Time, Money and Simplicity

18 Replies

A lot of people have asked me why I decided to get into real estate. I have three criteria for when I look to invest in any business - 1) I want to make a lot of money, 2) I don't want to spend a lot of time doing that and 3) I like businesses that are very simple - something I can easily explain to my wife and parents (and that's exactly why I lost money investing in Bitcoins!! :)

So back in 2010 my wife and I had saved up some money and I was looking to invest in some income generating assets or businesses, I considered investing in franchise restaurants (very briefly). After doing some research, I realized that owning a restaurant is more or less like buying a job for yourself and I absolutely didn't want to do that. I have always been very interested in personal finance and I used to follow couple of blogs and one day someone had mentioned about a real estate investing in one of the comments to a blog and that's when I started looking into real estate investing.

It fit my criteria of making money, not taking a lot of time and my wife and parents understood what I was wanting to do. Those were the main reason why I got attracted towards rental properties over flips or wholesaling. Flipping is definitely good money, but in my opinion and experience, it takes a lot of time.

Once I figured out that I wanted to be a landlord, I started researching books and internet to learn more and that’s when I came across Millionaire Real Estate Investor book and Biggerpockets blog. Millionaire Real Estate Investor reassured me that choosing buy and hold investments over flip and wholesaling was the right thing for me and also gave me a good focus and helped me develop a strategy. Biggerpockets gave me tactics on how to implement my strategy.

One of the main reasons I like buy and hold investing is because I can systemize it very easily. For example, my team has built the business to the point where we have automated a lot of steps and have taken decisions out of wherever we can. We use the same paint color in every house we do, no exception. We use the same flooring wherever we can, same roofing, same windows, same fixtures, etc. This allows me to volume without having to spend a lot of time.

For example, I bought 4 houses couple of weeks ago and I only looked at one from inside and the rest I just saw the before pictures and videos for my records. My project manager will take care of all the rehabs and he doesn't even need to ask me about scope of work. Basically, for roof, siding, windows, furnace or other major components, we have a very simple rule. If it will need to be replaced in next 3 years, replace it now. We do new flooring and paint in every house. This helps us expedite our process. I have may be spent 2 hours per property since the purchase and project manager is taking care of rest.

For me, I have minimum rate of return that I look to make on my money and time, but rate of return on my time is much more important than rate of return on my money. 

@Sharad M. , listening to your podcast episode got me thinking along the same lines as far as doing the exact same basic rehabbing to every property, i.e. paint, flooring, etc.  Thanks for sharing your story and helping me to think along the "work smarter, not harder" line.

Hi @Evan Bell

I have always tried to keep my business as simple as possible. For last 3-4 years while I have been investing in real estate full-time, I have always looked at other business opportunities also and that's why not making real estate a full-time job for me has been very important to how I develop my business.

Best wishes for your future success.

Sharad

Great post, thanks. I'm new and looking to do what you are doing. How did you make decisions for interior finishes? Is there a source you were able to tap that informed your decisions for the finishes? 

Thank you,

Andy

@Sharad M.

I am in the process of saving for the down payment on my first investment property. I aspire to have a team one day much like yourself. Do you have any advice as to how to systematically setting up a more or less automated RE business? Is there profit sharing for your project manager I would feel that there would be greater incentive to get the job done with potential for greater rewards.

@Sharad M. Thank you for sharing. Keeping the process simple as possible is my goal, as well. I'm new to Real Estate investment, and recently changed our business plan from Wholesale and flipping, to buy and hold multi-family. I found I didn't have time for Wholesale and flipping with a full-time job. I love my job, and Real Estate Investment gives me a greater opportunity to provide more for my family.

Originally posted by @Lawrence Lloyd paclob :

thanks for sharing your story and some great advice for the buy and hold properties. I'm brand new to being a real estate investor but I am fired up to getting my first rental started!

Aloha

Lloyd Paclob

 Hi Lloyd,

You are most welcome and I am glad you found the information helpful. I am starting to write blogs to share what has worked for me in the past and hopefully someone can learn something from my experience.

Best wishes for your future success.

Sharad

Originally posted by @Andrew Graves :

Great post, thanks. I'm new and looking to do what you are doing. How did you make decisions for interior finishes? Is there a source you were able to tap that informed your decisions for the finishes? 

Thank you,

Andy

Hi Andy,

I didn't do anything complicated.

For example, for living room and hallway flooring, I use vinyl plank flooring. I found out about it on BP website. If it works for other investors who have tried it for few years, it works for me.

For paint, I use Glidden Natural Lined in Eggshell finish for all my properties. Every single one of them. The color is neutral and looks nice and goes with everything and now I don't have to even think about paint color.

For kitchen and bathroom, I use ceramic tile and it's the same tile that goes in each house. Neutral beige color. Goes with everything.

For kitchen cabinets, I have started installing unfinished oak and we paint it grey. It looks great and neutral and everyone likes it.

For bedrooms each house gets the exact same carpet.

For plumbing, each house gets PEX plumbing.

If we replace roof or windows, each house gets the same brand of shingles or windows.

Each house also gets the same plumbing and electric fixtures.

These are things that we don't even try to contemplate.

If it is neutral and goes great in one house, it goes in every house. My property manager likes the finishes and we are able to rent our properties quickly with great tenants so it's a win-win for everyone.

Please let me know if you have any questions.

Sharad

Originally posted by @Jason D. :

Sharad M.

I am in the process of saving for the down payment on my first investment property. I aspire to have a team one day much like yourself. Do you have any advice as to how to systematically setting up a more or less automated RE business? Is there profit sharing for your project manager I would feel that there would be greater incentive to get the job done with potential for greater rewards.

 Hi Jason,

I have always liked things very simplified so I have always tried to automate decisions wherever possible from buying to rehab to renting.

I read E-Myth Revisited and it helped me start thinking in terms of systems.

I don't have profit sharing with my project manager. Honestly, with all the projects that I am working on, I don't even have a full-time project manager. My project manager helps me 15-20 hours a week in taking pictures and other physical tasks that needs to be done locally and I pay him hourly. I have tried to automate a big part of my business. The biggest key has been building a system and finding team that can be part of your system and implement your vision.

Sharad

Inspiring story Sharad. Loved the podcast. I'm a relatively new investor (I have some MFH in Kansas City), and also have a full time day job. The engineer in me is always looking for ways to simplify or automate my processes. Thanks for sharing your ideas around this.