Show Summary

Rental properties are one of the most powerful ways available to build wealth and cash flow. However, many investors don’t pull the trigger because they’re too cheap to pay a property manager, or they don’t want to take on that task themselves. Finding a great property manager can help you meet your goals, and help save you a lot of heartache. Michael Drew joins us for this FlipNerd.com Expert Interview to tell us how finding the right team (property manager, financing, etc) is the key to your ability to successfully build wealth with rental properties. Check it out!

Highlights of this show

  • Meet Michael Drew, CEO of RealEstateDone4U, and Indianapolis turn-key rental provider.
  • Join the discussion on the power of building wealth and cash flow with rental properties.
  • Learn as Michael explains the importance of using a great, trustworthy property manager, and building a great team.

Resources and Links from this show:

Listen to the Audio Version of this Episode

FlipNerd Show Transcript:

Mike: Hey, it’s Mike Hambright with FlipNerd.com. Welcome back to another exciting Expert Interview, where I interview awesome guests from across the real estate investing industry to help you learn and hopefully inspire you a bit.

Just a quick reminder of our upcoming REI Power Summit that’s coming up. It’s the largest online real estate investing event. We’re very dedicated to making this awesome. It’s 100% virtual, so you can join from anywhere at any time, and even if you’re not able to join real-time as our presenters are speaking, you’ll get access for 12 months afterwards. So we have over 50 great speakers so far, lots of great vendors that can help you in our business. So check it out. REIPowerSummit.com.

For today’s show, I’m excited. I’m joined by Michael Drew. He’s the CEO of Real Estate Done 4 U, a turnkey rental provider in Indianapolis, Indiana. And is extremely knowledgeable in investing overall, even in the stock market, which is where his background is, but he’s very knowledgeable in using real estate as a vehicle for wealth building.

He’s actually the author of this book in my hand here, “Retire on Rent.” It’s a great book, and we’ll talk about how you can get that.

But as people continue to grow leery of investing in the stock market . . . as many of you know, we have had definitely some major jitters lately. More and more people are shifting into real estate as an asset class. The power of building wealth with rental properties is very clear, and I think a lot of folks really appreciate hard assets these days more than ever.

So that’s what we’re going to talk about today. The power of building wealth with rental properties. And we’re also going to talk a fair bit about the importance of a great property manager to help you meet your goals, because the academic view is just buy the property and it’ll be a great investment. But the reality is if you don’t have a great property manager in place, you might have just bought yourself a nightmare.

So before we get started with Michael, though, let’s take a moment to recognize our featured sponsors.

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We’d also like to thank Colony American Finance, National Real Estate Insurance Group, and VirtualStaffNow.com.

Please note, the views and opinions expressed by the individuals in this program do not necessarily reflect those of FlipNerd.com or any of its partners, advertisers, or affiliates. Please consult professionals before making any investment or tax decisions, as real estate investing can be risky.

Hey, Michael. Welcome to the show.

Michael: Hey, Mike. How are you?

Mike: Good, good. Great to see you. I’m really excited to talk about this topic. It’s funny, my wife and I were just reviewing our rental portfolio today and thinking about making some changes on the financial side, but it’s . . . we’ve been . . . we don’t have a huge portfolio, but it’s powerful, though. We bought a lot of our properties, quite frankly, in three to five years ago when the market was ripe, and didn’t really realize what would happen over the next few years with values going up, and more importantly, with rents going up quite a bit.

Michael: Right.

Mike: And so it’s really become a great vehicle for our wealth building, even though we don’t realize a lot of the benefit of it today, I mean, at some point in the near future, that thing will be paid off and be a cash flow machine. So I’m excited to talk about this, because I think more and more people need to understand the power of this, and I think a lot of people have been thinking about investing in real estate for a long time for their retirement or wealth building, and they just . . . they never kind of get over that fence, because there’s something in the way.

Michael: Right.

Mike: Hopefully we can get them over that fence today a little bit.

Michael: Yeah, it’s funny you say that. In fact, what is it, “Snow White and the Seven Dwarfs,” I believe there was a song in there that says, “We don’t like what we don’t know. In fact, we hate it.”

Mike: Yeah.

Michael: And there’s a lot of fear around that unknown.

Mike: Yeah.

Michael: You know, thank you for plugging my little book there, but I never knew how to write a book. I mean, I was just totally clueless. And then I went through . . . I realized, like, I probably knocked it out in three months, but it took me two years.

Mike: Yeah.

Michael: But same thing with your first house. And then unfortunately, we as Americans, look, at our history. Unfortunately, it comes to a point when we’re forced into doing something that we do it. I love my mom and dad but, my mom . . . you know, the doctors for years have been telling her to quit smoking. Well, we knew that about 40 years ago, mom.

Mike: Yeah.

Michael: And it’s just . . . if we can just take that, use that hat, like, when we get our oil changed in our car, sure, we could probably do it, but it’s worth the $30 or $40 to have the other guy do it.

Mike: Right.

Michael: And that’s where my position is. You know what? We’ve already had our mistakes. We’ve already done a great job. We’ve already had a lot of mistakes, too. A lot of people can just benefit from those.

Mike: Yeah. I think there were some things . . . there was a time, and I don’t know if this is going to be a good analogy or not, but I’ll kind of wing it here and see what happens. But there was a time when you would never invest in the stock market without going through a broker, right?

Michael: Of course. Of course.

Mike: Now everybody just does it on E*TRADE, and you do your own research and stuff.

Michael: Right.

Mike: Which, is what it is. But I think there’s so many things that . . . and so my point is now people would almost never say, “I want to use a full-price brokerage to buy my transaction.”

Michael: No. Why would you?

Mike: Like, they have a hard time doing it, because they’ve seen that, well, most people just do it themselves.

Michael: Right.

Mike: And I think that’s one of the challenges a lot of people have with real estate is, not everybody. Clearly a lot of people have seen the way. I don’t manage my own rentals. I never, ever would. I hope my property manager lives forever, because he’s awesome.

Michael: Right.

Mike: In fact, I just had him on an interview that we just published.

Michael: Cool.

Mike: He actually owns 2100 houses himself, actually, so . . .

Michael: Oh, great.

Mike: But my point is that I think some people say, “Well, I know somebody that does really well with rentals, and they manage them themselves.” And they start to get in their mind, like, “Why would I pay somebody to do it?”

Michael: Right.

Mike: And so they don’t want to pay somebody to do it, yet they don’t buy them, because they don’t really want to deal with it themselves. So they’re kind of stuck in the middle of I don’t want to pay for it, and therefore I’m just not doing it. It just doesn’t make sense.

Michael: Well, you brought up a lot of great points. One of them was about the stock market. Back in the day, maybe I’m dating myself, but at least when my dad used to trade, it was about $75-ish a transaction.

Mike: Yeah.

Michael: And here’s what you need to understand. When I started learning about the stock market, I don’t know, 15 years ago or so, 20 years ago, is that the key was information. If you remember, my sister’s an NBC news anchor. Do you remember that you’d actually have to wait for the news to find out either what happened that day, or what the weather would be tomorrow, or who won the ball game.

Mike: Yeah.

Michael: I had no idea who won the ball game until the news came out.

Mike: Right.

Michael: So in that genre, or in that area of information, if you will, the threat to the stockbrokers or the market makers, my friends in Chicago, was these people at home were being . . . could go from dial-up to high-speed.

Mike: Right.

Michael: And therefore, the arbitrage in there and the benefit of the bid and the ask price in the stock market was going to be gone. And so that kind of gave birth to kind of a trade at home area.

Mike: True.

Michael: That said is that when you apply that to real estate, here’s where it’s different, is the variable of people. So yes, it’s nice. I can tell you what different flooring to use until I’m blue in the face. But the point is this asset is supposed to perform. That’s a variable with people.

Mike: Right.

Michael: And so therefore just, using an Excel spreadsheet to find out the best property, that’s good, but you really need to put on your big boy pants and really understand the people behind it.

Mike: Sure.

Michael: Because like you said, I wish my property manager would live forever. I hope somebody says that about our team someday.

Mike: Yeah. Yeah, what you said is, like, that . . . my biggest expense with my rentals, absolutely, no doubt about it, is turnover.

Michael: Right. Of course.

Mike: It’s the vacancy and then the repairs I have to do in between.

Michael: Yeah.

Mike: And so if you can manage your tenants properly or kind of get in front of some of the issues that you could have otherwise then it could save you substantially. And you may say, “Well, I’m paying 8%, 10% for property management,” whatever that might be. But it’s like, when you have those situations, which you’re always, you’re going to have.

Michael: Right.

Mike: What happens in those time periods? Because that is your biggest expense, if you can’t manage that.

Michael: Well, now, that’s very interesting that you say that. In fact, I don’t have a ton of attorney friends, but they say there’s an inherent argument there, an inherent difficulty. I want to do a good job for my clients in their case.

Mike: Yeah.

Michael: However, if I do a good job, then I have to charge them, because I spent 10 hours instead of two hours on it, you know? So it’s kind of how that property management company has been designed, okay? If you’re . . . it’s kind of like my child, we have four kids. So what are you incenting? What is that behavior you’re incenting? And then the child will then deliver on that behavior.

Mike: Right.

Michael: Hopefully, right? So like our company, for example, we never went into the property management business to go make hundreds of thousands of dollars. That wasn’t the point.

Mike: Yeah.

Michael: The point was, we were up to about 70 rentals, and we were just kind of imploding a little bit. We didn’t have systems. We didn’t have a software. We didn’t have proper underwriting procedures. This was 10 years ago.

And so our system was built by investors, for investors.

Mike: Right.

Michael: And to us, turnover is a headache. I don’t want turnover. Nobody wants it. I don’t want it. A hundred of the homes that we manage are ours that we own ourselves. So ours is not designed to be a big huge profit stream. In fact, for example, is we’re kind of big into copying success. Like, your friend, I’d love to meet him, who owns those homes. And we’re a little bit of marketing nerds. We have a specific system on a 90-day to lease expiration, a 60-day to lease expiration, and a 30-day to lease expiration.

Mike: Yeah.

Michael: So the girls in the office and the team in the field knows what we’re doing in those different time periods to incent the behavior we’re looking for, which is, of course, a lease renewal.

Mike: That’s great.

Michael: And that make sense? That’s what I would do.

Mike: Yeah.

Michael: That’s what I would . . . in my book, I say I want people to treat me like . . . I treat my clients like I wish other people would treat my widowed mother.

Mike: Yeah.

Michael: Which is true.

Mike: Yeah. Yeah, it’s interesting. We talked about this a little bit before we started here, and just some of my experience. I have a great property manager now, we have a great relationship. He manages for a few other people. Not very many.

Michael: Right.

Mike: But mostly for himself. And he’s been a mentor to me for a long time. And so he’s like, “Yeah, I’ll manage your properties.” So that worked out great.

But I think unless you have . . . the challenges that I had with other property managers is they’re looking at their business model. They have a business. They have to make money. And I understand that.

Michael: Sure.

Mike: But when their business model starts to be aligned with the things that are not aligned with you, such as turnover . . . basically, the more I turn over tenants, I get a placement fee.

Michael: Right.

Mike: And I’m going to mark up maintenance, so therefore the more maintenance the house needs, the more money I make, and stuff like that, it’s misaligned. I mean, why don’t you kind of talk about some different models of property management and what the pros and cons are of those, for folks that . . .

Michael: Sure.

Mike: I guess what we’re talking about here today is that . . . I think a lot of people look at the academic view of a rental property, and they say, “Well, I’m going to buy this property, and this is my PITI, and this is my rent, and I’m going to estimate 10% vacancy, and I’m going to estimate 5% maintenance.” Never works out that way, ever.

Michael: Correct.

Mike: But there’s a lot of other things in there in terms of turnover, or bad management, or other things that could happen.

Michael: Right. Right.

Mike: That a lot of people don’t . . . it doesn’t come up in the academic view.

Michael: Correct.

Mike: But in the real world, it happens, so . . .

Michael: Big time. Big time.

Mike: Help save people from those issues that they might find out the hard way.

Michael: Sure. Sure. And, in fact, what I like to do to solve those issues is, instead of competing, if my deal is a better deal by $1 or $10 or $100, is I just invite people to town, I buy their airplane ticket and have them come on in. Because most of my clients will buy homes and keep them. They’re not, I think only a handful have left, and most of the time, the spouse has died or something weird.

The point, what you’re trying to capitalize on there is the relationships.

Mike: Yeah.

Michael: For example, you’ve probably heard this before, but locally owned and managed property management company, that’s family owned. But you don’t get that. See, in the Midwest, where we are in Indianapolis, we have those old Midwestern values, where we have, maybe to our fault, we have loyalty, and we have a lot of pride.

And so our team, all of our . . . the gals in the office and our team, they don’t know if it’s Mike’s house, or my mom’s house, or my client’s house. It doesn’t matter. The same pride, the same honesty and transparency is held within that. That’s why I encourage people to go in and meet the property management company.

One thing that would be a joke, again, I don’t want to step on any toes. Maybe you have relationships here I don’t want to offend. But a national property management company. That would be . . . it doesn’t . . . it’s like a national . . . it just doesn’t make sense to me. It’s like a national parent. Let’s just parent from DC, and we’ll tell all the kids what to do. It just doesn’t make sense.

Mike: But that’s how this country works. We have our parents are in DC, and they’re telling us all what to do, right?

Michael: Right? Right?

Mike: Okay, yeah.

Michael: A perfect example is, here, I have four closings here this week, and one of them is on . . . we’ll do the one I’m showing. So we have the client, Marilyn, is getting the property inspected. I know actually who rehabbed the property, and we send the punch list on the inspection over to the employee that did the rehab.

Mike: Yeah.

Michael: Because they know the property, they know the tenants, they know the system. We’re dialed in to the point, as a property management and rehab company, that everything is down to the SKUs. Every toilet’s the same, every wax ring’s the same, every window treatment is the same. And then the wear items, for example, like a wax ring, it’s on the truck.

Mike: Yeah.

Michael: So if there’s a little bit of moisture in the half bath, that’s only one wax ring, I know the SKU. It’s on the truck. And in that zip code, we’ve got Jerry is over there, and then somebody is dispatched.

Mike: Right.

Michael: We don’t pick up the phone. And then all of a sudden instead of a service call for $50, and it just . . . you know where I’m going with this.

Mike: Sure, sure, yeah.

Michael: It just makes a whole . . .

Mike: And that’s kind of why . . .

Michael: And then as people come in, yeah . . .

Mike: My property manager is the same way. He . . .

Michael: Yeah.

Mike: I don’t think his employee . . . I think his bookkeeper knows which houses are mine and he knows which houses are mine. But everybody else, the maintenance staff, they just know these are properties that I manage, and they use the same materials and everything for those houses because with that many properties, he’s buying carpet by the semi-load, and toilets by the skid, all that stuff.

Michael: Right. Right.

Mike: But I think part of that is . . . it’s interesting that you were kind of mentioning this, because I know that you own some properties, as well.

Michael: Sure.

Mike: Is the difference between a property manager that actually owns rental properties themselves and one that doesn’t. Because I used to have one, quite frankly, that didn’t also own properties, which I never really thought was an issue at the time.

Michael: Red flag.

Mike: But over time it’s like, something would happen, I was like, “Does he understand my pain?” Does he understand this from my perspective, from the owner’s perspective?

Michael: Right.

Mike: And any kind of thoughts on using a property manager that . . .

Michael: Oh, yeah. Well, you . . .

Mike: . . . that kind of can understand where you’re coming from.

Michael: Yeah. The analogy I used to use, which . . . I’m a sports guy. I like to . . . I’m good at a lot of sports. I’m not great at any of them. Is if you’re going to go into the gym, and you want to lose weight, you probably wouldn’t hire the overweight personal trainer. You wouldn’t hire the Willy Wonka guy that’s saying, “Hey, I want to lose 10 pounds,” you know?

The guy who gets it . . . I remember my dad. My dad had passed away about 11 years ago. And when he was teaching me how to fix things around the house, he said, “Son . . . ” He’d lean in real close and he’d say, “You just look for the oldest guy you can find at Home Depot and ask him the question.” Because he knows, you know? He knows.

And so to your point is the property managers, like myself, who own the same real estate, is . . . like you mentioned carpet, for example. About seven years ago, we tried out these commercial grade of carpet. We got it at pennies on the dollar. It was great. You could just shampoo it right out. Stain resistance, whatever.

Mike: Yeah.

Michael: But over the years, we noticed that our . . . maybe sometimes we’d keep it in our bedrooms, but mainly we’d go to hard surfaces. Vinyl plank, a variety of different hard surfaces, because the turnover’s a lot less.

Mike: Yeah.

Michael: And we’re able to rent the units that had hard surfaces.

Mike: Right.

Michael: Remember, we were born out of exploding from ourselves. We just owned so many that we had to get these systems in place for ourselves.

Mike: Right.

Michael: And so I don’t feel like a $2000 carpet bill that . . . I don’t gain any value there. I didn’t improve the property. So we started incurring the initial expense of hard surfaces in the beginning, and then the turnovers are a lot less. And then that’s what I’d do for my mom, that’s what I’d do for myself, and that’s what I’d do for a client.

Mike: Sure.

Michael: And the rental amounts are the same. We still get $900, or we still get $1200 a month in rent. Doesn’t matter.

Mike: Yeah. Yeah.

Michael: You know, so . . .

Mike: Yeah.

Michael: Yeah. Good point, good point.

Mike: So talk a little bit about . . . I think a lot of . . . especially folks that are looking to accumulate properties . . .

Michael: Yeah.

Mike: When they’re getting started they think a lot more about how they would feel if they lived there, or they . . . because of HGTV, everybody’s an expert on how to do something, or how to rehab something.

Michael: Sure. Sure.

Mike: There was somebody that I used to kind of mentor, and her very first rehab, she wanted to put the dishwasher almost on a pedestal. So it’s up high, so you don’t have to bend down so low. It’s like, I’ve never seen that before. She said, “Well, I have that at my house. I really love it.” I was like but nobody’s ever seen that before. That sounds cool, but . . .

Michael: Right. Right.

Mike: But, you know, you’ve got to have a special counter put in, you’ve got all sorts of stuff. So just talk about those people that are kind of the HGTV pro, but you know that it doesn’t add value, and why people shouldn’t care about what they think about a rental property.

Michael: Yeah. Not to be rude, but that’s a beginner’s mistake.

Mike: Yeah.

Michael: I’ve made the same mistake. You rehab because it looks good, or you watch one of those shows. But here’s what you don’t understand. By the way, do you notice that every one of those shows, they always make money, and they always do it in the last, 30 seconds before the . . .

Mike: Yeah. And they get their money on these huge checks. I mean, that’s so cool.

Michael: Whole price offer all the time.

Mike: Yeah.

Michael: Let’s think about this. Like, I’m not a Subway fan, which is the franchise. The Subway sandwiches. However, if Mike, you and I need to go . . . we’re low on franchise income, so we evaluate Subways, and they’re great businesses. We should really go buy a Subway. And there’s one right there over available on the strip center right next to the mall, and man, it’s lock and load. Let’s do it. We each put in X, whatever, $50 grand each. I have no idea.

The point of doing a Subway is to make money. The point is not to become a sandwich artist, my friend.

Mike: Right.

Michael: Okay? The point is to make money. It’s a great location. It makes sense. The numbers work. Whether or not you like subs is irrelevant. Read the book, Michael Gerber’s “E-Myth.”

Mike: Yeah.

Michael: I mean, this is basic, basic stuff. So for example, in our area, in our zip codes, is A rentals are good. You’ll make more money with B rentals. You’ll make more money with them. It’s just how it works.

Mike: Right.

Michael: Now, the rents don’t quite keep up with the A, A-plus property. I tried it. We built 70 of them, and they’re good. But if you’re my best friend, I’d probably give you an A-minus or a B-plus. You’ll just get a better rate of return.

Mike: Sure. Sure.

Michael: So absolutely. Just put your ego in your back pocket and go from there. Absolutely.

Mike: Yeah. It’s kind of funny. I’ve talked about this in the context of rehabbing a few times before. But it gets to a point to where the first few houses I rehabbed, I’ve rehabbed probably around 200 houses. The first few I rehabbed, I liked going to pick out stuff. Lights and stuff like that. And my wife is, like, staging the homes herself.

Michael: Right.

Mike: And it gets to a point to where you’re like, “Well, I don’t have time for that. I need to do more deals.” And then it gets to a point to where it’s a boring business. Like, if it works in its best, it’s boring. You’re doing the same thing over and over again. It gets monotonous. It gets boring. But that’s what will make you the most money.

Michael: Sure. Sure. Well, so then what I did is when I talked to these people about . . . to kind of transition into building and having real estate become a wealth, a financial leg on their table, if you will.

Mike: Yeah.

Michael: Is, like, what is your plan? I talked to people very . . . you’re right. It is a boring business. Boring can be good, though, right?

Mike: Yeah.

Michael: Is what is your plan? When people say, “Oh, I make $100,000 with my business,” or, I don’t want to drop numbers to impress or not impress anybody. I don’t care if it’s $50 grand or $500,000. It doesn’t really matter. Let’s say you make a quarter million dollars. That’s $20 grand a month. Here’s a question. How are you going to make your $20 grand a month when you retire?

Oh, you’ve got your $2 million in your paid-off house? Your $2 million at 5% is about $100 grand. After taxes, it’s $70. You’re used to living on $20 grand a month. I mean, people don’t really do the math on this stuff.

Mike: Yeah.

Michael: They really don’t.

Mike: Yeah.

Michael: And so that’s when I talk to them, and they’re 35s. You know, 35 to 50-year-old range. And I’ll say, “Well, listen. How about this house right over here? Let’s do a little dog and pony show.” We show them that this thing, on a 30-year mortgage, or even a 15-year mortgage, is going to give you $200 to $400 a month in positive cash flow, grab onto four of them, and they realize, well, the four of them will give me $1000 a month in positive cash flow. That means in two years, I’ll have another $24 grand. And what can you do with that? Buy property number five.

And they’re like, “Wow. So all I have to do is buy my first four properties, and the positive cash flow should help me buy property number five in two years, property number six in 1.7 years, property number seven . . . ”

Mike: Yeah.

Michael: And they’re like, “Well, oh, well . . . ” And they get to, “How do you start?” You start with one, you know?

Mike: Yeah.

Michael: And if you do it, and if you roll up your sleeves and you have somebody to hold your hand, somebody like me and you, we’ve been around for a while. We don’t need to fleece the field. We leave some meat on the bone for the clients, and they enjoy it.

Mike: Yeah.

Michael: So it’s not that hard when you start. My joy is when someone comes up to me with a challenge. You know, they’ve got . . . I do a lot of 1031 exchanges, and they say, “Hey, listen. Now I’m really looking to get this money moving.” And I said, “Oh, that would be fun. I can give you a couple doubles, a couple four-bedrooms. Let’s get this done this month, and we can pay you . . . we’ll ACH your rent next month.” I mean, that’s fun for me.

Mike: Yeah.

Michael: And then it gets a little bit more exciting.

Mike: Yeah. I think we talked . . . we kind of started this interview talking about people that have kind of fear of getting started, and I really think that they . . . I do coach a number of people, but not in the context of building wealth with rentals directly, per se. Although it’s something that I think is powerful.

But, I mean, I have a very good friend of mine that, for years, he wants to buy rentals. And every time I’m like, “Hey, here’s a deal. I’ll sell you this deal I haven’t told anybody else about it. I’ll sell it to you for less than I’ll probably sell it for somebody else, because I’ll feel guilty if I did anything other than that.”

Michael: Right.
Mike: And then there’s always an excuse. “Oh, no, no, I . . . ” You know, there’s some reason why he won’t do it. But I think . . .

Michael: Right.

Mike: I think what I don’t provide is . . . I know that your company does, and there’s a lot of other companies out there that do this, too, is almost like a financial planning exercise of how you can build . . . let’s talk about what your goals are, and let’s build this, instead of just a transaction.

Michael: Right.

Mike: And I think that’s where a lot of people get hung up, is their . . . in this business, opportunities come up, and they’re gone almost immediately, right?

Michael: Sure.

Mike: So you’ve got to be willing to act fast. And I think some of the way that people get over that is, one, is experience. After you’ve done it a few times, you’re like why did it take me all these years to make a few deals? Because . . .

Michael: Absolutely. Yeah.

Mike: . . . I’m over that fear hump.

Michael: Right.

Mike: But two is just working with somebody, from a property manager to whoever’s providing you financing, that you can just trust that you know is going to kind of steer you in the right direction of doing the right thing.

Michael: Right. Right, right.

Mike: Yeah.

Michael: And then . . .

Mike: There’s a question in there somewhere.

Michael: There is. But what you were saying is it makes a lot of sense, is we all felt that. My son, who I love a lot. He’s 14 years old, and he’s getting his confidence. He lost some of his baby fat, and girls are starting to like him now.

And I said, “Well, that’s great. Did you ask any of them out?” And he said, “No, dad. No, not yet.” I said, “Did you put on your big boy pants today? What’s going on here?” He goes, “Oh . . . ”

You know, same with real estate, to a certain extent, is we know the deals work. The appraisals come in, the inspection’s punched out. Nothing’s going to . . . there’s no such thing as a perfect deal.

Mike: Right.

Michael: Sorry, there’s not. I make more money off my imperfect deals, it seems. So to those of you who are kicking tires, or something like that, you really have got to start . . .

And I will say this. A friend of mine, Chris, who’s done triple the business I have, said this. He said, “If you want a deal done right, don’t do it yourself.” I am not the best drywaller at all. You don’t want me fixing any plumbing or electric in your house, or let alone your rental.

So if you take, from a business perspective, you know, whether you’re a stay-at-home mom, or stay-at-home dad, or a corporate executive, or you’re just looking to really get started here, is almost, like, that you’re not that qualified, really, to maybe do your own taxes. Maybe you’re not that qualified to change the oil in your Mercedes, or whatever it may be.

Well, therefore you’re bright enough to go ahead and hire experts to do that. Maybe you should borrow from our experience to do the same thing.

Mike: Yeah.

Michael: And that’s where our joy is, you know?

Mike: Yeah.

Michael: As a provider, there’s values in life insurance and trust and all those other things. I could probably download some documents and do my own will. I could probably figure it all out. But I’d rather go to the guy who does it all the time. I golf with him right over there. And he’s going to get me dialed in.

Mike: Yeah.

Michael: It just gives me confidence. And he says, “Well, what about health care power of attorney? What about a life insurance trust?” Oh, I should do those, too. That’s what your job is.

Mike: Right.

Michael: Here’s your $500. Big deal.

Mike: Yeah.

Michael: And that’s what I appreciate. If you really want to do it yourself, it took me so many years, though. It took me seven years. I know I lost over $100 grand in the stakes. I say it’s my learning curve, and I used to be embarrassed of that number, but it’s what you . . . you’ve got to spend to learn, it seems.

Mike: Yeah.

Michael: You know?

Mike: Yeah. I think some of it is . . . I was thinking of some of my friends that I’ve told to do certain . . . kind of advise them on certain things before. And I think there’s a difference between somebody that’s a . . . if you’re a small business owner . . .

Michael: Right.

Mike: . . . I think you tend to understand your opportunity costs a lot more than if you work for somebody else.

Michael: Of course. Right.

Mike: Some of it is they’re just like, “Well, I’ll just . . . ” Like this same friend that I said, I didn’t tell you the rest of the story. For a long time I would say, “Here’s a deal, and now you need to do this, you need to do this.”

Well, out of nowhere, he bought a house that wasn’t A-type property.

Michael: Right.

Mike: That doesn’t cash flow. It was in his neighborhood, and he lives in a nice neighborhood.

Michael: Right.

Mike: Doesn’t cash flow. It was, like, three times the market value of what I think the ideal rental value . . . I like stuff that’s kind of C-plus, B-minus. So in my market, that tends to be stuff that’s between kind of $70,000 and $100,000 type ARV. The Dallas area. He bought a house that’s like a $330,000 house.

Michael: Right.

Mike: For a rental. And I’m like, “What are you doing?” Like . . .

Michael: Right.

Mike: Why wouldn’t you come to me? I’m one of your best friends. I’ve bought hundreds of houses. Like, let me kind of tell you the way.

Michael: Right.

Mike: And now he went and figured it out. And then all of a sudden he bought a with . . . a four-plex, with four one-bedroom apartments.

Michael: Oh snap.

Mike: I’m like, “What are you doing, dude? What are you doing, dude?” So anyway, I don’t even know where I’m going with this. But I think that sometimes people, they really need to listen to those that know what they’re talking about, and put ego aside sometimes when you think, “Well, I can just figure it out on my own.”

Michael: Yeah. And, in fact, that’s why I wrote a book, and that’s why I . . . I even have a little fitness brand out there. Like, when I work out, my wife and I lost 70 pounds and kept it off for 10 years. And they say, “Why . . . how’d you do that?” And I give them a little bit of . . . we have a diabetic daughter, so I know a lot about insulin and carbohydrates. But here’s the best thing, is, let’s go to the gym. “Well . . .” What do you mean? Well, let me show you. Because your workout and my workout’s probably completely different.

Mike: Yeah.

Michael: Well, how about next Wednesday? You know, I hear all this stuff. And I said, “Well, let me know when you’re . . . ” You know, and I tease a little bit, because that’s my personality. And I said, “Well, just let me know when you’re serious.” Because I can give you another 10 books, but what’s the old adage, right? If all the information in books were the answer, then all the librarians would have thin thighs and great relationships and be millionaires, right?

But the information is not the key. The action is the key.

Mike: Sure, yeah.

Michael: So let’s go to the gym together. Or, you know what? My golf game is lackluster. I’d love to learn more. Can I do a round with you? Shoot a round with you? It’s pretty basic stuff. But that just comes from maturity.

Mike: Yeah.

Michael: When I was in my early 30s, maybe, I was still that do-it-yourself-er guy. I didn’t think I had the money to really do it right. Now I’m in my early 40s, and now I get it. Now it just doesn’t make sense. Now I immediately go to the oldest guy at Home Depot, you know?

Mike: Yeah.

Michael: And it seems more efficient.

Mike: Yeah. Yeah.

Michael: And it’s more fun now.

Mike: Yeah. Yeah. Well, Michael, maybe you can just take a minute and just kind of share . . . we have just a few minutes left here.

Michael: Sure.

Mike: First take a minute and just kind of share maybe your best advice for folks that are trying to get started to buy rental properties, or for some of those that have done a couple, and they tried to do a bunch of stuff themselves, maybe, and maybe kind of hitting a wall on thinking that it was a bad idea. Maybe some of it is just bad decisions on their part of how things get done, or whatever.

Michael: Right.

Mike: But maybe just a couple minutes to talk about how to do this the right way.

Michael: Sure. Well, you know what? It’s funny. Since I mentioned a little bit about sports, because they’re kind of easy. You know, football season is . . . people can relate to them easier.

Mike: Yeah.

Michael: When somebody comes up to me and says, “Hey, listen. I want to lose . . . ” I’m not a personal trainer by far, but I have a lot of different things I’ve done. And I say, “Well, what is your point? What are you going for? Do you want to just lose weight? Do you want to get more muscular? Do you want to step on stage? What’s the point?”

“Well, I just want to really look better in a T-shirt.” What is that . . . and I really, like, it’s a painful process.

Mike: Yeah.

Michael: And then they finally say, “I want to get rid of these stupid love handles,” or something like that. Okay. Got it. What does that mean? It probably means about 20 pounds. Okay. And like I said, I’m not a personal trainer at all. But then I dial it down to realize that really, nutrition is really the problem.

So when an investor comes to me, and they’re looking for these one-offs. What do you do here, or what’s this, or what’s this, or what . . . what’s the point?

So that’s my big tip. That’s one of the tips.

Mike: Yeah.

Michael: What are you going for? One of my clients is a CFO at a local company, huge company here. She has no time whatsoever. So I know exactly what she’s going for, I know the product, and I know what she’s . . . that one cup of coffee with her was very valuable.

Mike: Yeah.

Michael: And she’s on her sixth property. The first two or three worked, and boom.

So just be clear. You know, maybe you are a do-it-yourself-er. Maybe you’re not. But be clear on what you’re going to go for. Do you want the six-figure income? When do you want it? And then I can help you find a loan product.

For example, I do a lot of investing in my Roth IRA. We have a lot of clients who do the same thing. And they’re designing their six-figure income, but they need to have more tax-free income. So I help them do that. O different things like that. That’s fun for me.

Mike: Yeah.

Michael: So be real clear on what you’re going to go for. “I want to make sure I make $20 grand a month in the next X number of years.” Well, judging by your credit, you can’t do it that way. And then we just figure out . . . [inaudible 00:32:12].

Mike: Yeah. Yeah. I think what you said is . . . I think one thing that people get hung up on sometimes, especially with real estate, is they’re doing it for the money. They want to make money.

Michael: Sure.

Mike: But the goal tends to be something like units. “Well, I want to own, like, 20 houses.” It’s like, well, okay, well, what does that equate to in terms of real dollars? Because you can’t put units in the bank. So I think what you said is great. So I would kind of encourage people that are out there to . . .

Michael: Right.

Mike: I think what you said, it sounds like, just figure out what it is that you’re trying to achieve financially. And then back into how to get that done, right? Exactly.

Michael: You got it.

Mike: [inaudible 00:32:42] At the end of the day, it’s not rocket science. It’s just having a plan, right?
Michael: It’s not. Like when you’re saying . . . like I said, the little Subway franchise, you and I both have to chip in $50 grand, and it makes us $2 grand each a month. So it pays us back roughly in two years, and we own a business together. That’s not bad.

Mike: Yeah.

Michael: And then we can evaluate it. By the way, don’t plan on me making sandwiches, though.

Same thing with you. If you’re going to build a $20,000 or $2000 a month income, don’t . . . you’re not going to be doing any drywall.

Mike: Right.

Michael: You’re not going to be doing any toilets. So remember that means your rate of return has to incorporate that 8, 9, 10% property manager, right?

Mike: Sure.

Michael: And therefore, that goes back to the first half of the interview, which is dialing in that property manager and that relationship. And that’s where I’m sure maybe you have those and wherever you’re listening to this from, or of course I’d love to raise my hand and have you come visit us.

Mike: Yeah. Yeah. Well, why don’t you take a second and share how people can learn more about you, whether they want to invest in Indianapolis, or they want to pick it up here again. I know there’s a lot of folks that just listen, but . . . “Retire on Rent” by Michael Drew. We’ll add a link down below the video for those that want to find your book here. But kind of tell us how folks can find you.

Michael: Sure, sure. Well, thanks so much. Well, I did actually grab that URL, so if you’re thinking about that book, it’s called RetireOnRent.com, and it is available also on Kindle, and I’m trying to record that on Audible. It’s still on the to-do list, though. But it’s RetireOnRent.com. That’s just for the book. That will link to . . .

Mike: Just get James Earl Jones to read your book, the abridged version.

Michael: That’s right. Sam Jackson. And then the main real estate website is RealEstateDone4U.com. And that’s the RealEstateDone, number 4, letter U, dot com.

Mike: Okay.

Michael: And we have a couple white papers that are going on there. We have a webinar that I do on a couple times a week basis.

Mike: Awesome.

Michael: Just watch the webinar, watch that. And then just schedule time with me and see if the shoe fits. You know, I’m a lean and mean organization. You won’t come and see a big office. We know everybody, we hug everybody.

Mike: Yeah.

Michael: I know maybe . . . sorry if I’m cheesy, but it works.

Mike: Yeah. That’s great. Well, Michael, I appreciate your time today. Great to see you.

Michael: You, too. You, too, Mike. Well, hope to see you . . .

Mike: And I would encourage everybody out there, you know, no matter what, I think real estate is just an awesome tool, I know Michael does too, for building wealth. And it’s not without some drama once in a while, for sure.

Michael: Right.

Mike: That’s why it’s important to have a good team. But I think it’s such a great vehicle for someday being able to say, “It doesn’t matter.” Nothing matters anymore, because I’ve got this.

Michael: You’ve got it.

Mike: Instead of worrying about what your retirement account is doing in the stock market, which a bunch of people just got hit hard. Or in terms of your pension fund at a company that is maybe not as stable as you once thought it was.

Michael: Right.

Mike: All those things, they kind of go away when you take personal responsibility in building wealth with real estate.

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