BiggerPockets Podcast 079 with Michelle & Bruce Fischer Transcript

Link to show: BP Podcast 079: Low Income Landlording and Investing to Make a Difference with Michele and Bruce Fischer

Josh: This is the BiggerPockets Podcast, show 79.

You’re listening to BiggerPockets Radio simplifying real estate for investors large and small. If you’re here looking to learn about real estate investing without all the hype you’re in the right place. Stay tuned and be sure to join the millions of others who have benefited from BiggerPockets.com your home for real estate investing online.

Josh: What’s going on everybody this is Josh Dorkin host of the BiggerPockets podcast here with Brandon Turner. Why so quiet Brandon?

Brandon: I was waiting for you to say like, what’s up Brandon? Or, how’s it going Brandon? Or what’s new Brandon and I got nothing.

Josh: I don’t really care.

Brandon: Awkward silence.

Josh: Well that’s part of the game man.

Brandon: Yeah I guess, I guess. Well here we are another episode of the BiggerPockets Podcast and today we’re actually going to talk to some friends of mine sort of. I mean they’re local investors from my part of the country so I’m excited for that.

Josh: Nice.

Brandon: Yeah.

Josh: Nice, are there necks red as well?

Brandon: No, they are not rednecks. They probably own a truck though everybody in Washington…

Josh: They’re really, really…

Brandon: Owns a truck.

Josh: Great, they’re really nice people and it’s a pretty cool show.

Brandon: We haven’t done one like this, a husband wife team in a long time, so.

Josh: Yeah it’s been a while.

Brandon: Yeah it’s cool.

Josh: It’s been a while.

Brandon: Cool.

Josh: Well before we get into the, we’ve got today’s quick tip.

Brandon: Quick tip.

Josh: Today’s quick tip is keyword alerts, set them up if you have not already set up keyword alerts. These things will help you to keep up to speed on what’s happening on the site, make BiggerPockets more of a passive activity so to speak. So when something comes up of interest you’ll find out about it whether it’s by email or if you’re a Pro member you can get a text message.

Brandon: For example, had you set up the word Seattle you would have known that we had a BiggerPockets meetup in Seattle a couple of weeks ago. You would have been there but if you don’t have that setup you wouldn’t have known you would have missed out on all that fun time that we had.

Josh: Nice, nice.

Brandon: Keyword alerts are important and they’re great so.

Josh: Yes and I think best use cases are local areas or towns that you live in or towns nearby strategies that you’re interested in. We’re going to be making some improvements to keyword alerts to allow multiple terms to be used in conjunction for a single alert. And when that’s launched we’ll let everybody know. So you can say like Seattle and rentals and you won’t get alerts for only rentals or only Seattle, you will get an alert if something comes up for both. So…

Brandon: Cool.

Josh: We’re working on it, we’re working on it. So yeah that’s today’s quick tip, make sure you have some keyword alerts set up. Alright let’s get into this, today’s show featuring a conversation with Michele and Bruce Fischer. Michele and Bruce are buy and hold investors who hail from Longview, Washington and as a couple they got started in real estate. They were enticed by the low income property, low priced property excuse me, after the crash.

And something triggered in them and they said, hey let’s see if we can scoop up us some great deals and their idea was also to do some charity as part of their investment strategy I believe. At least it is my opinion of that and so their strategy lets them buy low income properties, help folks out who need to be served by good landlords in tough areas and that’s what they do.

Brandon: It definitely it’s a niche sort of industry so kind of a, it’s kind of a cool show. I don’t think we’ve done quite, one quite like this before so I think you guys will like it a lot.

Josh: Yeah, I mean they’re all about revitalizing communities, revitalizing neighborhoods and taking care of folks who need a little more taking care of. So, yeah definitely listen up, even if that’s not your strategy. There’s certainly some cools tips and things in here so we encourage you to stay tuned. With that why don’t we get started, Michele, Bruce welcome to the show guys good to have you.

Michele: Great to be here.

Bruce: Hey guys.

Michele: Thanks for having us.

Brandon: Thank you. Michele and Bruce, we first met at a BiggerPockets meetup, what, a year ago maybe something like that.

Michele: Yeah…

Brandon: Yeah.

Michele: Down in Portland.

Brandon: Yeah down in Portland that was awesome so I’m glad I finally get to get you on the show. We talked a lot that night about what you do so, but it’s been a year and I have a terrible memory so we’re going to rehash all that again. So, why don’t we just start, very beginning? What did you guys do before real estate and how did you get into it?

Bruce: I started life as a mortgage banker way back years ago and saw all these rentals mortgages that came through and was just really interested. I took a class, part of my banking credentials you have to do a class on real estate. And one the teachers told us that, she went on and on, about how great rentals are as far as making money. You can put $10,000 in stock and you make 10% you get $1,000. Put $10,000 in rental houses you get a $100,000 house you can make 5%, a lot more money.

And one of the things she really showed us that just really got me interested in this was she talked about a mobile home he had. It’s this trashy mobile home park and her friends had asked about it she’d show them her different properties. And she showed them this one and they always, thought it was, thought it was terrible. Why would you own this? Well she stopped doing that and she started showing their financial records, now all of a sudden her friends are really impressed.

Brandon: Yep.

Bruce: So I stuck with that for a really long time and how to try to get Michele to be interested in this as well and it took her a long time. She just wasn’t very easily convinced to do something different. And finally in 2008 as everybody knows the prices of houses went way down and it was a lot easier to convince her to go into rental housing when houses are $50-$60,000 rather than $200,000.

Brandon: So what did he say to you Michele? How did he get you over the hump what was it? Was it his charming good looks or was it?

Bruce: It took me 15 years so it couldn’t be [inaudible][06:04].

Michele: Well I’m in the accounting industry by trade and he showed me basically what the financials would look like and that was pretty compelling. So that caused me to want to go start looking at them.

Bruce: And our kids were getting older and we were getting bored so. Stuff’s been different right?

Josh: Everybody needs a hobby.

Bruce: Yeah.

Brandon: So what was it? Let’s talk about that first, that first investment property. Did you guys decide to look at the rundown mobile home park route or?

Bruce: We did, another part of it was I was really involved in affordable housing. I’m Commissioner in a housing authority…

Brandon: Okay.

Bruce: I work for Habitat for Humanity, I started the Habitat for Humanity over in Brandon’s area.

Josh: Nice, I didn’t know that.

Bruce: Yeah.

Brandon: That’s funny, maybe you told me that, like I said bad memory.

Josh: That’s okay.

Brandon: It’s a habitat there’s not a lot of humanity.

Bruce: Well there used to be when I was there.

Brandon: Yeah, yeah, yeah.

Bruce: So we were doing a lot of work in this neighborhood, a poor neighborhood in our town. And I was doing all this work for other organizations and it kind of got in my heart that maybe I should put my money where my mouth is. And focus on, I keep telling everybody the neighborhood’s improving, I should actually put some money down and do it. And Michelle at the same time started to spend time over there. I’ll let her tell.

Michele: It was really because of the rentals that we started spending time there. So we decided to start looking and we were just driving around the properties and stuff and they were ugly and beat up. And it was like, you’re sure you want to buy something here? I was hesitant but once we got going and I started spending more time in the neighborhood I really enjoyed the neighborhood. It was so much more vibrant than, people are out living on their porches, they’re talking to people. It’s just a really active, fun neighborhood.

Josh: You’re talking about lower income areas right?

Michele: Yes.

Bruce: Very little income and 2 bedrooms for $350.

Josh: Oh wow! That is very low income. Okay, so…

Brandon: $350 is the monthly rent.

Josh: $350 a month. Well that is pretty low.

Brandon: Yeah.

Josh: That’s a challenge for a lot of people and it’s one of the reasons we wanted to have you on the show today. It’s because a lot of people we talk to especially, we just had Bree Schmidt on the podcast. And she did kind of the opposite end to that in Chicago where she bought a really higher-end like $400,000 houses or multi-families and rented those out to high-end tenants. So it’s like a completely different world so that’s kind of why we wanted to compare and contrast the 2 with you guys.

Brandon: It feels like this is like a Harry met Sally conversation here too which is kind of fun.

Josh: Oh I’ve never seen Harry Met Sally, what?

Brandon: You’ve never seen…

Josh: No.

Brandon: Come on guys, Bruce, Michele you guys know what I’m talking about?

Bruce: They don’t get movies in Aberdeen.

Josh: We don’t get movies in Aberdeen.

Brandon: My goodness, alright, never mind. Well so tell us, what stood out beyond, you said vibrancy, you said there were folks out, active, what beyond the, this is going to sound wrong because I know it’s not guilt. The put your money where your mouth is situation. What grabbed you?

Bruce: Money.

Brandon: Money.

Josh: Really, how so?

Brandon: ROI or what?

Bruce: We can make a lot of cash on these things, we’re doing well on cash and low risk. Our highest house was $107,000 for a duplex.

Josh: Okay.

Bruce: We don’t have a whole lot of money into these things.

Josh: Gotcha.

Bruce: We’re able to get steady cash flow out of them.

Josh: How far are you from Portland? You’re close right?

Bruce: 50 minutes, yeah 45-50 minutes.

Josh: So I mean, just to let people know this, Portland is one of the most expensive markets in the US, it’s very, very spendy there or at least, it’s spendy. Tucker we had on the show back early one of the early ones, he was flipping houses in, he was flipping $1 million house in Portland. So, just to reiterate my point that I always like to, if you live in an expensive area like Portland, I’m not saying go and buy in their backyard and give them competition. But just the fact is within an hour of an expensive area they can go and find low income properties that are affordable to get into.

So it’s always kind of cool. So you started buying investment properties in this lower area, what was your very first investment? What was that like?

Michele: It was kind of interesting because when we were looking around and going through them we kind of decided that we didn’t need to see inside to make offers. So this was a house that we, it was a 4-bebroom house right on the edge of the neighborhood. And it was occupied and we decided to just make an offer so we didn’t see the inside until we went into inspection. So our first clue probably should have been that when we made a lowball offer and they accepted without a counter offering. So this was 4-bedroom house for $63,000.

Josh: What was it listed at?

Bruce: $80,000, little over $80,000.

Brandon: So you offered at $63 and they accepted and you walked in and your eyes fell out of your head.

Michele: We walked in with our inspector and I almost started crying it was horrible. There was mold and crayons all over the wall and the sink was draining.

Bruce: There was a leak in the sink and they just put a big…

Michele: Bucket.

Bruce: 50 gallon bucket underneath, I guess 5 gallon bucket underneath and instead of emptying the bucket they just let it overflow.

Josh: Not funny.

Bruce: Very Hispanic couple that spoke no English, it was very hard to communicate with them, the mold was just terrible all through the house. And then there was a sewage underneath the house.

Brandon: So…

Bruce: From where it came from.

Brandon: That’s a shame, I mean first off this family’s living there in such deplorable condition and ultimately probably not advocating for themselves because potentially they don’t know any better. And frankly the fact that whomever the owner was seemingly didn’t care.

Michele: Right.

Brandon: So that’s I think from my perspective I guess you saw that besides the shock and horror was there. So I’m like, wow this is what we’re talking about, this is what we need to put a stop to.

Bruce: That’s exactly what it was.

Michelle: We probably should have walked away from it in hindsight but our inspector was pretty excited about it. He was just kind of pumped about it and thought it really had a lot of potential. And we liked the floor plan and that’s kind of what we learn, some houses just have really unworkable floor plans and some have really nice ones and this has a really nice, it’s a very small compact house it’s only 1100 square feet for a 4-bedroom. But it’s just laid out really nice.

Brandon: So let’s talk about that for a quick second, what makes a floor plan a workable floor plan? My first rental property was a property that had a shotgun apartment. So it was living room is connected to bedroom, bedroom is connected to kitchen, to go to the kitchen you had to go through the bedroom which it’s terrible layout. But what makes for a good layout?

Bruce: It’s kind of the same thing for us, really bathroom placement is a lot of it. You have to walk through a bedroom to get into a bathroom then we found another one that was like that, the only way into the bathroom was through 2 bedrooms. And then we found another one where the only way to another bedroom is through one bedroom. So you have to go through someone’s bedroom to get to your bedroom. Hallways are important.

Brandon: Gotcha!

Michele: Or if there’s a dining room area that is just kind of wasted space, we like if, what works best for us is an open area where it’s a living room and dining room together and they can decide how they furnish it. Rather than it being sparsed up for them so that’s another consideration too.

Brandon: Gotcha.

Josh: That makes sense.

Brandon: So it sounds like you ended up buying this property is that right?

Michele: We did.

Bruce: Yes we did.

Brandon: Did you offer any lower after you saw the inside, did you try to negotiate lower?

Bruce: We did make them clean the sewage out under the house.

Brandon: Okay.

Josh: Nice.

Brandon: That’s good news.

Bruce: And they had no problem to put that in, that’s another sign that they were ready to get out.

Brandon: Yeah, so how much did it end up costing you guys to get this thing fixed up? Did you end up getting rid of the tenant that were in there or did you kind of hold them and fixed it?

Bruce: Fortunately we did and they had lowered the rent on the tenant, the previous owner, because of how bad the shape was and because they had lost their job. So we had to raise the rent a little bit up to almost, but still below market. But once we raised it they had to leave.

Brandon: Wait, I want to clarify. So the previous owner…

Bruce: Yeah.

Brandon: And straight up slum lord.

Bruce: Yes.

Brandon: Instead of fixing the sink with the 5 gallon bucket that was dripping down and the mold on the walls they decided to drop the rent, to shush up the tenants.

Bruce: I wouldn’t go there but that’s what happened, I mean that is kind of what…

Josh: I do have to say though, a lot of my tenants like refuse to, they just flat out will not call. I had a tenant one time I think I told this a while ago on the podcast. I had a tenant call and say, well no, they never called, they never called, they never called. Anyway, I was in the parking lot one day doing something, picking something up and the kid comes down and asked me if I could look at his ceiling because there was some mold.

And I went up there and I looked at it and it wasn’t like a spot of mold, the entire ceiling was an inch of just green grass essentially. And it was the entire ceiling of the bedroom and living room because they didn’t want us to come into their unit so they just never called to complain about it. Until it was so bad and it was a roof leak never made mention of it. They used buckets to clean it up, it was probably years, years of this happening. And so that’s why you need to do inspections.

Brandon: That’s what I was going to say.

Josh: That’s why you need to do, yeah. That’s why we do 6 month inspections now on our units but before that, this was only 2 years after we bought it we had never been, I think I may have been in that unit once maybe when we first bought it when I did the walk through. But I don’t think it was bad then, I don’t even think, I would have cleaned it if it was but it was terrible, terrible. That happens quite often we have tenants all the time, they won’t call about issues they’ll just live with them forever and ever and ever and ever.

Bruce: That’s why I don’t want to call them a sum lord because I don’t know what their, what happened.

Brandon: Yeah.

Josh: But there are definitely ways you can by doing inspections you kind of know those things by doing the periodic inspections and making sure things are running correctly. There’s ways that I think can improve that.

Brandon: And I think anyone listening especially the newer landlords need to heed that wisdom and make some kind of plans setup on your properties where you do these periodic inspections. And it’s not necessarily to go in and try and catch your tenants doing bad things, certainly it’s helpful. But for this very reason.

Josh: What we do is like smoke alarm checks and the reason, we do water checks and smoke alarm checks that’s what we tell out tenants. That way it gets us two things, one it gets us into every room of the house. Because there should be…

Michele: Right.

Josh: A smoke detector in every room, well every bedroom and then one on each floor they might state. But also in the bathroom and kitchen by doing the water leaks and the water heater closet. So we get in every area of the room just by doing those two things, water heater checks or water checks. And furthermore that just helps with knowing when there’s a water problem. So you can, because tenants will never, I notice that they never call about a dripping faucet.

I’ve had bathtubs that have just been pretty much full on just running and they won’t call about it they just let it run 24/7 and I’ll wonder why my water bill was so high.

Michele: I was going to say that’s a great way to term it and when we schedule them we always make sure that they know it’s not a housekeeping inspection, coming to look at the house.

Josh: I think one more tip for people and I’m sure you guys would agree with this I would think is the more you can let your tenant know that you want to fix their repairs and you want to help them. I think a lot of tenants get that mentality of well if I complain about this water leak they’re going to raise my rent. And that’s just, or they’re going to, I have a tenant text me once in a while she sends me a text and every time it’s, I’m so, so sorry for bugging but and then she’ll write the problem.

And she’s so afraid of like she’s bothering me or I’m going to be angry, I don’t know what it is. But I think that happens quite often with tenants and so we try to really like reinforce with them especially the new ones. We want to know the second there’s a problem because the sooner I fix a problem the less money it costs me in the long run.

Michele: And a lot of people want to automate getting the rent payment. But one of the things we like getting them face by face is another monthly opportunity to talk to people and see how things are going. And if there are any issues that they aren’t willing to pick up the phone and call us about. But now we’re face to face they might tell us.

Josh: That’s interesting, I automate my rent payments, I couldn’t go to every single one and pick up rent and do nothing for the first week but that technically. But I do think that is a good idea when you’re first starting out there is nothing wrong with that. I think not even just for starting out but if you got I don’t know enough to go around and do it for a couple hours pick them up that’s great. If you want to talk to your tenants and find out what’s going on and they’re pretty open to talking.

Brandon: So let’s talk about this property. You guys go and, I think I asked you but how much did it cost to fix up about?

Michele: We spent $9,600 and part of that was blowing in insulation…

Brandon: Okay.

Michele: So that it would be more comfortable.

Bruce: And less mold.

Michele: Yeah.

Josh: Yeah.

Brandon: So did you use the insulation to cover the mold or did you…?

Bruce: No.

Brandon: Actually clean the mold?

Bruce: We cleaned the mold, took down a lot of the walls that they added and painted and all that stuff.

Brandon: Alright, alright, so you got this place back up to speed now what are we renting it for?

Michele: $825.

Josh: A little more than the 1% rule.

Brandon: And a little better than the $350 that you guys…

Bruce: Much better.

Michele: Like the 4-bedroom.

Brandon: Nice, nice, that’s great.

Josh: How did you buy it? How did you finance it?

Michele: We had some savings and this one we went with a conventional loan.

Josh: Okay cool.

Bruce: It was our first one so it was pretty easy enough to get.

Brandon: So let’s talk about the neighborhood, so this was in a kind of a tough neighborhood it sounds like.

Michele: Yeah but this house is on a quieter block so it’s kind of what I would call the nicer section of the low income neighborhood.

Brandon: Okay and are all your properties in the low income neighbor or?

Michele: Yes, it’s a 40 block area and as we started expanding we did look in other areas but I kind of told Bruce that I really wanted to jut focus and have all our properties in that neighborhood.

Brandon: Gotcha! And are they all really close together like same block or you just kind of…

Bruce: No they are the exact opposite we have one in the corner, the north corner and one in the south corner.

Michele: And all throughout.

Brandon: I gotcha.

Josh: That’s cool, so…

Michele: But none of them are more than a couple miles from our house.

Josh: And that is helpful. When we talk about lower income neighborhoods what does that mean for those people listening and don’t know what that means? How would you describe it? Are these violent? Are there gangs? Are they just low income? What does that mean?

Bruce: Ten years ago it probably was violence and gangs but it really has cleaned up a lot and now it’s just poor. It’s people that, basically they have no income for the most part.

Brandon: It’s like minimum wage and government assistance type of stuff.

Bruce: Government assistance is a lot of it, I think half of our people probably don’t have any job at all and those that do it’s pretty minimum wage or they’re temporary.

Michele: It’s an area where people with section 8 vouchers don’t want to live in.

Josh: Oh really.

Brandon: Explain that.

Michele: Yeah, people with section 8 vouchers can afford to live in a nicer neighborhood.0

Brandon: Oh gotcha, gotcha. Okay wow, okay so…

Bruce: Our places are below fair market value of FNB that use this.

Brandon: Gotcha! So you guys are literally the bottom, bottom of the barrel, I mean not in terms of like the garbage houses. But bottom of the barrel in terms of everything else.

Bruce: Yes.

Michele: We like to, when people move out of our places they usually going homeless. We’ve had one tenant move out and buy a house but generally they’re spiraling to homelessness, living on somebody’s couch situation.

Josh: That seems tough.

Bruce: It’s very tough.

Brandon: I was going to say as a landlord it appears that you’re almost putting yourself in a situation almost asking almost, don’t get me wrong but almost asking to have high eviction rates and lots of problems.

Bruce: And we’ve gotten that, we have never evicted anybody, you give them $100 and they’ll leave pretty easily. But…

Michelle: We get so excited when a tenant stays for 1 year, people don’t stay very long.

Brandon: So why? I mean beyond being clearly as good people who are looking to take care of other people, at least that’s how I would see it and the financial motivations I understand. But at some point if you have so much turnover there’s kind of an equalizer isn’t there?

Bruce: It’s a little rough, part of it is just the economy in this town right now is just really bad. So this is the worst, well hopefully, this is the worst it will ever be. I don’t want to say that too much but it’s still getting better and yes it’s just a really rough time we’re going through now and we just got to do what we got to do.

Brandon: Gotcha.

Michele: So if people are just barely making it by so if they have any hiccups then they can’t stay there. So we focus on anything we can do to keep them, keep them there longer. What can we do to get people in there faster? What can we do to minimize the turnover cost that we know we’re going to deal with the turnover?

Bruce: And we have very few vacant days, when someone leaves we get someone in pretty damn quick.

Brandon: So what does that mean? It sounds to me like you’re not just slopping up a sign. It sounds like you guys are, we did a podcast on low income I’m totally blanking out who it was.

Josh: Lisa Philips?

Brandon: No it wasn’t Lisa but it seems like you’re a lot more involved in the community, you’re a lot more involved in…

Josh: Al Williamson.

Brandon: It was Al.

Josh: That’s when he talked about that.

Brandon: It sounds like there’s a lot going on you guys are really proactive. So what are you doing? How do you minimize turnover time? What are your tactics and techniques for even if somebody is having a hard time paying what do you guys do? I’d love to hear more about that.

Michele: So for minimizing the turnover as soon as we know that we’re going to have someone move out we put it up on Craigslist. And we can’t put up a ‘for rent’ sign in the neighborhood until they move out because once for rent sign is up the mailman will no longer deliver mail in that neighborhood which is really weird.

Brandon: Is that a legal thing or is that just…?

Bruce: That’s what the mailman tell us.

Brandon: Weird.

Bruce: Yeah.

Brandon: Once there is a ‘for rent’ sign they won’t, why?

Bruce: Because of vacancy issues.

Josh: Interesting, so they don’t want to deliver mail to an address that they think might be vacant.

Bruce: Right.

Brandon: Thinking somebody going to have a mail? I don’t know.

Josh: Yeah.

Bruce: Yeah.

Brandon: Weird yeah.

Michele: Unless if it’s a duplex will let the person next door know that it’s coming open and ask them if they have any friends that they want to apply. So we just try to work things from all angles and once it goes on Craigslist we get a lot of phone calls and a lot of people who want to see. And if it’s vacant we’re accommodating and we’ll drop anything and go show it to them.

Josh: So what do you look for then when you get a tenant to come look at it? Obviously these properties aren’t attracting the mortgage bankers of the world. So how do you, what are you looking for in a tenant?

Brandon: How do you screen somebody?

Josh: Not, yeah, it’s screening but also, not necessarily like just a credit report but like yes, how do you do the whole process? What are you looking for?

Michele: We try to talk to them as much as we can about what they are looking for in appellees and why they are moving and that type of stuff when they are looking through. But we really need them to fill out the application and it is a pretty involved application and we don’t get a lot of applications back. I don’t know if it’s just too intimidating or if they decide that if we really are going to check all this stuff and never mind if they are looking for are less involved landlord. So once we get that application back we try to verify and look at much stuff as we can before we have to spend any money to screen.

And I kind of have a point system where they get and lose points for certain things. So we are looking for someone who has job stability, that they’ve had income source for a year or more. We don’t true them out if they have less than that but they are going to lose points for that. And we look at where they have lived and for how long. If someone is consistently moving for six months and always had that’s not a desirable attribute that we’re looking for. Criminal wise we see a lot of criminal activity so it’s kind of gauging how many and what type.

So we just kind of go through our process and we look them up on Facebook see what we can find out. See if because it is a smaller community see if we know anybody who knows them. And just work it as much as we can and then if we think that they will be able to fit we go ahead and do that credit check and that gives us a lot of information about, we know what they have terrible credit most of them don’t even have bank accounts. It gives us the address history and more criminal information and that kind of stuff.

What we’ve had our a really good niche that we have that we really like is people just starting out that don’t have any rental history yet especially if their parents or someone is going to sign for them. That’s usually people with no rental history we can influence them more saying you’re letting them know and educating them rather than someone who’s had a really bad rental history because it’s probably not going to change.

Brandon: That makes sense and I just wanted to point out one thing you mentioned was checking Facebook. I don’t know how many landlords do that but I know we do that for a lot of our tenants. You can learn a lot of stuff just, people have an open Facebook which most people do you can learn a lot of stuff about people. I figured out people have pets or people have kids that they didn’t say they had and like you can learn a lot of things that, or…

Bruce: It’s a lot easier in a small town where you are bound to know somebody that knows somebody.

Josh: I’ve had tenants who say like I look on their thing and they will be complaining about how much they hate their landlord because they are kicking them out of their house. And then I go on them, like oh they’re being evicted.

Michele: Right, right.

Josh: They write crazy things and they can tell if they are a partier or what you can tell a lot from Facebook.

Bruce: Right.

Josh: Definitely, so this is interesting for me. You guys are doing something that I attempted low income, I didn’t attempt low-low income. I think it takes a special kind of person to even concentrate doing that’s kind of business. I think please don’t take this as critical, I think it is extremely challenging business I think it’s a very risky business. I know you say it’s not as risky because the property is don’t cost a lot of money. But to me risk is my turn over, higher, folks who have more criminal activity that kind of stuff.

I can see this kind of landlord-ing as not the sit back and relax kind of landlord-ing this is absolutely a more active type of landlord-ing. In fact I wonder, I know you guys self-manage correct?

Bruce: Correct.

Brandon: I know when I was looking for my low income properties I had a very hard time finding property managers who would manage. And I’m going to guess that there’s probably even less who would tackle low-low-low income properties. Is that right?

Michele: There are some there’s probably 4 property manager companies who are active in that neighborhood. But I’ve noticed that the places sit empty a lot longer than ours do.

Josh: I think I found that, I haven’t used a property manager really but from what I’ve seen that property managers around my area so they don’t fill their units anywhere to as close as fast as we do. Because they don’t have that incentive which that’s the trade-off, if I’m getting 99% occupancy, if I give it to a property manager I’m going to get 90% but I don’t have to deal with it. So I know some people will treat one for another so I guess it just comes down to what your strategy is. I know when I started out…

Michele: Well…

Josh: Go ahead.

Michele: I was going to see the flipside of that is maybe they are doing more stringent tenant screening…

Josh: Yes.

Michele: And having better results on that end too.

Brandon: And I would actually encourage you not that I know any better but I think, because I don’t, to talk to those guys. I’d be really curious if I were in your shoes to have that conversation with those property management companies and find out how long people are staying in the property and if there turnover is higher or lower. Maybe they will have a vacancy for a month or two but the might have tenants that last a year and a half two years. So it’s that kind of a balance I don’t know.

Michele: Right and I have that data, I haven’t mined yet but since we started every single week I’ve taken the information off of Craigslist of what the addresses are, what they are renting for and the attributes of the properties. So I’ve got a huge database now…

Josh: Interesting.

Michele: I’ve got everything.

Bruce: It’s her hobby on Thursdays.

Brandon: Okay so I want to hear more about this. You will and you find out about every unit that is available, what goes up for rent in the area. So you have got this treasure trove of information on which unfortunately you haven’t yet dug into on Thursdays. So we’re going to have to set you for Friday’s to start digging in. So what was your, clearly you were collecting it with an end goal, what’s the end goal, what did you want to find out?

Michele: My main end goal was to be able to get an accurate market rent so that when we have a place coming up we can look at similar properties nearby and now what we should be charging for market rent. But I realized as I started getting more and more data that I could use it one, to figure out which properties are tenant occupied and contact the landlords if I want, figure out how long they are staying at the addresses start popping up. There are some that pop-up so often that I know that those are really problem properties but I haven’t really taken the time to really dig everything I can out of that information.

Bruce: And we do too is to take some of the harder tenants that others won’t take. We that extra time right now and as long as we have the extra time and the willingness to do it we do take some tenants that are much riskier than others would.

Brandon: Yeah.

Bruce: It’s a tradeoff, when we this time we will stop doing that trade-off but for now it works for us and hopefully for the community.

Brandon: Yes that’s great. Well listen I straight up admit that I am not the guy, I am not the guy to go in there and buy those properties and hold hands. I’ve been there and it was a terrible experience for me and I’m not willing to do it. That said I’m glad that there are people that are willing to do it because it’s not where are these folks going to go.

Bruce: And at the same time we’re not doing this out of the goodness of our hearts we are making money on this.

Brandon: No, of course, of course, yeah you better be.

Michele: It is easy to get burned out though. I know that one year we just had a lot of turnover and 2 or 3 of our units were empty at the same time. This year so far every other month we’ve had turnover which is a little bit more than we normally have. So it is easy to get burned out.

Brandon: Yeah.

Josh: My wife and I tend to, when we started out we did a lot more, a little bit more hands-on little bit lower income and as we’ve gotten more and more properties we’ve been slowly getting better and better properties. We’re looking for that trade-off were not making quite as much cash flow on the better ones but in the long run I think they will pay off better, I think. I mean it’s all, real estate is so multidimensional that it’s hard to, it’s not just left and right if you do this then this will happen.

But you talk about the cash flow and mean you’re doing this for the finances not just out of the goodness of your heart. So why don’t we jump to that a little bit? Do you mind me asking, how many units have you guys gotten so far?

Michele: We have 8 doors, we have 5 properties 3 of them are duplexes.

Josh: Okay.

Brandon: Gotcha.

Josh: And what do you look for when you’re shopping for an investment property? Do you have a minimum cash flow per unit you’re going to expect? Or do you just look for the cheapest property and offer on it?

Michele: We’re targeting at least $100 per door cash flow and targeting 10 cap and then we had some other factors we kind of looked at. So basically when we were shopping we would put all the numbers together on what we looked at that and maybe picked the best from that day. We don’t window shop very much so when we decide we were going to jump in we jumped in really quick and…

Bruce: And a lot of the places workplaces we thought we could make a difference, places that were already fixed up and ready to turn key rentals that we weren’t all that interested in.

Michele: We were looking for the ugly things that we could do something with.

Josh: Do you feel like you are building equity in those properties that you are buying the ugly ones that you want to do some work on? Do you feel like you are building equity into that?

Michele: Not really but I feel like they are easier to rent.

Josh: Okay.

Michele: Because they are a little bit nicer…

Josh: Because you fix them up and…

Michele: Because people are out little more excited about them.

Josh: I found the same thing.

Bruce: We shouldn’t be selling them for losses but the prices aren’t really going up very fast in this area.

Josh: It’s not an appreciation play but I don’t think low income housing is ever an appreciation play. I think it’s more of a [inaudible][35:58].

Brandon: That’s okay different places in people’s life have different strategies. You start out, I think it’s really good to start out as a cash flow investor. Like what you guys are doing I think it’s excellent starting out that way. Because one, you are gaining a ton of experience making a bunch of money and helping the neighborhood as well. And then as you, 10 years from now I’m guessing you guys will be in a much different place just like I was 10 years ago. So I think it’s awesome what you’re doing again it’s not for everyone like Josh said.

I think some people’s personalities just clash with that, my personality clashes with it now. But I love that you guys are doing it so.

Josh: Agreed.

Bruce: We play a lot of good cop bad cop. I go in and go talk to those tenants, I’m their friend and oh I got a call from my wife I can’t do this for you.

Josh: That’s funny.

Brandon: Nice, nice, well how do you guys find your properties? Are you guys finding them on the MLS? Is that mostly what it is?

Michele: Yeah on the MLS with an agent.

Bruce: We have an agent that tells us properties that are coming up and he keeps us pretty informed. And then like we said we are in the neighborhood all the time, we do see them too.

Brandon: Gotcha. And then on financing I know the first was conventional. How have you been funding the rest of the properties?

Michele: Three of our finance are conventional we got a second mortgage line of credit on our primary residence which is a great way to go because that can be our safety net. When money is rolling good we can pay it off and when we need we can pull it out so it’s great to have that flexibility. And then we have a family loan too.

Brandon: Okay so kind of a mixture of both conventional and some creative methods.

Michele: Right.

Brandon: Cool, cool.

Michele: Because what we did not realize when we started buying and we were making cash offer is very early in the process they require you to show that you really have the cash. And it’s like well you know I will have it by the time we close. So that piece is kind of hard to work through the timing of that, the line of credit helps a little bit with that.

Brandon: Yes, I’m a big fan of that.

Bruce: I hate cash just sitting in my checking account.

Brandon: I know.

Josh: I know, cash sitting in your checking account is never like, it always just feels wrong until you need to go get a refinance. And then they are like all you need to have six months of reserves for every single unit you have. And I’m like dang it. So like, cash is not fun to have so every time I get it I want to buy something new until I tried to go get a refinance and it’s really, really tough to get refinance is when you don’t have that but whatever.

Bruce: We basically use our line of credit as the savings account because any extra money goes on a line of credit.

Josh: Yup.

Josh: Gotcha. I’m very different if I don’t have some cash sitting there I’m freaking out, I’m like oh my God what if, what if, what if and…

Brandon: I’ll tell you what Josh I may have said this on a very early podcast but I used to play Monopoly with a friend of mine every single day of high school. Over the summer break we played it every day, I played at least 100 games, every day we played Monopoly. He was a Math League too.

Josh: Yeah, I was captain of the Math League. So, we played every day and we were like hard-core, we could finish the game easily under an hour but my quickest game was like 12 minutes I think. But I think we were so obsessed with monopoly. Anyway so what beat strategy I learned during that time was my goal in that game is to never own more than $100 in my possession. So I always gets rid of my money no matter how fast I can I will buy, sell, trade, buy anything whatever I just get rid of everything and I don’t want more than hundred dollars.

And what that does is it forces me to play creatively and I’ve only lost once in the past 10 years and that was to my wife who is a better investor than I am. I’m not telling anyone they should go and give away all their money in order to be a good investor but there is a principle there that I run my own life by. When you have a lot of money I think you are less creative and maybe you don’t also as hard to make your investment happen or whatever. Again I’m not telling everyone to go spend all their money and have no backup. But there is something to say about that.

Josh: I don’t disagree with you I think that’s one of the things that people find most fascinating about you Brandon is the creativity. I think that’s what you’re fairly well known for and so I think that’s awesome. But we’re not here to talk about you so…

Brandon: Let’s talk about Monopoly.

Josh: So Michele, Bruce if you guys were to do anything differently what would it be? Is there anything that you regret thus far in terms of your strategy?

Michele: There’s two of the properties that we have that I would not have bought if I knew what I know now. So I think the strategy is good it’s just maybe it’s focusing in a nicer part of the low income area instead of doing it scattered all over and maybe trying to get isolated. We did try to get more like on the same block or next to each other but that was just really hard to do.

Bruce: I think for me it would have been, didn’t go with Michele beforehand and got the same strategy. We don’t always see eye to eye on everything and it would have been nice to have an agreement before we started this rather than the last minute have to decide on something.

Josh: Well speaking about that’s why don’t we moved to that a little bit and talk about investing with here and working in the business with your spouse. Because I mean most people listening to this podcast are probably married and a lot of them, you’re involved with this post in the process so how do you guys do that? How do you avoid arguing? How do you avoid…?

Brandon: By the way to anybody listening Michele has her hands wrapped around Bruce’s neck right now. So I just…

Bruce: We have no idea how to avoid arguing so we could not even begin [inaudible][41:46].

Michele: That’s part of the process.

Josh: It is part of the process that’s true. How do you guys do it? How do you run a successful real estate company together?

Michele: Part of it is dividing who focuses on what, I do all of the paperwork and he does most of the dealing with the tenants. Just dividing, he does most of the rehab I do most of the cleaning, dividing it up and knowing what roles we have which doesn’t mean we can’t help each other. But that’s kind of what the area that we are controlling. The procedure manual, Bruce doesn’t like to follow it but at least have it written down what we think we might want to do in certain situations.

Brandon: Bruce she just called you out in front of like 50,000 people.

Bruce: I think everybody that knows me knows I don’t follow the procedure manual. I have no idea even where it is right now I couldn’t tell you.

Brandon: Alright, so you guys get along fine, Bruce ignores Michele and everything works out.

Bruce: I like to put it down as financing in the end it comes down to trust. We trust each other we don’t always agree but we trust and at the end of the night we wake up happy.

Michele: And we’re going to figure things out together even if one of us caused the problem we are still going to work together till I get ourselves out of it.

Josh: I think fundamentally this show is, become the marriage show. But I mean fundamentally if you have that attitude that’s the attitude that will keep a marriage together, it’s the same attitude that will keep a partnership together. You are going to right you have to expect it and the first time there is trouble you don’t stop and run away and you realize you may have different opinions but the key is can you get on point.

I think Brandon had mentioned, I don’t remember if this was on the previous show are in conversation with me. He had talked to me about some folks who come to them and say hey what do I do you? My wife really, really doesn’t want to get into real estate what should we do? The answer was plainly don’t do it find another way to make money. Because if you guys are completely polar opposite it’s not going to work.

Bruce: Or be, like we did and just be patient and eventually she comes around.

Josh: I think that’s great, I think another aspect of that is that there has to be a heavy dose of a grace or forgiveness or whatever with the other person. I screwed up so many times and cost us a lot of money that like my wife has to, she’s had, it’s not like I destroyed our life but I’ve made a lot of mistakes and make her work a lot of hours that she would not want to work.

And she forgives me for those things and I’m sure if she ever screw something up on me I’ll have to forgive her. And that’s part of life you make mistakes you make problems and you just get through it so both parties have to be okay with it. Like you said no matter who is probably it is you’re going to get through it together.

Bruce: And we also, we focus on it, she didn’t say yes to every house but no buying all kinds of rental, she said certain kinds. So we agreed on a certain kind of rental we had to compromise. I don’t get the deal that I want to do she doesn’t get a deal that she wants to do but we have an agreement of what we’re both comfortable with.

Brandon: Yes that makes sense. And I think that’s again whether it’s a spouse or just a straight partner not a straight partner but whether it’s a partner, no matter what kind of partner it is.

Michele: You walked into that man.

Josh: It’s pretty the same issues it’s just a lot harder when you’re married.

Brandon: Yeah because now you have to live with them afterwards. We are starting to get to the end here, I know that when I was buying difficult properties let’s just put it that way there were always fun and exciting stories. There was always something crazy happening, you guys have to have some stories where at the time you wanted to through your, throw a brick through a window but now you’re laughing about so let’s share them.

Michele: Earlier this year we had a tenant disappear on us he paid rent and then right after that disappeared. So we had an interesting little chase around town trying to find the poor guy.

Bruce: He had other people living in his house and they had no idea where he was either.

Josh: Was he in jail?

Bruce: No he just, actually we still don’t know where he is. We got a call from the electricity company saying the power is turned off on one of our units because he had just paid rent like 2 days ago. Went over there and there were people living there and we talked to them and eventually we got them out. But yeah, and they said, they kept telling us they knew where he was but they really didn’t.

Brandon: I heard a rumor that there was some kind of barter for rent from one of your tenants. Does that have anything to do with prostitutes or?

Bruce: She never offered.

Michelle: She never offered to Bruce. We were moving in a new tenant and we were talking about the unit and stuff. And he said I’m really familiar with this place the person who used to live here was a prostitute. And he was like oh!

Bruce: I just thought she was really trampy because every time I went there she was naked under a robe with a new guy. And I was there a lot because she paid, she had issues with rent paying rent on time. And yes every time I was there, there was someone new.

Josh: Now I know why.

Bruce: She had to move because she couldn’t pay her rent so she wasn’t all that good. She does not pay guys.

Josh: I haven’t dealt with that yet but that’s funny. What about animals do you guys take them? What are your thoughts on low income tenants with pets? Because we talked about that with Bree with the higher end tenants and she does take them because she assumes like higher end people it’s kind of a niche for her. So what are your thoughts on accepting dogs or cats?

Michele: We have 2 properties that are duplexes that we don’t allow them just because of the way the property is set up we don’t think it’s a good fit. But on the other properties we do I load them, we do charge $25 extra per month per pet and a higher deposit too. So that kind of gets us excited about having pets it’s like well at least we’re going to get more money from them.

Bruce: But dogs only, no cats no lizards no fish.

Brandon: It’s a good idea discriminating against cats.

Josh: It’s not a good idea we love cats.

Bruce: Under some of our units so.

Josh: I was going to ask on pitbulls how about the “dangerous breeds”?

Bruce: No dangerous breeds.

Michele: And a lot of people have pitbulls, we get so many call us asking. That’s kind of a low income trait we’ve noticed…

Brandon: I know, I never understood that but it is isn’t it? Like every low income person that applies has a pitbull.

Bruce: It’s a 100 foot place and they want a pitbull.

Josh: I think part of it is status part of it is protection I think it’s having a pitbull you kind of know that if you’re going to rob them and whatever there is a safety net for them. I think that’s one of the big at least in my discussions back in the day, that was kind of the reasoning behind it. Okay 25 bucks a month extra and then increased security. How about tenant proofing your property? We did a show with Darren Sager and Darren talked about tenant proofing his properties. He put better floors, better paint that’s kind of stuff to prevent it, I know what I as there’s no way to tenant proof low income properties. Are you guys finding the same thing?

Bruce: That’s been a really tough part for us because we started out putting nice things in, putting in ceiling fans, putting in nicer lights and vanities. And every time we put in a new tenant it gets worse and worse as far as less functional stuff, less nice stuff. Because you just got to have the minimum stuff, it’s going to get damaged, it’s going to get broken, you got to just do what you got to do.

Brandon: Got it just kills me, 2014 you would think people had some responsibility to take care of. I don’t know who literally wants to live in a crappy property I think people want to live in a good property. But you wonder why landlords are putting together properties that are really just bottom of the barrel enough to live on but you have to. Because otherwise folks just destroy it. I had cigarette burns, even when you don’t allow it, cigarette burns everywhere garbage piled up. I mean I’ve dealt with everything and it’s just, there’s nothing you can do.

Bruce: It’s tough.

Michele: We started putting laminate in the bedrooms rather than carpets because we were just having to replace the carpet so often usually because of pets.

Josh: We had a tenant we moved in well be replaced carpet I think it was January of this year in the unit. It was a little one-bedroom apartment, we replaced it in January the guy moved in in February and then he didn’t pay in March. We ended up calling him a ton of times, wouldn’t answer, wouldn’t answer, gave him three-day notice we had to serve it on his door. Then I went over there and knocked on his door a bunch of times and I was like well I’m going to file eviction for him tomorrow. So I put a note on his door it just basically said, please call us if you call us we will give you 300 bucks to leave tomorrow, put that on his door.

He never called so the next day I went to town to go file the eviction and I swung by there and the letter was still on the door. So I turned the doorknob and it opened and he was gone that was like the best way it could end. But where I was going with that is the carpet, I mean it’s three months old and he wasn’t even there for like a month of it, I was completely 100% shocked, completely shocked.

Brandon: Trash, gum, cigarettes.

Josh: I don’t know what, it was like he was changing motor oil in this room, in the place that’s what it looks like. It makes no sense.

Michele: We were naïve when we started we thought all if we fix it up and make it nice people will take care of it and we just learned that that’s not the case.

Josh: I think there’s ways like you said, the laminate things like that can help a lot. I like to do tile whenever possible it’s hard in the Northwest where we are obviously tiles aren’t that common but I like doing it because it is mostly indestructible. Things like…

Bruce: Mostly that bothers us.

Josh: Say what?

Bruce: Mostly that concerns us. Our tenants are very handy at destroying things.

Josh: Yes I know.

Bruce: One bad tenant and you can really damage a lot.

Josh: It always surprises me of how quickly you can, a unit can go downhill.

Brandon: Do you guys adjust for that with higher security deposits on these properties? Are you really can’t right?

Michele: It’s just what the market can bear and security deposits aren’t even one month’s rent in this area because people can’t come up with it.

Brandon: Wow, so let’s quickly get to that and then we are going to turn to the fire around here. What’s your average repair on a turnover? What does it cost you to kind of turn the unit around?

Michele: So I usually budget 7% of rent and that’s kind of what our trend has been. This year has been a worse year where at 15% I don’t have a dollar per, I know that…

Brandon: Well it’s more than like 40 bucks, so 800 and the property that’s like an $800 property where talking about 100 bucks.

Bruce: These are almost nothing or one or $2000 I mean that’s what, basically what it is.

Michele: The two extremes.

Bruce: We have a lot of people that move out just fine, no problems at all. And then some people that destroy.

Josh: And I notice you guys really eat it up and it takes a little to make that back.

Bruce: Yeah we don’t really eat it up, that’s another part that bothers me is we don’t eat it up the tenants do. The rents cover all this damage that they do and the thing that…

Josh: The security deposit.

Bruce: Well just a higher rent we so could charge a lot to lower rent if we didn’t have to pay all this stuff. The fact that we can pay all of this damage and still make money means that these low income people are paying to get new carpet every year, new windows all that kind of stuff.

Michele: So back to the financials, we plan and buy on $100 a door but we are trending at $170 at door.

Josh: In cash flow you mean or?

Michele: Yeah.

Josh: Okay.

Brandon: That’s great I mean that’s great so.

Josh: Final question before we go to the fire round, what do you envision yourself for the future? Where do you guys see yourself the next five, 10, 20 years?

Michele: We’re not sure we’re kind of in a holding pattern right now because we are kind of trying to figure that out.

Bruce: Our whole life has changed our kids are graduating in the next 2 years, we have 2 kids graduating high school.

Brandon: Nice empty-nesters.

Bruce: So everything’s going to be changing in the next five years who knows.

Josh: Nice and that’s okay, that’s okay. So cool. Well why don’t we move on? I think it’s time for the fire round.

It’s time for the fire round.

Josh: The fire round alright these questions all come from the BiggerPockets Forum so we’re going to throw them at you. Number 1. Your tenant consistently pays late rent, it’s consistent all the same what do you do about that?

Bruce: We argue.

Brandon: Stop arguing you too hold hands, look into his eyes.

Bruce: I’m more forgiving Michele not so much.

Michele: If they’re making progress payments and communicating them where going to work with them. I prefer to get late fees, Bruce prefers to waive late fees so we are always having that constant battle but we will work with tenants. Especially if they’ve kind of paid like by the 15th of the month. If they paid half the rent and are kind of making consistent payments rather than not paying anything for a month and a half.

Brandon: Come on Bruce, you got to get your late fees man come on.

Bruce: I know, it’s just tough the charge 30 bucks when they get $1000 per month total income, 30 bucks is huge on them.

Brandon: Yeah, you’re a good man let’s put it that way.

Bruce: I mean 30 bucks doesn’t mean a whole lot to me but it means a lot to them it’s really tough to do. But Michele’s absolutely right you do have to charge late fees and we had done a lot more now than we used to.

Brandon: I think a big part of landlord and again it’s a challenge. I can’t speak to me because I’m not there in your shoes but it’s a challenge balancing we’re trying to make money but we are also trying to run almost a ch-, it’s kind of it’s charitable. I call what you do charitable landlord in I don’t think the average landlord looks at the business the same way you guys do. I really do think that you guys are doing kind of a combination of charity, giving back to the neighborhood and landlording running a business. Because if you are just running a business they are getting those late fees.

Bruce: Right.

Brandon: Without even thinking twice about it. So I think your strategy is, it’s unique in many ways and I think for some folks I think it’s, I think a lot of people would find it appealing. And I think others might say well you guys are crazy and that’s fine.

Bruce: A lot of people think we’re crazy, that’s definitely, definitely what it is.

Brandon: Yeah.

Josh: It’s all good so my question fire round is if you’re getting property off the MLS what exactly are you guys looking for? Extended days in the market, short sales, what are the properties of the property that make it stand out to you as a deal?

Michele: Being on the market a long time is desirable but lots of times there will be something new on the market and we can make that work just as well. So it’s really just running through the financials and see which one has the most compelling financials. So it’s compelling financials and working floor plans that’s really what drives our decisions.

Brandon: Okay, okay, cool.

Josh: Alright what is the single best method that you guys find to market the tenants especially in low income areas where maybe there are not computer savvy?

Bruce: Actually we do almost exclusively Craigslist.

Josh: Okay so even in the low income that works.

Bruce: As we said before we can’t use ‘for rent’ signs in our windows.

Michele: Because that would be the best if we could.

Bruce: And we really do feel them almost immediately after they are vacant.

Josh: So where, are these folks, are they using a smartphones, do they have computers or they just like to go into the library or something?

Bruce: A little bit of both smartphones and library.

Josh: We actually find the majority of our tenants know from Craigslist also so cool.

Bruce: And free so it’s hard to beat.

Josh: And it’s free, yeah there you go.

Brandon: What would you do if a tenant says they want to pay weekly to help them budget out? Is that something you would consider?

Michele: Absolutely I do want to try to get a little bit more rent money to cover a. out risk and b. more time. One concern with that is, is lots of time because of the way my job works we have to be in town the first 2 days of the month anyway. And that’s when usually our tenant issues and collecting rent is going on. So being gone later in the month we probably have to set up something with them so that we could have the flexibility to be gone.

We don’t let our tenants know when we are gone so we try to make it seamless to them and that would be difficult that way.

Brandon: That makes sense.

Josh: I have a question this wasn’t a fire round question but I’m just curious. Do you let your tenants know where you live?

Michele: Yes, many of them bring the rent to our house.

Josh: Okay are you worried at all about safety or anything like that because of doing that? Somebody asked that in the forum actually a few days ago and…

Michele: Our house got broken into shortly after we started doing this and my first thought was that’s what had happened.

Bruce: But it wasn’t.

Michele: I get more nervous after someone moves out they are upset coming back and doing something that’s my only concern especially with the teenagers and stuff in our house.

Bruce: We actually have, and our kids go to school with some of these kids.

Josh: Interesting.

Bruce: So they know us.

Brandon: Makes sense.

Josh: For sure, for sure. Why don’t we wrap this up with the…

Famous Four

Alright here’s the quiz, you ready?

Brandon: Do you want to start it?

Josh: Yeah Brandon why don’t I start it? What is your Michele and Bruce and if they are separate that’s fine favorite real estate book?

Michele: Okay so we are going to stretch a little bit here. I guess the first thing I would say here is that every real estate book I’ve read and I’ve been reading more this year I get something out of it. I always get at least some tidbits of something that I can do differently. But especially when I was new and starting out I always felt that they did not go into enough detail and it was always really frustrating because it wasn’t stuff that I could really use. So what we wanted to say, there’s a book it’s kind of along the lines of Section 8 Bible which was a great book for us.

But it’s a book called See Poverty Be the Difference by Donna Beegle and the author was in poverty and she wrote this book kind of sharing about what it is like in poverty. And some ideas of how to get out and stuff. So it was really good for us to understand the mentality because when we first started it was like, I had so many questions about why do people do this, why how can you function without a bank account? How can you make it work when you only have this much income? In other words just so many questions and this helps. Helps kind of talk about some of those stuff and just good insights about how and why people are in poverty.

Bruce: It’s a lot about how people in generational poverty are just different not bad. A lot of people just, because they are different, because they have different cleaning standards because they are not as willing to go to the, volunteer at the schools. People assume they are just bad people. But in reality they have different ways of doing things.

Josh: That is the hard part I think for, I struggle with that and a lot of landlords do. We tend to look down on people when they, maybe a lower income and I try not to but it’s hard not to. Because I’m like why aren’t they just, why don’t they just pay their bills on time, work on their credit report? I mean come on people get a mortgage. I want to like, yeah it is true it is different it’s a different way of thinking and who says my way is right? I don’t know.

Bruce: I think one of the toughest things for Michele is to see how they decorate. You just going to these houses, these are my houses and they look so horrible but they love it and it’s what they’re liking. Who cares what we like?

Michele: We had one tenant who was moving out even though they are not allowed to paint we tell them not to paint. But her parting gift to us was to paint her whole place mint screen, the ceilings, absolutely everything and we’re like, oh my gosh. And we painted some of the walls to break it up a little bit in the ceilings but we left a lot of the mint green huge selling point people love it.

Josh: Wow! No kidding.

Brandon: That’s funny.

Josh: I would have been happy if they came with a gallon of mint chocolate chip ice cream with mint green, oh my goodness, wow, crazy.

Bruce: Again just because we don’t like it doesn’t mean everyone is not going to like it.

Josh: There you go okay, cool.

Brandon: What about your favorite, and business books that stand out for you guys?

Michele: Yeah, this is another little bit of a stretch because it is more about personal finances, but Money or Your Life by Vicki Robin and Joe Dominguez really changed our life and our outlook. We’ve read it probably in the mid-90s and it was kind of the voluntary simplicity movement and just because you have more stuff doesn’t mean you are happier and you don’t have to keep up with the Joneses. So that kind of got us on a different path of just leaving simpler and under our means and not overextending ourselves and that’s kind of gave us the ability to do this.

Josh: Cool. Yeah I had not heard of that one so definitely great.

Brandon: Hobbies.

Bruce: Books that were brought up before on podcast.

Josh: Yeah that’s always good because a lot of them are obviously, we hear a lot of the same ones so that’s great. What about hobbies?

Michele: We play tennis together and with the kids and right now working to get the kids into college our lives are just revolving around the teens and their activities and stuff.

Bruce: And then on Thursdays Michele’s hobby is to do that market research.

Josh: Don’t forget Thursdays.

Bruce: So I was kidding it really is what she likes to do on Thursday nights.

Brandon: Well that’s cool.

Josh: That’s awesome. And Brendon I know you got one more for them.

Brandon: My last question is what do you believe sets apart successful real estate investors from those who either give up or feel or never get started?

Michele: We think learning from our mistakes and then taking action versus waiting and that can be, we just jump right into buying properties. But also in landlord-ing lots of times you want to just step back and see how it just kind of play out and it’s always better to take some action even if it is wrong you learn from it.

Brandon: Cool, great, great, alright well that’s awesome.

Josh: Awesome.

Brandon: Where can people find out more about you guys?

Michele: BiggerPockets.

Josh: Hey, what is that? Right on, right on.

Brandon: We’ll link to your profile in the show notes of course. Yeah this has been awesome you guys.

Josh: Absolutely, absolutely. For anyone listening if you’ve got any questions for Michele and Bruce you can ask on the show notes at BiggerPockets.com/show79.Or of course you can go find their profile and link up with them. Listen guys we really do appreciate the time and you guys sharing a little bit of your story with us and we look forward to seeing you around the site.

Michele: Great thanks for having us.

Bruce: Thanks guys.

Josh: Thanks guys.

Brandon: Thank you.

Josh: Alright guys that was Michele and Bruce Fisher on the BiggerPockets podcast and we again really appreciate them taking the time. Hopefully you’ve gotten some value out of the show and I know that I certainly found it fascinating and think it’s a niche that would certainly excite some folks so hopefully you enjoyed. If you are a new member, a new listener to BiggerPockets podcast definitely encourage you to go back to the previous 79 shows and see what we’ve got.

We always have new ideas, new strategies, new niches, new techniques so listen up. And otherwise as I have to remind you every time I would not be doing my job if I wasn’t, definitely jump on the site if you’re not an active member of BiggerPockets. We certainly encourage it, BiggerPockets is such an amazing community of people like the Fishers who are out there just trying to help one another be successful. So jump in, get involved, participate, welcome new members and just share what you can when you can and you’ll see it come back. It definitely works that way.

Otherwise check us out on Facebook, twitter, G plus, Pinterest, LinkedIn and we’ll see you next week I don’t have much more to add. What about you Brandon?

Brandon: I got nothing, see you guys on the site.

Josh: We’ll see you around, take care, thanks.

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