Investment Property Basics #004

and we've got some thoughts. We've been doing it now for for quite a few years, and I think we got a lot of information to share with the listeners out there about how we've done things, kind of the ways that we've I feel like had successes with running properties and and maybe some of the ways that we haven't done it as well as we had hoped. But quickly, let's talk about really people want to know about our cover photo and how they came about. And there's one

lingering question that I've gotten from a bunch of listeners already. Matt, you've talked about working from home, but nobody knows what you do. It's kind of fun. We we got Kate, my wife, to take our photo, our goofy photo. But it's it's good, Okay. Not are photographers. We we've been photographers for the past ten years. And she she stays at home now with the kids, but is still a talented photographer. So that's what I still do though, primarily weddings,

because weddings are just way better than anything else. Why why do you say that it's more fun. You get to deal with folks that are having a blast, as opposed to say headshots maybe of you know, of some company or something like that when you're sitting in office. Weddings are just jam full of uh, fun and action and activity. You're basically going to a party every other Saturday. Yeah, exactly, And just I love it documenting it so that people can have smiling yeah picture proof for the rest of

it all day and enjoying myself. Man, it's awesome. Seriously, Yeah, it's the best. So now everyone knows the secrets out your wedding photographer, because you've alluded a few times to being, uh to working from home, and so people are like, well, just well I work from home. That's my my day job. Folks are like, oh, yeah, you get a party every

other weekend, right like you said it. But then Monday through Friday are that's that's emails, editing, the post processing, phone calls, meeting up with folks in person as well, all that kind of stuff. Running a small business, that's the thing that some people. Taxes, insurance all yeah, all

that action, there's a lot more to it. Anybody can kind of be a photographer maybe for a year or two, but then when it comes to taxes, and really taxes and insurance are the are the big things that start to gum things up a little bit, and folks are like, oh, I don't know if I want to keep doing this because this is more complicated than I thought. Yeah, that's I think that's the interesting thing because I'm friends with a few photographers and I've found out through the years.

You certainly have to have that artistic sense right to be able to make it at all. First and foremost right, you have to have that. But to add to that, and almost just as important, you have to be able to run a business. You have to learn and and want to know how to run a business well. And if you can't do that, that artistic side is especially

if you're gonna have your own small business like you do. Obviously, you can be a photographer for someone else and and and just enjoy it as a hobby even obviously, Yeah, but but you have to know how to run that business.

And there's a lot involved with that. Yeah, And you gotta, I mean you you need to want to know how to do that, and that's I think that's one of the things that fits me so well as I just love I mean I literally love doing do incorporate taxes, like all the boring stuff that literally goes into like the admin side, like the back end of working on the website, all that kind of stuff. Man, I love it, which is love building the thing from the ground up. It's just it's a blast, which is why we're a

perfect fit. And to go to you guys, go to Poor not Poor dot com and you'll see, you know, Matt did a lot of the does a lot of the images, does a lot of so the background work, and um, I'm kind of tackling some of those, some of those other things, some of the the audio, Yeah, the audio editing, because that's that's where that's what I'm into when I know, well, you make us sound good and I make us look good, Joel, So it's great. Are are the things that we're good at balance each

other out well, and the things that we enjoy. And I think if you've listened to the first few podcasts here, you might have already kind of got an inkling of that. So on Poor not Poor podcast. We drink a different beer every week. So we're gonna get into talking about investment properties in just a second, but first let's talk about this beer man. What would you bring for us today? All right? So today I brought the beer and it is called scatter Brain. It's an I p A from

a brewery called Bearded Iris Brewing out of Nashville, Tennessee. Sadly, I haven't been able to visit the brewery yet, but my mom was up there for a conference, and so I was like, hey, hey, Mom, I'm gonna need you to go pick up some Bearded Iris beers for me while you're there. I'm gonna need you to do this if you could, please, I asked nicely. And also like tossing your laundry as well. Also could you do my laundry? She's like, your thirty three son, I'll get your beer,

but I'm not doing your laundry. And so Mom was kind enough to bring back two four packs of beer de Iris beer for me. They specialize in I pas. I think they've done a couple other things, but like literally they'll have like seven I PA s on draft that are just different IPAs. That's what they do, so they know what they're doing. And uh, I will tell this interesting story. First off, how do you feel about your mom or someone close to you being a beer

mule for you? Because that's what they call them when you when you send someone out to get beer for you in another state or another location, your beer mule. Yeah, by that definition, I have been a beer mule for you, that's true. You have, you have? We brought back some Abissell Brothers and uh Trullium, Yeah Trulli. I'm out of Boston. I couldn't think of them. Uh yeah, man, but that was absolutely worth that check bag from from Boston. Holy cow, that's I will stay you do it all over again

just to get that beer. The only way I'll check a bag is for beer. That's the only time I'll ever check a bag Bucks, and just to get some amazing stuff that you're not gonna be able to get at least in our state in Georgia. So well know, yeah, bestl Brothers and nor Trillium. Neither of them distribute right at all. Yeah, and so actually literally the only way you can get that beer. When I went to Amsterdam

one time, I brought back. I believe I brought back thirty seven beers across a couple of bags, check bags. That's a lot of beer. And it was so worth it. I was drinking. It just reminded me of the trip. For I still have one bottle left that's just chilling bottle of Canti, just chilling for me. So because it last twenty years, I believe those those gooses that you can have them on your shelf for twenty years. So I want to tell you real quick story about my

mom getting the beer. So she went to the brewery with some of her co workers because she was there for a conference. And she shows up with the brewery and it looks like it's closed apparently. So she walks up to the door and takes a selfie because she just wants to prove to me that she actually went even though it was closed. Oh, instead of being like, sorry, you couldn't get there closing, she was gonna text me

the picture. And I guess there's this window. There's this window, and people are everyone staring at her and she's taking a picture. Everyone inside the brewery is staring at or while she's taking this picture, and her friends are like Uh, Cheryl, I'm pretty sure they're open. There's a bunch of people and they're looking at you while you're taking the selfie. And so she went in there and she asked the bartender, excuse me, do you sell beer here? Oh my god.

The bartender kind of looks at her like, yes, yes, ma'am, that's actually you are. In fact, that's all we sell. In fact, that's what we do here. We sell beer and beer alone. All right, So the beer is scatter. Let's talk about the beer because we've got a lot of real estate to talk about too. It's an I p A. Let's crack it nice. Yeah, this can it is.

It's one of those almost all silver cans. I like how breweries are doing that because the way that they're a lot of breweries are brewing a lot of different stuff, and so they're not dedicating an entire new label necessarily to each beer. They can just yeah, kind of slapping on a new label with kind of the standard can. Uh, like a silver tall silver can. I like that. Anytime

I see that, I'm like, I must be good. So Bearded Iris does sixteen ounce cans of beer and four Seliman four packs, and I believe it's about sixteen bucks for four packs, so it's not cheap. It's about four bucks a beer. But they're making some of the best I pass right now. No, but where on the street is They're coming to Atlanta soon, they're gonna start distributing. I think they distribute down in parts of Tennessee. But that's it so so just locally for thoughfully, we'll get

them soon. Nice hazy kind of got that orange juice, sort of look to it, man, beautiful color orange and uh so we will be drinking this bearded iris scatter brain, I p A. And we will give you our full beer tasting notes at the end of the podcast for now, though, Man, that's delicious, fruity hazy. It's got that, man, it's got a nice natural sweetness to it. Half of my beer descriptions include a man, I don't really have like a word for it sometimes because we're drinking good seers here, homie,

I'm just thinking about it as delicious. Okay, So let's get into investment property talk. What our investment properties, Matt. Yeah, when you hear investment properties, I mean the way we're gonna talk about it today is there's kind of two types. You've got your flip. So an investment property can be something you purchase and that you plan to sell pretty much right away for a profit. Or you can be coming at it from a long term buy and hold sort of option and you buy it and hold it

and you know, rents it out. Whether it's be commercial you know you can buy and hold with commercialist date where you're running out of businesses or single family homes or multi family homes, we're you know, running out too families. So and that's what we're gonna be focusing on today is the buy and hold. Yeah, and just uh quick note to people, we will Matt and I each own a few investment properties. Will get into the specifics in

a minute. Uh. We Also, this podcast will be a little bit more of a forest conversation, and eventual later podcasts you will get down into some of the trees on how to potentially screen a tenant, um, other decisions you need to make with your rental property about repairs,

how you choose where to buy. But for now, we're kind of going to kind of look at the forest and get an overview of what you should be thinking about if you're interested in rental properties and why you should be interested and potentially pursuing a rental property in your portfolio. That's kind of our general approach to to what we're gonna be talking about investment properties. And then so us personally, Yeah, man, how did you get started

with with rental properties? And in particular, Yeah, so I bought my first house in two thousand nine, and I got it for a just ridiculously cheap amount of money, as as did I three thousand nine. That was a good year, man, two thousand nine was the right time to buy a house. So actually, I think we both bought at the same time when there was an eight thousand dollar tax credit that you didn't have to pay back,

right right. There was one before that, uh that was like I think so fills that had to be paid back. But this eight thousand dollar tax credit for a short period of time, I don't know how long it was in effect, for six six months to a year, was you didn't have to pay it back. And so that was like the perfect time, the perfect impetus to buy a house. The iron was hot and the prices were low, and so I think it was up to ten percent

of your purchase price. So really if you could get in that eighty thousand to eight, you know, writing that eighty thousand dollar price range, you're you're maximizing your the government's paying for ten of your home. And so I bought a home into thousand nine and paid eighty nine thousand dollars for it. The federal government paid eight thousand dollars of that, so it was really more like an

eighty one dollar purchase. I lived in it for a couple of years, and I had a roommate for a little bit, and then um kicked him out because I got married, and so just decided after a while it just made a lot of sense to buy another house. And rents were going up, and I was like, oh man, it makes so much sense to to get in on this rental action. And you were charging that friend right like you had a roommate, and so that was sort of like your first tenant essentially, it was in your

own house, living with you. Yeah, And and considering how cheap I was looking at how much I was paying in rent every month, and compared to what rents are now, obviously it wasn't too bad, but it was still like seven a month, and I just couldn't find I knew that. I think my new mortgage was like seven fifty dollars a month, and then I could get someone a roommate to pay more than half of that, So it just made sense. I was like, oh, man, I can start saving a lot more money if I buy this house

and I have a roommate in here. And then that compounds on itself when you think of the idea of actually buying another house and running that out and how much more you can save, which then compounds and you

can buy more rental houses exactly right. And a lot of folks call that house house hacking, right where you kind of buy a property thinking that like, Okay, I'm gonna live here, but you know, I've got three other rooms and I'm not using if I can get three other roommates in there, and they're gonna pay for my mortgage right right, And it's not like your rip and

people off. It's just you're providing a great place for people to live while at the same time, you know, obviously you had to pay up front and put the down payment on the home and and everything else that comes with owning the property yourself. There's a lot of people that want a temporary place to stay. I don't want you know, he my my roommate at the time was month to month and he was I don't know that totally cool with that. He he just wanted a place to stay for three to six months and was

more than happy to pay. He didn't know how long he had to be able to handle you for right, It's like, I don't want to commit to a whole year. But just like we talked about with potential air b and bs UH last episode, you know, you can make a lot of money on AIRBBS. You're not ripping people off. People want a place to stay for a night and you've got You're taking on a lot of a lot of risk, but there's also a lot of potential reward. And it's the same with UH investment properties that you

rent out on an annual basis. There's a lot of risk and reward, but the reward could be could be quite nice. Man, Absolutely so, seeing you kind of think through all that back then own the time that you guys were considering so you and Emily, when y'all were considering getting your second house, is when we started having these conversations. This is way before poor not Poor a long time ago, but that's honestly, that was a huge sort of kickstarter for for us to kind of start

thinking that as well. We we we've got some good friends of ours that live up in Asheville. And that was my first, I guess awakening towards investment property. Like I didn't grow up in a family where that was a thing, where investment Oh yeah, everybody's got investment properties. It was very foreign to me. But seeing my friend Clark, his first home that he purchased was a triplex and so literally, I mean they moved in and within the

first month they had two other renters. Well they took over, they're already they're already there, and so they actually just maintained the lease that they already had and they were able to have income generated by this property that they had not owned and lived in right off the bat. And so I helped him a lot. I mean, I have to move into the house and kind of got to see that firsthand. So those seeds were planted then. But then honestly I thought, man, if Joel can do this,

he's an idiot. Yeah, I was just like, if if he can do this, I need to start I need to start thinking down that, you know, thinking on this down this path. But like, honestly, it just had to do with us talking about it. Yeah, right, And so that's what I'm hoping too, that listeners that are listening to this episode can at then this conversation, they'll think, Man, it's really not that complicated. It's not as nearly as scary as maybe I thought in my mind. Let's let's

start thinking more about this. This should be an avenue that we should consider. I feel like the first thing that people say usually is they think about the worst case scenario with tenants or but but in what else in life do you really consider the worst case scenario? First,

there's a lot of great case scenarios. And sure, there's a lot of potential pitfalls, and there's a lot of things that I mean, I think we could from from our like seven years as being landlords seven or eight years, there's there's some things that we can tell you that you need to avoid, that you need to consider. But ultimately, if you do a thorough job screening and you're smart, and you have a house that's in good condition that you would want to live in, and that's always my standard,

what I want to live in the house. If I wouldn't want to live in the house, then I'm not considering it. Time for some upgrades. Yeah, so yeah, So where where are you then today with uh? With real estate? So we have three rental homes and we also rent out the back part of our home and they're all single family homes. At one point you mentioned triplex. At one point we looked at a triplex and we put

in an offer, but we didn't get it. Uh. There there have been a couple of multifamilies so we've been interested in but just haven't haven't quite gotten them yet, and we put in offers but just haven't gotten them. But that is something we'd be interested at some point in time. You and I kept from the same cloth man same yeah, same here. I mean, yeah, like you, we've got three as well, which is it's just funny how how similar we are. Hopefully we'll kind of continue

to be able to expand that portfolio too. So what is your kind of ultimate goal? Like why do you do this? Yeah? That's great question because and I think anybody that's looking to go into having rental properties needs to think through why they're doing it, because the why behind it. And I mean for me, it's all about financial independence at some point and having another stream of income, having another way to make money. And I think there's a lot of value in real estate being one of

those pillars of how you make money. And so yeah, ultimately, rental properties are a great retirement asset to have as well because they can provide income every month. Uh. Most people these days don't have pensions, just have four O one case, maybe a little bit social Security. You're not sure how much you're gonna get there either, So it's one of those things that is perfect in the now to provide some extra income. Yeah, and then on top

of that, it's it's something for the future as well. Yeah, I mean that's exactly for us. Again, like I mentioned earlier, being self employed, our income is varies greatly depending on the season, right, So there's season and then there's low season, and so for us to kind of be able to stabilize our our variable income some is always uh, is always welcomed, and our family feels a little less stressed when we know that we've you know, we've got rent

kind of coming in. Obviously we've got mortgages, but still annoying that some of that we're going to be able to put towards our our expenses and cost of living living for ourselves, um, but also to man. Another reason why, like the more the bigger picture reason why why we love it the investment properties as well, is that we're able to buy into what we love, which is the city, like being you know, invested in the city both emotionally but also obviously financially as well. Like we believe in

in in our city. We we love it, and to kind of be able to to kind of be able to back that in a in a way that's really really tangible is great, I think as well. Yeah, and so the last house that I bought, it's it's it's uncam anyhow weird, uh, Matt and eyes lives are linked. The last rental homes we bought were literally it's been Yeah, we we've been destined to to do this. It was

our first foray into another neighborhood. And we'll get into the recent location is really important when picking rental property in just a minute. It was our first foray into another neighborhoods about ten minutes away from where we currently live, and and all our other rental properties are kind of right by almost exactly where we live, and we ended up buying houses that were two doors down from each other. But it's it's because we love that neighborhood over there

so much. Yeah, but we love you know what made has drawn me to that neighborhood for so long. It's awesome, man. I have always I've told Emily this for years and years. When I retire, I want to live next to a disc golf course, and actually maybe before that, I just want to someday live next to a discolf course. Got to walk out the door. And so the only discolf course basically an in town Atlanta is right there where this rental property is. So I wanted to have that.

I wanted to have that place near to that disc golf course. I love that park. It's just it's so awesome. The numbers worked too, which was nice. If the numbers didn't work, I wouldn't buy it, but it would kind of have all that line up together. Yeah, that's that's a nirvana, right, like the location you already believe in that you love obviously in the city that we love, but then also to have kind of like these sweet trappings of man Sunday, I could be over here and

walk straight out onto the whole one of the disc golf. Well, I knew, at least in the meantime anytime I've got to go over there and repair something, I was, sweet, you're gonna throw your disks in the drunk and I can go throw four or five holes at least as well. It's like Emily, I'll see yet too. Yeah, so it's kind of it was kind of perfect, perfect for me in that regard. Yeah, so Matt, let's talk about how

we manage our properties. Serves more the particulars. Yeah, it's interesting because the guy that I bought this last house from had fifty plus properties, jeez. And he told me at the time and he sold me this property, he said that the biggest piece of advice I can give you is to get a management company, which is interesting because I totally disagree with him, and I manage all my properties myself. And for the time being, I think until I probably get to double digits, I plan on

managing all my properties myself. And we both do that. And why do you think that's important? And why do you continue to do that? Yeah, I can see somebody that has fifty properties. Why why you don't want to do that? But yeah, so that's that's one one way you can approach it, right, it's pay management company. And and I would even suggest that there too for folks that know that they want to get into investment properties

but don't want to deal with the headache. Cause when I talk to people about investment properties, that's one of the first things they talk about, right, is, Oh, I don't want to. I just don't want to get the phone call in the middle of the night saying there's a leak and try to have to figure that out. It's like, well, you don't have to get that phone call. The management company can if you don't want to, don't

want to deal with that. But in your you've you've been a landlord now for six and a half years. How many of those have you gotten? That's my thing what I want to tell those people. It's overblown, that's true, don't worry about it. It almost never happens. But I guess what I'm saying though, is that if that is the barrier, don't let that be a barrier. Because management, you know, they take some off the top, but it's

not it's not it's not a big deal. Management companies will usually take approximately ten, so I might take seven, so might take twelves right about percent. It's gonna be

somewhere in that range. A lot of them take we'll take the first month's rent to just to kind of get it up and running that initial So you're you're you're talking about a big outlay there, and the numbers have to be a lot better on a property if you're going to use a management company, if you're planning on self managing, give a little more leeway in what you're going to purchase. The thing is, for most management companies, they're collecting the rent and they're answering those phone calls.

But here's the thing. You're you're still paying the plumber or the electrician or whoever may be out of your pocket. They're calling the dude, but it's not like they're getting a cheaper like you can shop around. You don't know that the management companies canna shop around for you. So there's and they they'll put on a certain face for you the property owner, But man, how are they actually

treating tenants as well? I mean, I know I had horror stories of management companies in college, trying to get them to respond to stuff in our apartment right, or even just trying to get trying to get the place to begin with, Like you'd have to show up at a certain time on a certain day. I'm like wait outside in the cold literally to remember to get a

place where we wanted to live and my roommates. And in my mind, the biggest reason not to use the management company is you're probably not going to be charging market rent. The that was the biggest thing I got when this when this guy, this investor guy that had fifty plus homes and and he sold this one home to me. He's kind of starting to eliminate some of

his port portfolio, sell off some of his houses. And when he said get get a management company, I looked at the lease that he had, because there was a tenant in there currently. I looked at what he was charging and I said, that's not anywhere close to market rent. Really, Yeah, And there's a lot of waste, that's what you're saying, there's a lot of waste. There's there's a lot of waste, and so I want to keep an eye on those things. I want to make sure I know my properties. I

want to make sure I'm there. That's why we can get into this in just a second. That's why location is so important. I personally want the homes to be really close by me, and I don't want to management company because I want to be over there from time to time. I want to move alow every once in a while or whatever it may be. I want to see them, be present, say, see how things are going, kind of get to know them and what's going on

in their life. Yeah, that's that's definitely our approach, right, I mean, but you and I both definitely manage our properties ourselves, and so kind of moving on then, I guess to some rules of thumb. What you know, if you're considering a property is if you're gonna do that, if you're gonna self manage, it's important to make sure that you kind of have the capacity to do that yourself.

If you if you know that you want to kind of self manage, and this is something you want to kind of that you want to start doing, make sure that you have obviously the financial capacity, right, Like you know, you have to put a chunk you know, twenty Typically with investment properties these days, it's if you're wanting a competitive rate, and you need to make sure that you've

got the mental capacity just to think about it. And if when you do get a text or an email or phone call that says, hey, this is busted, like like I did a few weeks ago over the over the holidays, you need to make sure that that doesn't stress you out and that you don't have any margin in your life to where one small thing is just going to wreck everything, right, because there's gonna be a little small things that kind of crop up here and there a decent bit. So that's something to I think

that to consider. Make sure you've got the capacity for that. And it might be best for you to have a partner where you guys are both excel at different parts of this. Someone brings the money, someone brings the sweat, the sweat equity to it. Yeah, you want to make sure that you've got that capacity. And one thing that goes along with capacity in my mind is location. So

how close are these rental homes to you? Every mile that you have to drive further to your rental home to go check on something, it might be a minor issue. That's the that's the crazy things. I Sometimes someone will call you about you know, the stove's not working and guess what it was just a flip breaker. And if you had to drive twelve miles to go free that out first is a mile and a half. Every mile passt is just it's more infuriating to drive, and so

well we we hate driving. Yeah, yeah, yeah, obviously when you're Atlanta, every mile is like you know, you can do the math, it's next minutes. It's an episode one. You'll know we hate driving. Um. I think it's really important for us, and it's something that you at least need to think through. Hey am I cool driving this far for stuff like that? Or how how am I actually going to run this in actuality? And at least for us, it's really important to have them close by.

And even this our our new rental homes that are you know, ten twelve minutes away, not two minutes away. I see it in myself. I'm like, oh, it's just a little more annoying to go over there than it is to the other ones. Yeah, I'm with you there. So if someone's considering getting an investment property, like what do you think, like what like the terms of the

loan that that folks should be looking at Well. I think the first thing first is you have to have, like you just mentioned, a bunch of money saved down and so if you don't have down for a round property, yeah, I mentioned that a second ago. Is that kind of standard now standards? Okay, that's pretty standard, and all this mortgage companies are requiring down instead of like the standard or even obviously less, but that some folks are doing.

But then they're getting hit with am I you? And I would I don't think ever recommend any loan for a home if you don't have at least to put down and so and and on around property. So you'll also need to factor in potential closing costs, potential repairs to the home and uh you you just want to be repaired. You can't bank on the tenant, uh you know, hopefully in a perfect world everything works out and tenants paying gangbusters for all twelve months of your loan term.

But you'll need to be financially prepared. You need to have you have some financial margin in your LAFE for sure. Yeah, emergency fund set aside even specifically for that house, not just for yourself personally, but I mean look at it as as a business because it is. You need to have a reserve and that'll help you weather the storms. Yeah, and obviously you want to shop around for that loan. You want to shop locally with at least three mortgage providers to try to find the best terms, the best

the best rate. Yes, so make sure you shop on that because there's a lot of people that talk to one person and like, all right, let's do it. You're talking about thousands and thousands, tens of thousands of dollars over the life of the loan if you don't shop around, and that's a lot of money. Yeah, a lot of times if they do just hit one check with one lender, it's always too as well. It's always just like a

big bank. It's just one of these big lenders and they're not really getting a competitive there's gonna be extra costs kind of thrown in there, and the measuring is going to be a little more expensive. And the big banks, the big banks are the absolute worst. They charge the higher rates. So you want to check. You know, local is better. I would say that some of the online banks are great for refinancing, but you might have issues and I can personal experience for you, right experience for me.

Actually that an arstilation is when it comes to a new purchase. As an online bank did not come through for me, and so I had to quickly, last minute try to turn to a lender um that was close by. And so I would I would recommend going with someone that you can actually know and talk to and that lives in your vicinity. Uh, and and shop with a few few of those potential loan officers in your area. Yeah. So do you want to talk about R O I

and the one percent rule and all that kind of stuff. Yeah, I think the easiest way to break it down to hey is this is this house to deal? Yeah, min, how do I know whether or not I should buy this house or not? Yeah? Yep, So before you even get a loane terms, I guess that's the first thing you actually have. Sucsess talked about that first. Yeah. Um, that's how we do things around here, It's right. And so the the easiest way for me to think about it in my mind and to explain to other people

is think about the one percent rule. Can you get one percent of the cost of the house back in monthly rents? So let's say for a simple math, you are buying a hundred thousand dollar house, will your monthly rents be equivalent to a thousand dollars a month? And

if they are, then it it's a great purchase. And if they're not, you have to think about that really, you know, really long and hard, because if it's close and you think, you know, by next year, maybe I'll be there, you know, maybe, But if you're if your monthly rent is going to be six dollars on a hundred thousand dollar house, it's probably not a good person. Yeah, or there better be a really good reason why that house is either really special or that you foresee rents

going up immediately there. Yeah, there there should be something else going on. But I think there's too many rule. Yeah, I think there's way too many people that get into the real estate investing game and instead of asking themselves the one percent rule, they ask themselves the question of will the monthly rents cover my mortgage? And that's a

terrible question to ask. And then there's just a lot of in lords that I've met over the years that say, well, the you know what, the rents are covering my mortgage, I'm golden, And they're only looking at the equity, I guess in the home because otherwise, why I'd go through all that if you're getting nothing right And in my mind, yeah, it's I'm not banking on purely just the thirty year payoff, right, and then I've got this, this house on my hands.

It's worth something. You know. I want to be able to not be already. You know, you might be a little you know, miffed if you get that text at three am or whatever from your tenant. I want to at least know in the back of my mind I'm making money every month. So I'm happy to respond to this because you know what, this is actually making me money and this is a good thing for me. And if it was only covering the mortgage amount, I wouldn't

feel that way. And then all of our all of our properties are single family yea, yeah, So what do you what do you think about that? What do you recommend to people should they start single family go directly into multifamily. I mean, if you I think it maybe

comes down to personality. If you know that you're gonna get into this and this is something you really want to pursue in something that you're interested in making, say even full time and you want to look at it like a an eight unit property, sure go for it. But if you're gonna if you're looking at managing that yourself, just know that you're going from zero to eighty miles

per hour, like right off of the bat. So I'm trying to think if if we would have been prepared, so say, instead of getting a single family, if we would have our first investment property would have been say even a duplex or a triplex. And I think there, I mean, would there would have been a more a greater learning curve right as as compared to just slowly kind of been able to being able to learn things

over the years. And that's just our approach which we prefer doing, is just kind of learning things ourselves, kind of nit nice smooth, slow sailing. Yeah, we're kind of in the in the slow rental building game. You and I say, I'm in no rush. We're in everywhere. We're buying a house every couple of years. So we're not we're not gangbusters full speed ahead. What I tell a lot of young people when uh they talk about wanting to buy a house, uh potential to you know, how

do I say about money to buy this house? And and you know how how it's getting so much more difficult to afford housing in my area. I encourage them to consider buying a duplex. I think, if you're young and starting out, that's actually a really smart way to be able to get a house and to cover cover some expenses. You can usually cover three quarters of your mortgage. Uh if you have a duplex by running out the other side, and then you're kind of getting into the game.

And then eventually, let's say, you know, you save up your money and you go buy your own single family house. You we're not both sides of the duplex. It's kind of a great way to get into it. Obviously that wasn't the path that I took, but I see that as just a really smart way to get in there, to get started, to get in the game. As a as an aside, that actually makes me think of the our Airbnb episode that you know that we did recently. I feel like we're further, We're closer to doing it

than not like last time. I said. I was like, I think we're like fifty fifty. Yeah, I mean, so you're saying duplex, and so it made me think of, oh, or a basement basement department. Yeah, man, I feel like we're like close to pulling the trick on less. I feel like we're like the of the way I agreed that we're gonna do it, so my airstream passion convinced

to you. Oh man, absolutely. So it's like us one night sitting down and talking into microphones and trying to convince each other that we should do this too, where the next day I was like, man, I really should do this. Let's do it. We'll keep updating everybody and no new news and yet but I just thought i'd tell you that. And I'm about to take a road trip and look at that air stream that I mentioned to you. So it sounds like we're both kind of

getting really close and getting each other. We're firing each other up, potentially making a plunge and pissing off our lives at the same time. So, so what else do you think folks need you consider then, just, you know, broadly if when they're considering an investment property, Yeah, so quickly, when we're just talking about a duplex and and maybe you know, young person buying a duplex instead of a single Emily home. Uh, one other benefit to that, I think and if you are want to start out small

kind of like kind of like we did. I do think it's really wise to live in your first home before you rent it out, so instead of it there's a couple of benefits this first we just talked about how much money you have to put down. You can put down a lot less money to live for a house that you're gonna live in. You can put down

less to which I wouldn't recommend, but you can. So my first home put down, lived in it for two years, then rented it out, and I kind of been trying to follow that cycle living in that hunt next home for two years and then moved and rented that one out. And so I think there's something there's a few good things. You kind of get to know the home, you know the area, you know the corks, you know the neighbors.

There's just there are a lot of benefits to doing it that way, not to mention the fact that you're gonna get a lower interest rate, get to put less money down. Um, there's just a lot of benefits to living in a place before you actually end up running it out. So, Matt, what about general handiness. You're handier than I am. How handy do I need to be

if I'm gonna own a run a home. I mean, you either need to be handy with like a tool or with a cell phone, because I feel like you're handy when it comes to finding somebody to fix something for you, right, I mean I'm sing about Yeah, I mean I'm handy because I enjoy it. I like learning, oh man, especially when it's something that I know I'm gonna have to do my own home or or another

property soon. Like, well, if I can learn how to do this myself and then know that it's not gonna take that long, that's a skill, hey, that I get to learn, And yeah, I've bettered myself in that sense, and be it. It saves me money times however many times I have to do it. So that's one of the ways I approach it. I really enjoy learning and how to do things that might be a little more considered handy mane work. But those are things I enjoy enjoy myself. But do you have to be able to

do those things yourself? Now? I just ask around and ask your friends to de texts or like a you know, Facebook post, be like, hey, does he may have an h fat guy because my a C just went out. If you have friends or anybody that kind of knows you, they'll be like, oh yeah, check out so and so. Yeah, get a few quotes. Yeah. Yeah, don't go to the first person that comments on your walk because that probably that person is probably maybe it doesn't have the best recommendation. Yeah,

you definitely get checking in a few Yeah. I think on questions of whether you need to be handy or not, I am not handy, but I have learned to do a few things, and you like to learn as well. Yeah. So I've replaced the toilet, I've fixed a water heater, replaced thermister. I believe that's what it was, called thermal couple or something like that. Now I was like thermal couple or something like. Uh, it's like it is a copper piece that the thing that heats up that tells

the furnace to keep going in exactly so. And you YouTube videos, by the way, are invalid. Yeah. In the age of YouTube, you you have very little excuse not to at least attempt fixing something on your own. I've fixed an air conditioner by replacing my air condisher stopped working and it was the condenser. No, not the condensor, it was the capacitor. Capacitor was the capacity, so you can tell because it gets domed the and so there's all these things. You know, YouTube will teach you so much.

If you want to fix something, just google. Yeah, just searching on YouTube and just watch three videos and you're gonna go. I would say this the minimum requirement for handingness. You need to be able to paint, and you need to be able to paint your own home, you know. And then so the interior specifically the interior specifically if you can't or unwilling to do that, if you're going to hire basic things like that out and eventually if

you have enough homes you can do that. But when you're starting out, you need to be able to at least put in some of the sweat equity to do some of the basic things cleaning clans. You need to be able to fill holes and throw get a new coda, paint up for sure, because that's that's pretty important. When it comes to if you're unwilling to do that, I would say I would say rental properties just probably aren't

for you. Yeah, there's there's definitely a degree of kind of d I wideness that that goes along with having investment properties obviously the way you know, the way that we approach it for certainly. Yeah, so handy nous. Yes, it's a plus. No, you don't need to be bringing Captain d i y, you know, Mr Sunday. But you know, if you can mow alan and paint and uh and do some cleaning, then I think you're well in your way.

And you know what, if you're curious and like to watch some YouTube videos and figure some stuff out, this this is the perfect place to experiment and try to fix things yourself. And you know what, I will tell you what, as a guy that's not very handy truly, in all honesty, I'm I'm really not very handy. To actually fix something like that yourself, when you know your limitations is super exciting. It's really fun to be able to you know what, I just did that. Holy crap,

I didn't think I could do it and I did it. Yeah. It's it's fun fixing, fixing something physical right and and in the world in an age where we so much of our work revolves around bits of data now on the computer, to be able to do something with your hands I also very much love that. Man, it's yeah, feel so good. So something else I wanted to talk about.

Two Screening tenants I think is one of the things that turns a lot of people off when it comes to because they think, oh, man, what if I get somebody a terrible renner or somebody that in there that's a criminal or something like that. There are so many tools today, it's it's not like it was even ten years ago. Specifically, we use a site called my smart move dot com which takes out so much of the stress when it comes to getting a new tenant. Right.

So it's a site run by trains Union, and all you have to do is just create an account and then you send your potential tenant, you punch in their email and send them, uh the form to to basically fill out that reports back with their credit report with like any like a criminal record or any past evictions anything like that, and so like there's no guesswork anymore. Like obviously, you know, you meet with them and you get to know them and make sure there seems like

they're going to be a good tenant. But beyond that called prior landlords. Oh gosh, yeah, that's the number one number one thing called called previous landlords. Make sure they've always paid and that's for really or on time. Yeah, that's where you get you know, obviously you have an application, you get them to fill it out right down that information. You talk to their previously previous three landlords and and their employer to make sure they're employed. And that's that's huge.

But but the TransUnion my smart Move service is excellence, like the bow on top. Just to know that, like, all right, man, these guys are they they said they're awesome, Their landlords landlords have you know, said they're awesome. And then there their credit is great and they're not a criminal. And I will say you can make takes a lot of stress out of it. You can make decisions based on if their credit is bad. I have rented to people with bad credit based on other things other references income,

proof of income. Uh. And when you do that, I suggest taking a larger security deposit. So if someone's got bad credit but good income, you take a larger security deposit, and that's kind of your your hedge against kind of meet in the middle. You don't want to if they still have a great place to rent and you want to be able to provide provide that to them as well.

All right, So one other thing you want to make sure of when you're looking at buying a rental property, you want to buy in a place that people actually want to live. So when you lift your rental property, you don't want to get people trickling in one every you know, one person that's interested in every couple of weeks. You want to steady stream of people that are interested in living in your plate. You want open the floodgates. A tip my buddy Clark has telling you about up

in Asheville. One of the things he told me was to make sure that you go by that the house you're considering that property, go by there at night and sit there just to like just see what's going on, you know, because like there's a lot of things that you will notice when you're there in the day, but just go there at night just kind of hang, you know, roll down the window and see what, Listen to what you hear, like smell like there, you know what if

there's some plant next next door or something close by. There's all these sort of things that you don't really you definitely can't see in pictures online. Maybe train tracks and the train runs at night. Oh my gosh. Yeah, exactly. There's just a lot of things like that you're not gonna know, and unless you're you're there in person. So if you're thinking about becoming a landlord, I mean there's

a lot of due diligence involved. You gotta run the numbers, you know, you gotta make sure it hits the one percent rule or it is close and you got some reasons why you're gonna buy. You gotta make sure there's enough people that want to rent it and that it's going to be something that fits into your life. But if it does, owning rental properties is a boon for you and hopefully in the short term and in a long term. I know it's been great for me over

the last eight and a half years. It's been a incredibly worthwhile pursuit and it's definitely helping me on my path to financial independence. Yeah, there's a lot of other resources out there as well. I mean, there's a lot that we're not covering, right, I mean, there's a lot sure. So there's a ton of ways that you make money

from real estate. Obviously the biggest way is the month of cash flow, but you're also you're building up equity, right, so every month and when that mortgage gets paid, that equity is getting paid down and you know that's that's equity that you that you get to have. And then so you got cash flow, your monthly rents, you've got your equity, and then you've got your the tax benefits. Yeah,

we didn't even get in attack. That's a whole another sort of it's a whole branch that we didn't even discuss. And so, yeah, the the benefits owning UH rental properties are myriad. There's so many if you are really really interested, Like we said at the beginning of this episode, this

is a forest episode. We're getting, you know, the overview, and if you really want to get down in the weeds, will in the show notes at poor not Poor dot com will get we'll link off to some of the great resources and we know of online UH specifically, I would recommend checking out this website Bigger Pockets dot com and there's all sorts of information you can get as down into the weeds as you want on potentially on owning rental properties. Any questions you may have, they've answered

on that website. So I would recommend checking that out. Yeah, i'd recommend if you want to go more of the old fashioned book route The Millionaire Real Estate Investor by by Gary Keller. And this is like like Keller, Williams Keller. Yeah, guy knows that's what's going on. So this is one of the one the books I was pointed to early on, and it's not really it reads like a textbook, but man is it rich with information. Things you wouldn't have

even considered obviously are in there. And so yeah, there's a lot of a lot of great resources out there that we recommend you check out. And if you've got more questions about rental properties and you want to reach out to Matt and I, we are available on Twitter.

You can tweet us at not Poor Matt and at not Poor Joel, and we would love to talk to you, message you back, and also maybe you some of your questions on a future podcast as we delve further into real estate endeavors real estate investing, because it's definitely one of Matt and I's favorite topics to discuss. Guys. So hopefully after listening to this today, you feel that investment properties aren't something that are sort of this sort of

scary unknown thing. It's I mean, it's it's really not overly complicated, and it's just a lot of folks aren't aren't talking about it. Yeah, they're so much easier than I thought they were going to be, as long as you know what you're getting into ahead of time and how much work it's gonna take, and specifically how much work that house is going to take, and how much return on investment you're getting, and you're okay with that mentally. I mean, I think it's a brilliant pursuit. Yeah, man,

So Matt, Yeah, Man, back to the beer. Let's get back to this beer. Dude, what's your take on Bearded Iris brewing scatter Brain I p A. Well, first of all, my beer is all gone, so you're still got a

little bit left. You're a little drinking yours. I like this so much, man, I'm a huge fan of all these new cloudy hazy I p A s that kind of have this like the hop profile that's sort of like the sharp has a sharp flavor to it almost like this sounds weird to say it, but almost like a like a blue cheese where it it's real smooth and fresh tasting like the beer, but then that sort of the bitterness is sort of I mean, that's the best way I can describe. It just reminds me of

like a blue cheese. I wonder if the listeners out there have watched the Netflix documentary Song Yeah. I was wonder if you're because, uh, if you watch that, you'll find, like Pep will describe these wines in the weirdest ways. It's about these these dudes trying to become wine Somalia's and they just it's fascinating how much things a rigorous process. Though. It's one of the most fascinating documentaries I've ever seen.

But you remind me of those people because the way the way you describe things is sometimes I don't know if it's true, and I just say I just say what I smell or taste, and then that's an odd one. I'm not gonna lie blue cheese. I wasn't getting that. I wasn't gonna say that, but you did. You went there.

It's a good beer though, yeah, well truly so. My thoughts on this beer is I love the New England I p A style as well the hazy, um juicy I p A s you know, We've been lucky enough to have some of the ones from New England, and this is a decent shot at I say it's up there from down south, it's in my mind it's not quite as thick um and it's doesn't have that thick mouth feel some of those up there half. And it's a little too sweet, but I think so, I think

it's a little too sweet. But I mean, honestly, it's it's fantastic. It's really really good beer. It's almost got like this sort of wheat profile to it. It reminds me of like a like a half of yeah, oh totally yeah, I can totally what I'm saying that, Yeah, I dig it um yeah, and I love those. It's a little sweet, it's a little passion fruity, and I think one of the things you're gonna find. I'm I feel like I'm not being kind to this beer, but

it's a really good beer. But I think the reason that is is because they're trying a style that the people who do it right. I mean, they're trying a very specific style, New England style I p a. S. And there's only a few people that do that, and and that's a hard standard to live up to, because the guys that are doing it well are crushing it, and you're trying to get into that down south and they're doing a great job. They're one of the best

I've had in the Southeast. But I would have I would drink this all the time though, if they were, if they were just dripping it in Atlanta. Yeah, totally, come on, guys, send it down here, we'll drink it. We gotta say give it thanks to my mom. Shout out to Cheryl, Thanks Cheryl, beer mule, appreciate it, Love you mom. Yeah, so let's recap quickly, rental properties, think about getting arountal property. If you desire financial independence, multiple streams of income are one of the best ways to

get there. And uh, I think we've talked about this recently, Matt. Passive income is is not a phrase that I love, but it is fitting in a lot of ways. And real estate is a great passive way of making income.

Um And so if you can have a small amount of handing this to you and have the capacity to take it on and the capacity to understand what's going on in your local market, and well, yeah, you definitely need to have that willingness to learn right, because I mean, if you're if you're looking for a deal or if you're trying to find a you know, a location that's gonna that's kind of up and coming, because you're not gonna be able to find a deal unless you know,

you know, you gotta be one one step ahead of a lot of folks there. So focus on a small segment of the market. Focus on right where you are locally, be an expert in that specific area where you are looking for homes. Gosh, you're so much we didn't talk about. Yeah, not not only know a specific area right at geographic location, but no even the specific ice home that you want. You want to know that, Okay, I'm looking for the

three too in this neighborhood and this price range. And when you know, when if you get online and check the MLS listings every morning and just kind of see what's out there, like literally it takes thirty seconds just you click a few get to know us out there, and it might take honestly for you, six months, oh man, scouring Zillo or redfin or whatever app it is and just finding out what the flavor of the local market is.

It took it took us over a year to find the house, the one too down from you guys, you know, like I mean, I was looking for a year getting to know that entire you know, neighborhood and that side of town. Before I felt like we had found a deal. And it's amazing a while where we purchased. The north side of the park is so different in the south side, like vastly different. I want to look at the house on the south side of the park that was like

sixty grand just a matter of two blocks. It was yeah, and it and it made all the different, all the difference, and I was like, I wouldn't want to live here, but I'd want to live there. Become that location expert on exactly where you want to buy and still to it, stick to what you know and don't venture too far outside of that. There's a lot of real estate investing experts per se that will, you know, kind of try to convince you to go bigger, go home. I say,

starts small. There's only a certain amount that you can actually know really well, and and but know that well and and then specialize in there. I completely agree. But you can do it, and there's a lot of ways to get started by a duplex by a single family home. Living it, move out, whatever it is, there's there's a lot of options. Thanks so much for listening everyone. Our home on the web is how to money dot com.

Be sure to check it out. We'll have our show notes up there for you, and don't forget to hit the subscribe button on Apple Podcasts or wherever you're listening to this show. Until next time, Buddy, best Friends, best Friends Out.