All right. OK, so you hear the bells? For whom the bell tolls. It is 1:00 PM eastern time, and
we are ready to start the show. Welcome and thank you so
much for joining us today. Today, we’re going to be talking
about single family versus multifamily, and why
Natalie and I love to invest in single families. Why that has been our
bread and butter for years. That’s the bulk of our
portfolio, I believe. We’ll go in some of
the ins and outs of it, give you sort of our
philosophy on it. And then we’ll open it up to
some questions and answers a little bit later in the show. But first, so
we’ll dive into it, you want to kind of
set this up on why we think this way about
single family properties? Well, there’s a lot of reasons. I think initially,
we just started getting into single
family real estate because it’s what
we could afford. Clayton had saved about $60,000,
and had spoken some investors that he happened to sit by
by happenstance on a plane. And they said, we like to
invest in these markets. And he had sort of been
doing some googling around what markets were
good, and what you can get for this much
money in these markets. So he went on some– it was like a Zillow
blog or something. Some real estate agent had
put together some listings, and had written
some little blog. And Clayton liked his
personality and was like, I have about 60,000 to invest. Can you take me around and
show me what I can get? And he got two
single family homes. Each one is three
bedroom, two bath. Each had one bedroom. Three bedroom, one bath. Three bedroom, one bath. Sorry about that. And he bought them. We put some work into it. And we rented them,
and they ended up being great properties for us. It ended up being
an extra $1,600 a month of our income at a
time when I wasn’t working. I had just given birth
to our second child. And so we’re like,
this is great. So you know one reason is
obviously the affordability. Is that you can get a house. You can get a house
free and clear right away with a small
amount of savings. And second is that you’re
more prone to have families who live in there who
sign– our first renter in those properties, both
leases were five-year leases. Because people want to move
into a house to stay there. People are not quite as
transient in an apartment. People tend to be
really transient. No one really sees
their apartment as like their
lifelong plan, right? So people barely even– they
don’t even paint the walls. They don’t even put
things up on the walls. Yeah, let’s go back to
those first two properties that I bought. And I grew up in a
single family home, so I understood
single family homes. And when I talked to– my famous flight when
I went to New Zealand, and I was sitting next
to these two investors, and I said, and I didn’t
have any rental properties at the time, and
I said, how long are you guys going to be
able to go to New Zealand? And this husband and wife,
they were in their 50s, they looked at me and
asked me the same question. I said, I’m going to
be there for five days. And I said, what about you? And they said, we’ll be
there for two months. And I said, two months? Who gets to go to New
Zealand for two months? And he looked at me and he said,
oh, I’m a real estate investor. And then I found out– he explained to me what he buys,
exactly properties he buys, he’s like, look, you’re
going to have problems. He’s like, you’re going
to have an eviction, you’re going to have a
gutter that falls off, it doesn’t matter,
because you’re buying ROI, return on investment. In small, single family
homes in the Midwest, that’s what he was buying. And so, I bought my first
two properties in Michigan, then bulk of my portfolio is in
Indianapolis and Jacksonville, Florida. We’ve got some properties in
Pennsylvania, North Carolina, kind of scattered
all over the country. But those first two
properties that I bought, I bought them for, I
think, like $26,000, and then I put like
$20,000 into each of them for the renovation. I over upgraded, I
spent too much money, I put appliances
in the properties, which our tenants now provide
all their own appliances. But those two single families
have then consistently performed for us. Have we had some fixes to make? Yeah, there was a
sidewalk outside of one of the properties that the city
sent us a letter in Michigan and said, you’ve got
to fix the sidewalk. It was like $2,200. There were some
bushes out front that needed to be trimmed
back at one point. But for the most
part, the tenants have stayed there consistently
and loved the property and they’ve performed for us. And that was really– I would say we’ve owned them
now– we bought them in 2013. So for four years, we’ve
owned those properties, and I’ve probably
have received or sent a total of 20 emails, in
four years, about them. Right. That’s nothing. I correspond more with
my kids’ teachers. Now, we could be
more annoying, right? If we wanted to be. I mean, I don’t know. We’re pretty annoying. I don’t think we’re
that annoying. Are you just talking
about in general, in life? Well, in life, we’re
pretty annoying. We are super obnoxious people. And we annoy our kids. But I’m just saying, to the
property management team, they’re doing a good job. I don’t need photos every
four months from them. I don’t need– my property’s
cash flow, if there’s an issue, and we just did a tenant
turnover on the property, we ended up having to pay, like
$1,500 in the tenant turnover to get it fixed up,
repainted, touched up. Great, send us the bill,
get it taken care of again. We sort of generally
look over the charges. Like, yeah, that sounds good. I mean, that’s not to
say we don’t always question certain Things
There was some bill that they wanted us
charge us on something. And you were like, oh, no,
no, I’m not paying for that. That was a different
property management company, but same market. So, it’s not like we just
sign on the dotted line without looking through our
expenses, we definitely do. Right. But we sort of
have a general idea of what they’re
going to cost us, and then we pay what
we think it’s fair. We don’t want to skimp
on the price of labor, because it’s not my labor. I’m so happy to pay for somebody
else to make money to do that job, because I cannot go there
and replace the cabinets. Do you know what a
cabinet would look like if I tried to put it up? It would look like– when you walk into a Disney
attraction that’s supposed to be like Br’er
Rabbit or something, and the cabinets are all askew. Like they’ve just gone
through a hurricane. No, and we’re not putting– It’s too soon for that joke. Oh, well. And the cabinets you’re putting
in, in a single family home, the types of
properties that we buy, they’re going to be your
base grade cabinets, they’re going to last
a number of years, but they’re going to
cost $1,000, or $700, from the local supply
house, local Lowe’s, etc., and they’re going
to be replaced. These are not custom
cabinets, right? These are not fancy, high
end, custom cabinets. Custom made for each
little nook and cranny. They’re base grade
cabinets, they’re going to be particleboard,
mostly, or Formica countertops. You’re not putting
granite countertops. My mistake, with my
first two properties, is that I overpaid
for the properties. I paid a little bit too
much, because I bought them through a realtor. I ended up, also, then,
paying too much for the rehab, over I over upgraded,
I put in appliances that I didn’t need to do. And I spent a little bit
too much on wood floors. I didn’t need to do that, I
could’ve put carpeting down. And also, we managed
the contractor ourself. Right. We found a guy who was
a friend of a friend, it was a friend’s brother. And he was great, but
it was a one man band, and so he had to do the
both of them by them– like, we probably, had
we got a crew in there, could have turned those
properties around in two weeks. But because it was just
our friend’s brother, it took him six weeks. And so that’s a whole month
that we’ve lost in rent, because we didn’t
know any better. Now soon after, we found
a property manager, and we had this great
question from, I think, Glenda, who said, do you
hire someone that far away? Definitely. So one of– we don’t
go to our properties all that often, some of
them we’ve never been to. In fact, most of them,
we’ve never been to. But an important
relationship to cultivate is the one with your
property manager. So Clayton did know
our property manager, he was referred to
us by the realtor, and so we trusted them, we had
a good relationship with them, and so any time they
need something from us, like to approve a charge
or whatever, they call us. And anytime we need
something from them. So a lot of times, we’ll
get– like there was one of them had an easement. Was it a tax– not a tax, an addition? An assessment, sorry,
that’s what it’s called. An assessment on something
they wanted to improve, so it was extra taxes on us. And so that, we’re
happy to pay for it. Or if the city
says, hey, we need you to maintain this
thing, I’ll just send it to the property
manager and say, please take care of this. Right. So on property
management piece of this, the property management
teams that we work with, and the reason we love working
with the property management teams that we do in
our different markets, is because we actually
recently had to, basically, not recently– six months ago? Had to basically fire a
property management company up in Michigan that had,
what we discovered was, they were nickel and
diming our clients. And us. And us, yeah. And we want property management
teams to be on our team, right? Which is, they’re
going to do stuff that you don’t even know about. They’re going to go
out to properties, check on things
for you, do things that you don’t even know about. And if you annoy the
property management team, if you’re kind of
an asshole, then guess what, they’re not going
to really want to work with you. But if you have a
property management team like we had in
Michigan, what we found is, that they were not
really on our team. That they were– there was stuff
showing up on people’s bills that were– because everything
had to be approved above a certain amount, a
dollar amount, or something. They were just adding
all these additional fees to bills and things like that. And properties were sitting
vacant for a long time, and just trying to get
answers, it was ridiculous. So you want to have that great
relationship with your property management team, absolutely. And make sure that
they’re on your team, that they have your
best interests at heart. They want your
properties to cash flow, because property
management companies don’t make very much money. And they have the
most thankless job of any group in the
real estate hierarchy. Even worse than, like, realtors. Property management
companies, they have to deal with
the worst of it. They have to go out
and show properties, they have to walk the streets,
they have to put up the signs, they have to deal with
the tenant turnovers, they have to deal with
a maintenance call, because a door handle fell off. They have to fix all of
that and take care of it. And also, if a board
of health letter shows up that they
have to deal with, guess what, sometimes,
it’s because the tenant has decided not to pay their bill. And so the tenant
is savvy and thinks, I can get around paying
my rent this month by calling the Board of Health. So that team then has
to deal with that side of the crazy fence. So while you’re sort
of sipping mai tais, relaxing and enjoying
your cash flow, remember there
are so many moving parts that are happening
behind the scenes to get you to that
point of cash flow. So just be aware
of those pieces. I wanted to go back to
something someone, really quick, said about Detroit. Someone said, Detroit? You’re crazy. Charlito Manny says, Detroit? You’re crazy. I don’t know if
you’re talking to me, or there was somebody
else you’re talking about. Oh Richard, Richard closed
on the Detroit property this past Friday. Look, I love Detroit. Detroit and the suburbs. Here’s the great, great
mistake that people don’t understand about Detroit, OK. Detroit is for lovers. Detroit is for lovers. If you haven’t seen the t-shirt. That’s Virginia. There is one, also, for Detroit. Really? Yes. Detroit is for soul music. Detroit’s for a lot of things. For cars. For cars. So Forbes magazine,
about two weeks ago, front cover story with
Jamie Dimon from Chase. and how Chase has been
rebuilding Detroit. And what Forbes highlighted in
this piece, which is something that we already knew from
the properties that we own, is that there are three
different areas of– there are three different
areas of Detroit. The first area is
like the bombed out battleground, which you
would never buy properties in. And the properties we own
are nowhere near there. The second area is the
A-class neighborhoods that got hit hard in the recession. And went bankrupt,
foreclosures, all kinds of major issues in those
A-class neighborhoods, where those A-class people
lost their A-class homes. And then there’s the other
area that Forbes pointed out in this article. And Forbes even said there’s
a great misconception about Detroit. Which is that the whole
area just got destroyed. Not true. That, in fact, a lot of
people didn’t lose their jobs. The people that rent
from us, the people in those neighborhoods
where we invest, still worked at the
hospital, they still worked at the post office. They still kept those
service based jobs. And in fact, they
didn’t lose their jobs. They stayed living there. They stayed renting there. In the exact properties
that we rent. So three different
areas of Detroit. And I love when people
don’t know about Detroit, because then it’s more
properties for us. Like when someone says, you’re
crazy, Detroit went bankrupt. Great, keep thinking that. You’ll start to notice, all
the articles, the Wall Street Journal and otherwise,
it’s one of the top places to start a business. One of the top rental
markets in the country. Indianapolis, Detroit,
and Jacksonville are the top three rental
markets in the country. So I just wanted
to address Charlie calling Richard crazy for
purchasing in Detroit. Now I will say– He might have been
calling us crazy. It will depend on where you
purchased in Detroit, so I’m not going to pass
judgment on that, but I will say there’s a lot
of misconceptions about it. And that’s another
reason that we like these types of
properties, because we’re buying homes for working
class families to rent. And these are the
types of people who have jobs that are more
recession proof than, say, a computer programmer or I
don’t know, some of the people who tend to lose
their jobs or someone who works on Wall Street, right,
during the Lehman Brothers crash. Those are the people
that lost their jobs. I mean, obviously, the post
office had some layoffs, everyone had layoffs. Factories had layoffs. People still have
to live somewhere. What, are you going to all
live in a homeless shelter? Are we all going to go
live in a homeless shelter? No. People still need to
rent in a down economy. Why shouldn’t they rent from us? Right. And so these, people
that live there, have a lot more recession
proof jobs than, say, even the jobs that we had. In media, they have layoffs
all the time, right? We both worked in TV
media and there’s always a bloodbath when it comes
to the recession time. And there are signs many, many
economists now saying we’re in for a market correction. And so there’s a lot
of investors who said, well, I didn’t lose a penny
during the 2008 crash, because I was able to
keep my rent steady. Because those people
still needed to stay put, and then they
couldn’t afford to move. They were just like, wow, we
better just hunker down, keep our jobs, and pay our rent. And so we feel a lot safer
with those investments. In fact, we don’t really
have stock market investments any longer, now that
Clayton sold his 401(k), we don’t have to ride that
like everyone else who still has their faith in
the stock market. Right. You talk to any
high level investor, single family homes make
up pretty much a bulk of their portfolio. I was just– I said this the other
day, that it was just– Robert Kiyosaki and his team
were kind enough to have– Oh, who now? On the Rich Dad radio
show, and we were talking about the types of investments. And Robert Kiyosaki’s
wife, who is the brains behind the
operation, Kim, she said, yeah, single family homes,
that’s exactly what I buy, that’s exactly what I bought. That’s the bulwark in
those neighborhoods, in those C-class neighborhoods. That’s what Ken McElroy does. Of course, he does now
multimillion dollar apartment deals, and all sorts of
other big condo complexes, and things like that. So when you’re
starting out investing, you’ve got to start, I believe,
with single family homes. So many people will say,
what about Grant Cardone, who says to buy a million dollar
properties, multimillion dollar apartment complexes? That’s great. Guess what, you’re
not there yet. And if you listen to my
interview with Darren Weeks, brilliant at the art of raising
capital, he’s saying, look, start with single family homes. Because you’re not going to
be able to go out and raise millions of dollars if
you’ve not done anything yet, to buy a 100 unit apartment
building or some big condo complex in Miami Beach. You’re not going to do it. And by the way, no one’s
going to take you seriously. But if you can show a track
record, where you have 30, 40, 50 properties, single family
homes, that are performing, then there are going to be
more likely to work with you. And I’ve been hearing this
from a number of high level investors over the
past few months. Start with single family homes,
build up a solid foundation and portfolio. And then, if you want to
move to multi-family, great. This is a good
question from Dustin. He says, if one of your
houses cost $45,000 to buy, how much
extra capital do you recommend having in
case of maintenance issues arising early? Now, there are two
ways to answer this. You may buy a house, with an
agreement with whoever you’re purchasing from, that you’ll put
an extra $10,000 into it when you close on it, in order
to make it rentable. That might be the case. But if you buy something that
someone tells you is turn key, then you should be ready to go. All you really have to save
for is taxes and insurance. Because once you
own that property, and you sign an agreement
with the property management company, this happens to
us a lot, then we’ll say, all right, we’re ready to
go, and then they’ll go in and say, oh, you
know what, I noticed that there is the handle
on the shower is broken, which can be a fall hazard,
so that needs to be replaced. And I say, OK good, replace
it, you have my permission. I don’t have to write a
check for that shower handle, they put that on my ledger. And then when the tenant
makes the first payment, they take the payment
for the shower handle and the maintenance
out of that payment, so you don’t have to come
out of cost for maintenance issues arising early. Those kind of things should
then be taken out of your rent. The property
management team almost gives you a credit, that’s just
how it works with good property managers. You might want to ask
your property manager, do you do that? Because if they
don’t, well then you will have to come out
of cash, and that sucks. But they should. That’s sort of the way it works. My mom just had, on one of her
properties in Indianapolis, she had the issue
in Indianapolis where someone just– a contractor, somebody local,
whatever it happened to be, drove down the back
alleyway behind her property dumped a whole lot of crap. Like some tires and
who knows what it was. But now it’s on her property. Now the city inspector
drives by and sees it, and sees that there is a big
pile of trash back there. Sends a violation letter. The property management
team handled it, at cost, they didn’t add an
additional cost on top of it. They had to get a dumpster. So they hired a dumpster,
brought the dumpster out, hauled away the trash. And it was like a
$400 or $500 charge to get the dumpster there, to
have the labor to remove it. Now they didn’t tack on an
additional $100 of labor, they just did it at cost. So the actual bill, to put the
dumpster, to pick up the trash, but did she come out
of pocket for that? No. It came off of her
rent statement. And guess what, that’s now a
write off for her on her taxes. So that $500 trash
haul is a write off for her in her tax year. It’s just the cost
of doing business. That’s not going to cost– really? $500 trash haul? Yeah. We had– because– Wow, that was a lot of stuff. Yeah, because
people will do that. They’ll go down a
back alley sometimes. I mean look at– we actually
have an area over here, I don’t know if you
can see it or not, but people– this is like
a forested area right here. And sometimes the people have
to put up the No Dumping signs, because people would
just dump stuff in there, they’ll do it in
the dark of night, because they don’t want to pay. Clayton’s first
wholesale deal, someone dumped cinder blocks, right
before it was going to close. And so the title
person was like, we can’t close on this,
because the city put some kind of notice on it,
that there’s cinder blocks. So Clayton drove his
little Nissan Leaf down to this property, and
was moving cinder blocks in order to close this deal. He doesn’t do that anymore
because we don’t invest much in New Jersey. But he was just so like,
gotta close this deal, got to get this done. So he did it himself. When you think about it, whoever
dumped those cinder blocks didn’t want to pay a
junkyard fine, or the fee to pay for the haul away. So they knew. Like, oh, here’s
an abandoned house, I’ll dump my cinder blocks here. Why do you have
cinder blocks to dump? I don’t know. Why does someone have that? Because a builder or something? Who knows, god knows. But these are the things
that happen and pop up. But again, the point
is that you’re not having to come out of
pocket on it, right? So for instance, the
sidewalk assessment from the city of
Redford, Michigan, where we had our first
property, it was like $2,200. There’s nothing we
could do about it. But guess what, we didn’t
come out of pocket for it. It came out of our
rent statement, and guess what, it was also– No, it was taxed. So we did, actually. For an assessment, there’s
nothing you can do about that. You know that, probably
for your own house. If the city decides that your
water system needs updating, that happened to us in South
Orange, in our old house. Nothing we can do about it. They’re like, hey,
we’re going to put an extra $1,300 on your tax
bill every quarter, pay that. You have to, or go to jail. So that’s how taxes work. So we had a couple
of questions that had come in over the past
month from you, a lot of you have written in. And I want to address
some of these points about single family
versus multi-family. Number one, let’s just talk
about, again, we go back to, that’s today’s theme, is this
idea of the type of property. You’re going to have a higher
vacancy rate in multi-families. It’s just the
nature of the beast. If you own a 10 unit apartment
complex, you’re going to have, I guarantee you that
not all 10 units are going to be rented, right? It’s very rare they’re
going to all 10 units rented at one time. Chances are, maybe two
of them will be vacant. So you can look at
about an 80% occupancy. With single family residences,
as Natalie mentioned, people are less transient,
people tend to stay longer, they tend to treat it more
like their own property. And therefore, put
things up on the walls, paint them the way they
like, sign longer leases. They like to be in
the neighborhoods where their kids can maybe
walk down the street to school. Those types of things. When you’re in– when you have
a four plex, and each of them is one bedroom, do
you think people are going to stay there forever? I mean, what if they have kids. I mean, it’s going to be more
of a transient environment for your tenants. It looks better on paper, any
time you have multi families, then the ORI is going
to look better on paper. But you’ve got to ask
yourself, how many more furnaces do I have to buy? How many more water
heaters do I have to buy? And how much of a
vacancy rate will I be dealing with
on this property? So again, that’s my
overarching philosophy on single family homes. Yeah. So we have some questions. Let’s do this one, here. OK. So Kyle Strickland says,
what is the average percent of management takes
off gross rents? I’ve heard 10%, but have
no first hand experience. 10% is pretty common. Very common. Mostly for single
families, though. From multies, usually
you get a discount. Multies, the average
is around 8%, if you have a duplex
or a fourplex, or even an apartment
complex, usually, you pay a little bit less. Usually, but not always. And usually, if you have
more multi-families, I’ve seen where– because I’ve seen, whether it’s
Jacksonville, Indianapolis, Detroit, those areas
are still going to have like 10%, even for
duplexes, on the properties. So if you’ve got three plex,
four plex, even larger, then that’s when you
can negotiate lower, because you have more
tenants to deal with and it’s one property
versus multiple structures. So you can– it just depends
on the state, I guess. It also depends on the size
of the property, right? Right, and you can– a good thing to do might be
to interview a few property managers in your area and just
ask them what are they charging and what are their services and
what do they charge for, say, some kind of maintenance
call, and that kind of thing. It’s good to just
get a sense of it. Some of my property managers
are larger companies, and some of them
are just one guy who has a brokerage license. For instance, our place in
Pennsylvania, and that guy will text me when I ask
him for answers, right? Whereas the bigger
companies that we work with in Indiana or
Michigan, I can’t text them, they don’t get back to me that. They’ve got even,
the one in Michigan, they’ve got an online
portal that we chat on– Yeah, they’ve got a
team of 30, 40 people. So there’s no one,
really, to text. So your experience is
going to run the gamut, and I’m not going to say
what’s better or worse. Because, for multies,
the national average is 8%, for multies. Just not in my markets. Right, but, well– I guess if you’re dealing with– But that is a standard
average, and there’s no reason you can’t ask for
that if someone’s servicing several properties of yours. And really, we’re just
thinking about cash flow, here. So you wouldn’t want to go
with a company that’s 8%, but then charges for
every single visit, right? You’d rather pay 10% and
be assured that they’re going to do more things. It just depends. And so you have
to figure out what you’re most comfortable with,
and choose from the gut. Yeah, I’m comfortable with 10%,
because in C-class properties, there’s a lot to deal with. When you’re in C-class
neighborhoods, you have a lot. In San Francisco
and New York City– Yes, but even at 8%, if
you’re doing a small– at 8%, say you have a
10 unit building, that’s 8% of a bigger chunk of pie. Right. And there’s so many of them,
that it’s the bulk of it. So, you’re trash talking 8%. No, I’m just– on
multi-families, like, yes, absolutely. Because it doesn’t make sense. You have one unit, they’re not
going to multiple properties, there’s one structure. But even in some of the
A class neighborhoods, like in San
Francisco, I paid 8%. But it was A-class market there,
so there’s no standard answer, but you wouldn’t want
to pay more than 10%, because you don’t have to. And you wouldn’t want
to pay a whole lot less, if you’re going to then pay for
everything ala carte, right? So I would say that’s
a solid average. Yeah, so 10% is
pretty much what we pay across the board on
our property management, and that’s what you can expect
to C-class neighborhoods. I’ve actually heard
of 12% in a lot of– a lot of investors
I’ve talked to pay 12%, like in LA,
California, Portland. No, it’s less I’m just telling
you what I’ve heard. In San Francisco, Chicago, New
York City, it’s usually 8%. All right. Well, good for them. All right, so what other
questions do we have here? But it’s 8% of– Multifamilies. Right. I mean, I own one
condo in San Francisco, and the management fee was 8%. But it was 8% of $3,000 rent. Right. So that’s a whole
lot more, right? And plus, I had an HOA fee
on top, so it’s not like– because that’s what
people can afford there. So when you have like a higher
rental market, higher end rental market, they’ll charge
of a smaller percentage, but they’re still making
a big chunk of change. Yeah. All right, so let’s dive into– personal, let’s see here. So we’re talking
about single family. Are there any of these
questions we wanted to– Ah, let’s see. You guys inspire
the heck out of me, how to pay your
mortgage in five years. That’s so nice. There was someone who
said something about– Will wanted to know if I’m still
building single new families. Yes, we are still building them. Our first round of
20 just wrapped up. Carpeting is going in this
week, which I’m excited about. I just got the
photos and updates, and we just started
to break ground on all of the new, the next
batch of, I think, 30 or 50 of them that we’re starting. So that’s exciting. What was the other
question you saw? Oh, there was someone
who said, should you go to a bank to get started? And then this person talked
about starting with all cash. Now, there are so many
ways to skin a cat. I hate that saying. It’s hard to say what’s
the best thing for you. But a couple of
things to keep in mind is that banks don’t
like to loan to LLCs and we talk a lot about how
you should own your properties in an LLC to protect yourself. Banks usually don’t
like to be quite as aggressive with their– what’s the word I’m looking for? With their competitive rates. Banks just tend to be a little
bit harder to work with, but there are a lot
of banks that you can get started with
one and start to build your portfolio that way. There are hard money
lenders, people that lend to investors
for a little bit more favorable terms. We were just talking
about this the other day, because we’re
securing a portfolio loan on a package
of 10 properties, and we were talking about
our overall liabilities in our family. Like the mortgage on
this house that we’re sitting in front of right now. We have a home equity
line of credit, and we have this portfolio
loan that we secured last year, that still has a balance
of about $200,000. And I was like, I’m
comfortable with that, because there’s a business
model attached to paying it off. We don’t have to
use our salaries, as employees of another company,
in order to pay that debt off. That debt is being paid by
the rent of those tenants. So you have to think about, when
you secure some kind of loan products like that, that if
you’re intending that you make 10%, 12% on that money, but
the bank, you owe 7% or less, between 4% and 7% is probably
a good rate for an investment product, then you have a
business model attached to that debt. So you don’t have
to worry about going to work to pay that mortgage,
because someone else does that for you, right? Right. Dustin asks, for
$10,000 a month, you need about 20+ homes,
costing around $45,000. Yeah. He did his freedom
number for him. He did his freedom number,
fantastic, way to go. Yeah, if you haven’t had a
chance to download the freedom number cheat sheet,
just go to our web site, Download it, it’s free,
it’ll help you figure out how many single family
homes it will take you to reach financial freedom. And for many of you, you’re
going to be surprised. You’re going to find out it’s 10
properties, it’s 12 properties, and you’re going to be
making enough passive income from those properties that you
will replace day your job, I mean, that’s the bottom line. This person, you
can address that. This person wants
to know, is there a higher ROI for larger
apartment complexes, versus single family? And it really is
going to depend– there’s a bug right here. We’re under attack. Run! It’s going to depend on how
you acquire that property. I always think of this
quote from Donald Trump, when people ask him about
his acquisition strategy, and he’s like, here,
I’m going to do it. Distressed. I love distressed. I love distressed property. So he’s trying to get
properties off market– Don’t ever do that again. Why? Is that not good? You, with your cut thumb,
doing your little– I know. No You don’t like
that, wasn’t good? So, he’s trying to
get a deal on– he like, the art of
the deal, right? He’s trying to get a deal
on off market property. So if you buy something
market rate through a realtor, then obviously, your ROI is
going to plummet because you’re paying the realtor,
you’re paying the price of this being
on the open market, you’re paying the price
of everyone bidding it up, competitively. Whereas, if you buy something,
either from a wholesaler, or from someone who knows how
to get properties of market, doesn’t matter what it is,
could be a commercial building, it just all depends on,
either your connections, or what you can dig
out, what you can find. Yeah. So some questions, also,
about the single family versus multifamily. If you’ve got any questions
about single families, particularly, let me know. Some of the
questions about pets, that’s another great question,
about pets in a single family. I love pets in a
single family property, because it’s hard for
owners of pets who rent to find great properties. And so if you’ve got a
property with a yard, one of our properties in
Michigan, and just like some of our properties
in Indianapolis, we’ve got– there’s a fenced in backyard,
or there’s a big enough backyard where they can have a dog. And guess what, it’s
harder for those people that own pets to
find properties. So they can then rent from
you, they tend to stay longer, because they don’t
want to have to move and trying to find
another property where they can bring their dog. Yes, there are
weight restrictions on certain dogs and
things like that, but for the most part,
what do you care? Is a dog really going
to pee on your carpet? And you’re going to switch
out the carpet in a year, two, three years, anyways, on a
tenant turnover, who cares? People with pets
have a hard time finding apartments or
homes that allow pets. So if you allow pets, they’re
going to be like, well, I can’t move because
I got fluffy. So they’re going
to stay for longer and you’re going to have
to replace that carpet when fluffy moves anyway. So the carpet is
relatively cheap turnover. So that’s not something you
have to really worry about. Unless they come up and they’re
like, can me and my alligator live here, right? You don’t want that. And there’s a whole other
issue about liability. We have a whole podcast
about insurance liability, because if they have a
really aggressive dog that bites people, then that
could be on you, if they don’t have renter’s insurance. So there’s that to think about. But they’re a little
tiny, I don’t know, beagle or a cat, that kind of
stuff usually is not really worth worrying about. How the apartment smells,
or how the house smells, you’re not going
to be there anyway. No, I have never seen
almost every property I own. The other day we– Is a single negative
or a double negative? I don’t know. But the other day, we were
driving to Pennsylvania, we went through that
little coal mining town where we have a rental property. And we were there for
this fall festival, and I was like, oh, you
know our rental property is like 10 miles from here. We’re like, eh, who cares. We didn’t even drive and see it. We intended to. But it was our baby’s
nap time, and the traffic was bad, so we’re like, meh. Who cares. Someone wants to know
what I did to my thumb, and I told this in the pre-show,
but this is a cooking accident. So, sorry if that’s distracting. It’s like gauze finger
that I’m gesturing with. Yeah. So let me answer
these questions here. OK. Adam wants to know,
hey Clayton and Natali, bought my first rental property
through you guys back in July, construction just
wrapped up, waiting for a renter at the moment. Looking into buying my second. Go Adam! Way to go, Adam. Rock and roll. I’m going to give
that a gauze thumb. Timelines are weird, because
people want to have– timelines are totally arbitrary,
so our goal on a rehab– I mean, we know
internally, OK, if we hit that eight
week mark, and this is a great lesson for us in this
discussion of single families versus duplexes or triplexes,
that those big, fat ass duplexes, they just– we call
them contractor graveyards. Because they take so damn
long, and they’re massive, and they eat up so many
resources from the team. So we’ve really
pulled back on doing any of the duplexes,
and those size, because they just
take up so much time. Timelines for
construction, anyone who is in construction,
even the guy that just in our basement,
who does multimillion dollar properties,
he will tell you we can’t ever give really a
timeline on construction. Your goal, you can have goals
but if you’ve got to order custom windows, and then the
window company takes two weeks, or Indiana power and light
takes another three weeks to bring the electrical
drop to the property, and get that set up. Which is sitting there,
waiting, twiddling our thumbs, while IPO decides to
put the electric drop. A whole series of things can add
up to frustration for people. So if we were to tell
somebody, hey, your property is going to be done
in eight weeks, and then, guess what, it’s
the ninth week and it’s done, well now you’re
upset because, well what if we told you nine weeks? Then you’d be happy. In any construction project,
especially on your own home, they say pad it by 10%. 10% for time and 10%, maybe,
a little bit more money. We try really hard to stick
to our construction budget. If we tell you it’s
going to cost this much, we try really hard not to
add anything else to it. We never do that. You ever see those– what’s that Chip and Joanna
Gaines, where they find like, oh my god, the sewage
line is rot, or something. They call the investor, and
they’re like, we’re so sorry, we found this that’s
going to cost you extra. We don’t ever do that. That happens, clearly,
but it’s so rare. And then we eat that cost. You want to pad your
expectations by 10% in time. Right, so we eat that cost. If we were to discover
some floor joists– we were doing a duplex recently
for one of our clients, and we thought it was going
to be a fairly easy rehab. And then guess what, we
started pulling drywall out and we realized that
the previous owner, it was fire damage. So what did they do? They cleverly hid it from us,
hid it from the next owner. And we had to go through
and rip everything out. So now, what we
thought was going to be a fairly light rehab ended
up taking us twice as long, because we had to rebuild
the whole stinking house. But did we charge
the client for it? No. But did we hit our five
weeks of rehab time? No. So we had to drag it on. And it sucks, but this is what
you’re dealing with when you’re dealing with properties that– going through tax
lien, have been sitting vacant for a
long time, foreclosure. You never know what
you’re going to find. So Ryan G asks, what’s
the max amount you’d pay for a single family home? And we base that on the expected
ROI of the property, the return on investment. So a couple of months ago,
last year actually, my sister moved to Idaho. And we were thinking of
doing some investment there, in a suburb of Boise. And so I said, well start
looking for properties with this amount of ROI. I gave her a spreadsheet,
and I said, figure out what we’re going to pay and then
go on– we use rent-o-meter? to see what the
average rents are in any given zip code. And then, put that
in, what you expect to make, per month
and per year, and then take off 40% for taxes and
insurance and maintenance fees and such. And so we expect to
cash flow at least 60% of what me make in rent. Divide that number by
the purchase price, and we told her we want
anything between 11% and 14% return on investment. She couldn’t do it. She tried really hard,
but in that area. It’s a really up
and coming area. It’s very competitive. She actually found one,
that she kept for herself. But it was just harder
to find in that area. So what we do, instead of saying
what the max amount of money is we’ll spend per property,
is figure out the max amount– or actually, the minimum
amount of cash on cash return that we’ll accept. We try not to do
anything less than 11%. It really depends what
we’re going to make. So, something here
in New Jersey, where we could rent it
for say, $1,500 a month, we would obviously pay
more than that, right? But in Indianapolis, where
it’s a lot cheaper market to live in, the cost of living
is cheaper, we’ll make $800. So we’re glad to spend a
certain amount, around $50,000, for that. So it really depends. If it’s not max purchase
price, it’s minimum ROI, if that makes sense. Hopefully, that
answers your question. So Amir Khan says,
can you please do a video on how your company
works and what’s the catch? What’s the catch? How much your company fee, etc. Per month, year. Amir, we have a great podcast
called How We Make Money. So I would recommend
you go and listen to the Investing in Real Estate
podcast with Clayton Morris. Why am I not on the marquee? Because you kind of pop
in from time to time, when I rope you into it. I’m only on wife Wednesdays. Wife Wednesdays. So we did a whole
episode on that, because I was always curious
why, when someone hasn’t even invested in real estate yet,
the numbers make great sense. Like the ROI is
10% to 12% net ROI. Like, why do you care
how we make money? We’re providing a great
service, a great product, and so Natalie said,
let’s do an episode where we address this question. So we did it, we broke
down exactly what we do, which is we buy our
properties off market. I might buy 20 properties at
one time, that are destroyed, and then we have
to rebuild them. And you’re paying us for
the labor to rebuild it. And you’re paying us for the
purchase of the property. And then there’s no ongoing fee
with what we do in our company. So there’s not like
an additional fee that you pay us, like a Netflix
subscription or something. You own the property
free and clear. You can do whatever
you want with it. You can turn around and sell it. You could live in
it, if you want to. You can live in it, if you want. You own it free and clear. You’re on the deed,
you’re on the title. And we keep our
margins very, very low. Because our goal is to work
with people so that they get 10, 15, 20 properties and
hit their freedom number. We don’t charge an
exorbitant amount, so that it’s a
win-win for everyone. So we could sell fewer
homes at a higher price, but our choice is to sell
more homes at a lower price. And that’s just our business,
that’s our business plan. And other companies
do it differently, and great for them. But that’s how we do it. So that’s the long
and short of it. Yep. OK. Someone was asking if
we require our renters to get renter’s insurance? And then, down in the chat,
our wonderful chat master linked to the post– linked to the podcast that we
did about getting insurance for your properties. And I would love it if
our renters got insurance, but it’s really hard to
enforce, and it’s so rare. And so a lot of
times, they just– I would say, if they have it,
we don’t even know about it. It’s encouraged. You’ll find it on your lease
agreement, they encourage– under the law, you can’t
ask them to do that. You can’t ask somebody
to get insurance. It’s their own TV, if
they want their TV stolen, that’s up to them. Yeah. So Jay Voss writes, I’m about
to have my rental paid off. Should I cash out
refinance, or should I use the cash flow to save up and
reinvest in another property? That’s a great question. It really just comes
down to the numbers. Cash out refinancing
can be great. You may also want to look
at doing a home equity line of credit on
that rental property, so that it’s an infinite
banking concept. Because then you
have access to that account over and over again. If you do a cash out refinance,
you’re getting one check, and then you’re kind of stuck. Someone else wrote earlier, and
I can’t remember where it was, so forgive me, I don’t want
to scroll back through it. Someone asked the question,
they bought a duplex for around the $60,000
mark, and they’re trying to do a
cash out refinance, but they’re having trouble
getting a bank that will loan below $100,000. That’s crazy. That’s crazy. I don’t know why. We have a lot of
banks that we work with that will do cash out
refinances, even like State Farm will do cash out
refinances, down to like 25,000 in value. So somebody is not
going to give you a cash out refinance on under
100,000, are they crazy town? Again, this is why
banks are losing. Banks are losing out
to private lenders like Lima One Capital, Vizio
Lending, other private lenders. Lending One. Lending One. These other companies,
that are more nimble. They’re basically just a hedge
fund, their lending out money. Then these traditional
banks down the street are getting screwed, because
they’re sitting on their hands and they’re not lending money. And that’s their mistake. They’re asking things
for like six months of seasoning on a property
and this other garbage. And guess what, the
hedge fund isn’t. The private lender isn’t. And they’re more nimble,
and they’re getting a lot more of this money. And they don’t
answer to the SEC, so they can make decisions
based on their own business practices, they don’t have to– there’s no
Sarbanes-Oxley, they don’t have to comply with
government standards, because they make
their own rules. Now, because of that, you pay
a little bit higher interest rate, but again, the portfolio
that I’m working on this month, we’re looking at a 5.9% interest
rate, which I would faint, if they asked it for us
for our primary mortgage, because it’s us, it’s
based on earning potential to pay the mortgage, right? But on a rental
property, if I know these rentals are going to
make a certain amount of money, there’s a business– that bird
is really squawking over me. Shut up Natalie. It’s like an October
Edgar Allan Poe bird. The raven. The Raven. I don’t remember
what I was going to say because of that raven. That damn bird. Give him your finger. I give that a thumbs down. To the raven. OK, here’s another question. Matt says, if I have
$200,000 to invest, should I go single family,
or jump into multifamily, or a larger investment? You’ve got to do the ROI math. Yeah, it just comes down
to ROI, and what you’re comfortable with. Again, ROI, on paper,
for multifamilies, it’s always going to
look more attractive. But you’re going to have
higher vacancy rates, and really want to look at
what is the actual performance of that property. Guarantee you, single family
is going to rent more quickly. And it’s going to stay
consistently rented. JayInfiniteTV says, when
you mentioned Jacksonville as a good rental
market in your videos, are you talking about Florida? Yes, I am talking about
Jacksonville, Florida, not Jacksonville, Mississippi. And if so, do you have anything
in Jacksonville, Florida right now? Yes, we own what, two or
three properties there? Two. Two. And they’re still vacant. They’re getting
rehabbed, and they should be rented up very soon–
or did they rent up, yet? They haven’t. We’re about a month and a
half in to having those. And the hurricanes in September
stopped down a lot of progress on that. Thankfully, they
didn’t have damage, but no one could
go out and work. We’re not that
much slave drivers. We let those guys not go
work in the hurricane. No. Where we do our properties
in Jacksonville, they’re 15 miles inland,
so there was no flooding, we just had some branches down
in the yards, and palm fronds, and things like that. The coastal areas is
where it gets hurt, so no, we’re good to go. Thomas Briska asks about
that 1031 exchange. And actually, last
week, we did a podcast, so seek that one out. All about the 1031 exchange. We actually have
not done it, but we have some things that we’ve
been researching on it that we share with you. MonsterMiata, I love
that name, says, true, I just wrapped up my first
rental property with you guys, it’s been around eight weeks,
and the property management company found me
a tenant, yahoo. Oh, Nick in Phoenix,
thanks guys. You bet. It’s what we do. We try to. We’re not perfect. We’re not perfect, but we fix
anything, that’s our goal. And this is another thing
I love about this business, is that, when you’re in the– unlike the stock
market, which is this ethereal of I’m investing,
when you invest in real estate, and you do it the right
way, you can fix anything. Tenant’s broken,
get a new tenant. Toilet’s broken,
get a new toilet. Roof’s broken, get a new roof. You can always fix anything
in rental real estate, if you just take a
deep breath, realize there are no such
things as emergencies, and you can fix anything. Right. OK, so let’s play this
game with JuniorShort08. JuniorShort08 says,
can you explain a quick snowball strategy to
start buying your properties? If someone has access to
a $50,000 line of credit. I would like to buy 12. OK. great question. Let’s pretend. We’re going to pretend. And we should actually
do a whole episode on the snowball strategy. I know that a lot of people– because there is no one size
fits all approach to this. So people want to
know how to do this. Yeah. Let me give you the example
of one of my mentors, his name is Abe, I’ve mentioned
him here on the show before. He now owns 2,500 properties. He started with one. He didn’t have very much
money, almost the same amount, $50,000. He bought a $50,000 property
in the state of New Jersey, this was years ago, and he
updated it, renovated it, placed tenants in it. He let it sit, I think for
about six months or so, and then he refinanced and
pulled the same amount of money that he put into it,
almost the same amount, back out of it
again, from the bank. Now, he’s got that same
amount of money to use again. He went, he bought
his second property. Then, he did– then he was
able to do the same strategy all over again. Now he has 2,500 properties. And when I asked him, I said,
have you used the same strategy the entire time? He said, the exact same
strategy the entire time. One of our clients, just
a few weeks ago, and we get these all the
time, but this one stands out to me because
I was helping him through this process. He purchased a property with
us in beginning of August for like $45,000. Renovated it, we renovated
for him, placed the tenant. He cashed out
refinanced, and he was able to get back almost the
exact same amount of money that he put into it. So it appraised at $53,000, he
bought it from us for $45,000, and he was able to pull
the exact same amount out. We have another
client right now who’s doing that on six properties,
pulling the money back out, and then you’re rolling it into
your next round of properties. Now, that’s the overarching
way of doing it, but you have some
more, probably nuanced, ways of doing that with capital. There’s a lot of different
ways that you can do that. We talked about, last
week, the 1031 exchange. So you can hold something
for a year and a day, and then sell it, if
there’s any appreciation. And then use that
for a new property that’s got a debt
service, and then you’ve got something else
that’s worth more value, and maybe making you more money. You could then pull
that out after– again, you have to wait
for over a year because of the current
capital gains rules, but then you could, say,
buy two or three things, so there’s just a lot of ways. And one of the things
that we’ve learned, in the many years that
we’ve been investing, is that there are just so many
tools that fall into your lap, either because you’re
listening to podcasts, or you’re watching
YouTube videos like this, or someone mentions something. And the really great thing
about real estate investment is that you follow
the trail of crumbs that other investors
leave for you. Someone will say
something and, ding, oh, that’s another way
that I can grow my– so what you have to do is
seek this information out, then when something sort
of sounds right to you, do your research, read a
book, read a blog post, ask as many questions, and see
if that strategy works for you. Because again, like I said
in the beginning of the show, there’s so many ways
to peel a potato. I don’t want to use
the cat one anymore. There’s so many ways
to chop a vegetable. But not this way. Not this way. Don’t do it this way. Shut up. Sorry. You walked right into that one. I kind of did. Yeah. It’s on the brain. McHale writes us in our chat. It says, hey, Clayton,
as I understand, minimum ROI is 11% or 12%? Well, on our properties,
we try to hit a net minimum of between 10% and 12%. Our new construction that we’re
doing in Indiana right now, it’s right around
10%, it’s like 9.5%, and those are
$68,500 total, that’s the total cost of
the new construction. So new construction, you get the
benefit of it being brand new, and we’re doing two years
guaranteed rent on that. So between 9% and 12%
is a good rule of thumb. Yeah. See what I did there? I keep rubbing my tetanus shot. But look, the stock
market, you get 2%. The other day, here
is a great story. The other day, I was moving
my 401(k) out of Fidelity and into our investment strategy
that we’re currently doing, and I sit on the
phone, he said oh– h was trying to get me to keep
my 401(k) money with him. And turn it into
an IRA in Fidelity. And turn it into
an IRA in Fidelity, and he said, well,
you know, you’re getting a really great
return right now. You’re getting a– actually,
this is really hot. The stuff you’re
investing in right here, you’re getting
about a 2% return. He was like, thumbs down. I’m like, you’re talking
to the wrong chump right now, because I’m
not going to tell you what I do for a living,
and what my investors get when their ROI hits. You’re not even on the
same ballpark as me, buddy at Fidelity,
and that’s why you have to spend millions of
dollars on advertising on TV, getting people, duping people,
into keeping money in a 401(k) with you. Anyway. All right, I’m going
to take this question, and then maybe you
seek out this one. So I’m going to talk about
Michael Vasquez, he asks, what are your
thoughts about dealing with a property
around a university, and possibly turning it
into college housing? And I’m going to tell you,
that’s not my favorite idea. Because college
students are lazy. No, because college
students are not going to take super
awesome care of your house. We lived in and around a
university in our last house, and there was a house
on the block that had a couple of
students living there. And the neighbors were always
complaining about them, they’re up late, they don’t take
the trash out on trash days, so then it piles up. And then you get fines
for that kind of thing. A lot of times, they’re not
paying their rent themselves, so they don’t have the same buy
in of taking care of the house, because it’s really their
parents paying it, or maybe their student loans,
or what have you. I don’t love the idea of this. I think that’s a
much bigger headache than you need to deal with. I would only do it if you,
either inherited that house, or if you lived in
that town yourself. Otherwise, I just feel
like I wouldn’t do that. Well, we own a property
in Indianapolis, we’re kind of near a bunch
of colleges in Indianapolis, at Butler University. But we don’t rent to students,
and our property managers vet our tenants
for their income. If they found a
student, they would have to get our permission to
put someone whose parents were rent verified. And, like I said, for
the reasons I just gave, I don’t love the idea that. So James Monroe
says, there are a lot of owner complaints
about property management in Indianapolis, what have you
done to address these concerns? Well I don’t own a
property management company in Indianapolis. What the property
management companies that we work with– you’re going
to find any property management company is going
to have complaints. There’s just the bottom line. The one that we use in
Michigan, that does a fantastic job for us, there’s complaints. There’s complaints about
our property management companies in North Carolina,
there’s complaints about– for everything in life,
there’s a complaint. So what do you do
to address it, what do you do to fix those things? You hire the right people. You expand the staff. You have meetings
to understand where there are pain points with
growth and communication. You hire the right people. For instance, in Minneapolis,
just hired an entire new staff for certain areas. For violations. Two people, former
FAA investigator and, what do you call it, inspector. Inspector. Just hired to handle the Board
of Health and city violations. That’s a great move. They actually have
somebody on their staff. Other property management
companies don’t have that. Right. So we don’t own the company
that we recommend for property management, but we work
really closely with them, because if they start dropping
the ball, and letting you down, that reflects poorly on us. And so clearly, we don’t
want that to happen. So Clayton has weekly meetings
with this property manager, to make sure that the
people who bought through us are getting the service
that they ask for. And he doesn’t have to do this. Because once you buy it, and
you have the property management team, you can do
whatever, right? But if you have
a bad experience, that reflects poorly on us. So we’re always having these
weekly check in meetings. We’re always, if
there’s something that we need to do to help
make that a better experience for you, we do it. But then also, we work with
them, almost like consultants. Where we say, look, there’s too
much of this thing happening, so that’s why we found
this awesome person, now, who’s working with
the city inspector, to make sure that we’re not
being bothered about trash or that kind of thing. So we are working
on it all the time, and that’s some one of Clayton’s
constant preoccupations, is making sure that
people who have trusted us with their investments
are actually getting the service that we
told them that they would get. Yeah, as an
entrepreneur, and someone who builds a company,
you partner with people who are on the ground. I implicitly believe in the
property management companies that we work with,
because they have leasing agents in the field. They are focused on getting
properties cash flowing. Have we had customer complaints
about people not responding as quickly as they could? Yes. So what we do? Try to fix communication
issues as best we can. Hiring the right people
to answer the phones. And people now
know, in the office, this gets handled in
the billing department, this gets handled in the
violations department. All of those
things, as you grow. So across the board. And when we expand
to different areas, these are the first kinds of
conversations that we have. For instance, in Michigan,
long conversations with our team in Michigan, like,
we need you to be on our team. You need to have our client’s
best interests at heart. And at the end of the day, if
you’re just out for yourself, if you’re just out to
nickel and dime people, then we don’t want
to work with you. And so I think you’ll
find that that’s the type of property management
teams that we seek out and try to work with. At the end of the day– But with all of them,
again, we try and stay on. Even though we handed
you off to a company that we have nothing
to do with, we stay on, almost as
a consultancy basis, because if people who
trusted us for this referral are not getting what we told
them that they would get, we have a problem with that. So we’re going to stick
by you, otherwise, there’s no point
in us doing this. One person asked,
one more time, for us to repeat the names
of the private lenders that we work with. We have loans with
Lima One Capital, we’ve been through the
process with Lender One, or Lending One. Google both of them,
I can’t remember. Wonder Capital is
another one, W-O-R, O-N? What are some other ones
that we’ve worked with? There’s so many. There’s– There was a State
Farm agent that was willing to do
something similar, there were a few terms
that I didn’t like, so I didn’t use that,
but there are so many. So we see some green
investors in here. Josh Cauth, hey, Josh,
great to see you in here. What else do we have? Gregory, Gregory Washington,
great to see you guys in here. Kevin, who owns a couple of
properties in Jacksonville, Erskine, saying
both our properties survived in Jacksonville. That’s awesome. Yeah, because they’re
4 feet off the ground, or whatever, on concrete block. And 15 miles inland,
so a lot of difference. I did a couple of
different videos, like the difference between
the soil structure in Florida versus what you saw in Houston,
where there’s this clay soil, so the water– it only
takes an inch of water to hit it, before it started flooding. Different than Florida. And then, there are a few people
talking about debt service, and how you cash flow when
you’ve actually had a debt service on your property. I think since the
bell just struck two, I think that’s something we
can consider for another– we have done podcasts on how to
account for your debt service on your investment property. So either seek out
that podcast, or we can think about doing
another livestream on that very same thing. I’m going to try
and see if we have any other questions in here. Do our tenants pay
our own utilities? Yes, tenants pay their
own, our own utilities, and they also are responsible
for lawn and snow removal. That doesn’t mean they
always mow the lawn. So you want to work with
a property management company that also doesn’t nickel
and dime you there, as well. They’ll send their crew out and
do it, kind of on their dime. Like my property
management company, again, like in
Indiana, they could charge every time they do it. They could say, your tenant,
yes, we’re managing it, they didn’t mow the lawn. And they could
charge you $60 a pop, and then they don’t do that. Sometimes they’re
elderly, not necessarily out there pushing a
lawn mower, but they’re responsible for that, as well. Right. Well, we’re going
to wrap this up. I’m going to go
elevate my thumb. Thank you guys. Thanks Chuck, you
guys are awesome. Chuck’s an investor, as well. Thank you so much, Chuck. Thank you, Kevin. Thank you, Rudolph. Any questions you
have, please feel free to reach out to our
team, [email protected] I’m happy to try to
answer any more questions. I get 500 e-mails
a day, but I will try to jump in and try
to answer some questions. And guess what,
we’ll also continue to answer the chat here
in the chat thread, I’ll be jumping
in as well, trying to answer as many
questions as I can here. So thank you so much
for subscribing. If you’re not already a
subscriber to our channel. Thank you so much, we publish
these shows regularly. And we’ve got a lot
of great content, in playlists here on the
channel, that can help you become a real estate investor. So also, if you want to
book a call with our team, you can do that as well. Just go to, you
can book a call with our team, and we will take great care of
you to the best of our ability. Until next time, everyone,
go out there, take action, become a real estate investor. And don’t chop your thumb
when cutting an avocado. We’ll see you next
time, everyone. It was a bell pepper. Bell pepper. See you guys.