JF2128: Investing As A Insurance Agent With Stacee Evans
Stacee is an insurance agent who bought her first rental in 1996 and slowly started to buy rentals and sell them. She has bought and sold 10 rentals and currently has 3 active properties that she rents out and 1 AirBnB. While living in California, she bought a house sight unseen in Houston, Texas, and shared the specifics of how she found it, the mistakes, and lessons she learned.
Stacee Evans Real Estate Background:
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“The reason I want to learn more is because of all of the mistakes I have made” – Stacee Evans
Joe Fairless: Best Ever listeners, how you doing? Welcome to the best real estate investing advice ever show. I’m Joe Fairless. This is the world’s longest-running daily real estate investing podcast where we only talk about the best advice ever; we don’t get into any of that fluffy stuff. With us today, Stacee Evans. How are you doing, Stacee?
Stacee Evans: I’m doing great. How you doing today?
Joe Fairless: Well, I’m glad to hear it. I’m doing great as well. A little bit about Stacey – she works as an insurance agent, she invested in her first property in 1996, she’s bought and sold about 10 or so properties since then, and she currently has three rental properties and one Airbnb. She’s based in Los Angeles, California. So with that being said, do you want to give the Best Ever listeners a little bit more about your background and your current focus?
Stacee Evans: Sure. So I started accidentally like quite a few people. Bought my first house to live in at ’94, a couple of things about the house I didn’t like, I didn’t want to raise a family there. So I just ended up saving money so I could do the down payment on my next one, turned my first one into a rental, the market went up, took out a home equity line of credit, bought another one, and then another one. Somebody called me and said, “Hey, I’ve got a friend that wants to move to Vegas. I don’t even live there. You want to buy a house and rent it out?” Did that, went up… Just got lucky on all the timing, didn’t know what I was doing, didn’t really know anything about tenant screening. I learned the hard way, made a lot of those mistakes, and then in the last few years, I learned how to learn, I would say. So I did a lot of research, listened to a lot of podcasts, read a lot of books, I started taking it a little more seriously. It’s not my main job, but it’s been a nice side job, especially lately; a nice way to make a lot of money. It’s nice to have a cushion, and I really enjoy it. So far, it’s been great, and I’m now at the point where I’m helping other people. People see my success and I love helping out and giving back that way as well.
Joe Fairless: I’m glad that you do, and I’m glad that we’re having this conversation. It sounds like there’s some lessons that can be shared that you’ve learned. It sounded like you took a more concerted effort fairly recently towards educating and doubling down on focusing on this. If that is correct assumption or if I interpreted it correctly based on what you said, what took place that made you want to take it to another level?
Stacee Evans: Well, for one thing, I really enjoy it. I do like my job, it’s a day job. I’m 40 hours a week, just the normal, and I’ve been there for many years. So I’m getting to the point where it’d be nice to have the option to retire and to be able to live off my real estate. So I might get to that point and keep working, but I’d like to have that and have the freedom and then have more money to do things that I’m more passionate about and just give back and help other people.
Another reason that made me want to learn a little bit more is because of all the mistakes that I’ve made. So it’s given me the courage and the knowledge to have a little bit of information. I live in California; last year, I did a major flip in Texas. It was a house that was almost burnt down, and I did it from living in California. I had actually bought the house sight unseen because I missed out on so many, and I learned how to do that through books and podcasts and forums… Basically, when you’re out of state, it’s all about building your team, and with a lot of hiccups, it worked out great. So it was nice to have that under my belt, and moving on to more things, which is just great for me.
Joe Fairless: Well, let’s talk about that deal in particular. I would love to learn more about the details of it. Can you tell us how you found it, what did you buy it for, what did you have to do, hiccups that you came across, all that good stuff?
Stacee Evans: Sure. So I bought it from a wholesaler. These numbers are [unintelligible [00:06:25].00] they’re going to be within a couple thousand. I bought it for $67,000.
Joe Fairless: Where in Texas?
Stacee Evans: It was in Houston.
Joe Fairless: Okay.
Stacee Evans: Beautiful neighborhood. Of course, I drove by. Like I said, I found it through a wholesaler, but this was probably maybe a total of 30 people. So I was referred to someone, used them, referred to someone else, referred to someone else. I had a lender; this was actually brought to me by a contractor that was looking at other ones who hooked me up with the wholesaler. He told me the ARV, the after repair value would be about $210,000. The contractor said he could do it for $95,0000. It ended up where the contractor took longer. It did come in, as he said, with the $95,000. A little bit of the work wasn’t great at the end, but I ended up selling it as soon as I went to go put it on the market; I thought it was going to be $210,000. My real estate agent said, “Let’s start it at $229,000 because the market’s pretty hot,” and I trusted her. I had three full-price offers within a few days; I couldn’t believe it. I did have to take a little bit of money off at the end. I expected the financing to be the hardest part, and because of good credit and access, the money was simple to get. At the last minute I ended up not using hard money lending, ended up paying cash for everything by using some money that I saved and getting extremely low-interest rate loans. I did part of it on credit cards; it was 0% loans for 18 months with a 3% fee, and then once it was–
Joe Fairless: How’d you come across that credit card?
Stacee Evans: I had the credit cards. I do a lot of credit card churning where you buy stuff on credit cards, everything and then you pay it off at the end of the month and you get all the benefits. I called one credit card company and I said, “Can you increase my limit?” and it was $12,000. They’re like, “Yeah, we’ll give you $60,000.” Are you kidding me? So it was just all kinds of things like that. At the very end, as I was finishing up, there were so many issues with the house. There was a little bit of bumps in the road with the contractor; it took a longer time. He did finish it, it looked great, but there was just a few things that weren’t great, and the buyer was going to back out.
Part of the money that I got was a friend of mine who’s a mortgage broker, and I called him and I said, “Can you do a HELOC for me?” He goes, “Yeah, just sign this piece of paper.” It was a low-interest loan; wasn’t even official, just sign up for the house. So I wanted to pay him back, and then I took out another low-interest credit card loan. So by the time I was about to close, I’d had everything paid off. So I had no more loans, because I was going to turn it into a rental… And then I called my realtor and I said, “Where’s the cancellation?” and she goes, “You’re not going to believe it; the buyers are buying it.” So it ended up going through. I had all this money and now I’m doing more deals.
I bought a house last month [unintelligible [00:08:59].21] Kansas City. I have an amazing team there. I’ve got a local bank there, a lender; it’s all about the team. I’ve got a rehab company, I have property management, I got a real estate agent. I’ve never used property management before. I’ve always managed everything, but these are a little low rent houses, so it’s nice to branch out and do something different, and then to rely more on other people so that I can scale up, which is my next plan.
Joe Fairless: On what you said regarding the churning credit cards and getting the benefits paying them off at the end of the month – when you got your approved credit limit from $12,000 or $16,000, whatever the number you said, to $60,000, how do you access that money to then buy real estate?
Stacee Evans: I just called a couple of my credit cards. I have a lot of credit cards that have zero balance because I don’t really use them. I only use whatever is going to give me–
Joe Fairless: I know, but–
Stacee Evans: So I called the credit card; they send me offers all the time. “We’ll give you a 0% cash [unintelligible [00:09:56].02]
Joe Fairless: Sorry, I’m not asking the question correctly. I understand getting the credit increased. I’m wondering about how do you actually get those dollars and buy real estate? Is that a check that you receive? Because you can’t swipe the card to buy a property.
Stacee Evans: Right. So I call them on the phone and then within two days, they just transfered it into my bank account.
Joe Fairless: Okay, so it’s a cash advance.
Stacee Evans: Correct, with 0% interest.
Joe Fairless: With 0% interest. Okay, got it. So I want to make sure I’m wrapping up the $67,000 house before we move on. So you bought it for $67,000. How much in total did you put into it?
Stacee Evans: The rehab was $95,000. I don’t have the spreadsheet in front of me with the exact expenses, but I had insurance, I had utilities, I flew back and forth a few times… So I counted all of that in, obviously on my taxes when I looked at my profit. Off the top of my head, I want to say it was roughly another $20,000 with everything, which included going back and forth. And then after I sold it, there was, of course, realtor fees and all of the closing cost fees.
Joe Fairless: What did you sell it for?
Stacee Evans: It sold for $229,000, but we did have to take $8,000 off, because there was a couple of items that weren’t done properly. So I did that as a credit for the buyer.
Joe Fairless: Okay, so $229,000 minus $8000, minus $20,000, minus $95,000, minus $67,000, not including any of those other miscellaneous things, that’s around $39,000 profit. Does that sound about right?
Stacee Evans: I subtracted all of the interest from my loans, because I did take a couple of low-interest loans. The credit cards had a 3% fee, so I subtracted that. So it was probably about another $10,000 off of that. It ended up being pretty nice at the end of the day.
Joe Fairless: You live in Los Angeles?
Stacee Evans: Correct.
Joe Fairless: This property’s in Houston. It’s almost a six-figure rehab. How did you manage the process and what would you do differently, if anything, if you were to do this type of deal again?
Stacee Evans: I managed it by relying on the people that I had there. It ended up that the wholesaler who sold me the house was absolutely amazing. I was having some issues with the rehab, and when he sold me the house, he goes, “I’ll do whatever you need during the rehab,” and when he said that, he performed just incredibly. He would go to the house, send me videos. So he was almost–
Joe Fairless: What’s his name?
Stacee Evans: His name is Colby, Colby Samson.
Joe Fairless: Colby Samson. Props to you, Colby Samson.
Stacee Evans: Oh, amazing. And he would check on me every week or two. I told him– I said, “I’m new.” I want to say that I did jumped in — even though I had spent a lot of time studying and learning and realizing how to do this, it was scary, and I don’t know that I would say I 100% knew what I did, but the first thing that I would do is – I wrote the one check to the contractor for the initial $30,000, and in my mind, I kept doing worst-case scenario. Okay, if he runs off with the money, I’m down $30,000; I can get through it; here’s how. I never really believed that it was going to work until the very end, and my goal was to come out even. I go, “I just want to come out even; I want to do my first flip,” and when I profited so much, I was over the moon, because it was something completely different from what I’ve ever done.
Joe Fairless: Good for you. There’s a lot of resourcefulness and educated risk-taking involved here and also some leaps of faith.
Stacee Evans: Oh, big time leap of faith. Yes, I did have the money and the access to it that if it went south because I kept doing worst-case scenario, I’d be okay, I wasn’t going to lose everything. But it was scary.
Joe Fairless: When did you complete that flip? How long ago?
Stacee Evans: It was last August of 2019.
Joe Fairless: Okay, and you just completed that less than a year ago, you found an outstanding wholesaler, you found a good contractor, it sounds like, correct?
Stacee Evans: I’m not going to say that, because his communication’s–
Joe Fairless: Okay, average? Below average?
Stacee Evans: He got it done; his communication ended up not being that good, he kept dragging it out, he was running out of money, he wanted me to pay him before it was done…
Joe Fairless: Oh, man. Okay, alright, alright. Well, you found a contractor that you wouldn’t use again, but eventually got you to the finish line.
Stacee Evans: But the house did look beautiful when it was done.
Joe Fairless: Okay. But you have some team members that were discovered that hey, they’re really reliable.
Stacee Evans: Absolutely.
Joe Fairless: What made you leave that area, since you’ve already established some connections that were really helpful, and then go to a completely different state in Kansas City?
Stacee Evans: So my experience is rentals. I’ve had a lot of rentals and I have some right now, and it was pretty much just looking for an area that has a good price to rent ratio. I was a little nervous about just Houston, because it does flood, the insurance is very high, the taxes are very high. So it’s not as good of a return on investment. So I was looking at other areas for that. I’m looking a little more in the long term. I’ve been doing this for so long. I’m looking at the end game, so if I can get some rentals, have a little bit of steady income, pass them on to my kids… So Texas was just a little bit too scary for me for rentals, personally. So I just wanted to find an area that’s going to give me a nice bit of return.
Joe Fairless: How did you become introduced to Kansas City?
Stacee Evans: I actually did a lot of research. I had a mentor that I paid that just gave me a few one on one sessions over the Internet, that taught me how to analyze different areas, how to look at the employment, if the population is going up or down… You want to make sure that when you are looking at a certain area, that the companies that are in the area are diverse, so you don’t have a situation like Detroit had where one company goes out of business and then everything collapses, and you want to look at the income of the people, that their rough estimate is three times their income from the rent, and then just the price to rent ratio where the price of the house is not going to be so high compared to the rent that you won’t make a profit. Where I live in California, the price of the houses are so high that you’re just buying it for appreciation here, but not really for income.
So an easy way to do it is if any of your listeners are trying to figure out how to find an area, you can literally just google ’10 best cities to invest in for rental houses’, and then you just analyze data. There’s a lot of public websites to analyze the data, and look at their average income. I like the area because the schools were decent. So a lot of the areas that I looked in other cities, all the schools were bad, and you want people that have families. So, so far, so good. I’m dealing with a very small local bank there and they just give you the money for the house and the rehab, and then they start out with just interest only for six months, and then instead of having to roll it out or refinancing it, they’ll go principal and interest, and the prices are so low that I’m just putting the 20% down. I’d rather do that than try to do 100% financing. I’m a little more comfortable having more equity.
I know there’s a lot of schools of thought where you buy it and you rehab it and refinance it, you get all your money out and go to the next one, but because of my last deal, I have so much cash that I’m able to do that and just keep a little money in each deal.
Joe Fairless: Now, earlier, you said that you’ve learned some hard lessons. What’s the story of a hard lesson that you’ve learned?
Stacee Evans: My hardest lessons were all about tenant screening. I had one story where I had a house in Vegas, and they weren’t able to pay the rent, and I got an extremely long, detailed email about how the girl couldn’t pay the rent. She put on her application; she was a dancer. So I’m thinking my little kid has dance teachers. Apparently, she worked at a brothel, she was getting diseases, she lived in a house with her ex-boyfriend and her husband and they were out of work and they were fighting, and I got a whole detailed thing; she couldn’t pay her rent. Actually, that ended up being okay, because I served her the notice to evict her. She called me; she goes, “We just can’t afford it,” and she moved out, and she left it a little messy, but it wasn’t too bad. The worst story is, on another tenant screening, I was in a situation where I wanted to rent my house out and I didn’t know what costs–
Joe Fairless: The first one?
Stacee Evans: This is another story. So I probably should have with this one. I’ll condense it, but I had somebody that wanted to run it; everything didn’t check out completely, I didn’t have criteria for running out for my effective tenants like I do now. I rented it to her and all she did was complain about everything and get the city to come out for one item after another. And after she moved out, she sued me and it was a year and a half lawsuit. She didn’t get anything out of it because my documentation was so good, but it was very stressful. So the biggest lesson that I learned is tenant screening.
Joe Fairless: Well, thank you for mentioning that, because let’s talk about your comment about your documentation was so good, because that will certainly be helpful for pretty much every Best Ever listener to learn what about your documentation helped you successfully defend yourself in that lawsuit.
Stacee Evans: So for every issue that she had, she would send me an email, I would reply to her email and I would tell her how I’m resolving it, and then she ended up trying to get a few people to testify for her in court, and she would go to the city Inspector and I would contact the city Inspector, and the inspector would say, “Oh no, we know she’s just trying to get money out of you.” She had about four, five people she was trying to get on her side, and they all came to my side. So she was saying that I wasn’t taking care of the air conditioning and I was sending the technician out over and over, and he said, “Well, her dog is so big and she won’t clean the filter, so he’s blocking it.” So it was pretty much just item after item; then and she said that her kid was getting sick from mold, and I had a doctor that has a mold company and I sent her his credentials. I said, “I’m gonna have him come out there. He can test for mold, he can look at your kid,” because she went and got her own mold testing company, and when I went on Yelp, this company had all bad reviews and they weren’t certified. So I said, “I’m going to send this guy out. He’s legit and he’ll even look your child,” and she goes, “I don’t want anyone that you refer,” and it was just documentation after documentation, and we ended up going to court. We didn’t have to, but by the time we were going to bring everything in, I presented documentation for everything she complained about, had my cell phone text messages, and I had all my emails. So the biggest expense of that was the attorney fees, and insurance covered a lot of that.
Joe Fairless: How much were the attorney fees?
Stacee Evans: I actually don’t know what they ended up being because the insurance covered that. I had to pay about $8,000 of it for an attorney to get my insurance company to cover it because my company didn’t want to cover it; my insurance company. I would guess over $100,000, because it was a year and a half of a lot of work.
Joe Fairless: Wow, and stress on your part; unnecessary stress, right?
Stacee Evans: Extreme stress. Oh, yeah. This is one thing that I learned in life is when something like that happens, [unintelligible [00:21:01].14] happen to you, you get it. So I take 100% responsibility for it. I didn’t know about tenant screening, or kind of did, but I didn’t have strict criteria; you either fit it or you don’t; if you fit it, then everything checks out, you get it; if you don’t fit it, I’m not taking a lot of excuses. I didn’t check out her employment, and I didn’t check everything out the way I was supposed to. So I look at that now that I’m not stressed out about it is a lesson learned.
Joe Fairless: The documentation, fortunately, that you had that back and forth documented, with not only just it documented, but also it sounds like you were providing solutions to her issues during the time, and it’s one thing to document stuff, but it’s another if you’re documenting it and that documentation shows that you’re looking to resolve the issues.
Stacee Evans: Yeah. Well, I mean, I knew that she was trying something. I didn’t know I was gonna get sued but I–
Joe Fairless: How much was she initially suing you for?
Stacee Evans: I don’t even remember the amount. I want to say $300,000 or something, and it was for just emotional distress. It wasn’t even for anything specific.
Joe Fairless: Gosh. Well, I’m glad you shared that story, because we’ve talked about the lessons already, and it’s a risk that we take as landlords, even if we’re not self-managing because in your case, you were self-managing. There’s always some way that something like that could– eventually, some resident could eventually sue a landlord, whether it’s self-managed or through a third party. Yeah, there’s certainly a high degree of confidence that that would get dismissed if it’s especially a third party that you have managing the property, but nonetheless, I imagine it was jarring when you first heard about that.
Stacee Evans: Oh, yeah. For sure.
Joe Fairless: Based on your experience as a real estate investor, what’s your best real estate investing advice ever?
Stacee Evans: Well, that’s a good question. I would say, at this point, and I should have been doing this all along, is to consistently learn, read books, talk to other people that are doing what you want to do, listen to podcasts, and do every single thing that you do with 100% integrity. It’s not a win-lose situation, ever. You always want to help everybody out, and just be nice to the people around you, and if you can add value and help them, you don’t even need to get something in return for it. It makes you feel better and it’s just a better way to do business.
Joe Fairless: We’re gonna do a lightning round. Are you ready for the Best Ever lightning round?
Stacee Evans: I’m ready.
Joe Fairless: All right, let’s do it. First, a quick word from our Best Ever partners.
Joe Fairless: Best ever book you’ve recently read?
Stacee Evans: I am going to say that best recently was The Book on Tax Strategies; I believe that’s what it’s called. It’s by Amanda Han and Matthew MacFarland. I read that book; the main thing I got out of it was you can’t have your accountant just find all your deductions; you have to take responsibility for yourself and saving lot of money on taxes.
Joe Fairless: Best ever way you like to give back to the community?
Stacee Evans: I work with a couple of groups that help feed the homeless, and I’ve been out there with them and I see it firsthand, and I also help out a lot of young people and some older people with financial advice in real estate, but I’m always happy to share any knowledge that I have.
Joe Fairless: How can the Best Ever listeners learn more about what you’re doing?
Stacee Evans: I don’t have a website or anything, but I am on BiggerPockets, so you can find me there. That’s probably the best way I would respond to messages, and I love to talk to people, keep learning from them and have them learn from me.
Joe Fairless: Stacee, thank you for being on the show. Thanks for talking about some lessons learned from tenant screening, as well as when you get sued what you better have ready to go in order to defend yourself, and that’s documentation that shows that you were attempting to resolve each of the issues. So it’s not a he-said-she-said thing. So thanks for being on the show. I hope you have a best ever day and talk to you again soon.
Stacee Evans: Thank you for having me.
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