Epic Real Estate Investing - After the Deal Closes, Finding Good Tenants, Virtual Wholesaling Update | Episode 96

Episode Date: April 7, 2014

So you closed on a "real deal," now what? If you didn't know, it's a new ballgame altogether. Do you know the rules? Matt picks up the Livin' the Dream series from where he left off on Episode 94 to discuss repairs and rehab, finding good tenants and an update on his virtual wholesaling apprentice Lisa Nilson.  ------------------------- Download Matt's free real estate investing course "How to Do Deals | No Money Required" at FreeRealEstateInvestingCourse.com or text FreeCourse to 55678 "Click" what interests you most:  Education Properties Income Coaching Learn more about your ad choices. Visit megaphone.fm/adchoices

Broadcasting from Terrio Studios in Glendale, California. It's time for Epic Real Estate Investing with Matt Terrier. Hello, hello, and welcome to another episode of Epic Real Estate Investing. If this is your first time listening to the show, welcome. Super excited that you are here, super excited that you found us. And if this is not your first time, welcome back. And you may or may not know this, but this is the place where I teach people how to escape the rat race by investing in real estate. And if I were to do it all over again, I do it exactly

the same way. I do it exactly the same way whether I had money and credit to work with or not. You see, while I was navigating my way through this real estate investing maze, so to speak, I stumbled upon 12 different strategies of investing in real estate using no money, and I had no credit. And I just, that's, I had to make it work. And in hindsight, by being forced into that situation, being forced to make real estate work without, you know, the typical resources of money and credit, I believe that made me a better investor. And I'm grateful that I did get started that way. And I want to make you a better investor as well. So what I did is I took the first two of those 12 strategies. I put them into a free course. They are the two strategies, which I believe

are the easiest and fastest strategies to a paycheck. I put those into a free course just for you, and you can access that free course at free real estate investing course. or if you're listening in on your smartphone and you just can't wait to get back to your computer you can download the course right there on your smartphone by texting free course to 55678 free course text that to 55678 and that's free course it's all one word and right there on your phone you'll get those that you'll get the free course right there on your phone now let's see what else the epic real estate tour it's coming up quickly it's the cash flow tour specifically and that's going to be held in st.

Louis on May 1st and May 2nd, $597 per person. If that tickles your fancy, if it's got your juices flowing, it's got you curious, go to epic real estate tour.com, epic real estate tour.com, and you can get all the details there as well as you can reserve your seat and you can register there. Speaking of cash flow savvy, lots of new things going on over there, we just added two new markets to our reach to our service, Atlanta, Georgia and Birmingham, Alabama. I'm excited about both of those markets. I'm really excited about the teams that we have in place there, too.

So you can download the new cash flow savvy investor package to get all the details at cashflow savvy.com. That's weird. Why would we put a company called Cashflow savvy at cashflow savvy.com? Very simple. Tons of emails, tons of tweets, tons of Facebook posts about the reopening of the Epic Pro Academy. and it's a little bit of embarrassing.

I apologize. First of all, though, thank you for your interest. You know, between a couple of large rehab projects that I have going on and the recent increased volume of our cash flow savvy turnkey operation, I just haven't been able to squeeze in the time to keep my word, to honor my word on version 2.0 of the Academy. So I want that to, I want to bring that up to the surface and I want to re-promise. And my apologies on that. I promised the end of January, and here we are at the beginning of April.

Oh, my God. The year is already flying by. So just two weeks ago, though, I did delegate my two rehab projects to one of my business partners. And then Mercedes, Fernando, and Rochelle, they've got total control going over at Cashflow Savvy. They don't need me meddling in their business anymore. They've got everything under control.

And they're doing actually probably a much better job without me now. So as a matter of fact, it's really amazing what focus can do rather than me focused on everything, me having a little bit of participation in every aspect. You know, I've delegated. They've all been assigned their own unique job responsibilities of which has the whole operation, you know, operating like a well-oiled, finely tuned machine that's, you know, providing performing cash flow investments to busy people that either just don't have the time to go out and find. the deals themselves and or they just don't want to. It's a good service that we're providing over there. We're getting to meet a lot of great people. And I'm just very proud of what we've created over there.

Anyway, what all that means is I've now got time to dedicate to the academy. In fact, the past two weeks, it's all that I have been working on. I haven't been taking any appointments. My attention to email has been very limited. Those of you that have sent me emails, you might have noticed that you haven't gotten a response in a while. But I'll get to them. but I've just been super laser focused on the academy.

And I'm happy to say that my part is almost complete, just days away, really. Then it'll be up to my IT people and my video editors. And, you know, I can say, I actually don't see why we wouldn't be back online, say by April 24th, maybe sooner, but that's kind of what I'm shooting for. Certainly by May 1st.

I've got to get it back up online for you guys in April. And as well, I'll be, picking up the online coaching sessions that I was conducting back at the end of last year. Many of you've asked what happened to those and when was the next one going to be. And, you know, I've put together those trainings now that they are on the calendar. So I'm recommitting to that practice. And they are back up there by popular demand as well. I mean, you spoke and I listened.

So I'm going to be covering as many of the requests for training as I possibly can. I guess I'll eventually get to all of them. but I'm covering the most requested topics. And some of those topics are how to create a marketing plan that works, a game plan, how to create a game plan to quit your day job, a game plan to scale your business, a game plan to exit the rat race, and a game plan to build and sustain your wealth.

And like I said, they are already on the calendar. I've already booked them. The live trainings, they are open to the public. However, the recordings will be made available inside of the academy only. Okay? So it's free to all of you, whether you're a member of the academy or not, you're more than welcome to come and watch and view the live training and learn and ask me questions, interact with me, and that's open to the public.

However, the recordings, I will be making those available to academy members only. If you want to go check those out and see if they fit into your schedule, you can go to EpicproWebinar.com, and you'll see the training schedule there. you can make your reservation for the trainings that that you find applicable to your situation. Maybe they all fit, maybe just one or two fit, whatever it may be. But go to EpicProWebinar.com. Go ahead and register and then block it off on your calendar because only the live versions will be available to you if you're not an academy member.

And I'll see you there. Okay, so the schedule is at EpicproWebinar.com. Tons of domain names today. Sorry about that. It happens every once in a while. Don't worry if you missed any of those, though, if you're driving, if you're on the treadmill. all of those will be in the show notes. So you really only need to remember one domain name,

and that is epic real estate.com, and this is episode 96. So that's dot com forward slash episode 96. Wow, 96. Getting pretty close to 100, aren't we? And I guess I'm going to have to do something special for that. I didn't realize we were creeping up on it so soon. Not sure what, but I'll think of something.

So to bring you up to speed on, let's see, Lisa's progress, that was another thing I wanted to cover, got lots of questions from last episode, and she's been moving right along, conducting her daily activities. And what I've found absolutely amazing is the response to her yellow letter campaign. I mean, we're an upwards of a 20% response rate. It's maybe 22, 23%. It's absolutely unbelievable.

Actually, it's really too good to be true. That's what I've been thinking. And I've said something's up here. I don't know what it is. I don't know if she's... I don't know what she's doing to her letters that's causing such a response, but I know for a fact, I've seen the letters. She's writing them out exactly as I show in the free course. And it's amazing what the response has been.

And we've been submitting the three-option letter of intent to every call that we received. So we've been practicing that as well. And, you know, we've been getting a good number of those offers accepted. So we're just kind of like, what's going on? things are just going too well. Well, you know, we've been getting these offers accepted, yes. But when we've been sending out the property manager or the contractor to give us an assessment of repairs, just a quick look over, the common theme that we've noticed is that

the properties need more repairs than what the properties are worth. And I thought it was kind of strange that we're receiving so many of the same story. and in short we've we've graciously had to bow out of every offer that has been accepted so we haven't done a deal yet and you know after further discussion with our property manager our property manager that's been going on the ground and doing our our recon for us i guess it appears we've marketed to a couple of zip codes where a few years ago four or five years ago some investment seminar company sold a ton of these properties to people out of state and they sold them specifically in these areas, they took the rehab money, they shut down their property management company,

and they left the investors there high and dry. So now we've discovered that after a little bit of research. And it all makes sense now. That's why our marketing response rate and offer acceptance has been so high. So what Lisa and I have done with the assistance of our property manager, we've identified new zip codes to market to. And we'll be getting started on that today. Okay. So it happens sometimes. Sometimes it doesn't work out as planned, but no big deal. Just regroup, reload, and fire again. You know, someone shared with me, I don't know, at the beginning of the year, you know, when something like that happens, and a lot of people will talk about, or they'll be bummed about, look at all the money that I wasted, look at all the time that I wasted, and that was all for nothing. No, it wasn't all for nothing, especially in this business. You didn't waste. You didn't waste. You didn't waste. You. waste money. What you did is you paid for data. You paid for information. And now we have that information. We can take that information. We can re-ame and fire again. Got it? So it just depends on how you look at it. You know, that's never happened to me. So that was a brand new experience.

And now I share that experience with you. So maybe you don't have to go through that experience. More updates on Lisa's progress to come. I did receive, you know, though, one specific question about last episode comes from Jeff G. And it was a very good question. And I thought it deserved addressing here on the show. I thought some of you might have the same concern or same question. Jeff wrote, I listened to your latest podcast with Lisa. I'm slightly confused.

My understanding of the process once under contract is to send a property inspector over and then provide a copy of the inspector's report to a contractor and have him give a quote for repairs. It seems you have Lisa skipping these steps and having a property manager perform both steps. Am I missing something? I ask because I'm confident I'll get a property under contract shortly, and I want to be sure that I understand this next step correctly. Okay.

So great question, Jeff. And I can see how you could be confused. You're right on the money, though, with regard to the process. But you see, the work I'm doing with Lisa right now, it's basically an experiment. I mean, it's not so much groundbreaking science or anything. It's not like no one's ever done this before. But it is an experiment to the extent that I personally want proof. I want personal proof of a solid, duplicate.

virtual wholesaling system that I can share it with you, something that not only can I share it with you that I know or I'll have confidence that, you know, if you apply yourself, each and every one of you can have success with this process. So that's what I'm out after. So, yes, I am experimenting a little bit with the process and the sequence of events. You see, what I have Lisa doing because we're doing this virtually is we're having the property manager do a quick drive-by to confirm rent in the property condition prior to going through the trouble of, you know, getting a formal bid and entering a formal contract. You know, I wouldn't pay for a property inspection or take on any expense related to property, for that matter,

until I officially, you know, had the property under contract. But I don't even know what the property looks like if it's going to be worth our time to put it under contract. So the difference in the process between being there in person and doing this virtually is that in person, you know, if you're meeting with a seller at the house, you could make that general assessment of the property conditions. You can view the neighborhood and you can kind of incorporate your findings into a formal offer, get that property on a contract, and then you can go through the property inspection and getting the contractor out there and taking on maybe some additional, you know, due diligence expenses. virtually, though, we can't do that at this point in the process. So what we do is we have the property manager who sometimes the property manager is on the same team as our contractor, or they're one of the same, or they're just closely related. So in this case, the property manager, she happens to be married to the contractor.

So they are kind of one of the same. They both have a lot of overlapping experience, so we have a good relationship with them, so we can use them for both purposes. but we have the property manager doing a quick drive-by and making that general assessment of the property conditions and neighborhoods for us. It's that same assessment that we could do in person if we were there, but we're not, so we're having them do it. Make sense?

Okay, so again, thanks, Jeff, for bringing that up and hopefully that clears it up. Wow, here we are. Again, time has gotten away from me, but we'll get on our way. We'll resume the Living the Dream series if we go a little long, you know, oh well, maybe you'll have to split up today's episode into two listenings. Okay, so back on episode 94, that's where we left off. And right there, we had just completed the process of closing a deal that meets your minimum deal standards. Now, it either cash flows your minimum dollar amount or it meets your minimum ROI percentage, whichever barometer or measurement you use to measure your minimum deal standards. next. Repairs, right? You got your property inspection completed during your due diligence period,

right? You had your contractor come in and give you a bid and then possibly you renegotiated with the seller based on what your inspector and your contractor came up with. And because of all that, you got a great deal, right? That's how you got the great deal. Great deals are frequently a result of needed work. It's not a perfect property if you got a great deal, right? Typically, that's how it works. So now that you own the property, these repairs will need to be taken care of. You know, your reasons for a great deal just became your problems instead of the sellers now. Now you've adopted these problems. What are your options here?

Well, really simply, you could just call the contractor that gave you the bid and then have them do the work. Or maybe you're handy yourself. You're a do-it-yourselfer type that wants to save some money by personally handling the repairs. But before doing that, though, I mean, I want you to be realistic about your own skills and your own experience. Make sure you don't take on more than you can handle. Don't bite off more than you can chew. And aside from that, what's an even bigger consideration for you to take on is to make

sure you're not working too much in your business. I mean, this is not the path to living the dream. At best, it's just a much slower path, but it's really not even the path. You want to get yourself out of your business as soon as possible. You want to get out of your business so you can work on your business. You don't want to be working in your business. You want to be working on your business. Now, this is the path of living the dream.

This is what's going to get you to actual financial freedom. And to spend less time working in your business and spend more time working on your business, really what that means is, or how that happens, that transition happens is just by incorporating systems. You need to implement systems. And a form of a system is delegating work such as repairs and rehab, having someone else do that for you. You know, it may be tempting to save some money by doing it yourself, but really the savings that you might get and taking on the labor yourself so you don't have to pay someone else for their labor, those savings will not make up for the cost in your time. Your time is more valuable than that. Your time is best spent looking for that next deal.

It's better spent negotiating contracts, negotiating good deals. That's what you should be doing. That's where you make the most money. Let a pro do your repairs and let a pro do your rehab work. Okay. Now, I'm not suggesting you ignore the extra expense of delegating this work. No, not at all. You still need to be, you know, a disciplined investor, a good businessman.

You still need to be shrewd about the whole thing. So I would recommend you have at least two more contractors come out and look at the job and get some more bids. Try and get two more bids. So you got, you know, this would give you three bids to compare against each other. And then you get to pick the one you feel is the most, you know, cost effective. And don't always go for the cheapest bid. You've probably heard that before. But when you're looking at three bids, you kind of, you want to go that direction.

But don't always go for the cheapest bid. You know, the price is certainly a considerate. but don't neglect factoring the time that it's going to take to complete the job, because time is certainly money, and don't neglect the quality that you're going to receive. Because that's going to determine, you know, when the repairs need to be done again. You know, so don't neglect those three factors.

You might not get it right the first time either. And that's okay. I mean, but just trust your gut. I promise you you're much smarter than you think you are. Trust your intuition. Usually your gut is right. on the money and just do your best. You may have to work with a few bad contractors before you find some good ones, but, you know,

once you do find some good ones, then this part of the whole process is going to be a whole lot easier for you. But if you've never rehabbed a property, you need to pay a lot of attention to this part. You know, even if you have rehab properties, you need to always keep your eye on this part of your business. Because, you know, you've heard me say here on this show several times, there are two major places where the potential for losing money really lies, where that we're. where the potential for losing money is the greatest.

If you can plug up and reinforce these two areas of your business, it's really, really difficult to lose money in real estate. And one of those places is where the potential for a great loss of money really lies. It's with your contractors. Bad contractors are responsible for 49% of all investor horror stories. Did you know 49% of all statistics are made up right on the spot? No, whether it's 49 or not, It's a great number.

Almost 49% of all investors' horror stories are about bad contractors. So watch the repair and rehab area of your business very closely. And when you find a good contractor or two, what you want to do is you want to treat them well. You want to pay them well also. You want this part of your business or a big portion of the worry about this part of your business. You want this behind you. You know, even if you have to pay them a little bit more per job just because you had a good one, I mean, you want to treat them well, you want to pay them well, and even you have to pay them a little bit more.

It's never going to be more than what a bad contractor will cost you in the long run, or maybe even in the short run. Okay, so paying a good one a little bit more is never more expensive than hiring a bad contractor. Got it? So watch this area of your business very, very closely. I mean, I wish there was a surefire way to guarantee success here, but there's just not. I mean, you're dealing with people. And contrary to popular belief, contractors are indeed. deed people. And with people come variables, lots of variables. So there, you know, this isn't any

unsurmountable task, by the way, not by any means. I don't want to scare you here. I just want you to take this portion of your business very seriously. There are a lot of good contractors out there. It's not like, you know, most of them will be bad. There are a lot of good ones out there. And I wish I could say the same thing for property managers. And, and that's actually the next step of the process. You know, if contractors account for 49% of all investor horror stories, I would say property managers account for at least another 49% if not the rest of that. But 49% for sure. And if you do the math here, what you're going to notice, the reason I kind of framed it is

49% and 49% is that you'll notice that there's only 2% left of which could cause you harm in real estate. And it's a category I'm just going to refer to as miscellaneous. That's what the 2% represents. But what you really want to get from this part, or from what I'm saying here is that if you have a good contractor or contractors on your team and you have a good property manager or property managers on your team, there's only this itsy bitsy, tinsie, wincy two percent miscellaneous category that could really harm you, that could really get in your way and cause you some pain and angst. That's really, really low when it comes to calculates. risk with your investments. And that's not just real estate investments, any investment.

2% risk is like, it's like nothing. Okay, so you want to really find a good, good contractors, and you want to, you want to treat them well, you want to pay them well, you want to hold them close, okay? The next part is property management. So let's talk about property management, because if you can get those two under, get those two things squared away, you know, you are smooth sailing, okay? is going to be real estate can be a very easy and fun, exciting trip for you. It's still fun and exciting, but a lot less negative of that negative stress.

Okay, so property management. Again, just like the contractor and doing the rehab yourself, you might be able, you might feel that you can handle this on your own as well. And you probably can. I mean, you feel you want to do it because you like people and you can save some money. And, you know, I'm not going to stop you from doing it. But just be clear that this is also not the first. fast-track to living the dream.

Again, if you manage your own properties, you are working in your business. You're not working on your business. That is the fast-track to live in the dream. You know, and being a property manager is far from being a dream job. And it doesn't pay very much either. It pays very, very little. Now, having said that, I don't think there will be much lost. In fact, there'll be probably much to gain from taking a stab at managing.

your first or first few properties yourself, especially if they're close to where you spend most of your time, if they're close to your work or if they're close to your personal residence. It could be a good use of your time. It could be a good education for you. And there are a few reasons this could be a good idea for you. Not required, but it could be a good idea. First, it's difficult to manage a property manager. It's going to be a real challenge to manage a property manager if you don't know how to manage

the property yourself. Okay, so that's the first thing. because you're going to have to manage your property manager. And when your portfolio starts to build and it starts spreading out and diversifying into other states and other types of properties, you might have to manage multiple property managers. And if you don't know how to manage the property yourself, that's going to be a challenge. Second, if you manage property before, you have a, I don't know, you have an understanding.

You have a clear understanding of what your property manager has to go through on a daily basis. and you'll understand that his placement fee and is 10% off the top of the collected rents, that ain't much, okay? It's not much for what they have to go through. And you'll recognize that having someone else manage your property for you is actually a steal at 10%. And this understanding is going to get you out of your business and to working on your business rather quickly.

Okay, so once you do that for a while, you're going to realize I don't want to do this, it takes up too much time, there's better things I could be doing. Even if it's not working, there's better things that I could be doing. I would, you know, 10% is a small price to pay for the freedom of not having to do this type of work. You know, you can take my word for it and just go hire property manager, all fine and dandy. Or if you're kind of doubting that a little bit, maybe you do need to go do it so you really believe that part. So you're not tempted to be pulled back into your business and you can spend all of your time working on your business. and if you can do that, it's going to translate into a quicker realization of living your dream.

Okay, so for now, let's not focus on property managers, and let's not focus on how to find the good property managers, not just yet. Let's cover how to find good tenants. I mean, as exciting as the process has been up to this point, this right here, this is the best part. I mean, actually, you know, this is the part that gets you paid each and every month. This is the key. cash flow. This is the residual income. This is the part that actually contributes to you living your dream. So becoming an investment property owner and taking the first step toward living the dream, you know, that's a huge step, but it's not the end of the journey. I explained that at the end of the end of the journey, not by any means. Owning a property, that's one thing. Okay, well,

finding the property is one thing. Owning the property is another thing. But managing a property is a whole different ballgame. But if you purchase the property right, right and you completed quality repairs and rehab, you did those two parts, finding the right tenants can make it a rather enjoyable game to play. And finding the right tenants, that's the operative phrase here. That's the key to this all working out. You know, finding, analyzing, purchasing the property are all absolutely crucial. But finding the right tenants, it's not crucial. It's vital. The property does not become a cash flowing investment until it's occupied by good tenants. Now, fortunately, and this might be a surprise to you, but fortunately, most tenants tend to be good

tenants, okay, most of them do. But I can understand, you know, you've heard stories out there, right? If you've attended more than one area meeting, you've certainly heard more than one story about the tenants from hell. But understand, those are the exceptions, okay? They are the exceptions. The caveat there is, though, one tenant from hell can outweigh five tenants from heaven, both emotionally and financially.

But the more effort that you put into finding the right tenants, the more effort you spend and the more, I guess, scrupulous that you are up front and finding the right tenants, the less you're really going to have to worry about. But finding the right tenants, that's key. And most of them are good tenants. So that's the good news. Okay. But, you know, that one misstep can, that one bad tenant can, you know, take over and ruin the five good tenants.

tenants that you have, and I don't want that to happen to you. It's happened to me many times, but you endure and you pull through and you find the good tenants and you recover. Okay, so to find the good tenants, first step is you got to set the rent, right? And at this point, you should have a solid idea as to what the property rent will be because you did this work upfront when factoring your minimum deal standards when you originally analyzed the property. And this is the number in your calculations that it can really throw a big wrench in into your return on investment. It's not like if you're off $1,000 on repairs,

then you know, you're just off $1,000. No, it's, this is the difference between, you know, we talk about the difference between cash and cash flow. This is the difference right here. You know, if you're off $1,000 in your rehab, you're just off $1,000. But if you're off $100 in your rent per month, that just threw off your ROI, one to 3%,

maybe even 4%, depending on your purchase price point. So to live the dream, it's your rents that will allow you to do that. So your rents, they're very, very important. Perhaps at this stage of the process, it is the biggest, most important number for you to really watch. You know, for example, if you're off by just, say, $100 in the rents, just $100 per house and you have 10 houses, that's $1,000 per month, right? For most people, I mean, that's a difference that could require you to buy an extra

house or two or stay at your job for an extra year or two before you're able to actually live the dream. That's the difference of $100 can make in your final results. It can really add on some time to your journey. So watch your rents closely and watch the rents of the other properties in your area as well. Remember that the market shifts and competition, it can come from out of nowhere. So make sure that the rent that you set can handle the competition. You know, in most cases, a tenant will just, they'll take the cheaper place, even if the more expensive place is nicer. That's why I told you a few episodes ago to really don't over-improve your properties,

improve your, bring your property up to what is, you know, what's performing in the area. And maybe a slight notch higher than that, but not much more than that because you're not going to get it back. It's not going to pay for itself. And the mentality for tenants, it tends to just be that. this is only a temporary situation anyway. And so the price is a big part of their decision process. But when I say that on the other side,

don't just give the place away either. Don't give the place away to a tenant. But set the price low enough that you don't have to take massive losses due to vacancy because the unit down the street is $100 bucks cheaper. Okay? Is that sinking in? You know, for example, all tenants being equal,

this is why this is important, all tenants being equal, if you lost a tenant over $50 a month, okay? So say you wanted $1,000 a month for a property, and they were only willing to pay $9.50, and they went down the street. They found a property for $9.50, and they rented that one instead.

And your property then sat vacant for just one additional month, and you eventually did find your $1,000 paying tenant, right? You would think that was so much of a victory. But do you realize it would take you 19 months 19 months to catch up for that one lost month of rent over 50 bucks. If you sat vacant for two months haggling over 50 bucks, that's 39 months to break even,

to bring you back up to the speed if you would have taken a $9.50 a month tenant initially. Just two months vacant would take you over three years to make up for those two lost months. So I don't want to scare you. I just want you to understand the math there and how it works. So I want you to be shrewd in your investments. be disciplined, but be smart as well.

So my philosophy for just about anything, especially when it comes to selling something, is that exposure drives demand and demand drives value. And I take that concept over to finding the right tenant as well. It'd behoove you to attract a lot of tenants. You can not only have a choice. I mean, if you have a lot of tenants, you have a choice in tenants, but also because with multiple tenants wanting your property, the more likely you're to get your desired rent

and frequently more, because if they all want it at the same time, they realize this competition. And they realize there's demand for this property and that demand will drive up the value. So exposure, that's how you find lots of tenants. Exposure is the focus when looking for tenants. And you can expose your property in a wide number of ways.

I mean, you can actually get very creative with this, and a lot of people do. But the good news is shelter. It's a fundamental human need. So you already have the demand built in, but you just want to create a bunch of demand. And you create a bunch of demand from a bunch of exposure or advertising. But you don't want to waste time either. You don't want to waste resources. You don't waste money.

So you want to start off by identifying who your target market is and get a good feel for their needs and wants. You know, who is likely to be interested in the property that you're advertising? If the property, say, is a duplex on the bus line of a college town, you may want to focus on graduate students. You know, you try the campus bulletin boards and web resources and maybe the university newspaper. Or if it's a spacious single-family home with a big backyard, it may be better to try to attract families by posting through, you know, the town newspapers, yard signs, and the internet, other mainstream advertising.

So that's just what I mean by identifying your target market and that can give you a good idea of where you should expose, quote unquote, the property, where you should advertise and promote the property. So here's some of the standard methods, okay, yard signs. It's yard signs that they've been around forever and they'll probably never leave us as far as a form of advertising for good tennis. They're extremely inexpensive. And studies has shown actually that people locate rental properties through yard signs. up to half the time. They're still one of the most effective forms of attracting tenants. So a lot of people, a lot of tenants, when they're out looking for property,

what they're looking for a place to rent, a new home, they'll drive through the neighborhoods that they want to live in. And if they see a house for rent, boom. So you've already got the demand because they're already there driving up and down the street looking for your for rent sign. So a simple for rent sign with a phone number can cost as little as a, I don't know, a dollar or two. And you can get various types of signs from a number of different sources.

It's, you know, it's a simple Google search. you'll probably find, you know, at least 50 pages of different types of signs or different places to buy those signs. Also, if you list the house with an agent, a real estate agent or a manager, they'll probably give you signs that you could put up as well. Or, you know, wherever you get the signs, it's just, it's best to keep them very simple, very straightforward, just include the contact information, include a big, clear, and legible. I see signs where, you know, they didn't plan out how long the phone number was going to

take across the board, and then it goes across. and then it starts to dip down the side and it goes vertical because they ran out of space. Don't do that. Okay? Just make them nice, big, and clear, legible. A lot of people are driving when they see the sign. So you've got to make it easy for them. It's also a good idea to use a couple of signs in different locations to maximize visibility.

I like putting two signs in front of the property, one pointing both directions to face traffic. If you own multiple properties in an area, posting signs on those properties can bring in many more phone calls. I mean, even on the properties that you already have, occupied. If you have a vacant property, a street over, putting a sign on the occupied property, could also catch tenants and it typically does. It gets the phone ringing for sure. So yard signs. Great resource. Online resources. Online sources are some of probably the most cost-effective ways today to get the word out. The web is a fast, efficient, easy, and inexpensive method of advertising rental property. You know, Craigslist.org, rentals.com, speedytenants.com,

various local web sources. Again, another Google search, you'll probably come up with a 50 pages. And that's where a lot of people start their search anyway is on the internet. Some sites even provide maps.

They provide photos, the virtual tours, and other resources that you can maybe upgrade your advertising to attract more renters, maybe getting at the top of the listing. So your property is seen first. Again, that's an element of exposure.

It's increasing your exposure. We know the exposure drives demand and the demand drives value. You can also use, a number of free social media sites to attract whole networks of people who might know someone who is looking for a new place to live. You know, obviously Facebook comes to mind. I think LinkedIn is a very good source as well.

So online resources. Print ads. Yep. People still read the paper, believe it or not. If you're going to advertise a property through print ads, it's usually a good idea to print them in the local papers. Sunday edition. That's where it gets the, it's the most red edition of the week.

and so there it's the most exposure. And so there are probably, you know, there are other publications around that you can advertise in pretty inexpensively. Be careful though with the print ads because that can get expensive, but believe it or not, we still do it and people still read them

and we still find tenants in all of our markets through local papers. Your future tenants, they may already be researching the neighborhood and looking for ads for rental properties. You know, tenants usually, you know, they give their notice around

the first or the last of the month. So those can be good times to advertise if you want to catch them at a good time. If you want to try and optimize your advertising dollar. Okay, lots of choices out there. Another resource, I kind of mentioned already, agents. Rental agents are obviously very valuable to the investment process. They can place your property on the multiple listing service. And if you don't know what that is, I'm sure you all do.

But that's just kind of the retail marketplace where people go to buy property. But they also go there to rent property as well. They have houses for sale on there and they have houses for lease on there. And it's the biggest, it's really the biggest source for people looking for places to live. So talk about exposure. That's massive exposure. Sometimes, you know, an agent can pay for themselves that way just by generating a lot of foot traffic through your property and that foot traffic creates demand and the demand drives value and you get a higher rent. So you may have to pay some agent fees, but, you know, like I said, sometimes it's worth it.

Typically it's worth it. Sometimes not. but you know, you never really know. So that's something that you can just kind of, it's probably local too. It's probably not the same in every market. I don't use a rental agent in all of my markets. The agent will often also show the property as well,

which, you know, that saves time. Okay, so agents. And then what's the other one I got here? Brochures and flyers. Very simple, very basic. Well-created brochures and flyers are also inexpensive and effective ways to advertise your property. You know, make these materials concise,

but include the place's basic information, including amenities and special features. If the brochure or flyer is classy and informative, so it will attract good tenants in professional contacts typically. You know, the right materials posted at the right places like bulletin boards and high traffic areas can make all the difference when you're looking for tenants. This is something that we just started doing, direct mail campaigns because we're doing, you know, we've got a lot of properties that we're processing through the cash flow savvy system. And we're doing a lot to help our property managers place tenants.

And direct mail campaigns, they can be extremely effective if they are well written and sent to a range of contacts like your friends and your family, your property managers, your other property managers in the area, business contacts, real estate agents, and anyone else who might be helpful. You know, different investors have their preferences, letters, brochures, postcards, emails, or, you know, whatever works. You may even want to provide a referral fee to motivate people to bring you leads on tenants. And as you experiment, you're going to refine your process for maximum effect. One thing that we're doing right now, we just started doing this is it's called Every Door Direct Mail. And it's a service provided by

the United States Postal Service. You can pick an area, a zip code, a city, a county, and they will hit every single door in that specified area with whatever you want to mail. And so what we've been doing is we've been looking at apartment complexes, areas that have high concentration of apartment complexes. We have a lot of single families. So we've been marketing our rentals to apartment complexes because, you know, it's kind of makes sense that someone living in an apartment might want to upgrade to an actual house, especially if it's not that big, much bigger of a jump in

rent. That's something that we've just started to do. Not sure that if there will be any backlash from the apartment property managers or not, but I'll keep you posted. So that's something that I'm actually very excited about, and I have no doubt in my mind that that's going to be effective. But I'll keep you posted on that one. Open houses. Yep, open houses for sales. You can also do that for renting a property. You can hold an open house to show off the place to prospective tenants. You know, Sunday afternoons are usually best for open houses, and the Sunday paper is your best bet for a local printing or a print reading audience. The Sunday paper is great for that.

Seems like for garage sales and open houses, the Sunday paper is still like the number one source. So be sure to include all of the pertinent information on your ad and your voicemail and your address, the time of the open house, rental price, amenities, and anything else that's going to get them there. You can put directionally, you can even put your own open house signs,

it's like a real estate agent would. You can put your own open house signs on nearby streets and drive people in from other areas into your open house. And it may go without saying, but it's important to make sure that the place looks clean and inviting for your guests on that day you hold the open house. Okay. I know it seems obvious. It doesn't even make sense that I'd even have to say that, right?

Believe me. I've seen some disasters out there of people trying to get houses rented and didn't even clean them up. So choosing the right strategy. You know, there's so many good options to choose from and mix and match into the best strategy for your needs, your goals, and your circumstances. Some parts of your advertising strategy might work out if you take care of them by yourself and other tasks are, you know, better left to an expert.

You know, you're going to be the judge. It's going to be a little trial and error there. Your team may have insights also in context that can be extremely helpful as you narrow down your best choices for advertising. The more, the better, though, in my opinion. Okay? I mean, keep your target market in mind. You don't want to, you know, launch a giant advertising.

budget on just finding a tenant, but maybe you do. But if you keep your target market in mind and you can be concise with that marketing, you know, the more exposure, the better. We do a combination of everything I just ran down to you. Now, once you have a good advertising plan going, it's going to, it'll be time to start, you know, bringing in prospective tenants. And it basically breaks down to, you know, just a handful of steps. Once you've got a prospective tenant, whether on the phone or you met them. And it's time to show the property. You process the application.

You screen the tenant. You review the lease. You sign the lease and you collect deposits and then they move in. So those are your steps. Show the property. Process the application. Screen the tenant. Review the lease.

Then sign the lease and collect the deposits and then they move in. So showing the property. It's rare that a tenant is going to move into a place, sight unseen. They're going to want to visit and check the place out. So you can arrange and open. or a private viewing, depending on the situation. One way or another, you will need to show the property, so it's best to try to keep it ready for viewings all the time,

just in case you get a good prospect when you least expect it. You can even keep a lockbox at the location so agents can show the property when you aren't there. Of course, if you do have tenants in the property, you should be as kind and accommodating as possible. If you need to show the property to prospective new tenants, you're going to need their cooperation when they're moving out and you don't want to make them upset and, you know, leave any surprises for you at the property.

When it comes to showing property, though, if you can, a good strategy is if you had four or five phone calls today and they all want to see the property, you know, let them know that I'm going to be there between 5 and 515 or let them know you're going to be there. I'm not going to be there. Let them know that you're going to be there between, say, 5 and 515. Tell them all the same time and watch them all show up together. Now, what this does is it creates kind of an auction type format. And it's not an auctions per se, but it creates that feeling amongst the people looking at the property.

It's where you've increased exposure. And now the people, the tenants that you brought in, they recognize that there's demand. And when it's time to fill out the application, you know, maybe there's a lot less negotiating on there because they know other people are interested in the property as well. So that's a tip that we try to incorporate as often as we can when we're showing properties. processing the application. If they like the property and they want to apply for it, it's time to ask them to fill out and sign a rental application. And you can find standard rental applications online

or at your closest, you know, stationary store or office supply store. They're very standard forms. Then the application, it just commonly includes, you know, the person's rental history, consent to a credit check, vehicle information, work history, references, you know, just other basic information. And you also have the option of using an online tenant screening program that'll generate a credit report for you for a small fee. And you can pass

that fee onto your tenant. You know, it's common to charge a small fee of $2550 for the application, which covers the cost of the credit report. And, you know, maybe you mark it up a little bit and so it covers your time as well. Another thing I like about it is it also indicates serious interest on the rental, on the rental agreement. It indicates that the tenant is actually serious about living at the property. So it's a good, good little test as well, just to test the sincerity of their application. And to be on the safe side, get the fee in cash, money, order, or cashiers check. Don't take the personal checks. Get that application fee and something that's essentially liquid right away. In the application materials, they usually also include identification,

you're going to want some paystuffs, tax returns, and other materials to establish that the the tenants are reliable. Be sure to get application materials for each adult who will be staying there as well. All righty? Okay, so now you've got the application. The next step is to screen those tenants. And, you know, the tenant selection process is, you know, like we mentioned earlier, it's one of the more important steps in managing a property.

A bit of extra time and energy in the selection process can save you a world of headaches later on. So be thorough and meet the candidate in person or have your professional property manager conduct an in-person interview. But, you know, we're talking, we're not talking about that right now. We're talking about you being the landlord. And run a full check of their credit, run a check of their employment history, their rental history, and stick to your criteria.

It's natural to want to help everyone, but don't allow your compassion to lead you into bad business decisions. Be kind and courteous, but don't be a sucker. All right. Don't be a sucker. Be thorough as you check and double check all of the relevant information. taking detailed notes as you go along. Okay, be very thorough on this part.

So while credit reports they're important, they don't really tell you the whole story or give you a well-rounded picture of your applicants. You know, in some cases, an applicant may have credit problems that are not his or her fault due to medical expenses, market changes, divorce, or any number of other tough circumstances. So try to get a holistic view of the situation, applying all of the relevant factors. I happen to be one of those people. I've got this terrible credit score. but I've got, you know, I've got two divorces and a bankrupt business back in 2001 because of this darn digital download.

It put the whole music business out of business or the whole music industry out of business. So that's, it's good to look at the hard facts, but a lot of times, especially in today, especially after 2006, 2007, 2008, 2009, that stretch there. A lot of people went through some rough times. but a lot of people have recovered and their great, responsible, reliable people now, again. Take that into consideration. Okay, so the rule of thumb, the traditional standard is that the rental price should not be more than a third of the income of whoever wants to live there. Combining incomes if there's more than one occupant. And if they seem to make enough money, but you're still a little bit nervous about the situation,

you can always suggest a higher security deposit or simply just move on to the next candidate. Trust your gut on this one, okay? In both ways. You know, if they've got a bad credit score, but, you know, they've got strong bank accounts and good references, maybe that's somewhere where you can trust your gut there

as well of them being a good person. All right, next step is to review the lease. Okay, the lease agreement is the legal contract that ensures you will receive your monthly cash flow, among other things. So it's important to make sure this document is in order. If the lease agreement is done right, it'll set out the rules that you and the tenants agree to follow, including certain responsibilities, policies, and limitations on both sides of the equation. It's not just about the tenant paying you the rent each month.

It's also about legal compliance, fair treatment, protection of the property, and other related points. And this goes both ways, too. You know, the lease states that the landlord will not discriminate on the basis of sex, age, ethnicity, or religion. depending on the state, it may also include the Uniform Residential Landlord and Tenant Act, various disclosure policies or any other pertinent policies. You know, as a landlord, you'll need to be familiar with the laws of your area. That's going to be very important because every state, you know, that they operate differently as far as whether they're pro tenant or pro landlord.

You've probably heard that before. So you want to be familiar with the laws of your area or have someone representing you who knows the laws, maybe a property manager or, you. an agent or an attorney. An attorney is not a bad person to already have at the ready. You know, and you should also know what your rights are as the landlord, like the right to charge additional deposits for pets

or the prohibition of pets in your properties. You may prefer some types of tenants over others, but you'll have to make sure that you are not making yourself vulnerable to claims of bias or unfair treatment. As long as the details are covered in writing, checked out by your team and adhered to, you should be fine. There should be nothing to worry about here.

But the legal aspects are something to be aware of. You know, like most legal and financial matters, some extra attention to the prep work for a lease agreement in the beginning can help you avoid so many problems later on. You should be able to find a standard lease agreement probably right next to the rental application. You can find them online. You can find them at your stationary store,

your office supply store. And you can also, though, you can also customize your lease and negotiate its terms later on. Okay. So there we go. Now we're wrapping it up. So here we go. What happens next? After you have purchased a property, you made it rent ready, you advertised it and you found a tenant. Right. What's next? Well, after the tenant's application goes through, you can have them sign the lease and schedule a date to move in. It's nice to have the tenants sign the lease in person so that you can review it and answer any questions that are there. And typically there are. If the tenant's

application does not meet your criteria, you need to notify them, explain why it was denied, and keep a copy in your files just to show that you have acted responsibly and fairly. That's very important. So you want to be in communication with those that you did not accept, and you want to keep records of all the applications and the reports that you ran through the process. So that's what you want to do to protect yourself with the applicants that you did not accept. But for the ones that you do, when everything goes well, you know, the tenant is approved, they sign the lease, they pay the deposit and their first month rent, any additional

fees that you may have, and they move in. Avoid personal checks if possible again. Take cash money orders or cashier's checks to avoid the potential complications of bounce checks, especially the initial payments. And then, you know, after you receive these funds up front, then you hand over the keys. Okay, it's time to move in. So try to, try to schedule time to double check the property a few days before a tenant moves in just to make sure everything is in working livable condition. In addition to the lease, you can put together a packet of information for your tenants that will include important phone numbers, email addresses, regulations, security codes, and any other information or items that the tenant may find helpful in his or

her new home. And you'll also need to notify some other people about the new occupants, maybe the homeowners associations, if one is present, your mortgage company maybe, utility companies, your insurance agent and anyone else who could benefit from knowing about the new developments. Your insurance agent can set you up with a landlord policy on the property as opposed to a homeowner's policy, which will give you added coverage for loss of rental payments during the times of any major repairs. Advise the tenants to also get renter's insurance to cover loss or damage to their personal belongings in times of disaster or misfortune.

So I think that's about it. That was a lot, right? but that's what's involved in managing your own property. And keep in mind that this is just one property, right? This was just one property. It's good to know the process, though. But this is not the best use of your time again. If your goal is to live the dream sooner rather than later,

this is not the best use of your time. I strongly urge you to hire this part out as soon as you can as your time is best reserved for finding deals and negotiating purchases. Got it? That's what you should be doing. That's the best use of your time. That's where you're paid the most.

And that's what's going to move you along this financial freedom journey, the fastest. All righty. So that's it for today. I'm Matt Terrio. Living the Dream. You've been listening to Epic Real Estate Investing, the world's foremost authority

on separating the facts from the BS in real estate investing education. If you enjoyed this show, please take a minute to visit iTunes and share your thoughts. Thanks for listening. We'll see you next time here at Epic Real Estate Investing with Matt Terrio. This podcast is a part of the C-suite Radio Network. For more top business podcasts, visit c-sweetradio.com.