This is episode #394, and my guest today is Kevin Ortner, CEO of Renters Warehouse…that manages over 20,000 rental properties.
As we start the new year here, if you have regrets about not starting to build your rental portfolio, or not building it fast enough…there’s no time like the present to get committed!
In today’s episode, we talk about building wealth with rental properties. From why real estate is a great tool for building wealth, to virtual investing in properties in other markets around the country, to finding deals and financing deals.
We want to help you achieve financial freedom with real estate. If that sounds good to you, don’t miss this show!
Please help me welcome Kevin Ortner to the show.
Mike: This is the flipnerd.com Expert Real Estate Investing Show, the show for real estate investors, whether you’re a veteran or brand new. I’m your host, Mike Hambright and each week I bring you a new expert guest that will share their knowledge and lessons with you. If you’re excited about real estate investing, believe in personal responsibility, and taking control of your life and financial destiny, you’re in the right place.
This is episode number 394 and my guest today is Kevin Ortner, CEO of Renters Warehouse that manages over 20,000 rental properties. As we start the new year here, if you have regrets about not starting to build your rental portfolio or not building it fast enough, well there’s no time like the present to get committed.
In today’s episode, we talk about building wealth with rental properties. From why real estate is a great tool for building wealth to virtual investing in properties and other markets around the country that might be better than yours for rentals, to finding deals, how to find them, and how to finance them. We want to help you build and achieve financial freedom with real estate. It’s a great vehicle if you treat it right. If that sounds good to you, you don’t want to miss this show. Please help me welcome Kevin Ortner to the show.
Kevin, welcome to the show.
Kevin: Hey. Thanks for having me, Mike.
Mike: Yeah, it’s good to see you. I know we’ve been talking . . . we’ve known each other for years now and we both believe in the power of owning rental properties. And I think as we kind of start the year here, 2018, hard to believe that those years just keep going by, but I think what we’re going to talk about today is hopefully inspire people that have been on the sidelines or maybe have a couple of rental properties but want to take it to another level that the time is right now to start building wealth with rental properties, right?
Kevin: It is, absolutely. Happy New Year. It’s awesome to be here with you and all the listeners of yours to the podcast. Pretty exciting, 2018. Gosh it feels like 2017 just started, right?
Kevin: But this is the time that everyone’s thinking about what’s going to be happening? What am I going to do? What are my goals for 2018? What are my life goals, right? Health clubs are busy, I just drove by the parking lot. Financial goals, real estate goals, this is a great time to be having this show and talking about how people can maybe leverage some real estate for their long-term planning.
Mike: Yeah. And I think you probably agree with me that anybody you know that’s built wealth with rental properties that has a portfolio, one of the things they will commonly say is, “I wish I had bought more or kept more,” historically, right?
And I think you could look through time and there’s ups and downs in the markets but if you’re in this business long-term, which when you’re in the rental business you’re generally in it long-term, I think that most people, that’s probably one of their bigger regrets is, “I wish I had kept more. I wish I knew then what I know now about real estate and therefore kept more.” So why not start today, right? That’s what we’re talking about.
Kevin: Yeah, exactly. I think to add to that list of regrets, I think one of them, like you said, is kept more, got more, or knowing what I know now back then but also just got started sooner, right? One of my passions is talking to the 20-year-olds out there and saying, “Hey, now’s a great time to start.” This isn’t a get rich quick scheme that you see on late night television. This is what I call get rich slow. It’s not sexy, it’s not really exciting, but it works.
There’s no tricks to it. It’s consistency, it’s discipline, it’s getting to start early, it’s saving. But if you buy a house when you’re 20 and you got a 30-year mortgage on it which are easy to get, by the time you’re 50, which really isn’t that old. It seems old when you’re 50, right? All of a sudden, you’ve got all sorts of cash flow coming in. So it’s about getting to start early. I think that’s one of the biggest regrets of people that really get into it later in life. It’s, “Holy cow. Imagine what I could have done or how my retirement could look if I did get into it early.”
Mike: Yeah, absolutely. And you know what you could do for your kids? You know, it’s funny because my wife and I have been talking about . . . my son is 10. We started real estate investing when he was one. So in hindsight, we look back and say, “We should have done this earlier.” But just the power of some things we could do with rentals, of having him buy rentals and having them, buying them in self-directed accounts and it’s, like, we could use real estate as a vehicle to easily pay for his college and things like that. Just the cash flow from it.
And it’s, like, imagine if for those of us that are 30s, 40s, 50s, 60s even that are listening to the show here, I know you and I are still in our early 20s but . . . if you feel like you kind of missed the boat a little bit, and you didn’t. You should always kind of start now. There’s a saying that’s like the best time to start buying real estate was 30 years ago and the second-best time is today, right? But you could still do things for your kids or your grandkids. You could go back and help them learn what you know now, right? Like, my son’s 10. If we started to buy even a few rental properties for him that started cash flowing, imagine what that would be like for him when he’s 40 or 50, right?
Kevin: Exactly. Yeah. I was just talking to my wife about this. One of the things maybe we will touch today, I’m not sure, but we were talking about the self-direct value rate and being able to buy properties in those as you mentioned and things like that. And honestly, I’ve never even done that because it wasn’t really known about in a big way. You could tell [inaudible 00:05:09] and it’s still not hugely popular but, man, that’s powerful how you could take advantage of some tax advantages. And then I was chatting with my family about that’s something we could do for the kids, right?
So, I think there’s a lot of interesting ways to leverage the power of real state long-term whether it’s for yourself, for your family. But creating that legacy and that long-term wealth, it’s huge. But, again, it doesn’t happen overnight, and I think that’s why some people look at it as, “I don’t know. I don’t need to get started today.” It’s a long-term play, right?
Mike: Yeah. And I think one of the things hopefully that we’re going to cover today is that you don’t have to do this all alone. There’s services out there like your property management company, we help people find deals. Financing is more readily available than ever before. So, let’s dive in here. Before we get started teaching people how to take it to another level starting right now, maybe just take a minute or two and tell us a little bit about your background and how you got into real estate investing.
Kevin: Yeah. So, I’ve actually been in real estate investing for, man, a long time. My father kind of got me into it and I bought my first rental property when I was a freshman in college. Borrowed a little bit of money from my dad for a down payment, had him cosign a loan with me, bought a duplex. I lived in one side, rented out the other.
The goal was to live rent-free in college, and not only did I live rent-free, but I learned I’ve made a little bit of extra cash on the side every month as well. And that was the bug, right? I said, “Man this is pretty cool.” Not only do I have enough to pay a mortgage, but I got some extra beer money coming in to. So that was pretty exciting in college.
I continued to invest after that and in fact, in a previous life, I was a corporate pilot and I flew corporate jets. So I was in the aviation world but continued to invest in properties, invest [inaudible 00:06:46]. I’ve always been really interested in it. That led me to what I’m doing today, doing Renters Warehouse about almost a decade ago now, almost 10 years ago and opened our first location in Phoenix and since then, it really built the business into what it is today which is we’re a national property manager. We manage about 20,000 homes across the country, all single family. We’re in about 40 or 41 markets now in 20 different states. So it’s been a wild ride.
I mean, the last 10 years have gone from flying airplanes around and investing in real estate as a hobby to being able to really, what we think is enhance the operations of properties, be able to really change how people can invest across the country. And now I get to go around and really talk to people about my passion which is investing in real estate in the long-term using it to create wealth and those types of things. So this has been a passion of mine for a long time. I think I got it from my blood, from my family, and it’s been an exciting ride.
Mike: That’s awesome. And I think we’ll talk today about how companies like yours can help make this easier for people. Because I think a lot of people, for a long time, have been looking for an asset class that they can believe in, right? A lot of people have had interest in real estate, but they really are investing everything in their mutual funds and index funds and stuff like that so they don’t have to deal with it. But for some reason, when they want to invest in real estate, they feel like they need to do everything themselves. It’s like, well, you don’t do that with any of your other investments, why would you do it there?
And so that’s one of the things that we want to hopefully communicate with folks that are listening today is that you don’t have to do these things on your own. And yes, you have to pay people for fees, but they probably can do it way better than you can and it’s ultimately going to, one, make it easier for you. Two, probably save you money in the long-term, and three, allow you to scale it up like it’s meant to be scaled up, right?
Kevin: Right. Yeah, that’s important. So let’s touch on that because it’s, build a team is important, you have the right people and frankly, it’s leveraging in your time. You only have so much time in the day, you might as well do what you enjoy or what you’re really good at and often times that’s not property management.
Mike: Yeah. Let’s talk about why real estate is a good vehicle. It’s a vehicle you’ve chosen and you support a lot of people, obviously. You’re managing over 20,000 doors now so you work with a lot of investors, the people that have trusted in you to build those things. But why do they think and why do you think and let’s talk about why I think real estate investing . . . real estate is a great vehicle for building wealth.
Kevin: I think there’s a couple components. In fact, I talked about this in the book I released earlier this year, really the four pillars, right? And the first couple are kind of obvious but that’s that long-term appreciation. We all know that over the long haul, real estate generally goes up. It has its ups and downs. There’s sometimes where things do go down. That’s how the world works.
But over time, if you look at the long-term history charts, they go up. Similar to the stock market in that way. It goes up over time. That’s great. I think owning a hard asset is pretty great. It’s something that’s tangible. It’s there. It’s a different type of thing that maybe a stock or bond or an ETF or something like that . . . or Bitcoin. It’s very different. Something that’s actually there and you can understand what is. It’s a house.
But I think a couple that people forget about or don’t think about at all when they’re looking at where they’re going to put their money are the tax advantages that come with investing in real estate, the things that you can write off, the expenses and the fees you could write up very differently from the fees that go along with some of your other investments. But the most powerful to me and my most favorite is leverage. This is pretty much let’s call it the only, for the most part, investment that ordinary Americans, everyday Americans like you and me can go to a bank and borrow money to buy.
I always like to talk about people can’t go into the bank and go up to the banker and say, “Hey, I want to borrow $100,000 to buy Apple stock.” They’re going to laugh you out of the bank, kick you out. If you go back in and ask for the same $100,000 to invest in your IRA, they’re going to kick you out of the bank. But if you go back a third time, say, “Okay. I want to borrow a hundred grand. I want to borrow, buy this investment, just happens to be real estate,” they’re going to give it to you right on the spot. And so the fact that an ordinary American can leverage a financial institution’s money and make their cash go further, and then on top of it have a tenant paying off the loan for them, I mean, it’s amazing.
And so that leverage component of it, the fact that it’s not actually the homeowner’s or the investor’s money paying off the loan escapes a lot of people. I have a lot of clients that maybe make $100 a month in cash flow on one of their properties and I’m like, “I make a hundred bucks month, $1,200 a year. That’s not really a lot. The house is worth $300,000 and my return on investment is $1200 over $300,000.” No it’s not. It’s over whatever you put into it and a lot of people that are clients of mine bought their home 10 years ago with an FHA loan with 3% down. So they might have $6,000 into their house. And they’re making 1,200 bucks on $6,000. It’s like a 20% cash on cash return.
So just changing the mindset of . . . let’s not compare how much you’re cash flowing today with what the property’s worth. Let’s look at how much you actually put into the home. Because that’s a very different analysis. I know it’s analysis you probably look at as well, but most people really forget about that. And so that leverage component of it and how that allows you to accumulate more over time and over time, 30 years down the road, 25 years down the road when you have them all paid off, now you have a huge annuity with an underlying asset value. It’s dynamic and it’s exciting. You can see it’s exciting, right?
Mike: Yeah, absolutely.
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Kevin: It’s dynamic and it’s exciting. You can see it’s exciting, right?
Mike: Yeah, absolutely. For us, it’s been . . . so I have a portfolio of about 40 rentals. So not huge, but pretty good. And we bought them really well. I’ve kind of told people historically to not count on big appreciation especially in Dallas where we’re at, but there’s been some significant appreciation here over the last five years. So I’m one of those that’s looking back and saying, “Wow, I bought hundreds of houses.” Then you have wholesale or rehab and resold, it’s like why didn’t I keep two or three times that? But what are you going to do, you know?
But truthfully, we’ve been on a very aggressive paydown. The properties need to cash flow and we want that, but we kind of keep paying down debt at the end of every year if we have cash in there. This is our strategy. Some people want to leverage them forever and you can get cheap enough financing and there’s nothing wrong with that. But our strategy is to get them paid off because we know they’re going to just cash . . . we don’t need the cash flow right now because it’s really our nest egg, our retirement. I don’t know that I’ll ever be able to retire. I think that’s more of a state of mind than anything else.
Kevin: I know you too well. You’re not going to be on the golf course playing 36 holes a day or anything like that.
Mike: Not a day. Yeah, maybe once a week or something. But yeah, so I think everybody has a different strategy and everybody has a different time horizon but that’s where the real beauty of this comes is down the road as they’re getting paid off and paid down and appreciations had a chance to take place.
Kevin: Exactly. Yeah, absolutely. But it allows more people, that leverage component, the ability to borrow on this allows more people to get in this game that think they can. They think of buying real estate knowing for long-term it’s like, “I don’t have the money to be able to do that. I can’t buy a big asset like that. I don’t know how to get started. It sounds kind of scary.” But frankly, I recommend to every 20-year-old out there, do what I did which is your first home should not be a single family home or a [inaudible 00:14:49] you just live in your first home.
Frankly, it should be a nice duplex or a triplex or a fourplex because you can get government financing, FHA-guaranteed loans which means you could put as low as 3% down on an investment property so long as you live in one of the units and it’s under four units or less, right?
So all of a sudden you can buy an investment property. Two-hundred-thousand-dollar property, that’s a nice duplex and you can live in one side, rent out the other side. Two-hundred thousand dollars, 3% down, six grand? It’s pretty good, $6,000, you have yourself an investment property and you’re probably having your mortgage paid by the other person that’s in the property, right? It’s amazing.
So these are the things that, shoot, I wish people would talk about this in high school. We’re not teaching kids how to be financially smart so they hopefully are going to be watching podcasts like this so they can be learning about these theories.
Mike: Well, yeah. They don’t teach this stuff in school. That’s part of the problem, right? They don’t teach anything about financial well-being in school, unfortunately.
Kevin: Yeah, exactly.
Mike: So what are your thoughts about . . . let’s talk a little bit about investing. So you guys at Renters Warehouse, one of the awesome things that you’ve created over the years is the ability for people to own properties in multiple markets and to be managed by you, the same company, in multiple markets. And of course, we teach people how . . . a lot of times people feel like they’re restricted by. Well, let’s say you’re in California or especially any coastal city. Properties generally don’t cashflow that well in coastal cities, but it’s like, well, you don’t have to invest in your market.
Now I think classically that’s how a lot of us are trained, well, you just buy houses in your market. But the reality is you invest in companies that are based in other places and if you’re not going to manage them yourself, it doesn’t really matter if you’re near them or not, right? So more and more, you’re seeing people that are investing in many other markets. Not necessarily where they live.
Kevin: Yeah. For sure. I think, like you said, classically, that was the way you buy properties close to home. It’s because you had to manage them or people wanted to manage them or there’s really no other way. That’s how it was. And then really this hasn’t changed until maybe five years ago, six years ago where it’s become easier to source properties across the country no matter what market you live in. Shoot, you can shop online for them, right? A lot of information about the property is out there.
But then how do you operate it. And I think that’s where companies like Renters Warehouse have come into play. Our goal has been to get to scale across the country as quickly as we could, be in the locations people needed us because now we can talk to our clients who live in Minneapolis saying, “Maybe Minneapolis doesn’t have the cash flow or the yield you’re looking for. But markets like Kansas City, St. Louis, Alabama, Texas, other markets do.” And you don’t have to buy in your neighborhood anymore and you can have the same operator, the same reporting, the same accounting, people you trust, manage the home for you.
And to your point, there’s also a lot of people on the coast that can’t invest in real estate in the back-end. It doesn’t make sense, right? In fact, I have someone who works for me who lives in New York. He’s in this business, loves real estate, gets real estate, is financially-savvy but he doesn’t own any because he’s like, “I can’t find a deal in New York that makes sense.” He’s looking at some of the other markets.
And we’re able to finally kind of bring that operation piece, which I think was one of the big pillars left to being able to do that, right? And then invest anywhere you want which is the transparency people are looking for, good operations, consolidate a reporting with some of our larger investors whether they own a home in Minnesota and Florida and Texas and Missouri, they can look in all one place and have all the reporting and understand the portfolios running and that’s new.
Mike: Yeah, for sure. And the funny thing is . . . not funny, but the reality is one of the bigger challenges with owning rental properties has always been the property management component. A property manager can make or break you, and the unfortunate thing is, for most people, it’s kept them out of the business because they either want to do it themselves and they just realize, “I don’t have the time for it,” or they don’t want to rely . . . so, it’s largely a mom and pop business. It has been historically.
I’ve had some bad experiences with small mom and pop property managers, husband and wife teams. Not that they were bad people, but it’s just like things happen in their life and if somebody gets sick, like, my properties are at the mercy of them. And a lot of property managers are smaller companies that just don’t have the resources that somebody like you does that can manage them professionally, right?
Kevin: Yeah. It’s a lot of work. And people who manage properties themselves know this. You know this, you’ve been through it. And people have had a bad experience traditionally with the property management aspect in this business. But it’s challenging. And we do things right 100% of the time or get it the way our clients want it 100% of the time. But having the experience we have and having the scale and the resources and the staff and the team available, some of those really kind of low-hanging fruit opportunities of not having someone to talk to because the property manager’s out sick, we’ve tackled.
We have hundreds of people that are available to talk to our clients every day. Just having the additional technology resources, having local knowledge in all the markets we’re in, having staff that’s worked for us for 8 or 9 or 10 years in this business. That’s a long time to be working professionally in the property management business. So that wealth of knowledge is important. So that’s what we’re trying to do.
As we were growing this business for 10 years is change the perception of property management because that’s always the sticking points, “We’re just going to do it ourselves because there’s no one really great out there to do it.” And we hope we’re doing a good job of kind of changing that reputation, so to speak.
Mike: Yeah, absolutely. So, let’s talk a little bit about finding deals and how that’s changed over time. It used to be people would call their real estate agent and say, “If you come across any properties, let me know.” I think what’s happening now is there’s an uprising of some turnkey providers or people that have businesses that actually help people.
In fact, we started a business out of hearing demand for that. I’ve always been an active investor, so I’m wholesaling and rehabbing and I would just keep some of my rentals. And after a couple of years ago through FlipNerd we have a lot of people that say, “Hey, I want to own rental properties, but I don’t want to have to go out and find them all myself. I don’t want to have to advertise. I don’t want to sit at the kitchen table,” which is what our model is and that’s what I teach active investors.
And so that’s when we started vetting out markets and people, operators in other markets that we said, “Hey, if you want to buy properties in . . .” What’s happened is in Dallas, it’s harder to find good rental properties. Harder than it was five or six years ago, and so now, we’ve done the work for people who are finding markets like Milwaukee, Memphis, a lot of mid-western and southeastern markets are really good. So we help people find deals through our passiverental.com website, but I know there’s a number of ways now where people can find deals online, right? That just didn’t exist maybe even five years ago.
Kevin: Yeah, there are. And I think kind of what you mentioned is really what’s changing in the internet. As the internet’s changed every other industry in the world, it seems like real estate’s kind of behind the par curve on that, right? For as big of an industry as it is, even just the buy and sell side of real estate hasn’t seen some of the technology, I think, that it could have coming. Finally, we’re starting to see some of that.
Same thing on the sourcing side, finding deals. We’re finally starting to see them online. People can sit at home now after work in their pajamas and research rental properties the same way they can research a stock on E*TRADE and find it through various websites that are out there, [inaudible 00:22:32], your program and your sites, other ones that are out there. And so I think that’s really kind of been the unique difference.
There’s a lot more interest now around wholesaling or how do I find a deal I can rehab into a rental for those that maybe want to take on that challenge. And that’s exciting to see that getting some traction. And then, of course, there’s still, although it’s the old way, it still works. You can have realtors out there bird-dogging for you looking for the right property. If they know you’re ready buy and you can buy quick, you’re going to see those deals come across your desk.
So I think my philosophy is, an all of the above strategy. If you want to find the good deals and, you know this, you’re a deal hunter. You’re always finding good deals. I can imagine you don’t have just one line in the water somewhere. You’ve got a lot of lines in the water.
So, from kind of combing the listings yourself online as an investor, connecting with the wholesale network and the markets you’re looking at, connecting with professional companies like Renters Warehouse or Passive Investor, it’s big. And then just the local real estate agents, make sure you have the right partnerships in place where they’re going to send you the deals they see come across first and . . . especially in today’s market where it’s a good market, you got to be able to act quick and you want to be looking at as many deals as you can that are coming through.
Mike: And I think for people that are listening right now that intuitively you know how to find deals. You know how you could go one way which is to find deals, then find somebody to do the work for you, then find somebody to manage it, then they find a tenant and kind of outsource all those things, the classical way, which a lot of people still do that. That’s fine.
But if you know in your mind, if you’re listening to this and you’re like, “That sounds awesome, but I just don’t have the time for it.” I think a lot of times, people will just kind of throw out the baby with the bath water. I know when I say phrases like that, it really ages me, by the way. But anyway, I didn’t even know where that came from. That’s way before my era, but I’m turning into my parents here. But anyway, is to say, “I know that’s the classical way of doing it and I just don’t have time for that and therefore I won’t do it all,” to say, hey, there is another solution, is this kind of turnkey model where the house has already been found.
It already has a tenant and already been rehabbed. The tenant’s in it and it’s actively being managed by somebody like Renters Warehouse. That’s a done for you solution and do you pay a little bit more for that? Yes. Is it still a great investment? Yes, absolutely, but it’s more of a done for you model that if you know you don’t have the time for it, then that’s the model for you, probably.
Kevin: Right. And that’s, again, I think that’s a new phenomenon, right? Because pieces of that puzzle are really starting to finally come together. At Renters Warehouse, we have what’s called our “Rent Estate Club” and that’s what we’re trying to help people do is have turnkey assets ready to go that have a tenant in place that they don’t have to worry about buying it, rehabbing it, filling it, having it vacant for a while when they buy the home because that’s when you’re not making money on your investments. They can buy it day one, they’re getting some cash flow coming at the door and it’s managed.
The three pieces, as you talked about, is finding a property, getting it ready to go, financing it and then operating it. And for a while, finding it, you could find them locally. Now, you can find them nationally, which is exciting. Financing has been around although it’s changing in a big way. Having an operation that’s at a national scale we thought was kind of that third leg to the stool which we really wanted to solve for people. And now you can do that.
So you’re able to go to, again, other affiliates of FlipNerd and your companies and things like that and find that turnkey opportunity and just plug and play into an operation like Renters Warehouse. And it becomes very much a true passive investment where I think, as you mentioned, kind of 10 years ago, even 5 years ago, even today, a lot of people look at it as, gosh, that’s a lot of work. It doesn’t have to be. It can be one way to diversify your portfolio if you build the right team, right? You got to build the right team to come in and take advantage of it.
Mike: Yeah, absolutely. Let’s talk a little bit about that because I think, historically, people don’t treat real estate investing or buy and hold strategy as a business. It ultimately is a business, but sometimes people, they work hard every day. If they’re working for somebody else or even if they have their own business, they’re working hard. They’re treating it like a business whether it’s theirs or not. And then they say, “Well, I need to do everything myself for rental properties.” So, they’re over there mowing the grass or fixing stuff up or whatever and kind of forgetting about their opportunity cost of their time.
I mean, a lot of us get into real estate, especially in a buy and hold strategy, to build wealth to help achieve financial freedom, right? Or let’s just say to help achieve freedom. Some of that’s financial, some of it is freedom of your time, right? I don’t have to work as hard anymore. Eventually, that’s what we all want.
But in the meantime, we’re like, “Well, I’m just going to do everything myself and ignore the fact that I’m trying to do these things to get some of my time back.” I mean, why do you think that is? Is it just because people are . . . they’re cheap or they don’t trust people? Like, what causes people to just think that, “I’m going to do something to achieve freedom, but in the meantime, I’m going to have less freedom?”
Kevin: Right. You know, I don’t know. I don’t know the answer to the question, but I think a lot of it comes from . . . I think, frankly, a lot of people just don’t understand or know the resources that are available to them if they want to get in it. So, frankly, you know this, for the past however many years people have been investing in real estate, it’s been very much a hands-on, labor-intensive, passionate thing.
I think people who invest in real estate are passionate about it. They like real estate. I think today’s investors at least do, they’re passionate about it. And if you’re not, you kind of go, “Well, I don’t really like real estate so I’m not going to invest in any.” That’s what I’m trying to teach people and I know you are. You don’t have to love real estate to invest in it.
You love real estate, I love real estate. It’s what we do, we’re passionate about it, but you don’t have to be passionate about it anymore. It can just be a way you diversify your financial future and your portfolio through some of what we were talking about. So I think a lot of the people that are in it, they love it.
They want to be maybe a little bit more hands-on but at the end of the day, it’s taken away from their time, like you mentioned, to either grow their portfolio, continue to grow their financial wealth, take time away from their family, their main job. Most people that invest in real estate, it’s not their main job. It’s your main job, it’s mine, but it’s not most people’s. So they have a job. They should just do that job and let some folks like us kind of help them out.
I start talking to people and say, “You don’t write your own will, right? You have an attorney for that.” You can, it’s easy. It’s easy enough, right? A lot of people aren’t doing their own taxes if they have a complicated tax situation. There’s things you hire professionals for and I think taking that concept into your real estate portfolio or your real estate investing and building the right team is going to make you far more successful. And that doesn’t just mean your property manager. That means having the right accountant, the right realtor helping out with transactions, the right education, and advice, and podcasts to listen to know where to go, the right maintenance tax, the right property manager, all those things.
And the network you’ve built with FlipNerd really helps people build that team. But I think that’s a foundational piece that a lot of people forget about is, you know, I’m just going to get in, and I’ll figure it out, it’s like, “Oh.” And you win the Super Bowl before the game is even played because you’re fueling the best team. And fueling the best team early on before you get started, it’s going to make it much easier for you to be successful.
Mike: Yeah. And I think one of the things, to circle back to what we talked about at the beginning is what people regret, is that they didn’t do more early on or keep more. And I think what happens, and it may be subconscious, if you start doing the work yourself, you tend to buy less properties because in the back of your mind, you’re like, “It’s more toilets I’m going to have to manage, more tenants I’m going to have to manage.” And so what happens is in the effort of saving costs, saving money by doing it yourself, you’re preventing yourself from growth, which is really one of the biggest benefits of real estate is using leverage and things like that.
But being able to leverage, I mean, truthfully, it’s easier. It’s not that much harder to manage. Well, especially, if you outsource it, for sure, but there’s always . . . even if you have a property manager, there’s always the tax component. There’s always things that you’re still going to have to do yourself or be involved in, but it’s not that much harder to do 10, 20, 30, 40, 50 than it is to do 1, right? Because you start to get some scale and you’re like, “Well, I’m going to go talk to my tax adviser.”
Well, it doesn’t matter if you have 500 properties or you have 1. There’s some complications that they’re going to have to figure out, but it’s not that much harder for you. And so I think that people are doing themselves a disservice by doing less properties because they’re not taking advantage of that scale opportunity.
Kevin: Right. But I think it’s so cool that you have 40 or so portfolio of properties and I know you don’t do your own management. Like, do you know any of your tenants? Have you seen any of your tenants many years ago?
Mike: I don’t know [inaudible 00:31:10] people’s name. I don’t know a single tenant’s name. I don’t want to. That’s the thing. I think I talk about this sometimes like if I’m out driving around, looking at deals, or just out with my family or whatever, if I’m anywhere close to one of our rental properties, I’ll go out of my way to not drive past it. I just don’t want to enter into my head that somebody’s parked on the lawn or that grass is too long. I don’t want to know . . . I mean, it’s not like I’m going to get out and mow it, so what am I going to do besides just get stressed out about it?
Kevin: Right. Well, it’s such an interesting mindset that you mentioned that because it’s always the opposite of other people, right?
Kevin: A lot of our clients are like, “Yeah. I want to drive by my property and look at it and check it out and see it.” I’m like, “That’s all fine and good,” but you bring up a good point, like, what are you going to do about it? There are things that happen when people are living in your home and not necessarily bad, but they maybe aren’t going to mow the lawn as frequently as you’re going to mow the lawn. Or if the property manager needs to call and remind them to mow the lawn. But that’s the benefits of kind of outsourcing is you can take it out of sight, out of mind and it’s interesting, big real estate investors such as yourself actually literally avoiding going by them.
Mike: I know. Well, the problem is early on, I did drive past them and it just stressed me out. Like, I see a branch on the roof or somebody’s got trash bags sitting by the front door or whatever, but I can’t . . . what am I going to do with that information besides get stressed out about it? I mean, I could call my property manager, but it’s not like I’m going to drive past all of them every day to make sure everything’s perfect.
Kevin: Right. Yeah, so that’s interesting. So I think . . . I got off on a tangent there asking that question. But, yeah, today’s teams exist for people to be able to do this at scale or get into the first one and not make it overly complicated. And I think for anyone kind of listening or watching today, that’s thinking, “All right. It’s the beginning of the year 2018. I’ve talked about doing this. I haven’t yet.” I’m sure you get a lot of questions around what’s your biggest piece of advice or how do I get started. I know I do. I’m going to get them a lot right now again beginning of the year. People are making those resolutions, those goals.
My biggest one is just start. I’ve talked to too many people for three, four, or five years at all the different meet and greets I go to, networking events I go to, educational events I go to. I see the same people and they haven’t done their deal yet because they haven’t found the perfect one or they haven’t found the perfect team or they haven’t found the perfect this, that or the other. It’s never going to be perfect especially on the first one, so my advice is always just start because you break that inertia. Once you get that first deal done, first deal on the books, it becomes that much easier. It’s like, “Okay, I can do this.”
Mike: Right, absolutely.
Kevin: So anyway, obviously, a personal thing of mine, a little tangent. Just start, right?
Mike: Absolutely, yeah. We believe in this enough, for those of you listening, that we just want you to take action because, truthfully, everything that we do here, Kevin and I and our respective companies, but we do what we do because we love it and we love to see people build wealth with real estate. We believe in real estate enough that we talk about it all the time. I mean, this is episode number 394 of my show and we actually just hit our 4-year mark. I talk about real estate all the time, obviously.
So to help you guys get started, there’s a few things I want to talk about. So, let me just kind of get mine out of the way real fast because Kevin’s got several things. If you want to get on the phone with us, my team, you can go to passiverental.com. Singular, not rentals but passiverental.com.
You can schedule a call with my team and we can help you. We can help you get financing and we can help you find properties in some of the hottest real estate markets around the country that are kind of done for you. They’ve been rehabbed, they’ve been found, they have a tenant in place. And then Kevin has a book. If you guys don’t have his book yet, Kevin, where do folks . . . tell us about your book real fast.
Kevin: I got the book right here, of course, for this interview because this is important, but it’s called Rent Estate Revolution. And in the book, we talk about everything we talked about today, which is we call it today’s key to retirement security, financial freedom, and the new American dream. So how to find your properties, how to finance your properties, and more importantly for a lot of people, how to operate them, right? As much as I’m a proponent of people outsourcing their property management and building that right team, there is a time and a place for people who want to understand what goes into actually operating a rental.
So we pulled back the curtain a little bit in the book, gave away a lot of our secrets on what we do to be successful as a property manager, you can find it in the book. So it’s Rent Estate Revolution, talks about the benefits of owning over a long-term. They could find it at rentestaterevolution.com. So instead of real estate, it’s rentestaterevolution.com. Renterswarehouse.com will have information about our company and the book. And then ultimately, of course, to Amazon and all the online book retailers have it as well.
So a great one for the new year, right? As you’re out planning on what you’re going to be doing this year and how you’re going to build your financial future and your success in real estate or in rent estate, for that matter, pick up the book. We’d be honored to have you do that, read it, and, of course, we’re here and my team to help people kind of put that puzzle together and figure it out.
Mike: That’s awesome. Guys, you got some great resources here to help you start this year right and not . . . if you’re kind of sitting there and you have some regret that you didn’t start earlier, well, you can’t go back in time. If you have a time machine, actually, let me know because I’ll do some things differently, too. But all you can do is just start now. So we’re here to help you. We’re going to add some links down below the video here on flipnerd.com for this episode to go learn more about Kevin’s book and some of the other things that we mentioned here. So, Kevin, thanks for being with us today.
Kevin: Hey, thanks for having me on. Great seeing you. Happy New Year and good luck in 2018.
Mike: Yeah, awesome. Same to you, man. Everybody, this is episode number 394. We appreciate you being with us today. If you could, go out to iTunes, Stitcher Radio, Google Play, YouTube, anywhere where we distribute our content or anywhere where you’re watching it right now and make sure you subscribe. And also, leave us a positive rating. That’s what energizes us to keep doing this. So, appreciate you guys. Wish you the best in the new year. And, Kevin, thanks one more time for being with us. Great to see you.
Kevin: All right. I’ll see you later.
Mike: Everybody have a great day. Take care.
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