BiggerPockets Real Estate Podcast - 85: Hybrid Investing, Long Distance Rentals, and Property Management with Mike McKinzie

Episode Date: August 28, 2014

Today on the BiggerPockets Podcast we chat with Mike McKinzie, a full time real estate investor from Garden Grove, CA. Mike is an investor and former property manager who has personally dealt with over 5,000 real estate transactions, but focuses most of his attention today on using property management to invest both locally and out of state. This show explores a variety of topics related to buy and hold real estate investing and offers a significant amount of actionable information on how to set up property management, covering everything from what questions to ask, what should be expected, and a whole lot more! In This Show We Cover… Growing up in a real estate family Hybrid real estate investing The key is to success in rental properties   Getting your real estate license as an investor How to prepare yourself for future-changing markets If you’re going to invest based on appreciation, THIS is how you do it!  The importance of updating trusts… How property managers can turn into lead sources How do you vet property managers? What does a property manager do? Managing your own portfolio How neighbors will help you keep an eye on your property How to deal with HOA’s the right way! The importance of due diligence  The difference between housing classes Dealing with marijuana And a whole lot more! Links from the Show: The Ultimate Guide to Growing Your Business with BiggerPockets Keyword Alerts by Brandon Turner The BiggerPockets Keyword Alert System Books Mentioned in the Show: The Richest Man in Babylon by George S. Clason Think and Grow Rich by Napoleon Hill The Ultimate Beginner’s Guide to Real Estate Investing by BiggerPockets.com Tweetable Topics: “You are the boss of your property manager…fire them if need be!” (Tweet This!) “Make friends with the neighbors of your property, and you’ll always have eyes on your property…” (Tweet This!) Connect with Mike: Mike’s BiggerPocket Profile Learn more about your ad choices. Visit megaphone.fm/adchoices

This is the Bigger Pockets podcast, show 85. 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 Dorkin host of the Bigger Pockets podcast here with my good friend Brandon Turner talking to you live from the road. What's up, Brandon?

What's up, Josh? I am in the road. I'm actually in Dickinson, North Dakota right now. Wow. Which is a fascinating city. Yes. If you would call it that, I think there's like 19,000 people in that bustling metropolis. It's amazing.

Yeah, I'm driving across the country right now to go see my family. So I'm excited for that. Awesome. Awesome, man. Well, very cool. So we'll make this intro pretty quick as a result. Today we've got a really, really cool show to you. But before we talk about that, why don't we get to today's quick?

Wow. Talk about coordination. We don't have much. Yeah, there you go. All right, guys. All right, today, you got it? You got it? Yeah, I'll let you.

Take it. Take it. It's yours. It's yours. Just come on. All right, today. All right, guys, we talk about keyword alerts a lot here on the podcast and on bigger pockets.

For those unfamiliar, keyword alerts allow you to get instant notifications when certain keywords are mentioned on the forums. Well, this week, we launched a new feature within the keyword alert system, and that's the ability to use negative keywords. In other words, if you want to be notified when the word Washington is mentioned, but not when Washington DC is mentioned, you can set up a keyword alert for Washington and add a negative keyword for DC. This way you can avoid getting notified about DC when topics come up that contain threads that aren't of interest. So check that out today at biggerpockets.com slash alerts.

And while you're there, you can also check out the guide. We just put together the ultimate guide to growing your business with keyword alerts, written by Mr. Brandon Turner. So definitely be sure to check that out. It's really great. Nice work on that, Brandon. Well, thank you very much. I wrote it in the car.

Well, well done. Well, that's awesome. Well, why don't we get to the show, man? We've got some good stuff today, and let's get going. You're going to lead in here? No, you take it. Introduce Mike.

All right. All right. Today on the show, we're going to be talking about buy and hold investing with Mike McKenzie. Mike's an investor in Southern California who invests both in state and out of state. Mike's a really good guy with lots of experience of those looking to either get started or improve their rental property business. Definitely want to pay attention.

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Carefully consider the investment objectives, risks, charges, and expenses of the Fundrise flagship fund before investing. This and other information can be found in the fund's prospectus at funrise.com slash flagship. This is a paid advertisement. And with that, why don't we bring Mike on in. Mike, welcome to the show. Well, thank you for having me. Awesome, awesome. Let's start this thing off the way we always start these things off. What is it that got you into

real estate investing? How did it all begin? Well, you could probably say I was actually born into it from my very earliest memories. My father was a realtor. Okay. So we had two phone lines in the house back in the 60s, which was very unheard of back then. Oh, yeah, yeah. One was dad's real estate phone. And so him and my uncle and some other relatives. My dad's generation were realtors. Before them, they were farmers. And they owned hundreds of acres in Southern California. And they subdivided, I mean, I have some pretty wealthy relatives. Just been in real estate in California since probably the 1910, 1920s. Clearly with hundreds of acres in SoCal, you have some wealthy relatives. But yeah, No, that's cool.

So you guys, you've got it in your blood. And what got you to take that step? I mean, did you become a realtor and follow the path? Well, the first few steps, of course, was as a teenager. My dad would have me go out, mow the yards, paint the houses for sale that were vacant. Everything that you would do with the house I was doing at as soon as I could drive. So the lawn mower, the weed whacker in the truck and go out and take care of a property that was vacant. needed to be cleaned up before a closed escrow.

My dad had a few rentals. I remember taking a garden hose into one because it had a concrete foundation. It was that dirty. That same house, I was pulling wallpaper off the wall and having cockroaches rained down on me. Nice. So everything involved with actually owning rental property I was doing as a teenager before actually owning anything. Which is a good way. to start, I think, for people. I mean, I like to tell people that all the time is go get your hands

dirty if, you know, you're just getting started. It's not always fun, but, you know, that's, that's kind of how I did it and worked out well for me, I guess. So question, so you said your dad was a real estate agent, but was he also then, I mean, your family subdivided. Did your dad also own properties? So did you, like, get raised with that as well? He did not own tracks. We did a few spec homes. Okay. It was more of his cousin and some of the other family out in the Inland Empire area that did some development farmland actually sold some land to the federal government and part of that is now a national wildlife refuge land that was bought from my family and one of my dad's trying to think it was my mom's niece her husband and his dad actually had a house moving business

where they would actually move a physical house from one lot to the lot. Which is really hard to do nowadays, but in the 1930s and 40s, you'd have 800 square foot house. You could move. And the highways are a little busier these days. And so all kinds of aspects. My uncle was an agent in the 50s. I think my dad got his license around 61. And before that, he was in construction.

Nice. So what was the first thing you did in the biz? Like outside of mowing lawns and, you know, all the odd jobs. as like a budding professional, so to speak. Well, with my dad being in the business, he got record or he got a word of a rental in San Bernardino for 30,000 that would rent for 500. And he talked to the seller and the seller didn't mind carrying for a short

period of time and carried 100%. So I bought a 30,000 house with no money down. Nice. And so the, The rent, of course, covered the mortgage payment. And I think I borrowed about $2,000 from my dad for carpet and paint. I was 20 years old. And the rent, I paid him back.

And a year later, I sold it for $50,000. Oh, right. Paid the seller off, paid my dad off, took the proceeds from that and bought a Triplex. Nice, nice. I was on my way. That's great. That's great. Did you have a plan or were you just kind of up?

Opportunity fell into your lap. You did the first one and then, why don't I buy a triplex? Or was there a path? There was a path, but it wasn't written in stone. It was just to accumulate, to buy and sell, sell and buy. Never a target like 10 doors in five years or anything like that. But I did want to keep building as I went. Gotcha. And I sold the triplex and bought two fourplexes.

Nice. And this was in the first three years. And then along the way, you pick up a house here or a house there. I picked up a HUD repo in Fresno. Back when HUD would sell to investors, nowadays, they won't. They only want to get owner occupants then. Well, a question for you about the, you bought the single family, and then you sold that and you bought the triplex. And you sold that by two fourplexes.

That was right, right? I got that. Correct. Okay. So did you have them all rented out? Did you have the rental houses rented when you sold them? Did you sell them to an investor then? Or did you just like flip it, fix it up, you know, and sell it as an empty house?

Remember? I bought them empty and I filled them up. Okay. So the Triplex had one empty unit and two that were occupied. And I owned it for like 12 to 18 months. So and I raised a rent a little bit, you know, $10 a month. Just raise the value of the property. Yeah, that's cool.

I always call that hybrid investing. I don't know if it's a, I think it's a term I coined. I'm going to say I did anyway. Yeah, we're like, it's like a rental and it's also a flip. It's kind of taking the benefits of both confining them into one thing. And it's kind of the whole Nickerson, how I turned a thousand dollars into however money, million, depending on what book you read. Like that, yeah, I call it hybrid investing because it's the benefits of both flipping in buying hold. And I love that strategy a lot. So it's cool to hear that you did it successfully, at least when you were getting started. And why did you sell them so quickly, 18 months? I know there were no flipping shows back then. There was no like. You know, that wasn't a, I guess, a popular mainstream thing, so to speak. So why not hold on to the properties? What was it that inspired you to dump them and move on to the bigger and better ones? Well, there's several metrics you go by, but I figured if I made 20,000 on 30,000 in a year,

I'm not going to be able to do that again in that property. And I also had my license as a broker at the time. So I had a lot of inroads for better investments. So if you max out the appreciation, if you appreciate 50% the first year, you're probably not going to go 50% the second year. Gotcha. And if you move areas from San Bernardino, let's say, to Fresno, you're moving marketplaces and trying to get the better market.

So were you aiming for appreciation when you had purchased these or was it let me buy them? Well, I'm guessing you weren't aiming for cash flow. otherwise you had to held on to the properties. Cash flow just enough to cover the expenses, the mortgage. But yeah, it was more of an appreciation buy so I could buy more properties. Okay. So you just wanted to get the appreciation, sell, hopefully you'd appreciate an X amount of time

sell, keep going, keep going, keep going, keep going. And what was the plan when the market turned around and went the wrong way? In my investing career, we've had two pretty bad markets went the wrong way. in the early 90s. Do you remember that? 9091? And then in... I was 6 years old.

0708. Those are when you just you buckle in and you just hold. Yeah. Values go down but rents really didn't. Gotcha.

On the show and generally, I tell people, you know, appreciation is a bit of a gamble. I still believe that, you know, and yeah, obviously it's been working for you.

So it certainly works for a lot of people, but a lot of people also lose their shirts. So it worked, which is fabulous. Absolutely fabulous. What do you do today? Let's kind of jump ahead. Before we jump there, I just want to point out one thing that I think you did right there, Mike, that I love is that if you're going to speculate or not even speculate, if you're going to

count on appreciation, right, you did it the right way in you bought properties that did at least break even, right? It's the people who are like, I'm going to buy this property and it's going to lose $1,000 a month in cash flow. But it's okay. The market will bail me out of a bad deal. And so, like, yeah, I love that idea of buying something. If you can at least break even, Worst case scenario, 30 years later, you're, you know, the mortgage is paid off. I think that's kind of the key, I think going back to that hybrid investing idea, I think that's kind of the key there. And the other thing really quick that I like that you did was you saw that you were making

profits. You saw I appreciated 50% or whatever it was. And instead of getting greedy, you locked in your profits. And that's something that I think a lot of people don't do is they're like, well, well, it's up 50%. It's going to keep going. And it does until it doesn't. Yeah.

Well, on that question. question. I want to ask both of you guys a question. What would you do in this case? So this is actually a real life situation that I'm going through right now. I got a property that I forced appreciation up by fixing it up. Right. So I made it better. It's a it's a fourplex or a fiveplex. And a lot of people on the side have heard of the story. I mean, as I bought it and fixed it up. But now I got the question. I can either hold on this thing for cash flow, but it's never going to climb in value again. I got it to where it's going to get. And now it's there forever or at least, you know, only rising with inflation. or I can take the profit out right now and go put it in something else.

What would you do? And how would a person like me, how would I decide which I should do? Well, my advice would be you have to locate the property that will do better than what you have. If you're just going to trade one apple for another apple, you're not gaining anything. Yep. But if you can actually, let's just say you take your value and you return and you get your cap rate and let's just say you're getting 9%, then you're going to have to find something at least 12% to make it worth the effort. and the headache. Yep.

That makes sense. Yeah. And I go back and forth. I mean, I'm, you know, I might cash flow anywhere between 700 and 1,000 a month on this property or I might make 30 or 40 or $50,000 and profit. So like I can do the numbers and I go back and forth. And it's not black and white. You know, a lot of people like to think real estate's black and white, but there's a lot

of gray area there. And that's, that's my question is if I got that cash and I paid the taxes on it or, you know, if I did a 1031, either way, like, am I going to find another property that's going to produce as well of cash flow? or that I can then force appreciation up again. And I guess that's the game we play. I think Mike nailed it. And for me, well, you know my answer.

My answer is unload that portfolio. Come on down to Denver. Let's go. Josh wants me to get rid of everything and, you know, come hang out and play and hang out at the Denver offices of BP. Yeah, yeah, yeah, someday. All right. So let's get back to my question.

Mike, what are you doing these days? Obviously, you started you were doing Brandon's hybrid investing. We'll allow him to feel special about coining it. What's your focus right now? Just right now, I'm adding to the portfolio. My wife and I are retired. I retired at 50, not by choice, but because of the passing of my mother. Unfortunately, she was my father's caregiver, and he had Alzheimer's.

So I had to leave Colorado. I was down in the Durango area and moved back. I'm sitting out in the house I was born in. Really? My mom was pregnant with me when they moved into this house. So I am really back home again. When mom died and then dad died two years later, their trust was really in a shambles. Unfortunately, and this is good advice for any investor out there, always have an estate

attorney that does your trust who's younger than you. My parents' estate attorney was older than them. So he retired long before they died. And so they drew their trust up in 1985 and died in 2010 and 2012. So there was a lot of legal work. And I am still today fixing some legal items with regards to their trust. Interesting. Interesting.

So never have a lawyer right of trust that's older than you. And I like to say never have my mom's getting some. some eye surgery. And she, you know, she's of retirement age. And, you know,

she loves all these old, these doctors who are right around her age. And she's like, they, you know, they feel like they're the right age. I'm like, mom,

the guy, 65 years old, you can't see. None of your friends can see. You're going to let a guy who can't see probably who's had two or three surgeries, do your surgery. Get a guy who's in his 30s or 40s to it.

Oh, I don't know. That's funny. I mean, you think about that when they drew their trust, there's three children, but two of us that are the heirs to the trust. Either one of us were married. And in the time being,

we both got married and had 13 kids between us. They never changed the trust. Update your trusts every two, three years. That's good advice. When things change, your kids get married, you have grandkids, maybe great grandkids.

Always be updating your trust. Hey, Mike, so you're doing some buy and hold now. You were doing the hybrid stuff at some point, I'm assuming that you started to actually hold on to properties for longer than 12, 18 months, things like that. When did you decide to settle down and actually hold on to some of these properties long term? I actually have a house now that next year, all own 30 years. Wow. So I do hold a few. Nice. For whatever reason. The way I look at it, let's just say I bought a house for 150, that rented for 1,500, 20 years ago.

All right. That house appreciates up to 400,000, but I'm not going to get 4,000 rent for it anymore, am I? Yeah. The rents are not going to go up like the appreciation does, especially in California. So when the rent gets to about half a percent of the value, it's time to move that house and buy something else.

Because we can get one to one and a half percent in lots of places in the United States. Gotcha. So the appreciation reaches a point where I have dead equity. My return on the value, not my purchase price, but the value is just not worth it. So you wait for the rent, the percentage of rent to drop to where your lower limit is that half percent. And when it gets close to it or thereabouts, you just, you know, if it's a long-term hold, if you're sitting on an appreciation, if you're sitting on a buy and hold property that begins to appreciate, that's when you know you've got the trigger to start looking to unload it.

And I did that this year earlier. Okay. A house in the town of West Covina. Oh, yeah. I was getting $1,600 a month. And I had a local broker run an idea for the CMA on it. He said, it's probably worth about $350. And I'm thinking, would I pay $350 for a house today that rents for $1,600?

Yeah. No. Yeah. Yeah. I ended up actually selling that and buying nine other houses. Wow. Wow. Wow.

Wow. Where'd you buy those like Apple Valley or up in the inner inner empire? Actually, I bought one in Texas, one in Phoenix, and seven in the Fresno area. Gotcha. Okay. So distant properties. Okay. All distant properties, yes.

Okay. So let's kind of, we'll get there in a second. What's your buying criteria? You know, what is it that gets you? to acquire a property for hybrid or long-term investing? For a real long-term investing, anything built after the year 2000, 1% rent, and every house that I bought this year already had a tenant in it and was under management. Okay, so 1% under management, it's no more than 20 years old, 25 years old,

and it's got a tenant. What do you like those properties in particular? Well, as we've talked to a bigger pocket, we look at 50% of the marketable rent over a period of a long time will end up being your expenses. But I don't want to buy someone else's 50%. And if a roof is 25 years old, guess what?

I bought the price of a new roof. That's going to be due in five years. Whereas a previous investor, he got off Scott free without having to pay for any of that. So if I can get a roof and things, that are new or newer, then it puts off that amortized, a roof is 30 years. We kind of know that basically, give or take five years. If I buy a house with 30-year-old roof, I'm going to have to put a new roof on it.

Yeah. And my last roof was $8,000. So that's, you know, if it's only going to rent for $1,000 a month, that's quite a hunk of your annual income right there. Yeah. Yeah. I know that makes sense. I want to go back to your, you mentioned buying at a distance.

You bought one in Texas and elsewhere. Did you buy through like turn key company or did you pick out the location and pick out the property yourself? How did that come about? The way that I buy long distance is that my property managers and that most of them are pretty large have hundreds or thousands of houses under management. They have investors who want out. Okay. And then they'll send an email to all their investors. So I get emails every month of, you know, we have an investor.

The last house of Texas I bought was owned by somebody in Washington. Had the tenant in it. It was built in 2007. And they needed out for their personal reasons. I mean, their net was like three months rent was their net. So I don't know their personal story. But I just went to pay cash for it because I'm easily going to make 8% or 9% on it. Nice.

And it was built in 07. So what is there to do? do on it. Yeah. That's a cool strategy just to call up the property manager and ask them or give an email from them and look for properties that way. It's kind of a creative method. Well, it wins for everybody because they do it for 3% instead of 6% for the seller. Yep. And for me, the tenant's already there for the management company. They just keep managing it. Yeah. And the seller usually gets a very quick sell. Yeah. Yeah. You know, four months of marketing time. Well, you know, and I think that's a strategy I used when I had to get rid of some stuff.

I called every property manager and let them know, hey, I've got these properties I want to unload. You guys have people that you're managing. You know, I think it's effective for both directions. If you're looking at a sell, you're looking to buy, you know, put the word out to the managers in town that you're in acquisition mode. And, you know, a lot of them obviously have licenses. So they're happy to help you out in some way, shape, or form. So, yeah, I think it's great. and as a strategy for finding leads, PMs are definitely a great resource.

So are you still using property managers or are you doing your own management or how does that work? I manage one house. Okay. All my other houses have property managers. And I've been very lucky with good managers. Unfortunately, I have bought houses that came with management that I had to fire because I didn't like them. I ran a management company for several years. I know what I want. Yeah, yeah. Could we talk about that? Because I, you know, I think we've covered it a little bit.

You know, I've got a big pet peeve with a lot of property managers because I think a lot of them don't do their jobs. But as a former manager and somebody who now uses them, what would you say are the most important questions for a landlord to ask property managers when interviewing them? And I say that because, first off, I mean, the interviewing them part, I think a lot of people think that the property manager is going to interview you and ask you about your properties, which they will. But you have to interview them as well. You need to make sure that these people are doing everything that you need and want them to do. And it's extremely, extremely important that you find the right company or you can find yourself in a lot of trouble. So what are the big things you would want to know from a property manager? The very first thing I ask a property manager is I want the name of three investors that you manage for and their email and phone number.

And you tell them that I'm going to call them. That's a good one. And I want to hear from them what their good points and bad points of your company is. Yeah. The next question is everything involved with the collecting rent if they own their own repair company, which I don't like. I agree with you on that, by the way. If they do direct deposit for the tenant or do they actually go to the door and collect rents, just the whole process.

Go ahead, Josh. Hey, Mike, so you and I agreed. You said you don't like it. Why exactly for folks listening do you not like property managers to have in-house crews? Why do I not like it? Yes, sir. Because it's not objective. Okay.

I mean, I don't mind if they have a crew that goes out once a year and replaces smoke detector batteries. Right, right, right, right. Or HVAC filters and that kind of thing. Go out and do that. The one company in Texas, they manage about 5,000 houses. So obviously, if they can buy filters and batteries and bulk can go out. And I get the deal on that too. Sure, sure.

You know, for 80 bucks, they go visit the property, change out the batteries, all the filters, check the property. Once a year, that's good insurance. Yeah. And, you know, my reason is the same. I just had an experience with a company that they had in-house crews. And, you know, there were magical repairs, at least from, you know, oh, yeah, we need to do this and this. And, you know, the bids didn't even come close, you know, between them.

And objective, reasonable, mid-level outside companies and their companies, you know, they were bidding many more hours, much more work on similar projects. It just didn't make sense. I do like the objectivity as well. So I think that's a good piece of feedback. I would make my property managers hire outside plumbers, electricians, handyman. Yeah. That's just flat out the way it is.

Yeah. What I find interesting about that is I've heard that as a sales pitch from certain property managers. Like I interviewed one a few, I don't know, two months ago. And like one of their big like reasons why I should use them is because they have in-house maintenance. So, you know, we can get it done cheaper and faster. So it's kind of cool here. And the other side of that is maybe that's not such a good point. It's not such a sales point for an investor.

That's cool. I mean, I can see if you have somebody on call for that 2 a.m. emergency. Yep. Yep. A real quick, a toilet something. But if I'm going to put a roof on or if I'm going to replace the HVAC system, I want somebody outside of the management company to do it. Yeah.

Or at the very least, have them bid evenly up against everybody else. Yep. Yeah. I still prefer an outside company to do it. Yeah. I can go to the state contractors board, verify their license. Yeah. and make sure that's well done and get three bids, you know, just the whole nine yards to make sure it's a good job.

All right. So we've got that you mentioned two, you know, using the outside contractors. And the first was you get the names of references. What else might you want to ask? Communication with me on every issue. Some property managers will only communicate once a month with a statement. Yeah. I don't know that someone moved out.

I don't know that we had to do a $200, you know, replace a toilet or I really want communication on every issue that's going on. It doesn't have to be a long phone call. It could be a short email, but just let me know what's going on. Yep. Yeah. I think that's good. That's good. So asking, you know, what's your communication style? How do you guys, when do you get in touch with me? What would you inform me of? How often would you get in touch with me? What types of things would you let me know about those would probably be the questions to ask yeah and if there is an eviction in process let me know where we're at yeah every state's different if you have a court date if you have a move-out date I want to know what the dates are well so so on that how how would you actually prefer it mike

how do you want a property manager talking to you and giving you feedback like you want to call them do you want them to call you email you know what's the best way that you like the ideal situation For me, it's email because it's accessible from my iPhone, my iPad, my desktop. Okay. But I prefer email because then there's actually a written record that I have a record of that I put in the file and say, you know, I was told on, you know, August 3rd that this tenant's moving out on August 31st. Yeah. Phone calls are nice, but then it's like, well, he said, she said. Yeah.

Yeah. Yeah. There's not for sure. Well, you said September 30th. No, I said there's August 30th. Yeah. Okay. So the email is just, it's solid.

And you can email back to them. And if they're busy or whatever, it's just, it's waiting for them to answer. Yeah. And it just, it's a good record keeping. Yeah, the record keeping is a great point about email. I agree. Cool. Hey, let's go back maybe a little bit more foundational on the idea of having property management.

Because, you know, Josh is more of a advocate for property management. I mean, even though he has a problem with them, you seem to at least get out of of your business, work on your business, that whole thing. I still manage, or at least my wife manages all of our properties. Maybe I can ask you this. Convinced me, I mean, like, Mike, convince me, why should I do what you're doing? I mean, you're retired, so you have, you probably have time that you could handle, you know, your rentals, but you choose not to.

Why should I choose not to versus choose to? Well, there again, it depends on what you and your family want to do with your time. Last year, I was actually in Russia on a cruise. But one of my rentals failed Section 8 housing inspection. Hey, Mike, really quick, I think there might be a sound issue. You said you were on a cruise in Russia. Correct. Yeah, that's, okay, I was hearing correctly then.

My headphones weren't broken. Somebody willingly went to Russia to go on a cruise. Okay, just making sure. We actually sailed out of London and did a whole Baltic Sea. That's cool. But we spent three days in the port of St. Petersburg, Russia. and I get an email, your house didn't pass Section 8.

And it's like, I didn't know there was an inspection coming. Yeah. And what had happened there again, with my parents' trusts, HUD didn't have the correct address that sent it to. Oh, yeah. But the bottom line is my property manager, one email to them, it was all taken care of.

Hey, you know, along those lines. Yeah. Well, well, but to the negative, along those lines, I missed a hearing about an inspection situation. I never went to court because a manager failed to notify me. And I got into a lot of trouble because of it. And it cost a lot of money and more headaches than I care to even think about. And it was because the property manager made some mistakes and wasn't good on notification, things like that. So, you know, that communication is really, really important. You really have to make sure that there's a level of

trust there. Think about the case of an eviction hearing or something else where, you know, a judge demands that you be there and, and you don't, you know, show up. Well, that's not good. Angering judges is never a good thing. So, yeah, I mean, and managers hold those key sometimes. And if they're not communicating effectively, you can really find yourself in trouble. So back to that communication issue. I just thought it was important to harp on it. Well, remember, you are the boss of your property manager. Yep. you have to be willing to fire them. Yeah.

And not give them a third or fourth write up. I mean, they mess up once, you know, it's like you're on the edge. And second time, I fire them. Yeah. I have fired four in the last five years. So, Mike, let's go back to Brandon then. Brandon's living in Podunk, Washington. I mean, there's six people in his town, one of which is the property manager.

And he interviews them. And turns out the property manager is not great. Of course, this is a hypothetical because, you know, we're not, I'm not quite sure. of what's happening up there. And so, but say there's, you know, a small town and there's really only one property manager around and they do, you know, they're not doing a good job. So I guess then you're stuck managing your own property, isn't that right? I guess every town, not every town in this country is going to have a good property manager.

Right. I lived in Pondon, Colorado, the little town called Bayfields. Yep. Between Pagosa Springs and Durango. What? population 1200. That is smaller than mine. And my property manager manages 40 houses, but he tells me, he says, I pay my home

nuts, my home expenses with property management, and I do a little bit of loans and selling real estate on the side for my investment. So if I lose a management property, that affects my groceries and my utilities. Yeah. He does a wonderful job. Great job. Direct deposits my rent. Usually within five or ten days after he collects it. He does all the inspections.

He doesn't charge any extra to get a new tenants. It's still the same flat fee, 8% a month. That's great. So you have to look for them. Yeah. Yeah. Okay. Fair enough.

Fair enough. Maybe I can ask you this since I've never had property management. What exactly does a property manager do in terms of, I mean, maybe you can just educate me here because I don't know. What can I expect them to do? and what do I have stuff to do for myself? For example, let's say I get a letter in the mail saying that my insurance isn't working. I mean, there's something wrong with my insurance.

There's an inspection has to be done or something needs to be painted. Is that my job or will they get the letter? I mean, there's a million scenarios I could throw at you. But you know what I'm asking kind of like what's their role versus my role as the owner? Well, you're still the boss of your property manager and in essence, thus the asset. You're in charge of that. I make my property managers do everything. I don't want to see the house.

I don't want to see the tenants. I don't want to have to drive by anything. So collecting the rent and collecting their 7, 8, 9, 10%, that's easy. Any Joe Blow could do that. It's when there's something else that needs to be done when they actually earn their money. And that is a HUD inspection or an insurance inspection. In the case in Colorado, my irrigation system from my yard has to be blown out every fall or it'll break in the ice. Yeah. And then blown out every spring. And he takes care of that. He orders it to be done by professional. But he knows it needs to be done. I don't need to worry about it.

Yeah. Yeah. And I'll chime in a little bit, Brandon. So where Mike says he has them do everything, there's really everything in between. I mean, you could hire a manager just to go and collect the rent. You can hire them to do the screening. You could, you know, I mean, presumably if you're going to hire one, you're going to want full service. But you may want to handle all the legal. and accounting and billing, whatever it is, you may want to deal with that yourself. So the key is to kind of figure out what it is that you personally can't let go of or don't want to let go of and maybe until you establish some level trust, you won't. And then when you get to that point and say, oh, you know what, these guys are rocking and rolling and everything, I don't have to remind them anymore to blow out in the fall in the spring. I don't have to remind them anymore to make sure that, you know, trees are being trimmed

and things like that, then you hand it over. But however you really want to do it, you know, it's going to be up to you. And based upon your level of involvement or what involvement you want to have. Yeah. In Los Angeles, you can hire one just to get you a tenant and then they're done. Yeah. And here it's 50% of the first month's rent and they're done. Yeah.

And some landlords will spend more than that on their advertising if they want to go on the LA Times or in a magazine or something. You know, there's companies here, 50% of the first month's rent. And then you're on your own every month. Yeah. Yeah. One of my concerns, and I mentioned this on a previous, you know, podcast, but my concern is, you know, there's properties of mine that, I mean, I have, like, in the low 40s and in number of units. And so, like, it's not that many. Yet there's still be like, you know, there's been four months since I driven by one of my properties.

And I'll happen to drive by and the lawn, it hasn't been mowed in four months. And I'm, like, shocked. I'm like, oh, man. So then I think, well, if I had a property manager that has 500. units or a thousand units, how are they ever going to be able to monitor those things? Or there's a broken window out in the front of their house and nobody called to tell me that, you know, things like that. Like how do I trust that a property manager is going to do that kind of stuff to drive by

and, you know, take care of my property since I can't even hardly seem to do it? I think that's why Mike asks for three phone numbers of three current tenants. Yeah, I guess makes sense. Your property manager, no less than twice a year, needs to drive by the property and not on a scheduled time, just random. I don't care if they're managing 10 houses or 1,000 houses. If they're managing 500 houses, they've got a staff. They've got a staff that drive around and do a visual inspection.

Some of my rentals are in HOA's, and they're really strict. I mean, I've had, you got any lions in your yard. Get rid of them. I mean, so make friends with neighbors. One of my houses in Colorado, we were friends with the neighbors. We were friends to the neighbors. And they said, your house is great. Your house is looking good.

Cool. Like a network of people there. That's great. I mean, really, the neighbor idea has been a really good one. Somebody suggested that to us back six months ago or so on the podcast. They said, you know, go talk to the neighbors on both sides, hand out your business cards. And we did that on one of our recent properties. Sure enough, they've been calling and, you know, complaining about this or that.

So then we can jump on the tenant right away. That's kind of nice. What I'd like to do is, yeah, get a manager that will do that. They'll go next door and hand out their cards. Right, right. Well, and that's one of those things that I kind of worry about. Like, you know, that I think that's something an owner's going to do. I find it unlikely that that's something that a manager would do.

I don't know. It just doesn't seem like something that a typical one would do. What do you think about that, Mike? What do you say to do? You mean drive by the property? No, no, no. Like, you know, having the property manager buddy up with the neighbors and make sure that the neighbors can keep in communication.

I know when I had property managers, even the ones that I thought were decent, I was the one always doing that, and that was never something that they did. I guess I got lucky because mine do do that. Oh, that's great. And they actually find out which of the homes on the block are tenant occupied. They're trying to add that to their management list. Yeah, no, that's great. And when you have somebody that's managing 5,000 houses, a lot of times they'll have three or four in the same street.

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Head to Costsegregation.com before April 15th. Hey, so you talked about buying it at an HOA. You've got a couple of properties you said that are in an HOA. Let's kind of chat about that for a second here. I'm big on not buying an HOA. I worry too much about all the rules and limitations and restrictions and things like that. Since you have these properties, I'm guessing you don't as much. But what's your take on HOA versus non-H-OA?

And what would you recommend, especially maybe a newer investor do? A lot of times an HOA can be a problem if they're very, very strict. But a lot of times they also add value. Most of the properties that I own in Texas, they have an HOA. And the HOA is a park and a pool and basketball tennis courts. and it's $300 a year. So you're only looking at, you know, $25 a month. And it adds value to the tenant and to future buyers of the house.

So you just take the good with the bad. If they complain about a bush or a weed, oh, I'll put up with that. And yes, I do get those emails about, you know, your yards turning brown or whatever. But that's good. That helps keep the whole neighborhood value up. Sure, sure, sure. Okay. So I guess then to the question on a newer investor,

you'd probably say, you know, see what you can deal with and, you know, maybe look at those CCNRs and talk to people who are in the HOA and find out, you know, how active, proactive or negative potentially the HOA is. I don't like condominium's townhomes because the HOA expense is so high. Yeah. So I would shy away from that. I've never had a condominium rental. Yeah. But when it's a large track, a builder track, a 500 or 1,000 or even 2,000 homes, The H-J-A is a different animal than it is in a condo complex.

Yeah, yeah, that makes sense. All right. So let's look back at your career now. What's the biggest mistake you ever made? I had a realtor friend who said, hey, Mike, let's go buy this house. We'll do really well on it. And I thought, okay, I got a little chief house. I need to sell and we'll buy this house.

So I sold this little 800-square-foot house and then bought a 1,400-square-foot house for 110,000. in Riverside, and five years later, sold it for 80. Yeah. So your biggest mistake was not partnering with your friend. It was buying the wrong house? It was just, I took his word for it because he was a realtor in the area, and I was 30 miles away, and I really didn't do enough due diligence on the neighborhood. Okay, so you gambled and you lost that gamble.

$30,000, yeah. Okay, okay, which, you know, which is a price you pay. I mean, with appreciation, right? I mean, if you're shooting for that appreciation. Now, let me ask you, on that house that you sold for 80K, was it covering expenses as a rental or a negative? It was vacant too much. If it had been fully filled with a good-paying tenant,

I would have made about 50 bucks a month. Okay, so overall then it was a bad buy, not only because, you know, it was in an area that just was probably going to go the wrong direction, but also because ultimately it was a property that wasn't in demand. Yes, and he said it'll be worth 150 in a couple of years. Yeah, yeah, well. Yes, Crystal Ball was fuzzy.

Well, and to the listeners, this is why I warn especially new investors until you really kind of know what you're doing, you know, cash flow is a much better strategy, at least in my personal opinion, than the speculation, because this can happen. This can happen to anybody. and even had Mike done his own homework, you know, it may have turned and gone the other way. You know, you never know. It was just not quite, it was a lower B class neighborhood.

Yeah. And I don't like to buy in those neighborhoods unless it's some spectacular deal. Okay. I mean, if that thing was written for 2000 a month, yeah, I would have, you know. Yeah, yeah. Hey, for those listening, what is a lower B class neighborhood? What are the different classes of neighborhood? Can you maybe fill us in on that?

If you look at the value of the house and the rental amount, class A is almost always 1% of the value or less in rent. In other words, a $200,000 house would rent for like $14,500 or $1,500. You know, that's your class A range. Class B, you're going to get 1 to 1.5%. Usually closer where you'll pay $70,000 and maybe get $1,000. 900 rents. That would be a Class B. Class C is when you buy these

40,000 houses that rent for $7.95. Now, is it only the ratio? I mean, is that what determines it? Or is it, you know, the quality of property? Is it, you know, white collar, blue collar and unemployed? I mean, what else determines neighborhood? Crime, stats. I mean...

If you look at, again, you know, like you said, blue collar, white collar, you can still have a solid blue collar middle class, upper middle class neighbor. Yeah. You won't have a white-collar neighborhood, probably in that range. Different areas in the country, as we all know.

From Texas to Michigan, to Virginia, to California, you could get a $300,000 dump in California. Right. And you get 100,000, you know, colonial mansion in Alabama, maybe. Yep, yep, exactly. So the price itself is a hard factor because areas are so different. Sure. But if you look at the rental amount of income, it's usually a really, really good key. It's not the only key.

Gotcha. But everything I'm buying in Oklahoma, Tennessee, Arizona, Texas, 1% or even a little bit less, may 0.9 or 0.95% of my purchase price. It's a rental amount. Gotcha. Good, good, good, good. All right, a couple other questions I have. How are you funding your deals? I mean, presumably it's all cash that you made from previous deals and you're just recycling it back in. Is that right?

or are you actually taking out money, taking out loans, and using new capital? Actually, right now I'm doing quite a bit of seller carryback. Really? Byving a lot of sellers that want to carry because they know that they can't get for 5% on a money market account or a T-bill account. Yep. And they love that 30 years of that straight income. They know that they're going to get that check every month.

And it's for them, there's no tenant, there's no property. tax. There's no problem. It's just a straight income. So are you actually like when you search for a property, you're searching for properties that have that or are you just stumbling across it accidentally? It's my networking out there. People are telling me that, you know, family member of theirs or whatever, they have a house that's free and clear, they inherited. They don't want to be, you know, landlords, but then like the cash flow and you give them 20% down maybe. And then they carry it and they get their check, you know, I rent it.

And if I get my PI payment less than 50% of the rents, usually a pretty good making deal, money making deal there. Cool, cool. Well, awesome. Well, we probably should at least start moving towards the direction of wrapping this thing up. I have a few more questions here. I want to get to. But maybe like the last thing I want to ask you before we get to the fire round and the famous four. And that is how to deal with things when the going gets tough.

You know, like, obviously you've been in this business a long time. It's been a career, you know, for you. So you've seen good, bad, you know, things, whether it's happening in your personal life, happening in your business life. I mean, how do you deal with just tough times and when you want to give up or just things are hard? There's been several times in my life, my divorce being one, where I actually had to rent a room to live in in Colorado. I mean, that was pretty bad. Yeah.

because I was giving her all my money. There are times you have to really buckle down, maybe work two jobs, you know. You do a lot of different things. I kept my rentals during that time, but they were pretty much of a neutral cash flow. And she was getting whatever positive there was. There's just things you have to do. Sometimes you move back home. I moved back home for 18 months when I was 40.

Yeah. You know, you do that just to get regrounded again. and refocus, you know. There's tough times out there, and you have to kind of walk through them when they come, find ways that you can, you know, maybe live in a mobile home. You live in a camping trailer.

I know where I live in Colorado, people actually had to live in tents out in the forest until they get a couple of months of pay saved up to rent a house. Yeah, yeah. Yeah, no, it's true. Listen, I mean, when times are difficult, you do what you've got to do to survive. So, you know, you were talking about you're this landlord, you got a bunch of property and you're sitting there and you're neutral and you're scrapping by to survive.

You know, I'm not going to say that that's the story of every landlord. It certainly isn't. But, you know, it's one of those things where what bothers me so much is when the public, the general public stops and says landlords are these rich SOBs that are, you know, just living the fat life while everybody else is, you know, scrapping by. and they get, you know, landlords really get bastardized by the media and the vast majority of cases. And I don't know. I mean, I think you're kind of one of these cases where you're, you know, at least at that point in time, you're just a regular guy who's struggling to get by. I mean, you've got a bunch of property.

But that doesn't mean you're this, you know, this Trump who's, you know, big making billions of dollars, right? And I know I'm preaching to the choir because everybody listening to the show is in the investing space. but I don't know. It just kind of, it really frustrates me that the level of disrespect that investors really get and I don't know.

I just wanted to get it out. Well, the surprising thing is that I don't have the stats here in front of me but I've read where around 50% of the rental houses

in the United States are owned by somebody who has one rental. Yeah. Interesting. It's just a little supplemental income for a retired couple

or maybe someone inherited a rental and they're not really real estate investors. And that's the world out there. And then there are people that get into the business that don't know what they're doing. It's frustrating for the tenants. You know, the tenant wants to have good service. And then again, as we know,

there's some difficult tenants too. Sure. But all in all, 90% of the tenants are good tenants, you know, and there's very, very little bad news. It's always this one that makes the news where this landlord is kicking out this elderly gentleman or something. And that's one in a million rentals in that state. Yeah.

But it made the news. Everyone thinks this landlord, all landlords are bad because this one guy is not fixing its old man's house or he's evicting him or whatever. Yeah, right, right. So you have to put up with that bad image, you know. Yeah. Well, we can all work on it by running good high quality rentals and taking care of our tenants and keep putting the word out.

But, yeah, I just wanted to vent. No, I understand it. Even property managers tell me that some of their investors are hard to work with. Yeah. They don't want to send them a couple thousand maybe they needed for a repair. And they always tell them they appreciate the fact that if something needs to be fixed, you know, I'll either transfer them or mail them a check. Yep.

Get it fixed. Get it fixed, you know. Whatever inspection that didn't pass, we've got to get it fixed. Yep. I think that's good. As an investor, fix your assets. Keep them in good shape. they'll serve you in the long run.

Yeah, I agree. I agree. All right, cool. Hey, let's move on to the world famous. It's time for the fire round. All right, these questions, we pull them straight from the bigger pockets forum. So you may have seen them while you're out hanging on there. Number one.

On the forums, really? Number one. What is your take on medical marijuana and tenants who self-medicate? I actually had that happen to me. If you can believe it or not. You self-medicated or you had a tenant due to. Well, you own property in Colorado. So, yeah.

I had a tenant up at the Fresno area who had a permit to grow medical marijuana on the property. Nice. And then the sheriff was contacted by the FBI because growing marijuana is a federal offense. Right. Even though it's legal in California. So I have a tenant who is legal in California and illegal federally. What do I do? Well, I don't know.

What did you do? I basically, I'm a little more afraid of the feds that I am in the state. So I told my property manager, I'm sorry, but they cannot do that. They cannot, I cannot allow them to do that. The property is breaking federal law. And the FBI threat to take your house. Yeah. So it's like, I hated California allows that.

Would you say what's my opinion on medical marijuana? No, we don't care. We know what your opinion is. That's a big assumption. Well, no, that was a good answer. That was a good answer. There are having two very sick parents and seeing elderly people who are too sick to eat and there are so much pain. I know that sometimes medical marijuana will give them an appetite a little bit.

And it'll ease of pain. They're dying. They're in the process of dying. I know there's chemicals in marijuana that. can alleviate that pain and the quality of life for their last two or three months. I can see where that could be, you know, I don't mind that. But when a kid says, I got a stomachache on one of the marijuana card. Yeah.

It's like, aren't we pushing the limits here? Yeah. Or they could just make it legal like they do here in Washington where Brandon is. And that's a wrap. All right. Well, and you know, it's funny. One of the most asked questions I get, by the way, when I'm not in Colorado, whenever I'm out of town and I meet new people and they find out what I do,

they always say, oh, oh, cool. So, like, are you guys, like, trying to get into, like, that medical marijuana stuff where you're, I mean, like, all the marijuana, like, so you want to grow in your house and stuff? You just. I was just there in May. Yeah.

And I thought I was going to see a pot shop on every corner. There is a pot shop in every corner in Denver. I was in Colorado Springs. I didn't see it. Well, that's where the military is. No, yeah, no. Up in Denver, every frigging corner, there's a pot shop. It's crazy.

That's crazy. All right. Investing in multifamily now. Or paying off student loans. Or paying off student loans. What should somebody do? Yeah, somebody just out of college. I think they were just barely out of college.

And they have a choice. They can buy multifamily property or start paying their student loans off first. What do you think? I would look at the interest rate, the overall interest rate on their student loans and buying a multifamily. Because here's what I did. I did a new vehicle. I could have paid cash for it. Instead, I bought a house and my tenants buying my car for me.

Yeah. Yep. Yep. And in the end of five years, the car's paid off. I still have the rental. Yep. Yep. That's right.

So if his multifamily makes them enough profit to pay off the student loans, if he can do that, he or she can do that, then he's made a wash out of it and he has an asset with the loans paid off. Yeah. Yeah, no, I like that. I think it's a smart approach. And obviously, it's going to depend on, you know, the individual. But yeah, I like that idea for sure. All right, cool, cool. Number three, now we know you're not a lawyer or a CPA. So, you know, we're prefacing with that. But just out of your personal life, when you get properties, do you put them in LLC's trust or how do you structure your investments? Right now, everything is just in my name and my wife's name. There's no LLC. There's no trust.

There's nothing. Okay. Is there a reason why? I had felt that as long as the assets were under $5 million, which is the capital gains. Inheritance, I mean, inheritance tax limit. There's not that much to worry about. But I already had the package from my estate attorney to start my trust. Okay.

because we've surpassed that number now. So I've got to start looking at how that trust is set up. And to see how my parents' trust worked, it really didn't work very well. Yeah, that sounds that way. I mean, it created more work. It'd be easier just to have a will. Yeah, yeah. Interesting.

If half goes to her, half goes to him, and we're done. Yeah, for sure, for sure. Because that's what we end up doing, spending 20,000 within a state attorney to do it. Yeah, makes sense. Yeah, that makes sense. All right, cool. Last question here in the fire round. The first floor tenant clogged the toilet.

The toilet overflowed and caused damaged in the basement floor and ceiling. How do you quota repair? Do you get a GC, mold removal guy, flood specialists? You have your property manager just take care of it and tell you that this happened and you don't even deal with it. What do you do? Hopefully I don't hear about it until I have an estimate. Okay. And the estimate, if it's going to be over $500, I want at least two estimates.

And if we're going over several thousand, I want three estimates. I want to see what each one finds, what each one says needs to be done. Maybe one of them is just going to paint it and covered up. One's going to remove the drywall and put the drywall up. And maybe one's going to go in there and demold everything and put an anti-mold coating on all the, you know, and all the two by fours and everything. Yeah. Yeah, there's a lot of different choices that could happen.

If it were you hiring, like let's say it's on the one property that you manage yourself, who would you call first in a case like that? Would you call a general contractor? I have three handymen locally here that I've used on my house I live in. And each one has your specialty. So I would just send one of them over to say, hey, what needs to be done? As a matter of fact, two years ago, had them put a whole new kitchen and a rental because it was a 19,

you know, a 62 kitchen and it, it increased the value of the house more than double the cost of the kitchen. Because it was, I mean, it was a bad kitchen. Now it's a beautiful kitchen. Yeah.

Cool. That's great. All right. Well, let's move on to the end of the show. This is our last segment, which we call the famous for. All right.

These questions we ask every guest and we want to see what you have to say about it. Number one, what is your favorite real estate book? How about the richest man of Amelon? I love that book. Yeah, I do too. It's a good choice, good choice. It doesn't say it a lot in there, but he talks about his land and other countries. Yep.

Cool. The rich man. Yeah. Very smart book. Very good, very easy read too. Yeah, that's a quick read. Yep. Yep, yep.

One hour, pretty much, two hours. You can swing through it. Yeah, that's a great book. All right, what about business books? Is there any business book that really stands out for you? They can grow rich by Napoleon Hill. Okay. It's a very, very good book.

There's several good resource books out there, real estate investing for dummies, where you can learn kind of the lingo and a little bit of the field without any real direct knowledge. And then I think the book that you guys wrote on beginning real estate investing is probably the best thing on the market. Oh, the ultimate beginners guy are you talking about? Yep.

Oh, hey. All right. Or somebody who's never, ever bought a rental house. Yeah, yeah, yeah. Thank you. And people can get that for free if you want to go check it out at biggerpockets.com slash UBG. UBG. Yeah, like ultimate beginners guide, UBG.

Yeah. That's amazing read too. That is, you know, it's not a missionary novel. No, no. Yeah, awesome. Well, thanks for reading it. Well, man, what about hobbies? What do you do for fun, Mike?

surprisingly, I love to geocash. What? Cool. I don't know what that is. You guys know what geocaching is? I have no idea. I know what geocaching is. That's cool.

I have no idea. It's like educating and finding stuff, man. It combines high tech with getting outdoors. What does that mean? Do you know what a GPS unit is? Yes. A handheld GPS unit? Sure.

You know, hikers use it and campers. Well, in the year 2000, one guy in Oregon took a five-gallon bucket kind of out in the woods a little bit, hit it, and then put on the internet, the coordinates, where it was. And he gave his friend the coordinates and said, see if he can go find it. They both had a GPS unit.

And the second guy, okay, I'll go try to go find it. He goes, you know what, that was fun. I'm using the GPS satellite system, the internet, and I'm getting out the woods. That's cool. And so he says, hide something else. So he hits something else. and pretty soon it just caught on.

And now there's geocaches around the world. I have found about 2,600, which is not a lot. But I have found caches in Russia, in Finland, Norway, Canada, Alaska. What are you finding? Is it just like an empty bucket? It's a small little, anything from a small container could be just a little small container to a five-gallon bucket. The most common type is like a key hider.

a magnetic key hider you find at the hardware store. There's a log inside and you just sign your name in a log. I put it back. Oh, that's cool. If you want to check geocaching.com, it's a great hobby. I know the Boy Scouts and the Girl Scouts, they use it to teach the kids how to use the GPS. And we're getting more and more use of GPSes in our car.

I think we all have them now. And you can actually put the coordinates in your car like in the urban geocash, and get close to the area. And they're in parks or they're in buildings. Takes you to some interesting historical sites. Cool. That's awesome.

That's awesome. I'll check more out about that. And we will link to that website at biggerpockets.com slash show 85, which of course is the show notes for today's show. And the final question from me, I want to know, what do you believe sets apart

successful real estate investors from those who give up fail or never get started in the first place. It's the old saying, if you fall down, you have to get up, whether you're investing or you're in sports or you're trying a new job, changing careers, anything you do, you're going to have to fail. Success is never as sweet unless you failed. If success is easy, then everybody would do it and there wouldn't be, you know, a set-apart success

group of people you have to pick yourself up you lose 30 grand on a deal it doesn't mean investing is a bad thing you know i could easily said hey this is stupid i lost 30 000 dollars yeah but you know what i made a wrong choice i didn't do my due diligence and i learned to actually research more taught me a lesson something that you'll never learn in a book you know until you feel the sting of that 30 thousand being lost i mean it hurts but i've bought houses that i've i've made 100 000 on in a couple years yeah there's two sides to it so the separation is the fact that as you go along it's not just a straight up geometric climb it's it's a bumpy ride enjoy the ride hang on for the downfalls and you know in the last three years up until a year ago there was great buys out there i think we all

know that, you know, and be ready to jump on those buys in 2011 and 12, there are some good deals out there. Yep. Everyone. Yeah, for sure, for sure. Cool. All right, Mike. Well, before we let you go, where can people find out more information about you or find

you online anywhere in particular? Not really. Just private message me on bigger pockets. I answer, I get quite a few. I answer them. People ask questions about buying property at a distance. You know, how do you live in California, buy a house in Texas? Never look at it, never see the neighborhood.

Just write me a private message. I'll be more than happy to talk to you about it. Sounds good. Sounds good. Well, listen, we really, really appreciate you taking the time. Thank you so much for being an active member of Bigger Pockets. And, of course, thank you for taking the time to be here on the show with us. Well, I hope we can help somebody.

Awesome. Well, thank you, Mike. Thank you very much, Joshua and Brandon. You guys have a great day. Thanks, you too. All right, guys. That was our show with Mike McKenzie, show, show 85 of the Bigger Pockets podcast.

You can check out the show notes at biggerpockets.com slash show 85. Lots of interesting stuff. I always find it fun when we get into some detail and chatting about property management and landlording. What do you say, Brandon? You had bad experiences with that. Yeah, that's fun to talk about. Well, why do we wrap this thing up? Listen, we really appreciate all you guys listening.

to the show. We appreciate you guys being members of Bigger Pockets and being part of our community. And I just want to say thank you. Also, by the way, we recently crossed 200,000 members on the Bigger Pockets website. So that's awesome. If you're a listener and have not yet joined the site, now's a really, really good time to join. There's tons and tons of people on Bigger Pockets, connecting, interacting, doing business, doing deals, learning, helping one another out. And I definitely encourage you guys to get involved. So do that today at biggerpockets.com. Otherwise, definitely be sure to follow us on Facebook, Twitter, Gplus, LinkedIn, Pinterest.

We're all over the place. And engage with us, connect with us, share our content, share our podcast, share everything. Let people you know, know about Bigger Pockets. The more people in your network that you can get onto the platform, the more people are interacting, the more successful. we can all be together and help one another out. So I definitely encourage folks to do that. But that's all I got for you. Get out there. Make things happen. Be successful. And we'll be here to help support you. I'm Josh Dorkin. Signing off.

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