Inspiring interviews with Today is Top Landlord, This is the Rental Income Podcast.

And now Damnly, Jeffy, You've had some difficult situations that your rentals have really helped you with.

Can you tell me what's happened.

Well in the past.

My son's mother, she had been diagnosed three months after he was born with stage four cancer.

I was able to take off without having to worry too much about bills or anything during that time and just worry one hundred percent on family, especially in the later part of her life before she passed.

Recently, though, back in May, I broke my hand bike riding with my son, of all things, and I was able to take off.

I'm currently off now, but I'm able to take off four months consecutively without worrying about having to make any of those bills.

Is living proof that having only one source of income can be very dangerous.

With his day job as a garbageman, if he doesn't work, he doesn't get paid, and having rental income has given him a lot of flexibility and security.

And on the show today, we're going to figure out how jeff build a rental portfolio that provides him over eight thousand dollars a month in cash flow.

Joining us on the podcast today from Fingerlake, Illinois is Jeff Has.

We'll take a quick break to thank our sponsors.

We'll come right back and we'll talk to Jeff.

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N MLS four two ero five six.

Jeff, let's start where you are today.

What does your portfolio look like.

I have six rental properties, two single families and four duplexus.

And when did you start buying rentals?

December of twenty seventeen was when I first jumped in.

I had a lot of headwinds, a lot of people that were telling me it's a bad decision to buy rental properties to have people in them.

They're going to destroy them on you.

It's just going to cost you money or you're not going to do well.

And I kind of took a step back and thought about it, and not one of those people that were telling me and giving me that advice actually owned rentals, either previously or currently.

Yeah, you know, it's so funny because the same thing happened to me when I was thinking about buying rentals.

Everybody was so negative about it.

But you're right, the people that are most negative know nothing about real estate.

So did that slow you down or did that stop you from getting started?

It definitely made me nervous, made me kind of question myself.

I looked back and I had quite a few friends in the trades, so that gave me a bit more confidence, saying, well, if I get stuck on this or stuck on that, well I can maybe ask them to help me out or give some advice.

I had a cousin who owned one rental property, and I before I jumped in and really got serious about trying to find one, and had a conversation with him and I said, yeah, you know, I hear how terrible it is and from everybody, He's like, no, no, it's great.

It's you know, you sign somebody to a lease and you know here and there you gotta fix stuff, but you get to write all those things off.

It's great.

It really is that it was like that bit.

Of sunshine in the clouds that I needed to start.

And you know, my my goal was one every year, four or five years, and I actually I did six of them over that span.

Now it seems like it was definitely a good move for you buying rentals.

You know, a lot of times we look at the cash flow, but as far as your net worth, what was your net worth before you started buying rentals and what is it now?

Uh, previous buying I went through a divorce actually was a pretty good one as far as the forces go.

But I would say I was g twenty to fifty thousand dollars net worth range at the most.

And today I'm closing in or right around the three million dollar mark.

Three million dollars in really not that much time.

That is really awesome with also with not a huge portfolio, you know, just buying one rental a year.

Well, let's take a look at your numbers and see how your cash flow is working.

So if you add up the rent from all your rentals.

How much rent do you bring in every month eight monthly?

Yes, thirteen yeah, about thirteen seven fifty roughly right now.

And I keep I keep the h I keep the rents on the fairly lower side too.

Why do you do that?

The turnover is usually your most expensive part if you have to.

You know, when you clean out a place, you're not only cleaning it out, but you're doing repair, you're doing upgrades.

You're going to get more rent when you have a place that looks more up to date, cleaner.

You don't want to go in with putting somebody in a place that you know already has problems or could have problems not on the line, because it's much easier to fix when nobody's living there.

So you're not raising rent on your tenants, like once they move in, you're keeping them at that rent.

I will raise them.

I do pay attention quite a bit to the market in the area, and I'll raise them, but I don't raise them as high as most places are around.

Like competitive, I keep mind very competitive.

So I if I lose somebody, it's because they bought a house or they're moving out of town.

It's rare that they would move for any other reason than that.

Okay, all right, that makes sense.

All right, So thirteen thousand and seven point fifty is your gross friend.

How much are your mortgage payments for all your properties?

I'm right around between five thousand and fifty five hundred a.

Month, okay, And that includes principal interests, taxes, insurance, everything.

That's everything concluded.

What about budgeting for repairs?

Like, do you set a certain amount of money aside every month or how do you handle that?

Yeah?

So I've been a great natural saver my whole life, and right now my average I average it, or my minimum that I save is about four thousand a month that I set to the side.

I'll make extra payments on principle and whittle down my mortgages as much as I can.

But put having that that buffer, and you know on the side there helps out a lot.

Okay.

So you're just saving money in general so that you have cash when something big comes up, but you're not necessarily setting aside a certain amount per month for each rental property.

No, No, I've been on such a pattern.

It start way back in twenty ten.

I started with not really a goal in mind, but I was seeing how much I was saving, and I was surprised at how little I had in the bank compared to what I made a week.

So I budgeted myself and made automatic savings, so I would only take home a certain amount every week, and it would be the exact same amount every week.

And over the years, you know, you get raises, you get promotions, and over the years, it just it built up without me ever even noticing it.

Right, Okay, so you've got thirteen thousand, seven fifty rand fifty three hundred mortgages, so your cash flow is eight four hundred and fifty before anything comes up.

But that's like on average every month, you're you've got about eight thousand dollars a month that you're mostly setting aside.

Yeah, I'll pay down, like I've gotten into investing quite a bit in the stock market as well.

In the past, with me saving as aggressive as I have, it was with a goal to buy another property within one year, so I was prepared.

You know, the best thing you could do is always, even if you don't have a goal in mine, prepare yourself so that when opportunities come up, you're ready to pounce on it instead of sitting on the sideline saying, ah, if I only had this or if I only had that.

Right, Right, So, when you're buying a property, it sounds like you're saving up a down payment.

So you're not doing any kind of like creative financing or anything.

You're it sounds like you're saving a down payment for every purchase.

Yeah, so I looked at all the different creative ways of doing things in my head.

If you're not if you're not working hard enough to save the money, put it to the side, if you're going out, you're borrowing money from people to help you out, if you're not really earning it and seeing how hard it is to make it.

If something comes up after you've invested that it's easier for you to just kind of throw your hands in the air and say I give up.

This is kind of like that blood, sweat and tears.

You know, you do all the work yourself, and it means more to you as you accomplish things.

Right, Okay, So as so, I guess when you set the goal of one a year, buying one property a year, that that was based on that you could save a twenty or twenty five percent down payment over the course of a year.

Right, So if with who I was using to get my loans through, I was able to get much lower rates.

Usually when you're an investor, you do pay extra on your loan rates, and with me putting twenty five percent down, it did two things.

It got my loan rate a lot lower and my cash flow was a lot higher.

So it set me up down the road in a much better place.

All right, Well, well let's let's figure out how you built your portfolio.

So let's go back to the very beginning.

What was your first rental property.

My first one was a single family house about thirty minutes from mine.

It was a foreclosure bank foreclosure.

It overlooks a lake, so it has a It's in a really beautiful area, and I had purchased that.

It's not a very big house.

It's around one thousand square feet to bed, one bath, attached, one car garage.

I paid ninety five thousand for it in twenty seventeen.

The only things I had to add were a refrigerator and then I just added window treatments.

So it was a very easy one to turn and get some a tenant, and I had a tenant in within about two weeks of me purchasing it.

Is that like typical for what you're looking for a property that you can buy and start renting out right away.

I'd say yes, But that was the easiest one, and then after that it just bought more and more difficult one.

Okay, I had kind of a thing that I went by, and that was, if I'm not willing to live in it, I'm not going to rent it to anybody.

So like my second home that I bought was a duplex that we kind of stumbled on, not knowing.

Even my realtor didn't know it was duplex because it wasn't listed as one.

So when we walked through it, we saw on the there was like a deck in the backyard or a staircase up to a deck.

We went up there and there's another door and we went inside and we're like, wow, this is a studio apartment.

So it was it was a diamond in the rough for sure, because I mean, they had it on the market for quite a long time.

So I was able to get it for one hundred thousand dollars.

And then right after I bought the house, the town announced that they were going to make like a river walk and they like revitalized the area that was in and put a ton of money into the neighborhood.

So just me buying it, and if I didn't even out the value the property want way higher.

And now that one hundred thousand dollars house that I bought in March of twenty eighteen is at least two hundred and fifty thousand value.

Wow.

Now with it not being advertised as a duplexit, was it oned as a duplexit?

Did you have any kind of trouble you or anything you had to do with the county to make it legal to rent out that other space.

No, And that was what was funny, was it was zoned or to be legal to be a multi family.

But I'm not sure if it was a newer real estate agent or what that they didn't properly code it in the MLS.

But even in the description of it, they never even bring up that there's an apartment overhead.

And I at the time too, if you think back to like the twenty eighteen when I bought that house, I don't think duplexes or multifamilies are all that desirable, So that might have been one of the things that they thought about.

Well, let's just leave.

That out right.

Wow, well, well, good for you for finding that.

How long did it take from the time that you bought that first property to that duplex?

Like?

How long?

How long did you wait for that?

So the.

House that I bought originally the first one was December of twenty seventeen.

It went so well that I started looking in January at another place, and by March I had purchased my next one.

So over a four month span, I had already closed on my next property.

Now did you notice the difference?

A lot of people prefer single families or some people preferred duplexes.

It sounds like you bought a lot of duplexes.

Like do you find duplexes are better rental or do you have a preference?

So they're definitely better rentals for cash flow, so I make quite that one.

In fact, when I started renting it, that was when the light bulb turned out in my head that I can chain trade a paycheck for one month's rent on a house.

And that turned my My goals were completely changed by just that house right there.

My cash flow is so high it replace the paycheck.

So in my head, I go, okay, now, from now on, when I buy houses, I'm going to figure in that I make enough cash flow that I replace a paycheck, so then I will be completely financially independent at that point.

Wait, explain that.

So you buy a property and the cash flow from that property is equal to your paycheck from your job.

Yeah, equal or greater than my take home pay for my job.

Yeah.

So I think I had mentioned to you before that you know, you can make a undred thousand a year and a third of that has gone to taxes right away.

So we'll say, on the high side, you're going to take home seventy five thousand an actual take home or seventy to seventy five thousand my job.

I have to work about twenty six hundred hours a year to make that.

With the rental properties I'm figuring out that I'm using.

I'm making over one hundred thousand dollars and I'm spending like sixty.

Hours a year doing much better deal.

Right, it's mind blowing.

Yeah, it's yeah, it's surprising that this stuff isn't taught.

In schools, but I know, yeah, if it was.

Mainstream, then we probably want to be talking about.

That's true, that's true, that's true, all right, so so that do you buy that duplex?

How long did you wait to buy your third property?

The third property?

I waited about a year from there.

Okay, I had to build up my cash.

I never went out looking until I had I we'll say, like thirty to fifty thousand in the bank so that I would be able to come up with a good down payment.

And to save that thirty to fifty grand.

That's just saving money from your job and then saving the cash flow from those first two properties.

Yeah, like I said, the automatic savings is where it's at.

Yeah, you never miss it.

If you never see it, you really never miss it.

And I mean I was making I don't know, I'm a garbage man, so we make pretty good money.

But when I had first started, I was making about, I don't know, around seven hundred to eight hundred a month.

So I figured, Okay, we'll draw the line at seven hundred a month and anything over we'll go right in the bank.

And it just little by little, little tiny bits were adding up, adding up, and adding up.

So by the time I was ab or wanting to buy houses, I had over seventy thousand dollars saved up in the bank, ready to go.

Yeah.

I mean, I think taking money out of your account, that that automatic savings is so important because if you have money in your bank, I think it's just human nature to spend it or something will come up.

But if you don't see it, I think that makes a big difference.

All right, So then you saved up.

What was your third property?

My third property was a home, another duplex, but it was a much larger duplex.

Bones of the house were solid.

It's built around early nineteen hundred nineteen oh two, I believe, so it's an older house, but it has a lot of cool character and features to it.

Being two bedroom, one bath upper, two bedroom, one bath lower made it really easy in my head to rent.

All right.

So you get that property up and running, and then how long did you wait to buy your fourth property?

About a year?

Maybe a little bit more than a year.

Was that another duplex?

That one was a single family home.

I had to put about twenty thousand into it to upgrade electric and then I moved some walls around and made it made the flow of the house a lot better.

So all in, I'm thinking it's a little right, around one hundred thousand all in on this house.

But I only financed sixty thousand of it because you know, I put twenty five percent down on it when I.

Bought it, right, Okay?

And yeah, and.

That house that was right around the COVID time when I got that one, when COVID was going crazy, and my payment on it was so low because the interest rate was three and a half percent on it, so the payment was like six hundred dollars a month or I don't even I think it was sub six hundred a month on that house.

And I was getting sixteen fifty for it.

So it just incredible to me.

Yeah, a single family house and making over one thousand dollars a month in income after expenses.

I was blown away.

So awesome, all right, and then your your fifth and final deal.

What's the latest property you bought?

I actually have six, probably six, got to Yeah.

I bought two more duplexes.

The the final one that I bought was when our interest rates were going a little bit crazy, and so that one is my highest interest rate at seven point six percent.

And I had bought that one.

It's in a pretty famous town.

It's where Groundhogs Day was filmed.

But I had bought that house and rents were just enough to cover the principal interest payment on that so right away I had plans for it to moving up because the rents were way way below market and total for the entire house, I was only making sixteen hundred total rent and now I'm making about fifteen per unit on that house.

So nearly doubled my money on that place within two years of time of owning it.

Yeah, and then there was one more place.

Yeah, the one that I bought before that was another home in the same town, another duplex.

That one is a huge house.

It's seven bedroom, three bath but it's a duplex, so the upper is two beds and one bathroom and then the lower is the remaining amount of the five bedroom.

It's it's a huge house.

It has pay for laundry in the basement too, so I'll go over there every couple of months and I'll pull all the quarters out of there.

It's like one hundred, two hundred and fifty dollars and just extra change that you get every couple of months.

So yeah, that one does incredibly well too.

After all my payments on that one, I'm at about two thousand a month and in income on that one, after all my all my expenses.

I'm putting two thousand a month in my pocket.

So that the key to your story is saving up down payments like that, that's really how you got to where you are today.

That it's it's you're just really good at saving money.

For me, that's what works.

I'm not a fan of bills, so as you could tell, I don't like having bills.

And the thing that's so amazing about investing in real estate is that there's so many different ways to go about it, so many different approaches, and not saying that one other approach is better than mine or worse than mine.

There's so many different ways to make it in real estate.

You hold it long enough, you're going to make money on it.

Very true.

Well, if anybody wants to reach out to Jeff, I've got his contact information on the website.

You can find it at Rental incomepodcast dot com slash episode five thirty four.

I'd like to thank Chailey Ridge from Ridge Lending Group for sponsoring today's episode.

If Jeff inspired you and you're ready to buy your first property or you want to add to your portfolio, reach out to Chailey.

She has a ton of different loan programs and she can find something that works for you.

You can find out more and track down Chailey at Ridge Lending Group n MLS four two ero five six.

Thank you so much for checking out the podcast today.

Make sure you hit the follow button.

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My name is Dan Lane and this has been the Rental Income Podcast