November 11, 2025 • 22 mins
Joe Hammel was tired of clocking in at the factory every day, so he decided to bet on himself. He went all in on real estate, and today he earns $10,000 a month in profit from his rentals.
On this episode, Joe breaks down exactly how he built his portfolio. We dig into his numbers, the types of properties that are performing best (and which ones to avoid), and the price ranges and locations that are giving him the best returns. Joe also explains why he focuses on total return, not just cash flow, the systems he uses to manage everything efficiently, and how he finances his purchases. Plus, we analyze one of his recent deals.
https://rentalincomepodcast.com/episode547
Thanks To Our Sponsors:
Ridge Lending Group - Making investment Mortgage process simple and stress-free.
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, Joe breaks down exactly how he built his portfolio. We dig into his numbers, the types of properties that are performing best (and which ones to avoid), and the price ranges and locations that are giving him the best returns. Joe also explains why he focuses on total return, not just cash flow, the systems he uses to manage everything efficiently, and how he finances his purchases. Plus, we analyze one of his recent deals.
https://rentalincomepodcast.com/episode547
Thanks To Our Sponsors:
Ridge Lending Group - Making investment Mortgage process simple and stress-free.
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.
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:00):
The inspiring interviews with today is Top.
Speaker 2 (00:03):
Landlord, This is the Rental Income podcast, and no.
Speaker 3 (00:08):
Damnly, Joe, what was it about rental properties that first
got you interested?
Speaker 2 (00:13):
It probably was the five plus years working in a
factory with no windows, doing the same thing every day
that I just realized there's got to be something better
out there. And so, you know, real estate wasn't on
the radar at all at that point. But I went
down the rabbit hole, started listening to podcasts, reading the books,
(00:35):
and I realized pretty quickly it pointed towards real estate, right,
that's the that's the common man's path to building wealth.
And so I just went all in. I was like,
that's that's what I'm going to do, no matter how
long or what it takes me, you know what takes
to get there.
Speaker 3 (00:51):
On the podcast today, we're going to figure out how
Joe went from working in that factory to making over
ten thousand dollars a month in rental and we'll figure
out how he built his portfolio, how he financed everything,
and figure out the types of properties that are working
best for him. Today. Joining us on the show from
Detroit is Joe Hammill. We'll take a quick break to
(01:14):
thank our sponsors. We'll come right back and we'll talk
to Joe. Are you thinking about investing in rental properties
but maybe you don't know where to start. My friends
at mid South home Buyers make it simple. For over
twenty three years, they've been selling fully renovated, turnkey rental
properties in Memphis and Little Rock. We're talking new roofs, plumbing, electric, kitchens, bathrooms.
(01:38):
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
flow from day one. Plus Mid South continues to professionally
manage the property for you after the sale, and they
back it up with two powerful guarantees. You get a
(02:00):
one year total maintenance warranty and a lifetime occupancy guarantee. Personally,
I've bought five properties from them and I couldn't be happier.
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
(02:22):
midsouthhome Buyers dot com. It's a lot of work to
find a really good rental property, 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
(02:43):
loan programs and she can find something customized to you
for your situation. If you want 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. Joe, let's start off talking
about your portfolio. What does your portfolio look like?
Speaker 1 (03:06):
Yeah, so it's mostly single family homes.
Speaker 2 (03:09):
There's a couple multifamily in there, and there's two random
short term rentals, but it's it's twenty four properties and
thirty one doors total.
Speaker 3 (03:19):
And how long have you been investing for?
Speaker 2 (03:22):
So? I really I bought the first house, which was
a house that I lived in and then I rented it.
I bought the house in twenty nineteen and I lived
in it for a year and my first official lease
I signed in is almost exactly five years ago today,
you know, October first, twenty twenty.
Speaker 3 (03:39):
Wow. Okay, so you have you've almost been investing in
two different markets where when you got started the rates
were still really low, prices were going up, and then
in the last couple of years we've had higher rates.
So what was that a heart adjustment to make?
Speaker 2 (03:56):
Yeah, you're exactly right, it's two different markets. I look
at my portfolio and I have less than half My
interest rates are like threes and fours, just golden, you know,
and then but sixty percent of those are seven and
a half. I have a lot of eight and a
quarter interest rates because I did it so much buying
and just in twenty twenty four into twenty twenty five
and end of twenty twenty three.
Speaker 3 (04:18):
So was that hard, like to make that adjustment in
your head that the rates are higher, so your interest
cost is more, So did your cash flow go down
a little bit?
Speaker 1 (04:30):
Yeah?
Speaker 2 (04:31):
You know, I think I'm a little bit lucky in
that fact that I started out the first couple had
the lower interest rates. So I was making so much
money so quickly on those first couple properties that I
was so convinced that real estate was so good, especially
the types of properties that I was buying. That as
the interest rates went up, I looked at my equity.
(04:55):
You know, my cash flow was good, but my equity
was great, and so it it just as the cash
flow diminished a little bit, I just kept buying because
I the cash flow right now is awesome, but I'm
really buying for the future, and the cash flow is
going to be across the board.
Speaker 1 (05:11):
I can refinance those sevens and.
Speaker 2 (05:13):
Eights r I already could get the eights down into
the sevens right now.
Speaker 1 (05:16):
I'm just kind of waiting a little bit longer.
Speaker 3 (05:18):
Yeah, you know, I think a lot of people miss
that that the rates are higher today, but the rates
are going to come down at some point and you'll
be able to refi. And at the same time, the
rents are probably going to be higher in the future.
So those deals that are working today are going to
work even better in the future.
Speaker 1 (05:35):
One hundred percent.
Speaker 3 (05:36):
Yeah, awesome, I will. Let's see what you've done. So
you're profiting about ten thousand a month from your rentals,
So let's let's see how this works. So how much
total rent do you collect every month?
Speaker 2 (05:51):
About total rents? About forty two five hundred a month, okay.
Speaker 3 (05:55):
And then how much are your mortgage payments?
Speaker 2 (05:59):
Pity payment are around twenty five thousand, seven hundred a.
Speaker 3 (06:03):
Month, okay, So that's principal, interest, taxes, insurance. And then
as far as budgeting for repairs or you know, maybe
utility bills or whatever their expenses, how do you budget
for the expenses?
Speaker 2 (06:18):
Yeah, I personally use fifteen percent for a vacancy maintains
a capex, So five five five I've just found that
to be close enough, you know, because all I'm really
doing with that number is forecasting. I'm just trying to project, well,
how much am I going to make next year? You know,
actual costs are actual costs, And my actual cost is
(06:38):
I just keep you know, fifty sixty thousand reserves, and
when a furnace breaks, I replace it and then I
let my cash flow, you know, replenish that three thousand dollars.
Speaker 1 (06:49):
So that's kind of how it works out.
Speaker 3 (06:50):
Okay, So you're not actually putting in the five five
five fifteen percent every month, like, yeah, I stopped.
Speaker 2 (06:57):
I stopped doing that after my first you know, five
six ten properties, and it just kind of it you know,
it was for when it was a lot at work.
But then two it I just kind of realized, as
long as they have the reserves, this estimate is close
enough that it kind of worked out.
Speaker 3 (07:13):
Okay, So then you're so your total total rant is
forty two five. You have twenty five seven in mortgages. So, like,
on average, how much are your expenses every month?
Speaker 2 (07:30):
Roughly around six thousand, eight hundred a month, you know,
if I'm including some utilities and other okay, things like that.
Speaker 3 (07:36):
All right, so then you've got ten thousand a month
in cash flow. Yep, yep, that's awesome. That's awesome. Right,
So what are you buying? Like, what what types of
properties are? Are you finding our work in the best?
Speaker 1 (07:50):
Yeah? So why so I am. I'm a realtor.
Speaker 2 (07:52):
In my real estate team, we call these types of
properties bread and butter. It's what the majority of my
portfolio is, and it's what we've learned works the best,
you know, seeing you know, we get the data from
everyone else and it's in you know, we're in the
metro Detroit market and we're looking at eighty thousand to
(08:13):
one hundred and twenty one hundred and thirty thousand dollars
purchase price. Those are going to rent out for eleven
hundred maybe up to fifteen hundred, sometimes fifteen hundred plus.
You know, if you're familiar with the one percent rule,
they're one point two one point four percent rule deals.
And you know, some of those are six to twelve
percent year one cash on cash, and they just they're
(08:36):
they have a really good balance of price to rent
and location. You know, I don't have I have some
tenet issues, but I don't have major tenet issues. You know,
as soon as I say Detroit, you know I have
the people probably think, oh boy, but we're not buying
the ten twenty thousand dollars houses. We're buying a solid
one hundred thousand dollars house and a solid market. A
(08:57):
lot of these are in the suburbs, you know, some
of them are you know, Detroit. But and they just
they just they just work. And so what we've learned,
what I've learned has worked, and I just I honestly,
you know, I think about scaling up sometimes, Oh I
need to buy large multifamily.
Speaker 1 (09:13):
I don't want to.
Speaker 2 (09:14):
I don't want to create the wheel. This this works
really well. So I just want to keep repeating it.
Speaker 3 (09:19):
And so you're getting good, you know, good tenants with
stable employment and people that just want a nice place
to raise their family.
Speaker 1 (09:29):
Yeah. Yeah, I mean thirty one doors five years.
Speaker 2 (09:32):
I've had two evictions, and I've had a couple of tenants,
you know, stop paying a head to someone knows to quit.
I think that's a that's a respectable number. I think
it's a very good number. If you're you're kind of
familiar with this industry, I think that kind of tells
you pretty much everything you know about tenet quality.
Speaker 3 (09:47):
Yeah, you know, it's interesting what you said about Detroit
because I I don't know why this is, but I
picture Detroit with a lot of boarded up houses and yeah,
fire damage houses, But you're not buying in those areas exactly.
Speaker 2 (10:01):
And I say this and obviously not poking at you
because you just said that, but it is something I
say a lot.
Speaker 1 (10:06):
Is there's two types of people who dog on Detroit.
Speaker 2 (10:08):
You know, people who have never bought here, and then
the people who did it wrong.
Speaker 1 (10:12):
People who did it wrong about the twenty.
Speaker 2 (10:13):
Thousand dollars house, and they they're scarred for life because
they probably lost a ton of money. Right, we don't
do that, You know, we're buying you know, I don't
do that. We're buying one hundred thousand dollars solid, solid house.
Speaker 3 (10:27):
Now, are is appreciation something that you're factoring into because
you know you're making ten thousand a month. I mean
that's great cash flow. But are you also factoring in
that these properties are probably going to appreciate over time?
Is that important to you?
Speaker 1 (10:44):
Absolutely? I mean that's what's one of the things.
Speaker 2 (10:47):
You know, I started out looking so much at cash flow,
but the second half of my portfolio was much more
focused on the total return on investment. You know, total
is my cash flow, my appreciation, my debt paydown, and
my tax benefits, and my sweat equity. If I fix
it up and I made I was making really good
(11:08):
money and cash flow. But I realized I was making
great money and equity. You know what my equity was
doing just because of appreciation and debt paid on all
those other things, it far surpasses my cash flow.
Speaker 3 (11:20):
Yeah, that's really But it's like rentals are just the
greatest investment because you're making money in so many different ways. Now,
are you also self managing everything?
Speaker 1 (11:31):
Yeah, that's that's actually kind of an interesting question.
Speaker 2 (11:34):
I identify as I self manage, but the reality is I
have a part time assistant. I think I say I
self manage when people ask me, you know, just just
naturally it comes out. I think I say that because
I started out self managing and it's a personal assistant.
I'm not using a property management company. So they're they're
part time. They're using systems that I built and that
(11:55):
I used to use. And an interesting fact about that is,
you know I live in Detroit, you know, live in
metro Detroit.
Speaker 1 (12:00):
I don't. I don't live in Detroit, live in a suburbs.
Speaker 2 (12:04):
But I've only gone to most of these houses one time.
Like I literally I manage, and my assistant has never
gone to any of them. We managed like an out
of state or would you know. We're using all systems
like digital dead bolts, having handymen go out there and
do all of our walk throughs and such. So it's
a pretty pretty hands off approach.
Speaker 3 (12:25):
Yeah, how do you do showings like say, when you
have a vacancy or how do you do that?
Speaker 1 (12:32):
I we do tenant self showings. Okay, we will.
Speaker 2 (12:35):
We have digital the digital codes. I'm giving out a
tip here. We we use slage digital debolts, so you
pre program the codes. They're not actually a Wi Fi connected,
so the codes are in there. You have to go
out there and you can rechange them. We tell tenants
it's a temporary code. You have to know let us
(12:56):
know exactly when you're going so the code will work.
Speaker 1 (12:58):
So in their head they have no reason not, I
believe right right.
Speaker 3 (13:01):
What they don't know is.
Speaker 2 (13:02):
I don't get out there and change that code for
a couple of days or a couple of weeks, or
I don't send I don't actually send the handyman to
go change the code until someone actually signs the least,
but we get there, we have them, we have them
apply first, so we have all their information we have.
We make sure we get their driver's license and their applications,
so you know, at least we have we're protected a
little bit that way. And then with the with the
(13:23):
bluff on it's a temporary code. I've knocked on wood.
I hope this doesn't mess me up. I've never had
an issue with self showings in you know, five years.
Speaker 3 (13:34):
That's great, okay, so the tenant's going there that they
see it, and then do you get any pushback with
people not wanting to apply before they've seen the property.
Speaker 2 (13:44):
Yeah, we do a lot of brainstorming on that, and
it's kind of something that you kind of got to
shift with the supply and demand. You know, when during
COVID that was easy, right, you had so many applications
and you could get kind of get away with that.
Speaker 1 (13:57):
When the market, if you're in the middle of December
and Anuary, it gets tougher.
Speaker 2 (14:03):
And really recently we started talking about all right, that's
kinda let's get the driver's license, let's get some sort
of insight as to where they're apt. But then we're
just gonna do like a some sort of pre quall
either a sheet or questions, just to kind of make
sure that we're not completely wasting our time. Yeah, but yeah,
we do get pushed back depending on the market, and
it's something you kind of got to adjust.
Speaker 3 (14:24):
Sure. So let's talk about financing. So you've bought a
lot of properties here in five years. How did you
finance everything?
Speaker 2 (14:34):
So I should probably go back to the beginning. I'll
make this kind of as efficient as possible. Out of
high school, I went to college full time and I
started working full time at the same time, so full credit,
full full college, and full time marketing.
Speaker 1 (14:48):
My work was most of the time.
Speaker 2 (14:49):
Over time, I was doing a lot of fifty sixty
hour weeks in the factory, right so I was I
was going to a commuter college and I was living
at home, so I was doing you know, school wasn't
that expensive. I was positive, So I was saving them
all through college.
Speaker 1 (15:05):
And this was in Ohio. I live in Michigan right now.
This was in Ohio.
Speaker 2 (15:10):
When I graduated college, I bought land for like ninety
six thousand, and then I bought a house. I used
FAHA and bought a house for one hundred and twelve thousand.
With that money that i'd saved up working through college,
I fixed them both up and then I followed my
girlfriend at the time now wife to Michigan.
Speaker 1 (15:30):
And I sold both of those.
Speaker 2 (15:32):
I profited like twenty twenty five K when I sold those,
and so that combined with working, I came to Michigan
with about sixty thousand dollars, which is you know, when
you're buying at that time, you know, I started out
with seventy thousand dollars.
Speaker 1 (15:45):
Houses. You can buy a couple of houses with just.
Speaker 2 (15:47):
That amount of money sure, And then there's two other pieces.
Speaker 1 (15:50):
The one was twenty twenty one.
Speaker 2 (15:53):
I used the COVID pull out your three zero one
K penalty free, and I pulled out a chunk o
that because I'd been working for years, so I had
chunk there. And then yeah, my wife was a financial advisor,
so she makes she's a partner at a firm.
Speaker 1 (16:11):
She makes pretty good money. And then I make pretty
good money as a realtor.
Speaker 2 (16:16):
So we live one hundred percent off of her income,
and I invest now everything I make, and we've pretty
much done that since we got married. So between the
sixty K I came to Michigan with and the three uh,
the four one k, sorry that this a three one
K earlier, the four one K that I cashed out.
Speaker 1 (16:36):
That's that's the funny. That's where all the money came from.
Speaker 3 (16:39):
Now, was that a hard sale for your wife? Because
you know, to to live on one salary no matter
how much money you're making, it is a sacrifice. I
mean you could always have a nicer car or go
on nicer vacations. I mean, there's always something you can buy.
So was that a hard sell to your wife that
(17:00):
we're making all this money, but we're only going to
spend your salary.
Speaker 1 (17:07):
Not I would say not really for two reasons.
Speaker 2 (17:11):
One, she's like minded, right, we're both very long term motivated,
you know, sacrifice in the short term for the long
term gain. And you know we both have you know,
neither of our families came from much money. So I
think that in a way that helped, right, because you're
so extremely motivated to to to kind of flip that script.
(17:34):
So I think we both had the same vision. She's
seen the first couple real estate deals. I showed her
the numbers and how they're working, and she's like, hey,
let's let's do it.
Speaker 3 (17:44):
Awesome, that's awesome. Okay. So then so then all of
your so I guess, like you, so your real estate money,
you're getting commissions when you sell a house, and that's
probably not as consistent as your wife's job, where she's
getting a paycheck every two weeks.
Speaker 2 (18:01):
Well, yeah, my wife, she she's actually ten ninety two
as a financial advisor. She makes the majority of her
money based off of what products and funds are into,
but she was much more established. Hence the reason I
decided to move from Ohio to Michigan, right, because that
was a decision.
Speaker 1 (18:22):
I am I following you up there, you come down here.
Speaker 2 (18:24):
She was way ahead of me, so it was pretty
obvious to go up there and follow her.
Speaker 3 (18:30):
Awesome, Well, let's take a look at one of your deals.
So tell me about this property.
Speaker 2 (18:37):
Yeah, I think a good property to look at would
be one that I recently bought, right, because the older
properties are a little bit not as relevant, whereas one
I bought in twenty twenty four is going to be
much more. Twenty twenty four is arguably more difficult than
twenty twenty five because interest rates were higher. They're lower
now as an extreme seller's market still for us in
(18:59):
twenty twenty four, whereas now it is it's cool to touch.
So this is just a three bedroom, one math in
one of those markets set. You know that I was
referencing purchase price of one hundred and twenty five, which
is kind of at the top of that bread and
butter range, obviously, because you know, the market kind of
pushed me up there to get some same type of
(19:19):
house I still did, like a medium fifteen thousand dollars
rehab I'm getting at thirteen so market rent for that
one is fourteen fifty on some of these later houses, because,
like I was saying earlier, how I focused so much
more on total ROI. I've gotten a lot looser with
(19:41):
my rents. I've done a little bit slower rent increases
with tenants just to kind of keep them here, keep
them happy. And so this one's under market pretty significantly.
It's actually, out of all my twenty twenty four, that's
my lowest one.
Speaker 1 (19:53):
It's at thirteen thirteen.
Speaker 2 (19:56):
It's still cash flows about two hundred and forty hours
a month. It's like a seven percent cash on cash ROI,
even with that low rent.
Speaker 3 (20:05):
Okay, so you're all in with the purchase price and
the rehab at one forty and then it's rented for
a thirteen thirteen and how much is your mortgage payment
on that?
Speaker 2 (20:16):
Yeah, So that's one of the ones that I haven't
eate in a eight point one twenty five interest rate.
Speaker 1 (20:21):
So my mortgage is eight seventy five.
Speaker 2 (20:23):
Luckily it's in a market with uh, pretty low taxes
and insurance awesome.
Speaker 3 (20:29):
Okay, so after you put some money aside for expenses,
that's how you're getting to the two fifty cash flow.
Speaker 2 (20:36):
Yep. Yeah, I'm putting away my fifteen percent for my
vacancy maintenance capex.
Speaker 3 (20:40):
I don't count awesome, And that's pretty typical like that.
That's that's the kind of deals that you're buying today.
Speaker 2 (20:49):
Yeah, exactly, awes And my idea with the eight percent
interest rate is that I don't care. You know, at
some points these interest rates should continue to slowly trend hopefully,
and they're already lower than that, so at some point
we'll just refince and change that right, and then that
cash flow number will blow up even more.
Speaker 3 (21:07):
If anybody wants to connect with Joe, I've got his
contact info on the website. You can find it at
Rental incomepodcast dot com slash episode five forty seven. I'd
like to thank Chayley Ridge from Ridgelinda Group for sponsoring
today's episode. If you're looking to buy a rental property,
(21:28):
reach out to Chailey. She's got a ton of different
loan programs and she can find something that works for you.
If you want to track her down, just go to
Ridge Lendinggroup dot com NMLS four to zero five six.
Thank you so much for checking out the podcast today.
Make sure you hit that follow button. I put out
(21:49):
a new episode every single Tuesday, and if you're following
the show, you'll get notified when the next episode comes out.
My name is Dan Lane and this has been a
rental income podcast
The inspiring interviews with today is Top.
Speaker 2 (00:03):
Landlord, This is the Rental Income podcast, and no.
Speaker 3 (00:08):
Damnly, Joe, what was it about rental properties that first
got you interested?
Speaker 2 (00:13):
It probably was the five plus years working in a
factory with no windows, doing the same thing every day
that I just realized there's got to be something better
out there. And so, you know, real estate wasn't on
the radar at all at that point. But I went
down the rabbit hole, started listening to podcasts, reading the books,
(00:35):
and I realized pretty quickly it pointed towards real estate, right,
that's the that's the common man's path to building wealth.
And so I just went all in. I was like,
that's that's what I'm going to do, no matter how
long or what it takes me, you know what takes
to get there.
Speaker 3 (00:51):
On the podcast today, we're going to figure out how
Joe went from working in that factory to making over
ten thousand dollars a month in rental and we'll figure
out how he built his portfolio, how he financed everything,
and figure out the types of properties that are working
best for him. Today. Joining us on the show from
Detroit is Joe Hammill. We'll take a quick break to
(01:14):
thank our sponsors. We'll come right back and we'll talk
to Joe. Are you thinking about investing in rental properties
but maybe you don't know where to start. My friends
at mid South home Buyers make it simple. For over
twenty three years, they've been selling fully renovated, turnkey rental
properties in Memphis and Little Rock. We're talking new roofs, plumbing, electric, kitchens, bathrooms.
(01:38):
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
flow from day one. Plus Mid South continues to professionally
manage the property for you after the sale, and they
back it up with two powerful guarantees. You get a
(02:00):
one year total maintenance warranty and a lifetime occupancy guarantee. Personally,
I've bought five properties from them and I couldn't be happier.
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
(02:22):
midsouthhome Buyers dot com. It's a lot of work to
find a really good rental property, 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
(02:43):
loan programs and she can find something customized to you
for your situation. If you want 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. Joe, let's start off talking
about your portfolio. What does your portfolio look like?
Speaker 1 (03:06):
Yeah, so it's mostly single family homes.
Speaker 2 (03:09):
There's a couple multifamily in there, and there's two random
short term rentals, but it's it's twenty four properties and
thirty one doors total.
Speaker 3 (03:19):
And how long have you been investing for?
Speaker 2 (03:22):
So? I really I bought the first house, which was
a house that I lived in and then I rented it.
I bought the house in twenty nineteen and I lived
in it for a year and my first official lease
I signed in is almost exactly five years ago today,
you know, October first, twenty twenty.
Speaker 3 (03:39):
Wow. Okay, so you have you've almost been investing in
two different markets where when you got started the rates
were still really low, prices were going up, and then
in the last couple of years we've had higher rates.
So what was that a heart adjustment to make?
Speaker 2 (03:56):
Yeah, you're exactly right, it's two different markets. I look
at my portfolio and I have less than half My
interest rates are like threes and fours, just golden, you know,
and then but sixty percent of those are seven and
a half. I have a lot of eight and a
quarter interest rates because I did it so much buying
and just in twenty twenty four into twenty twenty five
and end of twenty twenty three.
Speaker 3 (04:18):
So was that hard, like to make that adjustment in
your head that the rates are higher, so your interest
cost is more, So did your cash flow go down
a little bit?
Speaker 1 (04:30):
Yeah?
Speaker 2 (04:31):
You know, I think I'm a little bit lucky in
that fact that I started out the first couple had
the lower interest rates. So I was making so much
money so quickly on those first couple properties that I
was so convinced that real estate was so good, especially
the types of properties that I was buying. That as
the interest rates went up, I looked at my equity.
(04:55):
You know, my cash flow was good, but my equity
was great, and so it it just as the cash
flow diminished a little bit, I just kept buying because
I the cash flow right now is awesome, but I'm
really buying for the future, and the cash flow is
going to be across the board.
Speaker 1 (05:11):
I can refinance those sevens and.
Speaker 2 (05:13):
Eights r I already could get the eights down into
the sevens right now.
Speaker 1 (05:16):
I'm just kind of waiting a little bit longer.
Speaker 3 (05:18):
Yeah, you know, I think a lot of people miss
that that the rates are higher today, but the rates
are going to come down at some point and you'll
be able to refi. And at the same time, the
rents are probably going to be higher in the future.
So those deals that are working today are going to
work even better in the future.
Speaker 1 (05:35):
One hundred percent.
Speaker 3 (05:36):
Yeah, awesome, I will. Let's see what you've done. So
you're profiting about ten thousand a month from your rentals,
So let's let's see how this works. So how much
total rent do you collect every month?
Speaker 2 (05:51):
About total rents? About forty two five hundred a month, okay.
Speaker 3 (05:55):
And then how much are your mortgage payments?
Speaker 2 (05:59):
Pity payment are around twenty five thousand, seven hundred a.
Speaker 3 (06:03):
Month, okay, So that's principal, interest, taxes, insurance. And then
as far as budgeting for repairs or you know, maybe
utility bills or whatever their expenses, how do you budget
for the expenses?
Speaker 2 (06:18):
Yeah, I personally use fifteen percent for a vacancy maintains
a capex, So five five five I've just found that
to be close enough, you know, because all I'm really
doing with that number is forecasting. I'm just trying to project, well,
how much am I going to make next year? You know,
actual costs are actual costs, And my actual cost is
(06:38):
I just keep you know, fifty sixty thousand reserves, and
when a furnace breaks, I replace it and then I
let my cash flow, you know, replenish that three thousand dollars.
Speaker 1 (06:49):
So that's kind of how it works out.
Speaker 3 (06:50):
Okay, So you're not actually putting in the five five
five fifteen percent every month, like, yeah, I stopped.
Speaker 2 (06:57):
I stopped doing that after my first you know, five
six ten properties, and it just kind of it you know,
it was for when it was a lot at work.
But then two it I just kind of realized, as
long as they have the reserves, this estimate is close
enough that it kind of worked out.
Speaker 3 (07:13):
Okay, So then you're so your total total rant is
forty two five. You have twenty five seven in mortgages. So, like,
on average, how much are your expenses every month?
Speaker 2 (07:30):
Roughly around six thousand, eight hundred a month, you know,
if I'm including some utilities and other okay, things like that.
Speaker 3 (07:36):
All right, so then you've got ten thousand a month
in cash flow. Yep, yep, that's awesome. That's awesome. Right,
So what are you buying? Like, what what types of
properties are? Are you finding our work in the best?
Speaker 1 (07:50):
Yeah? So why so I am. I'm a realtor.
Speaker 2 (07:52):
In my real estate team, we call these types of
properties bread and butter. It's what the majority of my
portfolio is, and it's what we've learned works the best,
you know, seeing you know, we get the data from
everyone else and it's in you know, we're in the
metro Detroit market and we're looking at eighty thousand to
(08:13):
one hundred and twenty one hundred and thirty thousand dollars
purchase price. Those are going to rent out for eleven
hundred maybe up to fifteen hundred, sometimes fifteen hundred plus.
You know, if you're familiar with the one percent rule,
they're one point two one point four percent rule deals.
And you know, some of those are six to twelve
percent year one cash on cash, and they just they're
(08:36):
they have a really good balance of price to rent
and location. You know, I don't have I have some
tenet issues, but I don't have major tenet issues. You know,
as soon as I say Detroit, you know I have
the people probably think, oh boy, but we're not buying
the ten twenty thousand dollars houses. We're buying a solid
one hundred thousand dollars house and a solid market. A
(08:57):
lot of these are in the suburbs, you know, some
of them are you know, Detroit. But and they just
they just they just work. And so what we've learned,
what I've learned has worked, and I just I honestly,
you know, I think about scaling up sometimes, Oh I
need to buy large multifamily.
Speaker 1 (09:13):
I don't want to.
Speaker 2 (09:14):
I don't want to create the wheel. This this works
really well. So I just want to keep repeating it.
Speaker 3 (09:19):
And so you're getting good, you know, good tenants with
stable employment and people that just want a nice place
to raise their family.
Speaker 1 (09:29):
Yeah. Yeah, I mean thirty one doors five years.
Speaker 2 (09:32):
I've had two evictions, and I've had a couple of tenants,
you know, stop paying a head to someone knows to quit.
I think that's a that's a respectable number. I think
it's a very good number. If you're you're kind of
familiar with this industry, I think that kind of tells
you pretty much everything you know about tenet quality.
Speaker 3 (09:47):
Yeah, you know, it's interesting what you said about Detroit
because I I don't know why this is, but I
picture Detroit with a lot of boarded up houses and yeah,
fire damage houses, But you're not buying in those areas exactly.
Speaker 2 (10:01):
And I say this and obviously not poking at you
because you just said that, but it is something I
say a lot.
Speaker 1 (10:06):
Is there's two types of people who dog on Detroit.
Speaker 2 (10:08):
You know, people who have never bought here, and then
the people who did it wrong.
Speaker 1 (10:12):
People who did it wrong about the twenty.
Speaker 2 (10:13):
Thousand dollars house, and they they're scarred for life because
they probably lost a ton of money. Right, we don't
do that, You know, we're buying you know, I don't
do that. We're buying one hundred thousand dollars solid, solid house.
Speaker 3 (10:27):
Now, are is appreciation something that you're factoring into because
you know you're making ten thousand a month. I mean
that's great cash flow. But are you also factoring in
that these properties are probably going to appreciate over time?
Is that important to you?
Speaker 1 (10:44):
Absolutely? I mean that's what's one of the things.
Speaker 2 (10:47):
You know, I started out looking so much at cash flow,
but the second half of my portfolio was much more
focused on the total return on investment. You know, total
is my cash flow, my appreciation, my debt paydown, and
my tax benefits, and my sweat equity. If I fix
it up and I made I was making really good
(11:08):
money and cash flow. But I realized I was making
great money and equity. You know what my equity was
doing just because of appreciation and debt paid on all
those other things, it far surpasses my cash flow.
Speaker 3 (11:20):
Yeah, that's really But it's like rentals are just the
greatest investment because you're making money in so many different ways. Now,
are you also self managing everything?
Speaker 1 (11:31):
Yeah, that's that's actually kind of an interesting question.
Speaker 2 (11:34):
I identify as I self manage, but the reality is I
have a part time assistant. I think I say I
self manage when people ask me, you know, just just
naturally it comes out. I think I say that because
I started out self managing and it's a personal assistant.
I'm not using a property management company. So they're they're
part time. They're using systems that I built and that
(11:55):
I used to use. And an interesting fact about that is,
you know I live in Detroit, you know, live in
metro Detroit.
Speaker 1 (12:00):
I don't. I don't live in Detroit, live in a suburbs.
Speaker 2 (12:04):
But I've only gone to most of these houses one time.
Like I literally I manage, and my assistant has never
gone to any of them. We managed like an out
of state or would you know. We're using all systems
like digital dead bolts, having handymen go out there and
do all of our walk throughs and such. So it's
a pretty pretty hands off approach.
Speaker 3 (12:25):
Yeah, how do you do showings like say, when you
have a vacancy or how do you do that?
Speaker 1 (12:32):
I we do tenant self showings. Okay, we will.
Speaker 2 (12:35):
We have digital the digital codes. I'm giving out a
tip here. We we use slage digital debolts, so you
pre program the codes. They're not actually a Wi Fi connected,
so the codes are in there. You have to go
out there and you can rechange them. We tell tenants
it's a temporary code. You have to know let us
(12:56):
know exactly when you're going so the code will work.
Speaker 1 (12:58):
So in their head they have no reason not, I
believe right right.
Speaker 3 (13:01):
What they don't know is.
Speaker 2 (13:02):
I don't get out there and change that code for
a couple of days or a couple of weeks, or
I don't send I don't actually send the handyman to
go change the code until someone actually signs the least,
but we get there, we have them, we have them
apply first, so we have all their information we have.
We make sure we get their driver's license and their applications,
so you know, at least we have we're protected a
little bit that way. And then with the with the
(13:23):
bluff on it's a temporary code. I've knocked on wood.
I hope this doesn't mess me up. I've never had
an issue with self showings in you know, five years.
Speaker 3 (13:34):
That's great, okay, so the tenant's going there that they
see it, and then do you get any pushback with
people not wanting to apply before they've seen the property.
Speaker 2 (13:44):
Yeah, we do a lot of brainstorming on that, and
it's kind of something that you kind of got to
shift with the supply and demand. You know, when during
COVID that was easy, right, you had so many applications
and you could get kind of get away with that.
Speaker 1 (13:57):
When the market, if you're in the middle of December
and Anuary, it gets tougher.
Speaker 2 (14:03):
And really recently we started talking about all right, that's
kinda let's get the driver's license, let's get some sort
of insight as to where they're apt. But then we're
just gonna do like a some sort of pre quall
either a sheet or questions, just to kind of make
sure that we're not completely wasting our time. Yeah, but yeah,
we do get pushed back depending on the market, and
it's something you kind of got to adjust.
Speaker 3 (14:24):
Sure. So let's talk about financing. So you've bought a
lot of properties here in five years. How did you
finance everything?
Speaker 2 (14:34):
So I should probably go back to the beginning. I'll
make this kind of as efficient as possible. Out of
high school, I went to college full time and I
started working full time at the same time, so full credit,
full full college, and full time marketing.
Speaker 1 (14:48):
My work was most of the time.
Speaker 2 (14:49):
Over time, I was doing a lot of fifty sixty
hour weeks in the factory, right so I was I
was going to a commuter college and I was living
at home, so I was doing you know, school wasn't
that expensive. I was positive, So I was saving them
all through college.
Speaker 1 (15:05):
And this was in Ohio. I live in Michigan right now.
This was in Ohio.
Speaker 2 (15:10):
When I graduated college, I bought land for like ninety
six thousand, and then I bought a house. I used
FAHA and bought a house for one hundred and twelve thousand.
With that money that i'd saved up working through college,
I fixed them both up and then I followed my
girlfriend at the time now wife to Michigan.
Speaker 1 (15:30):
And I sold both of those.
Speaker 2 (15:32):
I profited like twenty twenty five K when I sold those,
and so that combined with working, I came to Michigan
with about sixty thousand dollars, which is you know, when
you're buying at that time, you know, I started out
with seventy thousand dollars.
Speaker 1 (15:45):
Houses. You can buy a couple of houses with just.
Speaker 2 (15:47):
That amount of money sure, And then there's two other pieces.
Speaker 1 (15:50):
The one was twenty twenty one.
Speaker 2 (15:53):
I used the COVID pull out your three zero one
K penalty free, and I pulled out a chunk o
that because I'd been working for years, so I had
chunk there. And then yeah, my wife was a financial advisor,
so she makes she's a partner at a firm.
Speaker 1 (16:11):
She makes pretty good money. And then I make pretty
good money as a realtor.
Speaker 2 (16:16):
So we live one hundred percent off of her income,
and I invest now everything I make, and we've pretty
much done that since we got married. So between the
sixty K I came to Michigan with and the three uh,
the four one k, sorry that this a three one
K earlier, the four one K that I cashed out.
Speaker 1 (16:36):
That's that's the funny. That's where all the money came from.
Speaker 3 (16:39):
Now, was that a hard sale for your wife? Because
you know, to to live on one salary no matter
how much money you're making, it is a sacrifice. I
mean you could always have a nicer car or go
on nicer vacations. I mean, there's always something you can buy.
So was that a hard sell to your wife that
(17:00):
we're making all this money, but we're only going to
spend your salary.
Speaker 1 (17:07):
Not I would say not really for two reasons.
Speaker 2 (17:11):
One, she's like minded, right, we're both very long term motivated,
you know, sacrifice in the short term for the long
term gain. And you know we both have you know,
neither of our families came from much money. So I
think that in a way that helped, right, because you're
so extremely motivated to to to kind of flip that script.
(17:34):
So I think we both had the same vision. She's
seen the first couple real estate deals. I showed her
the numbers and how they're working, and she's like, hey,
let's let's do it.
Speaker 3 (17:44):
Awesome, that's awesome. Okay. So then so then all of
your so I guess, like you, so your real estate money,
you're getting commissions when you sell a house, and that's
probably not as consistent as your wife's job, where she's
getting a paycheck every two weeks.
Speaker 2 (18:01):
Well, yeah, my wife, she she's actually ten ninety two
as a financial advisor. She makes the majority of her
money based off of what products and funds are into,
but she was much more established. Hence the reason I
decided to move from Ohio to Michigan, right, because that
was a decision.
Speaker 1 (18:22):
I am I following you up there, you come down here.
Speaker 2 (18:24):
She was way ahead of me, so it was pretty
obvious to go up there and follow her.
Speaker 3 (18:30):
Awesome, Well, let's take a look at one of your deals.
So tell me about this property.
Speaker 2 (18:37):
Yeah, I think a good property to look at would
be one that I recently bought, right, because the older
properties are a little bit not as relevant, whereas one
I bought in twenty twenty four is going to be
much more. Twenty twenty four is arguably more difficult than
twenty twenty five because interest rates were higher. They're lower
now as an extreme seller's market still for us in
(18:59):
twenty twenty four, whereas now it is it's cool to touch.
So this is just a three bedroom, one math in
one of those markets set. You know that I was
referencing purchase price of one hundred and twenty five, which
is kind of at the top of that bread and
butter range, obviously, because you know, the market kind of
pushed me up there to get some same type of
(19:19):
house I still did, like a medium fifteen thousand dollars
rehab I'm getting at thirteen so market rent for that
one is fourteen fifty on some of these later houses, because,
like I was saying earlier, how I focused so much
more on total ROI. I've gotten a lot looser with
(19:41):
my rents. I've done a little bit slower rent increases
with tenants just to kind of keep them here, keep
them happy. And so this one's under market pretty significantly.
It's actually, out of all my twenty twenty four, that's
my lowest one.
Speaker 1 (19:53):
It's at thirteen thirteen.
Speaker 2 (19:56):
It's still cash flows about two hundred and forty hours
a month. It's like a seven percent cash on cash ROI,
even with that low rent.
Speaker 3 (20:05):
Okay, so you're all in with the purchase price and
the rehab at one forty and then it's rented for
a thirteen thirteen and how much is your mortgage payment
on that?
Speaker 2 (20:16):
Yeah, So that's one of the ones that I haven't
eate in a eight point one twenty five interest rate.
Speaker 1 (20:21):
So my mortgage is eight seventy five.
Speaker 2 (20:23):
Luckily it's in a market with uh, pretty low taxes
and insurance awesome.
Speaker 3 (20:29):
Okay, so after you put some money aside for expenses,
that's how you're getting to the two fifty cash flow.
Speaker 2 (20:36):
Yep. Yeah, I'm putting away my fifteen percent for my
vacancy maintenance capex.
Speaker 3 (20:40):
I don't count awesome, And that's pretty typical like that.
That's that's the kind of deals that you're buying today.
Speaker 2 (20:49):
Yeah, exactly, awes And my idea with the eight percent
interest rate is that I don't care. You know, at
some points these interest rates should continue to slowly trend hopefully,
and they're already lower than that, so at some point
we'll just refince and change that right, and then that
cash flow number will blow up even more.
Speaker 3 (21:07):
If anybody wants to connect with Joe, I've got his
contact info on the website. You can find it at
Rental incomepodcast dot com slash episode five forty seven. I'd
like to thank Chayley Ridge from Ridgelinda Group for sponsoring
today's episode. If you're looking to buy a rental property,
(21:28):
reach out to Chailey. She's got a ton of different
loan programs and she can find something that works for you.
If you want to track her down, just go to
Ridge Lendinggroup dot com NMLS four to zero five six.
Thank you so much for checking out the podcast today.
Make sure you hit that follow button. I put out
(21:49):
a new episode every single Tuesday, and if you're following
the show, you'll get notified when the next episode comes out.
My name is Dan Lane and this has been a
rental income podcast
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