September 30, 2025 • 21 mins
Jon Paddol is a regular guy who has quietly built a solid rental portfolio. He started at 24, renting out rooms to friends, and looking back, he wishes he had bought even more properties when he was in his 20s.
On this episode, Jon shares how he transitioned from renting to friends to screening actual tenants, and what that experience taught him.
He also talks about how he only buys properties in a very tight area, close to where he lives, and how this has made managing his properties easier.
We also review Jon's numbers and discuss how the equity he has created has given him many options regarding paying for college for his kids and potential moves he may make with his portfolio in the future.
https://rentalincomepodcast.com/episode541
Thanks To Our Sponsors:
MidSouth HomeBuyers – Turnkey Rentals In Memphis & Little Rock. Instant Cash Flow On Day One. (Priced between $100,000 to low $200's)
Ridge Lending Group - Making investment Mortgage process simple and stress-free.
Rental Accounting Software Made Easy. Free 30 Day Trial.
On this episode, Jon shares how he transitioned from renting to friends to screening actual tenants, and what that experience taught him.
He also talks about how he only buys properties in a very tight area, close to where he lives, and how this has made managing his properties easier.
We also review Jon's numbers and discuss how the equity he has created has given him many options regarding paying for college for his kids and potential moves he may make with his portfolio in the future.
https://rentalincomepodcast.com/episode541
Thanks To Our Sponsors:
MidSouth HomeBuyers – Turnkey Rentals In Memphis & Little Rock. Instant Cash Flow On Day One. (Priced between $100,000 to low $200's)
Ridge Lending Group - Making investment Mortgage process simple and stress-free.
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 Landlords, this is
the Rental Income Podcast, and now.
Speaker 2 (00:08):
Damnly John, you think that if you think long term
with rental properties, it's really hard to lose.
Speaker 1 (00:16):
Where I am right now.
Speaker 3 (00:17):
If the market never increases, if rents never go up,
if the property values never ever ever go up, and
when all's said and done, when these things are paid off,
you know, we'll be looking at about seventeen thousand dollars
in cash flow monthly and you know, more than a
million in equity and a property. And that's just from
(00:40):
a slow and steady growth over you know, twenty five
years or twenty two years.
Speaker 2 (00:46):
And what's incredible is when you think about it, I mean,
rents are going to go up, properties are going to appreciate.
So that's that's kind of the worst case scenario that
the rents never go up, correct.
Speaker 3 (00:58):
I mean, And I mean I'm probably the I'm not
an economist, but I mean in the history, in the
recorded history of real estate markets, I don't know that
rent or house appreciation has ever not gone up over
the span of ten twenty years, you know, in modern
history at least. So I feel like it's pretty pretty
(01:21):
good odds that things are somewhat safe.
Speaker 2 (01:23):
I guess what I think is great and very relatable
about John's story is that this isn't something he's doing
full time. He buys rental properties in his spare time.
He only has three properties that he's bought over a
course of twenty years, and he's created over a million
dollars in equity. And on the show today, we're going
(01:45):
to figure out how he did it. Joining us on
the show today from Boston is John Paddell. We'll take
a quick break to think, our sponsors will come right
back and we'll talk to John. It's a lot of
work to find a really good rental property, and when
you actually find that property, I 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
(02:07):
Ridge Lending Group. She's a nationwide lender and her specialty
is helping investors finance rental properties. She has a ton
of loan programs and she can find something customized to
you for your situation. If you want 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
(02:29):
com and MLS four two zero five six. Are you
thinking about investing in rental properties but maybe you don't
know where to start. My friends at Midsouth home Buyers
make it simple. For over twenty three years, they've been
selling fully renovated, turnkey rental properties in Memphis and Little Rock.
We're talking new roofs, plumbing, electric, kitchens, bathrooms. Everything is
(02:53):
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 Midsouth continues to professionally manage the property
for you after the sale, and they back it up
with two powerful guarantees. You get a one year total
(03:15):
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 midsouthhome Buyers
(03:37):
dot com. John, Let's start things off talking about your portfolio.
What does your portfolio look like?
Speaker 1 (03:45):
So right now we have six doors currently.
Speaker 2 (03:47):
And how long have you been investing for.
Speaker 3 (03:50):
I've been investing for twenty two to twenty three years actually,
so it's been a slow progress.
Speaker 1 (03:55):
I'm sure.
Speaker 3 (03:57):
I'm sure a lot of the listeners when you hear
other real estate podcasts, there are people that move a
lot more expansively and a lot of quicker than that.
Speaker 2 (04:06):
What was there a huge gap? Like, so you bought
that first property in two thousand and three, what year
was it when you bought your second property?
Speaker 3 (04:16):
I think twenty eleven, and I was in my twenties.
And when you're in your twenties, the other thing that
nobody tells you is that everybody you know is renting,
So you can everybody you know either works at a
restaurant or knows somebody that works at a restaurant, or
just got their first job and wants to get out
of their parents' house. So I was like, effectively, even
(04:39):
though I was a landlord, I was effectively running like
a boarding house for my friends. And whoever was like,
whoever was in between apartments or whatever, I was like, yeah,
come on it, like you know, we at one point
we had a girl living in a loft over our
kitchen with no walls like blocking her and she was like, yeah,
if I'll just pay for electric and cable, and that
was how she contributed to the rent in our apartment.
Speaker 1 (05:00):
And it was like a three bedroom apartment. There were like.
Speaker 3 (05:02):
Seven of us living there because you know, and I
say this with all the love in my heart, but
towards other people in their twenties now and myself when
I was there, But when you're in your twenties, your
standard of living is so low, like everything's a sleepover man, right.
Speaker 1 (05:19):
So yeah, if you want, if you want to move in.
Speaker 3 (05:20):
It was great, It was It was I mean what's
now come to be known as house hacking, and it's,
you know, common practice. But really, at the time, I
thought I had like unlocked a key to a different universe.
I mean my friends, my friends, who I think loved
the experience, but they you know, probably paid God. I
(05:44):
mean they must have paid fifty sixty thousand dollars towards
that house over the years that we lived there in
our twenties. So it never even occurred to me to
be outlooking for more because we were having a great
time at the at the two family that I bought.
Speaker 2 (05:58):
So let's flash forward today. So you've got six doors
and it's three different properties.
Speaker 3 (06:05):
It's three different properties over six doors, over three properties.
Speaker 2 (06:08):
Yes, if you were to estimate how much those properties
have appreciated over the twenty two years, how much money
do you think you've made an appreciation?
Speaker 1 (06:20):
I mean it's certainly more than a million. We have
our our.
Speaker 3 (06:27):
Neck of the woods where I invest, north of Boston
is not a very easy place for cash flow. The
rents are incredibly high, but so are the property.
Speaker 1 (06:37):
Costs, So.
Speaker 3 (06:40):
That's you know, it's a risky thing for a beginning
real estate investor. You know, back when I started, cash
flow is more prevalent, and it it was kind of
skewed because I was also living there, So the bell
curve of what was acceptable to me in terms of
incoming money was a little bit different because I had
(07:02):
a tangible reason to stay at that property. But going forward,
as we continue to invest, I mean, cash flow is
tight around here. The smart move for me to do
the next step that I'll be taking is investing outside
of my area to kind of maximize some cash flow.
Speaker 1 (07:24):
But the appreciation here historically.
Speaker 3 (07:28):
I mean, we're in a little bit of a downturn
now or at least a you know, houses are sitting
on the market now, which is crazy compared to what.
Speaker 1 (07:38):
Is normally the case with the market.
Speaker 3 (07:40):
But appreciation around here generally speaking, has always kind of
been ridiculous.
Speaker 2 (07:45):
And I mean, what's really I think great about that
is this is something you just do on the side.
You've got a job that real estate isn't your main job,
but you've made a million dollars just by buying properties
and letting them, letting time go by and do its thing.
Speaker 3 (08:06):
Yeah, and again, I don't I feel like I'm making
my own version of rich Dad Kordad here. But when
I go, if I go back to words of wisdom
from my uncle, who's the investor, he always says he
I remember him telling me back when I bought the
place of twenty three. He's like, John, you buy the
property and you breathe oxygen. That's all you have to do, right,
And I mean, you know, of course occasionally things come up,
(08:29):
but but I mean overwhelmingly, I mean, I'd be floored
if I think about these properties for more than four
hours a month, right, I mean, I just don't spend
that much time on them. And and when you're take
into consideration like the amount of cash flow that goes
with that, you know, it's it really is. It's been
(08:53):
an incredible journey and I've been really fortunate with it.
Speaker 2 (08:56):
All right, So let's look at the cash flow. And
you know, like you said, the cash flow is kind
of thin. But let's put some numbers on this to
to understand this better. So if you add up the
rent for all your units, how much rent do you
bring in every month?
Speaker 3 (09:12):
So all of our market, all of our apartments are
most of our apartments are below market rent pretty significantly.
Speaker 1 (09:20):
Rent around here is nuts.
Speaker 3 (09:21):
If you have a corporate landlord, you could be looking
at two bedroom apartments that are going for forty two
hundred dollars.
Speaker 1 (09:29):
It's not a sane market. So most of ours are
well under market.
Speaker 3 (09:34):
And we still with just six property or six doors
i should say, are able to bring in about seventeen
thousand dollars a month.
Speaker 1 (09:42):
Okay, and rent, like, well why do you do that?
Speaker 2 (09:45):
Like why not raise that up a little bit and
make the cash flow better?
Speaker 3 (09:51):
My? Those places that charge market rent that really push
things you know, they have a lot of amenities. They
have keypad entry, they have you know, maybe a pool
or you know, all like an outdoor deck or something.
We have a lot of amenities too, but not like that.
You know, we're not new construction.
Speaker 2 (10:10):
Okay, So you've got seventeen thousand dollars a month in rent,
which is undermarket, but how much are your mortgage payments
every month?
Speaker 3 (10:20):
So we like to have for this time in our
real estate investment, like in our growth, we like to
have everything leveraged for asset protection and to maximize some.
Speaker 1 (10:35):
Of the repairs that we can do. So we have
probably close to.
Speaker 3 (10:42):
Maybe a little under like fifteen thousand in mortgage payments
right now, probably probably okay.
Speaker 2 (10:49):
And do you have any utilities that you pay or
HOA fees or anything like that.
Speaker 3 (10:55):
So one of those doors is a condos, so we
have an HOA fee on that, but it's that's about
three fifty four hundred dollars and that covers a lot
of the utilities actually, and you know, all the landscaping
and snow removal, which is a huge pain if you're
from where I'm from.
Speaker 1 (11:14):
So all that stuff's taken care of with that.
Speaker 3 (11:16):
So even though it's a huge expense, it does take
a lot of things off my plate that I no
longer have to worry about it as a landlord.
Speaker 2 (11:22):
So after you pay the mortgage and the kind of
fee and whatever else, it sounds like you've got about
sixteen hundred a month left over.
Speaker 1 (11:36):
Yeah, we got about twelve yees.
Speaker 3 (11:38):
A little bit more than that, probably about two thousand
somewhere in there. And then but again that cash flow
will really be unlocked. So what are my general plan?
My son right, and my daughter's going into high school,
my son's going into middle school, and my general plan
is to hold, hold, hold, maybe accumulate one or two more,
(12:01):
and then once we get on the other side of
college for them really start getting rid of maybe not
even getting rid of some, but moving them to property
management companies selling what we need to sell to if
there's any debt accrued from college. And that's kind of
what we're holding for. So if I if I moved
(12:24):
out of if we sold one of these properties now,
it would really unleash some cash flow from other properties.
But I like the job that I have now, so
I don't really feel beholden to do that.
Speaker 2 (12:38):
And then as far as budgeting for repairs and vacancy,
does that two thousand dollars a month cover that? Or like,
how do you do that?
Speaker 3 (12:49):
So because we enjoy this, I feel like this is
going to really drive some investors' nuts. But so because
we like to be leveraged at this point. And when
I say we, I'm talking about my wife and I.
These are like the decisions that we've made.
Speaker 1 (13:05):
But the.
Speaker 3 (13:07):
One of the lines that we pulled on to do
some of that, to do some of those repairs for
the heating system at the three family, we pulled the
line of credit on one of the investment properties. So
because there's a line of credit on those I any
cash flow I get, I just put towards paydown on
(13:27):
that helock.
Speaker 1 (13:28):
So I don't really utilize any cash flow.
Speaker 3 (13:31):
We make enough money from our jobs to live off
of that, and I'm just trying to do kind of
like a debt paydown on that one line of credit
because that's the only one that has a fluctuating interest rate,
and that just drives me crazy that it's fluctuating interest rate.
But I like having that line of credit in the
event of So that's where I take if there's a
serious repair that's needed. I'll just go to that and
(13:52):
then we'll continue pay down on that as cash flow dictates.
Speaker 2 (13:56):
Okay, yeah, that makes sense. And so what's in interesting
though about your portfolio is so cash flow wise, I mean,
you're making some money there to pay down the he lock,
but you're not making a lot of money. But it's
and I understand you want to keep the rents low,
but if you raised the rents a little bit, like
(14:18):
these properties could actually be making significant cash flow.
Speaker 3 (14:23):
Oh yeah, absolutely, they definitely could. I mean the other
thing is that we have somewhat low rates and so
you know, the cash flow and a lot of these.
Speaker 1 (14:36):
There are certainly arbitrage.
Speaker 3 (14:37):
One of the things that I need to work on
as an investor is understanding cash on cash return, which
I understand the mathematics of, but I don't utilize it
because for some reason, I'm just not comfortable with investing
outside of my market, which would be the smarter move
at this point. But yes, I certainly could free up
(15:00):
a lot of cash flow by.
Speaker 1 (15:02):
Turning some of these over, but it's just not what
I want to do right now.
Speaker 2 (15:09):
Sure, yeah, I mean, and that's the thing. It's like
you have a lot of opportunity. I mean, because you've
created that million dollars in equity. If at some point
you wanted to maybe invest in a different market where
prices were cheaper, you could always take that million dollars
and use that to fund a ton of purchases if
(15:30):
that's something you wanted to do. I mean, you have
a lot of options.
Speaker 3 (15:33):
And I've been I've been looking at It's funny. I
have about nine zilo searches from various lower cost markets
throughout the country that I've just I spend an absurd
amount of time staring at. And I do think about
turning the equity from one, you know, doing ten thirty nine,
bringing that money elsewhere and watching what it could unlock
(15:56):
for me. But again, there's just a comfort for me
in an understanding.
Speaker 1 (16:02):
I just know this area, my area.
Speaker 3 (16:05):
There was a two family that we sold that was
like it was probably like six blocks away from my house.
It was like right next to my daughter's middle school
at the time, and it was too far away from
my investment farm.
Speaker 1 (16:17):
It was like six blocks away.
Speaker 3 (16:19):
I was like, I don't know, man, we had a
problem where like I had to be over there a
couple of days in a row, we had like a
heating system go out, and I was over there a
lot and I was like, god, I hate driving across town.
It wasn't even across town. It was like it was
like a quarter the way across town. It was just
kind of a little bit further than I wanted to go.
Speaker 1 (16:35):
And so we sold the property.
Speaker 3 (16:38):
And you know, it drives me nuts now that I
sold that property, of course, as it does for every
investor with every property that they've ever owned. But but yeah,
it you know, I just know this market.
Speaker 1 (16:51):
I know it well.
Speaker 3 (16:52):
I can tell you exactly what the rents are supposed
to be based on without even walking.
Speaker 1 (16:57):
Into a house.
Speaker 3 (16:57):
I can just tell you and I and there's a
comfort to me and that that supersedes immediate cash flow,
because again, I like my job, so I don't have
the time to be following up with out of state
property managers or stressed out about if I got the
right property manager or if you know, the finding plumbers
in certain markets and stuff.
Speaker 1 (17:19):
I don't find comforting that right now.
Speaker 3 (17:23):
Just because you know, I've my kids are athletes, they
play a lot of sports. I have, you know, a
job that like my wife works, so I don't have
a ton of spare time, and this really works for
me in terms of the time that I can give
to it. As that changes, as my life changes, when
my daughter goes to college, when my son gets to
(17:43):
the point where he's off to college, then it's going
to be a whole different thing of maybe I'll be
bored with what these are and by that time there
will be so much debt pay down.
Speaker 1 (17:55):
I mean, because the rates are so low.
Speaker 3 (17:58):
Just my equity paydown, my principal paydown monthly is like
thirty five hundred dollars a month, So I mean there's
significant growth monthly, even if it's not in the form
of cash flow, you know, let alone, the growth of
the property is going through. So it's just about what
(18:18):
works for me now and holding these and as my
uncle says, breathing oxygen will put me in a position
when it is time to change that I'll be will
be golden. We can we can sell, we can pull
money out of those properties. We can use the cash flow,
we can pay them down. We have all sorts of
exit strategies that we can do. We can ten thirty
(18:38):
nine of them in there's something else somewhere else.
Speaker 1 (18:40):
That we want to live. It really opens up a
lot of opportunities for us for now.
Speaker 2 (18:46):
And that's great. I mean it's you've got you've got options,
and that's really I think what it's all about. It's
just having those options. And you know, what you're doing
right now is working great. I mean you've made a
million dollar, you're making money on the properties. But if
things change in the future, you can go with whatever
(19:07):
you want to do. And I think that's I think
that's awesome.
Speaker 3 (19:10):
Yeah, it's really been. It's I'm pretty psyched about twenty
three year old. Twenty three year old me really uh
really hooked me up. It was it was it was
a good decision and I'm and I'm proud of them
for sticking with it because it, uh, it really unlocked
it that one decision.
Speaker 1 (19:28):
You know, whether it was my.
Speaker 3 (19:31):
Just just growing up in my family and being around
real estate, if it was my aunts or uncles, if
it was my parents talking to me about it. I
know my mom helped, like helped with those final stages.
My family has like a real estate you know business,
so they were comfortable like walking me, helped me through
like the first transaction and everything, And I mean that
(19:53):
amount of graciousness being paid forward I hope everybody can
find because it it unquestionably that one.
Speaker 1 (20:00):
Decision and the ability to hold it over time.
Speaker 3 (20:05):
As has unlocked almost every financial opportunity I've had in
my life.
Speaker 2 (20:10):
That's what I love about rental properties. There's so many
different ways to do this and they all work. You
just got to figure out what works for you, and
this is definitely working out for John, and I think
that's great. Well, if anybody wants to reach out to John,
I've got his contact information on the website. You can
find it at Rental incomepodcast dot com slash episode five
(20:33):
forty one. I'd like to thank Jaley Ridge from Ridgelendon
Group for sponsoring today's episode. If you're looking to buy
a rental property, whether you're just getting started or you
want to add to your portfolio, reach out to Jayleey.
She's got a ton of different loan programs and she
can find something that works for you. And right now
(20:54):
she's offering a free consultation to help you get your
plan together to build your rental port portfolio. If you
want to take advantage of that, just go to Ridgelendinggroup
dot com NMLS four two zero five six. Thank you
so much for checking out the podcast today. Make sure
you hit that follow button. I put out a new
(21:15):
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 the Rental
Income Podcast
The inspiring interviews with today is Top Landlords, this is
the Rental Income Podcast, and now.
Speaker 2 (00:08):
Damnly John, you think that if you think long term
with rental properties, it's really hard to lose.
Speaker 1 (00:16):
Where I am right now.
Speaker 3 (00:17):
If the market never increases, if rents never go up,
if the property values never ever ever go up, and
when all's said and done, when these things are paid off,
you know, we'll be looking at about seventeen thousand dollars
in cash flow monthly and you know, more than a
million in equity and a property. And that's just from
(00:40):
a slow and steady growth over you know, twenty five
years or twenty two years.
Speaker 2 (00:46):
And what's incredible is when you think about it, I mean,
rents are going to go up, properties are going to appreciate.
So that's that's kind of the worst case scenario that
the rents never go up, correct.
Speaker 3 (00:58):
I mean, And I mean I'm probably the I'm not
an economist, but I mean in the history, in the
recorded history of real estate markets, I don't know that
rent or house appreciation has ever not gone up over
the span of ten twenty years, you know, in modern
history at least. So I feel like it's pretty pretty
(01:21):
good odds that things are somewhat safe.
Speaker 2 (01:23):
I guess what I think is great and very relatable
about John's story is that this isn't something he's doing
full time. He buys rental properties in his spare time.
He only has three properties that he's bought over a
course of twenty years, and he's created over a million
dollars in equity. And on the show today, we're going
(01:45):
to figure out how he did it. Joining us on
the show today from Boston is John Paddell. We'll take
a quick break to think, our sponsors will come right
back and we'll talk to John. It's a lot of
work to find a really good rental property, and when
you actually find that property, I 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
(02:07):
Ridge Lending Group. She's a nationwide lender and her specialty
is helping investors finance rental properties. She has a ton
of loan programs and she can find something customized to
you for your situation. If you want 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
(02:29):
com and MLS four two zero five six. Are you
thinking about investing in rental properties but maybe you don't
know where to start. My friends at Midsouth home Buyers
make it simple. For over twenty three years, they've been
selling fully renovated, turnkey rental properties in Memphis and Little Rock.
We're talking new roofs, plumbing, electric, kitchens, bathrooms. Everything is
(02:53):
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 Midsouth continues to professionally manage the property
for you after the sale, and they back it up
with two powerful guarantees. You get a one year total
(03:15):
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 midsouthhome Buyers
(03:37):
dot com. John, Let's start things off talking about your portfolio.
What does your portfolio look like?
Speaker 1 (03:45):
So right now we have six doors currently.
Speaker 2 (03:47):
And how long have you been investing for.
Speaker 3 (03:50):
I've been investing for twenty two to twenty three years actually,
so it's been a slow progress.
Speaker 1 (03:55):
I'm sure.
Speaker 3 (03:57):
I'm sure a lot of the listeners when you hear
other real estate podcasts, there are people that move a
lot more expansively and a lot of quicker than that.
Speaker 2 (04:06):
What was there a huge gap? Like, so you bought
that first property in two thousand and three, what year
was it when you bought your second property?
Speaker 3 (04:16):
I think twenty eleven, and I was in my twenties.
And when you're in your twenties, the other thing that
nobody tells you is that everybody you know is renting,
So you can everybody you know either works at a
restaurant or knows somebody that works at a restaurant, or
just got their first job and wants to get out
of their parents' house. So I was like, effectively, even
(04:39):
though I was a landlord, I was effectively running like
a boarding house for my friends. And whoever was like,
whoever was in between apartments or whatever, I was like, yeah,
come on it, like you know, we at one point
we had a girl living in a loft over our
kitchen with no walls like blocking her and she was like, yeah,
if I'll just pay for electric and cable, and that
was how she contributed to the rent in our apartment.
Speaker 1 (05:00):
And it was like a three bedroom apartment. There were like.
Speaker 3 (05:02):
Seven of us living there because you know, and I
say this with all the love in my heart, but
towards other people in their twenties now and myself when
I was there, But when you're in your twenties, your
standard of living is so low, like everything's a sleepover man, right.
Speaker 1 (05:19):
So yeah, if you want, if you want to move in.
Speaker 3 (05:20):
It was great, It was It was I mean what's
now come to be known as house hacking, and it's,
you know, common practice. But really, at the time, I
thought I had like unlocked a key to a different universe.
I mean my friends, my friends, who I think loved
the experience, but they you know, probably paid God. I
(05:44):
mean they must have paid fifty sixty thousand dollars towards
that house over the years that we lived there in
our twenties. So it never even occurred to me to
be outlooking for more because we were having a great
time at the at the two family that I bought.
Speaker 2 (05:58):
So let's flash forward today. So you've got six doors
and it's three different properties.
Speaker 3 (06:05):
It's three different properties over six doors, over three properties.
Speaker 2 (06:08):
Yes, if you were to estimate how much those properties
have appreciated over the twenty two years, how much money
do you think you've made an appreciation?
Speaker 1 (06:20):
I mean it's certainly more than a million. We have
our our.
Speaker 3 (06:27):
Neck of the woods where I invest, north of Boston
is not a very easy place for cash flow. The
rents are incredibly high, but so are the property.
Speaker 1 (06:37):
Costs, So.
Speaker 3 (06:40):
That's you know, it's a risky thing for a beginning
real estate investor. You know, back when I started, cash
flow is more prevalent, and it it was kind of
skewed because I was also living there, So the bell
curve of what was acceptable to me in terms of
incoming money was a little bit different because I had
(07:02):
a tangible reason to stay at that property. But going forward,
as we continue to invest, I mean, cash flow is
tight around here. The smart move for me to do
the next step that I'll be taking is investing outside
of my area to kind of maximize some cash flow.
Speaker 1 (07:24):
But the appreciation here historically.
Speaker 3 (07:28):
I mean, we're in a little bit of a downturn
now or at least a you know, houses are sitting
on the market now, which is crazy compared to what.
Speaker 1 (07:38):
Is normally the case with the market.
Speaker 3 (07:40):
But appreciation around here generally speaking, has always kind of
been ridiculous.
Speaker 2 (07:45):
And I mean, what's really I think great about that
is this is something you just do on the side.
You've got a job that real estate isn't your main job,
but you've made a million dollars just by buying properties
and letting them, letting time go by and do its thing.
Speaker 3 (08:06):
Yeah, and again, I don't I feel like I'm making
my own version of rich Dad Kordad here. But when
I go, if I go back to words of wisdom
from my uncle, who's the investor, he always says he
I remember him telling me back when I bought the
place of twenty three. He's like, John, you buy the
property and you breathe oxygen. That's all you have to do, right,
And I mean, you know, of course occasionally things come up,
(08:29):
but but I mean overwhelmingly, I mean, I'd be floored
if I think about these properties for more than four
hours a month, right, I mean, I just don't spend
that much time on them. And and when you're take
into consideration like the amount of cash flow that goes
with that, you know, it's it really is. It's been
(08:53):
an incredible journey and I've been really fortunate with it.
Speaker 2 (08:56):
All right, So let's look at the cash flow. And
you know, like you said, the cash flow is kind
of thin. But let's put some numbers on this to
to understand this better. So if you add up the
rent for all your units, how much rent do you
bring in every month?
Speaker 3 (09:12):
So all of our market, all of our apartments are
most of our apartments are below market rent pretty significantly.
Speaker 1 (09:20):
Rent around here is nuts.
Speaker 3 (09:21):
If you have a corporate landlord, you could be looking
at two bedroom apartments that are going for forty two
hundred dollars.
Speaker 1 (09:29):
It's not a sane market. So most of ours are
well under market.
Speaker 3 (09:34):
And we still with just six property or six doors
i should say, are able to bring in about seventeen
thousand dollars a month.
Speaker 1 (09:42):
Okay, and rent, like, well why do you do that?
Speaker 2 (09:45):
Like why not raise that up a little bit and
make the cash flow better?
Speaker 3 (09:51):
My? Those places that charge market rent that really push
things you know, they have a lot of amenities. They
have keypad entry, they have you know, maybe a pool
or you know, all like an outdoor deck or something.
We have a lot of amenities too, but not like that.
You know, we're not new construction.
Speaker 2 (10:10):
Okay, So you've got seventeen thousand dollars a month in rent,
which is undermarket, but how much are your mortgage payments
every month?
Speaker 3 (10:20):
So we like to have for this time in our
real estate investment, like in our growth, we like to
have everything leveraged for asset protection and to maximize some.
Speaker 1 (10:35):
Of the repairs that we can do. So we have
probably close to.
Speaker 3 (10:42):
Maybe a little under like fifteen thousand in mortgage payments
right now, probably probably okay.
Speaker 2 (10:49):
And do you have any utilities that you pay or
HOA fees or anything like that.
Speaker 3 (10:55):
So one of those doors is a condos, so we
have an HOA fee on that, but it's that's about
three fifty four hundred dollars and that covers a lot
of the utilities actually, and you know, all the landscaping
and snow removal, which is a huge pain if you're
from where I'm from.
Speaker 1 (11:14):
So all that stuff's taken care of with that.
Speaker 3 (11:16):
So even though it's a huge expense, it does take
a lot of things off my plate that I no
longer have to worry about it as a landlord.
Speaker 2 (11:22):
So after you pay the mortgage and the kind of
fee and whatever else, it sounds like you've got about
sixteen hundred a month left over.
Speaker 1 (11:36):
Yeah, we got about twelve yees.
Speaker 3 (11:38):
A little bit more than that, probably about two thousand
somewhere in there. And then but again that cash flow
will really be unlocked. So what are my general plan?
My son right, and my daughter's going into high school,
my son's going into middle school, and my general plan
is to hold, hold, hold, maybe accumulate one or two more,
(12:01):
and then once we get on the other side of
college for them really start getting rid of maybe not
even getting rid of some, but moving them to property
management companies selling what we need to sell to if
there's any debt accrued from college. And that's kind of
what we're holding for. So if I if I moved
(12:24):
out of if we sold one of these properties now,
it would really unleash some cash flow from other properties.
But I like the job that I have now, so
I don't really feel beholden to do that.
Speaker 2 (12:38):
And then as far as budgeting for repairs and vacancy,
does that two thousand dollars a month cover that? Or like,
how do you do that?
Speaker 3 (12:49):
So because we enjoy this, I feel like this is
going to really drive some investors' nuts. But so because
we like to be leveraged at this point. And when
I say we, I'm talking about my wife and I.
These are like the decisions that we've made.
Speaker 1 (13:05):
But the.
Speaker 3 (13:07):
One of the lines that we pulled on to do
some of that, to do some of those repairs for
the heating system at the three family, we pulled the
line of credit on one of the investment properties. So
because there's a line of credit on those I any
cash flow I get, I just put towards paydown on
(13:27):
that helock.
Speaker 1 (13:28):
So I don't really utilize any cash flow.
Speaker 3 (13:31):
We make enough money from our jobs to live off
of that, and I'm just trying to do kind of
like a debt paydown on that one line of credit
because that's the only one that has a fluctuating interest rate,
and that just drives me crazy that it's fluctuating interest rate.
But I like having that line of credit in the
event of So that's where I take if there's a
serious repair that's needed. I'll just go to that and
(13:52):
then we'll continue pay down on that as cash flow dictates.
Speaker 2 (13:56):
Okay, yeah, that makes sense. And so what's in interesting
though about your portfolio is so cash flow wise, I mean,
you're making some money there to pay down the he lock,
but you're not making a lot of money. But it's
and I understand you want to keep the rents low,
but if you raised the rents a little bit, like
(14:18):
these properties could actually be making significant cash flow.
Speaker 3 (14:23):
Oh yeah, absolutely, they definitely could. I mean the other
thing is that we have somewhat low rates and so
you know, the cash flow and a lot of these.
Speaker 1 (14:36):
There are certainly arbitrage.
Speaker 3 (14:37):
One of the things that I need to work on
as an investor is understanding cash on cash return, which
I understand the mathematics of, but I don't utilize it
because for some reason, I'm just not comfortable with investing
outside of my market, which would be the smarter move
at this point. But yes, I certainly could free up
(15:00):
a lot of cash flow by.
Speaker 1 (15:02):
Turning some of these over, but it's just not what
I want to do right now.
Speaker 2 (15:09):
Sure, yeah, I mean, and that's the thing. It's like
you have a lot of opportunity. I mean, because you've
created that million dollars in equity. If at some point
you wanted to maybe invest in a different market where
prices were cheaper, you could always take that million dollars
and use that to fund a ton of purchases if
(15:30):
that's something you wanted to do. I mean, you have
a lot of options.
Speaker 3 (15:33):
And I've been I've been looking at It's funny. I
have about nine zilo searches from various lower cost markets
throughout the country that I've just I spend an absurd
amount of time staring at. And I do think about
turning the equity from one, you know, doing ten thirty nine,
bringing that money elsewhere and watching what it could unlock
(15:56):
for me. But again, there's just a comfort for me
in an understanding.
Speaker 1 (16:02):
I just know this area, my area.
Speaker 3 (16:05):
There was a two family that we sold that was
like it was probably like six blocks away from my house.
It was like right next to my daughter's middle school
at the time, and it was too far away from
my investment farm.
Speaker 1 (16:17):
It was like six blocks away.
Speaker 3 (16:19):
I was like, I don't know, man, we had a
problem where like I had to be over there a
couple of days in a row, we had like a
heating system go out, and I was over there a
lot and I was like, god, I hate driving across town.
It wasn't even across town. It was like it was
like a quarter the way across town. It was just
kind of a little bit further than I wanted to go.
Speaker 1 (16:35):
And so we sold the property.
Speaker 3 (16:38):
And you know, it drives me nuts now that I
sold that property, of course, as it does for every
investor with every property that they've ever owned. But but yeah,
it you know, I just know this market.
Speaker 1 (16:51):
I know it well.
Speaker 3 (16:52):
I can tell you exactly what the rents are supposed
to be based on without even walking.
Speaker 1 (16:57):
Into a house.
Speaker 3 (16:57):
I can just tell you and I and there's a
comfort to me and that that supersedes immediate cash flow,
because again, I like my job, so I don't have
the time to be following up with out of state
property managers or stressed out about if I got the
right property manager or if you know, the finding plumbers
in certain markets and stuff.
Speaker 1 (17:19):
I don't find comforting that right now.
Speaker 3 (17:23):
Just because you know, I've my kids are athletes, they
play a lot of sports. I have, you know, a
job that like my wife works, so I don't have
a ton of spare time, and this really works for
me in terms of the time that I can give
to it. As that changes, as my life changes, when
my daughter goes to college, when my son gets to
(17:43):
the point where he's off to college, then it's going
to be a whole different thing of maybe I'll be
bored with what these are and by that time there
will be so much debt pay down.
Speaker 1 (17:55):
I mean, because the rates are so low.
Speaker 3 (17:58):
Just my equity paydown, my principal paydown monthly is like
thirty five hundred dollars a month, So I mean there's
significant growth monthly, even if it's not in the form
of cash flow, you know, let alone, the growth of
the property is going through. So it's just about what
(18:18):
works for me now and holding these and as my
uncle says, breathing oxygen will put me in a position
when it is time to change that I'll be will
be golden. We can we can sell, we can pull
money out of those properties. We can use the cash flow,
we can pay them down. We have all sorts of
exit strategies that we can do. We can ten thirty
(18:38):
nine of them in there's something else somewhere else.
Speaker 1 (18:40):
That we want to live. It really opens up a
lot of opportunities for us for now.
Speaker 2 (18:46):
And that's great. I mean it's you've got you've got options,
and that's really I think what it's all about. It's
just having those options. And you know, what you're doing
right now is working great. I mean you've made a
million dollar, you're making money on the properties. But if
things change in the future, you can go with whatever
(19:07):
you want to do. And I think that's I think
that's awesome.
Speaker 3 (19:10):
Yeah, it's really been. It's I'm pretty psyched about twenty
three year old. Twenty three year old me really uh
really hooked me up. It was it was it was
a good decision and I'm and I'm proud of them
for sticking with it because it, uh, it really unlocked
it that one decision.
Speaker 1 (19:28):
You know, whether it was my.
Speaker 3 (19:31):
Just just growing up in my family and being around
real estate, if it was my aunts or uncles, if
it was my parents talking to me about it. I
know my mom helped, like helped with those final stages.
My family has like a real estate you know business,
so they were comfortable like walking me, helped me through
like the first transaction and everything, And I mean that
(19:53):
amount of graciousness being paid forward I hope everybody can
find because it it unquestionably that one.
Speaker 1 (20:00):
Decision and the ability to hold it over time.
Speaker 3 (20:05):
As has unlocked almost every financial opportunity I've had in
my life.
Speaker 2 (20:10):
That's what I love about rental properties. There's so many
different ways to do this and they all work. You
just got to figure out what works for you, and
this is definitely working out for John, and I think
that's great. Well, if anybody wants to reach out to John,
I've got his contact information on the website. You can
find it at Rental incomepodcast dot com slash episode five
(20:33):
forty one. I'd like to thank Jaley Ridge from Ridgelendon
Group for sponsoring today's episode. If you're looking to buy
a rental property, whether you're just getting started or you
want to add to your portfolio, reach out to Jayleey.
She's got a ton of different loan programs and she
can find something that works for you. And right now
(20:54):
she's offering a free consultation to help you get your
plan together to build your rental port portfolio. If you
want to take advantage of that, just go to Ridgelendinggroup
dot com NMLS four two zero five six. Thank you
so much for checking out the podcast today. Make sure
you hit that follow button. I put out a new
(21:15):
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 the Rental
Income Podcast
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