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BP Podcast 078: Quitting Your Job, Buy & Hold Investing, and Succeeding With High-End Rentals with Brie Schmidt

by Brandon Turner on July 10, 2014 · 55 comments

  
Brie Schmidt

Today on the BiggerPockets Podcast we are excited to sit down with a real estate investor who just said “you’re fired!” to her day job and became a full-time real estate investor!

We are talking with Brie Schmidt, who invests in a wide range of rental properties in the Midwest and shares some incredible insight into how she finds them, finances them, and manages them. In our conversation we dive into some really important topics regarding personal finances, getting your first deal, working with your spouse, tenant-friendly laws, when to quit your job, and a lot more! You are going to LOVE this episode!

Today’s Sponsor: PayNearMe

PayNearMeLogoSmallOur sponsor today is more than a sponsor- it’s a company I know and love – and that is PayNearMe. This is a service I use every month to collect rent and highly recommend. In the past, my tenants used to either mail rent or drop it in a drop box – but this was a major hassle. So now, I use PayNearMe, which allows tenants to pay their rent, in cash, at any 7-11 or FamilyDollar. I get notified immediately that they paid and their rent gets direct deposited into my checking account. You can learn more or sign up at PayNearMe.com/biggerpockets – and if you are a BiggerPockets Pro member, be sure to sign up through the link at BiggerPockets.com/perks to get a $30 Amazon Gift Card when your tenant makes their first rent payment!

Listen to The Show on iTunes

Click here to listen on iTunes.

Listen to the Podcast Here

In This Show We Cover…

  • Why Brie chose a triplex for her first primary residenceBiggerPockets-Podcast-Cover
  • Choosing appreciation vs. cash flow in a buy and hold investment
  • Why Brie decided to diversify her investments into long-distance investing.
  • What makes an area “landlord-friendly” vs. “tenant friendly
  • Dealing with maintenance request issues.. even while on vacation.
  • Why Brie calls herself a “YouTube Landlord
  • Real Estate as a hobby vs. a business
  • Why Brie encourages Pets.. even a 120lb dog!
  • When should you quit your job?
  • Investing with your spouse: how to make it work
  • House Hacking and using your personal finances to fund your investments
  • Using online software to help you control your spending and invest in real estate
  • The one question that Brie asked that led to a ton of deals, financing, and partnerships.
  • Should you allow smokers in your rental unit?
  • And a TON more!

Links from the Show

Books Mentioned in the Show:

Tweetable Topics:

“They should force lawmakers to own rental properties before writing the laws.” (Tweet This!)
“BiggerPockets: Pissing Off Employers Since 2004” (Tweet This!)
“What’s more important? Getting rich or staying married?” (Tweet This!)
“The beginning of budgeting is understanding where you are.” (Tweet This!)
“I’ve learned more on the BiggerPockets forums than any book I’ve ever read.” (Tweet This!)

Connect with Brie:

Brie’s BiggerPocket Profile
Brie’s Twitter: @ChicagoBrie
Brie’s Website: ChicagoBrie.com

 

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{ 55 comments… read them below or add one }

Huy Nguyen July 10, 2014 at 7:20 am

Thanks for cheering up my morning guys and gal!!

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Brie Schmidt July 10, 2014 at 8:37 am

Huy- Thanks for listening!

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Joshua Dorkin July 10, 2014 at 8:44 am

Happy to help, Huy! Thanks for listening.

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Tom & Roni Keith July 10, 2014 at 12:20 pm

Make that a 2nd, @Huy Nguyen. Great Morning Show! Thanks.

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Brie Schmidt July 10, 2014 at 4:50 pm

Thanks Tom and Roni!

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GK Banchero July 10, 2014 at 12:21 pm

Woo hoo! Finally downloaded BP Podcasts onto my iPod! Now I can listen anywhere! Thanks, guys!

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Brie Schmidt July 11, 2014 at 4:41 pm

GK – Glad you got them downloaded and were able to listen!

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Jon Lafferty July 10, 2014 at 1:38 pm

Great show today guys. I really enjoyed hearing about Brie’s experiences and successes. You are really doing a great service to the REI community.
I was curious and maybe I missed it, do you have a threshold for how leveraged you get with your investments, 80% LTV, 50% LTV all cash?
By the way, I’m with Brandon, there is something unexplainable about a good Starbucks beverage.
Congrats and continued success.

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Jon Heather July 10, 2014 at 2:40 pm

I had the same questions in my mind about the LTV during the cash flow part of the discussion.

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Brie Schmidt July 10, 2014 at 5:00 pm

Jon – We have either bought or refinanced into loans that are 75% – 80% LTV – The longest we ever went with less than a 80% LTV was our first which we bought FHA and then refinanced conventional due to equity gains about 18 months later

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William Newman July 10, 2014 at 1:50 pm

Great podcast @Brie Schmidt,

The tip about the dogs, PRICELESS (in the right market)… We haven’t spoke in a while, but it sounds like everything is going very good!!!

Keep up the good work and Happy Investing!

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Brie Schmidt July 10, 2014 at 5:04 pm

Thanks William! It works for us, it also helps create a sense of community as a lot of our tenants BBQ in the yard with other tenants while the dogs play

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Ted Wilcox July 10, 2014 at 4:10 pm

I am wondering if you have breed restrictions imposed by insurance on what kinds of dogs you can have in your rentals. We have a Rotweiler mix and it was very hard to find a place to rent because of insurance. Do you have these kinds of restrictions or do you just have a good insurance company.

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Brie Schmidt July 10, 2014 at 5:06 pm

Ted – Yes and I totally forgot to mention it. We cannot have what they consider attack breeds due to insurance. We actually had to deny a really great tenant with 2 sweet pits this year because of their breed. I am personally against this rule but I also cannot risk losing my insurance over it

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Greg Jackson July 10, 2014 at 6:12 pm

Brie,

Great podcast! Very inspiring, great to see you catch the RE bug and run w/ it. Best of luck to you and your hubby as you continue to build your portfolio.

Also like those Gary Keller books. And the BP forums rock as we all know.

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Brie Schmidt July 10, 2014 at 8:33 pm

Greg – Thanks for the kind words and support!

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Antonio Vasquez July 11, 2014 at 12:39 am

Great show guys, Brandon & Josh you guys can quit ur day jobs and become broadcasters! Brie sounds so relax (probably because she just quit her 9-5) and yet she’s a go getter. Brie touch on a very key subject which is where she finds her deals. In the past basically every other guess has “trashed” or dont like buying off the MLS and he comes Brie so casual and say “Hey i buy all my property off the mls” and by the way those properties produce very good cash flow. I guess there are deals everywhere you look, you just have to look carefully. Brie i have to say for someone who kind off just fell into real estate investing you are very knowledgable and to have accomplished so much in so a short period of time its amazing. I got so much from your interview. Thank you so much and hopefully your no eviction streaks continue for ever.

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Brie Schmidt July 11, 2014 at 4:33 pm

Antonio – Thank You! I was actually super nervous and they were teasing me beforehand about it. But yes, I think there are still deals on the MLS though it takes time. We all just need the patience to find them. Good luck to you!

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Orion Walker July 11, 2014 at 1:12 am

Hi Brie,
Great podcast. Sounds to me like you could also start a side business doing consulting on how to organize your finances and live on/follow through with a budget. We use Mint, and find it helpful, but we need to get better about fine tuning our budget, monitoring, and sticking to it. I really liked what you had to say about how that has enabled you to grow the way you have in the last couple years. With our first property (4plex) under our belts and a renovation just completed I’m now taking the excess rent and setting it aside in a separate account each month. We’ll work on not touching that to build up for our next one. Also looking at refinancing to get some cash to move forward. Also working on getting my real estate license. I was just really inspired by your show because I feel like we are following in your footsteps and hearing about your success is very encouraging. My wife and I have also discussed the goal of being financially free by forty (3-4 years) and hearing you talk about it gives me confidence that we can really set that goal and achieve it. So, big thanks for sharing. Very inspiring.
See you on the discussion boards,
-Orion

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Chuck H July 11, 2014 at 1:24 am

I used Mint for years. Check out Personal Capital. I prefer that aggregate software now.

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Brie Schmidt July 11, 2014 at 4:37 pm

Chuck-
I will have to look into that. Thanks for the suggestion!

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Brie Schmidt July 11, 2014 at 4:36 pm

Orion-

Sounds like you are will on your way. Like I said on the show, it is much easier if you and your spouse have the same goals and remind each other of them constantly. One thing I did forget to say is we try to do a big international trip every 18-24 month. It can’t be all hard work and no play. We also use that as a motivator to keep to our budget. Good luck to you!

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Chip Carney July 11, 2014 at 10:04 am

I want to share my thoughts on renting to dogs. I have a triplex in Syracuse, NY. It’s is my first rental property. I purchased one on the middle to high end of the market purposely to attract high quality tenants. While I was screen potential tenants the people that I was leaning towards also inquired about allowing larger dogs. Being owned by a dog, or dog owner myself I originally advertised small dogs are OK. I ended up deciding to allow the large breeds. We have one flat with two dogs, one medium sized mix and a Great Dane (very cool dog). Another flat is rented by a single professional with three dogs. They have been the best tenants. I just signed a second one year lease with them both. I found this niche without intention, but I do feel that I have quality responsible tenants because they are responsible pet owners. I will likely have long term tenants because they find it hard to locate quality housing that allows large breeds.

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Brie Schmidt July 11, 2014 at 4:39 pm

Chip – Glad it worked out for you too! We have had no problems with our dog owners. Before we owned we lived in a 6 unit with 5 units of dogs and often spent our evenings in the yard with our neighbors. That is still the best place we ever lived and if we didn’t buy we would still live there (we actually visit often) We really wanted to create that type of community in our units

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Karen M. July 11, 2014 at 1:59 pm

Nice podcast! Brie, it was very interesting to learn about your experiences and congrats on your success! Sounds like you are doing many things right.

Brandon, as a Starbucks shareholder, I want to thank you and your wife for your great support. :) Happy peppermint mocha, man!

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Brie Schmidt July 11, 2014 at 4:40 pm

HaHaHaHa Karen! That is hilarious!

Thank you for the support. Best of luck to you!

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Vana G July 11, 2014 at 5:42 pm

Excellent podcast Brie! I am so inspired to hear your story and really looking forward to making things happen like you did.

All the best,

Vana

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Brie Schmidt July 12, 2014 at 9:57 am

Vana Thanks for listening and best of luck to you!

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Eric July 11, 2014 at 9:29 pm

All great ideas. As a landlord with 24 units, credit score is probably the number one attribute that I look for. If a person has a great credit score, they generally have a decent income, and no criminal record either.

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Brie Schmidt July 12, 2014 at 9:58 am

Eric – Yes! Tenant screening is so important and will make your life so much easier in the end

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Atul Mohlajee July 12, 2014 at 5:23 pm

I am really impressed with your zeal to achieve so much in a little time. Still question about how you made numbers work on Chicago’s north side. The only way I have made numbers 1.3 or so is by buying foreclosures. Maybe you bought distressed sales at the right time.

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Brie Schmidt July 12, 2014 at 6:43 pm

Hey Atul! I got lucky when I bought fully rehabbed from flippers. It was 2011 – 2013 right before the big jump we got in Spring 2013 – since then I have not seen anything that gives me the numbers I was getting. That was another reason I looked at new markets. I was able to cash in on the equity and invest elsewhere.

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Tiffany Alexy July 13, 2014 at 1:43 pm

Hey Brie! Great podcast. It’s really inspiring to hear about someone’s success and know that it CAN be done! I’m 24 and my goal is to have the option of retiring early and living on net rent income by 30. Who knows if I’ll make it but even if I don’t, I’ll be way closer than if I didn’t have that goal to keep me motivated!

You make a lot of great points about renting to pet owners and how it contributes to lower tenant turnover. As someone who likes doing what other people aren’t doing (it’s what gives you an edge over the competition) I can really appreciate that aspect of your business!

And Brandon – as a coffee enthusiast & former Starbucks barista – your Starbucks budget has my complete blessing FWIW. Actually the steam wands do have a thermometer on them so specifying “175” is totally relevant. I give myself a rough coffee budget of $40/month so y’all make me feel a little bit better :) If you are such a regular, you must know the other regulars at the shop too? This provides the PERFECT networking opportunity – just a tip. I’ve met an incredible amount of professionals at Starbucks just from working there. Not all real estate of course, but you can never have too many friends ;)

Thanks again guys!

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Brie Schmidt July 17, 2014 at 8:42 am

Tiffany – Sounds like you got a good start! Good luck!

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Julius July 14, 2014 at 4:22 pm

This information will help me

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Brie Schmidt July 17, 2014 at 8:43 am

Glad to hear!

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GG July 15, 2014 at 7:36 am

Finally had the opportunity to listen to the podcast. Guys and Brie – great job!! The podcast was concise and informative. It was very helpful for the newbies like myself. Keep up the great job and keep the podcast coming. I am learning so much.

Best wishes Brie!

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Brie Schmidt July 17, 2014 at 8:44 am

GC – Thanks!

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Grace July 16, 2014 at 3:30 pm

Hey Brie! I really enjoyed the podcast, hearing your story, and how you got started. Very inspiring! How important a role would you say having your RE license has had in your success as a real estate investor? Also, what aspects in particular about being an agent/broker did you not enjoy? I’m in the middle of a career change and was playing around with the idea of getting my RE license. Your perspective is much appreciated!

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Brie Schmidt July 17, 2014 at 9:00 am

Grace – For me it was not that big of a deal having one. But I do 1 – 2 deals a year because of the price point I am in. If I was buying monthly then having a license is really important.

As far as why I did not like it – it basically came down to the fact that I speak numbers and regular home buyers/sellers speak emotions. If you speak both then it would be a good idea – I also hated working nights and weekends when most home buyers are free

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Drew July 16, 2014 at 10:06 pm

Hey Brie! Good show! Thx for doing it!

Had a question – You mentioned never having late payments from tenants, and that has been driven primarily by having them you use direct deposit to pay their rent. Am I understanding this correctly? Can you elaborate on this?

Are you actually having them set up direct deposit from their job’s payroll directly into your accounts? …or are we talking about some other automated billpay system?

Thx so much!

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Brie Schmidt July 17, 2014 at 8:46 am

Drew, the service I use has free credit reporting built into it. So the tenants set up automatic withdraws on the 1st and it reports it as paid on time on their credit. All of our tenants have chosen this option to build credit and it ensures on time payments

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Anil July 17, 2014 at 4:47 am

Awesome show. Thanks Brie for sharing your success story. It is truly inspiring to me and I want to be like you when I grow up :)

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Brie Schmidt July 17, 2014 at 8:47 am

Anil – thanks for the kind words and support. Set a goal and let nothing get in your way!

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Anil July 17, 2014 at 9:07 am

Brie,
BP is really pushing me to set goals and achieve them. I am also looking into developing a more detailed business plan as well. There are so many real estate business professionals on this site, that it has really motivated me to take my investing and business to the next level. Thanks for assisting in the motivation!
Anil

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Bill Coleman July 17, 2014 at 11:58 am

Awesome show guys. I love the tip about charging a $1000 fine for any tobacco smoke that is detected in the unit – good deterrent. They may not be smokers but their friends might be.

Brie, one of the pieces of information that seems to get left out of nearly all of the podcasts are the gory details of how investors worked their financing and that’s what I am most interested in. I feel like I have better cash reserves than most new investors and I feel like I dont have a plan on how to those funds efficiently to get the most leverage.

I just bought two SFRs that need rehab and my cash is flying out the window. Seeing that you build a sizable enterprise with just good budgeting, I would like to understand the details of your finance plan.

My goal is to buy enough real estate to make that my full time job, as you have done. Would you be able to correspond with me so that I can hopefully develop a better plan? It might only take a few moments to explain and it could get me on track for my dreams. 3 years to retirement sounds like a very fast build out and I would be thrilled if I could make that happen.

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Brie Schmidt July 21, 2014 at 4:33 pm
Chris Vail July 17, 2014 at 1:41 pm

Thanks for sharing your story Brie. Excelent Podcast.

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Brie Schmidt July 21, 2014 at 4:33 pm

Thanks Chris!

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Jim Sestito July 18, 2014 at 5:14 am

Brie,

Great Podcast, glad to see your team having such great success.
– One quick question; you mentioned you will be licensed in 3 different states, can you talk about the cost to hold those licenses? Initial cost and then yearly expense?

Thank you and good luck with future investments!

Jim

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Brie Schmidt July 21, 2014 at 4:37 pm

Jim – I have been licensed in IL for over 10 years so I do not remember the initial costs. But every year it costs me about $1000 for licensing fees and MLS access. Because I am licensed in IL then all I need to do is pass the state tests in IN and WI (because the states have agreed upon this through something called reciprocity – so all I would pay is the state fees and MLS access since I will be opening my own office I won’t pay desk fees or franchise fees.

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Eric Kasowski July 23, 2014 at 5:47 pm

Brie,

Thanks for the excellent and informative podcast. It was truly inspirational. Can I ask what type of financing you use (I assume it’s not conventional with so many units), and do you hold title in a business entity?

Sorry if you said it and I missed it.

Eric

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Brie Schmidt July 28, 2014 at 7:35 am

Eric – The Chicago ones are residential conventional financing in our personal names – The new properties are commercial financing in a LLC

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Kim August 12, 2014 at 2:42 pm

One word ” WOW’.. not what i expected when i was linked into your Site. Great way to get your message across.

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Siva September 15, 2014 at 7:39 am

Hi Brie

Could you please tell me what are good neighborhoods in Chicago?
Heard you bought something recently in north Chicago?

Thank you
Siva

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