BiggerPockets Real Estate Podcast - 54: Investing in Under $30k Real Estate, Working a Day Job, and Good Vs. Bad Neighborhoods with Lisa Phillips

Episode Date: January 23, 2014

How much money does it really take to buy a rental property? $200,000? $100,000? $75,000? On today’s show, we are going to chat with Lisa Phillips, a real estate investor who buys real estate in the under-$30,000 range and achieves some incredible cash flow from her mostly-passive investing. Lisa shares some amazing insights into how she went from a personal foreclosure to owning several rental properties – bypassing the banks and investing creatively. If you are someone who is looking to get started investing with real estate investing without spending hundreds of thousands of dollars – this is the show for you. Read the transcript for episode 54 with Lisa Phillips here. In This Show, We Cover: Investing in real estate while navigating the instability of day jobs How going through a foreclosure changed Lisa’s financial future… for the better Knowing when to call it quits Tips for negotiating with creditors What makes motivated sellers attracted to a certain real estate investor? Tips for defining a good vs bad neighborhood Finding a property manager who exceeds your expectations How much does a good property manager charge? Simple tips for attracting the best tenants to your rental properties The positives and negatives of low-price investing What crimes are acceptable? Links from the Show Tenant Screening: The Ultimate Guide NARPM – National Association of Residential Property Managers CrimeReports.com SpotCrime.com Rentometer.com Books Mentioned in the Show: Rich Dad Poor Dad by Robert Kiyosaki The 4 Hour Workweek by Tim Ferriss Tweetable Topics “Be clear & upfront with what you can do for other people. What’s in it for them?” (Click to Tweet!) “Landlords: never sacrifice your standards just to fill a vacant unit.” (Click to Tweet!) “When looking to invest in real estate, leverage the power of the internet.” (Click to Tweet) Connect with Lisa Lisa’s BiggerPockets Profile Lisa’s BiggerPockets Video Blog Lisa’s website: www.AffordableRealEstateInvestments.com Learn more about your ad choices. Visit megaphone.fm/adchoices

This is the Bigger Pockets podcast, show 54. 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. 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 up, everybody? This is Josh Dorkin, host of the Bigger Fockets podcast. here with Brandon Dernor. Hey, Brandon. Hey, Josh. How are you? I'm good, man. I'm good. I know I make you laugh

every time I announce you, don't I? You are clever in your announcing, I guess. I am indeed. Yep, yep. So how are things, man? You've had a bit of a wet week, haven't you? I've had some plumbing issues this week, but I think we got it all figured out. Somebody had flushed large rocks down the toilet, we think, and completely clogged up the drain in one of my the recent foreclosure I bought. So the last guy wasn't too happy about being foreclosed on, so he decided to flush some potato-sized rocks. Nice. That's awesome. Yeah, those are the stories you don't hear about, you know? You never hear like the late night guy, you know, like on TV saying 59997 price, you can learn how to dig rocks out of a sewer pipe. You don't hear that.

That's true. That's true. Well, I am sorry to hear that, but I am glad that you guys resolved it. And I'm glad your stress has gone because you were a little stressed out. Yeah, it was fun. I couldn't find a plumber. There's the other, you know, we talk about rural investing, right? Like, that's the problem.

I mean, as much as there's great things about it, and I love the fact that I can buy a house for, you know, dirt cheap and then this triplex was $70,000. The fact that you can't get a plumber, period, on the weekends. is the downside. I mean, I called all seven of them in my town and none of them answered or called back the whole entire weekend.

Like, yeah, it's not. I truly believe people don't want to work. I don't get it. You know, everyone complains about how bad the economy is and nobody can find a job. And I tell you what, man, I've been trying to hire people and for bigger pockets.

And it's amazing. You know, I've responded to resumes with interview requests and people don't reply. I've gotten 40% of the resumes that I'm getting have like horrible major, major typos. And I'm like, you know, what is going on here? Do people really want to work or are they just too damn lazy to do it? I don't know.

Yeah, I don't know. It's insane. And rant. And rant. Well, that actually leads us well into our quick tip for today. Quick, quick, quick tip. All right, there you go. All right, so my quick tip is always get the cell phone number of your plumber, not just the company number.

Because if you build your list of maintenance guys and your plumbers and stuff ahead of time, don't just have a company number because a lot of times they will not answer on the weekends. Get a cell phone number. I now have a really good plumber cell phone number. I got from a referral. He's twice as much as everyone else, but he showed up finally. And yeah, quick tip. Cell phones. They're good.

All right, all right. Well, why don't we move on past your personal problems and get onto the show here? Thank you. Yeah, you know, I'm here for you, Brandon. Well, on today's episode, we're going to talk with Lisa Phillips. So, Lisa's been video blogging on the Bigger Pockets blog for quite a few weeks now. And it's really putting out some pretty cool content about investing in properties that, you know, quite frankly, scare a lot of people away. properties in the under $30,000 range. Now, I have owned some scary properties,

and this show is one that I kind of wish I had before I started, but there's some really cool stuff to come, so definitely pay attention. Lisa's got an inspiring story of how she built her rental portfolio after going through a foreclosure of her own, and she's going to share some great tips on dealing with the nuances of investing in these low-price areas. So, you know, if you want to learn about what it's actually like from the other side to be foreclosed upon or, you know, how despite the hardships, you can turn things around and get the ball moving again for yourself.

This is definitely a pretty cool show to check out. One more reminder to everybody, please be sure to come and ask questions of Lisa or leave comments on the show notes page at biggerpockets.com slash show 54. Or in fact, you could even ask questions of Brandon or myself there if you want, or just tell us how great you think the show is or how terrible we are. We do get those hate mail from time of time. We do. That's fun. We do. There are two kinds of real estate investors, those who have reviewed their insurance,

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and even loss of rental income. Now is the perfect time to review your rates and coverage. Get a quote in minutes at biggerpockets.com slash landlord insurance. Steadily, landlord insurance designed for the modern investor. 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. All right, with that, let's get moving and get to the show with Lisa. Welcome to Bigger Pockets podcast. It is very, very nice to have you. Thank you, Joshua. and Brandon. Ooh, Joshua. I like it when our guests actually say, and Brandon, even though you're the one that always welcomes them.

So, Lisa, thank you. Thank you guys for giving me the opportunity. Yeah, yeah, no problem. Well, let's get to this thing. Very first question I like to ask people, how did you get started with real estate investing? Okay. How I got started was sort of some bad lessons in overinflated housing markets

and being laid off. So the quick story is that, I was in Vegas and I bought in 2006. I just came out of college, had my first job. Everything was rosy then in Vegas. And I just felt like I had to get into the market. I got it in 2006. And as you can imagine, over the next couple years, the market fell off.

And I got laid off. So I had to, so I found another job relatively quickly and I moved to Ohio. But that meant I had to rent out the other house that I had. You nest that was overinflated and the mortgage, I had to pay like $800 a month to like cover the mortgage. And it was just like a really hard lesson to learn about overinflated housing and being forced into being a landlord. Then the second part of that story is yeah, yeah. And then the second part of that story is, so while I was there for about a year and a half in my new Ohio, I'm like, I guess I'm going to stay here. I purchased the condo that was distressed for about $35,000.

And it was built in 2001. And when I purchased it, that was great. And I was going to fix it up. And I had all this money saved for that. Well, then I got laid off again. Good old 2009. Oh, nice. So, so, so, so, so, so, so, that's the story of me coming into.

I did have a foreclosure, which is, I'm glad I had it at an early enough age where I think I have more than enough time to recover from it. But it was a hard lesson. I don't recommend for people, but I learned a lot in the process. And so I just purchased this other distressed property that was built in 2001. It was a foreclosure. And someone said, hey, why don't you fix it up? And I was unemployed.

So I said, hey, why not? And that's what really got me, like, looking at real estate investigates a strategy. So I've got a tip for you. If you're working for somebody right now and you really hate your job, job, just go buy a property because it seems like every time you buy a property, you get laid off. It's weird. I love, here's the deal. Like a lot of us have this instinct where you just love to buy real estate. You might not be in a place where you should, but we have like this internal need to like buy a home and fix it up. You know, like people love doing that. And I think I got caught up in it

with an experience. I always say I have a good disease. Yeah. I caught the bug and I can't get rid of it. Like I even tell my wife, okay, we're done for now. We're going to stop for a while. We're going to, you know, lick our wounds, make everything, you know, stables. Yeah. And then it's like, oh, well, that house just came on the market. And that's really cheap. And oh, look how good it would look when it's done.

Yeah. Yeah. So I'm with you there. I get it. So let's go back to that story of, I want to go back to your very first one and kind of talk about the Las Vegas property. Because, I mean, there are people that are worried that we're in another bubble again, just like we saw in 2006.

In some areas of the country, prices are even higher than they were back in 06, which is insane. I was talking to a guy just a couple days ago. And he was telling me, like, he bought these, oh, was a condo in like Miami for, I don't know, two or three hundred thousand and they're worth like six or seven hundred thousand now. Like just absurd amount of appreciation there. So I guess, I guess what are your thoughts? I mean, how you obviously, you know, weren't as experiences as you are now going into that. So what lessons, I guess, did you learn about investing in that kind of a market?

I did learn a very important lesson that honestly, I never heard anyone say this. I really had to go through it before I figured this out. And I wish someone would have it. It would have saved me a lot of time. Even if you're investing or buying for your real home, if you purchase a property and your monthly mortgage payments, even with 20% down or whatnot, is more than what the market rents are in your area, the house is overpriced, regardless. And there's going to be a settling period. You know, when I was paying $800 a month to, you know, because I was trying to keep the house

and I had a, I finally did get a job. You know, I was like, yeah, when I try to rent it out, I'm like, yeah, can you guys want to rent this out for $2,000 a month? Like, no. Are you crazy? You get $1,200. And that was the money. market. However, if I would have known that, I would have been, you know, I would not have invested in that housing for myself. You know, I would have stayed firm to that. So that was the biggest tip on how I judge every property from now on. So if it does fall, you're going to go right back to where it should be, you know, you'll be able to rent it out at cost. That's actually, that's the exact advice I give to my friends when they say they're going to go buy a house.

I was telling the same thing as, okay, great, but make sure that your mortgage payment, you could rent it out for at least that. So at least you're maybe breaking even if you had to move suddenly. First case. Yeah. Everybody always thinks that they're going to stay forever. It's like they don't think of two years down the road or three years down the road. They just think, oh, I can afford the payment. I think that's good advice. The only issue I have is, you know, there's a pretty big difference between your primary residence and a rental property. But I guess you guys are taking it from the angle of you need to consider your primary as a potential rental property in case of a worst case scenario. And I guess that makes sense. But ultimately, when you buy a house, you know,

you really do need to determine and judge how long you're going to be there. I mean, if you're going to be there five years, 10 years, it doesn't matter if you're upside down for five of the 10 years. I mean, you know, you're there to live and have a home. And, you know, presumably you're buying that house for the neighborhood, for the schools, for whatever purposes. So I don't know. I take somewhat of a different approach to it, but thus far, I've been lucky, and it hasn't bit me. Yeah.

Yeah. For some people, once you've been bitten by that layoff bug and that outsource, but it really changes your whole outlook on life. And, you know, it happened when I was relatively young, so sometimes those are the lessons that stay with you the hardest. So, yeah, so even if it's my primary because of that, that fight that I've, I've experienced before, I'll still probably be very cautious and go, you know, what if we both lose our jobs? You know, so it just sort of sticks.

It just sticks for me. Yeah. Yeah, I agree. And I think part of that might also be Josh. So, you know, like you're self-employed. And so I guess maybe you're a little more, you're probably not going to get fired from your job. You know, like, so you don't have to worry about suddenly having to move. But, you know, if you had a job and all of a sudden you got transferred out of state,

You something at a rental that's, or I mean a property that's upside down. You can't sell it. You can't rent it. You're just, that's how the foreclosures happen. No, I got you. Maybe that's part of it. I don't know. Well, I tell you.

Go ahead, Lisa. Sorry. No, I think that's part of it. I say I'm like an Alaskan fisherman. Like, they follow the salmon. You know, like I follow the jobs. And I always think I'm going to stay. Like when I bought the property in Ohio, I'm like, yeah, I like Ohio.

Columbus is great. And then I get the opportunity in the D.C. area. So I move there. but I did think that I would settle there for some times, but sometimes you just got to move the economy, I call it. And what's great about this is you are, you're not the only one doing that. You know, there's plenty of people.

I'm hiring right now. And, you know, I've gotten a lot of resumes from people who are in Ohio and random other places. And I'm like, wow, you know, it's amazing. People really move around a lot for jobs. So it's, you know, anyone listening, you know, don't, I probably want to pay heed to Lisa here and, you know, follow the jobs. Follow the jobs.

Yeah. But does it always mean that real estate market will be perfect where you land? That is true. That is true. All right. So, you know, that first deal, you know, a bit chaotic, the follow up a bit chaotic. Let's talk about, I actually want to talk about the down and dirty, the ugly F word, the foreclosure that you had brought up. Yeah. Yeah, it's okay. I'm open about it. I am open about it.

Yeah. Well, I mean, and that's fine. You know, I think as long as you are, if you're not like, you know, top secretive and then people find out later like, oh, yeah, this person, you know, did this. Well, okay. So what happened? You know, how, you bought, you bought it at a price that was probably not the right price. And what was the process like? That's, that's something I'm pretty. curious about. Okay. So, yeah, I was overinflated, although I didn't realize that until the market falls. Then you realized, oh, crap, this was not the price I should have bought this out. You know, and an experience leads you to that. So it wouldn't happen again. And so I had just purchased the new property. It was 35,000. So like the mortgage after taxes and everything's like $350 a month. And I found myself laid off again. And so I had a choice. And the choice was, well, I just bought this one.

And this is way cheaper to keep as long as I'm unemployed. So I was like, well, I could afford to live here. And I can't necessarily afford to pay $800 a month. Like I have my own living situation. I'm in Ohio now. I'm not in Vegas. You know, the IT industry that I'm in is moving further east, not necessarily staying right here in the Las Vegas area.

And so I called them up. And I'm like, hey. just lost my job. I don't know if we're going to do this, but can we work something out? You know, because in 2009 was big in the modification. So modification was everywhere, but pinks weren't necessarily doing it.

They were just saying that maybe they will. So I was hopeful for that. However, you know, at the time, I'm going through it with everyone else. So I hear all these stories about, yeah, well, they said they're going to work with me, and I paid them according to their contract, but after a year and a half, they still foreclosed, so they didn't like keep to the contract.

They just got as much money as they can while they went through the foreclosure process. So I was like, okay, are they going to work with me or not? Because if you're not, I didn't really have any faith in them. And they didn't seem to really work with me. And they were like, well, we can't really talk about modification until you've missed payments. And so, like I said, I had to make the firm choice. And I think what a lot of people get in trouble with is they try to keep on versus accepting. when they should, you know, call it quits.

I'm not saying call it quits is what you should do, but you got to recognize where you're at. And I'm like, I have an unemployment check. Yeah, yeah, yeah. Like, I can't do until I find something new and I didn't know what that timeframe would be. I was like, this isn't happening. I can't keep putting $800.

That's fine when I was single and I had a nice job, but it's not at this level when I have my own expenses here. So it was just very clear. I could have like taken a little bit of that and paid it over, but I was like, this overinflated house, this isn't going to work. And long term, you know, if I don't get a job, I don't want to sacrifice so much for a property that at this stage was a bad investment. You know, so I just cut the court. And I think that's why, and it's stressful in some levels, you know, so it's not easy.

And I had to rearrange my whole strategy of real estate investing because of it because I couldn't get any more conventional mortgages. And I can't on a second rental property for about five more years for primary. residence after three years, but for a rental investment, I have to wait five more. So it determined my whole entire strategy, but if you go ahead and cut the cord when you need to, versus hoping for that, what is it the hell marry to save the day, I think you might be able to manage it a little bit more easier. And so since I knew that next, oh, this is sort of me, so I knew the next month that that payment wasn't going to go in because I was like, got to cut the cord. And then I'm going to call them back in three months and see if they're willing to work with me.

So like I went and got my lows at Home Depot since I just purchased the new property and I knew it was going to be fixing it up, but I knew I had a little bit of income coming in. So just to have like, because I knew credit would take a ding, so I went and got that before the ding came. And I think, you know, I already had my best buy card for appliance. So I sort of was like, well, let's work with the situation as it is. And so that actually really helped because I was fixing at my next place. I'd get like six months free financing. And when the payments are like $40 a month, you can. stretch that if you have some sort of income and your monthly living expenses are low because your

house payment is $350 a month. You know, you have a little bit more wiggle room. And so, so yeah, so as far as the foreclosure process after that, you know, payment notices went out and the default notices. And I mean, there wasn't any calls except for investors wanting to buy my property. They would send me letters and if you're interested in a short sell. And I actually tried to do a short sell. And the investor was very motivated. And we were calling the bank every day. And they were like trying to decide.

So the house I originally paid $38,000 for. The investor was trying to get it for $120,000. And yeah, the bank was like, no. Yeah. Yeah. Yeah. Interesting. So they'd rather foreclose. So they were working and working, but they weren't coming to a conclusion. So then it was foreclosed and they took it back during that process.

So that just sort of went up in flames. And I had a first and second mortgage. So on the second mortgage, which was honestly sold, like as soon as I bought the house, my second mortgage was sold to someone else. So they were sold. So I got in contact with them and offered to settle. And tip for anybody who wants to do that, they're going to play games with you. Just play.

Like, hey, I can give you 10% you know, I can give you this much. 10% usually works. And if they say, oh, we can do that, you know, just go, oh, well, too bad. Call me when you can. And then hang up. And then a second tip is because I talk to a lawyer, they're like, make sure you get in writing that if you do pay and settle, It's paid, settled in full.

And it shows that and get that in writing from them. And when I called, they're like, well, sorry, we can't do that. And I'm like, well, I need someone who's authorized to make that deal to do it. And, you know, send me the paperwork saying that before I sign and pay you to settle this, this debt. And then they said they couldn't. Then I was like, call me when you can. And they called. And they were like, Ms. Phillips, here is my supervisor.

She's authorized to do this. And they faxed it over. And I was like, all right. So that was pretty easy. Hit me the deed. Gotcha. Gotcha. Gotcha.

Well, so, yeah, I mean, listen, a lot of people have found themselves in this situation, and it's really easy to point fingers and say, well, look, Lisa, you were irresponsible or Lisa, you screwed up, or, you know, I can go on and say a lot of bad things. And, yeah, look at you. But, but. Life happens. Yeah, life happens. Yeah.

It's a contract. And, you know, that's why contracts exist, you know, to give the banks, you know, and all. alternative, you know, when you don't pay. I found it's really interesting really quickly that, you know, the modification process, the banks were, it was really an interesting time because, you know, people were negotiating with the banks to get modifications. And they straight up said, you know, we will not work with you until you miss a payment, which is that, I mean, I, you know, I stopped. I've got banker friends. I've talked this through with a lot of people. And that policy to me just makes no damn sense.

You know, it's like that's money out of pocket immediately on the part of the banks. You know, if they, if they just stopped and gave some folks the opportunity, you know, who they were going to modify or foreclose on regardless, you know, they would have saved themselves a ton of money by just saying, all right, Lisa, you know what, you're paying, whatever you were paying, $2,800, $3,000, $25, you know, we'll cut your payment by X for a period of why, you know, we see that you're in good credit. We're going to work with you. Great. Great. You know, when things turn around, you know, the modification goes away and, you know, you're paying again, you know, and they don't have to deal with the process of, you know,

vacant property for months and months on end. Everybody would have won. It just made no sense to me. None at all. And it took 17 months of no payments that they got. Can you imagine, you know. Yep. Yep. That. That's crazy. That's crazy. But, you know, it is their choice. And I was like, okay. Oh, of course. But I have to do what I have to do to protect myself. So. Well, sure. And so that's how, you know, it's like, oh, I made a mistake this happened, but I have, you know, I still have to live. And my think is I do not want to be the person you graduated from college and have to go back and live with my parents. I was always like, you know, I got an engineering degree. So I was always a smart one. So going back home afterwards because I had no money left.

That was just for my own pride that was not going to happen. So I was like, sorry House in Vegas, but House of Ohio, we can work with this. Can work with this. Well, hey, before we get to the, I move on a little bit, I do have a question for you because you kind of have a unique perspective that most people in this show that we've interviewed don't have. You've been on the other side of that equation, right? You've been hit with the yellow letters and the direct mail.

So I guess what I'm wondering, do you have any advice for investors who are contacting people like you were in your shoes then. Like what made you talk to the one investor that actually encouraged you, you know, that you started working the short sale? What made you attracted to them? Or what can people do to help people in your situation? I can't give you some advice. So the person that I finally went with, it just came at a time when they, it sounded like

the banks would consider a short sale, whereas before the banks were very hesitant about that. But I started hearing, you know, in the news that, okay, short sales are an option. they're working more. And so once I heard that they were open to it, then I gave it a shot before I didn't think they were. And I think anyone trying to get in touch with me what they could have done to get a faster response is like be very clear right on that front page what you can do for me. You know, like, we will negotiate a short sell, you know, immediately. Like that would have got me to pick it. I'm like, hey, that's a better alternative than a foreclosure. But, you know,

there's all this other stuff and I see a lot of letters, but there wasn't any, what are you going to do for me in this current situation. So maybe that clarity and big, big letter. So I don't throw your, the letter away would have worked. You know, I heard from the news that short sales were now they're going to maybe start working with people. But, you know, it would have been nice if they maybe said it at the very beginning when they sent me a mailer or what the solutions might be.

You know, that makes the perfect sense on why I, you know, guys like, you know, Jerry Puckett who we had on the show and other direct mail people, why they say that, you know, the big old letter that just has like handwritten words like, I will buy your house for cash. Like that's why that makes sense. It's like, oh, all right. That's exactly what I'm looking for. There's no like long story. And yeah, I mean, I love hearing that from you from you on that perspective because that's

exactly why the people react to those kind of letters. They don't need to be fancy or really on professional paper or anything like that. Tell me what you're going to do. They'll talk from there. But not don't. Don't give me fluff. I don't need fluff at this moment. I have tons of people giving me stuff I don't need.

You know, give me something I need, but make it very clear that I need it and that I don't have to search for it. Yep. Awesome. Well, cool. Let's go on to, so after that happened,

you moved on in the property in Ohio. How did you buy that then if you couldn't get a mortgage? Or did you have the mortgage at that point? I did. Then I got laid off afterwards. And then, and then, yeah,

so this one's sort of fine. It's a little faster than this. And it's why I found rent. real estate to be a thing that I can depend on in times of hardship because I was able to fix it up and do a lot of myself, probably because it was newer and there's a lot of resources out there. And YouTube was big with people showing you how to do it yourself. So I went ahead and did a lot myself. And I feel so great. The knowledge you gain when you can fix up a house is some of the best knowledge in the world to have, being handy around the house. And it just got me thinking, you know, and then right before I got got my job, I got a roommate, and they came in. And because my, you know, I'm charging them 650, but my, my mortgage is 350. So all of a sudden, like, you're sort of up. Everything's paid for. And you realize that, okay, so for me, it just struck home so strongly that real estate is amazing, because you can always rent a room and have someone else pay

your living costs. And through that, you can, you can survive. You know, things aren't as tight. And so then I got in this thing of, okay, let me look for other houses under $35,000. Because I saw that there were in different parts of Ohio. So I was like, this works. And they'd visit the neighborhoods. They weren't that bad. And then I got my job offer in D.C. area. So I came out to the D.C. area.

And I'm like, I want to put this strategy. So this is when I got more strategic about, I want to fund another property under $30,000. And it proved to everyone that it can be profitable and it doesn't have to be in the worst part of town. So that's when I got into this, but more deliberately than the first two qualities or things that happened. All right. So let's talk about that. What was your strategy then for doing that? What was the deliberate choice you made? Right. So I'm in the D.C. Eden and houses are honestly like a 900 square foot single family goes for $400,000, if not a duplex. So I mean very expensive. even my rents, I mean, a run bedroom apartment and like an affordable housing complex is like $1,200 and $30 a month. And so, I mean, it's very high.

So I'm looking around. I want to do real estate and I'm like, and I go to realtor.com and I'm like, give me a 20 mile radius. Everything under $30,000. And then for me, that was Baltimore, Maryland, which is about a 45 minute drive. With traffic, it's an hour and 10, but when it's Saturdays and Sundays, it's not. and I went up there and I looked at a bunch of properties somewhere in neighborhoods that I was like, ooh, a little iffy. But then others were perfectly fine, but I had to go and see. So it was my realtor.

And he was a bit, it was sort of interesting. He didn't go to those parts of town much easier either, so he was a little nervous. I'm like, Joe, we'll just go and see it. If we don't like it, we'll just keep driving. He was like, okay. But I was able to get in touch with him because he had listened. his own like sub like $15,000 properties and he's like well I can't be upity about showing this to you since I listed I have properties at this price range and there are other real estate agents that they were

not even trying to hear that that wasn't worth their time or for inclination I get that so you just have to find somebody who's willing to work with you on your your sweet spot yeah yeah that makes sense yeah so um yeah that's what I that's what I did and I got started the first property I bought more deliberately. It was at 13,000 in the middle of vaults. It's about a mile and a half from John Hopkins, because I heard all these rumors about John Hopkins revitalization project.

So, you know, figured if you're going to go low in, go next to where tons of money is going to be poured into it. So you go... Yeah, so you went pretty much bottom of the barrel end next to... I did. Soon to come with a vast investment area.

Yes. Rumor. Yeah. Yeah. Yeah. Yeah. Yeah. Yeah. For sure. for sure. Well, I also started, you know, with low-end properties and be fascinated. You know, I know you like to talk a lot about that. In fact, you know, you do some videos on it and you talk about it on bigger pockets. Let's talk a little bit about the pros and cons of lower income properties. I mean, obviously you can buy these properties for very little money. What did you say $15,000? 13,000.

13,000. The head foreclosure. Okay. And what did that rent for? The first runner was 975, but there was a bit of an adjustment because we didn't keep him for long. So now it's at 900. Even so. Wow.

Right. Yeah. Wow. That's incredible. You know, it's funny. You know, in these neighborhoods, you're that first investor. like five houses after me, you know, where different investors came in. So you come in and they're like, oh, someone believes in this neighborhood.

Well, good. I'll come too. So like all the houses are now rented out. And who's who's who are those investors? I mean, you know, the problem I faced was I was, I was one of those people too. I was one of the first guys. And, you know, it was it was an area that I thought would potentially turn. And I went in and tried to do my part.

And what I noticed was the people around me were, the properties were just not getting taken care of. The renters. It was, you know, it was attracting very, very low, low, the low of the low. And, you know, the folks that the people who are renting from my properties were afraid of being around. So I couldn't fill my units anymore. and ultimately I had to get out. I had to bail because I didn't want to be the one propping up the entire neighborhood.

I'd have had to buy quite a few properties around my own just to prop up that one of property. It didn't make sense anymore. And I think a lot of people face that, particularly who are newer at investing in those types of properties. So I'd love your feedback on all that. Well, I think there are clear dividing lines. And I think some people aren't really, if you don't go down there and look, sometimes you don't get those clear dividing lines. Because there are neighborhoods that I won't buy in. I don't care how how cheap you are.

You know, like, no, I look around and I'm like, this is, no, I don't want people living around you. And that's just visual, it's gut. It's clear it's dated me that there's not a lot of people working and there's many people hanging out outside. That's too many. Like, I don't mind one or two families hanging. outside because sometimes your house gets a little cramped. You go outside on the porch and where everyone's at. But if it's like the majority of people,

like, no, that's assigned to me. Unless you're tired. I don't want to see you out. Well, yeah, but like no one's happy. You know, it's like meat, mad dog and people who come and like, who are you? You know, like, you could tell when people are friendly because they'll, you know, they'll nod their head and say

hi, but you can also tell when they're like, oh, you know, fresh meat, you know, so. So yeah, I think it's a, but and then I also, I wouldn't do this out of state. So here's, I think, where some people get in, they hear about Detroit.

There's $500 houses. You have all these property managers, and, you know, they're bad property managers. You know, so you hire them to take care of your investment, but you're paying all this money, and things are being done shoddly, and there's no oversight, and you're being gouged. And that's a bad experience because,

and I think, like, when you outsource this type of things to these neighborhoods, I mean, unless you know the property management team and you trust them, I mean, there's a level of being on the ground and seeing it for yourself and seeing over the work yourself. And I think when they try to be completely hands off in these neighborhoods, sometimes they don't get like the people who have the most pride in their work. So I think that will help as well. So yeah, you can get invested in these properties, but, you know, go down there and see or

make sure your property management is cream of the crop so they can handle this and they're comfortable in this neighborhood and they have good maintenance staff so they're not. doing the work half, you know, half ass. Can I say that? So, sorry. So they're not doing that this type of work that like they, no one would be proud of, you know, so that that can get you. Yeah. Yeah. Well, I guess are you managing your own properties then or do you use one of these property managers? I is a property manager. And I've gotten better and better at it. I tell so now there's a key factors like first of all I ask if they've ever they have homes in this neighborhood if they don't I'm like okay thank you but I want somebody who invests in this neighborhood

and too I've had bad experiences with property managers who get paid even when there's no one in the units now they justify they justify in a lot of different ways of why they want to get paid even if no one's there but sometimes they charge just as much as if there is a tenant there they're like oh I a minimum of $100 regardless. And I've seen that when I went to property managers who only get paid for performance when someone's running the unit, that I have much successful, much more successful time about it. So, I mean, I went through my bad ones and it's so frustrating.

Yeah. Yeah. But the keys to break it off, you know, so now I'm like, what's your break off? Like, I don't want anything that has like a termination fee. Yeah. Well, the thing to be wary of with those guys, and particularly, again, for the newer, investors is the ones who get paid on a success fee are also inclined to put in crappy tenants. And that was, again, something that I faced back in the day because I didn't know how to

screen tenants. I relied on these guys, and it was a nightmare. And, you know, Brandon put together an amazing piece. You know, we worked on this article for a while. It's how to screen your tenants, the ultimate guide to tenant screening. And we'll link to that in the show notes at biggerpockets.com. show 54. But you know, you definitely have to be careful when dealing with property managers that they're not going to put somebody in just to get somebody in there because, you know,

they're not getting paid. I 100% agree. I 100% agree with that. So do you have any, do you have any good tips then for finding a good property manager? You know, I found a lot of the, Yeah, so I like Narpa. I just found out about them a few months ago, and I've been using them, I think, for two different properties. The National Association of rental property managers. Well, Josh, look at you. Residential property managers. Yeah, Narpa.

Oh. And whatever. You know what? Sorry, Narpam. I like them as well. So I've changed over through my experience. I only do top rated anything. So if I go to Better Business Bureau, you need to have an A plus.

If I go to Angie's list, you need to have like an A. If I go to the residential property matter that at least you, if you go to Narfam, at least you have like if they don't do their jobs right, you have something where you can escalate to within their own organization that they care about. You know, so I want them to have some skin in the game as far as their reputation goes. And that cuts out a lot of the chaff, you know. So you get a lot of the people out of the way doing that. And then secondly, I don't like anyone that have a termination fee.

Like, I shouldn't have to pay you to quit if I don't like the work you're providing to me. So I've noticed that the companies that do have a termination policy, I don't like them as much. I'll deal with them. Like, I have a current property manager that's like that. And they just do barely enough. But I also am very aggressive with them. So if they don't get back to me and I have to send a second email three days later, I CC the manager of the company. And sometimes I'm like, may I speak to the O-Fair, please?

And I do this because I'm like, look, I'm not, you know, I'm going to be polite, but I'm not trying to be your friend. This is my business and you guys cause me too much stress being nice with you. So, you know, so that's also something. If you could escalate quicker rather than later and be polite about it, but, you know, owner, the manager will be C-Ced on this. Hey, this is my second email. Can you please answer this question why this accounting error occurred?

Because there shouldn't be. or why my tenant didn't get this or what who you know why isn't this being rented faster what's going on what needs to change so that's a good tip too and it's not easy to do no one likes to be the tattletail but when it comes to business it just makes things run smoother so i'm a i'm a c cer That's a great tip. It's a great tip. It has worked wonders for me in the past. Oh, yeah. There's nothing. It's not about being a tattletail.

It's about you're not doing your job. You're getting paid to do a job. And if you screw up, I'm going to go to your boss. And if they fire your ASS, as you said earlier, you deserve to get your ass fired because you didn't do your damn job. I agree. That's kind of the reason why I like Twitter. I think Twitter is the best customer service. You've said that before, Josh, too.

You go publicly call out companies for not returning phone calls or emails. And they're very, very quick to return them right after that. Oh, yeah. Facebook, too. I get personal email addresses for managers. I'm like, well, thank you. I want it in the first place, you know. There you go.

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Stop letting outdated lending practices hold you back. That's hostfinancial.com where your property's potential meets unlimited financing. Well, I have a question specifically. How much are you paying a property management? What's your current monthly rate and turnover fee and all that? Okay. It depends where you're at. Some places,

this is a full month, but some places it's like $300 to place a tenant. And some places it's half a month's rent. So it really, it's local. But it's pretty standard. If one place does like full months, everyone else in that area does and vice versa with half month or just a flat fee.

And then it's 10% pretty consistently across all the places I do property management. And that's why I like doing it at this price range because I have so much more room. Because, you know, there's usually quite a amount of cash flow I have where that extra, it could be, you know, 90 or $90 to $100, they can keep. But my life is so much smoother. So, yeah. So I take the 10%, but I do it at a price range where I can afford it and still have a positive cash flow every single month. Okay. So that's the other key to it. So I'm not doing it. So I'm not doing the work. I don't want to do the work. I have too much to do. So it's a big part of my strategy. Yeah, I've been, I've been, the reason I ask, it's kind of a personal reason. I've been

going back and forth the last, I mean, years, but specific the last few weeks, whether or not I want to start transferring all my properties over to property management. Because the more I get, the more and more time I'm spending on them, just with administrative things. And it's probably come across in the podcast over the past few months. Like it's just more and more, it's getting like just irritating. So I'm very, very, very. close. That's why I'm curious. So on another kind of related note, with these property managers, what kind of evictions are you seen on your properties or vacancy rates? Like, are they managing them pretty well? Or are you still, because it's a lower income area, are you having a lot more

difficulties? Good that you asked me that. No, no difficulties. If you make it nice, people will come. And some of the neighborhoods I'm in, you'd be like, oh, Lisa, are you really investing? I'm like, yeah, it's fine, but it looks really bad. So you would think that you'd find nobody. But it's, no, if, so when I was at 975, that was the one rent eviction I had. And that's what I realized that it's probably a little priced over the market for the neighborhood. And I shipped it down to 900. And that's been consistent for about a year.

And I don't see them moving anywhere. But there's two parts to it. How do you pick the place up? So you could always put a minimum, you know, you're not going to go all out in these neighborhoods. But you can always put a minimum. them, but I make a little extra effort to make it home me. And it doesn't necessarily cost a lot of money. It's, you know, it's brown walls. It's nice tan walls versus white, you know, and it's, and it's not that maybe it's just my nesting natural instinct, but it's like the little things you

could do to make it just a little nicer. So now on my properties, I put this nice soft tan that everyone walks into when they love on the walls, you know, or maybe I have on the cabinets. They do a little trim and molding. So when people come into my places, all they see is like, wow, cozy, warm, and, you know, comfortable. And you don't have to necessarily pay a lot of money for that.

You just have to put the right details in that resonates with the mother or father or with kids. Just something that gets them going. So for those two reasons, I put it to my standards of what I think is nice to live in versus just the bare minimum. I don't put that cheap. There's like this cheap 70 cent, a square foot carpet.

That's like the office carpet. And there's some people put that in their rentals, but it looks extremely cheap. Anyone could tell that like you don't care about this. So you know, upgrade to like the dollar $49. It's not the $3, but it's the $1.49. At least it looks like you're trying to make this a home, not like as cheap as you can get it. And that's a differentiator with, I think, why, you know, they come into my place. not that I do carpet anymore.

I try to do laminate, but why they come into my place and it's not hard to rent out. So no, and I can always lower the rents. I get these houses at low enough prices. I can go down a lot lower before I'm not breaking given.

So there's a bit of wiggle room for me to lower it as needed to get someone in. But I don't think I'll ever not have a renter, knock on wood. Yeah. What, you know, so, so, you know, I kind of prefaced some of this with the positives and negatives positives.

Obviously, cash flow can be really good. The turnover tends to be somewhat higher, I think, typically. It's harder to find folks who have good credit and things like that, no evictions. In many cases, I'm being very broad and generalizing here. But, you know, what kind of real... negatives have you experienced. Safety is certainly can be a concern. I know theft can be an issue.

I've dealt with, you know, AC units being stolen for copper. I've dealt with, you know, I've dealt with drug dealers. I've dealt with all the craziness that you can talk about. Have you experienced any of that? I have some negatives, but they're not,

but they were mostly like self-inflicted because I was to do my due diligence. So turnover. When the first guy turned over and I had to evict him, I realized that 975 is too much for that neighborhood. The neighborhood's fine, but it is a little, you know, a little bit more crash in the alleyways. You know what I mean?

People try to keep it up, but it's there. And it wouldn't be here in my neighborhood. You know, so there are these little nuances that do appear that makes the neighborhood not look as nice, even if the people are are really nice. And so that whole appearance thing really does slow things down on the appreciation front because you're like, as long as you guys keep dumping your trash in the alleyway,

we're never going to make this neighborhood work. So that's a negative. So you get a little frustrated, but that's the neighborhood it is. So it cash flows, but I don't like looking at the rents in the alleleys. So that's the negative. The tenants, I have to,

I usually pass almost a couple times. You know, like I pass on people. You just have to. And the ones I get aren't necessarily like stellar, they might have a blemish. But if they have a blemish on their credit, but they pay everything else on time and they have good rental records,

but they're not completely all, you know, charge off, charge off, charge off, charge off, charge off, then I'll take a chance with them. And just in different neighborhoods, you know, like my 2001 condo in Ohio in a nicer neighborhood, you know, I just don't get those sort of tenants and with lemishes. So, a little bit more consistent on paying the rent. So you have to be patient.

You got to let some people pass. There's people who applied. And I know they wanted to live in my property because where they're coming from. They were like, this is like, you know, so nice. And, you know, I wanted them to have nice things, but I could tell they just couldn't afford it. And they're not that responsible with making their payments. So there is a level of being very strict. not letting people with dogs in.

If you say you're not going to let animals in, don't let them in. And sometimes you just want that money. But in these neighborhoods, you're going to pay for it now or pay for it later. So pay for it with time now. So you don't have to pay for it with money later. So you just keep that in mind. Just keep that very firm in mind and hold off, even if it takes a few months. Yeah, I agree.

If you fix it up nice, it shouldn't take that long. Yeah. Yeah, I think that's great advice. You know, I think people get nervous. and, you know, when there's vacancies. But in particular, in lower-end neighborhoods, you definitely do not want to rush and get somebody in there and sacrifice on a credit score or sacrifice on somebody who's going to pay

because, you know, it's going to be a headache down later for you. And they know how to keep on and use that. Oh, yeah. They use those court. Like human emotional appeal, man, it comes out. Oh, yeah. You know, just tears and then my kids. I'm trying to just saying.

Like, you know, you don't want to mess with them. They're good. So get the right person in. Yeah, that's true. So you mentioned the word appreciation a little bit ago. You know, like what are your views on that? Like, obviously you're a cash flow investor. You're looking for the high cash flow.

Do you expect your properties to go up in value? Do you take that into account at all? Or do you assume because you're buying low end, it'll always stay low end? always be cheap, same price? Like, what are your views? I do expect appreciation, even in my slightly dirtier one year in Baltimore, but cash flows really well. And appreciation is a thing that sort of, you know,

things get to you. I think the conversation really needs to turn to why is there such a guarantee of appreciation? Like, I hear some people say it's a nice neighborhood now. It's going to always be a nice neighborhood. But I, you know, I would. feel more comfortable if people told me why they're so sure that 20 years from now that house is still going to be worth more and not less you know i know about forest appreciation you bought it distressed

you fixed it up now it's at market like i get that i get oh there's they're revitalizing across the street millions are being invested across the street that's going to have an effect because people like nice things it'll track nicer you know it'll trace people with money who like nice things like Like I get that, but there's such an acceptance that a house in a nice neighborhood will be nice 20 years. In 20 years, and I'm like, where does that knowledge and surety come from? Because economically, for me, it seems to me if you're not in a hot spot of economic activity, like a San Francisco or New York or D.C., like, how are you guaranteed that this neighborhood is going to stay so consistent over that long a time? So it's sort of, you know, I think I'd feel more comfortable with people if they offered some reasons for it, but I don't get the certainty that everyone has that appreciation's guaranteed.

I don't know. Maybe you guys can tell me a little bit more about that. But there's no backing it up. It seems very speculative of that. It's nice now. It's going to be nice 20 years from now. Why? Yeah.

I tend to just think it'll probably go up with inflation. I don't like to assume much more than that. It'll go up just like, yeah, just like everything. I kind of assume income is going to go up. about with expenses, probably not a lot more. So I don't usually assume, and again, that's my area because I'm a little bit lower income area, just like you are investing in. So I assume it'll maybe just go up with the economy, but I don't hinge my investing strategy upon it.

I think it's one of those things where you can somewhat predict areas that will be appreciating. And the way to potentially predict that is things like what you had talked about. say Johns Hopkins went and spent a billion dollars to renovate, you know, that part of the campus. They're throwing a lot of money in. They're not going to want to see a lot of shoddiness around it. So they're probably, you know, there's, you're going to start to see people sprucing up around it. Or, you know, take Detroit, for example, you know, Detroit starts raising properties and, you know, getting rid of all the eyesores and suddenly businesses start coming in.

Well, you know, there's going to be jobs, money. is going to start pouring in. So you'll begin to see appreciation. But, but, you know, I think those are obvious, yeah. But I think you need to just be smart about it. You know, I always tell people that it's, you know, appreciation is just kind of a little bonus, right? You know, buy property based upon the cash flow. And if you get appreciation, that's great. That's the icing on the cake. Would you tend to agree with that? Yeah. Yeah. Well, so, you know, how are you financing your investments. You know, you had that foreclosure. Are you just paying cash for the properties or are you going through private lenders? What are you doing? So the whole reason I started

looking at sub 30K properties was because I had a foreclosure. I was like at a 401K too. So I had a foreclosure. I couldn't get conventional financing, but I didn't want this train to stop. I'm like, no, I really enjoy real estate investing. And I was like, I'm so sure I can find these properties under 30 anywhere, you know, and I can do this and make it work. And but because of that, I'm constrained by, because I was constrained about the type of mortgages, I shifted my price down to 30K, which I already wanted anyways, but it was because I could afford it. So I figured this was my premise, even if I took my paycheck and if I'm making $60,000 a year, I took half of that and I saved it.

That means I can buy one property a year. So I cut my living expenses down. And I'm like, just on my own salary, I want to purchase one property. a year. And so I go out here and I start searching and oh, I just wanted to mention this when I do this. The reason I think there's such a disconnect with me looking in these sub 30K property ranges, whereas a lot of the mainstream talk is like it has to, it has to automatically be a headache as that I came into this in 2009, 2010, and the internet has built up so much. There's so many different websites that I use. I use crime websites. I use, you know, crime reports.com or spot

crime, you know, local realtors have their listings on site. So they have lower priced homes typically than local homes than the big national MLS and even rentometer. So I use all these things that are here now and I leverage them and I'm finding these 30K properties. Good. And so the part of the financing comes, okay, well, what can I do? So with one house, I rated and demolished as much as I can, because they don't let you take all of your money from your 401k, you have to ask permission for it. I took as much as I can, and I purchased a property with that. And I paid for, that was my year-long renovation. I paid for the renovation out of lines of credit with, like, Home Depot and lows because they do installation or different contractors off for financing.

So I tended to gravitate towards them. So I could use their financing, get it on 12-month refinancing. So that took a year, and I paid for out of my own pocket, the rest. So if I had to wait two months. I had wait two months to pay for the big thing. But then the other things I purchased, I purchased one property. I can talk to you about this at the end for $11,000. And I titled my car. So I'm a pay things off type person. And so, you know, I paid the car off and then as soon as I can. And so I went and got titled my car for like 5% interest rate. And I purchased the property. And Honda Civics really keep their value. FYI. I just want to put that out there. And I purchased another vacant property. And that was, that was right across the street from this, this $40 million

school that's going to be developed when I purchased it, but it was just in talks and they were sectioning things off, but no one knew about it. So I'm like, I'm just going to buy this property now. So I can talk about that later, because that's my, what's happening next. And then the last product I had was, I got a personal loan from the credit union because I tend to prefer credit unions. banks don't even like want to talk to you if you have any blemish on your credit, which is fine. That's their prerogative. But, you know, I don't like to put my money in institutions that won't give me loans

because that's the relationship I want. I put my money in your bank. You give me loans when they need it based on my credit. So they don't do that. So then I got a personal credit loan. And it was like 9.5% a little higher, but, you know, house pays it off. So, yeah, I just use different load investing products. I am, you know, your 401K, your cash out of your pocket, personal loans if it's at a low enough

price, and lines of credit to do the renovation. Okay. All right. That sounds a lot like how I got started. I mean, most of my early properties, yeah, we're just pulling from various places. When I, when I say earlier, I said, I want to take a, you know, time to just stabilize. That's what I'm referring to. You know, like I use so many different things and I was so creative, you know, like while I was building my portfolio.

Now, like, that's my strategy. I mean, that's my goal. That's my resolution for 2014 is to stabilize it all, get everything turned over to 30 year fixed mortgages, start, you know, just simplify. And so I don't necessarily think it's a terrible idea to be. I mean, I love creativity. And I love, you know, the whole Kiyosaki idea of don't say I can't afford it. Ask how can I afford it? And that's exactly what you're doing.

But it definitely does make for some interesting, interesting times. So it's good. It's good. I mean, it works. So anyway, a couple more questions before we wrap this up. First of all, I'm wondering, what advice do you have for new investors who want to get into maybe lower priced housing like this, especially if they're living in a higher end area where, you know, D.C., New York, something like that.

Okay. First thing on top of my head is leverage the power of the internet, like I mentioned. There's a lot of ways you could vet these properties for even Google Street View you can use. There's no reason for many of these things for you not to know exactly what that neighborhood looks like and how far it is from a main attraction by following a little arrow. So use the internet. There's a lot of and if you go in bigger pockets, people tell you sort of step by step what they do use. And that's a big part of it for these lower income neighborhoods so you can really vet them, especially with crime. There's certain crimes that I will not purchase with, but other crimes that I will.

will. So theft. That is, I live in a nice part of a Arlington, Virginia, and guess what? There's theft here. You're just not going to get away from it, okay. So if I go to these neighborhoods and I see theft, I'm okay. Uh, burglary, I'm like, eh, not so much. Maybe if it's far away, I might. But, um, and robbery, no. Okay. Um, assaults, uh, drugs, narcotics, prostitution, no. However, there's different types of things. If it's like a domestic issue, because those will pop up as, um, on these crime reports and crime websites,

that has had no effect. So there are neighborhoods I bought where I've seen that sort of issue come up, but that does not affect my house, probably because they keep it inside the house. Now I'm not saying this is a could or should. I'm just saying it is a what is. That does not, that sort of stays inside the house.

So it really doesn't necessarily affect everything. So that's something that if I see that on a report, that's not going to scare me away from a neighborhood. And also, if you're going to do it, you have enough leeway you should have to be able to, hire a property manager to take care of this. You know, use that as part as your strategy. You know, you can afford it.

It's worth it. So you don't have to go down there yourself. Just, you know, vet them very carefully and only get top rated and whatever you need to. So if you have to pay a little bit more, trust me, you know, pay now or pay later, it's worth it. So I think those are the biggest things, you know, fully vet on, you know, leverage the internet, property management. And I forgot the other thing I said, but. That's good. That's good.

No, that's great. That's great. So what about going forward for you? Yeah, we're very quickly running out of time here. So tell us, what does your future look like? What do you want to do next? So really quick, the vacant I purchased in 2011 for $11,000. They are breaking ground on this $40 million school. Ooh. Nice. But because I need time. Yes, K through 8. So, and it's charter, but the only people who can automatically have their kids enrolled are people who live in my property. So it's a bit of enough.

And so I need a year to stabilize as well. So I'm paying off all the other creative investment things I did. So I have, you know, nine months where I'm just going to chill on that. And so I'm looking to have a deal where I'm raising funds after that this is like my fourth property. And now people are telling me, Lisa, if you find another one, I'll give you some money on it. And so now I'm at the point where I, you know, going to ask them for the renovation costs and work out some deal. So that'll be my first and I'm excited about it. And two, I will be video blogging about investing in low income housing.

So anybody wants to check me out on bigger pockets or my other information. I just do it so people can be more comfortable investing in a price range because I think it could be very profitable. Our money goes a long way than it would in another neighborhood. And I think it's a good aspect to add your portfolio. But I think some people are a little nervous about it. But there's ways to do it a little strategically. So you can take all that nervousness out and just go straight with success. based off other people's experiences with it.

Right on. Right on. Very cool. Right. Fantastic. Well, this, we're going to move forward to second to last part of our interview here. It's time for the fire round. So what is the fire round, Brandon?

All right. The fire round is questions that we get from the bigger pockets forums. These are questions that real people are having in the real world. So we want to fire them at you. All right, number one, should I be using QuickBooks when getting started or am I okay just using a spreadsheet? Yeah, you experience people by growing at this. I'm like, yeah, a spreadsheet's fine. You don't have to make it.

You know, when you get the time, you can invest in learning QuickBooks, learn it. When you get the time and money to invest in a bookkeeper, do it. But is an Excel sheet fine? Yes. Don't make this too complicated. Good. Good. What kind of flooring should I put into my rentals?

Oh, yeah, I do not be carpet anymore. Yeah, no carpet. I do laminate because it's cheap and indestructible and or tile and it's long lasting. 100% worth it carpet, you just have to clean and it gets crazy. All right. Duplex or single family. What's the best way to start? I always like duplex, but only if it cash flows. Some people are like 100 or 150. I mean, minimum for me would be $200 per unit unless you're living in one of them. We're living one of them. You're saving in so many other ways. So go duplex if it cash flows. nice. If it doesn't go with single family. Okay. There you go.

All right. For rent signs, are they effective still in the electronic age? They're very effective in my neighborhoods. Before I'm finished, they're calling that number. You know, you put the little phone number up where they can call to get an application. So in my neighborhood, you know,

a lot of people walk in by, see the house and have a friend that they'd like to come live near them because, you know, they see inside, they peak and they're like, oh, it's nice. You know, why don't we get our cousins to come? I'd love to live next to them. So for rent science, do work. At least in my neighborhood. I agree.

I agree. Right on. They work well in mind, too. All right. It is time for the world famous. So, Famous For, these questions that we ask everyone. So let's go with number one. What is your favorite real estate book?

My favorite real estate book. Oh, gosh. Rich dad, poor dad. Well, no, it's not really a real estate book. It's close enough. I mean, that's what a lot of people say. I mean, almost everyone says. Like, that's mine too.

Yeah, I'll go with rich dad, poor dad. It's not creative. Sorry, there wasn't anything more groundbreaking than that. I mean, you could say something like, I don't know, bigger pockets. I mean, it's not a book, but, you know, I mean. But I do love bigger pockets. I've been on here forever. Yeah.

See? That's what we love. We'll work with that. All right. What's your favorite business book now in real estate? Not real estate. I'm really enjoying the four-hour work week. I really resonate with Tim Ferriss and his outlook on life.

And I think it's jam-packed with things that you can start immediately to get your time back. And so I love it. I recommend it for everyone. There you go. What page you on, Josh? What page you on? I don't have a lot. Right.

27 you can say it it's got inches and inches of dust on it at this point so yeah you'll pick it back up yeah one of these days all right what about hobbies what do you do for fun the inner diva in me likes karaoke which nice yeah I was just there last karaoke every weekend that's my my outlet a lot of fun a lot of um

I always wish it was more popular than it is. It's always just like 10 of us, you know, at the bar, like on rotation. Like, never more. And then you go to some spots where it's like there's 100 people who want to get their favorite song in. The Japanese love their karaoke. I'd love to. Hey, Josh, you know, whenever, you know, we have the next bigger pocket summit, we've got our entertainment now. Oh, we're going to have Lisa do karaoke.

Karaoke. There we go. Yeah. Someone's not shy. There you go. Nice. All right, final question. All right, what do you believe sets apart successful real estate investors, especially maybe in the lower end price point from those who don't ever get into it or fail or end up giving up?

It is having a vision. You need to have a vision. You can't just do it to do it. Do it for what? Like, what's the vision? What are you trying to see yourself? If you have the vision, you know exactly what you're working for and you're going to do it.

But it also takes a level of guts. You got to face your fears. things I found are not as bad as what everyone thinks they are. Fear and the human psyche is just, it's so strong. He's people from doing so much in life. And my favorite quote is, fear is the enemy of action. I heard it when I was 12 and I've lived by it since then.

But it's amazing once you understand that it stops you from doing what you need to do. And you break past that and face it. And most of the time you find out it's not that bad. I'm sure there's circumstances, well, there is, but that you live. You'll live. Okay, it's not the worst thing I've ever imagined. That's really going to get you someplace.

Because you can't do what everyone else is doing that's safe and comfortable. I think you're going to be this breakout success doing what everyone else is doing. If it worked, everyone would be a breakout success. You have to take a little bit of guts and go after it. I have a vision to know what you're working for. So that's what I think is a key difference. Wisdom in the last moments of the podcast. I love it.

That's good. Good stuff. Yeah, it's great. Well, Lisa, it's been a pleasure. We definitely appreciate having you on this show. So thank you so much for taking the time and for being a part of bigger pockets as well. We appreciate it. So thanks for being here.

Thank you. I had a great time. Got an expletive or two out. I thought that was pretty interesting. But you guys are great. Thank you, Brandon. Thank you, Joshua. Thank you for letting me present the different voice.

And you guys are great. Cool. Thank you. Hey, Lisa, where can people find more about you? You can find more about me on bigger pockets, but also on my different. video blog, Affordable Real Estate Investments.com. If you want to find out a little bit more about the real stories of how and why you can invest in these properties and working class neighborhoods successfully and more strategically. Perfect. Very cool. Well, thank you very much, Lisa.

This is great. Thank you. Bye, guys. Bye. All right, everybody. That was our show with Lisa Phillips. Hopefully you enjoyed the show. Lots of interesting conversation. Lots of a really interesting insight into what it's like to work in these lower income properties. I definitely want to thank everybody for listening. A quick reminder to check out the show notes at biggerpockets.com slash show 54. That's biggerpockets.com slash show 54. And, you know, come hang out with us on Facebook. Actually, on Facebook, we've been asking these trivia questions about once a week.

And it's been fascinating. You know, kind of a multiple choice question thing. And the conversations have been phenomenal. So definitely if you're not already getting involved in these discussions, you know, link up with us on Facebook at Facebook.com slash bigger pockets. Follow us on Twitter, Gplus. Gplus is awesome. And, of course, biggerpockets.com itself.

If you're a listener and don't have an account on bigger pockets, you need to set one up today. And if you have an account on bigger pockets and you're not using it, then you are absolutely missing out because the dealmaking, the networking, the interaction that happens on the site is just incredible. And just by creating a profile and doing nothing or not creating a profile at all, you're missing out on the action. So get in there, get involved, and start making money because people on bigger pockets who are interacting are making money.

Make it happen. Woo-hoo! 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 hype, 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. Thank you all for listening to the Bigger Pockets Real Estate podcast.

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