Ep. #44 - Rents Are On The Rise In Durham

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Rents are on the rise in Durham, North Carolina - and likely everywhere. I just got a bit of a shock upon checking what the Durham Housing Authority rent payment standard is for Section 8 Rentals this year.

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Intro...

Welcome to Episode #44 - Rents Are On The Rise In Durham - And Everywhere...

So we know that everything goes up in price and cost - inflation is a part of life. Pretty much nothing costs the same as it did 10 years ago. Now one possible exception to that, which comes to mind is electronics. Things like TV's are cheaper and much better than in the past. Also computers cost about the same as they always have, but are much better now for about the same price over time.

But I just went to Red Lobster this past weekend with my wife and son, and the Ultimate Feast (with a Lobster Tail, Crab Legs & Shrimp) is now $30. Not to long ago it was $25, and about 10 years ago it was only $20. And back then, it was one of my financial life milestones when I could justify and afford to pay $20 for a meal. It seems like nothing now, but that was big for me back then.

And then as now, I've managed my finances in Quicken since just before moving to North Carolina from Florida back in 1996, so I can literally scroll back in time (within Quicken) to see what I paid for anything and everything over the last 24 years.

So I went and checked Quicken to see what I paid in rent the last time I was a renter myself (back in 1998). I was paying $625/mo for a 2BR / 2-Story Duplex unit of around 1,000 SqFt. I checked Zillow and it says the rent Zestimate for this same unit today is $1,065/mo. So I checked Rentometer.com - and its crazy! It says this unit would rent for an average of $1,381/mo with the median rent for 2 bedroom units in this area being $1,450/mo!

That's crazy! I don't even think I believe that. But this brings me to why I'm speaking about this today. So it's been awhile since I had a vacancy to fill. My last vacancy was about 8 months ago. But yesterday I listed a 4 BR Townhouse for rent in Durham. And I had gotten it ingrained in my head approximate what things rent for here. I know about what to expect in rent from a 2BR and a 3BR, but since 4 Bedrooms are a little more rare for me, I wanted to do some extra research to make sure I list it for the right price.

Imagine my surprise when I checked Zillow, Rentometer (and other sources) - and I get results that suggest this 4BR Townhouse might rent for as much as $2,000/mo (maybe even a little higher). That's crazy! So I'm like - "No Way". No way this thing will rent for even $1,500/mo, let alone $2,000!

Now about 1/2 my rentals are Section 8, so I went to the Durham Housing Authority website to see if there has been any change to their Housing Choice Voucher (Section 8) payment standard for 2020. And to my shock and amazement, I see that they have increased their payment standard substantially for this year.

Compared to 2019, the increases for 2020 are... For a 2BR: from $990/mo to $1,088 (that's +9%). For a 3BR: from $1,356/mo to $1,461 (a little more than +7%). And for a 4BR: from $1,512/mo to $1,645 (+8%).

Now that may not sound like a lot, but in this market, an increase in rents of 7% to 9% is maybe 3 times or more the typical increase in rents that a Landlord may impose. And that is if any increase is imposed at all. My rent increases are normally somewhere between 1% to 3% per year.

So why does this matter... Why is it significant that rents are on the rise - and especially that Durham Housing Authority (DHA) has increased their rent payment standard for 2020 in Durham?

Well first, I often use the DHA rent payment standard as a gauge as to what I can expect to get in rent for a property. Now there are properties for which I'm getting far more in rent from a non-subsidized tenant than DHA will pay for that same home. But its still a great gauge as to the likely minimum rent that I can expect if I make the home available to someone with a Section 8 Voucher. But even then, I have to say "likely" (with air quotes) because the previously stated DHA rent payment standard is their maximum possible initial payment for a certain number of bedrooms. But that doesn't mean everyone with a voucher will qualify for that maximum amount.

For example, last year when the DHA maximum initial rent payment for a 3BR was $1,356, I had listed a 3BR Townhouse for rent at $1,320/mo, thinking it would surely be approved for this amount since it was below their max. Yet a particular applicant was only approved for $1,287/mo based upon her specific income. I took it, as she passed all my screening criteria to likely be an excellent tenant, and I was still sufficiently cash-flow positive at this amount - plus I wanted to avoid another month of vacancy, which would have cost me 3 times as much as the $33/mo decrease ($396 on the year). But now that she's coming up on her rental, I'll be requesting an increase.

And now that DHA will pay as much as $1,461/mo for a 3BR and this amount is more than justified by current market rents for a 3BR in the area - I'll certainly be requesting an increase.

But it goes even beyond that... Like I said, I use the DHA rent payment standard as a gauge of what minimum rent I may be able to get for a given property - so that goes into what I can PAY for that property.

Ideally you want the rent from a property to be at least 1% (or more) of your all-in cost for that property. Now there are certainly exceptions to this, and the "1% rule" (as its called) has some fluidity to it. And if you can get 2% or even 3% (which was easy during the downturn) then that's an out of the park home run.

So as an example, if my all-in cost to purchase and rehab a property to rental quality is $150,000, I'd want to be able to rent that property for at least $1,500/mo - 1% of $150,000. And if $50,000 of that were hard rehab expense, then my MAO (Maximum Allowable Offer) for that property would likely be around $90,000 (maybe even $85,000) to account for closing and holding costs. And then this property would need to appraise for $200,000 to make it a perfect BRRRR deal (BRRRR being "Buy, Rehab, Rent, Refinance, Repeat") where I'm able to pull out all of my cash and maintain 25% FREE equity in a cash-flow positive property.

But consider that if this hypothetical property were a 3BR for which my all-in cost is $150,000 - then I already know that in 2019, the most DHA would have paid in rents for this house was $1,356/mo - which is well below the $1,500 (1%) that I would ideally be seeking. Well to now have that increased to $1,461 potentially puts me right there near that 1% rule - and like I said, there is a little fluidity to it. I've done successful deals at .85%.

And if its a 4BR (or can be made into one), then it locks in easily for the 1% rule now that DHA will pay as much as $1,645/mo for a 4BR. And again, this is just my gauge as minimum... I can sometimes get even more from a non-subsidized tenant, although it goes both ways. I also have some properties with a Section 8 Tenant at a higher rent than an identical unit with a non-Section 8 Tenant.

But the most exciting thing about this increase in rents here in Durham is that the 1% rule becomes more obtainable with higher rents. I often get outbid on properties, and I wonder - "How in the world can they pay that much for that property!?" - but maybe this is a factor in that. Maybe they know that it will rent for more than I'm estimating, and so they are possibly analyzing based on a higher rent than I'm assuming. If so, then right there, they can pay more if they're correct. And maybe they also have lower rehab expenses - their own crew, bulk pricing, or they do a lessor quality rehab?

Whatever the reason, if you're getting outbid by your competition (as I often am) - knowing your numbers on rent can allow you to pay a little more. And with rents greatly increasing in this area, it may make the prices (that are also increasing) a little less out of reach than maybe previously thought. I know I'm going to be re-evaluating my numbers and what I'm offering based upon these higher rents and see what happens?

Well, at least I am after I actually get a tenant to pay at these higher rents. Sorry, but I need to see it (first) before I actually buy based upon these numbers. Thankfully I've got a vacancy to fill now, so I'll see. As I still don't believe these Rentometer numbers. If they're correct, I can rent this 4BR Townhouse for my highest rent so far. And that would also mean I'm greatly under current market rents for all my other properties.

And so that brings another question... How to handle rent increases with your current tenants? I actually want to be a little under market rent, so that the tenant knows they're getting a good deal - and thus they stay. But if rents are increasing here by 7 to 9% in just one year (as suggested by the DHA rent payment standard increase from 2019 to 2020) - then I'm WAY under market rent with increases in prior years of only 1% to 3% to my own tenants.

So I need to get back up to near market rent, but if I increase it by some high amount in a single year, that is certain to cause some concern and likely push-back. Tenants haven't likely been checking rents lately themselves, so they are certain to think it's unfair and start looking around for somewhere else to live.

Having a vacancy caused by rent increase is likely to end up costing more in the end than gained by the increase. For example, even if you increased rent by $150/mo (which is a 10% increase on $1,500/mo rent) - that additional $1,800 on the year would almost certainly be killed by a tenant turn - if the tenant decided to leave instead of paying the additional $150/mo. Just the cleaning, minor repairs, paint touch-up and carpet would potentially cost twice the amount of the increase. And that doesn't even account for a month or two of vacancy that could result.

For this reason, I tend to reward long-term tenants with lower rent increases during their tenancy - and then I'd go for the full near market rent increase at the next natural tenant turn. Not one caused by me pushing the tenant to leave because of a larger rent increase dropped all at once.

Its a balancing act - but you certainly need to increase some amount each year, if for no other reason than to get the tenant accustom to an annual increase of some amount. And you can fairly justify this with the Tenant by referencing logical increases in expenses that you've incurred for the home - in taxes, insurance or maybe HOA fees.

So don't be greedy - but don't be a push-over either. But I must confess that I'm far more willing to increase rent on a subsidized tenant, than I am on non-subsidized - because it's not likely that the Section 8 tenant will be the one actually paying any increase -anyway. If they do pay more, its likely to be minimal in comparison to what the government pays. So I want the maximum they're willing to pay. Its not like they're not trying to get the maximum out of me in taxes.

And I suspect one reason for their larger than typical increase in payment standard for 2020 - is to get more landlords to participate in the program. Here in Durham, DHA has some problems with their public housing properties (commonly known as "projects"). Beyond the expected issues of crime and drugs, they've got problems with carbon monoxide in the units from outdated heating systems and gas stoves. They've now likely got to spend millions to replace those old systems.

Google "Durham and McDougald Terrace"... Right now they have residents of the entire public housing community staying in hotels going on weeks now - yet another expense. So if they can get more landlords to make their rental units available to persons with Section 8 vouchers, it relieves a little of that pressure with each one.

And since my units are in locations and a condition that they are sought after by both those with and without vouchers - it makes perfect sense for DHA to get their payment standard up with (if not above) what landlords might otherwise be able to get from a non-subsidized tenant. And I love it, because DHA has never once paid late.

They give you more hoops to jump through, and the inspections can be a bit petty on some things - but overall, I'm happy to participate in the Section 8 Program. And the fact that rents are increasing here in Durham makes it a great time and place to be a landlord.

Imagine if I had bought that Duplex I was living in from 1998 to 2002 - instead of moving out and buying the home that I bought that year and still live in today? Even if I had to pay an inflated price to compel them to sell, it would have been a great buy, as rents have (apparently) more than doubled and I would be well on my way to having it paid off.

That's why there's the quote "Don't wait to buy Real Estate - Buy Real Estate and wait" - as both values and rents tend to increase over time to the landlord's great benefit. I've got a property that I bought back at the end of 2015 that was rented at the start of 2016 for then $1,380/mo - that is now rented for $1,530/mo, to the same tenants. But its still under market rent for the location, amenities, size and number of bedrooms, even with that increase over what is essentially 4 years.

Now Rentometer.com says that this home (as a 4BR) should rent for around $1,900/mo now (and I'm at $1,530). But really, this home has 5 bedrooms (its just that one doesn't have exterior egress, so its not officially an bedroom) - but at 5 bedrooms, it says it should rent for $2,500/mo!!! Crazy... Am I really $1,000/mo low on the rent for this house!? No, I don't think so. And I also don't think I'm low by $370/mo if you don't count it as an official 5 bedroom home due to one of the bedrooms being interior (so no window). But even if I am low, I'm not increasing the rent that much on what have been great tenants over 4 years. They are now due for renewal, so there will be an increase, but nothing like that. Maybe something like 3% to bring it to something like $1,575.

I'm not trying to be greedy and don't want to give my long-running great tenants an excuse to leave. Also the rent Zestimate of this home at 4 bedrooms says $1,500/mo is the correct rent. So dropping the debate about the 5th bedroom, maybe Rentometer just got some wrong numbers entered into their algorithm for Durham. Regardless, rents are on the rise in Durham and its a great time to be a Landlord.

So get some property here and I'm happy to manage it for you. I'm also happy to be your Realtor if you need to buy or sell property in the Triangle area of North Carolina. Checkout BlueChariot.com - you'll see my pretty face near the bottom of the home page.

Outro...

Disclaimer

In this episode of the... and Landlord Podcast, I speak about RENT increases here in Durham, North Carolina. And one example I give is that of my own... The 2 Bedroom Duplex unit that I lived in for 4 years when I was last a renter myself (from early in 1998 to the start of 2002), where my rent was $625/mo (increasing to $645 in the final year).

Well now here 18 years later, that exact same 2 Bedroom Duplex unit (of ~1,000 SqFt), is suggested by Zillow and Rentometer to have an average rent value of $1,381/mo, with the median rent for 2 bedroom homes in the area being $1,450/mo... That's crazy! If correct, it means that rents here have more than doubled over the last 15 years or so since the boom and bust occurred in Real Estate.

But think of that... This Duplex is nearly 20 years older than when I last lived there. And I drove by it recently, and it doesn't look like anything major has been done to update it or improve its appearance or condition. If the same people / company owns it now as then, they have likely paid it off by now (or are near to doing so). So they are not only getting more cash-flow from this now 35 year old property than before due to greatly increased rents, but also because they may no longer have a mortgage to pay from those rents.

What is better than Rental Real Estate Investing!? You end up with what is essentially a FREE house - because the tenants pay all the bills and expenses. You get cash-flow for life. And that cash-flow greatly increases over time due to the mortgage pay-down / payoff; and as result of annually increasing rents. Not to mention the incredible tax benefits and the likelihood that the property increased in value despite having gotten older. And did I mention the tax benefits? You get to depreciate the value on paper as it actually appreciates in real value... Wow - Seems like you'd go to jail for that, but its allowed!

Ep. #43 - Optimism Can Be Profitable

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Are you an optimist or a pessimist? For you, does every cloud have a silver lining; or is the sky always falling? Did you know that your answer to that question could go a long way to determining your eventual wealth (or lack thereof)?

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Intro...

Welcome to Episode #43 - Optimism Can Be Profitable

So over the prior few weeks, I've been speaking a lot about the New Year (2020); and the new decade out to 2030. But for this episode, I'd like to go BACK. Let's go back in time to the year 2010. What was your outlook back then? What did you think would be the happenings and outcome of that decade from 2010 to 2020.

We had just suffered a recession - The Great Recession (which I spoke about in last week's episode). Unemployment was high. Homes were being foreclosed upon on just about every street in the country. There were oil spills and terrorist bombings and continuation of long running wars - plus all sorts of natural disasters. I could go on and on naming all the bad things that were in play in and around 2010 and the years after - not the least of which was the political division in the country that is even worse now than back then - plus all the ever-present issues of discrimination, racism, sexism, hatted, violence, murders and all sorts of crime and injustice.

Anyone could have been forgiven for developing a negative / pessimistic outlook on what the future had in store. Just two years later in 2012 we got the television show: Dooms Day Preppers - which was just a reflection of a popular attitude that had risen in the years before - of... "I don't know what exactly, but something is about to wipe us out - so I'm getting ready for the end (of the world / of the earth, the country, the economic system, law and order, humanity itself) - whatever... I noticed that other day that Dooms Day Preppers is now available on Netflix - If you're still thinking the end is near - go for it!

Hey, I heard on the news the other day that a deadly virus is feared to have infected travelers from a City in China - so now 3 airports here are screening passengers on those flights. So could this be the Zombie Apocalypse virus. Or maybe its the Planet of the Apes virus. Pandemics have happened before, so it certainly could happen again - but my money is still on Alien Invasion - hey, I'm a sci-fi geek.

But even if you're not that pessimistic and you weren't a Dooms Day Prepper (back then or now) - in 2010 optimism of the coming future (the 10 years that we just lived through) was generally lacking in most people. And if it wasn't bad enough already, it got even worse at the end of 2016 / the start of 2017 when we got our current president... Even his supporters cringe wondering what he's going to say or Tweet next. So back then pessimism ruled supreme in the minds and hearts of many (if not most).

So it could easily be said and rationalized... Why invest in Real Estate? - "It could crash again, even worse this time". Why invest in the Stock Market? - "You know, what goes up, must come down". Why start a business? - "Most businesses fail anyway". Why go to school? - "You'll just rack up a bunch of debt". Why do anything that's planting seeds for such an uncertain future?

Now on the other hand - what if you had a more optimistic outlook of the future? What if you had started buying Real Estate back in 2010... How many properties would you have today?

What if you had bought Facebook stock at or near after its IPO in 2012? What if you had bought pretty much ANY stock in 2010 or thereabouts? Now I certainly prefer Rental Real Estate over Stocks any-day (you make money like 5 different ways / maybe 6 versus 1 or possibly 2 with dividends from Stocks). But my point is that if you had invested heavily in either (assuming the right properties and the right stocks) - you'd have made a killing over the prior decade.

Now yes, the RIGHT properties and the RIGHT stocks is a pretty big caveat. But that concern is handled with education and experience, which you could have easily gotten if that had been your determination. So if it had been your focus back in 2010, you could be sitting on a mountain of Real Estate / Stocks or Cash here 10 years later in 2020. That is, IF you had been optimistic enough about the future to take that risk and put in the required time and effort to learn HOW to invest in Real Estate or Stocks or whatever.

I might have mentioned it in Episode #20 with guest (Stock Day-Trader) Chad Kastel - that before I made the decision to move forward with Rental Real Estate Investing at the start of 2015 - at the end of 2014, I was considering taking a class on Stock Day-Trading. It was an orientation class to give details on if you then wanted to sign up for the full paid class - so I was on the path to learning Stock Investing. But I changed my mind just days before the class, cancelled it - and started educating myself on Real Estate. And then once I read the book Rich Dad Poor Dad - I never looked back.

People who had an optimistic outlook on the future and proceeded to educate themselves on investing (because they didn't think the future wasn't worth investing in) - those are the people who killed it over the prior decade. Being optimistic about the future became very profitable for those people.

Now since my focus is Rental Real Estate Investing (not Stocks) - think about the person who has been buying Rental Properties steadily (2, 3 or 4 per year) since 2010. This person may now have as many as 40+ Rental Units - that were bought during what might be the best Real Estate buying opportunity of our lifetimes. You don't buy Rental Real Estate if you're expecting the Zombie Apocalypse at any moment - or if you otherwise don't think the Earth / World, Country or Humanity is going to continue in a way that's beneficial to your investment.

You've got to have a certain amount of optimism to be an Investor in general, but especially so to be a Rental Real Estate Investor - as Real Estate is not a get rich quick endeavor. You'll get rich! But it might take a decade or two. And for those who began investing in Real Estate back in 2010, they had what might be realized someday as the best ever decade for Rental Real Estate Investing - with the added benefit of all-time low interest rates.

Properties were CHEAP and money was almost FREE... But as I mentioned in last week's episode - many of us were late to the party. So how was your decade? And are you optimistic about the one to come? If not, you may not only need to change your mindset - but also your associations.

I've mentioned before the Jim Rohn quote - "You're The Average Of The Five People You Spend The Most Time With". For you, are those 5 people optimistic or pessimistic about life - the future? I'd be willing to bet, they're whatever YOU are.

Because if they're generally optimistic people, they wouldn't want you around if you're a pessimist who always has a cloud handy to rain on their parade. And then on the other side, if they're generally a pessimistic bunch, would they want you around shining the light of optimism all over their gloom and doom fest? No - In either case, it doesn't fit. "Birds of a feather flock together".

So if you're not already, you'll not only need to change your mindset over to one of optimism and generally optimistic thinking - but also you'll need to change your associations, so that the people around you bring you along with them on their optimistic journey into the decade to come.

If you spend any time around me, you'll eventually hear me say something like "Everything always works out for me..." - and that's because it does! Any problem that I encounter, a solution will be found - and in some cases, provided - almost as if divine. I'm blessed. And as such, I'm optimistic about most things, both in my control and not. But there was a time that I was only optimistic about those things over which I had full control - because I only trusted ME.

But that's a very limiting existence, because I can't do everything myself. You've got to depend on other people - which based on your religious outlook, includes God (or the Universe if you prefer). And the Universe provides for those who provide for themselves.

So get something in works for yourself this year. Be optimistic about its success. And as much as it depends upon YOU, commit to doing the needful - daily, weekly, monthly - to make it happen. Leverage other people to make it a reality. Remove from your life (or greatly limit access) those negative people who are more than happy to tell you what you CAN'T do and why something WON'T work.

In a coming episode, I'll speak more about limiting negative association - and surrounding yourself with positive people. Because from this day forward, you're an optimist and you've got no time and no ear for those who are not also optimistic about the future. You can't let 2030 arrive and look back over all the missed opportunities. Make this your decade! I know its going to be mine - because everything always works out for me. And there's nothing that I can't do... How about you?

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Outro...

Disclaimer

So I'm a sci-fi geek, which means I believe (even hope) that life exists on other planets. They might be on their way here right now to end life on this planet as we know it. That could mean to wipe us out, and steal our planet's resources; or even to make us their food ("To Serve Man") style - as is the typical sci-fi result of "Alien Invasion". Or a more optimistic take on it, could be that they end disease and even aging itself - share their knowledge, technology - and take us to the stars. I say all of this because...

This 43rd Episode of the... and Landlord Podcast is about Optimism versus Pessimism - and how a person with an Optimistic outlook over the past decade (since 2010) had a much better chance of profiting financially than did someone with a Pessimistic eye towards the future.

Here I go into some of the many reasons a person might have legitimately had for being a Pessimist. But how resisting that tendency could have been very profitable - especially in Rental Real Estate Investing, or even Stocks. I explain how I'm an optimist in most things... I'm not expecting the Zombie Apocalypse. I'm not expecting an Alien Invasion. Not looking for a meteor to strike. Don't expect the government to fall or the economic system to crash (again) - at least not anytime soon.

So I am proceeding with an Optimistic outlook towards the future. And as such, I'm making investments NOW, that I fully expect all will still be around (including myself) to benefit from in that future. And I make the point that a person who had that outlook in 2010, and acted accordingly - likely had a great decade. Are you an Optimist or a Pessimist? What do you expect the next decade to hold for you? Because Optimism can be Profitable.

Ep. #42 - Are You Late To The Party?

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Singing - "The party's over..." - Na, y'all aint ready for my amazing singing voice. I considered becoming a world famous singer, but decided to get into Real Estate instead. But do you think the party IS over when it comes to getting a great deal on Rental Real Estate?

We're now nearing the 3rd week of 2020, and it could certainly be argued that sometime between 2010 to 2015 (or so), was the best time ever to buy Rental Real Estate. So now that we're into 2020, are you 5 to 10 years late to the party?

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Intro...

Welcome to Episode #42 - Are You Late To The Party?

Oh, and let me know what you thought of my singing... If enough people request it, I'll give you a full song.

Ok, so no doubt my best deals in Rental Real Estate Investing were back when I started in 2015 through the end of 2018. In comparison to that 3 year stretch, 2019 sucked as it relates to finding amazing deals on Rental Properties. Note however that I said in comparison. If taken on its own (without looking at things through my 2015 glasses) - then 2019 was a great year. Its all just really a matter of prospective.

And I'm sure that from the prospective of someone who started buying in 2010 to 2015, their comparison of then to now certainly has them with an even worse opinion of 2019 - in comparison. I know I certainly wish I had started buying in 2012 - which was likely the best year to snag amazing deals. I think the party really got started in 2012, as the crash was 2008 / 2009 and the dust was just starting to settle in 2010 & 2011.

Plus, whenever there's an economic crash, the first thing to go is the ability to get a loan. So there were all these cheap properties (foreclosures all around) - yet you couldn't get a loan to buy any of them. So it was happy times if you had the cash... But if not, the party hadn't yet started for you.

But after a couple more years had passed... Around 2012 the right balance had begun to emerge of cheap properties and foreclosures everywhere - and there was starting to be the ability to actually get a loan. The party had started - and people where making a killing in single family rentals / flips, small multi-family - and a ton of money was especially being made in the larger multi-family space.

Unfortunately for me, I was in the process of buying out my former business partner of my Web Hosting business. Oh, checkout ViUX.com (V-I-U-X.com) if you need a Domain Name, Web Hosting or other Website related services. So I now own 100% of ViUX since 2014, but it took 3 years of payments to get there again. And during those years, I don't even think Rental Real Estate Investing registered on my radar as anything I could do - despite properties being at an all-time low. I didn't even see them at the time, as you often can't see what you're not looking for.

Case in point - Did you buy stock in Apple, Google, Facebook, Netflix, Amazon or even Microsoft back in the day. You lived right through those stock rises and the signs were there speaking to their likely success - but you didn't jump in. Why? You weren't looking.

So I honestly don't know what the hell I was doing during those 3 years of my buyout from 2011 to 2013. How I could have missed what could have been the greatest Real Estate buying opportunity of my lifetime - is a complete mystery to me. I know what the problem was... Because I didn't have lots of money sitting in the bank, I never even considered that buying Real Estate was a possibility for me then. If only I had it to do over again - but unfortunately my time machine is broken. If it wasn't, not only would I go back and buy a ton of Real Estate - I would buy all those stocks I mentioned (and many more).

But then I took 2014 to get my credit and finances in order; plus I continued working to improve ViUX - now that I owned 100% of it again. So it was at the end of 2014 / the start of 2015 that I finally set my mind to Real Estate.

So the party began for me in 2015. And you could say that I was late to that party. Because it began for others earlier - like I said, around 2012 by which time it was actually possible to get a loan to buy all those cheap properties that were everywhere. And yes, if you had cash and/or the perfect credit needed then to get a loan, the party may have started for you earlier - maybe as early as 2010.

I try not to lament the past (even though I end up doing it a LOT) - so I'll be happy that I got to the party in 2015. As I mentioned in prior episodes (even last week) - I bought 2 properties in 2015. I bought 2 more in 2016; and then added 4 more units in 2017 - ending 2017 with 8 rental units. Then I added 7 more units in 2018, ending that year with 15, but my goal was 16 - so I missed it by 1 unit.

I was trying to double my number of doors / units each year, so I needed to end 2019 with 32 doors to maintain the pace of my original goal. I won't keep you in suspense - I missed that goal also. But I tried! I was bidding on all sorts of larger deals, including the one I wanted most - a 38 unit complex in Thomasville a little less than 2 hours from all my other properties here in Durham, North Carolina. But by the time 2019 had rolled around, prices had climbed (often to ridiculous levels) - and I kept getting outbid. Was the party over? Did the party end in 2019?

So the years of 2015 through 2018 were great for me - the party was in full effect. And trying (unsuccessfully) to NOT lament the past - if I knew then what I know now (famous words), I would have bought at least 3 times the number of properties as I did. Back then I didn't know - and was just learning about: Lease-Options; Seller Financing; Short Sales; Private Lenders; Hard Money; and on... But is the party now over even with this knowledge and additional funding resources? Did these things stop working in 2019? Are they now dead here in 2020?

The short answer to those questions is NO! Now there is a longer answer that begins with IT DEPENDS... Because while the party may not be over even here in 2020 - we've certainly past the point where you can damn near throw a rock and hit a property that can be bought and rehabbed for less than 70% of it's ARV (After Repair or Rehab Value). So while the party isn't over - what is over is "Amateur Hour".

So that longer answer to the question of "is the party over" is... IT DEPENDS - on if you're willing to get the education; do the work; and put in place the people and systems as needed to find and take down the deals that ARE still out there. Because they're are deals still out there - but you're no longer likely to find them by throwing rocks - as you could a few years ago.

It will now take more than just the MLS to find deals. Even direct mail alone is no longer sufficient. And people have long since figured out that someone without enough money to do legitimate marketing (so they're break the law by placing some form of 'We Buy Houses" signs everywhere) - likely doesn't have any CASH to "Buy Your House Fast for Cash" - despite what the cheap / illegal sign says.

You think people are climbing over each other to call the number on a sign of someone who has already shown a propensity to cut corners (and even break laws) - when it comes to what may be the most important financial transaction of their life!? I'd say NO.

So the party is NOT over. But (THANKFULLY) the amateurs are being pushed out of the business. And I say "Good Riddance" - because it doesn't take much to become a professional - so why should I shed a tier for someone who's not willing to put in the work to learn the business from the ground up (as I did)!? As YOU are doing!

So I commend you for listening to this and other shows like it. I commend you for reading the books like those I've posted at: www.andlandlord.com/books/ - and if you're going to read or listen to these books anyway, please help offset the cost of producing this show, by getting them from this page on our website - as we get a little affiliate kickback from Amazon.

Your success with Rental Real Estate Investing in 2020 and beyond (keeping the party going) - will center on your work to educate yourself to the business; and how to find the deals that ARE still out there; and learning how to recognize a deal when you see one.

That recognition will come from walking as many properties as you can and estimating the rehab required on each one. Then running the numbers on all such properties to see if you've really got a deal (or not) - or if there's any possibility to MAKE a deal where one might not otherwise be readily apparent.

For example, could you add square footage (out), or even pop the top and go up? Can you create additional bedrooms within the existing square footage. Can you go with a short-term rental model or extended stay - for additional income? Is there a student rental play or maybe residential assisted living? Knocking down the existing property and build new - maybe even multi-family? I could go on naming many different methods of making a profitable deal where there might not otherwise have been one. But you're certainly not going to be able to do that, if you've not educated yourself as to the process and options.

So the party IS over for those who want to just throw a rock and hit a deal, or just push the proverbial "easy button". But for those who are willing to get the education and do the work - the party's just getting started. There will be ups and downs in the Rental Real Estate Business (like waves), but once you learn how to surf those waves - that's when its just fun! Go get it...

Outro...

Disclaimer

People have been getting rich on Real Estate for decades - really going back hundreds and even thousands of years (before the current crop of humans on this planet even existed). But the economic crash of 2008 / 2009 might just have created the best Real Estate buying opportunity of our lifetimes.

Now as humans we tend to suffer from "recency bias" - thinking that what we've experienced is the best (or worst) that anyone in history has ever dealt with. True or not - in this episode of the [... and Landlord!] Rental Real Estate Investing Podcast, I'm asking the question - "Are You Late To The Party?"

"The Party" I'm speaking of is the situation that followed the "Great Recession" of 2008 / 2009, where a year or few later (sometime between 2010 to 2012) - in many (if not most) locations in the country, it was possible to buy Real Estate for LESS than its replacement cost. In other words, you could often buy a property for less than it would (or did) cost to build that same property new. That's a situation (a party) that doesn't happen every day.

So in this [... and Landlord!] Podcast episode, I mention my envy of those who were able to jump on those deals right at the start of the party (around 2010 to 2012). And I lament the past a bit (something I try NOT to do), in that I didn't get to the party until 2015 - but still in time to grab some amazing deals that are paying off big-time for me today. And I start the episode by asking (singing in fact) "is the party over?"

If you're just seeking to get started in Rental Real Estate Investing here in 2020 - are you 5 to 10 years late to the party? Is the party over? In fact, did the party end in 2019?

So just this past weekend, I submitted an offer on behalf of one of my Investor clients (acting as their Realtor). And even though we were several thousand over the listed price on a distressed Townhouse in Raleigh (NC) - the seller went with another offer. I'm told by the listed agent that there were over 70 showings in only 4 days and at least 20 offers submitted (including mine on behalf of my client).

So you can see from this one anecdotal example, that Real Estate is HOT right now, and competition for even highly distressed properties is high. From 2015 to 2018, I bought several properties just like this one - after they had sat on market for months in many cases. Now they go in days and for tens of thousands more than back then. So if "the party" is getting an amazing deal on a property - its not far off to ask "are you late to the party" or even "is the party over?"

Listen to this episode of the... and Landlord Podcast to hear my answer to these questions... And It's NOT "YES!" - What is over, is "Armature Hour". You're going to need more than the MLS or Zillow to find deals in 2020.

Ep. #41 - 2020 Vision

Show Episode Transcript

Happy New Year! This is the first [... and Landlord!] Podcast episode of the year! And I've got 20/20 Vision... And that's not ONLY because I had a form of Lasek Eye Surgery (called PRK) years ago. I'm looking into the future as to what goals I'm setting and achievements I'm targeting for 2020... How about you and yours? Spending a little time goal setting is NOT a waste of time. And what better time to do this than the start of both a new year AND a new decade!?

Intro...

Welcome to Episode #41 - 2020 Vision

It's 2020! So what's your 2020 Vision? What do you have set for this year as to the goals you're setting and achievements you're targeting?

It's hard to accomplish something by accident, so if you set no goals and put no plan in place towards an achievement - then you're likely to be yelling "Happy New Year" for 2021, with nothing significant to show for 2020. So now's the time to put something in place for 2020 that you can be proud of having achieved by the end of the year.

And beyond that - you'll find no better time than the start of a new decade, than to set some goals and put plans into place for what you'll seek to achieve over the next 3, 5 and 10 years. So not just what will you accomplish here in 2020 - but what will life look like for you in 2023, 2025 and 10 years from now in 2030?

You need only to look over the things that changed in the world from 2010 to 2020 to know that it will be a greatly different world (yet again) by 2030. How will things look for you by then? So let's set some goals... Let's make some plans!

“People tend to overestimate what can be done in one year and to underestimate what can be done in five or ten years."

This quote (of disputed origin) speaks to the problem for many with goal setting and making plans. Don't overestimate what you can do in 2020... Don't set your goals for 2020 (your short-term goals) at such a high level that they're completely out of sight and unrealistic as to what you can reasonably accomplish in 1 year. But at the same time, when you're looking out to 2023, 2025, 2030... Don't underestimate what you can get done in 3, 5 or 10 years.

For myself - I've mentioned in prior episodes that I started my Rental Real Estate Investing journey back in 2015 - and my goal for that year was to buy two Rental Properties. I did that!

Might you be able to set a goal for yourself to buy 1 or 2 Rental Properties this year? Or maybe you have the means to buy 3 or 4 this year (1 per quarter). But maybe you wouldn't want to set a goal to buy 12 properties this year - as a property a month might be a bit unrealistic for the average person. Don't set yourself up for failure.

You see... If you know that you can buy 1 property, then set your goal for 2020 at 2 or 3. Stretch yourself a bit, but keep it reasonable - keep it within the realm of possibility. Then if you miss it, it won't be by much - and you can adjust and move forward in the next year. I hit my goals for 2015, 2016, and 2017.

For 2015, I wanted to buy 2 properties. Did it! For 2016 I wanted to double that number - so just 2 more (easy). Did it! I stretched it a bit for 2017 to double my current number of 4 units, so I had to get 4 more in 2017 for a total of 8. Did it! And for 2018 - I again wanted to double my number of units from the prior years, going from 8 to 16. But I missed it by 1, ending 2018 with 15 rental units.

But hey - no problem... I missed it actually because I stopped following my plan. I began to switch my focus to trying to acquire larger deals. When I could have been trying to acquire that 16th single family house (which I've since gotten) - Instead, I was bidding at auctions on larger deals, like a 38 unit apartment complex in Thomasville (NC) that went for something like $1.6M.

I didn't get any of the larger deals in 2019 (always outbid), but I learned a lot on that front - that I'm certain will allow me to take down one of those big deals soon. And when I get that first large deal - I may have to re-adjust my goals and plans for where I'm seeking to be by 2023, 2025 and way out to 2030. Health and God willing - as far as it depends upon ME, I'm going to LOVE the coming years and this next decade. Everything is set... My goals are ambitious - but not unrealistic and certainly within my grasp.

So how about you? As the quote says...

“People tend to overestimate what can be done in one year and to underestimate what can be done in five or ten years."

So not only will you be setting realistic goals and putting a workable plan in place for your 2020 Vision. But you'll also extend that Vision out a few years to 2023, and a couple more to 2025, and then your Grand Vision for the entire decade out to 2030. By 2030 will you be the next Donald Trump? Oh, never-mind - He's no longer an effective example of a successful Real Estate Investor (too much political baggage) - forget I mentioned him.

But you know what I mean - will you control the world by 2030. Hey, I try not to put ceilings on what I can do - no limits. But my 2020 Vision is Great and my 2030 Vision is Grand. I'm not ready to talk about it just yet - but 2020 will see my realization of at least one of my life long dreams!

So for YOU - do you have rental properties already - and you're seeking to get more? Or are you trying to get your first? Either way, I've made the offer before and had the pleasure of speaking with several people, so I'll say again - reach out to me! I'd love to have a brief conversation with anyone for whom I may be of aid. Visit: andlandlord.com/contact/ - and either submit the contact form on that page; send an email to the address on that page (info@bluechariot.com); or call the number on that page: 844-USA-BLUE - and leave a message.

Either way, we'll schedule a 30 minute call for a mutually beneficial time - and discuss how we can get your Rental Real Estate Investing goals accomplished. And even if I don't know the answer or have any insight into your particular challenge or concern - maybe I can direct you to someone who may; or to a helpful resource on the matter.

So what's your 2020 Vision? Let's set some goals together. Some quotes on the matter...

“If you want to be happy, set a goal that commands your thoughts, liberates your energy and inspires your hopes.” —Andrew Carnegie

Another...

“Our goals can only be reached through a vehicle of a plan, in which we must fervently believe, and upon which we must vigorously act. There is no other route to success.” — Pablo Picasso

So I assume these are the people to whom these quotes are properly attributed; however, even if not - they speak well to the why we need to set goals and make plans. So if you've not already, get in contact with me - and set your 2020 Vision.

Outro...

Disclaimer

Yea, I've got 2020 Vision - in more than one way. So in this Episode #40 (the first of 2020) of the [... and Landlord!] Rental Real Estate Investing Podcast - I'm engaging in the New Year / New Decade pastime that pretty much everyone else is as well... Goal Setting!

What's your 2020 Vision? For that matter, what's your Vision of 2023, 2025 and all the way out to the end of this / the next decade - 2030!? That's what we discuss in this episode of the... and Landlord Podcast. We'll be setting grand goals and making plans to achieve them.

If you've already got a Rental Property (or few); or if you're trying to get your first - getting from where you are to where you seek to be will be aided greatly by a goal directed by a plan. So let's get to it and kill-it not only in 2020 but for the decade to come all the way out to 2030 (and beyond)!