Podcast Summary
Engaging with the BiggerPockets Community: Introduce yourself, set goals, and engage with new members on BiggerPockets for expanded network and opportunities. Utilize resources like DealMachine and Rent to Retirement to further your real estate investing journey.
Key takeaway from this episode of the Bigger Pockets Podcast is the importance of introducing yourself and setting goals within the BiggerPockets community. The hosts remind listeners to fill out the new member introduction form and share their goals for the year. Engaging with new members and welcoming them to the forum can expand your network and create more opportunities. Additionally, the episode features an interview with Mike Sherwood, a BiggerPockets community member and co-author of an upcoming BiggerPockets book. Mike shares insights on partnering, getting started, and investing while working a full-time job. The episode also includes promotions for DealMachine and Rent to Retirement, offering solutions for lead generation and no money down investment opportunities, respectively. Overall, this episode emphasizes the value of community engagement, goal setting, and utilizing resources to further your real estate investing journey.
Michael's real estate journey began with a duplex inspired by his grandparents: Starting small with a duplex, Michael built a successful real estate career through multifamily investments and expansion into flips and property management, inspired by his grandparents' top-down duplex and Airbnb income.
Michael's success in real estate began with a duplex inspired by his grandparents' investment. He started with the goal of making money while sleeping and has since continued to focus on multifamily properties due to the best financial sense in Buffalo. Michael's journey began in 2006, and he's since expanded into flips and property management. His inspiration came from his grandparents, who owned a top-down duplex, and his ultimate goal is to build on multifamily investments, potentially moving towards larger apartment buildings in the future. Airbnb also played a role in Michael's financial growth, helping him earn extra income to launch his real estate career. If you're considering real estate investing, Michael's story highlights the potential for starting small and building a solid foundation.
Finding and securing first real estate investment through an agent and FHA loan: Communication and setting clear expectations with tenants are crucial for maintaining privacy and property upkeep in real estate investments.
Securing the first real estate investment, a duplex in this case, involved finding the property through a real estate agent, using an FHA loan with a small down payment, and learning to set boundaries with tenants to maintain privacy and maintain the property. The process was quick and affordable in Buffalo's market, with the property listed for $58,000 and eventually purchased for $49,000 after negotiations. However, the investment required attention and setting boundaries to avoid constant tenant interruptions, even in the middle of the night. This experience taught the importance of communication and setting clear expectations with tenants.
Living for free or reducing expenses by renting out a portion of property: Being a landlord involves setting rules and expectations, training tenants to be responsible, and establishing clear boundaries to maintain a healthy landlord-tenant relationship.
Real estate investing can provide an opportunity for individuals to live for free or at least significantly reduce their living expenses by renting out a portion of their property. This can serve as a solid foundation for building a real estate portfolio and learning essential landlord skills. However, it's crucial to establish clear boundaries and expectations with tenants to maintain a healthy landlord-tenant relationship. An example of this was shared during the conversation, where a tenant called the landlord late at night for assistance in getting unstuck from a snowy parking area, which was not the landlord's responsibility. After this incident, the landlord made it clear that tenants were responsible for their own emergencies and should not disturb the landlord after hours. It's important to remember that being a landlord involves setting rules and expectations, and training tenants to be responsible for their actions. This can help prevent potential issues and ensure a successful investment experience. For more information on this topic, check out Pete Gardini's post on "Training Your Tenants" in the show notes at biggerpockets.com/show51.
Setting clear expectations and guidelines for tenants: Clearly communicate rules and responsibilities to tenants through a detailed lease and regular training sessions to minimize misunderstandings and potential issues.
Effective communication and clear guidelines are essential for successful landlording. Establishing rules and regulations upfront, and training tenants on how to be good tenants, can save landlords a lot of trouble in the long run. Michael shares that he and his partner have a detailed lease and that Michael's partner handles the day-to-day tenant management. They also have a version of a "Rent Talk" where they go through a manual on being a good tenant with their new tenants. This helps tenants understand their responsibilities and what is considered an emergency, preventing misunderstandings and unnecessary calls in the middle of the night. A memorable example Michael shared was a tenant who called at midnight claiming there was a flood, only to discover that it was just a poorly installed toilet that had been leaking for days. By setting clear expectations and guidelines, landlords can build a better relationship with their tenants and minimize potential issues.
Effective communication and collaboration in self-managing real estate investments: Divide responsibilities, leverage expertise, and communicate efficiently to manage real estate investments successfully. Having a real estate license can provide access to MLS and valuable investment insights.
Effective communication and collaboration are crucial when self-managing real estate investments. In the discussed situation, a tenant reported water leaking into her unit from below, but upon investigation, it was found to be in the unfinished basement. The property owners, who were self-managing, initially handled the issue themselves but later outsourced most of the maintenance to a contractor. They emphasized the importance of dividing responsibilities and leveraging expertise to efficiently manage their properties. The tenant management was handled by one partner while the other focused on repairs. The owners also highlighted the benefits of having a real estate license to access the Multiple Listing Service (MLS) for deal sourcing and understanding the numbers behind potential investments. Despite having full-time jobs, they made it work by delegating tasks and being resourceful.
Partnering with an experienced agent or investor for time-strapped real estate investors: Time-strapped real estate investors can form partnerships with experienced agents or investors for finding, prescreening, and closing deals. Each partner can have distinct roles and profits and losses shared equally.
For individuals working full-time jobs who are interested in real estate investing but have limited time during the day, partnering up with an experienced agent or investor can be an effective solution. This partnership can help in finding, prescreening, and even closing deals. Finding a partner can be done through personal networks or by educating them about the investment process. The partnership can be structured as a 50-50 split, where both parties contribute equally and share profits and losses. Each partner can have distinct roles, such as one focusing on the big picture and systematizing the business, while the other handles direct tenant management. It's essential to have clear communication and trust within the partnership to ensure its success.
Leveraging Technology, Strategic Partnerships, and Passive Investments for Business Growth: Use technology for property management, partner with trusted companies for investment opportunities, and consider passive investments for stable returns and reduced active involvement in property management.
Successful business growth involves systematizing operations through the use of technology, such as Rentec for property management, and strategic partnerships with trusted companies like BAM Capital for investment opportunities and NREIG for insurance. Investing in real estate can be challenging, especially with the responsibility of managing properties and dealing with tenants. To overcome this, consider passive investment opportunities like Pine Financial Group's mortgage fund, which offers a stable preferred return and profit split while minimizing active involvement in property management. Overall, the key is to leverage technology, strategic partnerships, and passive investment opportunities to grow and protect your business in a constantly changing market.
Focusing on actual property performance, not just financing: Seek deals with minimum cash flow targets and exceed them with 100% financing for potential passive real estate income and community revitalization.
Investing with Pine Financial Group not only offers potential passive real estate income but also contributes to community revitalization. During his conversation, the speaker discussed the importance of focusing on the actual performance of a property, not just financing. He also shared his personal approach to evaluating deals, which involves setting a minimum cash flow target with 100% financing and then looking for deals that exceed that figure. The speaker also mentioned a profitable 4-unit property in Buffalo, New York, which brings in around $2,800 per month. While the location might be further from New York City than some investors prefer, the speaker emphasized that there are often good investment opportunities within a few hours of major cities.
Building valuable real estate partnerships through communities and meetups: Engage in real estate communities like BiggerPockets to find potential partners and build relationships. Attend meetups to network, learn, and create opportunities for growth and partnerships.
Finding a good real estate partnership involves being able to come to agreements and constructively resolving disagreements. This can be achieved by engaging in real estate communities, such as BiggerPockets, where potential partners can be found and relationships can be built. The importance of being involved in these communities, even for new investors, cannot be overstated. Additionally, the recent surge in BiggerPockets meetups around the country is a testament to the power of networking and education in the real estate industry. By organically setting up these meetups, people are creating opportunities for growth and potential business partnerships without any sales or pitching agendas. Michael, who runs the Buffalo meetup, started it to give back and provide the help and resources he didn't have when he first started. Overall, being involved in real estate communities and attending meetups can lead to valuable partnerships and learning opportunities.
Connecting with real estate community through local meetups: Attend or host local real estate meetups through BiggerPockets Meet page to build relationships, learn, and potentially gain new opportunities within the industry.
Building connections within the real estate community can lead to personal growth and the ability to help others. A simple way to do this is by organizing or attending local meetups through BiggerPockets Meet page. These meetups provide opportunities for investors to connect, learn from each other, and potentially form mutually beneficial relationships. The meetings are informal and have no hidden agendas, often taking place at restaurants or quieter spaces. By hosting or attending these meetups, one can become a connector and potentially gain new opportunities. Overall, these meetups offer a valuable platform for building relationships, learning, and growing within the real estate industry.
Discover new investment opportunities and expand your network at local real estate meetups: Meet local investors, find affordable multifamily properties, and connect with experienced contractors at real estate meetups. Utilize online resources like BiggerPockets for keyword alerts to stay informed.
Attending local real estate meetups can provide valuable benefits such as meeting local investors, discovering new investment opportunities, and expanding your network. For instance, during a meetup in Portland, a local investor shared information about affordable multifamily properties located just half an hour from the city. Additionally, utilizing keyword alerts on platforms like BiggerPockets can help investors connect with local opportunities and engage with like-minded individuals. Moreover, some investors, like Brandon and Charles, are transitioning from buy-and-hold strategies to flipping houses to generate larger capital infusions for acquiring more multifamily properties. Despite having full-time jobs, they are able to execute flips with the help of experienced general contractors like Dave Niles, whom they've met through their networks. In summary, attending local meetups and utilizing online resources can open doors to new investment opportunities and expand your network, while flipping houses can provide a valuable source of capital for acquiring more multifamily properties.
Balancing buying and holding vs flipping strategies, unexpected delays in house flipping, thorough tenant screening: To be successful in real estate investing, balance buying and holding with flipping strategies, anticipate unexpected delays, and conduct thorough tenant screening to avoid costly evictions and lost profitability.
Successful real estate investing involves a balance between different strategies, such as buying and holding and flipping properties. Our interviewees shared their experience with their first house flip, which took longer than expected due to unexpected delays. They also discussed the importance of thorough tenant screening to avoid costly eviction processes. Their biggest mistake was trusting tenants who promised to pay rent but didn't, resulting in lost profitability. To avoid this, they now use a comprehensive screening process that includes income verification, good references, background checks, and even checking the cleanliness of their cars. Overall, their advice is to be diligent, patient, and thorough in the real estate investing process.
Caution with older properties and knob and tube wiring: Investors should be aware of potential issues with knob and tube wiring in older properties, and clearly outline tenant responsibilities for damages in lease agreements.
When dealing with older properties containing knob and tube wiring, it's essential to be cautious and informed. Some investors, like Brandon, choose not to purchase properties with this type of wiring due to potential issues and the reluctance of professionals to work on it. However, others, like Dave, buy these properties and ensure the wiring is functional and safe. Tenants may be responsible for damages they cause, and landlords should clearly outline this in their lease agreements. A duplex can be a good first rental property for those testing the waters of landlordship. In the case of tenant negligence, landlords should communicate clearly and follow lease agreement terms. Additionally, having thorough move-in and move-out inspections is crucial to minimize potential damages and disputes.
Partnering with someone for property investments with bad credit: To invest with bad credit, partner with someone with good credit for mortgage qualification. Pay off debts before investing if caused by unmanageable debt. For property maintenance, consider painting over paneling instead of removing it, and check heating units and external pipes during cold weather.
When dealing with property investments, especially with bad credit, it's essential to partner with someone who has good credit to help qualify for mortgages. However, the investment strategy depends on the reason for bad credit. If it's due to unmanageable debt, it's recommended to pay off debts before investing. Regarding property maintenance, painting over ugly paneling is often the best option when the damage isn't severe, as removing it can lead to unexpected issues. Lastly, during cold weather, it's crucial to check on heating units and ensure external pipes are shut off and sprinklers are drained.
The Power of Persistence and Enthusiasm in Real Estate Investing: Maintaining enthusiasm and sticking with real estate investing increases the chances of success. Mike, an experienced investor, emphasizes the importance of these traits.
Persistence and enthusiasm are key factors in successful real estate investing. According to Mike, those who stick with it and maintain their excitement for the business are more likely to succeed than those who give up. Mike also shared his love for the game of badminton and mentioned his favorite business book, "4 Hour Workweek." During the discussion, there was a mention of unusual snow removal laws, but no clear answer was given regarding their existence in Buffalo. Overall, the conversation provided valuable insights into Mike's experiences and perspectives in real estate investing.
Networking and Finding Investor-Friendly Agents: Network within real estate community, use BiggerPockets Agent Finder, engage with BiggerPockets community to learn, connect, and grow as real estate investors.
Mike Sherwood, a guest on the Bigger Pockets Podcast Show 51, shared valuable insights about real estate investing, specifically in the area of finding and working with investor-friendly agents. Mike emphasized the importance of networking and building relationships within the real estate community. He also recommended using BiggerPockets Agent Finder to quickly connect with agents who have a proven track record of success in the investor market. Additionally, Mike encouraged listeners to engage with the BiggerPockets community by joining the forums, blogs, and social media platforms to learn, connect, and grow as real estate investors. Overall, Mike's expertise and experiences provide valuable lessons for both new and experienced investors looking to succeed in the real estate market.
