Transcript

Ben:                 Welcome, my name is Ben Smith. I'm joined by the Leonard to my Sheldon, Mr. Curtis Worcester. How you doing today, Curtis?

Curtis:              I'm well, Ben. How are you?

Ben:                 I'm great. I'm great. So on today's show, we're really excited to have our partner and colleague, Abby Doody.

Abby:               Hey, there!

Ben:                 Abby, of course, supports us on all of our clients. We all work together, and she runs a lot of our financial planning for our main clients. And one of the things that we've just been noticing is a theme for a lot of our clients out there and people we talk to is this idea of real estate, is that real estate is something that I think people understand as a way to source and fund their retirement, right, is that they think about this as something they can buy, acquire, rent out, get income from, and it's another way to be thinking about income retirement, to then fund their own success.

Ben:                 In this podcast, we try to stay away from the investment stuff, right, as let's not get into investment theory and all that. So we don't want to get into that today, but we do really want to get into this idea of why would you do it, what would it mean to do it well, what are some lessons to be learned from investing in it, but also as I get to retirement and then into retirement, and then have challenges, right? I mean, I have challenges to how do I think about that, and when should I stop investing in real estate, or when should I be maybe selling my real estate assets? So that's the premise for today, for Abby, but that's what I want to get out of today.

Curtis:              Yeah, that sounds great. As you mentioned, we see it a lot, or we see a lot of interest in real estate within our clients, so I think this will be a really good conversation.

Ben:                 Yeah, so let's welcome in Abby. Abby, appreciate you coming on today. Thanks for joining us.

Abby:               Yeah, thanks for having me.

Ben:                 What we ... Obviously, with the arc of our podcast ... And again, the name of the podcast is Retirement Success in Maine, so the idea being we'd like to just introduce you here a little bit, just get into your background, obviously what led you to your point today of working with us as an investment consultant at Guidance Point Advisors, then we'll dig into the idea of your background to these properties. So just tell us about yourself in terms of growing up, and that history, just to get started.

Abby:               Sure. So I grew up in Portland and went to the Deering High School, and then left Maine, swore I would never live in Maine when I graduated from high school.

Ben:                 Like most do, right?

Abby:               Yeah, exactly. So I moved down to Boston, went to Gordon College, and I got a business degree there, worked in Boston for a couple of years, ended up hating it and couldn't wait to get back to Maine.

Ben:                 What did you hate about Boston? Because obviously when you're leaving Maine you're like, "Well, Maine's rural and nothing to do," and you're like, "That's so romantic that I can go to Boston. There's so much to do." You get there, then you don't like it? Why didn't you like it?

Abby:               Yeah, so I hated the amount of people and the commute. I was living on the North Shore and then commuting into Boston on a daily basis, so it was trains and subways and walking, and it was just too much for me. It was a hassle to get anywhere, and even though I wasn't that far from home, you don't really have the outdoorsy stuff in Boston, and I was just ready to come back to Maine.

Ben:                 Obviously you graduated Gordon, right?

Abby:               Yes.

Ben:                 So you're north of Boston at that point, but then you go work in Boston. What were you doing for work in Boston?

Abby:               So I graduated in 2009, which many people remember was the peak of the financial crisis. So with a business degree, not exactly the most valuable degree to be graduating with at that time. So I took whatever job I could, I was working at TD Bank in Boston, and it was great. I got some experience in the financial service industry, it gave me exposure to stuff I had never really worked with before, and it was a great first job. So I was working at TD Bank, and then a position came available up in Maine for a promotion, to do something a little bit more sophisticated. I would get my insurance license and be able to sell annuities in Maine. And so I had the opportunity to interview for that job and ended up getting it. So it was both a promotion and moving back to Maine, so it was a win/win for me, which was great.

Ben:                 So it was career that brought you back?

Abby:               Yeah.

Ben:                 Obviously you're recovering from the financial crisis at that point, getting back on the scene in Maine. What was it that you found that made you want to just stay here, because obviously you can get into a career and that can lead you lots of different places, but why was this the geographic center for you?

Abby:               So my family was here, and I was really excited to be back closer to my family. Also, the cost of living in Maine was significantly cheaper at that time than it was on the North Shore, so I could get a better apartment, my commute was lower, shorter time, and my money just went farther in Maine than it did in Boston, especially at that time. And I was still close enough; my best friend still lived just on the north side of Boston, still only an hour and a half from them, so whenever I wanted to go down, it's easy to get to the North Shore. So it fit all of the things I was looking for, plus I guess I'm a Maine girl at heart. I was happy to be back home.

Ben:                 So you're at this next place, and what led you then ultimately to get to Guidance Point?

Abby:               Yeah, so I was working at TD Bank for a few years, and the banking industry wasn't quite where I wanted to go. I was already starting to transition into the investment side of the banking world, but didn't see a lot of potential there, so I started looking for a different job. I actually ended up at Fidelity Investments in Portland, so that was really great experience. I got my licenses there, I got to talk to all kinds of different investors. I was the first person that anybody who walked into the investors center would talk to. I got to work with 401(k)s through Fidelity. Overall, just a really great experience.

Abby:               After a couple years at Fidelity, it wound up being that to move up in Fidelity, since there's only the one branch in Maine, I was either going to have to move to New Hampshire or Boston, which really wasn't something that I was interested in doing. I had already tried that, and not my thing. So then I ended up talking to my dad, who happens to have started Guidance Point. And so there was a position available, a starting level service admin person, and it just seemed to be the right time for Guidance Point to add somebody else, and for me to move from the corporate world of Fidelity over to a smaller, more personalized small business where I could have a little bit more control over my schedule, control over what I do on a day-to-day basis, and my potential was much more unlimited than it was at Fidelity.

Ben:                 Yeah, and I think that's obviously where we met, right?

Abby:               Yep, exactly.

Ben:                 ... was at that point, which is nice, we have a couple of Guidance Point businesses here that are going on, but with a family business, you got to make sure you're migrating differences, right, is you want to make sure there's some clear and defined reporting lines, and I remember that that first conversation of: well, okay, your father's involved in this business, and here where he and I were working together as partners on this, but also he's your father, you're his daughter, how do we make this whole thing work, because we don't want it to be awkward, we want to make sure that we're having really open and honest conversations? So I remember that first day was just going: okay, how does this whole thing go? But yeah, it's been a really fun trip, because I think you and I together, which ... 2013?

Abby:               '13. I know, it's crazy; six years.

Ben:                 So yeah, we've both learned a lot, right, as both grown, and as we've added clients over time. It's been a fun little trip, and Curtis has joined us here in 2019, so got a nice little unit, and with A.J. in Portland and then Larry Pelletier. He's in North Carolina sometimes and then in Portland, as well, out of our office there, so we got a nice little Maine team, which is fun, going on. But yeah, so it's been a really nice, cohesive team that we really do enjoy working with each other and going for that.

Ben:                 So since 2013, right, with Guidance Point; so I guess my question is: well why has this been the thing for you, right? So you got into banking, saw the Fidelity side, liked the investment stuff a little bit, and then you got into Guidance Point helping to service, and growing in your role here. What have you really enjoyed? What have you found out about yourself, and to where you are today, to where you want to be?

Abby:               Yeah, my role, as you mentioned, at Guidance Point has transitioned quite a lot from when I first started. It's taken on several different iterations. So I work both on the 401(k) side, mainly doing participant education, I also have some 401(k)s that I work with directly. And then, like Ben said, I lead up the financial planning, really, on the individual side. So I found that I really enjoy working with people more than I would have thought. I really enjoy talking to them. I enjoy helping them figure out their goals for retirement or wealth building, or whatever the case may be, and helping them to achieve it. So figure out a strategy and work together as a team to help them be successful.

Abby:               And the 401(k) education piece, I really wasn't sure if I would like that, and I really enjoy it. So for a lot of people, their 401(k) is their biggest asset, and oftentimes they may not have access to an advisor or a licensed professional to talk to them about it. And so I think it's a great service that these companies that we work with provide, to have us be able to go out and talk to their employees. And so I think being able to help them, help 401(k) [inaudible 00:10:15], in that aspect, has been really enjoyable for me.

Ben:                 Nice. In your career arc, obviously there's been a lot of changes here in formative years, which is great, but going forward for you, where do you see things going for you in terms of the professional world?

Abby:               Yeah, so I think just continuing to build the individual side of the business, continuing to help people grow on that side, and I really like the trajectory that I'm on, honestly. So I enjoy everything that I'm doing now, and if I did exactly what I'm doing now, that would be great with me. Yeah.

Ben:                 So let's get into the personal end for you, right, is so you got married last year, right? And so your husband, Casey, obviously you have a personal interest in real estate, which is why I wanted to have you on and talk a little bit about that here. So can you describe in terms of how did that interest start, in terms of: "Hey, here's something as an idea that we want to explore for real estate?" How did you identify that first opportunity, and then getting over the hurdle to say: "Yes, let's do that"?

Abby:               Yeah. So I will admit, it was all Casey's idea.

Ben:                 Okay. Sure, yeah.

Abby:               So Casey also works in investments, which is funny. So he worked for TD Ameritrade in Providence, in the 2009 to 2012 time frame. And a lot of his clients who were very wealthy had invested in multifamily buildings. So in Providence, or Worcester, Massachusetts, those areas, where you can buy a multifamily for relatively low cost, yet still get rents at a really good rate to help pay off the building and create an income stream for yourself. So Casey had it in his mind that that was something that he wanted to do, so when he got relocated to Portland in 2012, he really wanted to buy a multifamily, and so he looked around the city to make sure the location was good and the type of building that he was looking for. But that's really where it all started, was he talked to his clients and that was one of the ways that they found that they were most successful, was through real estate. And he has always been a do-it-yourselfer, hands on type of guy, so it fit naturally for him.

Ben:                 Got you. So in regards to doing that sort of work then, right, because it is work, right? This isn't-

Abby:               It is work. Yes, it's a second job.

Ben:                 Yeah. You don't really just buy something and then go, "Well, you rent it out and-

Abby:               A set it and forget it.

Ben:                 ... "it's just going to happen?" It doesn't work that way.

Abby:               No, it does not.

Ben:                 But would you say that's essentially the ... If you're a 10,000 foot overview of what's the formula to doing it well, it's that, right, is I need to be thinking about the level of rent I'm receiving from the property to the price that I have to be paying, right?

Abby:               Yep, exactly. And you want to make sure that those numbers work and you have some extra cushion, right? So if you're going to live in it, you want to ideally make sure that two of the units, if it's a three unit, ideally two of them are paying for the mortgage, so you're living there rent-free; if not, then maybe you just put in a little extra to make the mortgage work. But if those basic numbers don't work, if the building's three rents or two rents, or however many units there are, don't cover the mortgage, then it doesn't make sense to do.

Abby:               And then the third piece I would say that's really, really important is the location of the building. So you don't want to be in a location that people don't want to rent in, right? Because you're going to have problem tenants, you're going to have a problem finding people, you're going to have keeping tenants. So making sure your location is good and hopefully will be good for the foreseeable future is really important.

Ben:                 Let's get to tenants in a second here, but in regards to that price to rent formula, so when you're scouring it, the more handy you are, the more likely you are to get a lower price on the property, and as you said, and obviously I just know your story here a little bit, but in regards to you buy that property ... And one of the things that maybe you can just tell us a little bit about was: all right, so you started living in the property while also working on it, right?

Abby:               Yes. So living in it and working on it is quite an adventure, so it's not for everybody, but sweat equity, so the less you can pay for the building. If you are able and willing to put that work in, you can make an even bigger return. So living in it and doing stuff while you're living there definitely is an advantage, because if the other two rents are paying for the mortgage, then you can take all of that money that you would be paying towards the mortgage and put it towards redoing the property. So it's certainly not for everybody, and some people are not interested in that. It's definitely a lifestyle choice, but if you have the ability to do that, then you can hopefully pay less than a building that's already redone. You can put your own stamp on it, and then hopefully get more rents in the future.

Abby:               And so we've also been fortunate that we've been able to, when we have tenant turnover, get in there for a month, if we can swing the mortgage for a month without needing to have it rented. That allows us the ability to get in there to redo the apartment before the next tenant comes in, so we get more rent on the next incoming tenant.

Ben:                 So in regards to then finding that tenant, right?

Abby:               Yes.

Ben:                 So obviously, you probably have learned some lessons to the bad side, right?

Abby:               Yes.

Ben:                 Can you maybe describe a story or two about how it hasn't worked out well? Because I think we want to have a rounded conversation here about it's not all just great, that you always just find a great tenant and they never have any issues on the property, and they're always paying at the frequency you're asking them to pay, and you don't have any legal issues as well. So maybe what the bad has been for you, or have you learned anything on the bad side, to then that's helped you apply it to finding maybe better tenants that are maybe better suited to you guys?

Abby:               So our building is in Portland, which has had exponential growth since we bought it. And so I will say that we have been very, very fortunate with our tenants, and I think it also helps that the owners, us, have been living there while renting it out, right, because as a tenant: "Okay, the landlords are on the first floor."

Curtis:              Oh, that's true.

Abby:               You're not going to act up as much as if maybe the whole building is rented. So I will preface it with that. But really, we've been very fortunate. We haven't had to kick anybody out. Generally, our tenants have paid on time. But overall, we do a pretty big screening process for our tenants, so we have them fill out an application, we have them give us the authority to do a background check if we see fit. They put down references, we call them; so job references, their past landlords. And honestly, being in Portland, we do have an advantage. We have had an enormous amount of applicants each time we have an apartment for rent. So having a bigger pool of people to choose from allows you to be more choosy, right? So it goes back to the location thing: we're never feeling like we are in a rush to find a tenant, we never feel like we have to find a tenant. It's a good feeling that you have the ability to pick and choose, which just goes back to why you want to make sure that you're in a good location, right? Because if you're in a location and you only get two or three applicants and you're feeling pressure to rent to somebody that you may not want to or feel totally comfortable with, that's not a good situation to be in.

Ben:                 Right, sure.

Abby:               The last thing that we always think of is since we do live there, do we want to see these people every day, right? So I mean, they're basically housemates to us, and so we want to make sure that they jive well with us, and we get the sense that they'll take care of the building. We try and be really flexible with them and meet whatever requests that they have. So we want it to be more of a partnership. We want them to want to live there, rather than feeling like: "I have to, I'm stuck here for the next year or so." So the more that we can work with people, the better.

Curtis:              Nice. So I know we're talking about tenants right now, but I want to circle back on location, because you've brought up location a couple of times. So I'm assuming going into it, obviously at one level, it's the city or town itself, but I'm sure within that you also try to find the best spots within Portland, for example. So what goes into that?

Abby:               That's a good question. So Portland, as I've mentioned, has had a big revitalization within the past 10 years, so where our building is is in a very family-friendly neighborhood. We're nearby schools. It's an area that has always been nice, always desirable. We have off-street parking, which is very desirable in Portland, especially for snow bans, right, where some of the downtown peninsula locations do not have off-street parking. So stuff like that, that tenants might be interested in, those are big things. We also have a huge backyard, so we have a fire pit that the tenants can use, they have outdoor space. We're within walking distance to some walking trails. So overall, it's a great location. And you do pay a premium for that, but in exchange for that, hopefully you can get higher rents.

Abby:               Buying in a place that is up and coming: so there are neighborhoods in Portland that are not as great. That can be a bit more challenging. You're trying to build on something that's not quite there yet. And being from Portland, I knew the neighborhoods pretty well.

Curtis:              That's true, too, yeah.

Abby:               So I felt comfortable with it. So I would say if you are looking to do a multifamily, really knowing the city and the neighborhoods that you are buying in is really important.

Ben:                 But also, I think maybe merging the last two answers you had there ... So one thing is, all right, here's the type of tenant that I'm looking for, right? Because you're saying, "I'm describing a type of tenant that is like us," right?

Abby:               Yeah, exactly.

Ben:                 "And that's who we want to be renting to, and this is who we jive well with, and we're going to have a good relationship." I'm thinking about, again, on the retirement side, if it's, "Well hey, I want to be renting to a certain clientele. They're in retirement" ... And we've talked in previous episodes about aging and properties. So if you're going to have that certain population, you're going to have to address your property to those needs of that population and what they're looking to do, right? Because everything you just described is something like: well, in their twenties and thirties and forties, "That's great, because I'm near the schools and I got my kids here, and we got a play area for us, and we can entertain," all that. But from a retirement perspective, if it's a multiunit, is it ... And just describe your multiunit. Is it horizontally done, is it vertically? How's it structured?

Abby:               Yeah, so it's three units stacked on top of each other.

Ben:                 Okay, so in that case, that might be difficult for somebody that wants to go to the third floor and they got groceries and laundry and whatever they got to be bringing up.

Abby:               Right.

Ben:                 So those are the things you got to be considering, right, as well?

Abby:               Yeah, absolutely. And I mean, there's a lot of the duplex, so side-by-side buildings, so two units but the doors are right next to each other, so yeah, they're not on top of each other. So that might be more appropriate for somebody who is getting older and doesn't want to deal with stairs, or you have the first floor unit might be more appropriate for somebody who's getting older. But certainly I mean, most of our tenants who are applying are in their earlier twenties to mid-thirties. And I think that also goes with the phase of life that they're in, right? So they're just getting out of college, maybe moving to Portland, figuring out their career trajectory, aren't ready to jump into a house. One trend we are seeing is that older people are now renting for the same reasons, right? So maybe they've just retired and they're trying out a new location, they're trying out Portland for the first time. Maybe they're going to rent.

Ben:                 Interesting.

Abby:               Yeah, and so to give Portland a test run before they buy something, because prices in Portland right now are quite expensive.

Ben:                 So let's flip that on its head, right? So if you can continue on that theme of: "I like renting to people that are like us, or that I can relate to, or I have in common with." So right now in your life stage, here's where you are, and you're finding that population. But if you continue to go and you're in your fifties, your sixties, your seventies, your eighties, so would that be a theme that you would see continue with your properties, right? "So I'm now in my sixties, and I don't want to be reading to the 22-year-olds, right, because I probably have less tolerance for what they're into and what they're liking, and I'm probably not relating to them as much," which is going to cause a lot of tenant/landlord relationship, right, issues?

Abby:               Exactly.

Ben:                 So is that something that you guys have ... and I'm putting you on the spot, I haven't asked you this ahead of time.

Abby:               That's fine.

Ben:                 But is this something you guys have thought about, of, how are you going to be migrating that population with you, instead of, again, not trying to create problems down the road?

Abby:               Yeah. No, it's a good question. I think our ultimate goal is to not live in the multifamily, so we ideally would like to rent out all three units, and then move to another project. But yes, we always want to make sure the house jives as a unit, because you're exactly right: if you have a 60-year-old living on the first floor, and then a 21-year-old on the floor above them, it's not going to work. So if we're in the theme of renting to young professionals, I think we would stick with that, even if we were in our sixties. The biggest thing is if they have the income to pay for the unit; that's what we're most concerned about. But you know what? If the time comes and the building shifts to being everybody's sixty years old, that's fine too. We've also talked about Airbnbing it, which would be a whole other- [crosstalk 00:23:38]

Ben:                 And we can talk about that in a second. But that's an interesting switch, right?

Abby:               It is, yeah.

Ben:                 Because if you're saying, "Hey, I now want to start migrating away from young professionals, into folks that are in that first stage of retirement, and they're trying out different cities, and we're creating that culture in our building," well, it's not like everyone's rents and leases are all up at the same time, right?

Abby:               No.

Ben:                 So that's probably a tough transition moment of: "I know I'm going to have to go through something at this point, because two people are going to be here for the next nine months while this new type of tenant we're trying to bring in, and we need to make sure that whole thing works," right? So that would be a tough thing to be transitioning through, through that population group, right?

Abby:               Yes, it would be. Yeah. And I think we're less picky about particularly the age or whatever of the tenant. The biggest thing is whether they can pay on time and really afford it comfortably. But yeah, there is certainly a culture to that, especially with a three-unit. That's six people living together, and you do see each other on a regular basis. So yeah, definitely something to think about.

Ben:                 Okay, so we've explored the multiunit, and that was the first thing for you, right?

Abby:               Yeah.

Ben:                 And before you and Casey were married, one of the things that you guys explored, and just in terms of your lifestyle, one of the things that ... Casey's from Caribou, you're from Portland, but you guys found a love together of the outdoors, right?

Abby:               Yes.

Ben:                 Is you found this ... You love being outdoors, you love doing things. So talk about how that ... You explored that together, you found a co-passion for enjoying certain activities, to then going to the next property.

Abby:               Yeah, Casey's big thing before we got married is he wanted each of us to buy a property using our separate first-time homebuyer's. So you only have to put 3.5% down, there are some conditions, to buy your first home. Once you are married, if one of you has an FHA mortgage, that negates the other one's. So we really wanted to make sure we had two properties before we got married, to take advantage of that mortgage.

Ben:                 The program, right?

Abby:               So yes, we love the outdoors, we loved ATVing. We were traveling every weekend, really, to northern Maine, western Maine, all over the state, ATVing, to get outside. Portland is great, and there's a lot to do there, but that's not really where our passion is. It's really outside of the city. So Casey looks at real estate every day, and so he had found this property in Island Falls on a lake. And so-

Ben:                 And just time out for a second, for maybe the people that are listening that don't know where Island Falls is, right? So describe ... And essentially, we're talking about Portland, which I think everyone knows where Portland is, but describe in relation to where Portland is to where Island Falls is, if people don't know where Island Falls is.

Abby:               Okay, so Portland is in southern Maine, about an hour from the border with New Hampshire. Bangor is two hours north of Portland, so that's the last big city in Maine. Island Falls is another hour and a half north of Bangor. So total three and a half hours north of Portland, up 95, right? So Casey's from Caribou, which is five hours north of Portland.

Ben:                 That's right.

Abby:               So Island Falls is kind of a mid-point.

Ben:                 But almost ... So if you're going I-95, which ends at Houlton, right?

Abby:               Yes.

Ben:                 So Houlton's the last stop at I-95, so you're pretty close to where I-95 is ending in Houlton. That's the relation?

Abby:               Yeah. We're about 30 minutes south of Houlton.

Ben:                 Which again, it's your playground, right? It's where you like to explore and ATV and stuff.

Abby:               Yes, exactly. Yes.

Ben:                 So sorry to pause there, but-

Abby:               No. No, it was good.

Ben:                 ... continue on the path of ATVing to the next property.

Abby:               So we were ATVing, actually, for the weekend, and Casey found this property and was like, "Oh, let's just go check it out, see what it looks like." So we went and it was this beautiful property. They had just dropped the price on it. It's on a lake, and we were like, "Oh my gosh, I can't believe this hasn't been purchased yet." So it had been on the market for three years, so we went for it. And we figured this was more of a longterm play. So the multifamily in Portland is definitely an income-generating property, and we always knew we didn't want to live there full-time. The Island Falls property is more of a longterm, okay, this will be ours for our lifetime. We can work on it as we have the time and ability to do so. But it's really for our retirement, or any spare time that we have, we want to spend up there. And since the Portland property's always under construction, including our unit, the Island Falls property gives us a sense of home. So it's a single-family place. That's really where we feel most comfortable. We can get away from the crazy world of Portland and work and stuff like that, and just disconnect. So a totally, totally different type of property, and not even one that we were thinking about, but we happened upon it, and it just felt right.

Ben:                 So in regards to, again, this also being a potential theme for you for property, I think a very traditional way of thinking about investment properties and rental properties is: well, you got to go find a tenant, and then lock in a duration of a lease and get monthly rent from that, and that's just the model. But just like what has happened with Uber to taxis, so technology's come in and then changed some of disruption of that market. So can you talk about ... Obviously, you mentioned Airbnb as a theme, so I've never rented an Airbnb-

Abby:               You haven't?

Ben:                 I'll out myself right now. I'm pretty ... I've not done it.

Abby:               Oh, my gosh.

Ben:                 So can you describe maybe for those that haven't done it out there, maybe it's just me, but could you just talk about the concept of it, maybe from your side where you have a property and you're listing it on Airbnb, how people find it, how people interact with it? How do you get paid? And as a different revenue model for you, in terms of thinking about the property I have, and here's just another channel. So I'd just love to explore that, and maybe how you're thinking about that for ... Whether it be your Portland property eventually, or maybe for this Island Falls property.

Abby:               Yeah. So Airbnb is an app and website that people put their homes or apartments online for rent. So instead of a hotel room, you can basically rent somebody's house.

Curtis:              Short term- [crosstalk 00:30:00]

Abby:               Short-term rentals, yeah. So a weekend away, or something like that.

Ben:                 But as short as nightly?

Abby:               Yes. It depends on the Airbnb rental. Some are nightly, some require a two-night minimum. It just depends. And Casey and I have used Airbnb a lot. We went to Texas last year and only stayed in Airbnbs. So it's a very different travel experience, I will say, than a hotel. Things may not always be as they appear on Airbnb. So I would just say, take the pictures with a grain of salt.

Ben:                 Just like most things on the internet: don't believe everything you see, right?

Abby:               Exactly. So read the reviews well. But Portland, as I've talked about a little bit, is it's exploded in the tourism and how many people are visiting and living and moving to Portland. And so this whole Airbnb has come about in the past few years where we know several landlords that are renting out their units for $200 or $300 a night, and we're not even in downtown Portland. And so when you do the numbers, does it make sense to have a monthly tenant where you get monthly rent, or does it make sense to do a two-night minimum, and in the summer, you might even get more than $300 a night?

Ben:                 Because, to jump in, it's one thing to say ... And I'm just using figurative numbers here. Say I'm getting $1,500 a month for rent, and I can get $200 a night, right? So doing some rough math, if you rent it every night, which most people wouldn't, but say you rented 10 nights for $200 a night, so now I got more money out of this property. But the other part is you've got to be thinking about netting it, right?

Abby:               Exactly.

Ben:                 So if it's like, "Well, now I got to spend a lot more time on property, cleaning and rotating in between stays, I'm running a motel," mentality versus I'm actually ... So it is a different business, right?

Abby:               It's very different, yeah. And I know cities around Portland have talked about regulating the number of Airbnbs that are available within the city, right, because it can hurt hotels in the area, or neighbors don't necessarily want turnover every night in their neighborhood. So there are drawbacks, and certainly the cleaning and turning over of the unit whenever people leave is a big, big thing to consider.

Ben:                 And on top of that, too, is I think if you're renting out, people are generally bringing their stuff into your unit, right?

Abby:               Exactly.

Ben:                 So they have their own furniture. They have their own- [crosstalk 00:32:20]

Abby:               Right, exactly.

Ben:                 They have their own furnishings, but if you are then saying, "Well, I'm going to then rotate into Airbnb," then you have to make it comfortable, livable, appealing to that sort of price point so that people do it again and there's good reviews, and all that, right, as well?

Abby:               Yeah, exactly. And so there's more wear and tear on your stuff, and it becomes less of feeling like your place, more of a place that you're renting. And so it's totally different. We haven't done the Airbnb thing yet. The Island Falls property is another one that would be ideal for Airbnb, or any of those sites. So the Island Falls is a single-family home, but it's on the lake, so it's on ATV and snowmobile trails, so you could rent it. It is year-round as well. And that, I think we would do weekly rentals rather than nightly rentals.

Ben:                 Which probably from a lake experience-

Curtis:              I was going to say, that's probably more common, I would think.

Abby:               It is, yeah.

Ben:                 Yeah, right? Because it's more of a destination, versus, "I'm staying here to do something else," right?

Abby:               Exactly, yeah.

Ben:                 Which you're probably going to have different experiences from the-

Abby:               Very different.

Ben:                 But I guess where I'm going with that is, so it's an interesting play of, "Hey, I could be living here." And then I could say, "Hey, in peak seasons" ... Or, "I'm busy in the summer. I like where we go to do stuff, and I have a way to have this be an income property, maybe even not just 12 months of the time, maybe it's one month or two month." Or you can turn it on and off, I take it, as well?

Abby:               Yeah, exactly. So we have talked about, if we're in Island Falls for a month, we could be renting out the Portland unit in the summer for nightly rentals, or something like that. And certainly you can make extra money on top of it. And yeah, I'm not sure it would be full-time for either property, but there's stuff to consider. Like I said, Island Falls is our home, so having people in there on a weekly basis, it feels like other people are using your stuff, which is an interesting thing. My parents rented out their camp for weekly rentals when I was in high school and college and they ended up stopping, because it's a ton of work to do it, especially if you're cleaning it yourself.

Curtis:              That's true, too.

Abby:               You take out all of your pictures, all of your personal stuff has got to be locked away.

Ben:                 There's a pride thing, too, right?

Abby:               There is, yeah.

Ben:                 Because you do want it to be a certain level of quality because you want people to have an experience and you don't want to be embarrassed by an experience.

Abby:               Right, exactly.

Ben:                 [crosstalk 00:34:48] they used your thing and they were like, "Ah, it was okay," or, "Wasn't for me," or, "That was not as clean as it should have been. Those are all anxious things that I think we all deal with about even guests coming over for dinner, right? All of a sudden, everyone does the mad rush to clean your house because you don't want there to be anything out of place. I got to have it look a certain way.

Abby:               Exactly, yeah. So we haven't jumped into the Airbnb thing yet, but we'll see. It's an option, right? So having rental units and different types of property, it just gives you more options for income, options for what you want to do with it down the road.

Ben:                 And I'll point out something here, which maybe it ... You have an atypical experience, that I think if people are trying to get into and as they're getting into it now, or in retirement especially, you fast forward, it's probably tough for the average person to be saying, "Hey, I'm in Portland, and then my next property's in Island Falls, three and a half hours away, and I got to maintain both." That's a lot of work, and that's, "I got to be in both places."

Abby:               It is.

Ben:                 And the time to even transit back and forth is tough. But a typical theme that you would be seeing, right, is that, "All right, this is where I spend the majority of my time. This is where I'm going to be local to and I can service, especially if I have to do this myself," right? So you're trying to cluster your properties, generally?

Abby:               Yes, that's right. The closer you are to your property, the better off you're going to be. And there have been many situations where Casey has had to run back to Portland from whatever location we were in to take care of something. And so when you said at the beginning that it's a second job, it is. If something goes wrong with the house, that's on us to take care of, and that's part of being a landlord. So ideally having the properties close to where you live so that you are close to them if anything happens, if you want to work on them, whatever, the better.

Abby:               And Casey and I are both in a very unique situation where we both have the ability to work remotely if we don't have meetings, which, again, we are very fortunate, but not probably ... Most people don't have that luxury. So it does give us the ability to be a little bit more flexible in the properties that we buy and the locations of the properties that we buy. But certainly, if we're in Island Falls and something goes wrong in Portland, that is a pain. So we are hustling back down 95.

Ben:                 So I want to briefly mention and get to the third one, so you just recently got into a third property as well, right?

Abby:               Yes.

Ben:                 And just, I want to move on to the retirement success part here in a second, but can you just describe: well all right, you were at number two, and now we're like, "Well, that's number three," so just quickly describe that part?

Abby:               Yes. So number three is a big, old, brick building. There's really no other way to describe it. But it's old. It's in a town called Richmond, which is about 40 minutes north of Portland. It's on the Kennebec River near the Brunswick/Bath/Topsham area, in between there and Gardiner/Augusta. So it's really old. It's from the 1890s. It's five floors. It's totally gutted at the moment, so it's a blank slate for us. So we're figuring out what we want to do with it. So this may be more of a commercial product. In fact, I think it's going to be. So it will be fun. And Casey is super creative and loves to do this type of stuff, and so it gives him an outlet to do that and figure out what we're going to do with it. But yeah, this is in totally a different direction. So we have three totally different types of properties, which probably is also atypical. But hey, we're young, so.

Ben:                 So then go forward here: so if you look at this as the master plan, right, and I think where a lot of people start thinking about this in retirement is saying, "Isn't it great, I can work my professional job," what you're doing now, and what Casey's doing now is he's got a professional job as well, "and that then at some point, I have an ability to replace some, maybe all, if I'm lucky, or to replace some or all of our income using this rental income, and that I can then do the work of just maintaining those properties. Or maybe I become incapacitated in some way, or I have no interest in doing some of that work, I could farm that out as well, and still keep a majority of the revenue."

Ben:                 So is there, I guess, a strategy for you? Is that the thinking of: you're just being opportunistic now, and when we get to a certain level of revenue, then we're great? How do you position that to where you eventually want to be? So how far away are you, I guess is the question?

Abby:               Yeah. So because Casey and I are both in finance, we constantly think about retirement, which good or bad, that's the way it is. So we are constantly planning for retirement income, right? And so neither of us have pension plans, and so these houses are replacing a type of pension plan, to your point. So it's income that comes in every month. Casey is very handy now. That may change when we're in our eighties, but for right now, we don't need to farm any of the management out. So our goal is to get to a level where we can replace the majority of our incomes in these passive income streams through income. And so with the Richmond property and the Portland property, I think we can probably achieve that goal.

Abby:               So I'm not sure that we have plans, well we don't have plans, for another multifamily at the moment. So developing the Richmond property and getting income off of that, in combination with the Portland one, I think we're going to see where we go with those, and that's our goal right now. So we're not looking to accumulate hundreds of these things because they are a lot of work, and we do have real jobs.

Ben:                 And you're doing the work yourself, right?

Abby:               Exactly, yeah.

Ben:                 Which is very different than, "Hey, I can do this, and I can afford it," which is why we wanted to have you on the show, from a lot of lenses, is Maine's a pretty blue collar state, right?

Abby:               It is.

Ben:                 It's not all these just very rich developers that can afford to just acquire, acquire, acquire, and then hire all the contractors and everything's done in nine to 18 months. That's maybe more atypical, and there's a lot of just stories, and Abby, you and I have met a lot of people in the last five or six years, too, of they dabble in a lot of this-

Abby:               Yeah, absolutely.

Ben:                 They have five or six apartment buildings, and they love it. They have a skill in carpentry, they have a skill in plumbing. They can do their own electrical. And they go, "This is something I can touch. I can impact the effect of it, or the value of it. I can get appreciation back from the people I'm working with." So it's a different thing in terms of, "Well, I just deploy my money in an investment that I don't know, or see, or have no idea about, and hopefully I get it back." This is now something of: "I can actually see that working."

Abby:               Exactly. And it's more tangible, right? I think sometimes investments can be sort of up there, mucky, not really clear for a lot of people. And this, it's like, "Okay, that building gives me X number of dollars every month, and I know that if I put this much money into it to improve it, it will equal $100 more each month." So I think that tangible, real money and real sense of accomplishment is why a lot of people want to do it. And Maine is a great place, where some locations in Maine, the property values are still low enough and the rents are high enough that you can get into a multifamily and still have money being made on it.

Ben:                 But alternatively, it seems to be there is an idea of ... And I know we're just still talking accumulation and not necessarily in the retirement, and what do you do then ... But there seems to be a theme we've had of several clients approach here recently of: they like the idea, right, but where they want to be is maybe they do want to be in Portland right now and they love Portland and it's just very romantic and it's great, and "Everything I want to be, and it's young in energy, but then," they say, "but this is the thing: I like, Abby, just what you're doing. That's very interesting, I'd love to do that, too," and they look around, and they just struggle, because they look at the property values going up, and up, and up, and they're going to go acquire, but then they look at what the rents are, and it seems like the math just doesn't work, but they want to make it work. It has to happen. I guess that's just market cycles, for these things.

Abby:               Yeah, it is.

Ben:                 But what would be your advice to that sort of person that says, "Hey, this is the specific pocket or market I want to be in," and they're just looking at it and they want to get into this idea, but they maybe just can't make the math work?

Abby:               Yeah, that's tricky, because you're right, we have had a lot of people. And I think the idea of multifamilies has become a bit romanticized, and so I want to make clear that it is a lot of work, which is what I always tell people, right? It's not just you have a building and people pay you to live there. I mean, there's upkeep, if it needs to be redone, stuff like that. And you've mentioned this before, Ben, that real estate can be a bit more market timing-related. And so there's just times where it doesn't work, the numbers just don't work. So either you're going to have to compromise on something if you don't want to wait, right? So maybe you're looking at it from a different lens. So okay, maybe you want to be right in downtown Portland, but maybe a renter might want to be in the suburbs. So if you need to look in the suburbs and maybe make the numbers work out there. Or maybe the next up and coming place is Brunswick, and even though you might not want to live in Brunswick, there might be a whole pool of renters who do want to live there and are willing to pay top dollar for rent in Brunswick.

Ben:                 But property values maybe aren't what they are in Portland.

Abby:               Exactly, yeah. And so you do have to really think about where you want to compromise. And so if you don't want to do work on a property, well then that means you're paying top dollar for the property, and maybe the numbers don't work. So maybe you would consider doing something that needs a little bit more work. But again, that's going to be individualized, but thinking outside of the box a little bit can be really helpful if you feel the need to get into it right now. But there is definitely some timing to it, and I will say that we just got very lucky when Casey bought his back in 20-

Ben:                 You just never know.

Abby:               You never know, right.

Ben:                 That could have been the top, that could have been the bottom. That could have been-

Abby:               So that's the other thing, right, when people say, "This is the highest property values have ever been," well, people were saying that five years ago, right? And nothing can say when the market's going to go down, really. I mean, there will be signs, but-

Ben:                 But the point is, it's more of that the rent to the value-

Abby:               Exactly.

Ben:                 ... is the deal, not what the value is.

Abby:               Exactly.

Ben:                 Because, again, you could be in very rural, like you could be in East Machias, and here's the property values in East Machias, but there's the University of Maine at Machias, and there's a pool of renters that need access to really great housing, and they're willing to pay out for certain experiences, and you can offer it. And that's great. That would work, but you've got to put all those factors into it to have that be a consideration as you go, right?

Abby:               Yeah, you absolutely do. And we have friends in Aroostook County that have a bunch of rental properties and their rents are not that much lower than what we are getting in Portland, and their property values, what they're paying for the houses, is a third of what we're paying.

Ben:                 So it's a better, right-

Abby:               It's a better deal, but if you're living in Portland, you're probably not going to buy in Presque Isle, so a little bit of it is location, at this point.

Ben:                 Right, and of course rents can be transitory, right?

Abby:               Exactly.

Ben:                 The values are going to be transitory, rent's going to be transitory, so it goes to your thinking about how much you think that will persist in either side. So I would just move on to the next part then is, all right, retirement success. So again, we have a lot of people and clients that maybe they've already gone through all that acquisition, just a lot of what your story is, and then they get to retirement and maybe they're not acquiring, but they need to think about maybe cleaning up some of their assets over time, and they may have liquidity needs, right? They may have, "Hey, my spouse has got incapacitated and he or she needs to go to an assisted living facility, and I don't have liquid assets, so then I have to sell something in order to pay for that sort of health care need," so that might be where they start decumulating properties.

Ben:                 So how would you describe that process to be like, and maybe we're talking about, what is the selling process like? Because again, you've gone through some of the buying process, but the selling part is maybe tricky too, but it's probably different because now you have rents, so it's now a business that you're selling, not necessarily a property that you're buying, which is a completely different permutation.

Abby:               It is, and to go back to the market timing thing, right, so real estate really should be a long-term investment, unless you're trying to flip properties, but a lot of these rental properties people will hold for years and years and years, right? So trying to find the best time to get out can be a little difficult, right, because if you're trying to sell at the bottom of the market, you may not get the value that you want to get out of the property. So I think making sure that you have a solid financial plan going into retirement so that you know, "Okay, worst case scenario, if this property takes two years to sell, I have this much liquid net worth saved up in my bank account," right?

Abby:               So that's the tricky thing with real estate, is it's not liquid. So there may be times where it doesn't sell, and you need it to sell, so-

Ben:                 But you're also selling the property, not just based on the property value, but also that if it is an attractive property that people are renting, or you have Airbnbs and you have a business established, that you're selling the business of the property, right?

Abby:               Absolutely.

Ben:                 So it's all the income stream that maybe somebody that's coming in wanting to buy it, he's paying the value of the property plus the net present value of the income stream, right, is essentially the idea?

Abby:               Exactly, exactly. And so finding the right potential landlord who wants to buy that is going to be important, because if you have a good rental history in that building, that's certainly worth something, right?

Ben:                 Sure. [crosstalk 00:49:06]

Abby:               And if you've kept the building up, that's also worth something. So figuring out what you as the owner want to get out of it before you put it on the market is also good, right? So you have an understanding of, "Okay, these are the rents that I'm getting. This is the net present value of them. This is what I want from the actual liquid portion of the property itself." And there's a lot of considerations, certainly, that go into it, but I would say having cash outside of the property, in case you need it in the meantime, is going to be important.

Ben:                 So I guess where I want to continue to get into, and maybe as a wrap up here: all right, so retirement success; again, a lot of people using this income strategy, then at some point they're going to decumulate, what also themes ... Again, from the lens of somebody that's retired, and they're saying, "Hey, I have these properties, and maybe for the majority of my life, I was handy, I was able to deal with these things, I was able to take care of it," how have you seen maybe landlords get into this idea of, say, management companies?

Ben:                 Because I'm thinking about, "I need that income to live on, but I'm 78, or I'm 80," whatever that time frame, "and maybe I don't have the energy, or I'm not physically able to do things anymore, and I need to turn to a solution, because I don't want to just sell this. Yes, I can get liquid assets, but I lose the income of it, too." So maybe a near-term step within retirement of hiring a management company, how have you seen people do that, and what are some steps to find what you would deem maybe a good management company?

Abby:               Yeah, so my grandparents in Florida, when they were in their late seventies, actually purchased three rental units. And my grandfather was like, "I don't want to do any work on them," because they split time between Florida and Maine. And so he was like, "I am definitely going to have a management company help me with the upkeep." And so he did his homework and figured out that even with the cost of the management company, he's still getting a significant amount of income off of these properties, so much so ... So, he was in charge of all of them. He passed away a couple years ago, and my grandmother even kept two of the properties, because it still makes more sense for her to hold the properties while paying the management company to take care of them; the income from that is still more valuable for her than selling the properties. So-

Ben:                 And she could passively continue to keep her ears open in case somebody approached her and said, "Hey, I am interested in your property. Would you be interested to sell it?"

Abby:               Exactly.

Ben:                 So you can always keep your ears open to it.

Abby:               Right, and that's the good thing, right? You're never necessarily stuck in a property. So if somebody approaches you and the price is right, you can get out of it whenever you see fit. But I think doing your homework, finding good management companies, and making sure that they're working for you, right? Because there's now quite a few management companies in Portland that are pretty big and manage a lot of properties. They may not, though, manage it to the standards that you had, right? So you probably took better of it than anybody else, because it's your property.

Abby:               So I think before you get into a position where you definitely need somebody to be doing that work for you, maybe interviewing some of these companies, going to see some of the properties that they manage, and talking to other landlords who have them manage their property, I think is super valuable, because nobody's going to do it exactly like you, but you want to have a company replicate that as best as possible. But it is certainly possible to still make money from the income while paying a management company, if you wanted to [crosstalk 00:52:39] property.

Ben:                 Which it just feels like that's a natural progression. We talk to a lot of our clients about that, is, "Hey, if this is working for you, and you have a passion and a purpose in retirement, and this is something I love to do, and it just gives me something to take care of and think about and stay active with," and there's a lot of physical elements to keeping up with it, right?

Abby:               There are. It's a ton.

Ben:                 It's akin to working out, in a lot of ways, right?

Abby:               It is.

Ben:                 There's a lot of great benefits from having this be that, right, is that it essentially becomes that part-time job, gives me purpose, gives me something to think about, having great relationships with my tenants. I have that social element that we've talked about with a lot of our podcast guests so far, is that that's a big need.

Abby:               It is, yeah.

Ben:                 So that maybe at some point, I'm not able to do it, a management company, then, again, thinking about then maybe that last trimester of retirement, of, "Hey, I'm not able to do this anymore, also that somebody else can step in as well if I needed this to have it taken care of for my legacy and that," right? So a nice arc, which is why we wanted to explore that with you today, as this going through accumulation, all the way down to the overall selling, eventually, of the property, potentially, to other people.

Ben:                 So in maybe one last question for you, is in terms of you and Wes brought this up on our first episode, is retirement success in Maine, and retirement success for you, is he's said, "We have the benefit in our seat, as financial advisors and financial planners, is we get to sit back and see how people are doing it well ahead of us going through it ourselves."

Abby:               It's true. Yeah.

Ben:                 And say, "I like that," or, "I don't like that." And just what Casey was learning from his clients.

Abby:               Exactly, yep.

Ben:                 What have you learned maybe about yourself through that, and maybe as the scope of what you're building today for the rental properties, what is retirement success for you in Maine?

Abby:               So, retirement success for me is moving to Island Falls and living there and being able to ATV and snowmobile and hike and cross country ski at our leisure. And so I love being outside, I love being active. And so that, to me, having the income, right, from these other properties to be able to do that, is really the goal. And so doing projects that we like along the way, when we're older, that's great, but really, that is the dream, is to be able to live in Island Falls.

Ben:                 Which is Maine, right? It's like, why are you in Maine? Well, Maine is a very outdoorsy state. You can get everything here.

Abby:               Exactly.

Ben:                 You've got the ocean, you've got the mountains, you've got up north with the farming, you get all the industries and stuff, which is what's pretty fun for me to see, is you can say, "Hey, Abby is a Mainer, but also she loves being in Maine," right?

Abby:               Yeah.

Ben:                 You had to explore outside of it to see that this is who I am and what I love to be, and who I want to be, so I need to be more of who I am and not what everybody thinks I'm supposed to be. And my friends thought I was supposed to be out in New York City and Boston doing that stuff.

Abby:               Right, right.

Ben:                 But who I really am is-

Abby:               A Mainer.

Ben:                 Yeah. So that's great, so I really applaud you for going through that. So I want to thank you for being on the podcast today, Abby. Appreciate you doing this. Would love to have you help for co-hosting as well, either between Curtis and myself, to step in, but a nice little project we've got going on, so appreciate you jumping on and talking about real estate for the audience today.

Abby:               Yeah, thanks for having me.

Ben:                 All right, take care.

Ben:                 So it was really great to hear from Abby today, right? Of course, we work with Abby on a minute-by-minute, daily basis here, as part of our team at Guidance Point Advisors, especially with our clients in the state of Maine, but one thing is that we were really excited to bring her on the show to get into this theme of real estate. And I think from a retiree perspective, all of us accumulate lots of different things over our lives, whether there's emotions and memories and physical assets, and financial assets and things. And sometimes it's just getting to this organization and this purpose around why, and what, and how. And so we tangentially see Abby, and you get to know somebody as you're working with them. So it's been a nice thing, is see her going down this road.

Ben:                 And Curtis, you and I talk about, well, that would definitely not be me. You're not going to find me swinging that hammer and trying to fix stuff. But for them, for Abby and her husband Casey, that really works. And I know for a lot of our clients, that's in their blood, too, right, is they're handy and they like using their hands and they want to see this tangible property and asset. But for this idea of we wanted the audience today to get out of it is, again, getting into real estate, why that might be something. And you might be thinking about that today, of, "I'm pre-retirement," or, "I'm in retirement, and why would I consider it? What sort of things would I consider in accumulating properties?"

Ben:                 And then the flip of that is, "What sort of things do I need to be thinking about when I exit my property," right, because it is a business, and it's not necessarily just a house or just a piece of land, so there's something different to that, as a thought process. So those are the things that we really wanted to get out today, and I think Abby did a really great job walking us through that. Curtis, what was your takeaway from today?

Curtis:              It was really cool to hear Abby's story from a global perspective. And then one thing that I honed in on that I had never really thought about, she was talking about her living unit in Portland, and the fact that her and Casey live there with two other tenants, essentially two other groups of people living in these ... She has two other units other than theirs in that house, and the aspect of not only the on paper fit, if you will, of can they pay the rent, are they going to take care of the place, but the aspect of Abby sees and interacts with those tenants on a daily basis. And she talked about really trying to get a fit with her and Casey trying to find a good fit of people to essentially live with them. It's separate units, but same building. So I thought that was really interesting. That was something that I had never even taken into consideration.

Ben:                 And you could see that, again, from the retiree perspective or someone that's older and going, "Well hey, if I'm moving somebody in and they're not a fit to my lifestyle, and if I'm used to going to bed at midnight, and these people are going to bed at 8:00 PM, or they work in a different industry, and we have different cycles in terms of how we sleep and use the property," that's going to be impactful to all of the people. And if one party's feeling it, you know the other party's going to feel that, too. So yeah, that was a really great, really thoughtful point that I'd never even considered as a piece of that transaction.

Curtis:              Yeah, and then she talked about how as her and Casey age and how she can see their tenants aging with them. Right now, their tenants are closer to their age, probably, and certainly closer to their sort of lifestyle, and I thought that was really cool, to think about how that could change.

Ben:                 And that will also probably change, too, as people are ... If the owner is looking to get a certain culture out of it, there might be different levels of affordability, too, of people that are in a certain level of property, and what it looks like, and what their affordability is to how they use it, and all that. So yeah, a neat little packaged conversation about that, and I think that was a pretty important point to be making in having that discussion with Abby today.

Ben:                 So appreciate everybody tuning in. Of course, you can find us on our blog. This will be episode six, so if you go to blog.guidancepointllc.com/six, so you can find this episode with all the resources and things that we talked about today. If you have any questions, I'd love for you guys to reach out, but until next time, we'll keep on finding your retirement success.