Tune into the tenth (that’s right double digits) episode of the MovotoMic featuring Steph Douglass, CEO and broker of Open House Austin and learn how to break through traditional home ownership. This episode is eye-opening and should be at the top of the list for anyone interested in replacing their mortgage with income. For more updates follow Movoto on Instagram @movotorealestate or download the Movoto app.Â
Full Episode:
Full Transcript:
Patrick: Hello and welcome to the Movoto Mic podcast, a new real estate podcast brought to you by Movoto.com. My name is Patrick Kearns. I am an ex-journalist and 10-year vet of the real estate industry who is currently working as Movoto’s head of communications. Here with me today is my associate Sophie Brandeis. Sophie, how are you doing today?
Sophie Brandeis at 0:28
Sophie: I’m doing great. I’m excited about the guest we have on. She is remarkable.
Patrick: Awesome. Sophie, can you tell me who our guest is today?
Sophie: So today on the Movoto Mic, we are excited to have Steph Douglass, CEO and broker of Open House Austin. Open House Austin is a woman-owned real estate brokerage that helps people navigate nontraditional homeownership in Austin, Texas. They have assisted hundreds of clients in buying and selling properties through house hacking partnerships and tapping into home equity. Steph, welcome to the podcast. We are so excited to have you with us today.
Steph Douglass at 1:01
Steph: Thank you for having me. Excited to dive in.
Patrick: This is continuing a long trend of folks that we’ve had on the podcast. You are a Longhorn like Sophie. Is that correct?
Steph: Yes.
Patrick: OK, awesome. There we go. I think you are the fourth Longhorn we’ve had on the podcast at this point, which makes sense given that we are also an Austin-based company. Looking at your background, it’s a mix of a lot of real estate and some education. I am married to a teacher, so I’m very familiar with the journey in education. Talk to me a little bit about that transition. Why real estate now? Why is that your big focus and where you got your start?
Steph: Yes, I taught fourth grade math for seven years in the charter programs in Austin. I was very passionate about my job and I loved educating. I love watching people grasp concepts; it’s a huge part of who I am. But the pay was not great and the quality of life was tough for me because I am so extreme. I was very physically ill, almost. My quality of life was low and I knew that there was more—there was something that I could do that was like a higher quality of life for me. I bought my first house as a first-year teacher, started earning passive income from having a roommate, and I was like, “This is amazing. Could I scale this, and what would that look like?” I started to play around with creative house hacking strategies, not even having those words in my vocabulary yet. What piece of my house could I rent out next? This bedroom is not being used. I’m going to try to put this on Airbnb and just have strangers come through my house. Piecing those things together and then escalating from there made me realize that I could relatively easily replace my teacher’s salary with real estate investment income. So I transitioned away from teaching, which was hard because I really, really loved my job. But I eventually realized that I was losing money by going to work every day because I had also gotten my real estate license. I was teaching people how to invest in real estate, and I made that my full-time job. Now I have a brokerage here in Austin with four agents who are also really investment-minded. That’s a huge value of ours. I’ve grown to have a real estate portfolio of 19 properties and 34 doors. There’s a lot in between, but that’s my journey.
Sophie: Where do you think you got this entrepreneurial spirit from?
Steph: That is a great question. I think the scrappiness with which I was raised—I focused that into real estate. I think that can be focused in a lot of directions. Figuring things out was always my MO. I wasn’t that great at school and I figured out how to get good grades. I knew that I had to turn in the assignments. I had to work the system in a way that was catered to my skills. I have a lot of soft skills. I can talk to people, go into a room, and figure stuff out. I don’t have a lot of hard skills. Figuring out what industry that worked with made it possible for me to be successful. The scrappiness was a huge part of it. Doing things that I had never seen people do before. The creative part of real estate. It is shocking how much $1,000 a month can do for someone, like completely covering your mortgage every month. Most people’s biggest expense is their living. If I could cover that, I was like, OK, I’m set. Then I thought if I can cover that, I can do more. Having that scrappy foundational part of me made me into the entrepreneur that I am today.
Patrick: It’s so interesting because it’s such a regular theme on this podcast. People who have built successful careers in real estate, there’s not a playbook you just have to follow. It’s always about scrappiness. There’s no hard limit to the amount of hard work you need to put in to build a career in real estate. That also doesn’t put a ceiling on things for you. If you’ve got a normal job, you can be really great at that job, but you’ll generally make what everyone else in that salary range makes. Real estate is different; you’re on your own and building a lot of your own career. I’m interested in Open House Austin. It looks like it’s an indie brokerage. Talk to me about why operating as an indie when you’ve got franchise networks being part of a large brokerage system. What benefits does being this indie brokerage offer?
Steph: We started off under a larger brokerage, which was Realty Austin, and they just got acquired by Compass. We were butting heads on branding and messaging. As an independent brokerage, we really set ourselves apart by offering a lot of education, having a first-time buyer tilt but in a less salesy, more approachable way. I’ve done this so you can do it too type of way. Having our own brand was really important. I know some bigger brokerages allow you to brand yourself, but it seemed like in the spirit of what we teach to have our own face and company. We just started renting a space, and even that feels anti what we teach. I’m in the market to buy a commercial space so we can live what we teach and practice what we preach. I feel like that draws people to us. They see me, I look like a normal person, and they see what I’ve been able to do in real estate, and they feel like they can do it too.
Sophie: It’s really inspiring how you’ve taken your love for teaching and educating and applied it to a whole different industry. Theoretically, you’re giving people the keys to using real estate to make money.
Steph: Exactly. That is where it comes back to always: net worth, wealth building, freedom. Freedom is my main value, along with community. I’ve figured out a way to be financially free and flexible. The first thought is, how can I teach other people to do this? I’ve figured out this almost hack to life and want to spread the word. But it comes with its own challenges. We’ve definitely gotten our fair share of, “You’re the problem. You could always just quietly do this.” But if you’re spreading the word, there are pros and cons.
Patrick: Let’s talk about your website. You talk about the different types of nontraditional homeownership. Could you explain those for the average listener who maybe isn’t familiar with that concept? Talk us through a few.
Steph: Our mission is to help people break through the barriers of traditional homeownership. Traditional homeownership means you get married, buy a house, and have a kid. That’s just the way people’s lives are supposed to go. Breaking through that means buying earlier and being creative about who you’re buying with. We help people buy with partners. I’ve grown my portfolio almost exclusively through having partners. Looking at a deal, assessing what needs to happen, and figuring out the pieces that need to be put together so it can happen might mean doing that with your mom, cousin, or friend. Those are the partnership angles. Also, traditionally you buy a house and just live in it. The other angle is buying a house and then figuring out how to replace your mortgage with income. Utilizing your house as essentially a business and providing space for other people who want to pay for it, thereby covering your full mortgage or even cash flowing your mortgage. Those are the two angles we take. It’s really popular with millennials, and we’re seeing more and more Gen Z starting to pick up on the fact that real estate means more freedom.
Patrick: How do you account for the fact that not everybody is starting from the same playing field? Part of this education needs to be tailored to people individually. At Movoto and our parent company, Ojo, meeting people where they are and having solutions for wherever they are in the real estate journey is a big thing. How do you learn about somebody, their background, and tailor the solutions to them?
Steph: That’s such a good question. That’s part of the reason why we’ve been successful. There’s so much information out there. You could Google anything and find five different answers for the same question, but it’s really individual to your situation. That’s why having a brokerage and agents who are essentially personal consultants comes into play. Imparting my experience and knowledge to my agents who can then help people figure out where they fit into this puzzle. Not everyone has a huge down payment. Not everyone has the flexibility; some people want to travel and don’t want to be tied down. They come to those consultation calls with their specific set of circumstances, and from there we brainstorm and help them come up with a strategy. It’s different for everyone. People want that one answer, like how much down should I put? Even with the answers we have, it’s going to be different for every person.
Sophie: You say “houses before spouses,” right? I think that’s very clever. Single women buying homes traditionally hasn’t been a thing, even today it’s not talked about much. It’s starting to change. Why do you think that’s changing, and how does Open House contribute to that?
Steph: It’s almost inflammatory to say “houses before spouses” online now. But people are getting married later and later. If you are waiting to get married to buy a house, you are missing out on what could be 15 years of equity. Our parents got married at 21 and bought a house at 22, capitalizing on 10, 20, 30 years of equity. We’re getting married at 31 to 36, missing out on 15 years. That’s part of why we’re seeing this more and more. Recently, women weren’t even able to have a bank account. We’re still responding to those types of things. The biggest piece of what Open House has to do with “houses before spouses” and single women buying is making it an option, normalizing women buying houses. Not just women, but anyone who’s single. Making it normal for someone ready to buy, even if not partnered, to do it.
Patrick: It’s so interesting because the very traditional path you laid out is exactly the path I followed. My wife and I rented forever, got married, had a kid, lived in New York City, moved to Austin, then moved to upstate New York, and finally bought a house. I’ve worked in real estate for nearly a decade, covered the real estate industry, and still found the idea of buying a house terrifying. I was really nervous to start the process. When it was over, I realized it wasn’t that bad or hard, and my agent was great. It feels like people sometimes just need that little push to say, “You can do this. It’s not going to be that scary, but you need the right people around you and the right process.”
Steph: It’s so true. Our jobs involve showing houses and executing contracts, but a huge part of our job is the therapy people need through this process. It’s the biggest purchase of their lives, and it’s really hard for people. There’s a lot of trauma around finances that people are working through. Having the education to feel confident and the support from the team is so big.
Sophie: Your company, Open House Austin, helps people purchase homes in Austin. If our listeners are somewhere other than Austin, what makes a great agent to support someone whose goal is to buy a house in a nontraditional way? If they were in Austin, they’d obviously come to your brokerage.
Steph: We help people in the Austin area. The biggest thing that sometimes gets overlooked is whether the agent has done it before. Are they experienced personally in what you’re trying to do? It’s easy to be talked out of something when an agent doesn’t understand. If they don’t share the same values or understand exactly what you’re trying to do, they’ll try to talk you out of it and push you toward a more traditional path because that’s easier for agents. Interviewing agents and asking about their personal experiences, values, and investment mindset is important. It’s easy to use someone who’s a friend of a friend or your mom’s cousin, but having someone experienced and strong as a good advisor is underrated. People think agents don’t have that big of a role, but you can really utilize a good agent and have them help you a lot, translating into income or equity.
Patrick: The agents we work with must keep a certain number of transactions and performance because it’s important to ensure that if we’re connecting a consumer with an agent, we know this agent can get the job done and is the right person for them.
Steph: It’s micro changes, day to day, week to week, things are changing. If you’re a part-time agent, it’s not the highest level of quality or service, especially in the competitive nature of the industry right now.
Sophie: What specific qualities do you all look for in an agent? You have a very specific niche. When you’re looking to add to your team and interviewing agents, what sort of things are you looking for?
Steph: We’re looking for investment-minded agents, a focus on customer service at a very high level. Our focus is definitely first-time buyers, but we’re also making this an investment for them that will benefit them for the rest of their lives. We’re running rental analysis and other scenarios for the same house. Things like that aren’t really expected but are a huge part of the buying process. Flexibility is also important because we’re not doing typical deals. We’re not just having people buy single-family homes and move into them. We know city code regulations, zoning codes, and other details because we’re doing creative deals. I try to hire people who are flexible in those regards.
Sophie: Could you tell us a story of one of the first people you’ve helped achieve freedom or buy a home in a nontraditional way?
Steph: Yes. The very first people I helped buy a house are now living in Puerto Rico. They have both houses they bought in Austin through our brokerage still functioning as rental properties. The first one they moved into, added a tiny home, and split their primary suite, renting it on Airbnb. Essentially, legally, they have three units on that property and are cash flowing enough to be living in Puerto Rico. One of them has a job, they have three kids, and it’s very inspiring to see that buying a house doesn’t mean you’re settling down or stuck in a place. It exemplifies that with dedicated consistency, you can see huge rewards if you put in the work upfront.
Patrick: That’s amazing. One of the things I find really interesting about house hacking and different types of traditional buying is that zoning is a hot topic nationally. There’s not enough housing right now. You’re talking about someone buying a property and then subdividing it, theoretically creating more housing. Talk to me about how you view the current state of the real estate market. Magic wand—what is something you’d love to see change about how the United States does housing? We do it so differently than the rest of the world.
Steph: Yes, I think Austin is doing some cool things right now. We have the HOME initiative, making it possible for three houses to be built on one lot. That is the energy we want to see moving forward. Density is amazing. We have a housing shortage, and there are houses on large lots where people don’t want more density. Specifically in Austin, there are places that used to be suburbs that are now the center of downtown. Having the option to have three families on one lot instead of just one triples the amount of housing possible for that area. I like to think Austin is at the forefront of this because we have unique problems seen in other growing cities. If we can be at the forefront, that would be amazing, but there’s a lot of resistance. If I could wave a magic wand and say this is how housing is done, it would involve more density, more flexibility in zoning. Zoning is there for a reason, trying to preserve the quality of life for the citizens of the city. But there’s a lot of old school regulation that hurts affordability and quality of life. Walkability is huge. Being in close proximity to a grocery store and things you need regularly is important. Putting a grocery store where there used to be residential zoning is hard. Development is hard, and there’s a lot of red tape. We have a housing shortage because no one wants to do it; there are too many hoops to jump through. So density, walkability, and reduced hurdles for developers would be part of my plan.
Patrick: Quick plug for our first episode with Brad Inman. He talked about fighting NIMBYism back in the 80s. That’s what got him into real estate, fighting NIMBYs in the Bay Area in the 80s. It’s a full circle that this has been going on for a long time. People are fighting the good fight against NIMBYism.
Sophie: Before this podcast recorded, Patrick and I were talking about TikTok. There are a lot of real estate house hacking, get-rich-quick influencers online. Can you talk about some misconceptions people are preaching online and debunk some industry lies?
Steph: The fact that it’s easy should never enter anyone’s mind. It’s just not easy. Real estate is also not passive. You can build it like a business and make it more passive than not, but it’s not get-rich-quick. Especially now with the interest rates, we’re in a wild time in real estate. I’m 35, been in real estate since 2013, and it’s been a bull market with low interest rates. I would never want anyone to think this is going to be easy, quick, and passive income. It’s not easy. Time in the market is so big; I’m a long-term investor. Flipping houses is not investing; it’s a job. Long-term investing doesn’t see tons of income right now, but I know I will in the future. It’s a long-term play. There’s also a dangerous narrative that buying multiple houses makes you part of the problem. As someone who started with very little, this is a cool way to grow wealth with a low barrier to entry. Stopping yourself because you think it makes you part of the problem is a bummer.
Patrick: We like to play a little game at the end of our episode. It’s called Let’s Get Real. We hit you with some rapid-fire questions, and you answer right off the top of your head. The first thing that comes to mind. Ready?
Steph: Got it.
Patrick: What’s one thing every entrepreneur should know?
Steph: Know how much it costs to get a customer and how much that customer brings you.
Patrick: One piece of advice for a first-time homebuyer?
Steph: Be strategic about the down payment. Putting too much down can drain your reserves and not lower your monthly payment enough to make it worth it. Don’t feel pressured to put more down than you need to.
Patrick: What is so special about owning property in Austin, Texas?
Steph: Austin, Texas, is the best city in America. I’ve been a property owner here since 2013, watching it grow. There’s a lot of people who don’t like the growth, but I think it’s exciting. I feel like I live in a different city every day, and being part of a city that’s innovating and doing interesting things is really special.
Patrick: Well, thank you so much for coming on. I agree with you; Austin is the best city in the country. It was great to learn from you and talk with you.
Steph: Thank you so much for having me. It was amazing. Appreciate it.
Patrick: Thank you so much.
