BiggerPockets Real Estate Podcast - 94: House Hacking, Partnerships, and Investing in Multifamilies While Working a Full Time Job with Michael Siekerka

Episode Date: October 30, 2014

Starting out in the world of house flipping and landlording can be taxing and a lot to take on at first, but it’s all a learning experience, which is why we want you to get to know a master at both, Michael Siekerka.  Michael’s first real estate investing experience was just six months after he graduated college, when he occupied his first purchase by doing a fix and flip. After years of rehabbing properties by partnering with friends for quick income, he eventually found his niche in buy and hold properties. In this informative episode, Michael shares with us how he manages his properties, the criteria he uses to find new places to rent out and the methods he follows to work successfully with hard money lenders and agents to boost his revenue. This is a show to hear if you’re in the market for success! In This Show We Cover: How to partner with friends correctly How to go from a fix and flip business plan to buy and hold properties Learning to finance correctly The dangers of using hard money lenders The pros of working with a real estate agent How to handle a basement leak — after the property is on the market Collaborating with commercial lenders Why working a job AND investing can be an ideal setup Making sure you have a Plan B The positives of working with a showing agent How his focuses have changed since his first purchase Importance of vetting tenants Why you should get references for prospective property managers And lots more! Links from the Show Hotpads Postlets BiggerPockets.com/analysis  The BiggerPockets Forums Online Rent Pay Tools Mike Recommends Intuit Google Wallet Chase QuickPay Books Mentioned in the Show  Commercial Mortgages 101 by Michael Rinehart Tim Ferriss’s The Four Hour Work Week Connect with Mike Mike’s Website Mike’s BiggerPockets Profile Learn more about your ad choices. Visit megaphone.fm/adchoices

This is the Bigger Pockets podcast, show 94. 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. What's going on, everybody? This is Josh Dorkin. host of the Bigger Pockets podcast here with my co-host,

the guy who's been making fun of me the whole time. Mr. Brandon Turner. What's up, Brandon? Not much. Today's show, we just got done recording it. We're doing our intro later. Today's show is probably one of the funniest one we've ever done. I was cracking up on this show.

Mostly at your expense. Yeah, mostly because you're like a crazy weird stalker who hangs outside people's windows. But yeah, okay. Oh, yeah. People will like that. All right. Anyway. Yeah, weird and uncomfortable.

That's how we roll. All right, today's show is awesome. We're going to cover a ton of stuff about a little bit about flipping, a little bit about landlording, a little bit about property management, a little bit about everything from a guy named Michael. You guys are going to love it. So before we get to that, we should do today's quick. Oh, quick, quick.

Clearly disorganized. By the way, once again, guys, I've got branded in town and we're recording this show. And look, there I am. There he is. We're in the same room. it's weird, it's uncomfortable. I really don't like him that close to be. It's kind of odd and awkward.

So if there's any kind of weird sound stuff, we've been trying to manage it, but apologies in advance. But yeah, so, you know. Can I do the quick tip? Are you going to stop talking? Oh, you know, I just kind of, wow. If you're a listener, I apologize.

Wow. That sounds so insincere. Our listeners deserve better than that. All right. Today's quick tip is, I don't know, what's our quick tip today be? A way to be prepared, Brian. Here's our quick tip. Honestly, here's our quick tip.

If you have a quick tip, we want to start doing some more variety in them. I want you to tweet them to at bigger pockets. So tweet your quick tip to us. That way you have to be within 140. Well, use hashtag quick tip. You can do that too. Yeah, hashtag quick tip and at mention us, bigger pockets. And put your quick tip.

Not that complicated. Do you not know how to use Twitter? Yeah, but then you got 140 characters. minus at bigger pockets, minus at QuickTip. Now you got like a 12 character quick tip. Whatever. QuickTay's going to be like, smile. All right.

Way to go with the quick tip. That was awesome. Nice to smile. All right. All right, Brandon, that was fantastic. Most investors spend all their time talking about their high level returns. But that's not the number that actually matters. What actually matters is what you keep after taxes.

And that's where multifamily real estate quietly stands out. With built-in advantages like to, the right deals can generate steady cash flow while reducing the tax drag. Bam Capital structures its multifamily investments around those fundamentals, pairing tax efficiency with disciplined operators and a long-term approach. This isn't about chasing hype or guessing market timing. It's about building durable, tax-aware wealth over time. Learn more at biggerpockets.com slash bam.

Do you ever notice how every passive investment somehow turns into a very active lifestyle, active spreadsheets, active phone calls, active stress. Here's a better question. What if you could buy brand new construction homes, 10% below market value, in the best markets across the country, without making real estate your second job? That's exactly what rent-to-retirement does. They're a full-service, turnkey investment company,

handling everything for you. In some cases, investors get 50 to 75% of our down payment back at closing, plus interest rates as low as 3.75%. They've partnered with bigger pockets for over a decade, helping thousands invest smarter. If you want to do the same, visit biggerpockets.com slash retirement to learn more. Okay, we're going to shift gears for a minute

to cover something important, especially for new landlords. The shows often talk about getting stuck doing everything ourselves and the cost of sweat equity. The key question is simple. Is my time better spent elsewhere? I use a tool that cuts down

on a lot of landlord hassles. And the wild part is, it's just $12 a month. It handles rental screenings, rent collection, maintenance requests, and accounting, all in one platform, via a mobile app or desktop. It saves me time in tenant communication and keeps me organized for

tax season. It's called Rent Ready and you can sign up for a six month plan for just $1 with promo code BP 2025. Pro users get it for free because we believe in it. Just sign in through your pro account to get started. Rent Ready helps ensure on-time rent with auto reminders, keeps communication professional, and lets you post listings to multiple sites. Check it out at rentready.com slash bigger pockets. That's rent, R-E-D-I-com slash bigger pockets. All right, all right. Well, let's bring in our guest today.

Our guest today is Michael Sukerka. I hope I'm saying his last name right. I think you got it. Okay, good. Michael is, like I said, he does a little landlord and little flipping, little a lot of stuff, and he is a very bright and very funny guy. So I think you guys are going to love this show. Awesome. A little lot of stuff. Way to put it.

Way to put it. Mr. Michael, welcome to the show, man. It's great to have you here. Thank you, Josh. Great to be here. Indeed. Indeed. It is great to be here. Michael, we are excited to talk to you today. You know, I've seen you around the site quite a bit over the last few months. That's creepy. A little creepy. I don't like stalk him. I mean, I sit outside his bedroom window sometimes, but that's just because he likes to listen to my guitar.

Right. Wow. Let's take this somewhere else. All right. Keep an eye on Brandon's cats for him from time. Yes. Yeah. Thank you. Thank you. I appreciate it. All right. How did you get involved in this crazy little thing we call real estate? Well, I got the bug back when I was in college. You know, I always, it was kind of, you know, 708 back when real estate was the thing to do. And I really had an interest in it.

I tried to talk my dad into buying a house for me and some buddies to rent out, something we could fix up. And no go. Couldn't talk them into it. So I went out and started looking at houses on my own and was pretty close to pulling the trigger on a couple places. Thankfully, I didn't end up purchasing anything in college, but I had that itch. And as soon as I graduated, that was my goal from day one was to get my own property, whether it be a fix and flip or a rental or something and just get involved. So it took about six months after I graduated and bought my first home, owner-occupied,

live-in, fix-and-flip. I think, Brandon, you mentioned that's how you got started as well. And just kind of never looked back from there. Hey, you said thankfully, thankfully when in college, you did not get to buy any property. I just want to hear about that. Why thankfully? Yeah, so when I was in college, it was like I mentioned before, I was right at the precipice of the real estate boom. So had I talked my dad into something, I think we'd be probably just about now

crossing over into positive equity. So I don't think he would have bit too hard on that. and you probably wouldn't be too happy with me. I thought there was more of a story there. I was looking forward to hearing some fun. I wish there was, but no, that was it. Oh, man. All right, so you go, you buy this first house to live in and flip.

How long did it take for that to happen? And was that the intent when you purchased it? Yeah, so I purchased the house to live in and to remodel. So I bought a big time fixer-upper, and I bought it wrong. I paid way too much money for it. I was too excited to buy it. But I moved in that on the day of closing, I went and ripped all the carpet out, just started, you know, destroying the place. It took me about three or four months

to get it livable. And by livable, I mean, the, the microwave worked and the TV was hooked up. That's all you need. Yeah. So your bachelor at the time? Yeah, bachelor at the time. By myself. Yeah, sleep on the floor, Robin. Yeah, it's all good. So had a, had a nice semi-finished basement with the, with the tacked down ceramic floors that we could just spill beer all over. And it was great. So after that first three-month stint of really just going at it pretty much every day, once that TV went in, I kind of slowed down. And it probably took me a good year and a half to two years total from when I bought it to when I was really done.

So I think it sounds like you're saying you got comfortable, right? So you were in there. Your intent was to flip it. The TV came in. Suddenly you could kind of sit back and enjoy where you were. You were a little too comfortable and you weren't motivated, right? Absolutely. So for those people who are thinking about a live-in flip, you know, no carpet, you know, mattress on the floor, you know, don't clean the place up well until the very end, right?

Live Spartan. Is that kind of the advice that you've got? Yeah. Yeah. And I'd like to say I learned from that, but I'm kind of going through another live-in flip right now. And we kind of knocked out the bedroom was a big milestone. And we kind of pushed the rest of it off just because we got that piece done. That's good enough. My wife and I were doing the exact same thing right now. Once you get comfortable and you, you got to make sure that when you reach that milestone, you keep pushing on because if you settle down, even if it's for a week or say, I deserve a reward.

Let me take a break. You get derailed. Yeah. You know, I was fine that, you know, on my property, you know, I put in, I don't know, three months worth of work when we moved into our house. Like I knew it needed a lot of work. So I bought a foreclosure and put in, yeah, I don't know, 10, 15, $20,000 worth of work.

And then I got like 95% done, right? And then like the last 5% I probably, in all honesty, won't finish until the day I move out. Right? And it's like sad. Like, why don't I just finish it? And then my wife can enjoy and we can enjoy living in a house that's done. But I say like my railings, like I replaced all the banisters. And then like I stopped about halfway up.

So like if I had little kids, they'd just like fall down and like not make it. But the cats can jump down now. So it's great. Nice. Nice. So, well, I was going to say, so you've done these living flips. What is your focus? What has your focus been?

I mean, do you do pretty much all strategies? What do you do? So I started out primarily looking to rehab to flip. That first house was where I got going. From there, I partnered up with a couple folks, friends of mine from work on other flips. And somewhere along the way, one of my earlier properties was a fourplex, a live-in, flip, fourplex and I started seeing the merit of having that cash coming in every month as opposed to, you know, waiting for that big payday with a fix and flip. And at some point, probably about

two or three years ago, I really switched directions from trying to flip houses and to acquiring long-term buying hold properties. Nice. Nice. Well, I'm curious about the partnering with friends from work that always seems like a little possibly nervous to be kind of, you know, getting in bed with those colleagues. Hey, Josh, you want to flip a house together? Not a chance in hell. Yeah, so that's a great question. There's two separate folks that I partnered with on different deals. I'll say I was the primary motivator behind the whole thing in both cases. I kind of, I was the one with the drive and the, hey, we're going to go do this. And they were like, yeah, sure, I'll tag along for this. So in my situation, both of them, I would say were successful

from a dollars standpoint, but very unsuccessful from just my personal well-being. Yeah, the relationships probably didn't suffer nearly as much as many partnerships do. I'm still great friends with both of those folks today, but I learned a lot of lessons. And the biggest one that I took away from it, which I employ in partnerships that I'm involved in today, is to really define what each person's role is going to be and how they're going to be compensated for the, their involvement in who brings what to the table. Yeah. So what did the deal look like? I mean, what did the original partnerships look like? And clearly there was some stress that was created because of it. So it sounds like you guys kind of put it all together and you're like,

yeah, you give 30%, you give 30%. I'll do 30%, 33, 33, 33. And, you know, let's do this. And that was it, right? Yeah, it was very unorganized. The deal looked like this. You put in half the money and do half the work, and I'll put in half the money and do have to work. And we'll split half the, you know, cut the profits down the middle and everybody's happy. Why doesn't that work? Well, how do you make half of a phone call? You know, how do you just ask Brandon? Besides a podcast on Skype, I don't think you guys meet contractors through Skype. And it's, you really can't, you can't share certain responsibilities. You really need to have one person that is in charge of certain things. One of the things I found that I'm good at is dealing with contractors

and keeping them on point. And going back to these two partnerships, we didn't deal with any contractors. We were doing all the work ourselves. And again, with me being a little bit more experience with the rehab work and whatnot, I was the one saying, you know, here's how you tile, here's how you do this, and kind of teaching them along the way. And it ended up being more work for me. And I felt like I was contributing more than that 50% mark. and still only getting half of that return. Yeah. Yeah, I've been there as well.

I mean, that's why typically when I do a partnership nowadays, like my favorite kind of partnership are you lend the money, I'll handle everything else. Let's just keep it that way. It's just so much more simple, right? Because yeah,

it is hard. And then you get like weird things like, you know, hey, I think I've been doing a little bit more work than you this month or, or I did a little, yeah, it's weird.

Like you get a lot of awkward, you know, discussion. Right, right. It's just easier. It's easier you, one person does something, somebody else does something else, and it's easier to say, hey, you know, you're not living up to your end of the bargain.

This was your task. It's clearly written out here in our documents, and you didn't do it. And how can they argue with that? I mean, they might, but they hopefully won't. But you should, I mean, you should be putting time into this. You know, I think a lot of people do what you did, Michael, unfortunately. And they rush and they say, hey, this is my buddy, you know, well, you're going to, you know, we'll be 50-50 partners.

They'll write the, you know, some kind of corporate doc, but they don't really, really, really break down every possibility because maybe they don't have the experience to do so. And so I want to encourage people, think about your business, where it's going to be today, where it's going to be tomorrow, sit down and really break down every possible role that you can imagine the two different people are going to do if it's not a deal, not an arrangement like what Brandon does and really write everything out, just brain dump for a day, you know, two days, a week, a month, whatever it takes until you guys have nothing left to dump, right? and then just start pointing lines and assigning roles to people.

And I think that in itself is going to help protect you or obviously do what Brandon does and make it really simple. You give me the money. I'll do the work. Done. Yeah. One of the things I see quite a bit on BP is folks that, you know, commenting, hey, you know, I'm going to partner with so and so.

How do I structure this? And my first thought is just kind of like, oh, man, why are you asking complete strangers how to interact with somebody that you're going to be? halfway, you know, you're going to be on this deal, right? And so since those first two partnerships, I have partnered up with other folks, and I'm involved in a very successful partnership right now. And what we did from the get-goes, we sat down and we spent days talking about, you know, who does what, who brings what to the table, you know, contingency plans. What happens if you don't do what you're supposed to do? How do we handle that? And we outlined all that stuff up front.

And it's, you know, working phenomenally. We don't have those same qualms if, you know, if somebody's not holding up their end of the deal, like, oh, now I got to pick up the pieces. It's, oh, here, this is outlined. If you don't do X, then, you know, we hire somebody or you pay me more or whatever, and we get it done. That's terrific advice. I mean, just spending the time needed to structure that.

I love that. That's great. I said the same thing, but you didn't say you loved it when I did. What's up with that? I don't love anything you do. Sorry, you know. Me and Michael, we're BFFs and you are on the outside. Ouch.

Oh, man. This is a tough one, boxing match. Well, Michael, let's move on to something else because, you know, clearly, I don't know, this isn't going well for me. Let's talk about that live-in-fourplex, you know, how'd you find it? Why'd you decide to do the living fourplex? You know, give us some information here. Sure, sure. So that property, it was right about when I'd finished up the single-family home that I was living in, bought to, owner occupy. I had a friend from work and we both agreed, you know, hey, we want to buy something. We want to rehab it. We want to make some money off of it. We might as well live there while we're doing it. That works great. So we started looking around. We looked at single family homes all over town. And one day my real estate agent said, you know, hey, I got I got this fourplex here. You know,

you guys want to take a look at it. And we're like, yeah, sure, why not? Let's check it out. So we went and looked at it and started looking at some of the numbers and just primarily just the rental income and we realize, you know, we don't, we don't have to do a thing to this place. We don't have to touch it. We don't even have to move into it. We can leave two of the four apartments vacant and it'll pay for itself. So anything we do from there is just gravy. So, you know, we did some deliberating, talked things over and we're like, let's go for it.

Nice. Do you remember how you financed it? Yeah, so that was actually a challenge. I think we went to several commercials. lenders initially. We went to several conventional lenders. What we ultimately ended up doing was getting a conventional loan on it. And actually, since I had not sold my primary residence yet, my partner actually got the loan on it and I had to gift them the money for my half of the down payment to appease the bank and make that work. Nice. Interesting. Interesting. I'm curious.

your real estate agent pitched the foreplex to you. So do you guys, you guys get lots of deals from your agent? Do you have a very proactive agent who's out there kind of finding deals? Are these on market deals or are these kind of, hey, you know, he knows everybody in the neighborhood. And, you know, when somebody's about to list, they hit him up and they're like, hey, John, this thing's coming on soon. Great question. So I'd say the majority of the properties, almost all the properties that I look at, come off of the MLS. And one of the good tip for people getting started out there is to get, you know, actively monitor the MLS. And if you see something that's appealing, jump on it. Because if it's a halfway decent deal, it's going to be gone in a couple days.

How does somebody who's not a real estate agent actively monitor the MLS? I mean, how do they do that? So I get a daily feed from my agent. It's automated. She doesn't do a single thing. She just went in and set up the parameters. So anytime a, a multifamily property in the areas that I'm interested in comes on the market. If a price changes, if it comes back on the market after a field contract or anything happens, I get an email notifying me immediately. And so I can reach out to her and say, hey, let's go back and look at this thing. Okay.

Yeah. I do the same thing with my agent. And if you, you know, people are listening to this and they don't have that set up, just call your agent and find out if they can do that. Almost every agent can do it. And if they can't, you know, I don't know, maybe you need a new agent. Yeah, yeah. It's pretty standard. It's pretty standard stuff.

And yeah, I mean, it helps you be quicker. I mean, I wouldn't rely on just like Zillow or Trulia or one of them because good information, but they're not complete. They're not the MLS. Yeah. And in terms of establishing that criteria, you know, you said multifamilies and X, Y, Z area, what is your criteria exactly? I mean, do you have anything more specific than that? I mean, are there any kind of, hey, we want stuff that has only, you know, three-quarter showers or, or, Bath. Yeah, I could I could probably talk for half an hour about what I what I like and don't like in properties. Some of the big things, and these don't come into the automated email list, but things that I typically look for.

One is the area that does come into play in the automated list. I kind of identified early on areas that I'm comfortable investing in, comfortable traveling to, and comfortable having tenants in. And once I identified that, I kind of got a bulk list of here's all the active property. properties. Over the years after owning property and looking at hundreds and hundreds of properties, I've identified some things that work for me personally. I almost never look at a building if it's not separately metered unless it's priced significantly low enough to where I could go in and redo the entire electric and separately meter it. I tend to shy away from anything that doesn't have central HVAC. I'm not a fan at all of the window units. To me, just kind of scream dumpy apartment complex and my landlord doesn't care about the place.

So every single one of my units has, and that's nothing against you guys if you got that. I know. Yeah, I'm just, I'm just looking at Brandon's reaction. We don't have air, you know. You just don't give them air conditioning, right? We don't have, we don't. I'm in the Pacific Northwest. It gets above like 75 degrees like once a year.

Yeah. They can suffer that one day a year. There is, there is a bonus for having property in podunk. They don't have to worry about air conditioning. They don't have to worry about one. watering the grass or the plants. I mean, you know, it's a paradise there when it's sunny, the three days of the year. Four, Josh. Okay, so sorry. Come on, calm down. Anyway, anyway. All right, so where were we here? We were talking about his criteria.

If you were paying attention, you might know that. But he's talking about the metering. He's got to have metering. He was talking about the air conditioning units and the windows, which you got kind of angry about. Are you trying to prove something here? I prove. All right. So tell us more criteria. What else is interesting to you, Mike? So I definitely, most of my rental property is near college campus, near the University of Louisville.

So I tend to look for things that are going to appeal to that college student, something that's easy to maintain. You know, I don't mind carpet in my units because over the years I've spent a lot of time getting to know carpet installers and can get it pretty cheap. So built-in keg-grators. Sorry, can you repeat that? A built-in keg-grators. Yeah, yeah. I tried to screen those types of folks out, but. Good idea.

But yeah, so anything that's going to hold up long-term, most of the apartments I buy, I tend to buy distressed and remodel. So I'm not too worried about what's in there today. I'm more worried about the layout, the flow. You know, is this something that somebody's going to all live in? And is it close to the campus or close to where they want to be downtown? Talk about layout.

What is it that catches your eye on a layout? What is something that you're going to say, no way I've got to get away from this thing? Sure. I'll give you an example. One building that I looked at, I think it had six or seven units in it. The front six units were awesome. I was walking through this place. I was like, man, this is looking pretty good.

It was off market, so I didn't know quite what the owner was looking for at this point. But I was working with a broker who had it as a pocket listing. And we got to that seventh unit, that secret back unit. And we walked through it and it had, I guess it was classified as a studio, but it was on two levels. The whole thing was probably about 10 foot by 15 foot with a staircase in there. So two levels, 300 square feet. The staircase, you know, we walked in there and the guy kind of warned me. He's like, you know, you want to be careful.

And I look straight down. And, I mean, it was almost a ladder leaning up against the wall. It was that steep. I mean, they had wood boards tacked up there. It was stairs, but it just wasn't functional. I think the second floor was the bedroom. And then the first floor had a partial kitchen. And I can't even, it may not have even had a kitchen or it may not have had a bathroom.

But, I mean, it just was a liability waiting to happen. So once I got to talk in details with the guy, I mean, hell, I'll buy anything, you know, if the price is right, I can tear that thing down or fix it or do something with it. but, you know, they wanted a, they wanted a price based on the 500 bucks a month that that was getting at that time. And to me, I would have just had to scrap the whole apartment and get rid of it. So that's the kind of thing, you know, I try to avoid anything that is going to be hard to rent. You know, if it's going to sit, that apartment, sure, it has a tenant in it today. But when that guy leaves, you know, how hard is it going to be, you know, am I going to have to wait six, eight, ten, twelve months to find the next person that's willing to deal with those crazy steps. Yeah.

And that's smart on your behalf. Just, I mean, A, liability reasons, you know, something like that sounds like it could be pretty dangerous. And B, for exactly what you said, you know, something that you would think is going to need to be knocked out, right? You'll have to, you know, expand the other units and use that space. Well, if they're selling based upon rents collected, you're never going to come to a price on that. Right. Right on. Well, have you had any other experiences with funny layouts like that?

There was one building. It was a mixed use building. So the first floor is a restaurant, very well-known restaurant. I actually went to the restaurant probably a week or two before the showing because I knew I was going to be going to look at this place. Awesome food, awesome layout. I was like, man, this, you know, I was getting real excited. So I go and meet the agent there. We were walking through. We walked through the restaurant, kind of looked around. It was a little funky. The storage space was a little tight. No big deal. Then we go up the second and third floor. are residential units. So I think there were a total of six apartments in the building on top of this restaurant. So we go in the stairwell, beautiful stairwell. Most of the buildings I look at, let me, a little caveat are in the historic part of Louisville. So they're, you know, 100 plus years old. So there's all kinds of cool details. And we can talk more about that later. But the inside of the hallway, just awesome. So I'm walking in and I'm just like, I'm starting to get giddy. I'm like, this is going to be great. We get up to the second floor and go into the first apartment. And it was very disturbing. So first of all, it was a bathroom with no door, no, no nothing. It was just a

toilet sitting, you know, kind of in the back of the room. There was a sort of kitchen, but really it was just a mini fridge and a stove, not really any cabinets, very strange, a bed and a dresser. And I kind of poked my head in it and I was like what you know what the hell do you even do with this you know who's going to rent this out so we kind of looked around a little bit more and it turned out it was more it was the kind of place that some guy was keeping for for parties and stuff on the side it wasn't his he wasn't living there yeah so I thought that's a little interesting but whatever you know I'll let's see these other five units so we go across the hall and I take that back I think it was actually eight eight apartments not six so we go

across the hall and go in the door there. And three of the units, the other three units on that floor had all been merged into a speakeasy type bar, almost like an elk slodge. You know, had this very, very like mahogany rich, musky old man type of feel to it. And I'm walking through this and I'm like, you know, what do you do with this? And I'm talking to the guy and I'm like, like, you know, this is kind of cool. I might, you know, come check it out on Friday night and see what's going on? But, you know, what do I do when this guy decides he wants to hand in his keys and say, you know, I can't, I can't do this anymore. I found a 23-year-old Bimbo that I'm, that's love in my life. And, you know, she's keeping me on the straight and arrow. So, you know, sure, the place was

bringing in, I think between the, on that floor with those four units, I think the guy was paying two grand a month. He wanted to keep that arrangement and blah, blah, blah, blah. But you know, I was looking not six months down the road. I was looking six years down the road or a couple years down the road. What do you do when somebody, you know, you've got a tenant who's there who looks like he's going to be there for a while. He's paying numbers look great. But when he's gone, there's no, you know, it was an unlicensed bar, so to speak. I mean, I'd have to completely gut the whole floor and redo it. So I was just like, you know, the building's great. I love it, but I'm not going to touch this. That makes sense. That makes sense. Yeah. And,

You know, it's, again, it's the same situation, right? You could have renovated it. You could have kicked him out and cleaned up the units and done something nice with it. That would have cost you money. They were probably not going to list this price for a discount because they had rents coming in. It was in good condition, right? And so unless you can talk them down, right? I'm assuming if you were able to get them down by X amount, it would probably be worth your while, though, right?

Right. So at some point, that deal, you know, I'd be all over it. And one of the things that happened in this deal is the broker that had showed it to me. You know, after he asked for feedback and kind of went back to the sellers, he said, you know, they really want an offer. And I was like, well, you know, I don't really think I need to make him an offer. It's going to be insulting. He's like, no, they're, you know, they really want to sell. They want an offer. You know, they need to divest this property. So I was like, all right, let me, let me crunch some numbers and figure out what it's worth to me. And I made him. And I made him. And I made him. offer. It was pretty close to my highest and best, and it was about half of what they had it listed for. So got a very quick no, thank you. And that was that. And that property is still on the market today. I actually, this was probably about a year and a half ago. I was browsing some commercial real estate the other day and saw that it's still sitting there. Same exact price. Oh, same price. Same exact price. Yeah. So. So if anybody listened to the show wants a nice, speak easy, they can, you know, let me know. I'll punch you in the right direction. That's funny. All right. So,

Are you still work? I mean, are you working a full-time job or is this your full-time gig or what's your story? I do. I do work a full-time job. I work in insurance. So I'm an actuary for the 90% of the listeners out there who have no idea what that is, primarily involved with looking at claims statistics and pricing insurance. So very, very unexciting. I've decided to turn myself as a, you know, when people ask me what I do, I'm a real estate investor. Nice. Nice. Nice. Nice. So you went, you got into this multi, well, you didn't get into this multi. You're looking at these, these multifamily properties. Is that really your bread and butter today? I mean, do you really just like focusing on those types of deals? Yeah. So the last fix and flip I did, I probably sold about a year and a half to two years ago. And that really turned me off to fix and flipping and turn me on to apartments. Because at that point, I had probably about 10 to 15 units, rental units, and they were more or less covering my holding costs on this fix and flip that just did not go as planned. What went wrong? You know, it really wasn't that bad of a deal in all for, you know, compared to some of the

stories I've heard. The biggest challenge that I faced on the whole property was we finished an unfinished basement and found a leak down there after the fact. So I had to, you know, rip out and refinish the basement, pay, you know, four or five grand to have the basement sealed and get French drains put in and all that jazz. So that was a big setback. And that was, you know, after the property had been on the market for quite some time. So, you know, I was already bleeding. And I was like somebody came and cut my knees out under me.

So it was just like, ah. So are you totally out of the rehabbing? business at this point? I mean the flipping business. Out of flipping, yes. So now primarily what I look for are distressed rental, you know, multi-family properties that I can go in and, you know, use the same contractors, do a lot of the same things to these apartments, really spruce them up. But then, you know, go and either, depending on the financing situation, once they're completed, I get them rented out and either seek new financing or just hold on to them as is. Are you using the same agent or using multiple agents to help?

you find these different properties? I primarily use one agent who I was who I was introduced to pretty early on. She helped me buy my first house. She she was recommended to me by another local investor. And over the years, you know, I've seen hundreds of properties with her. I really got to know her, but she's been instrumental in, you know, anybody can kind of show your properties and say, yeah, you should buy this or no you shouldn't or whatever. But she's, she's also an investor, herself. She's got several rental properties in an area that I like to invest in. So she knows contractors. She knows plumbers. She knows management companies. You know, she knows lenders. She knows the work. So it wasn't just, you know, I don't stick with her because she sends me that automatic

listing update every day. I stick with her because, you know, over the years, she's really helped me grow from that, that green-eyed guy who just wanted to go and, you know, rip a house apart and put it back together to somebody who, you know, really want to. You know, really want to. wants to build a business and contract a lot of that workout that's involved in that. And a great agent can really mean the difference for a newer investor, can it? Absolutely, yeah. Yeah, I mean, if you turn to somebody who doesn't know what they're doing and you don't know what you're doing, you're in a lot of trouble.

Yeah, and one of the things in my experience, over the years I've dealt with probably 10 different agents on my side and countless more on the other side of the table. and one of the things that I would advise folks out there is to really take what they're saying with a grain of salt and do your own research, you know, figure out, you know, just because they say that blowing out this wall and throwing a deck on and putting sliders on is going to add $10,000 worth of value to the property. You know, why do they think that? Is there anything that backs that up? You know, is there a comp down the street that has that that's worth $10,000 more? And really research what they're telling you. Don't just take them at their word. That's great advice. Great advice. Yes, it is. So how are you financing these deals today? Like if you go and find a property today that you want to go buy, how would you put it together?

It depends on the type of deal. So I recently just finished a triplex that I remodeled top to bottom, more or less a complete gut. That property I purchased with a hard money loan, which is the same lender that I've been working with for a lot of the rehab deals that I was doing. I built a relationship with him. He doesn't typically like to live. loan on multifamily property, but he's worked with me enough to where he was willing to pull the trigger on some multis for me. I bought that property cheap enough, and it needed so much work that going through a conventional loan or commercial loan just wasn't going to work out. So I partnered up

with him on that, or I say partnered. I took a loan from him on that, a very, very high interest, generous loan for him, and remodeled the whole thing top to bottom. Then once I got it completely done, rented out, tenanted. I went to a commercial lender that I also got a relationship with and said, hey, you know, look, I got this property. It's bringing in X. It's probably worth about this. How much can you loan on it? I shopped that around to three or four local lenders that I've done loans with in the past and built a relationship with and kind of ended up pitting it between two of them and getting what I wanted out of it. That's cool. That's cool. I'm a big fan of like the hard money to refinance later kind of strategy. I mean, it's a little bit.

dangerous and that, I mean, for those people who don't know what a hard money lender is, it's, you know, obviously a person who lends at high interest rates and high fees in short term, and but they can do loans, they're not a bank, so they can do these loans that nobody else can do. And so I guess what are some of the dangers, maybe you can talk about that. What are some of the dangers of using a hard money lender? Because, I mean, I like them, but they are dangerous. So why is that? Sure. So the biggest thing is holding costs, at least in my experience, you know, you're, you're borrowing a lot of money, in most cases, a good deal of money, and you're paying upwards of 12%, you know, and some, I've heard people paying 16, 18, 20% for

this money. So you're really, the clock's always ticking on you. You know, you need to either, I think you guys discussed it in a previous podcast, but having, you know, three or, you know, as many exit strategies as you can, just having one plan isn't, isn't really going to to work for you. If something happens and you're stuck with it, you can really find yourself in trouble. Well, so let's just say that real quick. Let's say you bought a property, this triplex, and you went to go get a loan from these people and they said no. The bank said, you know, no, you got too many properties, too many loans. What would you do at that point? My plan B would probably be to sell the property, which would break my heart because it's such a great rental property. But with the amount

of work that I put into it and my equity position, because I did get a hard money loan, but I also sunk a lot of my own capital into it. So I had plenty of. of a buffer there that if, you know, ultimately my goal was to cash out refinance and recoup as much of my personal funds as possible and pay off that hard money loan. But if that, if that didn't come to fruition, plan B was to potentially sell the property. Plan C would be to, you know, call my dad, pull a note out of Brandon Turner's playbook and say, hey, you know, dad, I got this deal, I owe X on it. you want to partner on it. We're not all that lucky.

Must be nice, guys. Must be nice. Well, the nice thing is you don't need money to do that strategy. The person just needs to have good credit. So there's a lot of people out there who have good credit that you can partner with if you had to in an emergency like that. Nice. Nice. And you do cover that.

And you're talking about that in the podcast. A couple weeks ago, yeah. And in your book, right? That we did. So, yeah, people want to know more about the hard money to refinance strategy. Check it out in a, what's my book call the end? the book on investing in the real estate with no and low money down, which you can get at BiggerPockets.com slash no money.

Here's the truth about passive investing. If the strategy isn't right on day one, the returns won't save it. Multi-family real estate offers structural advantages. Many investors are overlooking, including depreciation that can help offset taxable income while cash flow continues. Bam Capital builds its investment with that reality in mind. They are focused on solid operators, tax efficiency, and long-term performance. For investors who want real estate exposure without being landlords and who care about consistency over hype,

this is a smarter way to allocate capital. Learn more at biggerpockets.com slash bam. People love to call real estate passive income, which is interesting because most of the investors I know are very busy. Busy finding deals, busy managing teams, busy worrying they pick the wrong market. Rent to retirement flips that model. They help investors buy turnkey new construction homes, often 10% below market value in top rental markets across the country. Their local teams handle the build, the property management, and the details, so you don't have to. In some cases, investors even receive 50 to 75% of their down payment back at closing, and there are interest rates as low as 3.75%. They've been trusted partners with BiggerPockets for over a decade, and if you

want to learn more, visit BiggerPockets.com slash retirement. The rise of the tech savvy investors here. You don't need a huge team or tons of overhead to manage rental properties. Just the right tools. So, I want to tell you about how I use rent-ready to get ahead. For landlords who treat their time-like capital and recognize the cost of sweat equity, this tool gives you everything you need to scale. Rent collection, tenant screening, maintenance accounting,

so that you're organized come tax season, and you can run numbers in preparation for future deals. And more. All in one platform via a mobile app or desktop. Modern landlords don't just own property. They optimize it. Rent-ready will keep you organized, running leaner, and ready to grow. Start with Rent Ready.

Visit rentready.com slash bigger pockets. That's rent rEDI.com slash bigger pockets. And use code BP 2025 to get rent ready's six month plan for a dollar. Yeah. But anyway, I guess I want to talk a little bit more about the hard money lenders. Just in terms of the no money down, you know, people talk about them. And I mentioned this in the book about it is possible to get a hard money lender to fund 100%, but it's very, very difficult and maybe not wise.

So I guess what is your hard money? money lender require? What does yours require you to put down? So for a typical fix and flip, he's looking for 10% of the purchase price down up front, and then he'll loan up to 70% of the completed value. Okay. After repair value. And he does a full as is appraisal and after repair value appraisal. He's got an appraiser that he works with. So this isn't like a typical bank where you go in and say you want a loan. and they approve you and then they call some random 800 number and Joe Schmogos and appraises it. He's got an appraiser, one appraiser that he's been working with for years, who he trusts for

valuation on property. So those are the typical numbers that he requires. Now when I got into, I've done a couple of multifamily deals with him and he's required more upfront on those. I think he only loaned about 80%, but he did throw in capital to help do the remodeling. So it's very, appealing, you know, for somebody like me, I may have enough money to buy the place with a normal loan, but I may not have enough capital to really clean it up and make it what I wanted to be. So having somebody that can, you know, lend that money short term and give me a bridge to get where I need to be is tremendously helpful. And you said he threw in that extra capital.

Let's not confuse people. That was not a gift. Yeah, he just showered. He showered me with the money. He wrapped it up in a box, put a little bow on it. It was beautiful. Nice. That's awesome. I need some of those boxes. Yeah. All right. Hey, so Michael, I'm just curious here. I mean, you're working a full-time job. You're a number-crunching actuarial individual. What's your plan? I mean, are you trying to, you know, do you have a goal of, hey, I want to buy X number of properties? I want to have enough property to be able to offset my actual job income and just quit my job. Do you love your job and want to do that forever? And this is just another way to go vacation.

every, you know, two weeks. I mean, what, what are you doing here? That's a great question. So when I started out my goal day one in my corporate job was to save up enough money so I could start flipping houses and get that, you know, start making six figures a year, go on HGTV, have my own TV show, quit the corporate job and, you know, just be a star. As most people that get into flipping quickly realize there's, you know, it's not as glorious as, as, as, you know, it's not as they make it out to be on the TV shows. You're not making as much money and you're not making it as quickly as they like to make you think. So over time, you know, as my investing has changed and my job has changed, I've personally changed my focus. My original plan was to only be there

as long as I had to be. And now my goal is to really grow both my real estate business and grow in my professional career and just wait until, you know, I get to that crossroads where I, where it makes perfect sense to say, I got to get out of this, out of this job. I'm making so much money in real estate or what am I doing messing with this real estate? I've got this great job. And at some point, you know, it's not clear to me today what the answer is there, but I do enjoy my job. It offers me the flexibility to, you know, to invest in real estate, which I also love. So I know a lot of people come on the forums and say, you know, I can't wait to quit my day job or I just quit my job and everybody's excited. I really love what I do.

And quite honestly, if I quit my job, which I probably could at this point pretty easily, I'd be bored to tears. I don't know what I'd do all day. Well, and honestly, that's kind of what happened to me, right? Like I quit when I was 27 and I said, well, I don't have to work a job anymore. I got, you know, passive income, you know, quote unquote, right? But I was still managing my own properties and I realized I was pretty bored. And I didn't really like managing my properties that much. Like, you know, so I'd rather have my wife manage my properties and I'd rather do something else fun,

which is why I'm here today on the podcast. So, you know, I think on the dirty work to your wife. Nice. She actually, she kind of likes doing it. Okay. I hate the phone. I hate the phone. Like people who know me, I hate answering my phone and talking on it.

So that's you got to do that as a property manager. Speaking of, do you manage your own properties, Michael. I do. I do. I do. Good question. And by the way, I never, never get phone calls. So you must be doing something wrong.

I'm doing something wrong. Really? Wait, are you kidding? You never get phone calls? Never. I've probably gotten two phone calls from tenants this year. What do they do? Text you or what?

I get a text message. I get an email. Never get a phone call. Do you tell them to text or email you or that's just what they do? So I kind of set the tone when I start interacting with them from the day that they. Well, the training. You know, yeah. So I kind of mentally train them that here's how you communicate with me.

When somebody reaches out to me through Craigslist, or postlets or, you know, hot pads or one of these other great sites. By the way, if you're getting into rental property, you've got to use these sites. They're free. And they just, you know, anybody's looking for an apartment's out there digging around on them. So take advantage of that. But when I get an email from somebody, you know, over the years I've kind of learned to

tweak how I handle it. But I ask for a set of things. And if, you know, if the person doesn't provide me answers to these five questions, questions. I don't even, I don't waste my time on them. One of those questions. One of them is a phone number. So if you, if you can't give me your phone number, you know, why am I wasting my time with you? The second thing is I just recently started doing this, but asking why the person's interested in moving. One of the things I've found is that, you know, folks will, folks will email you and say, hey, you know, I really want to look at this apartment. And I'll get through, you know,

I'll show it. I'll get through the application process. and then find out that, you know, they're wanting to move because they can't afford their rent on their current place that's $25 more. And it's like, well, you know, I could have nipped that in the bud right at the beginning. Another question I ask is, when are you looking to move? I'm sure you guys have experienced this. But, you know, I've got, I don't anymore, but I used to get folks who, you know, would email me, say, you know, this is the perfect department. You know, I love it.

When can I see it? And we set up a showing. They're like, oh, this is it. This is the one. They go home. they send it to me and and they say, oh, yeah, I want to start in four months. I'm like, well, just wasted all that time for nothing because this is going to be gone before that. So those are some of the questions I ask. And I also ask how many people are, how many people will be living in the

apartment? Because most of my apartments are one or two bedrooms. And I've had people, I've had like groups of three or four people interested in renting out of one bedroom apartment. And I, you know, I don't even, I don't even want to waste my time going to show that because it's not going to happen. Yeah. Yeah. That's cool. I mean, that is so important to the pre-screening because you'll drive yourself crazy if you go out and show a unit to every tenant who calls you. I mean, like, the vast majority will never qualify anyway. So the more you can do up front to disqualify them and, you know, only show it to people who are, you know, who are probably going to work out. I mean, I do a lot

of group showings. Like last Saturday I had, you know, typically I don't do it anymore. My wife does, but there's this one property that I'm taking full responsibility of because it's a Long story, it's my best friend's house. Anyway, yeah, so I scheduled six showings all for the exact same time for 10 o'clock. Guess how many showed up? Three? One. One out of six showed up for their appointment.

I mean, these people all excited about it. They'd all seen the house. They'd driven by. They'd all wanted to see it. One out of six. So had I made six appointments, I would have wasted six hours or five hours of time to do that. So that's why I always recommend, yeah, do that screen ahead of time and do group showings. Good, nice.

Yeah, to that same point, I just started using a showing agent, you know, a real estate agent who's looking for some additional work on the side and looking to get into investing. And we kind of figured out, you know, hey, this is a great opportunity. But one of the things that she, she kind of suggested was doing group showings. And she really loves the additional safety. You know, if you, you probably don't care so much, Brandon, because he's going to want to mess with the crazy old cat. You just call him a crazy cat guy. I love that. I love that. You can be my guest host anytime you want. But yeah, so for her, I mean, she loves the added safety. You know, if you've got four or five people showing up for a showing, you know, Craigslist can be sketchy. And you always hear that random story of, you know, this Saturday other happened through Craigslist. But when you know that there's going to be five people showing up to look at that apartment, you're not, you're not worried about that one crazy person. nobody's just. I was going to say, and the competitive nature of people. Like, I'm going to get this house before that. You know, that lady's ugly. I'm going to get it before her.

Like, they get in this, like, bitey little, like, angry. Like, I don't like that person over there. And, like, they want to get the apartment above that person. They'll, like, talk behind their back. And, like, it's fun. I have a good time with that. Do you talk with them behind the other person's back? Is that?

Of course I do. I'm like, yeah, yeah, she's terrible. And I go. Oh, stop it. Oh, stop it. Come on. No, but they do. But they do.

But they do. they get really bitey at each other. Like, or not at each other, but like, like when one goes into the room, they're just like, yeah,

you know, like those are like, I don't know. I mean, what's the worst they've ever said? It's things like, yeah, I think they've got a dog

or something like that. Like just like dropping these little things to just, you know, you shouldn't rent to them. You should rent to us. Oh, boy. Oh, boy.

It's, I got low income tenants. Yeah. Yeah. Hey, hey, Michael, let's,

let's get back to something real here. Not Brandon's stories. Nobody cares about. Tell me about this showing agent. You talked about a showing agent. Obviously, it's an agent that shows, right? But how do you work that out? I mean, they're not getting a commission.

So are you paying them on a per showing basis? And how do you find somebody? I mean, this one kind of fell in your lap, obviously. But tell us more about that. Yeah. So one of the things, as I'm growing, I really wanted to get, you know, kind of hand off some of the responsibilities

that are involved with rental properties. and showing the units is a big one. This, like you mentioned, this one kind of fell in my lap. I had met with somebody who I met through bigger pockets, ding, ding, ding, ding. It's a good site, good site. Reach out and connect with people. But I had met with her, and really there was no intent behind the meeting other than just saying, hey, you know, get to know each other.

Here's what I'm interested in. Here's what I'm doing. Here's what you're doing, whatever. But as we got to talk in, you know, we got into a little bit more. and we just kind of discovered this mutual arrangement that would work great for both of us. And we didn't iron anything out at that time, but I kind of left and thought about a little bit more. And she thought about a little bit more. And we did come to a per-showing payment arrangement.

And that's also one of the things that drove me into group showings is because, you know, if she's only there for an hour, if I get six people in there or one person, it's still going to be the one showing. fee. So that's kind of how our arrangement works. And it's worked great so far. No complaints there. I don't have any advice for somebody who doesn't have this arrangement and is looking to go out and find it other than, you know, connect with people, whether it be through bigger pockets or your local RIA meeting. And, you know, eventually you're going to come across somebody. I mean, heck, if you would have found me five years ago, I would have been that guy that would be like, oh, you'll let me show an apartment for you and you'll throw 20 bucks my way.

Yeah. Just tell me when and where I'll do it. So you only pay her 20 bucks? Wow. I pair of 20 bucks. Yeah. Wow. Is that unreasonable? I don't know. I'm just, you know, it doesn't sound like a lot of money. Sounds cheap to me. I mean, you should pay her more. Like he said, five years ago, I would have hands down done that for $20. I'm just busting your chops, man. And I agree, I would have done the same thing. Yeah. Yeah. Cool. I think it's awesome.

Sorry, I'm moving on. No, I'm moving on. Stop it. I'm going to have to tell her not to listen to this. She's going to come back to me and say, hey, I want 45. Yeah. And say, well, Josh has your other 25. I got her back. And I want a commission. I want my check.

Thank you. Thank you very much. No, no, no. All right, Brandon. I know you want to move on to something, don't you? Yeah, I'm going to move on to the world famous. It's time for the fire round. The fire round.

These questions come ripped out of the headlines of the bigger pockets forums. Number one. what is your best advice for finding a top of the line property manager? Now, I know you manage your own properties, but this was a question, so I want to throw it at you. Do you have any good tips do you think people should on finding a property manager? Yeah, that's a great question. I've actually screen, you know, screen slash spoke with many property managers in the area. I bought property that was managed by property managers. So, and I know several in the area. So one of the things I would suggest doing is talking to the person that's in charge, you know,

finding out what kind of response times they have. One of the things that I found was lacking in the people that I talked to was, you know, they kind of prioritize, you know, if they have 800 units they're managing your 15 units, probably, you know, they fall somewhere in there. Sure, they're going to tell you that this is the most important property that we have. But, you know, come armed with an example and say, you know, hey, if I text you or call you or whatever and I've got a tenant who has a light bulb burnt out in their kitchen, how long, you know, what's your turnaround time on that? And, you know, they might, they might tell you it's a day or four days or whatever. But, you know, when you ask for, second thing is ask for references. And if you get a reference,

call that person and ask them the same question, you know, if the light bulb is burnt out, how long does it take so-and-so management company to get over there and replace it? Because those are the little things that, you know, they're not going to make or break your bank. You know, you'll get paid the same amount of money every month, but the tenants are, they're going to see that and they're going to be like, well, this person doesn't care about the property, you know, so now I don't really care about the property or I don't want to stay here, whatever. So that's a big one. And then I'd also strongly recommend finding somebody who also invests in property themselves. A lot of the property management companies I know of in Louisville are, you know, probably about 50-50. Half of them are

owner-investors where, you know, they're in the business. They know what they're doing. They're in the same shoes as you. And the other half are just folks that either didn't, you know, either saw an opportunity for making money in real estate without having any money or, you know, whatever. But they don't, they don't know what it's like to be the owner to be paying those bills to, you know, have that troubled tenant or the eviction. So somebody that knows what you're dealing with. healing with would really make a huge difference. That's great. Good advice.

Yeah. I mean, I think there's some argument from investors about all those criteria, too. I mean, I know that, you know, when I first started looking for managers, I wanted somebody who managed a lot of units. And I found that the ones who managed a lot of units were putting their units before my unit. And, you know, I even heard from tenants that I had like, yeah, you know, We're trying to move our friend in and we told them we want to get them in our building and they try and push them to other properties that turned out to be properties that they owned.

And that's kind of one of the dangers that you face. And I still to this day, I don't know how to get past that, but I think it's the references and, you know, calling trying to find references of references maybe because, you know, you're only going to give good references. Yeah, that's an excellent point, Josh. Can I revise my answer real quick? Sure. So my new answer is what I'm.

currently trying to do build up enough property to where you can hire somebody to work for you. And then you control what happens if you want to fire them or if they're not doing something right. They answer to you and you only. Yeah, I think that's good advice. And that comes in time. And the question is how many doors is that? And I think that's different for everybody. But all right. So do rules like, well, the rules of thumb, like the 50% rule and the 70% rule, do those still hold true in today's market? Well, I never really bought into any particular rules. I actually got into investing before I discovered bigger pockets and come across some of the rules after I had already kind of developed my own rules. So for me, you know, the rules that I created are specific to not to Louisville, Kentucky, they're specific to old Louisville or the highlands are very, you know, very, very, very. very market-specific, and they're geared towards the property that I'm interested in.

So my advice would be to kind of have an idea going in what you want to get out of it, but come up with your own criteria. And if you need to adjust that criteria as the market changes, be very careful about doing so, because I think that's a key indicator that things are either overpriced or it'd be a good time to sell. if you're not finding any deals that meet your criteria, maybe it's time to unload some properties and wait until something good comes on. Yeah, I think that's great advice. And, you know, the quote rule thing, you know, again, those are guidelines.

We didn't come up with them. They're not mine. I'm not invested. I'm not invested in them. It's, you know, people in the community have come up with them. And generically, they tend to be a fairly true for certain situations, right? I mean, it's not going to work for everybody. But I really like what you said, which is, you know, get out there.

You know, whether it's those rules or some other rule that you might have, you know, adjust them for what works for you in your particular market, in your particular strategy, in your particular niche, figure it out, narrow down your criteria and establish that. Make that your rule. And now that's what you use going forward every time the agent sends you something. Every time the mailers go out and somebody calls you, whatever it is, you've got your rules. Don't shift them. Don't budge them. Because if you start to, oh, but this feels really good. It's really close.

But, you know, that's a really good way to get yourself in trouble, I think. Yep. Agreed. Agreed. All right. Next question. What is your opinion on buying out-of-state rentals? That's a very great question. So I recently just moved out-of-state. So I'm now actually a out-of-state landlord. Interesting. moved down to Southwest Florida and have been down here for a couple months. My current plan is to continue purchasing property out of state now, which would be Louisville,

as somebody who didn't start that way or doesn't plan at this point. Eventually, I plan to purchase property in other areas. But I would suggest that you really probably want to go and know the area that you're looking to buy property. And if somebody throws out a deal on the bigger pockets marketplace saying, hey, I've got this eightplex in Cleveland, Ohio, it's great. Cash flow, it's a cash hog. And you're looking to invest in Cleveland, Ohio, you know, but you've never been there. How do you know that the property's in a decent area that it's going to rent well, that it fits your criteria? So my suggestion would be to go and and know where you're investing.

And then after you get comfortable and know where you want to buy stuff, find folks on the ground that can be on your team and on your side, whether it's a realtor or some contractors or whatever, and make sure you're on the same page with them and really utilize them for what you're trying to do. Nice, nice. I was on mute. I was going to say, last show, podcast show 93 with Eric Stark. It was similar, similar thing.

He was in Detroit and he moved to Florida as well. Where in Florida are you? It's great down here. I'm in the Fort Myers area. Okay. He was in Fort Lauderdale. Yeah. Can I have a barbecue at your house as well?

I just ask him if I could have one. Okay. Yeah, come on down. Come on down. We have two barbecues two days in a row. Well, and the interesting thing was he also invest back at home in Detroit while he's in Florida. So it's kind of cool that you guys are both doing the similar strategy there.

Yeah. Awesome. All right. So what would you do if a tenant asked for a three-week extension on the rent? Say no. But, you know, my aunt is really sick and I got to travel and I just can't do it right now. So I was in this situation very early early on. Thankfully, I am grateful for it. But I had that tenant that was three weeks late every month.

And I was a huge pushover. I mean, I let them do work on a process. property. I was remodeling. Anything you could think of that would be the wrong thing to do, I did it. And boy, did I learn my lesson from that. And so going forward, I set the rules in stone. You know, if somebody's late, typically now, you know, I receive all my rent electronically, so I don't get the excuse of, oh, yeah, it's in the mail. What do you use for that? great question so i use um three different sources i give the tenants an option whatever they prefer but i use primarily intuit payment networks which charges uh 50 cents per transaction uh and i i just eat

that cost i don't charge it back to the tenants um the other options i i work with are google wallet um i just started using that uh three or four months ago and that's been working out great um and And then the other one, some folks, if the tenant banks with Chase, I like to use Chase QuickPay because that also works very well. Nice. The last two options are free, which is even better. Definitely, definitely. So you derailed my train. I thought I forgot where I was going with that.

Yeah, we were talking about. It was the original question. It was about a tenant for three week extension. And you said, no, I don't do it. Absolutely not. So, you know, move on to the next question. Yeah, but with electronic rent, I know, you know, the day of, you know, is it there? or not. There's no question about is it in the mail or oh, I forgot to stop by the office or whatever.

I know either I have it or I don't. Typically what I do is I with all my tenants, I'll text them. You know, I very rarely have anybody that's late. But if I do, I'll text them and say, hey, you know, I didn't receive your rent for whatever month for October. And, you know, they'll get back to me within a day and say, oh, yeah, you know, I forgot or I don't get paid till Friday. And I say, all right, well, you know, here's add the late fee. on there. And if it's with Intuit payment networks, I'll cancel the request for that payment and I'll add the late fee on there. But that's a huge thing you got to do is stick to those late fees. Sometimes what I'll often do is I'll cater to my soft side and give somebody a break if it's their

first time and I'll charge them half the late fee. But I very rarely, if ever anymore, don't charge a late fee if I don't have that rent when it's due. Yeah. Nice. Yeah. Nice. Cool. I, I, do. We're very similar, so it's good. Great minds think alike. All right, moving on to the world famous. Famous for. Famous for these questions we ask everyone. So let's hear them from you. You listen to the podcast. You know what's coming. Number one, what is your favorite real estate book? Favorite real estate book? I tried to think of something that wasn't overly mentioned. But one thing I often tell folks to buy on bigger pockets and I have no affiliation with it is commercial mortgages 101. And that's by Michael Reinhard.

I kind of stumbled across that book when I was trying to refinance a sixplex. And that was kind of when I figured out, oh, crap, I can't get conventional financing on this thing. And it really just opened my mind up to the world of commercial financing, which if you want to get into buy and hold, at some point, you're almost going to have to understand how that world works. So that book covers it in detail. nice great I had not heard of that one so cool all right and that's not one of our books I think Michael was just saying he mentions it to people on the site

so just to clarify okay moving on favorite what is your favorite business book? I tried to do the same thing and come up with something that wasn't overly mentioned but I really got to lean on the four hour work week tremendous tremendous book

it really kind of forced me to think about how to simplify things instead of overcomplicating them. Nice. There you go. There you go. What about hobbies? What do you do for fun? I love wakeboarding.

I've been into that for about 10 years now. Part of the reason why I moved down to Florida was like to. I'd like to do it for more than two months out of the year. Can we go wakeboarding when I come down for the... Oh my God. Seriously? Dude, stop. We can do that.

We can do that, yeah. See, I just got an invite. You didn't, Josh. See, that's... I mean, Josh can get me to do. But here's like, Michael's... going to quietly send me an email. Hey, Josh, anytime you want to come down, come down.

Whereas you, like, kind of make it so they can't say no. And then they feel awkward about it. It's like Michael Quarles of barbecues. You're the Michael Quarles of in your face making people feel awkward. Josh, one of the things with living in Florida is you don't have to invite people to come visit you. So we'll come. Sadly, I'm probably not going to send you that email. So if you want to come, you got to ask, man.

Wow. Okay. All right. Or you can show up. I don't care. I think I'll just show up. I'm showing up. Nice. All right. The hobbies where I live. That's a scary thought. Because I'm outside your window right now. All right. We've got to add this thing. We're kidding. Ah, I'm losing it. All right. Last question of the famous four. What do you believe sets apart successful real estate investors from those who give up, fail, or quit, or never get started, or freak out or pass out or whatever? You got it out. Nice.

I think the biggest thing is probably persistence. I was going to say passion. You know, you really got to love what you do, but there's plenty of successful folks that aren't really passionate about real estate. So I kind of changed my mind. I went with persistence. If you're, you know, I don't know a single real estate investor that hasn't come across a situation that was difficult or costly or they lost money on. And you've got to be able to pick yourself up, dust your shoulders off and stick with it. Nice.

Great. Awesome. Awesome. Mike, it's been a pleasure, man. Where can people find out more about you? Well, you can reach out to me on through bigger pockets. I'm always on there. Always. Always. Always. Yes, I don't sleep. I live, eat, and breathe bigger pockets. He does. I can testify to that. Nice. That's awesome. You can check me out on there. I also have a website that is primarily just to showcase some of the work that I've done. And that's WWW. renovate, like innovate with an R in front of it, followed by kY.com. So www. www.RenovateKY.com. Nice. Cool. Awesome. Awesome. All right, guys. Show 94, the Bigger Pockets.com slash show 94. You can find the show notes. Link up with Michael there. If you've got

questions about the show, definitely link up with him there on the show notes. Otherwise, reach out to him on the site and at his website. Beyond that, thanks so much. We really appreciate having you come on board. And obviously, we love having you as a member of the community. Absolutely. Thanks. Thanks. Yeah, it was a pleasure being on. And Brandon, I'll see you in a couple months. Yeah, I'd be careful. You might want to turn that. It might be sooner than that. All right. Otherwise, guys, besides the fact that my co-host is creepy. This is the Bigger Pockets podcast. If you are not active on bigger pockets, you're missing out opportunities to hang out with crazy guys like Brandon Turner and very, very nice guys like

Mr. Michael S. Sikirka, Sikirka, I can't say it. Sikirka. Sikirka. Michael, Sikirka. Michael, Michael, thank you again. And guys, if you're not already doing so, please follow us on Facebook, Twitter, LinkedIn G+, all the other social networks. We post and share lots of cool stuff there and really want to thank everybody for their time for listening and be active, get involved in our community, get out there, do deals, make things happen, and ask questions if you need help. 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. Make sure you get all our new episodes by subscribing on YouTube, Apple, Spotify, or any other podcast platform. Our new episodes come out Monday, Wednesday, and Friday.

I'm the host and executive producer of the show, Dave Meyer. The show is produced by Ian K, copywriting is by Calico content, and editing is by Exodus Media. If you'd like to learn more about real estate investing, or to sign up for our free newsletter, please visit www.biggerpockets.com. The content of this podcast is for informational purposes only. All host and participant opinions are their own. Investment in any asset, real estate included, involves risk. So use your best judgment and consult with qualified advisors before investing.

You should only risk capital you can afford to lose. And remember, past performance is not indicative of future results. Bigger Pocket's LLC disclaims all liability for direct, indirect, consequential, or other damages arising from a reliance on information presented in this podcast.