Financial Success Through Medium-Term Rentals – Sarah Weaver Transcription:
Steven Pesavento 00:05
This is the Investor Mindset podcast and I'm Steven Pesavento. For as long as I can remember, I've been obsessed with understanding how we can think better, how we can be better, and how we can do better. And each episode we explore lessons on motivation and mindset for the most successful real estate investors and entrepreneurs in the nation.
Steven Pesavento 00:27
Alright guys, welcome back to the investor mindset podcast. I'm your host, Stephen Pesavento. And each week, we share mindset tips and real estate investing strategies to help you take your business and your investment portfolio to the next level. And today is no different. I have Sarah Weaver in the studio today. How you doing today, Sarah?
Sarah Weaver 00:45
Good. Thanks for having me, Steven.
Steven Pesavento 00:47
And Sarah just put out a new book through bigger pockets called 30 day stay. She runs a number of different businesses traveling the world having a good time living the good life. And of course, uses real estate as one of those key vehicles towards really creating that dream life that we all want. And she's doing it. So she'll be a great example of somebody who's living that life. And if you're interested in that, you'll be able to learn a lot today. And even if you're not, I think you're gonna be able to take away some big takeaways. So Sarah, are you ready to get into things?
Sarah Weaver 01:19
Yes, I am. All right. So
Steven Pesavento 01:21
before we get into the juice, tell us if we start out by looking back at earlier in your life, what events or influences from your childhood shaped who you are today?
Sarah Weaver 01:34
Yeah, great question. One event that was really a pivotal moment was I was actually in a near fatal car accident. I was 16. We were T boned. And at about 55 miles per hour. And point of impact was where I was sitting. And I had a number of injuries, I broke my pelvic bone into places my clavicle, my arm. And it really solidified this personality that I have where I am a yes person to a tee, sometimes to a fault. But I just really started living then on like, tomorrow truly is not guaranteed. And I learned that at 16.
Steven Pesavento 02:18
It's so true. And you know, as hard as that experience was, I am sure. As hard as it was, what those experiences really do is they set you in on this path of who you are. And you had a choice in that moment to either be scared, or either have faith that you've got the control to live the best life that you have. And the set that out. And for so many people, they have these little mini experiences, but they're not quite shocking enough to get them to wake up. And it's really a shame because you don't need to lose somebody or, you know, break a bunch of bones in your body in order to realize that it's time to wake up and start living life. And so, before that point, you know, you're 16 years old after that, you know, when did you look back and realize that this was an absolutely pivotal moment for you.
Sarah Weaver 03:11
It was probably two years later, when everything just looked different. You know, like the friend group that I had? Well, Sarah, you're not fun anymore, actually got said to me. And then the boyfriend that I had started dating one of my best friends because she was still fun. And I wasn't fun anymore. And so really quickly started learning these like social cues of okay, well, that's not a very good person, or that's a selfish person or, you know, really started learning the value of investing your time into good people. And so it taught me this beautiful skill of navigating friendships, and I can now say, years later, I have the best friends in the world. Because I'm really I have a great discernment of people.
Steven Pesavento 03:59
Yeah, it's such a good point. Because, you know, when we make changes, that's one of the things people often ends up anchoring them where they're at is unless they have a really clear vision of that compelling future. And you know exactly why you're doing something or the pain is literally big enough. And in your case, it was to set you out on this path. People often will bounce back, though, they'll stop the change from happening. And it's not that the people around you were bad people. It's not the people who are starting to stop people from changing or bad people. It's just they're living with this blueprint of the world. And they weren't ready to make that change. You know, they were living in this world and you're looking at it from a new perspective. And it's so true when it comes to people stepping out of what I would call traditional, the traditional work world into a world where they can actually create that financial freedom. And one of the things that I realized very early is that like without having that kind of experience, you have to create it for yourself, or you have to really create Eat this compelling future. And that's part of the name your number process. You know, it starts out by setting that goal picking your passive income number. But really, it's all the juice all the motivation comes from connecting to what life is going to be like. So tell us a little bit about the life that you've dreamed up. And then we'll get into the vehicle that you've used to get there.
Sarah Weaver 05:22
Yeah, it's really interesting. I, when I was 19, I actually studied abroad, and again, tying it back to the accident. I think it's because Why didn't want to wait until senior year? Because what if I didn't necessarily think I was walking around thinking morbid thoughts all the time, I was more thinking, what if I get an internship or a boyfriend or something that's going to keep me from studying abroad. So I studied abroad right after freshman year. And then that's when everything changed. I was like, wow, I want to travel the world. And so I took inventory of my skill set. And I realized I'm great with people. I'm a great communicator. I was a journalism major. So naturally, I added on a second major of International Studies, and I wanted to be an international journalist. And so I pictured a life where I was jet setting around the world. I wanted to be Lisa Ling. She was like my idol when it came to journalism. She had long in depth pieces. And that's what I wanted. And so it's funny now, you know, 10 years later, I am jet setting the world and meeting people and telling stories, and I wrote a book, but it's not quite traditional journalism.
Steven Pesavento 06:31
Yeah, yeah. But why go the traditional route, once you start getting out into this world, and you start seeing what's possible, and you start realizing that, oh, hey, everything that I dreamed up, I can actually wine this together into this incredible life, where I get to do the things that I studied, and I love, but that actually also fuels the lifestyle. And I think a lot of people end up thinking that these have to be two separate things, hey, they absolutely can be for a lot of people creating that separation between the dream life and the path towards getting there. You know, sometimes it does make sense to separate it. But oftentimes, as business owners and entrepreneurs, which, you know, when it comes to money, and financial independence, you know, a lot of people don't really understand money, you know, you got to focus on how do you make money, then you got to focus on how you multiply money, then you got to focus on how you manage money. And I set it in that order for a reason, because a lot of people are broke, and they're trying to manage money by saving a buck or two at Starbucks and drinking coffee at home, instead of going out and figuring out hey, how do I do this thing called make money. And one of the best ways and fastest ways to make money is to be a business owner and to do your own thing, but you don't have to, you can be a high income earning producer, you can do a lot of other things that can make money. And then that's when you get into the investing space of of bridging that gap between the money you have in order to multiply it. So I know you wrote this incredible book that just was published. Tell us a little bit about your strategy, both for making money. And then because it's an active strategy, where you're actively operating, you're making these decisions, you're going out and finding these properties. You're putting the manager in place in this business that actually allows you to have some semi passive income as well.
Sarah Weaver 08:13
Absolutely. So the book 30 day stay walks through the investing strategy called medium term rental. So it's a furnished rental, that you rent for 30 days or more, hence the title 3030 day stay. And what I love about this strategy is I thought I had to be an active investor in order to make the most money. So I thought I needed to own short term rentals and I had to self manage. But what I realized is that I could have medium term rentals that would only have four turnovers a year, instead of sometimes four turnovers a week. And I could hire a virtual assistant, and have her manage them for me. So I now have in house management, and I'm pretty semi passive. It's definitely not fully passive. There's definitely investing for that. But I'm more passive than I ever imagined and so much more cashflow than a long term rental.
Steven Pesavento 09:09
I love this medium term strategy. I fell into it myself because I had put an Airbnb together. I'd been doing Airbnb since 2014. Back when you make a 7x, or an 8x Return on a lease, so it was very different than it is today. But once Airbnb got banned in the area, I had to turn and start realizing that wow, you can actually make another 23456 $700,000 A month depending on the type of property you have per month. And the only difference is you've got to find somebody every 468 months. Sometimes people stick around. So tell me Sarah, where did you kind of realize this and then how is this strategy different than say long term? Traditional rentals?
Sarah Weaver 09:56
Absolutely. I discovered it by turning my primary into a furnished rental. In my mind, I thought this will be great. It'll get rented on the weekends, I'll go visit my grandparents or I travel full time. So I'll go down to Mexico. And my very first tenant was a traveling nurse. And I realized, Oh, this is awesome, you get one turnover, you know, one time, you have to communicate with your cleaner for three months, and then that tenant even extended and stayed an additional three months. So then I slowly started turning this is inside of a four Plex, I started slowly turning three of the four units into medium term. And then I bought the four Plex next door, I turned all of those into medium term. So now in two buildings, I'm running seven medium term rentals. And on a building where my PI Ti is 2000. I'm bringing in $7,500 of rent.
Steven Pesavento 10:50
Hmm, that's huge. Tell us what's the difference just so people can understand what's the difference between a monthly rental in that area, and a furnished rental?
Sarah Weaver 11:02
Yep, so the one bedroom, one bath unit would rent for long term for 850. And that's very high end, like that's the height of the market for that area. This is Omaha, Nebraska. And then for my furnished rental, I'm getting 1875. And in the month of August, I will turn it back into a short term rental, and I'm able to get 2200 but only in the month of like July and August. And so I'm actually netting more as a medium term rental in the winter, because I have a tenant who's fully occupying the unit.
Steven Pesavento 11:37
Yeah, yeah, it makes so much sense to do this. And a lot of people this is kind of the whole concept of really getting to understand what are those different vehicles, right? Because once we name our number, and we pick our passive income number, how much do we need to create every single month? And I'm curious for you at the time, what are your expenses to live right now? You know, you travel the world, including all the travel and all the wildness that you have. What do you think your expenses are?
Sarah Weaver 12:06
Yeah, it's definitely increased. I've started attending a lot more networking events and, and spending more time in the US. But But Steven, when I started investing in real estate, I was spending $1,200 A month because I was living in a just a very scarcity mindset, like I call it a dirty backpacker mindset. And so a lot of your audience is likely very, very far from ever spending $1,200 a month. But that's where I started. And so it's interesting, I love what you talked about, like making money, and then managing money. I was really good at living really small and not experiencing a lifestyle creep. Because I I decided really early on that I would invest in real estate. And so even when I was making $47,000, I was putting away everything I could to invest in real estate. So it created a very cheap lifestyle. Now, now your
Steven Pesavento 13:02
dollars a month. That's more than I that's, I spend more on food.
Sarah Weaver 13:09
I know. And what's really cool is that that looked really fun. Like that was three months in Brazil, three months in Argentina, three months in Mexico a month in Portugal. So it wasn't like I was like sad in an apartment in Iowa. Like eating cereal. I was having a lot of fun. But what I can tell you with confidence is now that I've upped my budget, I'm having a lot more fun.
Steven Pesavento 13:35
Yeah, well, what you're also taking advantage of it should be made clear, you're not talking about being in the US paying us prices. You're in countries that the exchange rate is super beneficial. It's kind of like when I was running Airbnb is I went lived in Medellin, Colombia for for a couple months, and I was paying like 1000 a month to live and I was living big I was eating out I was I was at one point I realized I was taking the train places and I'm like, the the cab is $1.50 American Why Why spend another 40 minutes on the train. This is dumb. But point being if you're in that point where you know you're living, you know, it's 5000 bucks a month to live. And you end up setting your passive income number at 10,000. You're able to then back in, how am I actually going to get there. And this medium term rental strategy, although not fully passive, it's a great make plus multiply putting those two strategies together to be able to create that type of income to allow you to start doing what you want, because it's not that difficult for you to start understanding how are you going to get to $10,000 a month in passive income. If you take a product that normally is selling for 850 a month, and you're actually selling it for, you know, $1,000 plus more per month, you only need 10 of those units to be able to have that thing create that type of income, you know, not 100% Hands off, but mostly
Sarah Weaver 15:06
Well, and that's what I kept reminding myself is obviously dealing with tenants is not people's favorite part about real estate investing. But then I started realizing my dollar per hour was so high. And it allowed me to leave my nine to five. And the moment I left my nine to five, I did what any entrepreneur does, I started businesses. Well, at the beginning, I gave myself more jobs, like until you start hiring people, you think you're a business owner, but no, actually, I had like five jobs. But now that I have staff that helps me run these businesses, I mean, I'm making more money than I would have ever imagined.
Steven Pesavento 15:40
Yeah, because once you step into that entrepreneurial mindset, you can actually create much more, but there's a lot of people who aren't meant to be entrepreneurs, like they're not meant to go and take that feeling of risk and do those things. No problem with that, I believe anybody can if they set their mind to it, but you don't have to, that's what's so cool. You can stay in your job and create that security that you're comfortable with while also creating this other income stream, setting up vehicles, like the one that you're using here, to be able to actually get to that destination that you want to be at. So talk to us a little bit about if somebody wants to go down this path, and they're thinking to themselves, hey, you know, I got a couple rental properties. I kind of don't really like these things, or maybe I'm running some Airbnb is and it's getting a little bit old. And you know, there's a huge shift that's happening. A lot of people who have Airbnb isn't they're not seeing the returns that they were seeing before, which is the reason that I don't run Airbnb ZZ anymore. I, you know, I only buy large multifamily apartments and other types of assets that I know are stable in down markets, because I've experienced what that Airbnb model is like, but for all those people who are in that position, this could be a great strategy. So how would you recommend they go about beginning to get educated on what this vehicle looks like? So they can decide if this is something they want to add to their portfolio?
Sarah Weaver 17:01
Yeah, well, it's a lot easier to turn your Airbnb or short term rental into a medium term rental, because it's already furnished. So the first thing that I would do is I would list it on furnish finder, it's $99, for the whole year, they don't take any commission or anything out of it. And I would just see what is the interest in having 30 days or more on that furnished rental, um, that would be the easiest thing to do. If they have a non furnished rental, then I would use that same website furnish finder, but I would go to furnish finder.com forward slash stats, S T, A T S, and I would find out what are the comps in the area, and you have to analyze your property, make sure it is worth it. Once you account for furnishing it, and utilities, oftentimes, it is worth it. But there are some cases where it's not worth the hassle of furnishing your unit, for whatever reason how much you can get long term isn't that much less than what you can get medium term. And I'm always telling investors like, follow the numbers, let the numbers make your decision, not your emotions. So those would be the two ways I would approach it, depending on the type of property they have.
Steven Pesavento 18:12
Yeah, I call that doing the math, you really have to be able to sit down and do the math. And look, I'm not a numbers guy. I don't love being in numbers all day, I hire smart people to do that for me. But you got to be able to do the basic math, and it's not that hard to really be able to look at it and see, hey, how long is it going to take me to pay off if I furnish this whole thing? And is that going to be worth it? So, you know, one of the things that I think we can really offer to investors and our listeners here is an opportunity to see a vision of a life that's maybe different than the vision that they currently have. And I think that's one of the most important things because you know, step two of naming your number is really this compelling vision. And what I like to do is be able to show examples of incredible people are living incredible lives, not so that other people can match it exactly. But they might get some inspiration. You know, if you're if you have, you know, a few kids, you can also do what we're about to talk about. But you know, if you're a single person or you've got you know, a partner who you're on this journey with, tell us Sarah about this kind of dream life that you're living. And, you know, walk us through how that's actually possible because of using the vehicle of investing.
Sarah Weaver 19:20
Yeah, I love this, Steven, because it really was so intentional. I knew what I wanted my life to look like I wanted to spend, like I said, three months in Brazil, and three months in Vietnam and three months here. That's what I wanted my life to look like. And I always tell people, when I talk about travel, you insert whatever that thing is, maybe it's more time with your kids or maybe you're a cyclist and you just want to go on a long bicycle ride on a Saturday, whatever it is, like make that your goal like prioritize what you want in life. So that's what I did. I had a long list of things that I wanted to accomplish but before I turned 30 or before I settle down, or whatever life is going to turn into in my 30s. And I had a long list and then I just made it a priority. And now what's so cool is that because I share everything on Instagram, I had other real estate investors say, hey, I want to do that. And so I invited 11 investors to come on an epic adventure with me earlier this year. And to my surprise, nine of the 11 said, yes, the other two that didn't come was just because of pregnancies. And so they were like, Oh, welcome to the next one. And so what I've designed is now a company that caters to real estate investors, and I get to go on epic adventures with people like me. I mean, it sounds like people like you to Stephen, like, if you're spending three months and metazine I'm like, Okay, well, Stephen, and I just became friends, because clearly, we valued the same thing, which is experiences.
Steven Pesavento 20:51
Yeah, well, I think that's so cool. Because here's one of the things, I'm a big believer of put together a group of people and go do the stuff you want to do, because frankly, they also want to do it. One thing I noticed locally is like nobody likes planning anything, well, I don't either. But it better to be the person planning it so that you can do it. And I think that's really great. Because what you're actually doing as you're simplifying the process for people to connect with one another. And what is really powerful, I mean, one of the key steps of naming your number is actually getting access, and one of those things you need to get access to as a community. Because when you get in community, when you go and have these life experiences that reinforce your vision, that reinforce what you want, and you show yourself that it's possible you reward yourself. But then when you can tag that along directly alongside a community of like minded people are on that same path, not only you're going to learn about other vehicles that might get you where you want to go, but to, you're going to be able to set in even deeper these new beliefs. Because when you're going from where you want to where you are right now to where you want to go, it's a journey. And like we talked about earlier, when you have that life changing experience, I've had many myself as well. And when you get knocked in the face, but you're making a change, and your friends, or your family or the loved ones around you who only want the best for you, but they're only looking through the glasses of life that they have. When you keep hearing from them, you're gonna give up on your dreams and goals. And that's why it's so key to get in community. And I love the opportunity to be able to do that on an adventure. Because what you do is you really set that in much deeper with an emotional experience connected to these people. So I think that's phenomenal. Tell us, where are some of the places that you've personally traveled to, and had some of these, you know, incredible experiences.
Sarah Weaver 22:43
Yeah, one of the trips that was so important to me was I did a motorcycle trip through Vietnam. I wasn't didn't grow up on motorcycles, it was definitely a new challenge. For me, I love learning new things. And so not only was going to be a mental challenge, but also a physical challenge. So that's a trip that I did three years ago now. And then coming up in February, I'm taking 11 investigators to Patagonia, and we're gonna hike the hike the W trek down in Chile. And that's been a bucket list item for me for years, I spent quite a bit of time in Argentina, and Brazil, but just didn't make it over to Chile. And I'm really excited to do that. Later this year in 2023, we're going to do an eight day African safari in Tanzania, followed by an eight day hiking Kilimanjaro.
Steven Pesavento 23:33
Mm hmm. That's amazing. I love that that's such a cool experience. And this is why it's important to really start envisioning what that future looks like. Because the decisions that you make on what that vision is going to influence the decisions of what vehicles you should use to make money, multiply money, and eventually managing money. Because if your vision is to go and take these epic trips, and travel the world and bring your family and do amazing things, then you may want to be able to set yourself up so that you're not in such an active business, where you having to be active all of the time. Because although you might be able to make the most money per hour, in real in, in reality, it may actually end up just turning into a new job. And so that's why it's really important to understand, where do you want to go? What's that vision, but then also understand, hey, do I want to be active? Do I want to be 100% passive where I make no decisions and I let experts do the work and I can just kick back and enjoy life? Or do I want to do something that's semi active, semi passive, that can allow you to be able to get there faster, but also give you some of those benefits. So I think that's so huge. So as we're getting close to wrapping up here, you know, we defined financial independence as the moment that your passive income number reaches your target, you know, double whatever your expenses are at the time that you set it. So when did you realize As for yourself that you made it, and when did you realize that you truly were and are financially independent?
Sarah Weaver 25:07
Yeah, it happened in two different times. So it happened first when I, again was living so cheaply. It was like an afterthought. I was like, oh, yeah, okay, well, that, but then I thought, well, well, that doesn't actually feel good enough, right? Like, I don't want to be living cheaply all the time. And so that's when I really raised my financial thermometer. And so it would have been the middle of last year that I realized, wow, okay, this is working, what I'm doing is working. And this is just the beginning. I'm not the type of person that starts something and doesn't want to finish it. And so now, I've, you know, quadrupled that number, in my mind, and I'm well on my way to hitting that as well.
Steven Pesavento 25:50
Yeah, I think that's so great. And it does just go to show and illustrate why we pick our initial stage one number as something that is achievable, it's greater than what we're living today, we can expand our lifestyle, but our money can keep working for us. But there's nothing wrong with setting new targets along the way. The only issue that happens is when people set new targets, but they don't enjoy the fact that they hit the first target. Right. And I can tell you're not that kind of person. So let's keep that as an example for for you, as a listener, you know, be the person to enjoy the journey as well as the destination.
Sarah Weaver 26:28
That's such, that's such The beautiful thing about not enjoying that lifestyle creep is now I'm 32. And I'm so excited about certain things that my friends have, frankly, been enjoying for years, and likely take for granted. Whereas I'm so excited about that thing that I now spend my money on. And so I'm really thankful to my earlier much frugal or self.
Steven Pesavento 26:51
That's awesome. That's really awesome. So, the listeners are interested in learning more about this vehicle of mid term rentals. How can they get the book, tell us the name of it and tell us how they can get in touch with you.
Sarah Weaver 27:05
Absolutely. Your listeners, Steven can get 10% off using my promo code Sarah S A R h@biggerpockets.com. The book is called 30 day stay.
Steven Pesavento 27:17
Awesome. Well, thanks so much for joining us. Thanks for being able to share this strategy with our with our listeners so that you know truly we can start understanding not only the target that we want to hit, but also what are the vehicles that are going to get us there. How can we get there quickly and being a great example of living a fun lifestyle? I'm a big believer in that. So thanks so much. We look forward to seeing you guys on the next episode. Today's episode is sponsored by von Finch capital. If you're interested in investing alongside me in the same type of real estate opportunities that I personally invest in, then head over to Von Finch Capital and join their private investor network. You can do so at Vonfinch.com/invest. Join me on that next deal. I look forward to seeing you on the inside.
Steven Pesavento 28:07
You're listening to the investor mindset podcast. If you like what you heard, make sure to rate review, subscribe and share with a friend. Head over to the stevenp130.sg-host.com to join the insider Club, where we share tools and strategies from the top investors and entrepreneurs and how to take it to the next level.
