BiggerPockets Podcast 002 with Karen Rittenhouse Transcript

Karen Rittenhouse Podcast BiggerPockets

Link to show: BP Podcast 002: Subject To, Direct Mail, and Investing from a Woman's Perspective with Karen Rittenhouse

Josh: What’s going on everybody? This is Josh Dorkin and you’re listening to Podcast #2. With me is my co-host, Brandon Turner. What’s going on, Brandon?

Brandon: Not much. I am glad to be here.

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Josh: So, today we’re going to talk to Karen Rittenhouse, from Karen is a real estate investor located in Greensboro, North Carolina, and she’s actually bought and sold more than 150 single-family homes over the last eight years. Karen started her real estate career with an original goal to own five rental properties. She’s actually far surpassed that goal and today, with her husband, Jim, she’s got 11 employees, a real estate investing business, a full-service real estate agency, a property management company, and so much more. She’s the author of three books, The Essential Handbook for Buying a Home, The Essential Handbook for Selling a Home, The Essential Handbook for Landlords—she might even be writing the essential handbook for writing essential handbooks.

You can check out those books. We’ll share links to those and her website on show notes at and Karen, it’s great to have you on the show.

Karen: Thanks so much. I’m glad you guys had me today.

Josh: So Karen, you started this goal of owning five rental properties—where did that come from?

Karen: Well, my husband and I met and married later in life. My kids were grown and leaving the house, and my focus became retirement. Jim and I both made really good money and lived very well, but we just didn’t have anything saved for retirement, and I wanted to quit working. I had been working since I was 15, and we had very small 401Ks.

So what I did was I started reading and researching about the wealthy. I don’t mind there’s a 1% in this country—I just wanted to be there. How did they get there? How did they get generational wealth? And I kept running into real estate over and over. So I knew I could buy houses. I had bought two in my life. One, a long time ago with my first husband, one as a single mom, so I knew I could do that.

And I talked to Jim. I said, I think if we had five rental properties for retirement, that that will be set. Because by the time we retire, they’ll be paid for. They’ll be generating $1,000 to $2,000 a month income, so that’s an extra $5,000 to $10,000 a month passive that’s just going to come in. And he agreed. It was great. We started as a hobby on Sundays, driving around looking at neighborhoods, talking to first sell-by owners, talking to real estate agents.

Now, this time, it was probably 10-12 years ago, 15 years ago and the market was very good. So our goal was to pay 5-10% below retail, get it to cash flow about $200 a month so that it would cover our costs, cover hot water heater damage, painting a carpet when tenants moved out. Not for income—this was strictly long-time hold for wealth and retirement. So it took us about five years to get those three rental properties—sorry, it took us about three years to get those five rental properties, and at that time, we were done with my original goal.

What happened next was Jim and I were both in straight-commission sales for our income so we never took vacation because if we didn’t work, we didn’t eat. And we certainly didn’t take off at the same time. So finally, after about five years or so, he and I took a week vacation to Seattle.

Josh: Nice. Good place.

Karen: So we came home—of course, our commission’s in the toilet. We hadn’t sold anything, so we had nothing. But our rent checks were in the mail. At that time, I had this aha moment. I said, what if we’re focusing on the wrong end of our income? This real estate stuff works no matter where we are, no matter what we’re doing. We can be on vacation. We can be on the sofa. We can be in the hospital. And at that time, I started calling rental properties oil wells. And I said, these little oil wells just pump. It doesn’t matter where we are or what we’re doing. Maybe we should do this more.

Josh: That’s great. I had never heard it stated like that. Have you, Brandon?

Brandon: No, that’s awesome.

Karen: Oil wells?

Josh: We’re going to have a whole new thing on BiggerPockets. We’re going to talk about oil wells and nobody will know what we’re talking about except the people who listen to this podcast.

Karen: That’s right—it’ll be our secret.

Josh: Nice. Well, that’s great. There was that aha moment where you just came out and were like, holy cow, we can actually start making a living with rental property.

Karen: Everything changed. And we didn’t know. We thought maybe. But I said five is good. What if we had ten? What if we had 15? How many can you have? I didn’t even know. Is there a law? Is there a certain number and you can’t have more than that? So we started at that time looking for a guru. We wanted to know more. We needed training.

We knew we didn’t know anything, and we found somebody who was training in Atlanta, which was perfect for us. That was a five hour drive, so we took two days a weekend. We went down to Atlanta for a two-day event and we were already psyched about real estate. We were already primed, and of course, it was two days of selling. Jim and I together had $20,000. Everything this guru was selling, his whole package, all of his books, all of his forms, contracts, everything was $20,000. We took it as a sign. So we bought everything he was selling and we headed home. We were so psyched.

Now, at that time, we each had a good enough income that either one of us could pay all the bills. So what we decided was, one of us should quit our W-2 job, try this real estate thing full-time and see if it worked. Now, I didn’t know what “worked” meant. I just thought maybe I can get to retirement sooner. Maybe I can have a better retirement. I don’t know. But I wanted to quit, jump into it full-time and see where it would lead. And so that’s exactly what happened. I quit my job and jumped into it January 2005 full-time.

Josh: Wow. Wow, wow, wow. So the first thing that comes to my mind from there—I definitely want to talk to this transition from that five deals to whatever you are today—150 is what I think I’ve got written down but I’m assuming there might be more.

I want to talk about you. You are a person of the female persuasion, and there are not a ton of female real estate investors out there and I’m really, really curious to hear about the challenges—what you experienced, kind of from a female perspective. I don’t know if you can actually do that, but I think it’s just fascinating because I don’t understand why there are not more women in this industry. There are tons of women who are agents and brokers, but not a ton of investors. So can we talk about that a little bit?

Karen: Maybe nobody was desperate enough because I don’t know—I was really desperate to secure retirement and to not be a burden on my children. I had been a single mom for a long time so my big focus was how to not be a burden, how to have my retirement set, how to pass onto my kids and grandkids so I just jumped in with blinders on and was determined. It was interesting because for the first two and a half years, I did it myself. At the end of the two and a half years—well, my husband would help when he got home from work but I did it about 18 hours a day, seven days a week for two and a half years.

In that time period, I bought 25 houses and then I was done. I said to my husband, we have enough. I said to my husband, five was good, 25 is plenty. He said, no, no, no—you’ve got a good thing going and at that time, he quit his W-2 job to join me.

Well, starting out when we were first working together, of course it annoyed the heck out of me but contractors would come, attorneys, anybody, and they would want to talk to my husband. So, it was interesting because there were a number of people who came for interviews because they wanted to work with us, even people that I had met, spoken with, and set an appointment with, would come in and say, “I’m here to see Jim”. None of those people got hired.

Josh: Yeah.

Karen: And I think, really? In this day and age, you still have that mentality that you need to talk to the man? So that was interesting.

Josh: Wow, wow, wow.

Karen: But Jim had a very different perspective on finances than I did. We coached and trained as I think I might have mentioned, but what we found constantly with couples, the man is typically the leader and the woman is the support. But we females have a real hard time wrapping our heads around the term “good debt”. We don’t want debt. We don’t want debt for our children. We know what it means to budget for our groceries or whatever else is going on in our lives. So why is it okay to borrow money from people to buy an asset that you can’t begin to pay for? And to have this hanging over you.

So Jim and I argued for probably two and a half years about the term “good debt”. I said, that’s an oxymoron. It makes no sense.

Josh: Gotcha.

Brandon: My wife and I talk a lot about that as well right now. Because she’s very much more, we should pay off everything as quickly as possible, but I’m like, oh, but look at the interest rates and the numbers and the math. Yeah, we have that debate at least once a week. We talk about that same issue.

Karen: Jim had all these calculators and spreadsheets that would show me, yes, we can sell that property today and make $15,000. If we hold it, look, Karen, in ten years, it’s going to be worth $350,000 to us. Why would we sell today? And I would say, so I can buy groceries.

Josh: Yeah, definitely. So let’s get into this female thing a little bit more, if you don’t mind. Obviously, I like you. Had I been a female hiring, would have also told them to take a walk if they had asked for my husband at that time. So how do we overcome that? Because I don’t know that we can just kind of wheel it away, this bias. But I think a lot of women potentially shy away from stepping in from the industry because I think they assume it’s a man’s world. Do you have any advice to somebody who’s thrived as a woman in this “man’s industry”, which I disagree with completely.

But do you have any advice for women who might be thinking about it but say, I’m a little worried, I don’t want to be dealing with these male contractors, chauvinists, this, that and the other? What helpful tidbits do you think you have for them?

Karen: What was interesting starting out, because as I mentioned, Jim and I could each pay all the bills so we had to decide who would quit and start this business. Jim wanted to—he was ready to jump. I didn’t want to. Again, I think it was a security issue. I was mid-40s, did not want to be stupid again, but what I determined was, if Jim quit and learned this business, he’d be really good at it—he’d be capable—I’d come home at the end of the working day exhausted and he’d want to tell me about it. And I’d say, I’m exhausted, I don’t want to know and I’d turn on the TV. If I quit and learned this business, I’d be forced to learn everything. Jim would come home at the end of the day, say tell me everything you’ve done, and we’d both learn the business.

So as most uncomfortable, I was way outside my comfort zone, I was terrified. But I made myself do it because I knew that I needed to know it and I wanted to know it because again, I wanted to know for myself and for my children, to make sure that I could do this business. Now, once I got into it, I think it was a great thing that it was me as a female doing it. I think most people are comfortable saying the woman tends to make the decision about buying and selling. You better make the kitchen and the master bedroom look good because it’s what the woman looks at.

As a woman in the business, especially someone who had been a single mom, I had a real heart and passion for women. So as an investor, I never went in aggressively to talk. I never went in to close a deal when I talked to sellers. I always went in to solve a problem. I always went in saying, what is it you need and how can I help you? And that’s how I learned the business. Because people would tell me, this is what I’m looking for. This is my pain point. This is my issue. And I’d say, let me see if I can figure out a way to fix that for you. And then I’d get back to them.

Because of course, I didn’t know anything anyway so I had to figure it all out. And I just would go back and say, I may not be your best solution but I am a solution and here’s what I can do. And if it doesn’t work for you, I just want to keep helping you. Feel free to call me, ask me questions, and I think it was kind of a mothering response that people liked and was comfortable with.

Brandon: Yeah, that makes a lot of sense.

Josh: I was going to just say, it’s funny because most of the people that I talk to who I believe to be successful in investing look at it from that same approach. How can I solve your problem? It’s not, let me shove it down your throat. It’s I want to help solve your problem. And if you do that, it’s amazing how doors open and even if you can’t close a deal right now, I think things start coming back to you once you begin to do that.

Karen: They do. Yep. People would come back, call back, sometimes much later. And that’s how I learned the business because I heard gurus and I read books and they’d say, it’s this way. And I didn’t necessarily find it to be that way. I found people—at the time—eight years ago—I would say half or less than half were desperate sellers that I bought from.

But they always had an issue. They didn’t want people walking through their house. They didn’t want a ‘for sale’ sign in their yard. They wanted to know they could move when their new house was ready to move into. They needed to move quickly because they had been transferred. So many different reasons, that I would go, okay, I can do that. And they were willing to walk away from equity for that just because I made a solution. It didn’t have to be a desperate sale or a need.

Josh: I think that’s a really good transition to how exactly you started buying these properties. You talk about dealing with sellers, possibly motivated sellers who had a problem. Could you expand on that a little bit? When you first started, what was your business model? How did you pick these properties up?

Karen: When we first started and were working with some agents and ‘for sale by owners’ and things, we could get mortgages. Of course, we both had good incomes and we had good credit scores and at that time, mortgage companies would allow you to have eight loans in your name. Jim and I have separate last names. It worked out really well. I got eight loans in my name. Then, he got eight loans in his name.

Josh: We’ve done that as well.

Karen: I said okay. Then of course, we’re stuck. We still had good credit scores, but boy, our debt to income ratio is plenty. Then we had to be creative. We were forced. So at that point, we did almost exclusively for probably four years—we bought subject to the existing financing.

Josh: For those who don’t know, what is ‘subject to’?

Karen: That means you go in and you take over the financing that’s already on the home. A lot of people will say, well, the seller’s not going to let you take over a property and keep the mortgage in their name. But it is very legal. It’s on the hood. We would explain to people when we went in why we could pay more if we didn’t have to get our own financing and if we did take over their existing financing, and it was never a problem. We bought a whole lot of properties that way.

Josh: I’ve heard that there are issues with lenders could foreclose on a ‘subject to’. Have you had that happen at all?

Karen: We have not. We have not had one lender out of well over 100 properties. It was actually a credit union that contacted us and went in payment. And we were able to talk to them and discuss with them and they ended up saying, fine, okay, no problem. What we have found is, the banks do know what’s going on because they do see the deed change. They do see a change in insurance policies, and we’ve got more than one letter from lenders saying, we’ve seen all these changes. We’re not sure what’s going on but please continue the payments to this address.

And my belief is they do indeed know what’s going on but they’re very grateful to have a loan that’s performing. So no, we’ve never had one call. In the beginning, it was a tremendous fear, especially for me, I guess as a female. For both of us. Oh, my gosh, what happens if one does?

Because we’d hate to do that to the seller. Obviously, it was going to hurt the seller more than us. We did let them know if this would ever happen, you would get the house back. We’ve already paid it down more and we’ve already repaired it. You’ll have an opportunity to come in and rescue your loan, but our priority was always to make their payments first. We didn’t want that to happen and it never did.

Josh: So it sounds like you’ve done over 100 ‘sub-to’ deals. What would somebody who is interested in potentially doing these deals—how would they go about getting started? What advice would you have for that person?

Karen: Well, I guess, first, go online and read about it. Get all the information you can. Find an attorney who is comfortable with you doing that and will handle the paperwork doing that. We have three. In the beginning, that was one of my big dilemmas learning how to do it and also getting an attorney who understood it and was comfortable because we do all of our closings with attorneys, of course. We want all of our seller to be comfortable.

In our subject-to documentation, we have two places where the seller signs saying, I understand you are not ultimately responsible to make my payments. And then our attorneys have their own paperwork that they have the sellers sign saying now you know these buyers are not ultimately responsible to make your mortgage payment. So it’s all about disclosure, disclosure, disclosure. And paperwork. We make sure all of our paperwork is done and approved by attorneys willing to defend it in a court of law.

Josh: Tell me about approaching somebody.

Karen: Approaching a seller?

Josh: Yeah, what is that conversation like? How does that come about? What is your approach?

Karen: Well, I go in, first of all—and I’ve done a lot of them over the phone. I used to just do a lot of them over the phone because I didn’t have time to run around and telling you that it was going to work. So I would explain to them, I eventually had a form that I would start with the seller’s asking price and then I could deduct prices from there. I could deduct our closing costs, repair costs, things—so that we would get to the bottom of this form and at the bottom, it would come up with the number that I was offering. I always wanted to be able to show the sellers how I came up with my offer price so they knew I wasn’t just making up a number and they weren’t confused. And then I would say, this is what I can pay if I can take over your existing financing. Let me explain what that means. Let me explain why.

And then would proceed with, if I go out and get my own financing, of course, it’s going to cost me more and I can pay less. So I would show them that taking over their loan, they would get the best deal. If I had to get financing, they were going to get less. And if they wanted cash, they were going to get even less. So a lot of people like knowing that they’re getting a better price. That’s the first comfort area.

Josh: Okay. Yeah, that makes sense. And I’m curious—I’m kind of going backwards a little here, but how do you advertise for them? How do you find motivated sellers?

Karen: Our favorite way is direct mail marketing.

Josh: Okay.

Karen: And again, the reason I started with that was efficiency. I was busy. I was trying to learn this business. I couldn’t also learn neighborhoods and I certainly couldn’t learn large areas. So starting out, I picked three neighborhoods. My own, first. Then, two other in the price point I was looking for and the condition and then the age I was looking for. And then I direct mail marketed to just those three neighborhoods. And basically, we buy your house, we can buy houses, if you know anyone who’s selling a house, please have them contact us. That way, it’s not personal. It’s not an affront to the person getting the postcard and that way, when they called us, I knew it was a house I was interested in because it was the neighborhood I was interested in.

And also, when they get that and they call us, they know I’m not an end user. They know I’m a company so they know I’m not going to offer retail.

Josh: Okay, Karen. So let’s talk about how you’re going about doing your mailings. Presumably, you’re using some kind of company to get the list for the neighborhoods, the three neighborhoods that you’re focusing on. I’m assuming you’re not walking up the streets writing down addresses, so presumably, you’re using somebody to do that. Who is that, and is the process a difficult one to get that information? How does that work?

Karen: Right. No, it’s not difficult. Starting out, we did some starts and stumbles. We ended up using Postcard Mania. They’re out of California. They ended up being one of our favorite resources, and what we did there was, we just narrowed down neighborhoods. So we narrowed it down by area. We narrowed down to price point. We wanted owner-occupied only, because we were buying from owners. Now, we also will do non-owner occupieds, but we had three-bedroom or more, two baths or more, ten years old or newer. So over the years, we give different specifics but we just wanted to mail to these three neighborhoods and homes that met our criteria.

Josh: Gotcha. So you used Postcard Mania and they put the list together for you and they actually send the postcards out as well?

Karen: They did. When we first started, we had 5800 homes that we mailed to. We made sure they were hit every six weeks in the beginning and we did that for four years. Then we backed it up for when we would hit them every two, three months. We hit them all a lot less often because it’s pretty saturated. We’re known in the neighborhoods. They see our signs go up and they come to our open houses so we’ve really become known throughout the years.

Josh: Wow, absolutely. So what makes, presumably, there’s some metrics that you use in measuring the success of your direct mail marketing campaign. What are those numbers? Maybe you can share some of those percentages with us in terms of leads that you get or anything like that.

Karen: Gee, I don’t know. I know when we first started, we said, you have to talk to 100 to get 10 to make 5 offers to buy 1 kind of thing. Now, we probably talk to 20 to buy 1. As far as how many mailings we did to buy a house? Jim knows that. I really don’t.

Josh: Maybe we should have had Jim on the show. No, I’m kidding.

Karen: The numbers questions. Men are always about numbers.

Josh: Oh, boy. Oh, boy. I mean, this is fascinating. Something just jumped back in my mind here and it was on the number of properties. You said you’ve got x number of properties. The number doesn’t really matter but some people might be sitting here listening and say, you know, when it enough enough? Is there a point where you’re getting closer to retirement and you just don’t want to keep adding? So, I guess, is there a number for you, a specific number of properties, a number of income, an amount of time that you’re spending managing the business? What’s that level? Where’s the line?

Karen: Yeah, and for everybody, it’s different. We see it constantly with our coaching students. Someone will buy two or three a year. Someone will buy at least three a month. For me, it went from five to when Jim had said, well, when you have 25, we’ll stop. So of course, I jumped up and down when we got 25 and he said, no, no, no, because if we stop, what else will we do? Then, we started hiring employees. We have two different office building sites. So suddenly, we had to buy more and more to cover overhead. We have enough. We do have enough properties. We bought 68 properties last year. We have out-of-state investors. We’ve partnered with students. We do it a lot of different ways. We do some flips. We do not nearly as many flips as holds.

But from now on, this year going forward, we’ve changed our strategy to where we don’t want to hold. We only want to sell. And because we want to pay off the however many number we’re going to keep and be done. Our goal is to totally be done and self-sustaining in three to five years.

Brandon: Oh, wow. That’s great. Is your plan then, to take the equity from the ones you’re selling and pay the mortgages off on the others or just pay them down? You’re not going to buy anymore, so is that your strategy?

Karen: Right. We want to get these mortgages paid off.

Brandon: No, that’s great.

Josh: That leads me to think about exit strategies a little bit, and maybe we can kind of approach that. I always like to tell people, when you get started, you want to start with the end in mind. You want to know on a specific deal how you’re going to get out, but that leads me to think about the lifespan of somebody’ real estate portfolio. And I don’t know if you’ve got any thoughts on that, but maybe some perspective into how somebody can plan for, I guess, getting rid of their portfolios. What happens? How do they go about doing that?

Karen: Exactly. And we say the same thing. When we start with the end in mind and then back up into smaller steps, how to get there. And it keeps you focused. It keeps you on track. For us, we want this to be generational. I want our children to get it. When they inherit, they get it at a stepped-up basis so there’s no tax involvement. We have everything set up through trusts. We have nothing in our own name. Everything automatically just flows and passes onto the next heirs. We also have business partners. We have business entities and structures so that eventually, we will be simply passive holders of the companies that we have going.

We probably, year five or six, went from studying real estate—we thought we had a good handle—to studying business entities and wealth management. And we’re a part of national groups and national mastermind groups now, on owning and operating, structuring businesses, getting it to where it functions without you so that you can either sell it or just hold it passively. And that’s what we’re doing like.

Josh: You know, what I really like about your story, Karen, is in every real estate investors’ life, there are these stages that they go through. At your beginning stage, you start with the acquisition and you’re passionate. You’re trying to get everything you can. And then you kind of transition into the holding period and then you eventually get into the, what do you do with all that? It’s great to see, you said, in the last eight years, you can see the entire system there.

Karen: The entire spectrum, yeah.

Josh: Yeah, it’s really cool to see that in one—because sometimes you see that spread out in over 20 to 30 years, but you can see in eight years then, how quickly you can build pretty serious wealth and real estate just through, I guess, being careful and having a plan and just following that plan through.

Karen: Absolutely. We always say, start with a plan—a business plan—which we purchased a big business plan and we spent two months working on it back at the beginning. A business plan, just like your business, just like you, grows and evolves and morphs over time. So, my first goal, five properties. Jim’s next goal, 25. I had no idea I would have offices and employees. It was never part of the plan. But it just got here.

And now like I said, we study business and we study wealth and it’s all evolved and it’s been so exciting. But you have to constantly learn and be adaptable, for sure.

Josh: Yeah, I always talk about a plan as kind of like a road map where you wouldn’t drive from New York to California, just getting in your car and driving and heading south. You just wouldn’t do that. You want some kind of GPS or map to get you there and I definitely think that the business plan is such a key part for new investors. It doesn’t have to fancy. It doesn’t have to be complicated. It just has to be a plan so you can just fill in the blanks and just follow that plan and make sure it works, figure out the math.

A little plug here, but I love the BiggerPockets forum because of that. I did it when I started. I posted, hey, does this sound like a good idea? This is my plan for the next five years. And guys would say, no that’s a terrible idea. No, that’s a great idea.

Just today, I responded to somebody else who had an idea about buying cheap, cheap houses in Detroit and then selling them with seller financing and he asked, what do you guys think of my plan? And there’s just this massive discussion going on here about his plan and I love that because it’s like a road map. It gets you there the quickest and most efficient route and it keeps you kind of focused.

Karen: Yeah, it keeps you on track. Focus is so important. We’ve watched a number of investors who started where we did who get discouraged because it’s not get rich quick. I don’t tell anybody to look for the home run. We never looked for the big numbers. We were very excited, the few and far between times when they happened. We just looked for getting on base and keep moving around. A lot of people want more and get discouraged so then they get distracted by the next bright, shiny thing.

We had investors who suddenly, they’re selling juice products or they’re selling internet service or whatever, and you think, oh, my gosh, what are you doing? And they get distracted and they get off course because they didn’t really have a good plan and real estate falls by the way.

Josh: Well, that’s a lure of the get rich quick. I think there’s just—I think too many people don’t understand that this is a business. It should be run like a business. I think a lot of people think they can just jump in and do it and jump back out. And you get a lot of those people attracted to this industry who are those, I want to get rich quick. I think I’m going to make millions because I saw some dude on television talking about it, some ladies next to him in the hot tub or whatever. And it’s like, come on. Seriously, if you stop and think about it for just five minutes, you’ll realize, you’re not going to get rich quick. It doesn’t happen.

Karen: And be patient because it doesn’t matter what you do every day when you get up, even if you’re going to a 40-hour a week W-2 job. It takes time and you’re going to be busy doing something—you might as well be busy doing this because the rewards you will reap long-term are huge.

Josh: Absolutely. Absolutely. Let’s talk about mistakes. Surely, in the years that you’ve been doing this, you’ve made one or two. Which ones really stand out most for you and why?

Brandon: She hasn’t made any mistakes, folks.

Karen: I tell you what. We have always been uber cautious and uber slow. We haven’t bought like employees’ offices or whatever until we had the money coming in to do it. Jim didn’t quit his job until we had the money coming in to do it. We have always worked with attorneys. We have never created our own contracts. We just really tried to dot our I’s and cross our T’s and we have been lucky or I can’t think of any really big mistakes.

We were talking the other day—we have not made money on two deals that we’ve done in all the years and all the properties. So we’re cautious. We’ve done a lot but I can’ stress strongly enough about making sure that you do everything through an attorney and having good documentation. I’ve seen investor contracts, especially rental agreements where they very much protect the investor, not so much the tenant. And you never want to get into court with a lopsided contract. You never want to stand before a judge with something you’ve done on your own. So I think one of the biggest, best things that we do is work with attorneys and get things done right going in.

Set your foundation. Get your foundation good and secure and then you can rock and roll.

Josh: That’s terrific advice. You’re making me feel guilty now. I’m going to go call my attorney later today and go get some stuff figured out but that’s excellent advice. Like you said, just be cautious. I think a lot of real estate investors just jump in and they want to just start doing things and making things happen and I think being careful, being cautious and doing the right thing at all times—I think it’s a recipe for success.

Karen: For all successful leaders, yeah.

Brandon: But I think there’s a fine line, right? The fine line is, there’s that caution and then there’s the actually taking action and taking that first step and I think it goes back to what you guys were both talking about on that business plan. If you’ve got the plan and the road map, it helps you overcome the fear that comes with being overly cautious oftentimes.

Josh: The analysis paralysis.

Brandon: Right.

Karen: Get started and do something and you can figure it out as you go, for sure. Because you can’t begin to know everything starting out and going in, but little by little this year—next year, you’re going to know more than you do this year. Every year and every deal, you learn more and more and get better.

Josh: Well, what was your favorite deal?

Karen: Probably one of my first. Just because you never forget your first. But I was thinking back to the beginning and being new and I had set up my little home office in a spare bedroom and I had printed out a stack of questionnaires in case somebody called because I wanted to try to remember things to ask them. And I was terrified. I just knew I was going to go to federal prison but I didn’t know why. But this is a really big deal, real estate. You’re dealing with mortgage companies, all kinds of lenders. You’re dealing with attorneys, insurance companies, people’s homes—hundreds and thousands of them. I was scared to death. Just starting—I hadn’t done a deal. I was scared to death.

So no kidding, I had put out some advertisements in newspapers. I had magnets on my car because those were cheap. I had done just a little bit to get started. My phone rings. The very first week. My caller ID says: US Government, Baltimore, Maryland. I paralyzed. I thought, should I answer? Should I not answer? Oh, my God. It’s the government. I’m going to prison. I don’t know what I did. And all those things, you know how they go through your head real fast? And I thought, just answer because if you’re going to prison, you have nothing to lose. So I answered the phone and this woman on the other end says, do you buy houses? And I think, oh, my God, I’m going to prison. The government knows what I’m doing. I just started!

So again, should I answer or shouldn’t I answer? And I went, yes? And she said, I have a condo I’ve been trying to sell for about a year. And I thought, oh, my God. This one’s in Baltimore, Maryland! How does she know what I do? So long story short, she had bought a condo in my neighborhood in North Carolina for her son while he was in college. He graduated and moved to a house. It had been on the market with a realtor for about a year and she said, my son saw the phone number on somebody’s car at the grocery store. My car! So we’re talking. I said, I don’t know if I can help you. Let me see what I can do. I looked up her property, evaluated it, called her back, said you’ve got it at full retail. I think if you listed it for this, you could probably sell it.

She said, thank you, honey, so much. You’ve helped me more than my agent had. I really appreciate it, but can you buy? Of course, I didn’t want to buy it. I was scared to death. I didn’t want to buy anything. So I offered her 65 cents on the dollar, not really knowing what I was doing, thinking I had the right price. And she said, honey, I’ve owned this for six years and you’re offering me less than I still owe. And I said, yeah, I know, I might not be the best offer. If you have more questions going forward, feel free to call me. Because again, I didn’t want to buy anything. I was scared.

That night, she called. She said, honey, if we do this deal with you, how do we do it? So I explained the paperwork. I was talking about taking over her existing financing. And I said, and you have to write me a check for $9200. She goes, yeah, that’s what I thought. So the next day, she called me, and she said, we want you to buy our property.

Josh: Wow.

Karen: Now, how can that not be my favorite deal, right? So a few days later, I meet her son at the condo. They’d had it on the market. It had fresh paint, fresh carpet, all the appliances, including washer and dryer, a two-story stone fireplace. It was amazing. We own it to this day and they wrote me a check for $9200, which I turned around and spent on marketing.

Brandon: Wow. How long was it on the market because she called you?

Karen: Ten months, I believe. And my first week.

Brandon: That’s an awesome story. That is really cool.

Karen: It was like a sign from God. This is what we’re supposed to do.

Josh: That’s great. Hey, you talked about a number on your car. You have one of those magnets?

Karen: I did, because it was cheap. So my husband bought it. He said it was $50 for a set and I was horrified. I said to him, the only reason I can ride around with that tacky magnet on my car is because when I’m driving, I can’t see it. So fortunately, it got stolen off our car three different times so I quit using it.

Josh: But it worked.

Karen: Oh, my gosh, those things work. Everything works. Every single thing you do works. Some better than others. Everything works. Do anything. Do everything.

Josh: Hey, where did you get the car magnet sign from, do you remember?

Karen: I do. It was a local company. It’s just a couple of miles from us, a sign company that made them for $50/pair and we even had a little one for the back bumper.

Josh: Wow, that’s really great. Well, this has been fantastic. I’m looking at the clock here and I think we’re kind of running out. So we’re going to kind of come to some of these questions really quickly and you know, you’re fascinating. This has just been really, really interesting and maybe I do say it to everybody, but we definitely have to get you back. We’ve got to dig into some other stuff because this is incredible.

So let’s get to a couple of quick questions here at the end. You made a reference to baseball earlier on. You must be a baseball fan. What’s your team?

Karen: No, I’m not.

Josh: What?

Karen: I like them all. In case I ever want to run for mayor.

Brandon: All right, she doesn’t like baseball, but ladies and gentleman, Karen Rittenhouse is a tried and true Guitar Hero expert. Is that true?

Karen: Oh, my gosh. I absolutely wear myself out with Guitar Hero.

Josh: Great. What’s your favorite song?

Karen: Oh, lord. I don’t know. I’m terrible, I don’t know. I don’t hear any of them. I just see the colors coming at me so fast so I’m trying to keep my fingers moving as fast as the songs are coming.

Josh: What is your favorite real estate book that’s not one that you’ve written?

Karen: That’s great. You know what? Again, starting out, we just read anything at Barnes & Noble and Borders, but my favorite books are always the motivational, think outside the box books rather than specific how to do real estate, like Michael Gerber, The E-Myth, T. Harv Eker, Secrets of the Millionaire Mind. You’ve got to think bigger than a 40-hour employee and a W-2 employee and those books really help take you outside your limitations. Those are my books.

Brandon: Okay, that’s great. That’s awesome. So the one question I like to ask everybody is, so you’ve been in this industry for eight years now and you’ve probably—I know you do some coaching and some training. You probably see a lot of people come and go. Some people come and make a lot of money and they are very successful. Some people just disappear. So what is it in your opinion that sets apart those top performers, the ones that actually make it, from the ones that just jump in and then jump out again?

Karen: Focus. Yeah, just making a commitment and sticking with it. You’ve got to pick something and stick with it. Don’t get distracted by the bright and shiny objects. You can make this business work.

Josh: That’s great. The guru product of the week. Stay away, right?

Brandon: All right, well, one last question which is, where can people find more information about you? Presumably—not presumably. Obviously you are on BiggerPockets. Are you also on Facebook, Twitter, G+, LinkedIn—where do you like to connect?

Karen: Right. Mostly through my blog, On Facebook, I think it’s Karen’s Perspective, Twitter @KSPerspective.

Josh: Okay, great. And we’ll add that in the show notes for everybody to check out. That’s going to be at and Karen, it’s been fantastic. Really, a truly, truly, great show. We’ve enjoyed having you and we’ll see you back on BiggerPockets.

Karen: I really thank you, Josh and Brandon both, for giving me this opportunity to share. I hope you can tell I absolutely love what we do. We’re in the business of helping people. We help buyers, we help sellers, we help tenants. Every single day of my working life, I’m helping people and I get paid for it. I think it doesn’t get any better than real estate investing and like I continually say, there’s never been a better time to be in real estate.

Josh: That’s great. Agreed, agreed, agreed. Thank you so much.

Brandon: Yeah, thank you, Karen.

Karen: Thank you.

Josh: And that was our interview with Karen Rittenhouse from We really hope you enjoyed the show, guys. Just a quick announcement—we’re up to 16 five-star reviews on iTunes right now and I just want to say thank you to everybody who hopped onto the iTunes player and left us a review. It’s really awesome. Every single five-star review, these things are going to allow us to get more and more exposure so we can continue to bring you guys amazing guests who are willing to share their real life experience and knowledge with us.

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Thanks again. This is Josh signing off.

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