BiggerPockets Real Estate Podcast - 380: Profitable Landlording in a Crisis with Mike Butler, Chris Clothier, and Dave Poeppelmeier

Episode Date: April 30, 2020

Feeling like you're in uncharted territory as a landlord? You're in good company! Today's show walks you through how to ethically and profitably manage rentals through the COVID-19 outbreak and beyond. Brandon and David sit down with Mike Butler, acclaimed author of Landlording on Autopilot; Chris Clothier, partner at REI Nation (formerly Memphis Invest); and Dave Poeppelmeier, owner of eight houses in Toledo, Ohio. You'll get a ton out of this panel discussion, including exact scripts for communicating with non-paying residents, strategies for connecting tenants to government resources, a discussion about "deferment" vs. "forbearance," and much more. Mike (500+ units), Chris (6,000+ turnkey units), and Dave (8 properties, mostly student rentals) are all in different markets and at different stages of their investing careers... so you're guaranteed to learn something you can apply in your business today. Enjoy this episode, jump on the BiggerPockets Forums to connect with fellow investors, and subscribe to this show in your favorite podcast app so you won't miss us next week! In This Episode We Cover: Mortgage forbearance vs. deferment for landlords What % of REI Nation's tenants paid April rent Establishing open lines of communication with tenants What tone to use in conversations about rent Why Dave proactively reached out to his renters Guiding tenants to government resources (unemployment, etc.) Creating contingency plans Mike's "Wendy's walk-up window" for rent payment How to look for better financing in low-interest-rate environments How to stay organized if you're getting government assistance for your business And SO much more! Links from the Show BiggerPockets Forums BiggerPockets Webinars BiggerPockets Bookstore BiggerPockets Podcast 224: Building a Process to Buy 17 Deals a Week with Chris Clothier Are Your Tenants Unable To Pay Rent Due To Coronavirus? Here's What To Do! BiggerPockets Podcast 234: Tenants, Evictions, & The Dark Side of No Money Down with Ryan Murdock BiggerPockets Bookstore  Check the full show notes here: https://www.biggerpockets.com/show380 Learn more about your ad choices. Visit megaphone.fm/adchoices

This is the Bigger Pockets podcast show 380. There could be 10 different plans you have. You've got the worst case scenario to the best case scenario and everything in between. And if a resident does this, then I'm going to do this. And if they react this way, I need to do that. I mean, you have time, but you have to spend time preparing. You're listening to Bigger Pockets Radio, simplifying real estate for investors large and small. If you're here looking to learn about real estate investing, without all the hot.

You're in the right place. Stay tuned and be sure to join the millions of others who have benefited from biggerpockets.com. Your home for real estate investing online. Hey, what's going on? Everyone is Brandon Turner, host of the Bigger Pockets Real Estate podcast here with my favorite ex- wrestler.

Did you ever wrestle in high school? No, I was a basketball player. Ex-basketball player, David Green. What's up, David Green? There was actually a... rivalry between wrestlers and basketball players because we at the season was at the same time and we both wanted to use the gym. So that was like lightweight insulting what you just did. Was it like the West Side story where like you guys would go out in the street and like start snapping your fingers and like doing

like it. Yeah, it looked more like the Michael Jackson beat it video where like we were kind of holding hands, but we also had a knife and the other one and we were like circling and dancing while trying to look tough. That's usually what jocks do in high school. I remember those days. I was not a jock. I was a no. No, You bloomed late. You ended up becoming a man's man, which you guys will hear about later in today's show. Exactly how Brandon. See, David, David felt emasculated. Is that the word today? Because David's at home. And I talked about being on a roof today. And, you know, David. I was at home getting a manicure and lushinging my hands while Brandon was out there living by the sweat of his brow and the cut of his jaw. Yeah, that's, you got to listen to this episode to the end because it's, Very good. That's funny.

All right. Well, speaking to today's episode, we got three guests on today's episode who are all landlords. So we have Dave Poplmeyer, who's a newer, or maybe not even newer is the right word, but he is a smaller landlord with a less than 10 rental units of his own. Then we have Mike Butler, who you may have read his book, Landlord and an autopilot, a very good book. He manages, I think, close to 500 rental units, and he owns a whole lot of himself. And then, of course, we have Chris Clothier. He's been on the show multiple times before. Chris is a investor, but he also runs a tour.

turnkey business that buys, renovates, and sells homes to out-of-state investors. They operate in, like, all over the place. They have like 5,000 units now that they manage for their clients. So we've got the entire gamut here of landlords.

And today's entire show is on how to navigate this COVID world, this world we find ourselves in today as a landlord or as a real estate investor. And even if you don't have any properties yet, we talk about a lot of just big picture of where we're headed afterwards, just as a real estate investor in general. So even if you are not a landlord right now, if you're a flipper, wholesaler, a house hacker, whatever, you're going to get a lot of valuable information today out of this show. We got some really smart guys and myself and David as well.

So with that, David, let's get today's... Quick tip. What do you got? Today's quick tip is location matters. Now, when you're looking at where to buy a rental property, there's more and more people that are starting to work from home. And the long-distance investing thing is starting to pick up some tracks. and people are realizing I can work from home so I can buy a property from home.

Don't just look at cash flow. That's one of the like the siren and the old tales of sailors that are getting pulled out to see, you know, and like brought to their debts. That's cash flow. It calls to you and it says, I will meet all your needs and I'm perfect. And it's a mirage. It's not always true. You need to consider location.

The properties that you're buying will tend to be rented by a certain demographic of people. So one of the questions I always ask my agent every time is, what kind of people live or rent in this neighborhood. And what I'm looking for is not necessarily how much money they have, but what type of job they work in, okay? Are these Hollywood actors? Are these construction workers? Are these firefighters?

What type of person? Because certain jobs like a firefighter are much more recession resistant. Other jobs like a tech worker, they can work from home when you're having a slowdown like a virus-related thing because you've got to think this corona thing could happen again. There can be another outbreak, okay? This is something that we should just kind of plan for. other industries like someone who works in a warehouse and stands in an assembly line and stamps

metal they're not working from home so when you're buying properties consider that what is the industry that your tenants are going to be working in and are they going to continue to have an income stream if we have another shutdown like this all right and that was today's not so quick tip from david creed just kidding you got a know if you throw it to me it's probably going to be a medium long tip yeah it's a long tip today all right with with that no it was good it was really good advice. And it is like, when you say cash flow is like the siren, what he, Dave is not saying you shouldn't buy for cash flow, you shouldn't look at cash flow. He's saying that that's, that's all you're looking at. Because sometimes you think you're getting a good cash flowing deal, but then

your tenants destroy, I mean, one of my worst deals ever looked great on paper. But like the tenants just kept destroying the house and it was a bad neighborhood and I couldn't attract the right tenant. And the house itself had so many just weird things about it that like my quote unquote cash flow ended up being non-existent. So, you know, there's more to a deal than just looking at that number of what cash flow comes in. Yeah, look at the holistic, the entire deal. We all joke that rentals are passive, but if you're spending nights matching receipts or guessing what a property earned last month, that's not passive at all. Base lane fixes that part of landlording, the financial chaos. Their banking and AI bookkeeping system automatically tags every

transaction, updates cash flow insights in real time, and builds the reports you need for tax season. You can even automate transfers and move money around without paying wire fees. It's just cleaner. Sign up at baselane.com slash BP and get a $100 bonus. Base lane is a financial technology company and not a bank. Banking services provided by Threadbank, member FDIC. Here's the thing about traveling. If you buy food at the airport, a burrito, salad, bag of peanuts, you start wondering if you should have opened a savings account for snacks.

So wouldn't it be great if you could actually earn money while you're traveling? Well, you can. Airbnb has something called the co-host network. While you're away, you can hire a vetted local co-host with hosting experience to help take care of things, communicating with guests, preparing your space, managing reservations, Everything runs smoothly while you're off making memories. Your home might be worth more than you think.

Find out how much at Airbnb.com slash host. Did you know your house gets bored when you leave? I can't actually prove that, but it probably misses out on the action, the footsteps, the late night fridge raids. Yeah, when you're gone, your place is basically on unpaid leave. It's sitting there in the dark thinking,

I could be contributing right now. Your side room wants a side hustle. Even your Wi-Fi is like, we could be networking. You're on vacation, spending money like it's a sport while your staircase at home is fully capable of sending your income upwards. Here's the twist. You can go on a trip and actually earn money. Airbnb makes that possible with the co-host network.

If you're away for a while or have a secondary property, you can hire a vetted local co-host with real hosting experience to handle it all. A co-host can handle guest communications. It can manage reservations and keep things running smoothly so you don't have to check your phone between beach days. That means less stress and more time enjoying your trip. You can relax, knowing guests are taken care of, and your place is in good hands.

You travel, your house works. Everyone wins. If you're ready to host but could use some help, find a co-host at Airbnb.com slash host. And now, without any further delay, let's get to our interview with Dave, Mike, and Chris. All right, gentlemen, welcome all to the Bigger Pockets podcast.

Good to have you all here. Thanks. Thank you. Hello. All right, all right. So before we get into this thing deep into the world of how this coronavirus stuff and how the social distancing is affecting landlords today and real estate investors, I wanted to take a second to have each of you introduce yourself for those who might

not know you. So why don't we start the man who's been on the podcast now? This is number four. So you guys all know who he is. Chris Clothier. Chris, tell us about yourself real quick. Yeah. So look, you know, since the last time we were here, not a, not a ton has changed. We're still operating. Oh, wait, what am I saying? Not a ton of change. We've, we have been known as Memphis Invest. And we've branded this past year to REI Nation after entering into our seventh market. So we're, look, man, we're doing what we've

always done. We're buying houses in seven markets, having fun, renovating them. We're managing a little over 6,000 units today for single family passive investors. And other than that, I have no more kids. I stopped at five. Okay, good. So that's an update. And the company's growing. We're having fun and just kind of doing our thing. This is a challenging time. But up until up until this day, we just, you know, we kind of kept doing what we do, what we've talked about so many times on here, being good at buying and selling and occupying and managing. So that's cool, man. Yeah, I wondered when you were going to change the name because, you know, it can't be, it wasn't super clear, right? Memphis invest in Dallas. It was like, wait, is it Dallas invest? Is it? Yeah, it makes sense.

I'll tell you, when we hit the halfway mark, when we had sold just as many houses in markets not named Memphis as we had Memphis, we knew we had to make a change there to kind of be more reflective of who we were. So, yeah, we just, we've been planning it for a few years and did it January 1st. All right, very cool. Well, and of course, if people want to hear more about Chris's story, you can go back and listen to the episodes he's been on. We'll put links in the show notes at biggerpockets.com. So I show 379. Now, let's go to Dave Peppelmeyer. I hope I'm saying that last name right, Dave.

Is that correct? Close enough. All right, Dave. Tell us about yourself. Who are you, where you at in the world? What do you do in real estate? Yeah. So once again, my name is Dave Peppelmeyer.

I live in Toledo, Ohio. And my wife and I, we own houses in the Toledo Metro area. We started buying houses in 2013, basically straight off of rich dead poor dead so once again like a lot of investors that was the big eye-opener for us and since we had no idea what we were doing we actually did his full system and everything and it was great and so just slowly but surely we've been adding houses we have eight houses and we focused mostly around university at Toledo we like the student housing my wife and i both went to university at Toledo so we know the area and it's it's cool kind of giving back per se in

the fact that we actually give students nice houses living and not the cesspools that I may have not been sober in once or twice back then. So, yeah, just like everybody else, we're kind of planning for the worst and hoping for the best with everything here in this market, but we're not letting us slow us down. We're still looking at acquiring more houses and actually are buying our first four pack of houses for the first time ever. So we're rocking and rolling still. on the four pack do you get like a buy three get one free discount i would love that but no

all right very cool and finally uh for many of you needs no introduction but we'll give one anyway mike butler uh mike was the author of a landlord and an autopilot which you've probably heard me talking about the show before because that book mike your book made such a massive impact on my wife heather and i when we are getting into real estate we got that book from the library then we went and bought it and then i mean it was been underlined and highlighted and and our entire world was built off your business, your model in your book. So thank you for joining us today. Mike, tell us a little bit about yourself and I guess how you became the godfather.

Oh, thank you, Brandon. I'm here in Louisville, Kentucky, and I started my investing while I had a full-time job. And as an undercover police detective, the murder for hire, contract killings, organized crime. I was on a bomb squad, so I love adventure. And we've got hundreds of rentals here in my hometown. I like to do it in my own backyard and one county for one legal system, one court system. And it works.

It never in a million years did I dream that I would be here on this call with you, Brandon, and all these other experts. And I grew up in a poor end of town, typical story, but oldest of seven kids in a blue-collar neighborhood. So real estate is just unbelievable. Changed my life, gave me true financial independence. And I want to help others achieve that as well. Yeah, that's awesome, man.

That's awesome. Well, definitely you guys, check out Mike's book. So good. Landload and autopilot, again, like I said, so many of our systems are built off of what you taught. So very cool. It's an honor to be here today with all three of you guys today. So why don't we, what do we start with? We heard a little about what your markets are like. I'm going to actually jump in and ask Chris and start with you because you've got, you know, 6,000 units you're managing across what seven cities you said. Right. So you got a pretty, a nationwide view or at least, you know, somewhat nationwide view of what's going on? What are you seeing right now? We are recording this, by the way, for everyone listening, we're recording this on Monday the 13th of April.

So obviously the show comes out, I think a week and a half after recording this. So there might be some slight changes between now and then, you know, forgive us for, you know, the rapidly changing world around us. But what do you see right now, Chris? Yeah, I'll tell you, the biggest change that we've seen right now has been remarkably, it's been communication that we're on, we're even just about on all of our numbers as far as the number of properties that have paid their full rent, the number of residents that paid rent in advance, so before the first day of the month, the number of residents that paid by the due date, which in Texas is the third and in all of other markets was the sixth this month, all those numbers remain remarkably the same. What changed was

the communication. So we had a lot of communication beforehand from our residents. We did not do any outreach on the front end, but we decided to wait and manage case by case. because everybody knew rent was due April 1st. So what we found was a lot more open outreach from residents. They kind of know that they're in a precarious situation. They're trying to communicate in advance of, hey, I lost my job, I got laid off, I got my hours to cut, whatever their duress ends up being. We just have found ourselves managing this list of people that are proactively outreaching

saying, hey, this is my scenario. What can we do to kind of work together? because nobody wants to lose their housing right now and nobody wants to be in a scenario while they'll lose it in the future. So that's been the shocking thing to us so far has been that rather than going and having to chase people down,

we actually had a lot of people very proactively come out and say, when I say a lot, we found it to be about 8% of our entire portfolio did some outreach on the front end. Out of that, 25% of that 8% paid full rent on time, no issues. But they just wanted to communicate

that, hey, we're seeing some some signs in the future we may struggle. So, you know, it was one of these, so far that just the communication has been really, really upfront and very proactive, whereas we were anticipating a real struggle. So far, it hadn't been that way. Yeah. You know, one thing that's unique about your situation, Chris, is you're in seven different markets and you're doing a large volume. So you probably have the most accurate information from just a sample size perspective. Has your company noticed a difference in one area versus another? with how tenants are acting, who's paying, who's not,

or has it been pretty much uniform across the board? Well, I would say that we don't see, we don't vary a lot in the price point of property. And so we may be in seven different markets, but price point is generally the same until you get to like a Dallas and a Houston, where their property is just more expensive so the rents are higher.

We were anticipating to kind of see the same numbers across the board. What we found is that the smaller markets, the tertiary markets, like a, I'm not even sure that Little Rock would be a tertiary market. That would be, I don't know what the number is for like a fourth level market, but what the name is. But like a Little Rock and a Tulson, Oklahoma City, we found these markets paid almost 100% in full on time. We had very little disruption in those markets, whereas Memphis, we, you know,

we've got the most properties in Memphis. And then Dallas and Houston, we saw, you know, just a little higher level of disruption in those markets. So, you know, they were for whatever reason, they just, they if we've seen a variation in collections and that kind of stuff it's been in those markets they're carrying probably the biggest load of no pays or slow pays or those that are that are in complete duress lost their job and struggling but if we haven't seen it by price point because we just don't we don't manage enough varying price points so now did you proactively reach out to your tenant pool and talk to them or did you wait for them to call you how did you guys handle that no we i mean we debated

we debated amongst our executive team a lot i was i was very pushing for us to get something out like back around March 20th. I wanted to be way out in front. But I give my dad a lot of credit because he's the one who took everybody's, you know, opinions, including mine. I was pretty forceful. And just said no. He just said that I don't, he justified about saying, I don't want to have to communicate with our residents over and over and over again as things change. He's like, what we're going to do is we're going to have a plan on dealing with those that are having trouble. And then we also had a plan for each step of the way on times when you're late, when you're, you know, whether you're

making a plan or not making a plan, whatever. So rather than try and, and I'll give you a great example of this, we decided one of our options was let's go to all of our residents and give them a price break right off the bat and tell them that if you pay on time, you get a price break. And that's not in, that's not being very responsible with our owner's money, because that's their money. And we reckoned that a, or our rationale was that a majority of a residence would be able to pay on time. They weren't going to be in duress. And we were right. You know, here we are today. You know, we've collected roughly 90% of the rent that has been billed. And by the day it was late, we were over 70%. So if we had given discounts in advance to get people to pay on time,

we would have gotten the same amount of money or the same number of units would have paid their rent. they just all would have paid a lot less, and that would have taken money out of the owner's pocket. So we said, let's just, let's manage the exceptions rather than the rule. Let's not go out to everybody. Let's let this play out the way it's going to play out. And then we will work with residents on a one-on-one basis rather than try and manage this whole big pool with one policy. You know, that was one of the points I made early on.

I made a video on bigger pockets that got a lot of views early on was, you know, we're sending this letter out to tenants. And before the letter one came out, I made another video that said, like the most important thing you can do is have a plan in place that you know what you're going to do. But now we in house, in our company, said, okay, this is what's going to happen if tenants don't pay rent. But the distinction is there's what if tenants can't pay rent? And I said that in quotation marks. I can't pay rent because they call, you know, if you give them the option of not paying rent,

most of them will not pay rent, right? So this is not, but we internally, and I'm sure you do well, I'm sure all you guys do is, is what if they don't pay rent? That's a different question, right? So we chose the same as you, Chris, is we, like, we did send out a letter, but we didn't give them options. We didn't give them a discount. We didn't give them like that.

we just said, hey, you still got to pay rent. Now, if they don't pay rent, now we do have a plan for that, and I'd like to talk about that with you guys in a minute. But I'm curious, Mike, I know I saw Kevin shot me over your letter that you sent tenants. So I know you sent something to tenants as well, right? Is that true? No, no, no. Here's what I did.

Congratulations and kudos to Chris, 6,000 units in seven different cities. That just makes my head hurt. But I like, we've got just as far as the number of units. We're over 500 units. And I got an excellent staff and team leaders. So here's what I did. When all this stuff first started popping around and like Chris said, around March of 20th or so,

it might have been a few days before that. I went, oh, no, I got a plan right now. So number one is I don't want to call up or be proactive and reach out. Say, hey, if you have trouble or get a discount because they're going to, yeah, I'm having trouble. Okay. So what I did is how could I effectively communicate to them that they have to pay the rent? Well, keep in mind, back then they were talking about you don't have to pay rent for two months.

Okay, the court, no foreclosures or no evictions for two months. And that just kept getting extended. So I'm like, holy cow. And then you see on Facebook rent strikes. Yes. Remember that kind of garbage? Yeah. And so a lot, we've got a, I would say a majority, not all, but maybe I'm going to ballpark

at two-thirds of our residents live paycheck to paycheck. And so they're going to freak out if they lose their job and all this. stuff and they can't really function too well. So what I did is I went on my one on my website and I put something about I want to protect my staff and employees so we created the Wendy's walk-up window and so nobody has to deal with the public. I'm serious and that there's pictures of it on our website. So I created the Wendy's walk-up window and then on there I said something about if you expect to have trouble paying rent click here and so when it goes over there I've got it's it's not pretty. I just banged this up real fast to get it out.

And it was something along the lines like this. Okay, coronavirus outbreak or whatever, okay, you must pay rent. Your rent is not waived. And there was one of the questions I put in there, I said, if you need help getting your free $1,200, the federal, the feds promised like $1,200 before the Care Act was passed, I think I have something like that on there. And I said, if you expect that you might have trouble, well then click this link here. And it goes to a page with six links and talks about like how you can get the unemployment,

headed federal, state, and local. And our local government, the idiots, okay, they basically got what's called a neighborhood department. They got like $3.2 billion. Just go get in line and they'll give you money for stuff. And so we started getting, believe it or not, I mean, I was terrified when all this initially rolled out. And I didn't want to tell them, hey, if you need to, I didn't want to send something. out under everybody's nose because they would participate. Yeah, I wanted discount.

But I felt compelled to put something up there for those. We started getting checks from these local agencies for their rent before April 1st. I was shocked. And so then the folks who had trouble paying rent on April the 3rd, okay, that's when we normally send our late notice, pay or quit possession notice goes out. And so we looked at that. And I was shocked. I was expecting April to be a blood bath, you know, with 33%.

or tenants or renters being unemployed. It was like Chris said, you know, it was about maybe a total 8%. And so what I did is this is something unique. We've never experienced this before. So rather than try to adapt all of our property management software and everything like that, I just created what I called a Corona tenant hot, a resident hot sheet. And it allows my resident manager. She was keeping notes in a notebook.

And she asked me to help her create this. So I created this thing. And now just at a glance, I can see the status of everybody there. And if you remember, I said the paycheck to paycheck people, those are the ones that can't function. Okay. So the paycheck to paycheck people, I want you to think relationship-wise, like, remember, leave it to beaver. Yep. And so this is how I trained Carl and my resident manager.

And I gave her two extra helpers to be proactive to reach out to these people, but when they haven't paid the rent. So you'll discover great residents who haven't paid and they're terrified and they can't function and their world's all upside down. And so we reach out to them like June and Ward Cleaver, call them by their first name a lot. Hey, Chuck, what's going on? I see this never happened before. You haven't paid your rent. So Chuck is going to say something. Okay.

And Chuck's going to bump his gums a whole lot. Let him throw up, okay, because now he's getting that cancer out of his belly and who gets credit for it. You do. Okay. So now you can talk to what our goal is is to get Chuck to make our rent, make the rent payment, go into the A pile and get paid first. So we're going to offer them all kinds of ways to get some help. Even offer, and I know this sounds goofy, corny for Chris because his staff doesn't have the time.

But sort of be like Junior Ward Cleaver. Hey, well, what bills you got? You know, can you defer some of these? But you got to pay your rent because you know what? Your landlord got loan payments to make. And if you don't make your rent payment, they can't make the loan payment. you could lose your home. So ultimately we want them to pay it all.

Okay, that's our goal and that's our what we strive for. For they say, no, I can't do it, blah, blah, blah, blah. Well, how much can you pay? That's the last resort. And when they get down to that, if they got, say, a thousand bucks as a rent and they say they can pay $600. Well, tell you what, Chuck, let's get that $600 in here right now. And that means there's $400.

At least that's going to help you not lose your home. You know, let's get that $600 in. I'll take the $400, park it on the shelf. It's not. We're not going to forget about it. Okay. And when you get back up on your feet again, then we'll take whatever,

how much you still owe and we'll craft some kind of payment plan that won't crimp your lifestyle. And it'll be a win, win, win. And I was shocked. I was expecting we prepare for the worst and hope for the best. You know, when you're hearing stuff like 33% of the renters are unemployed, and that was as of two days ago,

who knows what it is today. But wow, I mean, we've got some great residents. And I love them. Now, if you've got, you know, A quality stuff, you know, that live in the gated communities and things like that, you're not going to talk to them like Junior Ward Cleaver. But the paycheck, the paycheck people, yeah, the ones pay $22 a week to rent a toaster. Yep. Turn off that tolster rent.

Let's pay your rent. Yeah. Okay. Well, what I like about what you were saying, Mike, and this is what we kind of the same thing. I think probably all of us are is like you got to give your tenants options. Like part of the job of a landlord, like I think is to be there to help like process through the difficult situation with your tenant. I mean, like, we don't have to, but like, it's a complicated time. So, like, we were literally, like, having the website available.

Here's how you apply for unemployment. Because I know tenants who just had no idea even what unemployment, how it worked or how to apply for. All they know is they lost their job. Let's help them. You're exactly right, Brandon. And here's another thing that goes with that level of a tenant. Okay. And they can live in nice homes, too.

But you want to be like, I mentioned junior ward cleaver and I keep saying it all the time. But don't just expect you can make a proactive phone call and they're going to perform. Yeah. Okay. They ain't paid the rent. What makes you think they're going to be responsible after the phone call? So then I like to give them a deadline. Okay, Chuck, now when are you going to apply for this or go to the call this agency or

whatever? Okay. Now, when are you going to get that done? Now, I'm going to check back with you Wednesday. Okay, you say you can have it done by Tuesday. I'll give you extra day. I'm going to check back with you Wednesday. And you do follow up with them.

And what that does is that makes them subconsciously the psychology of it. It makes them feel valued. like you care like you're trying to help them okay and that's what you want that's how you're going to get good tenant retention so uh the follow up on that is just as important is reaching out and being proactive one thing i really like about your method brandon and i talk about this lot when you're referring to psychology when people are unsure what to do or they're scared or oftentimes when they're in a position where they're not in in a position of strength right when they're out leveraged or they don't have a whole lot of recourses like a tenant's going to

feel when they're not working and they don't have a lot of money is they're usually looking for someone to make an enemy they want to like brandon always says someone wants to be the villain in their own story they want someone to be a bad guy you just quote you just quoted you wow and i gave i just got quoted by david green this is great we're also assuming brandon actually came up with that quote that he didn't hear someone else say it and then quote it that is my quote thank you i've indirectly plagiarized someone because of brandon no what you're saying is it's actually like a police tactic. I'm sure that's where you picked up that skill because we learned to do that kind of stuff all the time. You're going to make them do what you want them to do. They're going

to pay that rent, but you don't want them to feel like that's what you're doing it. So you give them options. You tell them, hey, here's a list of places you can go to get help. Did they need to get that from you? Probably not. They probably heard about this stuff in other places. But by you offering it to them, it makes it hard to not like you. Makes it hard for them to make you the bad guy. It makes them difficult for them to say, screw that guy. I'm not paying anything. That's very wise that You're basically, nope, you're going to comply. You're under arrest. But I'm going to let you feel like you have a say in how it goes down.

Well, here's what I've trained my staff to do that are reaching out to them. I've got a dedicated page that has six links for them to see the benefits. So we ask them, one, do you have access to the internet? Well, does your cell phone? Can you go to the internet? We'll go to our website and see where it says residents, touch that. Now, here's a list. And the links are in there.

All they got to do is click on it to get started. The phone numbers are there, everything. and we encourage them instead of, you know, most folks are expecting their landlord to call them up, beat them up. Where's the rent? Where's rent? You know, that's the villain. Yeah.

Okay. That you guys are talking about. But instead, I want to offer help and feel like, make them feel like we're offering them solutions to help them in this crisis. Well, to go to the villain example. So like, no one's to the villain their story, right? There's actually something called like the hero's journey. It's like, like, writers know about this.

And like, they were in the writing. And a lot of sales guys talk about this is like, there's this journey that everyone goes through. And as a business owner, like you don't want to be the hero. Like you can't be the hero. The customer is a hero. This is just like sales stuff.

Who's the guy that wrote that book? There's a really good one about it. Donald Miller. Yeah. Story brand. Yeah. Yeah, story brand.

So good. But he makes it, you don't want to be the hero, but he's like, you don't want to be the villain. You want to be the guide, right? And that's what we're doing by, by helping our tent.

Like, I mean, besides the fact that like this is a bit, you know, a sales thing or whatever, we legitimately are the guy. Like, the landlord should be the guy. Our job is to both help our owners if we're managing for other people to make sure it's profitable. But we do that by making sure our tenants stay for long term and they can pay their rent. And so it's kind of a we are the guide in between everybody. And so we're making this thing happen.

I'm curious if I could bring in Dave into you in this part. Like what did you see? Was it better than expected? And did you preempt anything with your tenants? Or did you just rely on waiting for them to call you? Being smaller and mainly working with college students, I did actually reach out. When students move in, I kind of have with them, I call the dad talk. You know, have fun, don't destroy the house, pay the rent, and enjoy your time.

The dad talk, I love that. And so. That's exactly what that is. It is. And so I got three kids. It's a dad talk. So, yeah, so I actually send out texts. And actually, I'm on the board of one of our local investors groups,

print property investors network here in Toledo. So we had this discussion at our March board meeting, you know, as everything. was going on, it's like, okay, you know, us smaller people, what do we do? And so we kind of all agreed that we're just going to text. Text works great, obviously, for the younger generations and things like that. So all I did was all of my groups of, I have five groups of students and three just normal residents in our in our houses. And I just sent out of text saying, hey, guys, how are you doing? Are you okay in this craziness? And that's all I did. And so I got a lot of text back. Yeah, we're doing good. hey, thanks for checking in on us.

I mean, there was a lot of gratitude from our residents, and especially the students, too. I mean, they went from a normal spring semester to all of a sudden, now all their classes are online. They're not seeing anybody. And some of them are essentially trapped in these houses in Toledo. Like, you know, I know a bunch of my students live up in Northeast Ohio two and a half hours away. And so, so yeah, so it's not like they can just pop back home.

So that went really far, I feel. And so once again, being small enough, I can do that. And then here in Toledo, too, I sent up a follow-up text a couple weeks later, is checking in again. It's like, hey, how are we doing with paying rent this month? So I didn't just come out of the gate like, yeah, where's the rent? But the second one is like, hey, if you're going to have any problems, please let me know. And so when I move people in, once again, that's one of the biggest things I go over is

this communication. You know, please don't stick your head in the sand. I'm here to help you. you know, I am, you know, I'm not big money pocketbags investor. You know, I'm like you. So, so yeah, so here in Toledo, they also have, if you dial 211, it goes straight to the United Way. And so through the United Way, you know, there's all kinds of, once again, how to file for

employment, assistance with utilities, all that kind of stuff. And for one house, I did do that. I told them, you know, about 211, and then I don't know if they did anything with it. But, yeah, so I was more upfront with the community. but once again, I'm smaller. I'll have 6,000 units to manage. So I can do that. And it worked out really well. That's cool. Are any of you guys utilizing some of the programs that Mike gave to the clients as far as paycheck protection program or any of the other government loans? When you say utilizing them, what do you mean, Dave? Have you applied for any of them? Have you seen

any money show up? Yeah, like all the SBA stuff and the paycheck protect, like just like all the the stuff the government now come out with the hell business owners as business owners are you guys getting that at all so as a business owner we absolutely applied for that yep but haven't we don't have anything i mean that was uh i know that's probably uh a very normal thing that most business owners are saying right now we've we've we've done the application but the banks don't know what's going on nobody really knows what's going on we haven't heard anything back yet so we applied for the paycheck protection thing which is like two and a half months of payroll so we got like 75 grand approved on paper like in an email is that it's been approved and that's that's all i've got i haven't seen no money

congratulations thank you yeah so i've got a piece of paper saying that i'm approved for a 75 000 and then of course it's like some people are saying it's forgivable but then it's not actually in the paperwork so we don't really know if it is or not the whole thing just like who would expect the government to be clear i don't know yeah i got something to add to that uh when it's all first got started i was attended so many webinars and educational things and all this and then only to discover that one webinar says, well, they changed this two days ago. Now they don't have as many steps. And I'm like, my God, pull my hair out.

So I don't want to be an expert on that, but my wife is doing all that for me. But I will say this, you know, apply for that stuff, if you can help it. One of them I thought was really weird was economic disaster. Remember that one? E-I-D-L or something like this. Yeah, yeah, yeah. Yeah, it used to be complicated. Then it got simple.

And they said, go ahead and apply for it. and if your application is pending or even if you get denied, apply again, and we'll send you $10,000 to a forgivable loan. So that was bizarre. And I heard this on a webinar that I think is super sharp. I'd like to share with everybody on the call. If you do get any kind of this CAR Act or any kind of corona money or loans or what have you

that has a specific purpose, read the fine print in it. And this is beautiful. Let's say that Brandon said you got in email money for the PPL or PPP. Well, do this. To protect yourself, okay, open up a brand new bank account and put that money in a brand new bank account used exclusively for the things involved with that. And don't put it in your operating account. And that way, you got a bank account that supports that you complied with everything that is required.

That's smart. Yeah, we'd heard that if you thought it was difficult to get the application done for the PPP, then wait to you apply to have it converted to a grant. So we had, yeah, one of our, you know, a friend of ours in the lending world, it told us the same thing, Mike. So that was a, that was a big, I guess a big opportunity to protect yourself and make it easier on yourself in the back end is to have a separate, you know, a separate account just for that particular money should you get approved should you actually receive it so that you can run

everything through it and have a nice easy good looking paper trail for it yeah that's the you know you talk about opportunity on here brandon one thing that a lot of folks are just sort of kind of ignoring because time square is empty and Vegas strip is black and all this but you know the feds we haven't heard too much about this lady but the feds just lowered the rate they say almost zero percent yeah so i i believe there's there's going to be all kinds of opportunities in the near future, whenever this starts to wrap up and the economy gets going again. So stockpile cash and ask whoever you do business banking with, credit unions included, see if they have adjusted their investor loan products and see what the interest rates are. I mean, if you could get two and a half percent fixed for 30 years, would you borrow a million dollars?

I think so. I would. I think so. A lot more than that. Yeah. Yeah, that's what I'm not trying to freak anybody out, but, you know, take a good look. We're all at home. You can't go anywhere, really.

So take a look at your rentals, your portfolio, and this includes, you know, Dave, you as well, and try to touch base with the loan officer that you deal with at those different banks or whatever you're talking about. You can see if they have an investor loan product that's been adjusted to the new rate. And here's how I know that they're going to do it is because you have you seen that was it New Day USA, the veteran loan company. Yeah. Remember that they make home loans for veterans? Yeah. Just about two or three days ago I saw a commercial on on TV where they said that at a refinance your home, this is the lowest rate ever, not in recent years, not in this decade ever. So they're taking

action on that. And hopefully some of that trickles down to us. Yeah. You know, the other side of the grants and loans was the forbearance and the deferment. And I know, Dave, you have a little bit of experience with that. Do you mind jumping in and kind of sharing what you've been doing as well as what you've been recommending when it comes to loan forbearance or payment deferrence? Sure. So the one out of my eight houses I did have basically when I bought the house in January,

I knew the tenants were barely straightened by at that point. And so once this all hit, it wasn't surprised that they're the first ones that came forward and said, yeah, there's no way we can make the rent. And so I have that house, and then another house, these two houses are in a new LLC of mine that the lease is up in April. And because we can't show that house, we have no one to live in that house after April here. With those, those two I have with the, they're commercial loans with a small local commercial bank.

So I emailed Shannon, my loan guy and said, hey, here's what going on as a community. get some kind of deferment for the three months, you know, with this CARES Act and stuff like that. He's like, yeah, sure, let me get that paperwork on for you. Okay, great. And I've actually talked to him since. And he says, yeah, everything looks like it's approved. Now, with the deferment, there's still interest being accrued, but, you know, for the three months, you know, there's no payments. But what will happen is I have a, I have a 10-year balloon payment.

So they'll just wrap those three months into the end of the balloon. and so that's going to help me a lot because these two houses are not going to have money coming in effect. I'm going to put some money in them to get them spruced up a lot. Now, my other houses, I have four other houses that are rentals that are in my personal name for the loan, 30-year fixed. So I called up that mortgage company and asked the same things. Like, you know, with COVID-19 here, I'm a little concerned about these next couple months. Is there any way we can do a loan deferments? so that way I stay out of trouble. And their answer was, well, no, but we can do a forbearance.

And so now the legal definition of a forbearance is it's just an agreement with the banks saying that if you do this, we won't foreclose on you. And so with what this bank was willing to do is they were willing to have me not make payments for three months, but then all four payments would come to do at the same time that fourth month. That's exactly what I got from my bank. Yeah. And so that, I don't see how that helps a whole lot of people. So I said thanks, no thanks on that one.

But yeah, and so I'm sure a lot of newer investors like myself, I mean, the easiest way to get going and investing if you have a decent, you know, well, paying job is to get a 30 year fixed loan in your own name. I mean, especially now like Mike said, with these rates being ridiculous, I wish banks would loan to me that way still. But, but yeah, so I'm sure there's a lot of people that are in a similar boat where they're just starting out. They have two, three, four houses. they have 30 they have you know loans on them so i would say you know call your bank and you know ask for a deferment first and just be up front and just know what you're asking for and yeah i mean give it a shot why not i mean can't hurt to ask to clarify that a deferment would be putting the payments at the end of the loan and a the forbearance is having a temporary break in the payments and then they're

all going to be do it once is that where you're saying that that's what this bank did now other banks might make some other kind of arrangement. And that's just, you know, the forebearance is just basically an arrangement with the bank. For me, for me, with my deferment, for me, it would be at the end of the loan because it's a 10-year balloon. But if you had like a 30-year fix out, and I don't know if they would just, you know, reconfigure the payments. I know the interest part of the payment will be higher.

So that might change your actual monthly due. But, yeah, that's what I was told. I'll let you jump in one second, Mike. I just want to make the point. it's very important that you listen to what Dave's saying and when you call your bank or you talk to whoever that you don't use verbiage that means something to you, that means something completely different to the person you're talking to, right? That you go ask for forbearance, but what you really wanted was a deferment and they grant

you what you asked for and then you find out four months later or three months later you have to make all four payments, right? Like I see this problem often, especially as a real estate agent who's helping to sell houses when we talk to clients or you're talking to a lender and you say, oh, this is an investment property. And in your head, what that meant was, I'm buying it because I want it to be worth more money later. It's a good investment. What the lender heard was, oh, you're buying this to rent out. You have to put 25% down. That stuff can happen very easily. So specify in plain terms what you're looking for. Don't just throw around these fancy terms trying to look smart because you can get yourself in hot water.

Did you want to jump in now, Mike? Yeah, I had a couple things to add. And I work with investors frequently. But here's a question I'd like for you to try on your lenders their day. the ones that being nasty with you, say, well, what if I just made interest only payments? If I made interest only payments, could I do that for three months? And then kick back in. And then, of course, the balance wouldn't drop. But we've had some success with that working with investors. And then the other thing, I want to just, I can't emphasize as much as what David just said is just super important.

Okay. if you hear the word forbearance, okay? If they use that word, that'll be a red flag. Dig into it more. Find out exactly what they're talking about. And then they'll talk about if so if you defer payments and then they use the word forbearance, well then that means the unpaid payments

got to be tacked on to when the next payment is due too. You're going to have a big payment to make there. And then the other word to look for or listen for is if you hear the word modification, hit the pause button. because what they'll do is they'll combine the forbearance and they'll talk about, yeah, we can do a loan modification, which basically means you've got to reapply for a brand new loan and they're going to up the interest rate. It's creating a brand new loan.

So if you hear modification, it sounds, that's sort of kind of like a slick way to not tell you you're getting a new loan. Yeah, interesting. Yeah, so just be really careful about what we're like get really good details from these lenders and what it is. Like David said, everyone's got their own little definitions here of what things mean. And so make sure you guys aren't applying for something you shouldn't be applying for. If you don't understand it 100% and you're not clear, get with somebody who does understand it. Yeah. And find out exactly what it is because, I mean, never mind, I'll shut up.

Hey, Chris, I want to jump into you real quick and ask from the, because I mean, all of us are dealing with this, but you on a much grander scale with so many units, repairs and maintenance. How are you dealing with problems when they come up right now? Have you noticed a huge slowdown in people calling or because they're all at home now there's a huge. uptick in people calling, and then how are you dealing with it? To date. So since, you know, really, so we're talking three weeks in, we have, we have not seen a noticeable uptick in calls. One of the things that we are implementing is quality of life issues. So we're focusing heavily on quality of life when, and for instance, if there is a, you know, you've got a major plumbing leak, if you've got a AC unit that's gone out or a furnace that's gone out, and depending on what

the weather's like, you know, we are, we are making sure that we're addressing issues that are quality of life first. If they are minor, we're asking the resident to address those themselves and show us what they've done in that scenario. But, you know, it's interesting because it's not just rental collection and are they, have they paid rent and where are we at in that cycle, but it's also, and I think it's probably where you're going is it's the COVID-19. It's, you know, they don't want people in their houses or vendors don't want to go into. a house because they don't know, you know, it's a, there's a lot of questions about what we can and what we can't do. So we instituted a policy with our residents of quality of life issues will be addressed

immediately and the way that we always address them. And then, you know, there's a scale of the severity of the problem and is it going to damage the home itself, such as a slow leak. You may say, well, that's not, that's not a quality of life issue, but it's going to lead to major damage to the home. So there's something that, that Mike had said. earlier, and I just want to say this just briefly, what we've had to do of the last three weeks is retrain our team. There's a new set of rules for operating right now. And so, you know, with us, we've got a, we've got a rather large team. There's probably a ton of landlords that are managing their own properties and some that are small management companies that are listening to this,

that are, you know, this is very disrupted, not just in the how are you going to do business, but how are you going to do business? How do you go about your day? So we had to create brand new scripts. We had to train on, you know, train the team, go through role play so that they'd be prepared for the questions and the responses and the, you know, the way they're going to handle snares that come up. And so with, with like repairs and maintenance, this is a big thing. With a, with a large company like us, part of the way we've always done businesses at rents, there was this cash flow cycle. And so oftentimes an owner wouldn't have to send in money to cover certain, you know, low cost repairs or certain up to a certain dollar point. But now that you,

don't know what's going to happen with rents and you don't want to apply someone else's rent payment to repair on a different house. That makes sense because of the cash flow. So now that's a, that's a whole other change in adjustment where now owners have to pay for repairs in advance to ensure that their particular bill is paid by their money and not by someone else's. Does that make sense? Do you follow all that with the, I mean, when you're talking about millions and millions of dollars moving and what we quickly recognized was if there's a hiccup in that and 60% of the rents are collected, which was this big fear that everybody had was, would we only collect 60% of the rents? And you did work on someone's house that no rent was collected on.

You literally just used someone else's money to pay that. So basically, your company would collect all the rents from all the properties, hold them in a sore, I mean this is probably not the right word, but like a fund or a account. And before they were paid out to all the owners and you kept your portion, some of that money could be made to pay for repairs, which was then reimbursed later, but now you're saying if all that money doesn't keep coming in and you're putting money out to make repairs that aren't for the specific property of the money that came in, that person might not get their cash. You're having a way that money flows through a company. And so you don't have 6,000 different accounts for everybody, but you account for it in your software. So, you know,

where money is all going. But if those bills never stop, the repairs never stop, and rents are not supposed to ever stop. So the money's always, there's no issue with it matching up until all of a sudden one day, no rent comes in. And then you had this list of bills here that needs to be paid. And so what we had to institute was all owners, something we'd never, ever had to do before. You have to pay for repairs in advance to make sure that your residence properly taken care of and that there's, you know, you don't have funds that move the wrong way, if that makes sense. And so, yeah, there's just a whole new way of having to do business today. And that was a great question there because it's not just does a resident or does a vendor want to go into a home and do work, but it's, man, what work needs to be done?

How is it paid for? How do you tell a resident that this is something that they need to take care of and they need to send you pictures? Because it's not a quality of life issue and maybe they get reimbursed. I mean, it's created a whole new dynamic to how things operate. And that's how every business is dealing with right now. They're all trying to figure out, can I keep employees on staff? How many can I keep on staff? Who can I keep on staff?

Who can I work from home? How long can I keep them off? It's tricky. Yeah. And it's going to, that was the thing that we were, I would say that we're still most concerned about right now is that even if you feel like you've got control of things right now and the, like the data I gave you earlier, we feel good that we've got control of what's happening right now.

We have no idea what's going to happen in May. We have no idea what's going to, is it going to change and we've got to make more adjustments. Mike, did you want to jump in? Yeah, I've got so much on this repairs and maintenance, okay? Number one, remember the TP scare? Yeah. Yes. Okay.

So when that happened, we did, we were proactive. And my resident manager fired out a text, a email, and a voicemail blast to every resident that the only thing that goes in your toilet is toilet paper. Nothing else. Okay. And if we catch something else or if our opponent pulls something else out, then it's, you're going to have to pay for that. So, and we train all of our service tech. to take pictures of front of the house, back of the house. He took pictures of paper towel, a roll of paper towel,

sitting on the sink next to the toilet. Guess what he pulls out? Paper towels or baby wipes or whatever it is and all that. When they pull that stuff out, they take a picture of it and they're getting paid. So once she did that, boom, we don't have anymore. So they're listening on that one there. And another great opportunity, I like what Chris was talking about. You've got to make some adjustments.

And quality of life is very important. But two things, one thing I want to point out is how much, before this coronavirus hit, what was one of the most number one complaints that are questions that investors and landlords had? How to find good contractors? How to find good help. Nobody wants to work. Well, guess what? We just hired two guys that over 20 years experience, HVAC, where the HVAC company laid them off. Yeah. So now's a great time. I mean, it's a little bit frightening, okay, because you're thinking, well, cash flow,

what have you, but you can get some good quality help right now. They're people, the responsible people are hungry. They want to work. And so take advantage. I'm getting my whole deck stained right now because I'm getting my whole deck stain on my house right now because like the guy that'll work. So I'm like, all right. My phone calls.

Yeah. The number of calls I had about business has dropped a lot, but they're all about, hey, are you thinking about changing industries? Do you want to get into real estate sales? I need a loan officer for this new company. Do you know any good loan officers? You got to think like that because every single time that there's a change in standard operating procedure, something gets harder, but something else gets easier, right? Like, opportunities don't just disappear. They just move. They go to a different place. In fact, I was having this thought the other day that like we get a recession every seven to ten years. People hear that all the time. But we never really talk about why.

Like, why do we have to get a recession every seven to ten years? And one of the reasons I think it happens is that we do things a certain way. Technology will catch up so that you, like the dot-com industry, everybody needed a website. If you could write code to make a website, you were just a god, right? Everyone needed you. We paid a bunch of money.

Then software improved to the point that it wasn't hard to make a website anymore and they didn't need to pay people a lot of money. All those jobs went away. Boom, there's a recession. And you stay in a recession until those people go learn new skills. They get in a different industry.

They become useful again. Now they start making money and then the economy goes up. It's a healthy thing to have these ups and downs. But my point would be, you need to understand that real estate investing is not different than any of these other jobs in an economy. Things change. It's okay for things to change. There's going to be things that shift around. And what you're talking about is like a really good example of that. The people who recognize,

oh, the opportunity is somewhere else and make the move faster are the ones that tend to do better. I got one more that nobody's never heard of yet. Okay. I'll bet you. Okay. They're talking about all this, the care act and all this kind of relief money and this and that. I was thinking, oh, wait a minute. I know, Chris has this and I know Brandon has this. I'm not sure if Dave Peppelmire, can I say that right? Yes. Okay. Good. I'll hit a home run. All right. Or Dave Green, but I've got a business insurance policy. So I'm a broker as well and I don't do listings. I'm not interested in that. But I have to be a broker to have my own in-house property management company that might want to manage properties for others for fee. So some of the risk I have is, all right, I ask my, my interest.

agent before I hired him. If I sent somebody over to a house that I don't own and they fall and trip and get injured, does my insurance cover that? He said, I don't know. I said, so go find out. So he does. So I've got this big business policy for my C-Corp for my property management company. And I asked him, I said, Ferrence is his name, is from Hungary.

I said, I got business insurance, right? And he goes, yeah. I said, what about loss of income or business loss? And just about three or four days ago, I heard Trump talking about that. He says, I got insurance for that. And I don't remember what party he was talking about. So I called up my insurance agent. Don't send them an email.

Don't call their office and talk to some CSR person that's their helper because they'll bang it in your account. And that inquiry will kill your insurance code, just like a driving record. Talk to your insurance agent and ask them. He says, you know what, Mike? He says, you're not the only one that's asked that. our leaders, our wizards in the sky up at corporate, they're going over that right now and see what they can put together.

So I think it's a branch, spanking new one, and they're not going to offer it to people. It's going to be up to us to be, you know, proactive, reach out there and ask him about that. And he seems to think we're going to get something for it. Interesting. Yeah, I'd never even, never even thought about the lack of income, lack of income insurance, or what do you call it, lack of, or disruption of?

Oh, I've called it a business law. or loss of income or I don't know. I don't know, but I think everybody here knows what we're talking about. So I ask them. Yeah. Ask them and see if you've got a business policy, you might have a line in there that says something like that. They really don't want to, you know, point out to you.

Yeah, that makes sense. Because if I had rail damage, I never had an insurance agent call me up. Say, hey, how many you got, Mike? Yeah, that's true. You got to be proactive about it. I like that. That's a good tip. Hey, Dave, what about you in terms of repairs, maintenance,

anything you're seen right now in your, in your business? No, I mean, not a whole lot of change. I mean, once again, with eight houses, you know, we get the small stuff once in a while. But I still, you know, once again, just from a customer service, you know, keeping my tenants happy. And once again, it's kind of like comfort food right now. You know, when you call up your landlord, your owner and say, hey, you know, the

step's almost ready to break. Yeah, we'll get there tomorrow. And I am very fortunate. In fact, I have, speaking of staying the deck, I have my trusted H-PAC guys at my house right now because I'm getting exhaust revented because I'm putting a bathroom in my garage because I'm living in my garage right now as a physical therapist. And so, but yeah, so it's just we have great H-PAC guys. We found some great plumbing guys. So we're really getting our core team kind of set up. And so once again, you know, I have the ability being small.

enough to really still do all the little stuff and not have to kill me. So that's nice. That makes sense. Last week, my tenant will call my tenant, Ryan Murdoch. You guys know about who I'm talking about who's listening to the show right now. Ryan lives in Hawaii here. He runs my mobile home park business. And Ryan actually is sort of my tenant. He lives in like the extra house, the mother-in-law house, whatever we want to call it on my property. Anyway, so he comes down and he's like, dude, it rained last night and I got a hole in my roof. We knew it was there for a while, but it got real bad. He's like, it was just pouring in. He's like, he's, like, I got to get this thing taken. We got to get it taken care of today.

I was like, all right. And I'm thinking, who do I call for that? And I'm like, you know what would be more fun? Me and Ryan on a roof. So we literally, in flip-flops, went on his roof up on the second story. And we completely re- uh, whatever you call it, shingled a good chunk of his roof. And you know what? I didn't have to do that. And there's no lesson in there other than it made me feel like a man. That was it. I was like, everyone needs to recognize Brandon is, is manly and handy. That's what it was. It was like, I can handle. I can handle. this. So sometimes there's my, here's my lesson. I'm going to pull out of that. Sometimes it's

okay to do your own work, David, because it makes you feel like a man. I felt like William Wallace. That's what it was. And then I watched Braveheart that night. If that's what you need to make like a man, then I support it, man. Like whatever it takes, testosterone replacement therapy, roof replacement therapy. Chris, Chris Clow the ear showed up in a pink shirt today to let us all know that he's a man, right? That's kind of a common theme of what's going on here. I'm telling you. Yeah. Now, I'm going to put a roof on later, but I am wearing pink. now. I think putting a roof on in pink is the ultimate boss move.

I don't think it's a bad idea. Well, we all know Chris is a man. He runs like, you know, super long races. So you're more of a man than me, Chris. It's good. When I bought my first rental, I thought collecting rent would be the hard part. Nope. The admin crushed me. Every night was receipts, tax forms, and checking who was late on rent. I kept thinking, if this is one unit, how do people run 10? Base lane changed that. It's Bigger Pocket's official banking platform that handles expense tracking, financial reporting, rent collection, and even tenants screening, all in one place. It's the system I wish I had from day one. Sign up today at baselane.com slash bigger pockets and get a $100 bonus. Baseline is a financial

technology company and is not an FDIC insured bank. Banking services provided by Threadbank, member FDIC. Wouldn't it be great if your houseplants paid rent while you were out of town? I mean, they've got the whole place to themselves, lots of sunlight, zero responsibilities. But no, they just sit there waiting for someone to spray them with some cool mist like a bunch of leafy loafers. But guess what? Your home actually could be earning you money while. while you're not there. Airbnb has a great feature called the co-host network, which makes hosting your home so easy. If you live far from your property or are away for extended periods, you can hire a local co-host to take care of the hosting for you. These co-hosts are vetted locals

who already have experience hosting on Airbnb. A co-host can handle all the details like messaging guests, creating your host space, and managing reservations. So everything runs smoothly. It's a practical way to earn a little extra money, maybe even some cash toward your next trip. Plus, you get to share your place with someone traveling to your area while. you're off making memory somewhere else. Your home might be worth more than you think. Find out how much at Airbnb.com slash host.

Did you know your house gets bored when you leave? I can't actually prove that, but it probably misses out on the action, the footsteps, the late night fridge raids. Yeah, when you're gone, your place is basically on unpaid leave. It's sitting there in the dark thinking, I could be

contributing right now. Your side room wants a side hustle. Even your Wi-Fi is like, could be networking. You're on vacation, spending money like it's a sport while your staircase at home is fully capable of sending your income upwards. Here's the twist. You can go on a trip and actually earn money. Airbnb makes that possible with the co-host network. If you're away for a while or have a secondary property, you can hire a vetted local co-host with real hosting experience to handle it all. A co-host can handle guest communications, it can manage reservations and

keep things running smoothly so you don't have to check your phone between beach days. That means less stress and more time enjoying your trip. You can relax, knowing guests are taken care of and your place is in good hands. You travel, your house works. Everyone wins. If you're ready to host but could use some help, find a co-host at Airbnb.com slash host. All right, guys, I want to move to Opportunity. We mentioned Opportunity.

We mentioned the shift. So I wonder what do you guys think for the future? Where is this headed? what kind of both challenges and opportunities are we going to see? And obviously, none of us know. This is pure speculation. We don't know if this is any next week or next month or 18 months from now. But you will be quoted exactly for what you say.

And I'll be surprised if it's not perfectly correct. Yep. And if you offend somebody, John Oliver will be doing a segment on you. So what do you expect the future to look like here going forward? What's changing about our industry? Whoever wants to jump in first, feel free. Well, which industry you're talking about? You're talking about the main real estate.

It's just real estate. in general, we'll say real estate investing in general. So whether it's from the management side or flippers, wholesalers, rentals, real estate investors in general. I'll keep it really short in that that I don't, like none of us knows, as you said, what is going to change about our particular industry. But I do, I do believe that just like every other real estate cycle in the past, it'll all be local and you will see dips. You'll see some markets that won't have any disruption at all. But what will remain the same is that the, I'll use the word intelligent and I'll use it loosely, the intelligent investor who is willing to be patient and diligent in the way they're going to

invest and they understand what they're doing and why they're doing it, they will have no problem. This will not be a disruption for them. They will continue on doing what they've always done. there's there's opportunity to invest today it'll be there tomorrow it'll be there months from now but it's going to go to the people that are as i just said in my opinion that are patient and diligent with what they're doing they and they have a purpose behind their investing i guess the other thing that remains true is that those that aren't will make some bad decisions and some will lose money and some will lose investments and you know i think that what's funny about real estate is that it always whether it's changing it always remains the same what you know those that are smart with

their decision making and do it purposefully will be okay. And those that don't may not. I'm probably not the answer you were looking for as far as the exact. But that answer won't get me in trouble though, David Green. You can't put me on that one later. I was spot on no matter what happens. You've got a career in politics, Chris. I was thinking that as you were talking. And I'm like, look at this artful Dodger just making his way using so many words yet saying nothing at the same time. I've got a lot of practice. Mesmerizing. What about you guys, Mike? All right.

What do you got? Here's what I see. Okay, so right now we're in the midst of something we've never seen before. And we've had an economic meltdown for the most part. And so what's going to happen whenever we start to come out of this, as much as everybody wants to, they're not going to be able to flip a switch. And we go back to the way it was the day all they started.

So we're going to have a lot of folks going to have a lot of problems. So I do encourage you to find resources. to cash, stockpile cash, you know, do some cash out refies, because here's where the opportunity, I think, for a lot of investors, especially those who want to grow their business, think about for how many years had the interest rates for homeowners been super low? My daughter is a 2.9% something fixed for 30. Okay? If they hit the wall and their business just evaporates and disappears, they can't make a payment of any kind. So if you, you've got some cash, you can step in and jump the loan and buy that property and hopefully

put them in another one of yours. If you're going to jump a loan and take over payments on somebody's loan there, don't let them stay in the house because I did that one time and that was a big mistake. Just imagine because I was trying to be nice, be helpful, and they stop paying their rent, and I go to evict them and the judge, they show up with an attorney says, how can you evict my client when they still got a loan on the property? So that was ugly. So if you're going to jump a loan, overpayments, make them move, they can't stay there. And if you got cash, there's just going to be a boatload of those coming down the pike. And that's a future opportunity that I see that's going to be a no-brainer. All right. What do you think, Dave? Well, kind of being, you know,

hyper-specific being around the University of Tledo and student housing, you know, I guess my fortunes are tied to do my students go back to school next fall? I mean, if you can do, if you can do school online, I guess our biggest concern is do the students that we have signed leases for for next year, do they actually show up and move in? So, but honestly, I think one thing that we saw in the 2007-eight-nine recession was everything collapsed. So what do parents tell your kids go to school so you get a good job? So hopefully, you know, the enrollment stays up. And then once again, just our non-student tenants, you know, same things as you guys, you know, just, you know, I'm hoping that they, you know, keep jobs.

They can keep payments. You know, hopefully their mom or dad can help out. So, so, but, but yeah, I mean, once again, I'm trying to keep plowing forward. We're still looking for things that are that are coming on the market. And so, yeah, I wasn't around for the 2007, eight, you know, fiasco slash opportunity. And so if this is going to be another one of those, it's one of those where, yeah, I mean, it's a little scary, especially, you know, being a newer investor. and I still have a job and everything.

But yeah, it's, I just want to keep my eyes open. And once again, we have kind of a mission being from the university, from Toledo, things like that. And Toledo's, it's a great place to invest. I mean, this is a great town. And like I said, my residents have been great through all of this. No one's been saying, oh, I'm going on a run strike or anything like that. People have been really cool through all this. So that's, that's helped a lot.

Yeah, that's cool. You've kind of been in the epicenter of this whole thing. Do you want to share your opinion on how you think, like the whole crazy COVID real estate scare? I mean, to be fair, we all look to you for strength, certainty, and hope in these uncertain times. I'm sure you do. And so I'd like to hear what your thoughts are on how you think real estate's going to change.

Oh, you're funny. I actually was just going to ask you the same question. I wasn't going to be as condescending about it. Yeah, I saw it was coming out of your mouth. Well, first of all, okay. So here's the question I was going to post you. guys, and I will pose it to you. I'm just curious, like, like, vote. We'll vote here. Do you think this whole thing is going to, because we've said it before, that, like, companies

who have always required their office workers to work in an office, all of a sudden now we're being forced to do it at home. So are they going to go, oh my gosh, we can work from home? Why am I paying office rent? And that's going to just decimate office buildings across the country, or it's going to be the office that everyone's like, I'm so tired of being at home. I'm never working at home. I'm going back to work with my friends because they're all at work. I'm tired of my kids right now. Right. I'm wondering, the same thing for students, kids in school, right? So Dave, with you, are people going to be like, oh, my gosh, I can do school from home?

Why did I ever go to college? Or it's going to be like, I miss my friends. I'm going like, why would I ever do homeschool, home college? What do you guys think? Is it, which way is the economy moving? And then I'll offer my thoughts. Well, I think from the, from the university point, no one wants to do classes online. I've been doing a couple of things at houses here and there before all the lockdowns

hitting it and I was taught and a group of guys are there in chemistry. It's like how do you do your lab online? I mean, you can't, you know. And so I so I think I think for the for the university kids, they they do not want to do things online at all. What do you think Mike and Chris? I'll go Mike first. Are people going to are people going to shift away from offices and schools or is this all just going to blow over? Well, I'm going to steal a phrase from Chris. He talked about the intelligent investor, the intelligent business owner. I think with Zoom meetings, their stock is just blown through the roof, but I think the intelligent business owner investor are going to now see how they can,

can work from home, work for my business. And I think those folks are definitely going to implement that, especially if there's some way for them to, you know, use us. Zoom meeting or something to make sure that they're not pitil farting around or outside, you know, shooting a neighbor's dog or something. But I think other folks are going to say, no, you know, I got to have people in my office. So I don't know which way that that's going to go.

It's an excellent question. And that's pretty, I have no idea. I've got folks that work from home and they live in one in Missouri and one in Georgia. And they've always worked from home. What anything, Chris? I think you're going to see the start of that transition to more working from home, more mobile, you know, officing or whatever they, whatever you want to call it, outside the, of the traditional office space.

My dad is still our CEO, and he is very old school, and he will never go to work from home. This is killing him right now. It is, it is, but he's, he's super old school. I mean, that's his, that's his way. He wants to see people. He wants to interact with everybody that works for us, our team. Part of it is to hold them accountable.

And part of it is because he's very, that's just the way he was brought up. That's the way he's been in business for however many years now. He's been working for 50-something years. He's like, that's just him. And so, like, I mean, he said it to us. Again, he's like, we will never be a work, totally work remote. But I think that you're going to start seeing some of the young, younger generation, younger business owners, those that are coming up in this environment,

they're going to say, hey, this is, I mean, if this can work, why would we take on that expense? And it's not just rent, but it's everything. It's the utilities. It's the insurance. It's every little piece that comes on to it. If I can just take a little piece of that with a Zoom account or whatever other, you know, Slack and Salesforce and every other, you know, different way of monitoring what my team does, I think you're going to start to see the slow transition of more and more people working.

remotely. You know, my, my, this is an analogy. Watch out David Green. There's an analogy coming. Uh-oh. All right. So my dad is retired, but he still goes back to work occasionally, like, you know, up until the last couple weeks, to work at his old job, they hire him back.

But like, because he just wants extra money and he's got some time to kill. So I asked my dad, I'm like numerous times. Why don't you just go drive for Uber or go drive for Uber? Like, you'll make more money than you're making it your job. And it's way more fun. Like you'd probably actually enjoy, because my dad's a talker. He loves talking. And you'd mean.

all these cool people. You drive around, work when you want, you know, and he's like, I don't understand that, that technology thing. You know,

like, I don't know how to use the Uber. I don't know, whatever. But if suddenly he was forced to go and drive Uber for a week or two weeks or three weeks,

he would realize, oh my gosh, Uber is so much better than what I was doing. And he would be an Uber driver. I guarantee it. In fact, I might even,

next time he comes out here for like a month next winter, just like set him up and take him out and show him how to become an Uber driver because I think he would just love it.

So it would require something to be forced upon him for him to do that. I think that's what this is going to cause. It's a lot of forced action that's going to change behavior long term. Things like shopping on, I think Amazon was already a powerhouse. I think Amazon is going to become 10 times the powerhouse that already was. I think, what's the guy who runs that thing? The billionaire. Bezos. Bezos. Yeah, right? That guy, like, I think $100 billion net worth is nothing compared to what his net worth will be in five years from now. So I think things like that are going to, going to force those office buildings I do think are going to struggle. Like, not all of them. It's not like

100% are going to close. But I think if you saw a 10 or 15, 20% drop in the next couple of years in the offices, I think that's entirely possible. Right. I think that, we talked about this couple weeks ago. I think nursing homes are in trouble. I would not send my parents to a nursing home right now because I would worry about future viruses and how quickly spread throughout them. I think that, but like David, you said, there's shifting opportunities. It's not that they're not going anywhere. So I think there's opportunity for more like the mother-in-law houses, like what Hawaii does and California does a lot is the extra unit. I think there's a lot of opportunity for that. I think those like box houses, you know, that like come in on a trailer and like set them up

and like a day later they got a house. Yeah, those things. I think there's a huge opportunity. A dumpster that unfolds into a house. I think I like there's some crazy cool stuff out there. I think there's opportunity there. You know, I think I think that's it. So David, what do you think? I'm going to ask you though, Green. What do you think? People look to you for hope and for trust and they want to know what you think, David, because they just come to me when the line to talk to you is too long. They're like, I'll just, I'm like the other, like in and out looks too long. I'm just going to go to Carl's Jr. So that's what I have. I'm actually, what's funny you said is I have a listing coming to the market like in a week or so here. And with it is coming an RV that

is, it's in working order. It comes with the house and he's renting out the RV for a thousand dollars a month. So there's the house. There's a studio that they rent for like 15 or 2,000. a $1,000 a month. And then an RV that also is 1,000. So it's going to be like 10 minutes from Facebook really close. And whoever buys, it's going to spend like $1,500 a month to live there, which out here, they would be spending $5,000 or $6,000. That's what your mortgage would be. So, yeah, I do agree with you. Like, I'm looking actively for more ways to keep housing costs low. What I think that the coronavirus is going to do is it's going to signal the beginning of the end of the I get paid by the hour structure that we have right now with business.

in general. I think everybody here that's a business owner, I see Chris nodding his head. He knows where I'm going with this, knows that plan, I guess, of paying people that way was developed from like a factory where you stood there and you put things together. And so they knew you were working. Otherwise, your assembly line would get stacked up. And it's continued. But now you can have an employee that goes in the office and does three things the entire day and you don't often see it because they get paid by the hour. And it brings this mindset that because I'm here, I deserve to get paid. And if I have to work when I'm here while I'm doing extra. But from a business owner perspective, all we care is I have a task that needs to get done.

I would happily pay somebody per task and they could make more per hour than paying somebody per hour and trying to have to manage and supervise and make sure they're doing the thing that they need. So especially with a business like mine, that's a pretty good size, but it's not so big that I need a full-time accountant and a full-time web person and a full-time lead source. Like the leads come in and they determine who's going to get. this leader, how are we going to follow up with that? I don't need, there's not enough for one person to do one job, but if I hire one person to do all those jobs, now I got to just watch them all day long

to make sure that they're doing something. There's plenty of opportunity to work from home if you're productive. If you're good at what you do, if you're the so good, they can't ignore you, and you can convince a company, because all the company cares about is that project gets completed. That thing that they need done gets done. They don't need to pay you per hour. And what I'm getting at is the only reason they make you come into the office is to make sure you're working, right? That's why be there if you don't have to be there. You could be at home. It's because so many people won't work if they're at home.

So if we move away from the pay per hour and we get into the paper project, well, then it's on you. You could be at Starbucks. You could be at your house. You could be at the beach. You could be in the office. You could do whatever the heck you want as long as you're getting it done. So I don't think this is going to happen right away,

but I think that this is starting us down that path to breaking that reliance on the dollar per hour pay structure and getting into a dollar per task. Deep. I like that. I just took a lot of notes there, Peter Green. I'm going to use a lot of what you just said in my future arguments for having to get moving away from this hourly stuff because you're right. This is, it's just nuts. And I've said what you just said. And it's interesting because right now, this is going to force many companies to institute a policy if I'm not paying you to show up. And I love what you said about, you know, people take that, take the hourly income is what they're getting paid to show up and works. it's going to cost you extra.

Yeah, I mean, if you want to do something, I want you to pay me more. I thought you just told me to pay me to walk through the door. And that's, it's so interesting. It's so interesting that you just said that because that's an argument I've been making the last couple of weeks that we, there's just like this, there needs to be a fundamental shift in the way that businesses, especially, you know, big ones like mine that have a team of over 100 people of just how they, they operate. And to Brandon's point, this new work from home environment, is that going to change?

Is that going to change, you know, the way people are paid for performance rather than pay just to, you know, have a hold a place, a desk in an office. I think Jeff Bezos has already implemented that and verify that's what David's thinking here because then they take a lot of their drivers, their employees and set them up, gave them $10,000 in a van and turn them into independent contractors. And they get paid by the piece or by their results. Yeah. And that's huge.

Yeah. Yeah, really. Yeah, 100% of it. agreed. I think that's where the world's moving. I think that also one final notice, I think more more people, at least I hope that they're going to start thinking this way. I think more, I hope more people start realizing I cannot rely. One, I can't live paycheck to paycheck forever. I can't rely on this job forever. Because like even people who thought they had a super secure job, you know, even like, yeah, I work at a restaurant. People always need to eat.

All of a sudden don't have that. And so my hope is that this becomes a wakeup. I think that, you know, books like Rich Dad Portad are going to come in really handy right now. I think a lot of people we're going to read that and go, oh, now I understand why this is important, why financial freedom is important. So if anything, I think our industry is going to, like, from a education standpoint, is going to see an explosion in the future. Same with it to any online business, like people learning to code, people learning to be consultants, like all that stuff. I think people will be like, oh, because, like, I mean, like, if you hear what a lot of the really smart people are saying, is this COVID thing going on right now isn't the end.

This is an increasing problem with like SARS and H1N1 and like, now, like, what happens when the next thing doesn't have a 2% kill rate, it's got a 12% kill rate or a 30% kill rate, right? And like that stuff is likely in our lifetime. I think that the fear before was terrorism was going to kill us all. And now I think the fear is, you know, hugging your neighbor is going to kill us all. And so I think, yeah, that's a, that's a shift. Maybe it's just the hands that goes away. The only thing that changes in 2020 is nobody shakes hands anymore. He's got to bring the Hawaiian Shaka for everything. Hawaiian spared out years ago. It was like, Hey man.

What's up, Brada? Save lives with the Shaka. Yeah, save lives with the Shaka. There you go. All right, guys. Well, we had to get out of here in a little bit. So I want to ask one more question from each of you. I'm curious.

And then we'll kind of do some wrap up work. People can get to know you more and reach out. But first, I'm just curious. If you had to speak directly to a landlord right now, think of our average user right now. Our average listener out of the quarter million some people who listen to the show is probably, you know, youngish. You know, I would say between 25 and 45. they have a few rental properties, maybe five, 10 rental properties that they manage themselves

or maybe they have a property manager, but they're fairly, I don't call it hands on, but they're at least involved, right? That's our most likely person who's listening. What do you say to them right now, whether it's advice, warning, encouragement, whatever, what would you guys say to those people listening right now who are just newer landlords or just like, you know, the average American under 10 ownership landlord? Chris, you want to go first? Yeah, yeah, that's fine. Forever. Yeah, cool.

Yeah, no, I'll tell you straight up that I wrote this in a form on the Bigger Pock's forums a couple, I mean, a few days ago that it's not too late to plan. Many people that I spoke with directly froze. Just as we were talking about the, as Mike was mentioning, the resident that freezes when they're, you know, scared or don't know what to do, we saw a lot of business owners. I spoke to a lot of small management companies. I spoke to a lot of individual landlords that did not. not know what to do. They also didn't have a good, you know, group of mentors around them. They didn't

have anybody to bounce ideas off of. And, you know, as I mentioned, we're in there having these heated debates on what to do. So we had all these different ideas flying around. So it was easy to make a decision. Whereas somebody else, when all those ideas are flying around their head, they don't, you know, a lot froze. So my biggest thing is, it's not too late. You have to prepare for what's coming next. You have to prepare for. And I said it that there could be 10 different plans you have. You've got, you know, the worst case scenario to the best case scenario and everything in between. And if, you know, if a resident does this, then I'm going to do this. And if they react this way, I need to do that. I mean, you have time, but you have to spend time preparing. I've,

I've been telling people these last few weeks that I'm actually very optimistic. I'm very encouraged and I have a lot of confidence in, you know, what's going to happen next, especially when it comes to our company. And I told them that the reason why is because we've spent so much time, preparing, that we're not going to be surprised. No matter what happens, we will not be surprised in May or in June. Sales go up, sales go down, rents go down, whatever happens with the, with the maintenance, you know, calls go through the roof, calls stop. It doesn't matter. No matter what comes our way, we've prepared for it and we've, you know, prepared our team for it. So for if you're a landlord, if you're a small business owner, if you're, you know, no matter what it is, and you may be stuck in

this idea of what's going to happen next, well, you don't know the answer to that and neither do we. No one does. What you can do is control how you react and you prepare yourself, you know, kind of through stoicism by accepting, accepting that the worst case scenario can occur. And if it does, how do you react? And if you have already prepared for that on the front end, it makes it easier any way to to take action and function each day. If you haven't prepared and haven't thought about it, I mean, it's almost like it's almost like the lack of preparing just starts snowballing. So my big thing to everybody was it's even whatever today's date is, today's the 13th, it's not too late. Start now. Start today. Start tonight. It's okay. You know, you're breathing.

You're still alive and kicking. So go to work preparing for how you are going to be prepared. That's my best advice, I guess. Can I expand real quick on what you said there? Just offer some commentary. So a couple weeks ago, you know, back when I put out the first video on bigger pockets, a few weeks ago that went, I don't know, called viral, but it has a couple hundred thousand views now. And it was basically, here's my five point plan. In fact, I might even see, in fact, I'm just going to say it.

We'll put the actual video, the audio from the video at the end of this podcast. So you guys can hear it of what my five point plan is. We've always talked about all the stuff today. I'll just have Kevin throw the audio on the end of this episode when it's done. But basically, that was my wife and I sitting down for 20 minutes looking at each other going, okay, what are we going to do if? And I was just going through it. And honestly, we didn't know the answer.

Like, I might act confident with this. Like, I'm going to regret saying this. But like, I'm just as like, I have no idea what's coming, right? But just having a plan made both of us feel so much better. And then now hundreds of thousands of other people feel better because I had a plan, like who have watched this video now. Because it's like, it's more important to have a plan than to have the perfect. plan, right? Just like, okay, now I feel like I'm good. If we have to adjust the plan later,

great. At least we have something we can adjust. But if you're just like out there, like, oh, no, what's going on? Yeah, so I love that you said that, Chris. Good stuff, man. All right. Mike. All right, my turn. I got some things. It's awesome stuff there, Chris. And same with Drew Brandon. And I know you're getting ready to wrap it up. I've just, I've had a blast on here. You guys are awesome and sharp. And everybody listening to all these guys here. This is what it takes. okay but a couple of things I just jotted down and I would say make education I want you to budget education just like you do insurance or property taxes or anything else I'm still learning every day and I have education in my budget for what I'm going to what I want to learn more about

and I'm sure each of you guys do that too so make that part of your budget and then goals okay you got to listen to bigger pockets like you're doing right now and that is a and that's a very important part of your education and this stuff works and I'm going to just change a little bit differently with what Chris said I mean he's he hit a bull's eye failing to plan is planning to fail and so I have and of course I have a staff I know Chris has a staff and in you guys days probably on his own but I have a meeting every week with my staff at 12 noon on Mondays to review what happened last week and so everybody's on the same page as we move forward of not only what's coming up this week, but coming up in the future.

And I would say this one, I like this, avoid bad advice, especially from poor people. And I know everyone's going to agree with me, but how many times have somebody said, well, my uncle who said he had a rental house, he told me blah, blah, blah, blah, blah, well, is that really who you want to look at the noise, look at that head that that noise is coming out of? Do you admire that? Is that what you want to be when you grow up? No.

Okay. and Brandon said this basically prepare for the worst hope for the best okay and if you combine all of those things that I got a book you want you to read if you haven't who moved my cheese that's what we're at right now a little 10-minute book you can read it real fast that thing is awesome and it'll help give you some insight about what's going on right now in our world and everything in America well in fact the world with all this corona stuff I love that you said that book because that is exactly what's going on right now. The entire world's cheese was just moved.

And like that book is such a perfect analogy for what's going on. Yeah. Yeah. And it's a fast, easy read, okay? And if you don't like reading, well, then get the audio version and write it on your phone, on your nightstand next to your bed and you get it through osmosis. Yeah. That's a, so education, film, to plan goals, you got to set goals in addition to planning.

In addition to planning, you got to set some goals. So you got to take a financial. snapshot of where you're at now along with your lifestyle and everything else. And then do a financial snapshot of where you want to be in three to five years. Okay. And now you've got a point A and you got a point B. And now you, you know, the shortest way to get from point A to point B is you're all straight line.

And now you know what you've got to do and just put some mile markers on there, measure yourself, make your, hold yourself accountable. And if you're not good at that, get somebody on here that will. You know, I'm sure Dave or, or Brandon, or Dave or Chris, anybody, I mean, have a private confidential accountability partner to help you achieve your goals of what you want to do. Who was it? Dave said Dave Pepelmire.

He's on the board of a real estate investor group. You know, join one of those. You're going to get local updates on what's going on in your town, whether it's fair housing laws, everything like that. And that affects everything in our real estate industry. So I'll shut up. I'm done. Thank you, Brandon, and Dave. That's good, man. All right, Dave, and what do you got? Final advice for those listening? Well, so once again, kind of coming out of the newer investor, you know, once again with eight houses and adding more, I guess the biggest thing

that I did in the early, early days was like Mike said, it's just learn. I mean, you're not going to know everything. We were talking before the call started. This is a shameless plug for Mike again. I'm with Brandon. Mike's Landlording System was the first major purchase I made. And at the time, it was like, oh, my God, I'm sliding this credit card for how much. But you know what?

You need a system. And so that has helped me tremendously. It's just read the books. I mean, I'm sure on bigger pockets, we have lists of, you know, resources and suggestions. I mean, asking the forums. It's like, hey, you know, I just bought my first house. Now what? What should I read now? And it is. It's all mindset.

Luckily, I've had some pretty good mentors in my life and in my past two, not just in real estate, but other financial, you know, friends, family, things like that on the good side. You know, I've had people say, oh, my God, you're investing. Yeah. Well, actually, as a physical therapist, I've actually dropped down from a full-time PT to a part-time PT in the last six months. So I could focus more time by rentals. Yeah, that's awesome. And so my wife's a realtor. And so she was doing all the day-to-day stuff with tenants and with trying to do her real estate stuff as well as to be the mom of three kids.

And it's like, you know what? Something's got to change. And so I made the jump down to part-time. But even though we have less, you know, W-2 money coming in, I am loving life so much more. I mean, this is fun. And really, I mean, if this isn't kind of fun to you, if you didn't like playing. not believe when you were a kid, then it might be a little harder. But even through this big old hiccup here, I internally, I feel all right because I know that we've learned a business the

right way. We have our systems in place. You know, my wife and I have had a conversation of, well, what if one, two, three houses stop paying? Okay, we'll still break even now. And at this point, it's okay. I'm not going to be making millions of dollars right now, but setting a foundation for a pretty decent income that it can either pass on to my kids or just let it ride. And I'm happy with that. So just keep going. It's weird right now. But if you're not going to buy something, yes, learn. Buy the books. Read the articles. Just feed your brain. That's awesome, man. All right, David, let's close it up with you. What's your final advice for people listening right now? I think one obvious piece has been reserves matter. One of the ways that I didn't mention,

I think this is going to change is there's been a lot of, I'm not sure if I want to invest in real state, but it kind of seems cool. So I'm going to do it because it's cool. This is going to shake some of those people out because now they get a taste of the fear that they experience people actually have to live with. It's not just cool all the time. There's actually, it can be scary to. So that's one way.

And the advice that I would give to people is we talk about looking for an opportunity that has a barrier to entry. You want to get involved in things that are hard to get into. And when you're just accepting that right off the bat, you don't worry when this happens. I've never for one second thought, oh my God, why did I invest? us in real estate when this whole scare came. And throughout a lot of this, we still don't know how it's going to go, but the initial, the world is ending, the sky is falling, what is going on, has turned into a difference.

And I think most of these guys said between like 8 and 11 percent of tenants not paying their full rent. It's not a huge huge. I think one of them was even at like 4 percent different Chris said between this year and last year. And there could be things that do completely shake it up and they do make it different. But overall, if you're living beneath your means, if you're smart with your money, if you're making good sound investments, if you're buying properties in good areas, if you're buying good properties, if they're cash flowing, you don't really need to worry about a whole lot. So when this happens, I just go right back to the fundamentals.

Was I starting to get a little sloppy with the fundamentals that I was following? This will help me tighten it right back up again. The people who end up getting hurt are going to be the sloppy ones. And so that's the only advice that I would give is just like, this should not catch you up guard. this should not freak you out. You should not panic. If you had your emotions affected that much by what if people stopped paying rent for a little while,

you probably didn't understand real estate investing in the first place. All right. All right. My quick advice is work out every day. It's too easy to get at home and get no exercise in whatsoever. And you just start feeling more and more down. You start scrolling Facebook. You get a bunch of really, really just negative stuff coming all day,

a bunch of fake news. And pretty soon you just like, you're not doing anything with your life. So get up, get some blood pump and get your workout in. What are you doing for workouts right now, Brandon? I do different stuff every day. Like pretty much every day. But kettlebell this morning. Ryan's trying to get me into kettlebell workout.

So I don't know. That's my thing. What about you? Lifting cows? I'm on roofs. I change myself and I caught myself on the back in front of as many people as I can. That I did carrying tar up and down a ladder in the hot Hawaiian sun.

That's what you do. That's what you do. I'm glad that's what you're doing. I'm glad. What I really am doing is super simple. Everybody can do it. You watch TV and when there's a commercial, you do an exercise. You can do air squats.

You can do push-ups. You can do leg raises. You can do sit-ups. Like, not that much. But if you just do that for like a couple hours in a row, you will have gotten a workout and it won't feel like a workout. You're not going to have to like carve out an hour of time and kill yourself. Yeah.

keeps the blood filling, keeps you in a good mood because it's easy to get into a bad funk when you're in the home looking at all day. Or to, you know, change a roof when there's nothing. There you go. You got to find a way to feel like a man or a woman. All right. With that, where can people connect with each one of you? Let's start with Dave Pupplemeyer.

Did I say that right? Close. Yeah. Where do people? Okay. I get it sometime. Where do people connect with you? What do they learn more about you and find out about you?

I'm on bigger pockets. On my business is D3L Properties. So the email is D3L Properties LLC at gmail.com. And so yeah, so I definitely need to start hopping on bigger pockets more. But yeah, if you're a new person starting out and you want someone who's still close to that point, absolutely. Give me a call or whatever and we'll go over things. Absolutely. Cool, man.

Chris? Yeah, you can reach me at R-EI Nation.com. That's the new web address of our company. There's a lot of information on there. You can learn about us and you can learn about me in particular. But also, I try and stay pretty active on bigger pockets. I get sidetracked, but I am still fairly active there on the site. So Chris Clothier on Bigger Pockets, you can send me a message to Bigger Pockets.

I think I try and get back to everybody that messages me there. And then, yeah, those are probably the two simplest ways to find me. I'm pretty active in both locations. All right. And Mr. Mike Butler. What about you working? They can't connect. Mike Butler.com.

It's real easy. Mike Butler.com and just click on the contact us and you can get a hold of me there. Very, very cool. RIA Nation. I like that. Yeah. That's cool, Chris. It's kind of catching.

Memphis Invest to RIA Nation. Yeah, Memphis invest to RIA Nation. Just one last thing. Just one last thing. Okay. Always try to take your killer deals and put them into your self-directed Ralth IRA for tax-free profit and income for life. Whoa. We can do a whole show. Yeah. Let's get off now.

Are we getting off now? What are you? That's a nice teaser. Stay tuned next week to learn how are you. All right, guys, this has been, it's been fantastic. Thank you guys for joining us today. Really, really good stuff. I mean, I look up to all three of you guys quite a bit when it comes as landlording things. So thank you for sharing. Your thoughts, so you guys take care. Yeah, thank you, David.

Thanks, guys. Thank you. All right, David, you want to stay safe. Mr. Green, you want to take us out? This is David for Brandon, not as condescending as David Green Turner. Signing off. You're listening to Bigger Pockets Radio, simplifying real estate for investors large and small.

If you're here looking to learn about real estate investing, without all the hype, you're in the right place. Be sure to join the millions of others who have benefited from bigger Pockets.com. Your home for real estate investing online. Hey, Bigger Pockets Nation. It's Brandon Turner, author of the book on rental property investing, landlord with over 500 rental units, and host of the Bigger Pockets podcast. You know, this is a troubling time full of uncertainty in the world, right? However, some things are really certain. And one of those things is that a lot of people are not able to work due to the social distancing

we're engaged in right now. And as a landlord, many of these unemployed workers are renting from us. So, as landlords, what do we do? Of course, now, if you're not a landlord and you're watching this, you're probably wondering, what's the big deal? Just do the nice thing and don't make anyone pay rent for a while. But we know that that is not necessarily possible, right? I mean, unless the government changes something drastically, we aren't going to just suddenly be able to stop paying our mortgage payment. We're not going to be able to stop paying our taxes, the insurance, and the other expenses that are needed to run a property. And despite what the general population thinks, most landlords are not rich, greedy, multinational corporations with billions

sitting in the bank. Most landlords are people just like you and me, people who, whether by accident or on purpose, ended up with a few rental properties and are trying to manage them while also working a job or running a business. And most will not be able to pay the bills on their properties long term without getting rent from our tenant. So, what do we do? Well, I can't even answer for you necessarily, as we all have unique situations, but at least I can share with you the exact strategy that my wife and I have come up with for our personal rental properties. And hey, do me a favor. If you find this video helpful, don't forget to click that little thumbs up button so that more property owners will get this information. All right. So, here is our

five point plan for dealing with late or missing rent. Number one, have a plan. It's kind of a summary point here, but it needs to be made, whether in the Wild West or while dealing with a tenant, shooting from the hip is generally a terrible idea. Making decisions on the fly usually results in bad decisions being made. So step one is to commit to having a plan written down for how you are going to deal with this issue.

Because for most property owners, this is not a question of if, it's a matter of when. Now maybe this video itself can become a plan that you follow, but even if you do something entirely different from what I'm about to say, Just be sure you are prepared. This way, you won't be shooting from the hip when that dreaded phone call comes in

from the tenant who just lost their job. All right, step number two, empathize. Now, the remainder of the steps on this video, three, four, and five, they're more concrete, but I want to make sure we address this. Tenants are people, and they're going through a remarkably scary time. Perhaps maybe a worse time than you're going through

because you're probably a little more financially educated and have more of a foundation of finance than many of your tenants do. So before anything else, listen to them, understand what they're going through, talk with them, empathize. We're all in this together. So let's remember to be human and keep people before profit in our discussions. Now that said, we still need rent. We can't survive financially without it.

So that brings me to step number three. Step three, explain that rent to still do. For as long as there have been tenants and landlords and bills to be paid, there's a super interesting piece of human behavior at play here. People will pay the bills that give them the greatest. consequence of not paying. In other words, most people financially struggle to pay their bills.

But they can pay some of their bills as not all their bills. This is why late fees are so important when landlording, because when the choices between paying rent and buying a flat-screen TV, well, the late fee and the threat of eviction tips to scale towards that money being used to pay rent. But today, we're not really dealing with flat-screen TVs,

are we? But the principle still applies. Likely, your tenant is going to have to make some serious decisions on what bills get paid and which ones don't. That is why after talking with the tenant and empathizing with them, I believe it's still important to let them know the rent is still due. And as I'm sure you've heard, evictions are being suspended in most areas in the U.S. right now. The ability to issue a late fee might also be banned soon.

Your tenant very well might assume that this means the need to pay rent is also being suspended, and it's your job to inform them otherwise. Even if you can't evict right now legally, it doesn't mean that they still don't owe the rent. It doesn't mean that you won't even if you won't evoke. later when the courts do open back up again. You don't need to be a jerk about this, but let them know that you have a mortgage payment, you have bills to pay,

and that them paying is going to be vital for keeping the property. All right, step number four, give your tenant their options. Look, once you've explained that the rent is still due, now is the time to help the tenant navigate this difficult time. You'll be plan to do this by giving them their options, as they may be unaware of the different ways

that they could come up with the rent. First, we've planned to help. plan to keep an eye on programs that the government is designing to help individuals, especially tenants. This is a rapidly changing time, so we're going to keep a close eye on the assistance programs. Now, right now, there is a very real possibility that the government is going to issue cash payments to every adult American. And, you know, that could help quite a bit. But even if they don't, there might be a local, like, or local programs, state programs or other federal programs that could help. Also, we are going to offer other suggestions as well.

For example, maybe they could borrow money from a relative. or maybe could the rent be paid via credit card? In fact, to help where we can, we plan to offer to pay the fee associated with using a credit card. And that can be up to $30, $40, $50. Now it would be a good time for you to get set up on a rent collection system that has the ability to take a credit card. Companies like Venmo, PayPal can handle that

as well as property management software like Buildium, AppFOLio, or Cozy. All right, step number five, the emergency rent deferral plan. Okay, this is where I hope my tenant, don't watch this video because I don't really want the tenant knowing that this is an option yet. If I brought this up at the beginning for tenants, most everyone in the world would jump at it. Because remember, humans will naturally pay the most pressing bill, so I need them to know that rent is still incredibly high on their priority list. So step five, though, is our worst case measure that'll only be mentioned to tenants when they don't pay their rent,

not when they call and say they're not sure they'll be able to. We'll still let the tenant know that the rent is doing the first, give them their options, I just mentioned, and even still issue a late notice to the tenant if they miss paying rent. But what if they really have exhausted all their options and they just can't pay the rent? And they're a good tenant,

especially if they're a good tenant. This is where we will introduce the tenant to our emergency rent deferral plan, or ERDP. And because we followed step one of the video, we have a specific plan in place to deal with this inevitable situation. And having this documented plan in place shows the tenant that this is not us winging it,

But we have a system that can handle this. We're professional. But more on that system in just a second. First, there's a really important question we're going to ask each tenant before we introduce this plan. How much can you pay toward your rent? Chances are, even if they can't pay all of their rent, they can probably pay some of their rent.

Maybe the rent is $1,000 a month, and they can pay $300 toward their rent. Well, we're going to accept that $300 and move on to the ERDP. Now, what is the ERDP? Simply put, the ERDP allows the tenant. to opt into a payment plan for their rent over the following 10 months. The ERDP is an addendum to their lease that gives them the ability to take their rent and pay it in equal portions for the next 10 months.

Now, that begins the second month after enacting. It basically gives them an extra month before the increased payment begins. So, for example, let's say that we've gone through all of this, but the tenant simply cannot make the April 1st rent. They owe $1,000 in rent, and because we asked what they can put toward it, they are able to put $300 towards the remaining towards what they owe. So the remaining $700 becomes like $70 a month.

That gets added to their rent beginning June 1st. So starting June 1st, now not May 1st, and I'll explain why in a second. They will pay $1,070 per month in rent until the following March. Now, why not start the payment next month? Simply because I have a strong suspicion that this is not going to end quickly. One month deferral may not be enough time to get them back on their feet. So we're going to wait an extra. month before adding that extra payment.

Now, furthermore, it is our company policy that during this time, a tenant will be allowed to use this ERDP twice. Of course, we're not going to tell them that immediately, the same reason we want to, you know, we're not going to tell them what the program to begin with. We want them to work through steps one through four first. Rent has to remain a priority, but eventually we will let them do two months. Now, if after those two months are still unable to pay, the tenant may just need to move. Now, this is a completely uncharted territory.

we find ourselves in today. I'm not going to lie to you and tell you. I know exactly what we're going to do then, and I know what the future holds. But here's the deal. The government can't forever stop evictions and stop making people pay rent or allow them not to pay rent,

but continue to force mortgage payments and foreclosures. I mean, otherwise, every landlord in the country is eventually going to go bankrupt, or all these banks are going to end up owning millions of properties. So somewhere something's going to have to give. If this social distancing, job loss, and potential economic meltdown continues,

we're going to make new rules as it happens. My guess is that the government will offer more and more programs to attempt to help. Because remember, you and I are not alone in this. Everyone is trying to figure this out. And we will. Humans have an incredible ability to figure stuff out when the night is darkest.

We will get through this. We will survive. We will emerge stronger. Now, I hope this video shed some light on what I'll be doing in my personal rental portfolio to handle potential rent issues in the near future. Maybe you'll be doing something a little bit different. And hey, that's great.

You know, we're all just figuring this out. I encourage you to share your thoughts below the video and let us know what your plan is. And perhaps together, we can help the world, both tenant and landlord, move forward financially successful. Remember, if this video is helpful, please hit that like button below the video, a thumbs up, and share them to somebody you think

would benefit from hearing it. And if you're a landlord and you're looking for more advice on managing rental properties, my wife and I wrote a book called The Book on Managing Rental Properties. It's full of tactics, tools, and strategies for navigating the messy world of, landlording. You can even get it out of library, so if you don't want to buy it, just read it. And perhaps now is a good time to get some reading in anyway, to brush up on your skills.

Because remember, the economy cannot stop your work ethic. It cannot stop your drive. It cannot stop your quest for self-education, self-improvement, and personal growth. For biggerpockets.com, my name is Brandon Turner. Sign it off. Thank you all for listening to the Bigger Pockets Real Estate podcast. Make sure you get all our new episodes by subscribing on YouTube, Apple, Spotify, or any other podcast platform. Our new episodes come out Monday, Wednesday, and Friday. I'm the host and executive producer of the show, Dave Meyer. The show is produced by Ian K.

Copywriting is by Calicoe content, and editing is by Exodus Media. If you'd like to learn more about real estate investing or to sign up for our free newsletter, please visit www.biggerpockets.com. The content of this podcast is for informational purposes only. All host and participant opinions are their own. Investment in any asset, real estate included, involves risk. So use your best judgment and consult with qualified advisors before investing. You should only risk capital you can afford to lose.

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