Once a month, I share my rental property investment numbers.
I hope that this gives you more insight into whether or not buy-and-hold real estate investing is a path you want to pursue.
(Also, I’m trying something new this month by directly putting the net income — not the gross, the net — into the headline, along with the time that managing my rental properties took. Please let me know if this makes things more interesting, or more cheesy.)
Let’s dive into last month’s numbers.
February Revenue: $9,158.52
You might notice that February’s revenue is exactly the same as January’s (within 1 cent).
Here’s the funny thing about rental real estate income: the revenue mostly stays the same. Most other businesses have active day-to-day operations, which makes their revenue numbers fluctuate a lot more. There’s more activity and change.
In a rental property business, though, not much changes from month-to-month. Within a reasonable range, the top-line revenue stays roughly the same.
Volatility comes from expenses, not from earnings.
Here’s what I’m getting at: I hope these reports aren’t boring. Because you might be like, “Uh huh, I get it. Gross income somewhere between $9,000 – $10,000 …. AGAIN. Booorrrring.”
Maybe that’s the point. There’s no San Francisco venture capital funding; no New York 35th-floor conference room; no business class flights to London or Hong Kong. This isn’t a glamorous business with red carpets, galas and TV green rooms.
This project is much more straightforward: I purchase and maintain homes. Then I let people live there for money.
We can dive into the checklists, processes and systems — the “how to” — but when we step back to assess the big picture, the strategy is simple:
- Buy home
- Rent out
- Profit
Create a great tenant experience, which minimizes turnover and keeps customers happy. Manage this enterprise as efficiently and effectively as possible, because time is your most valuable asset.
Then move on with your life. Let your assets create income in the background while you spend time with your family, launch a different business, or travel more.
Anyway — here’s how February’s income breaks down:
Unit 1, Triplex: $2,750
Unit 2, Triplex: $1,490
Unit 3, Triplex: $1,295
House #2: $850.50
House #3: $1,273
House #4: $1,500
House #5: —– Still nothing! (See below)
Ridiculously Tiny Interest From Bank: $0.02
Total: $9,158.52
(Note: Gross income is after property management fees, when applicable. Check out the FAQ HQ for full details.)
The property manager who oversees House #5 sent me two months’ payments (in one transaction) at the end of February; it hit my account on March 3rd. She also sent an additional payment mid-March. You’ll be seeing higher revenue next month.
February Expenses: $3,554.03
- Mortgage: $3,524.03 — This is PITI for several properties.
- Lawncare: $27
- Stupid, stupid bank fee: $3
Total: $3,554.03
This is an unusually low-expense month; please don’t view this as the norm!
In January 2016, our expenses were $2,000 higher than they were in February 2016, and we’ve of course experienced some months in which we spent thousands on major capital expenses like installing new windows, siding or gutters.
The water/sewer bill pinged our account on March 1, so you’ll probably see two utility payments next month.
Remember that we have annual or biannual expenses (like CPA fees and legal fees) that hit our account in one big chunk, rather than monthly installments. You can see those in updates like November, where — wham! — there’s a $2,023 line-item.
That’s why we’re adamant about keeping strong cash reserves to pay for these irregular bills.
I like to keep three months of gross revenue (around $30,000) in cash reserves at all times.
(I know, I know. I should move this into a higher-yield account. I can hear the comments already. Wow, you sound just like my conscience. My interest-starved conscience.)
Why three months of revenue? There are two reasons:
- 50 percent rule-of-thumb
- Vacancy risk
Let’s quickly cover these:
The 50 Percent Rule
As a general rule-of-thumb, you’ll spend about half of your revenue on operating overhead.
This is a very broad rule-of-thumb and doesn’t reflect the specifics of any neighborhood, so please take this with a massive grain of salt — or a whole darn salt shaker. A salt processing plant, really. Maybe a rock salt mine, plus heavy machinery?
If your operating overhead equals 50 percent of your revenue, then three months of revenue covers six months of operating costs. This jives with the idea that people (and businesses) should maintain a six-month-emergency-fund.
(Jives? Did I just use the word “jives?”)
Okay, let’s move on before I embarrass myself further …
Vacancy Risk
All seven rental units could stay vacant for three months and we’d still be covered.
Of course, the chance of simultaneous vacancies in all seven units is far-fetched. The more units that you own, the more you protect yourself from vacancy risk.
- If you own one unit and it’s vacant, you have a 0 percent occupancy rate (for that month).
- If you own seven units and one is vacant, you still enjoy an 86 percent occupancy rate.
That said, my recommendation to any beginner investor is to move slow-and-steady; one property at a time. As a first-year investor, you’re going to make first-year decisions. Give yourself space to make mistakes and learn, and don’t let vacancy concerns scare you into buying too quickly.
The takeaway that I hope you get from my vacancy remark is that as your rental business grows, you enjoy more benefits-of-scale. You’ll also become more efficient and more confident.
But in fairness, you also experience the drawbacks-of-scale, as well. We have seven times more components that can fail: seven water heaters, seven A/C compressors, seven dishwashers.
We keep $30,000 in cash reserves because we like knowing that we can handle multiple vacancies plus repairs. If we have two or three vacant units at the same time that a roof leaks or a pipe bursts, we’ll still be okay.
(Note: Some investors advocate deploying ALL your cash. They argue that you should tap a home equity line of credit to handle repairs. I’d need an entire article to deconstruct that line of reasoning, but here’s my one-sentence Cliffs Notes response: debt is not a wise substitute for an emergency fund.)
Cash Flow: $5,604.49
One purpose of these reports is to show you that there’s no such thing as consistent cash flow.
In the five months since I’ve started posting these reports, you’ve seen net cash flow range from a low of $2,209 (November) to a high of $6,102 (October).
As we continue, you’ll see months where this dips into the negatives (the next time we replace a roof!), and you’ll hopefully also see months where we top $6,000 – $7,000+ for less than five hours of work.
Speaking of which, let’s tackle the final piece of this puzzle: How much time did we spend earning this $5,604?
Time: Five Hours
Okay, story time.
Have you ever thought: “This is probably a bad idea, but I’m going to do it anyway?”
Like ordering bacon cheddar cheese fries. Or the third donut. Or that time our society collectively decided that Pauly Shore should have a career.
Last month, we had one of those this-might-be-a-bad-idea-but-lets-try-it-anyway events. And hey, it worked out! #LessonNotLearnedYet
Let me set the stage:
Rental properties are broadly classified as Class A, B, C, or “War Zone.”
There’s no governing body that dictates this taxonomy. Judging “Class A” vs. “Class C” is like ordering a steak. Everyone has a subjective understanding of “rare” vs. “medium” vs. “well-done.” And yes, the boundaries between medium vs. medium-well can be fuzzy. But the system still works. Everyone is clear about whether a steak is rare or well-done.
Properties are the same. Our properties range from Class A to Class C.
Class A properties attract qualified tenants who typically:
- Pay rent on time
- Maintain the property
- Need minimum levels of management
Class C properties attract less-qualified tenants who sometimes:
- Pay rent late
- May create excess wear-and-tear, if not outright damage
- Need higher levels of management
I’m speaking in broad generalizations, but you get the idea.
Also:
- Class A properties charge higher rent.
- Class C properties charge lower rent.
Okay, I’ve set up this background/stage, here’s the … um, the punchline?
Property managers tend to charge 8 to 10 percent of the rental income — regardless of whether a property is Class A or Class C.
Do you see where I’m going with this?
- Class A properties cost the most to outsource, but require the least management.
- Class C properties cost the least to outsource, but require the most management.
(I’m over-simplifying this chart, but that’s the general idea.)
Let me put this in stark numbers:
Our Class A triplex brings in $5,535 in monthly rental income (among all three units combined). Outsourcing this management at 10 percent would cost $553 per month, plus typically another one-half to one months’ fee for new tenant placement.
And yet — as you can see from the previous monthly income reports — the triplex requires almost zero management. The tenants pay their rent on time. The units are in great condition.
We occasionally get a rouge pest-in-the-attic or a broken water heater, and whenever this happens we solve the issue with a simple text message to our contractor. At worst, we’ll place a few phone calls.
We spend only a couple hours per month managing this triplex, and we collect an extra $553 per month (in management savings) from this effort.
When we ask ourselves: “Is the reward worth the effort?,” the answer is yes.
One more slice of background: Our properties are located in Atlanta. We are not. When we moved to Las Vegas last year, we decided to try the following approach:
- Class A — Keep managing remotely
- Class B — We only have one Class B unit, and we’ll hand it to a management company in the future. We’ve had the same very-easy-tenant there since 2012 and we’ll continue managing it while that tenant remains.
- Class C — Hand these to professional management! (We already hired managers for these units, even when we lived in Atlanta.)
Yes, remote management is a risk. I’m okay with that.
We approached this as an experiment. We like testing hypotheses. And so far, it’s been working well.
This brings us to last month.
One of the tenants in our triplex is moving out. We need to find a replacement. We’re attempting this from across the country for the first time. Do you see why there’s a strange feeling in the pit of my stomach that says, “uhhh, are you sure this is wise?”
(I’d like to reiterate the disclaimer that this is an experiment.)
We have a few factors working in our favor:
- There’s strong rental demand in that area.
- We lived in the triplex ourselves for five years, so we know the property’s layout and condition inside-and-out. (Pun sheepishly intended.)
- We know the tenants personally; they were our neighbors.
Here’s how we pulled this off:
Step 1: We published advertisements on Zillow and Craiglist for the vacancy.
Step 2: We fielded emails, answering each one with a pre-written Canned Response (a free feature in Gmail).
Step 3: We fielded phone calls. We invested time to ask every prospect about the rental market. Their feedback was invaluable in keeping us informed about the current rental market, which at the moment is hot, hot, hot.
One woman, for example, told us that she’s been trying to move into this neighborhood for months, but every unit gets multiple applicants.
Step 4: We organized an Open House in which prospects could tour the unit. We told the current tenant that her only role is to allow access into the unit — we will personally answer all questions. In other words, the tenant isn’t “showing” the unit; she’s just allowing access. We correspond directly with each prospect.
Step 5: We stood by the phone during the Open House, in case prospects wanted to call with any questions.
Step 6: We received multiple applications, all submitted online through Cozy. (Affiliate link.) The tenants pay the application fee directly to Cozy, so we don’t need to bother handling the funds.
Step 7: We reviewed the four applicants, chose one, and reviewed the lease with him over the phone. He signed the lease remotely and mailed his security deposit.
The last step — which we’ll handle in late March — is the actual move-in/move-out inspection, which we’ll need to handle in person.
Coincidentally, Will needs to be in Atlanta at that time, so he can easily handle the task himself. In the future, we’ll need to make a decision about whether it’s worth our time to do-it-ourselves or negotiate with a property manager to solely handle tenant placement without providing ongoing services. But we’ll cross that bridge later.
How long did this take? Here’s the breakdown:
- 30 min: Phone calls with current tenant (multiple phone calls, at 10 minutes per call)
- 60 min: Updating the advertisement for Zillow and Craigslist (we decided to give it a makeover)
- 60 min: Posting and re-posting the advertisement (combined total of multiple sessions)
- 30 min: Tweaking the Gmail Canned Response, and answering emails outside of the Canned scope
- 120 min: Fielding phone calls from prospects (note: We talked to them A LOT to gather market data. This could’ve been shorter, but we chose the more time-intensive route because we think it’s important to stay on top of the market.)
Total: 5 hours
(Houses #2, #3, #4 and #5 didn’t need any attention last month!)
As you’ll see in the next report, we spent another two hours in early March reviewing applications and signing the new tenant. Later this month, we’ll probably also spend a few hours processing the move-in/move-out inspection.
In total, I expect that this turnover will consume roughly 10 hours spread across two months (5 hours per month).
“You value your time. Why do you bother doing this yourself?”
A property manager would typically charge between one-half to one-full months’ rent for this service.
This unit rents for $1,490, which means it would cost us between $745 to $1,490 to outsource this tenant placement. If we handle it ourselves over the span of ten hours, our effective “hourly income” is between $74 — $149 per hour. (That’s lower than my hourly rate for coaching, but it’s also far less mentally and emotionally demanding.)
Again, I’ll repeat the disclaimer that I’m not advocating this approach. We’re testing the idea of a long-distance-turnover, and publicly sharing the results.
I’m 100 percent an advocate of outsourcing management on Class B and C properties, given their higher workload and lower cost-of-outsourcing.
By the way — as a “thank you” for making it to the end of this article, here’s a basic checklist for any rental Open House that you might run. You can download it here for free:
This is simplified version of the checklist that’ll be included in the real estate course that I’m offering.
The enhanced version will have word-for-word scripts that you can copy/paste/use, videos on exactly how to set this up, templates for every form, etc.
Er … I mean, that I will be offering in the course. Once I develop it. Yeah. That first.
Speaking of which —
The beta-test group is filled! We opened the rental property course exclusively to the VIP List and capped it at 25 students. Those spots sold out in four minutes. We raised the cap to 50 people and sold out in another five minutes.
From start to finish, the cart was open for a total of 9 minutes before we sold out (twice).
I never expected that type of response, and I’m flattered, overwhelmed, grateful, and totally-incapable-of-finding-the-right-word-to-describe-this-feeling.
Right now my singular focus is creating this rental property course.
If I don’t publish blog posts as frequently, or if I don’t reply to as many comments or emails, or if you don’t see me on social media as much, it’s because I’ve blocked off everything other than deep development of this course.
In the meantime, if you want to learn more about the real estate course, join the Real Estate VIP List.
Thank you everyone!
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It’s good to know the 50% rule of thumb–taken with plenty of salt. We’ve always been interested in owning rental properties, but might prefer to save up and buy low-cost houses in cash. We have experience and a lot of contacts in home remodeling and repair. We’d have to wait a few years to see a profitable return, but it’d be nice to stay debt-free. Any thoughts on this plan?
I’d need a full blog post to really walk through this, because it’s a big question. Fundamentally, you’re asking: What are the pro’s and con’s of leverage vs. cash? How do you make the decision? What factors should you consider? What type of rewards justify leverage (what’s both the magnitude and the probability of those returns), and how much leverage do those expected returns justify?
So … not something I can answer in a quick comment. But I’ll try to give an abridged version:
There are two factors at play: Rational decision-making and emotional/psychological satisfaction. On a purely rational level, you’d need to:
(1) Analyze your risk-adjusted return — the expected returns that you could earn, relative to the risk that you shoulder in order to achieve those returns.
(2) Assess the current market (how much interest will you pay in the coming years; how much will the market appreciate in that same time; is it actually a cost-savings to buy now?)
(3) Opportunity cost, interest rates, inflation rates, etc.
Here’s an article that talks about some of the other factors to weigh. (This article covers repaying your mortgage vs. investing in the market, so it’s not exactly the same question, but you can carry over many principles: http://affordanything.com/2014/04/10/showdown-keep-your-mortgage-vs-crush-your-mortgage-who-wins-the-championship/
But that being said, the rational side of the discussion is only one aspect of the conversation. You’d also need to contextualize this in terms of your life goals, and that’s where the discussion can get extremely hazy.
So anyway … my point is that there’s no simple answer for “leverage is better” or “buying in cash is better.” The decision needs to be contextualized based on the market that you’re investing in, your life goals, your overall business strategy, and a whole host of other nuanced factors. And you don’t just make the decision once — you make it CONSTANTLY, over and over, as those factors change.
I know that’s not a satisfying answer, but it’s an honest one. I can’t prescribe a black-or-white, yes-or-no answer in the span of a few hundred words. So I guess the best answer I can give in this comment is: “It depends.”
Thanks, Paula! I appreciate your abridged “points to consider”–very helpful.
Great reply, thanks for the details!
I like the fact that real estate income is pretty consistent once you have the systems in place. Looking forward to the course!
You wrote: “(I know, I know. I should move this into a higher-yield account. I can hear the comments already. Wow, you sound just like my conscience. My interest-starved conscience.)”
Permit me to speak with your “interest-starved conscience” on your behalf for a second, please:
“Dear Conscience, you’ve been busy with other things, so you have not been following the economy. The highest “higher-yield” accounts currently available range between between 0.95% and 1.0% APY. It is not even worth my TIME to transfer the funds from one account to the other! Don’t worry, I will notice if it ever again becomes worth my while; but for right now? I’d rather spedn my expensive time doing worthwhile things! Okay?”
I love this comment!! +1 all the way!! 🙂
Thanks Elenor! 🙂
Thanks again Paula for your great piece of information.
Yes we made the course vip list whatever and you MUST be flattered and proud!
One burning question, you mentioned NOT liking debt/HELOC loans for
upgradings or eventually repairs to rental properties.
I thought HELOC’s were only available for your OWN residence and not
for rental units?
Thank you for your reply and or suggestions
Hey VarAway,
I know this reply is about 2.5 months late, so hopefully you’ve found the answer to your question elsewhere by now. But if not, LOCs are available on rental properties but you’d need a SIGNIFICANT amount of equity to borrow anything worthwhile because they loan money at much lower LTV on rentals than for primary residences. For instance you may be able to get up to 85% LTV on your primary residence at some banks, but on a rental you’d be more in the 60% LTV range. If you shop around I’m sure some smaller, local banks will be more willing to work with you though. I hope this helps.
read the article, one thing i picked up on and hope other Investors do as well, is the fact that you put away 30k for emergencies. i started doing that from the first check, I have the same goal of 30k in reserves just in case. I pay the bills that come in for the property and the remainder stays in the accounts. once i get to that limit, then the money will be taken out and used to help with even more investing. good article as usual !!!
It get’s easier to budget for emergencies the more properties you actually need less/unit for emergency because you’ve budgeted for them.
It’s always a big deal when a roof needs to be replaced, so you have cash laying around just in case even though you might replace it once every 20 years. When you get to 20 buildings, what is the likelihood you’ll need a new roof this year? Law of large numbers says it’s pretty high.
Just like vacancy. A vacancy can kill you if you have only 2 units. When you have 20 units, 1 being vacant continuously is actually a 5% vacancy rate and is part of the budget.
When these expenses fit nicely into your operating budget, you don’t need to save so much for the unexpected. The unexpected becomes routine.
You can use HELOC for whatever you want.
Do you use LLCs. One for each property?
After much deliberation with my partner, we decided to hold off on buying a rental property until we can afford to do it with cash (perhaps a foreclosure) — and if we really love the area.
We’re still up to 6 digits in mortgage for our primary home, which is currently ‘class A’ – so might as well start paying off our mortgage first (at least make it as small as we can cos we don’t even have 20% equity yet, so we’re still paying for escrow – UGH)
So, much like Kallie above, any thoughts about paying off mortgage first then invest in a property? Of course, if we find a deal we thought was really, really good and we have money saved up, might as well jump on it right (thing is, that deal is hard to find, we’ve been looking for one for months!)
Ruby,
Can I recommend that you do something safe for your first rental? If you buy a normally listed rental or a FSBO, you can have yourself, a real estate agent, an inspector etc look at the property.
The return might be a little less, but you also will have much less risk.
If you buy a foreclosure, there is a chance you get the property and it has a major issue. In that situation, you cant get a bank loan and might not have the cash to do the repairs.
Would you be able to get a decent return on your current house if you rented it out? Might try seeing if you could buy a second property and move into it and rent out your last house. (that is what we did)
Taxes are sure nice that way–if you live in it two years first.
Paula – I’ve only just discovered your website and blog, and I’m really liking your approach. I wish I could be one of the lucky ones coming to your course, but I’m an Aussie, living where I was born! I’ll keep listening to your pearls of wisdom though.
Hi Paula,
really interesting the 50% rule, I heard it first in your podcast, with the 1% rule. It’s helpful to start thinking or real estate investing – thank you!
I truly wish our local renter market was pulling the numbers like yours. My highest renting unit is a SF split foyer that pulls $1425/month and that’s high for our area. Though I’m happy with my CoC returns I tear up a little every time Paula releases her amazingness.
Oh man what I would have given to be part of that Beta group! We’ve been investing longer than you and not doing nearly as well with it. I need help Paula!!!! 😉
Very interesting! I know how much you value your time so I think it speaks volumes that you put the time in to finding out about the current rental market where your properties are located. Thanks for sharing!
Thank you for your candor and consistent enthusiasm, Paula. I am learning so darn much from you! How exceptionally refreshing to find someone of your caliber who is so willing to share the knowledge with others. Many thanks!
Thank you Laurie! I really appreciate that. 🙂
After reading this whole post, I only wanted to be a grammar punk and say that “biannual is once every two years, and semi-annual is once every six months. ” -tweet this!
Ha! I love your blog posts Paula, keep them coming.
Thanks,
Mark R.
Actually, biannual can mean twice a year or every two years. To avoid confusion, a lot of people use semi-annual, as you suggest, for twice a year, and biennial for every two years. But biannual is technically correct in either context.
Actually, I’m going to outpunk you and note that “biannual” can mean either every six months or every two years. Some people avoid it entirely and prefer to use the less ambiguous terms “semi-annual” (as you suggest) and “biennial” (for every two years). But “biannual” is technically correct in both contexts.
Well look at that. Apparently you are correct. See, I learn something new every day. 🙂
Consider me ‘outpunked’
Hi Paula,
Thank you for this article. You have put in a lot of time and effort to creating the systems you have in place. After reading your article, I thought about the following story:
“Legend has it that Pablo Picasso was sketching in the park when a bold woman approached him.
“It’s you — Picasso, the great artist! Oh, you must sketch my portrait! I insist.”
So Picasso agreed to sketch her. After studying her for a moment, he used a single pencil stroke to create her portrait. He handed the women his work of art.
“It’s perfect!” she gushed. “You managed to capture my essence with one stroke, in one moment. Thank you! How much do I owe you?”
“Five thousand dollars,” the artist replied.
“B-b-but, what?” the woman sputtered. “How could you want so much money for this picture? It only took you a second to draw it!”
To which Picasso responded, “Madame, it took me my entire life.””
YES. A thousand yes’es. I love that story, and others like it.
This perfectly illustrates one of my core messages: Handle the work upfront, so you can enjoy the benefits (efficiencies, income) in the future.
Passive income is not a euphemism for free money. It’s the act of working hard today for the sake of tomorrow.
I might try self-managing one day as well. Right now I don’t see it worth the effort, but I guess I don’t really know until I try it.
One of my questions has been, who has the keys in case the tenant gets locked out? Or would you just call the locksmith? What if you need to let someone else in for a repair while the tenant isn’t home?
Hi Brian,
We keep a lockbox on every property with the keys inside. We use this one, which is inexpensive, durable and easily fits around the gas meter and/or the A/C cage. We code all of them identically, so that we always know the key code.
We DON’T give this access to the tenants. This is purely for contractors. If the tenants lock themselves out, they’ll need to call a locksmith at their own expense.
It is impossible to lock yourself out on my rentals. I only use deadbolt locks that lock from the outside, thus eliminating this problem. I learned this one the hard way. Lockboxes on each property work great as well. This way you and your contractors can access easily and quickly without carrying around a massive pile of keys. You can also install locks with keypads on them.
From a sheer management standpoint, I rarely spend more than 5 hours a month. Even with 25 rentals. If I do some maintenance, it probably averages 20 hours a month.
I get a bit more net income than you, but it’s still pretty good money. I even cash flow when I replace three roofs, as I did a couple of years ago.
I hear about homeowners opening HELOCs as a tool to quickly pay off a mortgage. They use the HELOC funds to pay down there mortgage, repay the HELOC, and do the same thing again. Do it a few times and your mortgage is paid off much faster because you are paying less to interest and more on principle each month. Have you ever done this? If not have you heard of it and if so, what’s your take on this strategy?
Do you have any blog posts about holding your properties personally vs in LLC’s? I own 3 rentals now, and looking to add more. I have a $2MM umbrella policy and $1MM liability on each property. But I am still curious if I am property insured. What if some freak accident happens and I get used for $5MM? Any insight you have would be appreciated.
I couldn’t see a place to search through all the blogs. Thanks!
Hi Paula Pant,
It looks nice that real estate income is very much stable, if the things are placed well.
This article provides with a handy piece of information.
Thanks for making us aware that HELOC, do provide loans for rental investment of your property.
I just wanted to join your side and carry up your course. But I am an Indian, thus would be
connected with your blog for more information.
Thank you.
Have a great year ahead.
Shantanu sinha
I’m thinking of purchasing a rental unit away from where I live. Not sure if it’s a good idea, but it’s a good source of income!
Question: Do you have your real estate licence, or did you learn everything as you went along?
Both! I bought my first 5 rental units, then after that I got my real estate license. I didn’t want to invest in the license until I was sure that this is an area that I’ll be in for the long-haul. Also, getting the license didn’t make me a better investor. Learning how to invest made me a better investor. My license merely allows me to fill out my own paperwork. 🙂
Love the simple strategy of renting property – I’m at stage two, have tenants. And very much looking forward to stage 3, make profit. This property is managed by a property manager, even though it’s only 2 hours away. Even with that, I make a profit after costs.
Thanks for outlining how much time you spent – as much as I love property, even 5 hours a month feels like a stretch for me currently!
Paula,
For the 4 applicants do you pull the credit reports for all 4 and only then decide who gets the unit or is the credit check done only for the finalist?
Putting myself in the applicant’s shoes; I would be upset for a hard inquiry on my report if I don’t get the unit so trying to understand the sequence of steps. Also what is the criteria you use for deciding which of the 4 would be the lucky one?
Hey Paula,
Do you have any specific advice for our-of-town first time investors? I live in a very expensive area, and want to invest in a city that is about 4 hours away. I’m doing a ton of online research to get a feel for neighborhoods, but it does get tough not living there. I want to go to some of the landlord meet up groups but they are all on a work night, and it’s tough to build a relationship with people without seeing them often.
Every agent wants me to look at places before even talking to me about them in detail for example. It’s also tough to start building a network. I’m also trying to look for a property management company, but can’t really go to their open houses…
I’m trying to navigate through all of this. Seems like a lot of advice you gave about starting out an building a good team implies that you need to live close to where your properties are (scoping out the hoods, going to meet ups and REIA, going to property managers’ open houses,etc…) Any advice from you about how to start out from far away would be much appreciated!
Thanks! Keep up the great work!