Latest / LeadingLane Podcast / How to Build a Rental Portfolio One Property at a Time | LeadingLane Podcast | Ep 104
Transcript
- Steven L. Burch (00:00) Welcome to the leading lane podcast. Today I want to ask questions and learn about your property management stuff that you do actually on your site. Cause I have property management, but more so long-term ⁓ rentals, but you do something completely unique that I've never heard of. And I am very intrigued by it. So what do you do? Ashley (00:22) Yeah. So we live in a medical community, ⁓ and we are busy with furnished apartments. So originally we bought a sixplex maybe six or seven years ago. and we just had same thing, long-term tenants. you know, we inherited several tenants. ⁓ and then you think about the timing of how that happened. think that furnished apartments really took off with COVID. So. When COVID happened, there was a nursing shortage, which was greatly exposed, which we still have not recovered from. And so I just saw that some other people were making their single-family homes, furnished apartments or whatnot. So as our long-term tenants started moving out into the houses or out of the area, I started swapping them into furnished apartments and then. I mean, it's been wild. ⁓ It's been crazy. With, right, like that went so well that we then swapped another long-term into furnished. And then we have since then bought two more single-family homes to swap into short-term rental. And it is very unique and very time-consuming compared to a, you know, year lease or whatnot. These are typically... 13 week leases because they've been hired for that timeframe. will say luckily, as of recent, almost everyone gets like renewed another 13 and another 13. And some people we've had for almost a year. think that that is the halting point is they can't do more than a year in one area. Steven L. Burch (02:04) So, I mean, are you able to basically negotiate how long the individual needs or is it always a set 13 contract? Ashley (02:13) It's different with... Yeah, it's different with every person. So I'm just more or less lining up with whatever the medical complex has offered them. some people get ⁓ offered six months right away. We can do that. Most of them are 13 weeks. But then again, they normally know halfway through if they're going to get extended. Steven L. Burch (02:32) Sure. So what is your vacancy look like then? Like how does that look? they sit for a long time or? Ashley (02:38) So we typically have like two days to swap, which is pretty wild. I would say every now and then, like if we weren't too good at updating the sites or something like that, they have sat, but otherwise, you know, we use furnished finder its website, but we've also been really lucky with just word of mouth. So somebody that might currently be a tenant and then they meet another traveler or they, lot of these travelers travel together. ⁓ Steven L. Burch (02:43) Hmm. Ashley (03:07) We've been able to fill them just by word of mouth, but basically they'll submit this request that they're looking for a placement from X day to X date. And then we line it up with our calendar. So like our calendar on that portal will show that there aren't any openings until a certain date. And then you'll always know like when people are looking, cause it'll be quiet. And then like over a five day timeframe, you'll get like 20 requests. I think a lot of them are putting out requests like to numerous people, which was a little frustrating because then. Steven L. Burch (03:32) Hmph. Ashley (03:38) You think someone's gonna move in and then they don't move in and really odd like some people will be like can I move in tomorrow? ⁓ And that to me is crazy like how you plan life that way There are some people that end up staying in hotels until they have what they want I think one unique thing for us is that depending on the situation depending on the house we allow animals and You would be shocked the amount of people that travel with their animals ⁓ I would probably say more than half And a lot of the other ones here in town don't allow for animals. So we have been able to, you know, make up some difference there, but obviously there's other things you have to worry about there too, as well. Steven L. Burch (04:18) So what does that look like for their utilities and such? Is everything covered in that one monthly? Or I guess how did the payments work with them? Ashley (04:27) Yep, so it's monthly. It's always due on the first of the month, but the term furnished basically means that you are supplying it to them ready to go. So I almost think about it like a hotel, but long term. So that includes all utilities, internet. ⁓ One of my favorite things is then we stage the whole entire house, if you will. So it's got to be couches, beds. Steven L. Burch (04:47) Mm-hmm. Ashley (04:50) silverware, all of the things. They're responsible for their consumables, but we're responsible for everything else, lawn care, store removal, trash. Steven L. Burch (04:59) So basically it's kind of like an Airbnb if you will, for like furnace finders specifically like in the medical field industry, is that correct? Okay. Ashley (05:09) Yeah. Yeah. So we had, you know, we had one of our properties on Airbnb for a while. And I just like, to me, that was more frustrating. Like they would be weekend stays, which I do understand. Like I like to stay out of your view if I can versus a hotel. then like, I'd almost be giving up a 13 week contract because someone had a four day stay in the middle. So I actually just removed everything from Airbnb and just slowly stick with them for now. Steven L. Burch (05:30) Mm-hmm. So, mean, real estate really, like we hear it all the time. It's the fastest way to get wealth and build wealth. What made you want to get into the rental world? Because that's a whole different beast than just sales. So what made you step over there? Ashley (05:53) Yeah, I think some of it has to do with Ben being in construction, right? So I looked at it from the standpoint of we have an inn there, if you will, as far as maintenance, like I can take care of a lot of those things himself. you know, the very first property we bought was actually Ben's grandma's house. So it came with wanting to keep that in the family. And then I had a girlfriend that was looking for somewhere to live. And so they actually stayed there for, I think, six years. So that was kind of our Steven L. Burch (06:05) Mm-hmm. you Ashley (06:22) original in, you will. And that was really to keep it in the family. then once we started seeing that I had a friend that had numerous investment properties and kind of slowly, slowly but surely ⁓ started kind of selling them off and asked if we'd be interested in six bucks. And then you're right, like I started thinking about it more long term as to, you know, 20 years from now and we're slowing down and we're looking at income either Steven L. Burch (06:40) Mm-hmm. Ashley (06:51) Monthly wise, what that looks like, or you sell the property and take that and either invest it in, you know, stocks, etc. Or you can sell a property to buy maybe a second home somewhere. ⁓ You know, all those types of things, you just start wondering like, how can real estate really work in your benefit? I've had that discussion with clients to there's a lot of clients that bought at a really good time. You know, they couldn't likely sell their house for 100 grand or more, but with such a low interest rate, if they're at three and a half or percent rate, it make sense to keep that even for another five years so that ⁓ maybe when their kid they're in college, they can sell that property and not have to be so financially strapped? Steven L. Burch (07:33) So what are some other ways that you either do or know of that if you're in real estate or even if you're not in real estate, how do you maximize and capitalize on the industry to continue to grow your portfolio with just not having to sell every day? Ashley (07:49) Yeah, I think it's really a matter of having a pulse on the town that you're in, right? So other people outside of town might not understand what furnish finders are, right? Like you guys don't really have a lot of that. But I think it's also being very aware of the market as far as market rate. So, you know, it doesn't necessarily make sense to buy a $200,000 property, right? Because the rents may not match for that. So it's becoming really educated. Steven L. Burch (08:02) Bye. Mm-hmm. Ashley (08:16) I think, you know, um, I have a ton of investors, so it's also finding a realtor that understands that area and can, I mean, a lot of them aren't, local, um, you know, and, and kind of find those sweet spots for you. Like maybe it's 140,000, but it's also, you know, maybe finding one that needs a little bit of work and you can update it. Cause the other thing is people are pretty picky. Like I know when I look at BRBOs and I know when we send each other ones, like Not looking for the ones that have the paneling or, you know, the sheet of carpet, right? Like you're looking for the ones that have been really well maintained. ⁓ so I think that when people are looking for ways, like you can start small, I just had that discussion with another friend of mine, like, you don't have to buy 10 at one time, like buy one, just start with one and test it out. Cause I think people are also, you know, it depends. It's, and it's very different if you're doing furnished versus not furnished, right? Those are very different numbers. Steven L. Burch (08:49) Mm-hmm. Great. Mm-hmm. Ashley (09:14) you're not doing furnished, right? That's typically a different rent number. You don't have to worry about furnishing it. You don't have to worry about utilities. You typically do have a longer, you know, tenant. So there's definitely advantages that way. I think the rental market is interesting wherever you are. We deal with a shortage of inventory for houses in general. So there is some, you know, avenue as far as having rentals available for people. Not everybody wants to live in an apartment building. So I think starting small is probably the most important thing. Like I we started with one and did that for a couple of years. ⁓ And then it was like one more. It's not all a bunch at one time. Steven L. Burch (09:49) Mm-hmm. Do you plan on adding more? Ashley (09:57) I do. The goal I've always said is like one a year. ⁓ about 15 more days to make that happen. So that's probably not going to happen. ⁓ You know, our last one was actually like December of last year. So we'd like to wait till maybe before that was November. So we like to wait till the end of the year, but it has to be the right. Ben is very picky when it comes to properties. So we did look at two other ones this year that Ben said no to. ⁓ So darn Ben. ⁓ But right. ⁓ Steven L. Burch (10:08) you Mm-hmm. Tarkin. Ashley (10:34) It also lends itself to some other opportunities then, right? Like you might not be in this area that we end up having properties, right? So that's always something that think the more we've traveled, maybe we've talked about that doesn't necessarily mean you have to have a rental in your town, but if you like to go somewhere, you know, expanding those horizons into other markets and seeing what that looks like is kind of, think where we're headed. ⁓ But I also don't want to work until, you know, Steven L. Burch (10:51) you Ashley (11:03) I'm 60 and trying to figure out what that looks like so that you have the ability to retire early, if you will. I had a lot of clients lately that are maybe in their mid-60s and they talked about how they had all these plans when they're going to retire. Now one needs a hip surgery and one needs a knee surgery and not feeling so hot. And then when they go and they travel, they can't get around like they used to. So this really makes you kind of think a little bit more about. Steven L. Burch (11:22) Hmph. Ashley (11:31) what that looks like ⁓ and how you can take advantage of time and money and resources, make the property work for you. Steven L. Burch (11:39) I mean, what you're doing is real life monopoly, right? Like you're building, I mean, it's kind of a fun game to look at it that way and continuously stack it for whatever your future holds. And think also too, like with what you guys are doing is it's going to allow you to basically have endless opportunities, right? Like, yes, you don't have to physically be there to manage it. You can hire somebody else or have a team to do that for you. ⁓ But this now becomes passive income, if you will. Ashley (12:05) Mm-hmm. Steven L. Burch (12:09) And you have equity that you're building into these things so you can go and add on to it or whatever you choose to do. So I think it's very ⁓ lucrative but also flexible. So you have many different avenues that you can go and make money off of it or liquidate out and cash out on it too. Ashley (12:28) think we like to do it that like ones that we buy, we accept for the six bucks, we remodel those as we go. otherwise we would really like to just remodel them from the beginning. And then we don't worry about anything. We don't get all these extra calls or whatnot. I think what you've led us to is obviously looking more at property management, which is another tool. So tell me about that from your side, I guess. Right? Like, how does that look like for you? Because you do so much property management and how do you feel like people Steven L. Burch (12:34) Mm-hmm. Mm-hmm. Ashley (12:57) make that shift from owning to property management. Steven L. Burch (13:02) You know, ⁓ Sit again. Yeah. Ashley (13:05) Like how do you like because you have so many like what makes it do you think in your area that it's like people decide to rent their property especially long term. Steven L. Burch (13:11) Actually, I think that a lot of people at first couldn't sell. mean, that's kind of where we were at. And so they didn't know that there were other options and they didn't want to obviously have it go into foreclosure. So talking to them about going on to the rent side, the property management side of things and creating an investment now, which is the majority of our stuff because the military base is here and like people are PCSing out. And so they don't have a huge future plan as far as knowing exactly what's going to do. They're being told when they're going places. So I think people just kind of fell into it. But then we do have, we've landed a lot of investors that do this. This is what their side gig is for sure. And just like, know, like they're wanting to continue to build their portfolio. And when there's an opportunity that pops up that might work for them, we always give them a first call. see that's something that we can keep them inside of our portfolio instead of going somewhere else. But property management was not something that I wanted to do at the very beginning. Well, whatsoever kind of fell into my lap. So I'm very thankful that we now do that. And we have Shawnee, we have 250 right around there. yeah. And I think you actually changed my mindset on... Ashley (14:24) How many do you manage? moving. Steven L. Burch (14:35) Why don't we have our own personal portfolio? And for the longest time, the financial advisor that I was working with basically was like, why would you want to put all your eggs in one basket? If you own the brokerage, you have property management, company like everything is in real estate. Don't put all your eggs in that one real estate basket. Well, hell, now looking at it, like I have staff that handles property management. We have a full team that does it. It doesn't make sense not for us to be able to do it. So that is something that is on our roster to build our own personal portfolio up more than just the two that we have right now. So, ⁓ yeah, I mean, I love it some days it's helped stabilize our, our monthly income for sure, but It's a wild world out there. And some of the things that we, we get from tenants owners as well. Um, you know, we had one tenant submit a work order after hours. It was on the weekend and their son dropped their phone in the HVAC floor event and they expected us to come out and get it for them. Like, Nope. I mean, you can call somebody to do that and you're going to pay for them, you know, but we're not going to go out there. So I think it's. Ashley (15:45) No. Steven L. Burch (15:52) Sometimes people, you know, they never lived somewhere else or this may be their first, they don't know how it really works. And, um, there's just some really unrealistic expectations out there. Um, the latest one, I think it was this last week, we had a emergency, critical emergency on our alert firm maintenance and there was, um, carbon monoxide alarms going off in the property. So they called like, of course we tell them to call 911. get out of the property, get safe. Well, it's because they started their cars and didn't open the garage doors. So, I mean, like that's very harmful for sure, but they initially were basically making it sound like the house was defective. And in reality is they kept the car on in the garage. Don't do that. Ashley (16:41) It is, I mean, it is like a, it is amazing to me, like the amount of people that don't know, you know, basic maintenance and it's not, it's not their fault. I, it always always something like, I feel like in school, they should almost talk about like basic home maintenance, like how to change a light bulb, how to turn the water off in the house, like all those types of things that when people are stuck in those situations, they just kind of freeze. Steven L. Burch (16:51) you for real. Mm-hmm. Yeah, because and also we do this every day. So I do understand to where we're in this industry and they don't know. And I'm glad that, I mean, we have a maintenance department that filled all of that and tries to help troubleshoot over the phone, but that's pretty difficult to do when every property is completely different. So ⁓ it's been ⁓ a learning opportunity for sure, but it is extremely lucrative when you get it all set up and properly working for you and continue to add your own portfolio in there too, it makes it even better. Cool. Ashley (17:38) Yeah, I would say if someone is considering looking at how to add, like, just start small, start with one and then write. If you don't like it, if you hate it, then hang onto it for two years and then get rid of it. Steven L. Burch (17:44) Mm-hmm. Absolutely, it's easy to move it. So, love it. Well, tune in to the next one and we appreciate you always listening to us.