All Forum Posts by: Jason Powell

@Jim K.

Wow Jim, that felt pretty rude, and you sure made a lot of assumptions about me when you know nothing about me. Normally I wouldn't respond, but since you publicly shamed me in front of all my friends .....

First of all, I never called myself a master builder, nor would I be so ignorant to do so. I would also never claim to truly know what trades people go through after performing physical labor for decades. Wow, what a tough and honorable career.

However, I have been the "grunt guy" on about 10 different house flips through high school. I do have two degrees in Construction Engineering. I have worked for a general contractor during my college years. Again, I was the grunt who got loaned out to any sub like a slave to do the work non of them wanted to do when my superintendent "owed them a favor". I have worked with multiple unions, pile bucks, carpenters, pipe fitters, plumbers, you name it. I've been involved on projects installing dams, street cars, BNSF train bridges, mechanical systems at Intel, dental labs, 30 story buildings, you name it. I'm sure I could impress even you with my insider lingo. EVERY time I started out with severe judgement like you just displayed, from the trades people and EVERY time gained respect of the trades in a matter of weeks. How do I do this without putting in 40 years of manual labor and destroying every joint in my body you may wonder?

While I won't respond to your 101 specific questions, here's a good example for you. Just a year ago I had a tenant die and liquefy all over the floor. A restoration company took out all the remaining guts, carpet, etc until it was safe to work with some basic PPE. They left the body soaked plywood. I also "inherited" all the tenants junk (which all stunk like you wouldn't believe). After 10 guys quit the job site and were puking all over my yard, guess who the one person is who cut the plywood out, heaved it into the 30 yard dumpster ALONE, and yarded out 4.7 TONS of junk, almost all ALONE. 

Each and every one of my guys knows I wouldn't never ask them to do anything I wouldn't personally come out and do myself. They know the reason I have what I have is because I'm willing to do what 99% of the population isn't willing to do, even if they knew with certainty it would lead them to become a millionaire. I could list of 20 examples but won't. I've had the back spasms, had the fiberglass insulation in every crack of my body, coughed up the black crap in my lungs, had the welding burns, etc, etc etc. It's not about me though. And again, with all sincerity, I'm not a master builder, and I'm certainly not up to par with the level of skill most of the people I hire possess.

There is a huge gap between the difficulties of blue collar and white collar workers. Even though I've had many of their experiences, of course I couldn't extrapolate that over decades. Nor could they understand what it's like to have a dead beat tenant stick their finger in their nose and tell you they are going to sue you for everything you've ever worked for and be the future landlord of your building. 

This post is getting long, and I could write 10x the amount here. I still stand behind my advice to the poster though. Somehow us ignorant, soft-handed, privileged, white collar folk need to overcome the common immediate judgement that you've displayed on your response.

Go put in a days worth of work along side the workers. Be there first, leave last, work the hardest, and do the toughest jobs right in front of them. Position yourself as a follower of their leadership in "their world".  Then bring out a cold pack of beer at the end of the work day. You'll win their affection and respect for quite a while. Even when new workers come and "gripe about the rich kid owner", you will have built a loyal following that stands up for you.

Everyone who works for me knows that I would outwork them in a heartbeat with a smile on my face, a good attitude, and would never ask someone to do something I wouldn't personally do. I only get my hands dirty once in a blue moon, but when I do, I make it count and make it visible.

Also, I'd recommend the book "How to Win Friends and Influence People". Read that a couple times, take action on the principals, and you'll be well loved. 

Thanks for sharing. People need to hear this more. I talk to new "soon to be" investors locally and see posts on BP all the time that have $5k in their bank account and want to run out and buy a plex asap with a no or low money down deal. A good portion of these people will get burned by scenarios like you mention, which is real-life in the shoes of a landlord with multiple units.

Somehow these things always seem to come in waves for me too. Roof leaks, sewer line leaks, normally good tenants getting chronically late on rent, trees falling down, fences blowing over, tenant dies in unit and isn't found until weeks later, tenant's foot "breaks through the bathtub???" and fails to tell me for many weeks, etc etc etc......

I find most people who don't have good cash reserves do so because they can't stand not getting a return on their money. I try to reach a happy middle ground by having a stage 1 reserve in cash/CDs getting about 1.7%  and a stage 2 reserve in stocks.

This may be unpopular, but I'd say focus on earning more for now, much much more. Focus on honing in one skill that makes you more valuable in the workplace. There's no way I ever could have started my real estate investing on a 30k/yr income. Not even double (I do have higher geographic cost).

Jobs that make 100k+ with no college degree: sales (insurance, cars, software, medical, RVs, real estate, etc), trades (plumbers, electricians, even carpet layers in my area make 120k/yr). Radiology tech can make 100k with 2 yr degree.

A side gig with Postmates will always be capped near minimum wage. Focus on a skill with steadily inreasing earning power, even if its not overly attractive the first year or two. It does take time but will explode your earning power and ability to invest. Saving money with frugality is great, but I imagine it would suck with $2,500/Mo in gross income.

The "invest with no money" strategy is 95% of the time a pipe dream. Some people certainly pull it off, but that's definitely a much harder path than just earning more. I mean no judgement, as I've worked some of the crappiest low paying jobs out there! 

 Donald,

Normally I would just say "no". And normally I wouldn't accept these tenants in the first place. In this case, because that was a neglected unit I had dragged my feet on rehabbing, I said yes for $50/Mo per extra person. I knew after they left I was rehabbing anyway, so I figures what the heck.

In reality, us landlords are pretty powerless against that. Our options are to serve a no cause termination once the lease is done, or "prove" they are breaking lease  (very tough to prove in court) by having extra people live there. Tenants will do what they want to do and think they can get away with. 

#1 Tenant: Do you accept applicants with past evictions?

Me: No, as it states on the online add.

Tenant: oh, well let me just explain and I'm sure you'll understand. We are suing the crap out of our current landlord because he's a complete tool......long sob story.....oh, and Teeeechnically we got evicted before that too, but only because our roommates moved in the middle of the night without saying a word, and of course my boyfriend and I couldn't afford the rent by ourselves. 

By the way, my boyfriend and I will also have a roommate living with us that has a doctors note for a dog. Can we get an application?

#2 AFTER tenant signs a lease...."oh, I forgot to ask, can my boyfriend also live with us? And also my daughters boyfriend? Oh, and my daughter is pregnant and will be having another kid in 2 months (age 16). 

#3 Lady comes to me, her and 5 kids, asks if I accept government funds as source of income. She and ALL 5 kids had disability income and government assistance. Long story, but I rented them to a year and then raised rent. I lived next to them in one of the 4 plex units and to the best of my ability could not figure out what any of their disabilities were. When I raised rent after the first year, she rolled her eyes and said "ugh, I guess I will have to get a part time job."  A week later, I see her and one of her daughters joined my $200/month athletic club.

@Anthony Hurlburt  and @Greg H.   Thank you both very much for your responses. I'm sure this particular tenant knows how to "play the game" and after 10 years of being there, this is likely not a coincidence.

Thanks!

I'm closing on a property in a couple days. One of the tenants has not paid April rent, and the landlord has given proper notices and just filed paperwork at the courthouse. The court date is set for when I own the property (after closing). Can I show up to court as the new landlord and continue un-interrupted with the eviction process, even though I wasn't the one who filed the original notices and courthouse paperwork?

Thanks in advance!

@Roshan K.

Of course it's not a great investment return, probably about 2% or so, but I view that as insurance. It's different for everyone's situation, how much real estate one has, leverage amount, income level, ability to scale back spending, etc. But if I were outside of my "prime hiring years" for whatever W2 job I was leaving, I would certainly not quit my job right when my rental income met my expenses when my liquid funds only added up to a couple month's worth of living expenses. 3 months worth seems like a VERY risky proposition to me, especially if one is highly leveraged as most BP folks seem to advocate for. Just a replacement of a flat roof on a 10 unit apartment building would run me about $50k, what a lot of people indicated in this thread is an entire year's worth of living expenses.

I would argue that most people who think my statement is absolutely nuts have never lived through a significant market correction while being a full time landlord. But, then again, sometimes I wonder if I'm too conservative and miss out. I probably place a big premium and being able to sleep well at night.

I find it very interesting that people's monthly retirement income number seems to be solidly split between those 10k/MO and above, and very low numbers of less than 4k/mo. 

My goal is $15k/mo, but by the time I reach it, my number will have gone higher due to inflation. Not only that, but I'd most certainly want 3 yrs of living expenses in cash and/or CDs.

One thought that comes to mind that I haven't seen brought up is that if one "retires" early off rental income that's just barely hitting your expenses, you'll likely get squeezed over time as interest and depreciation deductions go away and more of your income is taxed. 

Also as someone mentioned earlier, when long term care and/or other health events happen in older age, you'll be forced to sell property, pay huge depreciation recapture taxes, and cut off your income streams.