How to Live Off Rentals and Stress Less w/ Vacation Rental Expert Kirby Atwell

Episode 80: How to Live Off Rentals and Stress Less w/ Vacation Rental Expert Kirby Atwell


MAR 24, 2022 EPISODE 80


“Start your business with an outcome in mind.” 

These are rousing words from the master of rental property investment himself, Kirby Atwell. After serving in the US Army, he felt a calling to go all out and start venturing into real estate. Throughout his real estate career, he has faced a lot of lessons that became his pillar to fortune. Now Kirby is one of the hottest real estate investors in the country. He also runs his podcast show that has inspired many to dive headfirst into rental properties. With that being said, this episode revolves around Kirby’s journey towards success. And how he has overcome setbacks along the journey. Learn how he paved his way to financial freedom, earned massive profits, and achieved security by living off rentals.


Key Takeaways

[0:28] What is the most important and most challenging lesson he learned in real estate investing?

[1:48] How has profit first impacted his life?

[5:27] Using his investments to pay a debt

[8:50] Talking about his brand “Living Off Rentals.”

[10:33] Why did he decide to switch investing in rental properties, and how has he maximized the BRRRR method?

[13:08] How many rental properties do you need to walk away from your full-time job and feel secure?

[13:52] What have been his challenges while living off rentals?

[17:19] It’s essential to focus on what you’re good at

[18:36] Learn how to say no to the things that don’t serve you at the highest level 

[20:57] The whole point is to start making profit a habit

[23:56] Figure out how your business is going to lead you to the lifestyle that you want



[0:46] “I learned that you should start a business with an outcome.”

[14:16] “You’re always in that constant “crack addict rehab mindset” where you have to get another deal.”

[14:53] “There are just so many benefits to not thinking about how many deals you should make to pay your bills.”



Tired of living deal-to-deal?

If you are a real estate investor or business owner who is tired of living deal to deal, and want to double your profits, head over here to book your no-obligation discovery call with me. Either myself or someone from my team will hop on a short call with you to get clear on your business goals, remove any obstacles holding you back, and map out a game plan to help you finally start keeping more of the money you work so hard to make. – David



David Richter:

Kirby, tell me, you got to tell me what is the biggest or hardest lesson you’ve learned in real estate investing?


Kirby Atwell:

Well, there’s been a few, but I can say probably the biggest one for me was learning that I should always start my investing or really anything that I’m doing with the end in mind, with the outcome in mind. I spent five years of my life flipping properties to sit down with my financial statement at the end of that five years and realize that I was pretty much in the exact same spot, financially speaking, that I was when I had started.

From in 2011 to 2016, we flipped over 70 properties, but I had zero assets to show for it. We had plowed all that money back right back into our business, like you’ve talked about a lot not doing, and it was all gone. We’re really starting from scratch. Since that time, I’ve changed up that I do things a lot and I always start and have a vision of what I’m trying to accomplish at the end.


David Richter:

Awesome. I love that. That’s one of the seven habits of highly successful and effective people by Steven Covey, begin with the end in mind, which I think is an awesome way of saying that and a great introduction to Profit First. You got to tell me your story of how you got involved with it and how it’s impacted your life. Do you want to tell me a little bit about that? I’ve had the privilege of being on your podcast and you preach the Profit First message. Tell me how it’s impacted you.


Kirby Atwell:

Absolutely, yeah, and I always keep my book right by my side here.


David Richter:

There it is. Boom. Profit First for Real Estate Investing right there.


Kirby Atwell:

That’s right. Yeah. I read the original book that Mike wrote. Man, I don’t know how many years ago now, but it was shortly after it was released. And like so many other people, loved the concepts, agreed that they probably work, but didn’t set up my accounts. Since then, I’ve actually read it a few times. Finally, after a couple years later reading it again, I did set up the accounts somewhat and I struggled. Like you’ve talked about, I struggled reading that book and understanding, how does this apply to real estate investors?

Because especially when we were flipping, there was a point where we had over a million dollars in our checking count and the vast majority of that was not our money. It was like, how do I figure this out? I can’t just separate it. It’s not all income. It didn’t seem to fit until once you wrote your book that clarified a few things. I was kind of following the Profit First system prior to that, but the two big things I didn’t have or didn’t understand I needed was the other people’s money account, which was kind of a game-changer.

Once you brought that up, I was like, oh, well, if you take that out of the equation, now it is really just your own income for the business. And then the income account I never set up because I always had this thought in the back of my mind, I have all these automatic payments coming in and out of one account, so I’ll just leave the income account as my operating expense account. And that just doesn’t work. You got to separate out that income account.

Once I did that, things changed quite a bit. Also, it opened my eyes quite a bit. That’s kind of how I initially got started and how it evolved over time.


David Richter:

Awesome. Well, I appreciate that. I appreciate you taking action too. So many people read or don’t read and don’t take the action. It’s encouraging and a breath of fresh air when someone does that and then seize the actual benefits of that. Because that’s what we want for people is that clarity that gives confidence to make those decisions. Let me ask you this.

I don’t know if you have anything crazy or not, but have you bought anything good with your profit account over the course of these years that you’ve been implementing Profit First?


Kirby Atwell:

I haven’t. Nothing like crazy. I’ve been mostly focused on paying off debt. We’re at a position now where neither my wife and I work a job. We’re supported by the income from our investments. The more debt we can pay down and the bigger the spread we can create there, it’s just more security for us. That’s really been where I’ve been for focused, but this year I did set up an additional sort of 10% of the profit account that’s going to be a staff profit sharing.


David Richter:



Kirby Atwell:

I think I’m blessed with a really great team and they act as if it’s their company already, but I want them to have that ownership, and I think it’ll take it up even a bigger notch if they can feel sort of the benefits of all the work that they’re putting in.


David Richter:

Oh man. I could park there for a while. It’s the people. It’s the right people on your team and it’s showing them that appreciation. First of all, there are several things there that I want to unpack. Number one, that you’re using it to pay down that debt. I mean, if you’re listening to this now and you have good debt, like on your properties, like to purchase the properties, or bad debt, I mean, that profit account is there for that if you want to do that, if that is your goal to have free and clear properties.

We have several clients doing that where they’re paying down. It is just like you said, Kirby, like just that peace of mind and more cash flow. You’re going to have more cash at the end of the day, which is amazing. But if you have bad debt too that’s keeping you up at night, that specific account, the profit account, can help you wipe that out. I love what you’re doing with the profit account.

I’ve seen this with other people too, where they set that up and then they set up a portion of the profit account to go to their employees. Because come on, I mean, like you said, it’s those people that are the best aspects of the business. From I get to interact with them. They’re the ones actually helping me build the business. They’re the ones that are doing a lot of the work, and they’re the ones that I enjoy going to work with. Having something like that set up for them is going to be huge.

I’ve seen the people that do that and guess what? Their people are happier and they know that the owner is taking care of them, and that it’s also tied to the profit. We think there’s this big expense coming up or whatnot, then everyone’s thinking, do we really need this? It gives them some buy-in as well too if they know it’s tied to that profit account. I’ve just seen that with several of the people we work with. We do that too, and it’s great. I love that you said that.

I think that’ll bring a lot of, especially as you’re growing a company, keeping that in mind. If you just starting out and you’re just getting Profit First implemented, that profit account can eventually become too, what can I do with my team, or what that margin that I’m able to make sure that my team feels taken care of. Yeah, that’s amazing. Love that.


Kirby Atwell:

We establish right from the beginning that we’re going to do 10% of the profit before I even implemented Profit First. When I started the company, 10% of the profit to support a veteran cause. That’s always been a part of the company. Just like you said, it’s just super motivating. It gives you something beyond just flipping houses or getting another rental.

It’s like there’s a cause behind it, but it was a much harder to track that as kind of like guesstimating 10% of what I thought the profit was going to be prior to setting up Profit First. Now I know exactly the amount that I can pay my employees at the end of the year or quarterly, and then the 10% of the profit account for the veteran causes.


David Richter:

That is awesome. Not only because you do that, but because of what that really returns to you as well too. I mean, it’s a great aspect of like, hey, we’re actually giving back here. We’ve got a system for it. Like you said, now, it doesn’t have to be just like random. It can be, well, here’s our profit, our cash profit. Here’s 10% of that going to this cause. We have other people that set that up. That was a big part of us, Simple CFO Solutions, from day one.

One of the reasons I started the business was I didn’t like the cap I had on my giving. It’s like for this, now it’s percent based. The more people we help, the more we can help others. I love the veteran cause too. We give to several different things. One of them Operation Underground Railroad. There’s just a lot of things that we like to invest in. Whenever someone brings that up, giving, that definitely has a special place in my heart. Appreciate you sharing that as well too.

Let’s talk about living off rentals, because that is your brand. That is what you do. It’s also, I believe, gotten you to the place where you said you and your wife don’t have to work anymore. Tell me about that from when was that point? How many rentals did you have? When was the key aspect of being able to actually live off the rentals?


Kirby Atwell:

Yeah, great question. I don’t know how far back you want me to go, but like I mentioned, lots of lessons has learned along the way. I served in the army first. Went to West Point, served as an officer in the army. Got out in 2011. I read Rich Dad, Poor Dad when I was in the army. Just kind of fell in love with the concept of financial freedom and how you can leverage real estate to get there. When I got out though, I no longer had the W-2 income to get loans for rental properties. I bought a few while I was in the army.

Decided it seems like a logical choice to start flipping properties. Like I mentioned, I did that for five years. Got really nowhere financially. That was the point that I sat down and said, okay, why am I doing this? It was financial freedom. I had subscribed to all these vanity metrics throughout the five years where it was like the sexy before and after pictures and the big checks at the end of the project that the vast majority of it wasn’t profit. A lot of times it was negative profit, depending on how the project ago.

But in 2016, I realized none of that stuff matters. What matters is the income that can support my family at the end of the day, because you can’t do anything unless you’re able to provide for yourself along the way. I decided I was going to switch into rental properties and pretty quickly built up a portfolio of 26 long-term rentals through the BRRRR type model. And that just changed my financial situation drastically. But in end of 2017-2018, I discovered short-term rentals.

We set up our first one in our basement and just tested it out, because we were buying a new house and rehabbing it anyway. We turned our walkout basement that was unfinished into a one bedroom apartment. It produced over that first summer, just over the first three, four months, it produced just over $20,000 of income. I was like, this is crazy. I mean, this is a one bedroom basement apartment. If I can scale this into other homes, there’s a lot of potential here.

I decided to switch fully from long-term rentals into short-term rentals. I’ve since sold off all 26 of my long-term rentals and just focused on short-term, and I started building up a portfolio of short-term rentals. When we sat down and ran the numbers, I mean, the first one was, again, kind of an experiment, figuring out what the numbers would be. But then once we started figuring out the projections, I realized once I have eight of these, it more than pays for my salary.

I mean, it’s more than I’m making in my salary, and I would feel very comfortable leaving. And obviously that would free up more capacity for me to continue to buy more. That was it. Over the last year, about a year ago, I left my full-time role. I was a CFO of a nonprofit while I was running my long-term rental business and decided to leave. And now we live off the income from our vacation rentals. We have a portfolio of 10 of them now in Michigan City, Indiana.

We have two more that were we’re rehabbing, and we also bought a 45 acre farm that I live on here in Valparaiso, Indiana. We’re planning to build out more here. We just rehabbed the barn and we’ve got a unit there. We’ve got a couple air streams that we’re rehabbing. We love it. It’s a lot of fun. Gives us so much more flexibility in life, lower stress. I was driving downtown to Chicago a few times a week for my previous job. I don’t have to do that anymore. I mean, it’s life changing.


David Richter:

Oh, that’s awesome. I love that journey as well too. It sounds like, like you said at the very beginning, beginning with the end in mind. How many rentals do we need? How many do I need in order to walk away and feel secure? When is that magic day going to be? It’s like asking yourself those better questions. Once you start to be that business owner mindset, even if you’re not the business owner yet, but just asking yourself, getting you in that frame of mind, I think that’s where you eventually got to that point.

It was like, yes, we’re here. We’re done. I can quit my job. I can do what we set out to. It’s like, hey, that eight? It came true, and really preparing for that. What would you say during that time was the biggest challenge? Was it mindset? Was it actually acquiring the deals? Was it like with Airbnbs, was it the management? What was the most challenging during those times of being able to live off the rentals and ramping up to that point?


Kirby Atwell:

Yeah, yeah. Well, just one comment too on what you just mentioned before I jump into it. You talked about flipping that switch to where all of a sudden you realized we have enough income from our assets to live off of. That’s a strange transition, especially for someone who’s done a lot of rehab projects, did a lot of flips. You’re always in that constant like… I call it like the crack addict rehab mindset where you have to get another deal.

It’s like you’re constantly anxious because you don’t have a deal going or enough deals going or you feel like you need to do another one. All of a sudden, there’s this point where you’re like, I don’t have to go find another deal. I can do deals because I want to do deals. I can do better deals. I can take my time finding deals. I can pick the cream of the crop. When that becomes the case, the types of deals you do, the stress level goes down, there’s just so many benefits to not having to do four deals this month to pay my bills.

It’s now the bills are taken care of. Now I get to do the work I want. That was when I started… I started the podcast a little before then, but that was when I started helping others get their first vacation rentals as well. There’s just so many benefits that came with that. But in terms of the biggest challenges along the way, I’d say there’s a lot of tactical challenges obviously like contractors, the right types of financing.

Those are really common I think across the board. Anyone who’s in real estate is going to come across those challenges. You figure out how to overcome those challenges. But I think the big thing for me was when I got… It’s like my income was directly related to my organization level. When we were flipping, it was chaos all the time because we had… At one point, we had 22 different projects going. There’s a lot of contractors, a lot of money all over the place. It was just like you’re just trying to hold on.

After I left, I realized I needed just to get super organized and size scale wasn’t the answer. It was more about better deals, less deals, but better. I’m a big fan of that book Essentialism, which is all about less but better that Greg McKeown wrote. Once I started to get really around what I was doing, I had a streamlined process, I blocked out… Like if somebody sends me a multifamily deal right now or a flip that’s not right in my direct market, I won’t even take the time to even analyze the deal or even read the email.

I just respond and say not interested, because you’ll go down these… Because everyone’s like, “I just want a deal,” and you’ll analyze this multifamily, go visit the property, spend a week of your life going down this road that you don’t have a system around and trying to pursue this deal when somebody else is an expert in that thing. And that is what their system is around. They’re going to beat you out. They’re always going to do it better than you.

I think it’s so much more important to focus on what you’re good at and figure out, this is my market. This is what I do. This is my contractor team. We have a great cleaning team now, a handyman, a guest relations person. These people are all in place and there’s economies at scale around it, because all our properties are within a five minute drive of each other. We just stamp out the same thing and we’re the best at doing that very specific thing. That was kind of I think a big lesson for me.


David Richter:

Man, that is so good. Less deals, better deals, focus, that is the mark of a truly successful person, I believe, in a truly successful company, the ability to focus, the ability to say no to things. That is so…


Kirby Atwell:

It’s hard.


David Richter:

It’s hard, especially when you’re first starting. Like you said, especially in the fix and flip, it gets addictive too like, I need the next deal. It’s very easy to see like, I want every deal that comes across my plate. Okay, it’s a little bit outside. That’s okay. Then it turns out to be the worst rehab of all time, and it’s the furthest from you. You’re just like, what the heck is going on? Been there, done that. I love that. That message out there, just the focus and really being able to say no to the things that don’t serve you at the highest level.

I get it when you’re first starting. If you’re just first starting now, you might take any deal that comes across your plate. But there has to come a time when that flip switches and it’s like, hey, no. Now I get to choose. Because like you say, Kirby, it puts that power back into your hands. I feel like that’s what Profit First does too with the money side, because it’s like, we can be doing all these deals and we can be buying the houses and renting. But if we don’t manage the money, then where’s it all going?

That’s where it’s very important if you’re going to take the time to focus on the best deals, that you get the best bang for your buck and actually have a few bucks at the end of the day too. Could I ask that then, where in this process did you implement Profit First? Was it near the beginning, the middle, or when you first were able to jump full-time last year? When was the official time that you were starting to implement that to get you that clarity?


Kirby Atwell:

I wish it was like I really dove in to it fully because then I’d know exactly. I mean, I read it the first time when I was flipping, it was toward the end of flipping. I think it was somewhere around that 2016 mark and realized things new needed to change. And then I implemented separate bank accounts shortly after I started with the long-term rentals. But it was still not where it is today by any means.

I think the biggest benefit once I got it to where it is today, where you have the income account, all the other expense accounts set up and the other people’s money account, which was key, now the decision making is just so much better because I’m not kind of guesstimating where I think we are. It’s like, no, I’m pretty clear on where we’re at, and I’m clear on how much we need to do and what the margins need to be on each deal to make it a deal in order to sustain the business.


David Richter:

Awesome. If you’re listening to this, listen to what Kirby said. He did. He started implementing it and it’s nowhere near where it is today, but that’s the journey. That’s the process. The whole point is to start making profit a habit, even if it’s $10 at a time or whatever it might be. Just starting that process. Then you could be like Kirby today where he’s like, “Hey! Now I’ve got all this clarity. I’ve got actual money in these accounts. I’m paying down the good debt. I have the OPM, other people’s money, separated out.”

You’ll get to that point too if you’re listening. I just want that to be an encouragement to you if you’re just starting out at the very beginning, because Kirby, do you wish at the beginning of flipping, at the beginning of buying rentals that you had the system you have right now?


Kirby Atwell:

Oh my gosh, absolutely. You talked about it in your book. Mike talked about it in the original book. The main thing is just go set up the accounts right now. If you’re listening to this, just set up the accounts because that’s the key. And then on the first and 15th is typically when I move the money because that’s when I pay all our cleaners who clean the vacation rentals for us. I distribute all the funds that are in the income account from the bookings that we got.

And then from the expense, the operating expense account, I can pay all the cleaners and a couple other contractors that work with us. It’s all just so much clearer now.


David Richter:

Awesome. I love that. I just need to keep beating this in people’s heads. That’s why I wrote the book. That’s why we have the podcast. That’s why there’s Facebook group. That message there, what you’re saying, if we could get that started as soon as possible with people, that is the good habit start as soon as you implement, as you start implementing it and using the system. Just please listen to Kirby. Listen to all these people here on this podcast that are begging you to start this.

I really appreciate that, Kirby. That’s been some great info here today. I’ve just got a couple last questions here. Number one, what advice would you give to the audience right now that are real estate investors? It could be on anything real estate investing or outside of real estate investing.


Kirby Atwell:

I think going back to what I talked about was the biggest game changer for me, just stop what you’re doing right now and take a day and plot out what you want your life to look like five years down the road or 10 years down the road. I’d say as far horizon as you can, but it’s hard to wrap your mind around once you get beyond a certain point. What is it that you want life to look like at that point? That’s your starting point then, and then backwards plan from there.

If the actions you’re taking today aren’t going to get you to that place, we could have flipped the way we were flipping forever, and we thought more deals and bigger deals was the answer, but more deals and bigger deals brought us more staff, more marketing, all of the overhead expenses, slimmer margins, because we couldn’t manage that many, that wasn’t the answer for us. I realized that, and that’s what caused me to make the shift.

Figure out, again, how your business is going to lead you to the lifestyle that you want and what that looks like. And that will, I think, change your life the most of anything.


David Richter:

Awesome. I absolutely love that. Begin with that end in mind. I mean, it’s been said here several times today. I think that is one of the key things of being able to reverse engineer that. Kirby, thank you for not only telling us that, but living it out and showing people that you can get out of that rat race and actually live off rentals and do that. That brings me to my final question here.

You’ve provided a ton of value on this podcast. How can people connect with you? He has a podcast as well too. I highly recommend it. Kirby, why don’t you tell people how they can get in touch with you?


Kirby Atwell:

Yeah, yeah. You can listen to the David Richter episode. It was a great one, and the ‎Living Off Rentals Podcast. But I think the best place to go is livingoffrentals.com/start. We really lay out the steps to get started, especially if you want to go down the road of vacation rentals, which is obviously something I’m really passionate about. I think that’s a great place to connect with me and start.


David Richter:

It’s livingoffrentals.com/start. There you go. That’s where you can get started with him. If you’re at that place where you’ve never done a deal, that’d be a great place to start. If you’re doing the fix and flip or the wholesale side and you want to start building your passive side, go there. See the information that he has. This is someone who’s living it currently. This is not someone who’s just telling you theories of what he’s heard from other people. He’s actually living that today.

He’s implemented Profit First, so there’s a big plug for him, because I know anyone who’s implementing Profit First has that system down and they’re doing it right. They’re not just spinning their wheels. They’re getting to be actually profitable. We love what you said too about the giving account and paying down the debt and just all those different things that you brought today. Kirby, it was great having you on the show today and really enjoyed having you on.


Kirby Atwell:

Well, thank you for writing the book. I really appreciate it. It’s benefited me a lot, so I appreciate being here.


David Richter:

Awesome! Thank you so much. If you’re a real estate investor or business owner and you want to double your profit, or if you want to keep more of that profit, head over to simplecfo.wpengine.com. Thank you so much for listening and have a great day.


David Richter:

Hey, everyone. It’s David Richter, the Profit First REI podcast with Kirby Atwell today. We have a special guest, Kirby Atwell, where in this episode, we’re going to talk about how Profit First has transformed his business, because what he uses the profit account for, some amazing ideas and tips to actually move the needle inside of your business and to pay down debt and how he does that.

David Richter:

Also, he talks about less deals and better deals, of how when his mindset shifted to that, how that exploded his business, how to live off of rentals, and some of the biggest challenges that he’s faced because he has Airbnbs and rentals and whatnot. And then he tells how he was able to actually quit his job over a year ago and fully be supported by the rental income and also how Profit First has affected that and given him intense clarity and confidence to make those decisions. Here’s another exciting episode of the Profit First REI podcast.

David Richter:

Thank you so much for listening to today’s show. If you found this episode valuable, could you do me a quick favor? Could you give us an honest rating within iTunes? And be honest. You could say whether you liked it or not. Obviously with iTunes, the more reviews and ratings we have, the better it is for other people that are searching for Profit First and a podcast. We’d love to be ranked on there and that’s thanks to your help.

David Richter:

We would really appreciate that if you would like to go give us a rating. Also, if you’re looking to connect with us further, I would highly recommend checking out our Facebook group, Profit First for Real Estate Investors, and that’s literally what it’s called. You can type in Profit First for Real Estate Investors, and you’ll be able to find our Facebook group right there. Come join active real estate investors who are supporting each other and growing their businesses and profits together.

David Richter:

That’s what that group is all about. The links should be in the description below. If you’re interested in working with us and implementing Profit First in your real estate business, we offer coaching and guidance.

David Richter:

If you want to work with someone who’s actually Profit First certified and who works right now currently really with real estate businesses, you can actually go start your application process by going to simplecfo.wpengine.com/apply, or just go right to simplecfo.wpengine.com, there’s an applied button right on there, if you want to actually start your Profit First journey with someone who can actually walk you through those step by step and help you know and grow your cash flow. Thanks again for joining us for another episode of the Profit First REI podcast. See you next episode.