00:00hey everyone john sonmez from
00:01simpleprogrammer.com
00:04I'm answering a bunch of videos today so
00:06this is I think it's like the fourth one
00:07I'm doing in this batch here and this is
00:11a little bit of a different question
00:12here so this one is actually about real
00:15estate so I'll just read this this email
00:19it's from from James and it says hey
00:23I've been a huge fan of your blog for
00:25several years and your advice has really
00:27helped me with my deaf career cool like
00:29that I was just wondering if you have
00:32any advice for someone who is planning
00:34on renting their first property soon
00:36okay my father and I inherited the house
00:39a few years ago and we are planning on
00:42renting it out do you manage your
00:44properties yourself or use a company to
00:45manage it for you are there any lessons
00:48you've learned from mistakes you've made
00:50you can share any tips anything I should
00:53absolutely avoid doing thanks for all
00:55the great advice over the years so
00:58you're getting into property management
01:00so if if you're if you don't follow my
01:03blog or these videos you probably are
01:05unaware of the fact that I am a real
01:08estate investor I've been investing in
01:10real estate since I was about 19 years
01:12old I bought my first house I never
01:14rented I just bought it wasn't easy to
01:17do at the time I was basically broken
01:20and I've just barely had enough money to
01:22pay the mortgage but somehow I managed
01:24through that and I started investing in
01:26real estate and I owned quite a few
01:28properties now probably somewhere like
01:3024 26 units of property like you know
01:35some of them are for flexes and duplexes
01:37and whatnot so that's why James is
01:39asking this question because he
01:41obviously knows that I am a real estate
01:43investor and he wants my advice on this
01:46so let me see where it were to start
01:49here so dude listen do I manage the
01:53properties myself ratiza company and
01:55manage it absolutely I use a company to
01:57manage my properties when I first
02:00started out in real estate investment I
02:01tried to manage properties myself and
02:03I'm a pretty big guy you know good but I
02:09would pound on the door
02:12you know like I'm going to throw you out
02:13of this house like give me the red you
02:15you you know and they would just ignore
02:17me and Oh we'll have it tomorrow next
02:20week and I'd come back next week and you
02:22know flexing my muscles and in trying to
02:25intimidate them to pay they never paid
02:28people just have different priorities
02:30right I found the renter's it's crazy
02:34crazy how people live right you know my
02:36my priorities in life are you know like
02:39money-wise is first I need shelter so
02:42it's my money there first then comes
02:44food right and then comes like things
02:47like you know entertainment and you know
02:50or you actually come to utilities you
02:51know stuff like that and then at the
02:53bottom is like entertainment like you
02:55know cigarettes and booze and and
02:57whatever you know movie there a lot of
03:00people renters that had rented my
03:03properties I found that their number one
03:05was like uh booze and number two was
03:08cigarettes and number three was right
03:10and so all the way down the list the
03:12very bottom was paying the rent kind of
03:14ridiculous but hey that's something you
03:16learn so what I found from that was that
03:19a property management company made
03:22things a lot easier in fact I mean it
03:24looking at it in retrospective its it's
03:26really the powered agency right if I
03:29could have gotten a better results
03:30getting the rent if I would have I in a
03:33more a business suit brighter and more
03:36business clothes knocked on the door
03:39said that I worked for the owner of the
03:42property and he was a harsh man and that
03:44he expected the rent when would you have
03:47the rent and and and I acted like I was
03:51on the side of the tent I would I wasn't
03:53the owner but I worked for you then I
03:55could negotiate on his part and I could
03:57say yeah I'm pretty sure he's gonna
03:59throw you out you know
04:02uh he's got a court order he's not a
04:04very very friendly guy he's not very you
04:07know whatever I could I could use that
04:09kind of guys and have the power of
04:12agency now obviously I've got the power
04:14of agency through a management company
04:15when they go and they knock on the door
04:17and say hey the rents due
04:19they're like hey we represent the
04:20we'll just or you out and there's not
04:22that there's no there's no very neutral
04:24party there I mean they're working for
04:26me but but they represent me they you
04:30know someone can't directly manipulate
04:32or trick them because there's there's a
04:36gap in between there they have to talk
04:38to me and I and I'll say no get the rent
04:40don't don't take any of their excuses
04:42throw them out or get their rent right
04:44so definitely get a property management
04:46company it's the best money I spend
04:48every month fees are somewhere around
04:50six to ten percent I don't care I mean
04:53if you don't pick a property management
04:55company based on their feet they pick it
04:57based on how good they are
04:59I fired several property management
05:01companies in my time and you know if you
05:05have to pay ten percent or more it's
05:07worth it to pay a higher percent to pay
05:10more to have someone manage your
05:11property and have them do a good job
05:14because property management companies
05:15can cost you a fortune if they have
05:18bogus repairs and they you know they're
05:20kind of shady a lot of them so they'll
05:22do a lot of things like bogus repairs
05:23they won't get things rented they'll
05:25have crappy tenants in there make sure
05:27it's a quality one that's that's that's
05:29they're probably going to charge more
05:31money but you check about check the
05:34references call up their owners that own
05:37the properties and then it's not just a
05:40good relationship from the start with
05:42them when you do hire them make sure
05:43that they know that you're on top of
05:44things you're managing the property
05:46management company it's not like you are
05:48just having the manager properties and
05:50you're never touching them you're not
05:52managing the properties but you're
05:54managing the property management company
05:55and that's that's fine because that it's
05:57one thing you have to manage listen when
05:58you have five properties it really comes
06:00into play this is one thing you have to
06:02eventually you get in a relationship and
06:04you find the right one and it's it's
06:06less work but but that's definitely my
06:09advice make sure you get a proper team
06:11in a company to do it from the start you
06:13don't be penny wise and pound foolish
06:15like let them do repairs you don't want
06:17to be up all night like answering phone
06:19calls fixing plumbing problems and
06:21things like that just make sure that
06:23you're on top of them like
06:24ask them to account for time and money
06:26spend and things like that let's see
06:29what else here so a lessons I've learned
06:31are mistakes that I made I think I've
06:33shared most of those you know the
06:34biggest thing I mean if you've got it a
06:36property that you've inherited you won't
06:38have to worry about this but you make
06:40money in real estate when you buy right
06:42this is the key thing is you don't just
06:45go and buy right you go and you research
06:47the market but when you do when you do
06:50buy when the numbers line up right you
06:52act quickly a lot of times I'll make
06:55offers on a property before I've even
06:56seen it because I know it's a good deal
06:58or I've made an offer that's low enough
06:59that if they accept it or counter it to
07:01the right degree that I know it'll be a
07:03good deal then I'll go and inspect the
07:05property I'll put a continuously in my
07:07contract it says that I need to inspect
07:09it physically and then I'll hire an
07:11inspector if it passes my first
07:13inspection and if there's stuff that's
07:15not right I will walk away and I'll lose
07:18the inspection money big deal not a big
07:20deal you know to do that you got to be
07:23willing to do that so you know along
07:25with that run your numbers make sure you
07:28know how much rent are you going to get
07:29you know reduce that assume that you're
07:31going to rent it out for 10% under
07:33market right because you don't want to
07:35have vacancies assume all the fees if
07:38you're going to get a mortgage on it
07:39what is it going to cost what's the
07:41taxes was to insurance what's the
07:42homeowners association fees or do the
07:45utilities were to repair and upkeep
07:47factor that all in and make sure that
07:49it's a good deal on paper before you do
07:51it because what you don't want to do is
07:53buy property and have it be an
07:55alligator's pulling money out of your
07:56pocket I've been there I've done that
07:57it's painful it hurts that the way that
08:01you adjust this is you adjust the price
08:04down you make low offers you know you
08:06might have to make a hundred offers and
08:07one of them gets accepted that's that's
08:09the right price for you and also you
08:11come in with more down payment so that
08:13your mortgage is less anything you
08:16should absolutely avoid doing or
08:19anything you should absolutely avoid
08:20doing I think I've pretty much pretty
08:23much covered that there obviously you
08:26could just got to be smart you got to
08:27know the market oh I would there's a
08:30couple things I might add to that which
08:31is don't don't rent to your friends
08:34or your family that's a bad idea right
08:37he's trying to collect rent for your
08:39friends and family not going to work not
08:42going to work out very well don't let
08:44your friends or family manage the
08:46property either that's not going to work
08:48out well either don't do any of those
08:50kind of things that are going to you
08:52need to be objective right you need to
08:54be a business person this is a business
08:57also appearances are are separate from
09:01bottom-line right when you look at
09:02rental properties this is a business
09:04what money does it bring in what does it
09:07not how beautiful does it look I've had
09:09some ugly-looking properties and I've
09:11seen some friends of mine that have done
09:13real estate investment that have bought
09:14properties and they have spent money
09:17like making this place look nice for
09:20renters that are going to trash the
09:22place because they wouldn't live there
09:24themselves you can't think that way with
09:26real estate investment this is a
09:28business decision you've got to think
09:30like a business person you got to think
09:31about your investment right and it comes
09:34down to the bottom line how much money
09:36does this probably cost me and how much
09:38does it bring in and that's you know and
09:41think in the long term that's the other
09:42at last piece of advice I'd give you is
09:44this is not you're not going to make
09:46short-term money in real estate if you
09:48do you're going to be working your butt
09:50off for it right flipping houses it's
09:52possible right and you can make a lot of
09:55money but you're going to be working
09:56your butt off to do that it's going to
09:58be just as hard as working a job it's
09:59not you're not using the power of your
10:03not investing at that point real estate
10:05investing is a long-term thing by
10:08definition so you're looking at a
10:10minimum of 10 years 20 years to see your
10:13return that's where you should be
10:14thinking when you're fine real safe when
10:16you're focusing on this focus on a 10 to
10:1820 year from now period at the least
10:20maybe even further out maybe 30 years
10:23for a full 30 or mortgage that to pay
10:25off but do not focus on the short-term
10:27or you will get burned I promise you you
10:29will get burned I know so many people
10:31that I've given real estate advice to
10:33I've gotten them into real estate
10:34investment and they have not listened to
10:36the biggest piece of advice I've told
10:38them which is this is a long-term
10:39investment and they have burned
10:41themselves trying to make a quick buck
10:44such thing as a quick it's not
10:45possible believe me if there is possibly
10:48a way to make a quick buck without you
10:51know doing something completely
10:53dishonest and even those are probably
10:55not as easy as well people think tell me
10:58about it because I've tried just about
11:01you know everything I've been involved
11:02in a lot of different business ventures
11:04in from real estate to stock markets to
11:07to selling products online
11:10entrepreneurship building companies it's
11:12all hard work if you're going to make a
11:14profit so hopefully that's helpful
11:17advice to you I don't mean to disparage
11:18you too much about real estate
11:20investment it's the best investment that
11:21you can make it's great that you're
11:23doing this just make sure that you you
11:26think about this and that you do things
11:28in the smart way all right well that's
11:30it for this video if you like these kind
11:33of videos about you know really I talk
11:36about a lot of different things on this
11:37channel from career advice to real
11:41estate investment in kind of
11:43inspirational type of videos don't don't
11:45hesitate to subscribe to the channel and
11:48and you'll get these videos for me
11:50actually lately it's been more
11:52frequently than once a week even though
11:53I said I was going to going to cut this
11:56down to once a month but hey yeah and if
11:59you have any questions comments send me
12:01an email leave me a comment below take
12:03care talk to you next time
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