All Forum Posts by: Rene G.

Ok, for the fully paid property you're free to do what you want, you don't even have to carry insurance on that one if you want. For the rest you'll need to work with your lender and HOA if any are like townhomes or condos. Also, I would consult an insurance broker. And if your using an LLC you might be able to bundle some policies under that LLC. I'd like to know what you figure out... Please share your outcome with us if do.

Are the properties in question fully paid off?

Hey @Jordan Deaver, 

What is your current screening process? ...Maybe that would be a good starting point for us to give you some good feedback. You might be doing the right things and only need some tweaks. 

Also, what class of neighborhood do you operate in, e.g. high-class A and B or low-class C and D?

Hi there Mary,

The problem is, how do you go from being a new landlord to a supreme cyborg landlord master—half human, half machine?

There's a lot of free info online, but that takes time to gather and can be overwhelming to sort through. Not to mention, there's a ton of "bad" free advice online. And as you do research, you'll quickly realize that everyone wants to convince you to do what they do. For example, old-school landlords pushing bad advice saying it's better to spend 60 minutes to save 60 dollars.

Everyone in the market is trying to get you to believe they have the answers for you. If it's not property managers trying to undercut you with hidden fees, then it's big software companies trying to hook you with property management software that has more features than you need. Or do-it-yourself landlords harping on how doing everything is "the way."

Do you want to know the truth? You don't need any special "tips or rules" you need a solid winning strategy—without a winning strategy—you're going to have to learn everything.

Get ready, you'll bounce around from one idea to the next. You'll purchase a bunch of different softwares and tools before you REALLY know what works. It's sad; all the 'little guys' out here are all asking the same "tactical" questions repeatedly... Without a strategy, they work harder, not smarter and stress themselves out by sweating the little things NEVER considering there are better outside-the-box ways to do things. Most newbies are strapped for cash and constrained by a lack of experience. If you're a small-time landlord, you have an uphill trek. You will have to gain experience on your own from trial and error. Unfortunately, that's just the way it is.

What makes matters worse...

If you're a new landlord, there's a lot that you don't know. In the beginning, you won't know landlord lingo or acronyms and how everything blends together: CapEx, Cap Rate, BRRRR, ROI vs Yield, Capital Gains...and whether or not they actually matter to you as a new landlord. You won't know system shortcuts that save you money and time. You won't have any idea how to anticipate repairs.

If you're lucky enough, you'll figure things out before something major goes wrong. You know what, I'm just going to call it out now. You are probably going to fall victim to the frugality trap. There's such a widespread belief that landlords should do everything, even their own repairs and maintenance. It's madness! There's such a strong bias out there — you'll end up doing it too (unless you learn to question it now).

New landlords are so determined to save money, they fall right into the trap. They are willing to do almost anything. Especially if they only have one rental and they're desperate to save every penny. They'll spend hours watching YouTube, listening to podcasts, reading books, and researching laws online. They'll download free leases, addendums, and other forms.

It doesn't stop there; they'll send out handcrafted emails or private message every landlord they know looking for free advice. They are not even ashamed to post questions across social media whenever they have issues.

The problem here is they're wasting a lot of time and getting mostly bad advice with no clear strategy. If this is you, it's okay, it happens to the best of us. Landlords are often so concerned with how to do things that save them money, they lose sight of the big picture.

If you're out there trying to collect free advice, recognize that old-school landlords can be narcissistic in the way they do things, and they want them done THEIR WAY — even if there are situations where you’re able to show them there is a smarter, easier, faster, better way...You know the type? They can’t possibly be shown a better way.

They are entrenched with their "myside" bias; their way is the only right way. They'll be the ones to tell you how to swing by your rental and do stuff: check filters and patch drywall holes, everything from mowing grass to clearing drain lines, no job is too small—not even swapping batteries or cleaning house. They especially like replacing and fixing: windows, doors, floors, and toilets... Haha! You get it—they do anything and everything to save money. It's madness!

Landlords that don't have systems for protecting their time fall victim to using a reactive approach that's riddled with bad advice. If they are not careful, before they even recognize it, they'll be a jack of all trades, and a master at blaming tenants for their problems. This is a formula for disaster. As a landlord, you risk burning out early or becoming a grouchy slumlord.

It's kinda shocking, the real issue is knowing what not to do. Yes, strategy is more important than tactics. Even if you had all the tools and directions... Without a winning strategy, small-time landlords fizzle out and never build lasting wealth. Everything needs to tie into a Real Freedom Strategy. Anyways that's how I see it... Don't take my word for it, you'll find out if you stay in the game long enough.

After ten years of managing my own rentals from Iraq, I developed self-service management. It's the same as regular property management, except that I'm in control and use systems that give me Real Freedom.

Old-school landlords don't know anything about that because they love to do everything in-person, on their own. Property managers aren't flexible enough to do it because they're constrained by company policy and what the actual homeowners say. As my own boss, I set the priorities and get my own reward... Real Freedom!

This was developed after years of trial and error. Working on the other side of the world (in a backward timezone and with crappy internet) taught me the importance of systems. At first, it kinda felt like I was a landlord with one hand tied behind my back. Fortunately, I was determined and figured it all out. After many years of struggling, I earned self-service management. Now, it's like landlording with no hands!

If you'd like to talk more, please feel free to reach out. I have faith in you. Just get crystal clear on your long-term winning strategy, develop a basic formula for success, then run everything through it and always stay focused on the big picture.

Merry Christmas and Happy New Year!

 DOUBLE YES!

Hi Matthew,

You probably won't like what I'm about to say, but I promise I will try and be helpful. I sense you're not fully committed, and it seems you might give up if things get hard. Please don't; if you can go through the learning curve without giving up, you will succeed and love REI more and more!

I get a sense of your hesitation because of these things you said/how you said them:

"...first job after college" --- Did you want to get into REI earlier and why did you wait until now to start learning about REI?

"...real estate investing as a side project" --- Why did you word it that way, and how much time do people really devote to learning about side projects...what will you devote?

"...like to pull the trigger on something within the next 12 months once I learn more" --- If a perfect deal showed up tomorrow, would you not do whatever it takes to make it happen, and why do you think it takes 12 months to learn more?

"...I'm looking into buy and hold properties but not sure what niche is most appropriate yet." --- What is holding you back, I can already tell you that buy and hold is probably the best bet for you (I can already tell you don't want another job flipping, short-term rentals, old-school landlord, etc.), but why haven't you figured this out on your own yet? 

"...is it typically common for newbies to outsource property management" --- What makes you hesitant of property management, especially as a newbie when most people learn best by doing, and how do you know if your property manager is doing a good job/how can you catch them BS-ing you?

"Ideally I would like to be as hands off as possible, is this unrealistic for someone just starting out?" --- If you want to be 100% hands off why not just buy mutual funds, index funds, or bitcoin, why REI?

My tidbits (but don't listen to me; I could be wrong):

I often feel that everyone wants to be a real estate investor, but no one wants to be a self-managing landlord master. You can be as hands-off as you design your rental business to be, BUT you need to know what you're doing first. Note the word "business." Commit fully. I call this the Forever Difference...if you are going to do something and you commit fully as if you are going to do it FOREVER...you will behave and act differently in everything you do. You will probably design every aspect of your rental business to give you Real Freedom. 

On the other hand, if you are not fully committed and you treat this like a hobby, everything you do will be shortsighted, or you'll try to cheap out on everything. That's where I see many investors get into trouble... they either try to rush things or cut corners. 

Embrace the suck, as we say in the military. lean in and tackle things head-on. Convince yourself you are doing this forever and you will learn everything and design your rental business to run without you one day...but in the beginning, you will have to get your hands dirty.

If you don't like being a landlord, you will never last long-term. In the back of your mind, you'll want to escape if you keep your eyes on the exit. Do not even think about one day selling all your rental properties and retiring! Quit trying to take the easy way out! Don't let the thought cross your mind!

I highly recommend doing your own property management before outsourcing, especially if you only have one rental.

Oh, my advice, set aside as much money as you can and devote as much time as possible to become a landlord master... better yet, a supreme cyborg landlord master—half human, half machine!

Congratulations on graduating college and your first job! Merry Christmas and Happy New Year!

@Heather R baileyyou're welcome to join my private landlord community if you want. I pretty much give away all my secrets about how I've been an RE investor and self-manage my rentals being deployed in the Middle East over and over. I'm currently in Baghdad, Iraq on the other side of the world in a backward timezone—if I can do this, you can too! Something to consider, if you have 10 or fewer rentals, even if you're a W2 employee, you can self-manage if you use what I call the plain vanilla business advantage. The trick is to carry yourself kinda like a property management company but use the flexibility of a landlord to work smarter not harder. DM me if you're interested. Either way, I wish you the best of luck on your Real Freedom journey!

I wonder if you had an idea of how long you wanted to keep the rental before you purchased it. In my opinion. If you had a "forever perspective" going into the deal, you'd be more selective of the rentals you buy. For example, kinda like what Warren Buffett says, his favorite holding period is forever. So, he's very careful to buy great stocks, not junk.

Something else to consider, the more variables you have in your business, the more complexity, and the harder it becomes to successfully identify problems and root causes to find real solutions. Case in point, investors chasing low-quality rentals to increase their door count, only to realize later mistakes when they're in too deep or hit major problems they should have avoided. Investors that keep having problems need to take a look at how much complexity they have.

And another thing, don't let everyone convince you into thinking you are wrong for paying off your rental. Taking on more and more debt and getting a bunch of doors increases complexity and can spread you thin. I hate how people are quick to assume everyone on BP only cares about getting more doors. It's ridiculous, people are out here with razor-thin cashflow and are living desperately from tenant to tenant. And what happens when COVID hits and you can't afford the debt service? The ones suffering the most are the new investors eager and unprepared.

Have you heard the saying quality is better than quantity? Or what about simplicity is better than complexity?

What sounds better to you... You have rentals in one state. In total you have 10 fully paid off A-class rentals cashflowing $20k per month. Everything set to run on autopilot with LLC ownership and a family trust for estate planning/inheritance purposes.

Or...

You have rentals if five different states. In total you have 30 maxed leveraged C-class rentals cashflowing $100 per door/$3k per month. There is lots of complexity with different team members living in different states. Maybe you transferred ownership into its own LLC too, against the due on sale clause because you never heard of anyone getting their note called.

What offers more freedom and peace of mind? What would be easier to hand off if you died? ...more complexity in probate court across different states/laws.... e.g. court appoints an executor in charge of liquidating everything to settle your debts and what's left for your family.

Let's not forget the average landlord owns three rental properties (30% of landlords own properties worth $400k or more, with 7% of the top landlords owning properties worth $1 million or more). Half of all the 'single-unit' landlords purchased their property initially as a primary residence (later transitioning it into a rental property). Landlords operating 2-to-50-unit buildings provide most of the affordable housing stock in the country. — Read all 29 Insightful Landlord Statistics (2022) here: https://getflex.com/blog/landlord-statistics

Hey Nathan G, I've got some friendly proofreading feedback for ya. Under your RIGHT OF ENTRY AND INSPECTION section change "perspective renters" to "prospective renters."