Do you read books? If so, are they Fiction books; or do you read Business, Finance and Mindset books? You see I went for a very long time without reading any books. I was a Web Programmer, so I would often read books on Programming PHP, Perl, ColdFusion, JavaScript and other scripting languages. But once I had found what I needed to know to solve whatever coding challenge I was facing at the moment – I put the book down and did not touch it again until some other challenge arouse. I used them more as reference manuals than anything else.

So one year I was away at a business conference, sharing a room with a colleague and he was listening to a Mindset book, which I referred to as a “Self-Help” book – as I asked him “why are you listening to that!?” – Somehow I had developed a negative outlook on such books. I pretty much considered it beneath me to read or listen to such non-sense. I’ve since apologized to him for my comments, as now I try to read a different book on Mindset, Business or Finance – at least monthly. I absolutely LOVE these books, and they’ve helped me greatly to excel in Business but also to improve as a Person in general.

I had learned, as the quote says…

“Reading is essential for those who seek to rise above the ordinary.” – Jim Rohn

Or how about this…

“The more that you read, the more things you’ll know. The more that you learn, the more places you’ll go.” – Dr. Seuss

Welcome to Episode #7 – Books Every Real Estate Investor Should Read.

I absolutely love quotes, so here’s another for you… “If we encounter a man of rare intellect, we should ask him what books he reads.” – Ralph Waldo Emerson

Now not to suggest that I’m a man of rare intellect, but hey – If I don’t think highly of myself – who the hell will? So I remain my biggest fan!

In this episode, I’ll relate some of the books that I’ve read and feel worth you reading as well – as they benefited me greatly, so maybe the same will be true for you also.

To this end, a new page is now live on the [… and Landlord] Podcast Website at: andLandlord.com/books -and here I’ll post details about each book that I mention on the Podcast, along with a link to where you can order the book or get it on Audible.

So in Episode #2 – I mentioned the book Rich Dad Poor Dad by Robert Kiyosaki. This book is cited possible more than any other by Real Estate Investors as the book that got them interest in and into the business of Real Estate Investing. Not that its the best book ever written on the subject of Real Estate Investing… I wouldn’t even say that it is a book about Real Estate Investing necessarily. However, it sets your mind on a different track when it comes to Money, Business and Investing – and it uses Real Estate as an example of the type of thing one SHOULD invest their money in… Because its an asset that produces an income (rent from tenants), tends to appreciate in value and is highly tax favored by the government – among many other reasons.

And then in both Episodes #4 & #5 – I mentioned the second book by Robert Kiyosaki – The Cashflow Quadrant. This is my personal favorite in the Rich Dad series; however, I believe there are a few (including his latest) that I’ve yet to read. I like this book because it talks about the different ways we all get our money, divided into 4 “Cashflow Quadrants”. I’ll not go into that again here in this Episode, but listen to Episode #5 especially, for full details. But in short, this book helped to open my eyes as to the differences in being an employee, small business owner or self-employed (on the left side of the Cashflow Quadrant); versus getting income from a business and investments (on the right side). Its a great read to get you thinking along the lines of diversifying your income and creating a situation where money and systems are working for you, instead of you working for money.

The [… and Landlord] Podcast Books page at: andLandlord.com/books – will grow over time to contain many book recommendations. However, today I’d like to speak about two in particular, that you can find now on this page along with Rich Dad Poor Dad and The Cashflow Quadrant both by Robert Kiyosaki. They are “The 4-Hour Workweek” by Tim Ferriss; and “The Richest Man in Babylon” by George S. Clason.

The 4-Hour Workweek is a book about getting out of the 9 to 5 job trap… How to get out of the cubical and stop working for money to create a situation where you’re leveraging businesses, people and money – to work for YOU. It is exactly the sort of book you should read after Rich Dad Poor Dad and The Cashflow Quadrant, as these two put you in the mindset of making major changes in your financial life – but they are short on actionable advise. What to do… How to do it? Whereas The 4-Hour Workweek is packed with actionable advise that can allow you to create a plan of action, and to start making actual changes in your financial life – by changing the way you make your money.

Go to andLandlord.com/books and click through to the page on The 4-Hour Workweek. There you’ll find my comments on what this book did for me. Unfortunately, I found it a bit late along my path, but it still had a major impact on my course of actions as I worked to remove myself from being involved in almost everything that happened in my businesses. After-all, you can’t create a 4-Hour Workweek for yourself when everything depends on you.

And then The Richest Man In Babylon is a book that is nearly 100 years old; and even more so, it features stories (or parables) set in ancient Babylon, over 8,000 years ago! Why should you bother to read such an old book containing apparently even older stories? Because the stories teach a financial lesson that is just as valid today as they were 100 years ago or even 8,000 years ago for that matter.

Among other lessons, The Richest Man in Babylon teaches “The Seven Cures for a Lean Purse” and “The Five Laws of Gold”. Now you’ll have to get beyond references to things like “purse” and “gold” and just hear and think “wealth” and “money”. You’ll also have to get past all the thee’s and thou’s and other aspects of Biblical speak – but it only helps to take you back in time so the stories really take hold.

These stories will stick with you – for the good. I still think about the “4th Cure for an Empty Purse”, “Guard thy treasures from loss” – whenever I’m about to make a new investment property purchase, go into another area of business or start a new business partnership. I don’t want to be one of those people who amasses millions of dollars only to lose it all in a bad investment or two. This book will not only help to protect you from that sort of outcome, but it will help to build your wealth to begin with.

So remember to checkout the Website at: andLandlord.com/books – which now has these 4 books listed, and we’ll be adding more as they are mentioned on each future episode of the Podcast. And while this episode was all about books, in future episodes we’ll just mention related books and post them to this page or we might do short book segment within the Podcast.

And I don’t want to leave you in complete suspense as to what the full list of books is going to be, so I’ll just mention a few more of them now. In no particular order, some of the additional books will be…

Secrets of the Millionaire Mind

The E-Myth Real Estate Investor

The E-Myth Revisited

Think and Grow Rich

Rich Dad’s Who Took My Money?

The ONE Thing

The Book on Investing In Real Estate with No (and Low) Money Down

The Book on Managing Rental Properties

The Millionaire Real Estate Investor

Extreme Ownership

Never Split the Difference

Pitch Anything

Pre-Suasion

Psyched Up

Influence

And the classic…

How to Win Friends & Influence People

Now as I go through additional Podcast episodes, each of these books will be mentioned as it relates to the topic at hand, or some experience I had. Or something that I think would be beneficial to you in your journey to becoming a Landlord, or to becoming the best Landlord you can be. Real Estate Investing and being a Landlord entails many different aspects of Mindset, Business and Finance. So all of these books play a role.

You’d be surprised how a book on time management, or efficiency, can make your landlord business so much more streamlined and efficient, helping you to put in policies, procedures and systems that take burden off of you, placing it elsewhere, and freeing your time, while still doing an excellent job for your customers, which are the tenants, so that you can grow your portfolio without creating stress, bringing more people onto your team, working with more vendors, more contractors. And as you bring these people in, and your company grows, and you have more employees, it’s only going to make everything run just that much more smoothly if you’ve read a book like How to Win Friends & Influence People or Extreme Ownership. And you know that if your company isn’t working like you want it to, it’s not your employee’s fault. It’s your fault, because either you haven’t communicated to them properly, or you haven’t trained them properly, or you hired the wrong person. A book like Extreme Ownership will help you internalize those things, so that you can get the best out of yourself, so that you can, in turn, get the best out of everyone around you.

These books have an enormous impact on all aspects of your business, of your life, of your finances. As i read them myself, I’ll make them available to you, letting you know what I got from them, what it did for me. And so, I created this page at https://www.andLandlord.com/books, to be that destination where you can go to see what I’m reading, and what you might want to read and why. Now, in full disclosure, if you order a book from that page, I do get a small affiliate commission from Amazon. It’s nothing much, but every little bit helps lessen the expense of producing this podcast.

So, if you listen to the podcast, and you’re going to get the books anyway, I would certainly appreciate it if you get them from https://www.andLandlord.com/books.

So let’s end this episode on Books Every Real Estate Investor Should Read with some final quotes…

“If you are going to get anywhere in life you have to read a lot of books.” – Roald Dahl

And…

“Once you have read a book you care about, some part of it is always with you.” – Louis L’Amour

In 2019, maybe more than ever before - you need to be able to evaluate properties, market for deals, negotiate with sellers, and have reliable funding in place to close. As I've mentioned before, I started my Real Estate Investing career in 2015, which admittedly was a better time to have started than 2019.  In fact, I'd say I was about 5 years late. Had I started in 2010, its possible I'd have 10 times the number of properties as I do now. But like the Chinese Proverb says...

"The best time to plant a tree was 20 years ago. The second best time is now."

Welcome to Episode #6 - Evaluate, Market, Negotiate & Fund - What It Takes To Succeed As A Real Estate Investor In 2019...

Having started my Real Estate Investing career in 2015 instead of 2010, I'll try not to lament only catching the tale end of what may prove to be the greatest opportunity to acquire deeply discounted properties in mass that may occur within my lifetime. Likewise, YOU should not use the current market condition as an excuse NOT to get started or to grow in YOUR Real Estate Investing business in 2019.

Sure, 10 or 20 years ago would have been a better time to start, but would you say that someone just turning 18 now (so they were only 8 years old 10 years ago) has missed the Real Estate train due to their "bad timing of birth?" - and so they should not even bother with Real Estate Investing now? Of course not!

Regardless of the decade or year; irregardless of the current market condition - (and what is the difference between "regardless" and "irregardless" anyway? Nevermind...) - THERE ARE ALWAYS OPPORTUNITIES in Real Estate! You just need to know how to recognize them, how to take them down, and how to perform to profit.

This requires certain skills - but the good news is that it can all be learned... So how do you go about finding and acquiring rental property deals in a market like what we have today - where everything appears to be overpriced (at least from a positive cash-flow prospective)? At the start I said... In 2019, maybe more than ever - you need to be able to evaluate properties, market for deals, negotiate with sellers, and have funding in place to close.

So let's start with evaluating properties...
Among other things, I've spent the last 4 years learning how to evaluate properties. Remember that one of the key indicators of a potentially good rental property deal is where the likely monthly rent is > 1% of the purchase price + any rehab needed and other expenses. So if you are buying it for $80,000 and it needs $15,000 of rehab to be rental ready, with maybe another $5,000 for closing, holding and other costs, totaling $100,000 all-in; then you'd want to be able to rent that property for $1,000 or more per month. That's called the 1% Rule and it's a strong indicator of a likely great deal - or at least certainly worth your further consideration.

Now from 2010 to 2015 and a few years thereafter, you could almost throw a rock and hit a 1% deal in most markets - they were all over the MLS. It was not even uncommon to find 2% deals, and I've heard of some people bragging of 3% deals or better that were just been sitting on the MLS for months. My personal best is just a little over 1.5%, but my properties also tend to appraise (post-rehab) far above what I had in them, thus allowing me to pull out most (if not all) of my cash upon refi; and in many cases also pull out a nice profit for myself; having equity remaining in the property; and also still maintaining positive monthly cash-flow.

What this means for you is that while the 1% Rule is a great rule-of-thumb consideration, it does not represent the sole-method of profiting from rental property. There are certainly times when it makes perfect sense to buy a property that is < 1% on the rent to cost consideration. The lowest I've gone is just above 0.6% - but I also have no cash remaining in that property (thus an infinite return); pulled out additional cash as profit at refi (free money, tax free); have a ton of equity remaining in the property (I refinanced at 65% LTV); got great tax benefits (due to the expensive rehab finishing the attic into a second 2BR unit); and it sits in an ideal location with progress all around (so massive appreciation potential). I also got the vacant lot next door where we start construction next month on a home with $300,000 comps all around. With all those benefits, do I really care that it failed to meet the 1% Rule? So don't treat the 1% rule as if it were written on stone tablets coming down from a mountaintop held by an old man with a white beard.

If you want to find good deals in 2019 you'll need more than a strict adherence to the 1% Rule. And in that regard, if you're new to Real Estate Investing, you may even be at an advantage over those who started earlier like myself, as my business partner has to remind me all the time (when we're evaluating deals) that it's not 2015 anymore. For example, its hard for me to even think about paying over $100,000 for a 2BR Townhouse, when from 2015 to 2017, I was buying them for $60,000 - and now they're going for twice that and even more. I have to be reminded to take off my 2015 glasses and see things for how they are TODAY. I've missed out on a lot of properties for this reason, as others are able or just willing to pay more than I am.

You see, everyone has different circumstances... I've recently lost deals to persons who paid what I consider to be ridiculous prices for properties that cannot possibly yield positive cash-flow at what they paid. However, maybe they're in a 1031 Exchange, and the alternative to paying too much for the property is getting hit with a massive tax bill. Better to over-pay for a property than to give the same money away to the government and have NOTHING to show for it. Or maybe they are paying all cash; whereas I must account for the cost of financing. Or maybe they are going to live in the property for a year or more, so they are getting much better financing and low to no down-payment; whereas I must put down 20% and my interest rate may be a point or two higher. Maybe they are going to do most of the work themselves and thereby building sweat equity in the property. Or maybe they are just going to knock the current building down (I'm seeing a lot of that in Durham) and build something new that changes the value proposition entirely. So what one person can pay for a property and have it still be a good investment may be entirely different (more or less) than what you or I can pay for the same property due to differences in our circumstances.

So you'll need to understand all the various means by which you can profit from a given rental property to know if you should buy it despite not having the best rent to cost consideration. Can you add square footage (up or out) to increase the value at refi and resulting cash out? Can you steal space from elsewhere in the house to create an additional bedroom of reasonable size to boost the value and rental rate? Is the property at a location that is almost certain to appreciate - highly distressed but ideally located, maybe in an improving downtown area? Can it be torn down for the land to then build something more valuable for the location? Now some of this gets into more speculation than I'm willing to indulge for myself (I'm an investor, not a speculator), but you may be more risk tolerant than me.

These are all different considerations when evaluating what a property may be worth paying for, as you have to be able to justify paying the prices that properties are going for in 2019... How are you going to make any money!? And will you regret what you paid or even be upside down come the next downturn in the economy? Or will it even matter at all if you still have positive cash-flow?

Now this all assumes that if you are going to be rehabbing the existing property into a rental, that you know reasonably well what the approximate cost of that rehab will be; what the finished property will appraise for at refi; what it will rent for on a monthly basis; and what other expenses will average, such as: Taxes (which may go up based upon what you paid at the next assessment); Insurance; HOA (if any); Vacancy; Repairs & Maintenance; Capital Expenditures; Property Management; Interest Rates; Points; Fees; Closing Costs; etc... You'll need to have all of this down cold when running your numbers. I'll go more into detail on these in another episode when I dive into how I evaluate properties for the BRRRR method that I use - which stands for: Buy, Rehab, Rent, Refinance, Repeat - which I believe was coined by Brandon Turner of Bigger Pockets. And I think they have a book coming out soon specific to the BRRRR method of Real Estate Investing.

Now let's talk about marketing...
Once you know how to evaluate a property for all that its worth (or could be) - you have to learn how to find them... And in full disclosure, I'm still working on that myself. Hey, we'll improve on this together. There are countless ways to market for deals. I've never been one for bandit signs, but you see them blighting just about every street corner anywhere you go... I BUY HOUSES! Well hell, so do I, but I HATE those signs. However, they must work to some extent or people would stop spending money on them. Just say no... I've spent too much money building my "Blue Chariot" brand, to advertise it (directly or indirectly) with cheap signs illegally placed at street corners. I looked into billboards a couple years back, but it was much more than I could justify at that time. I've also looked into advertising on radio and TV, but the timing just wasn't right.

I do direct mail and door hangers, which have gotten me a few properties. And I can't NOT do the online methods of SEO / SEM and PPC, when I own a Website business, so I'm into that with varying levels of success. I really should put more effort into that, as I should logically have top ranking for "Durham I/We Buy Houses" (and related keywords)... I'll have to get to work on that.

I like calling landlords, for rent signs and CraigsList rental listings to see if they'd like to sell, but that's time consuming so I'll need to setup a VA to handle this on my behalf. Lists for divorce, probate, pre-foreclosure, tax liens, evictions, code violations, etc... They all work to an extent. Really, almost everything works if executed properly and consistently. But some of it (like direct mail) takes more money than others. You can easily spend hundreds, even thousands per month on direct mail. I'll do an episode specific to marketing for deals; however, I'd like to invite a successful wholesaler on as guest to speak to their methods.

Speaking of which... How do you think wholesalers are getting deals? If you are in contact with wholesalers and they are sending you properties for consideration, you should consider each one a personal defeat, that you let someone in your market who is not even going to buy the house themselves get it under contract! Then they are going to sell that contract to you, when if you were on your game, you would have found and worked with that seller directly and likely gotten a much better deal for yourself in the process - or at least that is how I feel whenever I get a property lead from a wholesaler. But there's certainly a logic to letting others do what they do best and paying them well for a valuable service of bringing you consistent deal flow. Hey, as long as they are bringing value, go with what works. That may prevent you from needing to become an expert marketer yourself and may even remove some of the need to be a great negotiator.

So let's talk about negotiating with sellers...
As I said before, I've spent the last 4 years evaluating deals (buying a good number of them), but the books I'm reading now are often on the topic of negotiation, as it does me little good to be able to evaluate a deal if the ones from the MLS all suck. Having gotten most of my deals from the MLS in prior years, I now realize that to continue my business growth in the current market, I must now go out and make my own deals - BEFORE they hit the MLS or come to me from a wholesaler. But even in that statement, I still feel everything works with the right strategy and proper consistent execution, including the MLS and working with wholesalers - negotiation comes into play in all cases.

So now I'm reading books like: Never Split the Difference (Negotiating as if Your Life Depended on It) by Chris Voss; Pitch Anything (An Innovative Method for Presenting, Persuading, and Winning the Deal) by Oren Klaff; Pre-Suasion (Channeling Attention for Change) & Influence (The Psychology of Persuasion) (two books) by Robert B. Cialdini; and the classic, How to Win Friends & Influence People by Dale Carnegie. These and other such books provide an insight into the human mind, behavior and how to do and say things in a way as to get what YOU want out of most situations in life. These techniques are not always easy to apply, but with practice and genuineness to create win/win situations - they can become a normal part of your personality.

Amazing things will happen for your Real Estate business when you can convenience sellers to give you financing or to sell to you on terms like a lease-option, and do so in a manner that does no harm to (and actually benefits) the seller. To date I've done 3 lease-option deals where everyone benefited greatly, and those sellers now offer testimonials and references as to my ethics in business and personal character - which will just make the next such deal even easier, when I can put that person on the phone with 3 others who've done similar deals with me in the past.

I'll speak more on these and other books and my work to become a better negotiator. One such book is Psyched Up (How the Science of Mental Preparation Can Help You Succeed) by Daniel McGinn, which relates especially well to me, as I've always had a fear of public speaking and presentations. When I went into the house to speak with the first sellers who did a lease-option deal with me, I had to devote a considerable portion of my thoughts and efforts to just not shaking as I explained how it all worked - as I was just that nervous. But by the third lease-option deal I was fine, which built confidence for my first presentation to a Private Lender.

So now let's talk about the money...
Most people think you're not going to buy anything if you don't have any money - and so they rule-out Real Estate Investing as something they can pursue, as they think instinctively that to buy a $100,000 house, naturally you need to have $100,000. But this same person would not think twice about going to a car lot and buying a $10,000 or $20,000 car with no money down... Something about that extra zero creates a disconnect for most people that they cannot easily breach. And even when the extra zero isn't there, such as for a $60,000 house, in 2019 they are harder to find and/or just may not be in an ideal location; or needs so much rehab work that you're right back in that 6 figure zone with the extra zero coming into play again.

So let me start by saying that if you can barely pay your existing bills; do not own your own home; have no money in the bank, no savings (no retirement, no insurance); and your combined score from a few frames of bowling is higher than your credit score - you may not be ready for Real Estate Investing (just yet). In that case I suggest you start listening to Dave Ramsey or Susie Orman and get your financial life in order. They provide great advice for that. Because while you may not need a lot of money to be a Real Estate Investor, it helps to have some - and it is even more important to be able to show at least some recent history of managing well what money you do have.

Unless you have some special circumstance, you're likely to need about $5,000 to maybe $30,000 of available funds for down-payment, fees, closing costs and reserves. This can be cash in the bank (ideal), or a Home Equity Line of Credit (HELOC), a loan from a retirement account (IRA / 401K), etc... And your credit score will likely need to be somewhere in the 700 range for the best rates, but some lenders will go lower. You'll also likely need to be some distance in time away from your last late payment, judgement, lien or bankruptcy. But this all relates to your first purchase or maybe your first few using conventional funding, such as from a bank.

You can lessen or eliminate most (if not all) of these requirements, by using 100% OPM - Other People's Money. In the beginning, OPM will likely come only from family and friends - as their love for you may overcome the reluctance to fund what is your first time Real Estate endeavor. But you may also find a seller willing to offer some period of 100% seller financing or a lease-option - it happens, and you won't know if you don't search (market for deals) and ask (negotiate).

But the real fun is once you've established yourself as a knowledgeable and trustworthy Real Estate Investor - because then OPM will come from those who were strangers just days, weeks or months before. It is also when sellers are most likely to be willing to sell to you on terms, which might include 100% seller financing. Further, it is when Hard Money Lenders (aka Professional Private Lenders) will bend over backwards to give you the best terms on money for your deals.

Once you have a few Private Lenders and a Hard Money Lender or two on your team, along with a few conventional lenders, each day that you wake in this business feels different, as your biggest problem is no longer finding money for deals - it is finding the deals in the first place. And then the dilemma shifts from concern about finding money to buy properties to finding enough properties that meet your criteria to keep your Private Lender's funds in-use.

You don't want to have funds committed to you by a lender and not be able to find suitable properties to leverage those funds continually. You'll also have Hard Money Lenders calling and emailing you each week to ask if you've found another property yet. So this becomes the primary reason for needing a highly effective marketing machine and then being able to negotiate win/win deals with those potential sellers. I'll have a future episode about finding and working with Private and Hard Money Lenders - and there's a great book on the topic called "Raising Private Capital (Building Your Real Estate Empire Using Other People's Money)" by Matt Faircoth of Bigger Pockets.

So how do you become and grow as a Real Estate Investor in 2019?
YES, its much harder than it was from 2010 to 2018... You'll need to be able to evaluate deals properly, quickly and from a number of perspectives. You'll need to be a proficient marketer to find properties (off market deals) to evaluate and buy. And once your marketing efforts are bringing you a steady stream of deals to evaluate, you'll need to be able to negotiate effectively with those sellers to take the deals down at a price that creates a win/win for YOU and the seller. And regardless (or maybe is it "irregardless") of all that, you won't be able to buy anything if you do not have your finances and business in order such that banks and individuals are willing to lend to you at rates and terms that make the numbers work.

Your lenders are a part of your team, and on many deals it may seem as if the lender is benefiting more than you are - which is why I seek to become a lender myself. But without the lender there is no deal to be had, as even the richest person does not have enough money to buy every property that comes their way. EVERY REAL ESTATE INVESTOR USES OPM... But outside of family and friends (and often times even then) it requires you to position yourself as a Real Estate Investor who is knowledgeable and trustworthy - as no one has any money they will be OK with losing. People work hard for their money, so it is an immense responsibility when using OPM to fund your deals.

Well, that's it for now... I'll talk more about all these things, but let's bring this episode to a close, as it is already the longest so far. Get into the Real Estate Investing business and if you are already, then grow your business in 2019. And if you have no desire to learn how to evaluate properties, and market for deals, and negotiate with sellers - then maybe you should be the bank for others if you are in a position to do so. Being a Private Lender can be very rewarding. I'll talk more about accredited versus non-accredited investors and ways of adding Private Lenders to your team in a future episodes, but reach out to us at BlueChariot.com/invest - if you'd liked to learn more about being a Private Lender on a coming project by Blue Chariot Properties.

Opening / Quote:

As I've progressed to overcome challenges in business, real estate, and even as a husband and a father, I've come across certain quotes that I found in some way inspirational, or that helped to focus my thoughts on an area of my personality and habits where there was just room for improvement. So, I'd like to begin sharing some of these with you. One that I feel relates well to this episode is most often attributed to Gustavus F. Swift, "Don't let the best you have done so far be the standard for the rest of your life."

Intro:

Husband, Father, Entrepreneur, Realtor, a long list of other titles and descriptions... and Landlord. Welcome to the [... and Landlord] Podcast with me, Jonathan Taylor Smith, also known as J.T. - following a roadmap to Financial Freedom through Residential Rental Real Estate. Welcome to the [... and Landlord] Podcast...

Welcome back, episode number five. So, the previous episode was basically about sacrifice. What are you willing to sacrifice in order to achieve financial freedom? At the start of that episode however I mentioned the second book from Robert Kiyosaki, called the Cashflow Quadrant. My opinion is that it's the best of his books, but you really do need to read the first one, Rich Dad Poor Dad, prior to reading the Cashflow Quadrant. The Cashflow Quadrant is all about how you make your money as it relates to achieving wealth and financial freedom.

And as I mentioned in that episode, it's a circle divided into four regions or quadrants. And the upper left is [E], for Employee, which is where most people get their income. Below that, the lower left is for [S], which is Small Business, or Self-Employed, which is where I get my income. My wife gets her income from the [E] Quadrant, I get most of mine from the [S] Quadrant. Above that, back on the right at the top is [B], for Business. And in his book, he describes it as a business that has more than 500 employees. But as you go further into it, you learn that it really relates to any business that has been systematized such that it runs largely independently of the owner. And I am seriously striving towards that in my businesses. Below that, the lower right corner is [I] for Investor. And that's where we get the other portion of our income, from rental properties and other investments that we have.

For most people, being in the [E] Quadrant, the goal is to spread yourself into those other quadrants until you're entirely out of the [E] Quadrant and you are making all of your money from the [S], [B], and [I] Quadrants. And even better, from the [B] and [I] Quadrants. This relates to the quote that I led with, "Don't let the best you have done so far be the standard for the rest of your life."

If you're currently getting all of your income from the [E] Quadrant, nothing wrong with that. You can get rich in the [E] Quadrant. There are people that have extremely high levels of income from the [E] Quadrant. But it's harder to become wealthy if operating solely in that quadrant. You really need to diversify your income, because when you're in the [E] Quadrant, you're working for someone else. Your destiny is not in your own hands. You need to protect yourself in case the company goes out of business, or they downsize, or you're let go for some reason.

When you're in the [E] Quadrant, you are among the most highly taxed individuals, with the fewest deductions and shelters to protect yourself and limit your tax liability, which is why it is extremely difficult to become wealthy when operating only out of the [E] Quadrant. So, what are you going to do to spread your wings, to move into those other quadrants? Because by doing so, you truly do have the opportunity to change the standard for the rest of your life, to make what you do in the future better than what you've done up to this point.

And that should be taken in no way disparaging as to what you've accomplished up to this point in your life. Remember, I started my first company in 1996. I was self-employed starting from 2002. But I didn't get into real estate until 2015. By anyone's measure, I was successful for that entire period of time. Anyone looking at me would have said, "Hey, he's a successful business man." - I knew that I could achieve more. And so I orchestrated things so that I could move into another area of income, that being investment property, rental properties, and the [I] Quadrant.

And so from that point, with my wife operating in the [E] Quadrant and me being in the [S] Quadrant, we both worked to expand over into the [I] Quadrant with rental property investments and other investments. So, now we're operating in three of the four Cashflow Quadrants. But yet I still know that I have more within me, so I am working to systematize my businesses so that they will truly run without me, putting people in place with the knowledge, skills, and authority to run the businesses on my behalf so that they are viable businesses, not just for a day or a week without me at the helm, but for months, or if necessary, for years. That they will still be viable businesses that operate without me, that bring in cash-flow, that supports my needs financially. That will be financial freedom.

So, my goal is to get entirely into the [B] and [I] Quadrants. For now, I want to operate in all four quadrants. And you know that a table with four legs is far more stable than one with three, or two, or one. If you're only operating in the [E] Quadrant, you have a table with one leg. That's not stable. It's an entertaining circus act, but eventually you're going to fall. So, you need to move into those other Cashflow Quadrants. Add more legs to your table to make it more stable. And the easiest way of doing that is to get your finances set so that you can start buying assets, and investing in things that create cash-flow, that have an income component.

There are other investments that you can pursue, paper investments, stocks and bonds, mutual funds, ETF's. Those things have their place, but that's not what my podcast is about. And that's not what my passion is in. I love rental properties, and being a landlord. And even if you don't want to be a landlord, you can outsource that to a property manager. It's all about putting people, policies, procedures, in place that allow you to be able to get the most out of your day without everything being your responsibility, ultimately building your wealth in the process.

Then in addition to moving into the [I] Quadrant with some sort of investment that creates cash-flow, again, rental property is where I'm at, you need to start a business. Some kind of side hustle. There's so many things that you can do to make money online today. And then even still, lots of businesses that you can start that are in the real world, but can be advertised online. There are opportunities all around to move into the [S] Quadrant. And yes, you're not likely to get rich overnight. Your business isn't going to go live on Monday and you're rich by Friday. You're going to have to work at it. Remember, I started my first business in 1996. I didn't become self-employed until 2002.

So, it took me six years to get to the point where my business was making more money than I was on my day job, and I felt confident to be able to quit, which up to that point was the hardest thing that I have ever done, to quit a perfectly good job thinking that my business was going to be able to provide for me and my family from that moment forward. Scary stuff, but I did it.

So, you don't have to think that your business is going to transform your life overnight. It's going to take work. But what you're doing is you're setting that foothold in another Cashflow Quadrant. You're adding another leg to your table, making everything more stable. And eventually if you do get to that point where your business is making more money, and your time would be better spent on that business than working in the day job, then go ahead and quit the day job, because even though you're, again, removing a leg from the table, the [S] Quadrant leg is far more beneficial to you than the [E] Quadrant leg.

First of all, you are now in control of your own destiny. You're self employed, you have a job that you own. It's your job that you created for yourself, and you are in control of your own destiny. More important than that, as a self-employed individual, as a business owner, you have tax benefits, deductions, and shelters against taxes that can start building your wealth, because when you're in the [E] Quadrant, you earn money, you pay taxes on that money, and then you spend what's left over. But when you're in the [S] Quadrant and the [B] Quadrant, you earn money, you spend money, and you pay taxes on what's left over.

Did you catch the difference? In the [E] Quadrant you pay your taxes first, and then you spend what's left over. But in the [S] and the [B] Quadrants you spend the money first, tax free, and then you pay taxes on what's left over. Now, of course there are some limitations to that. You have certain rules and regulations you have to follow. But the general sense of it is that as a business owner you are expected to have certain expenses for your business. You have to keep your personal and your business finances separate, but to the greatest degree possible you put your expenses on your business. You spend the money before you pay tax on it, and then you pay tax on what's left over.

The difference is transformative for the creation of long term legacy wealth, because taxes are your number one expense in life. Nothing will take more of your money than taxes. And it's not just income taxes, but property taxes, sales tax, and all the fees and everything that you pay taxes on. You don't even realize many of the taxes that you pay. You don't realize how much of the price of something you buy, like a gallon of gas, is actually just taxes.

Taxes are your number one expense in life. And so by moving yourself from the [E] Quadrant to the [S], and then later to the [B] Quadrant, you are creating a wealth effect of tax savings. So, you keep your [E] Quadrant job for as long as you have to. But as quickly as possible you need to move into the other quadrants. And the easiest of the other quadrants to move into, from my experience, are the [S] and the [I] Quadrants. It doesn't take a lot of money to start a business on the side. And it takes far less than most people realize to buy investment property assets.

Like I've said before, you can get a bank to give you 80% of the money. My first rental property, it required less than $20,000 out of my pocket. And that may sound like a daunting figure to many, but there are many ways that you may not be thinking of that you can get $20,000 to buy an investment property. And there are techniques that you can use that might require zero out of your pocket. So, start looking for ways to move into the [S] and the [I] Quadrants. And if you have to keep your [E] Quadrant job while you do that, there's nothing wrong with that. As a matter of fact, there are some scenarios, like the case for my wife, where it makes perfect sense for her to stay in her [E] Quadrant job, especially with what we're doing in the other quadrants, because it won't take very long for her to get to a point where she can retire and will have an income from that job for the rest of her life.

So, why would you quit something like that prematurely, even if you have income from other sources? I quit my job because, well one it was excruciating, I was never cut out to be an employee. But I needed to free my time in order to build my business. But even if I had kept that job, it was not one that would have ever led to any retirement benefits, or anything like that. It would have just been a job that eventually the company went out of business shortly after I quit anyway. Not saying that they went out of business because I quit, but as it would happen, the company went out of business anyway. So, even if I had kept the job, I would have eventually become unemployed. So, I did it on my terms and it worked out perfectly.

So, "don't let the best you have done so far be the standard for the rest of your life". Spread your wings into those other quadrants. Buy a rental property, or some other cash-flow generating investment. And start a business. Something on the side, you don't have to quit your day job. And I recommend it be an online business, because that's where my expertise lies.

I've mentioned before that I had an IT business, a Web Hosting business. Well, let me tell you a little bit about that business. The name is ViUX Systems, Inc, that's V (as in Vision), U-I-X (as in X-Ray). And the website is ViUX.com. And it is a Web Hosting business. What it does is, it helps small businesses and individuals get online and have a website and email, and all the related services that you'd need to do business online. If you've ever heard of GoDaddy, you're aware of what my business does. It's all the same stuff. But whereas GoDaddy has millions of customers, ViUX has thousands of customers.

And when you're seeking to start an online business, I recommend that you begin with the domain name. A lot of companies come up with the name of the business, and then they go out to try to find the domain name, and they end up with a domain name that does not match their business name, or has dashes in it, or it's some extension other than dot COM. And that's not to say the extension has to be dot COM, there are some pretty great extensions that came out a few years ago other than dot COM. But dot COM is still the king, it's still the assumed ending of a domain name.

It means you're going to have to work just that much harder if you don't have a dot COM in order to get it publicly known. So, start with an excellent domain name that matches your business name. Name your business after the domain name once you've acquired it, and try to get one that is an exact match of what you want the name to be, and with the preferably dot com extension. But there are others that you can choose from.

So, with me you'll notice this podcast is the [... and Landlord] Podcast. And I have andLandlord.com. The podcast is brought to you by Blue Chariot Media, and I have BlueChariot.com. I also have BlueChariotMedia.com. The hosting company is ViUX, and I have ViUX.com. Do that favor for your business and get a domain name that matches what you want the business name to be. But before any of that, you have to make up your mind to start a business, to move into the [S] Quadrant. And hopefully you start a business that through additional effort and time in business, and putting policies and procedures in place, that you can move it to the [B] Quadrant.

Regardless of whether you're in the [S] or the [B] Quadrant, the excess income from that business, move it into the [I] Quadrant. Use it to buy investment properties. Buy assets that create cash-flow. So, again, operate in as many of the Cashflow Quadrants as you can. My wife gets her income from the [E] Quadrant, but it makes sense for her to remain there because she has a great job, she gets retirement benefits, and not just that, but she gets the healthcare benefits that our family depends on from her job. I get my income from the [S] Quadrant, and I'm working to move that over to the [B] Quadrant. The money that I make from that business, I save it and I invest it in assets that are in the [I] Quadrant.

So, I have a diversified income structure between my wife and myself. We have three, and working on four legs to our Cashflow Quadrant table, because we're operating in three of the four quadrants. Even if we only had two, we would want them to be on the right side, in the [B] and the [I] Quadrants, because those are the quadrants that will allow us to have other people and systems working for us, rental properties and other investments working for us. Our money working for us, so that the excess cash-flow from those businesses in the [B] Quadrant and those investments in the [I] Quadrant are enough to pay all of our expenses for the lifestyle that we want to life, which is what true financial freedom is all about.

That your business and your investments pay for your lifestyle. That's where we're headed. And so I want you to get there as well, and I want you to start thinking about how you can get into those other quadrants, especially if you're only in the [E] Quadrant right now. And remember, my knowledge of and use of the phrase Cashflow Quadrant in the diagram and everything, it didn't come from me, it came from the book Cashflow Quadrant by Robert Kiyosaki.

From my understanding, it came to him from his Rich Dad, which is from the original book in that series, Rich Dad Poor Dad. I would highly, highly recommend that you go read those books. Start with Rich Dad Poor Dad, and then go to the Cashflow Quadrant book. I think the third in the series, if I'm not mistakes, is one about increasing your financial intelligence. I've also read that, and I'll speak a little bit about that. But read those books. And again, they may not be the best written books, but he will tell you himself, he is not a best writing author, he's a best selling author. So, don't criticize the books for how they're written, or whatever. But utilize them for the content that they contain. The lessons are invaluable, and if you've read them before, as I said, read them again. It has to hit you at the right time in your life when you're looking for that thing that these books can be the answer to that thing you're looking for.

By the fact that you're listening to this podcast, I would suspect you're on a journey leading you towards financial freedom. And if you've gotten this far without reading those books, I'm telling you they were transformational in my life. You should read both of them, starting with Rich Dad Poor Dad, and then go into the Cashflow Quadrant. I'll give you some more information about the other book, about financial intelligence. And there are still more books in the series. But those were the ones that were foundational for me.

And then there's still another book, and that one is The Richest Man In Babylon. Now, Robert Kiyosaki didn't write that book, it's a very old book. I'll give you more details about it. But I will be speaking about that book in a coming podcast episode, because it teaches you how to manage money, and how to save money. And even how to get out of the wrong type of debt, so that you can be successful. And I mentioned the wrong type of debt, because I listen to persons like Dave Ramsey who would teach that you shouldn't have any debt. I personally disagree with that. I think that there are certain debts that you want to have, and certain debts that you don't want to have.

Credit card debt, any other debt that doesn't tie itself to an asset that pays you money is a debt that you want to avoid. But debts like rental property, where the income from the property is paying the debt, there's nothing wrong with that. It's the greatest type of debt you can have. Why wouldn't you want to go out and buy $1 million worth of rental property and have $1 million worth of debt that your tenant pays for? That's the greatest thing ever, why would you not want to do that? That's the best type of debt to ever have.

And so I'll talk more about those types of scenarios as well. All of the books that I mention on the podcast will be available on a books page on the website. I'll upload it at andLandlord.com/books. And you'll be able to click through to get any of the books that I'm speaking of. I'll try to not just put up a list of books and say, "Hey, go read these," but let you know what I took from the book, and how it affected me and my journey towards financial freedom. Because that's what this is all about, it's about using real estate and businesses and other means to achieve financial freedom. And also at the same time, how it should affect your family life.

Like I said, I'm a husband and a father. My businesses and my investments relate to how I am at home with my family. So, it's all about living the best life that you can. I personally think real estate investing and being a business owner is an enhancement to my life. And I simply want to share that with others to give you the opportunity to do the same. And maybe by hearing my story, and those of others I will bring on this podcast, it might streamline your process to get to where you want to be in life.

Exit:

Thank you for listening to the [... and Landlord] Podcast, with me, Jonathan Taylor Smith, by Blue Chariot Media. Following a roadmap to financial freedom through residential, rental, real estate. You can find the podcast website and blog at andLandlord.com. The main company site is BlueChariot.com. If you've received any value from this podcast, help me, please, to make it available to others and make sure you don't miss an episode, by subscribing and posting your five star rating. Plus, share it on social media. I welcome your comments on the blog. And if you'd like to share your Landlord Horror Story, or have a comment or a suggestion for the show, call 844-USA-BLUE - and enter extension 263, which spells "AND" on your keypad (as in AND Landlord). And leave a message. It may be used on a coming show.

Thank you. Be all that you are.... and Landlord.

Disclaimer:
Nothing on the preceding show should be considered specific, personal, or professional advice. Please consult an appropriate tax, legal, real estate, financial, or business professional for personal advice. The comments and opinions of any guest are their own. Information is not guaranteed. Any investment may have potential for both profit and loss. The host is speaking solely on behalf of Blue Chariot Media LLC.

What’s going on, everyone? Episode No. 4! I'm getting into this. I'm starting to enjoy it. So, last week, I did a bonus episode. I did two episodes last week. Don’t know if I'll have time to do that this week, but I'm working on several episodes. So, I'm excited about the content that I'll be able to put out in the near future.
Today, I thought I would do an episode about sacrifice. What are you willing to sacrifice in order to be financially free? And don’t get me wrong. I ask that question still on my own journey towards financial freedom.

So, I haven’t gotten there yet myself, but it’s in sight. I have a plan that I feel confident will get me there. And the reason I don’t feel I'm there already is because in the reading of what I think is Robert Kiyosaki’s second book, The Cashflow Quadrant, he mentions the four quadrants that a person receives their income from.

And the cashflow quadrant is basically a circle, which is divided into four regions, and the upper left hand corner is [E] for employee, which is where most people get their income from, and that’s the quadrant that my wife’s income is derived from. Then the lower left side of the quadrant, is [S], for self-employed or small business, and that’s where I get my income from. I'm in the [S] quadrant. Back at the top, on the right side, is [B], for business, which Robert Kiyosaki describes that as more than 500 employees, or a business that will continue to run even if you're not there for a prolonged period of time. Below that, the lower right corner, is [I] for investor.

And so, I operate out of three of the four quadrants, with my wife being in the [E], me being in the [S], and she and I together in the [I] through our rental properties and other investments that we have. But we’re not in the [B] quadrant. My businesses, none of them are larger enough. There are no 500 employees in any of my companies. If I weren't there for some period of time, and when I started, especially my IT company, it would not last a day if I wasn't there.

And then as I read books like The 4-Hour Workweek, and Traction, and other books that teach you, basically, how to create a real business that doesn't rely upon you, I was able to put systems and procedures in place that backed off some of that responsibility from my shoulders.

So, now, yes, the business can operate for some period of time without me, but it’s not years. It’s probably not even months. It’s weeks at best. And so, I don’t consider myself to operate in the [B] quadrant, and based on Robert Kiyosaki’s definition, I don’t operate in that quadrant. Even with my investments, they call rental properties ‘passive income’, but they’re only passive to an extent. You do have to do some things to keep the money coming in, and to keep everything from falling apart. And so, they’re not completely passive. And so, until I get to that point where I have enough money coming in from activities that require nothing of me, I don’t consider myself to be financially free. But I do have things in works that will get me there.

So, going back to what I was asking before, what are you willing to sacrifice in order to become financially free? And I ask this because I had to make some sacrifices to get involved in real-estate investing.

Prior to 2015, I was an avid sports fan, and I was a guy who had the NFL Sunday ticket, and I would watch several games on Sunday. I would record several games, and I would be watching those games Monday, Tuesday, Wednesday, and Thursday of that week. This was before there was regular Thursday night football, and I would be watching the Monday night game without trying to find out who won on the games that I recorded. So, I would usually record the Monday night game, and watch it later, and football went throughout my week. Basketball, professional basketball, especially when it got past the all-star break, and when the playoffs come around, I was there every game. College basketball, most games. College football, most games, I pretty much liked every sport with the exception of baseball and hockey. At one point, I was in three different NFL fantasy sports leagues at the same time.

Very confusing to keep up with things, and I watched a lot of television. Sci-fi TV shows and movies, crime dramas, action, a lot of different shows, always watching television. Even when I was working, I would usually have a television on in the background. My excuse was that I am not really paying attention to it. I'm still getting my work done. It’s just something on in the background to keep me entertained. But it took up a lot of time watching television all the time. When I was in my car, I would usually be listening to music, or political talk radio.

When I decided I was going to become serious about real-estate, I cut all of that out of my life, pretty much cold turkey. I quit watching sports entirely. For three years, the only sports I watched were the Super Bowl. The first year, it was just because I was invited to someone’s house to watch it. But other than that, I cut out sports entirely, including all the playoffs. Didn't watch those either. And an amazing thing happened, I kind of lost interest in it. It was like the desire to watch sports just faded away over a short period of time. I became uninterested to the point where when I came across a game, or I would hear somebody saying “hey, such and such game is on”, like Duke and Carolina, or something like that, I was like “huh, well”, I wasn't really all that interested in watching it, which was something that’s unheard off for the former version of myself. I would have planned my entire day, if not a week, around making sure that I was going to be able to watch that game, but I gave that up. Why? It was a sacrifice I was willing to make for real-estate.

Likewise, with regard to television, I watched everything you could think of. We've got like three DVR’s in our household, so there’s plenty of capacity to record all sorts of programs, but I cut it out. The only thing I continued watching were the few programs that my wife and I watched together. So, there’s like that two hour window between 8 and 10 when we’re both in bed, we would watch some program together. I continued to do that because that’s time spent with my wife, laughing or joking about something ridiculous that we’re watching on television.

Other than that, I cut television out of my life, and then music. I stopped listening to music entirely. I completely cut out political talk radio type programs. I realized, ultimately, that it wasn't doing me any good to be up on the latest politics that wasn't pushing my financial freedom goals down the line. So, I killed that as well.

I replaced all of these things that were sucking time out of my day and my week, with reading books on real estate and on business and on mindset, most of all, listening to podcasts. When I'm in my car, that’s what I'm listening to; someone’s podcast. And I hope my podcast can become that for someone else. I would soak up information from podcasts. When I'm at home, I would be listening to books, and again, whenever I say read books, I probably mean listen to. Audible was on all the time in my car, a lot of time at home, when I'm cutting the grass, when I'm working around the house, when I'm cooking dinner, or anything, I'm probably consuming something about business and real estate. Those things that weren't productive to my financial freedom goals, I got rid of them.

So, that’s why I ask; what sacrifices are you willing to make in order to put a plan in a system in place that you can follow that will, ultimately, lead you to financial freedom? Are there things in your life that, while enjoyable, are not really the best productive use of your time? What can you get rid of in your day that doesn't take you away from friends and family, but still allows you to clear time on your schedule for education, for enlightenment, evaluation of what you’re doing now that you can potentially do better in order to become financially free sooner?

For me, it was to get rid of sports, politics, music, and entertainment, right up until the point where it would have also caused me to lose friends and time with family. And that does not mean everyone has a right to be in your life. If there are people, even family and friends, who are detrimental, or even just not supportive of you trying to achieve financial freedom, they don’t need to be in your life.

Limit your exposure to negative influences and move on to better things. I have a very dear friend who lamented the fact that I was no longer able to debate the latest political happenings because I wasn't following it anymore. But I replaced that time with education on real-estate. I wouldn't be able to have this podcast right now if I didn't educate myself over the prior four years on real-estate investing. Everything I'm speaking to you about, and will speak to you about, I learned over that period of time, and I continue to learn now, because of the fact that I replaced non-productive, time-suck pastimes that filled my week with productive time, to educate myself on something that I was passionate about, and that is financial freedom through real-estate investing, specifically rental properties; being a landlord. And that is what brought about the [… and Landlord] podcast. So, what are you willing to sacrifice?

I would submit to you that if you spend any time listening to music, in my opinion, you’re wasting your time. Unless your line of work is somehow in the music business, listening to music isn't doing anything to enlighten you. It’s not doing anything to educate you on finances, or business, or real-estate, or anything.

Watching TV, I would submit to you that Dancing With the Stars is not going to lead you to financial freedom. The Bachelor is not going to make any money for you. Anything with hip-hop, or wives of some profession, or city, in the title, is not going to teach you how to manage finances. Whatever reality show, whatever TV show you spend your time watching, and there are lots of out there that I would really love to watch, they’re not going to make any money for you. I make an exception for a few shows that my wife and I like together because that’s time that we have together to laugh and joke about something. With that exception, and keeping it limited, I don’t watch a whole lot of television. I gave it up, even though there are countless shows on TV that I would love to watch. I think, right now, we’re probably in the golden age of television. There has never been a better time to be entertained on television, or at the movies. But is it going to get you to financial freedom? I would say no.

What are you willing to sacrifice? That is a question that needs to be answered, because it will take sacrifice in order to get to financial freedom. And it’s not just the sacrifice of the things that spend time, it’s also a sacrifice of the things that spend money. Do you spend $6 every morning on a cup of coffee? If you do, I would say you’re wasting money. That could be used to save towards a down-payment on a rental property. There are lots of activities that we undertake every day that we don’t realize how much money they spend.

What I did related to finances, is I bought a program called Quicken, and I started tracking all of my finances in Quicken. It told me, after a very short period of time, what I spent my money on. I could tell you, to the penny, what I spent on for beer, for pizza, and clothing and dry-cleaning. All the different things that I spent my money on, I would enter it into Quicken, and I would categorize it all. Thankfully, because of the fact that I don’t transact in cash very often, it was easy for me to categorize and lay out all of my transactions in Quicken.

And it becomes shocking to see where your money goes, how much I spend at Chick-fil-A, or Bojangles. It was shocking when I looked at it, and realized one year that I spent almost $750 that year at Bojangles, and even more at Chick-fil-A. That’s ridiculous. It was $2000 in fast food I could have put towards a rental property. So, I immediately changed my habits. I sacrificed that apparent desire for fast food, and I stopped going to Bojangles, to the point where I didn't remember the last time I went, because of the fact that I was able to see that it was wasting money going out to eat fast food all the time. And not just there, other places I looked at how much we spent at Olive Garden, and Red Lobster, and Outback. Not just the chain restaurants, but when we would go to places that are better, it was a lot of money being wasted. So, we decided to sacrifice on our eating out budget, and to start cooking more at home. I learned how to cook, because I previously did not, and between my wife and my self, with both of us cooking, it created a lot more leftovers, and it saved a lot of money.

So, look through your schedule. Look through your finances. Put some method in place of tracking your spending. See where you’re wasting not just time, but also money. Re-deploy that time towards educating yourself on business, on real-estate, on finances. Change your spending habits so that you have as much money as possible to invest for your future. Save money so that you can invest that money, so that money then starts working for you. You cannot be financially free only working for money. You have to have money also working for you, and you’re not going to get there if your time is spent on Dancing With the Stars. Don’t let me pick on that. I think I have that in my head because Brandon Turner often uses that as an example on the Biggerpockets Podcast, and I listen to that all the time.

Regardless of what it is that’s consuming your time that’s non-productive, you need to re-evaluate, and re-position, so that you can be financially free. So, ask yourself what are you willing to sacrifice, and then do it, so that you can eventually become financially free.

What’s going on, everyone? Episode No.3! Thank you for coming back. This is a bonus episode, the second this week. As I said, occasionally, I would release more than one episode per week. I wanted to elaborate a little bit on the topic from the prior episode which was speaking about my first rental property purchase, a townhouse, that I bought in May, or actually got under contract, in May of 2015, and enclosed on it in July of 2015.

So, I wanted to speak a little bit more about that whole process, some of the underlying things that I had to do in order to get to the point of being able to make that purchase.

So, as I said, it started with my reading ‘Rich Dad Poor Dad’ on the cruise ship. In between that and actually making the purchase, I also read Brandon Turner’s book called The Book on Buying Real-Estate With Low (And No) Money Down, that you can get on Biggerpockets.com. I also started to post things to that website, listen to their podcast, signed up to participate in their webinars, pretty much just soaking up as much information on real-estate as I could. But there are three critical things that I had to be able to do to make that first purchase successful.

Number one, I needed to be able to evaluate a potential purchase. I needed to be able to put in the numbers for what the loan was going to cost me, and what the property was going to be priced, what the anticipated rehab was going to be, all of the different aspects that make up the profitability of a rental property purchase. You have to account for vacancy and repairs and maintenance and capital expenditures, and property management and, so, all of these things go into the formula that spits out the answer as to whether or not you’re going to make any money on a given property.

Biggerpockets.com has a bunch of calculators, two in particular, that I used then and I use now. They didn’t have the second one back then when I made that first purchase. Back then, they had what they referred to as the rental property calculator. Now, they have that and BRRRR calculator. BRRRR stands for Buy, Rehab, Rent, Re-finance, Repeat, and it’s basically just an acquisition strategy, usually related to acquiring distress properties with short term money like short term private lender or a hard money lender loan, that you’re going to then rehab into a rental, and re-finance into long term financing through a conventional lender like a bank. Whereas, the rental property calculator is usually for those properties that, even if they do need rehab, it’s not so significant that you can’t get conventional financing on it right from the start.

So, those are the two calculators that I use most often. They didn't have the BRRRR calculator when I got that first property. I didn't even know what BRRRR was, or have that concept in mind. But when I was using the original rental property calculator, it was already with the intent of using conventional financing. You probably shouldn't even get into a scenario where your very first project is one that requires such a high level of rehab that a conventional lender won’t finance it.

And so, the webinars that Biggerpockets has, will often teach you how to use the calculators, and then you want to get to the point where you know what you’re likely to get as far as terms from a bank for a conventional loan, so that you can plug those into the calculator. You want to know what your likely vacancy and rent, are repairs and maintenance and capital expenditures and property management. You want to call around to different vendors, and get those numbers so that you can then plug them into the calculator.

And in some cases, you just have to use estimates, like for instance; I believe I used 6 % vacancy and 2 % repair and maintenance, and 4 % capital expenditure, and 10 % property management. And then you just plug those numbers in. I think I realized that I was going to be able to get a sub 5 % loan, so I think I did my initial numbers on 4.75 %, which is exactly what it turned out to be. You just need to be able to quantify all of those numbers as required for the calculator to do its work; plug all those numbers in, come out with a value for this property as to what it’s going to return on your investment.

And you should be doing those assessments of property every day, even if you’re not going to buy a particular property. Every time you see another property on the MLS that might even possibly be a decent rental purchase, or not, run it through the calculator, and evaluate it as a potential deal. The more of those you do, the easier it’ll become, and eventually you'll get to the point where you’ll have enough of the information in your head that you’ll just be able to eyeball the average deal, and know immediately if it’s even worth further consideration to even worry about plugging it into the calculator. But you should do a hundred evaluations before you make your first purchase, and I'm sure I did more than that.

So, as I said, there are three critical things that I needed to be able to do to ensure my first deal, or to the increase the likelihood that my first property would be profitable. And the first of those, like I just said, was being able to evaluate the deal in the first place.

But the second was knowing what the property would rent for, which is ironically required to be able to do the first. You can't evaluate the profitability of a potential rental property if you don’t know what that property is going to rent for.

So, that’s the second thing. You have to be able to know what a property will rent for. Now, there are many online resources. You go to Zillow. They have the ‘Zestimate’, which usually relates to what the property’s value is. But they also usually have a rental ‘Zestimate’, and that will give you an estimate of what it will rent for.

Or you can go to Craigslist, and look up rentals of the same number of bedrooms and the general area in the same approximate square footage. And that can give you anecdotal evidence as to what a given property should rent for.

There is a website called Rentometer, or some people might call it Rent-O-Meter, but I think it’s a play on spirometer, so, Rentometer. And it’s Rentometer.com, and you can buy a subscription to the website, but they let you do a certain number of free evaluations where you just put in the address and the number of bedrooms, and what you can think you'll be able to rent it for, and it will tell you what something of a similar type and size in a close proximity to that address is likely to rent for.

And I always back that number down a bit, because I don’t want to be at the top of the market rent. I typically like the idea of renting properties a little bit below market, so to have an above average quality property that you rent for slightly below market rent, it makes it so that it’s easier to rent the property, and you get more interest in the property as a result.

And also, it’s less likely that your tenant is going to leave. I tend to keep my tenants for a long time. But through those sources, you will be able to get an idea as to what the property will rent for, and that number is critical to the first part of what I was speaking of in the overall evaluation, such as using the Biggerpockets rental property, or BRRRR calculators.

And then another thing that I do to gauge what a property will rent for, is that I consider what it would rent for as a Section 8 rental, and about half my rentals are Section 8. And I know that probably puts fear into your heart if you, especially, already have a bias towards being a landlord. But I can tell you that some of my best properties and some of my best tenants are Section 8, and I'll go over why that’s the case in another episode, but there are many reasons for it.

Knowing exactly what Section 8 will pay towards the rent of a given property lets you know immediately that it has atleast that minimum rent value. And in some cities, Section 8 pays above market rent. In other cities, it pays below market rent. And my city of Durham, North Carolina, it is not unusual for Section 8 to actually pay slightly above market rent in some cases.

The main determining factor is the bedroom count, but also the size and location and amenities play a factor in what they will ultimately pay, as well as the perceived affordability for any particular prospective tenant. For instance, they may pay more, or less, for one tenant than they will for another based upon that tenant’s income. But generally speaking, if I want to know what Durham County, where I live, will pay as a Section 8 voucher rent towards a given property, I can just go to Google, put in search keywords like ‘Durham County’,’ Housing Choice Voucher’, ‘payment standard’, and Housing Choice Voucher is the actual name of the Section 8 program. That will take me to their website, scroll to the bottom, they have a document, 2019 Payment Standard Schedule. Pull that up, and you can see that they will pay for a two bedroom upto $990 a month, a three bedroom upto $1356 a month.

So, that automatically lets me know that when I'm targeting my two bedroom properties, if I'm considering them for a Section 8, that I'm probably going to be able to rent that property for somewhere around $960 a month, because I back it a little bit off of the maximum that they state, of $990. Likewise, if it’s a three bedroom, I can probably assume that I can rent that for around $1300 a month.

And it just varies for each particular tenant, but those are general standards that I know. I can then plug that number into the Biggerpockets calculator, and come up with the estimate as to the profitability of this property as a rental. And then of course, I would confirm, using Rentometer and Zillow and other sources, and there are several others that I haven’t mentioned. Those are just the ones that I use most, and you can even compare further to Craigslist and other rental listings in your area to get an idea as to what are two bedrooms, or three bedrooms, or four bedrooms renting for in your area.

So, that’s two of the three things you need to be able to do. Overall, you need to be able to evaluate the property as a rental acquisition. In order to do that, you need to be able to know about what it will rent for, or what it is likely to rent for. And you want to be conservative on that number, so that if you have to lower your rent in order to get someone in there, you’re still profitable.

And then the third thing that goes back to the first, because you’d have to know it in order to be able to do the overall evaluation of the property, is what will the rehab cost. What will it cost to get this property to the point where it is rentable, where it is rent-ready? And in the case of my first purchase, I'm in the habit now of just automatically plugging in $9000 as the cost to get each rental unit ready. Sometimes I'll back that down to $6000 sometimes. if If think it’s probably a little bit more deferred maintenance, I might bump it up to $12,000. But you need to know what the rehab cost is going to be in order to make sure your numbers are correct.

So, those are the three things that I had to be able to do before I felt comfortable making my first purchase. I had to, number one, be able to do the overall evaluation of whether or not this was going to be a good purchase. I needed to know what my cash-on-cash return would be, what my overall annualized return would be, what my monthly cashflow would be. And the Biggerpockets calculators, the rental property calculator, and when you get a little bit more advanced, and you’re going to do a BRRRR deal, the BRRRR calculator will make those numbers known to you.

But you have to be able to do the second and third thing in order for the first to work, and that is you have to be able to know what the property is going for, and you have to be able to know what the rehab is going to cost.

Now, related to that thing one, the rehab, you should go look at a lot of properties, especially those that are vacant, and are being sold as is, or other tell-tale indicators, that there is a problem. And I'll be doing an episode related to getting connected with realtors so that they can send you those deals as they’re posted to the MLS. And you need to go look at as many of them as you can, and I'll put some information in that episode about how not to annoy the realtor by having them show you all sorts of things that you're never going to buy.

But that’s a part of why I decided to go ahead and get my own license, so I wasn't being a burden like that, and could go show myself a property whenever I wanted to. But you need to go look, first-hand, at as many properties as you can, so that you know what the typical things are that are going to be necessary. You're going to assume flooring, you’re going to assume painting, and then you're probably going to be replacing the appliances, and those are going to have a certain default cost to them that you should just assume. And then from there, you have to look at more; does it need a roof? Are the exterior sidings or boards in need of replacement or repair? Are the deck boards in good condition, or do you need a new deck, or do you just need a few new boards? Or does it just need to be stained? Does it need gutters? Are the trees going to need to be trimmed, or are there trees that are going to have to be removed? Does it need landscaping? All of these things are going to factor in.

And you also should just assume that you're going to have a $1000 plumbing bill, because I like to have a plumber come out and snick everything, so that I know that when I put that tenant in there, there were no plumbing problems when they got there. So, if any come up, I know they caused it and I have no problem then charging them for it. And I'll go into that as well that gets more into my lease and my style of landlording. I'll get into that in other episodes, but all of these factor into your upfront rehab cost, and you need to know what that is, so that you can get an accurate assessment as to whether or not this purchase is even one that’s going to be profitable for you.

So, that’s it for this bonus episode. Check out Biggerpockets.com. while I'm, by no means, wanting people not to listen to my podcast, there are some other podcasts out there that are just amazing with content. And so, listen to the Biggerpockets podcast. Join their webinars. I think they’re every Wednesday. Go to their website, and order some of those books. They’re great. And then get a subscription to Audible.com, and download some of those books, and all of this information will be on my website. I haven’t gotten it all there yet. I'm still working on it, but it will be a source for you to be able to just follow the plan that I followed in order to get to where I am now. But most of all, practice, practice, practice. You need to go look at properties and evaluate the rehab cost. You need to be evaluating properties on the Biggerpockets rental property calculator. They give you a certain number free if you’re not a pro member. But if you go ahead and sign up as a pro, then it’s an unlimited usage scenario.

And I've got a few episodes in the works. I haven’t decided which I will release next. It may be something on sacrifices that you have to be willing to make in order to be a successful rental property investor, or to become financially free. I have one in the works about realtors as I mentioned, so I may release that one next. But regardless, the regular episode will be out next Tuesday.

Welcome back! Episode No. 2! So, I didn’t scare you away last week, or are you finding me for the first time this week? Either way, thank you for listening to the …and Landlord podcast. I want to help you secure your financial freedom through residential rental real-estate. In other words, being a landlord. If you are already a landlord, I want to help you do it at your highest level, so that it increases your wealth without decreasing your day-to-day enjoyment of life because of the feared problems with tenants, toilets, termites and other troubles such as rent not being paid on time that can become all too real if you’re not running your rental properties as a business. And that’s what I’m all about; the business of being a landlord.

So, before we get started, how did you like that shorter intro? It was a little bit too long, so I cut it down from last week. It’s about a third of the length that it was before.

So, last week, I mentioned briefly the story of how I became involved in real-estate, and I wanted to elaborate a little more on that story this week. As I said before, I was on a cruise ship. It was a seven day cruise. I was with some great friends and family members, and I was having a great time, and I brought along the book ‘Rich Dad Poor Dad’, something I was going to read in my spare time. And prior to that, I had been interested in real-estate off and on for years, but I always had some reason that I didn’t do it. Some excuse that I made, and to an extent, it had to do with the landlord horror stories that other people I said had vomited all over me. That’s how it felt. And so, when I was on this cruise, I was reading that book. Each chapter was building a fire within me. And by the time I got done with that book, I could not wait for the cruise to be over, so that I could get off that boat and start looking for my first rental property, because at that point, I had made up my mind that real-estate was going to be my future.

The book ‘Rich Dad Poor Dad’ is a must-read for anyone who is wanting to increase their financial intelligence. And the book is not specifically about real-estate. It’s not necessarily a mindset book. It’s not really a motivational book. I wouldn’t even say it’s the best written book, but it put a voice to something that I had been looking for. If you know something isn’t right, but you can’t quite explain it, can’t quite get the words together to explain what it is that’s not right, and then you come across a book that, basically, lays it out for you, and makes you say “yes, that’s it”, that’s what ‘Rich Dad Poor Dad’ did for me.

It basically put a voice to the feeling that I had all along that my understanding of finances wasn’t what it really needed to be to benefit myself and my family. That book put it into words what I had been feeling all along. So, it’s completely possible that you could read ‘Rich Dad Poor Dad’, and think “huh, nothing really to it.” It has to hit you at the time in your life where you are looking for that thing that you can’t quite put into words, and then you read the right book at the right time, and that’s it. Well, that book, for me, was ‘Rich Dad Poor Dad’, and for a lot of investors, it’s ‘Rich Dad Poor Dad’, but I’ve met many people who have read the book and they didn’t do anything with the information.

So, I hope that that’s not you, because I suspect that you wouldn’t be listening to a podcast like this if you weren’t seeking that kind of information. So, it’s probably exactly what you need to read. But in full disclosure, I have met many people who read the book, and literally were like, “huh, nothing much to it.” And they moved on, and their life didn’t change at all. Whereas me, and countless other people, read it and they were never the same from that moment forward because they completely changed their mindset on how they looked at money and investing. So, if you’ve read ‘Rich Dad Poor Dad’, and it really didn’t do anything for you, there was no spark, it didn’t ignite anything new, it didn’t drive you to do anything different, you didn’t find it to be all that special, try it again. Maybe on a second look, it will do something that it did not the first.

For me, it was a transformational book. I count that as one of the best things that I did, especially for me because I never really read books in that manner before.

Prior to ‘Rich Dad Poor Dad’, I had really never read a mindset book, a self-help book, any of the, basically, business how-to books. I was a computer programmer. I would go out and read a book on how to program PEARL, or how to program PHP or ColdFusion. I would go out and get a book that specifically taught me how to do one thing, and did so quickly.

But the idea of getting a book that was going to teach me how to think, I had never even considered doing that, and I kind of thought it was beneath me a little bit at one point. But when I became less egotistical, got over myself a little bit and realized that there was something out there for me to pick up from the writing of people who are doing already, at a high level, what I want to do, it changed my life.

So, try it. If you’ve already, try it again. I think it’s a critical book for any real-estate investor to read. And really not just even a real-estate investor, anyone who wants to have a better understanding of money, they want to increase their financial intelligence, it’s a book that you should read. After I read it, and I got off that boat, I immediately started looking for my first rental property.

So, that was the end of March, the beginning of April, 2015, and I got with the realtor, and told him the criteria of what I was looking for; basically a rental property that was under $100,000.

He came back with the listings of what was available then, and set me up on a search, and eventually around May, we came across a townhouse that was for sale for $64,900, and I put in an offer. The offer I put in was $60,900, so $4000 below what they were asking, and they accepted it. Now, the history of this townhouse was that it was originally listed back in January of 2014 for $74,900 as a short sale. And then it dropped to $69,900 in February. It dropped again to $59,900, in April, and it went contingent in June, but didn’t sell. Then it went contingent again in October, but again, it didn’t sell. Then, it was cancelled in December, 2014, after having spent 136 days on market. but that was a short sale, and so, it apparently got foreclosed upon after that because it was re-listed in January of 2015 as an REO, as a foreclosure, for $69,900. It went contingent with someone in March of 2015, but didn’t sell. So, right when I was on that boat, or getting off, somebody had this property under contract. But for whatever reason, didn’t buy it. Then it dropped to $64,900 in May. Days later, I came along.

I looked up the history of the property. I knew that not a few months before, it had been listed for $59,900, so I gave them an offer of $1000 over, and they accepted it. And so, I closed on that property at that price of $69,900, basically $61,000, on July 13th, of 2015. It had spent an additional 124 days on market for a total of 260 days on market. And it was a two-bedroom, one and a half bath, townhouse, just over 1300 sq. feet, so, pretty large. It did have an HOA fee of $144 a month, so that’s a pretty steep HOA fee. And there are many reasons why you want to be cautious of investing in properties that have HOA’s, the condos in townhouse communities. There are several things with the HOA communities where you can come back to be bitten. I’ll go over that in more detail some other time.

The critical thing to note here is that the very first property that I got, the property that started it all for me, and was a great investment, it sat between 2014 and 2015 for 260 days. That would not likely happen today. And in all likelihood, if the same property were to go on market today, even at $120,000, it would probably sell within a week.

That’s just the difference in the market right now. So, just be aware of that. 2015 was a special time, but don’t let that scare you away, because times like that always come again. There will be another time where you can buy properties significantly below its value.

At the time of that purchase, the tax value of this property was something like $89,000, and it was going for far less than that. Now, this property is probably valued at around $125,000, but like I said, don’t let that discourage you. The HOA fee has gone up a little bit. I think it’s $155, or $157 a month now. But when I originally bought it, and got it rented out for $880 a month, it’s now renting for $920 a month. But I could actually go higher. I have two identical units at the same location that are rented for $960 a month. But the reason I have this one rented for $920 a month is my very first tenant ever, who was the person that I put into this property, she’s still there today, and she’s a great lady. No problems with her whatsoever. I picked a perfect tenant on my first outing, and because of the fact that I’ve had no vacancy and no issues all this time, it’s a no-brainer that I should give her a good deal, so that she has every reason to stay for years to come.

Now, when I got this property, even before purchasing it, I had estimated that it was going to cost about $3000 to get it rental ready. I was wrong. It actually cost three times that amount. I spent about $9000 getting this property rental ready. Just the cleaning and painting and landscaping cost a certain amount, but also ended up re-tiling the floors in the lower and upper bathrooms, putting new vanity tops in both. And then there were plumbing issues that were not anticipated.

Now, in hindsight being 20/20, I probably could have gotten all of this done for closer to $6000, but I made a few mistakes trying to build out my team, paid a little more than I should have for a few things, didn’t have the ideal team members in a few cases, and I caused some of my own problems.

For instance, I was trying to tighten a loose toilet, and I cracked it. Who knew you could only put so much force on porcelain before it cracks? Evidently, everyone except me, so now I’m paying to put in a new toilet, when the old toilet was fine. It was just a little loose. But I got through it. In the end, everything worked out. My wife was even there, helping me to some of the cleaning on this first property. And just for the record, she hasn’t helped me do any cleaning on any property since the first one, which isn’t a bad thing because as I progressed in my knowledge, I realized that there are just certain things that I did not want to be doing myself. And so, I outsourced it. Not to mention, the property that I bought right after this one, was disgusting, and there was no way that she was going in there to clean that one.

So, I bought this property in July of 2015, started the rehab of it doing some things myself, and trying to build team members for others. I thought it was going to be $3000 a rehab, it ended up being $9000. And I got it listed as a rental as soon as it was in a condition suitable enough to take pictures. I took them myself with my cell phone. It turned out pretty nice. And it took a little longer than I thought it would to get the property rented.

The tenant did not actually take occupancy until October of 2015. And like I said, she’s still there today, but it took a little longer to get it rented than I thought it would, even though it got lots of attention. And that initial rent was $880 a month, and it was a cash-flow positive property even with the $9000 additional, because I bought it for basically $61,000, put in another $9000 in rehab. So, I essentially had $70,000 in the property, but it was rented for $880 a month. Even when accounting for the $144 a month HOA fee, I was still above the 1 % rule.

And the 1 % rule is basically that you should be able to rent a property out for 1 % or more if your all-in cost for that property. So, it might all in-cost for this property being $70,000, it’s probably a good deal if I can rent it for $700. Well, I had it rented for $880. And even when you subtract the $144 HOA fee, that’s still $736 a month of rental income from this property, not counting other expenses. But you’re not really looking at other expenses when you’re calculating the 1 % rule.

So, this was a good buy. It met the criteria of what you’re typically looking for as a cash-flow positive rental. And even though, I was three times over on my rehab budget, the number still worked. Everything came out perfectly, and I was able to find a great tenant, even really before I knew how to find a great tenant. I didn’t have my tenant screening procedures and policies, and my lease wasn’t where I really it to be. I’ve come a long way from where I was then and that first tenant still worked out, and I’ll tell you more later in a different episode about the second property, and my tenant in that second property is still there as well.

So, if you’d like to see the before and after pictures and a more detailed write-up of this first deal of mine, I will create a link to it on the show-notes, so you’ll be able to go into a little bit more detail. But, it didn’t kill me, and what doesn’t kill you makes you stronger. It worked out to my benefit in every way, and it didn’t extinguish the fire that had been set in to me originally by reading that book, ‘Rich Dad Poor Dad’.

Now, in between that book and this property, I did read other books, and I came across the website www.biggerpockets.com. And so, that was an invaluable resource, and reading Brandon Turner’s book, the book on investing in real-estate with low and no-money down, it was very helpful because one of the things that occurred when I was trying to buy this property, is that even though I had the money set aside for my 20 % down on this property, it wasn’t seen as properly sourced funds by the lender, because as I said, I’m self-employed. So, the lender was concerned that I was using business funds to fund this real-estate purchase. And for whatever reason, they don’t allow that.

So, what I ended up actually having to do, is something that was suggested in that book from Brandon Turner, which was to use other sources of funds like a home equity line of credit. Or in this case, I used retirement savings. I took out a loan from my wife’s Thrift Savings Plan, TSP, and they will allow you to take out a loan for the purpose of purchasing a home. And so, I used those funds, which the lender would consider properly sourced, and I bought the house using those funds for the 20 % down. And then I was able to use my own funds after the deal had been done to pay off the TSP loan.

So, it’s a bit of creative financing, and I’ll talk more in later episodes of how I used other forms of creative financing, whether it’d be the TSP loan again, a home equity line of credit, lease options. There are several things that I’ve done, including using private lenders, in order to initially fund the purchase and then refilling them out with long-term funding at a later date.

So, that’s just a rundown of what was my first real-estate investment deal. Everything worked out well, and I got a good deal, probably a great deal, on the property. Now, it may be a little bit more difficult than then to get that type of a deal. It is certainly harder here in my area of Durham, North Carolina, but where you live, it may be different. And even if it’s not, that does not mean that great deals can’t still be had.

I purchased a property just in November that I’ll relate at some point, and it also was a great deal, and so, that’s November of 2018. We’re a few months out of that now, but they’re out there. And so, there are systems and procedures and processes that you can put in place so that those deals come to you. And there’s some information that you’ll have to have, and you’ll have to educate yourself on the different methods of creative financing. You’ll have to be able to negotiate, and so there are some techniques and some books that you’ll want to read related to that. But I’ll cover all these things.

This episode is about as long as I wanted it to be. So, I’m going to go ahead and wrap it up now, but we will go into more about all of my deals on future episodes. But I don’t want this podcast to just be about the deals that I’ve done. I want it to be about the deals that you can do, and so I’ll go into different aspects of systems, processes, procedures and things that you’ll need to know and be aware off in order to take advantage of that perfect deal when it comes your way. You won’t find it if you’re not looking. So, you need to be looking. And so, I will do an episode, probably the next episode, about making the initial connections that you’ll have to have with realtors, and the cites and systems that you’ll need to put in place to be able to capture that deal when it comes your way.

I’m also going to be doing an interview next week, and that will be coming soon as well, of an investor who started his journey not too long ago, and has met with great success thus far. And so, I’ll bring those stories to you as frequently as I can, because they’re out there. Lots of people are doing great things in real-estate investing, and I want that to be you as well.

And lastly, the website is done. So, check out www.andlandlord.com. It’s not perfect, and I will be making a few changes and adding a lot of content over the days and weeks to come. But check that out, it also has links to all of the places that you could listen. You may not need that since obviously you’re already listening. But it’s there, and if you’re not listening to this podcast on one of the major platforms, I would really appreciate it if you did. Listen to it on iTunes, or Stitcher, and make sure that you rate, five stars would be great, and provide your feedback.

This is it, the very first episode of the [… and Landlord] podcast! I am J.T Smith, and the [… and Landlord] podcast is all about achieving financial freedom through residential rental real-estate. In other words, being a landlord. Yes, I know. You don’t have to tell me. You don’t want troubles with tenants and toilets and termites and rent not being paid on time. You don’t want those headaches. We’ve all heard landlord horror stories where the tenant was a nightmare, and completely trashed the property. Would you believe me, however, if I told you, because I am telling you, the likelihood of those types of tenant troubles can be significantly reduced, if not completely eliminated, by having policies and procedures and systems in place that allow you to be a professional landlord? In other words, to run it as a business?

So, this podcast will be about professional landlord-ology, so to speak. I'll be releasing weekly episodes, and occasionally I may release two during the same week. Many episodes will be me solo, speaking on the topic of interest. But as often as possible, I'll bring in a guest to interview, so that we can learn from their successes and failures, and even hear their landlord horror story. I think those are important to hear, so that we can disarm them with best practices on how to avoid horror story situations going forward.

It’s like if you’re in a horror movie, you don’t say “I’ll be right back” and go outside to investigate a noise. You're going to have a bad day. Likewise, as a landlord, there are certain things that you need to just avoid doing, or it will not work out well for you. Hearing the details of someone else’s nightmare situation, along with first-hand information as to how it could have been prevented, could literally save you thousands of dollars and months of headaches.

But even that has to be kept in its proper place, because prior to me getting into real estate, I would tell people that I wanted to buy rental property; that I wanted to be a landlord. And inevitably, they would vomit their landlord horror story all over me. As a result, for years, I let those stories and the fears they created in me, keep me from taking action. And that easily delayed my landlord journey by a decade. Don’t let fears and doubts keep you out of what I feel is the most amazing opportunity to achieve financial freedom that exists for the average person today.

I laid out many of the benefits of residential rental real estate in the intro. And by the way, sorry about that long intro, I will shorten that before the next episode. But the benefits go beyond even those I've already mentioned.

So, what is financial freedom? I count it as a scenario where you have income from your passive investments that exceeds your monthly expenses. So, let’s say you require $5000 a month to pay all of your bills and live the lifestyle that you desire. And I don’t mean that you're taking your vacations every year and you’re driving a Ferrari. Just your normal lifestyle that is satisfying for you on a day-to-day basis. If you needed, for example, $5000 a month, to achieve that lifestyle, but you had $5000 a month, or more, coming in from your rental properties, or other passive investments, then I would count you among those who are financially free.

So, that’s the goal. But of course, you’re not going to get there with just one property. That’s why you need to make it a systematized business where you have multiple properties that are all working towards your monthly cash-flow needs. In fact, that makes it even more secure for you, because if you only have one property, and it goes vacant, well now you have a 100 % vacancy, and you’re coming out of your pocket to pay that mortgage. But if you have ten properties, and one of them goes vacant, well, that’s only a 10 % vacancy, and it should certainly be the case that those other nine properties are generating enough cash-flow to cover the mortgage and other expenses for the one vacant property until you can get it re-rented.

So, the method to the madness is over time to create a portfolio of cash-flow positive rental property, with great long-term tenants who pay their rent on time and create little to no distraction in your life, ultimately resulting in fully paid-for properties that were essentially free to you, that will continue to kick out cash-flow to meet all of your financial needs for the rest of your life, while leaving a legacy for your family.

So, if you’re already on that journey, the goal of the [… and Landlord] podcast is to help you get there faster and with fewer bumps and bruises along the way. And if you haven’t started that journey yet, I want to inspire you to do so. Get started. Buy investment property. It’s the greatest thing ever, and we are living in an amazing time, so don’t let the opportunities, that are all around you, go to waste.

So, a little bit about me. Why should you listen to me? Why should you care what I think, or what I have to say? Well, the tagline of the show, and from where the name originates, is “Husband, father, entrepreneur, realtor, and landlord.” These, and many other titles and descriptions, speak to who I am, and what I do. So, in part, the show is about me, but I also want it to be about you, and all of the titles and descriptions that speak to whom you are, and what you do. And I want to help you add “…and Landlord” to that list. And I believe that I'm qualified to do so, so as it is mentioned in the description.

I'm a husband; I've been married to a beautiful woman for almost nineteen years now. And no disrespect to your spouse, but I have the best wife ever. I'm also a father. I have an eleven year old son. And again, no disrespect to your children, but my son is amazing. I love my family. I'm also an entrepreneur, meaning I own multiple businesses, such that I have been self-employed since 2002. So, I can give you insight into managing people, putting systems and processes in place, and leveraging automation to get more done in less time with less effort.

I'll tell you more about my businesses in future episodes, but one of them is a technology business; web-hosting and IT consulting. So, I can give you insight into anything and everything related to utilizing the internet to be more productive. And an aspect of that business is search-engine optimization, and search-engine and social media marketing. So, I can guide you in growing your business online, and using those resources to find deals, to find properties to buy to make into rentals, to find money to buy those properties, to find team members, to build a team of professionals that are there to support your needs and to help you grow your rental property portfolio to one that is large enough and generates sufficient cash-flow, to make you financially free.

And so, as also mentioned in the title, I'm a realtor. After I bought my second property, I went and got my real-estate license, because I realized that it would help me to be a better investor.

And so, in line with my entrepreneurial mindset, I started my own real-estate agency, and I'll tell you more about that in later episodes. So, I think my unique combination of over two decades of business experience, I started my first business in 1996, along with also being a licensed realtor, along with having a rental portfolio of my own properties that I manage myself, and having a property management firm that allows me to manage properties on behalf of others, have all brought me to a place where starting this podcast is the perfect thing for me to do, because I've come to the understanding that you learn most and best by teaching others. And so, that’s what I want to do. I hope I will be able to provide you with excellent content. And in the process of preparing and presenting that content to you, I will only learn more myself.

So, that’s about it for this initial, inaugural episode. This is number one, and it was just a brief introduction to me and to the purpose of the podcast. I'll go into more details about myself and my businesses and tell some of my specific stories in coming episodes, as it relates to things that will help you become, and succeed, as a landlord. Also, none of us are born knowing any of this stuff. I, myself, learned it from others.

And so, as we move forward, I will point out certain online tools and resources that I found particularly useful; books that I've read that I thought, in some way, transformative. And just know that any time I say read, I probably mean listen to. I love Audible. And one book, in particular, that I'll cite for you, is the one that over the prior twenty years or so, is responsible for most investors getting involved in real-estate, and that is Rich Dad Poor Dad. So, in a coming episode, I'll tell you the story of how I was on a cruise ship, reading that book; Rich Dad Poor Dad. And that was the one that I actually was reading, in electronic format, in that case. And despite the fact that I was with great friends, having a great time, I couldn’t wait for that cruise to be over, so that I could get back home and start looking for my first property.

In addition to books, and various online resources, I also consume podcasts myself almost daily. And so, when I have some information to relate that came from a particular show, I'll give that show credit for being the source of that information.

Well, that’s enough for now. I just wanted this initial episode to be an introduction to me, to the podcast, and what is to come. So, I'm extremely excited about this; the [… and Landlord] podcast. I could not be more excited, and I want this to be a two-way communication. Give me your feedback. Let me know how I'm doing, how I can improve. What information you would like presented, topics you're interested in hearing discussed. Because ideally, as we move forward, this show will become far less about me and more about you, and the guest that I bring on to interview. New episodes will be released on Tuesdays of each week. And on the next episode, I'll tell my story of how I became a landlord, continuing from being on that cruise ship reading Rich Dad Poor Dad.