)
Like, no, Dad, I want nothing to do with it. No, yeah. I think that there’s something to be said for that. Cause I think that there’s so many things about real estate that that like that work so well with this, like the legacy part and the fact that you can maybe provide something even when after long after you’re gone. I love this. I love the line that there may not be a finish line. I talked to a lot of people that are kind of

neck deep in real estate and stuff and they’re like 68 years old and they’re like, I’m never gonna really retire because they just something about something about being able to be involved in stuff is just really appealing. And I think what you said is really the key there, which is you can choose whether or not you do it. You can choose when and where and if you want more deals or no deals or if you want to sell or hold or whatever. So I’d love to hear, for someone

who’s a little earlier in the process. Tell me about what does a good deal look like for you now? your market is maybe a little bit unique in the fact that it is somewhat rural, I would say. I don’t know the area personally, but you were kind of mentioning a couple of prices and I was like, that’s gotta be some pretty rural stuff. Like we’re talking like five-figure houses

Yeah, in some in some cases. And I would love to know kind of a a little bit about your market, what you’re looking for, and why you’re looking for it.

Josh Yeatts (07:26)
So we live in a kind of a unique area because up until a few years ago, houses were really dirt cheap. I’m talking, you could get them for 40,000, 50,000. And they’re starting to go up more and more because we were blessed with a casino that Caesars casino that just opened a few years ago.

And so now the houses are starting to pick up, you’re starting to see less of those. But I really like honing in on either finding something around seventy thousand, or if I’m gonna go much over that, I’d rather just shoot for a hundred thousand. And the reason I have come to learn is I can get a DSCR loan. And at that hundred thousand mark, my lender

will let me do 15% down. And so I can do, 15% down rather than 20% down. But it really takes a lot of like, really digging and looking to find, those, houses somewhere between 70,000 and around a hundred thousand that I really look for. And I try to stick with my buy box of two bedroom, one bath, single family homes.

I’m in the market for some multifamily now, but so far it’s been two bedroom, one bath, single family homes that I just kind of like I said, I either find them on Facebook, find them sometimes on Zillow. But sometimes my realtor will just call me and say, Hey, look, I have this listing that just popped up you might be interested in. It hasn’t went on the market yet, so it might be a good time to grab it.

Cody Crabb (09:08)
So walk me through the math on a hypothetical one here. Like let’s say you’re looking at one around this hundred thousand dollar mark. What has to be true about the property and the rent, besides maybe that buy box of the two bed, one bath, like you said, for you to be like, Okay, this is a good deal. Like how much can you what percentage of rent do you look for? I mean, I’d love to know just kind of how you make these calculations.

Josh Yeatts (09:29)
Yeah, yeah. Well, so when I’m looking for one, obviously, the location is very important. ’cause, I’ve come to find that, I can charge around here anywhere from, if it’s a two bedroom, one bath, I can charge around somewhere around a thousand to twelve hundred a month.

And I kind of put that in my mind that if I’m buying it for 70,000, I’m getting the payment’s gonna be low. But I keep in my mind, this is gonna be something I’m gonna refinance and hopefully pull out some cash for the next deal where I don’t have to, save up a bunch of money, and pull out, phone cash. So I look for those properties around

the 70,000 mark. And I make sure that, that whatever I do to it, I can increase that value enough to hopefully pull out, maybe twenty or thirty thousand for the next one.

Cody Crabb (10:26)
Yeah, so okay, this is really good. I think when people think about flipping, they think of either the one extreme or the other. They think of like dude comes in, fills in the holes in the walls, does the old paint can in the cupboard trick to make it look all new, ever thinks it’s all new, and then we do you add a couple things and that’s it. And then the other extreme is like you’re basically remodeling from tip to bottom. So I’d be curious to know like what would you be

your advice for someone who’s kind of looking to flip, like what are some high value things that you can do quickly to really increase that value right away? Yeah.

Josh Yeatts (11:02)
Well, of course, paint just makes everything look, a hundred percent different, I always make sure that whatever I’m buying, I like to find it where the AC, the HVAC is, newer. I like to find one that the plumbing and most of the big ticket things, the roof is,

in pretty good shape. All I have to do is go in and paint, maybe, new countertops, maybe paint the cabinets if they’re in decent, look decent, I may have to, replace some cabinets. But just kind of, the typical things of that nature. One thing that actually makes a big difference, believe it or not,

Is replacing the receptacles and receptacle plates that make it look a lot different because if you go in a house and everything looks great, but it has the old two-pronged receptacles that have been painted over a dozen times and there’s the plate covers are it just believe it or not, it makes a big difference. if you just go in and just replace all

those receptacles and the plate covers, that freshens it up along with the trim and the paint.

Cody Crabb (12:50)
Yeah, and I mean those are like literally, go in there with a nail gun, you could do it in a few hours, really. Like, I mean that’s the kind of stuff I like to hear ’cause it’s simple stuff that is you’re not like, papering over something that you shouldn’t be or something. You just are adding a you making it look so much better with just this minimum amount minimal amount of work. when you when we talked about you starting out, when we were kind of before we started recording here.

you mentioned something interesting to me. I’d love to dive into kind of how you actually got your foot in the door. You had obviously you had the ability to kind of step in because of the real estate connections you already had. But I would I really liked the strategy that you used to kind of get the fur those first couple things off the ground with family.

Can you kind of give us a little bit of a sneak peek there and kind of for people that are kind of thinking maybe I can’t do this or something? This seems like for someone that is just barely starting out, this something like this could be a great option for you to kind of get your foot in the door.

Josh Yeatts (13:52)
Yeah, I’m a firm believer like there’s always like a way. you may not know what that way is, but it the way is there. And so, for me, I was literally took the first house that I bought, of course, as we were talking, took the first house that I bought and I turned it into a rental. And then I just kind of kept going from there. But this past year,

I had a family member, my grandparents, that, they’re on up in age and they were like, Josh, we own our house straight out. we don’t have a mortgage on it. And they said, we want to find something that’s no maintenance.

I bought a house and we turned the basement into an apartment and you guys have your own apartment, you have no maintenance,

can just you do as little or as much as you want to do and I’ll rent your house out. And it kind of turned into this crazy thing where my parents were like, because the house is over four thousand square feet and has it’s another wing to it and I’m like, they said, well we want to move in too. And they said we can, you can take our house and rent it out. And they put both of their houses in,

my LLC name, but you know they said you can just rent these out and let that make the mortgage payment.

Cody Crabb (15:06)
So for somebody who’s listening who’s just getting started, maybe they think I don’t have the money or resources to do this for a long time. I’m not going to be able to afford to do anything with real estate for a really long time. What would you tell them to look at in their own situation? Where are there maybe some opportunities for them that they may be missing?

Josh Yeatts (15:24)
Well, there are a few different things that I would consider. One thing that I’ve actually done, just about every year when I get my tax money back, I put that toward and of course with having six kids we get a decent, tax return most years and I look to take that and put that but

I think one thing you need to do is just invest in yourself. Invest in the knowledge that learn everything that you possibly can while you’re saving up. So that when you do have that the money to put down and of course it’s more than just putting, fifteen or twenty percent or sometimes it’s more than that, but

it once you do have that amount to put down, you already have the knowledge and the wisdom to be able to, more or less be able to say, I’m making a good decision here. And then there’s other things too, like, I tell every person that’s in their twenties, 18, 19, 20, even in their 30s that they’re single,

Try to buy a house and rent a room out or buy a duplex if you’re able to or a triplex if you’re able to and rent those

Cody Crabb (16:40)
So yeah, I totally see what you’re going with that.

Josh Yeatts (16:47)
You can put, you know, three and a half or, you

just coming in you’re buying something that, like I said, if I had started out, if I’d have known the starting out, I would have rented out rooms and in my house and made that mortgage payment and saved the money I would have been using for a mortgage to buy other rental properties.

Cody Crabb (17:03)
Yeah, it makes a lot of sense. Well, this is I think this has been great for our listeners, especially those kind of starting out. Speaking of starting out, you mentioned that you have a YouTube channel where you kind of talk to people kind of in this arena. Tell me a little about that and what you talk about on there.

Josh Yeatts (17:19)
Yeah. Well, so about a year ago, I was thinking to myself, I wish there was a, especially if like, 18 year olds, 20 year olds, and I’m sure there is some platforms that, speak to, that eighteen year old or twenty year old that does not know what to do, where to start, in terms of not just real estate, but more just life in general, like finances.

And I said, I’m gonna start a YouTube channel. It’s called Next Gen Wealth with Josh. And I said, I’m gonna start this. I’m going to just talk to people about, everything from like, the habits that you make that maybe get you closer or further from your financial journey and or

even things like, buying your first house or, saving money, just all these different topics that, I know a lot of young people were not taught these things growing up. They were, just kind of neglected, and

Cody Crabb (18:13)
Half

the time their parents didn’t know him either. I read people where they’re like, I learned how to do all this stuff and I was looking at my parents, like, what the heck were you thinking? we could have had so much more if we just so I think that’s a great way to look at it, is that there’s this can not only be helpful for you but for your family going back however far,

Josh Yeatts (18:29)
Absolutely.

Cody Crabb (18:31)
Well that’s great. So one more time, what was the name of the channel?

Josh Yeatts (18:34)
It’s called Next Gen Wealth with Josh.

Cody Crabb (18:38)
Awesome. We’ll go ahead and throw that in the description so people can check it out. in the meantime, Josh, thank you so much for giving us some great advice today. This has been really interesting. Yeah, man. And thanks for giving us some of your time. And listeners, thanks for giving us some of your time as well. If you liked this episode, make sure you don’t miss the next one. And we’ll see you next time. Josh, take care. We’ll catch you later.