August 5, 2025 • 23 mins
Nick Disney has tried it all: high-end rentals, low-end rentals, and everything in between. Over the years, he’s figured out exactly what type of property makes him the most money with the least hassle.
On this episode, Nick shares the type of property, neighborhood, and price range that consistently performs well for him.
We talk about the mistakes he made when chasing slightly higher returns on different types of properties, and how those deals often caused more problems and made him less money than expected.
Nick also shares how he’s been able to step away from the day-to-day management of his rentals by building a team he trusts.
https://rentalincomepodcast.com/episode533
Thanks To Our Sponsors:
Ridge Lending Group - Get A Free 30-Minute Strategy Session With Caeli Ridge.
MidSouth HomeBuyers – Turnkey Rentals In Memphis & Little Rock. Instant Cash Flow On Day One. (Priced between $100,000 to low $200's)
Rental Accounting Software Made Easy. Free 30 Day Trial
On this episode, Nick shares the type of property, neighborhood, and price range that consistently performs well for him.
We talk about the mistakes he made when chasing slightly higher returns on different types of properties, and how those deals often caused more problems and made him less money than expected.
Nick also shares how he’s been able to step away from the day-to-day management of his rentals by building a team he trusts.
https://rentalincomepodcast.com/episode533
Thanks To Our Sponsors:
Ridge Lending Group - Get A Free 30-Minute Strategy Session With Caeli Ridge.
MidSouth HomeBuyers – Turnkey Rentals In Memphis & Little Rock. Instant Cash Flow On Day One. (Priced between $100,000 to low $200's)
Rental Accounting Software Made Easy. Free 30 Day Trial
Mark as Played
Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:01):
Inspiring interviews with Today is Top Landlord, This is the
Rental Income Podcast and.
Speaker 2 (00:08):
Now, damnly, NICKI, you figured out a sweet spot when
it comes to investing in rentals. Tell me what you're doing.
Speaker 1 (00:16):
Well.
Speaker 3 (00:16):
We found a spot in our area where we're very
consistent on how much we're paying for a property, how
much we can rent that property for, and it most
of our portfolio looks just like that. And what we
found is whenever we tend to go outside of that,
even though it looks like a good deal, it never
(00:37):
works out as well, and we never make as much
and there's always a few more headaches than we thought.
So now we just kind of stay in our lane
the best we can.
Speaker 2 (00:46):
On the podcast, they we're going to figure out where
Nick has found that sweet spot to be where he's
making the most amount of money with the least amount
of hassle. We'll figure out what he's buying and what's
happened when he's veered off from that. Joining us on
the show today from San Antonio is Nick Disney. It's
a lot of work to find a really good rental property,
(01:07):
and when you actually find that property, you want to
make sure you're working with a lender that can get
that loan closed. The lender that I recommend is jay
Ley Ridge from Ridge Lending Group. She's a nationwide lender
and her specialty is helping investors finance rental properties. She
has a ton of loan programs and she can find
something customized to you for your situation. If you want
(01:29):
to find out more or you're ready to get started today,
just go to Ridge Lendinggroup dot com. That's our Idge
Lendinggroup dot com n MLS four two zero five six.
Are you thinking about investing in rental properties but maybe
you don't know where to start. My friends at Midsouth
Home Buyers make it simple. For over twenty three years,
(01:51):
they've been selling fully renovated, turnkey rental properties in Memphis
and Little Rock. We're talking new roofs, plumbing, electric, kitchens, bathrooms.
Everything is brand new and done right. And here's the
best part. Every property comes with a well qualified tenant
in place before you close. That means you get cash
(02:12):
flow from day one. Plus Midsouth continues to professionally manage
the property for you after the sale, and they back
it up with two powerful guarantees. You get a one
year total maintenance warranty and a lifetime occupancy guarantee. Personally,
I've bought five properties from them and I couldn't be happier.
(02:33):
If you want to talk to someone that's been through
the process, feel free to reach out to me. I'm
happy to answer any questions, or if you're ready to
get started, just go to midsouthhome Buyers dot com. That's
midsouthhome Buyers dot com. Nick. Let's start off talking about
your portfolio. What does your portfolio look like. Our rental
(02:55):
portfolio is all single family rentals. I guess there's one
duplex in there, but pretty much all single family rentals
in and around the San Antonio, Texas area.
Speaker 1 (03:07):
That is a rental part.
Speaker 3 (03:09):
We also, you know, have a portfolio of mortgage notes
that we hold and so we have a balance between
the two. But yeah, we are single family real estate investors.
Speaker 2 (03:19):
Now, you mentioned that there is kind of a sweet
spot for the perfect type of property that you like
to buy. What is that?
Speaker 3 (03:29):
So where we found the most success is in our
you know, not a new neighborhood, middle income, typical blue
collar neighborhood where there's a high demand for rental property.
So we always have a large pool of folks that
want to rent there. The rents are not too high. Now,
(03:52):
our rents are a little lower compared to the some
parts of the nation here in San Antonio, but we
don't want rents that are too high. And also we've
found found that avoiding spots where they're very low, like
the lower income some of the really rougher areas, that
is another spot that we we tend to avoid. And say,
writing between those two has been our sweet spot.
Speaker 2 (04:13):
And what kind of price point, like if you look
at what you're buying properties for and what they rant for, so.
Speaker 3 (04:22):
You know, everything that we buy pretty much is a
fixer upper. So we're paying usually, you know, somewhere between
one hundred one hundred and fifty for the property we're looking.
We have properties that the actual repaired value is two
hundred and below. Most of ours are kind of in
that one seventy five to two hundred range on the
value once we fix them, and those are runting for
(04:44):
about about one percent of that, you know, so seventeen hundred,
we have some fifteen hundred's and you know, in a
couple in that eighteen nineteen hundred range, how.
Speaker 2 (04:53):
Did you figure out like when you were just getting started, like,
how did you figure out that that was a good
area to be.
Speaker 1 (05:00):
In trial and error?
Speaker 3 (05:04):
So you know, almost anything can be rented, and there's
different people who specialize in different types of investment property
and even narrow that down different types of rental property.
What we found is for our area that in that
price range, there's a huge demand for rentals. There's a
(05:27):
big just pool of people who want them. Every time
we would have one for lease, we have multiple applicants
just kind of right out of the gate. So that
was a good sign that we were in our in
our target market where we wanted to be.
Speaker 1 (05:40):
And the other part was buying things you know, over.
Speaker 3 (05:44):
The years that didn't really fit in there, that we
tried to put into the rental pool and just finding
out that it just didn't work as well as these
other ones, and you know, we made a choice to
try to avoid them.
Speaker 2 (05:56):
So doing so many properties and having so many properties
in the same niche and are they kind of in
the same area, the same part of town.
Speaker 1 (06:07):
The same general area.
Speaker 3 (06:09):
You know, most of our stuff, if you know, if
you're looking at San Antonio on a map, we're pretty
much the south half of San Antonio, some of that
southeast southwest and some of that central and kind of
south area, but they're all in that general section of
San Antonio.
Speaker 2 (06:25):
So do you find that you have a lot of
efficiencies like just knowing that the houses are are in
similar neighborhoods, like similar type properties, Like you just find
like that you just know what things are going to
cost for repairs or when you're buying a property, you
kind of know what you're getting into.
Speaker 3 (06:47):
I think that you make a good point there because
we find a lot of predictability in what we're going
to run into. And what I mean is we know
how much the rehab is going to cost us, we
know what our repairs are, We had a real good
idea on what the rent is going to be in
those areas, and we can really predict going in and
(07:08):
I mean really, as we hold on to them as rentals,
what more of our costs are going to be. Obviously
things come up, But when something comes up, what's it
going to cost us? How much money do we need
to put that property in to turn it over? Which
I think people can do that if they're specializing in
any section. We found a lot of success here in this.
In our market, there are people that specialize in more
(07:30):
expensive rentals, lower income rentals. But if you're growing your
business and you're starting, I would really encourage you to
specialize somewhere, find something really really good at that thing
before you try to do ten different things.
Speaker 2 (07:47):
I agree with you. I think that is really one
of the keys to being successful with rentals is to
become an expert or a specialist in whatever you're doing.
So every once in a while you have veered off
of this and bought it, maybe a more expensive property
or a cheaper property, And so what's happened? Like, why
(08:08):
have things not worked out when you've veered off this?
Speaker 3 (08:13):
H I mean, I think a couple of different scenarios.
You know, we would with the more expensive ones, we'd
find a good deal and it wasn't really exactly what
we had as rentals, but man, you know it's it's
at a good price. We've got some good equity capture
right out of the gate by you know, forcing the appreciation. Man,
let's just hang on to it, keep it as a rental,
(08:34):
so be a little more expensive. And what we saw,
especially as prices were going up a few years ago,
is our property taxes shot up, our insurance has shot
up a ton, and what happened is the rents did
not keep up with that proportionally, so you didn't have
that much of an increase in rent but you had
(08:55):
increased set costs. Well, it really cuts into your cash flow.
And some of those turned into where yes, we had
some equity in them, and that it's positive, and that
equity was going to continue to grow, but it wasn't
cash flowing hardly at all, and that is not something
where we.
Speaker 1 (09:12):
Wanted to be.
Speaker 3 (09:14):
We want to have properties that have equity and cash
flow together. And it ran out really fast on the
more expensive properties.
Speaker 2 (09:20):
Yeah, that's a good point. So it's almost like your
cash flow evaporated like it was there at first, but
then as the taxes and insurance went up, you didn't
have cash flow at some point exactly.
Speaker 3 (09:32):
And with the less expensive properties, you know, some of
those were okay, man, this is a very cheap property
we get in the rents are less, no problem, right,
But what you'd see was when we had some repairs
or turnover it with the lower rents, it took a
(09:52):
lot longer for us to make up that money, make
that money back that were in there, and so again
your overall like annual AH really got cut into and
there we weren't seeing as much appreciation in those properties,
and so you know, what we found was the balance
of what fit for us and where we would grow
(10:14):
the portfolio was right in between those two kind of
the best place we could be to find that stright spot.
Speaker 2 (10:20):
So with those lower end properties that you were buying, like,
did you have more turnover? What were they more challenging
to manage that? Then some of the other properties that
that's kind of your your sweet spot properties.
Speaker 3 (10:35):
You know, the turnover was mixed. It wasn't that there
was so much more turnover across the board in those
in those less expensive properties, they tend to be older properties,
and older properties typically have more things that break than
a newer property. And when you know, some of the
(10:56):
costs were almost the same as a little bit more
expensive property, but we had rents that were hundreds of
dollars less, so it just would take longer to kind
of make back when you had expenses, and we didn't
have as as as many quality applicants in those areas
(11:18):
that we liked to choose from. When we'd have something
put out, you know, for lease.
Speaker 2 (11:24):
So when it was all said and done, when you
bought cheaper properties, did they end up making money? Like what,
were they still profitable at the end of the day or.
Speaker 3 (11:34):
They were they were because we and a lot of
that was because we do buy it a discount. So
for us in our business we are marketing, we buy
houses cash for houses, so we're looking to be direct
to seller most of the time.
Speaker 1 (11:47):
But we've bought them at a discount.
Speaker 3 (11:48):
And then we've rehabed the properties to become rentals and
so we were always able to force some appreciation in there,
and so they were still profitable, but not where we
want to specialize and grow it. And we didn't have
as as a true rental property, we didn't have the
(12:08):
same profits that we did and something that was a
little bit more expensive.
Speaker 2 (12:11):
Right, Yeah, I think the key there is that you
bought the property right like, you got a good deal
on it. If you had paid market price for the
property or not gotten a great deal, that maybe wouldn't
have ended well.
Speaker 1 (12:24):
I would completely agree with Yeah.
Speaker 2 (12:26):
Now with the higher end property, the higher end properties
kind of have a wrap that the tenants are maybe better,
tenants are easier to deal with. You have less payment problems.
Did you find that to be true?
Speaker 1 (12:42):
Nope.
Speaker 3 (12:43):
I think there's there's payment problems across the board. You know,
we didn't find that that we necessarily have less payment
problems or less tenant issues. There's people that make a
lot of money and you know, they manage it maybe
not the best way, and they still struggle with that
payment even though they have a higher income and you know,
(13:06):
a live in a more expensive rental property. We did
not see that. What we've seen is in our in
our neighborhood that we focus on the most. They you know,
they may not be really wealthy people. They need a
good quality home and if you give them that, you know,
they may not have a ton of money, but they
work really hard and they're happy to pay their bills
(13:28):
and we don't see any more issues than we did
in a more expensive house.
Speaker 2 (13:33):
Now, was it hard for you to wrap your head
around selling a property? You know, because it's like when
you're growing a rental portfolio, you want to add properties
and grow a bigger portfolio, but when a property isn't
working out and you need to sell it, was that what.
Speaker 3 (13:52):
Was that hard to do? Yes, you know, it's a
short answer. It's easier now that I've been doing it
longer and to have more experience, But especially starting out,
you know, I mean a lot of us working really
hard to grow that portfolio, and you worked hard to
get that property, to get it ready, to get it
(14:13):
least and everything, and you're like, hey, this is one
of my properties in my portfolio. And even though when
you look at the numbers, sometimes it's not what you
want long term, it's hard to let it go after
all the effort and the time that it took to
get it. But I have found that when you feel
(14:34):
like one is not successful or it's not a property
that you want long term, you need to put those
thoughts away and commit sell it. There's always another property
you can go find something that fits better for you.
But I think it's a struggle for a lot of
folks as you're starting out and growing it. Because we
want to have those properties in our portfolio. That's why
(14:55):
we started.
Speaker 2 (14:56):
So with some of the properties that you've ended up
saying like were you looking for a certain return to
get out of the property or like did it because
I guess like one thing that I struggle with I've
had a few properties I've sold over the years, and
I always feel like, well, maybe this tenant didn't work out,
(15:18):
but if I get someone better in there, it's gonna
do better. I just need to give them more time. Well,
was that something that you've encountered or something you've struggled with?
Speaker 3 (15:31):
Definitely, I mean I definitely have had the very similar
thoughts like, well, maybe it wasn't this, it was that
or this or that. If the property is not producing
and you can't really really pinpoint what it is, you
have to look at what your goals are and what
your needs are. And when I say that, I mean, Okay,
(15:51):
if your goal is cash flow or your goal is equity,
what's the best way to get there today? Not necessarily
the choices you made three or four years ago when
you got it. What's the best choice to do with
this property today? And sometimes it is selling that you
can reinvest that in another place or in another property,
or something that you know is going to be better
(16:13):
for you moving forward, and right or wrong. I also
just believe certain properties are just not right and they
tend to have all the headaches over and over and
over again. And I don't care who you put in
there what you do and there's some reason that I
may not know. And if you run into one of those,
please sell it and just move on.
Speaker 2 (16:31):
Yeah, yeah, because there is a on the flip side
of that, there's a lot of properties that are just great.
I mean, you're going to get great tenants. Nothing's going
to come up, you know, it's just about finding that
that good property. Well, I want to talk to you
about how you're managing your properties because I think this
is something you've done a really good job at. So
how do you have things set up? Like when a
(16:53):
tenant has a problem, do they contact you or do
you have someone that helps you out with that?
Speaker 3 (17:00):
They don't, They don't contact me. Unfortunate. You know, we
have a we have a team here and so they
do contact somebody on our team.
Speaker 1 (17:10):
Hey, here's the issue, here's what we're facing.
Speaker 3 (17:14):
We and then that personal contact whatever contractor that we
need to get out there, because that's typically going to
be the issue for for us.
Speaker 1 (17:27):
That works really well.
Speaker 3 (17:28):
We have contractors that we are that we go to
and we've set up relationships with them where hey, they
know if we sent you a tenant and an issue,
we have an agreement that they're going to contact them
within twenty four hours at least reach out to them
to schedule. They can't always get over there that soon,
but they'll at least contact the tenant, so the tenant knows, hey,
we've been heard and somebody's on it, and then they
(17:52):
will go out and kind of assess what we're looking at.
Speaker 2 (17:54):
So break it down, like who do you have like
contractor wise as far as like what the trades are
that you kind of have on speed dial.
Speaker 3 (18:04):
Absolutely so, and for anybody, uh, starting out, I would
encourage you to get these folks right here. So you
need a good plumber because you were going to get
plumbing issues. You need a good handyman. Give me a
general contractor where really a handyman can fix most of
the things. You just need somebody good and somebody responsive,
a good HVACT. You know, somebody that can go fix
(18:26):
those acs, especially like here we're in San Antonio during
the summer, it's hot, we're gonna have AC problems. Those
ones you want on speed dial. And then an electrician
because things are going to come up. You don't want
somebody who maybe doesn't have that much knowledge but electrical
going into it. If you have those four people that
you can contact and they can jump on it and
(18:47):
go handle it. That is going to handle ninety something
percent of the issues that come up. And we have
found it's better just to build a relationship with those contractors.
Then understand, you know what your expectations are, and they
will go out, they will handle the work, pay the bill,
and then everybody's taking care of you and the tenant.
Speaker 2 (19:10):
So you give them a dollar amount, like so when
they get out to the property and they see what
the problem is, is there a certain dollar amount that
you tell them to just fix it, and then a
certain dollar amount where they need to call you.
Speaker 3 (19:23):
Right what we do two hundred fifty dollars. If it's
going to be less than two hundred fifty bucks, please
fix it while you're there and lets me move forward.
If it's more than that, we usually get a phone call.
There are a couple of guys that we've worked with
for I mean probably ten years now, so they get
a little bit of leeway, but they already know what
our answer is going to be. But I think if
(19:45):
if you find somebody that you can work with and
set expectations, it's It's never been an issue contractors like, hey,
here's what we got. They'll step outside, they'll call you,
they give you their opinion, Hey, this is what we're
looking at. And most of the time we're say, hey,
let's go ahead and take it and fix it. But
you don't want them to just fix everything, and then
all of a sudden you get a bill for four
(20:05):
thousand dollars and you're like, whoa, what happened here?
Speaker 1 (20:08):
You know.
Speaker 2 (20:08):
I've found that when people are maybe just getting started
with real estate, they feel like they want to do everything.
They want to wholesale, they want to flip houses, they
want to do rentals. Like do you think that that's
a big mistake to try to do everything at once?
Speaker 3 (20:26):
It's a huge mistake. And I say it from experience,
and so I think people see that, oh I could
do this and that, and somebody's always going to come
to you. Even to this day, you know they're going
to come to you with a Nusani object, Hey well
why don't you do this? I really really encourage everybody,
(20:47):
especially when you're you're starting out. Hyper focus, right, you
don't even have to be one hundred percent correct, just
know what you think you want to do now, and
fully commit to it. Because the person that I talked
to that says, well, I'm gonna I'm gonna flip a house,
I'm gonna wholesale some rent a couple, do some owner finance,
(21:08):
and then maybe on an Airbnb and part of a commerce.
You end up doing five or six things really bad.
You're not good at anything, and you're pulled in too
many different directions. If you can be super focused on
one thing that you're going to do really well and grow,
then when you have your business set up, you can
either adjust or you can add something else then. But
(21:32):
I would definitely encourage people to commit and focus, especially
when they're starting out.
Speaker 2 (21:37):
You know, it's interesting you say that because you know
when you specialize in something, you're going to be good
at it. And like with you saying specialize in one thing,
like you're also saying specialize in one type of rental.
So to go back to what we were talking about
before that, like when you veered off and did things
(21:59):
you weren't and one hundred percent of an expert in
that's where you ended up getting into trouble.
Speaker 3 (22:06):
Almost every time I was like, man, it's a good deal,
we'll go do it. It's not really what we do.
It ends up costing us more than we think, taking
longer than we think, and we make less money than
we think we're going to make. And every time I'm like,
why don't I just stay in my lane and do
what I'm good at?
Speaker 1 (22:21):
And it's true to this day.
Speaker 3 (22:23):
So I really really encourage people to commit, focus, grow something,
and then you can always adjust. You're not committed for
the rest of your life. You can always adjust if
it doesn't work for you or if you want to
go in another direction.
Speaker 2 (22:38):
If you want to hear more from Nick and how
we used a helock to build his rental portfolio, you
can check out my last interview with him. It was
episode number four ninety two, And if anyone wants to
reach out to Nick, I've got his contact information on
the website. You can find it at Rental Income podcast
dot com, slash EPISODISO five thirty three. I'd like to
(23:02):
thank Chailey Ridge for sponsoring today's episode. If you're looking
to buy a rental property, whether you're just getting started
or you want to add to your portfolio, definitely reach
out to Chailey. She has a ton of loan programs
and she can find something that works for you in
your situation. You can track her down at ridgelendinggroup dot
(23:24):
com NMLS four two zero five six. Thank you so
much for checking out the podcast today. Make sure you
hit that follow button and that way you'll get notified
when the next episode comes out. My name is Dan
Lane and this has been the Rental Income Podcast
Inspiring interviews with Today is Top Landlord, This is the
Rental Income Podcast and.
Speaker 2 (00:08):
Now, damnly, NICKI, you figured out a sweet spot when
it comes to investing in rentals. Tell me what you're doing.
Speaker 1 (00:16):
Well.
Speaker 3 (00:16):
We found a spot in our area where we're very
consistent on how much we're paying for a property, how
much we can rent that property for, and it most
of our portfolio looks just like that. And what we
found is whenever we tend to go outside of that,
even though it looks like a good deal, it never
(00:37):
works out as well, and we never make as much
and there's always a few more headaches than we thought.
So now we just kind of stay in our lane
the best we can.
Speaker 2 (00:46):
On the podcast, they we're going to figure out where
Nick has found that sweet spot to be where he's
making the most amount of money with the least amount
of hassle. We'll figure out what he's buying and what's
happened when he's veered off from that. Joining us on
the show today from San Antonio is Nick Disney. It's
a lot of work to find a really good rental property,
(01:07):
and when you actually find that property, you want to
make sure you're working with a lender that can get
that loan closed. The lender that I recommend is jay
Ley Ridge from Ridge Lending Group. She's a nationwide lender
and her specialty is helping investors finance rental properties. She
has a ton of loan programs and she can find
something customized to you for your situation. If you want
(01:29):
to find out more or you're ready to get started today,
just go to Ridge Lendinggroup dot com. That's our Idge
Lendinggroup dot com n MLS four two zero five six.
Are you thinking about investing in rental properties but maybe
you don't know where to start. My friends at Midsouth
Home Buyers make it simple. For over twenty three years,
(01:51):
they've been selling fully renovated, turnkey rental properties in Memphis
and Little Rock. We're talking new roofs, plumbing, electric, kitchens, bathrooms.
Everything is brand new and done right. And here's the
best part. Every property comes with a well qualified tenant
in place before you close. That means you get cash
(02:12):
flow from day one. Plus Midsouth continues to professionally manage
the property for you after the sale, and they back
it up with two powerful guarantees. You get a one
year total maintenance warranty and a lifetime occupancy guarantee. Personally,
I've bought five properties from them and I couldn't be happier.
(02:33):
If you want to talk to someone that's been through
the process, feel free to reach out to me. I'm
happy to answer any questions, or if you're ready to
get started, just go to midsouthhome Buyers dot com. That's
midsouthhome Buyers dot com. Nick. Let's start off talking about
your portfolio. What does your portfolio look like. Our rental
(02:55):
portfolio is all single family rentals. I guess there's one
duplex in there, but pretty much all single family rentals
in and around the San Antonio, Texas area.
Speaker 1 (03:07):
That is a rental part.
Speaker 3 (03:09):
We also, you know, have a portfolio of mortgage notes
that we hold and so we have a balance between
the two. But yeah, we are single family real estate investors.
Speaker 2 (03:19):
Now, you mentioned that there is kind of a sweet
spot for the perfect type of property that you like
to buy. What is that?
Speaker 3 (03:29):
So where we found the most success is in our
you know, not a new neighborhood, middle income, typical blue
collar neighborhood where there's a high demand for rental property.
So we always have a large pool of folks that
want to rent there. The rents are not too high. Now,
(03:52):
our rents are a little lower compared to the some
parts of the nation here in San Antonio, but we
don't want rents that are too high. And also we've
found found that avoiding spots where they're very low, like
the lower income some of the really rougher areas, that
is another spot that we we tend to avoid. And say,
writing between those two has been our sweet spot.
Speaker 2 (04:13):
And what kind of price point, like if you look
at what you're buying properties for and what they rant for, so.
Speaker 3 (04:22):
You know, everything that we buy pretty much is a
fixer upper. So we're paying usually, you know, somewhere between
one hundred one hundred and fifty for the property we're looking.
We have properties that the actual repaired value is two
hundred and below. Most of ours are kind of in
that one seventy five to two hundred range on the
value once we fix them, and those are runting for
(04:44):
about about one percent of that, you know, so seventeen hundred,
we have some fifteen hundred's and you know, in a
couple in that eighteen nineteen hundred range, how.
Speaker 2 (04:53):
Did you figure out like when you were just getting started, like,
how did you figure out that that was a good
area to be.
Speaker 1 (05:00):
In trial and error?
Speaker 3 (05:04):
So you know, almost anything can be rented, and there's
different people who specialize in different types of investment property
and even narrow that down different types of rental property.
What we found is for our area that in that
price range, there's a huge demand for rentals. There's a
(05:27):
big just pool of people who want them. Every time
we would have one for lease, we have multiple applicants
just kind of right out of the gate. So that
was a good sign that we were in our in
our target market where we wanted to be.
Speaker 1 (05:40):
And the other part was buying things you know, over.
Speaker 3 (05:44):
The years that didn't really fit in there, that we
tried to put into the rental pool and just finding
out that it just didn't work as well as these
other ones, and you know, we made a choice to
try to avoid them.
Speaker 2 (05:56):
So doing so many properties and having so many properties
in the same niche and are they kind of in
the same area, the same part of town.
Speaker 1 (06:07):
The same general area.
Speaker 3 (06:09):
You know, most of our stuff, if you know, if
you're looking at San Antonio on a map, we're pretty
much the south half of San Antonio, some of that
southeast southwest and some of that central and kind of
south area, but they're all in that general section of
San Antonio.
Speaker 2 (06:25):
So do you find that you have a lot of
efficiencies like just knowing that the houses are are in
similar neighborhoods, like similar type properties, Like you just find
like that you just know what things are going to
cost for repairs or when you're buying a property, you
kind of know what you're getting into.
Speaker 3 (06:47):
I think that you make a good point there because
we find a lot of predictability in what we're going
to run into. And what I mean is we know
how much the rehab is going to cost us, we
know what our repairs are, We had a real good
idea on what the rent is going to be in
those areas, and we can really predict going in and
(07:08):
I mean really, as we hold on to them as rentals,
what more of our costs are going to be. Obviously
things come up, But when something comes up, what's it
going to cost us? How much money do we need
to put that property in to turn it over? Which
I think people can do that if they're specializing in
any section. We found a lot of success here in this.
In our market, there are people that specialize in more
(07:30):
expensive rentals, lower income rentals. But if you're growing your
business and you're starting, I would really encourage you to
specialize somewhere, find something really really good at that thing
before you try to do ten different things.
Speaker 2 (07:47):
I agree with you. I think that is really one
of the keys to being successful with rentals is to
become an expert or a specialist in whatever you're doing.
So every once in a while you have veered off
of this and bought it, maybe a more expensive property
or a cheaper property, And so what's happened? Like, why
(08:08):
have things not worked out when you've veered off this?
Speaker 3 (08:13):
H I mean, I think a couple of different scenarios.
You know, we would with the more expensive ones, we'd
find a good deal and it wasn't really exactly what
we had as rentals, but man, you know it's it's
at a good price. We've got some good equity capture
right out of the gate by you know, forcing the appreciation. Man,
let's just hang on to it, keep it as a rental,
(08:34):
so be a little more expensive. And what we saw,
especially as prices were going up a few years ago,
is our property taxes shot up, our insurance has shot
up a ton, and what happened is the rents did
not keep up with that proportionally, so you didn't have
that much of an increase in rent but you had
(08:55):
increased set costs. Well, it really cuts into your cash flow.
And some of those turned into where yes, we had
some equity in them, and that it's positive, and that
equity was going to continue to grow, but it wasn't
cash flowing hardly at all, and that is not something
where we.
Speaker 1 (09:12):
Wanted to be.
Speaker 3 (09:14):
We want to have properties that have equity and cash
flow together. And it ran out really fast on the
more expensive properties.
Speaker 2 (09:20):
Yeah, that's a good point. So it's almost like your
cash flow evaporated like it was there at first, but
then as the taxes and insurance went up, you didn't
have cash flow at some point exactly.
Speaker 3 (09:32):
And with the less expensive properties, you know, some of
those were okay, man, this is a very cheap property
we get in the rents are less, no problem, right,
But what you'd see was when we had some repairs
or turnover it with the lower rents, it took a
(09:52):
lot longer for us to make up that money, make
that money back that were in there, and so again
your overall like annual AH really got cut into and
there we weren't seeing as much appreciation in those properties,
and so you know, what we found was the balance
of what fit for us and where we would grow
(10:14):
the portfolio was right in between those two kind of
the best place we could be to find that stright spot.
Speaker 2 (10:20):
So with those lower end properties that you were buying, like,
did you have more turnover? What were they more challenging
to manage that? Then some of the other properties that
that's kind of your your sweet spot properties.
Speaker 3 (10:35):
You know, the turnover was mixed. It wasn't that there
was so much more turnover across the board in those
in those less expensive properties, they tend to be older properties,
and older properties typically have more things that break than
a newer property. And when you know, some of the
(10:56):
costs were almost the same as a little bit more
expensive property, but we had rents that were hundreds of
dollars less, so it just would take longer to kind
of make back when you had expenses, and we didn't
have as as as many quality applicants in those areas
(11:18):
that we liked to choose from. When we'd have something
put out, you know, for lease.
Speaker 2 (11:24):
So when it was all said and done, when you
bought cheaper properties, did they end up making money? Like what,
were they still profitable at the end of the day or.
Speaker 3 (11:34):
They were they were because we and a lot of
that was because we do buy it a discount. So
for us in our business we are marketing, we buy
houses cash for houses, so we're looking to be direct
to seller most of the time.
Speaker 1 (11:47):
But we've bought them at a discount.
Speaker 3 (11:48):
And then we've rehabed the properties to become rentals and
so we were always able to force some appreciation in there,
and so they were still profitable, but not where we
want to specialize and grow it. And we didn't have
as as a true rental property, we didn't have the
(12:08):
same profits that we did and something that was a
little bit more expensive.
Speaker 2 (12:11):
Right, Yeah, I think the key there is that you
bought the property right like, you got a good deal
on it. If you had paid market price for the
property or not gotten a great deal, that maybe wouldn't
have ended well.
Speaker 1 (12:24):
I would completely agree with Yeah.
Speaker 2 (12:26):
Now with the higher end property, the higher end properties
kind of have a wrap that the tenants are maybe better,
tenants are easier to deal with. You have less payment problems.
Did you find that to be true?
Speaker 1 (12:42):
Nope.
Speaker 3 (12:43):
I think there's there's payment problems across the board. You know,
we didn't find that that we necessarily have less payment
problems or less tenant issues. There's people that make a
lot of money and you know, they manage it maybe
not the best way, and they still struggle with that
payment even though they have a higher income and you know,
(13:06):
a live in a more expensive rental property. We did
not see that. What we've seen is in our in
our neighborhood that we focus on the most. They you know,
they may not be really wealthy people. They need a
good quality home and if you give them that, you know,
they may not have a ton of money, but they
work really hard and they're happy to pay their bills
(13:28):
and we don't see any more issues than we did
in a more expensive house.
Speaker 2 (13:33):
Now, was it hard for you to wrap your head
around selling a property? You know, because it's like when
you're growing a rental portfolio, you want to add properties
and grow a bigger portfolio, but when a property isn't
working out and you need to sell it, was that what.
Speaker 3 (13:52):
Was that hard to do? Yes, you know, it's a
short answer. It's easier now that I've been doing it
longer and to have more experience, But especially starting out,
you know, I mean a lot of us working really
hard to grow that portfolio, and you worked hard to
get that property, to get it ready, to get it
(14:13):
least and everything, and you're like, hey, this is one
of my properties in my portfolio. And even though when
you look at the numbers, sometimes it's not what you
want long term, it's hard to let it go after
all the effort and the time that it took to
get it. But I have found that when you feel
(14:34):
like one is not successful or it's not a property
that you want long term, you need to put those
thoughts away and commit sell it. There's always another property
you can go find something that fits better for you.
But I think it's a struggle for a lot of
folks as you're starting out and growing it. Because we
want to have those properties in our portfolio. That's why
(14:55):
we started.
Speaker 2 (14:56):
So with some of the properties that you've ended up
saying like were you looking for a certain return to
get out of the property or like did it because
I guess like one thing that I struggle with I've
had a few properties I've sold over the years, and
I always feel like, well, maybe this tenant didn't work out,
(15:18):
but if I get someone better in there, it's gonna
do better. I just need to give them more time. Well,
was that something that you've encountered or something you've struggled with?
Speaker 3 (15:31):
Definitely, I mean I definitely have had the very similar
thoughts like, well, maybe it wasn't this, it was that
or this or that. If the property is not producing
and you can't really really pinpoint what it is, you
have to look at what your goals are and what
your needs are. And when I say that, I mean, Okay,
(15:51):
if your goal is cash flow or your goal is equity,
what's the best way to get there today? Not necessarily
the choices you made three or four years ago when
you got it. What's the best choice to do with
this property today? And sometimes it is selling that you
can reinvest that in another place or in another property,
or something that you know is going to be better
(16:13):
for you moving forward, and right or wrong. I also
just believe certain properties are just not right and they
tend to have all the headaches over and over and
over again. And I don't care who you put in
there what you do and there's some reason that I
may not know. And if you run into one of those,
please sell it and just move on.
Speaker 2 (16:31):
Yeah, yeah, because there is a on the flip side
of that, there's a lot of properties that are just great.
I mean, you're going to get great tenants. Nothing's going
to come up, you know, it's just about finding that
that good property. Well, I want to talk to you
about how you're managing your properties because I think this
is something you've done a really good job at. So
how do you have things set up? Like when a
(16:53):
tenant has a problem, do they contact you or do
you have someone that helps you out with that?
Speaker 3 (17:00):
They don't, They don't contact me. Unfortunate. You know, we
have a we have a team here and so they
do contact somebody on our team.
Speaker 1 (17:10):
Hey, here's the issue, here's what we're facing.
Speaker 3 (17:14):
We and then that personal contact whatever contractor that we
need to get out there, because that's typically going to
be the issue for for us.
Speaker 1 (17:27):
That works really well.
Speaker 3 (17:28):
We have contractors that we are that we go to
and we've set up relationships with them where hey, they
know if we sent you a tenant and an issue,
we have an agreement that they're going to contact them
within twenty four hours at least reach out to them
to schedule. They can't always get over there that soon,
but they'll at least contact the tenant, so the tenant knows, hey,
we've been heard and somebody's on it, and then they
(17:52):
will go out and kind of assess what we're looking at.
Speaker 2 (17:54):
So break it down, like who do you have like
contractor wise as far as like what the trades are
that you kind of have on speed dial.
Speaker 3 (18:04):
Absolutely so, and for anybody, uh, starting out, I would
encourage you to get these folks right here. So you
need a good plumber because you were going to get
plumbing issues. You need a good handyman. Give me a
general contractor where really a handyman can fix most of
the things. You just need somebody good and somebody responsive,
a good HVACT. You know, somebody that can go fix
(18:26):
those acs, especially like here we're in San Antonio during
the summer, it's hot, we're gonna have AC problems. Those
ones you want on speed dial. And then an electrician
because things are going to come up. You don't want
somebody who maybe doesn't have that much knowledge but electrical
going into it. If you have those four people that
you can contact and they can jump on it and
(18:47):
go handle it. That is going to handle ninety something
percent of the issues that come up. And we have
found it's better just to build a relationship with those contractors.
Then understand, you know what your expectations are, and they
will go out, they will handle the work, pay the bill,
and then everybody's taking care of you and the tenant.
Speaker 2 (19:10):
So you give them a dollar amount, like so when
they get out to the property and they see what
the problem is, is there a certain dollar amount that
you tell them to just fix it, and then a
certain dollar amount where they need to call you.
Speaker 3 (19:23):
Right what we do two hundred fifty dollars. If it's
going to be less than two hundred fifty bucks, please
fix it while you're there and lets me move forward.
If it's more than that, we usually get a phone call.
There are a couple of guys that we've worked with
for I mean probably ten years now, so they get
a little bit of leeway, but they already know what
our answer is going to be. But I think if
(19:45):
if you find somebody that you can work with and
set expectations, it's It's never been an issue contractors like, hey,
here's what we got. They'll step outside, they'll call you,
they give you their opinion, Hey, this is what we're
looking at. And most of the time we're say, hey,
let's go ahead and take it and fix it. But
you don't want them to just fix everything, and then
all of a sudden you get a bill for four
(20:05):
thousand dollars and you're like, whoa, what happened here?
Speaker 1 (20:08):
You know.
Speaker 2 (20:08):
I've found that when people are maybe just getting started
with real estate, they feel like they want to do everything.
They want to wholesale, they want to flip houses, they
want to do rentals. Like do you think that that's
a big mistake to try to do everything at once?
Speaker 3 (20:26):
It's a huge mistake. And I say it from experience,
and so I think people see that, oh I could
do this and that, and somebody's always going to come
to you. Even to this day, you know they're going
to come to you with a Nusani object, Hey well
why don't you do this? I really really encourage everybody,
(20:47):
especially when you're you're starting out. Hyper focus, right, you
don't even have to be one hundred percent correct, just
know what you think you want to do now, and
fully commit to it. Because the person that I talked
to that says, well, I'm gonna I'm gonna flip a house,
I'm gonna wholesale some rent a couple, do some owner finance,
(21:08):
and then maybe on an Airbnb and part of a commerce.
You end up doing five or six things really bad.
You're not good at anything, and you're pulled in too
many different directions. If you can be super focused on
one thing that you're going to do really well and grow,
then when you have your business set up, you can
either adjust or you can add something else then. But
(21:32):
I would definitely encourage people to commit and focus, especially
when they're starting out.
Speaker 2 (21:37):
You know, it's interesting you say that because you know
when you specialize in something, you're going to be good
at it. And like with you saying specialize in one thing,
like you're also saying specialize in one type of rental.
So to go back to what we were talking about
before that, like when you veered off and did things
(21:59):
you weren't and one hundred percent of an expert in
that's where you ended up getting into trouble.
Speaker 3 (22:06):
Almost every time I was like, man, it's a good deal,
we'll go do it. It's not really what we do.
It ends up costing us more than we think, taking
longer than we think, and we make less money than
we think we're going to make. And every time I'm like,
why don't I just stay in my lane and do
what I'm good at?
Speaker 1 (22:21):
And it's true to this day.
Speaker 3 (22:23):
So I really really encourage people to commit, focus, grow something,
and then you can always adjust. You're not committed for
the rest of your life. You can always adjust if
it doesn't work for you or if you want to
go in another direction.
Speaker 2 (22:38):
If you want to hear more from Nick and how
we used a helock to build his rental portfolio, you
can check out my last interview with him. It was
episode number four ninety two, And if anyone wants to
reach out to Nick, I've got his contact information on
the website. You can find it at Rental Income podcast
dot com, slash EPISODISO five thirty three. I'd like to
(23:02):
thank Chailey Ridge for sponsoring today's episode. If you're looking
to buy a rental property, whether you're just getting started
or you want to add to your portfolio, definitely reach
out to Chailey. She has a ton of loan programs
and she can find something that works for you in
your situation. You can track her down at ridgelendinggroup dot
(23:24):
com NMLS four two zero five six. Thank you so
much for checking out the podcast today. Make sure you
hit that follow button and that way you'll get notified
when the next episode comes out. My name is Dan
Lane and this has been the Rental Income Podcast
Popular Podcasts
On Purpose with Jay Shetty
I’m Jay Shetty host of On Purpose the worlds #1 Mental Health podcast and I’m so grateful you found us. I started this podcast 5 years ago to invite you into conversations and workshops that are designed to help make you happier, healthier and more healed. I believe that when you (yes you) feel seen, heard and understood you’re able to deal with relationship struggles, work challenges and life’s ups and downs with more ease and grace. I interview experts, celebrities, thought leaders and athletes so that we can grow our mindset, build better habits and uncover a side of them we’ve never seen before. New episodes every Monday and Friday. Your support means the world to me and I don’t take it for granted — click the follow button and leave a review to help us spread the love with On Purpose. I can’t wait for you to listen to your first or 500th episode!
Stuff You Should Know
If you've ever wanted to know about champagne, satanism, the Stonewall Uprising, chaos theory, LSD, El Nino, true crime and Rosa Parks, then look no further. Josh and Chuck have you covered.
The Joe Rogan Experience
The official podcast of comedian Joe Rogan.