EP 30 - Get Rich In Real Estate - a podcast by Brian Cook And Kindra Cox

On Episode 30 of The Brian and Kindra Show, they discussed how to get rich in investment properties. 

First things first, it is important to evaluate if you have the personality to be a landlord.  Not everyone is comfortable with the difficult interactions that will eventually happen with renters.  If you find you are not comfortable with handling evictions or late fees, etc, a management company might be the best fit for you.  It is important to remember that being a landlord is not personal, it is a business transaction.

One of the challenges of being a landlord and owning rental properties poses is building the right team to keep your properties in sound condition. It is necessary to have a team of ‘go-to’ professionals who you can rely on for heat/air, plumbing, construction, etc. By keeping renters happy you are more likely to have a happy return on investment.  A solid lender relationship is another must for your team. When buying investment properties, it is imperative that one be able to purchase quickly, having a lender who is ready with the pre-approval letter to submit with offers. 

Why would someone want to do rentals? Generally, investors find rentals to be a long term wealth building program with steady income and steady return.  Let’s look at the ROI (return on investment): if you invest $10,000 in a $100,000 loan, having a bank or investor in the other $90,000, then you charge $1,000/month in rent and your insurance, tax, and monthly payment are $900/month, your profit is $100/per month. That totals $1,200 ROI per year, which is a 12% return on your cash out. A lot of times this gets calculated incorrectly where you calculate the return on the full investment of $100,000, which is 1.2%. However, the landlord only invested the $10,000, the lender invested the other $90,000. Their return on investment is your 5% interest.  There are great programs out there for purchasing investment properties. It is recommended to pay off the loan in 10-15 years max. However, a loan at 4.7-5% interest with a 30-year fixed note and 15% down could potentially be obtained. On a $100,000 house, the ROI will be substantial. 

It is also very important to ‘do your homework’ on potential investment purchases. Pay close attention to maintenance and upkeep.  If there is a high-risk on the property, you typically have a high return. If there is low risk on the property, you typically have a low return. Mobile homes typically have more maintenance work required because they aren’t built as strong, but they are inexpensive to purchase and have high return. Apartments have high-return, but they have a harder clientele to work with. Each time someone moves in/out, you are constantly cleaning and maintaining. 

Brian and Kindra hope these tips have been helpful to you. As always, if you have any questions or need help, please feel free to reach out to your local real estate professional.

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