The SFR Show

Michael:

Hey everybody, welcome to another episode of The Remote Real Estate Investor. This is our weekend wisdom episode. I'm Michael album and joined today by Tom Schneider and Roofstock CEO, Gary Beasley.

Theme song

Michael:

So, Gary, we want to ask you a question about what is your favorite metric to use when evaluating properties? And how do you think about that metric when it comes to total return.

Gary:

So I like to think of single family rental homes as sort of like a bond that's indexed for inflation with an equity kicker, and I'll explain what I mean by that. And the reason I think it's particularly relevant right now, is we're in a low interest rate environment, people do feel like with all the money we've been printing over the last few years, there is a potential for inflation down the road. So you want to think about what kind of investments could potentially be inflation hedges in case inflation. And the Fed has said, we're gonna keep rates low, and we're not so worried about inflation, so we're not gonna be as aggressive in raising rates.

And then you've got this equity kicker element in homes, which is really the appreciation component of it. So let me tell you what I mean. So the bond component is that the cash flow that you could generate from the home when you own it, and that's like the bond piece every year, you could raise the rent to at least keep up with inflation, because their annual contract. So if there's a lot of inflation in the market, you can raise the rent. So if you had to sign a 10 year lease that was flat and inflation went up, you would be in trouble. So you've got that annual indexing.

And then you've got the capital appreciation piece, which if the property goes up, you know, 3%, a year or 4%, a year, which is historically has done over the long term, you get that capital appreciation piece, like you would get, say, in a stock with a stock value going up, you've got the value of your underlying asset going up. And what's nice about real estate, unlike with stocks, which are harder to, in most cases, put leverage against unless you have a margin account, anyone could get a loan for a house. And so you could get a 70 or 80% loan on the house. And I like to give a you know, very simple example, if you have a home that basically just covers its costs over, say, a five year period, but it goes up at three and a half percent a year and you have an 80% loan on it, you could get a 14 or 15% annualized return on that, because you've got someone else paying down your mortgage and creating principal value, you've got, you know, you're you're riding the property value along, and you're getting kind of four to one leverage on your equity.

So when you sell it, your annualized return over that period can actually be quite high, even if you're not pulling money out or getting current return along the way. So when I look at investing in homes, the yield is one component of it. But I'm really more of a total return investor, I don't necessarily feel like I need to pull the money out every month and then spend it or put it into something else, what I'm trying to do is create value in that asset. And so I like the idea of having someone else pay down the loan balance for me, and create value over time just by getting that exposure to housing, and letting the market be your friend. And then at some point in the future, if you decide to liquidate it, you've got a lot of hopefully embedded equity value, that's when you could sort of realize the benefits of that investment.

Michael:

That's a great kind of analogy and pictorial representation. Can you talk just real briefly about how a bond works if somebody wanted to go buy a bond, so that way they can compare that investment versus real estate? How does that traditionally work?

Gary:

Yeah. So when you buy a bond, what you buy is a coupon on that that bond, and then you get your money back. So you could buy a municipal bond or Treasury, something like that. And let's say you get an interest rate on that bond of 3%. And you buy your hundred dollar bond, and you get $3, every year back. And then at the end of that term, you get your hundred dollars back. That's the entirety of your return. And that's a 3% annualized return, because you're getting your 3% every year, the difference between like a bond and a single family rental home, which you might be able to get a similar kind of return every year on a home, but the value of the underlying home is going up. And so then instead of getting $100 back, maybe you get $120 back, right and so that's where that's that equity kicker piece that I'm talking about. That's over and above that bond piece.

Michael:

Already, everyone that was our quick weekend wisdom a big big, big thank you to Gary super informative. If you enjoyed the podcast, please feel free to leave us a rating and review wherever it is you listen to your podcast. We look forward to seeing the next one. Happy investing

In this episode we chat with Coach Chad Carson with coachcarson.com about his journey to financial freedom, real estate partnerships, common challenges for investors and Chad's thoughts of the future of real estate. 

---

Transcript

Michael:

Hey everybody. Welcome to another episode of The Remote Real Estate Investor. I'm Michael Albaum and today I'm joined by,

Tom:

Tom Schneider.

Michael:

And today we are going to be having a really, really, really fun episode with author, teacher Chad Carson with CoachCarson.com . So Chad is gonna be talking to us about all things real estate, his story, how he got started, and now he's been a full time investor since his college graduation. All right, let's jump into it.

Theme Song

Michael:

Chad, thank you so much for taking the time today. Really appreciate you being here with us.

Chad:

Yeah, thanks, Michael. Thanks, Tom. Really great to be here as well.

Michael:

And so tell all of our listeners whereabouts in the country are you located.

Chad

So I live in Clemson, South Carolina. And probably our claim to fame is the university right next door. It's a tiny little town. But Clemson University's here the football team. And so I went to school here and then stuck around afterwards and still live here. And it's really right next to the foothills of the Appalachian Mountains, lots of hiking, lots outdoors, lakes. So just a good good place to live and raise a family and invest in real estate as well.

Michael:

Awesome. And we were just chatting before we started recording here that you got some rain from this last weather system. But everything is all good. Everything is sounded dry.

Chad:

As far as I know. Yeah. No emergency text, you know, you guys are about long distance investing and passive investing. You know, most of the time, I don't hear anything from the property managers. They handle it. But now it's every once in a while you do get some emergency text.

Michael:

So far, so good deal. Awesome. So I know you I think Tom knows you pipe in bigger pockets. It's kind of, you know, you're a big hero of mine for what you've done and what you've written. And we'll get into that in a little bit. But we'd love to get a little bit of your background and your story to start things off here.

Chad:

Sure. Yeah. Well, I love bigger pockets as well. And what when I first started there, it was 2003. And I graduated from college. And I was a I was a biology major in college, I played football. So I kind of was just, you know, like anybody else when they're becoming an adult trying to figure out what's what's next, what am I going to do with my life. And I was fortunate enough that my dad had rental properties. And I used to like growing up, he would drop me off at a rental property and that he had bought at a foreclosure sale in the middle of the summer in Georgia.

And it'll be hot in the junk everywhere and an old refrigerator and he's alright, Chad, I'll be back in a few hours cleaning that frigerator out. They had old, you know, like deer meat or something. I'm sure it sounds like I hate this business. Who would want to do real estate. So low Behold, I graduated from college, I thought why don't I just give this real estate thing a shot for a year or two. And then I'll go back to the real world after that. And 20 years, 18 years later, I'm still still doing that little side hobby of real estate investing.

Michael:

How great is it? It's so funny how the lens in which we learn about something or see something tends to overshadow you know, somebody of the other facts, right? Because we hear all the time Oh, I don't want to be a landlord. I don't wanna go fix toilets in the middle of the night. Or it is just you know, I don't want to go clean out refrigerators.

Chad:

Yes, exactly. Yeah, my brother and I were ungrateful little little guys that were complaining about that. But it was really good. It was a good learning experience to I think you all come in a side lesson, but cleaning the floors of the store or cleaning out the frigerator of your landlord. I mean, you don't want to do that forever. But it's really a good learning experience to see the basics of the dirty work of what has to be done.

Michael:

Absolutely. And so we're all your dad's rentals local to where you guys lit.

Chad:

He was in Newnan, Georgia still is he has rental properties there and he and my mom have retired and live off a rental income now. And so yeah, that was all kind of local local rentals. And then he's actually now lives in another state. So you know, it's evolved into a long distance rental arrangement for him as well.

Michael:

Right on and so after you graduated college and started to do your real estate side hustle, I mean, how did you get Into it full time was it was always part time or was it always full time?

Chad:

It was actually full time for me Luckily, I didn't need a lot of money to live right after college you know, still in the the ramen noodle stage, living and spare bedrooms of friends houses and worst case living in my camera, a Toyota Camry or a 10 or something, you know, so I was I was in that stage of life where I was really low cost no family to support it. So I just jumped in. And rather than being an investor, I was really more accurately an entrepreneur, who is just trying to find good deals, we would flip them we would either typically when I my first year to have a business partner, we've worked together the whole time, we would find deals for other people and just kind of pass them on for a small fee is what's called a wholesaler.

So that was how we learned the business, cut our teeth. And then but as we learned to do that, we picked up that skill of finding good deals, it was kind of a natural step to start borrowing our own money from private investors from a couple local banks. And so we started flipping some houses where we fixed them up and flipping, flip them. And then after another A few years after we built up a little bit of capital, we started doing rental properties. And that's really split now that's that's our main thing. Now we very rarely do any flips. But we do rental properties. We loan some money to other people who are flipping houses so we're more of a kind of transition into a more passive investor long run

Michael:

Right on you kind of covered the Whole real estate investing schema there, didn't you?

Chad:

Yeah, I've been fortunate to be able to do a lot of it. Yeah, I've been on the money side now a little bit more the buy and hold the flipping, I've been the one who's out there making, you know, 5, 10 offers a week, you know, knocking on doors trying to buy properties that are, you know, in distress situations or landlord. So, it's been fun to be able to do all aspects of it. And I think it's kind like I talked about earlier, some point, if you want to outsource it other people, I don't think you need to know how to be an expert on everything. Like I'm not an expert, remodeler, contractor. But it certainly helped me be able to make decisions a little bit better with our money. Knowing all the details, what has to be done,

Michael:

That makes sense.

Tom:

It's almost more important to know where your gaps are at, you know, you know, versus coming in. And hubris and you know, saying that you're the best and every as that's a great point.

Chad:

Yeah, yep.

Michael:

And was all this local to where you were Chad?

Chad:

It was at the time. Yeah, so I've always invested in Clemson, I was fortunate that, you know, not a lot of people in the country aren't as fortunate that the deals that we were flipping also transition nicely into rental properties. And actually, my very first rental property was a house that I bought from another investor, the investor owner financed it to me with a really small downpayment. And I moved in briefly for like six months, and I realized is like a 2324 year old kid, as I can't afford this house with like $750 payments, and it's the best it is sold to me. So I quickly moved out and rented it out, and was able to at least turn it into a rental property.

So that is my story. But I have over time, my wife and I part of our our story is that she's a Spanish teacher, we love traveling. And so we always knew kind of the back of our minds, the rental business is going at once we want to turn that into an income stream that we can use to travel and have a little bit more flexibility. And so several trips in our time together, 2009, 2017, we've gone abroad and kind of taken our backpacks before kids and just wandered around in South America. And then 2017, we had our two kids who were three and five at the time. And we moved to Ecuador for 17 months, and put them in school there. And they were able to study set learn Spanish with kids there and and so what started as a local business turned into a more of a long distance business and kind of forced us to think about systems and approaches and property managers. And how do we do this without me having to be there all the time?

Michael:

Oh, this is so cool. I have so many follow up questions. But what a neat story. What a neat story. So with all the local stuff. Did you have property managers, were you utilizing property managers when you're doing the buy and hold type stuff?

Chad:

Yeah, we started off doing everything ourselves. So not saying that's the right way to do it. But we were the property manager and say we as a business partner as well, early on, we actually divided up the business into like, the first step was acquisitions, and then financing, and then fixing up the property and then farming it out, which is either selling it or renting it out. And we basically divided it down the middle I was the acquisitions guy, I was the financing person who worked on getting bank or private money. And then he would manage the rehabs and then either get it rented out or sell it. And so we we did all that in house in terms of the early on property management.

And we over time, the the model we did was we grew kind of internal assistant who started off as a bookkeeper. And then she's really competent as a bookkeeper. And we saw the she had other skills, communication skills. And so we kind of groomed her into being more of a property manager, where she would do 90% of the tasks. So the you know, when we put signs out or put ads in the online or took calls from people or talk to people, former landlord, she would do almost all of that, I would still be the underwriter to decide, yes, we're going to rent to this person or not. And I would sign the lease agreements, still do some things like that. But we basically built our own internal property manager for a little property management company for a little while. But then over time, we'd grown a little bit bigger. And it outgrew her capacity to do as much. And she also decided to retire. So we just in the last year, we've moved more to third party property management with a couple different companies. So we've transitioned into just having being more of a pure investor, and having other people do do the property management stuff

Tom:

In transitioning to that more of a buy and hold strategy versus wholesaling. I'd love to hear what were some of the early kind of like learning points that are no struggles of just getting in and being more that kind of buy and hold strategy is I would imagine doing self property management. There's some challenges there but kind of across the board. I'd love your thoughts on.

Chad:

Yeah, I mean, yeah, the definitely the actually learning how to be a manager was was a big growing curve, you know, and I wish we had more time of dating myself a little bit, but 2007 and eight was when we were really started transitioning into more full time buying hold. And that also happened to be the time that the Great Recession happened and rate time and I

Tom:

Think everyone was forced to do that. Anyway,

Chad:

I was forced to do it. That's why we couldn't flip as many houses that we had just bought in 2007. So that was a big learning experience. I think the other thing we just a lot about we just had we had learning lessons where we may mistakes on how to how to analyze the numbers for a rental property. And this is a big takeaway that I know you guys probably talked about too, is that if you don't have a good estimate of what your maintenance and your capital expenses are, and you underestimate those, you know, when you buy and hold your, you're holding this thing for me, you're nobody else is going to bail you out of this, like with a flip, you could, you can make a few mistakes, even worst case scenario, you lost a little bit of money, you get rid of the property, and you move on to the next one, with a buy and hold. I mean, this is this is it, you better do your analysis right up front, because it's not going to get any better over time. I mean, the rents might go up in value out a little bit, but it's a long, slow process. And so we bought some properties and just got too aggressive and underestimated a lot of repairs, where we thought we're gonna make $200 a month in cash flow, we're really negative 50 or negative hundred bucks a month. Hopefully, I'm not the only one has ever done that. But

Michael:

You’re in very good company, man.

Chad:

All right. Yeah, so we made that mistake. And but I guess that's the way I learned, you know, I could read in a book, I could listen to a podcast, and then you make the mistake. And now it's burned into my head, wait a minute, like you have to replace heating and air units, wait a minute, this is a 60 year old property and the sewer system or the, you know, the pipes underneath the house are going to start breaking after a long time. So I think some of those old house problems, Tom, were the are some of the lessons, I think we learned that you have to understand how houses put together again, you don't have to be the expert on doing all that stuff. But if you're gonna invest your money, and especially investing directly in properties, you do need to be the asset manager who thinks about the long term life of your systems, which types of properties are most efficient. So we found out that, you know, if you have a house that has all wooden siding, and you have to paint that every five or 10 years, that's a lot more costly than having a property, this brick siding, and has metal trim around the outside of the house, as you know, double pane vinyl windows, and all that low maintenance stuff that seems just kind of boring details. But those kind of things make the difference between a property that makes money over 10 to 20 year period, and a property that becomes an alligator and eats all your money instead.

Michael:

It's such a good point to chat about knowing those type of nuances and intricacies of whatever the local effect on the property is going to have. Right. And in harsh weather climates, you want to have maybe a different exterior than in a hotter climate. So knowing all that stuff, I think is so critical. Chad, I'm curious to know about your partner, and how you guys whoever it is got linked up, because something I get questions about all the time is how do I find a partner? And something I've always said is find someone who has what you don't whether it's money time to experience go look to partner with someone, as opposed to whoever your best friend is just because it's easy. So how did you two meet?

Chad:

I think your advice is right, I think we did bring different things to the party. But we were both beginners in real estate investing when we got into it. And I was when I played football in college at Clemson he had an online business, which at the time was a weird thing in 2000, you know, 02, 03 to have a internet business. And he had it was actually related to Clemson sports. And so I was he was doing interviews with some of the football players. And I just met him that way and kind of hit it off talked about finance and real estate something else. And so over time, we just went to some classes together and said, Hey, this is cool, we ought to do this together. And when I decided to move back up to Clemson, right after college was over, we just jumped in together, we actually started an LLC, each of us put 250 bucks into this LLC.

And so we had a $500 in capital in this thing. We actually read a book called The E-Myth at the time really awesome. business book, and book, it was the first book we read about business and it said, Hey, when you start a business, you ought to go and treat yourself like a big corporation and say, Alright, here's the CFO, here's the CEO. Here's the person who handles bookkeeping. And so we drew this like diagram of all the different roles in our little flipping business. And I said, Tommy, which one do you want to take? Alright, I'll take this one. You took it we just like like alternating back and forth. It's totally random. And, but but it was a really good exercise, because it did force us to divide our task and ask like, Alright, who's good at what he was better at just working with contractors and saying, Hey, this is what it is, can you do any better on that price, he was just kind of haggling and staying on focus, and a really good project manager.

And then I was more than a communicator, and going out negotiating with people and finding sellers and kind of the more the sales communication role. And we just divided that up. And we had some crossover here and there, but I think we were, what we both contributed was we didn't have to have a lot of overhead and hire anybody for a while because we contributed a bunch of time to it personally. And then eventually it became profitable to the sense that we could start hiring some people particularly on the rental side, but the thing that made it work was exactly your advice. Make sure you're each bringing something different to the party. The other thing was just aligning your long term goals and Is this a good person, you got to trust your partner with somebody This is all about trust is somebody who you believe in you can trust. If there's any inkling at all, there's just not even if it's not trust, it's not a good personality fit. Just don't do it. Like just move on. There's better there's better ways to spend Your time because it's kind of like a marriage, but without all the other benefits of marriage for a long time, and for better or worse, and, you know, a lot of partnerships get ugly, because there's not an alignment of a lot of those things we just talked about.

Tom:

Yeah.

Michael:

For anybody considering a partnership, please rewind the last four minutes and listen to that again.

Tom:

Yeah. You know, I like about two is just thinking of like, what people bring to the table, you know, it's not all like one side, it could be experience, it could be they have a lot of extra time to work on it. It could be a lot of capital. I mean, just like, as Michael was alluding to earlier, and I mean, just to hammer on the point, like, yeah, trust, if that's not there, like just throw it all out, it really, really doesn't matter.

Chad:

Yeah, I didn't want to hop on that one. We've done other partnerships since then. So we have a company. But we've partnered with other people, and exactly that role, where we brought the energy expertise, the ability to go find deals, somebody else was super busy at a job, but has some capital and credit. And we did partners like credit partnerships where they would buy, we'd bring a deal, they'd buy the property, and then we found a way to split up the deal. And they were a bit more passive. And we've used a lot of creative financing to get that done, like lease options and, and other kind of contracts. But real estate, so cool. In that way, there are a lot of different ways to split deals up. And it happens all the way up from the very tiny deals all the way up to, you know, hundreds of millions of dollars in commercial real estate, there's using options and leases and contracts, that sky's the limit on how creative you can get if you get the basic, you know, arrangement of what you're talking about that everybody brings some value, you agreed in writing how it's gonna work. And to me, that's one of the most fun parts of the business.

Tom:

I got a question for each. I think a lot of people have can offer one of these things get money or skilled or whatnot. But I think a lot of people are concerned about getting taken advantage of like, what is their kind of BS detector on somebody they might want to do work with? Do you have any advice for people in vetting out a potential partner, either on the capital side or on the operation side on enter your method of kind of identifying like, is this a good actor?

Chad:

I just like to move slowly. Yeah, I think some of this is like, even outside of the real estate sphere. Most of us have worked with people before most of us have been taken advantage before typically is moving too fast. It's trying to get it done. Now, I read a book early on in my career, as well called the Seven Habits of Highly Effective People.

Tom:

Love your book list!

Michael:

Killer list. Chad.

Tom:

Keep them coming.

Chad:

Yeah, I go back to that book all the time. Because there's so many life lessons, it's about knowing yourself, but also how you communicate with people, when his comments was when you're working with systems and business, you know, a lot of entrepreneurs want to go fast, they just want to make everything efficient, do the best thing. But when you're working with people, like slow is fast, like going slower, and slowing things down and getting to know somebody. And I've constantly been reminded this over time, whether it's working with money partners, where you know, I just got to know somebody for a year or two. And do I trust this person do I like them is my personality align. And so many times, we just want to jump into something really fast.

But when people go slowly, take your time, ask questions, get to know the person, then and only then do you start looking at some of the details of the real estate deal. Because all of that the foundation of all that other stuff is completely dependent on that relationship and that trust. So I think that's my tip, it's not really a hack or something you do fast. But if you're long distance, which I know a lot of listeners are, it's gonna be a little bit more challenging. But maybe one of the silver linings of COVID is that everybody's doing zoom anyway. So just getting used to having a zoom with a property manager having a if you are going to partner with somebody who's like a general partner, don't let them push you into something too fast. They're trying to push you really fast. That's probably the wrong person. I've heard somebody give a tip where they've said, I'd like to invest money with you. This is the limited partner talking.

But I want to watch a couple deals that you do before I do that. And they get all the documentation for that deal. They would follow the whole thing through as if they had invested with that person ask questions, they paid attention to details. And that takes a lot of patience takes a lot of time. But I think that's so worth it. You'll get to know somebody, you'll get to know how they do things. If you just study them for a little while, six months, nine months, maybe a year after that you've cemented that even though they're they're a good person to work with it or not. And then that that time you've invested in that downpayment, of relationship building you've invested can last for 20, 30 years after that,

Tom:

Love it, there's this theme in poker called being tight and aggressive. And it's like, you know, having kind of taken that time to get to know someone doing all that right work. And then once it's like, oh, yeah, this is right, then it's being aggressive and moving quickly. I love that.

Chad:

There you go.

Tom:

Moving slow and fast.

Michael:

It is such good advice. Because Yeah, I know, every single time I've been burned by someone is because I moved way too quickly. Because I felt cornered felt forced, it felt like I was my hand was forced. And yeah, it worked out horribly and to the opposite. Everyone that I spent time getting to know it's worked out beautifully or it just never worked out at all and that's okay too. But I spent the time to learn that

Chad:

And I think about myself Why did I do that? Because I've done the same thing like I think it was because I was I had a scarcity mindset that absolutely another deal. There's not gonna be another partner, right? You know, there's always another deal. There's always another partner. So as a brand new investor, don't get pressured to think that you're going to miss out on something. There have been deals for 100 to thousands of years in real estate, there will be deals for hundreds and thousands of years. Again, don't worry about it, you're gonna be just fine.

Michael:

The deal of a lifetime only comes around about once a week. So

Chad

yeah, there you go.

Michael:

Awesome. Well, Chad, I know that you're also in the real estate education space, you have coach Carson, calm, curious to know what you see some common hurdles, challenges are for new investors,

Chad:

I think before knowledge is confidence. Like I think, you know, I deal with so many people who are competent professionals. And in some other space, you know, they're an engineer, they're a salesperson, they're a nurse, janitor, whatever, they're good at what they do. And then here, they come into real estate, and they're an adult trying to learn this thing. And they're also gonna invest a bunch of their money in it. That's just a recipe for like, lack of confidence. And just man I can't. And so that's one of the biggest hurdles that I see. My solution is kind of like, this is sports analogy, Coach Carson, kind of why bring that to the table, is that anything time you're trying to do something big, you just got to break it down into really little small pieces, like the Dave Ramsey baby steps.

Because when you do that, it becomes less intimidating. And you build confidence on that one little thing. And I'll give you an example. Like something out when people are first starting, I often recommend that they just focus on your What is your strategy? Like Don't worry about getting into analyzing your market, don't worry about the money yet. Don't worry about any of that. Let's just talk about like you and your finances and where you are. Are you a brand new beginner, are you you have a million bucks in the bank and you're trying to like diversify, or you have 50,000 bucks in the bank and you're trying to grow that nest egg, depending on where you are, that's gonna sort of dictate which strategy makes sense, whether that's house hacking, buy and hold rentals, long distance rentals, turnkey. You know, there's a lot of different viable strategies out there. Don't try to copy cookie cutters that you heard on a podcast because it worked for Chad or worked for somebody else, you know, have that self knowledge of saying, Alright, here's where I am. Here's where what I need in my life financially, and just be okay  with that strategy. be okay with doing one deal, even though people on bigger pockets are doing thousand deals in one year, you know, man, that's intimidating. Like, I can't I can't do that.

Michael:

I could never do that.

Chad:

Yeah, I could never do that. So therefore I must not be successful. I think that's the challenge is that you can if you compare yourself to other people, that's going to kill your confidence. If you try to take on too much at one time, that's gonna kill your confidence. So be okay with who you are. be okay with where you are. Break it down into the next step and say, what's the next thing I need to figure out? All right, I got my strategy. I'm going to do house hacking. Alright, good. What's next? All right, I need to figure out my target market. Where am I gonna invest? Alright, let's talk about that. How do you analyze the market. So you break it down in those steps, and it becomes much more manageable.

And it's kind of like, you know, you're going on a hike or a journey, you just kind of check one milestone off another milestone. And that's the cool thing about real estate to me is that you don't have to jump all in at one time. Um, there's a bunch of little steps, even down to the contract. If you get a property under contract, that seems really intimidating. But there's a due diligence clause where you can you ask your local attorney or local agent to if you made a big mistake, and you shouldn't pay that price, you have about 14 days maybe to evaluate that and get out of it. So I think there's so many little steps like that we can move forward with low risk or no risk and build your confidence to the point where you get some momentum eventually.

Michael:

That's great advice. So you're also the author of retire early with real estate, a great book, I've read it, we're actually gonna be reading it for our roof stock Academy book club next month. We're very excited about it. Yeah, it's gonna be fun. It's gonna be a lot of fun. You're gonna come join us for our book club session next month. What motivated you to write that?

Chad:

Yeah, it was actually right in the middle of when I was traveling to Ecuador when I wrote it. And I actually had a conversation with Brandon Turner BiggerPockets. We were at a conference about a year before that. And we were just chatting about his books he was doing, they were doing pretty well. I was just picking his brain. And he's like, Oh, you want to write a book, you know, go submit this. And it's kind of early stages of their book, book business. And I started I like the idea. I've been writing a blog and thousands and thousands of words, initially, I didn't think anybody would read that stuff. And then more people started reading it as Oh, that's cool. So I had a lot of words on paper, but I kind of condensed like, what is it all about that? What are some of the messages I'm trying to convey? And what are the things that are important to me and one of the I think the core messages that I try to get across in my blog, and my podcast is that real estate investing is a vehicle. It's a tool, but it's taking you to a place where you're doing more of what matters in your life.

So it's really about your life. It's about working backwards from what's important to you, what are your values? How would you spend your time on a day to day basis, if you had unlimited money, and money wasn't an issue anymore? I think those answers are why most of us are doing it. And very often it gets turned around where we're like, it's all about the thousand units. And it's about the doing really well which is which is cool. You know, I'm not discounting any of that stuff. But I wanted to write a book that not only validated like the small investor who's investing for lifestyle and who's trying to, you know, maybe have five properties, get them paid off and have three or 4000 bucks coming in and allowing them to work a part time job instead of working a full time job at 40 years old.

Like that kind of lifestyle business is what earlier retirement meant to me that was the idea of getting control of your money so that you can get to control your time and your life. And start asking yourself that question like, Alright, what does matter to me what I want to do, and I grew up, you know that same question we asked when we were 15 years old, 10 years old, like when I grew up, I'm going to be an astronaut. When I grew up, I'm going to start this big thing that's going to help the world and save the world. You know, when we get to be adults, we kind of get that creativity and that imagination ground out of us because we get into the practical stuff. And so I wanted to write a book that kind of inspired on the big picture of, hey, what could you do, if money were not an object, and then go from there and give like a blueprint. So it's kind of the big picture, here are the steps you can take to climb up the mountain, whether you're brand new beginner, whether you're intermediate, whether you're advanced, here are the steps you take and the things you need to think about if you actually want to live off of your rental income and have that flexibility.

Michael:

That's so great. Yeah, so often I hear or the question asked, you know, what's your goal and people give $1 figure unit count figure that really needs to go a step further than that is to know what is that money your unit count gonna allow you to do? What's the life that you want to be living?

Tom:

Yeah, yeah. The Why just because it's such a struggle, you know, in going through it, like, there's setbacks all the time. And it's like, you have a really flimsy why on, you know, not a clear kind of definition of like what done you know, where you want to go makes it that much more difficult to keep going without that more solid aspect?

Chad:

Absolutely. Yeah, my real estate is fun. I love the business too. But I recognize there's, there's kind of a variation on the people who get into it, how passionate they are about it, like some people would be fine, getting a few properties, letting somebody else do all the work. And they want to go start a nonprofit to do something completely on their own related to real estate. You know, I'm a nerd, you guys are nerds. We're like doing podcasts about this all the time. But there's some people that are kind of partially nerds about it. And you know, that's okay, too. But if you have that passion in mind, and you have that in mind, it's more than just kind of fluffy feel good stuff.

I mean, it it dictates how you make decisions about the types of properties you buy, the scale of how you grow your business, the types of contracts and deals you get into. I mean, for example, my business partner and I have mainly stayed with small residential. And we've gotten into some like smaller multifamily like 12 plexes. And we bought some bigger properties as well. But we really like the small scale. And we've kind of kept our financing. And the way we do deals pretty simple, like we're not doing syndications and going out and starting, you know, big funds, although we could have had a lot of opportunities to do that. But working it backwards and saying, why am I doing this, I want to be able to turn the business on and off and go travel for 17 months, or I want to start a business like coach Carson, where I made zero money for several years, because it's just fun. And I like it's a passion to be able to do that you've got to build a business that not only makes money, but also has certain require, certain capabilities and systems that allow you to do whatever you want to do. So it's very practical, when you start from the end, kind of work it backwards.

Michael:

I think that's such a good point. I know for me, I kind of personally fell victim to that mindset that, you know, the former mindset of, Oh, I got to get to 100 units, 100 units, hundred units. And then it just got to be to this kind of overwhelming point. And I said, Wait a minute, why am I doing like, why is that number important? What is that going to give me? What if I just rearranged some of the things that made my life simpler, could I get the same result or a better result. And so learning to do less with more, I think is really important too. So I love that point you made Chad. Okay, so you can do real estate full time since you're out of college. And I hear so many people, especially in the academy talked about wanting to retire early and looking to you know, make real estate then do real estate full time. Give us a day in the life of a full time real estate investor. When you're not in Ecuador.

Chad:

Yeah, that's a good question. You know, I still like work. I think that's one of the secrets that people hear about retiring early.

Michael:

Because we're nerds, man.

Chad:

I enjoy it like I do like it. But I think the main differences is there's a lot less pressure. I know when we first started even up until 2014 and 15, even we had some of the properties, same number of properties. There's just always the pressure of like next month, I got to produce again next month, I got to do more and get into some of these plateaus where the cash flow continues to come in. Yes, there's some problems. Yes, the heat and air blows up here and there. Yes, there's some cash flow kind of rollercoasters here and there, but getting to the point where it's pretty consistent on the amount of money you can get coming in, that allows you to kind of change your schedule around as well. For example, I used to take all of our leasing calls, I used to take calls from people, you know, when you put a property for rent, you get dozens of calls, and you're on the phone all the time, like I do deep work, I do creative work, I do things that are not necessarily really urgent, and I paid other people to do the sales calls and taking care of maintenance issues.

And and so I think that's that's the thing that shifted, that doesn't mean I'm not aware of those like I still I think all of us no matter how, you know, quote passive, you get should still pay attention to the detail. So like I look at the property management reports every month, I'm paying attention very closely to the cash flow and the amount of rent that's being collected. And are there any kind of exception reporting Are there any weird things on the report this month that are different than normal? I equate that actually To the like, when you watch the matrix, I think it's so cool when he finally can start seeing everything and like digital numbers, you know, 01010. And so I've always compared the point where you're stepping back from your business to something like that, where you look at reports, and you look at, you know, your analysis of your business and numbers. And then when you see something weird or something unusual, you then jump into the matrix, you go in there, and you figure it out, and talk to the property manager and say, Hey, what's up with this thing? Let me get in the weeds too.

So I just I've had to be in the weeds in the last month or two, we had a fire, unfortunately, for the one of our rental properties, and no one was hurt. That was my first question. But we've had to deal with getting bids from contractors dealing with insurance, and how's this gonna work? And how did you tie those two things together. And so that was a new one. For me, I'm spending more than a normal amount of time on that kind of project that comes up every once in a while. But on a typical week, when it's just, Hey, I'm going to do a little bit of bookkeeping, I'm going to send a text message to the property manager. I mean, that could be an hour or two per week, probably max, you know, 110 properties. So it just ranges depending on how involved you want to be.

And also what's going on, I like to get in on the big side, the one we're selling a property when we have an insurance issue like that, when we every once in a while just meeting up with the property managers and talking strategy talking, Hey, how are we screening tenants? What's your best practice here? You know, there's some things like that that go on. But the kind of day to day week to week basis, it's looking at your bookkeeping, looking at those numbers, asking questions, sending a few texts here and there. And that's, that's kind of a normal routine for me.

Michael:

Right on. So not to one up you by any means. But I actually had two fires in the same building on a property that I own, and I'm dealing with the insurance thing. So I don't know how it's going for you. I hope it's going well. But if you want to chat offline more about it, I'd be more than happy to public adjusters came and saved my bacon. That's a big, big, big plug for that profession. I was a big fan of that. So I hope it continues to go well. But yeah, let me know if you need some recommendations. happy to share.

Chad:

I'm in the early stages. So yeah, I think we'll we'll connect on that. And I'm planning on doing a podcast at some point on my, you know, lessons, the good and bad of what I'm probably screwing some stuff up as well. But yeah, that's that's the that's my plan in the next couple of months to share what I've learned.

Michael:

Okay, perfect. I look forward to hearing that.

Tom:

I got a question for you sort of a crystal ball question. So changing world going through a pandemic, lots of technology advancements, how do you see this evolving real estate investing with your strategy or general kind of an open ended question of just the confluence of changes in the world and how you see it affecting real estate investment?

Chad:

Yeah, I love that question. I think one of the trends and this has already been ongoing before COVID-19 came about, I read a book, it's another book recommendation. Big Shifts Ahead by…

Tom:

I heard you drop Deep Work to another great, great book.

Chad:

Yeah. Another another reference.

Tom:

We love John Burns. Sorry, you're talking about Big Shifts Ahead.

Chad:

Okay. So you know, John Burns, okay. I don't know him personally. But I like his work and his book, Big Shifts Ahead.

Tom:

We had him on the podcast before he's yet he's a super entertaining guy. We had our back, I'm sorry for interrupting. Go ahead.

Michael:

No, he's a legend.

Chad:

He's really smart. his company's built is very good with analytics. And what my understanding is they advise a lot of hedge funds and builders and construction, who are looking at the whole country and trying to figure out the big trends. And so one of the to your question, though, one of the big trends that I think is most relevant for us, as investors trying to pick where we're going to invest, and you know, where we put our money is just the flow of people like where are the demographics of people moving and why. And one of the interesting things that john put out there was that, first of all, there's growth all around the country, I mean, country is doing pretty well, if you look at the big picture, let's be optimistic here. Like in the big picture, we're still have a rule of law, we still have contracts with our economy is really hard to replicate.

You're not when I travel around the world, it's kind of evident, you have good people everywhere, but to replicate the recipe of what we have going on with availability of credit, and Mark real estate markets and contracts. And it's just this recipe is pretty unique that we have. So United States is a great place to invest your money. That's my main takeaway. But then within the United States, john burns points out that a lot of the movement of people has been to the south of Southwest, southeast. They're just kind of outpacing growth in those areas. So I'm in South Carolina, Georgia, you know, Alabama's kind of seeing that North Carolina, Tennessee, Texas, you know, been a big way. A lot of people know that it's already on the map, but also Arizona, Southern California to an extent. But you know, there's a weather thing there. But also within that kind of movement to the south. There's a movement from city centers, to suburban areas. And he actually coined a term called surban. I don't know if you guys talked about it on the podcast yet.

Tom:

We didn't talk about but I love it.

Chad:

Yeah. So the suburban, it's like a hybrid. You have a lot of millennials, for example, lived in urban areas, pre forming their family, they love public transit. They love biking and walking paths and parks. So a lot of these urban things you think about good restaurants, good quality of life. Well, they're moving to the suburbs because they want to buy houses, the urban areas are out of their reach because of the prices. But when they go to the suburbs, what are they looking for? They're looking for urban like qualities. And so one of my favorite locations to invest in and help other people invest in are, you know, go to a city center, go to go to an Atlanta, go to a Charlotte, go to an Austin, Texas, but then go outside the city and find these, you know, little pockets, these little suburban places at 50,000 people 20,000 people, hundred thousand people, and they have their own little gravity, their own little town center and find the ones that have some quality of life factors.

So it could be a college town where I am, that's an example. You've got football games, you've got, you know, intellectual stimulation, you've got culture, there could be other areas that have natural beauty. I think a lot of places Colorado, for example, you know, people are moving there, because of the quality of life. And businesses are moving there, high tech businesses are moving there, because their employees want to live there, these millennials and some of these people who want that quality of life. So I've actually been trying to take my town and Clemson into that I'm kind of getting into local politics and have a nonprofit trying to build bike trails. And I've been trying to convey to them like that trend is happening. And if you're not investing in like quality amenities, and your little small town, to attract those people, you're missing the boat, it's not the traditional, bring in this huge manufacturer who's going to have all these big factories somewhere, a lot of its going to be small tech businesses and people who are working remotely.

And so as real estate investors, we can also pay attention to that and kind of follow some of those trends. And I think particularly for those who aren't big, huge hedge funds, trying to find our one or two little deals, I think we have to go to some of the smaller markets in order to find the opportunities where there's actually still some meat on the bone, you know, some opportunities to buy some properties that cash flow, and have some good growth potential.

Tom:

That's awesome. there's a there's a fund out there that focuses very specifically on this kind of tier two cities. And you're right that a lot of those ones have been kind of picked off, you know, the larger private equity and hedge funds and funds are you know, made. It's so competitive. But that's a great point as far as kind of crystal ball on where to go and looking for these, you know, just outside of those major cities. The great john burns reference. Love it.

Michael:

Tom, any final questions for Chad before them get out of here?

Tom:

No, that was great. Yeah, that was great.

Michael:

Well, Chad, thank you so much for taking the time to be here today. If folks have more questions for you want to learn more about you? where's the best place where they can do that? or reach out to you?

Chad:

Sure. Yeah, everything online for me starts at coachcarson.com. I've been writing a blog there for years I've want to guides and articles and how to kind of in depth how to articles also have been a lot of fun with my podcast and YouTube channel too. So if you like podcasts have the real estate and Financial Independence Podcast focuses on some of the things we talked about today and more the nuts and bolts and practical side of using real estate to retire early to achieve financial independence.

I also interview some other people, mainly, you know, students, I do have some experts on there. But a lot of it's just real people who are getting it done, how they bought their property, how they, you know, grew to three or four properties. So trying to focus just on the nitty gritty nuts and bolts. And I do the same thing with my YouTube channel where I kind of just get behind the camera kind of coach whiteboard style, you know, drawing on a little whiteboard or something. And here's how you do a debt snowball. Here's how you do a house hack. And so if you like those kind of kind of nuts and bolts type approach to real estate. That's, that's what I try to do.

Michael:

Fantastic.

Tom:

Awesome. We'll add a link in the podcast description.

Michael:

Perfect. Chad, thank you again for taking the time. So looking forward to having you on the academy book club next month. Appreciate that in advance. And we'll catch you later.

Chad:

Yeah. Thanks, Tom. Thanks, Michael. It's been a pleasure.

Michael:

Okay, everybody, that was our episode a big, big, big thank you to Chad Carson. That was a ton of fun. Thank you so much for joining us a lot of really great nuggets in there. So go back and give it a read, listen, rewind it, take notes, tons and tons of great content in there. So again, a big thank you to Chad. And we look forward to having Chad back on the Roofstock Academy book club session for the month of November. And so if you were thinking about joining the academy or not sure, check us out at RoofstockAcademy.com and feel free to take advantage of the book club session that we're going to be having for the month of November where we have Chad back on. Thanks everyone for listening. And if you'd like that episode, feel free to give us a rating and review wherever it is you listen your podcasts and we look forward to seeing you on the next one.

Tom:

Happy investing

In this episode we chat with Coach Chad Carson with coachcarson.com about his journey to financial freedom, real estate partnerships, common challenges for investors and Chad's thoughts of the future of real estate. 

---

Transcript

Michael:

Hey everybody. Welcome to another episode of The Remote Real Estate Investor. I'm Michael Albaum and today I'm joined by,

Tom:

Tom Schneider.

Michael:

And today we are going to be having a really, really, really fun episode with author, teacher Chad Carson with CoachCarson.com . So Chad is gonna be talking to us about all things real estate, his story, how he got started, and now he's been a full time investor since his college graduation. All right, let's jump into it.

Theme Song

Michael:

Chad, thank you so much for taking the time today. Really appreciate you being here with us.

Chad:

Yeah, thanks, Michael. Thanks, Tom. Really great to be here as well.

Michael:

And so tell all of our listeners whereabouts in the country are you located.

Chad

So I live in Clemson, South Carolina. And probably our claim to fame is the university right next door. It's a tiny little town. But Clemson University's here the football team. And so I went to school here and then stuck around afterwards and still live here. And it's really right next to the foothills of the Appalachian Mountains, lots of hiking, lots outdoors, lakes. So just a good good place to live and raise a family and invest in real estate as well.

Michael:

Awesome. And we were just chatting before we started recording here that you got some rain from this last weather system. But everything is all good. Everything is sounded dry.

Chad:

As far as I know. Yeah. No emergency text, you know, you guys are about long distance investing and passive investing. You know, most of the time, I don't hear anything from the property managers. They handle it. But now it's every once in a while you do get some emergency text.

Michael:

So far, so good deal. Awesome. So I know you I think Tom knows you pipe in bigger pockets. It's kind of, you know, you're a big hero of mine for what you've done and what you've written. And we'll get into that in a little bit. But we'd love to get a little bit of your background and your story to start things off here.

Chad:

Sure. Yeah. Well, I love bigger pockets as well. And what when I first started there, it was 2003. And I graduated from college. And I was a I was a biology major in college, I played football. So I kind of was just, you know, like anybody else when they're becoming an adult trying to figure out what's what's next, what am I going to do with my life. And I was fortunate enough that my dad had rental properties. And I used to like growing up, he would drop me off at a rental property and that he had bought at a foreclosure sale in the middle of the summer in Georgia.

And it'll be hot in the junk everywhere and an old refrigerator and he's alright, Chad, I'll be back in a few hours cleaning that frigerator out. They had old, you know, like deer meat or something. I'm sure it sounds like I hate this business. Who would want to do real estate. So low Behold, I graduated from college, I thought why don't I just give this real estate thing a shot for a year or two. And then I'll go back to the real world after that. And 20 years, 18 years later, I'm still still doing that little side hobby of real estate investing.

Michael:

How great is it? It's so funny how the lens in which we learn about something or see something tends to overshadow you know, somebody of the other facts, right? Because we hear all the time Oh, I don't want to be a landlord. I don't wanna go fix toilets in the middle of the night. Or it is just you know, I don't want to go clean out refrigerators.

Chad:

Yes, exactly. Yeah, my brother and I were ungrateful little little guys that were complaining about that. But it was really good. It was a good learning experience to I think you all come in a side lesson, but cleaning the floors of the store or cleaning out the frigerator of your landlord. I mean, you don't want to do that forever. But it's really a good learning experience to see the basics of the dirty work of what has to be done.

Michael:

Absolutely. And so we're all your dad's rentals local to where you guys lit.

Chad:

He was in Newnan, Georgia still is he has rental properties there and he and my mom have retired and live off a rental income now. And so yeah, that was all kind of local local rentals. And then he's actually now lives in another state. So you know, it's evolved into a long distance rental arrangement for him as well.

Michael:

Right on and so after you graduated college and started to do your real estate side hustle, I mean, how did you get Into it full time was it was always part time or was it always full time?

Chad:

It was actually full time for me Luckily, I didn't need a lot of money to live right after college you know, still in the the ramen noodle stage, living and spare bedrooms of friends houses and worst case living in my camera, a Toyota Camry or a 10 or something, you know, so I was I was in that stage of life where I was really low cost no family to support it. So I just jumped in. And rather than being an investor, I was really more accurately an entrepreneur, who is just trying to find good deals, we would flip them we would either typically when I my first year to have a business partner, we've worked together the whole time, we would find deals for other people and just kind of pass them on for a small fee is what's called a wholesaler.

So that was how we learned the business, cut our teeth. And then but as we learned to do that, we picked up that skill of finding good deals, it was kind of a natural step to start borrowing our own money from private investors from a couple local banks. And so we started flipping some houses where we fixed them up and flipping, flip them. And then after another A few years after we built up a little bit of capital, we started doing rental properties. And that's really split now that's that's our main thing. Now we very rarely do any flips. But we do rental properties. We loan some money to other people who are flipping houses so we're more of a kind of transition into a more passive investor long run

Michael:

Right on you kind of covered the Whole real estate investing schema there, didn't you?

Chad:

Yeah, I've been fortunate to be able to do a lot of it. Yeah, I've been on the money side now a little bit more the buy and hold the flipping, I've been the one who's out there making, you know, 5, 10 offers a week, you know, knocking on doors trying to buy properties that are, you know, in distress situations or landlord. So, it's been fun to be able to do all aspects of it. And I think it's kind like I talked about earlier, some point, if you want to outsource it other people, I don't think you need to know how to be an expert on everything. Like I'm not an expert, remodeler, contractor. But it certainly helped me be able to make decisions a little bit better with our money. Knowing all the details, what has to be done,

Michael:

That makes sense.

Tom:

It's almost more important to know where your gaps are at, you know, you know, versus coming in. And hubris and you know, saying that you're the best and every as that's a great point.

Chad:

Yeah, yep.

Michael:

And was all this local to where you were Chad?

Chad:

It was at the time. Yeah, so I've always invested in Clemson, I was fortunate that, you know, not a lot of people in the country aren't as fortunate that the deals that we were flipping also transition nicely into rental properties. And actually, my very first rental property was a house that I bought from another investor, the investor owner financed it to me with a really small downpayment. And I moved in briefly for like six months, and I realized is like a 2324 year old kid, as I can't afford this house with like $750 payments, and it's the best it is sold to me. So I quickly moved out and rented it out, and was able to at least turn it into a rental property.

So that is my story. But I have over time, my wife and I part of our our story is that she's a Spanish teacher, we love traveling. And so we always knew kind of the back of our minds, the rental business is going at once we want to turn that into an income stream that we can use to travel and have a little bit more flexibility. And so several trips in our time together, 2009, 2017, we've gone abroad and kind of taken our backpacks before kids and just wandered around in South America. And then 2017, we had our two kids who were three and five at the time. And we moved to Ecuador for 17 months, and put them in school there. And they were able to study set learn Spanish with kids there and and so what started as a local business turned into a more of a long distance business and kind of forced us to think about systems and approaches and property managers. And how do we do this without me having to be there all the time?

Michael:

Oh, this is so cool. I have so many follow up questions. But what a neat story. What a neat story. So with all the local stuff. Did you have property managers, were you utilizing property managers when you're doing the buy and hold type stuff?

Chad:

Yeah, we started off doing everything ourselves. So not saying that's the right way to do it. But we were the property manager and say we as a business partner as well, early on, we actually divided up the business into like, the first step was acquisitions, and then financing, and then fixing up the property and then farming it out, which is either selling it or renting it out. And we basically divided it down the middle I was the acquisitions guy, I was the financing person who worked on getting bank or private money. And then he would manage the rehabs and then either get it rented out or sell it. And so we we did all that in house in terms of the early on property management.

And we over time, the the model we did was we grew kind of internal assistant who started off as a bookkeeper. And then she's really competent as a bookkeeper. And we saw the she had other skills, communication skills. And so we kind of groomed her into being more of a property manager, where she would do 90% of the tasks. So the you know, when we put signs out or put ads in the online or took calls from people or talk to people, former landlord, she would do almost all of that, I would still be the underwriter to decide, yes, we're going to rent to this person or not. And I would sign the lease agreements, still do some things like that. But we basically built our own internal property manager for a little property management company for a little while. But then over time, we'd grown a little bit bigger. And it outgrew her capacity to do as much. And she also decided to retire. So we just in the last year, we've moved more to third party property management with a couple different companies. So we've transitioned into just having being more of a pure investor, and having other people do do the property management stuff

Tom:

In transitioning to that more of a buy and hold strategy versus wholesaling. I'd love to hear what were some of the early kind of like learning points that are no struggles of just getting in and being more that kind of buy and hold strategy is I would imagine doing self property management. There's some challenges there but kind of across the board. I'd love your thoughts on.

Chad:

Yeah, I mean, yeah, the definitely the actually learning how to be a manager was was a big growing curve, you know, and I wish we had more time of dating myself a little bit, but 2007 and eight was when we were really started transitioning into more full time buying hold. And that also happened to be the time that the Great Recession happened and rate time and I

Tom:

Think everyone was forced to do that. Anyway,

Chad:

I was forced to do it. That's why we couldn't flip as many houses that we had just bought in 2007. So that was a big learning experience. I think the other thing we just a lot about we just had we had learning lessons where we may mistakes on how to how to analyze the numbers for a rental property. And this is a big takeaway that I know you guys probably talked about too, is that if you don't have a good estimate of what your maintenance and your capital expenses are, and you underestimate those, you know, when you buy and hold your, you're holding this thing for me, you're nobody else is going to bail you out of this, like with a flip, you could, you can make a few mistakes, even worst case scenario, you lost a little bit of money, you get rid of the property, and you move on to the next one, with a buy and hold. I mean, this is this is it, you better do your analysis right up front, because it's not going to get any better over time. I mean, the rents might go up in value out a little bit, but it's a long, slow process. And so we bought some properties and just got too aggressive and underestimated a lot of repairs, where we thought we're gonna make $200 a month in cash flow, we're really negative 50 or negative hundred bucks a month. Hopefully, I'm not the only one has ever done that. But

Michael:

You’re in very good company, man.

Chad:

All right. Yeah, so we made that mistake. And but I guess that's the way I learned, you know, I could read in a book, I could listen to a podcast, and then you make the mistake. And now it's burned into my head, wait a minute, like you have to replace heating and air units, wait a minute, this is a 60 year old property and the sewer system or the, you know, the pipes underneath the house are going to start breaking after a long time. So I think some of those old house problems, Tom, were the are some of the lessons, I think we learned that you have to understand how houses put together again, you don't have to be the expert on doing all that stuff. But if you're gonna invest your money, and especially investing directly in properties, you do need to be the asset manager who thinks about the long term life of your systems, which types of properties are most efficient. So we found out that, you know, if you have a house that has all wooden siding, and you have to paint that every five or 10 years, that's a lot more costly than having a property, this brick siding, and has metal trim around the outside of the house, as you know, double pane vinyl windows, and all that low maintenance stuff that seems just kind of boring details. But those kind of things make the difference between a property that makes money over 10 to 20 year period, and a property that becomes an alligator and eats all your money instead.

Michael:

It's such a good point to chat about knowing those type of nuances and intricacies of whatever the local effect on the property is going to have. Right. And in harsh weather climates, you want to have maybe a different exterior than in a hotter climate. So knowing all that stuff, I think is so critical. Chad, I'm curious to know about your partner, and how you guys whoever it is got linked up, because something I get questions about all the time is how do I find a partner? And something I've always said is find someone who has what you don't whether it's money time to experience go look to partner with someone, as opposed to whoever your best friend is just because it's easy. So how did you two meet?

Chad:

I think your advice is right, I think we did bring different things to the party. But we were both beginners in real estate investing when we got into it. And I was when I played football in college at Clemson he had an online business, which at the time was a weird thing in 2000, you know, 02, 03 to have a internet business. And he had it was actually related to Clemson sports. And so I was he was doing interviews with some of the football players. And I just met him that way and kind of hit it off talked about finance and real estate something else. And so over time, we just went to some classes together and said, Hey, this is cool, we ought to do this together. And when I decided to move back up to Clemson, right after college was over, we just jumped in together, we actually started an LLC, each of us put 250 bucks into this LLC.

And so we had a $500 in capital in this thing. We actually read a book called The E-Myth at the time really awesome. business book, and book, it was the first book we read about business and it said, Hey, when you start a business, you ought to go and treat yourself like a big corporation and say, Alright, here's the CFO, here's the CEO. Here's the person who handles bookkeeping. And so we drew this like diagram of all the different roles in our little flipping business. And I said, Tommy, which one do you want to take? Alright, I'll take this one. You took it we just like like alternating back and forth. It's totally random. And, but but it was a really good exercise, because it did force us to divide our task and ask like, Alright, who's good at what he was better at just working with contractors and saying, Hey, this is what it is, can you do any better on that price, he was just kind of haggling and staying on focus, and a really good project manager.

And then I was more than a communicator, and going out negotiating with people and finding sellers and kind of the more the sales communication role. And we just divided that up. And we had some crossover here and there, but I think we were, what we both contributed was we didn't have to have a lot of overhead and hire anybody for a while because we contributed a bunch of time to it personally. And then eventually it became profitable to the sense that we could start hiring some people particularly on the rental side, but the thing that made it work was exactly your advice. Make sure you're each bringing something different to the party. The other thing was just aligning your long term goals and Is this a good person, you got to trust your partner with somebody This is all about trust is somebody who you believe in you can trust. If there's any inkling at all, there's just not even if it's not trust, it's not a good personality fit. Just don't do it. Like just move on. There's better there's better ways to spend Your time because it's kind of like a marriage, but without all the other benefits of marriage for a long time, and for better or worse, and, you know, a lot of partnerships get ugly, because there's not an alignment of a lot of those things we just talked about.

Tom:

Yeah.

Michael:

For anybody considering a partnership, please rewind the last four minutes and listen to that again.

Tom:

Yeah. You know, I like about two is just thinking of like, what people bring to the table, you know, it's not all like one side, it could be experience, it could be they have a lot of extra time to work on it. It could be a lot of capital. I mean, just like, as Michael was alluding to earlier, and I mean, just to hammer on the point, like, yeah, trust, if that's not there, like just throw it all out, it really, really doesn't matter.

Chad:

Yeah, I didn't want to hop on that one. We've done other partnerships since then. So we have a company. But we've partnered with other people, and exactly that role, where we brought the energy expertise, the ability to go find deals, somebody else was super busy at a job, but has some capital and credit. And we did partners like credit partnerships where they would buy, we'd bring a deal, they'd buy the property, and then we found a way to split up the deal. And they were a bit more passive. And we've used a lot of creative financing to get that done, like lease options and, and other kind of contracts. But real estate, so cool. In that way, there are a lot of different ways to split deals up. And it happens all the way up from the very tiny deals all the way up to, you know, hundreds of millions of dollars in commercial real estate, there's using options and leases and contracts, that sky's the limit on how creative you can get if you get the basic, you know, arrangement of what you're talking about that everybody brings some value, you agreed in writing how it's gonna work. And to me, that's one of the most fun parts of the business.

Tom:

I got a question for each. I think a lot of people have can offer one of these things get money or skilled or whatnot. But I think a lot of people are concerned about getting taken advantage of like, what is their kind of BS detector on somebody they might want to do work with? Do you have any advice for people in vetting out a potential partner, either on the capital side or on the operation side on enter your method of kind of identifying like, is this a good actor?

Chad:

I just like to move slowly. Yeah, I think some of this is like, even outside of the real estate sphere. Most of us have worked with people before most of us have been taken advantage before typically is moving too fast. It's trying to get it done. Now, I read a book early on in my career, as well called the Seven Habits of Highly Effective People.

Tom:

Love your book list!

Michael:

Killer list. Chad.

Tom:

Keep them coming.

Chad:

Yeah, I go back to that book all the time. Because there's so many life lessons, it's about knowing yourself, but also how you communicate with people, when his comments was when you're working with systems and business, you know, a lot of entrepreneurs want to go fast, they just want to make everything efficient, do the best thing. But when you're working with people, like slow is fast, like going slower, and slowing things down and getting to know somebody. And I've constantly been reminded this over time, whether it's working with money partners, where you know, I just got to know somebody for a year or two. And do I trust this person do I like them is my personality align. And so many times, we just want to jump into something really fast.

But when people go slowly, take your time, ask questions, get to know the person, then and only then do you start looking at some of the details of the real estate deal. Because all of that the foundation of all that other stuff is completely dependent on that relationship and that trust. So I think that's my tip, it's not really a hack or something you do fast. But if you're long distance, which I know a lot of listeners are, it's gonna be a little bit more challenging. But maybe one of the silver linings of COVID is that everybody's doing zoom anyway. So just getting used to having a zoom with a property manager having a if you are going to partner with somebody who's like a general partner, don't let them push you into something too fast. They're trying to push you really fast. That's probably the wrong person. I've heard somebody give a tip where they've said, I'd like to invest money with you. This is the limited partner talking.

But I want to watch a couple deals that you do before I do that. And they get all the documentation for that deal. They would follow the whole thing through as if they had invested with that person ask questions, they paid attention to details. And that takes a lot of patience takes a lot of time. But I think that's so worth it. You'll get to know somebody, you'll get to know how they do things. If you just study them for a little while, six months, nine months, maybe a year after that you've cemented that even though they're they're a good person to work with it or not. And then that that time you've invested in that downpayment, of relationship building you've invested can last for 20, 30 years after that,

Tom:

Love it, there's this theme in poker called being tight and aggressive. And it's like, you know, having kind of taken that time to get to know someone doing all that right work. And then once it's like, oh, yeah, this is right, then it's being aggressive and moving quickly. I love that.

Chad:

There you go.

Tom:

Moving slow and fast.

Michael:

It is such good advice. Because Yeah, I know, every single time I've been burned by someone is because I moved way too quickly. Because I felt cornered felt forced, it felt like I was my hand was forced. And yeah, it worked out horribly and to the opposite. Everyone that I spent time getting to know it's worked out beautifully or it just never worked out at all and that's okay too. But I spent the time to learn that

Chad:

And I think about myself Why did I do that? Because I've done the same thing like I think it was because I was I had a scarcity mindset that absolutely another deal. There's not gonna be another partner, right? You know, there's always another deal. There's always another partner. So as a brand new investor, don't get pressured to think that you're going to miss out on something. There have been deals for 100 to thousands of years in real estate, there will be deals for hundreds and thousands of years. Again, don't worry about it, you're gonna be just fine.

Michael:

The deal of a lifetime only comes around about once a week. So

Chad

yeah, there you go.

Michael:

Awesome. Well, Chad, I know that you're also in the real estate education space, you have coach Carson, calm, curious to know what you see some common hurdles, challenges are for new investors,

Chad:

I think before knowledge is confidence. Like I think, you know, I deal with so many people who are competent professionals. And in some other space, you know, they're an engineer, they're a salesperson, they're a nurse, janitor, whatever, they're good at what they do. And then here, they come into real estate, and they're an adult trying to learn this thing. And they're also gonna invest a bunch of their money in it. That's just a recipe for like, lack of confidence. And just man I can't. And so that's one of the biggest hurdles that I see. My solution is kind of like, this is sports analogy, Coach Carson, kind of why bring that to the table, is that anything time you're trying to do something big, you just got to break it down into really little small pieces, like the Dave Ramsey baby steps.

Because when you do that, it becomes less intimidating. And you build confidence on that one little thing. And I'll give you an example. Like something out when people are first starting, I often recommend that they just focus on your What is your strategy? Like Don't worry about getting into analyzing your market, don't worry about the money yet. Don't worry about any of that. Let's just talk about like you and your finances and where you are. Are you a brand new beginner, are you you have a million bucks in the bank and you're trying to like diversify, or you have 50,000 bucks in the bank and you're trying to grow that nest egg, depending on where you are, that's gonna sort of dictate which strategy makes sense, whether that's house hacking, buy and hold rentals, long distance rentals, turnkey. You know, there's a lot of different viable strategies out there. Don't try to copy cookie cutters that you heard on a podcast because it worked for Chad or worked for somebody else, you know, have that self knowledge of saying, Alright, here's where I am. Here's where what I need in my life financially, and just be okay  with that strategy. be okay with doing one deal, even though people on bigger pockets are doing thousand deals in one year, you know, man, that's intimidating. Like, I can't I can't do that.

Michael:

I could never do that.

Chad:

Yeah, I could never do that. So therefore I must not be successful. I think that's the challenge is that you can if you compare yourself to other people, that's going to kill your confidence. If you try to take on too much at one time, that's gonna kill your confidence. So be okay with who you are. be okay with where you are. Break it down into the next step and say, what's the next thing I need to figure out? All right, I got my strategy. I'm going to do house hacking. Alright, good. What's next? All right, I need to figure out my target market. Where am I gonna invest? Alright, let's talk about that. How do you analyze the market. So you break it down in those steps, and it becomes much more manageable.

And it's kind of like, you know, you're going on a hike or a journey, you just kind of check one milestone off another milestone. And that's the cool thing about real estate to me is that you don't have to jump all in at one time. Um, there's a bunch of little steps, even down to the contract. If you get a property under contract, that seems really intimidating. But there's a due diligence clause where you can you ask your local attorney or local agent to if you made a big mistake, and you shouldn't pay that price, you have about 14 days maybe to evaluate that and get out of it. So I think there's so many little steps like that we can move forward with low risk or no risk and build your confidence to the point where you get some momentum eventually.

Michael:

That's great advice. So you're also the author of retire early with real estate, a great book, I've read it, we're actually gonna be reading it for our roof stock Academy book club next month. We're very excited about it. Yeah, it's gonna be fun. It's gonna be a lot of fun. You're gonna come join us for our book club session next month. What motivated you to write that?

Chad:

Yeah, it was actually right in the middle of when I was traveling to Ecuador when I wrote it. And I actually had a conversation with Brandon Turner BiggerPockets. We were at a conference about a year before that. And we were just chatting about his books he was doing, they were doing pretty well. I was just picking his brain. And he's like, Oh, you want to write a book, you know, go submit this. And it's kind of early stages of their book, book business. And I started I like the idea. I've been writing a blog and thousands and thousands of words, initially, I didn't think anybody would read that stuff. And then more people started reading it as Oh, that's cool. So I had a lot of words on paper, but I kind of condensed like, what is it all about that? What are some of the messages I'm trying to convey? And what are the things that are important to me and one of the I think the core messages that I try to get across in my blog, and my podcast is that real estate investing is a vehicle. It's a tool, but it's taking you to a place where you're doing more of what matters in your life.

So it's really about your life. It's about working backwards from what's important to you, what are your values? How would you spend your time on a day to day basis, if you had unlimited money, and money wasn't an issue anymore? I think those answers are why most of us are doing it. And very often it gets turned around where we're like, it's all about the thousand units. And it's about the doing really well which is which is cool. You know, I'm not discounting any of that stuff. But I wanted to write a book that not only validated like the small investor who's investing for lifestyle and who's trying to, you know, maybe have five properties, get them paid off and have three or 4000 bucks coming in and allowing them to work a part time job instead of working a full time job at 40 years old.

Like that kind of lifestyle business is what earlier retirement meant to me that was the idea of getting control of your money so that you can get to control your time and your life. And start asking yourself that question like, Alright, what does matter to me what I want to do, and I grew up, you know that same question we asked when we were 15 years old, 10 years old, like when I grew up, I'm going to be an astronaut. When I grew up, I'm going to start this big thing that's going to help the world and save the world. You know, when we get to be adults, we kind of get that creativity and that imagination ground out of us because we get into the practical stuff. And so I wanted to write a book that kind of inspired on the big picture of, hey, what could you do, if money were not an object, and then go from there and give like a blueprint. So it's kind of the big picture, here are the steps you can take to climb up the mountain, whether you're brand new beginner, whether you're intermediate, whether you're advanced, here are the steps you take and the things you need to think about if you actually want to live off of your rental income and have that flexibility.

Michael:

That's so great. Yeah, so often I hear or the question asked, you know, what's your goal and people give $1 figure unit count figure that really needs to go a step further than that is to know what is that money your unit count gonna allow you to do? What's the life that you want to be living?

Tom:

Yeah, yeah. The Why just because it's such a struggle, you know, in going through it, like, there's setbacks all the time. And it's like, you have a really flimsy why on, you know, not a clear kind of definition of like what done you know, where you want to go makes it that much more difficult to keep going without that more solid aspect?

Chad:

Absolutely. Yeah, my real estate is fun. I love the business too. But I recognize there's, there's kind of a variation on the people who get into it, how passionate they are about it, like some people would be fine, getting a few properties, letting somebody else do all the work. And they want to go start a nonprofit to do something completely on their own related to real estate. You know, I'm a nerd, you guys are nerds. We're like doing podcasts about this all the time. But there's some people that are kind of partially nerds about it. And you know, that's okay, too. But if you have that passion in mind, and you have that in mind, it's more than just kind of fluffy feel good stuff.

I mean, it it dictates how you make decisions about the types of properties you buy, the scale of how you grow your business, the types of contracts and deals you get into. I mean, for example, my business partner and I have mainly stayed with small residential. And we've gotten into some like smaller multifamily like 12 plexes. And we bought some bigger properties as well. But we really like the small scale. And we've kind of kept our financing. And the way we do deals pretty simple, like we're not doing syndications and going out and starting, you know, big funds, although we could have had a lot of opportunities to do that. But working it backwards and saying, why am I doing this, I want to be able to turn the business on and off and go travel for 17 months, or I want to start a business like coach Carson, where I made zero money for several years, because it's just fun. And I like it's a passion to be able to do that you've got to build a business that not only makes money, but also has certain require, certain capabilities and systems that allow you to do whatever you want to do. So it's very practical, when you start from the end, kind of work it backwards.

Michael:

I think that's such a good point. I know for me, I kind of personally fell victim to that mindset that, you know, the former mindset of, Oh, I got to get to 100 units, 100 units, hundred units. And then it just got to be to this kind of overwhelming point. And I said, Wait a minute, why am I doing like, why is that number important? What is that going to give me? What if I just rearranged some of the things that made my life simpler, could I get the same result or a better result. And so learning to do less with more, I think is really important too. So I love that point you made Chad. Okay, so you can do real estate full time since you're out of college. And I hear so many people, especially in the academy talked about wanting to retire early and looking to you know, make real estate then do real estate full time. Give us a day in the life of a full time real estate investor. When you're not in Ecuador.

Chad:

Yeah, that's a good question. You know, I still like work. I think that's one of the secrets that people hear about retiring early.

Michael:

Because we're nerds, man.

Chad:

I enjoy it like I do like it. But I think the main differences is there's a lot less pressure. I know when we first started even up until 2014 and 15, even we had some of the properties, same number of properties. There's just always the pressure of like next month, I got to produce again next month, I got to do more and get into some of these plateaus where the cash flow continues to come in. Yes, there's some problems. Yes, the heat and air blows up here and there. Yes, there's some cash flow kind of rollercoasters here and there, but getting to the point where it's pretty consistent on the amount of money you can get coming in, that allows you to kind of change your schedule around as well. For example, I used to take all of our leasing calls, I used to take calls from people, you know, when you put a property for rent, you get dozens of calls, and you're on the phone all the time, like I do deep work, I do creative work, I do things that are not necessarily really urgent, and I paid other people to do the sales calls and taking care of maintenance issues.

And and so I think that's that's the thing that shifted, that doesn't mean I'm not aware of those like I still I think all of us no matter how, you know, quote passive, you get should still pay attention to the detail. So like I look at the property management reports every month, I'm paying attention very closely to the cash flow and the amount of rent that's being collected. And are there any kind of exception reporting Are there any weird things on the report this month that are different than normal? I equate that actually To the like, when you watch the matrix, I think it's so cool when he finally can start seeing everything and like digital numbers, you know, 01010. And so I've always compared the point where you're stepping back from your business to something like that, where you look at reports, and you look at, you know, your analysis of your business and numbers. And then when you see something weird or something unusual, you then jump into the matrix, you go in there, and you figure it out, and talk to the property manager and say, Hey, what's up with this thing? Let me get in the weeds too.

So I just I've had to be in the weeds in the last month or two, we had a fire, unfortunately, for the one of our rental properties, and no one was hurt. That was my first question. But we've had to deal with getting bids from contractors dealing with insurance, and how's this gonna work? And how did you tie those two things together. And so that was a new one. For me, I'm spending more than a normal amount of time on that kind of project that comes up every once in a while. But on a typical week, when it's just, Hey, I'm going to do a little bit of bookkeeping, I'm going to send a text message to the property manager. I mean, that could be an hour or two per week, probably max, you know, 110 properties. So it just ranges depending on how involved you want to be.

And also what's going on, I like to get in on the big side, the one we're selling a property when we have an insurance issue like that, when we every once in a while just meeting up with the property managers and talking strategy talking, Hey, how are we screening tenants? What's your best practice here? You know, there's some things like that that go on. But the kind of day to day week to week basis, it's looking at your bookkeeping, looking at those numbers, asking questions, sending a few texts here and there. And that's, that's kind of a normal routine for me.

Michael:

Right on. So not to one up you by any means. But I actually had two fires in the same building on a property that I own, and I'm dealing with the insurance thing. So I don't know how it's going for you. I hope it's going well. But if you want to chat offline more about it, I'd be more than happy to public adjusters came and saved my bacon. That's a big, big, big plug for that profession. I was a big fan of that. So I hope it continues to go well. But yeah, let me know if you need some recommendations. happy to share.

Chad:

I'm in the early stages. So yeah, I think we'll we'll connect on that. And I'm planning on doing a podcast at some point on my, you know, lessons, the good and bad of what I'm probably screwing some stuff up as well. But yeah, that's that's the that's my plan in the next couple of months to share what I've learned.

Michael:

Okay, perfect. I look forward to hearing that.

Tom:

I got a question for you sort of a crystal ball question. So changing world going through a pandemic, lots of technology advancements, how do you see this evolving real estate investing with your strategy or general kind of an open ended question of just the confluence of changes in the world and how you see it affecting real estate investment?

Chad:

Yeah, I love that question. I think one of the trends and this has already been ongoing before COVID-19 came about, I read a book, it's another book recommendation. Big Shifts Ahead by…

Tom:

I heard you drop Deep Work to another great, great book.

Chad:

Yeah. Another another reference.

Tom:

We love John Burns. Sorry, you're talking about Big Shifts Ahead.

Chad:

Okay. So you know, John Burns, okay. I don't know him personally. But I like his work and his book, Big Shifts Ahead.

Tom:

We had him on the podcast before he's yet he's a super entertaining guy. We had our back, I'm sorry for interrupting. Go ahead.

Michael:

No, he's a legend.

Chad:

He's really smart. his company's built is very good with analytics. And what my understanding is they advise a lot of hedge funds and builders and construction, who are looking at the whole country and trying to figure out the big trends. And so one of the to your question, though, one of the big trends that I think is most relevant for us, as investors trying to pick where we're going to invest, and you know, where we put our money is just the flow of people like where are the demographics of people moving and why. And one of the interesting things that john put out there was that, first of all, there's growth all around the country, I mean, country is doing pretty well, if you look at the big picture, let's be optimistic here. Like in the big picture, we're still have a rule of law, we still have contracts with our economy is really hard to replicate.

You're not when I travel around the world, it's kind of evident, you have good people everywhere, but to replicate the recipe of what we have going on with availability of credit, and Mark real estate markets and contracts. And it's just this recipe is pretty unique that we have. So United States is a great place to invest your money. That's my main takeaway. But then within the United States, john burns points out that a lot of the movement of people has been to the south of Southwest, southeast. They're just kind of outpacing growth in those areas. So I'm in South Carolina, Georgia, you know, Alabama's kind of seeing that North Carolina, Tennessee, Texas, you know, been a big way. A lot of people know that it's already on the map, but also Arizona, Southern California to an extent. But you know, there's a weather thing there. But also within that kind of movement to the south. There's a movement from city centers, to suburban areas. And he actually coined a term called surban. I don't know if you guys talked about it on the podcast yet.

Tom:

We didn't talk about but I love it.

Chad:

Yeah. So the suburban, it's like a hybrid. You have a lot of millennials, for example, lived in urban areas, pre forming their family, they love public transit. They love biking and walking paths and parks. So a lot of these urban things you think about good restaurants, good quality of life. Well, they're moving to the suburbs because they want to buy houses, the urban areas are out of their reach because of the prices. But when they go to the suburbs, what are they looking for? They're looking for urban like qualities. And so one of my favorite locations to invest in and help other people invest in are, you know, go to a city center, go to go to an Atlanta, go to a Charlotte, go to an Austin, Texas, but then go outside the city and find these, you know, little pockets, these little suburban places at 50,000 people 20,000 people, hundred thousand people, and they have their own little gravity, their own little town center and find the ones that have some quality of life factors.

So it could be a college town where I am, that's an example. You've got football games, you've got, you know, intellectual stimulation, you've got culture, there could be other areas that have natural beauty. I think a lot of places Colorado, for example, you know, people are moving there, because of the quality of life. And businesses are moving there, high tech businesses are moving there, because their employees want to live there, these millennials and some of these people who want that quality of life. So I've actually been trying to take my town and Clemson into that I'm kind of getting into local politics and have a nonprofit trying to build bike trails. And I've been trying to convey to them like that trend is happening. And if you're not investing in like quality amenities, and your little small town, to attract those people, you're missing the boat, it's not the traditional, bring in this huge manufacturer who's going to have all these big factories somewhere, a lot of its going to be small tech businesses and people who are working remotely.

And so as real estate investors, we can also pay attention to that and kind of follow some of those trends. And I think particularly for those who aren't big, huge hedge funds, trying to find our one or two little deals, I think we have to go to some of the smaller markets in order to find the opportunities where there's actually still some meat on the bone, you know, some opportunities to buy some properties that cash flow, and have some good growth potential.

Tom:

That's awesome. there's a there's a fund out there that focuses very specifically on this kind of tier two cities. And you're right that a lot of those ones have been kind of picked off, you know, the larger private equity and hedge funds and funds are you know, made. It's so competitive. But that's a great point as far as kind of crystal ball on where to go and looking for these, you know, just outside of those major cities. The great john burns reference. Love it.

Michael:

Tom, any final questions for Chad before them get out of here?

Tom:

No, that was great. Yeah, that was great.

Michael:

Well, Chad, thank you so much for taking the time to be here today. If folks have more questions for you want to learn more about you? where's the best place where they can do that? or reach out to you?

Chad:

Sure. Yeah, everything online for me starts at coachcarson.com. I've been writing a blog there for years I've want to guides and articles and how to kind of in depth how to articles also have been a lot of fun with my podcast and YouTube channel too. So if you like podcasts have the real estate and Financial Independence Podcast focuses on some of the things we talked about today and more the nuts and bolts and practical side of using real estate to retire early to achieve financial independence.

I also interview some other people, mainly, you know, students, I do have some experts on there. But a lot of it's just real people who are getting it done, how they bought their property, how they, you know, grew to three or four properties. So trying to focus just on the nitty gritty nuts and bolts. And I do the same thing with my YouTube channel where I kind of just get behind the camera kind of coach whiteboard style, you know, drawing on a little whiteboard or something. And here's how you do a debt snowball. Here's how you do a house hack. And so if you like those kind of kind of nuts and bolts type approach to real estate. That's, that's what I try to do.

Michael:

Fantastic.

Tom:

Awesome. We'll add a link in the podcast description.

Michael:

Perfect. Chad, thank you again for taking the time. So looking forward to having you on the academy book club next month. Appreciate that in advance. And we'll catch you later.

Chad:

Yeah. Thanks, Tom. Thanks, Michael. It's been a pleasure.

Michael:

Okay, everybody, that was our episode a big, big, big thank you to Chad Carson. That was a ton of fun. Thank you so much for joining us a lot of really great nuggets in there. So go back and give it a read, listen, rewind it, take notes, tons and tons of great content in there. So again, a big thank you to Chad. And we look forward to having Chad back on the Roofstock Academy book club session for the month of November. And so if you were thinking about joining the academy or not sure, check us out at RoofstockAcademy.com and feel free to take advantage of the book club session that we're going to be having for the month of November where we have Chad back on. Thanks everyone for listening. And if you'd like that episode, feel free to give us a rating and review wherever it is you listen your podcasts and we look forward to seeing you on the next one.

Tom:

Happy investing

Tom, Michael and Emil continue our series on how to source a powerful real estate team. In this episode, we discuss the property manager.

---

Transcript

Hey everyone, welcome to another episode of The Remote Real Estate Investor. My name is Emil Shour, and I'm joined by my co-host,

Tom:

Tom Schneider

Michael:

And Michael album.

Emil:

And in today's episode, we're going to be continuing our series on finding and vetting different people on your real estate investing team. So last couple episodes, we've covered insurance carrier and lender and then in today's episode, we're going to cover the property manager. So let's get to it.

Theme Song

Emil:

Alright guys, in the last episode, we gave a quick shout out before we got into the episode and want to do that again. Give people shout outs for leaving us reviews. So this last one came from IanC11. Love the pod great for someone who is new to real estate investing combos and personal experiences are super insightful, and the info is easily digestible. Thanks, Ian. Appreciate it. Man.

Tom:

We are almost at our 100th review on Apple podcasts, which is pretty awesome. And I think for the person who hits, who writes the 100th review, what do you think Emil? Some sort of like,

Emil:

What if now nobody wants to write a review? Because they're waiting to get to 100?

Michael:

They're waiting?

Tom:

Yeah, I think we sent him a shirt, a roof stock Academy shirt and books done. approved, budget approved.

Emil:

How about the next 10 reviews? So anyone from 94 to 104? will pick one person and send them that cool pack you mentioned?

Tom:

Well, maybe it's at 98, 95. There's a term for this type of promotion. It's we could be at 100. I don't know we could be right below good reason to write the promotion. We'll do it for two people.

Emil:

Two people. There you go. Alright, next 10 reviews, we're going to randomly choose two people and send you some cool stuff. Okay, so we're talking about the property manager. This episode, we're going to follow the same format that we have been, which is a three part question series. So the first part is, when in the process, should we be finding our property manager? When in our real estate acquisition process? How do you source a property manager? And what are some good vetting questions to ask them to make sure you're finding the right property management partner? So let's kick it off with when in the process? Should a new real estate investor start looking for a property manager? What do you guys think? When have you guys started looking for your pm in the process,

Tom:

I would say you can't do it early enough. Because it you know, if you take one thing from this episode, and I've probably repeated this a couple of times, is you can bring, especially as a remote investor, leverage that property manager as local boots on the ground. And you can begin the interview process by adding them as a data point within your acquisitions process. So let's say I'm looking to buy a house in Columbus, Ohio, or Atlanta or Indianapolis, you know, in talking to property managers, I can get their feedback on properties that I'm looking at and neighborhoods, it's a really, a secret sauce to a remote investor is bringing in that local property manager early and often. So I would say as early as possible, what you don't want to happen is in a transaction, you know, you've found a great property you like it fits, checks off all the boxes you're looking for. And then like last second scrambling to find a property manager, you're not going to make as good of a decision. And plus, you're wasting that opportunity to use that property manager as part of your acquisitions team. So early and early. Yes, early.

Michael:

I agree with you, Tom 150%. I think you, you nailed it. And they can be your eyes and ears, they can be adult, they should be involved in the due diligence process, they can give you insights into markets and sub markets and streets where you want to avoid and things where you want to be looking out for. I think they a good property manager is going to really have their finger on the pulse of a particular market. And so that only goes to stress the importance of finding not only just a property manager, but a good one. And Tom, to your point of scrambling last minute to find a PM, I've been there done that I did that twice. Actually, in the same market, I was really excited about the market, I was really excited about the deals, I didn't have a pm in place. But I had a really great agent.

And I've talked about this in the past. And so I purchased the deal. And then I threw it in interviewed a bunch of different property managers, and there were just no good options. So I had to pick the least bad of all the options. And like, just to put it bluntly, it sucked. Like it was so bad. I ended up firing the property manager A few months later. And it was a really awful experience. And after I closed that second deal, I was thinking about selling both properties and just getting out of the market because it was such a nightmare dealing with the pm in that market, because there were just no good alternatives. And the whole time before I fired him I was looking for alternatives and I just couldn't I just not none existed. And so I can get into it a little bit later. But I then convinced my agent to start a property management business and that worked out pretty well. But so in lieu of find if starting your own property management business are forcing someone to do it on your behalf. Definitely try to find a good pm early. Well, before you purchase. Again, if I hadn't been able to do that I would not still be in those markets today. I think your investment lives and dies by your pm.

Tom:

Yeah, I think we had an earlier episode where we talked about the decision of using professional property management or self managing, yes. This is the the, this episode, the guise of it, I think I'm using that word right, is you are buying remotely and you are using professional property management is the assumptions that we're making. In this episode,

Emil:

I would say that once you've decided on your market, once you're saying I'm gonna go invest in Dallas or Atlanta or wherever, I think your next step should honestly be to go talk to property managers, they know so much about the area. Yeah, you can spend tons of time researching online, looking on forums, whatever, but like property manager lives and breathes that they're managing, often hundreds of properties in that market, they can tell you the areas that they like managing where they don't like managing, where they're seeing a lot of growth, rent growth, whatever it is, they can tell you the types of properties that they are able to lease up very easily, versus ones that are more difficult. They're just a knowledge of wealth that I think you should tap as early in the process, like you guys mentioned. So honestly, it's like, once you've chosen a market, I would go start talking to two property managers, honestly.

Michael:

So Emil, I actually work with a student in the academy who takes almost the exact opposite approach. He's involved in a particular market, loves, loves, loves his property management company, and is now investigating other markets, only those in which that same property manager operates. So he's actually following on his property management coattails to other markets, other states, because he likes them so much, because he believes in them so much. So you can almost use your property manager as a roadmap so to speak, if they're operating in other markets as to other markets to potentially investigate. Now, of course, you can still go do your market due diligence and validate it for yourself. But knowing that that piece of the puzzle is already solved for you, makes it kind of nice.

Emil:

Yeah, this person probably chose a market and then found the property manager, and now is using them to explore other markets, right?

Michael

Correct. Yeah, it's only it's only for secondary. After you've established that property management foothold,

Tom:

I'd like four different property managers that I interface with, and man, it'd be a lot cleaner to just have one.

Michael:

So much better.

Tom:

That sounds pretty good.

Emil:

And just knowing that you have a reliable property manager to keep using, like, that's so invaluable.

Tom:

Yeah. And some specific stuff that I've gotten from property managers is they're like, for the most part, they're pretty honest. Like, in talking about a neighborhood, if they like or don't like it, in my experience has been a pretty like low pressure sales, like not like high pressure, like, Oh, yeah, this is the house right? where they'll give honest feedback. And some specific feedback I've gotten is, oh, you know that property, it's really consistent rent, it hasn't shown a lot of appreciation. But you know, it's always occupied that kind of neighborhood. Another one was looking at a property.

And they were talking about the bedroom count, I'm like, Yeah, it's a four bedroom, two bath, and like, oh, wow, we manage a bunch of properties there. And there's very few four bedrooms, that's going to move right off the shelf. So getting that kind of insight information that you wouldn't be able to get if you didn't bring a property manager in super early. So those are some specific examples of the benefits of bringing the pm in as early as possible.

Emil:

Nice way to throw some good anecdotes in there. All right, ready to move on to the next one, then?

Michael:

Do it.

Emil:

So our next question, or subtopic is how to source? So how do you go out and even find a couple of property managers to start interviewing. So what have been some ways you guys have researched potential property managers in the past?

Michael:

I'll jump in here and say personal references have been top of the charts for me. And if there's not personal references, then professional references, whether that's the agent you're working with, or through roof stock, or other investors in the area that you might not know on a personal level, the slack forums if you're a member of the Academy, or bigger pockets, great places to reach out to folks and ask who they've used to, they've had success with. And then cold calling and Google reviews, I think good sources as well. We talked about this in the past, but a lot of those reviews, you kind of take them with a grain of salt to a degree in that it's usually the unsatisfied folks that are leaving the most reviews and the loudest reviews.

But also by that same token, I've mentioned on previous episodes, that the people making these reviews, if their tenants are your future clients, and so you want to make sure that the client population being served by the manager is happy and satisfied, because that's who your tenants are going to be dealing with as well. So that's kind of the hierarchy that that I'll use, and it's a lot of cold calling, a lot of cold calling.

Emil:

Yeah, I've recently there's a property manager in St. Louis, who I'm looking to grow with. I was just doing a round of interviews last week and it was one pm that really stood out to me. And I always like to look at reviews but at the same time, like you mentioned, take it with a grain of salt because it's a You could have 100 happy tenants and they never write reviews and it's right I've disgruntled ones who were like, they want to get back at whatever pm and so that's the way they do it. This one actually had a bunch of great online reviews. So I thought that was really cool.

Michael:

That's even better sign.

Emil:

Yeah, rare. Yeah.

Michael:

Yeah, that's pretty. That's pretty rare.

Emil:

Anyway, Tom, what about you?

Michael:

Oh, just one more to add. Sorry, Tom,

Tom:

Take all my points. Make sure you take em all.

Michael:

How's the scraps man? NARPM. National Association of Realtors and Property Managers I think is that acronym, but there's some national accrediting body for property managers, and if they're a member of that…

Emil:

National Association of residential property managers, just look.

Michael:

Thank you, sir. So checking out that website can be helpful. And it's just another accolade for them to put to their name into their business. So they're usually held to a certain standard level, which can be helpful to know that they've got that in their back pocket, I Tom scrap away,

Tom:

Scrap away, I'm gonna try not to just repeat it, but the the Maslow hierarchy of selecting a property manager. Okay, I'm just gonna repeat it. So the first reference is a great place to start. But that's not the end all process, then you go into your interview questions and references, but personal references and professional references, and the best professional reference with the property managers I found to be his agents. So is there an echo in the room. So like Roofstock has some references within all the markets that we operate in, we go through a pretty thorough process of identifying property managers, so professional references, and then kind of blogs, social reputable forums, our friends BiggerPockets, Roofstock Academy, we talked quite a bit about specific local property managers that we like. And lastly is the old Google search bar. So on top of that list is where I will start in opening a market searching for a property manager. Yeah.

Emil:

As someone who works in digital marketing, I want to give one word of caution to our listeners, just know that a lot of times online, when, let's say, someone posts about who are the best property managers in x markets, you'll a lot of times either find vendors or vendors will peg a customer like they're watching those forums. They know a lot of investors are there. And so sometimes they'll peg a friend or somebody to go post on those. So just know that going in, right that things can on the internet can very easily be skewed and always do your own research. That's the one tip I want to give people here.

Michael:

Wait, you mean? You mean the internet doesn't have like editors that make sure everything is factual?

Emil:

Look, man, we're saying that all here, but think about it. Think about it. 10 o'clock at night, you're looking around. And you know, there's a couple couple people chiming in for the same property manager online on a forum, right? You're not immediately. You may be skeptical, you may not. So I just want to heed that warning to our, our wonderful listeners.

I don't have anything else to add here. You guys, you guys hit all the good ways to source potential property managers. Alright, so let's get to the good one. I think this will probably take up the majority of our time here is the vetting questions. So this is such an important part. It's important because I think it's easy to get a list of questions to ask. And I think property managers often get a lot of the same questions, and they can get good at responding in a certain way that they know and investor likes to hear.  So I'm curious if you guys have like, tried and true questions that kind of help break past the the canned responses.

Tom:

Emil I feel like Michael and myself has been like taking a lot of the low hanging fruit with some of these initial questions. Would you like to take the lead and leave us with more more scraps?

Emil:

Absolutely. I thought you'd never ask.

Tom:

Being a gentlemen.

Emil:

I'm going to go through kind of the questions I mentioned last week, I did a round of interviews. I'm just going to go through the questions I have listed to ask and some of them they get canned responses, but I need to know them anyway. So the questions I like to ask, and there's always things that come up that I don't list here, but how many properties Do they have under management? This kind of just lets you know, you know how big of a shop they are. I don't think there's a right answer for big or small. It's just good to know how many people they're serving.

Tom:

I think the size of the market is really important. Not so like if it's a much smaller market, it would be unreasonable to expect them to have these huge amount of properties. But if it's a very big market, so I think there's some thoughts in evaluating their answer based on what market they're in. Sorry, go ahead.

Emil:

Yeah, I mean, maybe some pros and cons, I would say, like, let's say they have less properties under management is you may be taken care of more, because you're not one out of 1500, you're one out of 200 properties under management, but they like maybe they only have 30 owners that they work with, right. So you're just going to naturally get more attention. The advantages, maybe some bigger shops is that they probably have some of their more like their processes and reporting. More buttoned up. I don't know. Do you guys have any anything else add in terms of properties under management?

Micheal:

Yeah, I like your take, too. I would also just add that I think a lot of the smaller shops are kind of more boutique key, and they can often be a bit more catering to their owners. And so I don't think that number alone, necessarily dictates good or bad, or strong or weak. It's just an interesting number to note, interesting metric to note and just kind of be aware of.

Emil:

Yeah, yeah, it's helpful as you're asking these other questions. Go ahead, Tom.

Tom:

My last thoughts just on volume of how many units they manage, I would, if I had to choose between one that manages less versus more, I would pick the one that picks more just in viability of the company, like it would stink, if you had a property management company that didn't manage a lot of properties and wasn't profitable, or wasn't able to stay in business that would just stink casting to all things aside, needing to change if for whatever reason, they were not able to stay in business. So that's not like a tried and true way to say how profitable that company is, or you know, if they're able to be sustained as a business, but looking at indicators that it's a business that's viable, that's going to continue on would be important to me, because I don't want to have to go and go through the exercise again.

Emil:

Okay, so some other questions, I like to ask, areas that they cover within that market. So there's some property managers that will have just a geographic concentration, they just a lot of their properties are packed into one area, so they'll know that area very well. So I just like to know what areas they cover where they really pros where, you know, they can help with determining rent, just knowing quality of tenant in those sub markets, so I always like to get an idea for the areas they cover. Next is the types of buildings they manage. So do they manage primarily single family homes? Do they manage a lot of small multifamily? Or do they primarily manage large, multifamily 50 unit plus or something? So, again, if someone's a property managers, primarily large multifamily, maybe me bringing them as single families, not the best idea, so I'd like to see what kind of buildings they manage and that they specialize in. And by the way, guys, feel free to chime in on any of these, if you have anything to add.

Tom:

If you are investing in section eight, making sure that they have section eight experience. So you know, not just building type, but tenant type would you say or if you're doing a short term rental versus a longer term rental, making sure that their inventory that they have now kind of maps up against what you have, I love to look at companies, property managers website and see what listings they have available for rent, I can tell you a lot of occupancy one, if you know they manage 100 homes, and they have 50 homes available for rent, like that's not a great sign like 50% occupancy is not very good. And then also making sure that that map, there's a great overlay of the property where you're looking at its similar location as well as rent. So you know, if you're buying a property that rents for $3,000, in this person's property management, they manage homes that rent for $800, that may not be a good matchup. So just making sure it's similar type property, similar rent type, all that good stuff.

Emil:

Great tip. Another question I like to ask is, usually you try to speak to maybe one of the co founders, or one of the owners of the company. And I always like to ask them if they own any real estate themselves real estate investments. And the reason I like to ask that question is, I think if they personally invest in real estate as well, they just have a much better understanding of the investor and how an investor thinks. And I like that I want them to think like an investor and how do my clients think, right? Like, when it comes to income expenses, all these different things, if they're doing all that stuff themselves for their own portfolio? Hopefully, the idea is that they're treating your portfolio the same way.

Michael:

Absolutely. On that note, I like to find out if they do own investment property, where they are located, and ask them the question kind of carte blanche is hey, if we both have a vacancy at the same time, who gets priority?

Emil:

I doubt they'll ever say that their property gets that would be bad. If they're like, yeah, my property and then your property.

Michael:

Yeah, but you can keep them honest. You know, if you ever happen to see their property listed on their website at the same time, yours is you can bring it up.

Emil:

Yeah, sure. A couple other questions. So I always like to ask them what their standard operating procedure for handling repairs with tenants. So is it an online portal that people Submit through, do they call in? What is their typical response time, things like that? How do they manage tenant calls, some people will immediately send someone out other people, what I like to hear is whoever speaking to the tenant, if they call in or whatever is trying to help walk them through how to potentially fix it themselves. If it's something minor, right? Instead of just getting someone out there, you have to pay for that time, that person's time. So like, just getting an understanding for how they deal with repairs with tenants is always a good question, ask.

Tom:

Nice, I'm gonna go ahead and jump in here. fees, the Oh, so important fees. And what's pretty remarkable about property managers is it's it's not a one size fits all the way that property managers charge fees, specifically around repairs and maintenance. Some charge a percent overhead, some charge, like an hourly project management costs. So knowing how they charge fees as it relates to property manager, excuse me repairs and maintenance, how they charge fees as it relates to rent collection, how they charge fees as it relates to late charges, all that kind of stuff. And generally speaking, the ranges that I see with single family rental, I've seen as low as 6% on a rent collection, to as high as 12%. In a market where it's more competitive and more property managers, you're going to see a little bit of a lower rate, generally speaking, versus markets where there's not not that many shows in town. So that would be my kind of range and thoughts on fees. And, and also the right now we're we're all three of us are looking at it as part of Roofstock Academy, we have this playbook, this interview template, that's part of the package of Roofstock Academy, where we have it for property managers, and all these other ones. So we're both kind of skimming through our interview template here, as it relates to property managers looking through them. But I think that's such a key one, the cost aspect?

Michael:

Yeah, it really is. And it can often be the determining factor between, you know, really profitable investment versus not. And I think one of the biggest components of that is what a releasing fee looks like, or a new tenant placement fee. Oftentimes, you'll see that up at 100% of one month's rent, and I've seen it as low as 25% of one month's rent. So on $1,000, a month rental, that's $750 annual swing one way or the other.

Emil:

What do you guys think about management fees instead of percentage based being kind of like a flat fee structure. So example somebody I spoke with last week, they charge you $50 per building, and then $25 per occupied unit. So let's say you have a single family home, I believe it'd be 50 plus that 25 or 75 bucks flat a month. And then if let's say you have a four family, it would be 150. Flat a month would be I've seen that before.

Tom:

I think the psychology of it is really interesting, it's like you should have some aligned incentives, right? If the property is occupied, that's great. I want them to be happy about it. And you know, making more money versus when it's vacant. There's also some perverse incentives around construction, where if the property manager is getting paid more money, because more work is being done, and they're getting a percentage, I'm not offering a solution and more just kind of pointing out a problem on the repairs and maintenance and construction side. But to your point on a flat fee versus a percentage, I like the percentage and that there's some aligned incentives, if the property is occupied and performing well, maybe get creative with some like year end bonuses, if they're low, or whatever. I don't know,just thinking outside the box.

Michael:

On the flat stuff. I've never worked the property manager that has done it. But mathematically speaking, it could make a lot of sense, especially on higher end rentals. I mean, if you're at, you know, call it 750 bucks a month per unit in that four unit. Let me just run some numbers real quick. That's what 2900 750 by fours 3000. And let's call it 8%. Is $240, is what you would typically be paying on that and in this case, you're paying 50 plus 25 by four, which is 150 bucks, 150. You're saving 90 bucks a month right there. So I think you just got to run the numbers. I don't think it inherently means good or bad. Again, it just you have to look at the numbers for your specific situation. And in that instance, I would take that, yeah, 10 days out of 10.

Emil:

Yep. If all the other things obviously check off, right. Like, like, I know, everyone likes to key in on the fee. Oh, yeah, absolutely. You got to make sure these other things that we're talking about, I would say that those are more important, because I don't know, they're just gonna play such a big role. It's easy to get like just honed in on the fees. And something I did early on, it's all I looked at really, which is big mistake. So I think a lot of these other questions are super important to factor in as well.

Michael:

Absolutely. And I harp on it all the time with insurance, you can go get the cheapest insurance, but if they suck at the one thing they're designed to do, and that's pay claims, what are we doing here? And so same thing with property managers, if you go find the cheapest property manager, and they can't do the one thing that they're designed to do manage your property, what's the point, you know, it's going to be way more headache and you're going to pay for it later down the road, probably through the nose, as opposed to just paying a little bit more up front. And so there's the age old expression of pay for it now or pay for it later. And pay for it now it's probably going to be cheaper.

Emil:

Exactly. Any other questions? You guys really like to ask that our listeners could really benefit from

Michael:

Last one I'll throw in there is what their accounting software looks like and what their portal online presence looks like. And if they even have one, that's a big, big, big must have for me, if they don't have an online presence, it's really difficult for me to kind of keep tabs on what's going on. And not that I need to keep tabs on what's going on. But anytime I'm working with a new property manager, I over communicate like probably to the point of a being obnoxious, but that's okay, because it's my property, and they work for me. So we got to make sure that we're both on the same page at the beginning, that just takes time to do and having an online portal makes it much easier for me to track what's going on what expenses are being paid, versus once a month getting a p&l profit and loss statement showing, hey, by the way, we spent $300, this month on x, or if I had known about that three weeks ago, I would have called you and asked about it. So I think that's a big big plus for for property managers.

Emil:

And the way you can kind of suss that out is again asking about, okay, when a tenant repair issue comes up, do you guys notify me? Do I get an automated email, like a lot of the property managers I work with as soon as if it's under $500? They don't even come to me for approval, and I just get an email with the issue. But I like that, right. I like that at least I'm getting notified about it. Because if it's most of the things are running the mill things, okay, whatever you at least you just know, and you can move on. But some things is like wait, this is like the third time this issue has come up this year. Now I want to go inquire about it. So just asking them like how do you as the tenant or the owner get updates on Repairs as tenants file those tickets? Go ahead Tom.

Tom:

My last question, I'll have more of a request versus a question is to take a look at what their property management agreement looks like. This is your your prenuptial agreement with the company. It defines everything we're talking about. We're talking about fees. Specifically, what I think is, is there's like a breakup costs, I had a property that I sold the other year where I didn't look into the property management agreement, and I ended up having to pay this stupid fee, it makes me mad just thinking about it right now, because I sold the property. And the person who bought the property didn't retain their property management services. So I would look through that property management agreement and see one, what are all the different fees and different ways of the property managers gonna be making money. And then two, if the relationship was to end, either you finding a different property manager, or you're selling the property doing 1031, doing whatever? What are the implications of that with property management agreement, but love all the other stuff you guys are talking about? The investor portal is so important, and point of contact, knowing who your ongoing point of contact would be? And what preferred means of communications and what the expectations are for getting back and responses. And all that stuff is really important as well.

Emil:

Yeah, you I remember, you've talked about this one about that fee you've paid when you sold the properties. And in this round of interviews, I talked to a property manager who said the same thing. They have a brokerage out there as part of their company. They're like, if you don't use our brokerage to sell your property, we charge you 1% of the sales price. And that was like an automatic deal breaker.

Tom:

It’s a deal killer.

Emil:

Yeah. Total deal killer.

Tom:

Yeah, no thanks. Take that out. Or I'm done. Yeah.

Emil:

Yeah. So good. Good to ask that are like really review that management agreement, because it'll be in there. So you got to read those things for sure.

Michael:

Emil. a follow up question for them is do what percentage commission do they charge? If they if you do use your brokerage? Do you know?

Emil:

That's a good question. I just was like, What? Are you serious? Yeah,

Tom:

Yeah. Yeah. Why are you trying to force my hand like this?

Emil:

Yeah, but that would be a good one.

Michael:

That's a pretty big red flag. But I have a property manager where they charge like, I think for four and a half percent commission, if they are the listing agent, but no requirement to utilize them. They just offer an incentive for you to utilize them.

Emil:

So that's great. Yep. That's awesome. It's like, hey, if you end up selling with us, we give you this preferred rate. Not like if you don't sell with us,

Michael:

You must.

Emil:

Yeah, exactly. Basically forcing your hand so that wasn't cool.

Theme song

Emil:

So we've done a couple of our Ask Us Anything, we call them ama's. But there's multiple of us. So they're asking us anything's. And we've gone through the initial batch of questions, and we'd love to hear more from you guys on questions we can answer in future episodes. Literally, whatever's on your mind, Tom, Michael, and I will we'll tackle them on future episodes. And so the best way to submit those questions to us, you can email one of the three of us so I'm at [email protected]. Can you guys give me your email addresses? I don't know them by heart.

Michael:

I'm at [email protected].

Tom:

And I am at [email protected]. And other way to submit would be Leave us a message so the phone line for submitting these ama's is area code 415-343-5866. You like my tone goes kind of up and down like a

Michael:

and I was like I was like wait a minute. That's not how you say a phone number.

Emil:

You're like a commercial marketer, 435 he's calling one 800

Michael:

Yeah, 588 2300 Empire

Emil:

And Twitter. We're always on Twitter. So I'm @emilshour.

Michael:

And I'm at. I think it's AlbaumMichael. Michael Albaum probably works too, I'm not sure. I don't know how Twitter works, but I seem to be talking about it all the time.

Emil:

And Tom, you are at?

Tom:

@tschneido

Emil:

All right. We're looking forward to tackling your questions on a future episode. And guess we'll see you guys in the next one. Happy investing.

Michael:

Happy investing.

Tom:

Happy investing.

Tom, Michael and Emil continue our series on how to source a powerful real estate team. In this episode, we discuss the property manager.

---

Transcript

Hey everyone, welcome to another episode of The Remote Real Estate Investor. My name is Emil Shour, and I'm joined by my co-host,

Tom:

Tom Schneider

Michael:

And Michael album.

Emil:

And in today's episode, we're going to be continuing our series on finding and vetting different people on your real estate investing team. So last couple episodes, we've covered insurance carrier and lender and then in today's episode, we're going to cover the property manager. So let's get to it.

Theme Song

Emil:

Alright guys, in the last episode, we gave a quick shout out before we got into the episode and want to do that again. Give people shout outs for leaving us reviews. So this last one came from IanC11. Love the pod great for someone who is new to real estate investing combos and personal experiences are super insightful, and the info is easily digestible. Thanks, Ian. Appreciate it. Man.

Tom:

We are almost at our 100th review on Apple podcasts, which is pretty awesome. And I think for the person who hits, who writes the 100th review, what do you think Emil? Some sort of like,

Emil:

What if now nobody wants to write a review? Because they're waiting to get to 100?

Michael:

They're waiting?

Tom:

Yeah, I think we sent him a shirt, a roof stock Academy shirt and books done. approved, budget approved.

Emil:

How about the next 10 reviews? So anyone from 94 to 104? will pick one person and send them that cool pack you mentioned?

Tom:

Well, maybe it's at 98, 95. There's a term for this type of promotion. It's we could be at 100. I don't know we could be right below good reason to write the promotion. We'll do it for two people.

Emil:

Two people. There you go. Alright, next 10 reviews, we're going to randomly choose two people and send you some cool stuff. Okay, so we're talking about the property manager. This episode, we're going to follow the same format that we have been, which is a three part question series. So the first part is, when in the process, should we be finding our property manager? When in our real estate acquisition process? How do you source a property manager? And what are some good vetting questions to ask them to make sure you're finding the right property management partner? So let's kick it off with when in the process? Should a new real estate investor start looking for a property manager? What do you guys think? When have you guys started looking for your pm in the process,

Tom:

I would say you can't do it early enough. Because it you know, if you take one thing from this episode, and I've probably repeated this a couple of times, is you can bring, especially as a remote investor, leverage that property manager as local boots on the ground. And you can begin the interview process by adding them as a data point within your acquisitions process. So let's say I'm looking to buy a house in Columbus, Ohio, or Atlanta or Indianapolis, you know, in talking to property managers, I can get their feedback on properties that I'm looking at and neighborhoods, it's a really, a secret sauce to a remote investor is bringing in that local property manager early and often. So I would say as early as possible, what you don't want to happen is in a transaction, you know, you've found a great property you like it fits, checks off all the boxes you're looking for. And then like last second scrambling to find a property manager, you're not going to make as good of a decision. And plus, you're wasting that opportunity to use that property manager as part of your acquisitions team. So early and early. Yes, early.

Michael:

I agree with you, Tom 150%. I think you, you nailed it. And they can be your eyes and ears, they can be adult, they should be involved in the due diligence process, they can give you insights into markets and sub markets and streets where you want to avoid and things where you want to be looking out for. I think they a good property manager is going to really have their finger on the pulse of a particular market. And so that only goes to stress the importance of finding not only just a property manager, but a good one. And Tom, to your point of scrambling last minute to find a PM, I've been there done that I did that twice. Actually, in the same market, I was really excited about the market, I was really excited about the deals, I didn't have a pm in place. But I had a really great agent.

And I've talked about this in the past. And so I purchased the deal. And then I threw it in interviewed a bunch of different property managers, and there were just no good options. So I had to pick the least bad of all the options. And like, just to put it bluntly, it sucked. Like it was so bad. I ended up firing the property manager A few months later. And it was a really awful experience. And after I closed that second deal, I was thinking about selling both properties and just getting out of the market because it was such a nightmare dealing with the pm in that market, because there were just no good alternatives. And the whole time before I fired him I was looking for alternatives and I just couldn't I just not none existed. And so I can get into it a little bit later. But I then convinced my agent to start a property management business and that worked out pretty well. But so in lieu of find if starting your own property management business are forcing someone to do it on your behalf. Definitely try to find a good pm early. Well, before you purchase. Again, if I hadn't been able to do that I would not still be in those markets today. I think your investment lives and dies by your pm.

Tom:

Yeah, I think we had an earlier episode where we talked about the decision of using professional property management or self managing, yes. This is the the, this episode, the guise of it, I think I'm using that word right, is you are buying remotely and you are using professional property management is the assumptions that we're making. In this episode,

Emil:

I would say that once you've decided on your market, once you're saying I'm gonna go invest in Dallas or Atlanta or wherever, I think your next step should honestly be to go talk to property managers, they know so much about the area. Yeah, you can spend tons of time researching online, looking on forums, whatever, but like property manager lives and breathes that they're managing, often hundreds of properties in that market, they can tell you the areas that they like managing where they don't like managing, where they're seeing a lot of growth, rent growth, whatever it is, they can tell you the types of properties that they are able to lease up very easily, versus ones that are more difficult. They're just a knowledge of wealth that I think you should tap as early in the process, like you guys mentioned. So honestly, it's like, once you've chosen a market, I would go start talking to two property managers, honestly.

Michael:

So Emil, I actually work with a student in the academy who takes almost the exact opposite approach. He's involved in a particular market, loves, loves, loves his property management company, and is now investigating other markets, only those in which that same property manager operates. So he's actually following on his property management coattails to other markets, other states, because he likes them so much, because he believes in them so much. So you can almost use your property manager as a roadmap so to speak, if they're operating in other markets as to other markets to potentially investigate. Now, of course, you can still go do your market due diligence and validate it for yourself. But knowing that that piece of the puzzle is already solved for you, makes it kind of nice.

Emil:

Yeah, this person probably chose a market and then found the property manager, and now is using them to explore other markets, right?

Michael

Correct. Yeah, it's only it's only for secondary. After you've established that property management foothold,

Tom:

I'd like four different property managers that I interface with, and man, it'd be a lot cleaner to just have one.

Michael:

So much better.

Tom:

That sounds pretty good.

Emil:

And just knowing that you have a reliable property manager to keep using, like, that's so invaluable.

Tom:

Yeah. And some specific stuff that I've gotten from property managers is they're like, for the most part, they're pretty honest. Like, in talking about a neighborhood, if they like or don't like it, in my experience has been a pretty like low pressure sales, like not like high pressure, like, Oh, yeah, this is the house right? where they'll give honest feedback. And some specific feedback I've gotten is, oh, you know that property, it's really consistent rent, it hasn't shown a lot of appreciation. But you know, it's always occupied that kind of neighborhood. Another one was looking at a property.

And they were talking about the bedroom count, I'm like, Yeah, it's a four bedroom, two bath, and like, oh, wow, we manage a bunch of properties there. And there's very few four bedrooms, that's going to move right off the shelf. So getting that kind of insight information that you wouldn't be able to get if you didn't bring a property manager in super early. So those are some specific examples of the benefits of bringing the pm in as early as possible.

Emil:

Nice way to throw some good anecdotes in there. All right, ready to move on to the next one, then?

Michael:

Do it.

Emil:

So our next question, or subtopic is how to source? So how do you go out and even find a couple of property managers to start interviewing. So what have been some ways you guys have researched potential property managers in the past?

Michael:

I'll jump in here and say personal references have been top of the charts for me. And if there's not personal references, then professional references, whether that's the agent you're working with, or through roof stock, or other investors in the area that you might not know on a personal level, the slack forums if you're a member of the Academy, or bigger pockets, great places to reach out to folks and ask who they've used to, they've had success with. And then cold calling and Google reviews, I think good sources as well. We talked about this in the past, but a lot of those reviews, you kind of take them with a grain of salt to a degree in that it's usually the unsatisfied folks that are leaving the most reviews and the loudest reviews.

But also by that same token, I've mentioned on previous episodes, that the people making these reviews, if their tenants are your future clients, and so you want to make sure that the client population being served by the manager is happy and satisfied, because that's who your tenants are going to be dealing with as well. So that's kind of the hierarchy that that I'll use, and it's a lot of cold calling, a lot of cold calling.

Emil:

Yeah, I've recently there's a property manager in St. Louis, who I'm looking to grow with. I was just doing a round of interviews last week and it was one pm that really stood out to me. And I always like to look at reviews but at the same time, like you mentioned, take it with a grain of salt because it's a You could have 100 happy tenants and they never write reviews and it's right I've disgruntled ones who were like, they want to get back at whatever pm and so that's the way they do it. This one actually had a bunch of great online reviews. So I thought that was really cool.

Michael:

That's even better sign.

Emil:

Yeah, rare. Yeah.

Michael:

Yeah, that's pretty. That's pretty rare.

Emil:

Anyway, Tom, what about you?

Michael:

Oh, just one more to add. Sorry, Tom,

Tom:

Take all my points. Make sure you take em all.

Michael:

How's the scraps man? NARPM. National Association of Realtors and Property Managers I think is that acronym, but there's some national accrediting body for property managers, and if they're a member of that…

Emil:

National Association of residential property managers, just look.

Michael:

Thank you, sir. So checking out that website can be helpful. And it's just another accolade for them to put to their name into their business. So they're usually held to a certain standard level, which can be helpful to know that they've got that in their back pocket, I Tom scrap away,

Tom:

Scrap away, I'm gonna try not to just repeat it, but the the Maslow hierarchy of selecting a property manager. Okay, I'm just gonna repeat it. So the first reference is a great place to start. But that's not the end all process, then you go into your interview questions and references, but personal references and professional references, and the best professional reference with the property managers I found to be his agents. So is there an echo in the room. So like Roofstock has some references within all the markets that we operate in, we go through a pretty thorough process of identifying property managers, so professional references, and then kind of blogs, social reputable forums, our friends BiggerPockets, Roofstock Academy, we talked quite a bit about specific local property managers that we like. And lastly is the old Google search bar. So on top of that list is where I will start in opening a market searching for a property manager. Yeah.

Emil:

As someone who works in digital marketing, I want to give one word of caution to our listeners, just know that a lot of times online, when, let's say, someone posts about who are the best property managers in x markets, you'll a lot of times either find vendors or vendors will peg a customer like they're watching those forums. They know a lot of investors are there. And so sometimes they'll peg a friend or somebody to go post on those. So just know that going in, right that things can on the internet can very easily be skewed and always do your own research. That's the one tip I want to give people here.

Michael:

Wait, you mean? You mean the internet doesn't have like editors that make sure everything is factual?

Emil:

Look, man, we're saying that all here, but think about it. Think about it. 10 o'clock at night, you're looking around. And you know, there's a couple couple people chiming in for the same property manager online on a forum, right? You're not immediately. You may be skeptical, you may not. So I just want to heed that warning to our, our wonderful listeners.

I don't have anything else to add here. You guys, you guys hit all the good ways to source potential property managers. Alright, so let's get to the good one. I think this will probably take up the majority of our time here is the vetting questions. So this is such an important part. It's important because I think it's easy to get a list of questions to ask. And I think property managers often get a lot of the same questions, and they can get good at responding in a certain way that they know and investor likes to hear.  So I'm curious if you guys have like, tried and true questions that kind of help break past the the canned responses.

Tom:

Emil I feel like Michael and myself has been like taking a lot of the low hanging fruit with some of these initial questions. Would you like to take the lead and leave us with more more scraps?

Emil:

Absolutely. I thought you'd never ask.

Tom:

Being a gentlemen.

Emil:

I'm going to go through kind of the questions I mentioned last week, I did a round of interviews. I'm just going to go through the questions I have listed to ask and some of them they get canned responses, but I need to know them anyway. So the questions I like to ask, and there's always things that come up that I don't list here, but how many properties Do they have under management? This kind of just lets you know, you know how big of a shop they are. I don't think there's a right answer for big or small. It's just good to know how many people they're serving.

Tom:

I think the size of the market is really important. Not so like if it's a much smaller market, it would be unreasonable to expect them to have these huge amount of properties. But if it's a very big market, so I think there's some thoughts in evaluating their answer based on what market they're in. Sorry, go ahead.

Emil:

Yeah, I mean, maybe some pros and cons, I would say, like, let's say they have less properties under management is you may be taken care of more, because you're not one out of 1500, you're one out of 200 properties under management, but they like maybe they only have 30 owners that they work with, right. So you're just going to naturally get more attention. The advantages, maybe some bigger shops is that they probably have some of their more like their processes and reporting. More buttoned up. I don't know. Do you guys have any anything else add in terms of properties under management?

Micheal:

Yeah, I like your take, too. I would also just add that I think a lot of the smaller shops are kind of more boutique key, and they can often be a bit more catering to their owners. And so I don't think that number alone, necessarily dictates good or bad, or strong or weak. It's just an interesting number to note, interesting metric to note and just kind of be aware of.

Emil:

Yeah, yeah, it's helpful as you're asking these other questions. Go ahead, Tom.

Tom:

My last thoughts just on volume of how many units they manage, I would, if I had to choose between one that manages less versus more, I would pick the one that picks more just in viability of the company, like it would stink, if you had a property management company that didn't manage a lot of properties and wasn't profitable, or wasn't able to stay in business that would just stink casting to all things aside, needing to change if for whatever reason, they were not able to stay in business. So that's not like a tried and true way to say how profitable that company is, or you know, if they're able to be sustained as a business, but looking at indicators that it's a business that's viable, that's going to continue on would be important to me, because I don't want to have to go and go through the exercise again.

Emil:

Okay, so some other questions, I like to ask, areas that they cover within that market. So there's some property managers that will have just a geographic concentration, they just a lot of their properties are packed into one area, so they'll know that area very well. So I just like to know what areas they cover where they really pros where, you know, they can help with determining rent, just knowing quality of tenant in those sub markets, so I always like to get an idea for the areas they cover. Next is the types of buildings they manage. So do they manage primarily single family homes? Do they manage a lot of small multifamily? Or do they primarily manage large, multifamily 50 unit plus or something? So, again, if someone's a property managers, primarily large multifamily, maybe me bringing them as single families, not the best idea, so I'd like to see what kind of buildings they manage and that they specialize in. And by the way, guys, feel free to chime in on any of these, if you have anything to add.

Tom:

If you are investing in section eight, making sure that they have section eight experience. So you know, not just building type, but tenant type would you say or if you're doing a short term rental versus a longer term rental, making sure that their inventory that they have now kind of maps up against what you have, I love to look at companies, property managers website and see what listings they have available for rent, I can tell you a lot of occupancy one, if you know they manage 100 homes, and they have 50 homes available for rent, like that's not a great sign like 50% occupancy is not very good. And then also making sure that that map, there's a great overlay of the property where you're looking at its similar location as well as rent. So you know, if you're buying a property that rents for $3,000, in this person's property management, they manage homes that rent for $800, that may not be a good matchup. So just making sure it's similar type property, similar rent type, all that good stuff.

Emil:

Great tip. Another question I like to ask is, usually you try to speak to maybe one of the co founders, or one of the owners of the company. And I always like to ask them if they own any real estate themselves real estate investments. And the reason I like to ask that question is, I think if they personally invest in real estate as well, they just have a much better understanding of the investor and how an investor thinks. And I like that I want them to think like an investor and how do my clients think, right? Like, when it comes to income expenses, all these different things, if they're doing all that stuff themselves for their own portfolio? Hopefully, the idea is that they're treating your portfolio the same way.

Michael:

Absolutely. On that note, I like to find out if they do own investment property, where they are located, and ask them the question kind of carte blanche is hey, if we both have a vacancy at the same time, who gets priority?

Emil:

I doubt they'll ever say that their property gets that would be bad. If they're like, yeah, my property and then your property.

Michael:

Yeah, but you can keep them honest. You know, if you ever happen to see their property listed on their website at the same time, yours is you can bring it up.

Emil:

Yeah, sure. A couple other questions. So I always like to ask them what their standard operating procedure for handling repairs with tenants. So is it an online portal that people Submit through, do they call in? What is their typical response time, things like that? How do they manage tenant calls, some people will immediately send someone out other people, what I like to hear is whoever speaking to the tenant, if they call in or whatever is trying to help walk them through how to potentially fix it themselves. If it's something minor, right? Instead of just getting someone out there, you have to pay for that time, that person's time. So like, just getting an understanding for how they deal with repairs with tenants is always a good question, ask.

Tom:

Nice, I'm gonna go ahead and jump in here. fees, the Oh, so important fees. And what's pretty remarkable about property managers is it's it's not a one size fits all the way that property managers charge fees, specifically around repairs and maintenance. Some charge a percent overhead, some charge, like an hourly project management costs. So knowing how they charge fees as it relates to property manager, excuse me repairs and maintenance, how they charge fees as it relates to rent collection, how they charge fees as it relates to late charges, all that kind of stuff. And generally speaking, the ranges that I see with single family rental, I've seen as low as 6% on a rent collection, to as high as 12%. In a market where it's more competitive and more property managers, you're going to see a little bit of a lower rate, generally speaking, versus markets where there's not not that many shows in town. So that would be my kind of range and thoughts on fees. And, and also the right now we're we're all three of us are looking at it as part of Roofstock Academy, we have this playbook, this interview template, that's part of the package of Roofstock Academy, where we have it for property managers, and all these other ones. So we're both kind of skimming through our interview template here, as it relates to property managers looking through them. But I think that's such a key one, the cost aspect?

Michael:

Yeah, it really is. And it can often be the determining factor between, you know, really profitable investment versus not. And I think one of the biggest components of that is what a releasing fee looks like, or a new tenant placement fee. Oftentimes, you'll see that up at 100% of one month's rent, and I've seen it as low as 25% of one month's rent. So on $1,000, a month rental, that's $750 annual swing one way or the other.

Emil:

What do you guys think about management fees instead of percentage based being kind of like a flat fee structure. So example somebody I spoke with last week, they charge you $50 per building, and then $25 per occupied unit. So let's say you have a single family home, I believe it'd be 50 plus that 25 or 75 bucks flat a month. And then if let's say you have a four family, it would be 150. Flat a month would be I've seen that before.

Tom:

I think the psychology of it is really interesting, it's like you should have some aligned incentives, right? If the property is occupied, that's great. I want them to be happy about it. And you know, making more money versus when it's vacant. There's also some perverse incentives around construction, where if the property manager is getting paid more money, because more work is being done, and they're getting a percentage, I'm not offering a solution and more just kind of pointing out a problem on the repairs and maintenance and construction side. But to your point on a flat fee versus a percentage, I like the percentage and that there's some aligned incentives, if the property is occupied and performing well, maybe get creative with some like year end bonuses, if they're low, or whatever. I don't know,just thinking outside the box.

Michael:

On the flat stuff. I've never worked the property manager that has done it. But mathematically speaking, it could make a lot of sense, especially on higher end rentals. I mean, if you're at, you know, call it 750 bucks a month per unit in that four unit. Let me just run some numbers real quick. That's what 2900 750 by fours 3000. And let's call it 8%. Is $240, is what you would typically be paying on that and in this case, you're paying 50 plus 25 by four, which is 150 bucks, 150. You're saving 90 bucks a month right there. So I think you just got to run the numbers. I don't think it inherently means good or bad. Again, it just you have to look at the numbers for your specific situation. And in that instance, I would take that, yeah, 10 days out of 10.

Emil:

Yep. If all the other things obviously check off, right. Like, like, I know, everyone likes to key in on the fee. Oh, yeah, absolutely. You got to make sure these other things that we're talking about, I would say that those are more important, because I don't know, they're just gonna play such a big role. It's easy to get like just honed in on the fees. And something I did early on, it's all I looked at really, which is big mistake. So I think a lot of these other questions are super important to factor in as well.

Michael:

Absolutely. And I harp on it all the time with insurance, you can go get the cheapest insurance, but if they suck at the one thing they're designed to do, and that's pay claims, what are we doing here? And so same thing with property managers, if you go find the cheapest property manager, and they can't do the one thing that they're designed to do manage your property, what's the point, you know, it's going to be way more headache and you're going to pay for it later down the road, probably through the nose, as opposed to just paying a little bit more up front. And so there's the age old expression of pay for it now or pay for it later. And pay for it now it's probably going to be cheaper.

Emil:

Exactly. Any other questions? You guys really like to ask that our listeners could really benefit from

Michael:

Last one I'll throw in there is what their accounting software looks like and what their portal online presence looks like. And if they even have one, that's a big, big, big must have for me, if they don't have an online presence, it's really difficult for me to kind of keep tabs on what's going on. And not that I need to keep tabs on what's going on. But anytime I'm working with a new property manager, I over communicate like probably to the point of a being obnoxious, but that's okay, because it's my property, and they work for me. So we got to make sure that we're both on the same page at the beginning, that just takes time to do and having an online portal makes it much easier for me to track what's going on what expenses are being paid, versus once a month getting a p&l profit and loss statement showing, hey, by the way, we spent $300, this month on x, or if I had known about that three weeks ago, I would have called you and asked about it. So I think that's a big big plus for for property managers.

Emil:

And the way you can kind of suss that out is again asking about, okay, when a tenant repair issue comes up, do you guys notify me? Do I get an automated email, like a lot of the property managers I work with as soon as if it's under $500? They don't even come to me for approval, and I just get an email with the issue. But I like that, right. I like that at least I'm getting notified about it. Because if it's most of the things are running the mill things, okay, whatever you at least you just know, and you can move on. But some things is like wait, this is like the third time this issue has come up this year. Now I want to go inquire about it. So just asking them like how do you as the tenant or the owner get updates on Repairs as tenants file those tickets? Go ahead Tom.

Tom:

My last question, I'll have more of a request versus a question is to take a look at what their property management agreement looks like. This is your your prenuptial agreement with the company. It defines everything we're talking about. We're talking about fees. Specifically, what I think is, is there's like a breakup costs, I had a property that I sold the other year where I didn't look into the property management agreement, and I ended up having to pay this stupid fee, it makes me mad just thinking about it right now, because I sold the property. And the person who bought the property didn't retain their property management services. So I would look through that property management agreement and see one, what are all the different fees and different ways of the property managers gonna be making money. And then two, if the relationship was to end, either you finding a different property manager, or you're selling the property doing 1031, doing whatever? What are the implications of that with property management agreement, but love all the other stuff you guys are talking about? The investor portal is so important, and point of contact, knowing who your ongoing point of contact would be? And what preferred means of communications and what the expectations are for getting back and responses. And all that stuff is really important as well.

Emil:

Yeah, you I remember, you've talked about this one about that fee you've paid when you sold the properties. And in this round of interviews, I talked to a property manager who said the same thing. They have a brokerage out there as part of their company. They're like, if you don't use our brokerage to sell your property, we charge you 1% of the sales price. And that was like an automatic deal breaker.

Tom:

It’s a deal killer.

Emil:

Yeah. Total deal killer.

Tom:

Yeah, no thanks. Take that out. Or I'm done. Yeah.

Emil:

Yeah. So good. Good to ask that are like really review that management agreement, because it'll be in there. So you got to read those things for sure.

Michael:

Emil. a follow up question for them is do what percentage commission do they charge? If they if you do use your brokerage? Do you know?

Emil:

That's a good question. I just was like, What? Are you serious? Yeah,

Tom:

Yeah. Yeah. Why are you trying to force my hand like this?

Emil:

Yeah, but that would be a good one.

Michael:

That's a pretty big red flag. But I have a property manager where they charge like, I think for four and a half percent commission, if they are the listing agent, but no requirement to utilize them. They just offer an incentive for you to utilize them.

Emil:

So that's great. Yep. That's awesome. It's like, hey, if you end up selling with us, we give you this preferred rate. Not like if you don't sell with us,

Michael:

You must.

Emil:

Yeah, exactly. Basically forcing your hand so that wasn't cool.

Theme song

Emil:

So we've done a couple of our Ask Us Anything, we call them ama's. But there's multiple of us. So they're asking us anything's. And we've gone through the initial batch of questions, and we'd love to hear more from you guys on questions we can answer in future episodes. Literally, whatever's on your mind, Tom, Michael, and I will we'll tackle them on future episodes. And so the best way to submit those questions to us, you can email one of the three of us so I'm at [email protected]. Can you guys give me your email addresses? I don't know them by heart.

Michael:

I'm at [email protected].

Tom:

And I am at [email protected]. And other way to submit would be Leave us a message so the phone line for submitting these ama's is area code 415-343-5866. You like my tone goes kind of up and down like a

Michael:

and I was like I was like wait a minute. That's not how you say a phone number.

Emil:

You're like a commercial marketer, 435 he's calling one 800

Michael:

Yeah, 588 2300 Empire

Emil:

And Twitter. We're always on Twitter. So I'm @emilshour.

Michael:

And I'm at. I think it's AlbaumMichael. Michael Albaum probably works too, I'm not sure. I don't know how Twitter works, but I seem to be talking about it all the time.

Emil:

And Tom, you are at?

Tom:

@tschneido

Emil:

All right. We're looking forward to tackling your questions on a future episode. And guess we'll see you guys in the next one. Happy investing.

Michael:

Happy investing.

Tom:

Happy investing.

In this short episode Chad Carson from coachcarson.com shares his thoughts on the importance of having a mentor.

---

Transcript

Michael:

Hey everybody, welcome to another episode of The Remote Real Estate Investor. This is our weekend wisdom episode. And On this episode, we have author, teacher Chad Carson on with CoachCarson.com. And this is going to be a little preview snippets where we have Chad talk about what a coach can do for you and your real estate journey.

Michael:

So Chad, you also work as a coach in the real estate investment space. And I'm curious to know what you say to all the naysayers out there that say, Oh, you don't need a coach ready to pay for education? Everything's available for free on the internet, YouTube, Bigger Pockets. What light, Can you shed on that?

Chad:

Well, if you don't need a coach, don't pay one. I mean, that's fine. Like, I think people, people, there's all sorts of different ways to learn. And I think the internet's awesome. Like the fact that bigger pockets is here, and they revolutionize the way you can get information is amazing, like, great. We having free information at your fingertips is just the way things work. You've got YouTube's, got bigger pockets, you've got articles, that's that hasn't changed. The thing is, though, is that we have more information than we've ever had. But how does that apply to you? Like that's, that's the bigger question.

And the one of the biggest challenges and this goes back to Cal Newport and kind of deep work idea is that we're all knowledge workers, if you're an investor buying properties, and this is all about knowledge, it's about you communicating ideas abstractly, and going buying this property. And so a lot of that knowledge is how do you focus? And what's the important thing to focus on? What are your strengths, like we talked about earlier? And what's the unique recipe for yourself that allows you to be successful. And there's nothing new about that, like, that's always been an important part of succeeding in anything like sports, for example.

I love the old like old school coaches like John Wooden that UCLA who won 10 national championships and basketball like 12 years, I think, you know, if you go back and look at the recipe for what they did to build success as a team, it was it was very much in those, you know, feed little small details of feedback like hey, what he would, he would take his like really good players like Kareem Abdul Jabbar, Bill Walton, he would bring them in before the season and say, Hey, guys, we're gonna spend an hour practicing tying your shoes and rolling up your socks. And can you imagine like, here's all of my future Hall of Famer, Kareem Abdul Jabbar, you know, roll up your socks, put them back down, roll up your socks, tie your shoes. I'm tight. I mean, it's almost like a joke, you know? Yeah. So you get them exasperated, though, to the point where they're like, Alright, what's up with this coach? And he said, you probably wondering why I'm asking you to tie your shoes dozens of times and roll your socks out.

He said, here's the point. The point is, if you don't put your socks on correctly, if you don't tie your shoes correctly, you're going to get a blister. If you miss, if you get a blister, you're going to miss a couple days of practice. If you miss a couple days of practice, you might not play your best you might miss a game. If you miss a game, we're not going to have you, we might lose the game. And if we lose, start losing too many games, we're not going to win a championship. And you came here to win a championship, right? Yes. Okay, so let's let's work on tying our shoes.

And that's the kind of thing that I think, you know, a feedback. This doesn't have to be a paid coach, this could be a mentor locally, but also, you know, classes, when we as humans, we learn from other humans, and we have feedback. And it's often a person is more experienced, can tell you what is the important thing like tying your shoes and tell you to ignore all this other stuff for now. Because that's the challenge right now we have so much information, you got to know what to ignore and what to focus on. And I would add into that recipe, what I think a good coach has is somebody who actually cares about your success. They're they they have your best interest in mind. And that's that's a hard thing to find as well.

So if you get a mentor if you get somebody who can, who can encourage you have some experience has some knowledge is made a big difference. In my own career. I've paid for education. I've had local mentors as well. I can't imagine not having the inner circle of people who've helped me kind of realize my own potential that I would have left a lot on the table. If I try to do everything myself.

Michael:

Love it. Love it. Already, everybody. Well, that was our episode with Chad Carson. A big thank you again for the weekend wisdom. Looking forward to the episode that's going to be coming out later in the week where we have you on for a full episode and get to talk to you about your story and your real estate investment journey.

Chad:

Thank you.

Michael:

Thanks so much for listening. Happy investing.

In this short episode Chad Carson from coachcarson.com shares his thoughts on the importance of having a mentor.

---

Transcript

Michael:

Hey everybody, welcome to another episode of The Remote Real Estate Investor. This is our weekend wisdom episode. And On this episode, we have author, teacher Chad Carson on with CoachCarson.com. And this is going to be a little preview snippets where we have Chad talk about what a coach can do for you and your real estate journey.

Michael:

So Chad, you also work as a coach in the real estate investment space. And I'm curious to know what you say to all the naysayers out there that say, Oh, you don't need a coach ready to pay for education? Everything's available for free on the internet, YouTube, Bigger Pockets. What light, Can you shed on that?

Chad:

Well, if you don't need a coach, don't pay one. I mean, that's fine. Like, I think people, people, there's all sorts of different ways to learn. And I think the internet's awesome. Like the fact that bigger pockets is here, and they revolutionize the way you can get information is amazing, like, great. We having free information at your fingertips is just the way things work. You've got YouTube's, got bigger pockets, you've got articles, that's that hasn't changed. The thing is, though, is that we have more information than we've ever had. But how does that apply to you? Like that's, that's the bigger question.

And the one of the biggest challenges and this goes back to Cal Newport and kind of deep work idea is that we're all knowledge workers, if you're an investor buying properties, and this is all about knowledge, it's about you communicating ideas abstractly, and going buying this property. And so a lot of that knowledge is how do you focus? And what's the important thing to focus on? What are your strengths, like we talked about earlier? And what's the unique recipe for yourself that allows you to be successful. And there's nothing new about that, like, that's always been an important part of succeeding in anything like sports, for example.

I love the old like old school coaches like John Wooden that UCLA who won 10 national championships and basketball like 12 years, I think, you know, if you go back and look at the recipe for what they did to build success as a team, it was it was very much in those, you know, feed little small details of feedback like hey, what he would, he would take his like really good players like Kareem Abdul Jabbar, Bill Walton, he would bring them in before the season and say, Hey, guys, we're gonna spend an hour practicing tying your shoes and rolling up your socks. And can you imagine like, here's all of my future Hall of Famer, Kareem Abdul Jabbar, you know, roll up your socks, put them back down, roll up your socks, tie your shoes. I'm tight. I mean, it's almost like a joke, you know? Yeah. So you get them exasperated, though, to the point where they're like, Alright, what's up with this coach? And he said, you probably wondering why I'm asking you to tie your shoes dozens of times and roll your socks out.

He said, here's the point. The point is, if you don't put your socks on correctly, if you don't tie your shoes correctly, you're going to get a blister. If you miss, if you get a blister, you're going to miss a couple days of practice. If you miss a couple days of practice, you might not play your best you might miss a game. If you miss a game, we're not going to have you, we might lose the game. And if we lose, start losing too many games, we're not going to win a championship. And you came here to win a championship, right? Yes. Okay, so let's let's work on tying our shoes.

And that's the kind of thing that I think, you know, a feedback. This doesn't have to be a paid coach, this could be a mentor locally, but also, you know, classes, when we as humans, we learn from other humans, and we have feedback. And it's often a person is more experienced, can tell you what is the important thing like tying your shoes and tell you to ignore all this other stuff for now. Because that's the challenge right now we have so much information, you got to know what to ignore and what to focus on. And I would add into that recipe, what I think a good coach has is somebody who actually cares about your success. They're they they have your best interest in mind. And that's that's a hard thing to find as well.

So if you get a mentor if you get somebody who can, who can encourage you have some experience has some knowledge is made a big difference. In my own career. I've paid for education. I've had local mentors as well. I can't imagine not having the inner circle of people who've helped me kind of realize my own potential that I would have left a lot on the table. If I try to do everything myself.

Michael:

Love it. Love it. Already, everybody. Well, that was our episode with Chad Carson. A big thank you again for the weekend wisdom. Looking forward to the episode that's going to be coming out later in the week where we have you on for a full episode and get to talk to you about your story and your real estate investment journey.

Chad:

Thank you.

Michael:

Thanks so much for listening. Happy investing.

In this episode Mark Woodling and Tom Schneider talk with Vincent Ash From the Indy Chamber about the Indianapolis Real Estate market, economic developments and what is happening in Indy in general. 

---

Transcript

Mark:

All right, ladies and gentlemen, welcome to the remote real estate investor. I'm Mark Woodling. I'm here with Tom Schneider. And we have Vincent Ash here with us today from Indianapolis in the Chamber of Commerce. So we really wanted to bring him on to give him a bit of a background on why investing in Indianapolis is something that really any investor should want to be interested in. So I think this is a good opportunity to not only hear from us, but really get one of the local experts who has an idea of what's going on in the market that we don't get to see or read about in your daily news.

Theme Song

Mark:

So, before we jump in with Vince, I want to run over some numbers about Indianapolis. So, Indianapolis consists of a pretty broad range, the populations 876,000 people as of 2019. So, the greater MSA is actually 1.8 million. So Indy alone 876,000 versus the greater population 1.8 million people and the population is growing at 1.3%. So the median household income is $64,200 number of units is 867,000 single Family properties, of that 58% are owner occupied in 32% are renter occupied, leaving about 10% that are currently vacant. So as for home price and rent, existing home values have actually gone up 7.2%. The effective apartment rent growth is 3.6%. home value at entry level home is on average $163,900. The existing median home price is $227,000. And the median for rent as of December last year was $1,259. year over year rent growth is 4.7%. And single family gross yield on average is 9.6%. Home occupancy rate is 95.4%. And apartment occupancy rate is 94.7%.

Vincent, why don't you give us a little bit of information about who you are and your position with Indianapolis chamber.

Vincent:

Absolutely. So my name is Vincent Ash. I am the director of Indianapolis economic development for the city and our county that we are also associated with I have been at the chamber for a little bit over two years now. I'm very much an Indy, local, Indy native, I moved to Indianapolis when I was five years old and pretty much been born and raised there. Prior to my role now at the chamber, I worked for Simon Property Group as a financial analyst. For those who are familiar with Simon, one of the biggest rates in the country and probably internationally as well. But I worked as financial analyst for them, no do a real estate transactions and then moved over to the chamber. My role as director of develop Indy is we basically are the economic development arm for the city of Indianapolis. So we work on business attraction, business expansion, real estate, real estate, redevelopment projects on a larger scale, looking at multifamily projects and things of that nature.

We also work very closely with the mayor's office in the city, on any economic development policies that they are looking to, you know, change or implement or modify. So overall, we have a pretty big scope. We do have a person, our team that focuses on business retention, we have an ombudsman that helps facilitate, you know, permitting, and regulatory and zoning questions. And then we have a project manager that focuses on retail. So we're touching a lot of different phases of economic economic development overall, it has been very successful, pretty respected throughout the city, not only as the economic development arm develop, indeed, but also as an indie chamber, having a lot of businesses that's associated with us as well. So that's overall what we do and kind of my role at the Indy chamber.

Mark:

So if there's anything that comes up, let's say that there's new business opportunities in Indianapolis, you're probably the first person to hear about them and really understand, you know, new companies that are moving to the area, new jobs that are coming in. And frankly, you're kind of a salesperson that's trying to bring in those companies and really make Indianapolis look as attractive as possible.

Vincent:

Absolutely. Yes, I'm not a salesman, but Trey, but I have to do it. For this job really just as like an attractive mechanism. I think the state does a good job of attracting people to Indiana. Fortunately enough for Indianapolis believe 60% of the GDP from the state is located in our in our central region, Indianapolis region. So overall, our state depends on our capital as well, Indianapolis, and as has been Bode very well for, you know, everything that we've got going on for us in the overall,

Mark:

That's great, well, this is a perfect conversation to be having. So let me just get in a little bit about really what we're looking for, you know, we all want to understand kind of the macro level economics of what's going on in Indianapolis, but we don't need to go into like population trends and jobs, income, you know, cost of living particularly now, but we're looking for you really, some of those nuggets of information that make any out of state investor feel like there's a level of confidence that they can have not just in buying into the city, but eventually they're going to be buying into real estate and owning, you know, brick and mortar and renting out, you know, properties in the area.

So, you know, maybe you can give us a little bit of an idea about what we're not hearing in the news, you know, and what you're seeing in the local economy that somebody in, let's say, on the West Coast isn't good to hear about. So maybe give us some general economic highlights. And maybe we even start with a little bit of a COVID-19 impacts and what you're seeing, since that's such a relevant topic.

Vincent:

So COVID-19 is affected everybody in the world and Indianapolis was was not any different for that. We did realize that, you know, it did affect a lot of our small businesses. And particularly, we look at our restaurants, our breweries that have been very successful here in Indianapolis, but those have been impacted the most Well, COVID is our as our restaurants or personal services. Are you looking at Barbara's beauticians? So overall, from a covid impact, our small businesses were hit the hardest, that we did some very innovative things at the chamber. As far as some traditional lending, as well as you know, help collaborate with a CDFIs to do paycheck protection programs that help keep these businesses afloat.

We also are doing like a reimbursement grant now, overall, to kind of help those small businesses and they've been very appreciative of those efforts. And it has honestly kept a lot of our businesses being able to stay open. Throughout the midst of this, I will say from a, from a broader scale, we're looking at some of our corporate, you know, attraction projects, or some of our expansions and growth that we've been able to see. I will say there was a pretty much a slowdown, I would say in April, I think as companies would kind of figure, trying to figure out what they will plan and planning on doing. But I kid you not. And I thought I was gonna be twiddling my thumbs throughout COVID. Because I was like, there's no, nobody's making a large capital investment, like going for it. There's no way I'm going to be busy, I was really just looking at ways that I could pivot and help out and other avenues going for so but we weren't, we didn't say very busy, stay very busy overall, when we looked at from our industry standpoint, Indianapolis is very diverse. And that was has helped us be pretty successful.

Mark:

So Vincent, maybe give us a little bit of a background of what Indianapolis is really known for, you know, that the jobs in the area that you see are really growing are just some of the basic highlights of why people are moving to Indianapolis because we know it's been growing a ton. We've seen rent growth, personally from Roofstock’s point of view really increase and seeing a lot of investors moving to the area and wind to invest there. So yeah, give us a high level and kind of walk through what you see. Indianapolis as in your eyes.

Vincent:

Yeah, absolutely. You know, kind of, as I was saying, from an industry standpoint, Indianapolis is very diverse. So that has really allowed us to be recession proof to an extent. When you look at 2009, we've been able to maintain a steady growth, when you look at you know, most of the rest belts, cities when manufacturing is left, you know, early 2000s and in the 90s a lot of those cities, you know, struggle, overall industry standpoint as being diverse, has been very beneficial.

So some of the major industries that we have here are looking at life sciences, pharmaceuticals, so Eli Lilly is a major anchor in our city. They employ about 440 thousand people just in our city alone. So you look at them and offer Eli Lilly have a lot of other pharmaceuticals or drug manufacturers that also have located here in Indianapolis and we kind of have sort of a life sciences of here. Not only that our tech scene has been exploding here lately. Look at Salesforce, and we are their second largest office globally outside of San Francisco and but we have a lot of different startups that are here indeed that are continually to grow. One of the one of those reasons why tech is is kind of booming here is from a cost standpoint, cost of living is very affordable here. But the main thing the main driver is workforce.

So we are within 70 mile radius, I believe we have close to 100 different it's a major college institutions. In particular, you know, some major ones Purdue I, Indiana University, all State University rolls home and Butler's located in Indianapolis, we have 40 institutions that's just located in Indy overall. So from a workforce and talent perspective, tech companies feel like they can attract a talent by locating here. So that has been very well received and our startups are continually to grow. High Alpha is a big venture group that's here indeed is very strategic about helping growth those hundred companies that they have been associated with Xylo being one of those startup companies that is growing, we just got an announcement that Kanos which is based out of Belfast and Ireland is going to grow here in Indianapolis and make any Annapolis their main hub.

So from a tech scene, we have been we have grown a lot. So when you look at life sciences, like a tech, we can look at our aerospace Rolls Royce and what they do from you know, manufacturing, engineering and aviation standpoint, they're headquartered here have about 44,000 people are that are in Indy. And then on top of that, logistics, we have the second world's largest FedEx, probably soon to be number one outside of Memphis because they are landlocked. So from a logistics standpoint, we are also growing. E-commerce is even more important now throughout the midst of COVID than it ever has been.

And we have seen major growth in pretty much all four of those sectors to even throughout the midst of this pandemic. And so it bodes well overall, from a diversity standpoint, the industries that we have here in Indy, allowing us to continue to be able to grow where our hospitality industry our convention industry is very in service industry is very huge here in Indianapolis, our convention center is we have Gen Con every year, you just looking at some of the announcements that we had recently from a sports standpoint, and they were supposed to have NBA All Star game in February, I don't foresee that happening with a pandemic going on. But you have NBA All Star game, we have Final Four, we have the big 10 Football Championship, the National Football Championship, all within, I think, a couple years of each other. And Andy has been very good at hosting big events, and our sporting industry has continued to be successful. So even though we see, you know, some downturns in our sports, in our hospitality, as being able to continue to grow in life scientists, tech logistics, aerospace has been has an other, you know, advanced manufacturing jobs proven us that we can, you know, stay resilient, and really recover and continue to grow throughout the midst of any type of downturn in economy.

Mark:

Oh, that's important. No, that's really, really good to hear. I mean, we want to see every market thrive and come back. But we know you guys are set up for it with it right infrastructure. And, you know, I agree these low cost of living areas are just really what people need, you know, people leaving San Francisco and saying, I can have a quality, quality lifestyle, but for half the price. It's so great. Well tell me a little bit about maybe what is happening, and we don't see it today. Maybe there's some new opportunities or you know, what's trending maybe with a kind of new interest in the areas or anything that you give us some, some intel on that others quite don't know quite yet, but is considered public knowledge.

Vincent:

I can say from a real estate development standpoint, we have been getting the attention of a lot of out of state developer. And so we have a lot of new pretty big projects lined up. One of those is a remodel of a former Coca Cola bility Hendrix Commercial Property Group, which is based out of Wisconsin is actually nearing completion of that project, which should be I believe, at the end of this year, basically took a Coca Cola bottling plant made it a mixed use, work, live play type of environment. There's a couple of tech companies that's going to be located there. They have all new independent restaurants that are new to Indy that will be there but they're no franchises, which is I think we're pretty big for is having a lot of local restaurants and local breweries very, a lot of very good ones. But this development alone really wanted to focus on the independent aspect, bringing new concepts in, they have an independent like film theater that's going in, that's going to be a part of heartland Film Festival.

And so they they have other retail components associated with it, but we were seeing a lot and we have we do have some other projects, you know, lined up from a you know, real estate related redevelopment standpoint, where companies and developers are coming in finding you know, properties, you know, like a former Coca Cola bottling plant and remodel it and refurbishing it. And we like I said, we have a few of those as well. We really kind of hit stream with a lot of multifamily developments, like I said, a lot of outside of the state developers are interested in, the good thing about indie is that we really haven't hit that significant, you know, density or high rise. But there's so much potential to do that. And developers are noticing that. So we got more high rises developments that's coming into our downtown core. Of course, that's where, you know, most people most take people, you know, want to locate and want to be in downtown. And the good thing about that is, is that they can live downtown, but also stay outside of downtown and still really have any type of lifestyle they want.

I would say, and I usually say this to any business or company that we have coming into Indianapolis, you can have any lifestyle you want, within a 30 minutes drive. And when I say 30 minutes drive, I mean 25 miles, yeah, I'm not, I'm not talking about, you know, six miles like that you get like in California, six miles will turn into a 45 minute 30 minute drive is going to be about 25 to 30 miles, you can and you'll have that any type of lifestyle you want. If you want to live downtown, you can live downtown, if you want to live in a suburban, you know, style, like a house, you can do that within 30 minutes drive up downtown, if you want to live on a farm, you could do that within 30 minutes drive downtown. So you have all these different mixes, and then you have these neighborhoods, of course, that surrounds our downtown area that are, you know, seeing significant investment, redevelopment of their homes, you know, appreciation values continue continually to increase as well.

So, we have a lot of cool pockets that's outside of downtown to a lot of good neighborhoods that have you know, the retail, the restaurants, the bars and things that people want to be around, that are growing, you know, significantly as well, and then even more pockets just continue to pop up. So it's been, it's been great to see, you know, it comes with its challenges as well, you know, making sure that we're not, you know, increasing poverty, we're giving people access, you know, to those quality jobs and stuff as well. So, we do focus on that, as well, making sure that you know, we don't leave, you know, some of our residents that are here behind, and we're helping grow them and scale them up as well. So, but, uh, but overall, it has been tremendous growth, from a real estate standpoint alone, you know, over the past, I would say three years, it's been pretty much boom, and then looking at some of the projects that we have lined up the next, you know, five to 10 years is going to look completely different.

So now is really the time to really look at Indianapolis, long heart and look to see ways to you know, really invest into the market as it still continues to go up. You know, I have colleagues that live in California as well. So and understanding how much you know, real estate costs in California compared to here, I'm like, you could live like a king, if you if you move to the Midwest. You know, for half a million dollars you can live like you'd be in a close to a mansion. So understanding that dynamic dynamic as well. I mean, that's, that's why you see a lot of real estate development that's happening here. So from a cost standpoint.

Tom:

One of my favorite parts about these market spotlights is learning about the specifics of these little neighborhood pockets. So, you know, within talking about some of them, you mentioned the kind of core downtown is there like specific names of different boroughs? Like I'd love to, you know, for you to kind of touch on like this specific area. And like, you know, if you threw a dart on a dartboard like where it is relative to kind of like downtown, like, how'd you categorize that?

Vincent:

So I'm going to be biased and talk about my neighborhood first. Yeah, of course. Yeah. So Speedway Indianapolis, for those who are not familiar is home to the Indianapolis Motor Speedway, the biggest sporting venue in the world that you know, is home to the Indianapolis 500 which of course will be without fans this year, but it can hold up to 400 to 500,000 fans at one time, I think 100 runni, Indianapolis 500 have 500,000 people. So our community that we have here outside of race weekend. It's a great community. It's just west of downtown. It literally it takes me a 12 minute drive to get downtown to work. Because as I as I work downtown to and commute to me is pretty important. I don't have to worry about hopping on a highway just hit the streets and I'm there within 12 minutes.

So Speedway is a great community, great school district. A lot of new redevelopment projects are happening in Speedway. I'm about five years ago, they were very critical to them to reinvest into their main street which is just adjacent to the track and we got de Lara which is a Italian car manufacturer for IndyCar. So there we have Daredevil brewery that came in big was brewery and other brewery came in AJ Foyt who's a famous racecar driver has a winery that's located on the strip. And there's a lot of mixed use new mixed use development that's going in as well. So that corridor has been great. It has been received very well by the community.

But there's also a lot of other plans for some projects that are really going on now really, you know, to that point as well. So Speedway is a great community highlight fall Creek place which is literally just north of downtown. So if you look at a downtown map, we have a highway system and goes around downtown. So it's just north of the Interstate, if you're looking at a map so that area has been seen significant investment I mean, we're thinking you're talking about houses 10 years ago, that was around 100 hundred and $50,000 that are now worth 600 $700,000 so that area has been a very cool pocket and you can kind of see the growth this is happening right around the area is you know, expanding on that neighborhood and new redevelopments going in there but they have nice you know, cafes and eateries very neighborhood feel in that area Broad Ripple which is north near I will say obviously focus on College Avenue 65th street so a little bit further north north in our city, that area has always been very well received very well. A good neighborhood has a good main strip with a lot of different restaurants and bars.

So those those three are pretty significant Fountain Square area which is just south east the downtown is another area that has been you know, has been booming. If you watch hg TV and are familiar with the show good bones, they are really flipping and redevelopment homes in that in that area of Fountain Square and Bates Hendricks that area as well has you know some local music that areas more like entertainment has some smaller music venues for live concerts. More of a cultural center that I think than the rest of the other neighborhoods. But overall, I believe those four neighborhoods are probably the biggest and have seen the most growth but you are seeing a lot of other different pockets like you know popping up or whether that be you know, Riverside Park which is just northwest of downtown area has like three golf courses but they're you know, redoing a one of the golf courses in putting in an amphitheater that's gonna cost like $15 million, and really making the quality of life type of feel more neighborhood type of feel a couple breweries have went in along with close to there as well.

So we have a lot of different a little more pockets that have been starting to see a lot of more traction. But overall, those neighborhoods are kind of like the biggest, like probably the highlights in Indianapolis outside of our downtown and they have been seen significant increase in investment over the past few years.

Tom:

And 30 minutes from everything. or excuse me, 23.

Vincent:

Yeah. And I kid you not I when I say 30 minutes, you can hold me to that get anywhere in Indianapolis in about 30 minutes drive, whether I'm going to Southside want to get north or if I'm downtown and you know, want to get home to the suburbs I pretty much a 30 minute drive so close. Well, I hate being stuck in traffic.

Tom:

Yeah, I think I've been an indie a couple of times and love it, man. Yeah. One of the things that really stood out to me is some of the investment in the downtown like there's this I think they call it a Riverwalk.

Vincent

Yeah, our canal, right.

Tom:

Yeah, yeah, it was it was this, like, how many miles is that? What did it look like? very new to this, it looks like a big investment for the government of building some some cool features. Go ahead.

Vincent:

Absolutely. So our canal was actually built in the 90s, late 90s, early 2000s is when is when it was kind of built, it was kind of built very proactively without a big plan in place at the time, but it was like, hey, let's just build a canal where people can you know, run and have a good time on over the past. Like I said, probably about seven years, we've seen more mixed use development that's been popping up activating the canal front way retail, or there's a workout facility that's down there as well very, like a niche type of workout facility and it wasn't really a franchise. So you have more, you know, restaurants that's popping up to activate the canal is about three mile radius.

So if you like running is a good place to go running on as well. I think one of another like big initiative that we have here in Indy, is we do have a river that runs through Indianapolis is called the White River. And the master plan associated with that is pretty aspirational. And a lot of people are focused on it, and making that a reality and really utilizing the riverfront as a asset, which a lot of times I think in years and pass in history has almost looked at as as a boundary or barrier. And you look at that pretty much real estate redevelopment across the nation. You know, the highways, railroads, and you know, rivers are kind of looked at boundaries or barriers but really looking at it, utilizing it as an asset. And we've seen a significant development around it.

We will continue to do so. You know, cleaning it up, make sure allowing people to be able to even swim in it is as bad as A plan for the past 15 years, which is now coming to fruition where people can actually, you know, safely you know that you be in a water, what has been historically a big industrial city, you know, that has effects, but that has been cleaned up. We haven't seen more development around that as well. So since we don't have a lot of natural resources, like, you know, like Denver mountains in or California and things of that, you know, utilizing natural resources as assets that we do have, and being able to build around those.

Mark:

you know, Tom invents it, we were actually in Indianapolis just last year, Roofstock did a property tour, where we read a 50 passenger bus drove through some of the major neighborhoods, like you're talking about Speedway, it just saw what the real estate looked like when and toured some of the properties. But what struck me as being real interesting was we drove through a few opportunities zones, and of course, you know, opportunity zones, that's really where there's a ton of investment because there's some tax breaks that investors can get. But what I always noticed was how many little coffee shops and little hipster spots are popping up alongside of those opportunity zones. And so you saw the live in you know, the communities were becoming more of a walkable area, you know, they had the the walkability to the coffee shop, maybe tell us a little bit about what you've seen and changes with opportunity zones, and how that's affected Indianapolis in general.

Vincent:

Absolutely. So just a little background about opportunities zones, once that program was rolled out by the federal government, pretty much I believe 80% of census tracts within our city was could qualify for it. So of course, we submitted them all. So to state then, of course, the state hand picked different census tract to kind of focus on so once they did that, our downtown is actually a qualified census tract, the state basically had to determine and predict not only, you know, out of what can qualify for what we can use, but where do we predict investment will happen. And I think they did a very good job of, you know, predicting that. So opportunities I was we have seen a lot of investment, we have seen quite a few like multifamily developments utilize this and have, you know, went adjacent to where those coffee shops are when adjacent to you know, kind of where the eateries and breweries are already located. And it really just enhancing overall the feel and walkability to neighborhood.

You know, to that point, we have been a major, major focus on mass transit here in Indy, we do have bus systems, but now we have a bus rapid transit line that has dedicated lanes, so it's not getting stuck in traffic, and the station's more feel like a subway style nation that have just a bust up on a corner. So those are bus rapid transit line has been very well received. The current one that we do have goes south from our university of Indianapolis, it's just south of downtown all the way up to Bravo area, and it hits quite a few opportunity zones. The next couple that we have going in, goes alongside of those new opportunity zones as well, we have one as going east to west, from West Washington Street, all the way out through downtown to the airport.

And we also have one that is going from downtown, out to the northeast think fishers Lawrence Lawrence area as well. So the way those opportunities also set up has been great. And we really are now you know, building our mass transit infrastructure, you know, around those opportunities zones and kind of enhancing the, you know, walkability and you know, the feel of it, you know, you don't necessarily have to own a car to be able to get around and get where you need to go. So that's important to us as well. But yeah, the neighborhood fields has been becoming very popular, very well received overall. And, yeah, we have a ton of coffee shops, but a lot of good local ones, a lot of good local coffee shops and breweries. So everything has been very well received

Tom:

both sides of it. I love it. You're reading my mind. I was going to ask about, you know, local transit and some of that, you know, just one last question on the opportunity zone, asking for a friend. So an opportunity zone, it's just a big tax advantage that the government gives or how would you define the scrape benefit that's catalyzing so much growth?

Vincent:

It's a tax advantage that the federal government is able to add a capital gains tax that you're able, basically savings that you're able to benefit from so but the program was to peak investment into distressed areas. So that was the intent of the program was to spark investment in distressed areas. And like I said, it's been very well received. Our downtown is one You know, a lot of projects specifically as told us you know, they're focusing on that from a business attraction standpoint, a lot of companies have also said like, yeah, we want to be located in opportunity zone as well to take advantage of you know, the savings that they'll be able to benefit often from as well. So it's been very well received. A lot of people are using it here locally, I'm sure across the nation but the good thing about Indianapolis being you know midsize city cost of living is great question. Life is great. People really see it as opportunity. I hate to use that word again, but a big opportunity to utilize, you know, that program.

Mark:

Yeah. And Tom, the way I look at it as, as an investor, you don't need to be the one necessarily taking advantage of those tax advantages. But you can sure piggyback off of everybody else's investments and really just see what's trending. And I think that's the, that's always the key, what's trending, where are people investing a lot of money into, and my eye is always, you know, see if you see a Starbucks, it's a good sign. If you see a coffee shop, it's a really good sign the breweries, yeah, that's a home run. Now, this is great. Vincent.

And so, you know, in in regards to some of those pocket markets, you know, we like to tell our viewers and, you know, our listeners, what are those markets that are really going to be kind of that next up and comer because a lot of the the properties sold on Roofstock are, are in, you know, more workforce housing type neighborhoods. So it may not be the the bars, breweries and coffee shops that we're looking at. But more of, you know, what are some of those areas that you could give our listeners some insight on that will be great investments, just because of maybe the new companies that are moving into those areas, or that significant investment that that may be going in based on opportunity zones?

Vincent:

Yeah, absolutely. So yeah, that's a good question. And as I mentioned, some before, like the Riverside Park, which is north east, I mean, northwest of just the downtown is pretty ripe for real estate development. be quite honest for you, there's been a lot of investment from a corporate level is a district called 16. Tech, which is really like a collaborative nature for r&d for companies located for r&d purposes and Life Sciences. This literally just south of where all these homes are located. There's a massive plan for you know, the part like I said, we're redoing it $50 million into the amphitheater, now the master plan over was like 100 and $50 million literally sits in between two universities.

Do you have any any you have IPY? There's located downtown, and you have Mary University, and that is also a growing University in Indianapolis as well. And yeah, this neighborhood, which actually I grew up in, so but I grew up in a neighborhood, and you see the growth that's happening pretty much on both sides of it. Residential really hasn't caught up really, at this point in time. But you have seen some people being able to come in here, and you know, taking advantage and investing into that community. So I would definitely mention that one. There's definitely neighborhoods, adjacent to fall Creek place that has been seeing a lot of growth, a fog replaces just north of downtown. So you look to, you know, the east of you know, that neighborhood, you can see significant growth as well. So, I think those are two neighborhoods, and really just focusing night, last night religious liberty, those two, but the good thing about those two is, those neighborhoods are very close to downtown.

So you could really just take a radius around downtown, probably, you know, 334 miles, even our Near East Side, as east of downtown has seen significant investment, significant growth as well. But from a real estate standpoint, you know, could still use some investment. But you see the commercial, you see, you know, you see, you see to the breweries, you see the companies, you see, you know, the cafes, but you know, from a single family home, there's a lot of, you know, distressed properties that could still, you know, be taken advantage of. So yeah, you could literally take a radius just downtown, probably a mile or two radius, you know, I would say two to three miles and just kind of focus in on that geographic, those geographic areas that, you know, probably are the next to pop that have started, have started seeing some significant growth. Some of those neighborhoods are, you know, a little bit more fluid, but, you know, the ones that chase into it are the ones, you know, that are getting there. So I those are definitely some of the ones that I would say, from a real estate investment standpoint, as you should probably focus on and move for, like here at NAB as a term of investment.

Mark:

Oh, that's great. Well, I think my only last question would be, you know, in terms of the vision, let's call it the 10 year vision of where Indianapolis is planning on going, you paid a really good picture of what what's happened, how it's changed what's going on in the near future. But what do you think about in 10 years? How would you see Indianapolis growing?

Vincent:

Continue to see a lot of growth? And like I said, I think our tech, I think our tech sector tech industry is gonna continue to grow as you look at the Midwest, you know, from a cost standpoint, and from a quality of life standpoint, I think we can compete with Chicago, but they just, you know, just have the the cool factor, I guess to it. So I think we compete with them. Both. From a cost standpoint, Indianapolis makes the most sense. So I think a lot of companies are starting to realize that especially even from Tech, the tech companies, but from 10 years from now, I think overall economy in from industries that's here and indeed will continue to grow. I think there's going to be a big shift from the big major superstar cities to some of the smaller midsize like a second tier cities.

I see us as one of those one of those cities, you know, we're being very proactive of making sure not only are we growing our economy overall, but as you mentioned, some of the, you know, the workforce housing that you know, that your investors probably typically invest in, also making sure that we're doing a good job of, you know, skilling up those residents, you know, we have been very innovative and some of our policies and looking at inclusive growth, and making sure that we're growing our middle class and making sure that we're giving people that are in poverty, access to quality jobs. So as a whole, you know, we can continue to grow, like I said, you know, there's economy as we grow and grow, if you look at it on paper, he's like, Oh, this is any office is doing great, like they're growing, you know, but, you know, there's been, you know, some cons to that, you know, you look at our poverty has grown a little bit as well. And so we have been very, you know, like I say, innovative and noticing that early working with Brookings Institute and other policy makers to make sure that we curb that and we're growing and an inclusive manner.

So not only are we continue to grow our economy, for higher skilled higher wage people, we also are growing middle school, middle class as well, who were decrease in poverty, like all of those are major, importantly, focused focus for us, I think, overall, a 10 years from now is going to be very well received, not only from an economy standpoint, and I think the growth that we're gonna be able to achieve, but also from a talent workforce, enable to attract diverse groups of people come to our city, which we think we've done a solid job on, but could be better, like most cities, probably you could say, I'm kind of a perfectionist, you know, some of those things, but But yeah, being able to attract very diverse groups of people, I think those are, you know, the neighborhoods, especially, when you look at cities and municipalities like this, people want to live around diverse groups of people. And so being able to, you know, focus on those being able to grow those will, will continue to help help our tech industry will continue to help, you know, our life sciences and R&D industry will will continue to help us attract, you know, you know, the college students that are already in our region, you know, VA Indianapolis and live here long term.

So I think from a growth standpoint, you know, Indianapolis 10 years from now is gonna look totally different from what it is today. I know you all visited last year, you can probably already seen like, Oh, yeah, this is pretty cool place, I think 10 years from now is going to be on a entirely different level. And, you know, probably looked at the way Nashville is looked at, or maybe looked at, even similar to Chicago and in some instances or Pittsburgh, I really think like, oh, I know, it's my job. And I could be a little bit biased. But I think the trajectory that we're going on some of the policies that we have in place and some of our vision, we're gonna be able to achieve those goals and Indianapolis is going to continue to be successful.

Tom:

The last thing that I want to touch on is some of the points of interest and you'd mentioned one of them that Indiana Indianapolis Speedway, the Indy 500, the Indianapolis Colts, I think I remember and running on that little River Walk I think there was like a Hall of Fame. What other would you say would be like, you know, destination driver points of interests? Which was that? Did I see a Hall of Fame? Did I see a Hall of Fame?

Vincent:

I think you’re talking about the NCAA Hall of Champions.

Tom:

Hall of Champions Sorry, sorry.

Vincent:

The NCAA is located here in Indianapolis. So their headquarters is here is on the canal wall and they have like a Hall of Champions like museum adjacent to it so that area because there's a couple of museums in that area as well that has been you know highlighted and that are are great to go to our children's museum is probably one of the best in the country has received multiple awards of being able to do that so…

Tom:

Is it like dinosaurs or what's what's in the children's?..

Vincent:

There is a huge dinosaur and outside of it, you may have drove by and seen it. Yeah, so there's a huge sometimes dinosaurs right outside of it but I think what we kind of preach not only you know are we gonna see are we a city where you come and have fun like but from a family aspect to like you know, I've been to other cities and I'm not going to knock any of them but I've been to other cities with like my family I'm like, just cool for like, you know, Millennials like this is great for younger people, younger professionals but like I can't see myself raising a family here and I think Indianapolis does a good job of making sure that is family oriented. As well as being able to go out have fun so I choose museum is great.

New Fields is our art museum. They have tons of great pro programming that go that goes on there year round. So like in the winter, they have like a winter lights thing. That's pretty cool. That's very well received family friendly, but also you can indulge and have a drink while you're walking around checking out you know, the winter lights. So New Fields is great army. Our museum is great. We have of course he said it. You mentioned coats. You have the Pacers that are here in Indianapolis. So our NBA You know, you know we've had our walls over a few years but you know, we always compete in from a basketball standpoint Indiana that's just basketball. You just enriched in basketball culture from so our Pacers are an attraction standpoint as well. Like I said, we NBA All Star supposed to be here February. I think they're just gonna probably shift the schedule back due to COVID for everything. Let me see we have a triple A baseball team. So not professionally, but triple A has the best attendance and all of minor league baseball.

Tom:

That's that park is awesome. I remember it's like a sunken diamond right in downtown. That's Yeah.

Vincent:

So it's pretty cool. So yeah, that area. We have, of course, our White River State Park, which is just along the river next to you know, our victory field where our baseball team plays that where they have a lot of concerts here as well. We have another outdoor music venue a little bit north of the city area called Noblesville. It has a host a lot of concerts. So of course, we have the track, trying to think of some other ones. Our airports been like rated top 10 in the country for the past, since it's been built as our airport is always very well received.

Tom:

Yeah, big international…

Vincent:

So I would say those are pretty much the biggest highlights. And then of course, we have our cultural districts, our trails we have, I think we have over 95 miles of trails throughout throughout the city. Connect connecting different districts and the ones that kind of mentioned mentioned before Fountain Square, Broad Ripple mass app is a pretty nice hub downtown, and Indiana Avenue as well. So we have a lot of different from a cultural standpoint, like work live play type of field. I definitely have to mention Eagle Creek is one of our biggest parks. It has a reservoir on it. So it has a lake bring a boat to some kayaking, as well as trails that you can highlight is bigger than Central Park in New York, that our biggest park that we have here in the city, nice restaurant, right that sits on the reservoir called Rick's boat yard. I highly recommend that literally just went there just Friday with my family.

So beautiful, like ambience, you know, feet. So we're setting as you know, over the reservoir. So we have a lot of different pockets and a lot of nature things that we kind of highlight guys, reservoirs, another one of them were from a neighborhood but they have restaurants and things over there as well. That's just north fish's area, which is in our region. It's not an Indianapolis proper, but it's a suburb has has exploded, you know, top golf course. Then you get to IKEA. That's a big win. So does IKEA is up there. Oh, so yeah, officials, district officials have been community has, you know, seen a lot of new development, they got some nice mixed use developments that's in that area as well. So I know it's not my job to advocate for other municipalities within our region. But that…

Tom:

Being a good guy.

Vincent:

Yeah. Advocate for our region.

Tom:

That's awesome about IKEA going in. I mean, that's one of my strategies is just to follow where these big corporations that have the budget to identify these up and coming areas, like let them do the work. So my very last question is, and you've already used an example on that of that restaurant that's on the lake. That sounds really awesome that I definitely will will check out but if I'm going to go visit Indianapolis, and I have one meal to get where would you recommend me going to?

Vincent:

Man, that's a tough one. I think I may know the answer. It's a steakhouse. But it's a steakhouse. So you got to go St. Elmo’s here one. So you definitely have to go there, I would say depends on your taste. I will say we was courting a tech company. They you know, they didn't want to really go high in you know, so you know, we took them to a barbecue joint, so, okay, so you know, you gotta I gotta know what you feel but i would i highly do highly recommend if you have one night that you have to go to St. Elmo’s

Mark:

Where would you go the visit? I kind of threw that out at you but where would you go what's the what's your spot?

Vincent:

Man as I say I like I like hole in the walls. So that's kind of that's kind of my go to so

Tom:

You're good company. Where's our hole in the wall, we gotta blow them up!

Vincent:

Go, you gotta do some barbecue at King Ribs is just west of Indianapolis at on 16th street like heading out to Speedway. I kill myself because I like come downtown workout more workout at Orange Theory and then like I got to drive up 16th Street and smell one one of our donut famous donut places Long's donuts they smell it as I'm driving by and then I gotta drive by King ribs know that too. So it's like I'm like shooting myself but…

Tom:

You got a bunch of sweat points from orange theory

Vincent:

I can indulge but yeah, that's that's what I would go to King Ribs. That's that's kind of what I would go to for me. We have no shortage of restaurants.

Tom:

Love it.

Vincent:

Well, one quick thing I'll throw out I saw the website downtown indy.org it's a great way to like really learn about you know the details of some of the the neighborhoods you explained. Somebody wanted to do a deep dive, but maybe Vincent, give us a little bit of maybe tell us where to go for the Indy chamber if people want to do a deep dive because we can provide a lot of highlights, but we'd love to, you know, have people go there, if you recommend going directly to the website?

Vincent

Yes, I'm gonna give you a few websites that you could go out and check out downtown indy is a good one that highlights the downtown area, and things in restaurants in our downtown corner, visitindy.com is a their organization just promotes on tourist attraction just for Indianapolis. So our museums, our parks, different events, as well do317.com basically will show all the different concerts and things that we have going on, and different other beer festivals and things like that, that we have going on as well. So do317 is a good website as well. I will say you know, since COVID, we have had too many events. So like like the rest of the nation. So I'm very much looking forward to being out going out to a sporting event or things of that nature. But I will say those three websites are probably the best websites to utilize to look at happenings happen, indie,

Mark:

Dnd what's indies indie chambers website that people can visit as well.

Vincent:

So it'll be Indychamber.com. And if you want to, we have different tabs, we have a lot of different organizations like we advocate, legislative. So we have policy team, we have a small business department that does lending games, free small business, poaching, of economic development, focuses on attraction. So if you want to see highlights of different companies that are coming here, feel free to click on the economic development tab, check out either develop Indy, which is a nap which proper, which is my team, or nd Partnership, which is our regional team that advocates for our region.

Mark:

Well, I'm a big fan of always visiting a city's economic development website that they get shows the major companies focused industries, quality, quality of life cost of living, and a ton of economic data a little bit high level. But again, it can really get into some specifics. So I always recommend that people go check that out. But hearing from you directly, I think is always the way to go. So appreciate your time today. Vincent, this was absolutely fantastic. And looking forward to maybe doing a catch up with these days soon and see what else is going on post COVID-19 once we get through all this.

Vincent:

Yeah, I appreciate it, Tom and mark. And definitely we come to any next time, feel free to hit me up. And we can catch up. This has been a great change of pace, doing this, having this talk with you. And not so you know, in the grind of work. So this is good change of pace. I appreciate the invite.

Tom:

Awesome. Get some barbecue. Awesome.

Vincent:

Thanks, man.

Mark:

Thanks, Vincent.

Mark:

Just want to say a big thank you to Vince for participating and giving us some insight in a way that we really don't get access to on a daily basis. So this is definitely a privilege to have people like him on to really give us an idea of not only what's happening today, what's happened in the past, but what's going on in the future state of Indianapolis. So great, big thanks to Vince and looking forward to doing this again.

Tom:

Happy investing