BiggerPockets Real Estate Podcast - 48: Duplex Investing, Finding Great Properties, and Tips for Managing Tenants with Darren Sager

Episode Date: December 12, 2013

On today’s episode of the BiggerPockets Podcast, we talk with real estate investor Darren Sager about his fascinating business model involving buy and hold real estate, live-in flips, and managing properties with minimal hassle. This show is crammed full of awesome, actionable ideas, tips, and lessons – so don’t miss a second of it! Read the transcript for episode 48 with Darren Sager here. In This Show, We Cover: The college professional who got Darren started When to use the 1% rule How Darren bought his first property for almost nothing down The $400,000 live-in flip The #1 most important characteristic Darren looks for in properties The secret to renting property to people with children How to save thousands of dollars using YouTube. And a whole lot more Links from the Show The Real Estate Agent’s Ultimate Guide to Working with Investors by Brandon Turner How I Found, Analyzed, and Bought an Ugly Purple Rental Property Brandon Bought a “Waldo” Rental Property…. But Should You? Allure Vinyl Plank Flooring PayNearMe Books Mentioned in the Show Rich Dad Poor Dad by Robert Kiyosaki The 4 Hour Workweek by Tim Ferriss The E-Myth Revisited by Michael Gerber Millionaire Real Estate Investor by Gary Kellar Millionaire Real Estate Agent  by Gary Kellar All You Can Do is All You Can Do, but All You Can Do Is Enough by Art Williams Hamburger America by George Motz  Tweetable Topics “If a deal doesn’t at least meet the 1% rule – run away.” (Tweet This!) “It may be cliche, but when buying real estate… location is everything.” (Tweet This!) “The worse condition a property is in, the more I’ll love it!” (Tweet This!) “The most successful people are those who failed the most.” (Tweet This!) Connect with Darren Darren’s BiggerPockets Profile Learn more about your ad choices. Visit megaphone.fm/adchoices

This is the Bigger Pockets podcast, show 48. 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. 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, everybody? This is Josh Dork and host of the Bigger Pockets podcast. here with my co-host, Brandon Turner. Hey, Brandon.

Hey, Josh. How are you? Good. How are you doing? How you doing? I'm doing good. Yeah, that was good, man. That was good. Practice a little more. You'll get it down. Yeah, you know, I'll get there. Yeah, yeah. No, all's well, man. All's well. The year's starting to come to a close. We've been very busy at bigger pockets. Lots going on. Lots of new improvements happening and lots of movement. So things are, things are going great. And, uh, I don't know, just looking for, forward to another good show. Yeah, me too. I've been looking forward to this show because our guest today is a cool guy. He's been on the site a lot and he's got some, he's basically got a ton of ideas that really matter to me a lot. So I'm especially happy for this show today. Yeah, and no offense to the

rest of our guests, but this might be one of my favorite shows that we've done so far. So hopefully everybody listening will pay very careful attention. But before we get in, into that. Why don't we do our quick. So for today's quick tip, stay tuned because our guest, Darren, is going to actually share the quick tip

later in the show. And it's one of my favorite tips I've ever heard. Yeah, it's good. Amazing. It's good. So listen up, listen hard, pay attention and stick around. That said, this is show 48 of the

Bigger Pockets podcast. And Of course, make sure to follow the show notes at biggerpockets.com slash show 48. And if you've got questions for our guests, make sure to ask them there on the show notes. Otherwise, why don't we dig in here to the show? Our guest today is Darren Sager. And Darren is a buy-and-hold real estate investor on the East Coast, who's doing some awesome, awesome stuff with small multifamily properties in some high-end neighborhoods.

He's got a lot of really, really, really good tips and suggestions for anyone looking to invest for the long haul, as well as some tips for flippers and wholesalers. And he's got tips on getting great deals, you name it. I mean, this thing is really chock full of amazing information. So pay close attention. Did you know your house gets bored when you leave? I can't actually prove that,

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property's income potential. No tax returns or personal income statements needed. Simple, efficient, and tailored for investors like you. Imagine a lender that sees the gold mine in your property, not just the numbers on your paycheck. That's the host financial difference. And they're approved in 47 different states. So your next big deal could be just around the corner. Ready to unlock your property's true potential? Visit hostfinancial.com. Don't let old school lending hold you back another day. That's hostfinancial.com. With that, why don't we get into it? And and start the show. Darren, welcome. Nice to have you here. It's great to be here and it really is an honor. Thanks, guys, for having me. Oh, no problem. Thank you for coming on. It's an honor for us as well.

You're an active forum member and we like to get active forum members here on the show. Let's jump into this thing. We'll start at the very beginning. What do you do, I guess? What is your niche or niche? I am primarily a buy and hold investor. I've been investing. in duplexus, so two families, since 1998. Wow, 98, okay. 98, yeah, I was in like 8th grade in 98. You're still in 8th grade, Brandon. I wish I was still in 8th grade.

Eighth grade was the worst year. I don't know if you guys remembered 8th grade, but, man, that was the year of like, that was the worst year of life. Hey, Darren, do you have a little violin? Because I've got one. I'm playing it right now. Thank you. Yeah, if any of my 8th grade bullies are listening,

this right now. I hate you all. You're talking for one of them right now. Probably am. All right. Anyway, so 98. Yeah, yeah, yeah. All right. So you started duplexes back then and presumably you're still investing in multifamilies. That's correct. Yes, primarily multifilies. Okay. Okay. Right on. And how did, so how did you get started into real estate? And we could talk all about the other things that you do in a little bit. You know, I would probably say there was a seed planted in me at a early time. I actually, I failed out of school and worked for a number of years and probably spent a number of late nights watching stuff like Carlton Sheets and Tommy Lou sitting there with the bikini-clad women there on the boat. And when I went back to school, I actually came across a professor

that was there, who I became friends with. His name was Peter Health. And Peter was this guy, you'd almost call him aloof. He didn't seem to have a care in the world. And I really mean that in a very good way. And I asked him why after getting to know him. And he said, you know, Darren, I own a ton of rental property. And you would never know it after meeting him.

So, and he started to tell me how he was able to purchase the property. and he gave me an idea of how much money that he was making that allowed him to basically do anything he wanted when he wanted. He literally could travel the world at a moment's notice and just go out and buy anything. So it really put a seed into my head about real estate. Wow. Wow. Nice. Yeah, that's great.

I mean, it's kind of one of these things where the last guy you'd suspect is out there killing. in the business. Absolutely. And that's why I think it's very important for anyone starting out to talk to everybody. You just don't know who you're going to come across in life that invest in real estate. And unless you open up your mouth, you're never going to find out. Yeah. Yeah.

That's awesome. So did he, obviously he was the inspiration. Was he kind of there to help answer questions to guide you in the beginning? or was he just kind of the guy that got the spark going? See, he got the spark going, but also in certain ways became like a mentor. He basically told me the 1% rule at the time. And that basically was a foundation for everything that I then went out and judged. And if I didn't have that, I don't know where I'd be today.

Oh, that's awesome. That's awesome. Well, really quick for those people listening, and who are unfamiliar, what is the 1% rule? The 1% rule basically says that you need to achieve 1% of the purchase price of your property on a monthly basis. So if you purchase a property for $200,000, you have to get $2,000 a month in rent per month. Yep, yep. And there's a lot of debate discussion on the 1%, the 2% rule on bigger pockets.

And I'd be curious about your theory. I'm pretty confident in saying if you find a 2% property, the odds are it's going to do well for you. Whereas 1%, you know, you may end up potentially pretty thin from time to time. What's your take? Well, I would say you'd be very hard pressed, at least in the New York metropolitan area, to find a worthwhile. home that actually made the 2% rule. True. So to be able to do something like that, I think you're probably looking at more

rural areas. Rural. Yeah, I was going to say, Brandon, can you say rural three times? Rural. I was actually waiting to put that in. I had that word written down. I thought you did. Gotcha.

No, and I was going to say, I feel like a lot of the 1%, Some people say the 1% rule is great. I have one property that I bought before I knew about anything, and it's the 1% rule, and that's my only property I lose money on. However, this property is a low, low income property. I only paid $70,000 for it, and it rents for $700 a month. But the taxes are extremely high, and the maintenance are extremely high. So because of that, it doesn't work.

I think in different price points, it probably works better. Like you said, on a $200,000 property with $2,000 a month, that's much different. I don't know if you could buy a $200,000 property in the New York metro area, can you? You still can, absolutely. Yeah. That's good to know. But, you know, the 1% rule was given to me as a foundation. It was if you don't get this, you run away from it.

Yeah. Yeah. So you try to achieve better than that, but that was really, if you're not getting this, then, you know, you got to move away from it. It's just not going to work. Yeah. And I think that's a smart way to go. you know again some people say if you don't get 2% runaway i i think that's i think that's pushing it a little bit i'd say 2% means odds are pretty damn good that you're going to uh be successful

uh whereas 1% you know you is is probably a good demarcation line for you don't want to look at anything that's doing worse than 1% absolutely absolutely yeah right on right on well so tell us tell us tell us about your first deal how how did uh how did you kick this thing off well well Well, after I graduated from college eventually, I graduated from Boston College in a degree in accounting and marketing. Oh, nice. And I went into Deloitte's real estate practice group. I was working at my clients, Bornado, and just got really good exposure on a very high level from working for REIT on how they ran their business. So, you know, I said, well, why can't I do something like this on obviously a much smaller scale, you know, take away a couple of commas.

and the numbers can still work out to be the same. But I just graduated school. I had college loans, so I didn't have a ton of money to be able to put down on a house. And the New York Times had an article on how to get into a house without putting 20% down and you could avoid PMI. And I was like, oh, wow. Because the last thing I wanted to do is just put money out of the door

for property mortgage insurance. that was just wasteful money. So they had this thing that they talked about doing a piggyback loan. And at the time they called it an 80-10-10. So you were able to put down your principal loan at 80%, take out a home equity line at 10% right off the bat and only put 10% down or even 5% down to get into a house and avoid that PMI.

So I was able to find a house that the numbers worked on. and I basically went to my mother and said, you know, the BOM, the bank of mom, and, you know, showed her the deal. And the house wasn't, you know, it wasn't a great house. But what was important to me was that it was going to cut my commute time by almost two-thirds for me getting in and out of New York City. So that's why it was very, very important for me to do it by time. You know, my personal time was important, and I was just spending a lot of time commuting. So, you know, you said a couple times the house, and it sounds like you bought this to live in. So was this a single family, or was it a multifamily?

Or was I not listening? To duplex, yes. Oh, so you said that, right? I probably didn't. Okay, I'm just making sure because I am trying to pay attention here, Darren. But I did say that that's all I buy, so primarily. Wow, you know, well, I'll just shut up. All right, so you bought the duplex.

You moved into one unit, and you bought this place, obviously, closer to where you'd be working. What did the numbers end up resulting? What did the numbers look like? Were you, was your rent covered or did you still have to pay something out of pocket? Yeah, I had to pay something out of pocket. In fact, I'll be honest, I really couldn't afford to live in the house. So I had to move out of it and rent out the other side. It wasn't something I wanted to do, but just with the higher rate on the piggyback loan, it just made sense for me to do that.

Okay. But the thing was this. When I purchased the house, I paid $2.35 for it. getting 1,200 per side. But I found out, for some reason, a guy with pretty much the identical house, two doors down, was getting like $17.50 a month for rent. And I'm like, why is he getting $550 more for his units than what would be mine? And it turns out he had a half bath on the first floor, because both my units have three

bedrooms in them. So they were three, three bedrooms, one bath. So they have what's called, you know, functional obsolescence. So just that extra half bath removed that obsolescence allowing a family to move in. And 550 more per month. You know, absolutely crazy. So I'm like, well, maybe I can take off $150. Maybe I can get $1,600. So sure enough, I've listed it with a realtor, got $1,600, moved into a basement apartment at $450 a month and lived there for a year and paid off the piggyback home. Nice. Nice. Yeah, you know, when you said earlier that you were having trouble, I thought the Bank of Mom was going to foreclose on you. I got worried.

The Bank of Mom has been very generous throughout the years, and God bless for that institution. Yeah, yeah. So you elected to just kind of take a shot in the dark, jack up the rents, and see what you can get instead of building that half bath is what it's sounds like. Yeah, because at the time, I literally had no money to, to be able to put the half bath in. Although, the funny part was the house was preplummed for it. Oh, interesting. Yeah, it was all set. The water lines were there. The drain line was there. It's like literally just open up the floor, pop in the toilet and put into vanity and you're good to go. And but for some reason, uh, the prior owner just didn't do it. Interesting. Did you, did you eventually put that in then? Oh, absolutely. Yeah. Okay, cool. And you still, is you still on that today? Oh, yeah. Yes. Yeah, then the rents have gone, I would say, through the roof since I purchased that property.

What are you, what are you charging on the rents on that? The rents now are well above $3,000 per month. So you're getting $6,000 on a $2,000 property. Yeah, more than that, yeah. That is a 2% ruler. So in the time, after the fact. after the fact. That's correct. So you are a buy and hold investor.

I mean that you dead set, you don't sell period or maybe a little bit. Or do you just hold on forever? Very little. Yeah. My primary thing was, you know, from the get-go, I had just wanted to create cash flow. You know, for some reason, instilled in me at early age was never to work for anybody else. I had seen, I guess, either family members lose their jobs after working long term for someone else. So I just never wanted that in place.

And I had created in my own mind that if I could just find a way to create cash flow, just constant cash coming in the door, then I would never have to worry about like creating a big real, a big investment portfolio of stocks that I eventually would have to pull money out of at a later point in life. I'd literally just keep on getting cash in the door. And I was telling this to a friend, and he's like, oh, Rich. Dad, Poor Dad. I'm like, what? And he goes, yeah. That's what that guy talks about and rich dad, poor dad. And I was like, oh, okay. And to be honest, to this day, I've never read the book. Really?

Never read it, you know. You're the first guest. It's kind of like the e-myth, man. You know, I could tell you everything in that damn book. I'm on page 27, but I know it's four-hour work week. You're on 27. Whatever. Yeah, so they're all the same. Same thing. They're all the same. And he's got the E-Meth right there and four-hour work week.

just to taunt me with. There you go. So I've got a question. And this is something that I don't think we've really asked any of the buy and hold guys. Obviously, you know, there are good tenants and there are bad tenants. But generally, you know, most people who get into the business leave because something just really bad happens. You know, they end up getting sick and tired of bad tenants. Have you had your run-ins with those guys, or have you just had pretty decent luck all along?

I've had a few issues, and primarily the only times that I've really had issues is when I've inherited tenants when I purchased, or I took over managing. So other than that, I've just been very diligent about screening. and one of the things that at least we have here in New Jersey, you know, the type of properties that I have, I would say the better properties get listed with real estate agents because you'd say they're more premier, they're more desirable. And here in Northern New Jersey, generally the incoming tenant pays the broker fee.

So when you're dealing with rents above, you know, 3,000 plus on some of these places, It creates a barrier to entry that can weed out a ton of, let's say, less desirable tenants that may cause you issues down the road. That's awesome. That's a really good piece of advice. So you're managing yourself right now, correct? You don't have a property manager? Oh, yeah. I manage myself, yeah.

Okay, cool. And you do this full time, or do you have another job? I do this full time, yeah. It enables me to, since I've been at it for so long, it produces enough income that, enables me to be a full-time landlord and also be an investor agent. An investor agent? So you represent other investors? Yeah, I'll go out and find, you know, different properties for other investors that are looking for real estate. So I got my license. When I got my license, I tried to be, you know,

everything to everyone. And you obviously get very, you know, in a very big pond, you can get lost easily. And I had a friend basically tell me after all my experience. He's like, well, you're working with the wrong people. He should just be working with investors. And sure enough, he was right. Nice. That's cool. I mean, I can't help, but I got to plug my article here.

So I wrote an article a while ago called the Ultimate Guide to the Real Estate Agent's Ultimate Guide to Work. To Working with Investors. Yeah, yeah, yeah. So anyway, people can check that out. I'll link to it in the show notes at BiggerPockets.com slash show 48. but it's basically all about that how a real estate agent can learn to work with investors. Have you read that yet, Aaron? I have read it, and I would have to say it is great.

It really is. And it was kind of funny when I was going through it, and it's telling you about all the things that you should be doing if you want to work with investors. And I'm like, oh, yeah, I do that. Yep, I do that. So it really, I mean, there's very little that I've come across in bigger pockets that I haven't said it isn't really good. I mean, you guys do a fantastic job,

and I'd say everything that you put together. Oh, thanks. Thanks. I appreciate that. So, okay, so you're an investor agent today. You've got these multifamilies. You bought the first one. Did you end up tweaking your strategy at all?

Or have you been kind of sticking with the, I know you said you do mostly duplexes, but have you been sticking exclusively with the duplexes? you know, is there a plan to expend beyond it? Tell us about that. I would probably say I recently, in the past couple of years, decided to go into the potential of flipping homes. And the first one I really did, I had the opportunity to buy a house that needed pretty much everything in a very, very good market in New Jersey. And the house was just surrounded by multi-million

dollars homes. And so there, this house was that was built in 1961 and nothing was done to it. It just, like, you walked into it. Hollywood would love to film a movie in this house when I bought it. It was just really a perfect timepiece.

I mean, the kitchen floor looked like a James and Whiskey bottle cover. I mean, it's just like, it was, it wasn't, it wasn't good. So, and what I decided to do was with that house, since the potential to make a lot of money was there. When I say a lot of money, you're talking multiples of six figures. I decided to buy it and actually live in it while I was fixing it up.

And if you, with tax laws, if you live in a house for two of the last five years at your primary residence, you can get not pay capital gains on the first $250,000 if you're single or $500,000. if you're married. So it can really make a huge difference when you go to sell. Interesting. Interesting. So the strategy is to buy dilapidated homes, start with the bedroom, fix that sucker up, maybe the kitchen, move in and hang there for two years and one day and get the hell out. Pretty much, yeah. You know, originally my strategy was to, and buy multifamilies, was to look for something that needed a ton of work or there was, you know, functional obsolescence to it and create that value that didn't exist.

And that way I can raise the rents. But now doing it with single family. Yeah. Do you still live in that property then? Or have you, did you sell it and move on? Okay. I'm still living in it right now. Nice.

And do you have a projection on how much you're hoping to, you know, make from that? Or what's your kind of end game with that? If my numbers are right and I think they're pretty good, probably. about $400,000. $400,000. That's not a big deal. Okay. Not a big, okay.

I guess Josh is rolling in the dough over there. I could see the walls crumbling behind you. Yeah. Now that's great. That's awesome. But obviously, you know, that's the only one we actually go to sell it. True. So, yeah.

Until then, you know, it's just, it's, it's, it's, it's, I'm not going to say it's speculating. Yeah. But, you know, because I ran the numbers and I constantly am checking them over. And this one that you're in now, then, is this, is this the only one that you've, you pre-flipped? I don't know what you would call it, mid-process of a flip, live in, yeah, whatever. Everything else that I've done was pretty much renovating to rent, you know, to do that too. And obviously, in that type of scenario, you need to move quickly as well because you don't want to lose your rent.

So I'd say there were mini flips, you know, because in the end, you know, I'm holding on to it, but you need to be able to execute, you know, equally the same. Yeah. Well, that makes a good transition then, because I want to talk about when you're when you're finding a property, how do you know what a good property is to buy? Like what kind of duplex are you looking for? I mean, what can you tell us about that process? Sure. Well, not to any way to sound like it's a cliche, but location to me is everything. It really is.

I love transportation hubs, really specifically train stations. Really? It just, again, from when I first bought my property, the very first one, it was for me to be able to commute in and out and York City and to be able to get in an under half hour. And I can commute in from New Jersey and be in center Manhattan in less time than some people from Brooklyn, you know, taking the subway system. Yeah. So I could have a good quality of life, lower cost of living in New Jersey, and get in and out of the city quickly. So I tried to focus on trying to find duplexes that were within always walking distance to a train station.

So under 10 minutes. 10 minutes is really the maximum that I would like to go. I prefer five minutes or less. Again, just to be able to, if you have to run home in the rain, you could do it really quickly. So I really try to focus on having three bedrooms at least in each unit. So I'm going to appeal to families because I want overall less turnover, if possible. And I also look for something that's beat up.

I want to find something that I can go and raise the rent by adding an extra bathroom. Let's say, you know, it's a 3-1. How can I get that extra bathroom in there so I can get a family in to increase my rent role? Yeah. You know, I want to touch on that. You talked about three bedrooms because they are good for families. Now, I bought a triplex last week, and there was one of the units has four bedrooms in it. And there was a – I talked a lot about it in a blog post I wrote on how I bought an ugly multifamily, which I'll link to in the show notes.

But the next day, a friend of mine, Ben Labovich, who was also a blogger on Bigger Pockets, wrote a kind of a response to that. And he said, here's why I wouldn't have bought in that. And his main reason was, and again, me and Ben are really good friends. And we talked about these posts. And he wrote because it had three bedrooms. He wouldn't have bought it because it was, well, it had four. But he doesn't want to rent to a family because you can't turn them down for discrimination reasons. So you're forced to have a bunch of little kids destroying your property faster.

I'm wondering what's your take on that? What's your response to that? Because I like bigger units like that like you do. So what's your reasoning? You know, when I go in and I fix up a place, one of the things I try to do is over-engineer the crap out of it, so to speak, and make it more abuse-proof. So I've done a tremendous amount of research. I'll constantly research materials and things to use that can take more abuse. but I prefer to rent to families because again, I think in the end, when you don't rent to families, you get more turnover and every single time you have a new tenant coming in, you're going to have to do more work.

So, you know, it is a tradeoff, but families tend to stay longer. Yep. Yeah. I also find that they seem to have better jobs. By the time you get into the age where you have lots of little kids, those people aren't going to lose their job and then they don't pay rent and you have to evict them. the one bedrooms, the studios, those ones you're dealing with people who are more transient in nature with their jobs too.

Well, at the higher rents though. Because I mean, you can say that. I mean, I've had properties that are low rent properties and bad areas and I've had families that destroy the hell out of every damn property. Holes and floor. How do you get a hole in a hardwood floor? That's one I've never heard of before.

I've had it. Wow. Yeah. Yeah. Well, so, you know, your point on the transportation hubs,

you know, I think the reason Brandon doesn't understand it is because he lives in the sticks. And they don't actually... I live in a rural area. No, no, but seriously,

like, you know, take places like a New York or Chicago, San Francisco, where trains are really essential to life for the vast majority of folks. And that's a, it's a brilliant strategy.

It works really well. It doesn't work everywhere. Boston, of course, it works in. But, uh, I think that's a fantastic plan.

I wanted to hit you up a little bit more on this abuse proof thing because it's the first time I've heard somebody say that they do that. And I think it's brilliant. I think it really is. And my question is, what are you doing? I mean, down to materials for which rooms and what are you doing the kitchens, the bathrooms, the bedrooms? Can you fill us in a little bit?

Sure. Well, you know, if we're going to, let's say, gutter room or something of that nature, instead of using half-inch drywall, we'll use five-eighths because it can take a bigger hit. So, you know, it takes, the cost to put a five-eighth is not much greater than it is for a half-inch drywall. But again, you banging into it is it's going to be able to take more abuse. Tiles. I love porcelain tiles. And it's, If I could tile an entire house, I would just because tiles can take so much abuse. You know, again, a lot of our rentals are, you know, higher priced. So one of the things that I would say we originally were putting in granite in the kitchens, but now without a doubt going forward, anything we're putting in is courts. because courts can take much more abuse. I've had a tenant accidentally go and put wine, even though the granite countertop was sealed,

you know, it's still staying the countertop. Yeah. Courts doesn't, you know, can take abuse. It wouldn't stain like granite can. I love courts. Love it. Of course, it's just fantastic. It really is.

So it's just a matter of, you know, researching. Certain things are going to wear out no matter what. You know, if you're going to refinish a hardwood floor, my floor guy knows how many layers of oil that I want to put on it. You know, I refuse to be, you know, the typical home where they'll go and put two coats in or something like that. I have a minimum of four. So I know that floor can just, you know, take abuse. So I prefer, if I possibly can, to do things once and make it last. We try not to be trendy in any of our choices, any of the design choices.

We try to do stuff that's going to be timeless. So no matter when you go and walk into that place, it's going to look good either today or 20 years from now. So what would you say on average, if you were to take what you're doing in terms of materials, extra coats of sealant and things like that, what's that costing? you additionally above what you might have paid if you were the average person doing this kind of thing? 10% 15 maximum. 10 to 15%.

And in the end, what will it do? It will, it'll save me down the road and having to replace it in five to seven years, going from five to seven to maybe 12 to 15. That's cool. You know, one thing that I do, and I don't think this would apply in higher-end rentals, but in lower ones to kind of make them abuse proof. They got this flooring at Home Depot called Allure. It's like vinyl plank flooring.

It's flexible and it looks really good. It's like laminate flooring. If you know what laminate is, it's like that, but it's made out of vinyl, so it's rubber basically. And yeah, I love putting that stuff in. It's about, yeah, I think it's $1.85 a square foot. It's a little more than carpet,

but the stuff, I mean, you can like, I don't know. I've had it in places that have like, you know, four, five, six, seven kids living in these houses, like not on purpose, decided to run a daycare out of it. And no, but like that, like the carpet is completely destroyed, gone 100%. The floor looks as good as the day I put it in. I love that stuff.

It's great. We've actually used that, but I'd say only in basements to be able to, when we finish a basement to make the basement floor look good. We have had some issues with it with the overlap where the glue sticks that it's come apart in a couple of places. But other than that, yeah, it can look good for a very long. long period of time. Yeah, I had that problem in a bathroom. It came apart around a toilet, so I won't use it in a bathroom anymore. But, yeah, that's cool. Yeah, good stuff. Yeah, that's

awesome. That's awesome. Well, no, thanks for zooming in on that stuff. I think it's a topic that a lot of people may not even consider. You know, I think the average guy's like, well, how can I do this, make it look nice, and save as much money as possible. And clearly, if you if you think about it, doing a better job of what you're doing, putting better materials is going to pay out in the long run. Well, I think it also, when you use better materials too, the incoming tenant can see it, and it kind of gives your place more of an it factor, just more desirable. There's very few times that, you know, I've been blessed in this aspect, and when I tell people

this, they're actually shocked. Since 1998, there's only been two months that I've never collected. collected a rent check. Wow. From any unit or from? From any of the units. Wow. Yeah.

So you've had two unit months total. Correct. Wow. Are you talking about because they were vacant, you couldn't fill them up fast enough? Are you talking about it because you had to evict or something? I've been fortunate. Never had to evict. And I've been also fortunate.

I've only been accord once. But what I basically do is, I have a very strong lease. I'm a member of the New Jersey Property Owners Association. I took their lease and modified it. The lease is over 20 pages long, and that's kind of also an entry barrier as well. If someone puts up a big resistance to signing my lease,

they're not going to get in the door. Wow. 20 pages. I mean, that's about as long as I've heard of. What types of screening type clauses if you'd be willing to share, and it's okay if they're just local to New Jersey or whatever. But I'm just curious, you know, what kinds of things really piss people off? Well, you know, there's certain things that I make the tenants pay for that maybe some other tenants wouldn't have to pay for. I make sure, first of all, all my units, all the utilities are separate, so I don't have to pay any utility, not even water.

I even will charge for their sewer usage because I get billed out for it directly. And again, so certain people are like, oh, I shouldn't have to pay that. Well, then again, then you don't have to live here. I also, one of the things I've done to kind of cut myself out of having to take phone calls from my tenants is I started doing this and all the other landlords in the area started doing as well, making them pay for, PSCNG service that covers all the major appliances and the hot water heater, the boiler, you name it. So if anything goes wrong, even in the middle of the night, they have a 24-hour hotline that they can call. They have no heat.

They don't call me. They call PSENG and they send out a service person to turn the heat back on. That's the local utility, yeah? Yes, that is the local utility. Wow. So that, yeah. So it actually, you know, it saves me money. It saves me time. It makes me more efficient in being a property manager because there's less, do you want to say, handholding that I need to do. I try to make sure going in that, you know, the tenant really understands the lease what I'm responsible for and what they're responsible for. And they understand how they're supposed to return the property to me ahead of time. And either they agree to that or, again, you know, it's going to create that barrier to them getting in there. Yeah. You know, one thing you said I really want to highlight here is that you have your tenants even pay for things like water and sewer. And I think a lot of landlords, they just assume that that has to, in a multifamily, they assume that that has to be the responsibility of the landlord. And maybe in some jurisdictions, maybe there's a law that says that. But I'm not aware of one in my area. So I mean, most of my multifamilies, I pay it. But like the new triplex, I'm going to part that out. And I have a couple duplexes. I just divide it in half. And the tenants never even, I mean, when I

in the duplex is like they never said a word like when I told them hey you guys are each responsible for your own water not even a peep from them so I think a lot of landlords could actually save a ton of money just by shifting that responsibility over absolutely I have a friend of mine who uh Kevin he had over 20 rental units and pretty much the way he was running things was more like a hotel versus a landlord tenant relationship and he thought that Even though the tenants had their own, you know, water meter that could actually bill out for their use, he thought he had to cover it. And when anything would go wrong in the place, let's say they clogged their toilet, he would be paying for a plumber to run out and unclog the toilet. And I'd be like, why are you doing that? They clogged it.

You know? So you tell them to get a, yeah, so you tell them to get a plunger. But I have things like that in my lease that explains that. That for nuisance items or just regular maintenance items, those things are their responsibility and not mine. And what if they screw it up? What if your tenant goes and tries, gets a snake or, you know, throws a bunch of draino down the toilet or does something, you know, that they shouldn't be doing and they mess it up because they're trying to maintain it? Or has that just not been an issue for you? It hasn't been an issue pretty much all the plummings have been updated, plumbing electrical, and all the places.

So if they dump Drino down the PVC pipe, it's not going to do a thing. Yeah, yeah. So if it was, but some of these homes, you know, they were built turn of the century, 1906 or above. But again, we pretty much have done everything in the homes. Yeah. Gotcha. Gotcha. But, you know, again, you need to find people with responsibility to begin with.

I'm not sure if I heard it on bigger pockets on a podcast, but someone said, you know, one of the ways you should go and possibly screen attendant is when you go and you meet with them, look in their car. Yeah. And look at the condition that they keep their car

because that's how they'll keep your house. Yeah. As like kind of a leading indicator. I was like, oh, wow. You know, that's interesting. And I've got to start looking in cars now. Yeah. 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.

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We talked about your early ones. But I want to know in today's climate, today's market, how are you finding good deals? Direct mail, MLS, what? I'm pretty much an MLS guy. Since I have my license, I mine the MLS every single day. I'm constantly in there seeing what has just come on. to the market. You know, there's certain areas of the MLS system that I'll tell you what's just been listed in the past few hours and you can see it. So I go in and I'm constantly viewing

to find things. And not just for me personally, but for my clients as well. Because even if, you know, a lot of MLS systems, they have, they can put you on an auto alert. So if something comes on the day prior, you'll get it next morning. Well, in certain places in certain markets, the competition's so high if you're not in there the day that it comes on the market. you're going to lose out. So I'm constantly looking in the MLS system, and I'm also networking with other landlords. Now, prior to being an agent,

what were you doing to find deals? Strictly working with an agent, who I thought was good until I became an agent myself. Nice. Well, you know, and we talked about that article earlier, but what criteria, I guess, would you say for somebody starting out

who might be looking for an agent to help them find good properties, what should investors be looking for in an agent? Well, I think they really need to ask the agent what experience they have with real estate investing. You know, someone who is not a landlord or hasn't been a landlord, you know, how are they going to understand what is that you're really trying to do? Otherwise, they're just, you know, kind of on the sidelines looking at it. You know, a typical real estate agent generally deals in emotions.

You know, most home purchases are purchased emotionally. And as an investor, you know, we look at things totally different. And that's why it's like when I started to be a real estate agent, and I would go into a house with someone who was looking to buy a single family home. And I would walk into it. And I'm thinking to myself, oh, you can open up this wall, that will create this value. but to be honest with you, the average person didn't appreciate it, but an investor does. See, I can walk into a house just because I've done it so many times and I can understand the bones of a house since I've gutted houses and plumb them and wired them.

Yeah. So I understand what needs to be done to be able to maximize either from a flip perspective or from a rental perspective. That's great. That's great. Well, so what's a typical deal for you? I mean, obviously you're buying these duplexes, but, you know, how about property condition? Are these things turnkey, cosmetic fixers, major fixers? And yeah, just tell us about that. The worst condition at it's in, the more I love it.

Okay. Especially now at this point in my investing career. Probably when I started off, I was over my head. I really didn't know much about how to do anything around a home. Thank God I had a friend of mine who was in construction. Ted, who literally came down, helped me out and literally showed me, you know, how to do certain things. Other than that, it's like I had to learn how to do everything by, you know, reading books. So, you know, you name it.

If I didn't have a book, I couldn't do it. And because, again, when I bought my first time, I couldn't afford to pay plumbers. And, you know, they were so much money. It's like, oh, my God, this is crazy. Because, again, I bought a house that I really couldn't afford. Deloitte was paying me 40 grand a year at the time. I bought a house that was $235,000. I got it because of my mother.

She co-signed on that loan. And that's how I got into the house. You go, mom. Exactly. Well, I think it's pretty cool. I mean, I like your perspective because you're a lot more like me in that more hands-on landlord. Like, I don't do as much fixing anymore.

But a lot of people we have on the show, you know, they have a lot of systems and processes and people that do everything for them. But you still do a lot of your own work, it sounds like. I still do a portion of it. But when I first started off, again, I did a majority of it. And I think by me doing the majority of the work in the beginning, it gave me greater perspective as to being able to hire someone to do it.

And now it's like when I do go and talk to a plumber or talk to an electrician, I can go and tell them exactly what it is that I'm trying to do. It's not vague in any way, shape, or form. You know, when I talk to the plumber about putting the new heating system in the house and making sure that he installed check valves and a spiral bend to take the air out of the hot water baseboard system, he actually respects me more. Yep. Because I know what I'm talking about. And, you know, it really, it helps you out. And I can't tell you, you know, again, I grew up in a day, day and age where, you know, you used books to learn this stuff.

But nowadays, it's, everything is different with the advent of the Internet. I have learned to do things in a shorter period of time by utilizing sites like YouTube. Yeah. On the current project. In your pocket. I just had a sneeze. The current project that we're in right now, we bought the house. It was literally sinking in the middle.

You know, the main beam that runs through the house in the middle of the house sunk by about two inches. So I brought in an engineer and asked them, okay, well, we need to level out the floors. And it was going to cost me well over $10,000 to level out the floors. And I'm like, oh, my God, this is crazy. So what did I do? I went on YouTube. and I looked up how to jack up a house. And okay, so I watched the videos.

I'm like, and, you know, this really doesn't seem all that difficult. I had two bottle jacks. Each one did, you know, 10 tons of pressure. I put them on each side of the post, went out and got metal plates and slowly jacked up the house, stuck in the metal plates, and level down all the floors in the house and one shot. You know, I keep my bottle jacks in the back of my Prius. It's always helpful to have. I mean, you never know when you're going to have to jack up the floors.

there you go I love that I mean I use YouTube a lot all the time as well I mean again I don't do as much any more of the fixing but when I was getting started we talked about a couple weeks ago

the unfair advantage right and so if people don't I mean that could be your unfair advantage is that you have the ability to learn how to do these things like when I got started

I got a book one two three Home Depot from the Home Depot and it was yeah yeah absolutely the big orange book yeah that's how I learned

how to do everything I remember soldering out my garage trying to get my water heater working. It was a disaster. I ended up calling a plumber friend of mine to walk me through it on the phone. But no, I think there is a time and place for doing your own work, especially when you're getting started. Absolutely. And it can save you a tremendous amount of money. And really, as you say, give you that unfair advantage where if you know that you can go in and do something and not have to hire someone, God knows how many replacement the windows I put in, you know, with everything that we've invested in. And now it's like I've got

clients that are just like, oh, Darren, I need to do windows. Okay, no problem. I'll come over and show you how to do it. Yep. So, you know, that's an added benefit that I'll do for my clients as well. I'll show them how to do things so that it can save them money because I want my clients to be as successful as they possibly can because I want to do more deals with them. Yeah. That's great. You are, You are the rising above and beyond type of investor-friendly realtor, which is rare, man. I mean, seriously, if you want to create a successful niche, I mean, you're certainly doing it. And I implore any real estate agents who are listening to pay very close attention because, you know, I think, you know, it's about the intelligence factor, but it's also about that service factor. and if you can provide that extra level of service,

that's really going to help out. I also try to give my clients access to any connections that I have. So, you know, if I know someone, like I've got a good friend of mine, again, who works for a window company, so he can get me the windows at virtually cost. So I just give it to my clients at the same thing. Again, I want them to be successful. One thing I would probably say that was one of the hardest things I did

when I first started out was, you know, you watch TV and you see these people that are, it seems like, paying absolutely nothing to get work done around the house. And at least in the New York metropolitan area, things probably would cost three to four times as much. And when you're a newbie, it's like, how can you possibly get better pricing on services to make you more competitive in the marketplace? Because when you're, you know, they're going to give the guy who's done, you know, 60 homes with him a better rate than it would. for the for the for the newbie you know a plumber may charge 95 or $100 an hour to the season investor versus the newbie is going to pay $190 to $200 an hour so what I did uh in an effort to try to save

money and I implore all new investors to do this is to group together and and that is to create volume between a bunch of you and you know when you go out to find the right plumber uh you tell So it's not just me. You know, I've got, let's say, you know, 10 units here, but it's also these 20 units or these five units or these one unit. In essence, we've got 50 and we're all going to give to our business. So what's a rate? Yeah.

Give me a better rate. That's a great, great tip. I think that's awesome. And I also implore anyone who's listening to do that because you can, you can certainly save a lot of money through service folk doing that. anybody from a handyman to a plumber, that works fantastic. Let's transition really quick to how you're acquiring these properties. What are you doing in terms of financing?

Are you paying cash for them? Are you putting money down? What's the plan these days? Not mom, not BOM. Well, yeah, the bank of moms tapped out. But how I originally came across and found bigger pockets was that I had exhausted the traditional methods of financing homes. So I was trying to find ulterior ways of being able to finance more property deals. And I found bigger pockets and found that,

okay, wow, there's this whole other avenue that I can tap into that I really wasn't all that aware of at the time. So now it's just like I've actually hooked up with so many different money people to be able either to get me into a community bank where I can be part of a portfolio loan. And that's just open up the doors and being able to do a lot more. You know, after you've gone past the four, it makes a big difference. Gotcha. Gotcha. So you're going to these sources, financing the good portion of your your properties, putting what, 20% down on them? And is that kind of the typical deal these days?

Yeah, pretty much. That's 20 or 25, depending, you know, if it's an income property, they generally want 25 right now. Yeah, right on, right on. And any tips on, well, let's see. So you said you're going to these community banks, going to portfolio lenders. Are you getting money from private lenders as well?

It's an avenue that I've only explored in right now in looking at something to fix up and then be able to refinance. So, you know, get the initial loan and then possibly put a couple hundred thousand dollars into something for, you know, via construction and then go and finance the whole thing out where I've created a lot more value in the home. That's what I've done in the last few small multifamilies I did. I use private money to fund the purchase, fix it up, and then go to the portfolio lender and they refinance it without too much of an issue. Yeah, I mean, as long as absolutely. And again, if you can show that you've got the cash flow there and you can show them success, they're going to look at it seriously.

Yeah, yeah, for sure. All right, so let's transition a little bit. Before we close this up, I want to know some kind of details about landlording. A lot of people who listen to this show are landlords. So let's go into some really specific things. Like, first of all, how are you finding tenants? How do you find them? Again, the primary way that I'm able to find tenants is by listing the properties

and getting the exposure there by putting it on the MLS. The properties that we have are generally, I'd say, more desirable. And because of their location, people want to live there. They're very close to the train station. They're close to schools. or close to the town that can allow a person to walk in and do whatever and not use a car. So that has enabled us to always have this constant source of potential tenants. But I think what's really important is for, if you're a landlord,

is really to try to understand who it is that you're trying to rent to and know your target market. Yeah. Again, you know, by us, you know, we've got three bedroom units. We're trying to target families. And generally, families don't like to move outside the school's year. So, you know, we make sure that all our leases renew either, you know, June, July or August. Yep. You know, it's – and again, it's like trying to find a tenant, you know, in the middle of October, you know, before the holidays are coming in.

it's just very, very tough to do. So no matter who you're, you know, if you got a one bedroom or a two or a three, it's very, very important for you to understand who your target market is and make sure that you're going to be able to rent to them. Yeah. So try to understand the cycles that they generally move on and plan around that if you possibly can. So let's say if you did have a tenant though that moved in in January, you know, offer them

a year and a half lease to get them through the. end of June to make sure that it would work on the school system cycle. That's a great idea. Now, of course, you have to obviously be careful not to violate any fair housing laws when you're advertising or when you're screening and picking your tenants. But by having your numbers work, your lease is kind of run during those durations, you increase the likelihood that you're going to get that target demographic. Absolutely. Absolutely. And again, there's just been very forefirm. that pretty much everything we've done is by via a realtor.

So it's just very, go ahead. Well, that's interesting to me because we don't, in my area, we don't do that. Like I don't, they don't list rental properties on the MLS like that. Can you kind of, I mean, for those people like me who don't have that, what is that process like? Well, I'd say it's very similar to selling a house. You know, a realtor is going to come in and, and list the property for rent. for rent, you know, and you have their listing with them for a duration of time for them to find you a tenant. Obviously, you have the amount that you want to pay, and the realtor generally goes and does the whole screening process.

So if it's, you know, a credit report, the application process, if they're looking at criminal history, whatever it is, they go and then present it to you as a landlord. and you can obviously if that person works out to whatever your standards are i think it's very important as a landlord you write down what is important for you or what your qualifications are so that way you never make exceptions for anyone that can kind of get you in trouble down the road so it's like on the uh the ultimate guide that that you wrote uh to screening tenants it's like three times, I think you run in there, three times the rent, their income has to give an absolute minimum. Well, then you better never go lower than that, if that's what your criteria is. That way you can never have an issue. Yeah, I'm so strict. Like, I won't do it. If it's a dollar

below, I won't do it because I have to draw that line just because, I mean, I don't want to be the guy in my own mentality. I don't want to be the guy that's like, well, you make a hundred less. So I guess that'll be okay. And then, oh, you make 200 less. Well, I guess that's okay. I don't want to parse that and be, you know, so I just, I have a very, very defined line. Like you have to make. Slippery slope. Yeah, it is. I have a, you have to make exactly, you know, $1,45 a month. If you don't make that, don't apply. And I, I state that everywhere. Yeah. And I think, I think the, the, the, the, the realtor thing comes into play, and I'm speaking out of generalities here, but I, you know, when I was an agent in Los Angeles,

I dealt with a bunch of rentals. Um, uh, I, I know New York City. you can't rent an apartment without going through a real estate agent. So I'm guessing it's in the major cities, and maybe somebody in the show notes can verify that for us. But I think in the big cities, you know, agents come into play a lot more than in the sticks. Yeah, interesting. Probably. But again, you know, depending upon where you are, who pays that,

who plays the broker commission is going to be different. I know if you go to Chicago, it's going to be the landlord who pays it. But primarily here in northern New Jersey or New York metropolitan area, the incoming tenant is paying for that broker's commission. Really? And that is advantageous for sure. I would love to have that if my tenants paid for all their own work of finding a place. Yeah, I don't have that. Sure.

There you go, man. Start moving out of Podunk and come join us in the bright lights in big city. Yeah, Darren, you got any rental properties I can rent for me? Oh, sure. Nice. It really depends if you qualify. Just go look at my car. Hey, so do you have any good tenant horror stories?

I mean, you said you only had, what, two evictions and you had to go to court once? What was that all about? I've had no evictions. I've only been to court once, and that was for what I charged the tenant in moving out. that they were in disagreement with the numbers that I had. So, you know, the only time that I really had issues were the police showed up. And I had a tenant with his throat around his hands around the throat of his wife was, again, when, you know, I inherited the tenant. Nice.

So, and then that was in my very first place that we bought, you know, the first duplex that we bought when we bought in that town. You know, it was really questionable. It wasn't the greatest neighborhood. But then a few years later, for some reason, Money Magazine named it one of the best towns in the top 10 towns to live in the United States. Nice. They don't always get it right. Yes, they don't. But thank God they hit it on ahead with that one because the rental rates went up.

The band went through the roof. Nice. And I think I saw that CSI episode, by the way. Oh yeah, yeah. Yeah, law and order, whatever it was. Husband changed in the life out. Yeah, it was very interesting to see that through a window. It really was.

Wow. My only eviction was from an inherited tenant as well. So, yeah, there is some risk in that. Yeah, and I've had many, many evictions, but of course that came with buying low-income properties and having crap standards. So, you know, very quickly learn my life. You make a very, very good point with that, Josh. Really, you do. Because, you know, I've told first time investors that, you know, a bunch of them would rather they say go out and buy a bunch of smaller properties because they cost less in more questionable areas.

It goes, oh, my cap rate's going to be better and my cash on cash returns is going to be better. I said, yeah, but you're going to be dealing with a whole bunch of other things that you're just not aware of. And unless you're really seasoned at this, you know, you really should have kind of a crawl, walk, run. Try to get into the best place that you possibly can to have a good experience that you can build upon. You know, and from there, you can build them in the empire. And I agree with you a thousand percent on that. I, you know, I would tell new investors never, ever buy the low-income properties until they've had experience as a landlord, till they understand how to screen till they get it,

because it can be an absolute nightmare. It was for me. I have no qualms talking about it. I've had horrible, horrible experiences about as bad as they can be as a landlord. And, you know, I don't want other people to go through the same thing. And that really is one of the big reasons why bigger pockets exist today is because of those experiences.

So, you know, I definitely, I'm glad. We agree on that. So in wrapping up this, this, this, you know, main section here, what's, what's, what's, what's your endgame strategy? You know, where do you see yourself in five, 10, 20 years? I mean, right now it sounds like you're doing all right. You know, you've got a portfolio. You're living off it.

You're, you know, you're starting to build it up. What's next? 10 billion dollars? You know, that would be great. But, you know, we don't have aspirations of anything of that. sorts. And I've met some great people on, you know, members of bigger pockets that have aspirations of even being a billionaire. And we particularly, we don't. We want to be comfortable and we know what our number is. And, you know, how we were able to devise that number was, you know,

by reading a few good books. I think, you know, the millionaire real estate investor was able to put that in perspective as to where we want to be. then how we need to get there. So there's a little plug for that book as well. Nice, nice, cool. Well, I guess why don't we take this to the... It's time for the fire round. Fire, fire round.

Oh, Batman did it for us. Nice. Yeah, fire round. All right, these questions all come from the Bigger Pockets forums where, Darren, you've probably seen these questions before, so hopefully you'll be ready for them. All right, here we go. Question number one, I can't find...

any tenants to fill my vacancy. What do I do? You can't find a tenant. Well, I would probably say the very first thing is the place is overpriced. You know, if you don't have a tenant possibly coming in there, the reason is that you're just probably above what market is at the moment. So you need to drop your price to be able to attract the people that are actually in the market at that moment. But this is another reason why I would say that I prefer to invest in a saturated market and not in more rural areas. So, you know, I want a constant stream of people that are always going to be there. But yeah, I have to say overall, it's you're overpriced. Right on. Yeah, I agree. I agree. How do your tenants pay rent? Are they paying online through direct deposit, cash, something else?

we never do cash so it's either direct deposit or through bill pay it just makes it a heck of a lot easier and really quick I will do a plug here really quick for for those people who do take ten have tenants that pay cash we you know we recently started working with a company that that allows you to collect cash without you actually handling the cash which which is kind of nice for safety purposes It's called Pay Near Me.

And you can, we'll link to it in the show notes, but it's pretty cool. Basically, your tenants can pay the rent at like a 7-Eleven or some other local businesses can take their payments. But it's great. You never handle it. It's all accounted for. So check out the link in the show notes for Paynear Me. It's a service we came across about a year ago. And we just now started working with those guys because we really do like the idea.

Yeah. Sounds great. All right. Next question. Window, curtains or blinds? Do you supply them or do tenants supply them? We supply blinds and pretty much that's it. If they want curtains, they got to put them up. If they go and they damage the wood, though, and when they do it, they got to repair it. So they got to fill in the holes, if they drill any holes and then paint afterwards and restore it back to the condition that it was given to them in.

all included in your 20-page lease, of course. Absolutely, it's in there. No joke. Your lease has got like the big FAQ section. What if my kid puts a hole on the wall? I swear. So I've had people come back to me. I'm not signing this.

Are you crazy? Nice. All right. So here's a morbid question that Brandon decided he wanted me to ask. It was in the forums. What do you do if your tenant dies? Wow. I know.

He's a morbid dude. I had this happen one time. Interesting. You know, it's never happened to me, but obviously. Maybe Brandon can answer. I think the first thing I would do is probably talk to my attorney and ask because I don't know if the lease, if they're renting there alone, the lease would probably become Nolan void. Again, I'm not an attorney, so I can't officially say, however, if someone else is living with them,

in New Jersey, we're required that if anyone is 18 years and above, they have to be on the lease. So let's say a mother's living with her daughter and the daughter's above 18, the daughter's technically still responsible and still needs all the legal aspects of needs to, you know, obviously perform to the lease. So at least that's what I understand. So I would say, you know, again, I'd be on the phone with my attorney. I wouldn't even, you know, know, know where to begin on that officially. So I wish I had a good answer. But, you know, sometimes in this industry, it's really important to understand that in most cases, you don't know everything. Yeah. So, and, and, And I don't claim to.

That's not true. Josh knows everything. No, I don't know squat. Forget me. It's not me. No, there are people who are, you know, claimed to know everything and anything. And they like to charge a lot of money for access to that information. And I think what you said, you know, you've been investing since 98.

You know, that's a considerable amount of time, 15 years. And, you know, in 15 years, you don't know everything. And you're still not going to know everything in another 15. In fact, the more time that I spend on bigger pockets, it just, you know, it's kind of like looking up at the stars and going, God, I'm small. You know, it's just like you realize in the end, although I may know a lot more than the beginner in the grand scheme of things, you know, there are so many things about this industry that I still have yet to learn and it makes it great. Yeah, for sure. For sure. Brandon, this is your question. Oh, yeah.

Do you rent to students? Uh, me personally, I've never done it. Uh, again, if I was going to do that man, when I really have to over-engineer the place. Yeah. Uh, put some spots for the beer kegs, you know, on the counter. Yeah. And, and I mean, have I been, I've literally, I've been through student rental units in just in the past six to eight weeks and looking at them as, as, as potential investments for my clients. So, uh, it's just not something that I would necessarily, jump into if I was new. Again, it would be very important for me to understand how I was going to be able to attract those students going forward because, again, the students are going to,

they are going to be more abusive to a place in general. Well, I tell you, some landlords are abusive to their student renters. When I was a senior in college, I inherited a, I rented a apartment and you walked in, you opened the fridge. I kid you not, there was not a square inch of that refrigerator that was not covered in about an inch of mold. Oh my God. And, you know, I said to the manager, I was like, this is, this is disgusting. You know, you guys need to replace the fridge. And they brought in a cleaning crew.

And I said, there's no way in hell, you're cleaning that thing, and I'm still going to use it. And so, you know, apparently they thought we would. And when the time came to start using the refrigerator, for some reason, it just didn't work and I don't know how that happened but uh you know you know it's funny you say that the very first place that we bought that there was so much mold in the fridge and again good old bank of mom she got that fridge spotless oh my god he thought it was a new fridge by the time that she was done so uh but yeah i'm sure there are landlords that that can be abusive to their tenants

and that's very, very unfortunate. I think if you do that, you really shouldn't be in this business. I agree. You know, if you're a landlord, you need to understand that you are in the service industry. You need to service your clients, and you will get a bad reputation, and people will not want to run from you. And it will catch up to you at certain points. Either, you know, if your personal reputation doesn't matter to you, then so be it. But, you know, if you're doing stuff like that, legally something is going to then catch up to you as well.

And that's not a place where we know that we want to be. Yeah. And, you know, you're given bad name for the rest of the industry. Absolutely. It's, you know, that's why every article you read about landlords and everything you hear on the news is bad because, you know, they like to pick out those guys. And anyway. It'd be like Joe Pesci in that movie when he was the landlord. That's going to be their opinion.

There you go. There you go. All right. Last question of the fire around. If a tenant wanted to buy one of your properties, would you sell? You know, that's a great question. And I would probably say no. And the reason why is because of how well they produced.

It would really take on some of them a very, very strong number for me to want to sell. Again, because they produce. Yeah, for sure. And again, it's never, my mindset has always been create cash flow. right on right on all right on all right cool cool moving to the final segment this is our famous for yeah wait wait there was no quick quick tip at all draft this whole thing yeah that happens in the beginning we usually record that before you quick you want to join us on that sure right ready it's time for the quick tip nice and today's quick tip is listen to the

is four. There we go. I have one. Okay. I got a bit quick time. Let's hear. Always put your paint codes of what you use in your releases. So in case you ever have to do a touchup, the tenant has to do a touch up. They don't have to call you and say, oh, what colors in the living room? Well, it's right there. That's in your lease. Darren, if you were in the room, I would give you a hug. Yeah, that's probably one of the best tips I've heard on the show, period. Seriously? I have the worst problem with paint. I'm like, I say I only use one kind of paint, but then like they're out and still

I have to get a different kind or a color match or whatever. I must have a hundred times different types of paint around my different properties and I never know what I'm doing anymore. That's problematic. It's very problematic. I have a major problem with paint. Over the past like six months, it's gotten, it's not my fault. I hired a resident manager to take over like all my maintenance.

And so he goes and gets like the wrong, every time he color matches paint. And I didn't realize this for a while. So he'll go to like Walmart and get them to like scan the color from the wall. And it's a totally different color every time. Yeah, that doesn't work. Yeah, that's not good. We use strictly Benjamin Moore paints and pre-mixed colors. And we tell them what those colors are.

So they never have to even question it. Yeah, such a good idea. And Brandon Nelson needs to fire his president property manager. We're working that way. There you go. All right, famous for it. Let's get going with this. Darren, what is your favorite real estate book?

It's clearly not rich dad because you haven't read that one. My favorite real estate book? Yeah. Yeah, I'd probably say millionaire real estate investor by Gary Keller. Right on. But a close number two, and being an agent is probably the millionaire real estate agent that he wrote as well. Cool. Good books.

So would you say that that is your favorite business book or do you have another favorite business book? I would say I have another favorite business book. another favorite business book. But I would probably say it's more of an inspirational business book. I don't know if you've ever heard of it. It is written by a man named Art Williams and he wrote a book called All You Can Do is All You Can Do, but All You Can Do is Enough. And it is a fantastic book. Art started out. He was a football coach and created an amazing a company selling insurance and I think he now owns the Tampa Bay Lightning, like a hockey team or something like that. So he's a billionaire. But he started out making $10,000 a year and he talks

about how, you know, through determination, you know, you can succeed. And despite even if you have limitations, you can't let anyone tell you that you can't do it. There is a great speech that he gave to the National Association of Religious Broadcasters. If you look it up on YouTube, it is fantastic. And art, I think, is really the one, the inspiration behind Nike's Just Do It at. Art came out with, yeah, so Art came out with the Just Do It well before Nike ever used it. So, really, really interesting guy.

Again, great book. All you can do is all you can do, but all you can do is enough. Cool. I'll link to that in the show notes. Yeah, sounds good. You know, I was going to say, Hamburg. Burger America by George Motes, but that, you know, got shot down. I don't know that one.

You know how this one? I don't know that one. This is classic. But again, it's a burger book. Anything about burgers is good for me. Absolutely. All right. So next question, hobbies.

What do you do for fun? I would probably say, you know, we like to travel. and I'm also a gamer. I'll admit that. I love my Xbox 360. And so if you want to find me on there, my tag sign is Green Darren. You know, I think we should like start,

and I'm going to put this to Brandon because I'm too old. Actually, I'm clearly not too old. But, you know, I think we should start setting up some like bigger pockets online gaming tournaments. Yeah, it might be kind of fun. It would be. That would be. That would be great.

Yeah, yeah. By the way, as we're talking to, you know, throughout the podcast, the light in your room has gotten darker and darker. I don't know. It's like to. I can't even see you anymore. I was going to comment on that as well. Yeah, the sun is sitting here on the East Coast. So if you go, hold on one second. I'll turn on. No, no, it's okay. We're almost like just standing in the dark. Yeah, you could be Batman. There you go. All right. I'm Batman. Okay. All right. Last question. of the famous four and the last question of the podcast. What do you believe sets apart the successful investors from those who fail? I would probably say no matter what, it has to be persistence.

You know, you need to jump into this business with both feet and really be committed to it to be successful, in my opinion, at least in buying, hole. In flipping, you probably can get in and out of it, obviously, a little bit more easily. But, you know, you have to come into this business expecting that you're probably going to, you know, get some knocks on the head and you're going to come across some bumps in the road. But, you know, obstacles are what you see when you take your eyes off your goals. So you really need to be focused and never give up. I probably say the most successful people in this business that I've come across are the ones who failed the most. But they didn't give up.

And that's why they're in the situation that they're in now. Nice. Good, tweetable topics in there. Good. All right, Darren, listen, man. Definitely a fantastic show. A lot of great tips and tidbits in there. And we definitely want to thank you for joining us.

and we appreciate you being a part of Bigger Pockets. And, you know, people who are listening who may have questions will hit you up on the show at BiggerPockets.com slash show 48. They can ask you any questions, and I'm sure you'll be there for them. Really quick before you go, can you tell people your website? Because I know they'll want to find you there. Well, you know, that's a great question. And I don't have a website, Josh.

What? No website. Yes, no website. I mean, I've got websites from my prior companies, but not when it came to real estate investing. So it's not necessary to have a website to be a successful investor. You hit the nail on the head. Yeah, you don't need to be it. What you need to be is a good networker and someone who's going to open up their mouth and ask questions. And you know, you guys have put together probably one of the best websites when it comes to real estate investing. that I've ever come across. And you've taken it to a whole other level.

And BP is really, it is a gold mine. Okay. You know, I know I'm shamefully plugging BP right now. You're not paying me to do this. Oh, stop, stop. There's probably not a single day that I don't come across something and go, oh, wow. Oh, wow, I didn't know that. So it is so chock full of information.

Again, you know, a millionaire real estate investor may be my favorite real estate book, but it pales in comparison to the information which is on bigger pockets. Well, thank you. Yeah, definitely I appreciate that. Definitely appreciate that. Well, you can find guys, I did know that Darren didn't have a website, but I asked him anyway just to mock him. No, just, no, honestly, I wanted to make a point for investors that, you know, A lot of people are like, oh, you got to build a website first.

You got to build a website first. And I think that's nonsense. I don't think that's true. So, you know, I was hoping that Darren would parrot that. And it sounds like that's the case. So listen, Darren, thanks again. We definitely appreciate it. And they, you know, anyone listening could find them on the show notes or look him up on

bigger pockets, just Darren Sager. And we'll, we'll see around, man. Thank you so much for having me, guys. It's been a pleasure. You go. Thank you. right everybody that was uh as as i said up front that was probably one of my my favorite shows that we've done so far i mean just a ton a ton of really really good information so hopefully you enjoyed it

as much as i did i know brandy did yeah no it totally like reinvigorates me to like uh what i'm doing like the whole buy and hold because you know buying hold investing can kind of feel sometimes like i'm not really seeing the fruits of my labor but you see a guy like him who's been doing it for you know a lot longer than I have. And he's experiencing those fruits right now. And I think that's, it's just refreshing. Yeah. And I just think a lot of the tips like, you know,

tenantproofing your property. I mean, it's just, there's some really, really smart stuff there. So good, good stuff again. Anyway, so please make sure if you've got questions, pose them to Darren on biggerpockets.com slash show 48, our show notes.

otherwise we're really really happy you chose to listen to the show if you've missed any previous ones go and catch up they're all pretty darn awesome and leave us some feedback and reviews if you haven't done that already on iTunes otherwise check us out on Facebook Google Plus

Twitter so on and so forth we like to do fun stuff there share some cool things that we don't share or discuss on Bigger Pocket itself. So follow us there. And if you're not a member of bigger pockets already, what are you waiting for? Seriously, there's just so many reasons to join. I don't have to tell you. If you've listened to our shows, you've heard from enough people who've given you about a thousand different reasons why you should. So thanks for listening. And we definitely appreciate the time you've given

to Brandon and I and our guests throughout the year. And we will, we'll, we'll see on the next one. Show 49 coming soon. I'm Josh Dorkin. 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 height, you're in the right place. Be sure to join the millions of others who have benefited from biggerpockets.com. Your home for real estate investing online. 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,

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