\n<\/p>\n
Section 8 investing<\/strong><\/a> isn\u2019t as scary as it seems. Most landlords will opt to not rent to section 8 tenants, fearing non-payment or just getting stuck with a bad renter. But, this means that the tens of thousands of potential tenants<\/strong>, waiting with guaranteed rent<\/strong>, have nowhere to stay, while you struggle to fill an empty unit. Ashley Hamilton<\/strong><\/a>, Detroit-based investor, thinks that not renting to section 8 tenants could be a huge mistake<\/strong>.<\/p>\n Welcome back to this week\u2019s Rookie Reply<\/strong>! This time, we\u2019ve got Cullen<\/strong><\/a> asking: Is it a bad idea to invest in properties out of state where the housing market is cheaper and more affordable for us? <\/strong>Or would it be better to save more money and invest in the market we are currently living in?<\/p>\n Good news for Cullen, we\u2019ve got a cash flow market expert <\/strong>here to help answer his question!<\/p>\n If you want Ashley and Tony to answer a real estate question, you can post in the Real Estate Rookie Facebook Group<\/a>! Or, call us at the Rookie Request Line (1-888-5-ROOKIE).<\/p>\n Ashley Kehr: Ashley Hamilton: Ashley Kehr: Tony: Ashley Kehr: Tony: Ashley Kehr: Tony: Ashley Kehr: Tony: Ashley Kehr: Tony: Ashley Kehr: Tony: Ashley Kehr: Ashley Hamilton: Tony: Ashley Hamilton: Tony: Ashley Hamilton: Ashley Kehr: Ashley Hamilton: Ashley Kehr: Ashley Hamilton: Ashley Kehr: Ashley Hamilton: Ashley Kehr: Ashley Hamilton: Ashley Kehr: Ashley Hamilton: Tony: Ashley Hamilton: Tony: Ashley Hamilton: Tony: Ashley Hamilton: Tony: Ashley Hamilton: Ashley Kehr: Ashley Hamilton: Ashley Kehr: Ashley Hamilton: Ashley Kehr: Ashley Hamilton: Ashley Kehr: Ashley Hamilton: Ashley Kehr: Ashley Hamilton: Ashley Kehr: Ashley Hamilton: Ashley Kehr: Speaker 4: \u00a0<\/p>\n<\/div>\n Interested in learning more about today\u2019s sponsors or becoming a BiggerPockets partner yourself? Check out our\u00a0<\/i>sponsor page<\/a><\/i>!<\/i><\/p>\n Note By BiggerPockets:<\/b> These are opinions written by the author and do not necessarily represent the opinions of BiggerPockets.<\/p>\n
This is Real Estate Rookie, Episode 238.<\/p>\n
If you are new and you\u2019re just wanting to get started and you want that cash flow, it\u2019s not a situation where if you make a mistake and fail that you could lose your shirt. Obviously nobody wants to lose money, but I\u2019d rather lose a couple thousand then a $100,000 or something like that. But again, with Detroit, we\u2019re very cash flow heavy. There\u2019s a lot of demand and especially in Section 8, so I feel like it\u2019s a great market for rookies to infiltrate because it\u2019s so low risk with the guarantee rents and things like that.<\/p>\n
My name is Ashley Kerr, and I\u2019m here with my co-host Tony Robinson.<\/p>\n
Welcome to the Real Estate Rookie Podcast where every week, twice a week, we bring you the inspiration, information, stories you need to hear to kickstart your investing journey. I want to start this podcast by shouting out some folks in the Rookie audience. Today we have a podcast review from someone with the username Owen Warren. Owen says, \u201cTotal game changer!!! I started out listening to the OG Bigger Pockets Podcast which gave me a plethora of information, but sometimes so much that it can lead to analysis paralysis.\u201d I know we\u2019ve all been there. \u201cWhile I still enjoy the OG Podcast, my focus has shifted more so to the Real Estate Rookie Podcast, due to the fact that I\u2019m still relatively new to real estate investing and have only completed a handful of deals. So whether you\u2019re brand new or have a well-balanced real estate portfolio, I believe Tony and Ashley, along with their guests, have great content to share with you guys. Thank you all for everything.\u201d
Man, that\u2019s one of the nicer reviews I think we\u2019ve got in a while. If you haven\u2019t yet, please leave us an honest rating and review on whatever platform that you\u2019re listening to. The more reviews we get, the more folks we can help. And that\u2019s always our goal here. So Ashley Kerr, what\u2019s up? How you doing today?<\/p>\n
Good, good. I got a child sick from school today. Sick or skipping school, still not sure yet what the consensus is. Yeah, it\u2019s been pretty busy. The end of the year is coming, and we actually have an episode coming up for you guys in the next couple weeks that\u2019s going to be about goal setting. So how did Tony and I do on our goals last year? What are our goals going to be for 2023? Now is the time to start thinking about that and kind of putting your action steps and your most important next steps in place.<\/p>\n
Yeah, I think a lot of people almost wait too long to start having that discussion, so I am excited to get into that. Yesterday I had an hour and a half long call with my CPA, just kind of like game planning for next year. We\u2019re in October right now, so I think it is helpful to start thinking about the next year before the next year actually gets here, that way you\u2019re kind of one step ahead of the game. We\u2019re doing the same thing in our business as well. We\u2019re already now trying to identify what some of the blockers and the obstacles might be for our real estate business next year as well. So for all of our Rookies that are listening, if you guys haven\u2019t taken some time to start thinking about the oncoming year and what it looks like for you, you should definitely, definitely set aside a day to start putting that game plan in place.<\/p>\n
And a great point, too, with talking to your CPA is even reviewing the past year, and see if there\u2019s anything you need to do before the end of the year hit.<\/p>\n
Yeah, totally.<\/p>\n
Because you can only write off things in 2022 for this year. So you can\u2019t wait until the year is over and then talk to your accountant and be like, \u201cOh man, I should have done this differently, or maybe I should have bought this,\u201d blah, blah, blah.<\/p>\n
I just want to share something that I learned in that conversation with my CPA. Cost segregation is one of the big benefits of buying real estate, and I always thought that you could only perform a cost segregation in the year that you purchased the property. So if I buy a property in 2022, I have to complete the cost segregation in 2022. But she corrected me and told me that you\u2019re not limited to the year that you purchased it.
So if I purchased a property in 2022, as long as I put it into service in 2022, I can still get all of the cost segregation benefits that come along with buying that property in 2022. So for example, at the end of this year, bonus depreciation goes from 100% in the first year to 80% in the first year, and then the last 20% is spread out over five years. So before, if I have a, I don\u2019t know, $160,000 cost segregation depreciation I was able to use, I could use all of that in one year in 2022. But moving forward, I only get 80% of that in the first year, and then a decrease every year there afterwards. So I was like, \u201cMan, I got to do a bunch of cost segregation this year to get all of that benefit.\u201d She\u2019s like, \u201cWell, Tony, not necessarily.\u201d She\u2019s like, \u201cAny property that you put into service in 2022 will still have the ability to use 100% bonus appreciation even if you do that cost segregation a year from now or two years from now.\u201d That was something that was news to me that honestly made me pretty happy, because we put quite a few properties into service this year.<\/p>\n
Yeah, and to kind of spread it out so that you\u2019re not taking it all in one year when maybe you don\u2019t even need it. So you could transfer that, do a little the next year, and then some the following year too. Yeah, that\u2019s really interesting. I didn\u2019t know that either that you could do it later on.<\/p>\n
Yeah.<\/p>\n
Well, today we have another special Rookie Reply format for you guys. We have Ashley Hamilton with us. She is a Detroit investor. You may have seen her on Instagram or the Bigger Pockets Podcast. She just had her second debut on there. Her first episode I think was one of the best performing episodes ever on the OG podcast, so you guys will have to check it out. But Ashley comes on with us live at BPCON. Yes, that\u2019s right. Me and Tony are still giving you guys interviews that we did in the basement of the hotel at BPCON. We want to bring Ashley on and we\u2019re going to talk a little bit about her, but she\u2019s also going to walk us through how she invests in properties, and as a Rookie what is the best way that you can get started that she thinks of. She kind of goes through these steps that she implements and thinks that will be beneficial to you guys to help you get started. Before we bring Ashley on though, we are going to do an actual Rookie Reply.<\/p>\n
This week\u2019s Ricky Reply comes from Cullen Lewis. Cullen\u2019s question is, \u201cReal estate rookie here. My wife and I are really wanting to buy real estate properties, but the market where we live is currently too expensive for us. Is it a bad idea to invest in properties out of state where the housing market is cheaper and more affordable for us? Or, would it be better to save more money and just invest in the market we are currently living in?\u201d
I\u2019ll take a stab at this first, Ashley, and then I\u2019ll pass it over to you. I think a lot of it depends on what your goals are, Cullen. If your goals are to maximize your tax benefits and appreciation, then maybe investing in a market that\u2019s more expensive might actually be a good thing, right? Because historically markets that are more expensive, like California, parts of New York, they tend to appreciate more than some of the more Midwestern or more affordable states. If the appreciation is a big motivating factor for you, then maybe investing in your own market does make sense.
If cash flow is what\u2019s most important to you, then yes, there might be a benefit to going into a market that\u2019s less expensive and can probably give you a better cash on cash return.
I think there are some things to balance there, but if you do decide to go out of state first, read David Greene\u2019s book on out of state investing. It\u2019s a great, great resource for both new and seasoned investors on how to build the team to invest out of state. But second, I think, don\u2019t just chase the markets that are super, super inexpensive, because sometimes you can find yourself in the wrong neighborhood. If you don\u2019t know that state, you don\u2019t know that city, you can find yourself with a property that\u2019s difficult to manage. We\u2019ll bring Ashley on here in a second, Ashley Hamilton, and she\u2019ll talk a little bit about how she\u2019s been able to invest in Detroit, but it\u2019s because she knows that area and she knows how to find the right tenants in that market. So I think if you do go into a market that\u2019s historically less expensive, you really want to do your homework to make sure you\u2019re investing in the right part of town.<\/p>\n
Yeah, and I think a great way to find another one of those markets is to look where other people are investing, and then do your own research from there. Because how many markets are there across the US? There\u2019s a lot. So look where other people are investing, and then go and do your market research from there. Like Tony had said, what is your goal? Is it cash flow? Are these cash flow performing assets? Are you going to be buying properties that are super old on the east coast? We just had a guest on who was buying houses in the early 1900s, late 1800s, and those may come with a lot of continuous repairs or updates because they\u2019re just such old properties. Or, would you rather buy something new and that\u2019s more turnkey? There\u2019s a lot of factors to look at when you\u2019re analyzing a market. I think that it\u2019s 100% doable to go ahead and invest out of the area that you live in. There\u2019s millions of people doing it every day.
Go into to the Bigger Pockets forums and just ask people, \u201cWho is the first person you connected with in a market to start on your team?\u201d It\u2019s most likely going to be maybe a real estate agent, or a handyman, or a property manager that can help you through the process. That\u2019s going to be a crucial part of it is finding your boots on the ground too to build that team for this.
Let\u2019s bring on Ashley Hamilton though, who\u2019s actually going to have a lot to say towards this question, too. I think we\u2019ll provide a lot of valuable information for you guys. Ashley, welcome to the Real Estate Rookie Podcast. Thank you so much for joining us here at BPCON. We\u2019re super excited to have you. You have one of the most amazing episodes on the Bigger Pockets OG Podcast, and you were just recently back on again with that podcast. For anyone who doesn\u2019t know who you are, please tell a little bit about yourself and how you got started in real estate.<\/p>\n
Absolutely. My name is Ashley Hamilton from Detroit, Michigan, as if nobody knows, right? Because it\u2019s always blasted everywhere. I really got my start I feel like in a very common way, where a lot of real estate professionals are people that want to get started in real estate where they\u2019re at. Obviously a lot of us don\u2019t have a six figure job or corporate America or a rich family we can borrow money to, so I was one of those people that really had to get in really creative. I literally started purchasing real estate using my tax return. I was fortunate enough to be in a market that was more affordable and easy to get into, where if I took a big risk because I didn\u2019t know anything, if I did have a loss or make a mistake, it would\u2019ve been easier to bounce back from because the capital requirements were so low. I chose Detroit as my market, and I started using my tax return to purchase properties.<\/p>\n
That\u2019s amazing. Because most people, they get that tax return, and it\u2019s like, \u201cWhat are we buying? What are we shopping for?\u201d And instead, you use it as a way to build your financial future. Can you just give us a quick overview of what your portfolio looks like today?<\/p>\n
Yes, absolutely. So today I\u2019m super blessed to be a proud owner of 35 doors. They\u2019re all located in the city of Detroit, but because the capital requirements are so low, I have a ton of deals that I purchase all cash. So I was able to have a lot of equity in my properties, and when I started to leverage that, that helped me almost tripled my portfolio in one year. So I\u2019m at 35 doors right now, and cash is always my number one. There\u2019s no wrong or right way to invest. Some people might invest for appreciation. But I really wanted the cash flow because I really wanted to spend time with my children. So that\u2019s where I\u2019m at right now and I\u2019m excited.<\/p>\n
A lot of investors, they hear Detroit, they think that, \u201cIs it the right place to invest? Is it the best place to invest?\u201d What has your experience been, and why do you think it might be a good place for new investors to get started?<\/p>\n
Absolutely. My answer\u2019s always yes, it definitely is. So one thing, I know a lot of people when they talk bad about Detroit, they was like, \u201cOh, you can buy a property there for $5,000,\u201d and they kind of played it as if it was a negative. So even if I lived in California, if somebody got on the news and said, \u201cYou can buy a property for $5,000,\u201d I\u2019m going to instantly do some research.
But yes, it\u2019s a great place to invest. We always had the automotive industry, so the big three auto companies, so they\u2019re still there. Now there\u2019s a lot of tech companies coming there, so that\u2019s really improving. But the best thing about Detroit is it\u2019s still affordable. So even now after the big COVID boom and all that inflation, you can still purchase a property all in for about $80,000, and that property will still generate at least $1,300 to $1,400 a month in rent.
The reason I feel like it\u2019s so important, especially for rookies, is because obviously there\u2019s no rule book or a way to do real estate. So if you are new and you\u2019re just wanting to get started and you want that cash flow, it\u2019s not a situation where if you make a mistake and fail that you could lose your shirt. Obviously nobody wants to lose money, but I\u2019d rather lose a couple thousand than $100,000 or something like that. But again, with Detroit, we\u2019re very cash flow heavy. There\u2019s a lot of demand, and especially in Section 8. So I feel like it\u2019s a great market for rookies to infiltrate because it\u2019s so low risk with the guarantee rents and things like that.<\/p>\n
Let\u2019s walk through that process kind of. So you\u2019re recommending that a rookie investor start out with more affordable housing, so these properties. What are kind of the action steps someone can take to identify a market? Maybe they\u2019re looking at other markets besides Detroit. What are some of the things that you looked for to find these $80,000 houses that were generating that amount of rental income?<\/p>\n
Yes, absolutely. I do have a four step process. But before I go into that, I want to talk to the listeners about, step away from the business a little bit and think about your customer. I feel like as a business owner, even though real estate is a property, it\u2019s still a business, and we kind of go technical. But I always think about my customer. So if you\u2019re servicing an affordable market like Detroit or a lower income market, I\u2019m thinking about who\u2019s going to going to live in this property? So nine times out of 10, it\u2019s going to be a single mother like I was, or a small young family, maybe a husband and wife and one small child.
When I was growing up, my parents always said, \u201cHey, stay where I can see you. Don\u2019t be running up and down the block, just stay where I can see you.\u201d When I look for a property, the first thing I do is look at the street view. As long as the seven adjacent properties to my subject property is good, that\u2019s one step off my checklist. And again, my logic behind that is the kids, they\u2019re not going to be all the way down the street. So if there is a smaller or a vacant property down the street, as long as the surrounding areas is good, that\u2019s going to be safe for my family, and they\u2019ll have neighbors and things like that.
So number one, when you\u2019re looking in Detroit, the first thing you want to do is look at the street view and try to eliminate properties that have blighted, burnt down, or vacant properties directly next to it. The next thing is you want to check to see what the rental amount is. That\u2019s also going to tell you what the neighborhood supports. On average in Detroit, even the worst houses you can get about a thousand dollars a month. If I\u2019m looking at the average rents, and I do use Bigger Pockets all the time, they have a great rental estimator and it\u2019s really accurate. It\u2019s hard because Detroit normally is not accurate, but I give props to Bigger Pockets for that. So if I can look and see that the rent in that area is going to be $1,000, that\u2019s letting me know it\u2019s a greater area.
Next you want to just check and see, make sure that there\u2019s comps. If you\u2019re going to be all in for $80,000, as long as you can identify one property that\u2019s sold in the last six months for $80,000, that would be the fourth step. After that, I would just reach out to real estate agents, making sure that property managers is readily available in that area.<\/p>\n
That\u2019s great advice, and those four steps you can do in any market.<\/p>\n
Absolutely.<\/p>\n
So building out your buy box, building out your criteria. If your budget is at $80,000, you\u2019re going to be looking for that. If you have a certain rent to price ratio that you want to meet, then you\u2019re going to look, \u201cDo the rents meet what you\u2019re purchasing the property for?\u201d Then doing the Google Street view, that\u2019s also a great tip, especially if you\u2019re investing out of state and you can\u2019t physically go and drive and actually view these neighborhoods to do that. So that\u2019s awesome.
After you\u2019ve identified the neighborhood you want to be in, what kind of happens next when you\u2019re ready to make an offer on a property? Are most of your deals through the MLS?<\/p>\n
Yeah, so to be honest, I feel like I\u2019ve been an investor that\u2019s capitalized on the people saying what you can\u2019t do. So you can\u2019t find good deals on the MLS. During my one explosive year where I purchase 11 properties, nine of them were straight off the MLS. I don\u2019t know if it was people weren\u2019t checking there, the flippers weren\u2019t, if that\u2019s how. So for sure you can use MLS, but I\u2019m a firm believer in networking, especially with wholesalers. And if you are really savvy, or if you\u2019re really interested in really exponential growth and profit, really look at properties that need a little work. Doesn\u2019t have to be a full rehab, but if you\u2019re willing to do the work, that\u2019s going to force the appreciation and give you a bigger outcome, especially in a city like Detroit. Because if it\u2019s 90% complete, obviously there\u2019s not going to be any savings on the offer. So for sure, that would be a couple things that I would look for as well.<\/p>\n
Okay. So then what\u2019s your process after you\u2019ve put the offer in and you\u2019re under contract? Are you doing inspections on these properties?<\/p>\n
Yeah. So to be honest, for sure, I always recommend that every investor get an inspection, but my philosophy is I buy neighborhoods, so just always considering my customer. And just also, if you pick a market, you want to know the statistics. So in Michigan, I know that there\u2019s 30,000 voucher holders that don\u2019t have a place to live because there\u2019s a housing shortage. So I know, okay, great, that could be a market I can service with a Section 8 and guaranteed rent, so that\u2019s why I\u2019m putting my mind in the consumer again. Once I buy the property, I start to look at and analyze properties similar to that to make sure that I\u2019m doing repairs that\u2019s going to make a Section 8 tenant want the property and feel lucky for it. Sorry.<\/p>\n
With that Section 8, I want to go into this because I don\u2019t think we\u2019ve really talked about this before, is what are some of the things that you do to your properties that\u2019s attractive for somebody with a voucher, or even the housing authority likes to see? Because they kind of walk through, because they do an inspection too of the property, correct?<\/p>\n
Yes, absolutely. So for sure, so to be honest, they do do an inspection, but it\u2019s a really basic inspection. You don\u2019t have to have the nicest property; they just want to make sure that it\u2019s safe. But for me, I want to stand out in my market. I know all the requirements that they ask, and you can easily do that by just reaching out to your local agencies. But I like to go a step over and beyond, because my philosophy is cash flow helps you quit your job, and tenant turnovers kills cash flow. So my goal is to eliminate tenant turnovers. So I know that if every property in my neighborhood is Section 8 and they just have the basic Formica Home Depot countertops, I might go in there and put a granite in there. I might spend $1,400 more, but I have a tenant that\u2019s going to stay three more years, and that\u2019s guaranteed rent. Those are some of the things that I do now.
And then also the cheapest way, if you guys don\u2019t want to commit to the granite, there is these faucets at Home Depot. They\u2019re literally $60. You can also get them on Amazon. And literally when you turn them on, it lights up. I run all the kids when I\u2019m doing a showing to the bathroom and show them that. That $60 faucet has literally made so many Section 8 people pick my properties over other, and it\u2019s not even that expensive.
When you think, always think of the consumer in mind. And me being someone that was on Section 8 when I was younger, and I saw how people treated me and my family. We had the basic minimum. We were never excited to show people our homes. I really want my tenants, whether it\u2019s Section 8 or not, to be excited to show people their homes. And again, that\u2019s going to make them want to stay longer and keeping my cash flow alive. So that\u2019s just some philosophies and a quick cheap tip. Like I said, it doesn\u2019t have to be the granite of $1,400. It can be a $60 faucet that you can put in there that really make an impact and really help your rentals occupy.<\/p>\n
Ashley, you talked a little bit about your experience as someone who lived in subsidized housing and some of the, I guess, stigma, or maybe the mindset the landlords had about their tenants. I think that is something that happens for a lot of new investors is that there is a stigma around investing in Section 8 or in lower income neighborhoods. Have you found any of those misconceptions to be true or those ideas to be true? Or maybe, what challenges have you seen, and how have you overcome those?<\/p>\n
Yeah, absolutely. I haven\u2019t found any of those to be true, because I truly believe that no matter if you make a $100,000 a year or $100,000,000, or $10,000 a year, because I\u2019ve probably been a little bit of both of those, you\u2019re still human. At the end of the day, I\u2019ve had people that work at making $100,000 a year at a factory that won\u2019t pay me rent at all. So it\u2019s really the judgment of character, and just giving people the benefit of the doubt. So for sure, even if you\u2019re having Section 8, a lot of landlords, they\u2019ll skim on their criteria or their screening process because they\u2019re thinking it\u2019s the guaranteed rent, and they just overlook that there was already red flags. So now when they get the tenant, they\u2019re like, \u201cOh, these tenants are bad. All Section 8 is bad.\u201d But no, you didn\u2019t do your proper screening because you just automatically assumed now that would\u2019ve just happened regardless if it was the government assistant or a regular paying.
It\u2019s definitely important to do screening no matter where your tenant is coming from. Just some of my obstacles, again, it\u2019s just showing that my prospects that, \u201cHey, I\u2019m human. I\u2019ve been there before.\u201d I think that really resonates with them and let them support me more, and kind of remove me from the big old evil landlord like I guess some people would think of it, because they know I\u2019ve been there before and things like that. So that\u2019s really helped me.
But again, I feel like just kind of removing the business like straight and narrow, and being understanding and say, \u201cHey, listen, I know you\u2019re a single mother, but don\u2019t worry. If you stay here three or four years, I have connections with a great realtor, and maybe I can refer you to a home buying program.\u201d So letting them know that, \u201cHey, as long as the communication is good, I\u2019m here to help you,\u201d that really has helped me in my journey as well.<\/p>\n
Yeah, I think it\u2019s kind of an unfair characterization to say just because someone makes less money that they\u2019re less of a qualified person to rent your property, right?<\/p>\n
Yes.<\/p>\n
A lot of times, someone on a voucher program, Section 8 or otherwise, they might be your best tenants because they know that there\u2019s a long line of people waiting behind them to get that unit. So it\u2019s like, \u201cIf I know if I disrespect this place, or if I\u2019m not a good tenant and I lose this voucher, where am I going to go?\u201d They\u2019re almost incentivized to be your best tenants because of the value that comes along with that voucher program.<\/p>\n
Yes, absolutely. I agree. And they stay longer too, typically. And especially if it\u2019s a nice place where they\u2019re just bragging to their whole family they never want to leave. I feel like also what I\u2019ve noticed is the nicer I make my rentals and the care that I show, the tenants reciprocate that as well. I mean, some of my tenants have better grasp than me. They\u2019re hiring companies, and I\u2019m like, \u201cWow.\u201d But they saw the care and respect that I put into the property, and they see me grinding and in the business. They reciprocate that with the property.<\/p>\n
You talked a little bit about your screening process. Can you elaborate on what that looks like?<\/p>\n
Yes, absolutely. This just is based off experience; obviously every market is a little different. But early on what I would get, the people that worked at the Big Three and the automotive that I just thought, \u201cOh, they\u2019re so successful.\u201d They would come in and they were the worst payers. I don\u2019t always just shoot for the income situation. My number one criteria is previous rental history. I feel like if you\u2019ve been renting a property for five years and you move into my properties, chances are you\u2019re going to continue to do right. If you don\u2019t have that rental history, that\u2019s when I kind of look deeper into your credit to try to build up that, see how your payment history is. But my number one is previous rental history. Obviously you want to make sure they can afford it because you\u2019ll be doing them a disservice just as much as yourself if every dime they get has to go to rent. I also make sure that their income is three times the rent amount. And then also, I really don\u2019t like people that had evictions in the last three years.
That\u2019s typically my biggest criteria. So no evictions in the last three years, must make three times the rent in income, and have previous rental history. Now, if it\u2019s a Section 8 tenant, then the income aspect, it\u2019ll just be three times whatever your allotment is. Some people, their rent might be $1,600, but they\u2019re only paying $300. So as long as they make $900 a month, then that would be a good candidate.
But if you all can notice, I didn\u2019t really say credit. And again, obviously if you don\u2019t have rental history, then I look at the credit. But I do realize that even though credit is good, but if these people had a 700 credit score, a perfect employment history, they\u2019ll probably be buying a house. They wouldn\u2019t be looking. So I always wanted to be a little bit lenient on people who didn\u2019t have the best credit, but as long as they have demonstrated positive pay history with their previous landlords, that\u2019s the biggest referral I can get.<\/p>\n
What kind of software are you using, if any, to manage these properties?<\/p>\n
Yeah, so if I told you guys what I do, you all would think I\u2019m a crazy person. I\u2019m definitely blessed. I\u2019m hoping to be able to use software and stuff, but it slows me down. So to be honest, I\u2019ve been running my businesses on spreadsheets. But for the last six months, I have been using Building, the property management software. I\u2019m going to sit here and say it live publicly. Don\u2019t use spreadsheets, just invest. It took so much time to set it up. I\u2019m not going to lie, it did take three weeks of me really getting in there. But now that it\u2019s going, it\u2019s literally the best thing. If it\u2019s just one or two units, you can do it on spreadsheets, but I highly recommend you using a property management software.<\/p>\n
Yeah, I was in the same boat too. With anything really, my businesses, I waited too long to implement it.<\/p>\n
Yes.<\/p>\n
Do it now while you\u2019re a rookie investor, and put it in place and build your systems up. You can change them as you move along, but starting from the beginning, instead of when you have, how many doors do you have now?<\/p>\n
35.<\/p>\n
Yeah, trying to onboard 35 units does take a long time and it\u2019s time consuming.<\/p>\n
Yes, for sure.<\/p>\n
What last piece of advice do you have for us for rookie investors? What would be your number one thing?<\/p>\n
I know it maybe sound cliche or maybe something that you guys would never thought, but to be honest, it\u2019s really getting crystal clear on what you want. I can\u2019t say that enough. I know it seems easy, but it\u2019s really important. Because I\u2019ll get people that call me up and say, \u201cHey, I want to be an investor. I want to quit my job in three years, so show me how to flip properties.\u201d That right there says you\u2019re clearly not clear on what you want. Because even though I love flipping, flipping is not a means to quit your job, right? Because you are using that $40,000 in profit, which really turns into $30,000 once you have to pay Uncle Sam that everybody forgets about. That profit, you\u2019re going to use that to sustain your life. So just really getting crystal clear.
Now, maybe you do want to be a flipper, and that\u2019s totally fine because you\u2019ll get the experience. But if you want to quit your job, you\u2019re going to want to look for cash flow. I feel like that\u2019s the number one thing, is getting crystal clear on what you want. Because a lot of us think like, \u201cOh, we want a hundred doors,\u201d or, \u201cWe want 20 units.\u201d But if that\u2019s not your goal and your goal is just to quit your job and have a better cash flow, then that\u2019s probably what you want to go after.<\/p>\n
Ashley, thank you so much for joining us. Can you let everyone know where they can reach out to you and find out some more information about you?<\/p>\n
Absolutely. They can reach me on Instagram at @Detroit_Investor. I share tips and show a lot of my rehabs right there, and truly just here to help and give back. I\u2019ve been so grateful for the Bigger Pockets family and literally just this whole community. I\u2019m so passionate about giving back because you can do this, guys. It doesn\u2019t have to be complicated. It really is simple. You just want to figure out what you really want and find people that are doing it. Shoot them a DM, right? Instagram is so good. Or just social media in general, because you have opportunities to DM and email your mentors and people that you might want to seek guidance from. Instagram is definitely the best place, @Detroit_Investor.<\/p>\n
Well, thank you so much for joining us live from BPCON. I\u2019m Ashley @wealthfromrentals. He\u2019s Tony @TonyJRobinson. Thank you guys so much for listening, and we\u2019ll be back on Wednesday with a guest.<\/p>\n
(Singing).<\/p>\n