S4E14 – Jessie Dillon – FIRE in 2 years with Real Estate

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Key Timecodes

• (01:18) – Show intro and background history
• (07:44) – Deeper into her background history and business journey
• (09:18) – Understanding her educational business strategies
• (11:10) – How she moved to real estate business model
• (13:36) – What are the red flags to avoid with partners
• (15:27) – A bit about her businesses numbers
• (17:05) – Deeper into her real estate strategies
• (27:51) – What is the worst advice she ever received
• (28:06) – What is the best advice she ever received
• (28:50) – Guest contacts

Transcription

[00:00:00.000] – Intro

Hey. This is Sean Tepper, the host of Payback Time, an approachable and transparent podcast in building businesses, increasing wealth, and achieving financial freedom. I’d like to bring on guests to hear authentic stories while giving you actionable takeaways you can use today. Let’s go.

[00:00:17.950] – Sean

My next guest was a salon employee, a cosmetologist making about 18 an hour with income limitations. She decided, Let’s start my own business. So she went all in with no backup plan and no savings. And within a year, her income went up to about 80,000. She then discovered that she can achieve fire much faster by investing in real estate. So what she did is she learned to optimize her salon. Get this, she only works about three days per month and makes about 8,000 in net profit. But what’s really exciting is what she’s doing with real estate. She started with single family, but she learned that multifamily is where you really want to be. So in this episode, she talks about who she partners with, what properties she’s looking for, where she looks for those properties, and some potential revenue she can generate. This is a good one. If you feel like you’re limited in your career or income potential, or you want to fast track your way to financial independence, this is a great episode. Please welcome Jessi Dylan. Jessi, welcome to the show.

[00:01:20.700] – Jessie

Hey, thanks for having me.

[00:01:22.190] – Sean

Yeah, thanks for joining me. So why don’t you kick us off and tell us about your background?

[00:01:26.360] – Jessie

Yeah, so a little bit about me. My name is Jessi Dylan. I live in Central Massachusetts. I’m 31 years old. I’m a wife, a parent, a yoga enthusiast, but not here to discuss any of that today. I also am a beauty business owner and a real estate investor. Bringing it all the way back to 2017, I was working at a big box beauty retailer doing education. I was really passionate about what I did, but ultimately it came with all of the downsides of retail management. So the pay, the hours, the commute, none of those things were ideal. I had started a family. I just had different priorities. I realized I needed a way out of that because there wasn’t as much room for growth as I was promised originally. Summer of 2017, I took this crazy leap of faith. I learned a new service in the beauty world. I had my cosmetology license from long before then, and I started doing this work on the side directly with clients. Soon my days off were packed with seeing clients one-on-one doing beauty services. So come fall 2017, I actually quit my job with no plan. I’ll never forget calling my husband and telling him that I did that.

[00:02:49.970] – Jessie

He was like, It’ll be fine. We’ll figure it out. I left my full-time job on a whim. We had no savings at this time. We were very much paycheck to paycheck, but I just knew that it was going to work out because I was at a point where my full-time job was actually preventing me from taking more clients on the side. I was at that point of constraint where I had to get rid of the day job to create more opportunity for myself. Fast forward to summer 2018, I had built up a name for myself. I really fell in love with the business side of offering beauty services and entrepreneurship, and I had to open a place of my own just for more space, more freedom, more control. I had been renting at an existing business up until then. At this point, it was just a year later and I had doubled my income I was working significantly less. And since then, I have just been building up the beauty business, going through tons of changes. The structure of the business has ebbed and flowed. I went from having employees and apprentices to renters to developing an online business mentoring program for other artists when we had to close down during COVID.

[00:04:09.930] – Jessie

That was a huge success. But ultimately, a couple of years ago, I realized I can’t do this forever. I was working in the business at that point quite a bit. It ramped up and there was really high demand for what I was doing. I was having really bad body pain. I realized I did not have the freedom that I got into entrepreneurship to have. It was quite the opposite. I realized I need a way out. I need to create my backup plan here, my escape plan. I actually discovered the whole Fire movement in a Facebook clickbate article. I was scrolling through Facebook and there’s an article, I think it was with Business Insider and Millennial Money, honey, who’s on Instagram. The tagline was something about retiring at 26. I’m like, That sounds great. I click that and I’m reading through it. It was basically just about aggressively investing in index funds to achieve early retirement. At that time, I was making so much more money than I had ever fathom to making. It was a far cry from what I was making in retail management. I was comfortably living off like 30 % of my income, so I was able to invest 70 % in index funds.

[00:05:29.820] – Jessie

I realized that was still going to take me 11 years, and there’s no way I could have kept up that pace for 11 years. But one podcast led to the next, and I heard someone being interviewed who is instead achieving early retirement through real estate. I was like, According to this guy, anyone can do real estate and you can achieve work-optional status a lot faster. It would also make me more time-independent and location-independent, and those two things are part of my big vision for success. This was only two years ago, just over two years ago that I heard that podcast. We’re talking fall 2021. I dove into every book, every podcast, the coaching calls, the boot camps. I was just consuming as much as I could for a couple of months until it all started to sound the same. I realized everything was starting to become redundant. I was just looking for these Golden Nuggets. That’s when I knew I had to stop consuming for a little bit and actually just start taking action on what I was learning. November 2021, I made an offer on my first investment property. This is while we were still renting.

[00:06:41.350] – Jessie

I actually was a renter through my first two investment property purchases, which is funny. Since then, I’ve bought four investment properties. I’ve gotten into wholesaling real estate. I’m down to working just one day a week in my beauty business, and I have a great team of renters in place who take care of clients every other day. Over the next year, year and a half, I should be able to achieve my real estate goals, make the beauty business completely passive, and achieve that time and location, independent status that I’m looking for.

[00:07:16.360] – Sean

Love the journey here and I love the leap of faith. You were backed into a corner. You didn’t have a choice. You had to do this.

[00:07:23.540] – Jessie

Yeah, and I think it was a little easier because at that time, we very much, my husband and I, we did not have golden handcuffs. We didn’t have super high paying jobs. We didn’t have an inflated lifestyle. So even if I did fall on my face, it really wouldn’t have been a far fall. I think that made it a lot easier.

[00:07:44.010] – Sean

I love that. Nice. All right, let’s get into the numbers a little bit. Are you willing to share what your income was when you were working for somebody else?

[00:07:55.890] – Jessie

Yeah. When I was at that beauty retailer, I was making 18 an hour.

[00:07:59.920] – Sean

Oh, boy.

[00:08:00.990] – Jessie

Okay. I was also driving an hour each way, so that was tough.

[00:08:05.970] – Sean

Oh, my gosh. Okay. So then when you you went into business, you started your own salon, it sounds like. Is that correct?

[00:08:15.630] – Jessie

Yep.

[00:08:16.330] – Sean

And then what after a year, what did your revenues get up to?

[00:08:20.960] – Jessie

My net income, even after taxes in the first full year in business, was $80,000 for that year.

[00:08:28.280] – Sean

Nice jump. Okay. And then I assume did it continue growing after that for the next year or two?

[00:08:36.070] – Jessie

It did, yeah. I mean, the more I pulled back with clients, I was willing to take a little bit of a pay cut to get some of my freedom back at a certain point. There was a point where I was like, making as much money as possible in this is no longer as important to me as it is to get some of my freedom back, my time. But there was a time I would say when the business was generating the most money, it was coming heavily from me doing services and from the business mentoring program that I developed online. I think our net profit in those higher months was around $25,000.

[00:09:17.080] – Sean

Per month? That’s great. Okay, so the mentoring, is that like a course or coaching program?

[00:09:23.730] – Jessie

Yeah. In the beauty industry, it’s a lot of people who are just really passionate about what they do. You can be the best hairstylist, lash artist, permanent makeup artist, but a lot of these people have no idea how to build and sustain a successful business, how to market their business, how to connect with potential clients and be discovered. So that’s why I developed that program because there were a lot of artists who were really not that good at what they did, but they were very successful because they were great business people, vice versa. So I had always wanted to do it. And then 2020, when we were forced to close the salon for three months, I finally had the time to do it. So I developed that program. And then shortly after, I added on an option for one-on-one coaching monthly.

[00:10:16.980] – Sean

Got you. Now the program, is that like a membership or a one-off purchase course they could take?

[00:10:24.340] – Jessie

Yeah. So the first round, we actually created the course live. So it was a live program, a six-month program that people would sign up for and pay in monthly installments. Now the course, all the recordings, all the content is just evergreen. And I no longer take one-on-one coaching clients.

[00:10:43.650] – Sean

Good for you. Very leveraged, passive income. Excellent work. And what do you charge for the program?

[00:10:50.850] – Jessie

Thirteen, twenty-five, I believe it is now, or maybe 1,349.

[00:10:55.420] – Sean

Okay, 1,349?

[00:10:58.230] – Jessie

Yeah, just a one-time payment.

[00:11:00.790] – Sean

Got it. Yeah, we see a lot of courses that can be as low as a few hundred bucks on up to 2,500. So that falls right pretty much in the middle. That’s great. All right. So you start, you learn to scale your own practice, become more efficient there. You have the leveraged income with courses and then you move to real estate. So let’s talk about that a little bit. Are you focused more on single-family duplexes, multifamily? What’s your specialty?

[00:11:29.450] – Jessie

I did start off a little bit smaller. I started off with a duplex, a single-family, and another duplex all in my area. Massachusetts, it’s a higher cost area. Getting into those three properties within eight months, I was pretty tapped out capital wise, so I really had to pivot after that. That actually inspired me to open my mind up to partnerships, which is something I was really resistant to before that because I had built a beauty business alone, and that worked out really well for me. So once I opened my mind to partnerships and really figured out, all right, what can I bring to a partnership? And then what am I looking for someone else to bring to the partnership? It was easy to reach out and find that ideal partner. So now going forward with partnerships, the sweet spot for me is like 10-20 unit value add, multifamily properties out of state.

[00:12:26.930] – Sean

Nice. Okay. With some of the partners, are they just individuals like yourself, maybe an entrepreneur, they have some capital and you come together? Or are you talking about maybe a business you’ll partner with?

[00:12:40.750] – Jessie

Not so much a business. I really like working one-on-one with people. So the partnerships that I’ve done in the past, the one I’m working on now and the future partnerships that I’ll be doing in a perfect world are two individuals, myself and one other partner, where they understand the wealth building power of real estate, but they don’t really have the time or knowledge to invest on their own, but they do have the capital and they want their capital to work harder for them. Whereas I bring to the partnership the time, the knowledge, the experience while they’re bringing the capital. And I love to find the right partner first, really feel each other out, really bang out all the details, make sure our goals are aligned, the vibe is right, and then go out and find the ideal property for us because the person that I’m working with is really more important to me than how good of a deal we can get together.

[00:13:36.010] – Sean

Sure. Well, let’s dive into that a little bit. What are you looking for with a partner? What are red flags you want to avoid?

[00:13:43.960] – Jessie

Red flags? I think a big one is someone who would want to micromanage my portion of the deal. So the day to day work that I’m going to be doing, it’s ideal for me to work with someone who is truly just too busy to even think to micromanage that and who really can see what I’ve done so far and put their trust in me with the project. I do obviously provide really thorough updates for my partners, but it’s important to me to work with someone who doesn’t micromanage. And of course, honesty, transparency, really feeling like we’re in this together and we’re always going to be looking out for each other’s best interests, that’s really important to me.

[00:14:29.390] – Sean

Got you. I love that. You want somebody who is so busy, they’re not going to bother you and start asking questions, get into the mix. I’ve got this. Let me be. Just you go do your thing. We got this under control. Yeah, that’s perfect. Do you have a team of people that works with you with real estate, or is it really just you?

[00:14:51.330] – Jessie

It’s mostly just me. I do have two virtual assistants who are amazing. One of them does more repetitive stuff and one’s a little more high level, who’s been with me since 2018. They’re both US-based. I know a lot of people talk about going overseas for VAs. I have tried that. It really wasn’t suitable for me, but I love my VAs, and they actually help with a lot of stuff in both businesses. Anything that’s repetitive or I can spend 20 minutes teaching someone how to do it, that’s something for them.

[00:15:26.140] – Sean

Sure. Got you. Just to take a step back here, so I’m clear, you work about one day a week with your salon, is that correct? Yeah. What are the revenues on that? I’d be very interested to hear one day a week, time investment. Let’s see what those revenues are.

[00:15:44.750] – Jessie

Yeah. Last month, I’d be interested to actually look back and see how many hours I worked. I probably did three full days last month, and my net profit from the beauty business as a whole was about 8,000. So that also includes profit from the renters, like the other girls who run space at the studio.

[00:16:05.460] – Sean

Got it. Okay. I’m just curious here. How many other women rent space in the studio?

[00:16:11.720] – Jessie

Five right now, yeah. And they each do one or two days.

[00:16:17.630] – Sean

Got you. Okay, that’s pretty good. Very leverage there. Again, like I said earlier. And then with real estate, it sounds like you spend probably the other four weekdays strictly on real estate. Is that correct?

[00:16:29.830] – Jessie

Yeah, I would say I usually… I mean, my work day is probably like four hours because that’s just like I start to run out of steam after that. But yeah, I do spend most of my other working hours focused on real estate. The only work that I have to do really for the beauty business outside of when I take clients myself is every month I just do a promotional campaign through text and email marketing and figure out what education I can offer the renters the following month. Those are really the only officey tasks that I have to do for that business.

[00:17:05.240] – Sean

Let’s get into the strategy of real estate. I’ve had a lot of real estate investors on the podcast. They will target specific areas in the US, sometimes locations that are around hospitals or universities, sometimes work in class, sometimes they go to the suburbs. So what areas are you looking at?

[00:17:25.820] – Jessie

Yeah. So my personal strategy going forward is long term rentals. So for me, I think a lot of my peers who go around hospitals and universities, they also use the mid term rental strategy. I use that in the guest room of our home, actually, to help bring down our mortgage cost. But as far as bigger multi-family projects going forward, I just go for long term rentals. I really like working class areas in bigger cities. So right now I’m investing in Chicago. A lot of people would call them C-class neighborhoods. I think that’s a really sweet spot for us.

[00:18:07.780] – Sean

Nice. Let’s dive into that because it’s been a while since the classes were defined. I have had other guests that talked about B-class as being really good. A few people talked about C-class. Why don’t you define what that is for the audience real quick?

[00:18:23.890] – Jessie

Yeah, I think everyone would probably give a different answer. But my personal thought would be an A-class neighborhood is all single-family homes on the higher end. A B-class neighborhood is mostly single-family homes, maybe a couple of multi-families. This is just neighborhood to neighborhood. A C-class neighborhood, I would say, is all multi-families, but relatively safe. A D-class neighborhood is going to be all multi-families, a lot of properties that are vacant, boarded up, distressed, possibly a higher crime rate.

[00:18:56.900] – Sean

Got you. Okay. I’ve had guests on the show that have talked about how long it can take if you use the strategy of going single-family to single-family to single-family. Well, it sounds like you graduated past that pretty quick, which is good. Moved to duplexes, and then you said earlier, 10 units.

[00:19:15.650] – Jessie

Is that correct? Yeah. The last property that I bought, which was with a partner, is 13 units in Chicago. We each own half of that deal. It’s a value-add project. There’s a lot of deferred maintenance. The rents were under market. So it’ll take probably one to two years to really get it to where it should be. But yeah, I knew that to achieve my monthly income goals, I was going to have to have around X amount of units, right? I personally hate the unit count metric. I think it’s a vanity metric, and it really doesn’t mean a whole lot and can be misleading. But I knew, okay, if I own something like 50 to 80 units with partners, so I have a true net ownership of half of that, right? Yeah. That will just about get me to a point where my rental income is more than covering my monthly expenses, my living expenses. So that’s my number. I knew, okay, if I want to buy 50 to 80 rental units with partners, I can either do that in four deals or I can do that in 80 deals. Right. And it’s the same amount of work, if not way more work to do it in 80 deals.

[00:20:36.390] – Jessie

So rather than going for death by a thousand paper cuts, I need to figure out how to just do bigger deals so that I can do fewer of them and get to the finish line faster and easier.

[00:20:47.680] – Sean

Yes, I love it. And then do you try to look at an average dollar amount per renter? Because if you do the math, let’s say you’ve got 50 to 80, split that in half. Or you’re collecting revenue against 25 to 40. What’s your minimum amount you want to be making per unit?

[00:21:08.070] – Jessie

I prefer to only look at deals that if the property was optimized, like once the market rents are achieved, expenses are brought down as low as they can be reasonably, with each unit cash flowing at least 500 a month, that would be a great deal for me. So if I’m collecting 250 of that a month, so 250 times 50 to 80 units is pretty good.

[00:21:34.200] – Sean

That is pretty good. I was just doing the math here. Five hundred times 25, you’ve got 12,500 split that in half. Still, 6,000 is pretty decent. But if you get to like that range between 50 and 80 at 25, you split it at that point. You split the 50 and you take 25, you’re taking over 12,000 passive income per month. That’s that’s solid. Way to go on accelerating to the larger properties. I found that a lot of people, pretty much almost every real estate investor on this podcast has talked about the starting point, single-family, but everybody’s graduated to larger complexes. So yeah, great work.

[00:22:17.270] – Jessie

Yeah, and I think owning the 13 unit, for example, it actually feels a lot safer to me for a couple of reasons. It’s less scary to me. Reason number one is when buy a commercial size, multifamily, so anything that has five units and up, the lender typically will make you have a professional property management company in place with a signed contract before closing. You know that the building is going to be professionally managed. That’s one thing that’s helping you. Another thing that’s helping you is you’re almost diversified. If you have a single-family home and you go two months without a tenant, you’re in the red, probably a lot. Some people can handle that, some people cannot. With a 13-unit property, if you even have a couple of units vacant, you’re still probably going to at least break even. It’s actually a little less scary to me for that reason.

[00:23:15.510] – Sean

Yeah, that’s smart. And great call on the property management company. I know people who try to maintain the property themselves, they get those calls on a weekend or nights like, Hey, Toilet is not working, or this issue is happening. It’s just a nightmare. So with that in mind, property management fees, we usually find on the podcast between like 8 % and 15 %. What do you usually run into?

[00:23:40.340] – Jessie

I would say for a long term rental, that’s pretty high. Right now, I’m paying 6% in Chicago, and I know that in Boston, Massachusetts, for example, 5% is pretty common because the rents are so high. That’s great. But something else to note too, I think a lot of people put property management in place and think that makes real estate passive, and it really doesn’t because you still have to play the asset manager role because no property management company is ever going to care as much about your investment as you do. You really do have to be on top of it week to week, month to month to make sure that everything’s running how it should be.

[00:24:19.060] – Sean

Let’s take a quick commercial break. If someone tells you to buy a stock, the last thing you should do is buy that stock. The first thing you should do is ask why. Unfortunately, a lot of influencers on YouTube, TikTok, Twitter, Reddit, and really the list goes on, are giving really bad stock recommendations and investment advice. The question is, how do you determine if what these people say is good advice or bad advice? That’s where Tykr can help. Tykr can quickly and easily determine if a stock is a good or bad investment, and it helps you manage your investments with confidence. But don’t take our word for it. Check out our Trustpilot reviews to see what people are really saying. Go ahead and get started with a free trial, visit tikr. Com. That’s T-Y-K-R. Com. Again, tikr. Com. All right, back to the show. So you’ve only been investing in real estate for, I’m doing the math here, we’re talking like three, four years? Two years. Two years. Just two years. Way to go. Okay, in the two years, any major lessons learned or major headaches you ran into?

[00:25:26.540] – Jessie

Those two are one in the same. But the biggest lesson was just that it’s never going to be perfect and you are getting paid to deal with the headaches. That is your job, is to put out the fires and deal with the headaches. It’s never going to be just easy and seamless and nothing goes wrong, it’s normal for stuff to go wrong. It’s normal for stuff to go wrong, and it’s normal to be stressed and upset about it when things go wrong. It’s just par for the course. I think that was the biggest lesson for me. When I bought that first duplex, there was the basement flooded maybe a month into owning it. It was just because the ground was frozen and then it got super hot and it was just like a freak thing that happened. But oh, my God, I was horrified. I think I was so upset because I just wanted to be a good landlord. I didn’t want them to think that I was not taking it seriously or not addressing it quick enough. I just really wanted to do the right thing, and I didn’t even know what the best way to handle it was in the moment.

[00:26:33.250] – Jessie

It was super stressful to me, but I figured it out, and now I know for next time. That was my first taste of like, Things are going to go wrong and you’ll always figure it out.

[00:26:44.400] – Sean

Set expectations upfront. Like, real estate is not perfect, can be very passive. A lot of people that achieve fire use real estate. It’s great play. Yeah, but there are headaches along the way. You just got to be resilient. Cool. Well, awesome. Let’s dive into the Rapid Fire round next. This is part of the episode where we get to find out who Jesse really is. If you can try to answer each question in 15 seconds or less. You ready?

[00:27:10.850] – Jessie

Yep.

[00:27:11.370] – Sean

What is your favorite podcast?

[00:27:13.810] – Jessie

The Bigger Pockets real estate podcast.

[00:27:16.210] – Sean

That’s a good one. What is a recent book you read and would recommend?

[00:27:20.750] – Jessie

In the Flow specifically for women.

[00:27:23.770] – Sean

Okay, never heard of it. We get a movie question here. What is your favorite movie?

[00:27:29.680] – Jessie

This is not going to be the most eloquent answer of everyone on this podcast, I bet, but my favorite movie is Hot Top, Time Machine.

[00:27:36.460] – Sean

Seriously, I love that movie. I’m not joking. One of my top five comedies, it is hilarious. Rob Cordrie, love that guy. We could talk all day about that. All right, next one. What is the worst advice you ever received?

[00:27:55.440] – Jessie

That I would be an idiot to buy a property that I’ve never seen in person before. Sure.

[00:28:00.530] – Sean

Wow. I’m sure you’ve received that a few times.

[00:28:04.040] – Jessie

Yep, I have.

[00:28:05.970] – Sean

All right, flip that equation. What is the best advice you ever received?

[00:28:10.760] – Jessie

That you only quit if you stop. Or I’m sorry. You only fail if you quit. You only fail if you quit.

[00:28:17.890] – Sean

Yeah. Yep, that’s a good one. I’ve heard that too. All right, and last question here, time-machine question. You would get this one. All right, if you could go back in time to give your younger self advice, what age would he visit, and what would you say?

[00:28:32.090] – Jessie

I think I would go back to my high school self, maybe just graduating high school, and just say that all the twists and turns are going to make sense. They don’t need to make sense to you right now, but they’ll always make sense in retrospect. So just trust the process.

[00:28:48.800] – Sean

Love it. Great advice. All right, Jessi, where can people reach you?

[00:28:52.410] – Jessie

Instagram is where I hang out most. On Instagram, I’m Jessi Dylan with an underscore at the end.

[00:28:58.420] – Sean

Awesome. All right, well, thank you so much for your time. This is great.

[00:29:02.150] – Jessie

Yeah, thanks for having me.

[00:29:03.460] – Sean

We’ll see you. Hey, I’d like to say thank you for checking out this podcast. I know there’s a lot of other podcasts out there you could be listening to, so thanks for spending some time with me. And if you have a moment, please head over to Apple Podcast and leave a five-star review. The more reviews we get, especially five-star reviews, the higher this podcast will rank in Apple. So thanks for doing that. And remember, this show is for entertainment purposes only. If you heard any stocks mentioned on this podcast, please do not buy or sell those stocks based solely on what you hear. All right. Thanks for your time. We’ll see you.