Jeremy's income can vary from month to month. He never knows how much money he will earn. He occasionally has a bad month where he earns no income.
In the good months, his paycheck covers his bills, but in the bad months, his rental income is there to cover his bills.
On this episode, Jeremy shares how he generates over $7,000 monthly gross income with just a few rental properties.
We talk about how Jeremy started by house hacking while still in college, and he shares how he has financed the rest of his portfolio.
https://rentalincomepodcast.com/episode520
Thanks To Our Sponsors:
The Guarantors - Protect your property against losses rent defaults, vacancies, lease breaks, damages, and more. All without increasing your operating expenses.
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)
In the good months, his paycheck covers his bills, but in the bad months, his rental income is there to cover his bills.
On this episode, Jeremy shares how he generates over $7,000 monthly gross income with just a few rental properties.
We talk about how Jeremy started by house hacking while still in college, and he shares how he has financed the rest of his portfolio.
https://rentalincomepodcast.com/episode520
Thanks To Our Sponsors:
The Guarantors - Protect your property against losses rent defaults, vacancies, lease breaks, damages, and more. All without increasing your operating expenses.
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)
Mark as Played
Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:00):
The inspiring interviews with today is Top Landlord. This is
the Rental Income Podcast, and now.
Speaker 2 (00:08):
Damnly Jeremy tell me how your rentals have kind of
become a safety net for you.
Speaker 1 (00:15):
So I'm in an industry where my income fluctuates. I'm
commission based, so I never know, you know, if it's
a good month or if it's a bad month, what
my set income would be. And my rental properties have
I've been very fortunate that they are kind of my
safety net. They are my guarantee income to pay my bills.
(00:36):
They cover all of my monthly expenses, so I do
have that peace of mind if it's a bad month
that I at least know the mortgage is being paid.
I might be eating, you know, crackers, but my mortgage,
my bills are paid. So it does give me that
peace of mind knowing that any of my commissions are
are separate and kind of a bonus.
Speaker 2 (00:56):
Jeremy's rentals are generating about seven grand. And the great
thing is he's doing this without a large portfolio. So
on the show today, we're going to figure out how
he did it, how he got to where he is today.
Joining us on the podcast from Atlanta is Jeremy Smith
will take a quick break to thank our sponsors. We'll
come right back and we'll talk to Jeremy. I've had
(01:18):
ten instead of either broken their leases or stop paying rent.
And I'm sure you know this can be very expensive.
It's very easy for the cost to exceed the amount
of money you're holding for a security deposit. And because
of this risk, I started using the Guaranturs to guarantee
my leases. The Guaranteurs protects your rental income against rent default,
(01:40):
vacancy loss, lease breaks, holdovers, and more. And this is
all at no cost to you. Your tenants pay for
the insurance premium. If you want to learn more about
their platform, check out my bonus episode from April tenth,
twenty twenty five. It's titled how to get the rent
money even if your tenant doesn't pay. If you're ready
(02:01):
to sign up today, you can enroll within minutes by
visiting the guarantors dot Com. Again, that's the Guarantors 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
(02:22):
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 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
(02:45):
five six. Investing in rental properties can be complicated, but
it doesn't have to be. My friends at Midsouth home
Buyers sell completely rehab turnkey properties in both Memphis and
Little Rock, and they've been doing it for twenty three years.
All their properties come totally rehab They put on a
new roof, new kitchen, new bath, new plumbing, new electric,
(03:08):
Everything is brand new. They also have a tenant that's
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on day one. Mid South home Buyers also continues to
manage the property for you after closing. It couldn't be easier.
Everything is one hundred percent done for you. All their
properties also come with a couple of guarantees. They have
(03:28):
a one year total maintenance warranty and a lifetime occupancy guarantee. Personally,
I just closed on my fifth property with mid South
home Buyers and I couldn't be happier. If you want
to talk to a happy customer, reach out to me.
I'm happy to answer any questions, or you can check
them out at midsouthhome Buyers dot com. Jeremy, let's start
(03:51):
off talking about your portfolio. Can you tell me what
your portfolio looks like?
Speaker 1 (03:56):
Sure, I am. You know, I've invested in real estate,
and I wouldn't say I'm one of these huge real
estate investors with you know, some people have thirty to
fifty properties. Mine is a little bit smaller, but you know,
looking to grow it. I have a couple of rental properties.
I've got four of them. One of them is a
(04:17):
town home and an hoa. I have a low rent
home on the south side of Atlanta. I've got a farmhouse,
and I've got a commercial space, so I've kind of
got a full range of different options. The commercial space
is in a high rise building as well, so between
(04:38):
single family residents, low income commercial I definitely have all
right now covered exactly a beach house now, I guess.
Speaker 2 (04:50):
So you said that your income fluctuates. What is your
day job? What are you doing for work?
Speaker 1 (04:56):
So I am in residential real estate in Atlanta, and
you know, I've been doing this for going on fifteen years,
and my you know, we have some cycles that you know,
it's the holidays and nothing really sells, or it's a
spring market and you are, you know, closing multiple properties.
(05:17):
So I rely heavily on my rental income to pay
for my monthly expenses, and starting investing in properties has
been you know, my whole goal is to keep that
balance between what is incoming and what is outgoing monthly.
And as long as I have that around that same coverage,
(05:37):
it gives me that peace of mind too. You know,
if nothing, if nothing comes in, am I commissions?
Speaker 2 (05:44):
Yeah? All right, So you're supporting yourself off the commissions.
But when you have maybe a bad month or you know,
maybe you don't bring in much money for a month,
you've got that rental income to help you get by
right until you get your next deal. Right, that is
really good. So now when we look at your fixed expenses,
(06:09):
like how much how much are we talking like how
much money do you need every month to to go
the bills.
Speaker 1 (06:16):
Yeah, so between I'm I'm super OCD. I keep a
spreadsheet of every income or every fixed monthly expense, every
fixed outgoing expense, and that includes mortgages, hoa fees, health insurance,
cell phone, all of the any any outgoing expense. And
(06:37):
so I'm round seven thousand dollars a month. I mean,
I've got a detail down to my Netflix account on here,
so it's around seven thousand dollars a month. And my
income that I received from my rental properties is around
seventy six hundred dollars a month. So I do have
that flexibility there, you know, to add more monthly expenses
(06:58):
because I have a six hundred dollars overage or you know,
keep that out of my pocket. So knowing that I've
got kind of that that balance and it changes, you know,
as soon as my health insurance goes up, which it
seems to be going up every year, I adjust my
spreadsheet and see kind of what my what my balance
is between the fixed income and fixed expenses.
Speaker 2 (07:20):
Well, that is pretty incredible that a portfolio that isn't
really that big is able to do that for you
and generate that much income. Well, let's figure out how
you did this, So like, how did you get started?
What was your first property?
Speaker 1 (07:36):
So my very first property was a town home on
the east side of the city. And I was in
school at that time and rent here in Atlanta is
quite expensive, so I was very fortunate to be working
in real estate at that time as well as aside
while I was at Georgia State University and I was
(08:00):
seeing all of these This is kind of during the downturn,
all of these properties that were selling for rock bottom prices,
and I didn't have much money at that time, but
I did have some savings for college expenses. So my
family and I decided that we would that they would
help me purchase a town home. And this townhome was
(08:21):
a three bedroom town home where I knew I could
purchase this and with the monthly payments that were required
for the house, I could have roommates and the other
two bedrooms that would pay for these expenses, So it
made sense. We knew that the property would appreciate and value,
and we knew that it would be a wash. There
(08:42):
would be no over between the monthly expenses and the
income IVY receiving from my roommates at that time. It
just made sense to purchase. And that's kind of how
I started with my first property.
Speaker 2 (08:53):
I mean that is really smart to I mean, to
house hack when you're in college. I mean most people
at that age aren't thinking like that. Like what gave
you that idea and where did that come from?
Speaker 1 (09:06):
I have to say when I was in college, I
was taking some business courses and we had to reach
out to local businesses that we were interested in kind
of interview them. I reached out to a real estate
brokerage and ended up working with them part time, helping
them with Fanny Main and Freddie mac foreclosures. And I
learned a lot from them. And I also learned that
(09:27):
I hate school and I really like real estate. So
I you know, if I didn't have my mentors there,
they really were kind of the driving force to start
really aligned for me. And I'm very fortunate.
Speaker 2 (09:39):
Yeah, that's awesome. And how old were you at this.
Speaker 1 (09:41):
Point that point first house? I started nineteen, so I
would have been maybe going on twenty, maybe going on twenty.
Speaker 2 (09:52):
Okay, So your parents helped you with the down payment,
you bought the house, your house acking your living free.
Do you still own that property today?
Speaker 1 (10:02):
I do so One of the funny things. I've never
sold a property. Every property I have purchased, I still
have it, and it's all and they've all become rental properties.
Speaker 2 (10:11):
And so this is fifteen years ago. So, and I
think this is one of the great things with rental
properties is that rents go up over time. So you
were living free fifteen years ago today, how much money
is that property rented.
Speaker 1 (10:26):
Out for two thousand and seven to fifty a month?
Speaker 2 (10:29):
Wow? And so what were the rents at the time
when you bought it.
Speaker 1 (10:33):
The rent at the time was probably fifteen hundred.
Speaker 2 (10:37):
Okay, yeah a month. That's great. Okay, so you've your
mortgage is staying the same, but the rents are going up.
I mean, I think that's great. So then how did
you buy your next property after that?
Speaker 1 (10:50):
My next property, I had the itch and I was saying,
you know, the benefits of having you know, these roommates
and making income from there, and I pulled out, I
gained equity in the home, and I pulled out a
fifty thousand dollars home equity line from my primary residence,
the town home, their first property. And from that I
(11:12):
purchased a house in South Atlanta and I purchased it
for thirty five thousand dollars. It had a tenant in place,
already had a new roof, had new windows. It was
a brick ranch like, not really much maintenance for it,
but it had a tenant in place, and I believe
at that time they were paying six fifty or seven
(11:34):
hundred dollars a month. And so I purchased that for
thirty five thousand, and then the remainder. I did improvements
to my primary residence. I changed the flooring, I redid
some appliances, I changed the countertops, made a big island
in the kitchen instead of kind of the high bars
that were trendy at that time, and just did you know,
(11:55):
small cosmetics. So I knew I was improving my primary
residence and purchasing another property.
Speaker 2 (12:00):
And you were still in school at this point.
Speaker 1 (12:02):
I was still in school.
Speaker 2 (12:03):
Yep, all right, So now you've got a second property,
and you've completely bought this by using the equity in
the first property. So you got like a heelock on
the first property.
Speaker 1 (12:14):
And I want to say at that time, and I
can't remember the rates, but the helock for the fifty
grand was around I think four hundred maybe four hundred
and fifty bucks a month, and then you know, with
my rental income from the property it you know, I
was always at that point, I didn't I wasn't looking
to make a lot of income off of it. I
(12:38):
just wanted it to have the properties and kind of
be close to even h But then once rent started,
you know increasing Now that property they pay around eleven
hundred dollars a month, and that home equity line has
been paid off from my real estate commissions, so it
really now that's eleven hundred dollars is is a profit
(12:58):
that goes toward income.
Speaker 2 (13:00):
Have you had many tenants in there over the years.
Speaker 1 (13:04):
I've had the same tenant there since I purchased the
property team years ago. Wow, And honestly, I could probably
increase the rent there, but she's such a great tenant
and good tenants are hard to come by. So it's
one of those things that I'd rather have a stability than,
you know, shoot for the stars.
Speaker 2 (13:23):
Yeah, and you look, I mean, you've got no vacancy costs,
you've got no turnover expenses. That money is coming in
every month. So have you not raised the rent at
all in fifteen years?
Speaker 1 (13:33):
Yeah? I think she was originally like six fifty or
seven hundred, and she's around eleven hundred.
Speaker 2 (13:38):
Now, okay, all right, solid, What do you think the
market rate is if she were to leave and you
were to rent it.
Speaker 1 (13:43):
Out, Probably thirteen hundred okay.
Speaker 2 (13:47):
All right, So she's a little bit under but not
a little.
Speaker 1 (13:50):
Bit of Yeah, she's not stealing it, but.
Speaker 2 (13:53):
Right right, all right. So now you're in college, You've
got two You've got the property you're living in where
you're renting out rooms, you've got the second property. What
did you what did you do next?
Speaker 1 (14:06):
So a couple of years go by, and my family
has a my family business is a wedding venue, and
they have a place kind of out in the country
and this this venue is out there, and one of
the properties that neighbor it was a small little farmhouse,
two bedrooms, one bathroom, and the owner was having some
(14:27):
financial difficulties and we talked about, okay, probably purchasing it.
So I worked out a deal with him that I
paid out had blown for in exchange that he would,
you know, sign the home over to me. So I
pretty much bought out his loan for around seventy thousand
and might have been like seventy three something something around there,
(14:49):
and the idea for that property. I was not going
into that as a rental property. The idea for that
was to flip it, and that was my first flip,
and I way underestimated the amount of work there. I
thought that I would throw some new floors in there,
(15:10):
paint some cabinets, you know, put some lipstick on it,
and call it a day, but ended up being a
full project. New wiring, new plumbing, new roof, new HVAC,
new windows. It's it is literally a brand new house,
and these costs were were a lot more expensive. Where
I had in my mind when I was going to
be doing these renovations that I would turn it into
(15:32):
a two bedroom, two bathroom instead of a two bedroom,
one bathroom. There really wasn't space to add a third bedroom,
but that was kind of the best way to do it,
but the costs were so high. It's still a two bedroom,
one bath So once I kind of looked at my
how much money that I put into the property and
what it was worth at that time, it was I
(15:52):
was about breaking even and that I wasn't really excited
about that. So all of that work I should be
at least making some kind of money on it, and
I decided to put that as a rental property as well.
And I believe at the time that I purchased or
flipped that house, I was I was getting twelve hundred
dollars a month, and now I'm getting I'll tell you
(16:17):
right now, I'm getting eighteen hundred dollars a month. There.
Speaker 2 (16:20):
Awesome. Now, so at this point you were out of school, right, yes, oh, yes,
so you're out of school. And then how did you
finance that property?
Speaker 1 (16:31):
So what I did? I had I had a personal
loan for fifty thousand, which was a high interest rate,
and ended up using that for my renovations. So that
personal loan was was I guess it wasn't a bad
(16:53):
thing to have, but I thought that it was going
to be paid off quickly because I thought I was
going to be selling it. So what I ended up
doing was keeping the loan and you know, putting the
place for rent. And I can't remember how much that
loan was, but it was still under the amount of
the rental income, so I'm still kind of breaking at that.
Speaker 2 (17:12):
And then did you eventually refinance that or did you
just work on getting it paid off.
Speaker 1 (17:17):
I eventually paid it off. And one of the things,
you know, fortunately and being in real estate and having
kind of all of my fixed expenses covered under my
rental income, all of my commissions that come in are
kind of you know, for other expenses, not bills. Sorry,
able to take a bunk of money and roll it
and put it into my paying off these loans because
(17:38):
I wanted to have all of that rental income kind
of franklier to come in and not have to pay
any bills for sure.
Speaker 2 (17:44):
Okay, all right, So then that was that's the last
residential property.
Speaker 1 (17:50):
You've bought, yes, as the last except for my primary
residence that I am now.
Speaker 2 (17:56):
Okay, So but then you ended up buying a commercial space.
Tell me about that.
Speaker 1 (18:02):
So my business, so, after I, you know, kind of
got done with school, I got into being at more
of a traditional realtor. And my business partner and I
who I started with in the beginning, who mentored me.
We had an office space in Midtown and we had
some issues with with there was some floods going on
(18:22):
in the building. It was underneath the condominium building, and
we ended up purchasing a commercial space underneath another condo
building in Atlanta, and him and I bought it fifty
to fifty and we worked out of that space for
years as our real estate office. Within the past couple
(18:43):
of years, things have kind of changed. We've joined a
bigger brokerage and the space has become irrelevant, and we
thought about selling it, and I thought, you know, well,
I could sell it and take a chunk of money
and who knows what I'm going to do with it,
or I could just buy my business partner out. So
what I ended up doing was buying him out and
(19:05):
turning it into a rental property as well.
Speaker 2 (19:07):
Okay, and that is that pretty easy to rent. A
lot of times when I see commercial properties, they they
sit for a long time. Did you have any trouble
renting that you know?
Speaker 1 (19:18):
I didn't. Actually, this one, this one is I'm fortunate.
It's a it's a small space, but it's underneath the
residential condo building, and the building is one of the
iconic Atlanta Old School buildings, mid century modern. It's got
a beautiful club room, concierge, fitness center, all kinds of
(19:38):
things that the commercial space also has access to. So
it's it's pretty appealing and it's only four hundred square
feet and it rents for twelve hundred bucks a month. Okay,
so on the busiest streets in Atlanta under in this
building a small little boutique. She leases it out close.
Speaker 2 (20:00):
I mean that that's such a small place. I'm sure
you'll have no trouble.
Speaker 1 (20:04):
Yeah, And it's it's not you know we see all
the time in these high rises you know that are
all commercial, multiple floors sitting vacant. I think the niche
with this one I got lucky is it's so small
and people who don't want to be in a wee
work space but also want a storefront this it's that
that niche there.
Speaker 2 (20:23):
Okay. So so you've got four properties that we've we've
walked through here and that's it, right, that's all your
portfolio is.
Speaker 1 (20:31):
That is that is my four properties. And you know
I've got my my fifth property is my primary residence,
which I don't know. You know, other cities have different rules,
but most condominiums in Atlanta only twenty five percent of
the building can be leased out at of times, so
there's waiting lists for people to lease their condos out.
(20:51):
I'm on a waiting list in my building. My building
is a little bit different. There's only three units allowed
in the building to be leased out out of time,
so who knows what that will happen, but guarantee, when
that happens, I will be moving out of here and
I will be putting dispisefully. Yeah.
Speaker 2 (21:06):
Well, all right, Now, as far as the mortgages on
the property, it sounds like you've got a lot of
these paid off. Like that first property that you bought
when you were in college, I mean that was fifteen
years ago. Is that property paid off?
Speaker 1 (21:20):
The only properties that I have more, Yes, everything's paid off.
The only properties I have mortgages on are my primary
residents and the commercial space.
Speaker 2 (21:27):
Okay, wow, okay, So how much rent do you have
coming in every month? Seventy six seventy six hundred, and
then how much is the mortgage the one mortgage you have.
Speaker 1 (21:40):
One mortgage that I have for the commercial or for
the for my primary it's around sixteen hundred.
Speaker 2 (21:46):
Okay, but like for a year for the commercial space.
Speaker 1 (21:50):
The commercial space is around seven hundred and seven hundred.
Speaker 2 (21:52):
Okay, now you it seems like these properties were fairly cheap.
Speaker 1 (22:00):
Yeah, okay. I ended up getting them for good prices
and you know, if you're looking to see where my
monthly expenses and income, you know, the expenses go a
lot of Two of these properties are in hoa's two
of my rental properties, so I have HOA fees on them.
One of them, my primary residence, has an HOA fee,
(22:22):
so that takes a lot of my monthly expenses out,
but it's still all paid for by by the rental income.
Speaker 2 (22:29):
Now, some people would maybe say that you would have
been better off instead of paying these properties off, you
would have been better off putting that money has down
payments to buy better properties. But in your case, where
you're looking for almost like a base salary to cover
your your expenses, to me, this makes a lot of sense.
(22:53):
Like you weren't trying to build a large portfolio. You
wanted to cover your expenses, and I think you've done
it here with four properties. Like what would does that
make sense? Is that kind of what you were trying
going after?
Speaker 1 (23:07):
Yeah, that that was my goal. I wanted to you know,
it would be great to own, you know, twenty properties.
But if you're if you own twenty properties and your
monthly expenses are you know, astronomical for these twenty properties
I'd rather own smaller ones and have everything kind of balance. Yeah,
that was my biggest The biggest thing with buying these
(23:29):
properties was to make sure that my income and expenses
were balanced together. And yeah, it made sense. And you know,
a couple of these properties I got lucky on. There
were just fortunate situations. But you know, you don't have
to purchase an expensive brintal property to get high income.
It's all about you know, seeing where where ROI will be,
(23:52):
what the you know, taxes for that area are, what
the hlla fs are. It's it's just a balancing game.
Speaker 2 (24:00):
Yeah, it's a real simple way to make seven grand
a month. I mean you've bought four properties here that
are making seven grand a month. I mean that's that's awesome.
That really really is awesome. And are you self managing everything?
Speaker 1 (24:14):
I do? So with the two of them, the townhouse
the first property, and in the commercial space are in
an h ooa and the HOA pretty much covers everything,
so those are really easy rentals. And but you know,
you do pay for the HOA fee, so I don't
(24:38):
really have to do much with them. The South Atlanta
home is the oldest and that probably has the most
work that needs to be done there, but it's not astronomical.
I do try to keep everything on monthly or quarterly
routines for maintenance, HVAC, things like that. And then the
farmhouse was renovated, so there shouldn't be anything wrong there.
(25:02):
But I do self manage. Being in real estate, I
do have a flexible schedule. I do have a list
of handyman and things like that, that and that are
familiar with my properties. I would recommend if somebody is
looking to hire a management company to really see what
they're all all they're going to be doing for you.
(25:23):
Sometimes these management fees are really high, and if it
is going to impact your monthly income that much, it
might be worth you managing it yourself and you know,
building relationships with some vendors who can help you in
case of emergencies. It's I would say, at least try
it yourself before you just dive right into a management company.
Speaker 2 (25:46):
If you're looking to invest in Atlanta, Jeremy is a
full time realtor. He works with a lot of different
investors and if you want to track him down, I've
got his contact information on the website. You can find
it at Rental Income podcast Slash episode five twenty. I'd
like to thank Chayley Ridge from Ridge Lending Group for
(26:06):
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, reach out to Chailey. She's got a
ton of different loan programs. If you want to find
out more, or you want to talk to Chailey personally,
just go to Ridgelendinggroup dot com NMLS four two zero
(26:27):
five six. Thank you so much for checking out the
podcast today. If this is your first time here, make
sure you hit the follow button. That way you'll be
notified when the next episode comes out. My name is
Dan Lane and this has been the Rental Income podcast
The inspiring interviews with today is Top Landlord. This is
the Rental Income Podcast, and now.
Speaker 2 (00:08):
Damnly Jeremy tell me how your rentals have kind of
become a safety net for you.
Speaker 1 (00:15):
So I'm in an industry where my income fluctuates. I'm
commission based, so I never know, you know, if it's
a good month or if it's a bad month, what
my set income would be. And my rental properties have
I've been very fortunate that they are kind of my
safety net. They are my guarantee income to pay my bills.
(00:36):
They cover all of my monthly expenses, so I do
have that peace of mind if it's a bad month
that I at least know the mortgage is being paid.
I might be eating, you know, crackers, but my mortgage,
my bills are paid. So it does give me that
peace of mind knowing that any of my commissions are
are separate and kind of a bonus.
Speaker 2 (00:56):
Jeremy's rentals are generating about seven grand. And the great
thing is he's doing this without a large portfolio. So
on the show today, we're going to figure out how
he did it, how he got to where he is today.
Joining us on the podcast from Atlanta is Jeremy Smith
will take a quick break to thank our sponsors. We'll
come right back and we'll talk to Jeremy. I've had
(01:18):
ten instead of either broken their leases or stop paying rent.
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I'm happy to answer any questions, or you can check
them out at midsouthhome Buyers dot com. Jeremy, let's start
(03:51):
off talking about your portfolio. Can you tell me what
your portfolio looks like?
Speaker 1 (03:56):
Sure, I am. You know, I've invested in real estate,
and I wouldn't say I'm one of these huge real
estate investors with you know, some people have thirty to
fifty properties. Mine is a little bit smaller, but you know,
looking to grow it. I have a couple of rental properties.
I've got four of them. One of them is a
(04:17):
town home and an hoa. I have a low rent
home on the south side of Atlanta. I've got a farmhouse,
and I've got a commercial space, so I've kind of
got a full range of different options. The commercial space
is in a high rise building as well, so between
(04:38):
single family residents, low income commercial I definitely have all
right now covered exactly a beach house now, I guess.
Speaker 2 (04:50):
So you said that your income fluctuates. What is your
day job? What are you doing for work?
Speaker 1 (04:56):
So I am in residential real estate in Atlanta, and
you know, I've been doing this for going on fifteen years,
and my you know, we have some cycles that you know,
it's the holidays and nothing really sells, or it's a
spring market and you are, you know, closing multiple properties.
(05:17):
So I rely heavily on my rental income to pay
for my monthly expenses, and starting investing in properties has
been you know, my whole goal is to keep that
balance between what is incoming and what is outgoing monthly.
And as long as I have that around that same coverage,
(05:37):
it gives me that peace of mind too. You know,
if nothing, if nothing comes in, am I commissions?
Speaker 2 (05:44):
Yeah? All right, So you're supporting yourself off the commissions.
But when you have maybe a bad month or you know,
maybe you don't bring in much money for a month,
you've got that rental income to help you get by
right until you get your next deal. Right, that is
really good. So now when we look at your fixed expenses,
(06:09):
like how much how much are we talking like how
much money do you need every month to to go
the bills.
Speaker 1 (06:16):
Yeah, so between I'm I'm super OCD. I keep a
spreadsheet of every income or every fixed monthly expense, every
fixed outgoing expense, and that includes mortgages, hoa fees, health insurance,
cell phone, all of the any any outgoing expense. And
(06:37):
so I'm round seven thousand dollars a month. I mean,
I've got a detail down to my Netflix account on here,
so it's around seven thousand dollars a month. And my
income that I received from my rental properties is around
seventy six hundred dollars a month. So I do have
that flexibility there, you know, to add more monthly expenses
(06:58):
because I have a six hundred dollars overage or you know,
keep that out of my pocket. So knowing that I've
got kind of that that balance and it changes, you know,
as soon as my health insurance goes up, which it
seems to be going up every year, I adjust my
spreadsheet and see kind of what my what my balance
is between the fixed income and fixed expenses.
Speaker 2 (07:20):
Well, that is pretty incredible that a portfolio that isn't
really that big is able to do that for you
and generate that much income. Well, let's figure out how
you did this, So like, how did you get started?
What was your first property?
Speaker 1 (07:36):
So my very first property was a town home on
the east side of the city. And I was in
school at that time and rent here in Atlanta is
quite expensive, so I was very fortunate to be working
in real estate at that time as well as aside
while I was at Georgia State University and I was
(08:00):
seeing all of these This is kind of during the downturn,
all of these properties that were selling for rock bottom prices,
and I didn't have much money at that time, but
I did have some savings for college expenses. So my
family and I decided that we would that they would
help me purchase a town home. And this townhome was
(08:21):
a three bedroom town home where I knew I could
purchase this and with the monthly payments that were required
for the house, I could have roommates and the other
two bedrooms that would pay for these expenses, So it
made sense. We knew that the property would appreciate and value,
and we knew that it would be a wash. There
(08:42):
would be no over between the monthly expenses and the
income IVY receiving from my roommates at that time. It
just made sense to purchase. And that's kind of how
I started with my first property.
Speaker 2 (08:53):
I mean that is really smart to I mean, to
house hack when you're in college. I mean most people
at that age aren't thinking like that. Like what gave
you that idea and where did that come from?
Speaker 1 (09:06):
I have to say when I was in college, I
was taking some business courses and we had to reach
out to local businesses that we were interested in kind
of interview them. I reached out to a real estate
brokerage and ended up working with them part time, helping
them with Fanny Main and Freddie mac foreclosures. And I
learned a lot from them. And I also learned that
(09:27):
I hate school and I really like real estate. So
I you know, if I didn't have my mentors there,
they really were kind of the driving force to start
really aligned for me. And I'm very fortunate.
Speaker 2 (09:39):
Yeah, that's awesome. And how old were you at this.
Speaker 1 (09:41):
Point that point first house? I started nineteen, so I
would have been maybe going on twenty, maybe going on twenty.
Speaker 2 (09:52):
Okay, So your parents helped you with the down payment,
you bought the house, your house acking your living free.
Do you still own that property today?
Speaker 1 (10:02):
I do so One of the funny things. I've never
sold a property. Every property I have purchased, I still
have it, and it's all and they've all become rental properties.
Speaker 2 (10:11):
And so this is fifteen years ago. So, and I
think this is one of the great things with rental
properties is that rents go up over time. So you
were living free fifteen years ago today, how much money
is that property rented.
Speaker 1 (10:26):
Out for two thousand and seven to fifty a month?
Speaker 2 (10:29):
Wow? And so what were the rents at the time
when you bought it.
Speaker 1 (10:33):
The rent at the time was probably fifteen hundred.
Speaker 2 (10:37):
Okay, yeah a month. That's great. Okay, so you've your
mortgage is staying the same, but the rents are going up.
I mean, I think that's great. So then how did
you buy your next property after that?
Speaker 1 (10:50):
My next property, I had the itch and I was saying,
you know, the benefits of having you know, these roommates
and making income from there, and I pulled out, I
gained equity in the home, and I pulled out a
fifty thousand dollars home equity line from my primary residence,
the town home, their first property. And from that I
(11:12):
purchased a house in South Atlanta and I purchased it
for thirty five thousand dollars. It had a tenant in place,
already had a new roof, had new windows. It was
a brick ranch like, not really much maintenance for it,
but it had a tenant in place, and I believe
at that time they were paying six fifty or seven
(11:34):
hundred dollars a month. And so I purchased that for
thirty five thousand, and then the remainder. I did improvements
to my primary residence. I changed the flooring, I redid
some appliances, I changed the countertops, made a big island
in the kitchen instead of kind of the high bars
that were trendy at that time, and just did you know,
(11:55):
small cosmetics. So I knew I was improving my primary
residence and purchasing another property.
Speaker 2 (12:00):
And you were still in school at this point.
Speaker 1 (12:02):
I was still in school.
Speaker 2 (12:03):
Yep, all right, So now you've got a second property,
and you've completely bought this by using the equity in
the first property. So you got like a heelock on
the first property.
Speaker 1 (12:14):
And I want to say at that time, and I
can't remember the rates, but the helock for the fifty
grand was around I think four hundred maybe four hundred
and fifty bucks a month, and then you know, with
my rental income from the property it you know, I
was always at that point, I didn't I wasn't looking
to make a lot of income off of it. I
(12:38):
just wanted it to have the properties and kind of
be close to even h But then once rent started,
you know increasing Now that property they pay around eleven
hundred dollars a month, and that home equity line has
been paid off from my real estate commissions, so it
really now that's eleven hundred dollars is is a profit
(12:58):
that goes toward income.
Speaker 2 (13:00):
Have you had many tenants in there over the years.
Speaker 1 (13:04):
I've had the same tenant there since I purchased the
property team years ago. Wow, And honestly, I could probably
increase the rent there, but she's such a great tenant
and good tenants are hard to come by. So it's
one of those things that I'd rather have a stability than,
you know, shoot for the stars.
Speaker 2 (13:23):
Yeah, and you look, I mean, you've got no vacancy costs,
you've got no turnover expenses. That money is coming in
every month. So have you not raised the rent at
all in fifteen years?
Speaker 1 (13:33):
Yeah? I think she was originally like six fifty or
seven hundred, and she's around eleven hundred.
Speaker 2 (13:38):
Now, okay, all right, solid, What do you think the
market rate is if she were to leave and you
were to rent it.
Speaker 1 (13:43):
Out, Probably thirteen hundred okay.
Speaker 2 (13:47):
All right, So she's a little bit under but not
a little.
Speaker 1 (13:50):
Bit of Yeah, she's not stealing it, but.
Speaker 2 (13:53):
Right right, all right. So now you're in college, You've
got two You've got the property you're living in where
you're renting out rooms, you've got the second property. What
did you what did you do next?
Speaker 1 (14:06):
So a couple of years go by, and my family
has a my family business is a wedding venue, and
they have a place kind of out in the country
and this this venue is out there, and one of
the properties that neighbor it was a small little farmhouse,
two bedrooms, one bathroom, and the owner was having some
(14:27):
financial difficulties and we talked about, okay, probably purchasing it.
So I worked out a deal with him that I
paid out had blown for in exchange that he would,
you know, sign the home over to me. So I
pretty much bought out his loan for around seventy thousand
and might have been like seventy three something something around there,
(14:49):
and the idea for that property. I was not going
into that as a rental property. The idea for that
was to flip it, and that was my first flip,
and I way underestimated the amount of work there. I
thought that I would throw some new floors in there,
(15:10):
paint some cabinets, you know, put some lipstick on it,
and call it a day, but ended up being a
full project. New wiring, new plumbing, new roof, new HVAC,
new windows. It's it is literally a brand new house,
and these costs were were a lot more expensive. Where
I had in my mind when I was going to
be doing these renovations that I would turn it into
(15:32):
a two bedroom, two bathroom instead of a two bedroom,
one bathroom. There really wasn't space to add a third bedroom,
but that was kind of the best way to do it,
but the costs were so high. It's still a two bedroom,
one bath So once I kind of looked at my
how much money that I put into the property and
what it was worth at that time, it was I
(15:52):
was about breaking even and that I wasn't really excited
about that. So all of that work I should be
at least making some kind of money on it, and
I decided to put that as a rental property as well.
And I believe at the time that I purchased or
flipped that house, I was I was getting twelve hundred
dollars a month, and now I'm getting I'll tell you
(16:17):
right now, I'm getting eighteen hundred dollars a month. There.
Speaker 2 (16:20):
Awesome. Now, so at this point you were out of school, right, yes, oh, yes,
so you're out of school. And then how did you
finance that property?
Speaker 1 (16:31):
So what I did? I had I had a personal
loan for fifty thousand, which was a high interest rate,
and ended up using that for my renovations. So that
personal loan was was I guess it wasn't a bad
(16:53):
thing to have, but I thought that it was going
to be paid off quickly because I thought I was
going to be selling it. So what I ended up
doing was keeping the loan and you know, putting the
place for rent. And I can't remember how much that
loan was, but it was still under the amount of
the rental income, so I'm still kind of breaking at that.
Speaker 2 (17:12):
And then did you eventually refinance that or did you
just work on getting it paid off.
Speaker 1 (17:17):
I eventually paid it off. And one of the things,
you know, fortunately and being in real estate and having
kind of all of my fixed expenses covered under my
rental income, all of my commissions that come in are
kind of you know, for other expenses, not bills. Sorry,
able to take a bunk of money and roll it
and put it into my paying off these loans because
(17:38):
I wanted to have all of that rental income kind
of franklier to come in and not have to pay
any bills for sure.
Speaker 2 (17:44):
Okay, all right, So then that was that's the last
residential property.
Speaker 1 (17:50):
You've bought, yes, as the last except for my primary
residence that I am now.
Speaker 2 (17:56):
Okay, So but then you ended up buying a commercial space.
Tell me about that.
Speaker 1 (18:02):
So my business, so, after I, you know, kind of
got done with school, I got into being at more
of a traditional realtor. And my business partner and I
who I started with in the beginning, who mentored me.
We had an office space in Midtown and we had
some issues with with there was some floods going on
(18:22):
in the building. It was underneath the condominium building, and
we ended up purchasing a commercial space underneath another condo
building in Atlanta, and him and I bought it fifty
to fifty and we worked out of that space for
years as our real estate office. Within the past couple
(18:43):
of years, things have kind of changed. We've joined a
bigger brokerage and the space has become irrelevant, and we
thought about selling it, and I thought, you know, well,
I could sell it and take a chunk of money
and who knows what I'm going to do with it,
or I could just buy my business partner out. So
what I ended up doing was buying him out and
(19:05):
turning it into a rental property as well.
Speaker 2 (19:07):
Okay, and that is that pretty easy to rent. A
lot of times when I see commercial properties, they they
sit for a long time. Did you have any trouble
renting that you know?
Speaker 1 (19:18):
I didn't. Actually, this one, this one is I'm fortunate.
It's a it's a small space, but it's underneath the
residential condo building, and the building is one of the
iconic Atlanta Old School buildings, mid century modern. It's got
a beautiful club room, concierge, fitness center, all kinds of
(19:38):
things that the commercial space also has access to. So
it's it's pretty appealing and it's only four hundred square
feet and it rents for twelve hundred bucks a month. Okay,
so on the busiest streets in Atlanta under in this
building a small little boutique. She leases it out close.
Speaker 2 (20:00):
I mean that that's such a small place. I'm sure
you'll have no trouble.
Speaker 1 (20:04):
Yeah, And it's it's not you know we see all
the time in these high rises you know that are
all commercial, multiple floors sitting vacant. I think the niche
with this one I got lucky is it's so small
and people who don't want to be in a wee
work space but also want a storefront this it's that
that niche there.
Speaker 2 (20:23):
Okay. So so you've got four properties that we've we've
walked through here and that's it, right, that's all your
portfolio is.
Speaker 1 (20:31):
That is that is my four properties. And you know
I've got my my fifth property is my primary residence,
which I don't know. You know, other cities have different rules,
but most condominiums in Atlanta only twenty five percent of
the building can be leased out at of times, so
there's waiting lists for people to lease their condos out.
(20:51):
I'm on a waiting list in my building. My building
is a little bit different. There's only three units allowed
in the building to be leased out out of time,
so who knows what that will happen, but guarantee, when
that happens, I will be moving out of here and
I will be putting dispisefully. Yeah.
Speaker 2 (21:06):
Well, all right, Now, as far as the mortgages on
the property, it sounds like you've got a lot of
these paid off. Like that first property that you bought
when you were in college, I mean that was fifteen
years ago. Is that property paid off?
Speaker 1 (21:20):
The only properties that I have more, Yes, everything's paid off.
The only properties I have mortgages on are my primary
residents and the commercial space.
Speaker 2 (21:27):
Okay, wow, okay, So how much rent do you have
coming in every month? Seventy six seventy six hundred, and
then how much is the mortgage the one mortgage you have.
Speaker 1 (21:40):
One mortgage that I have for the commercial or for
the for my primary it's around sixteen hundred.
Speaker 2 (21:46):
Okay, but like for a year for the commercial space.
Speaker 1 (21:50):
The commercial space is around seven hundred and seven hundred.
Speaker 2 (21:52):
Okay, now you it seems like these properties were fairly cheap.
Speaker 1 (22:00):
Yeah, okay. I ended up getting them for good prices
and you know, if you're looking to see where my
monthly expenses and income, you know, the expenses go a
lot of Two of these properties are in hoa's two
of my rental properties, so I have HOA fees on them.
One of them, my primary residence, has an HOA fee,
(22:22):
so that takes a lot of my monthly expenses out,
but it's still all paid for by by the rental income.
Speaker 2 (22:29):
Now, some people would maybe say that you would have
been better off instead of paying these properties off, you
would have been better off putting that money has down
payments to buy better properties. But in your case, where
you're looking for almost like a base salary to cover
your your expenses, to me, this makes a lot of sense.
(22:53):
Like you weren't trying to build a large portfolio. You
wanted to cover your expenses, and I think you've done
it here with four properties. Like what would does that
make sense? Is that kind of what you were trying
going after?
Speaker 1 (23:07):
Yeah, that that was my goal. I wanted to you know,
it would be great to own, you know, twenty properties.
But if you're if you own twenty properties and your
monthly expenses are you know, astronomical for these twenty properties
I'd rather own smaller ones and have everything kind of balance. Yeah,
that was my biggest The biggest thing with buying these
(23:29):
properties was to make sure that my income and expenses
were balanced together. And yeah, it made sense. And you know,
a couple of these properties I got lucky on. There
were just fortunate situations. But you know, you don't have
to purchase an expensive brintal property to get high income.
It's all about you know, seeing where where ROI will be,
(23:52):
what the you know, taxes for that area are, what
the hlla fs are. It's it's just a balancing game.
Speaker 2 (24:00):
Yeah, it's a real simple way to make seven grand
a month. I mean you've bought four properties here that
are making seven grand a month. I mean that's that's awesome.
That really really is awesome. And are you self managing everything?
Speaker 1 (24:14):
I do? So with the two of them, the townhouse
the first property, and in the commercial space are in
an h ooa and the HOA pretty much covers everything,
so those are really easy rentals. And but you know,
you do pay for the HOA fee, so I don't
(24:38):
really have to do much with them. The South Atlanta
home is the oldest and that probably has the most
work that needs to be done there, but it's not astronomical.
I do try to keep everything on monthly or quarterly
routines for maintenance, HVAC, things like that. And then the
farmhouse was renovated, so there shouldn't be anything wrong there.
(25:02):
But I do self manage. Being in real estate, I
do have a flexible schedule. I do have a list
of handyman and things like that, that and that are
familiar with my properties. I would recommend if somebody is
looking to hire a management company to really see what
they're all all they're going to be doing for you.
(25:23):
Sometimes these management fees are really high, and if it
is going to impact your monthly income that much, it
might be worth you managing it yourself and you know,
building relationships with some vendors who can help you in
case of emergencies. It's I would say, at least try
it yourself before you just dive right into a management company.
Speaker 2 (25:46):
If you're looking to invest in Atlanta, Jeremy is a
full time realtor. He works with a lot of different
investors and if you want to track him down, I've
got his contact information on the website. You can find
it at Rental Income podcast Slash episode five twenty. I'd
like to thank Chayley Ridge from Ridge Lending Group for
(26:06):
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, reach out to Chailey. She's got a
ton of different loan programs. If you want to find
out more, or you want to talk to Chailey personally,
just go to Ridgelendinggroup dot com NMLS four two zero
(26:27):
five six. Thank you so much for checking out the
podcast today. If this is your first time here, make
sure you hit the follow button. That way you'll be
notified when the next episode comes out. My name is
Dan Lane and this has been the Rental Income podcast
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