3 Insider Tips: Buying the Perfect Rental Property!

Please note that this post is an excerpt of the webinar hosted by our sister company, The Landlord Code, where our co-founders coach DIY landlords how to avoid problem tenants and maximize rental profitability. Get access to more training like this in our (free!) private Facebook group HERE.

This is Episode Two of our Rental Rescue Show, Summer Series Landlord 101, taking you back to basics. Last week, we covered how to set up your rental for maximum profitability. Next week we have special guest Richard Hart, he is the man covering LLCs. It’s a juicy topic, but we have a lot of questions about that, including we personally have questions about that about is setting your rental up with an LLC.

Is that the best way to help protect you or does it just make it more complicated and what are some things to consider on that? So that’s nice. Well, we know, we know it’s going to be better for you. We also know it’s going to be more complicated, but good thing, Richard, heart’s going to be in the house because he is going to deliver everything and make it super simple for you to understand and realize.

If you’re thinking about buying an investment property, but what if you can go into the investment property situation, knowing that you’re making a right, the right decision, what do you think that would be possible for you? Do you think you’d make better decisions? Do you think that you’d have a more clear mindset about what you want to do next? Do you think you’d ask better questions? Yes. I mean, one of the biggest problems we see and we see this, not only from clients and friends who we speak with, but we see it in the landlord forums out there. We see it in the bigger pockets forums. I mean, there are a gazillion tools out there dedicated to helping landlords or would be landlords, figure out how to acquire their first property. And so much of this teaching centers around chess, trying to get people to step that first foot over the Line and the product we see for a lot of first time investors is that they just get caught up in analysis paralysis. They’re so focused on making sure they make the right decision that they miss all the other things. It’s like, they put the blinders on and they’re like, they’re looking for once one specific thing. And in that whole timeframe, they’re missing all the good things that are passing by them left and right.

If you’re so focused on looking for the one thing you’re going to miss everything else, that could be great opportunities for you. So we’re going to give you some different advice today. There are a million calculators out there on how to find the rent, the right deal. There are a million different courses you can take or forums. We are going to give you three very simple tips based on our insider’s knowledge on our 15 years on the business and are over $1 billion worth of rental serve with a less than 1% eviction rate, we are going to give you our simple tips for actually spotting a rental so that you can move forward with the confidence. So you can feel like you have the answers to the question and we’re going to help you cut through all that noise, whether you’re a seasoned investor. And you’re thinking about maybe pulling some equity out and finding another deal, whether you’re sitting on the sidelines, waiting for the market to shift or whether you’re ready to go right now,

Number one. When you are looking to spot a profitable rental is you need to know the demographic of the area where you are buying it. So it may sound like a simple thing. But what we’ve found over the years is a lot of investors and a lot of realtors maybe who are trying to advise them, operate with assumptions without actually Knowing what is that? What is it about assumptions when you, when you assume something, you make an ass out of you and me, right? Both people. So think Of it this way. And we use this to explain to clients sometimes if you think of the rental pool as a pie, think of it as a caloris, what are we in season or peach pie with some of something I feel like we’re just not stay on topic right now. You hungry. I’ll Always have a peach pie.

Gluten-free sugar-free obviously peach pie is your rental pool. Right? And do you want to be drawing from, let’s say half of this pie where this is your rental pool, or do you want to be having that like one little slice and that’s the rental pool you’re speaking to now, you obviously want the largest piece of the pie as possible because the more people you can speak to with your rental, the more people who your rental appeals to the shorter, your time on market will be the larger, the pressure of, of desirability of your property will be, which will push your price up. And those are two of the biggest things that these calculators, when you’re looking at these deal analysis calculators, aren’t telling you, they’re not telling you about the real life decision-making and factors that can influence your rent.

So you want to know the demographics, right? So if you’re renting in an area that may be school district driven, that may have lots of families, you know, around that might be a family centric community. So you might want, you want to target homes and properties that are going to cater to families, maybe three twos, four twos, yard, close proximity to schools, that kind of thing. Flat level yard. Right? I don’t so sorry. Back to identifying the demographic before we jump into number two, you need to know like who the people are, who make up the majority of the people, right? So is it, is this primarily, are you in like a Metro area, right? Or is this driving to couples and singles? Are you in a military area where you know that you’ve got people moving in and out a lot, are you in a vacation rental area where maybe it’s more of like a retiree community? Like yeah. You need to know who the majority of your demographic is. And this is not to speak in terms of like fair housing discrimination.

This is really just like a number same who are the majority? Not all, but who are the majority of the renters in this area that you’re considering? Exactly. So just jumping into 0.2 0.2 is knowing what that demographic one. So going back to what I was saying before is like, if you’re in, if you’re targeting a home in an area that has lots of schools that is sort of family centric, then you are going to want to target something that works for those types of people. Conversely, if you were living andworking in an area that’s maybe primarily occupied by students, maybe there’s a college area. My mom lives up in Bellingham, Washington, huge college community, their friends, own investment properties. And they rent those properties for a lot of money really fast every year.

They’re almost recession proof because of just the demographic of people that are looking to rent there. So things to keep in mind like that when you’re targeting the presell property or the investment property that you’re going to be purchasing. Right. So if like it’s a Metro area, right. And you’re, you’re near like a downtown and access to restaurants and coffee shops is really important. Then that’s something that you’re wanting, you’re going to want to consider when you’re picking which rental you’re going to write an offer. Yeah. So if you think about it this way, you’re not going to want to write an offer on a S on a house that’s in a college area because those people are nightly not going to pay the amount of money that you want for your rental property, for your house, unless you’re setting it up to be student housing, in which case, then you would be maximizing. Exactly. So I’ll, I’ll share a story about a client. We had, I believe this was in mill valley. They purchased a home. That was, Yeah. So they, they had this house, great location, awesome location, walking distance. So a lot of schools walking distance to stores, the only problem with this house was that you had to get from the, from the street to the front door, 90 steps, 9 0 90 steps. So what this did for them is that immediate a little bit harder for them to rent their property at the price point that comparable properties were renting for in that area.

So when they bought this house, they thought, oh, I’d be able to rent it for this amount of money because of the location, not taking into consideration that lots of families live in this area. And that may be 90 steps from street to S to front door. Wouldn’t it be ideal? So what ended up happening is that they’ve had to reduce their price on the rental listing rate on theirPR on the rental property. And it does rent pretty well. And Frank, funny enough, the people who’ve rented this property from us have all been people who are either been pregnant or have had kids, but they’re not paying top dollar for that area. And if you followed us at all for any length of time, you know that we preach that the number one secret ROI killer for any investor is vacancy, vacancy, vacancy, right? So when you’re buying a property, do you want to buy the property that everybody, that this majority of this demographic renting in your area, and it’s exactly the type of property that they want. Are you going to want to buy that type of property? Where do you think it would move faster or slower on the market?

Let me think about that, that type of property. If you’re matching with that, it’s probably going to move faster, right? Versus if you buy a property that you love for personal reasons, unless you’re planning on moving into it, it’s going to take, if it’s against the grain of what that, that demographic is looking for, it’s going to take it longer to rent and you’re not going to be able to get as much money. So if you’re buying for max ROI for max profits, if you want that deal, It’s max profits, max ROI, The deal. And you wantthat unicorn of a property where you look at the other landlord, you’re like, oh my gosh, how is his rental always rented? How was that guy buying a new car every other year? He, well, he’s figured out the plan are you guys seeing this? You want to make sure that you’re targeting the property. That’s going to rent the fastest and for the most money year after year, sort of recession proofing, which is a great segue into, well, Hey, how do I find this retro party? What is the bet? What’s the resource that I can use.

I know Darcy and Christopher look amazing on camera and maybe they can give me some ideas, but what’s the local resource that we can use to help us identify the right investment property for us. And this Is probably the easiest tip we’re going to give you today. But it’s the most important one. And it’s the most often overlooked step in a rental or an investor, or would be investors journey to find the right deal and find the right one. And if you’re, if you’re anything like me, you want easy because once it gets complicated, I gloss over. So the tip that we’re going to give you right now is drum roll contact, a local reputable property management company. And here’s why property managers are the actual people who are in the trenches.

They are in the day-to-day of this investment property that you’re going to be buying that you’re going to need to rent. These are the people who are actually talking to all the renters and not just like a handful of renters. Like if you’re a DIY landlord, you’re renting your property yourself. Maybe you’ve been doing it for years. Sure. You, you do have experience, but you do not have the 100 X level of experience that a great property management company is going to have. And you may be working with a realtor to identify the property to buy, right? And they may tell you, we can help you buy a rental. And this is true, but realtors specialize in buying and selling and they can help you identify the right price to pay for this rental.

Whether you have to overbid or underbid, they will take you through the sales process and be phenomenal. Salespeople. Realtors are not property managers. And to take advice from a realtor, unless they literally are like, Dave, what do you got Nightline? Right? When you have the night job job, That’s not the word Josie’s trying to say. They’re moving. They’re moonlighting, moonlighting as property managers. Thank you very much. Thank you very much. Shout out to the landlord co panelists to drop that on us moonlighting and this, they, they, their Moulin is PR I was the property manager. They’re not going to know. And here’s, what’s great about property managers is that they are not only dealing with the prospective tenants out there, but they’re also inside of the market. They know their market. And so they can tell you with accuracy, how much that property will likely ran for in the market. And also based on their experience, how long it might take, even in a tough market. So you can make an educated, well thought out investment decision on your rental property. Now the real estate, agent’s going to get you the best price. The property managers is going to show you how to make that money work, Right? So even if you’re a DIY landlord, right, even if you’re not trying to work with a property management company, you can still call and ask for advice. And honestly, if you have no intent of working with that PM ever, ever, you could offer to just pay them, you know, give them a couple hundred bucks for a consultation or work with a realtor who has a tight relationship with a property manager. So we have a lot of relationships locally with basically the top realtors. They all just call us because they’re going to give us the rentals. And we know we may not get that individual piece, but whenever they do have a client looking to rent, they call us. They don’t even want a referral fee. They just want us to take great care of their clients. And likewise, when they call us with a question, we’re Johnny the spot with the answer. So we have this symbiotic relationship, Right? And so, so I was just a personal story.

I get this call several times a week, Hey, my client’s interested in buying this property. They’re not going to move into it for a few years or it’s going to be a rental property. We think it’s going to rent for X amount of dollars. What are your thoughts? And they give it, show it to me. I’ll either help them actually get this deal done, or I’ve taught their, a prospective client out of this property because when they had their mind, the money that they were going to spend on it alone, all that they were going to come up so negative that it was going to be a hardship for them if they bought it. So do yourself a favor, ask the right questions, ask the property manager.

So they’re going to give you the right answers. You don’t, what You don’t want to do is rely on something like Zillow for your Zestimate, or there even some Great light analysis tools out there That I’d like you to do, enter it in. They’ll give you the average price point of the rental. Like fantastic. If what you’re looking for is an average. You don’t want an average. You want the real numbers that this property is going to rent for time and time again. And really like the net net of the question you were trying to get answered is is this a highly desirable rental in a highly desirable part of town for the bulk of the demographic who make up the top tier of renters in this area, if you can get that answer and you get the right answer, there is no way that you were getting a bad deal and there is no way that you are any kind Of success. Right? Right, exactly. So you’ll be able to make it rain. Are you guys seeing how this works? It’s not that complicated. You just need to ask the right questions, target the right properties and find the right resource to answer those questions. Right? So we’re Spending a lot of time in our summer series. This is our back-to-basics landlord. One-on-one whether you’re a, would be landlord thinking about buying your first property, or you’re an experienced landlord. Who’s maybe felt a little bit of pain is starting to think, you know, maybe there’s some better answers out there. We’re spending a lot of time this summer talking about getting the right answers. Because when we look back over the years and look at all the pain, we’ve seen DIY landlords face, and there is a lot, a lot of it comes down to not having access to the right information, not knowing what questions to ask, not even knowing enough to know that they’re asking the wrong question. And then you get all this pain sometimes to the tune of tens of thousands of dollars. When you take one misstep and the tenant sues you and you did the wrong thing, and it all could have been solved. If you just ask the right questions and done your diligence, you know, we’re going back to basis because we want everybody to make more money with their rentals. We don’t want them to have less risk and ultimately have what more fun? The F the F word, the fun word, fun. We want you to have effort all summer long. Fun, fun, fun. So We’re going to take some Q and a, we know a lot of you sent in right?

We’re going to answer a few of those quite have those centered around eviction questions this week. I guess that was just the theme of the right ends. But before we get to that, We’ve got some exciting news. Imagine This you’re a landlord D and we weren’t treating them like A business, just to put it into perspective for you guys. We made a mistake that literally, first of all, we were like pulling our hair out. We’re arguing. We wanted a burn. Theproblem we wanted to burn our management company to the ground at one point was like crazy pregnant. She was really upset and didn’t want to want to be part of it. And then we got hit with a hundred thousand dollar penalty.

So through a mistake that we made, and that actually spawn, it was that was the catalyst for us, changing everything, getting systems in place. We kept the company going and everything got better and more profitable. And we want that for you. We’re super excited. Those of you who’ve been following us, you know, we’ve been working on our signature course, which is going to take landlords from the beginning of not knowing what to ask through the landlord journey all the way to the end, to this landlord, feet in the sand live in easy pina colada in one hand, cause you have the systems to know the answers and you know where to go to get the right answer. If you don’t have the answer.

So we are super excited that we are going to next week, make available for the first time a pre-sale beta launch version of our course. And we’re only releasing it to those of you who are here in our network. So you may have met us through Facebook or through, through our local local networks. Some of you meet us on just referrals from zoom or people passing on the information. However, you have come to being invited to the show and to watch us today, you’re on the list or you’re on the invite list and we’re going to be showing you exactly what we’ve got up our sleeve next week. Yeah. And it’s going to be really great. It’s super easy to consume and we’ve made the information fun, fun to listen to and very informative. Yeah. So you’ll want to tune in, not only to hear about Richard, the man, the man CPA, LLC questions next week, we’ve got a fantastic lineup this summer coming for you. But if you want to hear about the beta launch, Sheila, can you drop the link? If you go to the landlord code.com, that’s the landlord code.com you can get on the wait list and everyone on the wait list is getting first shot.

We’re going to have a limited number of seats to go through a live it’s called a cohort launch where we will be taking you through the 10 week course. And we will be meeting once a week to go over the week’s content. So we will make that available just to a limited number of people here in our network. That’s going to be the beta launch, and then we’re going live, live this fall in September, but we’re going to give you guys here a first stab at it at a crazy low price that will never be seen again. So we’ll talk more about that next week.