Ep. #40 - Level Up! Problem? What Problem?

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Level Up! Yes, Level Up is a reference to video games... Do you play video games? Not that I have time to play them anymore myself, but when I did - I loved action role-playing games. And you typically started at Level 1 with basic weapons like a club or dagger and flimsy gear, cloth armor - so you died easily. It was - Level Up! Or Die.

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Intro...

Welcome to Episode #40 - Level Up! Problem? What Problem?

So what do video games have to do with Rental Real Estate Investing and the Business of being a Landlord? I'll tell you - but first let's get into the video game analogy a bit more.

So like I said, when you start out in an action role-playing video game (maybe you're a Wizard / Archer or maybe a Knight / Paladin or Barbarian). Whatever your character class, you start out at Level 1 with simple weapons and basic gear. Now thankfully you're also fighting Level 1 monsters or enemies, but the slightest thing can easily kill you - you're very easily knocked out of the game.

But as you play the game, you gain experience or hit points for each monster you kill and each challenge or quest you complete. And each time you reach a certain amount of points, you Level Up. Now you're Level 2. And you often get increased attributes, like your Strength increases. You gain more Intelligence. You get more agility or dexterity, and maybe your vigor or vitality increases and so now you can take more damage before you die - you can also give more. You now start fighting level 2 monsters, which increases the challenge, but you're also now a more hardy character - more than up for the challenge as your skills increase and you continue to Level Up!

Plus you acquire better gear, some of which may be magical or imbued with certain special features or powers. You may find a shield that not only protects you from hits, but also increases the damage done by your sword. Maybe you find a ring or amulet that gives you tougher skin. Or you get boots that allow you to run faster or jump further. As you play the game, the difficulty increases (along with the fun), but you are also progressively a stronger, faster, smarter, tougher character with improved weapons and better gear - now maybe your cloth armor has been upgraded to leather and you'll eventually obtain chain-mail or steal armor to take on the increasing challenge. You Level Up in the game!

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Ok, so hopefully you see where I'm going here - but in more subtle ways, the same is true of you as a person, as a Rental Real Estate Investor... and Landlord. As you move forward, you Level Up as to the type, complexity or difficulty of the challenges and problems you're able to handle. You become more resilient to overcome all obstacles.

If you're a Level 1 Person, Investor or Landlord - then you see Level 1 challenges or problems as major obstacles - and you can easily be taken out by these or "killed" (with air quotes) - in the game.

You maybe figuratively at Level 1 if you worry about Tenants, Toilets and Termites and let the false fear of 2AM Tenant calls scare you away from buying your first Rental Property. If you fear your going to get sued; or the tenant won't pay their rent on time (or at all); or they'll destroy your property (and so you'll have to evict) - and you use these or other excuses as to why you'd NEVER want to be a Landlord. Or you're scared to start your own business - because "it might fail". You let your dream die as quickly as your Level 1 character with a club and cloth armor - because you're at Level 1 and thereby easily taken out before you even really get started. You need to Level Up.

See, in the video game, as you fight and take damage, you also heal and gain experience. You get better as you Level Up. The same is true in life. The cliché of "Whatever doesn't kill you makes you stronger", has been repeated so frequently for so long (so as to become a cliché) - BECAUSE ITS TRUE! But if you refuse to take on the challenge and fight, then you remain at Level 1 and die having accomplished nothing in the game (and maybe in life as well). Many people remain at Level 1 in their life by just choosing NOT to take a risk. In the game, one of the best ways to Level Up is to take on a challenge or accept a quest - to go on some sort of an adventure. You'll never Level up in the game (or in life) if you refuse to take a risk.

It's sad when opportunity knocks - but fear of the unknown, fear of loss, fear of risk, fear of others, fear of fear - whatever... causes the Level 1 person to allow opportunity to continue on to someone else, and remain at Level 1. That other person who takes on the challenge then gets to advance to Level 2 and beyond. Take on a challenge. Take a risk. Do something you've never done before. Get outside of your comfort zone!

These aren't my quotes, but one is... "Everything you want in life is just outside your comfort zone.” - and another... “We cannot become what we want to be by remaining what we are.”

And author of the book, Secrets of the Millionaire Mind - T. Harv Eker said... [Whenever you feel uncomfortable, instead of retreating back into your old comfort zone, pat yourself on the back and say, “I must be growing,” and continue moving forward.] – In other words - Level Up!

And as you Level Up, what was previously a life threatening challenge in the game or a major risk, becomes nothing to you. If you're at Level 20 and a Level 1 monster attacks you, you can almost literally go to the bathroom or get a sandwich while the game continues and the monster attacks, and you'll be unharmed. That Level 1 monster is not able to inflict damage faster than even your rate of healing - that is if they can inflict any damage to begin with as the armor and other protections you've obtained likely provides complete protection from such an insignificant "threat".

So taking this analogy back to life... As you Level Up in your ability to handle challenges - a Level 1 problem that previously could have taken you out, is now easily handled and likely doesn't even register to you as being any sort of problem when you're at Level 20. Problem? What Problem?

So when people state that other cliché of "More money more problems"... What they fail to understand is that in the process of obtaining that money, the person had to fight and heal and learn and grow - they Leveled Up. So yea, along with the "more money" likely did come "more problems", but in the process they're now likely at a higher level such that these may not even register on the person's radar now as being any sort of problems - and are easily handled anyway - either directly or by their team.

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So I'll give you an example of myself... I've got to make about $30,000 a month just to pay all my bills between my personal expenses for myself and my family and all of my various business expenses. So if you only make something like $30,000 per year, I've got a monthly problem that you cannot even hope to comprehend as to how to handle. My problem (which I don't even register as a problem) are on a level above what you may be able to deal with - at this time anyway (as you can Level Up).

But about 25 years ago, I had a job making around $30,000 per year. And if you had told that version of myself (let's say he was at Level 2 then) - that he'd have to make more than his current annual salary each month just to cover expenses... Let's just say it would have been an interesting conversation.

And at the level I was then, I would have been completely overwhelmed by such a problem - whereas my current level does not even register this as a problem. I've Leveled Up MANY TIMES since then - but I won't even attempt to put a number on my current level.

And somewhere (likely not listening here) is a person who must make $300,000 each month just to pay his or her bills - and likely doesn't see it as a problem. But if I had that problem today, I'd be completely overwhelmed by it, because I'm not at that level (YET) - I need to Level Up some more to handle that level of problem. But when I do, suddenly it will be no problem at all for me.

And just as certain there is a person who must make $3M a month; and $30M; and $300M - and at their level, it's no problem for them. It doesn't even register as a problem for them. It's just December. So yes, somewhere a person must make $3B per month just to pay their bills (their likely running Apple or Amazon) - but again, it's no problem for a person at that level. Anything you or I have going on in our life or finances wouldn't even be considered a problem for a person at that level - as they certainly have someone on payroll to handle it for them - and even that person likely makes more than me and you combined.

And I'm not saying you need to get to that level or that there's even anything special about being at my current level. I desire to have at least 100 rental properties. Maybe you'll just want 1 or 10. I recommend 20 as a minimum goal, but I wouldn't be surprised if I end up with over 1,000. Regardless, don't compare yourself to anyone else - but also don't be content to be a lessor version of the person you could be and the success you could obtain - because you are too scared or lazy to do the work as needed to Level Up!

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So that's it... I really just wanted to talk about video games, as I wish I still had hours that I could sit playing games. And now that my son is 12, I don't even have the excuse of playing with him any longer, as now he'd rather play with his friends online... Can't even get my son to play with me!

But my favorite (role playing games) are a good analogy to business and life... You've got to Level Up - and quickly! And as you do, what you previously perceived as problems - become no real concern. As the higher level version of yourself is able to handle much more difficult, complex and previously troubling situations - but now with ease.

So don't be afraid of the next level / don't be afraid to advance - nothing bad comes from getting smarter, stronger, faster, better. How long have you been at your current level? Are you content to remain at this level - or do you desire to Level Up? You can't be successful with Rental Properties at Level 1. You've got no choice but to Level Up if you want to be a successful Rental Real Estate Investor... and Landlord!

Then you don't fear 2AM Tenant calls about Toilet Troubles - because you've got higher level systems and a team in place to handle any Level 1 issues like that on your behalf. Level Up! Then it's no problem... Problem? What problem!?

Outro...

Disclaimer

OK, so there was a time in my life when I spent a LOT of time playing video games - which is then kind of ironic that it now annoys me that my 12 year old son does the same (even more so that I was the one who first introduced him to video games).

But for the most part I left that behavior in my teens; however, whenever I'd allow myself to get sucked back into a given game, I could easily blow 6+ hours before I even realized it. I really LOVE playing video games, but I have no time for playing games right now - haven't for years. Now I make an exception in playing with my son, but he now prefers playing online with his friends from school - so I'm currently retired in my video game career.

Now that said - this episode of the [... and Landlord!] Rental Real Estate Investing Podcast - is my excuse to express my love of video games, and how it relates to business and life. Level Up! That is the goal when playing video games, and the same is true when playing the games of Real Estate, Business and Life.

Here I wanted to make clear with the sub-title of "Problem? What Problem?" - that what a person at Level 1 perceives as a problem, may be no problem at all for a person at Level 2 or 3. And a Level 10 person would not even slow down when encountering a Level 1 speed bump - they wouldn't even see it as a problem.

Success in Rental Real Estate Investing requires that we Level Up. My first property was just over $60K - when I was just starting with Real Estate Investing. Whatever level I was at then could not relate to my current level where my latest project will have a value of over $600K. And I have no doubt that I'll soon be dealing with projects that are over $6M - because I'll Level Up!

So this... and Landord Podcast episode serves as an analogy between Leveling Up / improving your charter in a role-playing video game and improving yourself in life - so that in both cases you're able to handle ever greater challenges to win the game.

This is the final episode of 2019 - so let this be your start to an amazing 2020. Make it your goal to end the coming year at a higher level than you began. The... and Landlord Podcast itself began in 2019, and I'd like to think it has reached a new level and will continue to improve in the coming year.

Happy New Year!

Ep. #39 - Rental Rehabs (Part 2) - Tenant Proofing

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Many people who feel they'd never want to own Rental Property and be a Landlord - fear that Tenants will just treat their property like animals... Or worse, they will let their animals treat their property like animals. They just know that somethings going to get damaged or broken just about every other day, and their going to get calls at 2AM about clogged toilets. True or not, there are things you can do in your Rental Rehabs to make such occurrences far less likely.

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Intro...

Welcome to Episode #39 - Rental Rehabs (Part 2)… Tenant Proofing.

So let me start right out by saying that the BEST method of Tenant Proofing your Rental Property - is to effectively screen for problem free Tenants. No amount of Tenant Proofing during the Rental Rehab will make up for a bad Tenant selection. Choose a BAD Tenant and you're going to get a BAD outcome every-time - no matter what!

I've touched on aspects of Tenant Screening in prior episodes, but I'll do an episode specific to this discipline next year. But for the purpose of THIS episode, I'm going to assume that you're implementing proper Tenant Screening procedures - because you can't out Tenant proof for BAD Tenants.

Now beyond that (unfortunately not nearly as obvious point as you'd think it would be) - let's get on to the actual Tenant Proofing of your Rental Rehabs for otherwise decent Tenants.

Floors, Faucets & Fixtures... So lets start from the ground up. One of your biggest Tenant turn expenses is flooring. Put in the wrong flooring and you'll be replacing it with each tenant (if not during a tenancy). Ideally you want to get a useful life out of your flooring that runs years and even has the potential to span multiple tenants.

Where possible, avoid carpet... Occasionally, I'll put carpet in bedrooms - when I'm over or near my budget limitations. And some Tenants actually prefer carpet in their bedrooms. But whenever I've got room in the budget to do so, I spend a little extra up front to get more durable flooring, even in the bedrooms - they'll get over it.

It's rare for even the most durable carpet to survive Tenants beyond a year or two (three if you're lucky) - especially those with children. I remember how disgusting the carpet became in my own home, just from having 1 child and a dog - before I replaced it with all hardwood. And I cleaned and vacuumed regularly - something you cannot be confident a Tenant will do.

Instead of carpet, I go with LVP and LVT, which is Luxury Vinyl Plank and Luxury Vinyl Tile. Previously I would put LVP in halls and family or living rooms and dining rooms, with LVT in the kitchen and baths (wet areas). But on my latest projects, I just went with LVP (the plank) everywhere, including the wet areas - since its supposed to be waterproof.

I like LVP (Luxury Vinyl Plank) because it looks great, is quick and easy to install, reasonably priced and its pretty durable. You have to instruct your Tenant on how to care for it - like not using anything abrasive to clean it. But with basic reasonable care, it should last for many years and multiple Tenants. And so if you go with LVP (even in the bedrooms), the additional cost should be re-captured at your very first Tenant turn - when you thereby don't need to replace any flooring.

LVP is great, because unlike hardwood flooring, it's not as easy to dent or scratch - but either or both can and do happen. For this reason, I always keep extra planks, and use the same color and style in each property. When needed, with a little effort, it's possible to pop-out a damaged plank and replace it with a new one.

Faucets... So when doing a Rental Rehab, you'll be tempted to use cheap faucets - or to allow to remain whatever is present already. Now I'm certainly not going to tell you to replace what are perfectly good and functional faucets if they are also good in appearance. But if you must replace a couple of faucets anyway, consider replacing all - and doing so with quality Delta brand.

My plumber once mentioned to me that Delta is the standard and best. I was once taking over a rehab where it had only gotten to the point of plumbing rough-in when I acquired it, and he stated that it was beneficial they set for Delta in the showers. Should I ever need to replace anything, get spare parts or whatever - Delta was the standard and best.

He also recommended that where faucet replacements would be needed anyway, that I should always replace with Delta. Now I've only recently started to apply this advice, because Delta was more expensive - and I thought a faucet was a faucet.

But his argument was that when you come across a 30 year old faucet that still works and looks great, it's likely to be a Delta. But I don't know... Maybe Delta was the dominant (or only) brand 30 years ago. Whatever - I've gotten the message, so I've started to replace my faucets (when I do replace them) with Delta brand.

And to make my Rental Properties more desirable, I opt for upgraded styles - with the best balance of price to appearance I can justify. What I'm primarily seeking is durability / longevity. To that end, I also try to minimize the number of moving parts. For instance, I hate faucets with the pull-up plunger to raise and lower the sink stopper. That's just something else to break. Instead I use the push sink stopper, that closes with one push and re-opens with another. Fewer moving parts, so more Tenant proof.

Likewise, no garbage disposals in my rental properties. I won't remove them when already present and in good working order. But in such cases, it's stated in my lease that they are a tenant repair / replacement responsibility should any issues arise. And so if the tenant expects us to handle any such issues, it's stated in the lease that we'll just remove it (not repair or replace) - as that's just something else to break, and the Tenant rarely knows how to properly use a garbage disposal anyway. Having one just encourages them to put things into the kitchen sink drain that should NOT be - No Thanks!

And while I opt for upgraded stainless steel appliances - I avoid ice-makers and water in the door. Although I will put these in where the water source is already present and the ice-maker doesn't cost me anything extra. But here also, I make it clear in my lease that if the ice-maker or water fail - I do not fix it or replace the refrigerator or anything like that. Those features are there as long as they work, and if they stop working, I was under no obligation to provide an ice-maker or water in the door refrigerator anyway - as they are just something else to break.

And while I'm thinking about water - here's a good time to mention that most of your problems in a Rental Property will be plumbing / water related. So if any plumbing work is needed, go ahead and opt for the more durable pipes and connectors from the start. I've spend hundreds repairing water damage done because a plastic fitting at the toilet water connection broke - should have replaced it from the start with metal, even though the original plastic fitting was working fine at the time.

And whenever I acquire a new Rental Property, I pay for the entire plumbing system to be serviced - replacing plastic fittings, snake the line and the toilets, check the water heater, and on... And this allows me to place any future plumbing clogs on the tenant to handle on their own (or reimburse me for handling on their behalf) because I can prove the system was clog free when they moved it. So short of roots in the line or some other system fault, it's on them to handle or pay for any plumbing issues - as I certainly didn't put anything into the toilet or sink to cause a clog. I don't live there.

Fixtures... So this would be your toilet paper holders, towel racks, soap dishes and tooth brush holders. But also your door knobs, drawer and cabinet handles, fans, and as in the name - light fixtures.

Now for the lights, you want them to look good of course (upgrade a bit here for best appearance), but they must also be durable. Thankfully, unlike faucets, they are not being touched by the tenants every day and likely have no moving parts - so you can focus a bit more here on the style to cost balance.

But for things that are getting touched and pulled on - you want those to be extreme durable and installed well. For example, I mount my toilet paper dispensers, towel racks, soap dishes, tooth brush holders, and all - into solid wood with large / long screws. I want a person to be able to stand on my toilet paper dispenser or towel holders and be fine. Not that they would do that - but then again, you never know. No more drywall screws for me, at least not where possible to avoid. And not in my later properties anyway, as I didn't start this until I was several years in.

So we've covered the floors, faucets and fixtures. So that's the ground up, but how about the walls? The paint... Like flooring, you almost always end up having to paint at each tenant turn - its a pain. I use the same paint in every rental property - just like I try to use the same floors. So I go with flat paint on the walls and semi-gloss on the trim. I'm generally able to wipe stains off the walls at tenant turns (or they are able to do so themselves) - because I use a high quality paint. But I can also quickly repaint or touch-up as needed, as the paint is easily matched and blends well, since its flat and I use the same paint on each property. And did I mention that its high quality paint. Don't go cheap on your paint. Better to go cheap on your painters than your actual paint.

But in closing... Third to proper tenant screening and the materials used being second, the next most important aspect of tenant proofing your rental rehab is your on-boarding process and inspections.

You need to make sure that your on-boarding process is fully informative to the tenant and sets your expectations as to the care and upkeep of the property. I go over critical aspects of the lease and details about the home. You must make sure that they know where the master water shut-off value is located. What should and should NOT be put into toilets and drains. How to prevent and address fires; as well as, where fire extinguishers are located and how to use them.

I cover what cleaning materials to use (and NOT to use), including providing the initial bottle of things like floor cleaner, stainless steel cleaner, toilet and shower cleaner, and all. I video much of this orientation and conduct a walk-thru of the property on video as well. During this walk-thru, I detail the current state of the property, with special focus on those things that are most often the cause of hits against the tenant's security deposit.

Now couple this orientation and video walk-thru of the home with the tenant's knowledge of (and my follow through on) regular in-person inspections of the property - the end result is most often a problem free tenancy. And when I do eventually encounter a tenant turn, it most often requires little to no additional work to make rental ready again - and I'm often able to return the tenant's full security deposit.

So don't be afraid of being a landlord. Just tenant proof your property and sit back and then enjoy the cash-flow, tax benefits and wealth creation of being a Rental Real Estate Investor... and Landlord!

Outro...

Disclaimer

The cover image for this episode shows your rental property flooded and infested with water fowl. So maybe you can't Tenant Proof against flood and fowl - but this exaggerated scenario (and birds) aside... You can certainly do somethings upfront (during the rehab) to protect your rental property against the more typical hazards - including pets (but hopefully not penguins).

So in this episode of the [... and Landlord!] Rental Real Estate Investing Podcast - I'm going over some of the things that I've done during my Rental Rehabs to Tenant Proof my properties. You can save yourself from headaches and keep money in your pocket by avoiding certain issues from the start.

Floors, Faucets and Fixtures - These are where I focus my Tenant Proofing efforts. These don't cover everything, but they go a long way towards your headache and hassle free Landlord life. They form the foundation - and built upon these, you must start with proper Tenant Screening, proceed with effective Tenant On-boarding, and continue with on-going Property Inspections.

So checkout this Episode #39 of the [... and Landlord!] Podcast to hear my insight into how I Tenant Proof Blue Chariot Properties.

Ep. #38 - Rental Rehabs (Part 1) - How Nice Is Too Nice?

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Wow! That's what I want prospective Tenants saying (to themselves or out loud) when they first see pictures of one of my rental homes. And again even more so when they walk in the door for the first time for a showing. I want them to have an intense desire to live in this home, so much so that after seeing it, they'd still want it even at $100/mo more than the advertised rent.

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Intro...

Welcome to Episode #38 - Rental Rehabs… How Nice Is Too Nice? This will be Part 1 of a multi-part episode.

So... Hardwood Flooring? Granite Counters? Stainless Steel Appliances? If you have Rental Properties, do they have these features? Or if you don't yet have any, would you want them to have these features? Or do you think these are just unnecessary upgrade overkill for a rental home?

Do you think or fear your Hardwood Floors will just get scratched by the Tenants, their Guests or disallowed pets that somehow are still present anyway? That they'll crack or stain your Granite Counters? And dent your Stainless Steel Appliances?

Now I'm certainly not going to suggest that these things can't or won't happen to your upgraded finishes. That'll depend largely on your Tenant Screening and Tenant Onboarding process - as well, as how diligent you are about on-going inspections.

But what are your thoughts about the prospect of earning higher rents, lowering vacancy and getting generally better tenants (who cause fewer problems) - by using upgraded finishes to make your rental homes more desirable?

So most of my rental properties are in the realm of being Class B. But I have one Duplex at a location that I would consider to be Class C, as it sits on a street of all Duplex Rentals - but they're generally well-kept and clean, plus its in the path of progress, with $400,000 homes literally right around the corner (you could throw a rock and hit one).

Now in all my properties I tend to install Luxury Vinyl Plank (LVP) Flooring on the lower level, which looks great and it's waterproof. This allows me to even install it at wet locations like the kitchens and baths - whereas I previously installed LVT (Luxury Vinyl Tile) at wet locations, but the LVP works and looks better.

I don't have any rental homes currently with real Hardwood Flooring, as I do fear that they'll get scratched and dented - however, I will eventually try it in a Class A property. Right now I'm deciding if I want to sell or rent my current home, which has Hardwoods throughout.

Now for upper level flooring, I've done both LVP and LVT from property to property, and typically carpet in the bedrooms - although I'm considering going with LVP in the bedrooms also. That increases the initial cost a bit, but LVP tends to stand up well to Tenants, and therefore I expect it will last through multiple Tenant turnovers. Whereas, since I have pretty good Tenant retention, by the time I have a turnover, it's likely the carpet will need to be replaced again.

During a rehab I tend to replace doors that show any damage beyond what can be easily repaired, painted over or otherwise hidden. I've replaced several sliding glass doors and I tend to replace them with the ones having internal blinds. That eliminates the need for separate Vertical Blinds that just get damaged by kids and pets.

And as for blinds... I'm not putting in those 1" plastic mini-blinds that you see in most Rental Properties. I put in 2" faux wood (meaning fake wood) plantation blinds. They're not much more expensive, but look great in comparison and are pretty durable.

Also, in my rehabs I typically replace door knobs, faucets, light fixtures - and pretty much everything else that's available in brushed nickel finish. And the brushed nickel light fixtures I choose are most often of the higher quality and design. I want them to be stylish and have that WOW factor - especially the ones over the bathroom vanities, in the dining room and kitchen.

And of the kitchen, it needs to have nice cabinets with brushed nickel handles (the vertical bar type). I've put in new cabinets in a few rental units, but for many I just resurface the cabinets to white or gray. Appliances are of course Stainless Steel - and not the ones when most of the appliance is black, with just a section or two of Stainless Steel. I most often opt for upgraded appliances with a nicer than average kitchen faucet. But for all of this, I'm still asking - "How Nice Is Too Nice?"

So that is the question... How nice is too nice when rehabbing a rental property? What upgrades and improvements are just a waste of time and money? Do you really need Granite Counters in a rental? Or are the "solid surface" counters or the cheaper counters that look a lot like Granite just fine?

Do you really need Stainless Steel appliances in your rental properties, or are you just as good going with basic white? Does it matter if your kitchen faucet is $50, $100 or $150? Certainly, one of those $250 faucets would be far too nice - a waste of money. If not, it certainly seems like a foolish waste of $100 if you're just as good spending $50 as $150. Likewise, does it matter if you have upgraded cabinet handles? Upgraded light fixtures? Upgraded flooring? Upgraded Blinds - and on...

Honestly - I have no idea! Meaning, I can't prove that the additional time and money spent on these upgraded finishes actually pays for itself in some quantifiable way. But anecdotally, it is my feeling that these upgrades make my properties more desirable - and as a result, I may get a better tenant. A better tenant who thereby causes fewer (if any) problems, because they have a house that they're proud to call home.

But no, I can't prove it. In fact, I've got three 2BR Townhouses in the same community with various levels of upgrades (one even having white appliances and formica counters). And I get about the same rent for each of them. So that kind of blows my theory out of the water.

So from this and various anecdotal examples, I'm left to conclude the answer to the question of "How Nice Is Too Nice" - is that anything over a base level of upgrades and improvements is a complete waste of money - unless it was needed anyway. So in my rehabs, I just address what was needed - and I do so with somewhat nicer items in the process.

I certainly want quality rental homes with nice upgrades and improvements to the property. I want the person to say (or at least think) "WOW" - when they walk in the door for the first time, or when they first see the pictures. But I see no need to spend money beyond what is necessary to achieve that goal.

In other words, I'm seeking a result that is well above average, but well below excessive - which is the point at which you get no additional "bang" for the buck. So "Too Nice" is spending $250 on a rental kitchen faucet, when a $150 faucet (or even one for $100) would have been fine (and still get that same "WOW" response).

So when I put in new fans, they are $50 each (not $100 or $150) - but they LOOK like they cost $150. Just like the $100 kitchen faucet I use looks like it costs far more than it really does. My LVP and LVT flooring comes out looking great - and is far cheaper and more durable than real Hardwood.

So I'm able to upgrade bath vanities, bath faucets, bathroom fixtures, flooring and everything - but not break the bank in doing so. I even install upgraded shower heads. Maybe great showers increase tenant retention - I don't know. But that doesn't mean you need to alter plumbing to put in an overhead waterfall shower-head - that would be "Too Nice". But not nice enough is just a plain basic shower head. Spend an extra $5 or $10 and get something nicer that your tenant will use everyday! And we can debate on if showers should be tiled.

I try to get the best appearance and durability results I can - for the lowest price. I'll talk more about durability in next week's episode. I spend more on certain items, but I try to save money wherever I can. For example, I'll spent around $1,800 on appliances (the frig, stove, microwave and dishwasher) - but sometimes I'm able to get the same for a few hundred dollars less.

I consider Stainless Steel Appliances to be my minimum (when the existing appliances need to be replaced anyway), along with LVP and LVT flooring. New or resurfaced kitchen cabinets and most often granite counters. But you must be careful, because just those few things can be $10,000 right there - and that doesn't even get into all the other stuff, which can easily be another $5,000. So is a $15K to $20K rehab too much for the average rental property?

Maybe... It really all depends on the numbers. What will the place rent for? And in this process, are you replacing anything that is really just fine as-is? Like I said, even thought Stainless Steel Appliances are my minimum - the rental with white appliances that I mentioned before had them present already (NEW) when I bought it. So I certainly wasn't going to replace brand new appliances just because they were white, instead of Stainless Steel.

So "Too Nice" in this context, is anything that is more than or beyond what you choose to establish as the minimum for your target class of rental property and ideal tenant. If your target doesn't want, need or value the upgrade - then it's a waste of money.

So if you handle this question of "How Nice Is Too Nice" as I've done - it just requires you to pick certain items that you use in every property when the existing related item needs to be replaced. I use the same kitchen faucet in almost every property. The same toilet. Same light fixtures. The same vanities. It really does get to the point that if you've seen one of my properties, you've seen them all. And in each case I pick slight nicer items, but where the cost for the improvement is not much more than the lessor option of the same item. And I'll talk about the other side of this equation next week - which is durability.

Outro...

Disclaimer...

Rehabbing distressed properties into rentals is a balancing act... You must watch your budget, because every dollar spent on the rehab lowers your ROI - and depending on how you choose to fund your rehabs, it can also lower your cash-flow (at least initially). And you want the resulting property to be nice, plus you also want everything to be durable - so that you're not likely having to replace everything all over again at each tenant turn.

Finding that right balance between price / cost, appearance and durability is critical to a successful outcome. And if you're like me, you want prospective tenants to think "WOW" (or even say it out-loud) - when they first see pictures or have a tour of your rental properties.

In this episode of the [... and Landlord!] Rental Real Estate Investing Podcast, I relate some of my thoughts on achieving this outcome and balance - so I ask the question "How Nice Is Too Nice?"

Here I relate that I cannot prove it, but anecdotally, I feel that the quality of my rental rehabs both make my properties more desirable (I definitely get that "WOW" effect); and results in an increased durability. But it does come at the price of an increased rehab cost. I put a bit extra into making my properties really nice (but "How Nice Is Too Nice?") - so at the same time, I must be careful not to take it too far.

Because at a certain point, things are durable enough and look good enough - so to go further or spend more gains little to nothing in return from increased rent or reduced vacancy. While I feel you can certainly attract a better tenant who may stay longer if you put a little extra into the rehab (like upgrading to Stainless Steel Appliances, LVP Flooring, Granite Counters, etc...) - creating a home they really love and have pride of residency... It has a limit beyond which you get drastically diminishing returns. And since measuring those returns are almost purely anecdotal anyway - you really must be careful when increasing rehab expenses to make a property nice. You can quickly end up with a property that is far nicer than it needs to be to get the same tenant at the same rent you'd have gotten anyway with a lower cost rehab to rental.

So where to draw the line? How nice is too nice?

Ep. #37 - Be All That You Can Be... and RICH!

Show Episode Transcript

It's sad... Most people never achieve anywhere near their full potential. Now, even knowing one's full potential is an impossible task - and how is that even to be measured? But its often readily apparent when a person was likely capable of doing more with their life - as its relates to general achievements and level of success - which unfortunately is most often measured in MONEY.

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Intro...

Welcome to Episode #37 - Be All That You Can Be… And NO - NOT necessarily by joining the Army!

So let me start this by saying that I am fully aware that MONEY or so called "Material Success" / Prestige or any of that are NOT (and SHOULD NOT) be the sole or even primary means of determining someone's level of achievement and success. So don't anybody call or email me saying anything about that.

YES, a person CAN rightly pursue happiness and experiences and matters of spirituality and any number of other life pursuits - having little to nothing to do with MONEY. But I have found (from my one man's limited prospective) - that having MONEY (the more of it the better) makes anything else you may wish to do in life a LOT easier. And you can be a blessing to a lot more people when RICH than POOR. If you can, you owe it to yourself, to those you know and love, and to the world - TO BE RICH! Keep listening and I'll tell you why its actually SELFISH on your part (when you can be) to be anything less than RICH.

Now in this episode, I'll be using two words often - RICH and POOR. And I'm going to count anyone who isn't RICH as someone who is by default POOR - even thought I'm fully aware that a middle class exists in between these two that accounts for a substantial number of people in this country - and likely most of my listeners.

And I know that RICH and POOR can be measured in ways other than monetarily. For example, I'd argue that health and youth are the greatest riches - as what old or sick billionaire wouldn't trade it ALL to be young and healthy again - especially with their current knowledge intact (because they'll be RICH again in no time). If Steve Jobs could have paid someone $100B (more than he even had) to make him healthily, he certainly would have.

I'm also aware that a truly POOR person in the United States is still in a completely different circumstance (really deserving a different word) than a POOR person in most other countries of the world. Maybe that word is "Poverty" - but even that is different when in the United States versus other places. So again, don't anyone call or email me saying that just because your not RICH it doesn't mean you're POOR, or any of that - I KNOW!

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Now all to often, the main difference between a RICH person and those who are NOT - is that it has never really occurred to the POOR person (outside of maybe winning the lottery) that they even can be RICH. Its a mindset thing. And most people really never even consider that greater things are within their grasp, or at least one day can be with the right focused effort NOW.

Ideas are what make people RICH - or should I say rather, effective execution on ideas. And POOR people tend to be both lacking ideas and fail to effectively execute on the few that they do have. You have to have an idea... You need a vision / a dream! Something that maybe you didn't do yesterday, that you will do today and consistently tomorrow and beyond into next week / next year - to make your days yet to come, better than those that have passed.

I'm not yet the best or "All That I Can Be", and will probably die (hopefully 50 years from now) - with that still being true. But I'm really excited about the coming year, as 2020 is set to be the best year of my life. Can you say the same? I asked this question in a prior episode... What do you have in works, that stands to make 2020 a better year for you than 2019? And I'm not just asking that question in terms of MONEY.

I'm likely to have some amazing experiences in 2020. I've got great friends that I'm planning to spend a lot more time with. I've made a promise to myself to connect with family members that I see and speak with far too infrequently. More travels are on my calendar. And lots of things are in works for my career, existing businesses, new businesses (I'll tell you more about those later) - plus lots of personal and professional endeavors, including areas of improved health / body, mind, spirit. God willing - Next year's me will be the best version of me to have walked the earth.

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A little background on myself for context...

I really started to focus on personal development back in 2015 at the same time of getting into Real Estate. That's when I came to the conclusion that I had not YET achieved anywhere near my full potential. And that's also when I realized that I was my problem... I'm so much different of a person than I was then.

Going back to childhood... I'm fortunate that I was born and raised into an environment where I always knew that I would do well in life. "Success" (whatever that was from a kids prospective) for me was my forgone conclusion. And not many people doubted that, especially as I got older and came into myself. I was a pre-teen saying to everyone who asked anything about my future plans, that I'd be RICH (whatever that meant to me then) by the time I was 40 (sometimes I would even say 35 or 30). And for a young back kid in the 80's, that was not exactly a realistic expectation - but still I had no doubt.

My father was a truck driver - who eventually came to own multiple trucks. I believe I mentioned in a prior episode that he earned 6 figures at a time (70's and beyond) when most Black People struggled to earn 5 figures. But he worked hard for that, and would be gone on the road for weeks at a time. But when he came home, it was to a large house that he and my mother had built on a corner lot, literally right across the street from a lake on one side and a golf course on the other - with a pool in the back yard. So when I wanted to fish, all I had to do was walk across the street. And the ocean was only 10 minutes away. This was not the average life for a black family in the late 70's and early 80's. So I knew that I was blessed to have this start - that most people don't have.

This allowed me to have big dreams for my future, as that was my floor (my starting point thanks to my parents) - so the sky was the limit (as the saying goes). Whenever someone would ask me what I wanted to do when I grew up (at age 9 or 10) if my father was around, when I would go on the road with my father during Summer breaks - he'd answer for me... "He won't be a truck driver!" - Because even though he did great with it, it was hard work (even more so back then when trucks had to be unloaded manually by the driver box by box). So he wanted better for me, and knew that I'd have more options than he did.

And I always showed an inclination towards technology. My mother bought me a computer when I was 7 - and I was born at the perfect time to leverage the Internet for money. I started my first online business in 1996 when I was 24, and was quickly making $60,000 a year with little effort - which was nearly twice what I was making on my day job as a Cellular Phone Tech (back when Cell phones only made phone calls).

Now my reason for saying all this about myself, is that I completely realize that my starting point made things easier for me than for most people (regardless of race) - but especially for the average Black Person. I've got a father who pulled in 6 figures per year; was raised in a very nice two-parent home (married 57 years) - when many people may not even HAVE a father in their life. So its easy for me to say that YOU should have big dreams and execute on ideas that will improve your coming days.

Like I said, it may never even occur to many people that they can be RICH. Their start in life, the people and circumstances around them and their experiences up to this point - may not even allow that thought to enter their realm of possibility as to what their life could be. I've been blessed to always know that I'd be RICH. It's just in how I think from childhood. My only question is will I stop at high 7 figures or 8? And don't be mad, but I don't rule out 9 or even 10... What's a Billion Dollars these days anyway!?

I've got ideas for more ways of making money than I can possibly pursue myself, which is why I'm starting another business now where I'm a minority investor - and my partner is the principle driver of the business... Like I said in last week's episode, "You Can't Do Everything Yourself". And even thought that episode was about leveraging VA's and building a team to get more done - that team can also include partners in multiple businesses.

So YES - its easy for me to say "Be All You Can Be" - and that "You Need To Be RICH" - when I think this way by default. As stated, you need to effectively execute on an idea to become RICH - and I've got lots of ideas and have learned better how to execute on them. So my purpose here is to get you to realize that you CAN BE RICH. And if you already know that - Congrat! Because most people don't or just can't believe its true - so for you I hope to offer an idea and tips on execution to make it happen. Also to inspire you to influence those around you to this same outcome. This same belief. This same mindset.

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That's one reason why it's SELFISH of you to NOT become RICH if you have it within you to do so - and most of us do. Who do you help by being less than your best self? And don't give me any of those excuses and clichés about money. I don't want to hear any of that BS about "Money Being The Root Of Evil" or any of that... If you want to go there, listen to Episode #33 - "How Do You View Money".

By being less than your best self - YES, unfortunately in this context measured in MONEY (recall my earlier disclaimers on that) - you are being selfish. Because you are then unable to aid and inspire others around you to the greatest degree. You're also being selfish because you are possibly then needing aid of others - instead of being an aid to others yourself.

If you fall out of a boat in shark infested waters and can't swim - but you're Michael freaking Phelps... I'm pissed that I may now have to risk my life to save you, when it was within you to be an Olympic all-time winning swimmer. You wouldn't need my help if you had lived up to even a portion of your potential... Selfish to do otherwise.

That is how I feel whenever a family member or friend asks me to borrow money. You've known me for years - maybe most (if not my entire) life. You know what I do... You know what I know... Yet the only question you have for me is "Can I borrow some money"!? Not can you direct me in starting a business? Not can you help me create a website? Not how can I improve my credit? Not how can I buy a house or rental property? Not anything that will help long-term that I'd likely be thrilled to do. No, "Can I Borrow Some Money" - something that may be harmful to me, while doing nothing transformative to aid that person long-term.

Now whether I may choose to allow the person to borrow money or not is irrelevant, as being RICH may allow you to be a blessing to others in that way. I've certainly paid my share of light bills for relatives. And "Borrow" (as I do air quotes) is a subjective term, as I'll never get that money back. But you never know what influence you may have on others who are witness to your accomplishments.

And your results may be better than mine at influencing others, if you're coming from a more difficult start than me. The further you have to travel to reach a point of "success" (again with the air quotes), the more obstacles you have to overcome, the more inspirational you'll be to others. But you inspire no one by being and remaining POOR. And your a potential Michael Phelps who can't swim if you have greater things within you (we all do) - but never reach inward to pull them out.

And I'm not saying you need to be a record holder for all-time Olympic medal wins... But to continue the analogy, how about just learning to swim and having a pool in your back yard that you can enjoy with friends and family. Or going on vacations and being able to get into the water without fear of drowning. But I'll end that analogy now, as I don't want there to be any confusion... What I'm saying is that you don't have to be all-time great to become better than your current self - and inspire others in the process. And to do less when more is possible - is selfishness.

As the clichéd saying goes, "if you aim for the moon and miss, at least you're amongst the stars". I've got a successful tech company, but I'm not Mark Zuckerberg. Am I a failure because I didn't create Facebook or Google or Amazon, Uber or AirBnB? None of them existed when I started my company, so I could have - but I didn't have those ideas. I wasn't even smart enough to invest in the stock. Also didn't buy any Bitcoin - and I'm a tech guy. Yet the ideas I did have, made me millions - and I will be making millions more... and I'm good with that. I don't compare myself to those people. I compare myself to the ideal image and accomplishments of ME - now and in the future.

What do I believe I have within me - Greatness, by whatever measure? What do you believe you have within you? Your future self will be pissed if you don't dream big, get an idea and execute it effectively - to Be The Best You Can Be.

My ideas are Tech, Real Estate and other Businesses. I'd argue that whatever your ideas, they should also eventually involve Rental Real Estate - that's why this is called the [… and Landlord!] Podcast. But regardless, get an idea!

Hell, start an Amazon business and get your merchandise from a drop-shipper until you can go custom and private label. Create something unique and sell it on Etsy. Start a local business... My Nephew started a bounce-house business in Florida, and he's killing it! He also has a car detailing business with his brother - so proud of them! If you need to, go back to school. Or determine what you're good at that someone might be willing to pay you for on Upwork.com... Just knowing how to use certain software like Excel, PowerPoint or QuickBooks is potentially something that you can get paid for.

We're living in the greatest time to be alive in the history of man kind. And your race - your sex - your nationality / sexual preference... While these things still can be obstacles, you can't deny that they're less so than ever before.

There are more ways to make money than ever before. Its easier to start a business than ever before. You can literally put up a website for few hundred dollars and have a global reach. You could never do that at any other point in history... AND YOU"RE BROKE!?! And you're anything less than striving to be RICH!? TODAY!?! With all that we have available to us?

Go slap yourself in the mirror if you don't realize that opportunity is all around you. Maybe it will wake you up and you'll see the opportunity in the reflection... Regardless, Life's a journey - so just make sure that when its over for you, that your not damn near in the same place where you started and that you leave a legacy... You were born for better things!

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Outro...

Disclaimer

Might there be a "Super" version of yourself inside - just waiting to get out? Or stated another way... Are you currently the best possible version of yourself? Might there be another possible version of YOU - who is capable of doing things that could make you RICH. Or do you think it more likely that you'll somehow develop super powers and fly before you'll ever become RICH?

The book Rich Dad Poor Dad puts forth the idea that being RICH is a choice. But the opposite is true as well... Being POOR is also a choice. Or actually, a life long series of daily choices - bad ones. But YOU CAN BE RICH. You just have to WANT IT. You have to WANT IT enough to DO SOMETHING to obtain it. And most people won't. In fact, they CHOOSE not to.

In this episode of the [... and Landlord!] Rental Real Estate Investing Podcast - I talk about how most people are not RICH because it has never occurred to them that they can be. And thus they make choices that ensure they won't be. At the basic level, all it takes to be rich is 4 things... 1) The belief that you can be; 2) The determination that you will be; 3) An idea as to how; 4) And effective execution of that idea.

The problem is that (outside of maybe winning the lottery) most people don't think that they can be rich. So they certainly don't have any determination to be rich. And most people are lacking ideas, such as for a business, product, service, etc... So they can't execution on what they don't have.

Ideas are infinite - but why would an idea come to you if you're just going to dismiss it as something you can't do anyway? So the first part of getting an idea to execute upon is believing that you can and then determining that you will.

So listen to this episode of the Landlord Podcast and let's stop being lessor versions of ourselves. We all have greatness within - LET IT OUT!