All Forum Posts by: Chad Carson

I look forward to seeing everyone there! Thanks for organizing to Rick and the Georgia REIA team.

 @Chad Carson Spoiler: do you REALLY only work two hours a week?! 

I do really work 2 hours per week on REAL ESTATE. On writing a book, recording a podcast each week, volunteering with a local non-profit that's building a network of walking/biking paths, coaching my kids sports - definitely still do a lot of work!! :) Work's fun when you don't have to do it for money!

It depends on what you mean by scaling. Do you mean how to go from like 1 property to 10 properties? Or are you trying to go big and have the syndication, hundreds of units type scaling? 

If it's the first, I just wrote a book for BiggerPockets called the Small and Mighty Real Estate Investor that shows you how to go from 1. Starter 2. Builder (scaling) 3. Ender/Harvester (living off income). I think you'll find it helpful.

For the second type of scaling, @Brandon Turner's Multifamily Millionaire Book is worth checking out. 

Quote from @J Scott:

Remember, 1% of a very large portfolio is worth more than 100% of a very small portfolio.

For many of us, the key to scaling was to figure out how to leverage other people and other people's money in order to do much larger deals.

In other words, focus on partnerships and syndications.  And focus on much larger deals.

I have a little different take than J. I don't think owning larger portfolios is for everyone. In fact, I think most of us should stick to a smaller portfolio of rentals to keep it simple and have a very flexible life along with the investment income.

For example, if you own 10 rental properties that rent for $1,800 and have a net operating income of $1,000/mo each, that's $10,000/mo or $120,000 per year after the debt is paid off.

If you need more, just add a few more.

But the point is you don't need many! Less is more.

Focus on quality properties. Sell off the ones that don't attract the best tenants or are high maintenance.

Refinance risky debt as you're growing so you can afford to stay in the game long run. And eventually consider paying off debt once you've hit a threshhold of networth and/or net operating income.

My own version of this plan is a little bigger than that with more properties. But that's mainly because I have a 50:50 partner and my average rent in a southern college town is about $775 and not $1,800.

You know the problem with this kind of plan I've laid out? It's simple (and for some people - boring). But in my experience, the most RELAXED, trully financially free investors I know look more like this than large syndication owners (forgive me @J Scott because if there's anyone who'd be the exception it's you!!)

Just food for thought!

I started in real estate investing right out of college at 23 years old in 2003. I mostly flipped and wholesaled at first, but a 50:50 business partner and I eventually started accumulating rental properties. We also ran into the 2008-2009 Great Recession! 

My flexibility, control over my schedule, and income increased continuously over time. But in 2017 I finally took a plunge living only off rental income. My family and I moved to Cuenca, Ecuador for a year for a nice little "mini-retirement." We had 33 properties together, many of which are small multifamily apartments. 

I tell more about my story and dozens of other regular rental investors (I call them small and mighty) in my new BiggerPockets book The Small and Mighty Real Estate Investor. 

As for doing your own planning, I find it useful to work backwards from a rough goal of how many properties you need. For example, if you need $120,000/yr to cover all expenses and a typical rental house rents for $1,800 and the net operating income is $1,000, you'd need 10 of those houses if they were all paid off (no debt). 10 x $1,000 = $10,000/mo or $120,000 / year.

There are a lot of paths to get to those 10 free and clear properties, and it may take 10-15 years normally. But that can be a sort of compass for you as a reminder that you don't need hundreds or thousands of units to become financially free!

Hope that helps!

Quote from @Erin Church:

When doing a little planning with our CPA, my family felt we needed around a dozen or so rentals to be comfortable. Our CPA insisted that we need at least 20 units to minimize risk. I'd love to hear how to safeguard against risk of non-paying tenants with the idea that pandemics/eviction moratoriums can happen.

Hi Erin, sounds like you've got a good team around you with a CPA who helps you do planning.
Although it can be nice to get a minimum number of units for a little diversity of income (5-10 units), I don't agree you need to keep growing to some set number (like 20) in order to reduce risk.

Instead, just have healthy cash reserves to get you through the cash flow ups and downs. In the end, you'll figure out the normal vacancy period for your houses.

For example, if it's vacant 5% of the time, you'll receive 95% of your rent on average over the long run. But some years you'll get 100% of the rent. And another year (when the tenant moves out), you may get 85%. A reserve can plug that 15% gap if you need it, and then you can refill the reserve once the property is full again.

Adding more properties adds its own risks, like more debt, more maintenance, more things to think/worry about. So, it's a balance which I try to help us all figure out in the book. 

Quote from @Jazmine Menders:

Definitely, interested in learning more regarding this subject. I’m a realtor in South Florida, specializing in assisting investors. Although only 2 properties seem a bit idealistic, I can see the potential in this method. 

 Hi Jazmine. Thanks for your interest! 
The "small" in small and mighty real estate investor can be 2 properties, 20, or 50. In the book I'll help you work it backwards from your financial goals to figure out how many properties you'll probably need. 

What makes this approach different is that I encourage you to build a portfolio with the LEAST number of properties possible, not the most. Simpler is better if you want free time and a life. Best of luck!

Quote from @Corby Goade:

I love this concept. I can't tell you how many crushed dreams I've seen by people drinking the Grant Cardone Kool Aid- thinking you have to 10x everything or it's not worth the effort- start with a 20 unit or dont bother at all. They spend six months or a year trying to be a bid dog, keep being told no or not having the stamina to break through and they give up. 

They miss the fact that they could do some simple house hacking to get the ball rolling and have an immdiate and tangible effect on their quality of life. Baby steps are okay- significantly better in my experience. 

Right on @Corby Goade! This was a big motivation for me in writing the book. I wanted a guide for people who don't need 1,000s of units to prove something. There's nothing to prove! 

The only thing that matters is moving forward towards a goal that fulfills your needs and will ultimately make you happy. 

Slower, safer growth and a smaller, simpler portfolio can accomplish this very nicely. The book is a guide for how to do it and also share a lot of stories/case studies of people who've done it. 

Quote from @Albert Hasson:

Silly post.  How many rentals one needs really depends on their lifestyle expectations and expenses.

 Yes, but it also depends on how you choose to structure your portfolio and capital structure.

I've found a real fork in the road when investors reach a plateau in their career. They could choose to keep reinvesting money into more properties to get bigger and bigger. Or they could decide to reduce risk, increase income, and optimize their life. 

Often similar cash flow positions but WILDLY different risk profiles and ability to sleep well at night.
 
That choice is a big part of the story of this book because the natural result of the 2nd choice is staying smaller (deliberately). 

Quote from @Joe S.:

I’m open to purchasing the book, but I have my doubts that someone only works two hours a week. 🧐

 Hey Joe. All good being doubtful. I understand. 

I have a stabilized portfolio after 21 years. In my first 5-10 years, I worked a lot more time than 2 hrs/week to BUILD it. But for the last 6-7 years, this has definitely been my real estate work schedule. 

I do work on other things, however. And I enjoy working!

I just choose what's most satisfying, whether it makes money or not. 

Some projects, like the book will make some money.
Other projects, like a non-profit I co-founded in 2015 in Clemson, SC (Friends of the Green Crescent) earn my no money by design. But I spend 10-15 hours per week on it.

That's my entire point with this book. Build a rental portfolio that frees up your time to do WHATEVER is important to you. Smaller is better for that in my opinion.