February 23, 2024

A 36% return on your FIRST rental property? In today’s housing market? That sounds almost impossible. With more and more inventors struggling to find a cent of cash flow and home prices still so high, how does a real estate rookie walk away with a deal most investors could only dream of? The answer lies within Danielle Daly’s strategy, and it’s one that most people would be too picky to repeat. But, if you have the ingenuity to do what she did, you could live for free in an expensive market, collecting some killer cash flow every month.

Before this cash cow of a deal, Danielle was a burnt-out hospitality worker who quit her seventy-hour work weeks to make $30,000 per year as a waitress. She wanted the pay of a nine-to-five, without the soul-crushing time commitment so many jobs expect. So, she left sunny Florida on a whim, and headed to snowy Denver, only to end up at…BiggerPockets. She couldn’t resist the real estate bug and got her sights locked on her first property.

Danielle spent months looking for the right layout, at the right price, with the cash flow potential she needed. Half a year or so later, she looks back on her first purchase as one of her best financial decisions ever. In this episode, you’ll hear how Danielle turned $30,000 into a half-a-million-dollar property in a pricey market, how she gets paid to live in her own house, and the one thing that helped her achieve investing success faster than the rest.

Ashley Kehr:
This is Real Estate Rookie episode 287.

Danielle Daly:
The number one thing hands down that allowed me to be successful and purchase my first house hack was going to networking events. The more you hang out with and meet people who are in the same industry as you, you’re going to become similar minded and you’re going to see what’s possible when you’re around people who are doing the things that you want to do. So that’s what I focused on.

Ashley Kehr:
My name is Ashley Kehr and I’m here with my co-host, Tony Robinson.

Tony Robinson:
Welcome to the Real Estate Rookie Podcast, where every week, twice a week, we’ll bring you the inspiration, motivation, and stories you need to hear to kickstart your investing journey. And as always, we’ve got another really amazing story for y’all here today. But today’s guest is a little special, a little different from our normal guest where it’s actually someone who works at BiggerPockets. So we got Danielle Daley on the podcast today, and she’s got just an amazing story.

Ashley Kehr:
Yeah. So she talks about where she was before she worked for BiggerPockets, and just the mindset of trying to figure out her quarter life, midlife crisis, or quarter life crisis I guess it would be called. I think it might be relatable to you if you are stuck in a job that you dislike or maybe you are in between jobs or careers because you don’t know what you actually want to do with your life. I think this would be a great listen if you are in that kind of scenario.

Tony Robinson:
Yeah. Danielle also talks about, and this is probably my favorite thing that I heard throughout the entire episode, was just the power of her network and how she consistently leaned on people that she had met at meetups or online or wherever it was to mitigate some of that fear that she had about taking that next step. I think if there’s anything you take away from today’s episode, it’s really that step about how do you leverage your network. And then she also gets into some nitty-gritty at the end about her rinse by the room strategy and how she’s able to really maximize her returns by leveraging that strategy. So overall, just a lot of really great things that Danielle had throughout this episode.

Ashley Kehr:
And then she also shares with what’s next. So what does she have planned for her next investment and then also the vision five years down the road.

Tony Robinson:
All right. I also want to give a shout-out to someone by the username of Joey1982. Joey lefts us a 5-star review on Apple Podcasts that says, “I love listening to the show and often listen to past episodes when I’ve run out of new episodes. They do a great job of presenting fundamentals and specific concepts in an easy to digest way.” Joey, we appreciate you. And for all of our Rookies that are listening, if you have not yet left us an honest review on Apple Podcasts or Spotify or wherever it is you’re listening, please take. It literally takes two seconds. Leave that honest rating and review because the more reviews we get, the more folks we can reach. The more folks we reach, more folks we can help.

Ashley Kehr:
Yes. And it keeps me very happy so I don’t have to be crabby to Tony that you’re talking to a monotone, the reviews are bad, you need to size it off.

Tony Robinson:
Yeah, our boring banter.

Ashley Kehr:
Yeah.
Danielle, welcome to the Real Estate Rookie Podcast. Thank you so much for taking the time to join us today. Can you start off telling everyone a little bit about yourself and how you got started in real estate?

Danielle Daly:
Absolutely. Thank you so much for having me. I could not be more thrilled to be here. Gosh, a little bit about me. That’s a lot to unpack, but-

Tony Robinson:
“Where do I start? What childhood trauma are we trying to unpack today?”

Danielle Daly:
I will spare the details on childhood trauma. No, so as far as how I got started in real estate, I actually used to work in hospitality. So it was a pretty long road to get to real estate, but I ended up just not being happy with what I was doing and I was just being overworked and underpaid and just generally unhappy with where my career was heading. So I ended up just making this transition and actually working towards getting my real estate license, which kind of was a bit of a fluke. Although I loved real estate, kind of being an agent was something I thought I wanted. The further down the road I got as far as pursuing my license, it just didn’t really kind of suit me.

Tony Robinson:
Danielle, can we just talk about that for a second? Because I know there’s a lot of new investors who think that in order to become a real estate investor, maybe you should get your license first. And I feel like we see this question get asked a million times around like, “Do I need to get my license to get started?” So walk us through why you thought that was the path initially, and then what changed your mind.

Danielle Daly:
Yeah, I think that is the place people start, right? You think real estate, if you don’t know a lot about real estate, you think being an agent. That’s just the first thing that pops to at least my mind and I feel like a lot of others. But I went down that road and just realized I want to be involved in real estate. I like the concept of investing and I like the concept of owning real estate, but I don’t know if I want that to be my career. I don’t think I want to necessarily be kind of… Like, agents are on call. That is a demanding job, right? When you’re first getting started, that’s the grind. And I was on the grind. I’m like, “Do I want to switch from one grind to another grind?” Not necessarily. But I ended up just realizing, “How do I get involved with real estate without necessarily being an agent?” And that’s when I actually found the job at BiggerPockets. And to say that spearheaded my development would be an understatement, but working here just opened up the world of real estate and the possibilities.

Tony Robinson:
Yeah. So you’re a unique guest, Danielle, because you’re also an employee of BiggerPockets. Just really quickly, can you tell folks what your role is here at BP?

Danielle Daly:
Absolutely. So I am an account manager on the advertising sales team. I’ve been here for two years now. I think it’s two years as of next week actually. Yeah, so just I sell advertisements and sponsorships. It’s been very exciting just being on this team in general.

Ashley Kehr:
Can you talk about how BiggerPockets has actually opened your eyes to becoming a real estate investor? I think a lot of people don’t even understand that investing in real estate is an achievable thing. So what kind of made you realize once you found BiggerPockets that you could do this?

Danielle Daly:
So aside from the support and just the tools and resources and shameless plug of BiggerPockets just being an awesome source for people who are interested learning about real estate, I think the biggest thing is just being around people who are interested in investing and seeing what they are doing and just being inspired by the fact that they are working full-time jobs. They have families, they’re living normal lives, but they’re also investing on the side and they’re able to make this their life’s goal of achieving wealth through real estate. And so it’s not just working at BiggerPockets that really got me interested in and more engaged with the whole real estate community. I think it’s also the networking and the ability to go to networking events and attend our meetups that we have through BiggerPockets and just external meetups and becoming friends with people who are into real estate. Just surrounding myself constantly by people who are involved with real estate, I think, has been the biggest change for me getting involved.

Tony Robinson:
And Danielle, I love that breakdown because I think everything you just said is something that any person listening can expose themselves to. Obviously, you’re in a unique position because you work for BiggerPockets, but the building the community, the surrounding yourself with the people who are going on that same journey, that’s something that anyone listening to this podcast can go ahead and replicate. But I want to take it back to before you joined BiggerPockets, give us a little bit more insight into what you were doing. You said that it was hospitality. Did you love hospitality so much you said, “Hey, I want to own the businesses that are doing hospitality”? Were you angry and upset? Just walk us through how you go from this hospitality lifestyle to what you’re doing now with BiggerPockets and being a real estate investor.

Danielle Daly:
Yeah. So just hearing you say, “Did you love it so much?” It makes me cringe because no. No. I fell into hospitality. And from all the people I’ve met in that field, that’s kind of the general consensus, is people just end up falling into it and it’s easy money and it’s easy to move around and to grow. So I’ll take it back. I was in college, I was like every other college student ever not knowing what I wanted to do with life. I was a psychology major. So I knew I loved that, but didn’t really want to end up in that field. So during my college years, I worked as a server, as a cocktail waitress, as a banquet server. Literally everything in a hotel you could think of I did. And so when I graduated college, I’m like, “Oh, wow, I have no idea what I want to do with my life. So I’m just going to continue along the trail of hospitality management” and I got a job as a sales and catering account manager at a hotel.
So got a little bit of sales experience, worked in the admin office instead of on the floor as a server, which was cool. But I worked that job for about a year and a half, and I’m just like, “This is not it. I am not enjoying this. I am working all the time. I don’t feel like I’m getting paid fairly.” It was just everything about it that I didn’t love. So I’m like, “Let me just try out one more hospitality job. Let me give it one more go” and I was a food and beverage manager. So a bit of a different portion of the hotel, but still within a hotel. Worked that job for a year.
When I tell you that was the most stressful job I’ve ever had in my entire life, I can’t even relay that over this interview right now. I don’t know how to express how crazy it was. It was 10 to 12 hour shifts, six days a week. I was working 70 hour work weeks on average. I was managing… Oh my God, I think there were 60 people under me, something absolutely ridiculous. I was told by someone that I looked up to, one of my, I guess, self acclaimed mentors at the time, and he said, “Look at the five people above you and see in your industry of course, if they are doing something you can see yourself doing, you’re in the right place. If you do not what they are doing, you are in the wrong place.” And I would just look around at work and I’m like, “Wooh! This is also not it. This is not what I want to be doing.”
So I ended up quitting that job because I was so stressed out, still very lost, still not knowing what I wanted to do whatsoever. I actually quit that job to become a server. So I sort of demoted myself to take myself out of this stressful 70 hour work week situation to become a server again. Of course, it didn’t feel great to be a manager and then all of a sudden go back to serving. But I did that for a while just because I needed space to thank. And during that time, I was a personal development junkie of trying to start a podcast and starting a blog and doing all these random things to just see what sticks. I was in Toastmasters and thinking, “What if I was a motivational speaker?” Just all these ideas that I feel like I had the space to actually think about when I wasn’t working my life away.
But then long story short, I got fired from that serving job because I, literally right after leaving manager, go to serving, gets fired, and I’m like, “All right, I am lost. I having a quarter crisis, a quarter life crisis right now. “So that happened, but then our friend COVID, our old lost friend, COVID, happened. That kind of spun up my entire life where during that time I was thinking, “What can I do that’s beyond serving? Because not to downplay serving, it could be a great job, I just knew it for me. I could just feel in my heart like, “This is not it.” And so I ended up pursuing getting my real estate license, going back to our conversation earlier. And I thought, “This could be cool. What if I was a server and I got my license and I could make some extra money and maybe get into real estate in this way?”
And then the universe happened and I got an opportunity to move to Denver because one of my good friends, she had a room in the house, she was renting. It was kind of random. It was just, “Hey, do you want to come move? I know you’re kind of figuring out your life right now. What if you figure it out in Denver instead of Florida where I was living?” And I ended up making that move. And during that time, that’s when the wheels were spinning. I knew I wanted to be in real estate, but not as an agent like we were talking about. But that’s when I found the job at BiggerPockets. And that’s when things just started to fall into place as far as me kind of taking this risk and moving. And then a couple months later finding this job at BiggerPockets. And then real estate just sort of developed from there in my life. But it was a rocky road. It really was to get there. But as soon as I realized working at this company could help spearhead my development with real estate, that’s when things just took off.

Ashley Kehr:
I think that your story is going to be very relatable to a lot of people that are in that position of, “I hate my job. How do I get out of here?” Or they’ve kind of transitioned out of what they thought was going to be their lifetime career and now are trying to figure things out. “What’s the next move? Do I move to Denver, market BiggerPockets?” But Tony, I’m interested when you worked at your corporate job. So when Danielle mentioned that her mentor had said to her, “Look up at the five people above you. Do you want any of their jobs?” Did you ever have any kind of moment like that where you looked and you were like, “Yeah, I want to be the CEO” or anything like that?

Tony Robinson:
So I literally wrote that down, Danielle, when you said that because I thought it was such a profound statement-

Danielle Daly:
Really?

Tony Robinson:
… because I found myself feeling the same way where… This happened to me twice. So the company that I worked at, they were always kind of reorganizing, “laying people off” and adjusting their org charts. It happened to me twice where every single person between me and the CEO was fired.

Danielle Daly:
Oh my God.

Tony Robinson:
It happened twice. So think about that fear of like, “Oh my God, do I want to go higher?” Because every time I see someone higher, they’re working more like you said, they have more responsibility, they have more stress, and they’re on the chopping block. So I was actually offered a promotion a year into that role and I said, no. I was like, “I’m happy where I’m at. I appreciate you guys believing me, but I’m happy where at where I’m at.” It was that second go round where I finally accepted that promotion and I ended up getting fired two years later.

Danielle Daly:
Oh, my God.

Tony Robinson:
It’s like the writing was on the wall, right? But there’s this idea of like we are so… I think it’s so ingrained in us from such an early age that you find a good job, you climb the corporate ladder and you don’t feel like you’re progressing if you’re staying at the same role. And just me being who I am, like I’m someone who’s hungry for achievement, I’m someone who’s hungry to get better, being in that same role almost felt like I was doing something wrong because I hadn’t moved up at that company yet, right? So there there’s this dynamic that we have to fight where it’s like, if you are in a role where you’re happy, where you feel like you can do it with your eyes closed and now that gives you the freedom to maybe allocate more time towards building your real estate business, sometimes a smarter decision is to say no to that promotion because it allows you to focus on other things.

Danielle Daly:
100^%. And honestly, kudos to you, Tony, for… The one thing as I was listening to your story, is you’re following your gut and not necessarily logic, right? You’re following what you think is the right thing, because logically, take a promotion. Someone wants to give you a promotion and more money, you take it right, right?

Tony Robinson:
More money. Right.

Danielle Daly:
More money. That’s more money, less problems. Not always the case. But that’s awesome that you also knew you had a larger vision for yourself in the future and it’s okay to not necessarily take every opportunity that comes your way if it’s not the right one for you. So that is awesome.

Ashley Kehr:
One other thing that you mentioned too was that your management job was the most stressful job you had ever been in. The first thing I thought about was, here you are now working a W2 job and building your own wealth with real estate. And that is less stressful than working for somebody else who’s like… Okay, worst case scenario, something happened at the hotel. Ultimately, it would be on the owners or whatever. That’s their business, that’s their building, that’s their property. But everybody is so ingrained that it’s their responsibility as employees, which it makes people, great employees, that they do care.
But with your real estate, if something bad were to happen, it would fall on you. You are the owner. And real estate is less stressful than it is working a job building wealth for someone else. I just think that is so impactful for everyone to listen to, is that going out on your own is scary and it can be a risk going out and buying properties and things like that. But in Danielle’s situation, my situation, Tony’s situation, it is less stressful than working for somebody else. Carrying on that stress, that responsibility that you are responsible to someone else, I think is also a big issue.
But Danielle, now that you are free and clear from that stressful job and has put it behind you, let’s talk about your first real estate investment, how you felt comfortable taking that leap into your first one.

Danielle Daly:
Absolutely. And such a good point, Ashley. Yeah, as far as moving into this first deal, things started to progress about a year into me working at BiggerPockets. I just started asking questions of like, “I’m talking real estate 101 for dummy’s questions, like, “How much do I need in my bank account the day that I close on a deal? What do I need? What sort of budget should I be thinking of? What are the expenses when it comes to buying a house?” I knew none of this. When I say none, I mean none. Someone said CapEx to me at a real estate meetup, and I’m like, Yeah, absolutely. CapEx.” And I had to go to the bathroom and Google what is CapEx. Capital expenditures for those who don’t know.
So yeah, I was very new. So it started there, how much money do I need to save? Awesome. In my mind, I wanted to save 40K. I did not save 40K. I think I had… I think it was exactly 37,000 I had in my account when I went to buy my house. I could have done it, I think, with 34, 35 at the minimum and still felt comfortable and still had money afterwards. So that was number one. How do I save this money? How long is it going to take me to save this money just so I feel comfortable going into a purchase of a home?
So I set my goal, I ended up saving $37,000 and then I started looking for houses and obviously reached out to an agent and a lender and went down that journey of asking around and going to meetups and just seeing like, “What are the steps? How do I go about this?” So yeah, I ended up embarking on searching for homes for about two months. I looked for about 30 houses, I think. Yeah, at least 30, and ended up finally funding the one after two months. But that was the gist of this first deal. I’m happy to dive in a little further.

Tony Robinson:
So a few clarifying statements or questions or both, I guess. So first I don’t want people to listen to this episode and say, “Danielle, of course you were able to do it. You worked for BiggerPockets, which is the largest real estate education company in the world world. Of course you were able to do this.” But when you talk about your ability to ask some of these questions, it’s not like you were coming to me or to Ashley or to Brandon when he was here or to David and to all the hosts of the podcast. That’s not what it was, right? But you were just now a part of this community and you were leveraging the entire community to get these answers to these questions. Is that a fair statement of how things went?

Danielle Daly:
I’m really glad you clarified that, Tony, because yes. So I’ll even back it up more. As far as first getting into the entire real estate network, love BiggerPockets, they’re fantastic, but they weren’t doing this for me, right? They weren’t saving the money for me. They weren’t analyzing deals on weeknights and weekends. They weren’t attending real estate meetups and reading the books and listening to the podcasts. They just provide the tools. It’s there if you want it. If you want to end up reading and researching and doing all the things, that’s on you. The number one thing hands down that allowed me to be successful and purchase my first house hack, in my opinion, was going to networking events. Not BiggerPockets related networking events just to clarify. External events. I was going to meetup.com and I was checking out what events are happening in the area and I was going at least twice a week to different meetups.
One thing I want to really make clear, because I’ve heard this from people in the real estate community just getting started, is they feel a little awkward or they feel a little funny going to these meetups because they don’t know a lot and they feel like they don’t have a lot to provide or a lot to give or teach to other people. When I went, I was listening and I was asking questions and that was it. I had nothing to provide to anyone. I didn’t have a lot of knowledge or insight yet into real estate. So my goal as someone who was still new to Denver, might I add, is to make friends. I just wanted to make friends with people who had a common interest as me.
So I would say at least 80% of my conversations were personal and maybe 20% were real estate. That is pretty accurate as far as how the conversations went. I would just go and meet people. The more you hang out with and meet people who are in the same industry as you, you’re going to become the people around you. It is just inevitable. You’re going to become similar-minded and you’re going to do similar things and you’re going to see what’s possible when you’re around people who are doing the things that you want to do. So that’s what I focused on. I didn’t focus on real estate knowledge at first.

Ashley Kehr:
I think that there’s a couple things to say, a general stereotype about real estate investors and going to a meetup, is that if there is an experienced investor there, usually they’re genuinely excited to talk to somebody who’s just starting out. And it gets them like, “They’re more than willing because there’s no secrets in real estate.” Every investor shares what they’re doing. The only exception is if they’re trying to sell something at that meetup and they realize that you don’t have a house that they can sell you insurance on, then yes, they may kind of veer away from any conversation with you. But real estate investors in general are very willing to share knowledge. I think that’s such a great part of the real estate investment community. And then just go there to listen. Just like Danielle said, that you don’t have to chime in, you don’t have to try to sound like you know what you’re talking about.
My business partner, Darrell, has been thrown into these rooms with a super experienced real estate investors way above my level. Every time I’m just, “Just listen. You don’t have to say anything. Just stand there.”

Danielle Daly:
That’s it.

Ashley Kehr:
“No one’s even going to know you’re there.” But it’s like you just soak up so much knowledge. And now it’s been over a year and a half that he’s traveled with me to these events and he is like… I will listen in on him talking and he’s talking about what he knows and he feels comfortable now. That took him a year and a half to get to that point. But a big part of that was, yes, he’s gotten experience as a real estate investor over the years, but also he would listen at so many meetups, so many conferences, so many events as to what people were talking about and he never ever tried to make it sound like he knew what he was talking about. If he didn’t know, he didn’t say anything, or he would admit he didn’t know something, or he would tell them to go ask me. But I think that’s something too.
And I think, people, if you are continuing going to the same meetup, same conferences, being around the same people, I think you’ll be a lot more respected too if you don’t try and engage and just say whatever to be engaging and that you kind of just sit back and listen and ask your questions too, 100%.

Tony Robinson:
I just want to share one tip because before I became Tony from BiggerPockets, I’d like to go to meetups also. What I would do when I walk into a room, and this is before I have my first-

Ashley Kehr:
So you don’t like to go to meetups anymore now that you’re Tony from BiggerPockets?

Tony Robinson:
No, not what I meant. I just mean this strategy doesn’t work as well now because most meetups that I go to, people tend to… Anyway, that’s not what I was trying to say.

Ashley Kehr:
Yeah, I know. I know.

Tony Robinson:
But before, when I would go into a meetup… And same, I was like an inspiring investor who didn’t have any deals yet. It can be intimidating walking into that room, but my trick was, you come in, whatever, write your little name on your name tag slap it on your chest, and then just find a group of people. People tend to cluster in little groups at meetups. Just pick a group, any group, whichever one seems to be having the best time, walk up and say, “Hey, do you mind if I join you guys?” And 10 times out of 10, they’re going to say. And then once you get into that circle you say, “Hey, my name’s Tony. What brings you guys here tonight?” Or, “Where are you at in your investing journey?”
And just those two statements, “Mind if I join you guys? Where are you at in your investing journey?” that can allow you to network in pretty much any meetup, in any room with any group of investors because people are always willing to share. But there’s that fear that you have to be able to provide a bunch of value, and really you’re just there to have conversations.

Ashley Kehr:
And Tony, I do this. When people say that, “Oh, can I join your circle?” I always say, “Yeah, we’re talking about this.” And I’m sure a lot of other people do the same thing too. If somebody asks to come and join the conversation, there’s somebody that will catch them up on what they’re talking about or whatever that is.

Tony Robinson:
Or what I’ll do is like, “Danielle, have you met Ashley?” if I’m already talking to Ashley. And now Danielle, you’ve immediately made a connection with this other person, right? So there’s so many ways to kind of network. I also love your point about the people that you surround yourself, they start to rub off on you. I had never seen Tommy Boy before I joined this podcast, and now it’s one of my favorite movies from that time period. So there are some benefits there.

Ashley Kehr:
Okay. So Danielle, you’ve been to your events, you’re ready to jump in, you go to… What was that? 30 houses that you looked at? Tell us about that first one.

Tony Robinson:
Well, I’m sorry, before you answer that, Danielle, because I don’t know if you mentioned this yet. But you went to 30 houses, but did you have a specific strategy in mind as you were kind of going through these different homes? Were you planning to flip? Were you planning to wholesale? What was the goal?

Danielle Daly:
Yeah, great question. So going into this, I just got out a notebook, wrote a couple things on a sheet of paper, tried to have my parameters, and then I told my agent and we got started. So these parameters were a four to five bedroom house, sub $500,000 for the home. I wanted it to be outside of Denver metro because I didn’t want to pay Denver pricing, but I still wanted to be 15, maybe 20 minutes max outside of Denver. I didn’t care if it was south, east, west, north, that didn’t matter to me. It could be any city that was just on the outskirts within a 20-minute radius. So that was really it.
And then I didn’t know necessarily how many bedrooms I needed to cash flow at first. I think I just said four to five bedrooms and went with it. But the goal that I did have in mind is, if I purchase a home and I rent out the rooms and I spend less than $600 on my portion, that is a win, right? It’s Denver. I’m consistently told that it’s hard to cash flow in the Denver area, Denver metro. So I didn’t even care if I cash flowed. I just wanted to own property and spend less than 600 bucks because that was cheaper than any rent that you can find here anyway.

Ashley Kehr:
I think that’s very important to highlight that that is a win and that it’s not you have to live there for free for zero. If you are paying less than what you would pay to live somewhere else, that is a huge win.

Danielle Daly:
Exactly. Yes, great thing to point out. My agent did a really good job at making that pretty clear. Not saying like, “You’re not going to cash flow. You’ll never get it,” but just making me understand, “What do you want in the house? It’s kind of a mixture of appreciation. You don’t necessarily have to cash flow because think about when you move out, if you’re spending 600 when you’re there, but then you move out, let’s say you break even after all expenses when you move out and then you potentially have an appreciating asset that you now own and you can move on and house hack on the second one afterwards.” So it was just understanding the reality of the situation was really helpful.
But I will say once we started looking at houses, the four bedroom homes were just not really cutting it. I was having to spend a little bit more than 600 for a four bedroom house with only renting out three rooms by… Oh, rent by the room, house hacking is my strategy. I probably should have mentioned that. So yes, definitely planning to rent out every room. But I realized the five bedroom mark as far as the cost of the home and the ability to potentially cash flow or even break even was becoming more of a reality. As we started digging in and understanding interest rates, the cost of the home, expenses, things of that sort, and then of course the rent I could get in specific areas. So then we dialed it back after maybe, I don’t know, five to 10 houses. We dialed it back and I said to my agent, “Let’s look at only five bedrooms. Now I want it to be five bedrooms. Now I know I can potentially break even and I can see the end result here.”

Tony Robinson:
I think that’s an important point. I’m so glad you brought that up about… You initially said four, then you transitioned to five. What you had, Danielle, was a buy box. You said, “I want this many bedrooms within this radius, this price point for this strategy.” That is your buy box. And we encourage people on this podcast, all of our listeners, to establish their buy box. But here’s the thing, when you’re doing this for the first time, a lot of your buy box is based on assumptions. And as you go out there and you actually start to look at properties, you actually start to analyze and even submit offers, you start to either disprove or prove those assumptions. And for you, you thought that the four bedroom was the sweet spot, but as you started to look and analyze, you said, “You know what? Actually it’s not the four, it’s the five that makes more sense.”
So I think the lesson here for all of our Rookie audience is that you don’t have to be perfect when you initially come up with your buy box. You just have to have something to kind of point you in the right direction so you’re not looking at every single property that hits the MLS anywhere. You want to be able to narrow in and focus down. And as you start to take more steps, you can refine it further and further. And it seems like it worked out well for you. So after these 30 properties, Danielle, did you kind of find one that eventually checked all the boxes for you?

Danielle Daly:
So this is an interesting one. When I found… Or not even found. When I first toured my current house that I bought, I did not know it was the one at all. It sort of reminds me of dating. You don’t know what the second you meet someone, you got to kind of date the house a little bit, see if it works, right? Run the numbers, whatever pros and cons list. So I didn’t know. I actually remember the day that I saw that house, I left and I was still thinking of the house and I realized the one downfall that kind of made me hesitant was my home has a negative slope. So a negative slope is basically there’s a basement, but the outer contour of my home, the sidewalk caves in a little bit towards my house. That is not good for a house because rainwater, snow, ice melt, things like that can potentially leak into the home, which is obviously not good. So that made me really nervous.
Now going back to networking, I had met a friend through a networking event. We had been friends for almost a year at this point. He is a structural engineer. That is his job. So lo and behold, I’m struggling, trying to figure out if this is the right house to buy and I think, “Oh, my friend, he’s a structural engineer. Let me give him a call.” I called him, told him the issue, sent videos and pictures, and I’m like, “What do you think? I am stressed out. I’m scared. I really like the house. The numbers work. I think I can make this happen, but this is making me nervous. Is this a structural issue? Is this something I should be concerned about?” He put my mind at ease and he looked it over and said, not at all. He was telling me about vertical versus horizontal, little cracking in the foundation, how much of a slope or elevation this is and where, and just doing his structural engineering thing. And he just said, “Absolutely, go for it.”
So this seems small in the grand scheme of things, but I tell him to this day, “That made up my mind to buy this house because I was scared.” I don’t know if I would’ve gone through with this if I didn’t have someone who was in the profession to be able to put my mind at ease. And that one little thing was from going to meetups and networking events. I wouldn’t just have a structural engineer in my phone. Who knows a structural engineer if you’re not in real estate? They’re not as common. So that was just a really cool thing to be able to call a friend and just feel better about the deal.

Tony Robinson:
I think things… And this is for anything in life really. Trying to achieve something that you’ve never achieved before oftentimes seems impossible, it seems scary, it seems dangerous, it seems risky, and all you think about are all of the worst ways that this thing can go wrong. But the fastest way to overcome those obstacles is to meet someone that’s already done it. They talk about the four-minute mile. I don’t know if you guys have heard this story. But for years, for centuries of the existence of manhood, they thought that running the four-minute mile was impossible. I think the guy’s name was Roger Bannister. He was the first guy to break that record, and then a month later someone else did it. So for the entire existence of humankind, it was impossible to do this one thing. Then one person does it and 30 days later someone else does it. And now you got people doing it all the time, right? I could probably train to get down to a four-minute mile if I wanted to because the perception of what’s possible has changed because now we know someone that’s done it.
So when you’re a new real estate investor, I think one of the best things you can do is find people, is meet people who are not always 10 steps ahead of you, but just one step ahead of you, someone who’s taken just one step further than you. Because then when you get to that step, they’ve just done it and it’s recent and they can give you all the ins and outs about how to do it. So if I ever want to buy a house anywhere in Western New York, I’m going to call Ashley and I’m going to say, “Ash, help me out with this.” Right? And if Ashley ever gets stuck on a short term rental, she’s probably going to call me and say, “Tony, here’s this thing going on with this guest. What should I do?” So the networking thing, Danielle, I love that you keep coming back to this. There’s so much power in it, but I think so many people undervalue the strength that comes from having a good network of folks.

Ashley Kehr:
On our Rookie Replies, I literally changed some of the questions so that they’re tailored to what I need to know about my short term rentals. Danielle, I really want to go into the numbers of this deal. When was this timeframe though that you actually purchased this property?

Danielle Daly:
So the closing date was September of 2022. Is it? Yes, we were in 2023. So September 23, and I started looking in July of 2022. So it took me about two months. When I found the deal, interest rates were kind of teetering from crazy COVID, low interest rate times quickly climbing. So I was getting a little stressed. It was changing literally by the day as far as when I was looking to when I actually closed on the house. But we ended up closing with a 5.1. I say we. I closed with a 5.1% interest rate. I think it was at about a 5.5 at that time and I had a $5,000 seller concession that my agent and I ended up negotiating. So I bought down the rate with that.

Ashley Kehr:
Oh, okay. Can you talk about that a little bit as to that kind of option of how someone would go about buying down their rate to get it lower?

Danielle Daly:
Yes. So what is cool about a seller concession is you are literally just getting money from the seller for you to use towards whatever you would like. If I wanted to use it towards just general closing costs or to use it for something with improving the home or if I wanted to use it to buy down the rate, it’s just free money to you to use. Now the cool thing about a seller concession in my case is there were actually two deals on the table. Or sorry, not two deals. There were two offers on the table before I closed on my deal. Offer number one was an FHA loan. They were offering 400… What was it? $489,000, which was the list price for the house. So flat rate, at asking, FHA loan. So what we did, I was at a 3% conventional, which for those that don’t know that exists, it totally exists. So it’s literally less money down than an FHA loan, but you’re still at a conventional loan which is beneficial for getting a deal done. It’s just more…

Tony Robinson:
Less friction.

Ashley Kehr:
You don’t have that inspection.

Danielle Daly:
Yes. Yes, you don’t have the inspection. And less friction was a great way to put it, Tony. Yeah, so it’s just easier to get a deal done with a conventional loan versus FHA. So I had the 3% conventional. And so my agent and I were talking, he’s like, “Let’s just offer 5K over asking with a 5K seller concession.” Now what that does is it’s a win-win. It is a win for me because I’m getting a $5,000 concession to buy down the rate. And as an investor, I don’t really care about the asking price. I care about my monthly rate. I care about my numbers. Am I able to break even or cash flow or spend less than 600 bucks, whatever my goal is. So it’s a win for me and it’s a win for the seller because they’re getting $5,000 more in asking.
So it’s kind of just a nice win-win. And so we offered that. And with that, in addition to the conventional loan, my offer ended up getting accepted over the FHA. So it’s just that, like a… It seems weird to just kind of finagle numbers ever so slightly to make it work in your favor, but it did. So seller concessions can be really powerful.

Ashley Kehr:
Would you have known how to do any of that without the assistance of your agent? Because just this episode, the couple times you’ve mentioned your agent or things like that, it seems like they were a very valuable tool to you.

Danielle Daly:
Absolutely. So I would not have known what a seller concession is. The whole process was just scary. You’re just signing your life away on this contract. I’m like, “Yeah, $500,000. As if I have that kind of money. Absolutely, sign me up for a 30-year loan for half a million dollars.” So no, I did not know at all. My agent was extremely paramount in that.

Ashley Kehr:
How did you find your agent?

Danielle Daly:
Through my network. So it was through people at BiggerPockets that have used him through people in my network at meetups. Just generally through networking. Yet again, my shameless plug to networking for the 10th time in this episode.

Ashley Kehr:
That’s what I was hoping the answer was going to be. Not, “Oh, I just Googled and found the first person and called.”

Danielle Daly:
No, no. Definitely networking.

Ashley Kehr:
Okay.

Tony Robinson:
But BiggerPockets does have a great resource. What is it? biggerpockets.com/agentfinder, I think is the URL.

Ashley Kehr:
Exactly.

Tony Robinson:
So you guys there, you can get a bunch of investor friendly agents to help you, let’s say one that Danielle’s agent helped her.

Danielle Daly:
Yep. Super useful tool.

Ashley Kehr:
What about the funding of this? So you said you got a conventional loan with only 5% down.

Danielle Daly:
Yes.

Ashley Kehr:
Did you go and get pre-approved? How was the lending process for you? Because I’m assuming here, but you’re doing ad sales. Was this a commission based job and then before that as a waitress? I don’t know how much income I shown, but…

Danielle Daly:
Yeah, yeah.

Ashley Kehr:
With tips and everything. But how did that work out as from going from the management position to working as a server and then working to BiggerPockets in, I’m just assuming, commission based?

Danielle Daly:
Yeah, so you assumed correctly. It is definitely commission. It’s salary plus commission. This was an entire uphill battle, let me tell you. This was probably my biggest aha moment that kind of freaked me out and almost stopped me in my tracks. So when I was first looking for a lender, I had been told by my network to talk to several people. “Shop around, talk to several lenders, don’t just find one on Google and pick one.” Shop around, talk with people on the phone, tell them your situation, ask questions. The whole nine yards, right? Just trying to find a lender.
The first lender that I talked to was actually someone I met at the gym just through word of mouth, just telling people I’m looking for a house. He’s like, “I’m actually a lender.” So we set up a call and I told him I had only been working at BiggerPockets at the time for a year. So we end up doing the pre-qualification. He gets my information and all my income and everything he needs. And so he ends up telling me that you do not qualify for anything more than, I think, it was like 350K for a house because we can’t count my commission since I have worked there less than two years. So he was basically telling me, “You need to hit two years for more than half of your income to count.”

Ashley Kehr:
Danielle, can I ask you one thing too? You had lived in Florida before. Was the cost of living lower where you were living in Florida than moving to Denver?

Danielle Daly:
Yes.

Ashley Kehr:
Or was it equal, you say?

Danielle Daly:
Yes.

Ashley Kehr:
Okay. So-

Danielle Daly:
No, yeah, definitely a lot less.

Ashley Kehr:
So most likely your salary in Florida too was like if you showed part of that as an income. I just want to show if somebody is thinking of making they’re relocating or changing jobs that if maybe you have this great job now, but the loan officer could go back and say, “Okay, you had this job for three months but your last year’s tax return only shows this much,” which may have been a great amount in that city, but maybe not have carried over to a more pricier place of living like Denver.

Danielle Daly:
Yeah. So the serving job that I was in before moving in Florida, I think I made $30,000 in 2020, which is not livable even in Florida, just to be transparent of what I was making. This is money that was fully made through taking that plunge of moving here and taking a risk and living in a market that is obviously more expensive, but there’s also opportunity to make more. So risky, but it paid off. But as the lender was looking towards my financials, we weren’t even looking at that serving job. He was trying to base it off of the year that I was at BiggerPockets because that serving job was so low that income was not helping me at all. So we were trying to look forward because I had made a good amount during that year at BiggerPockets.
So that freaked me out. That was one of those moments where I just thought everything through, I’m like, “Am I not going to be able to buy a house? Am I in over my head?” I think I cried to my parents over the phone just kind of super upset and I’m like, “My dreams are crushed. It’s never going to happen.” And I end up just the next day I’m hustling, getting back on the phones, just trying to call around to different lenders. Finally, I end up talking to a lender that I found through word of mouth and he’s like, “Yeah, we can get a year of commission. No problem. Or we can make your commission count for only working there for a year.” So I’m like, “Amazing.” So we ended up making it work, but it was definitely slightly soul crushing to hear that in the moment, to hear someone telling you, “You can’t do this,” I’m not going to be able to buy the sort of house I want with three 50 in Denver, it’s just not going to happen. So yeah, when you’re told no, you got to keep going.

Tony Robinson:
Yeah, there’s so much value in going to more than one person.

Danielle Daly:
Oh, yeah.

Tony Robinson:
Because every lender has a different skillset. Every lender has a different specialty. Every lender has different resources at their disposal that they can use to help people get qualified or different loan products that they know about. So I think one of the best things that a rookie investor can do is talk to as many lenders as they possibly can and be open and upfront to say, “Hey, I’m just shopping around right now trying to understand what your options are, but just know I’m also talking to a few other lenders to try and get the best possible loan product for my unique situation.” There’s nothing wrong with doing that as long as you’re open and honest.
Danielle, I want to talk a little bit about the rent by the room strategy because it’s definitely a way to maximize profitability on a traditional single family residence, but there’s also I think some challenges that might come along with renting by the room, especially when your house hacking and renting by the room because now you’re sharing your space with multiple other people. So a few questions that come to mind to me first are, when you go to find these people, how are you marketing to find those people? What’s your screening process to find those people? And then once everyone’s inside of the house, what kind of ground rules are you putting into place to make sure that you guys aren’t driving each other crazy kind of sharing the same living space?

Danielle Daly:
Yeah, great questions. I’ll start from the beginning here. As far as finding tenants, this might not be the way for everyone to do it, but like word of mouth for me, right? I’m outgoing. I like meeting people. So for me, I was telling people everywhere I went from the gym to these meetups, to my Toastmasters group, just literally telling everyone at work that I was buying a house and that I was looking for tenants by X date.
So I was at the gym and I ended up… I was friendly with this one guy and we would just talk and say hello. I saw him one day and told him this. He’s like, “I actually know two people who are looking to move from Fort Collins to Denver. I think they’re looking to move asap, so let me connect you with them.” Long story short, I found my first two tenants from this friend at the gym. Literally. I’m not even exaggerating this whatsoever. They have been the best tenants that I could ask for. So that was number one, was just telling people before I even made a listing. I did not own the home. I was telling my friend, “I am in the process of closing on my house and so I’m going to start looking for tenants.” So be proactive. Start posting and looking before you even close. Worst case scenario, you just take down the listing, so might as well start early.
Then number two or phase two, I should say, of finding tenants, because I still have two more rooms to fill, I posted on Roomies, Facebook Marketplace, HotPads which is kind of a sub-sector of Zillow if I’m not mistaken, because you can’t post rent by the room on Zillow, which I learned and I did not know until I went to post. You can’t do that on apartments.com either apparently. It has to be a whole unit or a whole home and not just a room.

Ashley Kehr:
Yeah, I didn’t know then either.

Danielle Daly:
Yeah, my post got taken down right away. So if anyone knows otherwise, please reach out and let me know. But for my purposes, it was not. It was not allowing me to do so. So out of all of those, Facebook marketplace was hands down the best lead capture tool, I should say. I think I got about 20 to 25 people reaching out. And this was during fall, approaching winter, which if you’re in the real estate community or you’re new to it, winter’s not the best time to find tenants usually. It’s not impossible. It’s just not the most popular time for people to move, especially in a state where it snows and it’s cold. So yeah, so Facebook marketplace was the win for me. So I got all these leads coming in. I have been told and did my own research and realized I could be as picky as I wanted to with the tenant that I accepted because I was the primary and living in the home currently.
Now, if you do not live in the home, you end up facing some fair housing laws and you need to be careful with who you’re accepting and why or who you’re not accepting and why. So I ended up just to kind of be a little picky and trying to choose someone who was just in a similar phase of life as me. So I would reach out to these people. Or I’m sorry, I would reach back out to them after they reached out to me. I would set up a phone call. We’d have a quick phone call. If it went well, I would ask them to come see the house and we would set up a day for them to come and visit. If that went well, then I was using this tool called Rent Ready. They’re fantastic. It’s a property management tool. You can send out pre-qualification sheets, you can send out applications, and the person literally just presses a link, pays for the application and fills it out without you having to do anything aside from just sending it to them initially.
So super easy tool, and that’s what I used. I would just go through that, get that pre-qualification, see if their application was accepted. Eventually, two of them worked out.

Ashley Kehr:
That’s awesome.

Danielle Daly:
Yeah, it worked out great. One of them was actually not even living in Denver, so she could not see the house. So she was very easygoing. She literally could not. We did a little Zoom call, but she couldn’t get there in time to come see it before actually signing a lease. So we just did… Yeah, we just FaceTimed and I just showed her around and that was it.

Tony Robinson:
Just one follow up question. You mentioned the phone call. Just what did you ask? Did you have a templated set of questions you would ask each person? Or was it just like, “Hey, let’s get to know each other.” Were you looking for something specific or was it a free flowing conversation?

Danielle Daly:
So this is where my friend Google came in. I went to Google and I said, “What questions should I ask a potential tenant?” I think I also went on BiggerPockets and I asked BiggerPockets on the forums. I also asked around with a few friends and just said like, “What should I be asking? I don’t really know what to ask.” So that was really… And I kept it mostly casual just to kind of get to know them and just feel if I felt like it would be a good fit. But yeah, I literally just googled and asked people and came up with a few specific questions, wrote them on a notepad and had these calls and that was it. I didn’t overthink it too much.

Tony Robinson:
I feel like ChatGPT could probably help with that too.

Danielle Daly:
Yes.

Tony Robinson:
We just talked about this in our last episode. “I’m screening tenants to move into my house while I house hack. What questions should I ask them” and you probably get some good questions from that.

Danielle Daly:
Literally, I’d have a whole script call. I know exactly what to say.

Ashley Kehr:
Danielle, I did want to know what’s next. So have you done another deal? Are you looking for another deal? Has your strategy changed at all? Are you pivoting? What does the future hold?

Danielle Daly:
So I would say for this next deal, I’ve been thinking a lot about it, but I think I’m going to just do another house hack, right? It’s just for me, it was such a low risk, high reward investment in my opinion, because you have to live somewhere. You have to pay rent or not if you house hack. But I think I’m going to just do something similar. However, I would like to diversify and look in a different part of town. So I live in North Glen, which is north of Denver by about 15 minutes. North Glen is amazing for breaking even to cash flowing. I am cash flowing actually about $250,000 right now. So I’m now basically financially free.

Ashley Kehr:
Wow, awesome.

Tony Robinson:
That’s awesome.

Danielle Daly:
So I might as well quit my job.

Ashley Kehr:
What will it be when somebody moves into your room?

Danielle Daly:
I’ll probably cash flow about 800 to 900 after all expenses at this rate.

Tony Robinson:
That’s awesome.

Ashley Kehr:
Wow. That’s awesome.

Tony Robinson:
Yeah, that’s amazing.

Danielle Daly:
Yeah, give or take. Somewhere around there.

Tony Robinson:
And then what did you have to spend to put into that property to purchase it?

Danielle Daly:
So my purchase was about… I think I spent a little over 20K, like 21,000 to 22,000, and then I put about 7 to 8 grand in renovations. So let’s say in total about 30,000.

Tony Robinson:
Yeah. So that’s a 36% cash-on-cash return once you move out. So that’s pretty darn good.

Ashley Kehr:
And think about the appreciation too in Denver.

Tony Robinson:
Totally. Yeah.

Danielle Daly:
Exactly. Exactly. And that’s kind of the note that I was going to make with diversifying and potentially looking for a different area, is places that are a little more west, a little more to the mountains or a little closer to Denver, they have a higher chance of appreciation at a higher rate than where I’m currently living, but I’ll be able to cash flow where I’m currently living when I move out. So it’s kind of this give and take of, maybe I want to get something that’s slightly different just so I feel like I’m diversifying even though I’m looking for the same strategy as far as that five bedroom house hack rent by the room.
I think it’s also worth noting that house hacking is a comfortability skill, right? If I had all the money in the world and it was not an issue, would I want to live in the house by myself? Absolutely. I would love to have an office and a yoga room and just a storage room for no reason. That’d be great. But when you think of the benefits of house hacking and how you can build wealth through such an on hand simple, not easy, but simple way of building your wealth, the comfortability scale, you accept it. It’s okay to live with four other people and you’re only doing it for a year or two. So it just makes sense.

Ashley Kehr:
Well, Danielle, this has been great. Thank you so much for sharing all of your knowledge with us. We do have one last segment for you before we close out the show, and it is the Rookie Exam.

Danielle Daly:
Ooh.

Ashley Kehr:
So the first question is, what is one actionable thing rookies should do after listening to this episode?

Danielle Daly:
Ooh, I love it. Okay. Depending on how rookie you are, I would say go to a meetup. If you have not been to one, go attend. It’s going to be uncomfortable. You’re going to be nervous. It’s going to be a little awkward too, but just go and be consistent. And then number two, for you rookies who are potentially looking at houses, you have the money saved, you’re maybe just a little bit scared, just take action and understand that everything in life is a risk. Like you just being alive is risky. You’re not making it out of here alive, so might as well just take some risks and go for it because there’s not a lot of downside to what can happen. I mean, the end of life, like money is just money. You want to be more proud of the things that you took the chances to pursue and things that were exciting and new. I don’t know. Just take some action and don’t be afraid because life’s just scary enough, might as well try to go for your goals and dreams.

Tony Robinson:
All right. Question number two, what’s one tool, software app, or system that you use in your business?

Danielle Daly:
I’m still pretty… I’m a noob if you guys haven’t gotten that already, right? I’m one property and I’m still a new peer. I use a lot of Google Sheets, but I think the one tool that I’ve used that’s been really helpful is Rent Ready. And that’s the property management software. It’s just made it really easy to manage tenants. The rent is automated. I, on the first, instead of being afraid of having to pay my rent or pay my mortgage, I’m just getting these notifications, “Rent in unit A, paid. Rent unit B, paid.” It’s a nice feeling to get those automated emails flowing through.

Ashley Kehr:
Okay. And the last question is, where do you plan on being in five years?

Danielle Daly:
In five years, it’s a lofty goal, but I see myself being financially free. And financially free for me, it’s not being a millionaire, it’s just where all of my passive income is exceeding all of my expenses so that I am deciding everything I want to do in my life. If I want to keep working, if I don’t want to work, if I want to travel, et cetera, I’m in full control over my finances and I don’t necessarily have to work if I don’t want to, though I probably will still want to. But yeah, financial freedom in five years. I don’t know how many properties, but at least five.

Tony Robinson:
Awesome. Well, let’s jump to our Rookie Rockstar before we close out today’s episode. And today’s Rookie Rockstar is Giovanni Lisi. Giovanni says, “First house hack in the books. Last week I bought my first investment property that I’ll be owner occupying.” It’s a three unit building with a detached garage. One’s vacant and the few Giovanni’s already started renovations on to make it a little bit more modern, but he’s anticipating that with some improvements, cash flow would be around $900 per month while still living there. “And if I ever move out, it jumps up to $2,200 per month.” Yeah, he was looking for the next one. So Giovanni, congratulations to you for crushing it with the house hack.

Danielle Daly:
Giovanni, you got to get on the show.

Ashley Kehr:
Yeah, really.

Danielle Daly:
He killed it.

Tony Robinson:
That’s a good story.

Ashley Kehr:
Well, Danielle, thank you so much for joining us. Can you let everyone know where they can reach out to you and find out some more information about you or if they want to sponsor the podcast?

Danielle Daly:
Absolutely. So yeah, as far as social media, I would say my Instagram is the most active. So you can reach me on my Instagram, it is daniellefdaly, D-A-L-Y. It’s my last name. And then, yeah, if you’re interested in anything, podcast, advertising related, here’s my shameless plug, reach out to me at [email protected] Hopefully those are two easy handles to remember in an email. But yeah, reach out to me. I’d love to connect.

Ashley Kehr:
Okay. Well, thank you so much for joining us. I hope everyone took away so much value like Tony and I did from this episode. I’m Ashley @wealthfromrentals, and he’s Tony @tonyjrobinson. We will be back on Saturday with a Rookie Reply.

 

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