liz
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[00:00:00] And welcome back to STL like the best. I'm Michael Chang. I have a very special guest today. It is my wife and business partner, Elizabeth. Welcome Elizabeth. Hi guys. How are you? Well, it's just me folks that are watching this. I'm in the office. Liz is filming in our basement office. And we wanted to start this miniseries within the podcast, and we got a lot of questions on how did you guys launch this business together?
And we want to tell you the story behind that. So this will be a multi part series. If you are a couple, we started this as boyfriend and girlfriend back in 2016. We really started doing the research and now we're married. We have two kids. And we continue to grow and scale the business. So really just want to tell you the highs, the lows, how to work together, like how we've worked together, mistakes we've made.
I'll start, I'll stop talking about this talk, but we're excited to do this with you. We hope like leave in the comments, if you like [00:01:00] this format. Awesome. Yeah. Very excited to be here. And for those who don't know me yet, I'll give a brief intro. I'm a full time real estate investor specifically in the short term rental space, also Michael's best partner and wife.
And prior to real estate, I worked in corporate sales for nine years for various fashion brands. So very excited to start this series and share our stories with everyone. And just to reintroduce myself to I, 40 years old, we both live in New York. It was, I got married seven years ago. We started dating like 10 years ago in 2014.
We started really talking about building a business. 2015, 16, right, Liz. And it's been quite a journey. And we were actually talking about before, like, how do we actually like structure this to make it useful? And I think the topic that we'll touch on today is like, how do you convince your partner's spouse to start a new venture, right?
Whether it's real estate or anything, starting a new venture. I'll, I'll just kick it off. I wasn't that interested in real estate. I didn't really have any background in it when I was working [00:02:00] in investment banking, I was very, very focused on my work and took a lot of convincing for me to actually quit my job.
I want to do this. The, really the credit goes to Liz for. Pushing this in the beginning, especially on the real estate side. So how, I guess you always loved real estate, right? Cause you got your real, even before we met, you got your real estate, you had your real estate. Um, yeah. So I always had the love for real estate.
I just learned from my father. I knew. Okay. So yes, I always have the love for real estate. You really learn it from my father's since young, see how he was able to build his wealth retirement through owning real estate. So. Always knew that was a path I wanted to explore, but while working in W2 in the corporate.
Well, like what exactly, you always say like corporate sales, W2, what were you doing exactly? Yeah, so I work for fashion brands doing. International sales, what fashion brands, Kate Spade, Tiffany, and long time ago, oh, so Liz Claiborne, like that was like almost 10 years ago. [00:03:00] Yeah. So had a, a lot of learn a lot of lesson and actually apply a lot of sales technique to nowaday into the real estate world.
So that has. being a great experience, but I fundamentally knew working the nine to five wasn't for me. I wanted the freedom to be able to have full control of my time. I think at that time, that was my goal. I don't talk about it a lot. The, the fundamental why was the reason driving me is. I, my, all my families are in Taiwan and I couldn't have enough time to visit them.
Lucky if once a year, most of times, like once every three times, once every three years. So in the end, I was thinking this can be it. I'm trading my time for money. For the paycheck, but I lose my family, so this cannot be the, I can't go on like this for that long. Even I stay in the corporate, the how many days can I really take off?
You have 14 days. If you go back home, that's it. You can't have anything else. So I told [00:04:00] myself I wanted something that had given me the flexibility, flexibility on time and real estate seems to be. The right thing to do. So I started immersing myself with bigger pocket podcast, met a lot of real estate investors through just cold calling or networking.
So that was great. That's how I kickstart in the real estate journey and then try to convince Mike with multiple attempts. Well, we'll definitely hit on that. And had I listened to you earlier, it'd be a lot closer to hitting our magic retirement number. But let's go back to, let's talk about your dad. He helped us start this, right?
Cause he had the, he had. The vacant unit in one of the buildings that he owns. And when we say buildings, there's two residential buildings that are like, have three units that were not gonna be real estate. Don't be like, Oh, we're real estate Mongols or anything like that. Mongols or anything like that.
But like, how did you see, like, how was that such a formative experience for you? To see, and I didn't talk about a little bit about what you saw, how he was able to really leverage like a pretty [00:05:00] basic job. Into creating like some pretty decent wealth for himself. Let me just talk about that. I think most people think, oh man, like I have to, cause like we both are immigrants, right?
And you feel like, oh, I have to have all this money or have this huge corporate job or anything like that. But that's not, that wasn't the case. And I didn't actually know this until you told me like later on, like how your dad built his wealth and I was like, oh wow, that's really cool and interesting, actually.
I want to talk about that. Yeah. So my father built his wealth through really at first he was a taxi driver. And so he knew by driving taxi, you just making a couple hundred a day. So he's like, why don't I just save all my money? And by at that time, it was very valuable to own them. And you can rent those license plate out in your city.
So for people that aren't familiar with New York City. So New York City before, actually still now, you had to buy like a medallion plate in order to be able to drive a taxi and this is before Uber. So those are actually really valuable. Those were actually like a real savings vehicle for immigrants to save because they would appreciate in [00:06:00] value and they would use that to retire now after.
After Uber, that caused big problems, but sorry, that was a savings vehicle. So for folks that aren't from New York, don't know the taxi medallion thing we have here. Yes. So he was able to, I think he used all the savings, bought two medallion license, and then was renting those out to other people. So very early on, I learned, Oh, owning the fundamental assets is really what.
Can give, provide you cashflow longevity and then build long term wealth. So he started there and eventually he saved enough and made enough money. He sold a medallion at a high, actually, which is a great timing for him. I think a combination, I wouldn't say luck, but just have to have the eye. And because he was in the industry so deeply, right?
So he understand. What's the market like, what's it's at the top. Is it the bottom? So he knows because he's driving on the street every single day himself. So he sold them early on and then use those [00:07:00] money in profit to buy the first real estate he owned the primary residence, which is a three family in New York city.
And that. He always told me one lesson. He always told me is use other people's rent payment to pay for your primary residence. So never house hacking. So he never paid a dime on his own rent and that was pretty amazing. So he didn't have that kind of stress every single month. So I have to make the rent.
I have to make the mortgage. I could just see him. He has the best lifestyle. He does what he wants. He has a really stable job. It's a W2 job with a union. So very stable. He. War till he retired, basically. The positive from it. So that was like the fundamental lesson you learned from your dad, right. It was like house hacking, right.
And rent, she's like 40 percent of your month expenditure. So you don't have to worry about the rent, right? It's a huge, it's a huge thing you have to worry about every month. So I think what you're saying is your dad taught you. Buy something, house hack, run out to other spots so you can, like, close to live for free [00:08:00] and you get the appreciation of that real estate.
I do want to, I do want to move over to like how we use that to launch our business, but maybe just talk a little bit like, so your dad started as a taxi driver. Bought the medallion, like saved everything, bought the medallions, flipped them into basically sold at the high to buying real estate. He had like two buildings, right?
Yeah, he sold that, bought the first primary residence and sold it again because he appreciated it so much and 1031 into a bigger building where it will bring him. Even more cashflow and then a house cacking again. So that's how it happened. So how did he own, but he owned two, right? Before he sold the other one.
Yeah. Yeah. He owned two. Yeah. So he owned two, two in Queens, New York. One, it was like helpful in our journey because we were able to use that to launch the Airbnb business, which will, you know, which I definitely want to hit on. But it's pretty powerful. You learn this from your parents. Like I didn't, I think I never learned this from my parents.
We did buy our primary home, but we lived in it. And actually they actually. I didn't realize this until we started doing it, but they house hacked too. [00:09:00] They, my parents have a very normal single family home in San Francisco. I still remember my dad, he borrowed money from my aunt and it was like the high.
It was 1987 actually. And it was like the high, the real estate bubble. He was really scared to lose the money, but he was like, we have two kids. We were living in a, the living room of my uncle, actually. And he's, it's not really a way to raise a family. So we moved here in 84. He like, my dad worked as my dad worked like as a delivery driver to save them, save enough money, bought the house.
So my brother and I could live there. And my, my, my mom and all of us, and then he basically finished a basement for his own use and then eventually rented it out. And then that basically, basically paid for the house, like basically covered a mortgage from like year five to year 30. It's like fully paid off now.
Yeah, it's it's a real way to build. It's a real way to build. Yeah, it's a real way to build wealth and New York City. Now the, the rent and housing value, it's just so expensive. House hacking might be really hard, but plenty of people are still doing it. You can still invest out [00:10:00] of state for cashflow to cover your.
Personal primary residence. There's so many other strategies. So I think a lot of people feel discouraged by living in a high expensive state and thinking they can't really invest in real estate because the housing price is crazy, but I don't think it's true. Nowadays, with all the technology information, there's so many other ways to invest in real estate.
So really just want to tell everyone don't get discouraged. Yeah, like our student, Brendan, who was in our mentorship program since August. He does this whole strategy, right? He lives in a kind of fairly high cost area in Florida and wants to buy and house hack. But instead, I think that's a new thing now, right?
Instead of house hacking for long term rental, but so his plan was to buy, his plan is to buy a duplex. Live in one house after the other as an Airbnb, just so that you can get that additional cashflow and learn the business. Like there are different, and that's the nice thing about real estate. There's so many different ways to play this.
Now let's go back to the topic at hand. Like how, like you eventually talked me into this, right? Yeah. [00:11:00] Thankfully. It took probably years, three, four years. No, I think three, four years to buy. It took two years for arbitrage took a year and a half. Yeah, we talked about it and remember there was a heated comment remember that remember that one like argument we had on the f train Yes, I remember we so you did it you really drove all the way I was working you did all our research and then when we First decided I don't actually remember this anymore like How did we decide to do that first one?
Okay. I remember I really wanted to buy and own assets from the very beginning. I didn't believe in arbitrage myself in the beginning. I was like, Oh, renting and re renting. What is this? I'd never heard of this. I don't think you can do this. So in the beginning, I was the one actually trying to push to buy.
And I was like, I show you some numbers I found short term rental in the smoke. I was like, look at this number is ridiculous. And you're like, Oh, these are scam. You can be real. Those people just trying to make money off you. This is going to be episode two, like the prior one of the biggest financial mistakes I've ever made.
So we'll, we'll save [00:12:00] this for the next one. Yeah, we can save it for the next one, but that was a very beginning. So I was like, okay, I can't convince you, but I could see how. Airbnb can be powerful because the way it generate cash flow. So we, at the time when my dad had the vacancy, we had a light bulb moment.
It's like, why don't we try with our own, my, our family's own units. It's vacant. And then see how it goes before we risk everything else. So the capital wasn't that much. It's really just the furniture. It was about like 10 K. Max at that time probably is 8, 000. Yeah. So that's how we, how I convinced you to even try it.
So we tried it and then you're like, Oh my God, what is this number? And that's how we start like, okay, we got to grow this business as fast as possible, but let's touch on it and we'll definitely hit on the growth as we hit. We started December 27th, 2016, and we'll walk, we'll talk through the journey.
Actually, I think I do want to, I think even for me and you, I should just want to talk about it. I think we should just [00:13:00] memorialize this for ourselves, actually. Yeah. It's actually fun to now looking back at all this. Yeah, that's the very beginning. That's crazy. So when we first, look, we first got the unit, I don't remember us really underwriting.
Well, I don't think, cause there were, there wasn't really the data tools out there to underwrite. Cause I think we, it was just more like talking to people around. I'm just trying to think of, if someone's listening to this, like, how'd you get started? Well, we got started because one, we had a kind of an easy way to getting a lease because it's family and it was like winter time too.
So it was going to be slow renting it out. It was like, if it doesn't work, then all we're out is the furniture. We'll just re rent it long term. And then. This was a kind of fun experiment and then we move on. And then the furniture, it was 8k. And then let's talk about the underwriting, like, I want to talk about the underwriting and a little bit of the, like, how do we actually set it up, the design and everything?
I don't remember us. There wasn't, I know there wasn't any, or any other real tools out there. How did we underwrite it? Do you remember? We didn't really, it's just on the spreadsheet. You try to build your model, your investment banker model, and then we [00:14:00] just play with the numbers and then just based on that was any, and yeah, there wasn't any tool at that time.
We were just going on airbnb. com and really just look at. People around us, the enemy method, the famous enemy method by Avery and Luke. Yes. They branded it. I don't think it was like, they didn't invent it. They just branded it. Yeah, but it's really cool. So we did that and then just, Oh, I think we can do this.
And then I think at that time we were like, okay, the worst case we'd lose the lease and then move on. We're not, it wasn't, we didn't invest like a hundred thousand dollars to buy the property. It was a lease, a 2300 lease. So now it jogs my memory a little bit. I remember the way I built the model. I remember it was just like, all right.
So our lease, our rent is this, our expenses is this. All right. If we want to make a thousand dollars a month, like what we have, what would we have to make and remember looking at it? It was like, all right, we can do dollars a month and then rent it out 20 days. Then it's okay. That's 400 000 plus the cleaning.
So that's 5, 000. Like, okay, can we do 200? [00:15:00] And if we looked around, I think we can, we weren't sure, but it was like. It was just worth it to try. I think it was just like, get you off my back a little bit too. It was like, all right, cause you had done so much work on it too. It was like, we got to try something.
We got to, I think this is a lesson too, right? You had to just try. Sometimes you, you never know. It's not guaranteed, but you have to just try. And I remember wanting to, I remember being like, one, you were really pushing, you kept pushing it too. I didn't want you to waste all the time and effort into looking at this.
Persistence being persistent helps, but also making it like a real case too. Right. Like, Hey, this actually can work, but I think you being flexible too. Right. Being like, all right, if he's not ready to buy, I'd never bought anything before. Right. Cause it was like, even though it's housed in a smoky, they were like 400 K.
A hundred K. I was like, I don't want to do this a hundred thousand dollars. Like I remember having this conversation with you. It was like, dude, we've never bought anything before. Now you want to buy a property in Tennessee that I don't know. I have no idea where it is. Never been there. Put a hundred K put, put half a million dollars down and we're going to manage this remotely while I'm working full time and banking and you're working full [00:16:00] time.
That's nuts. Yeah. I remembered that conversation. It was pretty heated. I was like. Like you don't understand this number. Have you ever seen this before? No, I don't. But that was the thing. Like when you work and you don't have no time, but it's not time, but also you don't have a perspective too. Right.
Cause for me, my perspective is like stocks. Oh, stocks go up 8 percent or whatever. Right. And then when I see big numbers, I'm like, oh, this is a scam. I don't. And I think a little bit of just, it's like, you're protecting yourself too. As in I'm smart. Like I know when these are scams, you're too proud to be open minded.
And that was, for me, it was a big thing. I was like too proud to be open minded. I'm the one with the MBA and I'm the one with the invested banking and done billions of deals. This number doesn't exist. This must be a scam because I don't understand it. So this is a scam. And that has served me so poorly until I changed that thinking.
But like that, I think our journey of starting there, I think that you were like. At least flexible. I'll be like, all right, we won't do this, but let's at least think about arbitrage. And remember, I think, like, the idea of arbitrage is actually for your mom. Yes. [00:17:00] So to be fair, our parents, my parents, they are like the people we really need to think, yeah, big time.
Yeah. You're, so Liz's mom, her friends, people doing rental arbitrage, we actually didn't know about this. We did some research, but like people are talking about it, but we didn't really put it together until she had someone in her network. Show her what they were doing in Manhattan. And they were like, these numbers are ridiculous.
And we're like, all right, if they can, and we're like, if they can do it, we can do it. That's how it got started. And that's how I think ultimately I became convinced of it. And unless you were, I guess you were just convinced of it from the beginning, right? This is just something that you wanted to do.
Yeah, I knew. Airbnb is something I wanted to tap into, not more, more so real estate is something I know I want to get into. Airbnb, just like the timing and everything, it just came along the way and then marry the real estate aspect pretty well. And then with some design element in there and coming from the fashion.
Industry background [00:18:00] that really helps. So my vision was already there when the idea popped up. Okay. I'm willing to give it a try. If we can't buy that's rent, that's proved it works. And then let's go sharpening our pencil operationally and on the analysis as well, before we go buy something bigger, because in the end of the day, it's our own capital, right?
It's expensive. Yeah. It's our money. We got to be really smart. On investing, so that's why I was like, okay, I'm committed. I'm willing to do this. So I remember you and I worked really hard for the first a year or two, really just on the weekend, setting up units, doing the figuring out operation stuff all along.
And at that time, there wasn't a lot of technology to help you like today. We were using manual keys. We were answering every questions on our own. 24 7. We were calling our phones. We were just using the Airbnb app. There was no PMF. There was, yeah. There wasn't a lot of the tooling that there is now. And I think that's what I want to hit on, I think, on the next episode.
What should we talk about next? So the next episode, [00:19:00] I think we'll talk about how we launched. And yeah, I think we should talk about how we launched and it's, of course, if you're listening, if you're interested, like definitely give us a comment, hit us up, let us know if you like this, any topics that you want us to cover, but I think we'll keep this one shorter for now.
I want to just introduce this concept, this topic, and you'll just hear directly from me and Liz on how we launched a business. Ultimately, like the podcast really is to showcase to people that it is possible for everyday normal people to do this. We weren't very normal everyday people. We bring on guests that have done it as well.
So you'll hear it directly from us, this six, now seven year journey together. Yeah. And then it's actually, it's very interesting for us to unfold this again, to think back how much growth and progress we have made. And I do think. Having as a husband and wife team working together in the beginning is very difficult.
If you're seeing another, I have, I always tell people, Oh, how do you [00:20:00] convince your spouse? I'll say in the beginning, first two years, it's really hard. You have to work out all the different ways of thinking. You see a different side of your spouse from work versus at home. So how do you balance that? So I think that's something we want to hit on in the next couple episodes and really share how we.
How we overcome this, these challenges. I know I'm really easy to work with. Yeah. As a investment banker who is skeptical about everything. Yeah. Yeah. Which I think is like, there's a time and place for everything, right? And there's definitely a lot of stuff, like when you're working, that serves you really well when you're working in a W2 job, when you work for someone else.
But when you work for yourself, you have to, there's a lot of those things that have to change and have to pivot because we work for yourself. Like just one thing, like it's not about winning. It's about, it's not about you winning. It's about everyone winning. And what I mean by that was like, in the beginning, when I looked at it, it's I have to win this negotiation.
I need to win this thing. If you'd never leave anything on the table for the other person, there's no relationship. They don't want to work [00:21:00] with you anymore. And ultimately running a business is like building a successful business is building relationships around you with your guests, with your landlords, with your vendors, with the people that you work with, with your business partner.
So this is the example of one thing that I've learned. And. Yeah, I think this is probably great for us to do, to have, to memorialize this and a little bit cathartic too, at least for me, a lot of things that we've gone through and my hope is that this, if you're listening, if you are someone in a professional services job, like I did this, I started this at 35.
I'm 43 now at 35, so it wasn't like 21 when I started this. So it's not about what, what age you are, but it's just like the mindset. Are you ready to do this? I think that's a much more important thing that I want to just make sure that, that folks understand. I'll leave you to last word, Liz. Yeah. And I think one of the cool, I would end with this.
One of the coolest thing I think I have seen. For ourself is the personal growth for both of us in terms of building a business together [00:22:00] and then built, how do we think about our family for the future, the business actually helped a lot as we started building our family, which I never thought of. So that's something I guess.
Pretty big, unexpected benefit that I found. I really want to hit on that too for the next episode, but I do think building your own business is one of the coolest thing, one of the hardest things too, that you can do, but the reward is so worth it. And I will leave you at that. And then we will talk more about it next episode.
I hope folks, Liz, thanks for doing this. It took a little convincing, but I'm glad, glad we were able to do this and then. Hopes folks. I hope you guys enjoyed this episode and we look forward to making more for you guys. All right. Thank you. Bye.