Episode 83: I Sold My Rental… Now The Real Decisions Start

After officially selling my first rental property last week, I’m now facing the next big decision in my investing journey.

HVAC installation starts this week on the Alabama midterm rental, and now I have to decide whether to use hard money draws or the proceeds from my recent sale to fund the next phase of the project.

In this episode of The Ricky Ricardo Show, I talk about:

• why I sold my first rental property
• how my mindset around cash flow and financial freedom is changing
• the reality of low cash flow rentals
• balancing liquidity vs. interest costs
• why HVAC may be the most important upgrade in this entire deal
• learning to think more like an operator and business owner

I also share why I’m moving away from simply collecting doors and focusing more on investments that can actually move the needle financially.

This isn’t guru talk. This is the real journey of figuring it out in real time while balancing a W-2 job, investing, risk, and chasing financial freedom.

Welcome back to The Ricky Ricardo Show.

🎥 Watch the full video episode on YouTube:
 youtube.com/@therickyricardoshow

📲 Instagram:
 @rickyricardoshow

About the show:
The Ricky Ricardo Show documents the real journey of building financial freedom through leverage, better decision-making, and real-world lessons — in real time.
Real estate is the current vehicle, but the principles apply far beyond it.

Transcript

SPEAKER_00 0:00

I didn't even drop an episode on Monday because my son took over the studio for a school project, and honestly, it was really worth it. But while all that was happening, I needed to make a big decision. HVAC starts on Thursday for the midterm rental, and I'm deciding if I need to use hard money funds or the monies that I receive from the most recent sell. And this is actually where real estate is starting to get real. Welcome back to the Ricky Ricardo show. As I told you guys last week, the first property I purchased back then is completely sold. I'm done with that. If you didn't listen to, go back to the episode and get some information regarding that. But I completed a full cycle. It was a turnkey long-term rental. I don't know if I will do that again. I'm pretty sure I will not. But just to share that with you guys, I did a full circle in that and I learned quite a bit. I realized the slow cash flow, though it is cash flow positive, wasn't enough for me. It wasn't enough for what I'm trying to do. And so I do have another property in Indiana that's actually performing pretty well. This first property that I got rid of was underperforming. There was a lot of headaches tied to it. One of the big reasons I got rid of it is because the renovation, the rehab to get it rent ready was going to cost almost $25,000 to $30,000. It was a $90,000 home. So I'm curious if you have any feedback or information on that, what you would have done. But it's a cheap home, and I thought it was too much. The money I would have put down into that, I probably could have got a home or put a down payment here in California and tried, you know, the midterm rental out this way. But it's helping me think of freedom from rentals a lot different. And that's one thing I shared with you guys before is you'll hear it over and over again. You'll hear that, you know, $200 of cash flow a month can be wiped away with an air conditioning repair, with a roof repair, with these major appliances, these major things that can take place, and it can set you back a few years. That's a real deal. It's it's really scary for a lot of people when you have rentals, because not everybody's gonna take care of your property as if it was your prized possession. I always tell people I can wash my vehicle better than the car washing station or those employees, and that's why I'd rather do it myself because I really detail and I get into it. Because if I let somebody else do it, I'm not gonna be as satisfied. But again, freedoms are different for everybody. For me, I'm trying to use this as a fast-moving vehicle. I want to fast track this as much as I can. And the $200 a month, you know, I may come to a realization that I just need to stack those and move on. But I'm not there yet. I think I've had some success, like I said, in a flip. And so I'm wanting to see bigger cash flows, bigger returns. And I think I might be there. I haven't fully tried the midterm rental, but that's why I'm moving into that realm because the numbers on a midterm rental, gosh, I mean, in a month and two months, I can make the amount of cash flow I would make in a year for long-term rents. But I know something that you guys are gonna say is like, well, is it always gonna be occupied? Aren't you gonna have vacancies? More than likely I will, right? A lot of people that do Airbnbs and midterm rentals, they always talk about vacancies, but with the numbers, and again, I didn't just jump into this crossing my fingers and hoping that a midterm rental can get me a lot of cash flow. I have some numbers and and some analytics that can tell me this is this is a decent play. This is a strong play. It should be. I haven't experienced that, and that's why you guys are here, and that's what I'm gonna share with you guys. Um, I put a decent amount uh amount of money down, and you know, this is just a learning process, and you guys are here to ride along with me and listen and see exactly if I can make this happen. Different from a lot of you know financial investors or or gurus out there that tell you what they did in the past and how they were successful. I guess I can do that with my flip, I can do that with you know my second property, but it's real recent. It's real recent. And again, I've always wanted to follow somebody or talk to somebody that was in the beginning stages of this journey. And so that's what my goal is to continue to give you guys. There's several of us that are trying this journey and and letting you guys know real time what is taking place. So I salute those individuals that are also sharing their journey, and I challenge you guys to go support those individuals for keeping it completely real. I'm hoping they are. I imagine they would be being the little guy, but let's see where we can go with it. That's what I want, and that's that's the goal. Selling that first property didn't give me liquidity, it gave me clarity. The reason it gave me clarity is because I now know that I don't want that. Right now, in my investing time and my experience and where I'm trying to go with my goals and my vision board and all those things, that first property wasn't going to help me get there. It just wasn't. And so I've shared it before. I've talked about it before that you know, people say, wait, that's a long game. I get it, but I felt like in the experiences I've had and the vision and goals that I know I want to go with or go to that it was an underperforming property. It's been a couple of years, and I had to get away from it. So that's that in a nutshell, right? But I got money from it, you know. I made my money back and then some. Uh it wasn't life-changing money, but you know, I won and I won a lot of lessons in that. So I take that as a huge success. That's a huge win. But I got some money back, so I I'm more liquid, but the money never sits long. And I instantly or immediately have another expense. And I have a big expense because with the midterm rental, I need to make a decision how I'm going to fund some of these things. So, because I have a Dutch loan for my hard money loan, is how I acquired this property, I only have to pay interest on the draws that I actually take. So, right now I have a loan out for the purchase of the property, and I haven't had a draw yet, so I'm not paying any interest on those monies, which is nice. And I need to decide do I want to use some of the monies that I got from the home I just sold just to pay for this HVAC, or do I want to use a draw? So I'm I'm gonna have to dig deep and research a little bit, nothing too crazy. It's just basic interest rate and fees and all that, and see what's gonna be cheaper in this. Like I said, it's not a full gut renovation. Rehab is a lot smaller, and if I'm gonna forego the kitchen renovation for now, then the expenses should be lower. Once we're done with the uh HVAC system, we'll make it look pretty, make it look modern as much as we can, and then we're gonna actually try some contracts early on in hopes that maybe those contracts actually fund the kitchen renovation. I need to balance flexibility and interest. So, how much liquid do I want to be? How much interest do I want to save? Because either move, whether I use hard money funds or my own money that's not being put into an investment vehicle to get a certain amount of interest, like there's an interest game in this. So I have to protect liquidity though, because I had my team look at other properties since the last episode and we decided to move away from them, but we still are or I still am actively trying to find that next deal. I feel like I'm in a position to take on multiple deals, but it just has to make sense for me. And so I'm not gonna rush just to say I got another door, another home, and cross my fingers and see if that works. Uh I'm trying to be strategic, but if I can find a really good deal, then I need to have money, at least a down payment to put towards another hard money loan to acquire an acquisition loan to acquire that property. But every level of this requires big decisions, and you sit down and look at the entire portfolio, all the money that are available to me, and just try and be strategic as much as you can. I'm learning in this. We'll see what I end up doing. If you have any thoughts about using the hard money funds since I already have the loan versus using the uh proceeds from the cell, let me know. I'll I'll take your opinion, I'll take your information, and we'll go from there. I think I have an idea what I'm gonna do, but I'm not 100% yet. And so I will let you guys know um in that regard, but I will take your opinions and information um if you think it'll help me. So the HVAC isn't sexy. The HVAC is not exciting, it's not pretty, it's just what people expect. Every home needs to have an air conditioner, HVAC system, right? And if it doesn't, instantly it feels outdated. That's the nice piece, but that's not something that someone's gonna walk in the home and say, wow, beautiful, white, modern walls. That HVAC system just, oh my gosh, it's top tier, top of the line. Nobody's doing that. But what I have now is window units. I need my guests or my customers to come into the home and feel like they can come home and relax. Um, not sure if you're if you've been into the Midwest, but a lot of areas, north, west, east, south, midwest, it gets hot. It's in the summer, it gets cold in winters, and you need a reliable system that can actually pull out cold air or hot air. And that's gonna make money because, like I said, that's what's expected. If I'm gonna rent a property, I'm gonna go right to the thermostat and I'm going to get comfortable. And that is what it is. Comfort matters in this. The tenants, you know, they're they're gonna be blue-collar workers more than likely in this market that I'm in, but who doesn't want a comfortable place to lay down in, right? It makes it more competitive. I'm sure I can try it without that, but then the first time you're gonna get some bad reviews, people may not like it, and they're just gonna go pick another home that can give them that comfortability. It helps with long-term value, it helps with the refi, uh which I'm gonna need to do at some point. I'm gonna have to refi into a uh DSCR 30-year term. But like I said, the HVAC isn't sexy, but this might be the most important upgrade in this entire deal. Hands down, comfort changes everything for a midterm rental. And that is why I will be spending $12,000 for a comfortability system. But I'm thinking differently now. I'm not just blindly chasing properties just to say I'm in one and let you guys know that I have another one, right? That was excited early on, but at this point, if it doesn't make me money and reduces my liability, I'm all for that. I want intentional investments, I want higher cash flows. I'm not afraid of a flip. So I'm actively looking for those right now. But I want cash flows and monies that actually impact my life. There's things that I like to do, there's things that I need and I want. And then also to try and reposition my family to be better off early. Um, I have a good paying job. I I'm able to work quite a bit, so that W-2 is the lifeline. That's nice. Obviously, it's super nice to have, but I'm learning to think like an operator, like a business owner. And so these are going to take higher risk, which then gives higher rewards to fast track what I'm trying to do. And that can change anyone's life. That can change my life because I'm chasing cash flow that actually changes my life. I'm not just willing to limp in and say, oh, I got a property and you know, I'll take advantage of it, you know, 30 years from now. I think there's there's a mix that needs to be had, and I will eventually get some of those, but right now it's see what I can do now to scale and get as much money as I can. That's that's what it is. And that's a mindset change, that's a mindset shift, and it's also being real. I think we get excited, or that I got excited to own multiple properties, and I did, and I wasn't getting crazy numbers, so that reality hit fast and hard. It's like, hey, do you got to do something different? You actually have to get active if you want to make a difference in your job and in your paycheck and in your monthly income to pay those bills or to you know be able to splurge a little bit and and move the needle to continue this chase towards some type of financial freedom. That's all I can really ask for at this stage of this journey. And I like I said, I've been super vocal, super realistic with you guys, my thoughts and everything on why. But you guys are awesome. Thank you for your time as always. That's just a quick update. Everything that's going on right now, it is a big deal for the property because I'm not doing too much to it. So this would be the biggest purchase. So the HVAC system is gonna start to go in. The cool thing is because of the relationships I have, they're not expecting any money up front, like the last ordeal I had with the flip, which was a whole saga nightmare in itself for mediocre work, I should say. But nonetheless, we're moving forward. The midterm rental is underway. I'm excited to get there. Uh probably looking at another month of renovations to get it ready and look at some contracts, but super excited. That's where where I'm at right now. Thank you for your listen. Subscribe if you haven't and let me know what you think. You know, I switched the podcast. I did 80-something episodes without video. The show's now on YouTube. And if you like the videos, go down to the comments and let me know what you think. I'll respond to you as soon as I can. But it's Wednesday. Thank you for your patience and me not dropping the episode. I've shared some funny clips of what my son did in the studio for a school project on my Instagram at Ricky Ricardo Show. Don't forget to follow, leave a review, and I will talk to you guys on the next episode with as many updates as I can. Thank you so much for your time and take care.