Speaker 1: Welcome to How to Money. I'm Joel, I'm Matt, and
Speaker 1: today we're talking about what makes a good rental property
Speaker 1: and Matt super cheap glasses? What why are you switching
Speaker 1: up the order here? Man? You have to talk about
Speaker 1: my glasses? Well, you know, good host knows when they
Speaker 1: shake things up. And I saw you in these fancy
Speaker 1: looking glasses. Tonight is my photography glasses. I only wear
Speaker 1: these typically when I'm only shooting. And so why why
Speaker 1: did you break about tonight? And my I couldn't find
Speaker 1: my other ones? And how much did they cost? I
Speaker 1: want to know that, so you should know that all
Speaker 1: my glasses are from Zenny. Did you know that optical? Literally? Yeah,
Speaker 1: so is any optical. They're one of those cheap overseas players.
Speaker 1: And dude, I have I'm gonna guess eight or nine
Speaker 1: different pairs from them, and they're great. They're super cheap,
Speaker 1: which allows you to purchase two to three at a time,
Speaker 1: and you know, if it doesn't work out, it's like,
Speaker 1: well I only dropped twenty bucks on them, all right,
Speaker 1: So twenty bucks a pair? Is that roughly what you're spending? Yeah? Yeah,
Speaker 1: it's been a couple of years. Maybe two or three
Speaker 1: years since I've ordered some. But yeah, typically you can
Speaker 1: get like the fancier coatings on there where it's like
Speaker 1: smudgeproof for different like UV. I don't know UV coading.
Speaker 1: I think all that's kind of bull crap anyway, So
Speaker 1: I love Zenny. I don't wear glasses because if you did, though, man,
Speaker 1: I think you would love Zenny. I totally go to
Speaker 1: so cheap. Yeah, that's awesome. I've totally you know, dug
Speaker 1: around on the website before and stuff like that. By
Speaker 1: the way, not an ad Matt just has any glasses.
Speaker 1: And so if you want to check out any optical,
Speaker 1: like literally an awesome money saving strategy if you wear
Speaker 1: glasses is to shop at ennypple, so it's any optical
Speaker 1: Z E, N N I, and then Optical dot com.
Speaker 1: So we'll put a link in the show notes. And
Speaker 1: then there's other actual, you know, similar companies online, like
Speaker 1: there's Goggles for you, and I've heard of them, I've
Speaker 1: never checked them out. I thought about hopping on there
Speaker 1: to check out one of their styles, see what they
Speaker 1: look like. But like the glasses you're wearing like legit,
Speaker 1: like like like Warby Parker or something like that. But
Speaker 1: you're talking about a hundred dollar glasses, and if you're
Speaker 1: going to one of the traditional eyeglass shops, you're probably
Speaker 1: spending or if you're even going to Costco, which hundreds
Speaker 1: reasonable hundreds, you're dropping at least two hundred bucks minimum
Speaker 1: on glasses. And so yeah, you know, go go to
Speaker 1: your eye doctor, you know, get your prescription, and you
Speaker 1: get the pupillary distance. That's an important How do you
Speaker 1: know all this? I know you don't even wear glasses,
Speaker 1: and you know you know about pupillary distance. I know
Speaker 1: all the numbers, of course, And so you gotta get
Speaker 1: all those things, plug plug them into a site like
Speaker 1: Zenny or goggles for you and just save joy, saving
Speaker 1: tons of money, tons of money on glasses and don't
Speaker 1: worry about it, because I think that's the biggest hang
Speaker 1: up people have. They're like, what if they don't fit
Speaker 1: me and or maybe I won't like them, you know,
Speaker 1: and just order a few pairs and they've got the
Speaker 1: different kind of sizes on there, and you know, take
Speaker 1: the measurements and do all that and if one or
Speaker 1: two don't work out, that's fine. You still got a
Speaker 1: new pair of glasses for sixty bucks. Assuming too of
Speaker 1: them to work out, you know, and you can I think,
Speaker 1: upload a picture of your face, right and yeah, yeah,
Speaker 1: you can do a virtual triogh Yeah, super funny because
Speaker 1: they I mean, they were doing this years ago, like
Speaker 1: seven years ago. Maybe it is when I got my
Speaker 1: first They've been around a long time at this point,
Speaker 1: and I remember the first time I did that. Nobody
Speaker 1: else had ever done something like that. I thought that
Speaker 1: was the funniest thing. You're an observant, dude, commenting on
Speaker 1: my glasses. Saw the new glasses. I was wondering, what
Speaker 1: was up, dude. I wanted to mention too. I finally
Speaker 1: got my uh, speaking of photography, I finally got my
Speaker 1: business checking accounts set up, and I'm about to kick
Speaker 1: Wells Fargo to the curb. Finally, high five my friend
Speaker 1: because I don't know. They suck so bad. We talk
Speaker 1: about this that they're essentially the devil. Really, yeah, Wells
Speaker 1: Fargo is the worst. So if you are banking with
Speaker 1: Wells Fargo right now, please please do yourself a favor
Speaker 1: and leave them. I have we have an article on
Speaker 1: our site about you know, how to switch banks and
Speaker 1: which banks you should consider switching to. But like dude,
Speaker 1: thank you, way to go, thank for leaving Wells Fargo.
Speaker 1: Like that's just a good American thing to do. Congratulations,
Speaker 1: it's the middle of the summer now, you know, there's
Speaker 1: nothing more American than kicking a giant conglomerate bank to
Speaker 1: the curve when they have treated people very poorly, literally
Speaker 1: committed crimes and and still no one goes to jail
Speaker 1: and there and their executives and CEOs get huge bonuses
Speaker 1: batty bonuses, thirty fifty seventy millions. What do you think
Speaker 1: about their new ads? Have you seen them? With the
Speaker 1: World Cup being on, They're like, we've been around since
Speaker 1: whatever year, but rebirth or renewed, you know, basically, I
Speaker 1: feel like it's just the lame way of like admitting
Speaker 1: that they screwed up. It feels very disingenuous because it
Speaker 1: feels like it's just branding, you know, right, Like it's
Speaker 1: a good it's a good way to brain yourself. I
Speaker 1: always but most people don't even know, aren't paying attention,
Speaker 1: I don't think. But the amount of stories that came
Speaker 1: out over the last what year and a half, of
Speaker 1: all the things that Wells Fargo has done to the
Speaker 1: American people. Uh, it are astounding, and you know, creating
Speaker 1: fake accounts and people's names just to hit the like
Speaker 1: the branch quotas manager is pressuring teller is basically to
Speaker 1: make it happen no matter what. Essentially, it's like, all right, well,
Speaker 1: when you put that kind of pressure on your on
Speaker 1: your on your employees, what do you what do you
Speaker 1: expect that they're gonna do? You know, if they're going
Speaker 1: to get fired for not hitting a certain number of
Speaker 1: new accounts opened within a period. So terrible culture to
Speaker 1: work in, and what they did to you know, so
Speaker 1: many of their own customers and um human people who
Speaker 1: weren't their customers that they were signing up for accounts.
Speaker 1: It's pretty awful stuff. If you just go to Google
Speaker 1: and type in Wells Fargo and then hit the news
Speaker 1: button and then just scroll through like the last year
Speaker 1: and a half, you'll you'll be amazed at all the
Speaker 1: terrible things they've done and how everyone's gotten away scot
Speaker 1: free man in the whole process. So I feel like
Speaker 1: we've said their name enough. Let me I do want
Speaker 1: to say who I'm switching to. It almost sounds funny
Speaker 1: to say because they don't sound like a real bank.
Speaker 1: But but there let me the best online free business
Speaker 1: checking account, did I say everything? Yeah? So their online
Speaker 1: they're not based in the location. It's for business, which
Speaker 1: is tough. For years, I've been looking for a great
Speaker 1: free online busines this checking account. Business accounts are the
Speaker 1: hardest one. It's so hard as a personal, as a human,
Speaker 1: as a single individual, but it's really hard as always
Speaker 1: a business to get a good free checking account. Yeah.
Speaker 1: Only recently have the business checking accounts kind of come
Speaker 1: on board specifically with what I'm looking for to which
Speaker 1: is not maintaining a balance. And that's one of the
Speaker 1: things I hate about my my wealth Fargo. And it's
Speaker 1: a grandfather to account, so I've got perks. So they've
Speaker 1: probably gotten like a lot worse. Yeah. Yeah, And so
Speaker 1: I don't know what what what the requirements are, but
Speaker 1: I know that they're worse. It's the only reason I've
Speaker 1: held onto that account because I try to sort of
Speaker 1: reorganize my accounts, and I realized it was gonna I
Speaker 1: was gonna have to increase the amounts either that I
Speaker 1: spent every month out of that account, or I was
Speaker 1: gonna have to maintain a higher balance. So I'm looking
Speaker 1: forward to only having to keep zero dollars in my
Speaker 1: Bank of the Internets, which is their name by the way,
Speaker 1: I don't know if I have I not said their
Speaker 1: name yet, Bank of the Internet. No you haven't, so
Speaker 1: that it's yeah, Bank of Internet. I think the actual
Speaker 1: name maybe Bank of the Internet. And that's amazing. You've
Speaker 1: read like you d C insurance that all that completely.
Speaker 1: It's it's b of I is there is like their
Speaker 1: shorthand Bank of Internet, be of Viye, But they're the
Speaker 1: one I'm on though now is the basic business checking account.
Speaker 1: And for them you do have to make a one
Speaker 1: thousand dollar initial deposit, but then after that you can
Speaker 1: just pull it out and then you're sitting there with
Speaker 1: a zero balance and I can use them to make
Speaker 1: my my business deposits remotely with my phone. And their
Speaker 1: limits are way higher than any big name bank like
Speaker 1: Chase or Wells Fargo. And their daily limits are higher,
Speaker 1: their monthly limits limits are higher, a much higher dollar
Speaker 1: amount than I mean, let's be honest that I'm ever
Speaker 1: gonna pull in. Yeah, it's They're like, oh the limits
Speaker 1: are I mean there's something like fifty a month. I'm like, okay,
Speaker 1: that's not gonna be a problem for me, trust me, dude.
Speaker 1: I know you've been kind of on that this hunt
Speaker 1: for a long time, so I'm glad you've just been busy. Man,
Speaker 1: it just takes some time to finally sit down. Yeah,
Speaker 1: I'm glad you found something that you know works on
Speaker 1: all those levels for you. And you know, we'll we'll
Speaker 1: put a link because I know there's a lot of
Speaker 1: small business owners that listen to this podcast and they
Speaker 1: probably are paying, you know, monthly fees every month for
Speaker 1: having a checking account or their limits or there's all
Speaker 1: these hoops have to jump through and it's just a
Speaker 1: huge pain having to do twelve transactions a month in
Speaker 1: order to keep it free. They accidentally click a view image, view,
Speaker 1: check image, deposit and then they get charged three fifty
Speaker 1: if you're listening, yes, yes, well as firego man, they
Speaker 1: do it, dude, that's the dirtiest thing I've ever heard of.
Speaker 1: I'm not even kidding. When you go and you log
Speaker 1: into your account, it's got your transaction summary and it'll
Speaker 1: say deposit and I'll have a little link and it
Speaker 1: says view image. And remember the first couple of times
Speaker 1: I did that because I like to see I just
Speaker 1: make sure, like, is that the one with that that
Speaker 1: I think I think it was because sometimes the amounts
Speaker 1: for the same and yeah, I was getting hit with
Speaker 1: these charges. Man. It wasn't until maybe a year later
Speaker 1: that they put a disclaimer kind of next to it
Speaker 1: explaining that that's what that was for the year before
Speaker 1: that though, when I was figuring it out myself, I
Speaker 1: mean I called them up. They said, oh, that's because
Speaker 1: you clicked view image, which freaking costs them nothing. Yeah
Speaker 1: that's crazy, that's crazy. That's so that I think to
Speaker 1: takeaways from the to takeaways if you are if you're
Speaker 1: a business owner, you should totally look into Bank of Internet.
Speaker 1: And we'll put a link on our show notes. Yeah
Speaker 1: you love to create, like write a post or something,
Speaker 1: but at the very least we'll have a link up
Speaker 1: there directly to them, because I mean, they're not advertising
Speaker 1: with us that it's just they're just a great, great
Speaker 1: service that they're putting out there, great resource for small
Speaker 1: business owners. And then if you do your banking with
Speaker 1: Wells Fargo in any way, former fashion and I probably
Speaker 1: have police stop and you know, I don't think you know,
Speaker 1: we're not usually here to bash companies. That's not usually
Speaker 1: what we're about. But I feel okay to doing that
Speaker 1: about right I. It feels cathartic. Actually, I think to
Speaker 1: to talk about how terrible they've been and uh and
Speaker 1: and if you do your business like things like that,
Speaker 1: we get our money taken from us as as consumers,
Speaker 1: as individuals because we don't fight back and because we
Speaker 1: don't move when a company takes advantage of us like that.
Speaker 1: And the competition in this country is so stiff, especially
Speaker 1: in the area of banking. There's so many good banks
Speaker 1: out there offering such great services. That for you to
Speaker 1: stay with the company that hates you, that doesn't care
Speaker 1: about you, and then it's going to charge you exorbitant
Speaker 1: fees for ridiculous things like clicking to see an image
Speaker 1: of your check, then insane. We're doing it to ourselves.
Speaker 1: And so leave a company like that, immediately go to
Speaker 1: another bank as quick as you can, you know, hustle
Speaker 1: up and uh. And it's good for our country, it's
Speaker 1: good for you. I mean, we should just not be
Speaker 1: supporting companies like this to treat their customers in this way. Yeah,
Speaker 1: I feel bad for even having waited this long, you know,
Speaker 1: I feel like I've I've I've been on the wrong
Speaker 1: side of history. Uh, but like waiting and not taking
Speaker 1: steps to kind of further go down that path. And
Speaker 1: you know what, last thing about the big banks, they
Speaker 1: continue to pay point zero one, all of them on
Speaker 1: your savings. So lame it? Need we say more? Yeah,
Speaker 1: all right, onto the beer for this evening. Um. Our
Speaker 1: friends Michelle and Jen just got back from Iceland. They
Speaker 1: actually went to a few countries and I was one
Speaker 1: of them, did a little tour. Apparently it's the land
Speaker 1: where there's a waterfall around every corner, which sounds awesome.
Speaker 1: Definitely want to go to Iceland at some point. Oh
Speaker 1: and the flights are actually really cheap to Iceland, Yes,
Speaker 1: in the wreck of vic Yeah, because Iceland Air flies
Speaker 1: there from like some of the Northeastern cities, and so
Speaker 1: if you want to get to Iceland, you can actually
Speaker 1: do it pretty reasonably if you fly out of the
Speaker 1: Northeastern corridor. So is Iceland still like the hit of
Speaker 1: city to the flant I think Iceland is the place
Speaker 1: to go, man. Like, I've got tons of photographer friends
Speaker 1: and everybody always post pictures from from Iceland. It's like
Speaker 1: the cool place to take a picture of horses and waterfalls.
Speaker 1: Waterfall like a black church like on the hillside. Yep, yep,
Speaker 1: that's it. That's it. That's Iceland. So we have an
Speaker 1: Icelandic stout from a brewery called Borg. Let's pop it.
Speaker 1: You sure that's how you say it? We we botch
Speaker 1: any other European uh name or phrase. I'm sure that
Speaker 1: I'm not sure that that's how it said Borg. So
Speaker 1: do you know anything about this actual? I don't. My
Speaker 1: friend Michelle texted me from Iceland and said, hey, we
Speaker 1: wanna get you a beer. Do you know what Icelandic
Speaker 1: breweries are good? And I didn't off the top of
Speaker 1: my head. So I went to the trust the old Internet.
Speaker 1: One of my favorite websites for looking up what beers
Speaker 1: are good, what breweries are good in a place, Beer
Speaker 1: advocate dot com. It's a great site. Like when I'm
Speaker 1: going to a city or to a country, I always
Speaker 1: go to be your advocate just to kind of see,
Speaker 1: you know, what people rate these breweries and the beers,
Speaker 1: and then I kind of know, you know, where my
Speaker 1: priorities lie for where I want to go drink. And
Speaker 1: so I looked him up and always a good way
Speaker 1: to play your travels. Yeah, yeah, and borg was was
Speaker 1: pretty well rated, and so Michelle and Jen were kind
Speaker 1: enough to bring back this Icelandic stout from them. And again,
Speaker 1: I don't know how to pronounce it, so I'll just
Speaker 1: say Icelandic stout. Not surprisingly, this poor is a nice,
Speaker 1: crazy dark color, not able to see through at all,
Speaker 1: nice brown head. It smells like a stout, which is
Speaker 1: actually kind of refreshing, just you know, like I feel
Speaker 1: like lately the stops we've had are bigger in their
Speaker 1: barrel age, and so it's kind of nothing but like
Speaker 1: barrel and bourbon and oak and wood. It smells like
Speaker 1: bourbon or some of the adjuncts that they put in it,
Speaker 1: like coffee or manilla or something that smells like classic
Speaker 1: stout smell, no doubt, no doubt. It's really clean. It's
Speaker 1: like a really clean stout. Yeah, that's actually funny that
Speaker 1: we kind of mentioning that. And then it's, uh, it's
Speaker 1: got this kind of nice boozy edge to it, like
Speaker 1: because and it is eleven and a half percent alcohol,
Speaker 1: so it's a you know, it's a bigger beer man.
Speaker 1: It tastes like a classic, delicious, bigger stout. I like it.
Speaker 1: So how far we get through this podcast? I want
Speaker 1: to run this morning, and I don't think I've rehydrated
Speaker 1: since then, so I'm just gonna just drink this real
Speaker 1: fast for you might want to sip because we have
Speaker 1: a lot of information to get to. That's right, man,
Speaker 1: we do. But first let's take a quick break. Let's
Speaker 1: get onto the topic in hand, what makes a good
Speaker 1: rental property, And ultimately we're assuming that you want to
Speaker 1: be a landlord, and that you don't want to be
Speaker 1: a landlord just for a few years, that you are
Speaker 1: kind of in this forward of the long term, because
Speaker 1: very few properties make good rental properties. If you're only
Speaker 1: planning to be a landlord for a couple of years,
Speaker 1: you should really realistically be looking at a longer time
Speaker 1: horizon and also be looking at a bigger percentage to
Speaker 1: put down. We'll get into kind of the specifics of
Speaker 1: what what we think makes up a good rental property,
Speaker 1: but no going into it that if you're not in
Speaker 1: it for the long haul, and you don't have twenty
Speaker 1: or likely to put down on a property that you're
Speaker 1: buying as an investment, probably a lot of this advice
Speaker 1: you know doesn't apply to you. Yeah, Jo, that's right.
Speaker 1: And we're also gonna be talking specifically about what makes
Speaker 1: a property good, right, so like we're talking about specific houses,
Speaker 1: specific homes. We've done a previous episode about investment properties,
Speaker 1: and we kind of covered more of the general basics
Speaker 1: where we talked about everything from your personal flanances way
Speaker 1: more than just how much to put down, but all
Speaker 1: the way from if you know, should I be handy
Speaker 1: all the way through to the different things you want
Speaker 1: to consider if you are looking at investment properties. Go
Speaker 1: back and listen to that one that is episode four.
Speaker 1: You know we're gonna come back to real estate again though, dude,
Speaker 1: because we just we love it so much and there's
Speaker 1: just so much you can talk about with when it
Speaker 1: comes to it. So yeah, I was gonna say that too.
Speaker 1: I mean, I think there is a lot for us
Speaker 1: to discuss, and there are a lot of episodes that
Speaker 1: over you know, the next coming months that we will
Speaker 1: create about investment properties because for you and I, there's
Speaker 1: such an integral part of kind of our ultimate path,
Speaker 1: the financial independence. There's something that we enjoy, we see
Speaker 1: a lot of benefits from and you know, for the
Speaker 1: long haul, I think real estate is if you're smart
Speaker 1: about it, if you're buying well, if you're holding for
Speaker 1: the long term. Uh, it's just as good, if not
Speaker 1: probably even better in a lot of ways than investing in,
Speaker 1: uh the stock market over the long term. So I
Speaker 1: mean we believe that, right. That's that's why it's such
Speaker 1: a huge part of our personal finances and uh and yeah,
Speaker 1: like you said, O, our path to sort of financial
Speaker 1: independence and in the long term. That's why we want
Speaker 1: to do this is because we want to be landlords.
Speaker 1: Like we both sort of see ourselves long term being
Speaker 1: landlords and this being something that we can kind of
Speaker 1: continue to do in our ripe old age as we
Speaker 1: continue to drink beer. So that's why for us, it's
Speaker 1: important for us to get a good deal on a property.
Speaker 1: We're not in this to just collect homes. I think
Speaker 1: sometimes people think they're like, oh, I would love to
Speaker 1: have a home up in so and so city, or
Speaker 1: you know, like even on the beach or and things
Speaker 1: like that. And that's fine if you want to have
Speaker 1: that for personal reasons, uh, you know, or to also
Speaker 1: kind of parlay that into a beach house or or
Speaker 1: something else like that. But if you're looking at it
Speaker 1: from the standpoint of generating income and to have that
Speaker 1: become more and more how you are able to feed yourself.
Speaker 1: You know, like if that's how you put food on
Speaker 1: the table, That's what I'm going for, is to be
Speaker 1: able to put food on the table that way and
Speaker 1: in the you know, ultimately I would love to be
Speaker 1: able to do real estate full time. And so because
Speaker 1: of that, we want to find a good deal because
Speaker 1: obviously the better dealer that we can get, the sooner
Speaker 1: we can get to that point. Yeah, So that's definitely
Speaker 1: one of the main keys in you know what makes
Speaker 1: a good rental property finding that deal, and you know
Speaker 1: when you've spotted a deal because you have been studying
Speaker 1: the market in your area. So just like grocery shopping,
Speaker 1: like I know when a bag of spinach is a
Speaker 1: good price at aldi because I've been to Kroger and
Speaker 1: I've been to publics and I know that, you know what,
Speaker 1: for a bag of spinach at all the is pretty
Speaker 1: dang good. And so in the same way, you want
Speaker 1: to be that familiar with the real estate market in
Speaker 1: your area, and what that means really for you is
Speaker 1: to specialize in a specific part of town or two
Speaker 1: or three. You want to know the streets in that
Speaker 1: area well enough to to know when a deal hits. Yeah,
Speaker 1: if when you see an address pop up and like
Speaker 1: your MLS listening for that morning, Like there should be
Speaker 1: certain street names that like jump out to you when
Speaker 1: you when you see a name, you're like, oh, let
Speaker 1: me let me click on that one to check it
Speaker 1: out because you know that street and that should sort
Speaker 1: of trigger something for you. Once you've gotten to that
Speaker 1: stay age, you're you're well on your way to becoming
Speaker 1: a real estate nerd. And so yeah, the beginning to
Speaker 1: finding a deal is essentially you know, studying Zillo Redfin,
Speaker 1: you know the FMLS, having an an agent that that
Speaker 1: feeds you properties every day, Right, you're getting stuff into
Speaker 1: your inbox, studying those leads for months essentially. Yeah, I
Speaker 1: mean even a year. Man, There's been times when I've
Speaker 1: been like really trying to get to know neighborhood, and
Speaker 1: every morning when I check my email, that's the first
Speaker 1: one I go to just a real quick make sure
Speaker 1: that there's nothing that popped up that was a really
Speaker 1: good deal, because like you said, yeah, you've been watching
Speaker 1: it and you just need to be that familiar with it. Certainly,
Speaker 1: that's the way we approach it. I think a lot
Speaker 1: of folks take it to a whole another level when
Speaker 1: they're buying even out of uh state or you know,
Speaker 1: like not locally to them, or sometimes folks are buying wholesale.
Speaker 1: We're not talking about that because that's not what we
Speaker 1: do personally. It takes a lot more money to kind
Speaker 1: of go down those paths, and we are definitely not
Speaker 1: at that point yet maybe someday, but we we kind
Speaker 1: of do it like Mama Pop style, you know, like
Speaker 1: what we know everything that goes on within our sort
Speaker 1: of portfolio of real estate. We're familiar with our parts
Speaker 1: of town and specifically what you know. We we know
Speaker 1: our city real well. Yeah, and we I think we
Speaker 1: like to keep it simple. You know, there are a
Speaker 1: lot of people that that like to grow big, grow fast,
Speaker 1: you know, a massive, big portfolio whatever. You know, we're
Speaker 1: kind of the mindset, you know, both of us that
Speaker 1: slow and steady wins the race. You know, smart solid investments,
Speaker 1: you know, with solid underlying financials, like we talked about
Speaker 1: an episode four. Then when we're buying, you know, we're
Speaker 1: making a long term investment, but we also we're using
Speaker 1: our own money that we save over time to put
Speaker 1: down on these homes. Super simple. There's nothing fancy about that,
Speaker 1: you know, Like folks are like, how do you do that?
Speaker 1: It's just like, well, just try to be frugal, save
Speaker 1: out that money once you get enough money. It's old school, right,
Speaker 1: there's nothing really like special about it. And there's all
Speaker 1: these you know, real estate conferences and seminars and hotel
Speaker 1: ballrooms like they'll they'll tell you here's how you get
Speaker 1: rich in real estate. Here's how you buy real estate
Speaker 1: with none of your own money, and you use somebody
Speaker 1: else's money to finance these deals. And I'm not gonna
Speaker 1: say that hasn't worked out for anybody. I'm sure you
Speaker 1: know at least two people speaking at those conferences have
Speaker 1: gotten rich off of your fees to end or but
Speaker 1: they're really good at writing books. Yeah right, but yeah,
Speaker 1: like we're the of the old school mentality. If how
Speaker 1: you should approach and buy rental properties, and that's with
Speaker 1: your own money saved up over time, going slowly but surely,
Speaker 1: knowing your market and finding that deal and on that note,
Speaker 1: to buy that underpriced property that we're talking about. You'll
Speaker 1: also need to, once you know your market, be ready
Speaker 1: to move quickly because when a deal hits, you're not
Speaker 1: the only one seeing that. There are other people out there,
Speaker 1: you know, that are looking for a deal as well
Speaker 1: in real estate, and so when something hits, you need
Speaker 1: to be ready to pounce. You need to have your
Speaker 1: finances ready, You need to have your relationship with a
Speaker 1: lender if you need one, if you're not paying all
Speaker 1: cash established, you need to have an agent that's ready
Speaker 1: to write and offer day of when you see that
Speaker 1: deal hit the market. And so yeah, you're just gonna
Speaker 1: want to be ready to pounce when the deal actually
Speaker 1: hits the market. And that's someone in these days with
Speaker 1: the market being as hot as it is. Man, if
Speaker 1: you're able to jump on a deal like that, and
Speaker 1: you know, hopefully even trust snaggett sometimes if you can
Speaker 1: get it before it makes it to the weekend, then
Speaker 1: I mean then that's like really good, right, because once
Speaker 1: you get like right through the weekend and everyone's had
Speaker 1: a chance to come to the internet and see what's
Speaker 1: out there, well, they're gonna have like highest and best
Speaker 1: offer by like next Saturday, and you know they're gonna
Speaker 1: end up paying twenty thousand more or somebody's gonna end
Speaker 1: up paying twenty thousand more than maybe what you could
Speaker 1: have gotten it for. Yeah, man. And so a good
Speaker 1: way to know if you are getting a deal when
Speaker 1: it comes to specifically an investment property is the one
Speaker 1: percent rule. And we talked a little bit about that
Speaker 1: on the Investment Property Basics episode that episode four that
Speaker 1: we mentioned earlier. One percent rule states that you should
Speaker 1: be able to get one percent of the purchase price
Speaker 1: of the home in monthly rent. And you know, it
Speaker 1: is a real sort of quick math, like not even
Speaker 1: back on the napkin, because you don't need to write
Speaker 1: it down. It's just it's just like taking the price
Speaker 1: and moving to this that's one plays two places, and
Speaker 1: think could I get this amount and rent for this
Speaker 1: house every month? And that's just a good way. It's
Speaker 1: sort of a good rule of thumb. I'm actually curious
Speaker 1: to hear your thoughstral On, if you think that this
Speaker 1: still sort of holds in today's market, because specific to Atlanta,
Speaker 1: the market is so stink and hot right now that
Speaker 1: I mean, on my most recent purchase, which was last year,
Speaker 1: I wasn't quite to one percent. You know, it was.
Speaker 1: It wasn't quite the one percent rule, and I knew
Speaker 1: that going into it, but uh yeah, even still, you know,
Speaker 1: I felt that it was still going to be a
Speaker 1: good deal, uh and I was still gonna be able
Speaker 1: to to make a good return on that. Here's my
Speaker 1: quick thought on that. I think of these areas that
Speaker 1: we're gonna talk about as kind of like weights, and
Speaker 1: if one area is weighted more heavily, I'm okay with
Speaker 1: the other area being a little bit lighter. Right. And
Speaker 1: so let's say a property doesn't meet the one percent rule,
Speaker 1: I don't write it off immediately. I think it's almost
Speaker 1: we should probably call it the one percent rule of
Speaker 1: thumb because if I buy a property that is a
Speaker 1: hundred twenty dollars, but I can only get a thousand
Speaker 1: dollars a month in rent, well, I still don't write
Speaker 1: that property off just because it doesn't meet the one
Speaker 1: percent rule, because what about potential ciation or you know
Speaker 1: where that property is headed and the neighborhood, and you
Speaker 1: know the infrastructure, the changes that are happening, uh, the
Speaker 1: potential growth in that city or or particular part of town.
Speaker 1: I mean, I think there are a lot of questions
Speaker 1: to ask, and so uh that the one percent rule
Speaker 1: of thumb is a really good one. It's just great
Speaker 1: way to kind of coal favorites and eliminate loser properties.
Speaker 1: But it is also it is not this and all
Speaker 1: be all, because you know, the last property I bought
Speaker 1: was you know, similar to what I just said. It
Speaker 1: was actually a hundred fifteen thousand dollar property. I'm currently
Speaker 1: getting a rent amount of a thousand dollars. But I'm
Speaker 1: almost positive I can meet the one percent rule next
Speaker 1: time around when I least to somebody else. And on
Speaker 1: top of that, I feel like the appreciation potential for
Speaker 1: this particular property is really really good. And so you
Speaker 1: know weighted averages, right, I'm taking these things and I'm saying, well,
Speaker 1: if I bought this other property, you know, and a
Speaker 1: lot of real estate investors invest specifically for cash flow.
Speaker 1: That's what people want, you know, they want to make
Speaker 1: money every month, and I that's fine, that's a that's
Speaker 1: a fine way to invest as well. It usually depends
Speaker 1: on where you're investing kind of what you're gonna pay
Speaker 1: a little more attention to. And but here where I'm investing,
Speaker 1: I'm paying attention to the cash flow. But even more so,
Speaker 1: I'm really thinking about the potential of a neighborhood and
Speaker 1: the potential of that property to appreciate over time. That actually,
Speaker 1: for me is a bigger influencer when I'm looking at
Speaker 1: a property than just meeting one percent rule of thumb. Yeah,
Speaker 1: even though I think it's a really good rule of
Speaker 1: thumb to use. Yeah, I mean said, I mean cash
Speaker 1: flow is still important. Like when you say that you
Speaker 1: don't wait cash flow as much, like you're still talking
Speaker 1: about like a couple hundred at least in positive cash
Speaker 1: flow a month, right, Yeah, I think probably the worst
Speaker 1: thing that I've ever I can never hear out of
Speaker 1: an investor real estate investor's mouth, is you know what,
Speaker 1: and it's covering the mortgage. The rent is covering mortgage. Right,
Speaker 1: That's that's a terrible thing to say. That's a terrible
Speaker 1: way to look at it, because you can put that
Speaker 1: money in an online bank account, and you know what,
Speaker 1: the online bank is not calling you about a broken
Speaker 1: toilet or a leaky a leaky roof. And so I'd
Speaker 1: rather if I my money wasn't going to make almost anything,
Speaker 1: I'd rather just have it in savings and not be
Speaker 1: dealing with the headaches of humans and fixing things. So
Speaker 1: it's definitely not the way you want to look at it.
Speaker 1: But back to the one percent rule real quick, I
Speaker 1: wanted to talk about it actually doesn't always just include
Speaker 1: the purchase price. Because let's say you're buying a house
Speaker 1: that is a complete dump, it needs a major renovation,
Speaker 1: and you are buying that house for thirty dollars, but
Speaker 1: you have to put seventy dollars into it. Well, you
Speaker 1: know what your hope is that at the end of
Speaker 1: those renovations of making that house livable, that you're able
Speaker 1: to then get a thousand dollars a month for rent.
Speaker 1: So essentially, what you're looking at, if you're boiling this
Speaker 1: one percent rule down, it is purchase price and immediate
Speaker 1: repairs and improvements that you need to make in order
Speaker 1: to get that house rentally or deferred maintenance. Sometimes it's
Speaker 1: college just like the things that you know you needed
Speaker 1: to basically dump into the property in order to kind
Speaker 1: of get it up to speed certainly where you're not
Speaker 1: kind of over improving it for the neighborhood or the market.
Speaker 1: But yeah, you definitely want to take that amount into
Speaker 1: the sort it's total costs there as well. And I
Speaker 1: think if you're not in the ballpark on one percent,
Speaker 1: you know, that's a great just ballpark estimate thing to
Speaker 1: think to look at as you're you know, looking at
Speaker 1: you know, fifty sixty properties a day as you're doing
Speaker 1: your research. It's just this awesome way to say, you
Speaker 1: know what, I'm keeping these five to do a little
Speaker 1: more digging, a little more research on to see if
Speaker 1: they meet the rest of my criteria. Yes, r O
Speaker 1: I man, so your turn on investment is for me
Speaker 1: a great way to kind of dig in beyond the
Speaker 1: one percent rule, uh, to figure out if, if if
Speaker 1: a property is going to be even better, since the
Speaker 1: one percent rule can just kind of be almost too broad.
Speaker 1: So let's say, for example, you get a hundred fifty house, right,
Speaker 1: and so the one percent rule a rule of thumb
Speaker 1: says that your monthly rent should be fi a month. Right,
Speaker 1: It's easy math ye, And you think, okay, I can
Speaker 1: I can definitely do that. If so, great, maybe you
Speaker 1: should jump on that property. But if you're short, you
Speaker 1: might think, oh, maybe maybe this isn't a good property.
Speaker 1: But if you're doing one percent rule on that with
Speaker 1: a typical down with today's rate, you're looking at an
Speaker 1: r o I that is easily over and that's huge.
Speaker 1: I mean, if you're looking at something that's closer that
Speaker 1: you're earning on your money. You can't make that in
Speaker 1: the stock market. And obviously a property takes a little too,
Speaker 1: maybe a lot more work, depending on if it needs
Speaker 1: additional improvements or anything like that. But all that to say,
Speaker 1: if it falls short or the one percent rule, we're
Speaker 1: saying that you could still potentially be earning a lot
Speaker 1: of money. But then, on the other hand, if you'd
Speaker 1: be happy with returns even less than that, right, so
Speaker 1: say you'd be happy with returns closer to say, which
Speaker 1: is still outperforming the market. And that means on that
Speaker 1: same house that you paid a hundred fifty four, you
Speaker 1: could rent that out instead for fifty a month, and
Speaker 1: that's more like you know, if you do the math
Speaker 1: on that, that's closer to like the point eight percent
Speaker 1: or the like point a five percent rule rather than
Speaker 1: like the one percent rule. What I say is all
Speaker 1: that to kind of help put it in context, is
Speaker 1: that you might see that a property may not completely
Speaker 1: perform at the one percent you know rule level, But
Speaker 1: if you run the numbers a little deeper and see
Speaker 1: and take the mortgage and just all the other repairs
Speaker 1: and maintenance costs and insurance and all that into account.
Speaker 1: All that included, you might find that you would still
Speaker 1: be making a ton more than you would if that
Speaker 1: money was just passively invested in the market. Yeah. So
Speaker 1: for me, one percent rules is helpful, but our o
Speaker 1: I it's just a much richer way to really kind
Speaker 1: of dig in and sort of compare should I take
Speaker 1: this money and invested in real estate or should I
Speaker 1: just dump it into the stock market? Yeah, Matt, So
Speaker 1: that one percent rule, right, is a great way to
Speaker 1: kind of initially check and then rule things out and
Speaker 1: decide what you want to look at more deeply. And
Speaker 1: then the r o I is a great way to
Speaker 1: kind of assess in a little bit more detail the
Speaker 1: particular property. And on top of that, you want to
Speaker 1: find properties and separate them by condition, neighborhood, risk, and
Speaker 1: potential appreciation. So how much work is this house going
Speaker 1: to take? Now? How much work is this house going
Speaker 1: to take over the next few years? Does it have
Speaker 1: a roof that needs to be replaced or an aging
Speaker 1: HVAC system? Those are the kind of items that could
Speaker 1: separate a potential a winner from one that you decided
Speaker 1: to discard into the I don't want to buy pile.
Speaker 1: And then neighborhood risk. So what does that neighborhood profile
Speaker 1: look like? And is it a neighborhood on the rise
Speaker 1: or is it a neighborhood that has been in decline
Speaker 1: for a few years. It's better to be buying in
Speaker 1: a place where you are going to have tenants vying
Speaker 1: for your property, a neighborhood where people want to live,
Speaker 1: because the more potential tenants that are interested in your property,
Speaker 1: the more rent you can charge, and the quicker you
Speaker 1: can fill those vacancies. You definitely want to make sure
Speaker 1: you're in a neighborhood where people actually want to rent
Speaker 1: your property. So, Joel, that was a lot of like
Speaker 1: r O I talk and numbers. My eyes closed over
Speaker 1: for a second. Matthew, I'm not gonna lie. That's how
Speaker 1: you just like holding your beer and just staring into
Speaker 1: it like you're trying to read your fortune in the
Speaker 1: tea leaves. Well, yeah, I'm kind of I'm kind of
Speaker 1: more of a gut field guy, And I know that
Speaker 1: sounds terrible. It sounds ridiculous. No, that's important though, I mean,
Speaker 1: and we'll get more into that here kind of after
Speaker 1: the break after in the next section too, because I
Speaker 1: think a lot of the changeibles when it comes to
Speaker 1: like location and some of that it is gut related.
Speaker 1: It's just kind of like you kind of have to
Speaker 1: trust your taste. I guess. Yeah, like you kind of
Speaker 1: have to go with your gut, but I guess for me.
Speaker 1: So here's my thing. I know how emotional I can be,
Speaker 1: and like I get excited if I see something I like,
Speaker 1: and for me, having numbers is just a great way
Speaker 1: to kind of check myself and it's a good sort
Speaker 1: of rule. Uh. And if I have spreadsheets and lots
Speaker 1: and lots of spreadsheets, um, I can punch in the
Speaker 1: numbers and I can say, I'm really excited about this.
Speaker 1: But then if I just look at the bottom line,
Speaker 1: if I specifically, for me, the r O. I if
Speaker 1: I look at that and say, that might be like
Speaker 1: the point eight percent rule, but I'm looking at, you know,
Speaker 1: less than a fiften r O, I almost like, well, shoot,
Speaker 1: I should maybe maybe I should just take that and
Speaker 1: just dump it straight into the stock market and invest
Speaker 1: in there instead. And not deal with the headache of,
Speaker 1: you know, an investment property. And so for me, I
Speaker 1: guess it's just a way to not look at everything
Speaker 1: through like rose colored glasses and think that everything's gonna
Speaker 1: be coming up matt Um triple sevens. Yeah, yeah, no,
Speaker 1: I and I completely understand that. And I think, you know,
Speaker 1: for probably for most people out there, running the numbers,
Speaker 1: you know, thinking through you know, potential real estate purchase
Speaker 1: with a lot of math behind you, you know, at
Speaker 1: your back, it creates a lot of wind in your sales,
Speaker 1: and it gives you, you know, that knowledge and the
Speaker 1: ability to know and decide if you're running the same
Speaker 1: numbers every time, you know, whether you're making a good investment.
Speaker 1: For me, that's why the one percent rule of thumb
Speaker 1: has actually meant a lot to me over the years,
Speaker 1: because I'm not a huge numbers guy. I'm not running
Speaker 1: spreadsheets on every property. And you know, a lot of
Speaker 1: the reason I buy somewhere is is based on essentially
Speaker 1: looking at that one percent rule, deciding whether the property
Speaker 1: I'm interested comes close to there, and if it's close,
Speaker 1: if it's in the ballpark. Then I make decisions based
Speaker 1: on a bunch of other factors like like the condition
Speaker 1: of the home and how much money it's gonna take,
Speaker 1: you know, over the right now and then over the
Speaker 1: next few years to improve and then or even how
Speaker 1: close it is to your best friend's house that he
Speaker 1: just purchased, right, which I think we mentioned in in
Speaker 1: episode four that we literally have rental homes two doors
Speaker 1: down from each other, and these are the rental homes
Speaker 1: that are good twelve to fourteen minutes away from where
Speaker 1: we actually live. But like the profile of the neighborhood,
Speaker 1: where is that neighborhood going, what's the trajectory, and then
Speaker 1: the potential for appreciation. So if it's close to that
Speaker 1: one percent rule for me, then I'm looking at those
Speaker 1: other factors and I'm saying, you know, does this house
Speaker 1: is this gonna you know, suck a lot of money
Speaker 1: out of me over the next few years? And you
Speaker 1: know if so, if it has you know, an aging
Speaker 1: roof and an aging h fact and it's not meeting
Speaker 1: the one percent rule, then boom, I'm probably done. Right,
Speaker 1: I'm out. It's not necessarily all these numbers that I'm
Speaker 1: running on a spreadsheet, but it's all these scenarios that
Speaker 1: I'm playing out in my head, and it's these things
Speaker 1: that I'm looking at every single time, and I've just
Speaker 1: gotten better and more astute at looking at those things.
Speaker 1: The more houses I've looked at and the more properties
Speaker 1: that I've purchased, the more offers that I've made. And
Speaker 1: so as a potential real estate investor, that's part of
Speaker 1: it too. You're gonna learn through, you know, knowing your
Speaker 1: neighborhood looking at just the listings. Then you're gonna learn
Speaker 1: by walking into actual home, looking at houses and seeing
Speaker 1: what's potentially wrong with houses that you're looking at, and
Speaker 1: comparing apples to apples. Hey, this house on this street
Speaker 1: looks like this and cost this much money, and then
Speaker 1: looking at a house two streets over that you know
Speaker 1: might have different factors at play. And so the more
Speaker 1: you look, the more homes you see, and the more
Speaker 1: offers you make. That's really the biggest learning curve I
Speaker 1: think in real estate is actually doing it. Yeah, man,
Speaker 1: that's right, And so we're gonna take a quick break,
Speaker 1: but after that we'll talk more about the sort of
Speaker 1: intangible things like some of the things that are harder
Speaker 1: to quantify that you want to consider when you're looking
Speaker 1: at investment properties. Okay, we're back for the brake man.
Speaker 1: So we kind of mentioned this just a second ago.
Speaker 1: But location, I mean essentially that's what you're talking about, right,
Speaker 1: So these sort of gut intangible things that you kind
Speaker 1: of like to go off of, you know, talk more
Speaker 1: about that. Yeah, I mean location is obviously yeah, you
Speaker 1: hear right, And like real estate location, Look, it's one
Speaker 1: of the three most important parts of finding one more time,
Speaker 1: and so location is is the most important thing for me,
Speaker 1: and specific location matters a ton. I mean, like we
Speaker 1: said earlier, studying the market, studying the actual streets, and
Speaker 1: knowing the homes that are located there. I mean that's huge,
Speaker 1: because one block of difference in a lot of parts
Speaker 1: of town and a lot of places you might be
Speaker 1: looking can mean a world of difference and can mean
Speaker 1: a world of difference as to whether a potential renner
Speaker 1: wants to live there, and can change the r o
Speaker 1: I can change the numbers completely. And so knowing that
Speaker 1: location in particular, how close is it to amenities, How
Speaker 1: close is it to the sounds of overwhelming traffic on
Speaker 1: a main thoroughfare, is it walking distance to nearby park?
Speaker 1: There are all sorts of things that I look at
Speaker 1: when it comes to location, and I'm looking for that
Speaker 1: upside potential. Right, So even if a house like we
Speaker 1: we sit talked about the one percent rule of thumb,
Speaker 1: even if it doesn't meet quite that, but the location
Speaker 1: is perfect and I see a lot of upside and
Speaker 1: rents increasing well over the years. Well, man, that house
Speaker 1: still made it into my list of maybes that I
Speaker 1: want to dig deeper on if it's got that awesome location. Yeah, man,
Speaker 1: that potential for growth. You can't overlook that. You know,
Speaker 1: you don't want to necessarily count on that from the
Speaker 1: onset like that. Okay, well this will appreciate, so it'll
Speaker 1: be better in the future. But if you're making all,
Speaker 1: if you're making everything on that, you're essentially a speculator
Speaker 1: at that. Yeah, exact, but that definitely is something that
Speaker 1: you want to consider. It's just like you said earlier,
Speaker 1: it's one of those weights that you kind of figure
Speaker 1: into this sort of equation that this sort of balancing act.
Speaker 1: And if you know that, well, you know, the current
Speaker 1: r o I isn't quite where i'd want to see it,
Speaker 1: but I know that this has huge potential for growth.
Speaker 1: I know that that new local brewery branch is going
Speaker 1: to be opening a couple of miles from here. You know,
Speaker 1: that sort of thing where it's like people are gonna
Speaker 1: love that or whatever it is, like you we would, yeah, exactly,
Speaker 1: like the different amenities. And so location is one of
Speaker 1: those special things where it's just very hard to quantify, right,
Speaker 1: you can't really put a number on it, and you
Speaker 1: can't just look at the numbers, you know, like if
Speaker 1: you're only looking at numbers, then yeah, well you'd end
Speaker 1: up purchasing uh, you know, mobile home parks or like
Speaker 1: self storage units, because if you look at the numbers,
Speaker 1: those you know, those kind of properties are the ones
Speaker 1: that bring in the highest amount of cash flow every month.
Speaker 1: Like that's that's where you're gonna see the revenue. But
Speaker 1: are you gonna see the kind of growth that you're
Speaker 1: gonna see in residential areas in a trailer park. No,
Speaker 1: that's that's just not how that works. You know, double
Speaker 1: wides don't quite appreciate quite as fast as as single
Speaker 1: family homes. I'm not trying to like knock knock trailer
Speaker 1: homes or anything. That's just I mean, that's just the
Speaker 1: reality of it. Yes, So I think that's actually been
Speaker 1: my hesitation up until this point to jump into multi
Speaker 1: family housing. UM, and I have friends to investing in
Speaker 1: areas of town that you can provide a really good
Speaker 1: cash flow when you know, with very little money down
Speaker 1: there their cheap houses, you know, they rent, they exceed
Speaker 1: this one percent rule. But in my mind, the long
Speaker 1: term upside potential of those homes, like the equity growth
Speaker 1: and just the value of the homes rising. Yeah, the
Speaker 1: equity growth and then the rent potential growth is actually
Speaker 1: hamstrung by the location. And so while it looks good
Speaker 1: on paper, it probably looks better on paper than the
Speaker 1: home that I just purchased, you know, right now, if
Speaker 1: you're running the numbers, well, I would still choose the
Speaker 1: home that I bought in September over a home that
Speaker 1: someone else bought that has you know, better numbers right now,
Speaker 1: but is in a location that I don't consider to
Speaker 1: have the same growth potential as where I'm looking. And
Speaker 1: so that's why the numbers are really important. But these intangibles,
Speaker 1: specifically like location and knowing what's going on around you
Speaker 1: where you live and what locations are going to be
Speaker 1: you know, hot and up and coming over the next
Speaker 1: few years. You know, that has a huge potential. Whereas
Speaker 1: rents on one house in an average location might be
Speaker 1: increasing at twenty five dollars a year, and the rents
Speaker 1: on another home and a hot location could be increasing
Speaker 1: by you know, seventy dollars a year. So those are
Speaker 1: definitely things that you want to factor in when you're
Speaker 1: purchasing a home. Yeah, and you mentioned it's sort of
Speaker 1: like the hot or the popular neighborhoods, And that doesn't
Speaker 1: necessarily mean that we're looking at fads or things that
Speaker 1: we think are going to be cool. It can be
Speaker 1: as simple as, oh, well, this neighborhood has a sidewalk.
Speaker 1: These are old school pieces of infrastructure that are built
Speaker 1: into neighborhoods that you just don't always see, right, So, parks,
Speaker 1: how close is it took, like public libraries to public transit.
Speaker 1: I mentioned sidewalks because for a stretch of time in
Speaker 1: the fifties and sixties, you know, when ranches were being built,
Speaker 1: essentially like typically ranch neighborhoods, you're not gonna, at least
Speaker 1: in Atlanta, you're not gonna see sidewalks in those neighborhoods.
Speaker 1: And that does something to the walkability. It does something
Speaker 1: to the community, does something to the neighborhood. Yeah, wide streets,
Speaker 1: on street parking, especially in in town neighborhoods where there
Speaker 1: aren't garages. You know, those are intangible things that mean
Speaker 1: a lot. And the wide streets, the type of housing, uh,
Speaker 1: the you know, the infrastructure, especially parks and libraries and
Speaker 1: and grocery stores that are nearby. Those are things that
Speaker 1: you definitely want to take into account when when you're
Speaker 1: looking for home. Yeah, and a specific tip that you
Speaker 1: can do is when you're considering a property man, drive
Speaker 1: by it or and park your car and walk around,
Speaker 1: you know, at all times during the week as well,
Speaker 1: not just you know at noon when you happen to
Speaker 1: have your lunch break, you know when at work. You
Speaker 1: want to kind of check it out at all times
Speaker 1: of the day and to see kind of what's going
Speaker 1: on there. You want to smell the smells here, that here,
Speaker 1: the sounds, and to see if it's somewhere that you
Speaker 1: feel good about. Again, it's hard to kind of quantify
Speaker 1: because you can't say that like, oh, if the air
Speaker 1: smells fresh, you should buy it. But like there's all
Speaker 1: these small, tiny little things that kind of plays into it.
Speaker 1: And this is I mean, Joel that you like you
Speaker 1: mentioned like your gut, that's when that comes into play
Speaker 1: like that you can't really put your finger on it,
Speaker 1: but sometimes you just have to kind of be there.
Speaker 1: And that's one of the reasons that we love investing
Speaker 1: locally as well, to be able to drive over there ourselves,
Speaker 1: to be able to walk the sidewalks, to to check
Speaker 1: it out, to meet the neighbors, all those different kind
Speaker 1: of things that that we try to do, you know,
Speaker 1: and when we when we do our our due diligence
Speaker 1: before purchasing a home, yeah, and driving those streets, especially
Speaker 1: at night after the sun is down, that can give
Speaker 1: you good idea of kind of what is actually happening
Speaker 1: in the neighborhood. And it can really give you an
Speaker 1: idea two of the streets in that neighborhood what is
Speaker 1: happening on them. And sometimes, you know, especially in some
Speaker 1: of the neighborhoods Matt, that you and I are looking in,
Speaker 1: sometimes the night activity can be street to street. Some
Speaker 1: streets are super clean and you have you know, a
Speaker 1: great community in neighborhood vibe, and then other streets in
Speaker 1: the same awesome neighborhood that we like are just a
Speaker 1: little sketchier, Yeah, a little dodgy, Yeah, exactly, And so
Speaker 1: hopefully there's kids is like drawing on the sidewalks of
Speaker 1: the chalk and not drug deals going down, you know,
Speaker 1: the two blocks over, which might be the case, maybe not.
Speaker 1: I don't know, right, you gotta check it out. Yeah,
Speaker 1: if you want to be a real estate investor, you
Speaker 1: have to start looking at things like that specific streets
Speaker 1: and driving those streets at night because you want to
Speaker 1: make sure that you buy the good rental property and
Speaker 1: not the bad one. Nice. That's enough about your gut, Joel,
Speaker 1: I mean, I make I mean, I mentioned that, but
Speaker 1: it's it's true, and it's it's definitely worth mentioning. You know.
Speaker 1: I feel like I kind of get pinned as like
Speaker 1: the nerdy kind of numbers guy for a good reason
Speaker 1: because I love them. I love the numbers. But that
Speaker 1: being said, I mean I don't want to under emphasize
Speaker 1: the gut and something about again being there and kind
Speaker 1: of feeling it and you kind of just have to
Speaker 1: trust your taste, uh, kind of have to go with
Speaker 1: your gut and and feel like you're making a good
Speaker 1: decision in addition to having the numbers back you up. Yeah,
Speaker 1: And a lot of those gut decisions honestly come after
Speaker 1: months and months and months of knowing a place right.
Speaker 1: So it kind of goes back to the first point. Yeah,
Speaker 1: you got to know it. I feel like, I say,
Speaker 1: it's a gut decision, but that gut it's a learned
Speaker 1: to gut. Yeah, exactly right, it's uh, it is a
Speaker 1: learned gut decisions. You're not like yosebody sam like shooting
Speaker 1: from the hip, Like you're still making an informed decision,
Speaker 1: but you know your gut does tell you a lot
Speaker 1: in that regard. You know that that is how I
Speaker 1: picture you purchasing homes that some of you are saying,
Speaker 1: I'm just like shooting from the hip. So something else
Speaker 1: you want to keep in mind when you are looking
Speaker 1: for a home that would make a good rental is,
Speaker 1: for the most part, you want to look for average homes.
Speaker 1: And by average, I don't mean average farming homes. I
Speaker 1: mean homes that are average to the market. And and
Speaker 1: basically you want to a home. You want a property
Speaker 1: that is going to be attractive to potential renters. What
Speaker 1: that might mean is that you're probably not looking at
Speaker 1: like the smallest of all homes available in the market,
Speaker 1: and it probably means that you're also not looking at
Speaker 1: like the hugest homes out there, because that's gonna be
Speaker 1: hard to rent. You know, if if you mentioned this earlier, Joel,
Speaker 1: but you want a property that appeals to a lot
Speaker 1: of people, because you want to have a lot of
Speaker 1: people wanting to rent that home from you. And if
Speaker 1: you've got something overly unique or too small or too big,
Speaker 1: you're definitely limiting yourself as to the number of tenants
Speaker 1: that you're gonna have given you a call. Yeah, if
Speaker 1: you've got an eight bedroom, five bath, you're just you're
Speaker 1: going to a limited audience, Like you're you're you're listing
Speaker 1: it on Zillo or whatever, and you're you're just listening
Speaker 1: to an audience that is almost non existent usually. And
Speaker 1: so you also, if you have a hundred and fifty
Speaker 1: square foot tiny home in the back of your house,
Speaker 1: that's kind of cool. People like tiny homes, but for
Speaker 1: a night exactly, that could make a good airbnb, but
Speaker 1: it is probably not going to be a great long
Speaker 1: term rental for you, you know, unless you're in a
Speaker 1: you know, high density place like San Francisco or New
Speaker 1: York City, right, something like that. Yeah, that's perfectly acceptable,
Speaker 1: like a studio or a one one for a market
Speaker 1: like that. That's that's perfectly acceptable, And that's probably what
Speaker 1: you're gonna find if you're lucky. People in Manhattan are
Speaker 1: used to living in like a coffin essentially, So if
Speaker 1: that might be okay to to buy, you know, a
Speaker 1: hundred thousand dollar coffin and rent it out for a
Speaker 1: thousand dollars a week, I don't know, think about the size,
Speaker 1: and you want it to be you know, kind of
Speaker 1: normal for the neighborhood, right. You don't want the nicest
Speaker 1: house on the block for sure, Yeah, that's right. I
Speaker 1: mean you you want to have monest finishes. Most people
Speaker 1: that are listening to this, if you're kind of in
Speaker 1: the market for investment properties, there's a chance that you
Speaker 1: can afford nicer finishes at your own home. And I
Speaker 1: think it's really important to kind of keep in mind
Speaker 1: that you're not trying to get this property to like
Speaker 1: your own personal standards. You're trying to provide a great property,
Speaker 1: a great place for someone to rent for short term
Speaker 1: or maybe for a long term and for a few
Speaker 1: years that they're going to be happy to live in
Speaker 1: and resist the urge to make all these different upgrades
Speaker 1: that you feel that like, oh sweet, now this house
Speaker 1: is ready to ready to go on the market. Well,
Speaker 1: well about all the people that you just priced out
Speaker 1: by doing that. You know, if if you have it
Speaker 1: at a certain price point, people that have a ton
Speaker 1: of money and people that have a modest amount of
Speaker 1: money could choose to to to rent that house. But
Speaker 1: if you're dumping a bunch of money to that property
Speaker 1: and you're getting like the granite counter tops on an
Speaker 1: investment property with a bunch of nice appliances, well, in
Speaker 1: order for the numbers to work, you're gonna have to
Speaker 1: charge more for it, and you're kind of pricing yourself
Speaker 1: out a little bit, and you're definitely limiting your your
Speaker 1: potential render pool. Yeah, So the thing is you could
Speaker 1: be you know, listing it too high where you're gonna
Speaker 1: have nobody interested in the property, or you're gonna have
Speaker 1: to bring the price back down, and you've just spent
Speaker 1: money out of your own pocket for upgrades that aren't
Speaker 1: actually going to pay off in the rental price. So
Speaker 1: instead of putting in a four toilet. You know, there
Speaker 1: are great low flow toilets at home depot or lows four, right,
Speaker 1: but we know this. You can get great countertops that
Speaker 1: aren't granite for a heck of a lot less. There
Speaker 1: are a lot of finishes that you could decide to
Speaker 1: go above and beyond on, you know, marble in the
Speaker 1: bathroom or granted in the kitchen, but those aren't gonna
Speaker 1: pay off, you know, sticking to regular tile. Making something
Speaker 1: look good and cute, that's a great standard. But making
Speaker 1: it look nice and fancy, you know, that's that's a
Speaker 1: different standard and probably one that isn't gonna pay off
Speaker 1: for you. Let's let's set back to the beer. I
Speaker 1: love that on the ingredients section of this beer it
Speaker 1: says pure Icelandic water. That's just good to know, right man.
Speaker 1: I feel like this is just a perfect example of
Speaker 1: just like a classic stout, which is funny because I
Speaker 1: think if stouts as being very kind of American at
Speaker 1: least the current stouts, not like the English style stouts.
Speaker 1: So it's kind of cool to have this from Iceland. Yeah,
Speaker 1: so next time you're in Iceland, pick up an Icelandic
Speaker 1: stout by Borg. This was definitely a fun one to drink.
Speaker 1: And man, I don't know why, but I always get
Speaker 1: so excited to drink beers from different countries. It's like
Speaker 1: one of my favorite things. Man, It's it's just so cool. Yeah,
Speaker 1: it's like you guys drink beer too, so we're we're
Speaker 1: the same people. We can get along. All right, let's
Speaker 1: move on from the beer. Let's do a quick recap. Yeah,
Speaker 1: what makes a good rental property? Well, first, it assumes
Speaker 1: that you want to be a landlord and you have
Speaker 1: the money for the down payment. No property is a
Speaker 1: good rental property if you're not in it for the
Speaker 1: long haul. And since we're trying to do this as
Speaker 1: an investment and to make money, you want to make
Speaker 1: sure that you're getting a deal. And the way that
Speaker 1: you know that you're getting a deal is by studying
Speaker 1: the market and knowing the areas that you're looking to purchase,
Speaker 1: and we're looking like down specific to the street and
Speaker 1: the block. You want to be that familiar with it.
Speaker 1: That way, when there's a deal, you can pounce. Yeah.
Speaker 1: And a great rule or rule of thumb is the
Speaker 1: one percent rule, and that means that the monthly rental
Speaker 1: income is roughly one percent of the purchase price, including
Speaker 1: those immediate repairs that need to be made to the property.
Speaker 1: That's right, Joel. Those numbers are very important, and you
Speaker 1: can dive into our o I as well if you
Speaker 1: wanted to get a little more specific unless back of
Speaker 1: the napkin type of math. But the other thing is
Speaker 1: is you can't only look at the numbers. You gotta
Speaker 1: go with your gut. That's right, your favorite go with
Speaker 1: the gut. You want to look for specific homes and
Speaker 1: neighborhoods that have that potential for growth. There are a
Speaker 1: lot of intangibles that are really hard to quantify, but
Speaker 1: you want to take into account schools, parks, other amenities
Speaker 1: that are going to make that property very attractive to
Speaker 1: your potential tenants. And don't neglect cash flow. That's often
Speaker 1: been the mantra of real estate investors, and while it's
Speaker 1: not the end all be all, it is an important
Speaker 1: thing to consider. You want the property that you're buying
Speaker 1: to be cash flow positive, and if it's not, you're
Speaker 1: likely making a speculative move and that's not good. So
Speaker 1: all these things that we mentioned, they're kind of like filters,
Speaker 1: they're like weighted measures. And so you know, not one
Speaker 1: thing necessarily disqualifies a home from being a good potential
Speaker 1: rental property. But the more you are familiar with potential
Speaker 1: investment properties near you, the more you'll start to see,
Speaker 1: you know, your own formula kind of come into play
Speaker 1: based on some of these things that we just talked about.
Speaker 1: So taken as a whole, it should give you confidence
Speaker 1: when it comes time for you to buy an investment property.
Speaker 1: Let's wrap it up. Thanks everyone for listening. Our home
Speaker 1: on the web is how to Money dot com. We'll
Speaker 1: have shown us up there for this episode, including that
Speaker 1: link to any optical cheap eyeglasses for you people that
Speaker 1: you know wear I'm and stuff. It's true, man, they're
Speaker 1: my favorite. And if you like what you hear and
Speaker 1: you've found this episode in this podcast in general helpful,
Speaker 1: we would love to hear from you guys, please leave
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Speaker 1: for listening. Until next time, man, Best Friends Out, Best
Speaker 1: Friends Out. M