A couple weeks ago we sent out a survey to all our newsletter subscribers, because Hipster is all about YOU! One of our questions was, “If you could ask Ali two questions, what would they be?” And you answered! (If you missed out on this, make sure you subscribe to everything awesome to get all the latest and greatest!)
We then sat down with Ali and asked her your questions about real estate investing, turnkeys, her own experience, and more!
These are seriously amazing questions and superb answers from Ali, so we’ve split it into 2 blog posts to help you read it all and really take in her wisdom.
Even split in two, there’s a lot of info, so we’ll get right down to it. Here’s Part 1 of the fantastic info Ali has for you (don’t forget to check out the links with even more info on the site!):
Personal Questions For Ali
How do I fly with Ali?
Shoot me a message when you’re in LA and we’ll go fly! ☺
What is a typical day like for Ali?
Ha. Well, my “typical” day is the minority of the days. Most days are all completely different. But my default day, if I’m not doing anything else, is to sleep in, piddle around the house drinking some coffee and maybe catching a TV show or too, then I spend the day on my computer (oftentimes from my couch on the laptop rather than in my office on the desktop) in my pajamas, and then in the evening I either head for the gym, pole dancing class, or work on school homework. Then I go to bed anywhere from midnight to 3am usually. Oh, and I walk the dogs in between all that and check Instagram a ton. ☺
You can also see a week in the life of Ali here!
Tell me about the beginnings of Hipster Investments and the business model itself, i.e. how you make money with the business.
Hipster was born very organically and unexpectedly. I was working a corporate engineering job and I randomly started buying properties for myself (the turnkeys). Suddenly people who saw what I was doing asked how I was buying and doing what I was doing (most people hadn’t heard of turnkeys before) so I started referring them to the companies I was buying my own properties through. That picked up so much that eventually those companies approached me and said that if I got an agent’s license that they could legally pay me referral fees for the people I was sending over anyway, so I did that and really just assumed it would be fun side money. But it picked up so much after that, and especially after I joined up with BiggerPockets, that I decided to just create a brand name and make it a company that could really help people out. Few people have heard about turnkeys, few companies talk about lifestyle design, few talk about the true awesomeness of passive income…so that’s what I started shooting for! Educating people that changing their lives was possible with the use of passive income, and helping out on the property front.
Hipster makes money with referral fees. If we send you to a company and you end up buying through them, we are offered a referral fee. A clarification point on that though—I don’t refer anyone to companies that I haven’t personally bought through myself, nor will I accept referral fees from those companies. I’ve been offered many times over referral fees from various companies, most of them offering me a lot higher than I currently make, and I turn them down. That is a huge distinction between Hipster and other companies out there who pitch people on companies that they will make a referral fee from.
How to get started with Turnkey Investment Properties
My retirement is in question, need help making REI happen, can you help?
It depends on what you need help with. If it’s with any of my areas of expertise, then yes absolutely!
Will you take me by the hand and guide me step by step to buy my first turnkey property please?
Yep! That’s what I’m here for. Reach out on the Contact Page on the website.
How should I start my investing?
It completely depends on what kind of investing. But whether you know or not, start by researching and learning as much as you can about what’s out there and what your options are. Get as much education in the area you want to invest in as possible and network and connect with good folks in that arena. If it’s turnkeys you want to start with, reach out to us on the Contact Page and let us know and we’ll help you through the whole process!
How do I obtain my first rental property?
If you are talking about a first turnkey rental property, start by reaching out to us on the Contact Page so we can be in touch with you and help you through the process. But in general, for the turnkeys, the first step is just to pick one out ☺ If you are talking about general rental properties, it really depends on how you are planning to buy it—foreclosure, auction, MLS with an agent, etc.
Why don’t I just take the first step to financial freedom? Scared?
Very possibly! It’s very common. If you are scared, reach out to me on the Contact Page and tell me what has you nervous about it and we’ll see if we can’t work through it together. Maybe I’ll have some perspectives that might help.
You can also read 3 Types of Paralyzed Real Estate Investors (& How to Overcome Inaction) by Ali!
What is Ali’s specific experience with Real Estate Investing (REI)?
Your experiences with rental properties? The good, the bad and the ugly!
Ooh, good one!
The good: cash flow! Literally, cash deposited into my bank account every month. And for doing nothing. It’s the best thing ever! Oh, and tax returns. My tax returns have never been higher since I owned rental properties.
The bad: For me, it’s having to spend time each month doing up a statement for my investor and calculating everything and sending him his chunk of money. But that’s just because I have an investor partner on a lot of my properties. But for finite returns on my end, I’m fine continuing to do the statements!
The ugly: PROPERTY MANAGEMENT. If you don’t have a good property manager, your investment is hosed. I went through a couple really hard years where my initial PMs were horrible and it cost me a ton of money. My mistake was not firing them sooner. I was too patient. But little is worse for both your wallet and your sanity than dealing with a bad property manager.
Can I meet you in person to talk about REI?
Quite possibly! Depends on where you are located. I’ve met several folks in-person before.
How much time per week do you spend on your investment properties?
Usually zero time per week! Occasionally I may need to touch base with my property manager about something, but that is usually via email and takes less than 2 minutes, or if it’s a lot of stuff we might do a phone call which might last 20 minutes tops…but those cases are only a week or two out of the whole year.
What has been the biggest challenge you’ve had in reaching financial independence?
Oh, I still haven’t reached financial independence. Still working on it! I’d say the biggest challenge for me has been having enough starting capital to build my passive income as big as I want it.
Would you help me fund my first turnkey investment?
I’m not currently helping fund properties, unfortunately.
Do you plan on buying more turn-key rentals?
Oh yes. I’m only not buying right now because when I quit my engineering job to start Hipster, I no longer had W2 income to qualify for a mortgage. There are a lot of creative financing methods I could pursue but I’ve been so swamped for the past couple years with everything that I haven’t had the time to research them. But very soon, I plan to get back to buying them! Truly, they are all I care to buy. Easy, fun to shop, and hands-off.
If you were faced with the choice to make your passive income from rentals or private lending, which would you choose?
Oh gosh, rentals, all day long. Private lending, I know nothing about it but I would never make returns anywhere close to what I can with rentals. Nevermind I can buy rentals with higher general returns than lending interest rates, but then if I leverage the properties my return jumps even higher, and then the tax benefits sky-rocket, and then lastly the equity/appreciation on a property would squash lending returns any day. Plus the thought of having to chase down non-payers on the loan sounds horrible. And the whole thing screams paperwork to me. I can’t see the benefit.
If you could only swing one rental property, would you focus on condo, house or vacation rental?
Oh geez, house, for sure. No contest. Condos rarely cash flow because of the condo fees each month and vacation rentals can be very wishy-washy. With those, why would I want to constantly deal with short-term tenants and have to expense all the utilities and turnovers (constant turnovers) myself, versus having a long-term tenant who covers all the expenses themselves? Plus the returns are higher on houses than vacation rentals, if bought right.
I think you started with investors. How did you structure those deals?
On a lot of my properties, my investor partner put in the cash required for down payment and closing costs and I took the mortgage in my name and did all the work. So essentially a money vs. risk split. Then we split everything 50/50. That structure only works with high enough margins so there is enough to split.
What are your thoughts on seller financing?
I love it! I just wish there were more opportunities for it. Seller-financing is hard to find.
What’s your biggest headache as landlord?
I am not a landlord technically since I use property managers, but as a “rental property owner” (as I’ll call me), my biggest headache is just making sure the property managers are on their game and behaving.
What piece of tech or software do you wish you had to make your landlord life easier?
A clone of myself. ☺ Since I use property managers, I don’t need tech or software anything though.
Would you sell a property once the depreciation tax benefits were used up?
Not if it’s still cash-flowing well! Plus that would take a while for the depreciation benefit to be used up. And the tax benefits are only one of a few streams of income on a rental property, so I definitely wouldn’t bail out just for not having that one (unless the other streams were in shambles).
Are there any markets you’ve outright eliminated?
Yep. Detroit (declined market, extremely high risk), all Ohio cities (declining markets), and Vegas (industry issues, prices too high, and exit strategy risk) are specific markets I’m currently against working in. Any market that is declining or doesn’t cash flow in addition to those are ruled out as well.