JF2342: Military Couple Powers Through Real Estate With Lindsey Meringer & Amanda Schneider

Lindsey Meringer & Amanda Schneider Real Estate Background:

 

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“Both mentorship and your community is important.” – Lindsey Meringer & Amanda Schneider

TRANSCRIPTION

Theo Hicks: Hello, Best Ever listeners, and welcome to the Best Real Estate Investing Advice Ever Show. I’m Theo Hicks and today we’ll be speaking to two guests. We have Lindsey Meringer and Amanda Schneider. How are you two doing today?

Amanda Schneider: Great! Thanks.

Lindsey Meringer: Doing great. Yeah. How are you?

Theo Hicks: I’m doing well, thanks for asking and thanks for joining us today. A little bit about their background. So Lindsey is an operator in the 10th Special Forces Group (Airborne) and is a green beret, and Amanda is a full-time real estate agent. They started their real estate journey in 2016 and their portfolio consists of five single family rentals, a triplex, and they’re currently working on a duplex that they’re going to convert into a five unit. So they’ve added these 11 doors in the past 12 months, with 14 overall, and their goal is to reach 20 doors by the end of 2020. They’re based in Colorado Springs, Colorado, and their website is www.theveteranrealtor.com.

So starting with Lindsey, could you give us some more information about your background and what you’re focused on today?

Lindsey Meringer: Yes, so I grew up in a small farm town, and that kind of life has helped us a lot in where we are today, in that I have a very extensive construction background, from roof framing, I worked in a finished cabinetry shop, so pretty extensive in the construction world, and I’ve been able to leverage that into real estate; joined the military in 2010 and since then, Special Forces… I’ve truly been all over the world from Africa to the Middle East and Europe and just kind of living that life as we’ve been W-2 entrepreneurs, and just pushing forward.

Amanda Schneider: Yeah. I was also in the military, and then I came out to Colorado Springs to be a contractor for the military, and that’s when I met Lindsey. And I had read the book Rich Dad Poor Dad, which kind of made me realize how lucrative real estate could be as far as that passive income.

So when Lindsey and I started dating in 2015, we had taken a road trip and we called it our all-or-nothing road trip… That if this worked out well for us, we were probably going to get married and move on with our life. If not, we were going to break up. So during that road trip, we listened to a ton of real estate podcasts. I think we may have even listened to Rich Dad, Poor Dad on that one, too. So that kind of spawned our investing from there. We got married and the next day we went looking for our first house together.

Lindsey Meringer: Yeah.

Amanda Schneider: Yeah.

Theo Hicks: Perfect. So I kind of want to talk about this duplex deal. So you are currently working on a duplex, and then the plan is to convert it into a five-unit. So maybe walk us through from the conception of the deal to where you are standing as of today.

Lindsey Meringer: Yeah, I think part of the conception – it is important to start at the beginning, because one little piece of advice I’ll give is to please trust your wife. We had a search setup, we were looking for multifamilies, and we look at zoning applications that are single family, zoned R-4, looked for potential… And I had actually trashed this duplex on the search, because it was a really expensive duplex. She messaged me and said, “Hey, I found this great duplex,” and it was zoned R-5, and it was 3,300 square feet. And she actually got me to kind of look into it more and it ended up having a lot of potential as a project.

So we went and  looked at it, and saw a duplex split level, and they had actually at one point converted a porch, done trusses over it and enclosed it; it has like these couple of weird storage areas next to a two-car garage and then a detached one car. And that porch has an outdoor patio area. So when we walked into it, we’re like, “You know what, this would be a really great conversion to four smaller units. We can break off the back of the property and we’re going to end up with a two bed, two bath; a two bed, one bath; a one bed, one bath and two studios.”

Theo Hicks: So from a manager’s perspective, it sounds like Lindsey saw this deal and was like, “Ah, nah, I’m good.”

Lindsey Meringer: “Nope.”

Theo Hicks: And you saw it, and  I guess — you saw it separately and thought that it was good. So what was it about the deal that made you interested in it?

Amanda Schneider: Well, Colorado Springs is an exploding market and we have tons of investors here. So we have five single families, so we’re like, “Hey, we really want to break into the multifamily.” But it’s so tough here, because we have lots of cash investors that are just coming, they’re paying over market value… So we wanted to find a creative way that we could possibly make a multifamily out of either like a single-family or a duplex or something. So we had a specific search setup where I would go on MLS and specifically search for properties that were zoned for more than the actual doors that were on that property. So that’s really what appealed to me.

Yes, it was priced a little high as a duplex, we did negotiate a little bit, we got the price down a bit… But I just saw that we could turn this into five units, and I just thought about the potential. And it’s in a really up and coming area of Colorado Springs, so that was another huge draw for me.

Lindsey Meringer: Yeah.

Theo Hicks: Could you maybe walk us through how you financially analyze a deal like that? How do you know how much you can pay for a deal that you’re going to ultimately convert into something completely different?

Lindsey Meringer: We just analyze everything as an end state, and the numbers work or they don’t. We had two contractors walk it. So there is actually some hiccups with this that we can talk through… But as far as the base analyzing of it, we just looked at rehab costs and conversion costs, funding fees, lending fees and then what we could rent everything for on the backside, and if the numbers made sense, they made sense. So even though it was kind of a big project and thinking outside the box in the use of the property, the base analyzing of it was pretty straightforward.

Theo Hicks: Sure. So if you don’t mind, walk us through some of these hiccups that you just mentioned.

Lindsey Meringer: Well, I think one thing to highlight before the hiccup is kind of creative way we financed it. So as opposed to using hard money, I went around to a ton of local commercial banks and just talked to the head of lending and all of them and told them the way I wanted to go about this, the vision I had for the project. It was great, because I got that face to face time and that recognition. But then I found a great local bank that was willing to be super creative with lending. So what we actually ended up doing is doing a commercial loan on the front, kind of as a hard money lender at a one point and 7%, which anyone who’s used hard money knows that would be an incredible hard money rate. But the way the lending works on it is the same principle. It’s an interest-only loan on the front side, and then we have residential on the backside. We’re doing four units, we’ll cash out, refi, roll it into a residential, and then down the road, we’ll pay out of pocket and just convert the single-car into a fifth and make it a commercial property.

So it’s been kind of fun learning a lot with this in the funding application to it, and kind of the way the fiscal tie in. But then yeah, with hiccups. We had a contractor that we ended up going with – we get a call one day that he is backing out. Then the next day, the plumbers and electricians back out. So yeah, we’re a month in and I had done all the demo myself just to save some money, so we were back to ground zero.

I had a great commercial contractor come in, he’s become our contractor for all our properties now. But he was like, “Yeah, this $78,000 property, a rehab is more like 140k.” So that was kind of a little bit of a heartache. But we’ve managed to push through it and we’ve kind of brought that budget down a lot as we’ve worked through and gotten creative. And the numbers on the backside with the rental are still so great that even that heartache and that raising the cost of rehab – we’ve still managed to make it work as a pretty solid deal.

Amanda Schneider: Yeah, and one thing I wanted to add too is there were some other things that this original contractor — it was ultimately our fault, because he had never done such a big project for us. So we just had faith that he could. But he was not versed in what it takes to convert something into more than a duplex. And the city, even though the lender looks at four units and under as residential, the city does not; it looks at it as commercial. So it also took a couple weeks of Lindsey calling around to different departments within the city to make sure we could do what we wanted to do. Do we need a development plan? If we need a development plan, that was going to be 15k… There was so much more that we had no idea that we had to do in this conversion.

Lindsey Meringer: Yeah.

Theo Hicks: Just going back a little bit… We talked about your search on the MLS – you’re looking at things that are zoned above what they actually are.

Amanda Schneider: Yes.

Theo Hicks: Is that something that anyone can do, or is that something that you need to have access to the MLS? So you need to do it through an agent?

Amanda Schneider: To make it the easiest, access through the MLS is the easiest. You could find an address, you can look it up on the county assessor’s website and see what is zoned. So I guess theoretically, if you found something on Zillow and you were just curious, you can always find that on the county assessor, and I would assume every city makes that public knowledge.

Theo Hicks: Yeah.

Amanda Schneider: But obviously, using the MLS is much easier, because I can just set up a simple search.

Theo Hicks: Alright. Something else I wanted to talk about too is maybe some tips, some advice on people who want to get into real estate investing with the person that they are married to. What are some pros and cons of that?

Amanda Schneider: Yeah.

Theo Hicks: Well, we may be a bad example, because we truly see eye to eye on most things with real estate. I thing that’s the thing, is we truly share this passion as our way forward in life. Our whole life revolves around real estate; granted, I’m still in the military, but if I’m not actively at work or deployed or something, I’m working on a job site or analyzing future deals… So sharing that common bond is absolutely crucial. I think we’ve heard plenty of stories through podcasts where the husband wants to buy a house, an investment property, and the wife isn’t on board. And I think the biggest thing that happens there is that nothing happens. They never take that leap.

Amanda Schneider: I would say the one thing that maybe we butt heads about sometimes is the fact that Lindsey does have all of this background knowledge about construction, but I’m kind of a type-A personality, so I like to have control and I like to know a schedule and a timeline. So sometimes I get to the point where I’m questioning a little bit too much about the subs that he’s running.

So one thing that I would say for advice is to find your lane and then stick within that lane, even though it can be really hard. So I do a lot of the finding of the properties and the finance, figuring that out. And Lindsey runs the subs, meets with them. He does that part of it. And that has worked really well for us, is not trying to get in each other’s lane… Because Lindsey can also freak out about some of the financing, where I know our way forward and how we’re affording things… But when he goes and looks at our bank account or something, he’s like, “Oh my gosh.”

Lindsey Meringer: Yeah, because I see the day-to-day and I’m pretty sure we’re broke all the time.

Amanda Schneider: Yeah. So just kind of just defining your own lane and staying in it.

Theo Hicks: Sure. So once you have these lanes defined, does that mean that Lindsey has the final say on everything related to his lane, and then Amanda has the final say, or do you guys still come to these decisions together? Or are they completely separate?

Lindsey Meringer: Yes and no is the answer to that. I’ve learned she is a genius with finances. She’s so organized. So in things like that, I’ll voice my opinion if something sounds super strange. But for the most part, I just have complete faith in her. When it comes to stuff on the building and design side, then sometimes I’ll just make the command decision, but a lot of times it’s really us looking at things together and making that kind of functional decision. But I would say the only thing that is truly just mostly hands-off is the financial. I really just trust her.

Theo Hicks: So Lindsey, you mentioned that you’re still in the military. Are you still working a separate job full-time? You said you’re a contractor for the military. Are you still doing that? Are you a full-time agent, or are you full-time in the real estate business?

Amanda Schneider: No, I’m a full-time agent and then we property-manage all of our properties, so I kind of do a lot of that, too.

Lindsey Meringer: Yeah.

Theo Hicks: So what happens when Lindsey is deployed, who takes over his duties? How does that work?

Amanda Schneider: Well, it’s been okay so far, because we haven’t really purchased the property that would need a full rehab when he wasn’t here. And that’s really where I rely on him the most, I would say.

Lindsey Meringer: Yeah, I’m currently in the process of a medical board for medical retirement from injuries, so I’m non-deployable now. So we’ve been fortunate in that. And I think that’s why we started in 2016, but we’ve added 11 doors in the past year, is because I’ve been here, and we’ve been able to approach everything together.

The first couple of years—we’re pretty much experts in the VA loan at this point. We got four properties under the VA loan, or five, I guess, now. And we would do one and then when I’d redeploy, we’d do another one, and then I’d deploy and redeploy and do another one. So we just kind of spaced it around deployments. But now that I’m home, we’ve been able to accelerate.

Theo Hicks: Perfect. Okay, starting with Lindsey, what is your best real estate investing advice ever?

Lindsey Meringer: Definitely the people around you, both mentorship and community. And there’s that rule, the sum of five, I think it is. You had a gentleman on your podcast, Nick Giuliani; I talk to him every single day, just for motivation. He’s farther along than I am and kind of chasing them at this point, but we bounce stuff off each other. We’ve surrounded ourselves with like-minded investors; there’s a couple of buddies that I have in special forces that are investors, and we do meetups and everything. And we’re just so driven every day by their social media posts, their text messages, everything. If we got down on ourselves a little bit or a little frustrated, we just look at our community around us and are immediately reinvigorated to go.

Amanda Schneider: And then I would say, don’t be afraid of doing your first deal or doing additional deals, even if you don’t have money, because you can make it work. And that’s one thing that just this last year has taught us. We’ve found, other than what Lindsey said about approaching the commercial banker and being able to use some of the equity from our other houses, we’ve also been able to borrow some money from our IRA creatively, and we’ve just found ways to make it work. If you find a deal and it’s amazing, you’ll find a way to make it work.

Lindsey Meringer: Yep.

Theo Hicks: Perfect. Okay, are you both are ready for the best ever lightning round?

Lindsey Meringer: Let’s do it.

Amanda Schneider: Yep.

Theo Hicks: Okay. First, a quick word from our sponsor.

Break: [00:17:36] to [00:18:28]

Theo Hicks: Okay, so for each of these questions, we’ll start with Lindsey and then we’ll do Amanda. So what is the best ever books you’ve recently read?

Lindsey Meringer: So I’m a big podcaster. But if I went for books, The ONE Thing is my book.

Amanda Schneider: Yep. And mine is going to be Profit First. It’s not really a real estate book, but it’s just an entrepreneur business book overall that teaches you how to make sure you’re also getting a profit from your business from the beginning.

Theo Hicks: If your business were to collapse today, what would you do next?

Lindsey Meringer: So that’s kind of easy for me, because I do for now do W-2 entrepreneurship. I’m in the military. And then as I Med board out, I’m transitioning into the space world here. So I will have a full-time career.

Amanda Schneider: Yeah. And I would say, I can’t imagine my business completely collapsing, but if the real estate market collapsed, I think I would just shift my focus towards working foreclosures, short sales, things like that. I would keep grinding, because I can’t imagine doing anything other than real estate.

Theo Hicks: What is the best ever deal you’ve done?

Amanda: That would be a couple properties ago… Security, Colorado, 80911 – there’s a report recently it’s the number one appreciation real estate market in the country. And then we bought a house there; it was next door to another house that we actually lived at. I found the guy, he was out, moving stuff out of his house. I just approached him, asked him what was going on.

Long story short, we were able to work a deal where they could leave the house in the condition it was in. The yard was full of stuff, they just needed to get out and get [unintelligible [00:19:49].23] for some security reasons. And the return on that was in the 20% range, but we have turned $57,000 into that, into about $145,000 in equity in a one year period. So it’s been pretty incredible.

Amanda Schneider: Yeah. And the one thing I would just add to that deal is that we were also able to get the sellers to cut us checks at closing that equaled about $15,000 towards our contractors. That was just part of the deal, too, which was pretty sweet.

Lindsey Meringer: Yeah.

Theo Hicks: Nice. What about on the flip side? Have you guys lost money on any deals? If so, how much did you lose and what lessons did you learn?

Lindsey Meringer: So we have not. Fortunately, a bunch of our first deals were VA loans, which gives you a super low barrier to entry. And then the Crestone property, the duplex conversion, the rehab budget has close to doubled, but we will still not lose money on that property, the numbers are so good. So knock on — I don’t have any wood around me, but we’ve been pretty fortunate.

Theo Hicks: What is the best ever way you like to give back?

Lindsey Meringer: We started about six months ago doing host home providing for intellectually and developmentally disabled persons. And it’s been stressful at times, but extremely rewarding, and that is something that we love doing.

Amanda Schneider: And then I’m part of an organization called Angels of America’s Fallen. It supports children of any kind of first responders/military that have passed during their service. It provides them up, until the age of 18, with extracurricular activities, so we donate a lot of money to that every year, we participate in their yearly gala, including volunteering for that.

Theo Hicks: And then lastly, what is the best ever place to reach you?

Lindsey Meringer: So I’m kind of a child at heart, so on Instagram, I’m Calvin J. Hobbs. You’ll see a picture of me, Amanda, and our dog. Then on Facebook, I’m just my name Lindsey Meringer.

Amanda Schneider: Yep. And you mentioned my website at the beginning… So the  https://www.theveteranrealtor.com/. You can message me there, but then I’m also on Instagram as @the_veteran_realtor.

Theo Hicks: Perfect. Lindsey and Amanda, thanks for joining us today and giving us your best ever advice. A few of my biggest takeaways – I like the idea of when you’re in a really competitive market and you want to get into multifamily, rather than buying a multifamily, trying to find something that you can convert into a multifamily or into a commercial property.

You mentioned how Amanda has access to the MLS, and you search that, looking for properties that are zoned something that is higher than what the property actually is. So something zoned R-5, that’s a duplex; R-4 that’s a duplex. So that’s the deal you guys are currently working on. And even though the renovation costs have increased because of this conversion, because of the strength of the market, you’re still be able to make money.

We talked about how you’re able to secure some pretty creative financing, and that was by simply going to local banks and talking to all the heads of lending about your vision for the project.

We talked about a few tips about starting a business, growing a business with your significant other, and making sure, as  you both share in the passion for real estate, realized that it is kind of your financial driver, in a sense. And then make sure that you’re defining what each of your roles are, and then whoever is the best at that thing is the person who’s the ultimate decider if you guys don’t agree… Or you can just follow Lindsey’s advice, which is that you always trust your wife, and let her do everything—no, I’m just kidding.

Lindsey Meringer: Hey, happy wife, happy life is a motto that I live by.

Theo Hicks: Exactly. And then lastly, your best ever advice – Lindsey’s was about mentorship and community, both in person and online for that motivation. And then Amanda’s was not being afraid to do a deal, do more deals without necessarily knowing exactly where the money will come from, because we’ve been able to make it work. If it’s a good deal, the money will follow. So thank you both for taking time out today to speak with us.

Best Ever listeners, as always, thank you for listening. Have a best ever day and we’ll talk to you tomorrow.

Lindsey Meringer: Thank you so much.

Amanda Schneider: Thanks.

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