Latest / The Jon Sanchez Show / The Top 9 Things To Look For When Buying Your First Rental Property
Transcript
- Jon G. Sanchez: Good Tuesday afternoon to you. Welcome to the John Sanchez show on News Talk780K, which it's a pleasure to be with you and a pleasure to be with one of my two co-hosts. taking a vacation again, Corey Edge of Adrility. What do you know? Cory Edge: Well, he deserves it. He needs it. Yeah. you? I'm doing good. How are you? Jon G. Sanchez: He does deserve it. He does. Absolutely. He does. How are you, my friend? Good. Doing good. Good, good. Surviving the heat. Getting through the heat wave. Exactly. Exactly. Well sp I know. I know. Yep. Yep. Exactly. A little southern cow weather ⁓ for most of the time, or the beach weather, I should say. Good fourth of July, first of all. Good. Yep, me too. Yep. Cory Edge: Getting through the heat wave, yeah. Last week was super nice with the overcast and the kinda mid seventies, like ⁓ I could I could live like this, but no. Yeah. Yeah, very quiet, didn't do much, which was great. The I think I don't know if I told you, but been to my place over in South Reno and we have seventy properties in this little, you know, area if you want to call it. So the Fourth of July, everybody comes together, they do a parade. The fire department, the you know, and kudos to the Washer County Fire Department, they get one of their engines, they drive down, they throw candy to all the kids, they do it. So I've been doing that for years. So yeah, it's been it was really and then a big barbecue for everybody. Jon G. Sanchez: ⁓ my gosh. ⁓ that is so cool. Yeah, yeah. jeez. That's like the old days of the way Fourth of July used to be, right? Neighbors coming together and ⁓ Cory Edge: Yeah, that was, you know, and again, ⁓ kudos to the fire department 'cause those they are always so helpful versus I guess you you got me right off my soapbox at the end of the last show, so I'll jump right back on. Versus the people at City Hall will do everything not to help you. But the normal blue collar guys, the police department and the fire like these guys are here to help. You need you need a cat out of a tree or a fourth of July engine, like, hey, what can we do? When will we be there? But Jon G. Sanchez: Yes, they're the best. Yep. Yep. Yeah. Yeah. Yeah. Yeah. Cory Edge: Damn, you go pull the building permit and it's like talking to an insurance company. These people are horrible. Absolutely horrible. Jon G. Sanchez: The the end the answer is no, first of all, right? Cory Edge: It's no right when you walk like there's a big sign that says no. Like I haven't even asked the question yet. Jon G. Sanchez: Yeah. Yeah, I know. I I I don't know what the answer is to that. I it's frustrating 'cause, you know, they're funded by taxpayer dollars and developer dollars and so on and so forth. And ⁓ you ⁓ you you just want to be treated like a human being, right? That's what I don't want. Cory Edge: Well John, if I had a hundred million dollars and was building a thousand houses, the answer is an automatic yes. No matter what. And not to go off on a tangent, but these are all the people moving here from other states to get away from the growth. So now they're anyway, whatever. What are you gonna do? Jon G. Sanchez: ⁓ right, right, right. Right. Good point. Yeah. Yeah, what are you gonna do? Gonna tolerate it. That's all you can do at this point. That's for sure. right, my friend, let's turn the page. Let's get things started here. First of all, just coming across the headlines a few moments ago, the missiles by the US are are now ⁓ raining down on Iran in retaliation, of I'm sure many of you heard. Iran fired missiles at three ships. I thought it was two, but now they're saying three ships, ⁓ basically overnight. And so sitcom just announced a few moments ago that they have launched a pretty strong retaliatory attack against Iran. we started to see oil prices move up pretty substantially towards the end of the trading session. Finished up about a dollar ⁓ ninety-three. But ⁓ yeah, in in the after hour session, our after hour session and things like that, ⁓ we saw it moving up in almost three dollars. So ⁓ we'll see what kind impact that has on the market tomorrow. But ⁓ but yeah, we will we'll continue to monitor that throughout the show and see if any other ⁓ Headlines ⁓ arise at that point. right, let me tell you what we have lined up for you. This is gonna be a fun topic, Corey Hitch. This is gonna be a fun topic. So you're thinking about buying your first investment property, we have designed today's show just for you. Okay. Before you go and you write an offer, before you go get a pre-quall letter from Dawai, before you do anything, Corey's created a list of nine critical things that every investor should evaluate. So we're gonna discuss things like How do you identify a great investment property? Because like we've said over and over, Corey, it's a completely different animal versus going out and trying to buy your primary residence. We're going to talk about common mistakes that you see and how to avoid those. And then I'll chime in a bit on the building the long-term wealth through real estate, right? so a lot of different things. But ⁓ know, Corey, I I was really looking forward to this topic with you because you and I come across people all the time, you definitely more than me, they're like, yeah, I want to get involved in the world of investment real estate. I know I should do it. I don't know where to start. And most importantly, I don't want to make any mistakes. I can't afford any mistakes. Maybe I'm a couple of years away from retirement. can't afford any mistakes. So therefore, where do I start? Right? How many don't you wish you had a dollar for every time you've heard something like that? Cory Edge: Yeah, and unfortunately I think the not starting scares a lot of people away when that's kind of the hardest part is the starting. If you just continue that momentum of getting started, find a property, study the property. If if it's the right property or not purchase the property. Jon G. Sanchez: I think I may have asked you this, but I cannot remember for the life of me the answer. So I wanna do it again. You personally or for you and your group, do you still get butterflies in your stomach when you go buy a property? Not for clients, but for you guys. Cory Edge: Well it certain certain properties, right? Because some of the properties that we purchase, sometimes we don't get the benefit of inspections, we don't get the benefit of title policies. I mean, we deal in a kind of a different world than than some of the other ones. So the chances of a mistake are higher and the chances of fixing the mistake are much lower, if that makes sense. ⁓ So a lot of, you know, high risk, high reward and and we rely on Jon G. Sanchez: Good question, huh? Okay. Yeah, okay. Higher risk, higher reward, bottom line. Cory Edge: You know, and I do a lot of it. We rely on the information and the the the data that I can find. Right. So yeah, so I of course I get some butterflies because I mean I'm human. If I'm wrong, you know, it's not the worst thing in the world, but it costs a lot of money. So yeah, I get butterflies and as far as just buying something and getting tenants and this and that, it's Jon G. Sanchez: Sure, sure. Yes, yes. Yeah, yeah, absolutely. Cory Edge: I think people make it out to be worse than it is. And you always hear it's just like reviews for, you know, an Amazon product or a resort, right? Like the people that had a bad experience will always talk, but the good ones don't. But by and large, the experiences are usually very good. So people have heard horror stories about buying rentals, but you don't ever hear the good stuff. And the good stuff is, you know, nine out of ten are good, one's bad, and that's the one that people remember. Jon G. Sanchez: Mm-hmm. Sure. Right, right. Yes. Mm-hmm. No, not very early, really. Okay. Right. Right. Right. Okay. Very good. Yeah, I've always wanted to ask you that. like you said, you're human. Of course you do. ⁓ All right. So it's gonna be a great topic. Top nine things to look for when buying your first rental property. All right, let's get the stock market side of things going here. And know, was a day, Corey, where the market wasn't quite sure what it wanted to do. We actually started pretty strong in the pre-market session ⁓ on the Dow the S P side of things. Matter of fact, we're up over 200 points, going into actually almost 300 points, excuse me. Cory Edge: Of course, yeah. Jon G. Sanchez: Going into the opening bell at 6 30, we're up about 272 or so in the Dow futures. NASDAQs were just weak throughout the morning. They were down over 300 going into the open. simple and and it it's starting to get a little bit complicated. So I want to spend just a few moments talking about that. and that is what happened on the Nasdaq side of things. So believe it not, you have some problems in South Korea, and it's impacting our markets here at home. Here's what I'm talking about. So Last few weeks I've noticed we've had some pretty good sell-offs, and it's a very, very volatile market in in South Korea, very tech slash semiconductor heavy. Okay. We've had a period, ⁓ some periods here in the last few weeks where ⁓ go down four or five percent, and then the next day maybe three percent, and then they rally five percent. Very, volatile. But one that happened overnight is we ⁓ we had Samsung, which is where it trades. released the earnings numbers and there were really strong earnings numbers. But the preliminary second quarter results sparked some profit taking. So everyone went, okay, how much better can this get? So we started to see profit taking going on in Samsung Electronics. Then that carried across the board. they reported operating profit that was more than 1800% higher than where it was a year ago. Revenue came in just shy shy of ⁓ what we call some very elevated expectation. But once again, We saw the weakness occur in Samsung and then we saw it occur in the the the South Korean market. And then everyone, whoa, if the ⁓ you know, ten thousand pound gorilla in the room, Sam Samsung's, you not quite where everybody wants it on the revenue side at least. Boy, that's an excuse to start taking profit. So we started to see that profit occurring overnight, taking that ⁓ in the ⁓ semiconductor space, memory sp space, on and on and on. And that just continued throughout the entire day. And then ⁓ You know, we started to see some pretty good rotation, obviously, out of tech and into other areas like consumer cyclicals and staples and things like that. But that wasn't, you know, really enough to ⁓ to carry us forward. So we ended up with a very small loss on the Dow side, down just 130 points. That was a quarter percent. closed at 52,925, again, after closing above 53,000 yesterday for the very first time. NASDAQ was down three hundred and two, one point one six percent pullback there, closing at twenty-five thousand eight eighteen, and the SP lowered by thirty-four points or point four five percent. So again, nothing major. we will see features. I'm just checking them right now, relatively flat with this news on the oil situation with Iran. But ⁓ yeah, we'll see what happens and what kind of impact is gonna occur tomorrow, if if any. I mean, we've seen this market surprise all of us when this oil situation arises. But the day I want go back, Corey, on one thing. The day started ⁓ in to Iran. We started to see oil prices tick up earlier today. ⁓ the US Treasury Department revoked a license that allowed Iran to sell its oil around the world. That's where everything started again after Iran attacked these three ships. So they revoked the ⁓ the authorization. That upset everybody. ⁓ then again, what happened was a liquefied natural gas tanker and an oil super tanker and an unspecified third tanker came under attack in or near the Strait of Hormuz early. We were in bed when this happened. And that's according to the Joint Maritime Information Center, which is a naval group that is led by the U.S. that provides security updates to merchant vessels in the Middle East. So the threat to the ships caused us to do I said at the beginning of the show, which is we've launched an attack against Iran again. And ⁓ we will see what ⁓ what exactly ends up happening about this. again, Central saying it was a pretty, pretty severe th attack. Don't know it's still going on or ⁓ If it was one of these where we get in, we bomb, we get out and sit back and wait and see. of course, now everything's gonna come back to is the sixty day memorandum of understanding is it gonna hold? You know, what's this really gonna mean for the markets and for our relationship with Iran and so on and so forth. So it could be a one off event or it could be something again that that lingers for some time. And Corey, you know, you and I both know, you follow the markets closely also, ⁓ that this could be excuse to start a a bit of a profit taking route, not just in technology but across the board. Cory Edge: Yeah, and it seems like it's going that direction. Anyway, it'll be it'll be curious to see what oil does 'cause the last few times this has happened, oil hasn't really reacted much. A couple bucks, then back down. So, like you said, if it's just a one off, then maybe it does the same thing if it turns into something longer term. But I think I think the president's gonna hold tight through the the midterm elections and you know, he's trying to keep those gas prices down. So ⁓ and Iran knows that. They're gonna keep Jon G. Sanchez: No, not at all. Yep. Yep. Yeah. Yes. Cory Edge: toying with him 'cause they know what he's trying to do. So it we'll see what happens. Jon G. Sanchez: Yeah. Well, I I you know as well as I do, Corey. I've so absolutely critical of this whole memorandum of understanding the things and ⁓ billions, hundreds of billions of dollars of funds and so on and so forth. The the whole thing has this smell really bizarre. Really, really bizarre. And mean, you think about it the guts it takes for Iran, knowing that, you know, essentially things have been quiet, right, for the last what two weeks now. And what would make them turn around and fire on three ships just out of the blue? Cory Edge: Yeah. Jon G. Sanchez: Right. So you you're kind of wondering what's what's they really even care about the memorandum of understanding? Do they even care? Or are they going, you know what? We're we've survived for you know thousands of years without the US. We can continue to survive thousands of years. You guys can't, we can. So hey, you know what? Here comes the missiles again. I don't know. It's it's it's absolutely crazy to think why they would blow something like that because they had a pretty good, like I said, hundreds of of dollars, but that's gone, the license to sell, like I said, to the world market. Cory Edge: Yeah. Jon G. Sanchez: That's gone. I don't know how we control their license. That's something I wanted to research. I didn't get time. But yeah, we we will see what happens tomorrow. All When we come back, we'll hit the commodity side and then we will s begin to tackle our topic today. Again, the top nine things to look for when buying your first rental property. Welcome back to the John Sanchez show on Newstock 780KOH with Corey HVG Rility. Mr. Millard has the week off. right, once again, ⁓ let's bring up to date of what happened in the ⁓ the market side of things today. Bit of a of a of a choppy session today. We lost modestly on the Dow side, again, down just one hundred and thirty-one points, quarter percent. NASDAQ was a problem child down three ⁓ two, one point one six percent. SP lowered by thirty-four points, point four five percent. All right, once again on the commodity side, gained $1.93 on oil, started started to see the oil move up ⁓ throughout the session, and then it ⁓ peaked out nearly a three dollar gain, but you know since back down just a little bit. But we'll see again tomorrow that we've ⁓ launched a new attack against Iran. Gold lost ten four thousand one fifty excuse me, four thousand one fifty seven fifty an ounce, ⁓ and a little uptick in the 10-year Treasury Corey, up five basis points. Y'all close there was four point five three percent. And in the absence of Mr. Millard, we did check the 30-year mortgage, according to Mortgage News Daily, up four basis points to a APR of six point six three. Well, a rate, excuse me, of six point six three percent. you know, ⁓ before we get to our topic, the nine things to look for when buying your first rental property. ⁓ did a great job last Thursday when we went through the ⁓ the local real estate report. Again, record medium price. hearing much chatter from other people in profession or clients, et cetera, saying, Man, it's gotta be a great time to sell. We got these record median prices or the buyer's going, Nope, not gonna buy right now. Prices are too high. Any repercussions after that after those numbers? Cory Edge: No, I mean it's been it's been kind of a a stalwart, right? Like I I do think to me it just feels like it's still a very strong seller's market as long as you're priced correctly. but there is some control in the buyer. So I I just see it time and time again that just because we're at record high prices doesn't mean you can just pick any price and throw it on the market. Because the buyers will absolutely revolt and they won't do anything. But if you price that property correctly or Jon G. Sanchez: Sure, sure. Cory Edge: very close to correctly, then you'll get some action and you'll sell quickly. And, you know, I've always told people, and again, I I people sometimes look at me like I'm selling them, you know, some kind of craziness, but the market will dictate the pricing. If you price it too high, you won't get any action. If you price it too low, they'll bid it up to the market. So what I've tried to do over the last few years is try to get my clients or counsel and be like, hey, let's let the market decide. Let's put it. Jon G. Sanchez: Yeah. Crazy. Cory Edge: where we think, we tend to hopefully start on the lower side of that threshold, knowing the market will push it up. And it just ends up where it's going to end up anyway. And I had to discuss Yeah, and it's like in your world it happens all the time, but in the housing market, it never used to really happen that way. But there's so much information. It's so easy. There's so many people like it. Jon G. Sanchez: Yes. Mm-hmm. Mm-hmm. Isn't that crazy? Yeah. Market equilibrium. Yes. Yeah, I was gonna ask you, that's something you you've emphasized that point for the last couple of years, but you know, going back in ⁓ eight when you joined me on the show for the first time, I don't remember you ever saying that before. It was that way, but ⁓ is it because there's so much information and people are coming so well educated to the ⁓ or selling table per se in the negotiations, they're like, Yeah, you you may be asking seven twenty, but ⁓ know, I see on the internet and through comp sales, et cetera. It was, you know, six eighty is the the the highest price I'm gonna go. Well, jeez, you know, how'd they know that? Okay. Cory Edge: Mm-hmm. Yes. Correct. Yeah, and I think it's just and it's a good thing. The buyers have a ton of information. They're very smart. They understand how to use it. And it's not like they're gonna call you and say, hey, John, you're overpriced, so let me know when it comes down. You just won't get any activity. They won't do anything. They won't like I said, and I I sound like a broken record in the old days, they'd say, ⁓ you want seven twenty, I think it's worth six fifty, I'll offer you six fifty. They won't even waste their time. They'll wait for you. They'll wait for the market to force you down to six fifty if you really want to sell and they'll do it that way. Jon G. Sanchez: Yes. Right. Right, right. Didn't that something? Yeah. Yeah. Gee it was crazy. Cory Edge: ⁓ so it's yeah, super, super interesting, but it's hard for people, it's hard for sellers to believe that because for whatever reason, and I don't know there's I can't think of think of an example in your world where it happens, but you get a s person that wants to sell a property and they think that picking the agent will determine the price. Like that agent can do can sell my house for three hundred thousand more than everybody else. Like that's not Jon G. Sanchez: That's such a good point. Right, right. 'Cause they got great marketing. Yeah. Or they'll buy the house from you if it doesn't sell. Yeah, right. Read the fine print on that one. Cory Edge: What? It's all just pure craziness. Like the mar we're we're facilitators at this point, right? Like we gotta get through. And it's some of it's very complicated. I told you last week I had a contingency deal where one had to close, then the middle one had to close, then the third one had to close. And so there are reasons you need a realtor in there because all of that can get very complicated if you've never been through it. But for lack of a better term, the market's gonna give you the price, whether you use me or whether you use the biggest company in the world. It doesn't matter. Jon G. Sanchez: It is. Yep. Yep. Well, it's a stock market's the same way, Corey. You know, we we can all think that we know what a price is worth, but the market will tell you what a stock is worth, plain and simple. It'll tell you what an IPO is worth. It'll tell you everything. And and it's a phenomenal forward looking indicator of economic activity too. Right. So Again, back to that old adage that one of my mentors taught me very young in my business or very young in my career. It's like, don't fight the tape. Don't fight the market. You know, just y you can't do it. It's too powerful. You just can't do it. Same thing. Cory Edge: Yep. Correct. Jon G. Sanchez: All right, when we come back, we're gonna get started. I promise you this time. The top nine things to look for when buying your first room property with Cory Edge Vidge Reality, Welcome back to the John Sanchez show on Newstock 780KOH with Corey Edge of Edrility. Once again, we finished with a 131 loss on the Dow. NASDAQ down 302, SP lower by 34. All right, folks, you're in for a real treat. Corey has put together a very incredible list nine of the top things to look for when buying your first investment property. Because you know, folks, for generations, of course, real estate's been one of the most powerful wealth-building tools in America. Rental properties, what do we get out of them? We get monthly income. ⁓ Provide some tax advantages, build equity, and again, hopefully appreciate over time. But again, not every property is a good investment, as you're gonna find out. difference, in our opinion, between a successful rental and a financial headache often comes down to know knowing what you should know in the beginning, right? Before you sign anything whatsoever. So today we're gonna discuss these top nine things every investor should look for. Corey, I love your first point. Location, location, location. Boy, that works in every aspect real estate, whether it's investment or primary. Love that. Cory Edge: It it is and it's I think it's very important in primary because you're looking at your own personal happiness and investment, it's important, but I always hesitate a little bit with it because there are if we take Reno Sparks, for instance, there are rentals in every corner of this county, right? From the high price neighborhoods in Montreux to the lower end neighborhoods, wherever you want to call them, there's rentals in every single one of them. So the location important, If you're going to find a tenant in any of them, usually if I say, Well, I only want the best location with the best schools, with the best this and that, you're gonna pay more for that property while you also get more rent. So what I tend to look at is what's the return on the property? Does that make sense? so I don't I certainly don't want to shy people away from again, I don't want to pick on a certain area, but I don't want shy people away from desirable neighborhoods, if that's what you want to call them, because there's renters in there too. And they could cash flow great and you can have great tenants and can retire on a property you buy there, you know, thirty years from now. So there's nothing wrong with it. but ideally the the boilerplate tenant typically, not every time, but typically is gonna be a young family going to have kids, gonna have children, blah, blah. So that's where you look at the schools and the shopping and the bus lines and freeway access and those things that would attract w you know what you think is a high quality tenant. but just know you're gonna pay more for that property. So you have to equalize the numbers. Jon G. Sanchez: I was gonna say so i i in theory does it equal itself out? You're paying more for all these amenities you just mentioned, but theoretically you should be getting higher rents. So therefore it it's it's equilibrium. Okay. Cory Edge: Correct. Correct. Yeah, yeah. So that's why it's important and we'll get into it next. But you want to do these kind of little easy financial worksheets ahead of time, right? Because if money's not an object, if you find a great rental house for a million dollars and you know, hey, I can rent this thing out for twelve thousand dollars a month, or you know, pick a number, like okay, those numbers actually work pretty dang good. Jon G. Sanchez: Mm-hmm. Mm-hmm. Cory Edge: And that may be a better deal than, hey, I found a smoking deal for a hundred and fifty, but I'm only gonna get, you know, a hundred dollars a month. Like, okay, well, you got a better price, but the numbers don't make sense. Like it's it's better on the bigger deal. So Jon G. Sanchez: Right, right. Yes. Yes. Okay. let's jump into that second point that you have positive cash flow, right? We're you're buying this not for ⁓ you know, the beautiful front yard. You're buying it for cash flow, appreciation and cash flow. So what do you look for there? Cory Edge: positive, positive cash flow. And there has been times, and I think we're probably in one again now, because we were certainly in one in 2006, 7 and 8, where people were sacrificing positive cash flow for potential future equity and it blew up in their face because they could not afford the negative monthly cash flow. So Jon G. Sanchez: Yes. Yes. I was gonna ask you about that. Cory Edge: You need to sit down and make sure it's going to be a positive cash flow. Doesn't mean it has to be $10,000 a month. You know, maybe it's only $50 a month. Maybe it's only $100. As long as it's paying for itself, that's the main driver. That if something ever happens to you, the property will continue to pay for itself. Also, it's a good way, John. Like it's not, I don't know the right way to say it. It's Jon G. Sanchez: Mm-hmm, mm-hmm. Mm-hmm. Cory Edge: It's not a nag on you. So if the goal is to I want to buy a rental property, say I'm 20 years old. I want to retire when I'm 50. I'm going to buy this rental property. I'm going to get a 30-year mortgage. And I want it free and clear by the time I retire. If that's a positive cash flow, you can set it and forget it. Right. Just let it do its thing for the next 30 years. And when you go to retire, you're going have this beautiful little nesting. But if you have to feed that every month for 30 years, at some point something will happen in your life where you want to get rid of it. Jon G. Sanchez: Mm-hmm. No more. Yep, those are the calls you get that say, I can't do this anymore. That that and bad re bad tenants, yeah. Those will those will drive you away. Okay. Cory Edge: Yeah. So Yeah. Positive cash and don't get me wrong, John, like we're gonna do the worksheet, we're gonna make it positive cash flow, it's gonna positive cash flow for four years, and then for whatever reason in year five, you're gonna have to replace something. That's gonna be negative. But then you get it right back on track. So, you know, things don't work as grand as you lay them out to be, but at least start on a good footing. Jon G. Sanchez: Mm-hmm. So I I wanna I wanna summarize most thing I think that you just said there, which is do not buy a rental property, especially your first one, on the hopes that appreciation is gonna make it a successful investment. Buy it first for cash flow, appreciation almost secondary in a sense. Cory Edge: Correct. I had a I had a a friend of mine I I probably shouldn't even be telling the story. But they called me not that long ago and they were talking about I need some write-offs. I need a write-off. I need this. I need that. I'm gonna buy a rental property that only loses, I don't remember what the number was. It's gonna lose, you know, fifteen hundred dollars a month, but I'm gonna get the write-off. I'm like, do you understand how mathematics works? Like you're gonna lose hundred dollars a month, but when you equate that over to your write-off, you don't get fifteen hundred dollars in write-off. Like you are just compounding your problem by doing that. Jon G. Sanchez: Right. Cory Edge: So that but that's the way people think. Like, trust me, it's much better to have a fifteen dollar positive than a fifteen hundred dollar negative, even for tax reasons. It's just better. If you're paying taxes, that means you're making money and congratulations. Jon G. Sanchez: You're right. Mm. Absolutely. Yes, exactly. point. All right. Let's go to number three, the condition of the property. What are we looking for here? Cory Edge: This is a big one. So there are people out there that are super skilled at fixing up properties and they're handyman and they, you know, were born and raised fix a plumbing, fixing this and that. They can look at fixer upper properties and they can calculate, you know, in their brain, like, hey, this thing needs X amount of work, but I know I can go do it on the weekends. I'm pretty smart. I've done it. And they can put in that sweat equity to turn that thing around. If you're not that person, there's no reason you can't buy a fix wrapper, but you need to calculate the cost. Jon G. Sanchez: Mm-hmm. Right. Cory Edge: of the contractor and all the things that come with it and it may outweigh the discount. If you're getting a $20,000 discount because of the condition, but it's gonna cost you $50 grand to get it up to the right condition, then it doesn't make any sense again mathematically. So you need to know the condition. And again, what we typically do is we're gonna sit down, we're gonna do all our financials, our worksheet, because we don't know anything about the property at that point. Then we're gonna do the offer, then we're gonna get the inspections, then we find out. which sometimes means great, I gotta go back to my financial worksheet and tweak some numbers because you know maybe this thing's gonna need a roof in five years and I can live with that if I can make the property work. I wasn't expecting it, but I can work it out because it's still a decent enough deal. so just know what those conditions are. Jon G. Sanchez: Yeah. Yep. Right. and it can get really expensive. We've all seen that. ⁓ you know, y the old saying, you never know what goes on behind the behind the drywall or what's lurking there. It could be so many different things. So ⁓ and You have that on your list. And yeah, the stories I've I've heard from friends and clients that foundation problems. I mean, you talk about a nightmare. ⁓ my gosh. So good point. That's like you've always emphasized, Corey, a great inspector is worth their weight in gold, if not more. Cory Edge: Yes. Correct. It's the most ⁓ the most important part of the deal is the inspector. And I I've had people and I still get them sometimes, they're like, no, I really want this house, just waive the inspections. And personally I say, well, I'm not gonna be your agent if that's what we're doing, because the three hundred dollars you're gonna spend is worth every penny to understand what's happening. Jon G. Sanchez: Yeah. How many times have you how many times have you offered to pay that 300? Cory Edge: I can usually talk my clients into it. ⁓ so I don't Jon G. Sanchez: Okay. Okay. I know you you're like, you what, I'll f I'll foot the bill. If you don't to spend I will foot it because it's gotta be done. Cory Edge: If it came down to a financial reason, like hey, I'm completely stretched, I want it, I can't afford it, then yeah, of course I'll pay it. ⁓ if it comes down to stubbornness because somebody has a big ego, then I'm not gonna I'm not gonna pay for your inspection. So Jon G. Sanchez: Yeah. Yeah. Different stories. No. Yeah. All right. Let's go to number four. local rental market. Right. People a lot of times fail to do the homework. What's really going on in that specific market. Cory Edge: Yeah, under understand the rental market. Now we are blessed in Washoe County to have an incredible rental market. Our vacancy right now, I'm just guessing, because I haven't looked at the reports lately, is probably running two percent or less. You can usually rent out anything you want. So really the crux of it is okay, I know I can get a tenant, but how much is that tenant going to pay? Because if I'm gonna do my financial stuff, I need to know what the tenant's going to pay. And I wanna be as close to accurate as possible, and maybe even if I think. Jon G. Sanchez: Mm-hmm. Cory Edge: Let's say it's two thousand dollars. Well, maybe I'm gonna take ten percent of that off and only put eighteen hundred in my financial sheet to make sure it still works because that's the key. Getting a tenant, not a problem. Getting a tenant that's gonna pay top, top, top of the line rent. I mean, there's more choices out there now. So you just yeah, you just wanna see what the market compare. Jon G. Sanchez: Little homework there to do. Yeah. So we're gonna take a look at things like rental demand, vacancy rates, average rents, obviously tenant quality. You've always been a big emphasis on do a full, you know, quote, background check on that potential tenant. Yeah, because again, yeah, the whole deal can look phenomenal on paper, but if they don't pay, everything's blown. Everything's blown. So you gotta gotta know that. And you've all you've also always emphasized, Corey, checking with references. Play past places they've lived. Cory Edge: No, absolutely. Correct. Yep. That's the mo that's the most important part and a what a lot so professional managers, which we'll get into, don't overlook that. But home ⁓ you know, brand new investors overlook it because they they look at it as a kind of a burden, like I don't wanna call this person and what are they gonna do? And it's the most important part of the application because you need to know and don't call just one because that person either might be a friend or might like, I need this tenant out of here, so I'm gonna say whatever you want to, you know, call two or three and make sure it's there. Jon G. Sanchez: Yeah. Yeah. Right, right. Cory Edge: Because it's very important to understand how these people live. You can also usually tell by the amount of time if you've had, you know, if your potential tenant has moved six times in the last seven months, that might be a red flag to figure out. ⁓ and there are, I was talking to somebody yesterday about this. There, we're getting more and more people from out of state. The laws are starting to change a little bit. It's it's very landlord friendly, but not as much as it was. And there are professional, Jon G. Sanchez: Yeah. There's something wrong. Yep. Absolutely. Cory Edge: the word just escaped me. The people that move squatters. Yeah, professional squatters. They understand how to get in there. They understand once they're in there that they have rights and they understand you cannot get them out easily. I did have a client a few years ago who was adamant to do their own management and one of these people, they ended up with one of these people and it was a nightmare, a nightmare for them to try to get this person out of the house. It was horrible. Jon G. Sanchez: They're basically thieves. S ⁓ s ⁓ the squatter says. Okay. Yeah. Crazy. Can't imagine. Yeah. And and for those of you that have ⁓ or thinking of rental properties in California, you think our rules are bad? Check out how unlandlord friendly California we come back in our ⁓ nine points. We're gonna hustle. We got ⁓ we've got four more to go. we're gonna talk about return on investment, ROI as we like to call it. Welcome back to the John Sanchez show on News Talk seven eighty KO e Corey Edge Vidge Reality, Mr. Edge, your phone number, sir. Cory Edge: six seven three six seven zero zero. Jon G. Sanchez: Beautiful. Thank you so much. right. We've been talking about again the top nine things to look for when buying your first rental property. And again, Corey's been kind enough to cover about four of them so far. Location, location, location is number one. Number two, positive cash flow. Number three, the condition of the property. Number four, the local rental market. We left off on my favorite, Corey, return on investment. What are you looking for here? Cory Edge: So again, I like to keep it simple. So positive cash flow will solve all your problems. If you're looking for long term, then get the positive cash flow and just set it and forget it. Just let the property compound, let it do what it's doing. We tell this story, we did it on Tuesday when we did the market report, or maybe was Thursday. 10 years ago, these prices averaged like 120,000. Now they average 600 and something thousand. Jon G. Sanchez: Yeah. Cory Edge: Let the market do all the work for you. But if you have positive cash flow, it's never going to be a burden on you because it's taking care of itself. And let that be your exit strategy, just time. Jon G. Sanchez: Love it. Well, speaking of exit strategy, that's our sixth point. Let's talk exit strategy. Cory Edge: And this is one you can set up again. In my example, if you're 20 and you want to retire at 50, and this is the way you think you can help it, then you know you're gonna have to have some perseverance to get through the tough times because you're gonna have them over 30 years. But just know that, hey, I'm keeping this property till it's free and clear and I'm gonna use it as a retirement perfect. Jon G. Sanchez: But like anything, Corey, we should always have an exit strategy, right? If I can't rent it, can I sell it? If I can't sell it, can I rent it? That type of thing. Plan B. Cory Edge: Correct. So remember this. Single family houses are usually easier and sell faster than big, huge, you know, buildings. so if you have single family houses, the exit strategy could always be, hey, I'm just gonna throw it on the market. I know it's gonna sell, I'm not gonna have any problems. ⁓ and so that's if you have to. Jon G. Sanchez: Perfect. right, folks. Unfortunately, we're we're out of time. Number seven was the right financing. Number eight, property management. And number nine, think like an investor. Corey, these are great points. Thank you so much for sharing them with us. And hopefully somebody will get off the dime and get out there and get that first rental property. If not, they give you a call and let you do all the work. All right, Great job as always. God bless everybody. We'll see you tomorrow on the John Sanchez show. Take care. Cory Edge: Sure. Yes, absolutely. I'll I'll do it.