November 4, 2025 • 23 mins
When Michael Atkins got his real estate license, he thought it would be the key to making more money. But after a few months, he realized the income wasn’t consistent. Some months were great, and others he made nothing at all.
On this episode, Michael shares how investing in rental properties changed everything. His rental income now covers all his bills, giving him financial stability and the freedom to grow his business without pressure.
We talk about how he saved up to buy his first properties, how he structures his income so commissions go straight into savings, and how not needing to make a sale has actually made him a better Realtor.
Michael also walks us through one of his deals, how he found it, what he paid, the mortgage and expenses, and how much it cash flows.
Plus, we talk about the importance of curb appeal and how small touches can make a big difference in your rental’s performance.
https://rentalincomepodcast.com/episode546
Thanks To Our Sponsors:
Ridge Lending Group - Making investment Mortgage process simple and stress-free.
MidSouth HomeBuyers – Turnkey Rentals In Memphis & Little Rock. Instant Cash Flow On Day One. (Priced between $100,000 to low $200's)
Rental Accounting Software Made Easy. Free 30 Day Trial.
On this episode, Michael shares how investing in rental properties changed everything. His rental income now covers all his bills, giving him financial stability and the freedom to grow his business without pressure.
We talk about how he saved up to buy his first properties, how he structures his income so commissions go straight into savings, and how not needing to make a sale has actually made him a better Realtor.
Michael also walks us through one of his deals, how he found it, what he paid, the mortgage and expenses, and how much it cash flows.
Plus, we talk about the importance of curb appeal and how small touches can make a big difference in your rental’s performance.
https://rentalincomepodcast.com/episode546
Thanks To Our Sponsors:
Ridge Lending Group - Making investment Mortgage process simple and stress-free.
MidSouth HomeBuyers – Turnkey Rentals In Memphis & Little Rock. Instant Cash Flow On Day One. (Priced between $100,000 to low $200's)
Rental Accounting Software Made Easy. Free 30 Day Trial.
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:00):
The inspiring interviews with today is Top Landlords. This is
the Rental Income Podcast and.
Speaker 2 (00:08):
No damnly, Michael, you had a job where you weren't
making much money. You decided to get your real estate license.
You figured you could sell some houses and make more
money that way. But after a while you kind of
realized that the income was kind of spiky. You might
have some good months where you made money, but then
(00:30):
you might have a couple of months where you didn't
make money at all. How did buying rental properties help
you even out your income?
Speaker 3 (00:37):
I mean, basically, if I didn't sell anything, I didn't
need a commission, And you know, I was always trying
to get business, but it was kind of spread it
and it wasn't coming in that much. And I noticed
that if I bought rentals that I could increase my
monthly income, and so it gave me a little bit
(00:57):
of stability knowing that, you know, reasonable expectation, I can
get so much a month, which with each rental involved.
Speaker 2 (01:05):
On the podcast today, we're going to figure out how
Michael was able to build a rental portfolio that provides
him with stable monthly income. So it really doesn't matter
how much he makes at his day job. Joining us
on the podcast today from Montgomery, Alabama is Michael Atkins.
We'll take a quick break to thank our sponsors. We'll
come right back and we'll talk to Michael. It's a
(01:27):
lot of work to find a really good rental property,
and when you actually find that property, you want to
make sure you're working with a lender that can get
that loan closed. The lender that I recommend is jay
Ley Ridge from Ridge Lending Group. She's a nationwide lender
and her specialty is helping investors' finance rental properties. She
has a ton of loan programs and she can find
(01:48):
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
Lendgroup dot 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
(02:10):
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 brand new and done right. And here's the
best part. Every property comes with a well qualified tenant
(02:32):
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 maintenance warranty and a lifetime occupancy guarantee. Personally,
(02:52):
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 dot com. Michael, let's start with your portfolio
today and then we'll kind of take a step back
(03:15):
and figure out how you got there. So tell me
about your rentals.
Speaker 3 (03:19):
I have fifty doors now. I've probably bought three or
four this year. They're mostly single family homes. They you know,
they've probably ranged from a two bedroom, one bath in
a c neighborhood to a four bedroom, two math and
you know, a minus neighborhood, if that makes sense.
Speaker 2 (03:42):
When you were getting started as a realtor and you
knew that your income was was going to be kind
of spiky, was your goal at that point to have
the rentals pay all your living expenses so that you
weren't relying on that commission income.
Speaker 3 (03:58):
Oh yeah, I mean it was kind of the goal there,
and to a certain extent, I'm you know, I've always
been very frugal, but I knew my job at the
Board of Education and the maintenance department wasn't you know,
it wasn't my life goal there, and it was just
(04:19):
kind of a job I fell into, And you know,
I didn't I didn't like the idea of, to a
certain extent, like the commission being based connected to the sale,
because there's always the pressure to make the seal. But
(04:41):
I preferred to be like an unbiased advisor where I
didn't really care whether you bought the house or not,
and having the rental income coming in every month, I
could kind of know that, you know, my house payments covered,
or my car payment or whatever, my bills are covered,
and I don't, you know, whatever I made from real
(05:01):
estate sales was just extra. You can kind of get
the commission to get ahead, and it kind of turned
into you know, early on, when I had multiple jobs
going on, real estate, commission just went to savings account
to buy more rentals. And you know, I kind of
had a threshold for savings there is around ten to
(05:21):
fifteen thousand dollars. But I could buy those houses and
put on the roof and replace the ac in it
and paint it, fix the floor, and get it ready
to rent. So I could. I basically was saving up
to buy the house, and then I'd save up the
money to repair it and I rented out and then
(05:42):
it's like I got to raise every month.
Speaker 2 (05:43):
So thinking back to those early days, like what did
you really at that point understand the numbers? Like did
you understand that there would be expenses to the properties
or were you thinking, Okay, if I make X amount
of mine money and rent every month, all my bills
are going to be paid? Like how much did you
(06:05):
really understand in those early days?
Speaker 3 (06:09):
No, I was I wasn't some kind of you know,
mathematician or super genius over there. I was just looking around, like, man,
how can I make my money work for me? And
that was really the only thing I knew where I
could kind of make my little small investment, and I
knew I could get back. Then I was saving up
(06:31):
to buy the house for let's say fifteen thousand, and
then I was saving up to renovate the house for
another fifteen thousand, and you know, I'm in it for
thirty thousand. But then I was getting you know, six
fifty a month for this little rental. And you know,
I was pretty handy, so I could make repairs myself
if I needed to or had to. And yeah, I
(06:56):
mean these numbers sound silly.
Speaker 1 (06:59):
Yeah deal.
Speaker 2 (07:00):
So yeah, So was that Were those properties in like
really rough neighborhoods?
Speaker 3 (07:07):
Yes, and no, I mean I didn't feel uncomfortable in
those neighborhoods. I would ben find living in them.
Speaker 2 (07:15):
Were you able to finance those houses or were they
all cash purchases?
Speaker 3 (07:20):
They're cash purchases for me. And again, it was just
one of those things where that's what I was comfortable with.
And yeah, you know, these houses didn't meet a FAJA standards.
It probably wasn't something that I could go to a
(07:41):
conventional mortgage broker. I probably had to go find a
local banker.
Speaker 2 (07:46):
And how did you save that money? Because you know too,
you were obviously very young. I mean you were just
out of high school. You had been working for the
school system, imagining you probably weren't making much money. How
did you save the money to buy those houses back then?
Speaker 3 (08:05):
Yeah? It was just always taught the kind of stilled
into me to save money. Okay, And you know, uh,
it seems like I've always had about three jobs, and
so you know, I didn't have any money, and I
(08:27):
was rarely bored because if I was bored, I was
finding something to do, right, Okay, So I always been
grasped push aground for farmers, help buddies, cut trees, basically
anything I could do to becca extra die, and that's
what I was doing.
Speaker 1 (08:44):
And okay, so that makes sense.
Speaker 2 (08:46):
So you're working hard, you're you're saving your money, and
then as you have the money, you're putting that into
a property, and then that property then is generating rain
for you. And because you don't have a mortgage, I'm
edge their cash flowing great.
Speaker 3 (09:02):
Yeah.
Speaker 1 (09:03):
Yeah, And today are you.
Speaker 2 (09:05):
Still buying houses with cash or do you take out
mortgages today?
Speaker 3 (09:09):
It really depends on the price. Some of these houses,
they're not the best performers and so I might sell
one of those houses and then ten thirty one of
the money into a nicer house. You know, maybe go
sell one of the two bedroom, one baths and go
buy a three bedroom, one bath, I mean three bedroom,
(09:30):
two bath, and it would be pretty close to the
same money. And you know, I'm still saving up my
real estate commissions, and I have extra money, I start
around for a deal. I think that's really the thing
that motivates me is when I see one that's kind
of undervalued or underappreciated. That's, you know, that's if I
(09:56):
don't have the cash, I'm gonna borrow the money.
Speaker 2 (09:59):
So so would you say that your rentals today they
have they made you a better realtor that you know
that you can always do the right thing for your client.
You're you're not you're not ever trying to get a
deal done. Has it made you a better agent? Just
(10:20):
not having that pressure that you need a commission check
to pay your mortgage this month?
Speaker 3 (10:26):
Oh yeah, It's made me a better advisor in so
many ways. I Mean, there's the thing where you know,
I truly don't care if you buy a house or not.
I might I might get annoyed with a client. If
they run me around town and we looked at a
dozen houses or two, really doesn't don't mean for me, Yeah,
(10:49):
a couple of dozen houses and you're not buying anything,
and it's really like, hey, uh, you know, I think
I think we need to re evaluate what you're looking
looking for here. But also from another perspective is that
I've looked at these houses from most of contractor's perspective,
where I just run across so many situations where something's
(11:14):
broken or I see a little telltale sign that tells
me something else is wrong. And you know, dealing with
property management companies, dealing with other property managers, dealing other agents,
and you know, this one looks really good on paper,
but when we kind of dig into the property, I
mean they ever once fall run across properties where I
(11:37):
can't really put my finger on what the problem is,
but I know it's a money pit. And you know,
if you buy this thing, you're just going to be
constantly eat up with maintenance expenses and it's just better
for us to go and find another house.
Speaker 2 (11:50):
Well, let's take a look at at one of your deals.
So tell me about this property. How did you find it?
Speaker 3 (11:56):
The agent was it had it listed Birmingham, which is,
you know, one hundred miles away, and so nobody in
Montgomery's looking at the Birmingham MLS. None of the agents
are looking at the Birmingham MLS for houses in Montgomery.
And I happen to be a member of that MLS,
(12:17):
and so I have an active search for anything listed
in my area in that MLS. It'll send it to
me directly, and I feel like it just gives me
a slight little edge over, you know, my peers here.
And this property was listed in Birmingham and been out
there for a while, and thinking, man, you know, buyers
(12:39):
can still see it on SILLO or realtor dot com,
but any of the local real estate agents they're they're
not looking. They're looking on their local mls for it.
And so it just was one of the houses I flagged.
I think it took me a little while to get
the agent on the phone or get a code to
get in the house and let them checked it out.
And like, man, the same pretty clean reflects, pretty good
(13:05):
ac unit was missing that they didn't bother me any
and so I made them an offer. Turns out that
they had already made plans to replace acy in it,
and they paid for it. They just were waiting for
it to sail before they installed it. And I felt like,
you know, got a pretty good deal just because it
(13:26):
was just listed in a different MLS.
Speaker 2 (13:29):
Right, So because it's not listed, right, they're not getting
the showings they should get. Not every agent is aware
of that property's out there, and that helped you get
a better price on it. Yeah, yeah, absolutely, that's great.
So what did you end up paying for the property?
Speaker 3 (13:49):
I paid one hundred and seven thousand dollars for.
Speaker 1 (13:51):
It and didn't need any rehab.
Speaker 3 (13:54):
Yeah, you know, there's always things. You'd come to the
house I live in and sure we can find thousands
of thousands of dollars worth of repairs. Yeah, today I
try to keep the house in my own house in
good shape. It's just the reality of it. And uh
so I probably spent around ten thousand dollars to fix
(14:16):
the little odds and ends, install appliances, and I had
the house painted. I can't think of everything off the
top of my head. Probably around about ten thousand.
Speaker 2 (14:28):
All right, so one oh seven purchase ten thousand dollars
to fix it up. So you're all in at one seventeen.
And what is that property rented for.
Speaker 3 (14:38):
It's rented for fourteen forty a month.
Speaker 2 (14:41):
Wow, okay, and how much is your mortgage on that
or do you have a mortgage on that property?
Speaker 3 (14:47):
Yeah?
Speaker 1 (14:48):
Yeah, So how much is your mortgage payment?
Speaker 3 (14:52):
It's seven to fifty three a month?
Speaker 2 (14:53):
Okay, and that includes taxes and insurance. Yes, okay, all right,
so fourteen forty you've ran seven fifty for the mortgage,
so you've got six eighty seven in cash flow before
any expenses. Now, how do you how do you budget
for repairs in vacancy and anything else that might come
(15:15):
up on the property.
Speaker 3 (15:18):
So I have enough rentals at this point the monthly
cash flows enough to cover any vacancies or repairs I
might have, So I'm not I wouldn't say that I
necessarily budget for it, but it's I mean I think that,
(15:41):
you know, I've worked up a little equation of you know,
probably a three percent for vacancy and easily for the
houses I'll have like a flat. So most investors will
they'll budget for cap X and repairs and for repairs.
(16:01):
I didn't think it was fair to do a percentage
just for repairs because the cheaper houses like that repair
budget would be smaller, and the more expensive houses it
might be out of proportion. For the bigger and nicer homes.
And so a lot of the repairs, whether you're in
a fifty thousand dollars house or half a million dollar house,
(16:22):
is going to be about the same. The cost of
that hot water tank for the fifty thousand dollars house
isn't going to be much more than the half million
dollar house, you know, And.
Speaker 1 (16:32):
So it's really interesting that it's it Almos.
Speaker 2 (16:38):
We have a lot of people on the podcast that
have bigger portfolios and they don't budget very carefully for repairs,
and it seems like people with smaller portfolios really do
budget carefully. And I think you have a good point
that as you have more rentals and you have more
rental income, it's easier to pay for It's not a
(17:00):
big deal. I mean, if you've got fifty re rent
checks coming in, if you have to buy a new
roof on a property that month, like you have the
cash flow to do it, it's not a not a
big expense. So do you think budgeting or sitting up
percentage percentage aside for repairs is maybe more important when
(17:21):
someone's just starting out than it is when they're more
established and that they have a bigger portfolio.
Speaker 3 (17:30):
I do. But also it's one of those things that
I have talked to some investors where you know, my
advice was to save up a little bit more money
because you know, repairs are going to happen, You're gonna
have vacancies, and you need to be able to have
(17:53):
the reserve there. So if you're trying to keep five
or ten percent and a save his account for repairs
or cap X and that that doesn't like that takes
time to build up. You know, three months into it,
you're then it loses a job and ak's quit Spain
(18:14):
or the uh you know, all of a sudden, the
tree falls on the house. Uh, you know, any number
of things happen. Then you know it's not wise just
leave the house taking or let it do nothing. So
you need to have the money to make those repairs.
You know they won I think.
Speaker 2 (18:34):
That's the most important things. Yeah, Like you got to
have cash, whether it's cash set aside or cash flow
coming in. But you really it's so important to have cash.
I couldn't agree with you more on that now. Let
me ask you a question, how important do you think
herb appeal is in your rental properties? Like do you
think that like a property, if it looks good, it's
(18:59):
gonna attract better tenants.
Speaker 3 (19:03):
Yes. So that's one of the things, Uh, you know
I've I've you know, spend months renovating these houses and
done you know, full bathroom remodels, just remodel the whole house.
And I'd be very proud of all the work I've
done and all the you know, deferred maintenance, decades of
(19:25):
deferred maintenance. I went and handled and fixed on the house,
and you know, I'd go and take pictures to market
the property and like, gole, he is, thing looks terrible,
and you know, it's kind of deflating because I'm so
proud of myself that I've done such good work. And
then I go to to take a look at the
X year and like, man, this thing is not attractive
at all. And so it was one of those things
(19:50):
to just go back to basics with kind of marketing
in a way and think about literal curb appeal. And so,
you know, one of the things I've kind of implement
it is I'll have the curb and the sidewalk and
the concrete the side of the house. I'll have it
all pressure washed, and I think it's a pretty like it.
(20:14):
It makes your house stick out because literally, you can
have a dingy sidewalk and once you get to the
property line, it changes to this clean, you know, freshly
pressure washed sidewalk and curve and makes your property kind
of stick out. And try to make pay a little
bit more attention to the xterior and make it a nice,
(20:36):
nice house, because that's what catches people's eyes. And it's
just one of the kind of things I've noticed is
somebody who's not going to take care of your property
and likely not going to pay the rent, they don't care.
They're happy to take the house in any condition. The
person who's likely going to pay the rent and be
(20:57):
particular about the property, uh, they if the house looks
dirty and dingy, they don't even consider it. They don't
put in the application, they don't they don't look farther
than the front photo. And so in my mind is
you know, the the tenant that doesn't care, They're still
(21:20):
not going to care this is a nice house. They
just seen rented as the bad house. But the if
your house is dingy, but if your house is clean
the good particular tint, they at least have a shot,
so they'll at least look at it and they'll put
in their application. And being in the pool and the
other applicants, so I think on average, you're going to
(21:42):
do better. It's not really saving money to not pay
attention to the shrubs and the lawn and the curb
litteral curb appeal. So yeah, I think a lot of
people forget. So I mean basically, if you're going to
look at a house, there's a lot box, or you
have an agent with you, like there's a you know,
(22:05):
a thirty second minute, a couple of minute delay while
you're at the front door while you're figuring out the
lot box, and you're right there at the door. Is
the door clean, is the doorframe ice and freshly painted?
Is the porch clean? Just things like that add up
because they're getting their first impression while they're right there
(22:26):
at the front door, right when they pull up in
the car to look at the house. And I think
it just improves your odds of having a good tenant
and you know, attracting the tenant that you're looking for.
Speaker 2 (22:39):
If anybody is interested in investing in Montgomery, or if
you want to reach out to Michael, I've got his
contact information on the website. You can find it at
Rental incomepodcast dot com slash episode five. I'd like to
thank chay Lee Ridge from Ridge Lending Group for sponsoring
today's episode. If you're looking to buy a rental property,
(23:03):
whether you're just getting started or you want to add
to your portfolio, reach out to Chailey. She's a nationwide lender.
She has a ton of different loan programs and she
can find something that works for you in your situation.
If you want to find out more or you want
to set up a time to talk to Chailey personally,
(23:23):
just go to Ridge Lendinggroup dot com NMLS four two
zero five six. Thank you so much for checking out
the podcast today. Make sure you hit the follow button.
I put out a new episode every single Tuesday, and
if you're following the show, you'll get notified when the
next episode comes out. My name is Dan Lane and
(23:45):
this has been the Rental Income Podcast
The inspiring interviews with today is Top Landlords. This is
the Rental Income Podcast and.
Speaker 2 (00:08):
No damnly, Michael, you had a job where you weren't
making much money. You decided to get your real estate license.
You figured you could sell some houses and make more
money that way. But after a while you kind of
realized that the income was kind of spiky. You might
have some good months where you made money, but then
(00:30):
you might have a couple of months where you didn't
make money at all. How did buying rental properties help
you even out your income?
Speaker 3 (00:37):
I mean, basically, if I didn't sell anything, I didn't
need a commission, And you know, I was always trying
to get business, but it was kind of spread it
and it wasn't coming in that much. And I noticed
that if I bought rentals that I could increase my
monthly income, and so it gave me a little bit
(00:57):
of stability knowing that, you know, reasonable expectation, I can
get so much a month, which with each rental involved.
Speaker 2 (01:05):
On the podcast today, we're going to figure out how
Michael was able to build a rental portfolio that provides
him with stable monthly income. So it really doesn't matter
how much he makes at his day job. Joining us
on the podcast today from Montgomery, Alabama is Michael Atkins.
We'll take a quick break to thank our sponsors. We'll
come right back and we'll talk to Michael. It's a
(01:27):
lot of work to find a really good rental property,
and when you actually find that property, you want to
make sure you're working with a lender that can get
that loan closed. The lender that I recommend is jay
Ley Ridge from Ridge Lending Group. She's a nationwide lender
and her specialty is helping investors' finance rental properties. She
has a ton of loan programs and she can find
(01:48):
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
Lendgroup dot 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
(02:10):
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 brand new and done right. And here's the
best part. Every property comes with a well qualified tenant
(02:32):
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 maintenance warranty and a lifetime occupancy guarantee. Personally,
(02:52):
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 dot com. Michael, let's start with your portfolio
today and then we'll kind of take a step back
(03:15):
and figure out how you got there. So tell me
about your rentals.
Speaker 3 (03:19):
I have fifty doors now. I've probably bought three or
four this year. They're mostly single family homes. They you know,
they've probably ranged from a two bedroom, one bath in
a c neighborhood to a four bedroom, two math and
you know, a minus neighborhood, if that makes sense.
Speaker 2 (03:42):
When you were getting started as a realtor and you
knew that your income was was going to be kind
of spiky, was your goal at that point to have
the rentals pay all your living expenses so that you
weren't relying on that commission income.
Speaker 3 (03:58):
Oh yeah, I mean it was kind of the goal there,
and to a certain extent, I'm you know, I've always
been very frugal, but I knew my job at the
Board of Education and the maintenance department wasn't you know,
it wasn't my life goal there, and it was just
(04:19):
kind of a job I fell into, And you know,
I didn't I didn't like the idea of, to a
certain extent, like the commission being based connected to the sale,
because there's always the pressure to make the seal. But
(04:41):
I preferred to be like an unbiased advisor where I
didn't really care whether you bought the house or not,
and having the rental income coming in every month, I
could kind of know that, you know, my house payments covered,
or my car payment or whatever, my bills are covered,
and I don't, you know, whatever I made from real
(05:01):
estate sales was just extra. You can kind of get
the commission to get ahead, and it kind of turned
into you know, early on, when I had multiple jobs
going on, real estate, commission just went to savings account
to buy more rentals. And you know, I kind of
had a threshold for savings there is around ten to
(05:21):
fifteen thousand dollars. But I could buy those houses and
put on the roof and replace the ac in it
and paint it, fix the floor, and get it ready
to rent. So I could. I basically was saving up
to buy the house, and then I'd save up the
money to repair it and I rented out and then
(05:42):
it's like I got to raise every month.
Speaker 2 (05:43):
So thinking back to those early days, like what did
you really at that point understand the numbers? Like did
you understand that there would be expenses to the properties
or were you thinking, Okay, if I make X amount
of mine money and rent every month, all my bills
are going to be paid? Like how much did you
(06:05):
really understand in those early days?
Speaker 3 (06:09):
No, I was I wasn't some kind of you know,
mathematician or super genius over there. I was just looking around, like, man,
how can I make my money work for me? And
that was really the only thing I knew where I
could kind of make my little small investment, and I
knew I could get back. Then I was saving up
(06:31):
to buy the house for let's say fifteen thousand, and
then I was saving up to renovate the house for
another fifteen thousand, and you know, I'm in it for
thirty thousand. But then I was getting you know, six
fifty a month for this little rental. And you know,
I was pretty handy, so I could make repairs myself
if I needed to or had to. And yeah, I
(06:56):
mean these numbers sound silly.
Speaker 1 (06:59):
Yeah deal.
Speaker 2 (07:00):
So yeah, So was that Were those properties in like
really rough neighborhoods?
Speaker 3 (07:07):
Yes, and no, I mean I didn't feel uncomfortable in
those neighborhoods. I would ben find living in them.
Speaker 2 (07:15):
Were you able to finance those houses or were they
all cash purchases?
Speaker 3 (07:20):
They're cash purchases for me. And again, it was just
one of those things where that's what I was comfortable with.
And yeah, you know, these houses didn't meet a FAJA standards.
It probably wasn't something that I could go to a
(07:41):
conventional mortgage broker. I probably had to go find a
local banker.
Speaker 2 (07:46):
And how did you save that money? Because you know too,
you were obviously very young. I mean you were just
out of high school. You had been working for the
school system, imagining you probably weren't making much money. How
did you save the money to buy those houses back then?
Speaker 3 (08:05):
Yeah? It was just always taught the kind of stilled
into me to save money. Okay, And you know, uh,
it seems like I've always had about three jobs, and
so you know, I didn't have any money, and I
(08:27):
was rarely bored because if I was bored, I was
finding something to do, right, Okay, So I always been
grasped push aground for farmers, help buddies, cut trees, basically
anything I could do to becca extra die, and that's
what I was doing.
Speaker 1 (08:44):
And okay, so that makes sense.
Speaker 2 (08:46):
So you're working hard, you're you're saving your money, and
then as you have the money, you're putting that into
a property, and then that property then is generating rain
for you. And because you don't have a mortgage, I'm
edge their cash flowing great.
Speaker 3 (09:02):
Yeah.
Speaker 1 (09:03):
Yeah, And today are you.
Speaker 2 (09:05):
Still buying houses with cash or do you take out
mortgages today?
Speaker 3 (09:09):
It really depends on the price. Some of these houses,
they're not the best performers and so I might sell
one of those houses and then ten thirty one of
the money into a nicer house. You know, maybe go
sell one of the two bedroom, one baths and go
buy a three bedroom, one bath, I mean three bedroom,
(09:30):
two bath, and it would be pretty close to the
same money. And you know, I'm still saving up my
real estate commissions, and I have extra money, I start
around for a deal. I think that's really the thing
that motivates me is when I see one that's kind
of undervalued or underappreciated. That's, you know, that's if I
(09:56):
don't have the cash, I'm gonna borrow the money.
Speaker 2 (09:59):
So so would you say that your rentals today they
have they made you a better realtor that you know
that you can always do the right thing for your client.
You're you're not you're not ever trying to get a
deal done. Has it made you a better agent? Just
(10:20):
not having that pressure that you need a commission check
to pay your mortgage this month?
Speaker 3 (10:26):
Oh yeah, It's made me a better advisor in so
many ways. I Mean, there's the thing where you know,
I truly don't care if you buy a house or not.
I might I might get annoyed with a client. If
they run me around town and we looked at a
dozen houses or two, really doesn't don't mean for me, Yeah,
(10:49):
a couple of dozen houses and you're not buying anything,
and it's really like, hey, uh, you know, I think
I think we need to re evaluate what you're looking
looking for here. But also from another perspective is that
I've looked at these houses from most of contractor's perspective,
where I just run across so many situations where something's
(11:14):
broken or I see a little telltale sign that tells
me something else is wrong. And you know, dealing with
property management companies, dealing with other property managers, dealing other agents,
and you know, this one looks really good on paper,
but when we kind of dig into the property, I
mean they ever once fall run across properties where I
(11:37):
can't really put my finger on what the problem is,
but I know it's a money pit. And you know,
if you buy this thing, you're just going to be
constantly eat up with maintenance expenses and it's just better
for us to go and find another house.
Speaker 2 (11:50):
Well, let's take a look at at one of your deals.
So tell me about this property. How did you find it?
Speaker 3 (11:56):
The agent was it had it listed Birmingham, which is,
you know, one hundred miles away, and so nobody in
Montgomery's looking at the Birmingham MLS. None of the agents
are looking at the Birmingham MLS for houses in Montgomery.
And I happen to be a member of that MLS,
(12:17):
and so I have an active search for anything listed
in my area in that MLS. It'll send it to
me directly, and I feel like it just gives me
a slight little edge over, you know, my peers here.
And this property was listed in Birmingham and been out
there for a while, and thinking, man, you know, buyers
(12:39):
can still see it on SILLO or realtor dot com,
but any of the local real estate agents they're they're
not looking. They're looking on their local mls for it.
And so it just was one of the houses I flagged.
I think it took me a little while to get
the agent on the phone or get a code to
get in the house and let them checked it out.
And like, man, the same pretty clean reflects, pretty good
(13:05):
ac unit was missing that they didn't bother me any
and so I made them an offer. Turns out that
they had already made plans to replace acy in it,
and they paid for it. They just were waiting for
it to sail before they installed it. And I felt like,
you know, got a pretty good deal just because it
(13:26):
was just listed in a different MLS.
Speaker 2 (13:29):
Right, So because it's not listed, right, they're not getting
the showings they should get. Not every agent is aware
of that property's out there, and that helped you get
a better price on it. Yeah, yeah, absolutely, that's great.
So what did you end up paying for the property?
Speaker 3 (13:49):
I paid one hundred and seven thousand dollars for.
Speaker 1 (13:51):
It and didn't need any rehab.
Speaker 3 (13:54):
Yeah, you know, there's always things. You'd come to the
house I live in and sure we can find thousands
of thousands of dollars worth of repairs. Yeah, today I
try to keep the house in my own house in
good shape. It's just the reality of it. And uh
so I probably spent around ten thousand dollars to fix
(14:16):
the little odds and ends, install appliances, and I had
the house painted. I can't think of everything off the
top of my head. Probably around about ten thousand.
Speaker 2 (14:28):
All right, so one oh seven purchase ten thousand dollars
to fix it up. So you're all in at one seventeen.
And what is that property rented for.
Speaker 3 (14:38):
It's rented for fourteen forty a month.
Speaker 2 (14:41):
Wow, okay, and how much is your mortgage on that
or do you have a mortgage on that property?
Speaker 3 (14:47):
Yeah?
Speaker 1 (14:48):
Yeah, So how much is your mortgage payment?
Speaker 3 (14:52):
It's seven to fifty three a month?
Speaker 2 (14:53):
Okay, and that includes taxes and insurance. Yes, okay, all right,
so fourteen forty you've ran seven fifty for the mortgage,
so you've got six eighty seven in cash flow before
any expenses. Now, how do you how do you budget
for repairs in vacancy and anything else that might come
(15:15):
up on the property.
Speaker 3 (15:18):
So I have enough rentals at this point the monthly
cash flows enough to cover any vacancies or repairs I
might have, So I'm not I wouldn't say that I
necessarily budget for it, but it's I mean I think that,
(15:41):
you know, I've worked up a little equation of you know,
probably a three percent for vacancy and easily for the
houses I'll have like a flat. So most investors will
they'll budget for cap X and repairs and for repairs.
(16:01):
I didn't think it was fair to do a percentage
just for repairs because the cheaper houses like that repair
budget would be smaller, and the more expensive houses it
might be out of proportion. For the bigger and nicer homes.
And so a lot of the repairs, whether you're in
a fifty thousand dollars house or half a million dollar house,
(16:22):
is going to be about the same. The cost of
that hot water tank for the fifty thousand dollars house
isn't going to be much more than the half million
dollar house, you know, And.
Speaker 1 (16:32):
So it's really interesting that it's it Almos.
Speaker 2 (16:38):
We have a lot of people on the podcast that
have bigger portfolios and they don't budget very carefully for repairs,
and it seems like people with smaller portfolios really do
budget carefully. And I think you have a good point
that as you have more rentals and you have more
rental income, it's easier to pay for It's not a
(17:00):
big deal. I mean, if you've got fifty re rent
checks coming in, if you have to buy a new
roof on a property that month, like you have the
cash flow to do it, it's not a not a
big expense. So do you think budgeting or sitting up
percentage percentage aside for repairs is maybe more important when
(17:21):
someone's just starting out than it is when they're more
established and that they have a bigger portfolio.
Speaker 3 (17:30):
I do. But also it's one of those things that
I have talked to some investors where you know, my
advice was to save up a little bit more money
because you know, repairs are going to happen, You're gonna
have vacancies, and you need to be able to have
(17:53):
the reserve there. So if you're trying to keep five
or ten percent and a save his account for repairs
or cap X and that that doesn't like that takes
time to build up. You know, three months into it,
you're then it loses a job and ak's quit Spain
(18:14):
or the uh you know, all of a sudden, the
tree falls on the house. Uh, you know, any number
of things happen. Then you know it's not wise just
leave the house taking or let it do nothing. So
you need to have the money to make those repairs.
You know they won I think.
Speaker 2 (18:34):
That's the most important things. Yeah, Like you got to
have cash, whether it's cash set aside or cash flow
coming in. But you really it's so important to have cash.
I couldn't agree with you more on that now. Let
me ask you a question, how important do you think
herb appeal is in your rental properties? Like do you
think that like a property, if it looks good, it's
(18:59):
gonna attract better tenants.
Speaker 3 (19:03):
Yes. So that's one of the things, Uh, you know
I've I've you know, spend months renovating these houses and
done you know, full bathroom remodels, just remodel the whole house.
And I'd be very proud of all the work I've
done and all the you know, deferred maintenance, decades of
(19:25):
deferred maintenance. I went and handled and fixed on the house,
and you know, I'd go and take pictures to market
the property and like, gole, he is, thing looks terrible,
and you know, it's kind of deflating because I'm so
proud of myself that I've done such good work. And
then I go to to take a look at the
X year and like, man, this thing is not attractive
at all. And so it was one of those things
(19:50):
to just go back to basics with kind of marketing
in a way and think about literal curb appeal. And so,
you know, one of the things I've kind of implement
it is I'll have the curb and the sidewalk and
the concrete the side of the house. I'll have it
all pressure washed, and I think it's a pretty like it.
(20:14):
It makes your house stick out because literally, you can
have a dingy sidewalk and once you get to the
property line, it changes to this clean, you know, freshly
pressure washed sidewalk and curve and makes your property kind
of stick out. And try to make pay a little
bit more attention to the xterior and make it a nice,
(20:36):
nice house, because that's what catches people's eyes. And it's
just one of the kind of things I've noticed is
somebody who's not going to take care of your property
and likely not going to pay the rent, they don't care.
They're happy to take the house in any condition. The
person who's likely going to pay the rent and be
(20:57):
particular about the property, uh, they if the house looks
dirty and dingy, they don't even consider it. They don't
put in the application, they don't they don't look farther
than the front photo. And so in my mind is
you know, the the tenant that doesn't care, They're still
(21:20):
not going to care this is a nice house. They
just seen rented as the bad house. But the if
your house is dingy, but if your house is clean
the good particular tint, they at least have a shot,
so they'll at least look at it and they'll put
in their application. And being in the pool and the
other applicants, so I think on average, you're going to
(21:42):
do better. It's not really saving money to not pay
attention to the shrubs and the lawn and the curb
litteral curb appeal. So yeah, I think a lot of
people forget. So I mean basically, if you're going to
look at a house, there's a lot box, or you
have an agent with you, like there's a you know,
(22:05):
a thirty second minute, a couple of minute delay while
you're at the front door while you're figuring out the
lot box, and you're right there at the door. Is
the door clean, is the doorframe ice and freshly painted?
Is the porch clean? Just things like that add up
because they're getting their first impression while they're right there
(22:26):
at the front door, right when they pull up in
the car to look at the house. And I think
it just improves your odds of having a good tenant
and you know, attracting the tenant that you're looking for.
Speaker 2 (22:39):
If anybody is interested in investing in Montgomery, or if
you want to reach out to Michael, I've got his
contact information on the website. You can find it at
Rental incomepodcast dot com slash episode five. I'd like to
thank chay Lee Ridge from Ridge Lending Group for sponsoring
today's episode. If you're looking to buy a rental property,
(23:03):
whether you're just getting started or you want to add
to your portfolio, reach out to Chailey. She's a nationwide lender.
She has a ton of different loan programs and she
can find something that works for you in your situation.
If you want to find out more or you want
to set up a time to talk to Chailey personally,
(23:23):
just go to Ridge Lendinggroup dot com NMLS four two
zero five six. Thank you so much for checking out
the podcast today. Make sure you hit the follow button.
I put out a new episode every single Tuesday, and
if you're following the show, you'll get notified when the
next episode comes out. My name is Dan Lane and
(23:45):
this has been the Rental Income Podcast
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