All Forum Posts by: Rene G.

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."

Never sell!

Option 3 stay... Why not stay longer and save up a bigger downpayment while you see what happens to real estate prices, rates, and inflation? If you're not in a rush, and you can wait, then you'd be able to focus most of your effort on bootstrapping your new business.

In an effort to help persuade your wife to toughing it out longer, try explaining that if yall stick to option three, you could potentially get a bigger/better new construction house later *and best part of all* another horizontal income stream (i.e. rental income). Not sure what would be more appealing to her, but maybe she'll be happy to know yall could use that exact income to either supplement/offset your new mortgage, or yall could be working towards leaving an inheritance to your kids... you know Proverbs 13:22 leaving an inheritance to your children's children.

I use audible and I have over 500 books. In addition to anything and everything real estate, I would recommend books on self-improvement, discipline, focus, sales, etc. 

Natha G. I think you might have misunderstood my stance. Do you think I was suggesting that Nathan H. should not do inspections?

I know, it's standard to have a "RIGHT OF ENTRY AND INSPECTION." section in every lease. I was challenging his thought process. Considering doing inspections every six months is overkill.

For me, inspections are done at move-in or upon move-out or lease renewal... VIA an online electronic form that asks the tenants to upload photos per section/item that automatically saves to my business cloud and triggers an email to be sent out to the tenant and me. HENCE the ABCs I mention above.

Sure if you're an old-school landlord (or if you're being trained by an old-school landlord) and you want to spend your time driving to your rentals to do in-person inspections with tenants every six months go ahead. In my opinion that is a waste of time. 

I guess the main point I'm trying to send home is too many landlords are working harder and not smarter... If their entire rental business is dependent on them alone, they are not really free. If they get hit by a bus everything will fall apart. But, that does not have to be the case. You have to be purposeful and design every aspect of your rental business to run with minimal input from you as the Landlord, so if something happens to you it can be easily maintained by your spouse, kids, or home office. 

@Nathan Holt

Are you trying to give yourself more work to do? No one gets into real estate investing to have less free time. There is already plenty of things that you have to do to ensure overall success. If you overengineer your lease to include a bunch of extra nuisance tasks that you have to do, and you fail to do all those tasks, it looks bad on you as the landlord.

To help prevent you from trying to implement every new idea, you must pass it through a well-defined filter. What do you want out of your real estate investing endeavors? Are you in this short-term or long-term? Is your goal to save every penny or are you in this for Real Freedom?

Once you really know what you want, then you can uncover a basic premise for the things you do/don't do. I follow the ABCs (just something I designed up): Automate, Balance, and Control. Everything I do must first pass my ABC filter. 

If you really want to put that in your lease, here are some questions to ask yourself: How can you automate it? How do you ensure you have balance while keeping control (i.e. how do you oversee without having to actually do the work)?

@Luis Torrico

No one will run your business better than YOU! Everyone is recommending more outsourcing. No! It's time to take over and right the ship. 

No matter how busy you think you are, you can manage your own rentals. Anyone that has less than 10 units does not need third-party property management. How do I know this? Because I've been managing my rentals from IRAQ for over 10 years. 

The first obstacle is to be courageous enough to believe in yourself (you can do it man!). The second obstacle is learning self-service management. Meaning, you build systems that take you as the landlord out of every equation. Most landlords are oblivious to this. 

You cannot have everything depend on you as the landlord. You need to have systems that work 24/7. I was forced to figure this out because I was on the other side of the world, in a backward timezone with crappy internet. Tenants can't just call me with "their" problems. I had to ask myself, "If the tenant can't get in contact with me, what do I need to provide them so they can handle stuff on their own?" You know the model, this is not new. We have self-driving cars, self-checkout, ATMs, and now self-service management! lol 

If you'd like to know how you can do the same DM me I'd be happy to connect and gladly give you free advice, no strings attached. 

@Sara Hook

Everyone wants to be a real estate investor (glamorous), but no one wants to be a landlord (dull)... 

Rule #1 in life, is never to take the easy route or look for unrealistic shortcuts to fast-track success. Hard work will always pay off in the end. In short, what I'm getting at since your strategy is buy-and-hold, is self-manage.

In the beginning, I recommend you learn how to manage your own rentals especially when you have single-digit quantity rentals. It will really help you learn the ropes, and later if you decide to outsource your management, you'd be well-versed with first-hand experience.

I love being a landlord and would be happy to help if you want to discuss this further feel free to DM me. 

Rene G

@Teresa,

If you're planning on being a landlord long-term, get into the habit of building systems that take the thinking out. At least, that's what I've been perfecting for the last 10+ years managing my own rentals from Iraq. 

I teach my "forever" landlords how to build systems into the lease. You want to keep long-term "good" tenants that have an ownership mentality, right? So how do you encourage long-term tenancy while still having a system? ...I have a whole sections explaining no month-to-month, the daily rate penalty should they go over, if they renew for a 1-year term—rents increases X%, if they renew for a 2-year term—rent increase Y%, etc.

I have so much to say...If you're interested in learning more details you can direct message me.

Rene G

@Jason Raynor,

HECK YEAH MAN! Taking action and committing to REI so early is awesome!

My 2 cents... Almost just as important as asking good questions is taking notes. I use Evernote and there's a helpful feature that I love is how you can hit the record button and it automatically starts a note...and you can use templates that will populate each time...so what I would do is preload my questions in an REI Q&A template that I could reuse and hit record while you ask questions and jot down your notes.

In my opinion, the most beneficial question you could ask is, "What is your investment strategy, and how/why did you choose it?" 

I will give you my answer: I'm a self-managing buy-and-hold long-term investor that targets B-class 3/2/2 (preferably 1-stories...no pool, no busy roads, no big trees...think limit liability, then think good for long-term tenants...near good schools/parks/jobs/etc). 

I got into this because I grew up poor. My goal is to build a permanent cashflow rental business that runs itself so that I can leave an inheritance to my children's children. I look at my rentals as castles, which means location is crucial—I never think about selling. 

My goal is Real Freedom and I want less complexity. The hard part is building my self-managing business to run itself. I know my kids will have their own passions and won't want to run my rental business. So I leverage the digital space to maximize efficiency. I use a basic formula I call the ABCs of self-service management (automate, balance, control). Every aspect of my rental business is based on this principle. It's a fractal concept that if you zoom into. one area, or zoom out to my overall business, everything goes back to the ABCs and it helps me stay on track to my Real Freedom goal.

I believe that one day in the future if we as landlords can hold on to our rentals long enough it will be super easy to maintain possession! Here's a short snippet of my thought process and how to use systems thinking as a landlord: https://youtu.be/h4fNA87ttp0