Episode 26 - Toughest Challenges in Real Estate? How to Survive it with Sara Aviles

Today’s guest is Sarah Aviles, a real estate investor who has tackled some of the toughest properties. Sarah shares her journey from retail sales to managing multi-unit properties, offering practical insights into real estate investing.

TAKEAWAY 1: Learning from Tough Experiences Sarah’s first big investment was a 12-unit apartment in a dangerous Stockton, CA neighborhood. She stresses the importance of thorough research and using the right professionals. Despite many challenges, including COVID-19, Sarah gained valuable experience.

TAKEAWAY 2: Section 8 and Subsidized Housing Section 8 offers guaranteed rent and regular inspections, providing stability. Sarah's book, "Confessions of a Section 8 Landlord," provides practical tips for managing these properties. Local subsidized programs often offer better support and resources for landlords.

TAKEAWAY 3: Diversifying Investments Sarah highlights the need to balance cash flow and appreciation by diversifying investments. She plans to develop properties in California, focusing on affordable housing solutions. Having a knowledgeable team is crucial when navigating new investment opportunities.

Thanks for tuning in to The BreakThrough Podcast. Sarah Aviles' story shows the value of perseverance and smart investing.

TRANSCRIPT

∎ Teaser / Highlighted Clip

[Sara Aviles] (0:00 - 0:27)

I bought a property solely with credit cards, but it was all because I went into the trenches, really had a trial by fire experience, and it was all during COVID. So we had a property manager to start, and then during COVID, they wouldn't go in the building and we would get squatters because of that because they wouldn't turn the units. It was in a bad area.

So we had to fire the property manager and manage it ourself from six hours away.

∎ Podcast Intro:

[Stephen Husted] (0:28 - 2:16)

Welcome to The Breakthrough with Stephen Husted, the show that takes you behind the scenes with successful entrepreneurs, real estate investors, and other movers and shakers in the business world. In each episode, we'll sit down with our guests to explore their personal and professional journeys, including the challenges they faced, the breakthrough moments that propelled them to success, and the strategies and the tactics they used to get there. Get inspired by new ideas and strategies and get to know our guests on a deeper level.

Join us for candid conversations, powerful insights, and plenty of breakthrough moments. Please help us grow by subscribing and sharing the podcast, and welcome to the show.

∎ Guest Introduction:

Hey, everyone. Welcome back to The Breakthrough with Stephen Husted. Today we're diving into the real gritty side of real estate with Sarah Aviles. Sarah's not your average investor.

She started young, buying her first property at 21, and quickly learned the ropes through hands-on experience with some of the toughest properties you can imagine. Today we're going to unpack Sarah's journey through the challenges of managing a 12-unit building in a notoriously tough area, especially during the strains of the pandemic. She'll share how she handled everything from tricky tenant issues to major management decisions that could make or break an investment.

Sarah's experience offers a deep dive into the realities of real estate that many shy away from discussing. Stick around to get an unfiltered scoop on making it in tough markets.

∎ Podcast Proper:

Sarah.

[Sara Aviles] (2:17 - 2:18)

Hey, Stephen.

[Stephen Husted] (2:19 - 2:19)

How are you doing?

[Sara Aviles] (2:19 - 2:21)

Good. Thanks for having me on the show.

[Stephen Husted] (2:21 - 2:51)

Yeah. This is great. I love it when I start to talk to a guest prior to, and I've had a few that have never been on a podcast.

And they get on and they're so like, and so I try to say, hey, we're just going to have a conversation. There's no structure to it. And some come on and they're having technical difficulties or just unsure of how to jump on a podcast.

How did that feel? I didn't know that this is going to be your first one. So how was this leading up to it?

Because I get nervous.

[Sara Aviles] (2:52 - 3:03)

Yeah. Well, I mean, I do public speaking and stuff, so I'm like, it can't be that much different. It's just figuring out lighting, making sure you have a mic, you know, those important things.

[Stephen Husted] (3:03 - 3:29)

Yep. I saw it. So good old Alex Bikiza.

So we were, we're in a transaction. We just closed on a refinance and he had told me, he's like, oh, you got to meet this lady, Sarah. She just crushed it.

She was at one of our meetups and she just blew the audience away. He's like, I think you should get her on the podcast. I'm like, okay.

And I'm like, pass me your information. So that's how we ended up, how, you know, you ended up on the show.

[Sara Aviles] (3:30 - 3:31)

So yeah. He's a great guy.

[Stephen Husted] (3:32 - 3:33)

Yeah. How did you, how'd you meet Alex?

[Sara Aviles] (3:34 - 3:49)

Through his actual meetup group that he does. So I went and showed up. I was like, it's like a block or two away from my house, so it's kind of embarrassing if I don't show up.

Like, he's like, where were you? I'm like, I don't know. He's like, he's in the house, a block or two blocks over.

[Stephen Husted] (3:50 - 3:51)

Can't use excuses. There's traffic.

[Sara Aviles] (3:52 - 3:57)

Yeah. I can't use traffic excuses. I'm just like, yeah.

I wasn't here today.

[Stephen Husted] (3:57 - 4:00)

Oh, wow. How many, how many have you been to?

[Sara Aviles] (4:01 - 4:21)

I think I've been to three, maybe four. Once he found out I wrote a book, he was like, okay, tell me all about it. I want, I want you to speak.

I want you to talk about it and be part of our speaker series. And I was supposed to be the second one, but I started out being the first person speaking at their group. And I was like, oh, great.

I don't know how this is going to go and what the setup's going to be. So I went into that one kind of blind.

[Stephen Husted] (4:22 - 4:36)

Yeah. I saw a couple of the clips on Instagram from it, so, and Alex has recommended a few guests onto my podcast. Like, he'll just reach out to me and go, hey, you need to get this person on.

I'm like, okay. Which is great. You know what I mean?

[Sara Aviles] (4:36 - 4:38)

Because I'm always looking.

[Stephen Husted] (4:38 - 5:04)

Yeah. He's a good connector. Totally.

Yeah. So I'm eager to kind of dive into your, your story because it seems like you got a lot of cool things going on. Question is, where do we start on this?

You know what? I was thinking of something before we got on. I wanted to start asking some of my guests, especially the entrepreneurs, what, what type of jobs did you have growing up before you got into real estate?

Can we start there?

[Sara Aviles] (5:05 - 5:05)

Sales.

[Stephen Husted] (5:05 - 5:06)

Everything was sales.

[Sara Aviles] (5:06 - 5:17)

Okay. Everything was sales from my first job in retail sales to doing digital marketing, advertising sales. Always been in sales.

[Stephen Husted] (5:18 - 5:22)

Okay. Yeah. That's a, it's a great skill to have in real estate, right?

[Sara Aviles] (5:23 - 5:28)

Oh, for sure. You're always selling yourself, whether it's for real estate or something else, whether meeting someone, you know.

[Stephen Husted] (5:29 - 5:29)

Yeah.

[Sara Aviles] (5:29 - 5:32)

Yeah. Something we do every day, whether we, we realize it or not.

[Stephen Husted] (5:33 - 5:43)

That's true. That's true. So how did that?

So what led you into real estate? And did you start off as a, as an agent first or were you an investor first?

[Sara Aviles] (5:43 - 7:25)

I actually recently got my license two years ago cause I, I was having so many opportunities land in my lap that I just missed out on because I didn't have my license. People were like, Oh, you know, sell my multimillion dollar house. I was like, I would love to, but I don't have my license.

So I actually decided to get that after investing in real estate for almost 10 years. Um, I started, I got obsessed with it when I was in college, actually. I went to school for fashion design under family and consumer sciences and I took a class that was actually, I think it was called how to manage a household.

And I was like, what the hell is this? I'm going to learn about, you know, taking care of babies and like cleaning the house. Why do I have to take this?

It was actually the best class I ever took in college because they talked about investing and how to manage your money. And that's part of it. So he introduced me to different books like rich dad, poor dad.

And once I read that book, I was hooked. I was reading every real estate book I could get my hands on. I mean, what 20 year old doesn't want to be financially free?

It's a very attractive dream. So I was obsessed with real estate, reading all the books I could get my hands on and was determined to buy my first property right after graduating college, which I did at the age of 21. So I bought my first property when I was 21 with the plans to live in it.

And when I could move out and rent that property as my first property, just to get into a deal with as least amount down as possible. And man, every time I did a deal, it felt like I was going to run off a cliff. Like I felt like I was a vomit every single time.

It was just getting past each deal and getting into them and getting more and more comfortable. And so I was able to trade up from my little single family home into a 12 unit apartment complex.

[Stephen Husted] (7:25 - 7:34)

Oh, wait, wait, wait. So, okay. Okay.

So you went from a single family to a 12 unit or just, you jump from that to a 12 unit?

[Sara Aviles] (7:35 - 7:35)

Yes.

[Stephen Husted] (7:35 - 7:36)

There you go.

[Sara Aviles] (7:36 - 7:37)

All right.

[Stephen Husted] (7:37 - 7:59)

So there, that just, that's a good thing to tell the audience about limiting beliefs and knowing that, you know, you have to have a certain way to start and everybody starts a certain way and everybody's on their own journey. But did you feel, what was the difference? Do you feel like they were both similar as far as the deal and how big they were?

Like, did you put the same amount of work in on the 12 unit as you did the single family?

[Sara Aviles] (7:59 - 9:19)

No. Tell me how that process was. Not at all.

So I was a very new investor. I had a single family home with only one tenant ever in it. They were lovely tenants, never had any issues.

And I was like, this is not hard at all. I'm just going to jump right in and buy a 12 flex. I was like, this is so easy.

And then I didn't, I didn't do as much research. I didn't know all the steps that I need to take. I didn't even use a commercial real estate agent.

I used a residential one. So I fell in a bunch of potholes and I had the best education that you could possibly get because I bought a 12 plex in one of the most dangerous cities in the United States in the worst four blocks of that city. So police officers would get shot on this street.

That's how dangerous it was. And I had gone, I'd seen the street, we'd toured the property. It was an anomaly.

It was a beautiful day. There was no homeless in the street. The streets were clean.

It seemed super, super nice. I was like, it looks good. The numbers penciled out.

And then we got into the reality of it. And I was like, oh, well, it's hard to get insurance on a property or property managers tell you they don't work in that area. It's probably a reason why.

But with that said, we learned so much from what not to do that it was able to make me look at other deals and be like, how worse could it be?

[Stephen Husted] (9:20 - 9:21)

Right. From starting there. Yeah.

[Sara Aviles] (9:21 - 9:52)

From starting there. I was like, I gave me the confidence to invest out of state. I bought a property solely with credit cards.

But it was all because I went into the trenches, really had a trial by fire experience. And it was all during COVID. So we had a property manager to start.

And then during COVID, they wouldn't go in the building. And we would get squatters because of that, because they wouldn't turn the units. It was in a bad area.

So we had to fire the property manager and manage it ourself from six hours away.

[Stephen Husted] (9:53 - 10:45)

So much to unpack there. You're telling the story and it's leading into some very similar to mine, too. Yeah.

Well, the big one is I think a lot of new investors will overanalyze and overthink the whole process. They'll consume all this content and read books and do all this stuff, but then they won't take action because they feel like they're just not ready in every avenue. And it really goes to show that it's almost better not to be, to just get going and you're going to learn.

And it really comes down to those learning experiences on your first properties and getting in the trenches and making all those mistakes. And then you just build from that. But that's the big thing where it stops people from investing is it's got to have the perfect scenario to just start to jump in.

And there's never a perfect scenario. I don't care how many properties you have.

[Sara Aviles] (10:45 - 11:30)

There's no enough to be dangerous. I mean, like right now, we were looking at a deal to do like development, like an ADU kind of flip thing. And I'm like, I don't have the money.

Where are we getting the money for this? Like, don't worry about it. Just put a primary resident loan, made the offer.

We get if we get the offer, we're going to find the money because it's a great deal and work our way through it. So it's one of those things like you don't always have all the answers laid out for you. Like we found the property that we bought with credit cards in Indiana.

We saw this amazing deal. We acted within like that hour. We're like, we don't have the money.

What are we going to do? And I was like, well, we have these credit cards. I mean, let's max these out.
Well, we were smart about it. They all were zero, zero APR, zero interest for a year or two.

[Stephen Husted] (11:30 - 11:32)

Yes, that's another story.

[Sara Aviles] (11:32 - 11:38)

Yeah, I use plastic and we were able to buy a triplex out of state entirely on credit cards.

[Stephen Husted] (11:40 - 12:12)

And then so let's back up here, I want to go back to the 12-unit, I'm really stuck on that part right now. You didn't hire a commercial broker. OK, so that's first and foremost.

So let me ask you this. How did you underwrite the deal? Like, how did you know?

Because there are two different types of brokers. Did your residential broker understand how to like underwrite a deal and did?

[Sara Aviles] (12:13 - 12:29)

No, no, I was the one doing all of that. He was just opening the door for me and give me the connection. So the biggest thing that I I had to do all the underwriting myself.

But the big hiccup we had by not using a commercial real estate agent is we didn't know how to do estoppel agreements.

[Stephen Husted] (12:29 - 12:30)

Right.

[Sara Aviles] (12:30 - 12:57)

Well, none of our units had estoppel agreements on it. And the owner gave us numbers that weren't accurate, rent that weren't accurate. So we had all these numbers that we were underwriting that weren't accurate just because we didn't have estoppel agreements.

There was no really enforceable way to go and come back at him for that. I mean, we could, but then it's just a bunch of court fees. So we just had to grin and bear it and move on and take that on the chin as a hard learned lesson.

[Stephen Husted] (12:57 - 13:09)

Right. Right. And so explain the estoppel agreements.

And then and also, did you get a T-12 from that? Was this a tired, old landlord that just did everything kind of?

[Sara Aviles] (13:09 - 13:30)

No, this is a landlord that bought a property vacant. I think it was at auction. So he was flipping it.

And so we didn't realize he was just filling the units with body. So we got it with 100 percent occupied building, but none of them were screened. They were all very poor applications for this building.

[Stephen Husted] (13:30 - 13:31)

Yeah.

[Sara Aviles] (13:31 - 14:39)

So we had to go through and get, boy, but surely put in higher quality tenants throughout the entire building. We did get the financials for the full year, like you were asking, and I was able to get all the rentals, get all the information I needed to do the underwriting. But a lot of it wasn't accurate.

A lot of it was like written on the paper, like scrap. So here's this is what I got. Here's some of the rents.

And they literally wrote it down on just this piece of scrap paper. There was no real good accounting system because they knew they were just trying to fill it and move on. They weren't trying to keep it or grow the building.

And then a lot of the work they did was really shoddy, too. Behind the walls, the electrical systems and stuff like that. So as you get deeper and deeper into a property, you're like, oh, look what they did here.

Look at these corners we cut. So you have to kind of see. So now I'm a little bit more wary when I buy properties that someone bought from auction or trying to flip because I know they're trying to just move it as quickly as possible.

The construction probably was faster than it should have been. They filled it with people that they didn't really care about long term. So that was something that we learned the hard way.

[Stephen Husted] (14:41 - 14:49)

That is, yeah, that's a pretty wild story. And he was basically getting people in there and trying to prove just to get the NOI up.

[Sara Aviles] (14:49 - 14:50)

Yeah, and they weren't all paying.

[Stephen Husted] (14:51 - 14:51)

Yeah.

[Sara Aviles] (14:51 - 14:54)

It hadn't even been a year and they weren't like half a year, they weren't paying rent.

[Stephen Husted] (14:55 - 15:11)

That is really crazy. So what did you do? So then you had tenants, you had squatters, you had tenants not paying.

Then you had to start to do some evictions. Obviously, you weren't making, you were losing money, I would imagine.

[Sara Aviles] (15:12 - 15:54)

Well, actually, once we got into the building, we were able to stabilize it pretty quickly. So we actually still had a pretty hefty cash flow. So the property was making money.

It was just, I felt like the property aged me 10 years, if that makes sense. I lost years of my life, but I was making money. Some of these properties are just not, even if they do make money, they're not necessarily worth it to hold on to just because of the amount of effort and not even effort, the stress it has.

Like we dealt with dealing with drug lords trying to trap out of our unit. We dealt with people putting swimming pools in our unit. I'm sorry, what?

[Stephen Husted] (15:54 - 15:56)

Did you say a swimming pool in one of your beds?

[Sara Aviles] (15:57 - 17:18)

Swimming pool. We were upset they didn't have a bathtub. We had only showers.

So they set up a swimming pool in their unit. I was like, you can't do that. Yeah, some crazy stories.

The other thing I learned too with some of these buildings, you have to be very careful, especially with low income section 8 around your electrical boxes. Because I realized it's a thing where sometimes they don't want to pay their electrical. So they'll go in, break into the electrical box and switch the wiring around so other units pay for their electricity.

So what we had to do is go through every single one of those 12 units, change all the wiring back to the correct unit, one by one outlet per outlet. And then once we got it fixed, we put a jail style door on the basement. Nothing was getting in because we had people crowbarring it open and trying to get in mess with the electrical system.

So that was a really expensive lesson for us. So now with all our properties, all electrical systems are very much contained, like no one's getting access to it because it's a very expensive thing to go through if you have to go and redo all the wiring. Especially if you're using electricians that are going on emergency time.

It's emergency time, they come out, they charge you double, maybe triple what they normally charge.

[Stephen Husted] (17:18 - 17:24)

Yeah, absolutely. This is some really good information. So good.

[Sara Aviles] (17:25 - 17:31)

I feel like people are like, oh, you don't have as many properties as me. I'm like, yeah, but I had them all compacted into one experience.

[Stephen Husted] (17:33 - 20:53)

Yeah, when you were bringing up the electrical part, I was like, and then you brought up something else that there's so much here to unpack. One of my first properties out in the Midwest was in Detroit, East Detroit. And when I bought it, I'm like, 34,000, I'm going to pay cash.

You know, it's going to make 850 a month. I'm like, this is a no brainer. And I did my due diligence.

I cruised the neighborhood, Google mapped and checked, and I knew where it was at. I buy a lot of different big box like Home Depot and Walmart and these things. I'm like, okay, these are legitimate places people could work.

There was a hospital a couple miles away. So I did all my due diligence. I went out to the BiggerPockets conference and they had a Detroit meetup group that was kind of outside during intermission or something.

And so I jumped in on it and people were talking about properties. I go, hey, I just just bought my first property in Detroit. And they're like, where?

And so I tell them and they're like, hmm, how did you pick? How did you pick that part of the block of that street? And I go, well, I cruise Google Maps.

It looked like the nicest of those streets right there. There wasn't as many boarded up houses. And she's like, well, yeah, that's the best block in that area.

That was a good you chose right. And it was a great property in the very beginning. I was like crushing it.

I'm like, okay, you know, this is 850 and, you know, I'm making cash flow, you know, and then I put a loan on it and, you know, still was making great cash flow. And it was like a little mini ATM at a great tenant. It was right during the beginning of COVID.

She moved in 2019 and then COVID started and she stayed in there and then she got out. And after she got out, everything went to shit. It was the it turned into the biggest nightmare I've ever gone through in so many different ways.

Squatters, two squatters. The property has a squatter in there right now that said, came up with a fake lease, somehow got in the house, said that somebody met her there, whatever the case may be. We were able to get her off the long term lease with this quote unquote other landlord.

We got her on our own month to month lease. Okay, so that was step one. We got that and it was just, you know, she wouldn't pay on time.

It's 20 days, 30 days, and now she's not. Now we're in the middle of eviction. I think we got two full months of rent, but, you know, didn't get the water in her name.

That's in my name still, you know, the electrical got stolen so many times. It got broken into so many different times. I think it's a target from somebody in the neighborhood.

I'm at this point where what you just brought up, is it really worth that money to me for the stress that I'm going through? Yes, it cash flows and you can talk about this. People talk about it on social media all the time.

Not saying you can't invest in the Midwest in sketch years. You can, but just understand what you're getting yourself into. It's not cut and dry.

You might make $400 a month in cash flow, all said and done, but you might have these big issues coming up that are going to just wipe out all that cash flow.

[Sara Aviles] (20:53 - 21:27)

Yeah, and then also down to even if you still have the cash flow, if you're the one managing it and getting these calls where you're raking your head, trying to come up with solutions, trying to deal with a police department, like, is that something you really want to be handling? With that said, my property was fine while I had someone else managing it. Like, my property is now in Indiana.

I have someone else managing it, so I don't get any of those kind of calls. And it's that peace of mind. Everyone's like, I talk to them, like, oh, I can just manage it from out of state.

I'm like, yes, you totally can. I know many people could do, but do you want to?

[Stephen Husted] (21:28 - 21:48)

Yeah. Oh, I don't want to and I don't, but I feel like even with a property management company in the mix, it's still a lot of hands on. You know, like right now we're going through the eviction process and they said, oh, we went to the first hearing.

I'm like, okay, what's, what did the attorney say? You know, now I'm like, okay, give me the attorney's phone number. I'm going to call him.

Where are we at?

[Sara Aviles] (21:48 - 21:51)

What about your personality though? Like, are you a really hands on person?

[Stephen Husted] (21:53 - 22:33)

I want, I don't want to be, but I think when you know things aren't stabilized correctly, I think when I know when a property is stabilized and it's running good, I'm kind of like, I step away, but I think I start interjecting myself within the portfolio when I see issues. You know what I mean? Like if I know something's going on over here, I start to pay attention to it more until it's kind of, okay, now it's running good or there's a, you know, I don't know.

There's just, there's some, there's so much to it. So you, you have the 12 unit. You got, where, where's the, where's the 12 unit at, by the way?

Can you say? It was in Stockton, California. Okay.

And you're in California?

[Sara Aviles] (22:33 - 23:04)

Yeah. I'm in California, in Southern California, Los Angeles. Um, so it was, but I grew up in Marin County, so I, I, but I'd never really heard of Stockton, even though I was so close and I didn't really understand how dangerous it was on that street.

And the funny thing was, it was between a property in Stockton or Sacramento. And I was just killing myself for not taking the Sacramento route, which now it's like shoot it up in value. But you know what?

Now I have great stories and I learned a lot from the experience. So you can't go wrong.

[Stephen Husted] (23:05 - 23:13)

You can't go. No, you can. It's like stepping stones.

You know what I mean? Like it really is. So you got the 12 unit and then you have something in Indiana.

[Sara Aviles] (23:14 - 23:24)

Yeah. I have eight units in Indiana. I have it mainly in Anderson and Muncie, Indiana.

So it's about 45 minutes North of Indianapolis.

[Stephen Husted] (23:24 - 23:25)

How's that been for you?

[Sara Aviles] (23:25 - 24:03)

Oh, I love it. It's complete night and day from California. Like it's the most number one landlord friendly state in the United States.

So the rules, I'm more likely to take more risks over there because I know the rules are in my favor. I'm more likely to let in a tenant that I wouldn't in California and give them a chance out there because I know if something goes wrong, I can get them out. So that's a very big difference.

I do specialize a lot in C-class properties, Section 8. And it's a different mentality out there. People actually pay on time compared to California.

It's just a whole different mentality shift.

[Stephen Husted] (24:04 - 24:48)

I feel like that's how it is in Kansas City for us as well. I don't think it's landlord friendly anymore as it was in the very beginning when we first invested out there. And these are some really good points.

Picking a landlord friendly state can make or break your business. Like that's just the reality of it. You invest in California or Washington or New York, you expect that the tenant's going to have more rights than you.

And it's going to be harder to run your business, period, end of story. But then you get into Indiana and that allows you to take more risks, provide more housing and be comfortable doing it without feeling like there's a ton of red tape.

[Sara Aviles] (24:49 - 25:01)

And then I can get more deals for sure. The price points are so much lower compared to California. During COVID, the triplex, I bought it for $50,000 for a triplex.

[Stephen Husted] (25:01 - 25:01)

Wow.

[Sara Aviles] (25:02 - 25:20)

And it's now because of COVID and forced inflation, it's doubled in value. But that was an area that did not really appreciate. But it just cash flows like crazy.

It brings in over $2,000 a month on a $50,000 property. You just don't see that in California.

[Stephen Husted] (25:21 - 25:47)

Yeah. It's like an idea. There's some pros and cons to both of it.

I almost feel like now we're pretty heavy in the Midwest. And now I'm kind of shifting my gears towards doing more development style out in Seattle and in here, just building and going that direction and kind of building both. Now I'm kind of going in that mode.

I'm going to do them both together and move up instead of just being so heavy in the Midwest. Well, you need to diversify for sure.

[Sara Aviles] (25:47 - 26:00)

You have cash flow and you have appreciation. They don't always go together. So there's also, you want newer construction.

My homes out in Indiana, they're old. I want to also have newer construction in my portfolio to kind of balance it out.

[Stephen Husted] (26:01 - 26:14)

Yeah, it's great. It's cool because there's so many different options, right? You can kind of get going on one and you start learning about it.

And then, of course, you hear about something else that piques your interest.

[Sara Aviles] (26:15 - 26:19)

Yeah, you're always looking at all different things, like you soak it one thing at a time.

[Stephen Husted] (26:20 - 26:46)

Well, and that is a big thing, right? I mean, would you agree? You really have to stay pretty focused.

I mentor new investors and we'll start off like a single family. And the next minute they're like, what about this? What about storage units?

What about, should I do an Airbnb? And I'm like, no, you should get a couple properties first. Start here and learn, make some mistakes, get some systems in place.

[Sara Aviles] (26:47 - 27:06)

Start in one bucket and then expand to other ones as you master one. We're always going to be learning. And then if you're spread too thin, you're going to be making way too many mistakes.

We're all going to make mistakes, but let's try to be a little bit on the safer side in regards to that.

[Stephen Husted] (27:06 - 27:14)

Absolutely. So give me some insights on Section 8. So you wrote a book on Section 8.

[Sara Aviles] (27:15 - 29:13)

Well, I wrote a book about my experience just with this one property. All my horror stories are in this one book, Confessions of a Section 8 Landlord. My goal was really to tell all the things I did wrong and what I learned from them so that other people who are going into Section 8 know how to avoid some of these things.

For one thing, you have to cap all the external water sources of the building. A lot of time with Section 8, those external water sources, which may have been used to water the lawn or the flowers, end up being a car wash business, or they become a swimming pool for the tenants. Or maybe the kids went crazy one day and made a swamp like they did in my property.

So you have to cap it, lock it, make sure they don't have access to external water sources. There's something else a lot of people don't know that with Section 8, you don't have to have the building be certified Section 8. It's actually per tenant.

There are some buildings where they have master leases with Section 8, but for the most case, it's case-by-case per application. So all people ask me about the process, they're like, oh, my building's not certified for Section 8. I'm like, no, it's about the applicant.

So when they apply and they get approved and Section 8 comes out and they do a tour of the unit, make sure it's habitable, there's no peeling paint, everything works, but there's certain things that tents tend to always break that aren't needed per that inspection. So like screen doors always break. They don't need them.

Or closet doors, 90% of the time, they always come off. They need to be fixed at every single inspection every year. You don't need a garbage disposal.

That will always be broken. You have a garbage disposal, don't have a dishwasher. It's more of like making it habitable, making it clean and nice, but don't provide extra services that you're going to have to fix every single inspection.

They do do an inspection every year.

[Stephen Husted] (29:13 - 29:17)

Yeah, yeah, that's some serious, valuable information right there.

[Sara Aviles] (29:17 - 29:31)

And then all the smoke detectors, just know the batteries will be out. So you just have to go back and actually know the batteries will be gone, the smoke detector will be gone because the battery will go off. They won't replace the battery, so they'll chuck the smoke detector.

So every year, expect to put in a new smoke detector.

[Stephen Husted] (29:31 - 29:37)

Okay, so the smoke detectors, even if you do the 10-year batteries, they're just somehow they'll come off the walls.

[Sara Aviles] (29:37 - 29:44)

They're just off the walls. 90% of the time, they're off the walls. So just expect to just come in before your inspection and put more smoke detectors in.

[Stephen Husted] (29:46 - 29:53)

So the Stockton property, you got a property management company that's managing it. I would imagine it's close by there.

[Sara Aviles] (29:53 - 30:14)

I did, except for when COVID happened and I had to manage it through COVID. After that, after we passed through that, I ended up selling the building because I was done with it, which is a fun process in itself. But luckily, we didn't lose any money on the deal.

We actually made a little bit of money. I just wanted to have my life back and have the easier properties again.

[Stephen Husted] (30:14 - 31:07)

Yeah, that was just a big internship. It was a big internship, yeah. Yeah, and I think it's completely needed.

You know, it's funny. Some of the new investors that I teach them all this information, and it's funny, we'll go through a deal and they'll go like, oh, that was pretty easy. I'm like, no, it wasn't.

There was like 20 steps behind that that I navigated you through so that you wouldn't make those mistakes. Or what I taught you, how to set up your bank account and how to make sure you're tracking everything correctly using some software. You better stay organized in the very beginning because when you build a portfolio, there's going to be things going on, whether it's the finance part of it to having a bookkeeper if you don't have those in place, you are going to feel lost.

[Sara Aviles] (31:08 - 31:11)

You know, I still haven't gotten a bookkeeper yet. I'm still doing it all my life.

[Stephen Husted] (31:12 - 31:12)

Are you really?

[Sara Aviles] (31:13 - 31:19)

I have a massive Excel spreadsheet that I do once a month and I'm like, man, I'm so close. I should just get one already.

[Stephen Husted] (31:21 - 31:52)

QuickBooks has where you can set up each property by class and then it connects the software from the property management company can connect to it as well. And so you can just get your P&Ls and it's per property. So, you know, your gross, your expenses.

But yeah, I started off the way you did and that's the worst part of the business. I hate it. I don't like, I'm not a bookkeeper.

I ain't doing that. You know, I'm sticking in my lane. I just want to know what I got going on.

I just want to know my net every quarter. Where am I at?

[Sara Aviles] (31:53 - 31:58)

Yeah, I'll probably be there at one point, but I'm also looking at that other software. Have you heard of Baselane?

[Stephen Husted] (31:59 - 32:00)

Baselane? Yeah.

[Sara Aviles] (32:01 - 32:21)

It's a bank for real estate investors that actually does all your accounting and all your bank accounts. And they can actually set, like if you're doing their properties yourselves, you can actually have them collect all the payments and do everything and it's free. So that might be something I'm going to be doing for my California properties.

[Stephen Husted] (32:21 - 32:22)

Okay, cool.

[Sara Aviles] (32:23 - 32:45)

That's another direction that I'm going. But yeah, I definitely need to get my QuickBooks set up and stop doing my giant Excel spreadsheet. But you know what?

I tell people too, like don't overthink it. You can go simple. And then as you grow, you know, find more and more sophisticated software and programs that you can use.

But don't go crazy with LLCs and systems and all stuff and you have one property.

[Stephen Husted] (32:45 - 32:46)

Right.

[Sara Aviles] (32:46 - 32:48)

You have to grow with it.

[Stephen Husted] (32:50 - 33:06)

Yeah. And simplifying it, you know, in the very beginning and kind of putting systems in place or it's important. But do you like doing like spreadsheets or what are the things you don't like doing?

That's a bigger thing. What do you not like doing?

[Sara Aviles] (33:06 - 33:36)

I don't like making tenants phone calls. I don't want that toilet conversation. Actually, I don't mind spreadsheets.

I'm a very analytical person. So it's almost like me getting to know my properties every month. So I go through it and I go through like a fine tooth comb of my property manager's reports and I post holes in all of them.

And I'm an over manager. So that was a big issue for me, too, is trying to not overmanage my property managers, because then they fire you.

[Stephen Husted] (33:37 - 33:38)

Yeah. Yeah.

[Sara Aviles] (33:38 - 33:57)

Oh, I just go in my little accounting thing and I make it super tight. So I feel comfortable with my own investment. I know as I grow bigger and bigger, I won't be able to do that anymore.

But that has kind of been my little crutch of feeling like I have a pulse on my property without actually managing it and being there. So some of these properties I've never actually ever been to.

[Stephen Husted] (33:58 - 35:25)

Correct. Yeah. Yeah.

That's kind of where I'm at, too. Same mindset. I pop around throughout the portfolio, like, where's the issues?

Let's get it. Well, here's a good example. I just finished a rehab on a duplex out in Kansas City.

And one of the units is going to be a midterm rental and the other one's going to be a long term. I want to first stabilize the midterm and make sure proof of concepts there that it's making the money it is. And then I'll probably eventually turn the other unit into a midterm as well.

So it got furnished. I hired somebody locally and basically just shipped all the furniture to her. And then she went and put it together.

And then it was like at 90%. I'm like, you know what? Screw it.

I'm going to go out there for a couple of days. Flew out there, stayed at the property. And of course, when I got there, I'm like, oh, that needs to be touched up.

That paint. Oh, that needs to get, you know, the list, the handyman list. But the big one was the grass was so overgrown.

And there was grass in, you know, in the sidewalk going up to the bottom unit, which the bottom unit is on the market for rent. And so I saw it. I'm like, what the hell?

Why? Wait, I thought I'm getting lawn service every week. So I call, call my assistant.

Hey, can you check on that? She's like, oh, yeah, you get it every week, actually, on bail. I'm like, oh, really?

Well, no one's cutting this lawn. It hasn't been cut in about a month.

[Sara Aviles] (35:26 - 35:26)

Yeah.

[Stephen Husted] (35:26 - 36:22)

So we called the property management. I said, hey, you know, law's not getting done. Am I getting charged?

She's like, yeah, you got charged the whole last month. And then all of a sudden, five hours later, here comes the guy pulling up to do the lawn. And I catch him out there.

I'm like, hey, are you the owner? He's like, no, I work for the owner. You haven't been out here in a while.

He's like, oh, we've had bad weather. I'm like, yeah, but I got charged for a whole month. So, you know, I think, I guess the moral to the story, just because you have a property management company, you need to understand your owner distribution statement monthly.

You have to understand what's coming in, what's going out, what got repaired. What did you get overcharged for? Why are you getting grass?

Why are they doing, you know, grass maintenance on this property? But it's the owner's responsibility. There's like, you know, I mean, there's, it's not a lot of things.

There's a lot of things.

[Sara Aviles] (36:24 - 36:51)

Out of state, I always like to have two eyes on everything. So, I don't like my property manager to also be my contractor. I like to have separate contractors, separate property managers, separate real estate agents.

So, I have two eyes on everything. So, if there's some disconnect and one person says it's done and the other person says it's not, someone's not telling the full story here. And so, that's helped me a few times just so that I have multiple people to talk to that don't have relationships with each other.

[Stephen Husted] (36:53 - 37:25)

100 percent. That's so true. Like, I definitely have the same.

I have a couple runners, people that I know that do multiple things. Some are agents, some are handyman, and I move them around to check on things. Because you have to.

Because there's stuff that slips through the cracks, you know, if you don't have people on the ground. And I know a lot of people talk about investing out of state and that you don't really need to go to your properties. You know, that is true in theory, but there is times when it does make sense to go out and get your eyes on things.

[Sara Aviles] (37:26 - 37:27)

For sure, for sure.

[Stephen Husted] (37:27 - 37:28)

Doesn't have to be all the time.

[Sara Aviles] (37:28 - 37:37)

Flying out there, hopefully in June, we're going to look at some auctions out there. So, we'll go and see all the properties, just drive by them and make sure they're still there.

[Stephen Husted] (37:39 - 37:50)

What's going on there? So, as far as the Section 8 is concerned, what else have you learned from it? Do you feel like that's your favorite strategy?

So far, it is.

[Sara Aviles] (37:50 - 40:30)

I found that it was very helpful during COVID, too, because we had guaranteed rent. When people weren't paying rent, we still had a good lump sum guaranteed by the government. And it also helps us check our property managers, too, because they do do those inspections.

So, I know if there's something that needs to be fixed or something's going on with the property that I wouldn't have known otherwise. And I just find the cash flow is so good if you're looking for cash flow in those C-class properties, which mainly are Section 8. And while Section 8 is great, subsidized housing that's from a local organization normally is better because it's guaranteed.

And normally, they care more. They have more people that they have as a resource versus Section 8. It's so, so many people that are trying to serve.

They just don't have enough time. And so, some of the local services, they'll give you better incentives. I've had one actually fill all my unit with new appliances for the tenant.

And they offer wraparound services to help them succeed. And often, they don't get to keep it forever. It's normally like a year or two.

And they graduate for the program. So, they have more incentive to get on their feet and get a stable job and do these things. Where I had in my 12-clex, we worked with an organization who we primarily rented to them over Section 8.

And I had a connection with the relationship manager for landlords. And she would call me up and always ask me, do you have any vacant units or units that are about to become vacant? And so, I'd give her a heads up before it hit the market because she would have someone in place right away.

And they specialize in getting single parents that are on the street with their children into housing. So, we were housing all these families off the street. And then, we'd see them graduate from these programs.

And often, they would eventually move out of our building into an even nicer area, into a single-family home. And they were just overall better tenants. I'm not saying that Section 8 is bad tenants.

You have to screen them as you would anybody. They're people. But I found these local organizations had better resources, better incentives for the landlords.

And really, the landlord relationship manager was the key because if you ever had any problem, you just give them a call. And they'd work through it with you because they want to control all your units. They want to fill all your units because there's such a housing shortage, especially if you're in California.

So, find that local organization, that nonprofit that works on housing and has a and subsidizes it is probably your best bet even over Section 8.

[Stephen Husted] (40:31 - 40:47)

Interesting. Yeah. And those tenants somehow ended up in that organization as well, right?

And so, is that how that shows a little bit more of an incentive on the tenants? You know, putting some effort into getting good housing, right?

[Sara Aviles] (40:47 - 41:35)

Would that be— Yeah, they didn't want to lose their voucher. And I didn't realize, I was very sheltered. I didn't realize that when I had a property in Stockton, I was talking to people.

Like here, we want to become—our parents tell us to become lawyers, to become doctors and things like that. There, their parents were telling them, get on Section 8. You've made it in life.

I was like, what? Yeah. It was a complete mentality shift.

So, you see the different mentality for people on Section 8 versus some of these like subsidized local programs are very different. Not saying it's for everybody. But we did come across that specifically in our neighborhood and found that the local organizations were definitely just overall better applicants and better support systems.

Yeah.

[Stephen Husted] (41:35 - 41:48)

And as far as the condition of the property, when they come up on that year inspection, then you know, too, how much they've kind of wear and tear the house up, right?

[Sara Aviles] (41:48 - 42:48)

Oh, for sure. For sure. As long as they didn't do anything that broke the least.

Like I've had tenants that bring in animals that weren't supposed to have animals and then that really wrecks the unit. But for the most part, these units are not like where we would probably want to stay. I mean, they're habitable, they're clean, they're nice, but they're not like granite countertops and like top of the line finishes.

So, there's only so much they can really do to the unit. Like I just know I'm going to paint every time and I'm going to fix this and this. And if they, you know, demo the kitchen cabinets, that's a whole different issue.

Right. But for the most part, it wasn't too much of a deal, a big deal, except for the tents we originally got from the previous owner. Those we always had issues with, with people doing some creative things and re-putting, like, it was something I saw.

They put in a, it's put in stick, pretend marble, like sticky marble on top of our brand new flooring all over. That was fun. I was like, this is great.

Pull a little bit of stuff up.

[Stephen Husted] (42:48 - 42:49)

This ain't coming off.

[Sara Aviles] (42:51 - 42:55)

Nope. The tenant do-it-yourself stuff gets a little, a little interesting.

[Stephen Husted] (42:56 - 42:59)

Oh, that's interesting. Well, they're trying to make it look.

[Sara Aviles] (42:59 - 43:04)

They're trying to make it look nice. Make it a little better. So, that was also the swimming pool one, but.

[Stephen Husted] (43:05 - 43:18)

What's the difference? So, you brought up the difference between investing in Indiana compared to California with, you know, tenant rights and landlord rights and all that good stuff. What are the big difference that you see as far as between the two?

[Sara Aviles] (43:19 - 43:26)

Well, like during COVID, you couldn't get anyone out. I would actually call a lawyer and they wouldn't answer the phone. They would not answer the phone because they were all shut down.

[Stephen Husted] (43:27 - 43:27)

In California?

[Sara Aviles] (43:28 - 44:05)

In California. No one, I literally had someone who was given a unit by a family member who left because they knew that they couldn't get him out and their girlfriend got out of prison and she was shooting up our building and we couldn't get them out. So, there was a lot of really creative problem solving with those in California, whereas in Indiana, it was during COVID and if someone really was struggling, of course, I would help them out, but there was also people who were bending the rules a bit and for people that weren't actually out of a job or things like that and they weren't paying rent, we were able to evict them, no problem.

It was like 30 days.

[Stephen Husted] (44:06 - 44:07)

Boom, just like that.

[Sara Aviles] (44:08 - 44:30)

Yeah, boom like that. Whereas in California, it was very difficult and there were situations where we have a 12-unit building and it's our responsibility to keep all of our tenants safe from some tenants that are unsafe and we can't get them out, but we are legally responsible if something was to go wrong. That was a very precarious situation.

[Stephen Husted] (44:31 - 44:55)

Your story is wild. I mean, I don't think people really understand. This is, you know, and probably you look back and it's better that you didn't know any of this, like you didn't know anything that you were going to go through because if this would have been the case and you would have never, ever, ever started investing.

[Sara Aviles] (44:55 - 45:22)

Of course, of course. Well, you know, I always tell people it always ends up happening like your first property. If your first property goes well, you're probably going to keep investing.

If your first property goes poorly, you'll probably stop. So I've noticed that trend a lot with people. And my first one was amazing.

I had no problems with it. Went up in equity, like it was great. And then that made me realize, even though I had this horrible property, there is other properties that are great.

[Stephen Husted] (45:23 - 45:55)

Absolutely. That's so true. Yeah, yeah.

That's kind of like what I just said earlier. I go through the same thing. You know what I mean?

I have like 80% going good. Then I got the problem child over here that I'm going, why am I even in this damn East Detroit property? I got to get rid of it.

But man, that pays for all my food and my car payment. Sometimes the problem ones are the cash flow ones. That is another big part.

You might get that number, but that number is going to come with a clock.

[Sara Aviles] (45:55 - 46:12)

It comes with a clock for sure. I mean, yeah, if you have the super easy, luxury, beautiful A-class properties that don't give you any headaches, but they break even or they lose money. But over time, you're going to get great appreciation.

It's just a different game and you have to have a stomach for it.

[Stephen Husted] (46:13 - 46:38)

Well, and I almost feel... Look, I don't care what asset class you're in. They all have issues.

Of course. You know what I mean? And at the end of the day, that's really what...

There's going to be some pros and cons. You're going to have some good wins. You're going to have some issues.

And that's the part about investing in real estate. And that's why the government stays out of it. That's why they're not more...

That's why they're not landlords. You know?

[Sara Aviles] (46:38 - 47:18)

That's why. I mean, I work a lot with consulting on Section 8. Also for local programs that are non-profits.

I even came across one in Northern California where the government was managing it and they didn't have the money to update it. So they were going to have to sell it off to someone else because the government became a slumlord because they didn't raise the rents to cover the expenses. So over time, it got worse and worse and worse.

And they had to sell it off to an investor who could actually make those improvements. And yes, he's going to raise the rents, but he has to do so to cover the cost of making it actually livable.

[Stephen Husted] (47:18 - 48:19)

Right. Yeah. And a lot of people, they don't realize that.

I think that people see landlords as... What's the big word I see? I get called this one a lot.

Parasites. My favorite one. You're a parasite.

Really. You would not want the government taking over and being your landlord because I will tell you, you're going to be in a worse situation by far because there's a lot of work to hear in this property that you're living in. I'm doing my best to make it really nice for you.

I take care of things. I don't want things to go unnoticed and broken. I don't think people sometimes realize that.

And of course, like you said, there's really bad tenants and there's really bad landlords. Of course. I think that goes, but that goes with pretty much anything in life.

Any business has its good points and bad points and that is the reality. People love to focus on landlords being parasites.

[Sara Aviles] (48:19 - 48:24)

Well, it's funny though because you look at the numbers and most landlords are actually small mom and pop landlords.

[Stephen Husted] (48:24 - 48:26)

Of course. Yes.

[Sara Aviles] (48:26 - 48:35)

They're using it to supplement their income. So it's very much a different story that's being painted across the media. So it's an interesting conversation to have.

[Stephen Husted] (48:36 - 49:01)

And are you a long-term thinker and you see the bigger picture down the road? You're not, you know, because you see that a lot online too, that, you know, you can buy a couple properties, get a castle and you're going to quit, you're nine to five. It's like, where is that happening?

I mean, yes, I guess in theory, some places you could pull that off. I know that's not happening to where I live in California.

[Sara Aviles] (49:01 - 49:05)

I mean, right now I could leave and live in Thailand and I'd be financially free like that.

[Stephen Husted] (49:05 - 49:09)

Oh, that is true. That is true. Okay.

All right. I'll give you that.

[Sara Aviles] (49:09 - 49:17)

It just depends, you know, what your lifestyle is, where you want to live. I mean, I have a little one. I can't just bail and go live in paradise.

[Stephen Husted] (49:19 - 49:21)

Yeah, no, it's a long-term play.

[Sara Aviles] (49:21 - 49:26)

Yeah, it's a long-term play for sure. And you know what your goals are and how active versus passive you want to be.

[Stephen Husted] (49:28 - 49:55)

Yeah. And what do you, so besides investing, like what else does investing translate for you and just your overall life? Do you know what I mean?

Because I think there's a lot, there's so many things that you get a lot of skills from investing that you don't really understand that you're actually creating these skills until you've created them. You know what I'm saying? Like, where does that translate?

So I guess it's translated, you started as an investor. Now you're an agent too.

[Sara Aviles] (49:55 - 49:56)

Now I'm an agent. Yeah.

[Stephen Husted] (49:56 - 49:59)

Okay. So you got that side. You wrote a book.

[Sara Aviles] (49:59 - 50:34)

My transition to author, a public speaker, and now I work with government and local nonprofits to help give back and, you know, bridge that gap between these organizations and landlords. Because there's a lot of, you know, infighting and it, you really need to have common ground. So I work with that, those organizations as well, as well as other investors who are looking to start and grow their own portfolios.

I feel like once you start getting into this, you learn so much that you don't realize how much knowledge you have and that you can give so much back to other people.

[Stephen Husted] (50:34 - 50:43)

Oh my gosh. That's such a great point. It's so true.

It is. Yeah. And it's always great to give the point, the things that you did, you know, wrong or what happened to you.

So you like, don't make that mistake.

[Sara Aviles] (50:44 - 50:45)

Yeah. I mean like...

[Stephen Husted] (50:45 - 50:47)

Those are the best. You write a book on that.

[Sara Aviles] (50:47 - 51:18)

Yeah. For years, my mother was like, you gotta write a book. You gotta write a book.

And I'm like, no, no, no. And I'm like, you know what? Screw it.

My friend did it. I can do it. You wrote a book.

And you don't really realize until you write it all down or you start writing a blog or whatever you're doing to give back that you have all this insight. Sometimes you're like, oh, I'm too small of a player because there's other people who are so much bigger than me, but there's always going to be people who are bigger than you. And there's always going to be people who are smaller in regards to their size and portfolio.

And, you know, someone else might be able to help you and you can help somebody else.

[Stephen Husted] (51:20 - 51:47)

Yeah. That's interesting that you brought that up. There's a lot of, you know, limiting beliefs and I go through it.

Everybody goes through it at all different levels. It seems like even the ones that you think have it all together are always second guessing themselves as well. I'm starting to learn that from talking to, you know, people that are very well off and have big portfolios and they're big on social media.

And I hear some of their backs. I'm like, oh my gosh, they've got a lot of self-doubt too. But they're trying to...

I love windows.

[Sara Aviles] (51:48 - 52:09)

It's all about breaking through the next level of like, oh, I can't make that income. And then you do it and you're like, oh, wow, I reached this level. Now I can make more.

I just have to get past that mental break. You just have to get past that and realize that the possibilities are endless. It's just a matter of getting through your own roadblocks in your mind.

[Stephen Husted] (52:09 - 52:40)

Totally. It's so true. And I go through that so much.

But then it's like I just kind of grind at it, you know, like I just keep going, going, going, okay, I'm gonna make this work. And then it's like, yeah, it's okay. And then I, you know, just keep doing it.

Consistency and determination will go a long way. I don't ever think of myself as, I always go, I don't even know how I'm doing all the stuff that I do sometimes. Like, I think that in my head.

Like, I don't feel like I'm that smart. I just have determination and I just do it.

[Sara Aviles] (52:40 - 53:05)

We all have imposter syndrome. I see it all the time where we are in denial of how much you've actually accomplished. And you have to look back and realize it.

I go to a meetup and this one person, she's like, oh, I didn't want to come and meet up. I'm not an investor. I'm like, well, you're here, so you're going to be an investor.

Come here. Like a lot of people, they just have this imposter syndrome and you kind of have to give them a mirror back to themselves so they can actually, you know, get past it a little bit.

[Stephen Husted] (53:06 - 53:25)

Yeah, it's that safety net for the brain. You know what I mean? Like we're kind of one minute, you know, we'll have, we'll be on our high horse and going, okay, we can do whatever.

And then like, hey, let me just, I don't know. Let's, let's think about this. Should we?

I gotta be okay. I think when this, my brain says that it means go.

[Sara Aviles] (53:26 - 53:27)

Yeah.

[Stephen Husted] (53:27 - 53:30)

Yeah. What do you like to do for fun?

[Sara Aviles] (53:31 - 53:33)

Um, I love to sing karaoke.

[Stephen Husted] (53:34 - 53:34)

You do?

[Sara Aviles] (53:35 - 53:42)

Karaoke. Not saying I'm good at it, but I like to do it. And then, uh, my husband and I actually were ballroom dance partners.

[Stephen Husted] (53:43 - 53:44)

Really?

[Sara Aviles] (53:44 - 53:47)

Yeah. That's how we met. Oh, wow.

That's cool.

[Stephen Husted] (53:47 - 53:48)

So you guys still do it?

[Sara Aviles] (53:49 - 53:55)

Not so much since we had a little one. It's hard to get, get away at night, but, um, we, we bust out a move at a party pretty well.

[Stephen Husted] (53:56 - 53:56)

Do you? Yeah.

[Sara Aviles] (53:56 - 53:59)

I feel like we got a little trick to pull out.

[Stephen Husted] (53:59 - 54:09)

The song comes up. You guys like look at each other from across the room and it's like, ready? So, uh, how old, you have a boy or girl?

[Sara Aviles] (54:09 - 54:11)

A boy. He's six.

[Stephen Husted] (54:11 - 54:12)

Cool. How's that been?

[Sara Aviles] (54:13 - 54:21)

It's been good. It's he's so funny. You don't realize how much kids pick up until they start just spewing it back at you.

And I'm like, oh, I said that.

[Stephen Husted] (54:21 - 54:22)

Yeah.

[Sara Aviles] (54:22 - 54:36)

He's already like decided he's, he's created his own business. He's gone and sold the farmer's market. And now he's decided he traded up.

He took some of that money and I bought a popcorn machine to then sell at games. I'm like, what have I created?

[Stephen Husted] (54:36 - 54:41)

Oh gosh. That is so great. Yeah.

That is, that's some good. That's it.

[Sara Aviles] (54:42 - 54:52)

We had some talks about what wealth is and what riches, and we talked about Warren Buffett and he's like, I need, I need stock mom. I'm like, okay, let's figure out how to buy you stock.

[Stephen Husted] (54:53 - 54:57)

Yeah. Just a little go a long way. It's just, it's the thought process.

[Sara Aviles] (54:57 - 55:00)

Oh yeah. He's, he's just picking everything up like a sponge.

[Stephen Husted] (55:01 - 56:05)

It's interesting that he didn't teach. Well, you know, there's just a lot that we leave out as, you know, as we go to school that I wish I would have known earlier. Like I got a little glimpse of it, you know, I didn't get going at same story.

Why is it that you, you hear people online or they go on a podcast or YouTube and they're What got me into investing in real estate was I read Rich Dad, Poor Dad, that one book, that book, that book. It's so crazy. And I've told, I told people recently that I've had a couple of friends that are, want to invest.

They got the money. They say they don't have the time, but they got the time, you know, they can, they can structure it. Yeah.

They got the time. If I can, if I can do what I'm doing, you got the time. And, and it's funny because they keep coming back on different mentalities.

And I go, you know, that I read Rich Dad, Poor Dad, and I did even buy my first investment property for 10 years later, 10 years, 10 years, read that book. I was just getting like my act together, so to speak. Let's just say that.

[Sara Aviles] (56:05 - 56:06)

Yeah.

[Stephen Husted] (56:06 - 57:35)

And got my license, you know, came an agent 2008, the market crashed. I wish I would've known what I know now in 2008, you know, everything would have been different. I thought the world didn't mean, and no, don't buy real estate.

I don't know what I'm doing. I'm just helping these people that are losing homes. That's, that's all I knew until I read that book on the beach in Kauai that I was like, oh, I'm doing this all wrong.

Wow. I got to do it. And I just, it was all my brain, but you know, back in 2009, 10, we didn't have social media.

You went to a conference and met this person, maybe flipping houses and they would talk. And then you'd walk out after it's all done and buy a CD. There was no social, there was no social, nobody was teaching things online.

So it, it felt so unattainable back then for me. And it's funny that I kept it on my brain so long until I finally, you know what I'm saying? I think people think everything should happen overnight.

Everything should be done. Like it, it could be a long drawn out process, but stay with that process because that's just part of your journey in life in general. It's, it's just a part of it.

You know, you got your family, you got your kid, you know what I mean? Like it's all this big picture, but I think sometimes people don't want to start, give up too soon or just want instant gratification. And that's just how it is in life in general.

[Sara Aviles] (57:36 - 57:43)

Well, it was early unless you have a huge bankroll that you can just deploy immediately. And even then you might not have the knowledge to do it correctly.

[Stephen Husted] (57:44 - 58:08)

Right. You better have the Sarah mentality. Just go for it.

Trial by fire, baby. Trial by fire. That, I mean, yeah.

Wow. It's such a, that's such a crazy story. And you know, I've been following a few people that are doing section A, but your stories are, your story blows.

They make it seem so easy and they don't. And two, big part of it is they don't tell their, the real story.

[Sara Aviles] (58:08 - 58:09)

Yeah.

[Stephen Husted] (58:09 - 58:10)

Because I think people have that.

[Sara Aviles] (58:10 - 58:19)

Everyone has normally one or two horror stories. You go to a meetup and you're like, what's your horror story? Well, I got 20.

They're all together.

[Stephen Husted] (58:21 - 58:23)

On this one, this one property.

[Sara Aviles] (58:24 - 58:46)

One property. I mean, not many people can say they, they had to tell off a drug lord like my husband had. So it, it, well, those kinds of things that are just like, hmm, let's, let's be a little careful next to the next one we pick.

But I mean, really, since it was the worst place we could have picked or one of the top worst places, it's like, how bad could it be?

[Stephen Husted] (58:46 - 58:51)

Right. How many times did you actually go to the, how many times did you end up entering that building?

[Sara Aviles] (58:52 - 59:50)

Well, my, my husband wouldn't allow me to enter the building after we knew how bad it was. So I went out initially and we did the whole inspection stuff. And once we realized it was really how bad it was, my husband would go out the property.

He wouldn't let my in-laws go to the property. He wouldn't let anyone else near the property because he was honestly afraid for their safety. It was a very, very dangerous street.

Like people were getting shot all the time. There was a drug lord that wanted to trap out of our building and he was trying to trick us and use certain tactics to get into our building knowing we wouldn't be able to get him out for the COVID. So there was a lot of really dangerous situations going on.

We had people shooting up in our apartment building. Like shooting guns off. So I was not at that property once we had figured out what was going on.

He went out there probably once we started managing it, once every three months. We had someone that we were working, was working with us in the building kind of be our eyes and ears since we were managing it. She was...

[Stephen Husted] (59:50 - 59:54)

How'd you, how'd you get that relationship? Did you just, did it, was it a kind of a feeling you started talking and you kind of...

[Sara Aviles] (59:54 - 1:00:11)

No, she actually reached out to us. She was a caregiver for one of the tenants there. I use that term very loosely because I don't know if she was actually really a caregiver.

She was a very unique personality, but she did help us get out of a lot of vines. She also caused a lot of problems for herself too.

[Stephen Husted] (1:00:12 - 1:00:12)

Oh, really?

[Sara Aviles] (1:00:13 - 1:01:38)

Yeah, she was a very interesting character. I learned a lot of interesting ways of getting rid of people. Not that I did it, but she was like, I can get rid of this person.

I'm like, what do you mean? She's like, oh, I have a buddy. I know where all the pigs are.

You put a body there, you'll never find it. I'm like, no, no, don't touch anybody. There was someone that we had a squatter breaking into our basement.

They'd pull up the basement with a crowbar and they'd try and live in the basement. We'd call the cops. They'd drop them down the street, just catch and release and you keep coming back.

We couldn't get a restraining order, couldn't get anything. And she took it upon herself to get rid of this person. We didn't ask her to.

I was like, oh, the problem's gone. I'm like, well, I was a little nervous after the pig conversation. Like, what do you do?

Like, where is this man? Is he alive? I'm going, yeah, he's fine.

He's fine. I verified he's alive. I'm like, you verified he's alive.

What do you mean you verified he's alive? She's like, oh, I offered to give him a ride and ask if he wanted a drink. I'm like, what would you put in the drink?

She's like, oh, red eye drops. I'm like, red eye drops? What do red eye drops do?

I looked up red eye drops. They can put people in a coma. There was actually a case where a wife ended up putting her husband in a coma with a bottle of red eye drops.

And so she knocked him out and dropped him off three towns over. Whoa. I was like, oh my God.

We never had that problem again. But I was like.

[Stephen Husted] (1:01:39 - 1:01:41)

She took matters into her own hands.

[Sara Aviles] (1:01:41 - 1:01:58)

I did not tell her to do that. She's not my employee. I was just like, oh my God, you could have killed him.

She's like, I verified he's alive. But I was like. I was like, what are you talking about?

I had to research this. I never heard this before. And this is a real thing about red eye drops.

So be careful with them.

[Stephen Husted] (1:01:59 - 1:02:00)

Yeah, I'm making a mental.

[Sara Aviles] (1:02:01 - 1:02:03)

Get rid of the red eye drops in the cabinet.

[Stephen Husted] (1:02:04 - 1:02:19)

Well, this is great. This is some crazy stories. I'd expect this.

I'm so glad I didn't read your book too up front because I would have known this and I would have been as shocked. So because you have these stories in there. What are your plans for the future?

What are you looking to try to do?

[Sara Aviles] (1:02:19 - 1:02:59)

Well, now that I have a bunch of. C-class properties in the Midwest. I do want to come come back to California and do some more of that development.

I really want to start building out large ADUs and sectioning them off. I know we have a major housing crisis here. Just not having enough home.

And focusing on homes that are under a million. Being able to resell these for like $899 or $799. Something that's actually attainable where I make a good amount of money.

And so does someone who needs a needs a home. Yeah, that's kind of what we're pivoting towards and trying to do some more. So we kind of balance out our portfolio as well as bring it kind of back to our home state too.

[Stephen Husted] (1:03:01 - 1:03:02)

That's exactly what I'm doing.

[Sara Aviles] (1:03:02 - 1:03:04)

Yeah, we all have the same mentality.

[Stephen Husted] (1:03:06 - 1:03:30)

Exactly. Well, and two, I think with building it's you can focus right on what's going on. You're managing a few people, so to speak.

You've got your contractor, maybe your architect, your surveyor. You've got a little bit more control than, let's say, dealing with a 12-unit and with a drug lord.

[Sara Aviles] (1:03:30 - 1:03:50)

I mean, we've done full rehab duds out in the Midwest and those were stressful enough. I think I'd like to do one more here where I can physically see it. Have a team that I meet with.

It's just a different game and I want to have a different class set as well.

[Stephen Husted] (1:03:51 - 1:03:59)

Yeah, that's great. So do you know what cities in your area are actually looking to implement?

[Sara Aviles] (1:04:00 - 1:04:45)

Yeah, I'm actually looking right in my hometown area. I'm in Woodland Hill in Los Angeles County and I'm looking in the San Fernando Valley. We had one that we made an offer on.

It was like a 16,000 square foot lot. I was like, this is perfect. It's huge.

It had a main house that could turn into a duplex. The only thing was it was agricultural RA zones. You can only build 5,000 square feet on that, which I mean, you can still make really good money because the house is about a little under 2,000.

You can add two 1,500 ADUs in the back. Maybe even sell them off. Maybe do a subdivision with an HOA and sell those to a first-time homebuyer.

[Stephen Husted] (1:04:46 - 1:05:00)

Yeah, that's great. That's good. Where I'm from, they haven't passed.

San Jose's looking into implementing everything. I think Berkeley's top on the list right now of putting it into place.

[Sara Aviles] (1:05:00 - 1:05:49)

Well, it's a lot of gray area right now because it hasn't really been pushed through, but it's still available. There's a lot of townhomes that they do that where they take a big, long lot. They demo the main house and they build four to five townhomes.

They don't split the lot. They do a subdivision with an HOA, do tenants in common and sell it off. It's more about being able to finagle that with the city as well as your brokerage and making everything fit together because it's still a lot of gray.

There's no real clear outline yet for this coming out and what's going to happen with it. Taking kind of that blueprint of what these investors have done in the past with these townhome builds, I'm assuming it'll be somewhat similar to that.

[Stephen Husted] (1:05:50 - 1:06:07)

Yeah. I think that's why we're starting out in Seattle where they've already been doing it. Everything's kind of implemented and everybody who's an investor friendly agent, they have the ball rolling.

The only problem out there is just inventory is low and there's tons of competition.

[Sara Aviles] (1:06:08 - 1:06:15)

Do they have a framework yet in Seattle all laid out? Are you in the process in Seattle of actually doing that and selling off?

[Stephen Husted] (1:06:15 - 1:09:10)

Oh yeah. They've been doing it out there for a while now, so that part's the easiest. Funny enough, how it all came about, I had a couple people that I met at the BiggerPockets conference on my podcast and they were bringing it up.

Then I had another lady that I met on FurnaceFinder. She was on an episode. I had her on the podcast and I got done.

I went, oh, and then I had a contractor out there. I was like, wait a minute, I got a whole team and they're cool. You know what I mean?

I've had them on my podcast. I've had this intimate hour conversation and I can just tell what's like, okay, I like them and that goes a long way in investing. If you can have the team that you actually like to talk on the phone, you get along with.

I said, you know what? I'm going to start out there. Flew out there, met the team, cruised the neighborhoods, learned a lot about Seattle, went down to Tacoma, met with Ann and yeah, we're moving.

We've been writing offers. We haven't gotten a contract. I thought I was going to get a contract a couple of weeks ago.

We thought we had it. And funny enough, this property that we wrote an offer on was literally right across the street from where my agent lives. And he had just bought a property.

He converted the basement into a unit and he built a daddo, a two-two, thousand square feet, two-story, looked like a white, kind of like a farmhouse, Northwestern style home. And so I saw the whole layout, how he did the landscape, how he separated everything. I'm like, and I saw the alleyways.

They're a lot in Seattle. They have a lot of alleyways and I'm all, yeah, this is cool. And I was just tripping out on the neighborhood too.

I'm like, God, this is such a nice neighborhood. I think he bought the house for like seven, maybe even less. I don't even know, but somewhere in that range.

That would be $2 million in San Jose, you know? So I don't know. So I saw the house across the street.

He goes, hey, you can write an offer on this one. It's on the market. We did.

All cash, thought we're going to lock it up. Somebody else came in. They did an escalation clause.

And then that agent came back to us and said, hey, do you want to improve your offer? I'm like, well, counter us. Now you want me to compete against myself, you know?

So we didn't get it. Long story short. Yeah, we'll go to the next one.

But we are starting out there. Tacoma just passed, are passing where you can sell off the daddos. And so that's going to happen in the summer.

That's a little better price point than Seattle. And I got a great team just ready to go out there. So I want to learn out there and bring that knowledge into California.

Because California, like I said, they pass something. It's not as cut and dry. It's not as cut and dry.

[Sara Aviles] (1:09:11 - 1:09:25)

You're going to call people and half people know what you're talking about. Half people don't. You have to get the right person on the right day with the right time.

All those things have to align. And you have to know your way around the system or have a team that does.

[Stephen Husted] (1:09:26 - 1:09:46)

Absolutely. 100%. That's the best way to end this, you know?

Put the right team together that knows what they're doing and is a expert in their section of what they do. Definitely. Where can the audience find you?

I know I'm going to link your book. I'm going to link your book.

[Sara Aviles] (1:09:47 - 1:10:03)

You can see my book, Confessions of a Section 8 Landlord, or you can find me online on my website, sarahaviles.com. And you can also find me on Instagram. How do I handle down there?

Sarah.aviles.exprealty. Cool. So some ways to find me.

[Stephen Husted] (1:10:04 - 1:10:42)

That's great. Well, I thought this has been a great episode. Man, I have to thank Alex.

I'm going to get done with this. I'm going to text him. I had Sarah on.

It was crazy. She kept me on my toes the whole damn hour. So yeah, this has been great, Sarah.

I really appreciate you taking the time to jump on the podcast today. And congrats on your first ever podcast. You did an amazing job.

You brought a lot of value. This was a really good episode. I think it was really packed with some really good gems.

So I really appreciate it.

[Sara Aviles] (1:10:42 - 1:10:49)

Great. Well, I appreciate you inviting me on the show. And it was a great, great first experience on being a podcast.

[Stephen Husted] (1:10:49 - 1:11:24)

It's awesome. All right. I'll be talking to you soon.

You have a great day. You too. Thanks.

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