Brandon: This is the BiggerPockets podcast Show…
“When we took over this property, our average rent was $465. Today, our average rent is $715. The only thing that changed that we—we didn’t do anything crazy. We added some baseboards and we repainted the interiors when people moved out and we added dishwashers and that’s it. That’s all we did and we’ve got the rents up to $715”.
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Brandon: What is going on, everyone? This is Brandon, the host of today’s BiggerPockets podcast, here with my wonderful co-host, Mindy Jense. How are you doing, Mindy?
Mindy: Brandon, I am doing awesome. Today is a great day. How are you doing today?
Brandon: I’m doing good, I’m doing good. You and I bought a mobile home park along with Ryan Murdoch and that’s going well. I actually just got an e-mail from him. I don’t know if you saw it coming in when we were recording the podcast, but—
Mindy: No, I was paying attention to the recording, Brandon.
Brandon: As soon as we hung up from the recording, I checked it and he says—Ryan, who is our boots on the ground guy said—this is great. I’ve got to read this. So he said, “Weather-related nuisance: we had a ton of snow between Christmas and the first week of January to the point where the plow guys had nowhere left to push the snow. That’s a pretty common thing here in Maine”. So they ended up bringing giant bucket load to come and move snow. So anyway, that’s fun. I never knew I’d get that e-mail.
Mindy: That happened to me. That happened to me in Wisconsin the first year I lived in Wisconsin. They got 101 inches of snow and at the end of the 101 inches, I can’t even throw it high enough over the snow banks on the driveway to get it off the driveway. I don’t know where to put this anymore.
Mindy: Yeah, I ended up throwing it in the street. Let those plows take care of it. Anyway.
Brandon: Anyway. So that’s fun. I’m excited, if we can over the next few years give people updates about how it’s going, but so far so good. No exploding pipes and that’s a good thing.
Mindy: And they’ve had bitter cold. I sent a note this morning, like hey, I just want to double check, like I’m the silent partner in this but I don’t really want to be silent. I want to learn all I can about mobile home parks. Together, we can take over the mobile home park industry.
Brandon: We are taking it over. So anyway, it’s fun being in this deal with you. And yeah, you guys, I want to speak to everybody on the podcast right now, and we’ll get to the interview in just a second but I want to say, like, BiggerPockets is such a cool place to find people to work with. Like, me and Mindy are working together. I work with a lot of people from BiggerPockets because everybody has something that they can bring to the table and then something that they need, right?
So just start networking, talking with people. That’s how you do business, is by networking. And BiggerPockets is the largest real estate site in the world for networking. And guess how much it costs? It’s free for a membership. Unless you become a pro member, which is even more cool. But, anyway. Do it. Hang out in the forums. Mindy is a sheriff over there in the forums. You’ll see her a lot there.
Mindy: Yes, you will.
Brandon: You’re the one that cracks down people when they start self-promoting themselves.
Mindy: I crack the whip, yeah. I do want to say that if you have something to offer somebody, if you want to be in a partnership with somebody or you want to even do some sort of business with somebody, tell them what you can bring to them before you ask them for things.
Brandon: Very, very good tip right there. That can be today’s Quick Tip. But it’s not.
Mindy: A Quick Tip. But it’s not.
Brandon: It could be, though.
Mindy: That’s just the regular old tip. Today’s Quick Tip is do you know that we offer landlord forms on our website?
Brandon: State-specific landlord forms.
Mindy: State-specific landlord forms, yes. We worked with attorneys in individual states to take a lease and make sure that it conforms to that state’s landlord-tenant laws. Today, you will hear our guest, Andy Propst, talk about knowing your landlord-tenant laws and even using them as a way to gauge where you want to invest.
Mindy: And your lease must follow your landlord-tenant laws of your state. So we did the hard work for you. We currently have, when this show goes live on February 8th, we will have 15 states available at BiggerPockets.com/LLForms. That’s LLForms for landlord forms.
Brandon: There you go. We’ve got states like California, Colorado, Oklahoma, Texas, Florida, South Carolina, Ohio, Indiana, and a few more. New York, Illinois and a bunch more coming. New ones being added all the time. Every month we add new ones, so I’d check back often. BiggerPockets.com/LLForms. LL stands for what?
Brandon: Landlord. The lord of the land!
Mindy: Ladies Love, like LL Cool J.
Brandon: Oh, is that what it stands for?
Mindy: Ladies Love Cool James. Really, Brandon?
Brandon: Really? I thought it was Landlord Cool James. I don’t know. Weird.
Mindy: Oh, wow. Okay, so anyway. Nobody wants to hear us.
Brandon: Moving onto our guest here in a minute. Before we do, let’s hear a word from today’s show sponsor.
Today’s episode is brought to you by our friends at RealtyShares.com. I love these guys. RealtyShares is a real estate crowdfunding platform that allows accredited investors to invest in pre-vetted real estate deals online. So investors can browse and then invest in both residential and commercial properties that yield returns 8-16% annually. As a Realty Shares member, you can passively invest in professionally managed real estate investments in a variety of asset types and geographies for as little as $5,000, all from the convenience of your living room. So to learn more and to get started with a free account, just go to BiggerPockets.com/RealtyShares. That’s BiggerPockets.com/RealtyShares.
All right, let’s get on with today’s podcast. So today’s guest is actually a guy—so my buddy, Nathan Brooks, who is an awesome dude out of—where is he at? Kansas City, I think. He’s going to yell at me if I got that wrong, but anyway.
Mindy: Isn’t he in Memphis?
Brandon: No, he’s not in Memphis. But anyway, he’s got a turnkey company out there in the Midwest somewhere. Man, he is going to yell at me for not knowing that. Anyway, he actually connected me here with Andrew Propst. Andrew is a property manager who has 13,000 units under management in a bunch of different states. I can’t remember how many but like a dozen states or something like that.
Mindy: Eleven, I think. Yeah.
Brandon: A ton. He also has his own investments as well. He recently bought a 42-unit apartment and he’s making like a million dollars on it. It’s crazy. You guys have got to hear this story. We go through a lot of landlord stuff today, talking about how to become a better landlord and property manager but also how to find deals. He’s got some amazing tips on finding deals, stuff that I don’t think we’ve ever talked about here on the show.
Mindy: I was going to say, I’ve never heard either of those two main tips that he shares on any of these 264 other shows that we’ve had.
Brandon: Yeah, he’s legit. So you guys make sure you listen to that. If you’re enjoying the show as always, please leave us a rating and review and subscribe to our channel over on iTunes or wherever you listen to podcasts. And also, Mindy’s got a show called BP Money Show. Make sure you guys listen to that and subscribe to that as well. So, without further ado—did you like that quick plug for your show, Mindy?
Mindy: I do. I appreciate that. Thank you. I want to say this is the best first five minutes of any podcast we’ve ever done.
Brandon: Don’t tell Josh that.
Mindy: Yeah, well. This is the most interesting first five minutes of the actual show. We’ve been yammering around for five minutes already. But the actual show, when Andy comes in—
Brandon: Yeah, it’s fascinating.
Mindy: Best five minutes ever. Okay. So without further ado, let’s bring him in.
Brandon: Andy, welcome to the BiggerPockets podcast, man. It’s good to have you here.
Andy: Hey, thanks for having me. I appreciate it.
Brandon: Yeah, this will be a lot of fun today. So, before we get into any type of real estate, I want to address the elephant in the room, because no one knows there’s an elephant in the room. But it’s something that I saw in like your bio, and I was like, no way. So I looked it up and sure enough, you have an incredible story not even related to real estate, having to do with being kidnapped. I want to hear it. Can you tell us the story? I know, everybody else, we’re going to get to real estate in a minute. I need to hear this for me.
Andy: Yeah, I’ll make it a quick version. The good news about the story is they made a movie about me being kidnapped, so that helps me shorten the story. I’ll just send you to the movie and you can stream it live in Prime now. It’s free. So yeah, I was an LBS missionary. I was 20 years old. My dear companion and myself, we were approached by some Russian mobsters. We didn’t know at the time. They asked us to come to their apartment and talk to them about what we do. Explaining our religion, basically.
So we went to the apartment, we walked in, and immediately we just started getting beat by bats. Just like knocked over the head. We didn’t know what was happening. It was like crazy traumatic. They bound us. They tied us up. They took us out in the middle of nowhere in this little town in Saratov, Russia. And we were held captive there for a week and there was a $300,000 ransom demand on the church or the American government, my family, anybody that would pay.
Obviously, the church, government, anybody won’t pay those ransoms because if they do then every missionary, every tourist, would be a target. Five days later, the FSB, KGB, the church security, state department, we had help from Bill Clinton, Gordon Smith, lots of pressure. They got scared and they took us out in the middle of nowhere and dropped us off and we hiked back to our missionary home. They flew us to Germany. We spent a couple of days getting checked out at the hospital. And then we got reassigned to England and then I finished my mission—
Andy: Yeah, reassigned to England. I mean, that’s a very short version. But again, it’s a great movie. I got called by a director in 2011. He said, hey, I want to make a movie about this story. It seemed like an awesome story. I want to know the rest of it. That was in 2011 and then we released it in November of 2013 and it’s got like 4.5 stars on Amazon. It’s a great movie called The Saratov Approach. Believe it or not, obviously going on a mission you learn a lot about life and then you get kidnapped, you learn a lot more about life. So it was a very difficult experience at the time but probably one of the biggest learning experiences I’ve had. It teaches you a lot about what’s important and you typically don’t get that when you’re 20.
Andy: That was really good. That was a really quick version.
Mindy: That is the best icebreaker story ever.
Andy: But yeah, it was pretty funny because I was meeting with a property management owner last night here in Arizona. I’m here for a conference. And they were mentioning that some Russians broke into their bank account and stole $900,000 and then the CIA called them and said, “I think your husband has been kidnapped”. And I said, that’s very interesting because I’ve been kidnapped by Russians. And they were like, really? Just like totally out of the blue, blew them out of the water. I’m like, yeah. So they didn’t know that I was, so I just kind of blew them away.
Brandon: Wow. All right, so we’re going to make an awkward transition here. How did this experience, being kidnapped by Russian mobsters, lead you to get into real estate investing?
Andy: Well, this is pretty interesting. I’m just kind of a cheap, frugal guy. I’m just—I don’t like throwing away money just on weird stuff. I always thought that like, this is probably bad for the podcast but I never wanted to pay rent. I either wanted to build equity but never just throw rent away. So when I got off my mission, I tried immediately—because my sister, when I was on my mission, she wrote to me and said, I’m managing properties. I’m an on-site manager and I don’t have to pay rent. And I was fascinated by that. You get to live there for free and basically do nothing?
And so I said, I want to do that. I got back from my mission and nobody would hire me. They all said, hey, we’re only hiring couples. We need somebody that does maintenance and then your wife would typically do the books. So I’m like, oh well this is an easy fix. I’ll just get married. And so, basically, married the first girl I saw who’s like the best woman in the world. We’ve been married for almost 20 years. So I got married, locked in the first job we interviewed for, got hired. And I started off my property management career in 1999 as an on-site manager at the CrossRoads Village in Tigard, Oregon.
Andy: That’s how I started in the property management, real estate. And obviously, you’re not paying rent. You can set money aside and then kind of build your net worth that way. So I always worked a second job but I always managed properties my whole life and we moved to Idaho, I got really serious about property management, building the single-family side along with the multi-family side, got a bunch of certifications in property management, commercial real estate, and just grew.
I started to grow my own personal portfolio and most importantly, helping others because I understand the intricacies of the business and what tenants are doing and where the demands are, etc. And helping other people grow. I mean, in Boise alone, we’ve helped put 3600 new units in the ground. Just new development just in Boise, which is a lot for Boise. But we’re also doing it in other markets, too, which is great.
And then we’ve helped owners really take advantage of the down real estate cycle. We helped people buy in 2008, 2009, 2010, 2011, and then that kind of slowed in our market. So now, we’re pushing people to other markets where yields are better. So it’s been a long ride in the real estate rollercoaster but it’s been fun and building my own portfolio is fun but helping other people kind of reach their investment goals is like, that’s what makes you feel good.
Brandon: That’s awesome.
Andy: You guys do the same thing.
Brandon: We try. We try. You’ve got expertise in a lot of areas but specifically, two areas I want to focus on today. Number one is your personal journey. I want to know like your own real estate, how did you do all that? What did you buy? We’ll go through that first. And then I want to shift over to like how do we manage tenants? What are the things you’ve learned now in managing properties and managing tenants, dealing with people? Because honestly, a lot of people get into real estate and they think that the hard part is buying the real estate and then it’s all easy from there.
But really, you can get an amazing real estate deal, the best deal ever, and still go bankrupt because you don’t manage your properties right. It doesn’t end once you get the units. So I think people kind of split between the two. So maybe we start with—let’s talk with you. How did you get started with your own actual investments? Like what did you buy first?
Andy: Yeah, I think my first investment was a duplex and I bought this in 2008 in Napa, Idaho. It was a duplex. It was a newer duplex. It was built in 2006 or 2007. And then immediately, the guy bought it, leveraged it to the hilt, right? And then who knows what kind of tenants they put in there. I think he paid like a 1% cap rate for this thing. It was ridiculous and he was just going to hold it for a couple of days, right? Sell it for $100,000 more. And that’s what everybody would do. So he put 100% down, probably took 25% off the top of that, and then immediately the market crashed and then he was in an upside down position.
So we bought that in foreclosure, I think he paid $334,000. I paid $110,000 for it. It was basically brand new and I still have it today. And then I just started in 2008, 2009, 2010, just slowly buying single-family multis—fourplexes, duplexes, and then the largest project I own is a 42-unit apartment complex. I recently bought a bowling alley with 10,000 square feet of commercial space.
Brandon: I saw that.
Andy: Yeah so, you know, literally, I am not attached one bit to the paint color, the carpet. I strictly look at the numbers. What is the vacancy? What is the potential revenue? What are the expenses? And it’s really easy. I think a property manager, for example, is a great person to talk to if you really want to understand what the real rent is going to be and what the expenses are going to be because they’re managing hundreds of these things and they can look inside of their units and make a really good budget assumption on how these things perform.
And the other thing that’s really important is that every time I buy an asset and I try to consult with some people when they buy assets is the focus is never look at the details. The devil’s in the details on these things like people don’t review the leases. They don’t review the attachments to the leases. They don’t look at the applications. Who the people are in there. And that stuff is really important for you to kind of judge your performance, especially the first six months.
Because if you get in there and you’re looking at these documents and they’re bad and they’re not updated, and we’ve seen situations where people are looking at buying a property and they have deposits in the system that don’t match the deposits in the lease, it really doesn’t matter what the system says. It matters what the lease says and they get just killed when these tenants move out because these tenants are expecting a $1000 deposit but the system only says $500. And so there’s a delta there. And I’ve just seen a lot of investors just get excited about like what the box looks like and not what’s inside the box and what’s in the paperwork.
So it’s really important to kind of slow down. If you’re doing this for the first time, if you’re not sure what to look for in leases and addenda, you know, I think it’s really important to get somebody that does know those things like a property manager, for example. With certifications, hopefully. And keep you out of trouble because I’ve seen a lot of investors get hurt by not looking at the right things.
Brandon: That’s so good. There’s so much in there I want to unpack. First of all, a lot of people feel, I don’t know, there’s a lot of bad property managers out there. A lot of really bad ones where I hired some bad property managers and like, I didn’t even know that was a thing. I could like ask for help or consult with them because they were just like so busy, they didn’t care. It wasn’t until David Greene, who recently published a book on BiggerPockets called Long Distance Real Estate Investing, and he talks about this Core Four—four people on your team you’ve got to have a good relationship with and they matter more than everyone.
And one of those is your property manager. He makes this case that if you have a really good property manager, they are the person you can go to, to find out how much it’s going to rent for, what to expect for vacancy, what are repairs typically in this area going to cost me? So I just think it was a good point you made there is you’ve got to get a good property manager. If you need help with these things and we all need help with these things.
So I’m wondering, do you have any advice on like, if I’m a newer investor, maybe even not a newer investor, how do I go and build a relationship with a property manager like yourself? Can I just like cold call you on the phone and be like, hey, I want to pick your brain for half an hour. Is that how it works? Any tips?
Andy: Yeah, and I mentioned this line and I don’t want to forget it because you told me, but “you never know how important a property manager is until you hire a bad property manager”. But I know that line resonates with a lot of people. But if you’ve ever hired a bad one, you’ll really appreciate the good ones. If you always had a good one, you never realize just how good they are until you hire a bad one.
Back to your question as far as talking to a property manager, to me as an investor that buys in other areas, to me, it starts online. I always try to go online and I like to see property managers that really put themselves out there. So if you land on a property management website and they don’t have the staff in there like the names and who they are and specifically what they charge, and they’re up front about everything, that’s kind of a red flag to me. Because if they’re up front about who they are online, they’re probably going to be up front and helpful who they are in person. So that’s where I would start.
And then when you find that person, hey, look, I found somebody online. They’ve got their picture online. They’ve got a Facebook page. They’ve got certifications in property management. These people have a lot to lose if they don’t do a good job, right? That’s the people you want to hire. You don’t want to hire people that have nothing to lose. And if they have a lot to lose, then they’re probably going to do what’s right and try to do what’s right for you. And so then you can start building that relationship with them.
But I think a lot of it starts online and then just calling them up if you find somebody. Not just do a Google search and find the first property manager that’s on the top. That doesn’t necessarily mean they’re the best. It’s probably a good chance that they’re good if they’re higher on the Google search, but I would look at a few to make the right decision. And then just talk to them. And if you’re investing long distance, obviously I would highly recommend getting on a plane and going out there and meeting them as one of the first things you do in going into a new market because there’s nobody that’s going to understand what the rents are, what the expenses are, what the areas are.
If you talk to a real estate agent, I love real estate agents. I’m a broker myself. But they might tell you rents that might not jive with what’s actual. A property manager, they’re going to tell you what’s right because they’re stuck with you. At the end of the day, once the property sells, you’re there. They’re there. The agent’s gone. They’re the ones that should be, in my opinion, quoting the rent. A great property manager is a huge asset, to me, if you’re building a portfolio in multiple markets.
Mindy: Okay, so you do due diligence on your property management team. Wow, what an amazing concept.
Brandon: So I’m wondering, how do you do that? What are you looking for? When you go and meet with them, let’s say, in person—what kind of questions should I ask? What kind of red flags are there that I should not talk to the person or not hire them?
Andy: I mean, I’m a huge ambassador for NARPM, which is the National Association of Residential Property Manager. I was the national president in 2015, served on the board of directors for ten years. So I would start there. if you’re buying single-family homes, I would say, you’ve got to have a certified member of NARPM, preferably a certified residential management company. A certified residential management company has audits done on their property management company on a regular basis.
I mean, the worst thing that happens to investors is that, you have a property manager that’s managing a property and they take your deposits and rents and you never see them again. If you have a certified property management company with NARPM on the single-family side, you have your bases covered. I can almost guarantee it.
If there is no certified firm in the area, then again, going back to who is this person in the community? What do they have to lose? If things go bad, are they going to do the right things and typically you can see that with their presence online and then meeting them in person. And I like companies that are a little bit larger because they have typically better systems and better people in place. And then again, they have more to lose if things go bad. That’s typically what I see out there.
Brandon: Makes sense, makes sense. So, I’m going to go back to your personal investing for a little bit. You mentioned a 42-unit apartment building. Where is that at and why did you buy it?
Andy: Yeah, the other thing, on the apartment’s side, going back to certifications, I love firms that are involved in IREM, the Institute of Real Estate Management. So these are guys that are going to be very helpful in helping you underwrite the right deal for your apartment. So if you’re going to buy an apartment building, they’re going to be able to calculate your cash on cash, your value enhancement, what your IRR is, what your cap rate is. And they’re in the market and they understand that so you can go to IREM.org or NARPM.org and find these people. They’re little diamonds in the rough in certain markets but if I was going into a market, those are the two places that I would look first. Obviously, I’d look at a Home River Group first, which is my company. But if we’re not there, I’m looking at those guys.
But yeah, I had a really interesting situation with 42-unit complex. I had a commercial real estate agent who was contacted by a friend that had a 42-unit complex. They couldn’t sell it. This was back in early 2015, so it was right before multi-family just kind of blew up. And they had this—again, this was a situation where I feel like, honestly, some of the best real estate deals are the worst managed deals.
So if it’s a good property, it’s just got a bad property manager that doesn’t care and the property manager is not giving the right advice to the owner where they’re just trying to like you know, save money and not reinvest in the property. So it was one of those deals. He brought it to me and said, hey, we want to—I don’t do multi-family, would you help me find a buyer? So I put it out to my group of investors. They said they weren’t interested in it and then I got a couple of buddies and we put together a nice offer on this thing. I think we paid $1.7 million for it.
Mindy: For 42 units?
Andy: Yeah, $1.7 million under contract today at $3,050,000. That’s it.
Brandon: $3,050,000. So you’re selling the property.
Andy: We’re selling the property. We’ve identified the property because obviously cap rates in Boise have just declined, which has obviously pushed our prices up. So we’re going to 1031 that property into a fourplex community, a really nice fourplex community on the Mississippi-Memphis border because our yields out there are way better than they are in Boise right now.
Mindy: Okay, so you just made $1.3 million dollars, and when did you buy this?
Andy: June of 2015 is when we closed.
Brandon: That’s awesome. Mindy’s like I quit real estate.
Mindy: Yeah, I’m like, I quit. Yes, exactly.
Andy: And just to show you like how important property management is, when we took over this property, our average rent was $465. Today, our average rent is $715.
Andy: The only thing that changed—we didn’t do anything crazy. We added some baseboards and we repainted the interiors when people moved out and we added dishwashers. And that’s it. That’s all we did and we’ve got the rents up to $715 and obviously that increases your NOI and makes your property worth a lot more money.
Mindy: So it was in decent shape when you bought it. It was just horribly managed.
Andy: It was poorly managed and hopefully that manager is not watching this podcast.
Mindy: That manager is not watching—they should because you just doubled their rents.
Andy: Like literally, I feel like some of the best deals—and I probably shouldn’t be giving this advice but if you called the property manager, right—this is me being honest and this is how I find deals. I’ll call property managers I know and say, tell me about your worst owners. Who is that? And they hate their life, right? They hate you. They hate their life. They hate property. Can you tell them I’m interested in potentially buying that property?
Brandon: Yep. I’ve always loved that.
Mindy: What makes a bad owner? Is this somebody who isn’t actively managing it or isn’t actively involved at all or is this somebody who’s like a slumlord? What am I looking for when I call up and say, tell me about your worst owner?
Andy: Yeah, it’s typically somebody that is just like, kind of in a bad position on their property. Like you said, maybe they’re a slumlord, penny-pincher, or they’re not reinvesting in the property so every time they get a maintenance bill, they flip out. They make the property manager’s life miserable. Well, that property manager is going to love to sell to a guy like me that reinvests in the property, makes the property—maximizes the ROI on the property and then if the timing is right, I’ll sell that property and try to exchange it into something else that makes a higher yield. And it all just depends on the cap rates. I don’t know if you guys have ever talked about it—there’s an awesome resource called Integra Realty Resource. Have you heard of it?
Brandon: I have not.
Andy: Awesome. So it’s IRR.org, I believe, is the website. And I go on there and just like on a consistent basis just pull down cap rates in different markets. And you can get specific. You want multi-family, you want industrial, you want office, you want retail—they have all this stuff. Great local knowledge in each market. Typically, they have some tertiary markets, secondary markets, primary markets, obviously.
And you can pull down this information so if I find something that makes sense to sell, I’ll just go to IRR and find where the highest yields, the lowest cap rates—sell the low cap rate and go buy somewhere with a higher cap rate. It’s a great resource for your listening audience, especially if they want to get into commercial and multi-family. You know, that’s a CCIM tip that I learned going into my CCIM courses a long time ago. I can’t live without Integra Realty Resources. It’s a great resource.
Mindy: Okay, you just threw out a ton of stuff. You threw out cap rates and you threw out CCIM. Can you share what that means for people who don’t know? For Brandon.
Mindy: He doesn’t know.
Andy: Absolutely. So cap rates are the capitalization rate of the particular markets you’re looking at. And those rates fluctuate based on demand, right? And so, right now if you can buy in this market at seven plus—seven, eight, nine percent cap rate, that’s a heck of a yield in 2018. Five or six years ago, most people were buying at a nine, ten, eleven yield because rents were pretty stable but values were down, right? Now rents are still stable but values are up and so that shrinks your cap rate down. So when I go into different markets, I look for a high yield in cap rates. I look to sell in low cap rates. So I want to sell in Boise, for example. I live in Boise and selling Boise at a six, and if I sell in Boise at a six, and I go buy in Memphis at an eight or nine, that is a huge difference in the amount of value that I get for my money, you know.
Basically, to understand the cap rates, you take what’s selling in that market and dividing that into the net operating income and then you get your capitalization rate. We don’t have to go into it but it’s almost like—I mean, with the technology we use and the demographic searches that we use, it’s almost like a crystal ball because rents historically have been very stable where the values have been up and down, all over the board.
So if you can put in a 2.5-3% rent increase into your performance, you can almost pinpoint exactly what your property is going to do if you just throw out home price appreciation or price appreciation, which scares me. I never have—that’s like one piece of advice. I’ve never bought anything based on appreciation. It’s always based on cash flow. Zero appreciation. You’ll never get hurt if the numbers look good based on the cash flow, not appreciation.
Mindy: That’s a good piece of advice. Okay. There, I’m going to link in the Show Notes to a really good article about cap rates because there’s a lot of confusion about it and we can spend the whole entire show delving into that. But I’ve got an article already on BiggerPockets.com so I will get that link and put it in the Show Notes. You said, CCIM? And then I want to go back to this 42-unit because I have way more questions.
Andy: Okay, yeah. CCIM is Certified Commercial Institute Member. So basically, it’s a national, worldwide association that trains real estate professionals on how to buy and sell and basically consult on commercial real estate. So basically apartments, retail, office, etc. I’ve gone through all the CCIM classes. I took the two-day CCIM course, Last Test. It’s crazy but you really learn how the financial side of real estate works and it’s almost kind of like cheating. You can look into a crystal ball. This is so important, what you guys do and the education you can get online or in person at these classes. Obviously, tuning into BiggerPockets to understand this stuff.
Because once you really understand it, you can really start making smart investments. I feel like obviously real estate is a great place, especially because—I mean, on a daily basis, because what’s happening with the stock market, I get people calling me. I’ve got to get my money out of the market. I get people that own retail because retail’s scary right now. I know people that have office because of the telecommuters. Amazon’s putting retail out of business. Telecommuters are putting office people out of business. And they’re all wanting to move their money into multi-family. So what’s that doing to multi-family? Well, it’s driving up the price and driving down the cap rate because everybody’s trying to go into that market.
And again, Integra Realty Resource is a great thing, a great website to look at so you can see where the cap rates are floating in each market—office, retail, industrial, multi-family. And you’ll see that multi-family is always at the lower end because everybody looks at multi-family as a long runway in this market. They’re not sure on office. They’re not sure on retail. But they think multi-family looks really good for a long time because we’ve got all these millennials.
The other thing that nobody talks about is we’ve got all these Baby Boomers that are downsizing and moving into apartments. It’s crazy. I feel like we get more of those applications than we do with the millennials. Because a lot of the millennials are now buying houses. So it’s a pretty interesting market dynamic we’ve got going on right now.
Brandon: I was going to say, I find multi-family looks more and more interesting all the time. It just seems to be a good—but like you said, everybody’s rushing into it. It’s a very hot investment. So it’s hard to find those deals. Are there any other ways that you’re finding deals today other than talking to property managers? That was an awesome tip, by the way. But anything else you’d recommend?
Andy: Man, I recommend building to rent right now, man.
Andy: I think that is one of the best opportunities out there because what a lot of these institutions are paying for rentals or single-family homes or rental multi-family units right now, you can build them so much cheaper and then potentially lease them up and then sell it to them at a crazy cap rate. Obviously, that’s very market-specific. I love rental development. Like I said, we’ve helped put 3700 units in the ground since 2011 in just Boise, Idaho. But I think that’s one of the biggest opportunities right now if you can get the construction price right, if you can get the land right, you can do a homerun on multi-family.
And I love like fourplex communities where you have an HOA, fourplex owners and you set up that POA, Property Owners Association, and then you have multiple owners in there. You can sell these fourplexes where you can get 30-year, 4% fixed financing. Awesome, amazing financing. High-yielding tenants in there and good locations. I love that play. Just you know, building it. Because right now, the people that have multi-family realize that they need to probably sell it but their biggest issue is, what do I do with it? I can sell it at a six cap, but I have to also buy it at six cap. So why would I go through it? I don’t need the cash.
Back in the day like 2011, 2012, cash was king. Today, it’s not that way. Cash flow is king now. So they’re way more interested in our cash flow and they’re way less interested in how much money they can take off the table if they sell it because they have nowhere to go with it. And they’re not going to move it into retail or office. So their only option is multi-family and those deals are hard to find. But I think building it, I think talking to property managers is great.
I think if you’re trying to look for a grandslam in the smile states, you know, the coastal states, the inland or whatever—you’ve got to look in the Midwest and some parts of the South. You can still find some really good deals but a lot of investors are really uncomfortable going into those markets and that’s one of the reasons why we’re trying to build our property management company in those markets because investors know us, they’re comfortable with us, but we’re not there. So when we’re there, they’ll happily look at moving maybe a property in Sacramento at a three cap and then buying it in Memphis at a seven or eight cap.
Brandon: Can we go back to the building to rent? Because this is something we never really talk much about on the show because it’s always been a crazy proposition to build something direct because the numbers never really seem to work out really well. Maybe because rent has risen so much in the past few years that that’s not entirely true anymore. Do you have an estimate like what are you paying or what are you seeing in terms of price per square foot to build a fourplex like that? Where are you seeing that?
Andy: Sure. And obviously, these numbers are going to change based on where you’re doing that, but I can give you an example you know, from coast to coast. If you’re going to build fourplexes, typically you’ll get 12, maybe 16 fourplexes on an acre depending on—sorry, not fourplexes, 16 units or 12 units on an acre, if you’re building fourplexes. Which obviously is not a high density fourplex. But tenants love them. They love them. They love the townhome style fourplex.
For example, if you can buy a piece of land that’s just basically a paper piece of land that’s got no infrastructure, it’s got water, sewer, electric go into it but not in it, you want to be probably, in our market, you’d want to be under $2.50 to $2.00 a square foot. With the entitlements and all the improvements, that’s going to push you up closer to $10-$15 a square foot and then you’ll probably want to be under $80. So $95 all in makes a great yielding property in Boise, Idaho. That’s in our market.
If you go to Inland Empire, right? Because rents there are triple, so you just take that same model and say okay, now I’ve got to be buying at $6.00 a square foot because construction costs are going to be a little bit higher there. Not as much as the land so it’s really important to buy the land right. Believe it or not, there’s still land deals out there where there’s infrastructure put into these locations back in 2006 before the bubble popped. There’s still some out there. You can buy those and you can pay a little bit more for those because the infrastructure’s already there. You just finish out the streets and then start going vertical.
Brandon: Let’s say you’re at $100 a square foot, all in. That includes land, you’re saying, where you’re at in Boise?
Andy: That’s right.
Brandon: Let’s say then you’ve got a 1200 square foot—I don’t know what’s typical for one of those—
Andy: Like 1000 square foot home. Two bed, two bath, a nice A minus finish, 1000 square foot, two bed, two bath. $100 bucks a square foot.
Brandon: Okay, and what does that rent for, typically? Let’s say you had $100,000 into a single unit of a fourplex, 1000 square feet. What does that rent for in your market?
Andy: $1000-$1100 bucks.
Brandon: Okay, so you’re 1% or better in terms of rent.
Andy: Yep, absolutely.
Brandon: Your repairs are dramatically lower because it’s a new property.
Andy: And you’ve got a warranty. You’ve got a long runway on that property. And people are doing that all day long all over the country. And you know, there’s some people that don’t want to do it because they’re not really sure but let me tell you, it’s not super hard to find good land deals out there. Construction’s not cheap. That’s your big challenge. I give you that.
But money is really easy to find. You can find banks all over the country, lenders all over the country that would love to lend. There’s a great product called HUD 221D-4 loan, which is a 40-year fixed non-recourse loan that you can get on new properties that you build. It’s a pain in the butt to get it but once you get it, you’ve got 40 years of fixed, low interest rate, non-recourse, and you can assume that.
So you want to sell this thing 20 years into it, you can sell that thing and somebody can assume that loan. The loan, in my opinion, is worth more than the property at that point. So there’s a lot of cool options out there for people that want to get into this space. You don’t even have to be a builder. You just find a good builder that’s going to build something that’s good at a reasonable price, identify the land, and then go get your financing and you know, you can knock this out all day long.
Brandon: How do I find a builder for something like this? I’m not going to call up just the local handyman to go build a $400,000 fourplex. So who does this? Recommendations?
Andy: My recommendation, if you’re looking in a particular market, get your property manager, call your property manager or if you’re in that market, go and find something that’s being built locally that looks nice that you like. And then go talk to the contractors. Who is the general contractor here? Hire that guy directly. That’s how you do it. Because it’s hard to go to the Yellow Pages and find multi-family builders in Boise. They’re just not there.
But if you find the local builder that does a good job, if you go to the national companies, they’re great but they might be a little bit more money. You know, there’s more to lose just like the property management guy. But there’s plenty of guys out there that do a good job and will do it. I think you could find builders in most markets to build you a fourplex or a multi-unit eightplex or sixteen-plex at less than $100 bucks square foot, all in. And you can get $1000 plus rent. That’s what we’re seeing in Boise and Boise is not that cheap.
Mindy: Okay so, Brandon usually uses the podcast to glean information for his own benefit. I’m going to use this one. Brandon, you just sit there and that’s it.
Andy: Good for you, Brandon. Good for you.
Mindy: There are two lots by my house that currently have these crappy old houses on them. One of them is uninhabitable. The other one is almost uninhabitable. When you say you’re finding land deals, are you finding just bare land or you said that you could find some that had the sewer connected but not like hooked up? Where are you going to find these deals? I really want to buy this house. I don’t know if they’re ever going to sell it. I should probably contact them. They’re probably not going to call me up and say, hey, are you looking at my house? But like where are you finding these land deals?
Andy: Typically, there’s what we call land hounds in every market. There’s this agent that just typically deal in land opportunities. If you get your local CCIM on the phone and say, hey, I want you to do a demographic research profile and find out where in this particular part of this market where they need units the most, right? Identify that and then just start e-mailing those land hounds and saying, we need properties in this area and we need this dollars per square foot to make it work. And magically, they start appearing. Just call any local MLS person and say, who’s sold the most land deals in this market? And they’ll tell you and then call that guy.
Mindy: I know who that is in my market.
Andy: Exactly. Call that guy. You tell me where you want to build this thing and I’ll do a demographic market research profile on that. Man, it’s easy to put together.
Mindy: Thank you. Do you ever buy properties—like, this one property, it is literally uninhabitable. There was this floor a few years ago and it got water inside it and they just used it to store their stuff. Do you ever go in and knock those down and then rebuild this particular property on this sweet piece of land on like a really hot area and it’s this weird shape where I think I could put a fourplex on there? It’s currently a single-family. Do you have any tips for zoning or is that more like local?
Andy: Yeah, I mean, obviously when you put that property under contract, obviously you want to have basically a disclaimer or your out clause that if we can’t get the proper zoning, then the deal goes south, right? So you just want to make sure your zoning is right before you do something like that. That’s what we’ve seen in the past. And it’s hard.
In certain neighborhoods, it’s really easy to get your zoning right. It just depends on how passionate the neighborhood is and what you want to do. And then in some neighborhoods, it’s like impossible. You’ll just get bought. People are just nasty about it. You want to make sure you get your zoning right because you can get stuck with a piece of property that you can’t do much with and that’s not good.
Brandon: But you can put that in your offer that it’s contingent upon the zoning.
Andy: That’s right. Yeah, typically those land deals, you can string those out a long time to make sure everything is proper before you buy the property. To be able to put on there what you want to put on there.
Brandon: Perfect. All right. Let’s shift a little bit and go over some property management tips because a lot of people who listen to this show have one, two, five, ten rentals that they’re handling and you’re the guy. How many total units do you guys have under management now? Do you know?
Andy: Somewhere just north of 13,000. We’re in 15 markets, 11 states. Our strategy right now is we’re going into these markets and we’re buying portfolios or platforms of property management companies. So a platform is basically somebody that’s like first-class operator in that market. We’re buying not only the senior management, the units, the company, everybody that comes with it and then typically once we buy that platform, typically they’ll have a thousand more units to buy a platform and then once we buy that platform and then put that platform in place, we’ll go give them the autonomy to go out and buy portfolios of properties.
Because there’s a lot of turnkey providers that are just quite frankly done managing properties, right? And they’re like, just take these things off my hands. I just want to sell turnkeys. So we’ll buy those units. We’ll pay them for that. Or there’s a lot of mom and pop operators that have hit 70 years old and they’re like, I want to be done. And they’ll just sell us the units. So those are kind of our strategies as we go into new markets.
So we’re trying to get in right now to Texas, Arizona, Georgia. But we’re already in California, obviously Idaho, Utah. We’re all over Florida. We’re in the northeast—North Carolina, Missouri, Memphis, Mississippi. Those kind of areas. And again, we’d love to get into Alabama because that’s a high-yielding market. There’s pretty good tenants there and there’s higher cap rates there. We’d love to get into St. Louis. There’s good opportunities there so that’s what we’re trying to do.
Mindy: So let’s say you’re not in the market that I’m in.
Andy: We’re in Chicago.
Mindy: I’m not in Chicago. I’m in Denver.
Andy: Oh yeah, you used to live in Chicago. We’re not in Denver. Denver is a great market yet very low yielding market.
Mindy: Yes, I am well aware of that delightful tip. So what am I looking for in a good property manager when I can’t choose Andrew?
Andy: Go to another market. I’m just kidding. Again, I think it goes back to finding somebody that is well educated, certified. Again, looking at their website just to start the conversation and then have a smart conversation about investments. Because there’s property managers out there that just fix toilets, they deal with tenants, and they just solve problems all the time and that’s what they do. And that’s needed, right?
But there’s also property managers out there that understand investments, too. And get it. And they invest. And they’re kind of in it with you. They’re more of like a portfolio manager versus a property manager and kind of understand your goals. When I typically sit down with somebody that wants to buy something at a market that I’m in, the first thing I’ll ask them is like, what kind of interest rate are you wanting to get on your money? Which is an interesting question to ask somebody when they’re wanting to buy an investment property. Because they’re not really thinking that way.
But if I can help them think that way, like hey, this is about paying you back for the money that you put in ultimately. That’s what the investments are. But typically, when we’re investing in real estate, we don’t think that way but that’s how we should think. We should think cash flow, dollars and cents. Money in, money out. And if you can find a true partner that understands the investment side of real estate, that is an amazing asset.
Not only do I look for that in my market, I look for that in every market I want to invest in because I want somebody that’s just as passionate about property management and investment returns as I do in every market I invest in. And I strongly recommend that people don’t—this is a problem I see with owners all over the country. They find a market they like and they never go anywhere else. And that’s a huge problem. It’s like putting all your stocks in one investment. Yeah, no certified financial planner would ever say, put all your stocks in Amazon. You probably should do that anyway, but you want to diversify because things can happen in those markets, right? If you’re in only one market and that market tanks, you’re in trouble.
So I think diversifying not only in what your asset class is but in location is really important. But you know, like back to your answer, or question, find a property manager that gets the investment side of property management and understands your investment goals and they’re in it with you to make it happen. I think that’s important.
Brandon: I love that. That’s a really good tip. All right, so let’s jump to some management tips. Things like, for example—actually, I want to ask this question first because again, I like to use the podcast as kind of a selfish thing but I think it’ll help other people as well. For the diversification thing we just talked about, I decided for that reason to invest out of state. I couldn’t find a lot of deals in my market and I wanted to diversify in case the West Coast gets hit with a tsunami and all my properties go away.
So I bought one in Cincinnati and then Mindy and I together with another partner, Ryan, bought one in Maine, which is exciting. But the one in Cincinnati, I’ve got this property and the rents right now are like $440 average. I look around like 15 minutes away—mine’s kind of like out not in the sticks, but it’s a good 15 miles from Cincinnati in a little smaller town. So here’s my question. How do I know how high I can push these rents? Like, the property right now is in decent shape. It’s a brick building.
But if I go in there and make this thing look like HGTV, you know what I mean? I go in there and paint the brick this cool white color, put shutters on the windows, make it really millennial-friendly, can I push them or is it too small of a town to make that work? I’ve been really debating this lately. How do I get these rents from $450 to where they are in other parts of Cincinnati at $650-700. How can I get them there or am I just stuck at a low amount?
Andy: Yeah, I mean I would recommend, what I’d like to do if I’m looking at a property, I’ll do a five-minute drive time map of that property and then I’ll see what the average median income is for that area. It’s very easy at that point to say can this area sustain a $600-700 rent? In about five or six minutes, I can tell you what the top side of that is even if you know, you HGTV that thing out, right? It doesn’t matter because the demographic profile isn’t going to justify the rents.
I just had this conversation with an investor that wants to buy in Oklahoma City and he’s like, man, I think we can get $800 rents here if we do this and this and this, and I’m like, look, man. The average income profile, the household income in this area is $31,000. Now, take $8,000—and typically, you want somebody to make top side, two and a half times, right? Monthly. Do that math. Go backwards and then the top side is that number, typically, if you’re going to put money into it. If that number doesn’t make sense, then you’re probably right where you need to be.
You might not want to put any more money into it because the area just doesn’t justify the rents. So it’s not just how pretty you make it. It’s like, it’s a simple supply and demand economics 101. You’re not going to get people that make $50,000 a year just suddenly move into that area because you’ve got this shining beacon in that area. Because those $50,000 people a year, they are five minutes away in another area.
Brandon: That’s a really good tip. I never thought about it in that way but I love that.
Andy: And a lot of people can just go to their local Census.org or whatever, pull that information out. There’s a lot of good free tools. You don’t have to call a CCIM to get this information although I’d recommend that. You can look at those tools and it basically will say, our average median income here is this. this is how many people that are this color and how many people that are this age—there’s so much information. It’s all about trying to get all the information and putting it together and then making your best judgment on the information available.
It’s things like demographic profile, age profile, income profile. What are the jobs like around there? What are those jobs paying? What do the leases look like? What do the addenda look like? The applications. Again, you’ve got this. Every time you’re buying a property, I don’t care if it’s a single-family home or a 400-unit apartment complex, you open up this box and it’s a big puzzle and you’ve just got to put the pieces together.
And at the end of the day, if you don’t put all the pieces together, it’s not going to be pretty, right? But if you put it all together, it’ll look gorgeous. It’ll work every time if all the pieces fit but you’ve got it. You’ve got to look at all these things to make the best decision possible.
Brandon: All right. All right. A couple more questions for you. I’ll throw some quick ones at you. Do you rent to people who have an eviction on their record even if it’s from a long time ago?
Andy: Yes. Yes. And that is a very market-specific question. Our evictions screening process in one market might be different in Memphis compared to Idaho where nobody gets evicted in Idaho. A lot of people get evicted in Memphis. But again, whatever you do in each market, you want to obviously treat everybody the same way. But in Idaho, for example, I think if you’ve got an eviction more than seven years ago, if you meet all the other qualifications, we can rent to you, right? If you’re in another market and you’ve had an eviction recently, it’s a high eviction market. We might look past that eviction and look at the other criteria that matter. Income, right? Jobs, security, all those other things.
Brandon: What about, do you ever work payment plans out with tenants, if somebody calls you and says hey, I can’t make rent. I lost my job. Do you guys have a policy for working with tenants or is it hey, figure it out or talk to your family and friends?
Andy: Yeah, I mean this is one of the other advantages of hiring a property manager. We don’t get personally involved in these things. We treat it like a business and I’ve always recommended to our owners that we need to treat all the tenants the same way. We understand that there’s certain circumstances that happen that cause these people to might have financial difficulties but if we treat one tenant, we give one tenant a break, and then don’t give another tenant a break, that could be a potential for a HUD violation. So we strongly recommend not taking partial payments because if you take a partial payment in a month, you can’t file the eviction that month.
So again, I think the best advice, if you’re going to manage it yourself, which I’m not a big fan of—I have all my properties professionally managed by a manager and I’m a property manager. But if you’re going to do it yourself, do exactly what—just stay to the lease all the time. It’s the best advice I could give any investor. Follow the lease. If a tenant calls up, don’t have a confrontation with them. I give this advice to my property managers.
If the tenant calls up and they’ve got an issue, oh I need to move out of my house and I’ve got four months left on my lease. Okay, well I’m going to send you your lease just in case you don’t have it and I’m going to point out exactly what the lease says if you need to move out early. And if you have any questions, call me back.
Brandon: Yeah, we do the exact same thing. Because personal, right? It’s like no, I’m the jerk that’s not letting you move out. We blame the lease for everything.
Andy: Absolutely. It’s the lease’s fault.
Brandon: The lease’s fault. The lease says you can’t move out. The lease says you have to pay rent on time.
Andy: We agreed to that and my job as the property manager is just to enforce the terms of the lease and do it the most professional way possible. So look, Mr. or Mrs. Smith, I understand. That’s so crazy that you have to move to Memphis or whatever. I get that. But what I’m going to do, I’m going to send you your lease and I’m going to tell you exactly what your lease says if you need to break your lease early. If you have any questions about that, let me know. We’ll do whatever we can to help you transition the best way possible. All right. Here you go. Send. Lease’s fault. The fault of the lease.
But I mean, some guy that’s managing the property himself will get the call from the tenant and they’re like, oh I can’t pay my rent. We manage 13,000-14,000 doors. We don’t have anybody like a month behind. Some guy that managers two or three properties will come in and like, hey man, I’ve got these three properties. This one’s six months behind. This one’s eight months behind. You can’t manage three properties and get them to pay on time? I’m like, what’s going on? Oh, I’m just a nice guy. I’m like oh, can I rent from you?
Brandon: So when I started building my portfolio a little bit larger, I went up to like I think 20something units. Maybe 25 units. I found myself always doing that. The tenant would call me and then they would tell me a sob story and emotions get involved and I’m like, all right. Yeah. Don’t worry about it. But then how I solved that, because I looked at my own weaknesses. Some people work on fixing their weaknesses and some people just find a way around them. I always find a way around them, right?
So I’m like okay, I’m never going to get better at confrontation or at trying to be less emotionally involved. I’m always going to be. So I need to get myself out of the situation. So that’s when I hired my mother-in-law just to answer phones. That’s all she did at the beginning. I was like, because she was looking for a job. She recently retired. She just wanted something part-time. I was like, just answer phones for me and then follow the lease. If you have any questions, ask me. I never talk to tenants anymore. I can make a rational decision versus an emotional one. And then it’s just a job for her. What does she care if she tells a tenant no or yes. Because she has to follow my rules, right?
I found that getting myself at least one person removed—now, if there was a great property manager in my area, hands down, I would have just shifted it all over to them. There wasn’t at the time. Now, there’s one that’s—I’m enjoying right now but anyway. Getting yourself removed from the emotion is so important. The mobile home park that Mindy and I just bought, when we were going in there talking to the resident manager, she’s like yeah, well this guy owed us, he was behind I think it was like $6,000 on a $300 a month rent. Like, how far behind do you have to be? I mean, I’m sure I could do that math but that’s just insane. And there were multiple people like that, that they have these payment plans worked out of years of not paying rent. Like, really?
Anyway, one last story and then we’ll move on. Last week actually, my wife told me that—I try to stay out of the management side of the business but she told me this story of how one of the tenants that called up and said hey, I think their check bounced. And so we called them and said hey, your check bounced or whatever. And they said, well I just can’t pay until the 25th.
And we did the, well your lease says you have to do this and your lease says that you’ll get a three-day notice if you don’t pay that we’re going to deliver to you today—anyway, within like 24 hours, they had paid it. So like, this whole I cannot pay until the 25th. It’s all about priorities, right? Every tenant has enough money to pay rent. They don’t have enough money to pay all of their bills so everything gets prioritized. I remember that.
Andy: And another example, I think this is really important—we’ve seen delinquencies go way down because of this. Definitely look for a property manager that has the ability to get all of your tenants paying online or automatic draft or has like a credit card portal where they pay. Because we’ve been taking credit cards. We have this thing called Cashpay where people can go to like a 7-11 and pay cash. It’s awesome, right? It goes right to the ledger. It just takes all the screw-ups out of the property management in accounting. Property management, in my opinion, are two things. Communication and accounting.
And if you can get the accounting automated, it really helps with the screw-ups with the accounting side. But getting your tenants to pay online, have their money automatically drafted or Cashpay. Have a property manager that has those technologies and capabilities because we’ve seen delinquencies go way, way down when it just automatically comes out. They don’t have to think about it. They don’t have to put it in the mail. In fact, our policy is that hey, if you sign a new lease, you basically have to pay online at a Cashpay location.
It has to come out automatically and you’ll see those delinquencies go down and you’ll see the stress of the property managers go out the door. They can focus more on adding value to your units instead of just like being a collection agency which is a tough burnout job.
Brandon: There you go. Love it. Love it.
Mindy: Okay. I have one more question before we move to the Fire Round. I am the Community Manager for BiggerPockets. I am in the forums all day, every day and I see this question come up all the time. My tenant is late. Should I start the eviction? Blah blah blah. As the property management company, when do you start the eviction? And what are your state laws?
Andy: When the lease says.
Mindy: When the lease says. So what does the lease say? Do you use all the same leases for all of your properties in one state, or do you use—
Andy: Yes. We try to have all of our leases the same but there’s certain state laws that will prevent you from doing the same thing. So if you want to evict someone in California, it’s going to be a much different situation than evicting someone in Idaho. Mindy, you bring up a great point. It’s very important when you’re making an investment choice as far as location, look at the landlord-tenant laws. I mean, that’s a big deal. California is a very interesting, fun state but you can get a tenant in there and it’ll take you six to twelve months to get somebody out where in Memphis, you just take their door off or whatever. I’m just kidding.
Mindy: You can’t take their door off. Don’t do that.
Andy: I’m just joking but landlord-tenant laws are very important as far as making a choice. But yeah, again, back to your—the eviction, we follow the state laws and follow the lease exactly how it says. And do it. If they say, oh man, I’ll be out next week. Okay, we’ll send you what we call a promise in writing but just in case you fail, we’re going to go ahead through the eviction process. If you pay us, great. But if you don’t, we’re starting it. That’s our leverage point.
Mindy: Okay, so in Colorado, I believe—I don’t have any Colorado rental properties so I’m not totally up on my landlord-tenant laws. And finding landlord-tenant laws is really difficult. You can’t just—I mean, you can Google your state name and ‘landlord-tenant laws’. Like ‘Colorado landlord-tenant laws’. The links are not as easy as they should be to find. I did some research for when Brandon was writing his book and I looked up every single state and I read them and it’s really difficult to find them all. So yeah, definitely look up your landlord-tenant laws. But in Colorado, I believe we don’t have any grace period so rent is due on the 1st and it is late on the 2nd. We have a three-day pay or quit, so then on January 1st, rent is due. January 2nd, I would post the three-day pay or quit, and so that doesn’t count the 2nd. So that’s the 3rd, 4th, 5th, and then on the 6th, I can file the eviction in theory if everything that I’m saying is true.
Andy: Yeah, that’s what the Colorado law is and typically your rent can be due whenever your lease says. We typically give them a five-day grace period. So we say, okay, rent is due on the 1st. We’ll accept it up until the 5th at 5:00 o’clock but at 5:01, we’re going to hit you with a three-day notice to pay or quit. And then three days go by, we go down to the courthouse.
Mindy: And file an eviction.
Brandon: We do the same thing. If rent is due on the 1st, we get into the 5th. Some landlords don’t do the grace period thing. Some states require it but some don’t. I like it though because a lot of my tenants are on some kind of program and most of those program’s money doesn’t go out until the 2nd or 3rd. Or the 4th sometimes. But almost every program is there by the 5th. If not, then they better just be a month ahead. But I always do the grace period. On the 6th, they get their three-day notice. On the 10th, they get eviction filed. By the end of the month, they’re out.
Like in a perfect month for us, that’s typically how we do it. Because we follow our lease, that’s the irony of real estate—I’m sure you’ve seen this as well, Andrew. The more strict you are, it feels like you’d have more problems and more tenants would get evicted. But no, the more strict you are, the more you follow your lease, the less evictions you have and the less problems.
Because what happens is tenants are like—okay, we’ll make a payment plan for you. Oh, don’t worry about that late fee. Don’t worry about that kind of stuff and they’re soft with the tenant which trains the tenant to be irresponsible. Eventually, they’re going to owe you so much money and then you’ve got to evict them. They can’t ever get caught up. You’re doing your tenant a disservice if you’re not strict or if you’re not firm.
Andy: One of my favorite quotes, I tell it to my people all the time. “The lazy parent that cleans his child’s room”.
Andy: They’re people. They’re people, man. I mean, if you give them an inch, they’ll take a mile. But you know. I’ve told that to a thousand people. I don’t clean my kid’s room because they need to clean their room. And if I do it, they’re just going to take that and I’ll be cleaning their room the rest of their life.
Brandon: Super good advice. So we’re going to talk a little more about property management here in a second in the next segment of the show which we call our Fire Round.
It’s time for the Fire Round.
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All right, this is the Fire Round and today, we are going to talk property management questions, landlording questions. These all come direct out of the BiggerPockets landlording forum, which of course you can get to by going to BiggerPockets.com/forums and there’s specifically one there just for landlord questions.
So why don’t I start with this one? I switched to a new property manager but the old property manager did not send the security deposit to me, or all the documents and the keys and now they’re not responding to my calls or e-mails. What do I do?
Andy: That’s a sucky situation, first of all. But I think the best recourse there, if you’re trying to communicate with them and they’re basically shutting you out and they’re holding your rents and deposits hostage, depending on what the state’s statute is on go over seized property management, a quick call to the Real Estate Commission or the Secretary of State typically gets the property manager to like, oh boy, here we go.
Brandon: That’s a great tip.
Andy: Kind of a last straw but even saying hey, I’m going to call these people because you’re not calling me back. It’s scaring me. They’ll freak out and call you back, I’m guessing.
Mindy: Not the tip I was thinking. I’m a real estate agent and I didn’t even consider that. I was like, oh, call an attorney. Glad you answered that.
Andy: Yeah , calling an attorney. Watch your rents and your deposits go away in one second because they’re going to send them a letter and that’s probably going to work but the letter is probably going to cost more than what your deposits or rents are.
Mindy: True. And the Real Estate Commission, at least in my state, they’re pitbulls. They do not want anybody stepping outside the letter of the law. They’re really, really strict. So that’s really great.
Andy: It honestly depends on which state you’re in but if you’re in a state where property management is overseen by the Department of Finance or the Real Estate Commission, those are calls that you know, are kind of desperate, Hail Mary type calls but they’ll work. You don’t even necessarily need to call them. You just say, hey, I’m going to call them if you don’t call me back and that will typically get them to call you back. That’s what I’ve done
Mindy: Okay. Here is the service dog question. I would like to know—
Andy: Hey guys, it’s been a great podcast. Thanks. Yeah.
Mindy: No, come back. Come back.
Andy: Oh, dear. Why.
Mindy: Because it’s the twist. Because you’re a professional property manager. I would like to know the process of evicting someone who has a service animal. Is that any different than normal process? Yes, service animal. Late rent. Not pay rent. Noise disturbance from excessive barking in the building, etc. All the reasons to evict a tenant with a service dog. This is a huge question. It’s becoming really abused, the whole service animal thing.
Andy: I just signed up for that. I can help you.
Mindy: Can you evict them on all the same normal reasons? Do you need special preferences? Any special extra notice or anything?
Andy: No, I mean, I would hate to evict anybody for anything other than non-payment of rent because that’s going to be a very expensive thing to do. If you have a barking dog service animal situation, there might be other things you can do to get them out like pay them to leave, cash for keys or something like that. Because in most states, if it’s for anything else besides non-payment, it’s a slow eviction process. Attorneys have to get involved. But if we’re talking non-payment, treat them like everybody else. If you treat them differently, then you’re in violation of you know, the Housing and Urban Development laws.
So you want to treat everybody the same but if they have a note from a provider or whatever, you have to obviously rent to them and to their pet without charging a deposit, whatever. But if they’re not paying their rent, it doesn’t give them an excuse. We’ve been in this situation where people say, it’s because of my disability because I can’t pay rent. I mean, that’s another—have you had that one?
Brandon: I don’t think I have.
Andy: But that’s happened. You know, it’s like, I can’t pay my rent because I have a disability and you can’t evict me.
Andy: What do you do?
Mindy: Yeah, I can.
Andy: Yeah, you can. You treat them like everybody else. It’s really what happened. The whole premise of the housing laws is to treat everybody the same. And so just because they can’t pay their rent doesn’t make them exempt, unfortunately. And here’s the other thing. Disclaimer, consult your local attorney on this stuff. Because what I can do in the states I’m in is a lot different than other states. So this might not apply but the great advice is treat everybody the same.
Brandon: There you go.
Brandon: I love it. All right, next question, semi-related but not quite. I recently discovered that our tenants are hiding their ferret in the basement of our duplex. They’re otherwise really good tenants. They pay on time, responsible, friendly neighbors. They were keeping them in his mom’s basement—them, so multiple ferrets, until she moved in with her boyfriend and then they snuck them into our basement. The ferrets are caged but they tried to hide it and in doing so violated our lease. What’s the best way to handle it? I mean, it’s a ferret. It’s not like a dog or a German Shepherd.
Mindy: No, ferrets stink. They have a bad smell. You have to wash them like every day.
Brandon: So what do you do? Do you evict somebody who was a good tenant over that?
Andy: Again, I strongly recommend at least in the states that we’re in at least not to evict anybody other than for non-payment of rent and try to figure out either for them to remove their ferrets—and I think a lot of this is getting a lease clause right up front. So, a very specific no pet policy or what pets are permitted and if they’re caught with a pet, what happens. So our lease will say hey, if we find a pet in your property, we’re going to go ahead and back charge you for all the months that you’ve lived there of pet rent. And then we’re going to start charging you a very expensive pet rent.
And then they’re going to be like, well crap, I’m going to move out. I can’t afford this. I’m going to get rid of the ferrets, right? But you’ve got to have that language in your lease that hey, if you’re caught with an unauthorized animal on your property, there are serious consequences. And hopefully, those consequences are going to get you to get rid of that thing or move out. Which is way better than trying to do a slow evict on an animal. And then they’ll play the—this is a service animal card.
Brandon: And then you’re screwed.
Andy: Then you’re in trouble.
Brandon: What we’ve always found is that it happens. Tenants move in animals all the time. And they always know they’re not supposed to. They’re always doing it secretly. They always know the rule. And so most of them are pretty good except the ones that go and claim service animals. But most of them have been pretty good about when we hit them up, we’re like hey, this isn’t going to fly. You have to get rid of the dog. Period. We’ll give you until next Friday. They almost always do. A couple of times it’s been, well, I can’t get rid of it. It’s my service animal. And then it’s—all right.
Andy: Right. And that’s awful. And one thing that we recommend is a bi-annual inspection of the property to uncover those animals. Or not animals, service animals, but pets. Because there’s a lot of people that sneak them in and they think they do a good job of like hiding it and it’s really obvious the second you walk in there.
Brandon: All right.
Brandon: Next question.
Mindy: Okay. I showed one of my rentals last night to a person who got through my pre-screening which includes asking if the person has had an eviction, to which he replied never. I did a quick search on his name and address and found he has had a couple of evictions and other small claims, looks to me like a professional tenant, or one in the making. In practice, what is the best way to handle this? Should I allow him to apply and send him an application and then deny him? Or I’m looking to avoid falling into some sort of a legal trap.
Andy: Yeah, no. Typically, whatever your application—again, you want to have your screening. If somebody applies to whatever apartment or house, you want to have your screening policies either on your website or at the office and your application process basically in writing. I would just like release whatever your screening process says, your application process says, just follow that. It’s typically not, I do a quick check to see if you’re on the repository, and then you do it and you call them and say, hey, don’t apply because I already checked and—I wouldn’t do that. I would stick to the exact same process every time.
Mindy: Okay, so what I keep hearing from you is stick to the same process.
Andy: Have a process and stick to it and make no exceptions. Because I mean, what will happen is HUD will come in and they’ll say, the first question is show me your policies and your procedures. What is the screening policy and what is the process on how you do that. And then they’re going to check to make sure you do everything the same way. That’s it.
Mindy: I’m asking this for all the people that have been asking in the forums. You’re a professional property manager and he says, find a process and stick to it.
Andy: Yep, that’s right. And don’t deviate from it. Like, I think it’s interesting that this is like the bad thing, right? I get a vibe about this guy so now I’m going to go get the repository and oh yeah, he’s got an eviction. Call him up. Don’t apply, loser. You’ve got an eviction. And then he goes and he calls the Local Fair Housing Council and you’re in trouble.
Brandon: We’ve had people—sorry—we always let anybody apply who wants to apply, period. Even if they tell us hey, I’ve got no job, I’ve got a zero credit score and I’ve got a murder on my background check. Well, our policy is we don’t rent to people who have a murder. But here’s an application if you want to apply. Because then they can’t come back later and say well you didn’t let me apply because you’re a racist or because you’re a sexist or whatever. There are a million things they could say. Or because I’m disabled.
Brandon: I didn’t know you were disabled. I can’t ask you that anyway. The whole thing just gets weird. So like just follow your process no matter what.
Andy: And if they call up, I mean, this is why it’s so awesome to have it on your website. If they call up and say, hey, I’ll shoot you a link to the process and how we do this and what our screening criteria is. And then you can decide. At the bottom of that screen, you can click ‘Apply’.
Brandon: We put our screening criteria right on our application as well and when they apply online, it’s there as well. It’s everywhere so like they know, you must make three times the rent. You must not have an eviction, I think we have it in the last seven years. Maybe we have ever. We don’t rent to smokers anymore. We just decided to stop renting to smokers because—
Andy: Not a protected class.
Brandon: Not a protected class. Yep.
Mindy: Good call.
Brandon: Yep. I don’t rent to dirty people. It’s not a protected class.
Andy: We’re subjective.
Brandon: Yeah, I don’t know if that’s actually in my thing but I try not to.
Mindy: You shouldn’t put that in writing, Brandon.
Brandon: No I probably won’t.
Mindy: Yeah, you probably want to edit that part out. So I don’t rent—we’re in Colorado, we have legalized marijuana but it is illegal on the federal level so we don’t rent to people who smoke pot. We don’t allow them to smoke pot. I guess you can’t really ask them, do you smoke pot and they’re like yeah.
Brandon: But Mindy, what if it’s medical?
Andy: Yeah, exactly.
Mindy: Even if it’s medical, it’s not a protected class.
Andy: Yeah, we definitely have on our leases, no smoking inside. It doesn’t matter what it is, no smoking.
Mindy: And no illegal substances. It’s still illegal on the federal level.
Brandon: It is but so is all drugs right? But there are drugs that you can—if you’re prescribed medical marijuana, that is now a drug you cannot tell somebody they cannot take medical marijuana if it’s prescribed. Because it’s not illegal to take medical marijuana at a federal level. It’s only illegal to take recreational marijuana, right? Now, that gets weird.
Mindy: See now I thought it was all illegal on the federal level.
Brandon: No, federal allows for medical, I think. Or maybe they don’t have a law against it.
Mindy: We need a marijuana person on this show.
Brandon: Let’s get some marijuana people. So what do you know about that, Andrew?
Andy: I’m not the guy.
Mindy: I’m not either. I just live in the state.
Brandon: I don’t know about the medical thing federal-wise. But either way, it gets really sticky because then like it also gets weird because you can’t ask a tenant if it’s for—like you can’t ask them what their disability is if they need it for it, it just gets weird. So we try to find other ways to avoid tenants that—typically, if somebody is like, there’s always something you can find in a tenant that is almost illegal to discriminate against. Like, we don’t rent to people who have not enough income or a job or whatever. It’s usually not just one thing.
Mindy: Yeah, they’re hitting a lot of those.
Andy: Correct. Usually. That’s usually the case. And then we have in our policy if it’s an income issue, you can get a co-signer, right? Or if your credit’s not there, you can pay an additional deposit or stuff like that. So we try to work with them if they shine in all the other areas but if it’s one area that’s not like a definite no, you can look at co-signers or additional deposit and stuff like that to help protect you.
Brandon: There you go. All right, let’s move on to the last segment of the show which we call our Famous Four. All right, these are the same four questions we ask every guest every week and we’re going to throw them at you. Number one, Andy, what is your favorite real estate related book?
Andy: Favorite real estate related book. I’ve done a lot of real estate books. I would say—put it up there. Yeah, let me see what it is.
Mindy: The Book on Rental Property Investing?
Brandon: Wow, thank you.
Andy: My book on rental property investing is my favorite book. But since I haven’t read that one yet, but I’m going to now—
Brandon: Good, you better.
Andy: I love the CI 101. It’s a commercial real estate investment book put out by the CCIM Institute. It’s everything you need to know about how to invest the numbers in real estate. It’s probably not a book—it’s a great book if you’re not interested in that stuff, it’ll put you right to sleep but if you’re interested in it, you’ll love it. It is years of great research and smart people put that thing together.
Mindy: Lucky for you, everybody here is really into that stuff.
Mindy: So is this a regularly available book since it’s by the CCIM Institute or do you have to be a CCIMer to get it?
Andy: I think anybody can get it and I think if you Google search CCIM 101 Commercial Investments, you’ll be able to pull that down. All that really deep like how to understand how the investments work by the numbers, it’s all in there and it’s pretty easy to follow.
Mindy: Okay. I will put a link. I’ll find a place where people can buy it and I’ll put it in the Show Notes.
Andy: Yes. You should be able to buy it.
Mindy: Okay. Thank you. What is your favorite business book, non-real estate business book?
Andy: I’m a culture guy so I love to try to figure out how—what kind of motivates people and I think the one that I kind of have gone back to a lot—obviously, the one that transformed my life, the one that got me out of being kidnapped was How to Win Friends and Influence People. But business book, specifically, Drive by Daniel Pink was very helpful.
Brandon: I have not read that but I’ve heard it’s good.
Andy: We’ve got, in Boise alone, we have almost 100 people, 300 people nationally that worked for our company so it’s like, how do you keep property management exciting every day? Do you figure that out, right? You’ve got some great things going on and that’s a great culture. What really drives people to be great every day.
Mindy: Screen your tenants. That would keep it exciting.
Brandon: All right, whatcha got, Mindy?
Mindy: What are your hobbies? What do you like to do when you’re not doing real estating?
Andy: I always think about like a million things are going on in my head all the time. Opportunities, threats, just like a SWAT analysis happening every second in my brain. There’s one thing that like turns that off. Standup whitewater paddle boarding.
Mindy: Oh. That’s neat.
Mindy: Are there opportunities in Boise to do standup whitewater paddle boarding?
Andy: I can leave my office at 5:00 o’clock and be on the river at 6:00 o’clock and then have like a two-hour float and be off the water by 8:30 and be home by 9:15 before it’s dark in the summer.
Brandon: That’s awesome.
Andy: Yeah, we just—we float the—it’s got some class 2 and class 3 rapids. There’s Goif and Mike’s Hole. They’ve all got names and it’s awesome. But just like trying to not die when I’m doing that activity just takes 100% of my focus so that’s why I love it. It just takes everything away.
Brandon: First of all, I did not know there was a thing, standup whitewater paddle boarding. I’ve heard of paddle boarding but that’s super cool. I want to try that sometime.
Andy: It is—you’re welcome. If you come down, if you’ve done paddle boarding, you’ll love it. And like the first couple times, you’ll like sit down in the rapids and kind of canoe through them but you’d get through a big rapid. You stand up on that thing, you get through, it’s the best feeling in the world.
Brandon: That’s awesome. That’s why I’m addicted to surfing. Then I went out to Hawaii in April. I’m actually going out there on Sunday, moving out there for the whole winter just to surf. Because it’s for that exact reason, is my mind clears when I’m on the water. You’re in the zone and it’s the best feeling ever.
Andy: It’s dangerous. Like I said, it takes so much focus to not die. And so I’m just trying to get through that.
Mindy: Your core must be awesome.
Andy: Oh, no. No, it’s not.
Brandon: Let’s see it.
Andy: No. But it is intense. It is so much fun. And like I said, it is the only thing that just takes all my focus because it requires your focus.
Brandon: Yep. I love it. All right, my last question of the day. What do you believe sets apart successful real estate investors from all those who give up, fail, or just pure and simple never get started?
Andy: One word, man. Knowledge. Knowing what to look for and again, putting the puzzle together. I think you can get lucky on a couple deals but if you don’t know what you’re doing and you’re not asking the right questions or looking for the right thing, eventually, it’ll catch up with you. The people that have done it and continue to do it and be successful in general over a long-term really understand how the investment side of the asset works. And if you can do that, you can make real estate work in any market. You can make it work.
Brandon: Cool. Fantastic.
Mindy: That’s a great answer. Okay, Andy. Where can people find out more about you?
Brandon: You know what, our website. We have our national website, the links to all of our local sites. HomeRiver.com. It’s very simple. www.HomeRiver.com. You can find out more about me there. I think there’s a profile on me there. Our chairman, John Hirschfeld. All the Senior Vice Presidents we have working for us. We have our national MNA in Finance based in New York. Our headquarters is in Florida and then we have eleven states across the nation so we’ve got a pretty good footprint but we’re trying to grow. We’re obviously looking for people that need a partner in property management. People are looking to sell their property management companies.
We have a great private equity firm that’s helping us acquire property management companies. So we’re trying to do something that’s never been done, which is a bonafide real national property management presence. There are bigger property management companies but they’re not in every location. We want to do that. We want to be the first ones to do it. And that’s tough. A pioneer in any adventure, it’s a tough road but it’s super exciting. Super exciting.
Brandon: Well, cool. The last question I do have—I said it was the last question but you own a bowling alley. So I want to know what is your average bowling score and what is your best bowling score?
Andy: Again, I did not buy this bowling alley because I love bowling. It was strictly [inaudible][1:27:40] purchase. I have learned to like it and there is this whole world of bowling that I didn’t know existed. It’s awesome. It’s crazy. But I’d say my average has gone up from about 80 to 100 and the best I’ve ever done is 174 and that’s true. But there’s an awesome article about when I bought this bowling alley because it was owned by one family for 50-60 years and then I bought it back in October. But I believe the headline is World’s Worst Bowler Buys Historic Valley Alley. It’s a great read. Idaho Statesman, front page. It was awesome.
Brandon: All right, we’ll link to it.
Mindy: I’ll definitely put a link to that.
Andy: Go bowling.
Brandon: I actually love bowling. I’m horrible at it but you know, I like it. It’s fun.
Andy: It’s a stress relief.
Brandon: It is. It’s not as cool as standup waterboarding. Not as fun as waterboarding.
Andy: I love being waterboarded. It’s awesome.
Brandon: On that note, let’s get out of here. Thank you so much, Andy. This was a lot of fun today. And if people have questions and they want to know more from you, ask it in the Show Notes, which you can get at BiggerPockets.com/Show265. Thanks so much, Andy.
Andy: Thank you. You guys are great.
Brandon: Thanks. Bye.
All right, that was our show with Andy Propst. That was crazy, starting with his kidnapping story. That was awesome and very sad.
Mindy: I can’t even believe—
Brandon: It was amazing that he got out of it.
Mindy: Yeah, I mean, yay he got out of it but can you imagine being kidnapped for a whole week in a country that I’m sure he spoke the language but not like super amazingly well. And Russian mobsters? That’s kind of scary.
Brandon: And being beaten with baseball bats? Man. Well.
Mindy: That’s probably not the best day of his life.
Brandon: Probably not. But he has a cool story though. I really love the way that—I don’t know. I feel like when I talk to a guy like him who is a professional property manager and the fact that he does everything almost the same way that I do in my business, I’m like, okay good. I’m doing things probably right. And I see people who just struggle so much with being a landlord. They really struggle with being a landlord and I look at the reasons why, it was like they don’t follow the processes. They don’t follow rules. They don’t think that they have a business. They’re treating it like, I don’t know, they’re sewing a hat on their head or something. You know, it’s like a hobby, right? Not a business. I don’t know. What do you call that? Crotcheting? Is that the word that hipsters like to do today? They crotchet?
Mindy: Crotcheting is—yeah.
Brandon: That’s a hipster thing. I don’t know. They do it.
Mindy: What would you know about hipster things, Brandon?
Brandon: I’ve got big glasses. I’m sure I could quit. I actually don’t. Anyways, I got a lot out of it so.
Mindy: I got so much out of it. I really enjoy—enjoy is not the right word. I feel reassured that everything that I have done in my rental property management career and everything that I am continuing to tell people in the forums all the time—have your processes. Stick to your rules. And follow your lease. It’s nice to hear that somebody who does this for a living as his actual job says the same thing.
Brandon: That’s true. And can I insert a shameless plug here? So my wife and I actually wrote a book called The Book on Managing Rental Properties. It is a big, bright yellow book. You can get it at any Barnes & Noble pretty much in the country. Also, you can get it at BiggerPockets.com/store but it’s like 197 pages of just how to manage tenants. And like I said, almost everything Andy does, we do. So if you want to know our process and how we do it, including there’s like forms in there and all that kind of cool stuff. Get it from Amazon. Get it from Barnes & Noble. Or get it with a bunch of bonuses when you get it at BiggerPockets.com/landlordbook. I think you can get that one and The Book on Rental Properties and Investing and a bunch of other stuff. BiggerPockets.com/rentalpropertybook? I can’t remember.
Mindy: Wow. If only there was a way to look this up, Brandon.
Brandon: Rentalbook. Let me try that. BiggerPockets.com/RentalBook. Yeah, that was it. Okay. So go to BiggerPockets.com/RentalBook and you can get the big yellow book and the big blue book, combined together, 600something pages of property management stuff plus other cool stuff. So cool.
Mindy: I don’t want to diminish your—or I don’t want it to sound like a shameless plug or I’m stroking your ego but this is really well written and it’s easy to understand. Any big words, you explain in plain English.
Brandon: That was my wife. I don’t know big words. So I don’t write big words. My wife makes big words.
Mindy: Everything that Heather did was beautiful and perfect and then you came along.
Brandon: I came along and put my face on the back cover and we sold some books.
Brandon: I’m a male model. What can I say?
Mindy: Oh. No. But yeah, these are great books. No.
Brandon: Thank you.
Mindy: You’re too tall to be a male model.
Brandon: I am too tall to be a male model and I don’t have a six-pack. So I’m not going to be a model. Whatever. I don’t care. I’m a hand model. Just like on Zoolander. Remember that?
Mindy: A hand model. I actually haven’t seen Zoolander.
Brandon: What? I’m leaving. I’m leaving right now. This is done. How have you never seen Zoolander? It’s like Top Five Best Comedies of All Time. Maybe even like Top Two Best Comedies. No, the gasoline fight accident? Oh, my gosh. So funny.
Mindy: I want to see a gasoline fight.
Brandon: Oh, my gosh. There’s so much good stuff in that movie. You’ve got to watch it now. Zoolander. You and I are going to watch Zoolander. We’ll bring Carl and Heather won’t care, but you and I and Carl will have a good time. We’re going to watch it.
Mindy: Okay. I will put that on my list. Since you got to do a shameless plug, I am going to do a shameless plug.
Brandon: Okay, what is it?
Mindy: On Monday’s episode of the BiggerPockets Money podcast—
Brandon: That’s your show.
Mindy: That’s my show. We talk to—Scott and I, we talk to Mr. and Mrs. Waffles on Wednesday and they have a really amazing story about how they decided they wanted to become financially independent. They share their tips for how they have their own business that helps them write off all sorts of things that you normally wouldn’t be able to write off as just a regular person who works from home. It’s a really great episode. They’re really interesting people and I would encourage you to check it out at BiggerPockets.com/MoneyShow8. Money Show 08. Now I’ve got to go and see if that’s actually the show number.
Brandon: While you’re looking that up, you know how like you hear people’s last names like Johnson, as like Son of John or like Thompson is usually Son of Tom, back like hundreds of years ago when they came up with last names? Where did Mr. and Mrs. Waffles on Wednesdays—where did that last name come from? I’m just kidding. I know that’s not real.
Mindy: Wow. But we cover that in the show and I was the big fat liar. It is actually Show Number 7. So that is BiggerPockets.com/MoneyShow7.
Brandon: 07 or just 7?
Mindy: It will also work. I do a redirect. So yes. So a thousand apologies for giving you the wrong information the first time. But yeah it’s a great show. Lots of fun. Lots of energy in that show so check it out.
Brandon: All right, well with that, let’s get out of here. I have got stuff to do like real estate stuff so I’m going to get out and go do that.
Mindy: You’re going to nap.
Brandon: I might nap.
Mindy: Okay. Brandon, thanks for letting me step in.
Brandon: Thank you.
Mindy: I always have a good time when I come to the show.
Brandon: I enjoy having you here. So thank you and who knows, Josh will be back soon. I think he’ll be back soon. We’ll see. So anyway. All right, let’s get out of here.
Mindy: For the BiggerPockets podcast, this is Mindy Jensen, signing off.
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