10 Reasons Why Investors Are Buying Pride of Ownership

Hey everyone, how are you doing today? I wanted to talk to you today because I’m starting to see the evolution of the One Rental At a Time story, which again is something I created hopefully to inspire busy professionals, folks with full-time jobs, and busy family responsibilities that yes, you too can get into buying rentals and becoming a landlord. If you conservatively finance then you too can have a better financial future. This has been going on now for probably about 18 months and part of the output of that is I’ve actually started buying distressed houses with cash and fixing them up, helping busy professionals buy what I’ve called pride of ownership rentals. Some people call them turnkey, but I thought I would summarize some of the conversations I’ve had and put together a quick rundown on why investors are very happy with the pride of ownership rentals we are putting together.

It’s kind of thrilling, I’ll admit, working the whole process. Finding a distressed asset and negotiating it, putting a cash price down, going in with contractors, getting multiple bids, you know, running the whole process. However, the end is perhaps the most exciting is when I see someone that could’ve been us 15 years ago buying their first or their second or their third rental home, knowing that that will help improve their financial future. It’s pretty cool, so let me share what I put together and then we can talk about each of them.

So the first question is: Why should you consider pride of ownership rentals and why have others already bought them? I thought I would share with you what they said. I first talked about this actually in our book and I didn’t really appreciate this when I started, but I wasted a lot of cash in the beginning, and frankly, we could have been at least 50%, if not 100% larger. I wish we had had a greater appreciation for our cash. I made the mistake of buying cheap and then doing all of the repairs. Today that would be called brrrr, but financing was different and the timelines were different, no one was doing it. I was buying cheap with 20% down and then spending all the cash on repairs. Then I had a decent cashflow house, but I couldn’t buy any more.

This was obviously because we had used all of our cash. So in today’s environment, it is absolutely a mistake and you’ll see that going forward. Conserve your cash, use it wisely, and you will be in a much better position. One of the reasons you’re in a better position is because financing is so cheap. I had a couple of investors here recently that got investment loans with a 3 on them, which I think is crazy because I remember several loans having a one on them when I started. If you can, leverage a 30-year loan or a 15-year loan at 3%, 3.5% or 3.8% or whatever and you’re earning 5 or 6%, that’s called positive carry. And frankly, wall street is built on positive carry. So it’s pretty interesting to think that you could get a completely remodeled property, get financing below the return and be in tremendous shape, let alone with tax advantages and somebody else buying your asset.

One of the things I’m most proud of is that I created this model from scratch and it fits who I am and what I want to do. It probably is not the most profitable way to do it, in fact, I know it’s not, But hey, it’s my thing to take the time to fill them up. I don’t want to sell them vacant and then say, “Hey, congratulations now it’s up to you to stick a tenant in.” I’m trying to de-risk the situation for investors. So my team and I take the time to run through everything, sticking to my criteria. We don’t even open escrow until the tenant is moved in and been paying rent because I want my buyer to have cashflow the day they buy it. I don’t want them to sit there for 30 or 45 days. I want the rent to be known because it’s important for me to run the calculations like I talk about in the course all the time so that you can compare your deals.

Again, the capital improvements are done. You can’t guarantee anything in this life, but my hope is that you’ve got three years of no capital investments. You’ll still have maintenance and things breaking because the tenants did this or that, but you’ll have new floors, new paint, new kitchens, new bass, new windows, and new cooling and heating. So the big things are done, but as we all know, plumbing issues could come up like the sewer line breaking. All of those things are always possible, but hopefully, the capital improvements are done, at least in the majority. And again, your financing, right? That’s because you’re getting it fully done instead of doing these for yourself.

You’ve got to know that time in the repair job is risky. Time is often the greatest constraint for people that buy my stuff. Well, you can go back and listen to Matthew talk about how we bought six of them. He had no time. He was a senior executive at a technology company and all over the world and had one hundred-hour weeks, but he knew he wanted to have a better financial future. So he bought six turnkey solutions houses and I think a duplex or triplex or two. If time is the problem, then great, that’s what these pride of ownership rentals are all about. I think it’s a great use of time, don’t you?

I talk about leverage and all of those things all of the time and we often sell stuff to people that- maybe they do one drive with me to see what’s going on and see what stuff looks like. I’ve had people buy sight unseen, both from the East Coast and other places across the U.S., which is really cool. We do all these walkthrough videos before, and for the afters we don’t hide anything so that you can always go back and look through everything. If you have a busy life but you know you want an asset that somebody else pays for, with interest rates under 4%, then this is a great time to be a landlord and buy pride of ownership rentals, in my opinion. Property management’s in place you’re free to change, absolutely, but again, back to getting you cash flow on day one, it’s already engaged. Property management is in the works and you can leverage the strength of being a part of a company that I’m at. I have no incentive, so if you wanna change, go for it. The property management’s in place, the lease is signed, you know, all of that stuff is ready to rock and roll.

The most important thing for me is that you can calculate your estimated return with some pretty good certainty because very early on I give you a range of the purchase price. If I say something like 171, or 175, and then I say that rents are going to be $1150 to $1250, you should be able to go in and do your own calculations and see if this deal makes sense for you. If you can get lower interest rates and get positive carry, it’s just a really good time. What’s important to me is to sell these units full, so that anybody buying them could really do their own calculations and get that return on day one.

So back to all the capital improvements being done; You’re not buying a cheap property where you’re going to have to bandaid it over and over, just limping by with zero cash flow, you’re going to have significantly reduced capital expenses. The first three to five years- because again, you have a new kitchen, a new bath, new flooring- you’ll have operating expenses and you can have tenant issues and all of that, certainly, but hopefully the majority of the capital improvements have been done and you can just put a little bit of reserve away every month. It’d be ready for them when they come.

In the end, you’re saving time, you’re saving cash, and you’ve started your journey. I can’t tell you how many people who have already told me, and keep in mind they’ve only bought one of mine, “God, I’ve been looking, I’ve been looking at it. You know, I looked out of state, I looked here, I looked there. I’m happy with what we got. I can get the return. You got the lease amount we wanted.” They’re really excited to see the closing statement where they get partial rent credit, and they get the deposit. To save time and cash for folks is a great feeling. So in summary, this is what I wanted to talk about. Pride of ownership rentals are awesome, and it’s an important part of what we’re doing.

We’re helping both the neighborhoods and tenants, and we’re also helping investors get started. It’s pretty cool. So do me a favor, if you like what I have to say then subscribe to our YouTube channel @onerentalatatime and hit that subscribe button. Also, if you have different Facebook groups in the like, share this video. I think more and more people need to hear about pride of ownership rentals, or turnkeys. It’s an important part of the One Rental At a Time story as we continue to grow, learn and educate. I’d love to hear from you so leave me a comment, ask a question, or reach out to me. Have a great day everybody.

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