GI175: Long Distance Real Estate Investing with Ali Boone

GI175 Long Distance Real Estate Investing with Ali Boone

Formerly an Aerospace Engineer, Ali Boone is an entrepreneur, real estate investor, author and real estate investing coach. After leaving her 9-to-5 to pursue ultimate freedom through entrepreneurship, her company Hipster Investments managed to facilitate over $18M in real estate transactions in its first five years of business.

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Announcer:
Welcome to the Global Investors Podcast, a show that focuses on helping foreign investors enter the lucrative US real estate market. Host, Charles Carillo, combined decades of real estate investing experience with a professional background in international banking to interview experts in all areas of US real estate investing. Now here’s your host, Charles Carillo.
Charles:
Do you have money sitting in the stock market? And you’re worried about it or worse. You have money sitting at the bank, not keeping up with inflation. My name is Charles Carillo, founder and managing partner of Harborside Partners. And since 2006, I’ve been investing my money and my family’s money into income producing properties. These are real assets, real properties with real addresses that produce real cash flow. At Harborside Partners, we provide passive investors who love real estate with a turnkey investing solution. If you want to put your money to work in real estate, but can’t find deals, don’t have the time to get funding in. The last thing that productive people want to do is manage real estate. We find the deals. We fund the deals and we manage the tenants, the termites and the properties. Partner with us at investwithharborside.com. That’s investwithharborside.com. Go to investwithharborside.com. If you love real estate, you like the idea of passive income and believe that income producing properties will appreciate over time. Go to investwithharborside.com. That’s investwithharborside.com.
Charles:
Welcome to another episode of the Global Investors Podcast; I’m your host Charles Carillo. Today we have Ali Boone. Formerly an Aerospace Engineer, Ali is an entrepreneur, real estate investor, author and real estate investing coach. After leaving her 9-to-5 to pursue ultimate freedom through entrepreneurship, her company Hipster Investments managed to facilitate over $18M in real estate transactions in its first five years of business. So thank you so much for being on the show, Ali.
Ali:
Thanks for having me. I’m excited to be here.
Charles:
So you have a very interesting background, always interesting to talk to someone that went from the W2 over and like did that transition. Cause I think a lot of people are in that position. Yeah. So tell us about your background both personally and professionally prior to getting involved in your current business and real estate investing.
Ali:
Yeah, sure. So I kind of had the typical growing up. You know, I grew up, my parents trained me, go to school, get good grades, get the sec, get the degree, get the secure job, retire when you’re 65 kind of thing. So I did that and hence that’s where aerospace engineering came from. I come from a family of more or less aviators and so I started flying airplanes and at, at some point in that equation I decided pilots didn’t get paid enough. So I was like, I’ll be an engineer, I’m certain it’ll be the same thing, it’s not. So I went to grad school, did that, you know, so I’d been in school forever doing the path that I feel like a lot of us are told we’re supposed to do. And I tell the story all the time, but I’ll never forget, I went to grad school, finished that, landed the dream job and first day on the job, you know, this is my first big girl job and I’ve got my business casual clothes on and I was like, Oh man, I did it like worlds in my fingertips.
Ali:
And I walked into my cubicle for the first time. Now mind you, during grad school I was flight instructing as a job. So like my office was a sky and landscape and adventure and all sorts of stuff. So I turn the corner to this just drag gray cubicle and I turn the corner and I’ll never forget it, it was like time slowed down and I looked at it and the, the voice in my head was like, Uhoh <laugh>, this isn’t gonna work. I knew it like, and I think I knew it before that, but I didn’t really know I had other options. So I did what I thought I was supposed to do and from that minute on before I ever sat down in my first cubicle, I knew I had to get out. And so it took me five years and within that five years I legitimately tried to kinda shift around in the company, find positions maybe more better suited to me.
Ali:
You know, I I, I gave it a whirl. Like I wanted to say for sure engineering is not my thing and I can very concretely say that I can still make a mean spreadsheet, but otherwise it wasn’t really my thing. And so in that five years, you know, I had skills, I could fly airplanes, I could do engineering stuff, but like nothing that seemed to be a practical application to getting me out of corporate is like, well how am I gonna get outta here? So for five years I just researched everything I could. I was like, I don’t know how I’m getting out but I gotta get out. And at some point I narrowed down what seemed to be the two options that seemed to be the things that get people outta corporate either start a business or get involved in real estate investing. And I chose the real estate investing route, not necessarily thinking it would directly get me outta corporate, but while I was exploring all these things, I was like, well, while I have a paycheck, I might as well do something smart with my money.
Ali:
So I started investing in real estate for my myself and through that, through meeting people and dive into the details later, but through the people I met, through the deals I started getting involved with, one thing kind of led to another and it became a very organic build into building my own company. So ironically I ended up doing the business and the real estate thing combined, which I didn’t see come in. And so I started more or less that business kind of as a side hustle, still not thinking it was gonna get me out, it was helping people return key rental properties. That’s what I had started getting involved with. And eventually it got to the point where I was like, I, in order to grow the real estate business, I’m gonna have to leave corporate, which means, you know, say in LA Vita that Friday paycheck and health insurance.
Ali:
And so I did it and that this year is actually gonna be my 10 year mark of leaving corporate. So I’ve been doing the entrepreneur thing ever since. I started primarily working with people buying turnkey rental properties. I still do that as the primary thing, but in the last few years I’ve started doing a lot of coaching and I also do business consulting kind of on the side. But real estate investing coaching has been amazing because I get to work with a lot of people who aren’t involved with turnkeys at all. And it’s fantastic and I absolutely love it. I wrote a book a couple years ago about real, you know, the industry and how to best get your footing in it. So it’s been fun, it’s adventurous and it can be very stressful, but you know, it, I would, would take the stress over corporate stress all day long.
Charles:
Yeah, that’s awesome. It’s amazing. It’s the paycheck and then also health insurance, which is what I hear every entrepreneur. No, it’s, it’s not from someone with a w2. They take that little they take your health insurance so they whats to call. But it is such a big thing with the cost of everything that’s happening in the United States over the last 10 years. It’s, But anyway, with that, yeah. With that being said what was your first real estate investment? Did you go in as, I imagine you had a full-time job, so you went in and you were, is it true, was it turnkey property? Is that correct that you
Ali:
Well, so that was actually not my first one. Okay. My first one was <laugh>, way more adventurous than that. So what actually, so I was sitting at my desk at the engineering job and at this point I had subscribed to every newsletter from every, I was just like, you know, give me information and give me anything to not work on my engineering stuff. So I get this announcement for, I think it was from Think Realty, the magazine, and it said, Hey, we’re doing this webinar on, well let me preface this real quick. Not soon, not too soon before this, I had started looking at rental properties. Cause I was investigating the real estate thing and I live in Los Angeles. So I went around with an agent and looked at possible rental properties and I didn’t know what I didn’t know at the time.
Ali:
I didn’t know how to run numbers or that I should run numbers, but something about these properties, I was like, I don’t really see where the profit is. You know, the cheapest one to that needed a total gut job rehab was like $270,000. And it’s like, well then by the time I actually got it in rehab it and then it rents for 1200. And I was like, I don’t know the numbers on that, but I feel like something is a mess <laugh>. So, you know, I just looked at these really expensive properties and I was like, I don’t get it. So this webinar announcement comes in and it says Beach bungalows starting at $99,000 in Nicaragua. And immediately I was like, well $99,000 is very affordable. I love the beach and I don’t know where Nicaragua is, but that sounds really cool. So of course I Google, I was like, where’s Nicaragua, Central America, Third world country? And I was like, even better. Like this is, I love doing things that make people’s heads turn. And I’m like, well this seems like a winner. So I, I assumed it was a scam. I really didn’t think anything of it. It was a pre-construction development and the more I dove into it waiting to prove these people as scammers, the more legitimate it became. Wyndham Hotels was in on this Jack Nicholas golf course design was in on this big investors were coming in on this side. This was no small undertaking.
Charles:
I’m sorry, what year was this approximately? So we can idea
Ali:
2011. Okay. 2011. Yep. And I ended up going down to Nicaragua. I ended up going down there a total of five times. Went down there, started really meeting other real estate investors for the first time, which was really cool. Was like found the people. And I bought into it. So I bought a pre development pre-construction development, beach bungalow cuz I love a bungalow and the beach and a home site. And I, so I was $40,000 in and a lot of other people were millions of their own money in and in as famous developer stories go, the money just magically disappeared, never to be seen again. So welcome to real estate. I was like, wow, I’m glad I chose this route. This is amazing. Not really <laugh> but through that the people that I met through that deal were already involved with turnkey and I had never heard of turnkey.
Ali:
And so I had kind of heard a little bit about it. I didn’t really care cause I wanted to stay in the third world country and do the cool stuff. And at that time in 2011, Atlanta was one of the biggest markets, like unbelievable cash flow and just everything. And I’m from Atlanta originally, so they knew that and they said, you know, hey, we know you’re not really into the turnkey thing, but just the heads up the the big market coming is Atlanta. And I was like, Oh, well tell me more cuz I’m from there. So I ended up buying turnkey in Atlanta and that, and so I shifted out of the third world countries, came back to the US and it’s been turnkey ever since. So I didn’t even, nowhere along this entire thing did I ever think that turnkey were gonna be the thing. But now it’s like I can’t get rid of ’em if I try <laugh>. Yeah. And occasionally I try
Charles:
<Laugh>. That’s great. It’s, it’s a very interesting, Have you have you purchased anything else outside the United States since this 10 years ago? Okay.
Ali:
Well not because not so much like the fear, the risk, obviously that is a thing because, you know, when this developer ran off, if that happens in the US there’s the horror stories in the US as well as far as people never getting their money back. Developer disappears to the Caribbean, whatever. But at least in that case, the FBI and you know, US authorities can try to help you in Nicaragua or somewhere like that. You’re kind of on your own. But more than that, it, it was just that the, there’s, I haven’t seen better deals than what, you know, in 2011 and 2012 and then going forward there was no better place to make just a ton of money. So that was, you know, that was my motivation for staying in the US is there’s just no nowhere to beat it.
Charles:
Yeah. It was one thing just on a side note is I remember my uncle was building a house in Costa Rica in oh seven. Oh nice. And he had this great Marriott was inside, it’s still there, it’s outside of HaCo. It’s a place called Los Suenos, which means the dreams. And he built it. My, he passed away and my, my cousin sold it. But the thing though is that when he was building it, I remember down there I spent time with him cause I was the only one that I was self-employed like him and I could go down there. So he invited me down and we were going speaking to all the different architecture architects and everything else he had going on there. Yeah. Cause it thing was like 6,500 square feet. It was huge. Wow. And he, like, they, they were telling us, they’re like, Well the problem down here is that there’s not too many like licenses and regulations. So I’m your real estate agent today. I’m your mortgage broker tomorrow, <laugh>. I’m like your closing agent like Thursday. You know what I mean?
Ali:
And then I’m the authorities if I screw you over <laugh>.
Charles:
Right, Exactly. Yeah. Yeah. And wait a minute,
Ali:
Let’s how I felt nicar,
Charles:
It’s my it’s my cousin that, that runs the police here or whatever. But it’s like <laugh>. So you going in there and that was just one thing that he had. He went through everything about how it worked and he had to change construction teams halfway through and all this kinda stuff. But the thing that was that, it was just that thing was like scared me. Cause I was like, Wow. And I had just bought a place a year or so ago prior to that in the United States and it was like, wow, this is like way over my head. Yeah. And I remember like being down there another time like a year later with investors, and this is right when the United States was like teetering in oh eight and these guys from the United States were going down there investing millions of dollars into development down there. And my brother and I, we got out of this like airport transfer rental car van back to the United States, the back to the air program were like, these guys are gonna lose their shirts. I don’t know anything that they’re doing <laugh>. But these guys were like talking big gain, like oh, 10 million here. And we got investors and I was like, hopefully they came
Ali:
Out much dripping sweat.
Charles:
Yeah. And I’m like, Oh my God, who are you? Even like, who’s your assist? Who’s your agent down here? You know what I mean? That you’re working with. Cuz like you, that was the problem. And that’s why I always ask when people have done it, I just like to hear exactly what they’ve done. But yeah. Not to get off on a tangent, but let’s talk about like what you’re doing now because you’re doing turnkey. I don’t, I, I, I read into it and I know that it’s a little different from normal turnkey properties and systems that you normally will see out there. So can you explain what your current business model is and kinda how you’re working with investors on that?
Ali:
Yeah, so the term turnkey, and this applies to different industries also, but for rental properties, the idea, the metaphor is that you just have to stick the key in the door, turn it, and you’re making cash flow on day one. So in order for that to happen, the property’s already rehabbed. Tenants already in place and property management is on standby to manage the property for you. And so technically you could buy a house next door to you in turnkey condition. But when I’m talking about turnkey rental properties, and when most people are talking about turnkey, they’re talking about properties that are sold by turnkey providers. So there’s companies scattered throughout different cities who go out. They’re basically glorified flippers. They just big scale flippers who cater to investors. So what they do is they go out and buy inventory in bulk, as many as they can.
Ali:
They rehab ’em in bulk. They place tenants, they have property managers set up ready to manage the property for you and you buy the property from them. So the idea, and one of the advantages is, and part of the marketing problem with it is, is they’re supposed to be hands off rental properties. I’ve since learned that people take that way too and it’s like, hey, let’s not think of these as hands off. But in terms of rental properties, as far as rental properties go, they’re about as hands off as you can get. And so someone else is doing all the hard work for you, you’re just buying the final product. So like I live in California where there is no such thing as positive cash flow or a decent entry price for anything. So as a long distance investor, if I wanna buy a property in Kansas City or Birmingham or somewhere like that for a hundred to $150,000, which can’t even buy a bathroom in California for that it, the idea is that it helps long there’s a lot of people it helps, but like long distance distance investors for example, it’s not gonna make sense for you to be the one rehabbing to do all the stuff.
Ali:
So they’re doing the stuff for you. So that’s really what, when you’re hearing people talk about turnkey rental properties, that’s usually what they’re talking about is from those providers.
Charles:
Okay. Awesome. So what are returns that are common with typical turnkey deals? Obviously no one’s gonna hold you this, but just so we have an idea of what’s happening.
Ali:
Yeah, I mean it changes all the time. And you also, as with any property, there’s gonna be a range. Obviously there’s, and with the inventory shortage over the last couple years, a lot of new construction, a turnkey have come up people offering new construction properties. Honestly, in a good neighborhood, the cash flow on those, you’re looking at like a one to 3% cash on cash return. There’s a lot of advantages to those cuz then you have better appreciation potential, better a whole bunch of stuff that can make up for that lower cash flow. But in terms of the cash flow, one to 3%, I’m working with some properties in Birmingham now that usually vary between about, between, let’s see, nine to 17% cash on cash. Wow. And that’s just the cash flow. Again, again, not any of the other profit centers. So, and there’s a whole spectrum in the middle.
Ali:
People sometimes reach out and say, Hey, what, what are the returns you’re getting on your turn keys? And I’m like, you don’t wanna know. I bought, I started buying in 2011, like that’s when the cap rates were like 14% and the cash on cashs were like 30 to 40%. Like we just, we don’t need to talk about it. So yeah. Yeah, it does <laugh> it does change what time and it changes with all the different markets. And then obviously, you know, the nicer properties are gonna be lower, but somewhere ignoring the new construction properties somewhere in the seven to 18% cash on cash depending on your financing and all that.
Charles:
Nice. So can you explain the process or your process? Because I mean we, you explained a regular turnkey process. Can you explain a little bit more in depth of how it works? Where the provider from the time the provider buys, the time that the investor comes in and what they’re kind of getting mm-hmm. <Affirmative> and like can you, can you give us a little idea of how that works?
Ali:
Yeah. And one of the big benefits of turnkey will kind of be built into this explanation, but basically like if you’re the turnkey provider, for example, you know your market, you go out, you find the properties, whether that’s auction, foreclosure, wherever you get your properties, doesn’t matter. Mm-Hmm. <Affirmative>, you buy the property with your money, you rehab the property, you place tenants. And somewhere in that equation you have some sort of property management, whether it’s an in-house property manager, like under the umbrella of your company. Yeah. Or a lot of the turnkey providers will work with a third party property manager that they contract with. So you do all of that, it’s your money and it’s your time. If I come in and I wanna buy that property, I basically, you know, look at your inventory and I’ll, I’m like, I’ll take that one. And one of the biggest advantages for me as the buyer is that in that equation, you’re the one holding all the risk.
Ali:
You know, if the rehab has an overage, if you can’t sell it for what you thought, you, you know, all the typical flipping risk that’s on you, me, as the the turnkey buyer, I get to verify everything before I put a dime down because I’m gonna look at the inspection report, I’m gonna, you know, check out the tenants you put in there, I’m gonna verify everything. And that’s really where that non hands off comes in because I want people doing their own due diligence. I, I should not take your word for anything. I should do the due diligence on this property as if I was buying it non-term key. But assuming I do all that due diligence, everything checks out, I close just like buying a normal house, get your loan, do whatever, pay cash, and then from day one I’m cash flowing and then the property managers manage it.
Ali:
Nowadays just, there’s been some kinda shifts with the inventory shortage and all that kinda stuff. A lot of the turn keys are being sold without tenants. So in that case there will be an initial vacancy period, a tenant placement fee. But it’s honestly because they can, cuz they’re in such high demand, you know, why hold it while it’s taking money out of their pocket and not just sell it. And people are, but the buyers are willing to do that. But for the most part, that’s how the process works. So there’s the risk is on the turnkey provider mostly because it’s their money, their time. You as a turnkey buyer, you’re, you don’t have to put any money into until you personally say, Yes, it looks good.
Charles:
Oh, okay. So yeah. Cuz obviously when you’re buying properties in such hot markets where we are now, I mean they’re, they’re going in and when we used to do it, it would be like, you know, you’re putting in huge deposits on properties. You haven’t seen ’em, you’re told there’s a hole in the roof, you’re still putting a deposit on there, you don’t know what’s going on. Just trying to get deals. Yeah.
Ali:
Tarp,
Charles:
You’ll be great <laugh>. So I mean, so that was, I remember doing that years back and doing flipping and how you had to be like, Hey, came on or this came on or something. You’re like, I’m over there right now, leave whatever you’re doing to find it. And you don’t have to do that. You have much more of a like you said, you can do all your background, your due diligence on properties and on managers. But the, my main thing with smaller properties or with any kind of properties is the management. And I feel management’s a lot more difficult on smaller properties. It’s hard to find good manager. It’s hard, it’s hard to not get feed out where it sounds like all you’re doing is just like putting the manager through kids through college. So what is the most important factor? I mean like when you’re going through this, like how fee intensive, how does the fee structure work with a lot of these providers where I’m not paying crazy amounts of fees for everything and I hope that they would have their own handymen and contractors on. So I’m not paying what I call yellow page pricing.
Ali:
Yeah, for sure. Management, I mean, easily of the, of, you know, I started buying turn keys 11 years ago and now having all these properties for 11 years and working with other people, hands down the biggest downside, downfall, whatever is on the property management side because I mean, as you probably know, property managers aren’t always the most elite part of the industry. You know, like, it, it attracts a lot of people that maybe aren’t all that great. And I’ll be honest, I have fired and rehired property managers, I wanna say four times something like hands down. Absolutely the only problems that I have ever had on my properties are, is somehow related to property management. So with that said, the the fees really aren’t that astronomical. Like you’re really just gonna be looking at somewhere between the six and 10% a month of the monthly rent and then whatever fees and yeah, like a, a sign of a good property manager or someone who’s not gonna call a contractor.
Ali:
You know, if the toilet won’t stop running, don’t call the expensive plumber, you know, send your handyman in. So they’re gonna be cognizant of, you know, who they use for maintenance. And some property managers will upcharge maintenance, like for everything you have to pay for maintenance, they’ll upcharge at 10%. But a lot of ’em don’t. I, none of mine have ever up charged. So that’s an, you know, interview question of do you upcharge maintenance? But the thing about property management is number one, just to understand it may not be perfect and the willingness and just knowing that you may need to fire one and hire a new one. It’s just kind of, it’s part of it. You know, people go into turn keys or working with property managers thinking everything’s gonna be perfect and that’s not necessarily accurate. You’re just really what you’re doing is you’re exchanging kinda like corporate and entrepreneurship.
Ali:
You’re exchanging one stress for another. And so when I look at the, the possibilities, let’s say I can either go find a property on my own, rehab it, do all the work myself, be the landlord or have something more turnkey with a property manager. Yeah. I don’t like the property manager part of the equation for the most part, but to me that is a heck of a lot easier and less risky to deal with than the alternative. So it’s like you gotta pick your, the luer of the evils kind of thing. So property managers, it’s a people management type of thing where if you’re a landlord and rehabbing, that’s more technical management, you’re managing the property, you’re fixing that running toilet, all that kinda stuff. But property managers, it’s just like being the boss of employees. You gotta make sure everybody’s functioning. And so just going in with the right mindset of, hey, at any given point they may really start to suck.
Ali:
And when they do, they may cost you a little bit of money, but it’s a willingness to do something about it, do something about it quickly. And, you know, interview managers. And now I have a couple managers spread out between my properties that knock on wood have been great. Like phenomen, they always start out great, but these have been pretty consistently great for a while. So again, if you expect perfection, you’re gonna be let down. But the fees really don’t. I’ve never, the only time that having a property manager has really messed with my returns financially is when they put really bad tenants in and then it costs me a gazillion dollars and a turnover and all that kind of stuff. But that’s not the fees, you know what I mean? Like the fees straight out I’d, it’s like either I pay those fees or I don’t get to spend my afternoons on the beach. Yeah. You know, I’ll pay those fees if I, it means I get to hang out and not stress and not have to worry about running toilets. So Yeah. It’s all, it’s a perspective.
Charles:
Yeah. There’s there’s one part of it where you’re, you’re hiring them to make your investment from active to really semi passives what I really call it when you have a property manager where I’m involved but not every day. You know what I mean? Yeah, exactly. And I think people, investors really need to know this because passive is sold through all these different programs is Oh yeah, real estate’s passive and I, cause I pay my rent. Well not everybody pays their rent on the first every month and never calls her landlord. So the thing that was, But the other thing too is so you’re tapping into them to handle all these issues and calls and mm-hmm. <Affirmative> marketing of the property. But you’re tapping in like we talked about before, into this network that they’ve, hopefully they’ve developed over decades, let’s say hopefully. That now I’m not paying, you know, it’s you know, boiler goes out 2:00 AM on a Sunday morning, I’m not paying 2 25 an hour.
Charles:
There’s someone going over there for 35 bucks. Yeah. Right. Or $45 to restart something or clean up something, whatever. It’s, and that’s, that’s the huge benefit because those we’re very tight profit margin when we’re dealing with Yeah. Properties with debt and they’ve just been purchased. I mean, we’re talking, you know, in within 10%. Right? Yeah. It’s, they’re not extremely profitable investments from like where people think like, Oh, I just pay the rent. They have no expenses. Right. Right. So I think it’s, it’s so important to make sure that when you’re talking to these managers, Cause I’ve gone through, I just signed a new property manager agreement like two, two months ago and I was going through it and they’re like, they had something in there and I’m like, what is this? Like where I’m paying a surcharge of the hours for health insurance for them?
Charles:
And I was like, this is really, you just take that out <laugh>, you take that out. I was like, so you youth to really go through these and figure out, and you’re like, Okay, that’s hourly’s a little high, but hey, I mean, if we can, I’ll pay this hourly all day long if you don’t call anybody with a license. You know what I, so it’s like, it’s just these things that you, like you said, you have to that’s the way, that’s what we got into this for being passive and, and you know, and you’re not gonna find anybody that’s gonna manage you as well as you are. I mean that’s just true
Ali:
Exactly. Us
Charles:
Thinking. But it’s just, I mean that’s, that’s what it is. You know what I mean? Yeah.
Ali:
That’s one of the arguments. Like people are like, well property manager’s never gonna manage as good as you do. Well that is a fact. That’s absolutely a fact. And I landlord a duplex close to me down in LA that me and some partners bought, and then I get paid to be the manager of, you know, from the partners. And so not only am I saving all sorts of money by not paying a property manager, I’m definitely taking care of the property way better than someone who didn’t own a du would. And I’m even getting paid to manage it. But I will tell you, I <laugh> Mm. And I don’t care if someone doesn’t take care of a property as good as I do. And if I have to pay the fees, that’s obviously, those are long distance properties, so it’s a little bit, you know, I can’t just walk down to the property property kind of thing.
Ali:
But I don’t care if they take as good of care. It’s not like I’m trying to move in the house or live in the house myself. If they take care of it up to a good rental standard mm-hmm. <Affirmative>, I, you know, and so some of the, the arguments that people give, I mean at the end of the day, some people just are, they’re gonna lose sleep if they’re not managing something themselves. In that case, definitely manage yourself. No investment under the sun is worth you losing sleep. But, you know, there’s a lot of perspectives that need to shift about like why property managers are bad. Well, yeah, they’re, some of ’em are bad and exactly the way you’re thinking, but again, the trade off for that is now you have to spend your time insanity and all of that to save what, to get you where, you know, and every situation is different obviously, but yeah, of course they’re not gonna take as good of care of it as you would, but you don’t necessarily have to care about that either.
Charles:
Yeah. There’s different levels of it too. If I, I don’t have to eat off the floor of one of my common stairways in the back, but if water’s coming out of the ceiling, Yeah. We should take care of that. Right. So that’s different levels that,
Ali:
But if they’re gonna take care of a, to a perfectly slightly above average level, perfect.
Charles:
My renters are happy, I’m happy if the property’s in good shape, you know. So so how do you, we we, you kind of glossed over a little bit by going from W2 to your, to what you’re doing now. How did you position yourself both mentally and financially to make the leap from employee to entrepreneur? And like how was that process?
Ali:
Well, I’ll be honest about the financial side, I did not prepare well for that at all. <Laugh>. That was, if I could go back and do it again, I, I see why I didn’t put more of nest egg aside because I was working at that point I was in to classified projects. And so I was actually traveling Monday through Thursday or Monday through Friday to top secret classified location. I was a top secret flight test engineer by the end of it. And so I legitimately didn’t have access to many unclassified computers to work on my real estate business. So I was kind of trying to do it, but it’s not like I was going home every day at five and could work on it. And so, well I, and well, I guess really what it was is that I just, I was at a stopping point and the, because I was working the classified side, I had to either quit or I had to quit one of ’em real estate or engineering job because I wasn’t gonna shift back to suddenly being home at five o’clock every day.
Ali:
So I actually took the leap kind of fast. I was also kind of antsy to get out. And I actually had a proper, one of the turnkey under contract at that time, but there was a delay with the deed or something and it wasn’t getting closed. So we actually had to switch to private financing cuz I quit my W two job. So I no longer qualified for the mortgage. So when I say I kind of rushed out of there, I kind of did, it wasn’t a rush, but I left there with not nearly as much money in the bank account as may have provided me some sanity <laugh>. And so I lost a lot of sanity over that next year while I wasn’t making much. But at the same time, it also put me into panic mode, which meant I had a fire under me.
Ali:
I mean, I was, was working, I was like, I don’t have, I, I can’t slack, I can’t do whatever, like I gotta, I gotta hurry cuz I don’t know where my rent is coming. I gotta work. And that ties back into the mental preparation for it. And I would say part of what helped me was I just had a very internal inherent drive. I had to get outta my own. Like there was no questions about it. I needed my freedom, I had to do this and I knew it. But I would say the absolute best thing that I ever did to mentally prepare myself for this. And it paid dividends over the first couple years of business that were pretty rocky. I read so many books and this was, I mean the internet was around at this time, but I wasn’t really an internet person.
Ali:
Like bigger pockets wasn’t really out yet. Like there wasn’t as much, it was just kind of messier online. So I was reading books all the Robert Kiyosaki books, all the, you know, whatever books. And there were so many things in the books that the people would say, whether about entrepreneurship or real estate, they would say, this is gonna happen to you, here’s how you can navigate that when it not if when it happens. And so sure enough I would hit those exact things and I’m like, oh this is totally normal because I feel like had I not read all those things in the books, I would’ve thought that I was doing something wrong or this isn’t okay or this isn’t normal or whatever. And so mentally all day long, 100% it was the stuff I read beforehand so that I knew when things were coming, I knew what challenges were en route and I knew that they were okay and actually a good sign when they happened.
Ali:
Yeah. So that was really, that was game changing for me and a mentor. Highly recommend the mentor for sure. That was, cuz there were many times where what was said in the book absolutely did not help me <laugh>. I was like, oh, panic and you know, everything’s setting in and you know, I launched myself off the cliff, I’m dangling off the side of the cliff and my mentor’s like, you know, hey hop back up here, let’s, let’s chat. And it was kinda like he was able to reel me in every time, pull me back up off the cliff, reset me, re-energize me, re-motivate me and then I could keep going and then sure enough I’d jump off the cliff again. You know, So it was kind of that, you know, he was, he was kind of the after the books and the mental preparation were before and then he was the during and, and after for sure.
Charles:
Yeah. Interest. Very good. So what are some common mistakes you see real estate investors make throughout this your, your own kind of voyage to where you are now?
Ali:
I’ll give two answers about it. One that’s turnkey specific cuz that’s what I’ve been doing for 10 years is work and what turnkey buyers. So I see their mistakes all the time and, and I was actually one of ’em, a lot of their mistakes are exactly the same mistakes I made. And then just general real estate as a whole. So the turnkey, the number one mistake that I see them making is not doing due diligence because these things are marketed as, hey, this expert is going to give you this property and it’s gonna be great and it’s gonna cash flow of this. And they’re like, Okay, sign on the dot line. I’m like, Oh. And it’s, it’s in the messaging. I get it. Like, and I’m trying to make people realize there needs to be a change in the messaging of these are not hands off.
Ali:
You should absolutely look into these properties just as much as you would. Cuz if you were doing this all on your own, you wouldn’t let anything go by without interviewing people, checking on things, verifying, don’t trust a turnkey provider. They’re doing the best they can, but they’re human. So there’s mistakes. So hands down, not doing due diligence in the same way that they would do for any other property. And some of that goes back to what I said about they’ve gotta reset their expectations cuz they’re expecting perfection. And I will tell you the minute, if there is one decimal point off in a proforma, immediately their brains go to scam, scam. I’m getting scammed every time. And I’m like, I, I’m talking ’em off the cliff all the time. So that’s on the turnkey side, expectations about the hands off and you know, how perfect they should be.
Ali:
Real estate investors in general, The big thing I see is two things, not taking the time to learn what will actually make a, a strategy successful. So I’ll have someone come up to me and they’re like, Hey, I found this property, I think it’d make a good rental property, What do you think? And I’m like, Well what do you think? You know, cuz there’s certain things you can look at to say, Oh yeah, this should make a good rental property. And they’re like, well I don’t really know <laugh>, you know, I get it. We don’t know what we don’t know, but like learning to run the numbers. How are you gonna sustain the numbers? Like learning how to be successful with a strategy they don’t even oftentimes realize they need to do that. So missing that whole thing, just assuming a property’s gonna work and not taking the risks seriously.
Ali:
And then the big thing that I feel like people don’t really talk about is, I mean, what happens when you Google how to be a real estate investor? What do you immediately see? You should wholesale, you should flip properties, you know, add value to the property. Well for some people sure. But for a lot of people, no. And it’s taking that time to really look at all the options because there are so many options in this industry. You can find one that follows suit with your natural abilities, your natural skill. And you can make it your own. Don’t, I mean, yeah, some people are gonna be great wholesalers, but I, yeah, like don’t do it because someone says it and you know what’s gonna happen is they’re like, Oh, I have to wholesale cuz everyone said I do. And then they do it. They don’t succeed at it, they’re terrible at it, they hate it and they’re like, well guess that’s it for real estate.
Ali:
No, there’s, you know, and so it’s, it’s just missing that kind of internal reflection of like, Hey, what might I actually be really good at? Cuz like me with turnkey, you couldn’t have paid me a million dollars even when I started into real estate to think that turnkey would be my thing. That sounds stupid. And like, how am I what? Like, but it worked and it, and it, it, it just followed my natural abilities and here I am. So it’s that, you know, just really not, people just fly into investing too fast and it’s like, hey, if you just take two seconds, reel it back in, you know, look at yourself in the equation and then investigate other strategies so you’re better setting yourself up for success.
Charles:
Yeah. The other thing too I liked is about the wholesaling flipping or whatever, and they, they get some sort of strategy. There’s so many strategies to make money in real estate. Mm-Hmm. <affirmative> there’s so many people just see in your closing statement, how many people are getting paid on what you’re doing. Yeah. And you’ll see. But the thing though is that it’s one of those things where people are like, Oh, I’ll do wholesaling, I’ll do flipping. Well that’s like another job that you’re, you’ve told me initially you want passive income. Yeah. None of this is passive income <laugh>. Oh,
Ali:
So you talk, so you work with the same clients I do.
Charles:
And you’re like, well, you know, it’s just like your goal. It’s like, and then it’s also people are like, well this is more toward passive income. Well no, I want to be an operator for now this new strategy. Well that’s like another job. And that’s like restarting and you’ve been in your job right now or your career for 20 years, so now you’re gonna go back to square one. Do you really love real estate? And most people, No, I just want passive income. So you’re like, okay, so you, you know, so it’s like, it’s one of those things and you don’t wanna be like dumb it down, but it’s really straightforward. You’re like, yeah, you want passive income, Invest in stuff that’s gonna require a little no time. There’s a system there, people are working for you. Versus hey, I’m gonna start a whole new thing. I’m gonna get business cards and a logo and a website and like, you know what I mean, Where you could just spend your time with what you’re doing and increase your money, increase your income, that you can invest into more passive, semi passive investments. So yeah,
Ali:
Like what you just said, I, I say this more when I’m doing business consulting stuff, but I, I use the phrase all the time. I’m like, don’t build your business before you’ve built the business. Don’t make your business cards and your website and all that before you’ve ever made a dime. Do you know, if you decide you wanna be this successful wholesaler, well, wholesale of property first, make sure that you’ve made a penny before you create the business card. And, and I’m guilty of this too. I always say like, I had 167 different business ideas and only one of ’em worked and that was because I didn’t build it before it built itself kind of thing. But yeah, you know, the wholesaling thing, I can’t tell you how many people have reached out and they’re like, I want passive income. And then they tell me that they have a nine to five job and a family of five.
Ali:
And they’re like, So I’m gonna wholesale and I’m, I I was, and my, my response always is when <laugh>, yeah. You know, like you’re already working a full time job and you have a big family. When exactly is this wholesaling thing gonna take place? Never mind the passive income, you know, my summer. But that’s really what I’m saying is the mistake I see people making is not looking into a strategy enough to know, if you look into wholesale and you would know that it is a job, it’s not even just active investing. It is a job. And so if you know it’s a job and you’re like, I think it sounds really cool and I would like to do it as whatever degree of job, great, but it’s more people are going into it because they think they have to do it. They have no idea what they’re talking about. And that’s really what kinda sets ’em up for disappointment later.
Charles:
Yeah. Well this is one thing too. And it’s you have all these gurus and all these different strategies are selling stuff, and that’s what people find. Those are the big marketers online and that’s what people find. And then they get, you know, tunnel vision as this is the only way to do it, which is not true. There’s so many different real estate cross classes, there’s so many different strategies. I mean, you can, you can be a multifamily investor in small multifamily, you can be in section eight, you can be in C B A D, I
Ali:
Mean, so you’re bringing up all the ones. People call me, but they’re like, I’m gonna be a multi-family investor. I’m like, Cool residential or commercial. And they’re like, Huh,
Charles:
<Laugh>, <laugh>. So it’s, yeah. So it’s just one of those things that people get it and they’re like, this can do it, but it, it takes down that like I like the idea you said about the proof of concept cause that’s very important. So as we’re finishing up here, what do you think are the main factors that have contribute to your success? Ally?
Ali:
I think, well, I mean, being willing to take the risk, and I almost don’t answer with that one just because I’m just a risk taker anyways. I realize that some people are not. So it’s not like it took a concerted effort for me to take a risk. But I would say probably the number one thing that has contributed to everything is me just being myself. Because me being myself and not trying to fool myself in any way, number one, put me in the strategy that worked. Again, I don’t it on paper. It seems stupid, but it works. So, you know, I real.

Ali:
Number one put me in the strategy that worked. Again, I don’t, on paper it seems stupid, but it worked. So, you know, I really followed what I’m good at and what came naturally to me and kind of the organic path, but also it’s why people connect with me. I, I have people call and I’ll be the first one to be like, Mm, you shouldn’t buy a turnkey. Or here’s why. Turnkey providers absolutely suck. Like, I don’t filter anything. And I feel like that’s what, you know, people come to me for. And I mean, my God, my company’s name is Hipster Investments, I’m not even a hipster. And people are like, Why? In the, like when I ran that name by a couple people, they were like, No, why, why would you do that? And I didn’t know why I was doing that. I just kept having this voice in my head, it sounds dumb, it, you know, whatever doesn’t sound professional anything, but the voice was in my head.

Ali:
I followed it. And so I think when people are willing to do that and be honest, you know, because I don’t like waking up early, for example, and that kind of makes me sound unprofessional. Well, it’s the truth. So I don’t wanna have so thing where I have to wake up early every day, you know, it’s that, it’s that kind of brutal honesty of who I am, what I’m good at, what I enjoy doing. People are gonna connect with that and it’s gonna put you in the right strategy that’s a fit for you because not even are there a million different strategy options, like you mentioned, there’s a million different ways to do each of those strategy options. And if you put a room, if you have put 200 investors in a room, I guarantee you probably no two of them are doing anything exactly the same. Yeah. So that’s the intimidating part of this industry is you kinda, it makes it hard to navigate. But it’s also the good news too, is there’s literally some way for you to be just in your self as an investor and very successful at it.

Charles:
Yeah, that goes true. I remember meeting some investors from Boston years back, this older guy, and he had been like the contractor and he bought like 33 family houses in Boston, outside of Boston. And he was like, he had Section eight in him and he had this like system and he was like, No. Like I was talking to him about it and I was like, and he is like, No, this is like proven I’ve done this for decades. It pays me, I like live here. Like I’m the, he had it, like he had this strategy down to it was perfect, right? Mm-Hmm. <Affirmative>. And you’re like, this is, this is like what a real estate investor, like this is thing. He goes, Nope, I don’t deal with anybody that doesn’t, I don’t get paid from the government on blah, blah, blah, blah, blah. Yep. And he had everything. It was completely set up. And that’s so different from probably his neighbor on one of the properties is like, No, I deal with, I don’t deal with section eight. I only deal with people. You know? So it’s like, it’s kind of, it’s interesting how that works. But

Ali:
And if you were, if he were to like write out his whole perfected process into a manual and someone else was gonna try and replicate it, I would almost guarantee it wouldn’t worked. Yeah. And it’s like that, it’s kinda that mystery component of like, Hey, wait a minute. You know, it’s like when you hear the gurus talk, that’s why people get so frustrated. Cause they’re like, Well, I followed the process. And it’s like, well, but his process is different than yours or hers is different than yours. And yeah. Like I guarantee you people wouldn’t succeed with that perfectly proven over decades model because it’s, it’s gotta be tailored to you and to what works for you. And section, section eight may work great for some people won’t for others, just like your point. Yeah. It’s, it’s that you gotta be honest with yourself and realize that you’re not gonna get the instruction manual step by step from somebody else. You have to make this your own period. Yeah.

Charles:
So how can our listeners learn more about you and your business ally?

Ali:
So I, I think I mentioned earlier that I put a book out a couple years ago. It’s called Not Your How to Guides Real Estate Investing Life Lessons on Hacking Your Mind Before You Hack Your Wallet. And it’s kind of what we’re talking about today. It’s more the mindset kind of thing of like, how can you set yourself up to better succeed as an investor, looking at your strengths, understanding the industry better. I do interviews with successful investors to give you a day in the life of what is the day in the life of the wholesaler or the flipper or whatever. So I set up a link for your people. Let me make sure, I’m actually gonna tell you the right one. So my company’s name is Hipster Investments. So if you go to hipster investments.com/global Investor, you can download a free digital copy of the book. And there’s ways to contact me on there as well. And if you want, if you’re like me and you have to hold a book, there’s an Amazon link also. But yeah, go check it out. Get a copy of the free book, Reach out any time. I’d love to hear from everybody.

Charles:
Great. So what I’ll do is I will add that link into our show notes. Perfect. And thank you so much for coming on today and looking forward to connecting with you in the near future.

Ali:
Thanks for having me

Charles:
On. Bye-Bye.

Charles:
Hi guys! It’s Charles from the Global Investors Podcast. I hope you enjoyed the show. If you’re interested in get involved with real estate, but you don’t know where to begin, set up a free 30 minute strategy call with me at schedulecharles.com. That’s schedulecharles.com. Thank you.

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About Ali Boone

Formerly an Aerospace Engineer, Ali Boone is an entrepreneur, real estate investor, author and real estate investing coach. After leaving her 9-to-5 to pursue ultimate freedom through entrepreneurship, her company Hipster Investments managed to facilitate over $18M in real estate transactions in its first five years of business. She was a long-time writer for BiggerPockets and has been featured in the Motley Fool, Fox Business, Business Insider, Investopedia, and US News. She recently authored NOT Your How-To Guide to Real Estate Investing: Life Lessons for Hacking Your Mind Before You Hack Your Wallet. Outside of real estate, Ali also teaches flying and can often be found snowboarding or volunteering in prisons. Her ultimate goal is to one day challenge Tim Ferriss to a lifestyle design duel.

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