98: AirBNB Arbitrage, Creative Financing, and Wholesale Lessons with Michael Glaspie
Michael Glaspie had his humble beginnings in Texas. Having been born and raised there, he naturally went to college in-state and eventually joined the military. What was a means to pay the bills became a sort of passion for him, as he rose to become a member of the U.S. Army Special Forces, better known as the “Green Berets.”
However, several years into his tenure, he started to question whether there was something more out there for him. Was service all that he was meant to do?
Sure enough, Mike realized that in order to be able to do more with his life, he had to be able to financially support it. In enters real estate investing. Mike purchased his first duplex with less than $2,000 and inadvertently House Hacked without fully understanding what House Hacking even was.
Along the way, Mike experimented with many different strategies and have come to accept rental income as his main vehicle for financial freedom. By having steady, passive cash flow every single month, Mike is able to supplement his once military income and build his portfolio to scale.
Up to date, Mike is a real estate agent and looks to triple (yes, triple!) his investment portfolio within the next five years. He attributes this feat to the people he surrounds himself with, as well as his continued education because that’s what got him started in the first place.
Our takeaways from our conversation with Mike:
1) “Subject-to”: Term is used when a property is acquired “subject-to” the existing financing. The mortgage remains with the same person (seller), but the title transfers over to the new owner, you (buyer). In Mike’s case, it works well with military members who have to sell a property with no equity (because military members usually move every 2-5 years). That way, they can maintain their credit score, not pay money out of pocket to sell their home, and have a pain-free solution to their relocation.
2) AirBNB Arbitrage: “A sexy way of saying a ‘sub-lease,’ which is a sexy way of saying ‘to rent out a rental.’ ” says Mike. His reasons for implementing this strategy are speed and profitably. In other words, to be able to invest quickly with less capital compared to other popular strategies with just as much, or more, return on investment (ROI). There is enough room for creativity in this strategy that other larger investments don’t necessarily allow because of the red tape involved. While many landlords might not like this idea, there are many benefits to them as well. Some include being able to receive steady income for longer term leases, endure less wear and tear on the unit, and have the peace of mind that the unit is being kept in tip-top shape.
3) Three lessons Mike learned on his first wholesale deal: 1. Don’t be overconfident, always keep the other party’s best interest in mind. 2. Keep out of pocket costs to a minimum. 3. Start with the end in mind. During the early stages of Mike’s real estate career, like we mentioned, he tried many different things. One of which was wholesaling. While it sounded simple enough to him at the time, with hindsight, Mike admitted that he did not make the best decisions on that first deal. As a result, the deal fell apart resulting in lost capital for Mike and housing trouble for the seller. Although he learned his lesson, if he might’ve been a little more cautious, the deal could’ve actually went well.
4) Implement fail-safes. Being involved in short-terms rentals (AirBNB), Mike ensures that he and his team are prepared in case a push were to shove. But this goes for every investment strategy out there all across the board. Whether it be on lease agreements, purchase/sale contracts, or partnerships, just to name a few, have specific terms and agreements in place so that all parties are on the same page, all parties can weather out a storm if one were to arise, and all parties are not put in an uncomfortable or unfair situation during the deal or life of the investment.
If Mike could go back and talk to his 16 year old self, he’d tell him, “Be patient and think about the results of your actions.”
An unexpected benefit of real estate investing, Mike said, was the freedom it grants you. With this business, you can truly work for yourself and be self sufficient.
A piece of advice Mike would tell his friends looking to get started in real estate would be to “Make the first deal… get started as fast as you can!”
Mike recommends using Personal Capital to assist you in all of your financial and accounting needs.
Mike recommends reading The Millionaire Real Estate Agent/Investor and The One Thing by Gary Keller, Jay Papasan, and Dave Jenks, as well as The Compound Effect by Darren Hardy.
If you’d like to get in touch with Mike, visit: www.fivepillarsrealty.com or follow him on Instagram @michael.s.glaspie
Thank you to everyone that has reached out to us to connect them with our trusted real estate agents in their area! And congratulations to those who have even closed deals using our referrals! For those that didn’t know, we can help connect you with real estate investor friendly agents in your area to help you get started investing in real estate. We recently made some changes to our website that we believe will better suit you in your real estate investing needs. For more information, visit www.millennial-realestate.com and head over to the “Start Investing” Tab. Best wishes and see you in the next one!