Finance Friday: How to DOUBLE Your Net Worth in 1 Year (or Less!)

Mindy:
Welcome to the Bigger Pockets Money Podcast Finance Friday recap edition where we catch up with Yourri and see if he’s still mining Bitcoin to heat his house.

Yourri:
And part of that is the fact that I took the non-financial advice that you and Scott May have thrown out into the wind and said, Hey, let’s reevaluate and see am I kicking optimization to an extent where I’m stepping over the dollar to pick up the dot. So I did readjust accordingly. And that’s I think really the thing that we probably want to discuss today because it was a vehement switch in the approach.

Mindy:
Hello, hello, hello. My name is Mindy Jensen and I’m solo Today with Yourri. I am here to make financial independence less scary, less just for somebody else to introduce you to every money story because I truly believe financial freedom is attainable for everyone, no matter when or where you are starting. Whether you want to retire early and travel the world, go on to make big time investments in assets like real estate, start your own business or just heat your house with Bitcoin. We’ll help you reach your goals and get money out of the way so you can launch yourself towards your dreams. Today we are talking with Yourri. Yourri is kind of like my favorite guest of all time because he is a returning star. When we last spoke with him, he was living in southern California in an A-frame with solar panels that powered his old inefficient computer that he mined Bitcoin with.
Not for the Bitcoin per se, but for the side effect, the heat generated by that inefficient computer, heated his house literally my most favorite hack of all time and my most favorite way to use cryptocurrency. Before we bring in Yourri though, I want to share with you our money moment. This is a new segment we have where we feature a money hack tip or trick to help you on your financial journey. Today’s money moment. Do you like to travel? Would you like to travel for cheap? House sit. Sign up for sites like Trusted House sitters where you can be connected with homeowners to watch their house, water their plants, sit with their pets and receive free accommodations in your city of choice. Do you have a money moment that you’d like to share with us? Email [email protected]
All right, before we bring in, Yourri, let’s take a quick break. We are back. Yourri, I have to know, are you still heating your house with Bitcoin?

Yourri:
No, I’m not doing it anymore. As I had previously mentioned, there was a threshold. We’ve gone below that threshold. Also, you may notice that there’s a change in scenery behind me, so I moved, and I’m not in the business of paying for someone else’s heat so my previous A-frame I completed renovations on converted over to a rental property, but we can get into that a little bit further. So to answer your initial question, no, I’m no longer mining for heat.

Mindy:
So now that it’s a rental, did you share your mined Bitcoin for heat with your tenants? Oh, oh, you said there’s a threshold. Now, back when we talked a year and a half ago, you were mining Bitcoin, and I don’t remember what it was, but you said if it gets below 17,000 then it doesn’t make sense anymore. I don’t keep up with it, but what is Bitcoin right now?

Yourri:
Honestly, I’m not checking because it doesn’t affect my day-to-day heating purposes. That’s really what it comes down to. We’ll wrap into it a little bit more. Am I still doing any sort of crypto stuff? Yes, I still have some assets in there, but am I actively mining? Am I actively heating or using the GPUs as a heating source? No, I’m no longer doing that. And to quickly wrap it back up because anyone who hasn’t seen the previous episode this only worked because I wasn’t monitoring for efficiency and I had an A-frame, which is extremely efficient when it comes to how you heat is distributed throughout. I really wouldn’t consider trying this with a traditional home. Consider me a weird one and maybe try not to follow that aspect of a hack though, though it is a really cool concept.

Mindy:
It’s a really cool concept. It is a great exercise in thinking outside of the box, literally thinking outside of the box, because your house is not a box, it’s an A. In fact, on episode 236, which originally aired in fall of 2021, I crowned you the champion of thinking outside the box. You’re an engineer. Sometimes your big brain gets in the way of your regular day-to-day life because you’re like, Ooh, how can I optimize? How can I optimize? I thought that was a great hack and that is in Bigger Pocket Money’s history as my favorite hack of all time because you’re taking a, I don’t want to say it’s a worthless asset, but a worthless asset like bitcoin. It’s not worthless. Please email, I don’t care at don’ttellme.com.

Yourri:
It’s a non-tangible asset.

Mindy:
It’s a non-tangible asset. It isn’t something that I consider, that I have in my portfolio. It’s not something I want. But you took something that was an old computer that isn’t so efficient, and now it’s generating heat and it’s heating your house. You’re powering the computer with solar panels. Literally the sun spits out photons. Is it photons?

Yourri:
Not in my world. I’m an air framer.

Mindy:
Let’s call it photons. Again, if you want to correct me, go ahead and email [email protected] He’s not here. Be like, why are all these people correcting you, Mindy? But the sun spits out energy, your solar panels collect it and power your computer, which heats your house and spits off Bitcoin on the side. Awesome.

Yourri:
Plus I get the added effects of all that solar energy being captured by my solar panels. Well, during the summer you get the shading effect underneath, so I got to help cool it down too. So there’s all sorts of weird benefits, but I think where a really fun place to start that’s going to really open up this can of worms is, it was episode 231 and I think at the time when we had last chatted, I was just under two years out of school, I was about a year and a half out. And in that time I’d stated, hey, I made some really, really awesome choices, made some good investments. And I think I’d mentioned my net worth was around the 130-ish range. So since then, it was October 21?

Mindy:
October of ’21.

Yourri:
Okay, I’m now sitting at 281.

Mindy:
That’s fantastic. You have more than doubled your net worth in one year. And I believe in that episode we talked about the rule of 72 that essentially says every seven years your net worth will double assuming a return rate of what is it, 8% or something?

Yourri:
Correct. And part of that is the fact that I took the non-financial advice that you and Scott may have thrown out into the wind and said, hey, let’s reevaluate and see am I taking optimization to an extent where I’m stepping over the dollar to pick up the dime? So I did readjust accordingly, and that’s I think really the thing that we probably want to discuss today because there was a vehement switch in the approach.

Mindy:
Okay. Well, let’s unpack that then. So you gave a lot of ethereal comments there. Let’s dive in and give some facts. What specifically did you change?

Yourri:
I liquidated my RSUs. I liquidated my speculative fund, and I also liquidated my dividend fund, and I threw it all into a rental property company that I went out and developed. So I did my first deal several at the end of ’21, literally will be the last day of the year. I closed on my first four units as a portfolio deal, two single family homes in a duplex December 31st of ’21. So I went in and just said, whatever, we’ll figure it out and dove headfirst and got as much as I feasibly could, not the greatest financing terms, but we’ll talk about how it actually worked out in the end to my benefit. And then later in April of the following year ’22, I ended up purchasing another five units in the form of three single family homes and another duplex. And then at the end of last year, I also converted my primary over to a rental as well.
So as it stands, I have a real estate company in Oklahoma of all places that have nine units and I’m actually flying out in two weeks to go talk about potentially an expansion of another three units. And then I have my one in California.

Mindy:
So a rental in California, one in California and nine in Oklahoma?

Yourri:
You got it.

Mindy:
Where are you living?

Yourri:
I am in beautiful, sunny southern California. I relocated after I got a major promotion, which will open up a little bit later. And now I am in the Irvine area, so much more expensive area, but it actually has worked itself out to be really darn close in cost of living, like nearly equal. And that comes from some very, very specific decisions I made to be as feasibly close as I could be to work in a strategic area where I basically walk everywhere. So I’ve eliminated the second largest cost out of my budget, which was driving.

Mindy:
Okay. Do you still have your car loan?

Yourri:
I do still have the car loan with my monthly payment being $142 a month, it doesn’t really hurt me in any way, so I’d rather just let it sit. The financing terms are still less than 3%, so I’m very happy to just let it ride.

Mindy:
Okay. So knowing Yourri, I know that he has thought of this instead of just, well, I’m going to keep it for now because. He has thought it through and made this decision. Like Scott says, if it’s less than 5% interest, you should probably keep. If it’s more than 8% interest, you should probably pay it off. If it’s in the middle, you should think about it. You should look at your goals and look at your income and look at all of your specific scenario and make a better decision, make a more informed decision after really, really thinking about it. Your car, it’s California, you’re going to need a car eventually. You’re going to need to get someplace anyway. It’s a low monthly payment. You make a good salary. Great, I approve.

Yourri:
I think the last time we had spoke it was a much more expensive car loan. I mentioned that I had hit a deer because at some point in between, I ended up getting a new vehicle, a very used vehicle as a means of kind of bridging that gap because I did hit a deer unfortunately.

Mindy:
I’m glad you’re okay.

Yourri:
Oh, yeah, I’m fine.

Mindy:
I don’t know if you had hit the deer when we spoke or not. You have the same interest rate that you had before?

Yourri:
Yeah, I lucked out. The interest rate was nearly the same, but I think my payment went from just about 300, if I remember correctly, down to the 140 mark just because I literally grabbed the cheapest thing I could feasibly find and said, this is reliable, this meets my requirements. I’m happy with it. I’m not going to have this thing forever. Let’s just go for it and just be done with it. It didn’t make sense for me to put too much thought, found a deal, went through and said, okay, let’s just be done.

Mindy:
Let’s go back and talk about your job because when we were first discussing with you, you said that engineers typically come in at a high salary, that space engineers typically come in at a high salary and then kind of stay for a while, but you’ve had a bump up.

Yourri:
A pretty significant one. So I made two changes. Yes, I still do believe that inherently engineers do start slightly higher and your incremental increases in salary are not nearly as strong as other professions. That’s my two cents. Others may disagree, but I hit a pretty substantial one for two reasons. One, I did make the switch over to being a program manager, which is more business oriented, and then recently I made the switch back into engineering. I did this dual role thing, and I’m currently actually doing that where I’m both a project engineer, which is a much more programmatic role, and then simultaneously I’m being the program manager for a portion of an airframe that I’m working on. So in doing so, my base salary went up 20%, which is pretty good. I got a new long-term incentive, which is guaranteed money every year in the form of stock units, which work out to 20% of my salary.
And then I have a potential for short-term incentive in the form of a yearly bonus, which is a potential other 20%. So I got a 10% increase from previous where I was because now I have groups of people that I have to manage. So how that works out low end in terms of total comp, it’s essentially like I got a 44% increase, max potentially 56%.

Mindy:
Wow, so that’s a little bit more than the 1.5 that you were projecting?

Yourri:
Yeah, absolutely. And mind you that came from a multitude of different things. It required me to give up the home I was living in, which I was very happy with and move to a completely new area, just bounce and say, hey, let’s go for it. I had other companies reach out to me, which offered me more. That does come back to the point, Hey, could I make the switch over to defense? I just wasn’t interested and it’s worked out in my favor as a result of not just chasing money. I’ve gotten to work on really incredible projects. It highlighted my attributes, which allowed me to really propel my career very quickly. It’s pretty rare that you would have someone go from an engineer one to the position I went as direct path. Normally there’s a few steps in between, but I’m pretty good at what I do. My company identified that and were willing to take those sort of chances, and it’s worked out in both of our favors.

Mindy:
Well, that’s great. Kudos to your company for recognizing your brilliance and kudos for you for jumping on the chance to increase your skills and increase your salary and increase… Not everybody wants to move. I have a cousin who was living in a very small town, and his company closed, and he was on unemployment and he didn’t want to move out of this small town. I’m like, there’s not that many employers there, you’re kind of going to be stuck in this one place for a super long time. He’s like, well, this is where I want to… He didn’t have kids. He just wanted to live in this same small town. Whereas I’ve lived in, I don’t know, 37 different houses in my whole life, and it’s no big deal for me to move. I think while you’re young, that’s the best time to move and see what parts of the world you like. And you still own the A-frame, you could always move back.

Yourri:
Oh, absolutely. Although I do plan on 1031’ing it probably within the next few years, but that was a strategic decision. I actually was debating either selling it or holding onto it. But there’s a very particular reason which we can dive into after we really debrief on the real estate as to why I chose to keep it, because I do believe that there is an enormous amount of appreciation that may come out of that place in a very short amount of time. So now that we’ve covered the W2 aspect, hey, I made some massive strides in that side, really good. And mind you, a lot of that did come from the fact that I took on significantly more responsibility than I recently should have. A bit of a gamble on my side, but it paid off. Then the next thing being the side business of the real estate.
I liquidated most of my stock. I said I’m only going to focus on having my IRA, my 401k as my holdings for stock for now. In time, I’ll bring brokerages back in in the form of those funds that I had previous, but for now I just liquidated everything and said, hey, I’ve got this bill of money, I’m going to go out and I’m going to find something. And that was a bit of a tricky one. It took me a bit to find something that I was pretty happy with. We constantly talk about the 1% rule and stuff like that, and obviously that’s becoming rarer and rarer and rarer if you want to focus on particular markets. But the one I found, I’m buying places for like 40K a pop and they rent out for almost $600 a month.

Mindy:
Okay. So I love those numbers on the surface. On paper, I love those numbers, but sometimes a $40,000 house needs a new roof and a new HVAC system and new appliances, and, and, and… And it costs the same amount, almost the same amount, to roof a $40,000 house as it does to roof a $300,000 house depending on size and all of that, but it can be great and it can be not great. What is the condition? Are you looking at these houses before you go buy them?

Yourri:
Absolutely.

Mindy:
Yes. Thank you for saying that.

Yourri:
New roofs, new appliances, new everything in them.

Mindy:
Yes, wow, for $40,000?

Yourri:
Welcome to Oklahoma.

Mindy:
Sorry, I’m getting shrilly and excited, but, oh, my God.

Yourri:
It comes from two things. One, I have found a gentleman who is looking to retire. He had around 500 units. He has his own construction company, property management, et cetera, and as a result, his economies of scale are much better. A lot of times I go to him and say, hey, how old’s the roof? Can we put a new roof on? We’ll just tack it onto the price. We’ll work it out. So I’m able to get his rates prior to, and it all works out

Mindy:
Okay. Hold on a second. How did you find this guy?

Yourri:
I almost want to hold back on that just so I maybe get on the Rookie Real Estate podcast and talk about the Golden Goose.

Mindy:
Well, it just so happens, I know the Rookie people, so maybe we can connect them with you after this show.

Yourri:
In short, it essentially required me to leverage somebody else’s time to develop that connection and as a result, we both made out like bandits as a result, well, actually all three of us. The person I purchased from is able to get incredible value for his properties. He’s able to offload the ones that he wants when he wants to, because I don’t say, hey, these are the specific things. I say, which ones do you want to get rid of right now for tax? You’re doing all your tax planning, what are you planning on getting rid of this year? Let me take a look through. Let me pick and choose and work alongside with you, we’ll work through this. So he wins out, the seller. I win out because I get basically first dibs. I also get properties that are ready to go. They have tenants in them.
Oftentimes those have been around a very long time, which is great, and I’m happy to work with those folks. I get properties that are renovated, even better. And then lastly, the agent I work with, he was able to go from being brand spanking new to us working together so heavily and me introducing him to specifically working with investors to now he’s completely moved out of single family and small multiplex, and now he does brokering for large apartment complexes. So he’s doing very well now. It all worked out for all of us, and it was tough. It was a lot of hours, but we made it work out.

Mindy:
Oh, hold on one second. Let’s say that again. It was a lot of hours. You didn’t just happen upon four units and now you have nine units in there.

Yourri:
No, no, no. The amount of time it took for me to get the systems in place to be comfortable with how all of this works out was just miserable at first. But now I’m past that, now the systems are in play, things are kind of just… The gears are lubricated. It requires a few hours a month out of my time just for bookkeeping purposes and following up with everybody and making sure that things are going off without a hitch. Quite frankly, I’ve only had one hitch so far. It was at the beginning of this year. I had a emergency gas leak and I said, hey, shut everything off, send somebody over there right now. I don’t care what it is, just go get it fixed. And even that as an emergency, getting somebody out there to completely replace a gas line, tear up the yard, and as a result also have to remove a tree, welcome to Oklahoma, it cost me two grand.
Yeah, it’s been really great. So that’s the scariest thing I’ve had so far. Otherwise, it’s been just an absolute peach. By peach, I mean, respectively, it’s there. There’s certain things I think would cause people a lot of stress, but for me it’s been like it’s just money and these things are… The pool is big enough at this point where everything is relatively self sufficient. I just need to monitor it to make sure that things are moving in the right direction and then keep sourcing good deals.

Mindy:
Okay. So is this seller your only source of these deals?

Yourri:
Right now, yes, simply because my goal is to build up any one company up to about 50 units in a location and to begin to diversify outside of those target areas. Right now I’ve got the nine in that part of Oklahoma. My plan is to build up to 50. And then once that’s well and good, I’ll say, hey, the market’s treated me well, here I will continue to hold onto this, but it’s time for me to go to a different pasture and identify a new area, which I’ve already started doing my due diligence. I’m figuring out where those areas are, and I’ve got a pretty strong opinion of how I’m going to approach this and when that’ll be. But I think I’m a few years out yet, probably five years before I start exiting this particular market and moving on to other areas.

Mindy:
Okay. So a few questions about this. You used the word diversify just now, and you used that in the last show. I’m wondering why you are so concerned with diversification. Not that that’s bad. I think diversification is great, but if you have found a location that is inexpensive, that is generating, that’s almost a 1.5% rule and you’ve got a pool of potentially 500 units to pull from, why would you limit yourself to 50 units there?

Yourri:
Simply put, I’m not necessarily looking to maximize the upside so much as I’m trying to find where that efficient frontier is. Additionally, I’m simply interested in, it’s kind of a silly answer because it is not necessarily monetarily driven, but I really love the chaos. So I do like to go set up the systems elsewhere, and if you just jump into something brand spanking new, sometimes you’ve got to just deal with the bumps and the bruises along the way, and that’s really exciting to me. So for me personally, will I always be in this very specific area? Probably not. Will I keep buying units maybe beyond 50? Maybe, but I’m more than happy to look elsewhere and see what else I can make work. Maybe one day I’ll say, hey, single family, small multifamily, small single family, not really my thing anymore. I kind of want to go look and start doing larger complexes, and I’ll identify a new area that I’m kind of interested in. So simple as that.
Will I leave the State of Oklahoma? Maybe just maybe. I really like it as a rental state personally. I really, really like it as a state. So we’ll see if I get peeled away from that, but I won’t stick to this particular city forever.

Mindy:
Do you use a property manager?

Yourri:
I do. And she’s absolutely wonderful.

Mindy:
So I am just going to share that finding an absolutely wonderful property manager can be very difficult.

Yourri:
Absolutely. I had to interview many people.

Mindy:
Yes. So you said you like the chaos. Go have kids if you want to enjoy chaos. Just have some kids. It’s like juggling with knives and then somebody throws a bunny at you too, and you got to catch the bunny without catching a knife in the bunny. That was a gross analogy.

Yourri:
Nah, it is what it is.

Mindy:
It’s chaos. Kids are chaos. I would much rather have a very smooth running real estate portfolio than deal with chaotic kids.

Yourri:
Yeah, I don’t know. I just like building up the business. It’s something that brings me joy. But you know what, hey, last year I had a completely different mentality than I do now. So maybe I’ll find out, hey, I’m not looking for more. Maybe five years from now I’m going to say I am not looking for any more stress. I do not care. I’m just going to keep riding this gravy train until we hit the depot, and we’ll just end it there. So the idea that I’m rigid is… That’s incorrect. I am relatively dynamic in my approaches and I’ll reevaluate as we go. So for now, I’ll hold off on that. The first four units were purchased by liquidating basically my stocks. The second one was completed by pulling equity out of my primary. I fixed that thing up bought. I bought that property in August of 2020.
So I got great rates on it. It was a fixer upper. I got rid of the carpeted bathrooms, that kind of thing. I got a lot of equity. By the time that the market peaked out out there, it was worth around 385. Right now it’s around the 335 to 350 mark depending on who you find. So I’ve held onto that. I pulled out $75,000 worth of equity. So that worked out. So I now have around $50,000 in equity left in the place, so a decent amount of buffer, but just something to be aware of. I did not get great terms on that. And that’s me mainly having a bone to pick with the company I worked with not sending out an appraiser whatsoever and just slapping a number on it. But that’s a whole different thing. I’m looking to restructure that debt at some point because I’m not particularly keen on them to say the least.
By doing so, they just dropped a note on me the day before we were going to close on this thing, which three days later I’d be closing on my other properties because they kept kicking the can, and they changed the interest rate by one and a half percent and increased it. I was livid. That being said, I’ll be looking to restructure that debt in the future. I’ll probably be looking around for some opportunities as far as how to redo that. It was just frustrating. That being said, it did work out because I bought some properties that are just absolutely doing phenomenal. Arguably my best property thus far has been a single family home I bought with a duplex in back. I bought that one for 142, and that one grosses around $2,100 a month.

Mindy:
Hold on.

Yourri:
Yeah.

Mindy:
You bought on one lot there is a single family home in the front that rents out as a single family home. And then directly behind that is another duplex that also rents out?

Yourri:
Yep, and I got it for 142.

Mindy:
For $142,000?

Yourri:
Don’t worry, I’ve got a right of first refusal. The deal I was really hoping to get done before this, and it hasn’t worked out because the gentleman I buy from is just picking away at this property as he finds time. But I do have right of first refusal on it, which is exactly what I want. We’ve already negotiated the price. It’s an eight plex for 250 that grosses around $5,200 a month.

Mindy:
Oh, my God.

Yourri:
Yeah, a little over 2%. I’ve got a good deal flow at this point. I’m doing fine. I just got to figure out how to source the money. That’s the biggest problem right now. Getting the down payments for these things is just… It sucks.

Mindy:
You looking for partners?

Yourri:
I’ve got a few people who keep on asking to partner with me, but my fear is always bringing personal life into business. And while I’m super comfortable with it and I understand, hey, losing money is a potential thing that can happen, I’m always fearful that friends may not necessarily see it the same way. So I’m kind of at this point where I’m like, I understand you’ve got money you want to throw my way. I totally get that. I’m really thrilled about it, but, time out, I don’t think you understand what this means in terms of business. You’re not seeing your money for X number of years because if we do this, we’re scaling. That’s my one fear right now. You’re bringing partners in. I have the liquidity through that side. I don’t have necessarily the comfort level to know that they’re ready. I know I am. I’m very concerned about that.

Mindy:
Well, that’s when you start partnering with people who are knowledgeable, people who have done it before, people who have a lot of money and just don’t want to bother with the day-to-day.

Yourri:
Absolutely.

Mindy:
But they still want some of the return.

Yourri:
I’d love to go get my title 63, just go set up a syndication on my own somehow, just figure that out and just go directly to my seller and be like, hey, you want to liquidate half your assets? I’ll do it. I’m happy to take them off your hands. So that was last year. It was an incredibly crazy year on the real estate side just because, well, I hit gold. That’s really what it comes down to.

Mindy:
You did.

Yourri:
The financing terms though are not as good. And there is a particular reason why.

Mindy:
Because the Fed kept raising rates.

Yourri:
Well, no, not even that. Fannie Mae does have a lower threshold by which they’re willing to loan if you didn’t know that. Most markets you don’t even care about that, but 40k they won’t loan on. So I had to go find a private equity bank to work with. So I now have a relationship with a small private equity bank in Oklahoma. They gave me a half a million dollar line of credit for my portfolio loan, but that’s tapped out. So I’ve got to go find another source for these next few deals. But most of the houses I purchase, you can’t go get traditional financing with. You have to go get commercial loans and all sorts of goofy things in order to go purchase them.

Mindy:
Even in that location because if you’re buying a $40,000 house, you’re not getting a $90,000 house for $40,000, you’re getting a $40,000 house for $40,000, right?

Yourri:
Yeah. The best margin of equity I got is I did purchase a place that appraised at $77,000 and I bought it for $69,000.

Mindy:
Okay, so you’re getting a bit of a discount maybe, but not a gross discount.

Yourri:
Not always.

Mindy:
If you’re buying a $40,000 house, you’re buying in an area that has $40,000 houses, how are owner occupants buying $40,000 houses if there’s no loans available for them? Because people who are buying $40,000 houses to live in are typically not swimming in cash.

Yourri:
I’m well aware, and there are nicer homes in that market, which definitely do qualify. But these smaller ones, I am in total shock. I have no idea because anytime I’ve asked about them, it does appear that they are rentals. I’m not finding anything out there that people are just living in at that price range. I’m not sure if that’s just because no one’s lending on it or what’s going on. And it is a bummer, don’t get me wrong, but I’m going to keep doing what I’m doing right now, and I’m not exactly positive on how they’re getting around it. So in my case, I developed a relationship with the bank out there. They were willing to work with me. They gave me some really awesome terms. They didn’t even have me put 20% down the first time. They did my business pitch, and they said, well, we’re willing to give you a break. This is your first one. Let’s work together. Let’s establish the business relationship. We’ll let you do 15% down. They said, okay, great. So it worked out.

Mindy:
Have you gone back to them and asked them if they will extend the line or asked them for more?

Yourri:
I did because the first time they gave me a quarter million dollar limit. And I went back and said, hey, listen, I’ve got some screaming numbers in front of me. And I showed them and we worked through the numbers and they said, yeah, we’ll increase to half a million. But at that point, your assets under management versus what’s in the bank right now, we can’t extend it further. I’ll be going back out actually in two weeks to try to chat with the president of another small bank, make the same pitches, show the number, show how everything is operating, et cetera, so that way we can maybe do that large expansion in ’23. The goal is that first deal that we got going on or that I’m trying to get set up in two weeks, which should be for another single family home and a duplex, that’ll be the first one to kickoff the year.
The seller and I have already kind of loosely discussed seller financing, so that may be an option for this first one because I’m fully aware I’m not going to get a bank relationship set up on the spot. That’s way too much to expect in my opinion based off what I’ve experienced thus for. But what I do want is I want to make sure that that bank relationship is well established, everyone’s on board, everyone’s happy for when that eight plex comes up because I am not letting that thing go.

Mindy:
That sounds awesome. There’s hard money that you can get into just to get such a smoking hot deal.

Yourri:
Absolutely. I think anyone who would probably see those numbers as a hard money lender would be like, well, this is a slam dunk. What’s going on? What did you just stumble upon? Did it fall out the back of a truck? That kind of thing. So that might be one route I go. It’s a bookkeeping nuisance to try to go that route if need be. So I’m trying to keep things as simple of systems as possible, trying to avoid over complicating everything.

Mindy:
I hear what you’re saying. Totally understand that. I get the part about the bank saying we can’t extend. I would suggest while you’re there anyway going back in again and saying, hey, here’s my updated numbers. I would love to continue working with you. What can I do? What can I show you?

Yourri:
Even easier, I’ll just pick up the phone because the president of the bank and I are friends on Instagram. I’ll just say, “Hey, James, what do I need to do?”

Mindy:
Nice. Yeah, what do I need to do? Take him out to lunch.

Yourri:
Oh, yeah.

Mindy:
A lot of times these little tiny banks if it’s a little tiny bank… Personal relationships in real estate are so important, and being face-to-face is different than calling them on the phone. And since you’ll be there anyway just a thought, pop in and just, hey, I want to thank you for extending this for me. I have the opportunity to make more, to buy more. I would love to continue using your bank. It’s such a great bank. It’s such a great relationship to me. I really value it.

Yourri:
Perfect.

Mindy:
Where do I need to be? Maybe he just needs to see more income. Maybe he needs to see more potential. I don’t know what they’re looking for because I don’t use a private equity bank.

Yourri:
And that’s something I’m trying to figure out because I can’t just go to a Wells Fargo for these things. Wells Fargo wants nothing to do with these sort of properties because they’re just way too small. So that was the second batch. The next five, which I used by pulling out equity, the terms weren’t very good on that, but all of those properties are actually wrapped up. And this is the bad part of the terms, I’m not going to lie. It’s not super great, but I’m willing to accept it. They’re 15 years. It’s 15 year financing. Not super great. Even at the bottom of the market, when I was purchasing them and this is where the gamble came into place, and it worked out in my favor, we agreed to lock in 15 year 5%, which is like, it’s not great, but I got those terms for the entirety of that credit line throughout that year. So when rates kept going up, it didn’t affect me.

Mindy:
That is a really great rate now.

Yourri:
That was a complete gamble, and I was looking at the writing on the wall and I said, I just don’t know how long this is going to hold out. So we came to agreements on those terms. I was willing to forfeit some of those lower interest rates up front, do a slightly smaller deal, and then I got into a bigger deal and then had that available to me without any worry. So big gamble. That was a little bit riskier than I normally would handle things, but it all worked out, so I’m thrilled on that aspect. That’s the Oklahoma properties. Then I got the California one. California one was just me at the very end of last year because I moved to this area about two months ago, just about a little over two months ago. Converted that house over to a rental. I knew that it was going to take a very special kind of tenant that wanted to live totally off the grid, out in the middle of nowhere, that kind of thing.
I did leave some money on the table. I actively chose especially since it’s California, I had some concerns associated with the tenant versus landlord laws, and I totally get that. There’s benefits to why one does one over the other. But I simply said, hey, what I’m going to do is I’m going to lower my margins. I’m going to give an essentially discounted rent, I’m not going to worry about it by advertising it as such. I’m going to get a larger pool of candidates, and I’m going to be able to select the one that makes the most sense. And it’s worked out splendidly. The person ending renting from me is also a landlord.
So we had that nice discussion. We went through it. I kind of explained why it was coming from this and why it was almost $700 less than some of the averages in the area, which sounds crazy, but as a result, I’ve had not a peep thus far, and it has been nothing but splendid. So it covers the mortgage, it covers the solar loan. It doesn’t create a huge amount of gap for maintenance. But that whole place was completely renovated soup to nuts by the time I left it, so I’m a little less concerned about it. Plus, if anything, I’m just using it as a deduction machine at this point, and I’m more than thrilled about that. But I am holding onto it because of the potential appreciation. Talk about an area of California that is getting a lot of jobs. That little tiny town within 45 minutes of it is Mojave, California, which no one lives in Mojave. It’s like a ghost town to be entirely honest.
There’s the space port, and that’s about it. But last year, California announced that in order to deal with supply chain constraints coming in from the port of Los Angeles, which is the biggest port in the US, we receive our goods from China through that port, and the fact that it is essentially just truck locked all the time because boxes would be unloaded, they’d be put onto trucks and they’d be shipped out. The way that’s being addressed is all the old rail lines that are running through there are actually going directly up to Mojave, California now. By the end of next year supposedly the California’s first ever inland port will be there, which is supposed to bring in another about 2,500 jobs.

Mindy:
What a great way to handle the gridlock there.

Yourri:
Oh, yeah, a hundred percent. It’s awesome. I’ve ecstatic about it because that is an very easy shipping route. I mean, you end up out there and you just take the 58 and you head to Las Vegas and then you distribute accordingly. So they’re going to be taking a lot of the stuff that’s going on, decongest that area from trucks, ship everything through a rail to this desert area, 400 acres of nothing. They’re going to bolster a town that has a population of 3,000 by adding or bringing in another 2,500 jobs. And then there’s another rebar plant being built out there that’s supposedly going to open in ’25 with another 500 jobs. So we’re getting over a billion dollars injected into this area in less than three years. So I said, I’m holding onto this thing. It’s going to bring in a lot of people.
If anybody wants to live rural at all, my community’s literally the only option. If you want to be in the mountains, this is your only option. And there’s not a lot of buildable land up there because it’s mountainous. And building in mountains turns out is not the easiest thing unless you’ve got a lot of cash to drop on terraforming, which a lot of people don’t want to do. And there you go. So that’s my fingers crossed appreciation play. I’m going to hold onto this thing, and my goal is in a few years, just let it go because I lived there for two years, so hopefully I can sell it within three from leaving for obvious reasons.

Mindy:
Or four, and then you move back for a year. There’s a lot of ways. Those don’t have to be consecutive two years.

Yourri:
Totally get it. That being said, I would like to offload it just because it could potentially bring me in a bunch of equity to just throw into Oklahoma.

Mindy:
Right. Or you know what? You’ve got your two years, and then it squeaks into a year and a half, you move back for six months, all of that is now tax free.

Yourri:
Absolutely.

Mindy:
Which is way better than paying taxes.

Yourri:
Oh, 100%. Otherwise, I’ll just hold onto it in time, just 1031 it and just say, yeah, whatever. Assuming 1031 is still around. That’s a whole debate, but we’ll see.

Mindy:
Well, and you will have plenty of heads up if 1031 is going to go away. They’re not going to announce, hey, 1031 is going away tomorrow, the end.

Yourri:
Exactly. So I’m not super concerned. But anyways, yeah, that rounds up my portfolio at this point. So I kept doing what I was doing before, maxing out my… Scott and you might slap me on the wrist for this, I do have the option of a Roth 401k. I actively choose to do traditional simply because being in a very high tax bracket right now out in California, I’ll retain that. I vehemently believe that in time there’ll still be ways of me reducing my effective tax rate in such a way where I can pull out at lower rates, so I’m not too concerned. I know that that may be a little bit of a faux pas especially when you talk to the financial community. Everybody loves Roth. I love Roth too. But in my viewpoint, the way I’ve calculated things out, I think having the extra money today provides me a lot more value than the potential tax savings on the backend, at least from my experience.

Mindy:
And you’ve made a decision that you’ve thought through. You didn’t just choose something by throwing a dart at a wall.

Yourri:
Correct. I didn’t default to traditional because it says traditional. I’m actively choosing to select a traditional 401K and a traditional IRA because of opening up that liquidity for me to deploy it in these really, really great properties I keep finding that’s really what it comes down to. So beyond that, that’s kind of it. Obviously, I took on an enormous amount of debt last year, but to purchase some pretty awesome assets. So I think that the proof is in the pudding. I already mentioned in the beginning of the episode, I went from 130 in October of ’21 to right now I’m sitting at 281. I’m going to call that great success on my point, and I think the system’s working.

Mindy:
I think that’s fabulous success. I lost a ton of money last year. I didn’t make anything last year.

Yourri:
Oh, don’t worry. I lost money too. It’s just some of the gains worked out in my favor. And another note to potential investors, hey, by the way, Oklahoma has yet to see some of these dips. My properties still are going up in value. My friends that live in Oklahoma City, their properties are still going up in value. Some areas are a little bit inflated and other areas are still depreciated. My market has not slowed down yet.

Mindy:
That’s awesome. Yourri, I’m so excited for you. I’m so excited for what you’ve been able to accomplish in one year, a year and a half maybe. It’s not even been a year and a half since we last spoke to you. You have such a bright future, and I’m so excited for all of the things that are coming your way. Where can people connect with you?

Yourri:
Realistically, there’s going to be two options. First and foremost, LinkedIn. I religiously use that platform. I love LinkedIn. Anybody can add me. I’m happy, happy, happy to have any sort of discussions, assuming I have the time. I’m not hard to find. There’s literally only one Yourri Dessureault, so you’re not going to struggle to find me. The other option is on Instagram, which is also Yourri Dessureault. I’m not very hidden. I’m completely open to the public eye. Please feel free to reach out if you’ve got questions, comments, you’ve got really good lending terms that can maybe help me out. I’m always looking for some liquidity, et cetera. So, yeah, feel free to reach out. I’m available to whoever.

Mindy:
And we will include a link to his Instagram and his LinkedIn in the show notes for this episode, which is 389. Yourri, thank you so much for coming on today. Thank you for sharing your update. I think that this is fascinating. I do have to say I’m a little disappointed you’re not still heating your house with Bitcoin, but I think you are doing so awesome.

Yourri:
There’s still time for me to reactivate those old GPUs, but for now, it doesn’t make a lot of sense. Turns out sunny Orange County doesn’t really require much heat and/or conditioning. So you leave the window open, you’re good to go.

Mindy:
I love that story so much, just because you were thinking outside the box, but you have so many other things that you are doing so well. I mean, nine units in one year?

Yourri:
Technically, it was five months.

Mindy:
Shut up.

Yourri:
Because I executed everything in five months. But the business is still going, and I’m trying to expand yet. The big thing is is trying to get these next three units just so I don’t take the foot off the gas.

Mindy:
Yeah, it’s okay if you take the foot off the gas, you’re doing okay.

Yourri:
Yeah, I get that. But the golden goose will only be around for forever or for so long. So I want to make sure that my seller gets as much value as he can out of me and I get as much value as I can out of him and we leave that business partnership well and good, and we all leave happy. If I could put a bow on what I did since last time, I simply maximized. That’s the two word statement. I simplified, and I maximized.

Mindy:
You know what? That is a great way to end this.

Yourri:
Perfect.

Mindy:
All right. That wraps up this episode of the Bigger Pockets Money podcast. I am Mindy Jensen, and he is Yourri Dessureault, the world’s most okayest real estate investor.

Speaker 3:
If you enjoyed today’s episode, please give us a five star review on Spotify or Apple. And if you’re looking for even more money content, feel free to visit our YouTube channel at youtube.com/biggerpocketsmoney.

Mindy:
Bigger Pockets Money was created by Mindy Jensen and Scott Trench, produced by Kailyn Bennett, editing by Exodus Media, Copywriting by Nate Weintraub. Lastly, a big thank you to the Bigger Pockets team for making this show possible.