Episode 117: How to Build a Vacation Home Empire with Crystina Cardozo

Acquania Escarne 0:00

What's up y'all? Welcome back to the Purpose of Money podcast. I'm your host Acquania Escarne and this is the Purpose of Money, a podcast where we teach you how to build generational wealth $1 at a time. Today, I'm super excited we have a special guest Crystina Cardozo of New Jersey. She is a math specialist, a math coach by day, and a vacation home expertise, who helps you design fine and rent out vacation homes to make passive income. We're going to talk to you today about how she's building her own vacation home Empire, and how she's building wealth and teaching others how to do it, too.

Acquania Escarne 0:44

Hey, Crystina, welcome to the show. How you doing today?

Crystina Cardozo 0:48

Hi, thank you so much for having me. I'm so excited to be here.

Acquania Escarne 0:52

I am so excited to have you. And I know this is going to be a good conversation because we have had so many tech issues that I know this is going to be good. Before we get into how you are building a vacation home empire, I would love to learn more about your money story and what money was like for you when you were growing up?

Crystina Cardozo 1:12

Yeah, so as far as I can remember, my mom was really big on having money conversations in the household. And I remember her giving me envelope saying this envelope, you are going to take some of your allowance money, and you're going to use it for giving it's your donate envelope. And then I had two other ones one for saving and one for spending. So I specifically remember calculating how much I'm going to put in each envelope and what I plan to buy. And then I also vividly remember my first trip to the bank. And I remember her opening up a bank account for me and me getting a little booklet and then being able to calculate how much money I had. And always not I couldn't wait to go back to the bank and just continue to save up money.

Acquania Escarne 2:00

Kudos to mom for teaching you financial literacy early, I have to remember the first time I went to the bank at five years ago with my mom to open up my first bank account. And just that joy of having something that was mine, but also that we could share, right? Because my mom would have to help me make deposits and you know, access the bank because I couldn't drive. But I love the fact that your mom was really open and transparent about money and financial literacy, which not all families do, right? Some families don't talk about money, don't want to talk about money, whether they have money or don't have money. And that's what really messes up a lot of adults. So I think it's really cool that your mom did that. I'd love to understand, though, like how did you go from a child who likes financial literacy to someone who pursued math as a career? What was your path to entering the journey of a math specialist or a math teacher?

Crystina Cardozo 2:55

Yeah, so my mom was an accountant, she still is actually a CPA. And I remember her taking me to take your kids to work day. And you know, me, being involved with the work and the money and the numbers. And at a young age, I really had a passion for dealing with money and numbers. But I realised that accounting was a little too boring for me. And so I realised that I wanted to educate people. And I wanted to be in front of the classroom. And I had a lot of friends at the time that I was always helping with math. And so I felt like that was my calling that I needed to be able to educate other people. And I really enjoyed it was just such a rewarding feeling for me to be able to educate kids. And when I was older adults as well.

Acquania Escarne 3:43

That is really interesting, especially since I have had to help my son with his homework in the past. And I used to always question is do math that they're doing in the schools today? So can you please help me understand? Why is it the ways of my past are so different now and that they're changing how they teach math to our kids?

Crystina Cardozo 4:02

Yeah. So it's so funny you say that because even at like parties, people come to me like, Oh, you're the reason why there's this new math, and I don't get it. You know, we're talking about this at a party. But I will say, as a math coach, so I started off my education career as a high school teacher teaching math, and a college professor teaching math. And now for the last nine years, I've been working in an elementary school as a math coach. So I specialise in math, and I make sure that teachers are teaching math the way they should be. And all the teachers will say that the way we are teaching math nowadays, if they would have learned that now, like back then they would have been so good at math, they would have had conceptualised it better, and they would have had a better experience in middle school in high school. So for I always give this example, if you think about a simple problem, like five times three, when we were kids, there might be a multiple choice question and it would say What's five times three and The answer might be five times three equals 12, or 15, or 20. Whatever it is, and we knew it because we had to have it memorised. Right the teacher forced us, our parents forced us to memorise certain things. Or it was always about memorization. Whereas in nowadays, the problem is going to be different. A five times three question might be, which image represents five times three. So they may see an image with five groups of three, or, you know, six groups of three. And they have to realise No, this is what multiplication means that it's repeated addition, and that I need to multiply this number a certain amount of times. So now it's all about conceptualising. It, it might seem like it's taking a little bit longer, because you're not remembering this is step one, step two, step three to get the answer. But it's all about conceptualising it and it will help them be a better mathematician when they get to middle school in high school.

Acquania Escarne 5:51

I love that. And I wish that someone had explained that to me. So I wouldn't have been as upset about the new man, because I was confused at first. And I used to get frustrated, because it will take longer. But now it totally makes sense. Because now my son can process harder problems faster in his head, whereas my generation probably would have been like, give me a calculator. I'm not going that far in my head. So I really liked that. And I think that you're right, it helped him in the long run become a lot more efficient at man. So let's switch gears a bit, though, because although I find that to be interesting, you know, I love to talk about real estate. And I would love to understand how did you transition into real estate because most people like their nine to five, they're not always looking for more income. But you have started at some point, thinking about leveraging passive income and real estate. So how did you come to that decision? And like what was happening at the time when you first got started?

Crystina Cardozo 6:46

Yeah. So like most educators, we always have to have a second job, right? So I was a high school teacher and a college professor or a high school teacher and a director of a tutoring centre, or I would just tutor on the side, so always had another job. At the time, my husband and I were looking for a place to live. And we were contemplating do we get this apartment? Or do we look at a house, and it just seemed that rent was just getting more and more expensive. And when I did some quick math, it made more financial sense to just save up for a year or two and buy a house and then our payments would be a lot lower than a rent payment. And without even thinking about appreciation or equity, we decided to go that route. And one condition we needed to make sure that we house had to house hacking is a term that we use nowadays. But really, we needed to make sure that we had a part that we could rent out whether it was a duplex, or in our situation, we found a house with a walkout basement. So we ended up getting that property, it at the time it had four bedrooms of full kitchen, a full bathroom, but it had no living room. So we decided to take down one of the bedrooms, and have more space for a living room. Because at that point, it was actually set up for like individual renters. And we would rather rent to a small family or a couple. And so that's what we did, we put all of our money into fixing it up super nice. And then we got our tenants I'll never forget. So we closed on May our first payment was July 1, but we already had everything ready by July 1. And so we had renters on July 1. So when our first mortgage statement was due, we already had that money going towards our mortgage payment. So we never have to worry about a mortgage, it took care of almost 100% of it. Yeah, and then that freed up money so we can then work on the upstairs where we were living. So it was very outdated. So then we decided, you know, to redo the kitchen and the floors and painting and all that stuff. But that came after making sure that our tenants had a nice place to stay, and that our mortgage was covered.

Acquania Escarne 8:56

I love it. And I'm a huge fan of house hacking. If you don't recall, I've done quite a few episodes on it. And I'll make sure to drop links to those in the show notes. But my husband and I house hacked the beginning of our marriage for quite some time. And even as recently as two to three years ago, most of the time it was because we could write in the first instance, we had a condo but I was deployed to Haiti and my husband was home in DC. And he got a frat brother to run out of room easy, has that person contribute some money to the mortgage and have a place to live? Later, it was a friend who was new to the area and didn't know where they wanted to live. So they use that home as a resting place while they figured out the neighbourhood. And then later it was me helping some of my colleagues when I was in the Foreign Service, we'd have people who would be here for like six to eight months and he didn't want to sign a one year lease then have to get out of it. So they would try to find short term rentals but those were just so much more expensive. So I was like, Hey, girl, you can have my basement and so I had a Friend staying in my basement for about eight months before she went overseas again. So we've always just utilised an opportunity to open our home, and to potentially make some extra income. So I'm a huge fan of house hacking. And I love that you actually were able to cover your mortgage. So how did you transition into someone who does short term rentals because house hacking your own house can be slightly different than renting short term rentals. So tell me about that transition, what made you get into that space specifically?

Crystina Cardozo 10:31

Yeah, so it was soon after living there, and we updated our house, I was pregnant with our first son. And the good thing was because our mortgage was covered, there wasn't that pressure for two incomes. And because we freed up our biggest expense, which was our housing expense, I was able to stay home with my son for two years. So that was just like, an amazing experience. And I think that was the light bulb that told us that real estate has the power to you know, get your time back and to be able to have this freedom. And so we decided that, you know, we love the fact that we didn't have to pay a mortgage, and we just, you know, wanted to continue to learn more about real estate. So soon after living like that, and fixing up our house. And you know, all this time, we're also gaining appreciation and so forth, we then moved to another house, we were able to rent out the main floor and the downstairs and paid for half of our new mortgage. So again, just this power of real estate. Soon after that, or maybe a few years later, our tenants told us that they wanted to buy the house from us, and we weren't looking to sell. But we were thinking like, wow, we could walk out with a lot of money if we did sell, and then we can do more things with real estate. And so that's exactly what we did. And then we started dipping our feet into flips, and started playing around with lending out money. And I will say that those were other jobs that we just created for ourselves. And we realised that we didn't want to have those jobs, you know, like flipping. And I will say from the beginning that it's not like we were that successful, one flip, we didn't make money, another flip and just made a few $1,000, even though it took almost a year to get that money. So it was a learning process. But then it was always like you got to start all over again, it's this other job. So we decided that no, what we want to do is we want to hold on to these properties. So we decided to look for another rental like a long term rental, we spent a whole year looking for a rental in our area or up to a radius of like an hour away. And we could not find anything that financially made sense that cash flowed. And I think it's because we were cash flowing so well with that first property. But you know, times are different now, this was years later. And we just could not find that cash flow. So it just so happened to be we were going on vacation to the Poconos area. And anyone who lives in the tri state area knows that that's a vacation rental area. It's a drivable destination for anyone in the tri state area.

Crystina Cardozo 13:12

And so we went up there with my cousins for a few days. And as we're driving around the area, it's a beautiful area that has lakes and skiing and hiking, and we were there regularly anyways. But we started paying more attention to what's for sale in the area. So I quickly pulled out my phone. And I looked on Zillow. And I saw that, you know, we just paid 300 or $400 a night for this house. And this house is going for this price and the mortgage is only $1,200. It was like we can rent this out for a few days out of the month. And it would give us that much cash flow. I was just my mind was just blown at that time. And so we decided that all right, where's the place that we would like a vacation rental? And we thought about Florida? Why not? We have kids, it'd be cool to have, like a house by Disney area. And so we started looking, we met with a realtor, my husband actually flew out there. And we started putting offer after offer on these properties going above asking price and we just weren't getting anything after months and months and months. And then something was telling me like, you know, stay true to the numbers. What makes sense, because at that point in Florida, even though it's somewhere where we wanted to buy a house, the numbers weren't making sense anymore. So then I thought about you know, Poconos, and I did the numbers again, and I'm like this makes sense. So we spent a day we found a house that we really liked. We put an offer on that one house under asking price, and it got accepted right away. And you know, we just fell in love with the house and it was just the best decision. So that's just, you know, a kind of a learning experience for us. Sometimes you can't force things right. You have to go where it makes sense. And, and sometimes you know life brings you to that and so that that was our experience and we bought our first short term rental property in the Poconos area.

Acquania Escarne 15:09

I love that I love the Poconos. It is drivable, and it's not just in the Jersey, New York, you know Pennsylvania area, but even from DC, Maryland, Virginia, a lot of people will go skiing in the Poconos or hang out even in the summer to when the weather's nice. So that's really dope. But what happened after that? Did you decide to get more properties in the Poconos? Or are you have you since left the Poconos and explored other areas? Tell me more about that? Yeah.

Crystina Cardozo 15:38

So after that, we decided that we wanted to get another property, it was doing really well. And we ended up buying a tiny house out in Missouri. And the way we stumbled across that was we were looking for something unique. The property that we had in the Poconos was a unique property, all of them have the same look. But this one had a cabin look to it. And you know, people, it's just something about, like this uniqueness of the property. And so we decided, you know, we really like a frames. And so we were specifically looking for an A frame type of property. And we found a tiny house, a frame in the Midwest in Missouri. And the pricing was so good. Like, we close for $86,000 for this tiny house, and it was like 10 minutes outside of a major tourist touristy place, like 10 million people are visiting this area a year. It's called Branson, Missouri. Yeah. And so we had a really good, you know, experience with that, like it was very profitable. And then we decided, like, I think a frames our thing. At the same time with our Poconos property, it was doing phenomenal, it was doing really well we would go there, you know, for my birthday, or for Thanksgiving with the family, like it was awesome to be a close drivable destination, you know, like it was a two hour drive. But we weren't going there often enough. We also went there often enough to do a lot of work. And I think that could be a problem too, because we weren't separating ourselves from the business because we were physically we kept doing a lot of things ourselves. So I think it pushed us to really put our systems in place and rely on other people to do things when we were investing further away. So anyways, with the Pocono property, the HOA decided to have a meeting, and said that they wanted to ban short term rentals. And at that moment, then they said, We're gonna vote on it. And we just had a bad feeling like we did not want to wait for this vote to go through.

Crystina Cardozo 17:44

And so we decided to list our property, we were the first to list and get out. And I will say to this day, there are still people who are stuck there a year and a half later, who did not get out and who cannot sell their property. So, and there's a whole bunch of lawsuits going on right now. It's crazy. So my recommendation is always like, don't go into Hoa, at least like not for vacation rentals. And that was a lesson learned. And luckily, we were able to get out. And we did make some money, still not a lot of money. But if it was still in the vacation rental market, we could have sold it for a lot more. But because people knew what was going on. And they were trying to ban it, that we walked away with a little bit of money, but at least we didn't lose anything. And then because we already had a property in Missouri, we ended up doing a 1031 exchange. So for those of you who don't know, a 1031 exchange is the you pretty much have like a middleman like you sell your property, the middleman takes the profit. And this is so you can avoid paying capital gains, we would have paid short term capital gains, because it was like 11 months that we had the property. And so in order to avoid paying that the we closed the property, the money went to the middleman. But then when you have 45 days to find a new location. And so because we already had great success with a tiny house in Missouri, we decided to buy another property in Missouri. And so yeah, so we did that. After 45 days of finding a new spot, then you have, I think 180 days to actually close, but the hardest part is finding a new location. And so we close on that property. And yeah, that does well. And then we also got another property in Wisconsin, that's an a frame. So we just continue to buy like vacation rentals, and we realise like this is how we're able to get a good amount of cash flow.

Acquania Escarne 19:38

I love it. I love it. So now that you've done it more than a couple of times, it's my understanding that you have now started to help others do this too. What does it look like to work with you? What type of responsibility do you take in the process? And what type of things do I have to do as an interested investor?

Crystina Cardozo 19:57

Yeah, so It's funny because my mom who I mentioned is a CPA at one point, she actually said, you know, find me a vacation rental. And I happened to go to a real estate conference. And when I went to a real estate conferences deal was presented to us by a realtor who was there. And I ended up asking my mom, like, are you interested in partnering up with us. And the good thing is, like, she already knew our work ethic, she knew you know how much money she trusted us. And so when you have trust in somebody, it just, it makes it a lot easier. She already saw, like my designs with the other properties. And so we bought together sick, it's like a mini resort there, six A frames, it's across the street from a lake. And it has its own laundry facility storage facility and in ground pool, which is really cool. So I have that experience to you know, work with her. And then also we started getting clients where they just have us do all of the legwork. They just say I want a vacation rental in this specific area. So recently, we had somebody I gave them a choice, like, where would you like your vacation rental to be? And they gave me three different states. And so one of the states was New York. And so I was working to analyse a lot of deals that you know, would come on the market. And eventually they found after a few months of like, showing them properties. Do you like this one? Do you like that one. And they were also thinking like, I want to make money. But I also want to use this for my family, you know, because one, you know, they were closer in age to retiring so they could see themselves like using it more frequently. And so we finally found a property. It's in the Finger Lakes region of New York. And then what we did was we met with the contractors, I actually designed everything, we literally went there like my whole family, kids and all we went there for a whole week. And we staged everything and got it ready. Like I just I asked them what their budget was, of course ahead of time, and gave them the links for everything.

Crystina Cardozo 21:58

And I said buy this, this is within your budget, ship it out there and I will be there in a few days. And we assembled all the furniture, I created the listing, I walked them through how I created the listing, I literally handed them over. And then you know, they started making money right away. And, you know, within I think two weeks there were like, we have our first two months of our mortgage covered. And so like that's the power of you know, cash flow, but we're not going to markets that are like, you know, Atlanta or like New York City, you know, like places that people know like most a lot of people unless you're in this region, we specifically try to look for drivable destinations like these drivable vacation places. Nobody's flying into the Poconos. Nobody's flying into Branson, Missouri, nobody's flying into the Finger Lakes region of New York, but the locals know about it, and they're all willing to go there, you know, wanting to go there. For the weekend. Especially like upstate New York, there's a lot of wineries it's like on the way to Niagara Falls. And so it's a really cool spot over there.

Acquania Escarne 22:59

I like that. And a lot of people even after COVID Still want to do staycations or near their home locations, just to get away and change the scenery. So I think that's a really smart idea. Plus, it allows you to be able to physically go to those locations when you're in the house hunting stage, right? But then I like how you said you turned everything over, gave them the keys and let them do the work. So that's really, really dope. The name of the podcast is called the Purpose of Money podcast. So I asked all my guests this question, what is your purpose for money? Yeah,

Crystina Cardozo 23:33

I think the Purpose of Money for me, especially, like I shared my journey of always working as an educator and doing something else. I think it's to really gain back that time. I feel like the first few years of having that house hacking experience and having that quality time of my son. I realised like the power of real estate and being able to do that. And so it's like, I want that back. And so I'm ready to work until I get to that point. And you know, it is a sacrifice because it's like you could this entrepreneurship life, you feeling you figuring out real estate, like it's a journey and you feel like you're doing a lot more, but I know like I'm doing it to get my time back. Right. And so obviously, you can't go too crazy. You still need to have like a work life balance. But I feel like real estate is giving us the power to do it at a quicker pace.

Acquania Escarne 24:28

Yes, I totally agree. If anyone wants to follow you or even work with you, how can they get connected?

Crystina Cardozo 24:36

Yeah, so I'm pretty active on Instagram. I'm talking about real estate, vacation rental markets or just like financial literacy stuff with my own kids. And so you can definitely find me there. She runs the numbers is my handle. And yeah, definitely reach out to me again, I'm willing to work with people from all over I'm not really picky even when Have my own vacation rentals, it really just matters where the numbers make sense. Again, I'm in New Jersey and the numbers make sense for us in the Midwest like we have properties in Missouri and also in Wisconsin, because that makes sense for us. And so yeah, definitely shoot me a message and we'll go from there.

Acquania Escarne 25:16

Thank you so much.

Transcribed by https://otter.ai