September 2, 2025 • 24 mins
When Greg Zessin first started buying rentals, he went after deals that looked like they would produce strong cash flow on paper. Some months, the numbers worked great, but other months, unexpected repairs or tenant issues wiped out his profits.
Over time, Greg realized that not all cash flow is created equal. He shifted his strategy to focus only on properties that provide steady, consistent income.
On this episode, Greg shares what he’s doing differently today: the age of properties he avoids, the age of properties he targets, and why he no longer takes on major renovations.
We also dig into the neighborhoods he likes, the neighborhoods he won’t buy in anymore, and how he’s getting tenants to stay longer, which has significantly increased his profits.
Plus, Greg reveals the unique ways he finds off-market deals.
https://rentalincomepodcast.com/episode537
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.
Rental Accounting Software Made Easy. Free 30 Day Trial
Over time, Greg realized that not all cash flow is created equal. He shifted his strategy to focus only on properties that provide steady, consistent income.
On this episode, Greg shares what he’s doing differently today: the age of properties he avoids, the age of properties he targets, and why he no longer takes on major renovations.
We also dig into the neighborhoods he likes, the neighborhoods he won’t buy in anymore, and how he’s getting tenants to stay longer, which has significantly increased his profits.
Plus, Greg reveals the unique ways he finds off-market deals.
https://rentalincomepodcast.com/episode537
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.
Rental Accounting Software Made Easy. Free 30 Day Trial
Mark as Played
Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:01):
Inspiring interviews with Today is Top Landlords, this is the
Rental Income Podcast, and now Damnly Greg, when you first
started buying rental properties, you had a very different strategy
than what you're doing today. Can you tell us what
you were doing in the beginning.
Speaker 2 (00:18):
Yeah, so, you know when I got started, I mean,
you look at every deal that comes across your plate.
If numbers made sense, you know, like if it looked
like it had strong cash wong paper, I was, you know,
doing the deal.
Speaker 3 (00:33):
But after a few years of.
Speaker 2 (00:36):
Doing it kind of realized there were some differences in
some of the properties and which ones were you know,
actually cash one what they said and on a regular
basis versus the ones that would have great months one
month and then two bad months in a row. So
totally changed our strategy and how we want to how
we wanted to move forward with properties as we as
(00:58):
we grew our portfolio.
Speaker 1 (00:59):
Having really high cash flow one month and then maybe
having no cash flow the next month can be really
frustrating and Greg really wanted that consistent cash flow month
after month. And on the show today we're going to
see how he changed his strategy and what he's doing
today to have consistent cash flow. Joining us on the
show today from Springfield, Illinois is Greg Zessen. We'll take
(01:23):
a quick break to thank our sponsors. We'll come right
back and we'll talk to Greg. I've had 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.
(01:46):
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(02:08):
your tenant doesn't pay. If you're ready to sign up today,
you can enroll within minutes by visiting the guarantors dot Com. Again,
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The lender that I recommend is jay Ley Ridge from
(02:30):
Ridge Lending Group. She's a nationwide lender and her specialty
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of loan programs and she can find something customized to
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more or you're ready to get started today, just go
to Ridge Lendinggroup dot com. That's our Idge Lendinggroup dot
(02:52):
com n MLS four two zero five six. Greg, let's
start off talking about your portfolio. What is your portfolio
look like today?
Speaker 2 (03:02):
So today, right now, I'm sitting at about sixty eight units,
mostly single family, some duplexes. I have some four plex townhouses,
and I have won eight.
Speaker 1 (03:15):
Plex And today your properties are all pretty consistent with
cash flow.
Speaker 2 (03:22):
Yeah, relatively speaking, most of them are pretty consistent. Now,
there's a few that have some ups and downs that
are some of my older properties that I've had for
a while, But yeah, in general, generally speaking, they're pretty consistent.
Speaker 1 (03:35):
And what about appreciation? Is that something you're looking at
when you buy a property.
Speaker 2 (03:41):
That's actually probably one of my stronger focuses today as
much as I still want cash flow and I still
won't buy a property without cash flow. Long term appreciation
is my long term goal.
Speaker 1 (03:54):
So yeah, I mean, long term appreciation is really incredible.
It can kind of sneak up on you, but it's
I think that over time you might be able to
make more money on appreciation than cash flow. What do
you think about that?
Speaker 3 (04:07):
Now?
Speaker 2 (04:08):
I would totally agree with that. Like, I know, over
the years, you know, we would joke around with my wife,
but she would be like, she gave me to just
be like, hey, you know, things are doing so well,
just sell them all. You know, she'd just be frustrated.
And the next station, you know, things be going good
and she'd be like, Okay, let's let's let's buy some
a couple more. But now today, like when we when
we sit there and look at our personal financial statement
(04:29):
and you know, the wealth that we've created by having
these properties, especially especially a lot of thems we' bought,
and even in the last like seven or eight years,
it's like, okay, this is a no brainer. There's there's
no more discussions of of let's sell them all, you know.
Speaker 1 (04:45):
Totally all right, So let's figure out what changed. So
when you were first starting out, you would you would
just look at the numbers and if the numbers look
good on paper, you would buy the property. But in
re reality that the numbers on your spreadsheet weren't really
translating in real life. Can you explain what was going on?
Speaker 2 (05:09):
Yeah, So yeah, when we first started buying properties, like
I said, we would, you know, we just kind of
look at what the house cost, what it cost to
fix it up, what the and what the mortgage would
be with the taxes and insurance, and what the rent
would be. And so we didn't really do a good
job of factoring capital expenses or general maintenance.
Speaker 3 (05:30):
So and we didn't look at the houses.
Speaker 2 (05:32):
We just you know, I mean we looked at the houses,
but we didn't think about what could go wrong with
these houses.
Speaker 3 (05:37):
So a lot of the houses we ended up buying
were much older houses.
Speaker 2 (05:42):
When I say older, I'm saying like they were built
in like between eighteen ninety and say nineteen fifty. And
so those houses, you know a lot of times by
this point, have had you know, change of hands numerous times.
Speaker 3 (05:55):
So there's a lot of.
Speaker 2 (05:56):
You know, maintenance that's gone on that you don't know
who did it. And why they did it. And those
are the things that we kept on running across. Things
that would just pop up that you know, somebody had
some weird wiring that they did, or they went from
you know, copper to PVC to packs back to copper,
you know, and all those junction points would eventually spring
(06:17):
a leak and cause us headaches.
Speaker 1 (06:19):
So yeah, and how old are the properties that you're
buying today?
Speaker 3 (06:25):
Most of the properties are buying today or nineteen eighty
or newer.
Speaker 1 (06:28):
Okay, So yeah, I guess like when you look at
a property that was built in eighteen ninety or the
early nineteen hundreds, it's like there's just been so many
renovations over the years. So was that causing you a
lot of problems too?
Speaker 2 (06:43):
Yeah, So we still have some properties that are older
like those, so we haven't gotten rid of all of them. However,
most of them we did find, like you know, like
I said, three to four different families have lived in there,
and many times you'd have you know, three to four
different di I wires do it yourself, and they're doing
whatever they thought was the best way to do whatever,
(07:04):
and just hadn't been maintained. The properties that we still
own today that are older are ones that have had
like maybe one or two owners, and they were pretty
original houses. They are pretty original to the footprint of
the original build. They they have multiple additions and stuff
like that.
Speaker 1 (07:20):
So right, right, yeah, just less chopped up. So how
do you how do you figure out like how much
to set aside for capac and repairs. I always find
that when you put numbers on a spreadsheet, if you
say I'm gonna allot ten percent of the rent to repairs,
that's really just kind of a guess, like you really
(07:42):
don't know what it's going to be. So how do
you kind of figure that out?
Speaker 2 (07:48):
So I generally, I generally put twelve percent in there
for everything. So there's there has been some studies I've
seen where they said twelve percent is what you should expect. However,
I do go back in there and I look at, Okay,
if the roof, if the roof's not brand new, if
it's only got seven or eight years on it, I'm
gonna determine what the cost of a roof is and
divide that up, you know, in two months there, So
(08:10):
to add the fact to that into my monthly cost, right,
the being with a water, heat, or any any your
major expenses. I'm going to see you try to figure
out what what life is left in it and then
divide that up so I can get that kind of
calculated in there.
Speaker 1 (08:22):
Right, So when you buy a property, are you are
you renovating it or are you renting it out in
whatever condition it basically is. When you buy it.
Speaker 2 (08:33):
We're doing light renovations. Now we used to go through
and redo everything. Of course, you know, back in the day,
we were buying older, you know, dilapidated houses. So so
now we're buying you know houses the first time home
buyers will be buying so you know, so there's a
big difference in those. So we're usually not going in
and changing out water, heusing furnaces, unless they just happen
(08:55):
to be like at the end of their life, then
we will do that just so we don't have to
have to deal with it while attendant's in there.
Speaker 3 (09:03):
But outside of.
Speaker 2 (09:04):
That, yeah, I mean we're normally we're freshing and up
the place, you know.
Speaker 3 (09:08):
But that's about it.
Speaker 1 (09:09):
So what about the neighborhoods. Are the neighborhoods different between
the older houses you were buying in the newer houses.
Speaker 2 (09:18):
Yeah, so they're for the most part, they are different neighborhoods. Yeah,
there's a few that kind of have a little bit
of mix, but most of the neighborhoods are you know,
they're more they're closer to like the meeting home price
for our area, so which is kind of makes it
your bread and butter, makes it kind of more of
(09:38):
a like a B class neighborhood where before, Yeah, it
was towards the lower end, so it was you know,
lower income neighborhoods. And yeah, so definitely different clients of
people renting those houses as well.
Speaker 1 (09:53):
So do you find with the properties in better neighborhoods
that you're getting a better quality tenant or were you
still getting good tenants at the the c properties.
Speaker 2 (10:07):
We still we still got a good number of tenants
in both. However, we do see we still see better tenants.
It can more consistently. So our delinquency rates are much
lower on the newer houses than they are on the older,
older houses.
Speaker 1 (10:24):
So yeah, what about people staying longer? You know, turnover
is always my biggest expense, so I like to minimize
turnover as much as possible. Do you find that in
the nicer neighborhoods, people are staying longer or not.
Speaker 2 (10:38):
Really, Yeah, they actually are, so that that I agree
with that statement. We do get significantly longer tenancy. Actually,
I find it. It's one of our favorite renter profiles.
We get a lot of like retirees or some or
close to retirement folks and they come in, they take
(10:59):
care of the place is super well. They want something
that's easy to clean and take care of themselves, and
they stay for a very long time. Actually you would
think it they would only stay for a couple of years,
but they stay for quite a long time.
Speaker 1 (11:10):
So all right, So the key then to consistent cash flow,
and that's really what you want is you want the
cash flow to be something you can count on, not
something that is really good one month and then the
next month you're you're losing money. But the key is
just is buying newer properties and buying in better neighborhoods
(11:32):
and accounting for what the expenses are going to be.
More dialing in what the expenses are going to be.
Speaker 3 (11:39):
Yeah, yeah, that's correct.
Speaker 2 (11:40):
Yeah, that's really what it boils down to, buying nicer
properties and better neighborhoods.
Speaker 3 (11:44):
You're paying more upfront.
Speaker 2 (11:46):
I think that's something a lot of people don't see
when they're looking at these They're like, oh, I can
buy a house for you know, half the price of
the ones that Greg's looking at. You know, so that's
a lower down payment for me. But then they don't
realize I got to drop you know, thirty thousand dollars
into renovations that I'm always spending four or five thousand
and two. Uh so, and then I'm also just able
to rent them out significantly faster because those older, older
(12:10):
homes and those worst neighborhoods are actually they take so
much longer to rehab instead of taken one to two
weeks or taking three or four months.
Speaker 1 (12:17):
Interesting. Yeah, yeah, Well let's talk about how you got
started buying rental property. So let's go back to the
very beginning. How did you fund your your first purchases?
How were you coming up with those down payments?
Speaker 2 (12:32):
So, yeah, we we bought our first house and lived
there a few years, and then decided to buy another one.
Speaker 3 (12:38):
We bought a foreclosure.
Speaker 2 (12:40):
That foreclosure had some equity in it, so it wasn't
a ton, but it was enough to give us. I
think it was around a twenty five thousand dollars line
of credit, and so yeah, we took we turned our
first first house into a rental, and then we used
the line of credit to buy start buying rentals, which
we bought, you know, three in the same so that
kind of took up the whole line of credit from
(13:02):
the get go.
Speaker 1 (13:03):
Wow, you bought three properties as a brand new investor.
You you bought three properties in one day?
Speaker 3 (13:10):
Correct?
Speaker 1 (13:10):
Yeah, So how did that come about? Was it the
same seller for all three properties?
Speaker 2 (13:16):
So we had two sellers on that one? We had
one one was a foreclosure. So this was back in
seven eight nine time, so there was more foreclosures happening then.
But the first one was a foreclosure and then the
other two was I was calling for rent signs and
uh found the landlord who was wanting to downside some
(13:38):
of the properties, and uh so I bought, uh bought
the other ones off of them.
Speaker 1 (13:42):
Interesting, So you you were looking for landlords that like,
were you thinking maybe they have trouble renting out this
property or maybe they're a tired landlord.
Speaker 3 (13:52):
Yeah, that's kind of what I was.
Speaker 2 (13:53):
I was hoping it was one of those situations I
called a lot of for rent signs, and you I
found a lot of a lot of landlords who who
got more than they wanted. So they were either wanting
to get out of it completely, or or they were
an accidental landlord, or they just yeah, they were wanting
to downside so it was easier to manage while we
were retired.
Speaker 1 (14:13):
So how does that conversation go when you when you
call off a re rent sign.
Speaker 2 (14:20):
Well, I usually call them up and just ask them
about the Sam Colin, I saw the for rent sign,
and they usually go into their sales mode and they
usually tell you about the property and the rent and
all that stuff. And I would ask me, Hey, I
don't want to waste your time. I'm not looking to
rent it. I was just curious if you're interested in
selling it. I have rental properties too, and I'm you know,
trying to pick up some more and and they'll be
(14:44):
frank with you.
Speaker 3 (14:44):
Most of the time.
Speaker 2 (14:44):
They're they'll say, yeah, I hadn't really thought about it.
But then they you know a lot of times they
think a lot of times they'll get back here and say, yeah, yeah,
I think i'd be interested in us talk.
Speaker 1 (14:53):
So what a great idea I'm going to have to
try that. That's pretty good. Have you had any other
creative ways to find deals like that?
Speaker 3 (15:04):
Yeah?
Speaker 2 (15:04):
Like I had well, and sometimes I mean the deals
find you. Like we had one that we had a
short sale that we bought that that they were get
ready to be sold for back taxes. So we got
that one quickly. As we were renovating at the neighbors
all noticed and one of the neighbors just said, Hey,
my mom, she has this rental house that she got
that you know, she doesn't want.
Speaker 3 (15:26):
Would you be interested in buying it?
Speaker 2 (15:28):
And I was able to actually talk them into doing
a contract for deed because I was like, Hey, I
just spent all this money fixing up this current house.
Can we do a contract for deed for two years?
And yeah, they happily agreed to it, and uh, yeah,
I got that one in a contract that way.
Speaker 1 (15:45):
With a number of properties that that you have, I
mean you've got a pretty big portfolio. Have you bought
all those properties one at a time or do you
do you find like an investor ever that's selling a
several properties at once.
Speaker 2 (16:02):
Yeah, I've had I mean majority of my properties came
in package deals. So we had the landlord that I
had that had the that that I called the for
rent sign. I found another person on Craigslist. They were
selling their portfolio and they were they were in pre foreclosure,
(16:23):
so we were able to buy that one by signing
on the dotted line. There was a landlord in town
here that had hundreds of properties and I ended up
working out a deal to buy roughly forty of his
properties through directly with his banks. So we got those
and these are these are all off market deals. So
(16:44):
for the for the most part, recently, about about a
year and a half, two years ago, I bought a
package a gentleman who was in his early seventies. His
father passed away and left him a handful of rental properties,
so he couldn't find a buyer to take the whole package.
So we were able to snag those up.
Speaker 1 (17:04):
How do you how do you line up the financing
for that? So when you're buying a group of forty
rental properties, how did you finance that?
Speaker 2 (17:13):
So, uh, the way I've been doing the way I
did the forty it's a little different than I do now,
but yeah, that I since he was in a four
in foreclosure at the time. The banks did not want
to lose the properties. So I contacted the banks and
was able to negotiate deals on all the packages. Each
(17:36):
package usually had about five or six properties that we
would have with the different banks. So so yeah, we
we on some of the houses. We negotiated no money
down and they would they even gave us money for
fixing the properties up. The one, the one deal he
had which was had still my favorite deal, One of
(17:57):
my favorite deals was that he had. It was it
was his better properties, his most recent purchases. The bank
gave us a loan for zero percent for the first year,
and then one percent the following year, two percent and
so on until it hit five percent.
Speaker 3 (18:14):
So yeah, that was a that was a fun deal.
Speaker 1 (18:16):
So you didn't have to put any money in, Like
you're basically taking over the mortgage for the seller, but
the bank was also giving you money to fix up
the property.
Speaker 3 (18:26):
Correct, yep, yep.
Speaker 2 (18:27):
On roughly thirty thirty four I think of those forty Yeah,
they gave us the money to buy them and fix
them up just by signing on the dotted line.
Speaker 1 (18:37):
How did you work that out? Like did you did
you offer that to the bank or did the bank
come to you with that offer.
Speaker 2 (18:44):
So I offered, I offered to take them over and
then and we all agreed that the properties needed money
and needed needed work to be put into them. And
I'm trying to remember. I think one of the bankers
actually suggested said, well, what if we did this, because
we don't want to we don't want to be taking
this back in another year. So they had suggested it,
(19:08):
and then I think we brought it up to the
other banks and they all was like, yeah, that's a
great idea.
Speaker 3 (19:13):
They it's just loaning more money for them.
Speaker 2 (19:15):
So as long as I can follow through, it was
it was a It was a great deal for them, you.
Speaker 3 (19:19):
Know, turned to loss into a win.
Speaker 1 (19:21):
So yeah, that's good. I mean that the bank wants
you to be successful. They want to make their money
every month, so they really really set you up for success.
That that's great. Now, at some point you left your job.
How many rentals did you have when you left your job.
Speaker 3 (19:38):
I think I had in the forties. I don't remember
the exact number.
Speaker 2 (19:43):
I was in the forties, which I just because I'd
had about a dozen properties, and then I think I
was still in the process of buying these forty because
then they again they were packages, so that that I
bought those over like a twelve or fourteen month period.
So so in the process of buying those properties in
the in the forty ish unit count.
Speaker 1 (20:05):
So was that hard, like to walk away from the
steady paycheck and you know, now you're living off rental income? Like,
what was that? Was that hard to kind of make
that shift?
Speaker 2 (20:19):
It was It wasn't hard, Actually it made it just
it was exciting. It was exciting for me. My wife
might have been a little bit nervous, but but when
we sat down and talked about.
Speaker 3 (20:29):
It, like.
Speaker 2 (20:31):
The rentals we bought needed a bunch of work and
they needed rented out and I wasn't able to get
that done doing a full time day job. So it
actually made more financial sense to just quit my job
so that I could focus on the rentals and get
them going strong.
Speaker 1 (20:46):
And that goes back I think to why the consistent
cash flow is so important that you need that money
to pay your bills. I mean, you can't have a
month with no rental income coming in.
Speaker 3 (20:59):
Yeah.
Speaker 2 (20:59):
Yeah, and when you have several of them hit at
one time that aren't consistent, that that that hurts.
Speaker 3 (21:05):
That hurts a lot.
Speaker 1 (21:06):
So yeah, So then when you left your job and
you're you're going at this full time, did you find
that you were finding more deals, like just because this
was your focus every day?
Speaker 2 (21:20):
Yeah, I felt I Yeah, I guess so, I mean
I was already in it, So I guess I was
finding some more deals. But I feel like deals were
coming pretty strong as they were, just because of networking
with bankers and other real estate investors because other you know,
we we all think we're in competition, but honestly, like
there's deals wecause some guys can't do, you know. And
(21:42):
so that's that's another way of finding finding more deals.
And but b I guess the more time you have
to be doing that, then yes, the more time you can,
you can definitely find more deals.
Speaker 1 (21:52):
So now at some point you opened up a property
management company. What what made you do that?
Speaker 3 (22:00):
Yeah?
Speaker 2 (22:00):
So yeah, after going full time into being a landlord
and became president of the Landlord Association, just talk with
landlords throughout uh in during our meetings and lunches and whatnot.
I just found a lot of them were making like
the same mistakes over and over again and not not
(22:21):
exactly learning from it. And so as I dove into it,
I saw that property management was a need, like it's
something that people were looking for because people didn't realize,
especially in our market, they didn't realize that other someone
else could manage your properties for you. That everybody kind
of thought they either had to do it themselves or
they had to sell. So that that sparked an interest
(22:42):
in it, which led to led to me starting a
property management Has.
Speaker 1 (22:45):
It changed the way like managing properties for other people,
has that changed the way that you manage your own properties?
Speaker 2 (22:53):
Yeah, I mean just to an extent, because I I
from the get go wanted to even before I was
managing for other people. I established my own LLC as
a management company long before you even had the thought
of having a management company because I wanted to manage
professor professionally or I wanted a professional experience for my residents.
(23:13):
So with that, when I started managing for other people,
I've learned a lot, Like I've just learned just from
one from doing it, but learning from my investors that
I managed for, like some of them have some interesting
strategies on things, and now I've been able to duplicate
that into my own property.
Speaker 3 (23:33):
So it's been great.
Speaker 1 (23:34):
If anybody wants to reach out to Greg, whether you're
looking for a property manager in the Springfield, Illinois area,
or you want to follow up with anything we talked about.
I've got Greg's contact information on the website. You can
find it at Rental Income Podcast dot com slash episode
five thirty seven. If Greg inspired you and you're ready
(23:57):
to buy your first property or you want to add
to your portfolio, reach out to our sponsor, Chailey Ridge.
She's a nationwide lender. She has a ton of different
loan programs and she can find something that works for you.
And right now, for a limited time, she's offering a
free thirty minute strategy session to help you get a
(24:17):
game plan together to build your rental 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 the follow button and that way you'll be
notified every Tuesday when a new episode comes out. My
(24:39):
name is Dan Lane and this has been the Rental
Income Podcast
Inspiring interviews with Today is Top Landlords, this is the
Rental Income Podcast, and now Damnly Greg, when you first
started buying rental properties, you had a very different strategy
than what you're doing today. Can you tell us what
you were doing in the beginning.
Speaker 2 (00:18):
Yeah, so, you know when I got started, I mean,
you look at every deal that comes across your plate.
If numbers made sense, you know, like if it looked
like it had strong cash wong paper, I was, you know,
doing the deal.
Speaker 3 (00:33):
But after a few years of.
Speaker 2 (00:36):
Doing it kind of realized there were some differences in
some of the properties and which ones were you know,
actually cash one what they said and on a regular
basis versus the ones that would have great months one
month and then two bad months in a row. So
totally changed our strategy and how we want to how
we wanted to move forward with properties as we as
(00:58):
we grew our portfolio.
Speaker 1 (00:59):
Having really high cash flow one month and then maybe
having no cash flow the next month can be really
frustrating and Greg really wanted that consistent cash flow month
after month. And on the show today we're going to
see how he changed his strategy and what he's doing
today to have consistent cash flow. Joining us on the
show today from Springfield, Illinois is Greg Zessen. We'll take
(01:23):
a quick break to thank our sponsors. We'll come right
back and we'll talk to Greg. I've had ten instead
of either broken their leases or stop paying rent. And
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(02:08):
your tenant doesn't pay. If you're ready to sign up today,
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Ridge Lending Group. She's a nationwide lender and her specialty
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to Ridge Lendinggroup dot com. That's our Idge Lendinggroup dot
(02:52):
com n MLS four two zero five six. Greg, let's
start off talking about your portfolio. What is your portfolio
look like today?
Speaker 2 (03:02):
So today, right now, I'm sitting at about sixty eight units,
mostly single family, some duplexes. I have some four plex townhouses,
and I have won eight.
Speaker 1 (03:15):
Plex And today your properties are all pretty consistent with
cash flow.
Speaker 2 (03:22):
Yeah, relatively speaking, most of them are pretty consistent. Now,
there's a few that have some ups and downs that
are some of my older properties that I've had for
a while, But yeah, in general, generally speaking, they're pretty consistent.
Speaker 1 (03:35):
And what about appreciation? Is that something you're looking at
when you buy a property.
Speaker 2 (03:41):
That's actually probably one of my stronger focuses today as
much as I still want cash flow and I still
won't buy a property without cash flow. Long term appreciation
is my long term goal.
Speaker 1 (03:54):
So yeah, I mean, long term appreciation is really incredible.
It can kind of sneak up on you, but it's
I think that over time you might be able to
make more money on appreciation than cash flow. What do
you think about that?
Speaker 3 (04:07):
Now?
Speaker 2 (04:08):
I would totally agree with that. Like, I know, over
the years, you know, we would joke around with my wife,
but she would be like, she gave me to just
be like, hey, you know, things are doing so well,
just sell them all. You know, she'd just be frustrated.
And the next station, you know, things be going good
and she'd be like, Okay, let's let's let's buy some
a couple more. But now today, like when we when
we sit there and look at our personal financial statement
(04:29):
and you know, the wealth that we've created by having
these properties, especially especially a lot of thems we' bought,
and even in the last like seven or eight years,
it's like, okay, this is a no brainer. There's there's
no more discussions of of let's sell them all, you know.
Speaker 1 (04:45):
Totally all right, So let's figure out what changed. So
when you were first starting out, you would you would
just look at the numbers and if the numbers look
good on paper, you would buy the property. But in
re reality that the numbers on your spreadsheet weren't really
translating in real life. Can you explain what was going on?
Speaker 2 (05:09):
Yeah, So yeah, when we first started buying properties, like
I said, we would, you know, we just kind of
look at what the house cost, what it cost to
fix it up, what the and what the mortgage would
be with the taxes and insurance, and what the rent
would be. And so we didn't really do a good
job of factoring capital expenses or general maintenance.
Speaker 3 (05:30):
So and we didn't look at the houses.
Speaker 2 (05:32):
We just you know, I mean we looked at the houses,
but we didn't think about what could go wrong with
these houses.
Speaker 3 (05:37):
So a lot of the houses we ended up buying
were much older houses.
Speaker 2 (05:42):
When I say older, I'm saying like they were built
in like between eighteen ninety and say nineteen fifty. And
so those houses, you know a lot of times by
this point, have had you know, change of hands numerous times.
Speaker 3 (05:55):
So there's a lot of.
Speaker 2 (05:56):
You know, maintenance that's gone on that you don't know
who did it. And why they did it. And those
are the things that we kept on running across. Things
that would just pop up that you know, somebody had
some weird wiring that they did, or they went from
you know, copper to PVC to packs back to copper,
you know, and all those junction points would eventually spring
(06:17):
a leak and cause us headaches.
Speaker 1 (06:19):
So yeah, and how old are the properties that you're
buying today?
Speaker 3 (06:25):
Most of the properties are buying today or nineteen eighty
or newer.
Speaker 1 (06:28):
Okay, So yeah, I guess like when you look at
a property that was built in eighteen ninety or the
early nineteen hundreds, it's like there's just been so many
renovations over the years. So was that causing you a
lot of problems too?
Speaker 2 (06:43):
Yeah, So we still have some properties that are older
like those, so we haven't gotten rid of all of them. However,
most of them we did find, like you know, like
I said, three to four different families have lived in there,
and many times you'd have you know, three to four
different di I wires do it yourself, and they're doing
whatever they thought was the best way to do whatever,
(07:04):
and just hadn't been maintained. The properties that we still
own today that are older are ones that have had
like maybe one or two owners, and they were pretty
original houses. They are pretty original to the footprint of
the original build. They they have multiple additions and stuff
like that.
Speaker 1 (07:20):
So right, right, yeah, just less chopped up. So how
do you how do you figure out like how much
to set aside for capac and repairs. I always find
that when you put numbers on a spreadsheet, if you
say I'm gonna allot ten percent of the rent to repairs,
that's really just kind of a guess, like you really
(07:42):
don't know what it's going to be. So how do
you kind of figure that out?
Speaker 2 (07:48):
So I generally, I generally put twelve percent in there
for everything. So there's there has been some studies I've
seen where they said twelve percent is what you should expect. However,
I do go back in there and I look at, Okay,
if the roof, if the roof's not brand new, if
it's only got seven or eight years on it, I'm
gonna determine what the cost of a roof is and
divide that up, you know, in two months there, So
(08:10):
to add the fact to that into my monthly cost, right,
the being with a water, heat, or any any your
major expenses. I'm going to see you try to figure
out what what life is left in it and then
divide that up so I can get that kind of
calculated in there.
Speaker 1 (08:22):
Right, So when you buy a property, are you are
you renovating it or are you renting it out in
whatever condition it basically is. When you buy it.
Speaker 2 (08:33):
We're doing light renovations. Now we used to go through
and redo everything. Of course, you know, back in the day,
we were buying older, you know, dilapidated houses. So so
now we're buying you know houses the first time home
buyers will be buying so you know, so there's a
big difference in those. So we're usually not going in
and changing out water, heusing furnaces, unless they just happen
(08:55):
to be like at the end of their life, then
we will do that just so we don't have to
have to deal with it while attendant's in there.
Speaker 3 (09:03):
But outside of.
Speaker 2 (09:04):
That, yeah, I mean we're normally we're freshing and up
the place, you know.
Speaker 3 (09:08):
But that's about it.
Speaker 1 (09:09):
So what about the neighborhoods. Are the neighborhoods different between
the older houses you were buying in the newer houses.
Speaker 2 (09:18):
Yeah, so they're for the most part, they are different neighborhoods. Yeah,
there's a few that kind of have a little bit
of mix, but most of the neighborhoods are you know,
they're more they're closer to like the meeting home price
for our area, so which is kind of makes it
your bread and butter, makes it kind of more of
(09:38):
a like a B class neighborhood where before, Yeah, it
was towards the lower end, so it was you know,
lower income neighborhoods. And yeah, so definitely different clients of
people renting those houses as well.
Speaker 1 (09:53):
So do you find with the properties in better neighborhoods
that you're getting a better quality tenant or were you
still getting good tenants at the the c properties.
Speaker 2 (10:07):
We still we still got a good number of tenants
in both. However, we do see we still see better tenants.
It can more consistently. So our delinquency rates are much
lower on the newer houses than they are on the older,
older houses.
Speaker 1 (10:24):
So yeah, what about people staying longer? You know, turnover
is always my biggest expense, so I like to minimize
turnover as much as possible. Do you find that in
the nicer neighborhoods, people are staying longer or not.
Speaker 2 (10:38):
Really, Yeah, they actually are, so that that I agree
with that statement. We do get significantly longer tenancy. Actually,
I find it. It's one of our favorite renter profiles.
We get a lot of like retirees or some or
close to retirement folks and they come in, they take
(10:59):
care of the place is super well. They want something
that's easy to clean and take care of themselves, and
they stay for a very long time. Actually you would
think it they would only stay for a couple of years,
but they stay for quite a long time.
Speaker 1 (11:10):
So all right, So the key then to consistent cash flow,
and that's really what you want is you want the
cash flow to be something you can count on, not
something that is really good one month and then the
next month you're you're losing money. But the key is
just is buying newer properties and buying in better neighborhoods
(11:32):
and accounting for what the expenses are going to be.
More dialing in what the expenses are going to be.
Speaker 3 (11:39):
Yeah, yeah, that's correct.
Speaker 2 (11:40):
Yeah, that's really what it boils down to, buying nicer
properties and better neighborhoods.
Speaker 3 (11:44):
You're paying more upfront.
Speaker 2 (11:46):
I think that's something a lot of people don't see
when they're looking at these They're like, oh, I can
buy a house for you know, half the price of
the ones that Greg's looking at. You know, so that's
a lower down payment for me. But then they don't
realize I got to drop you know, thirty thousand dollars
into renovations that I'm always spending four or five thousand
and two. Uh so, and then I'm also just able
to rent them out significantly faster because those older, older
(12:10):
homes and those worst neighborhoods are actually they take so
much longer to rehab instead of taken one to two
weeks or taking three or four months.
Speaker 1 (12:17):
Interesting. Yeah, yeah, Well let's talk about how you got
started buying rental property. So let's go back to the
very beginning. How did you fund your your first purchases?
How were you coming up with those down payments?
Speaker 2 (12:32):
So, yeah, we we bought our first house and lived
there a few years, and then decided to buy another one.
Speaker 3 (12:38):
We bought a foreclosure.
Speaker 2 (12:40):
That foreclosure had some equity in it, so it wasn't
a ton, but it was enough to give us. I
think it was around a twenty five thousand dollars line
of credit, and so yeah, we took we turned our
first first house into a rental, and then we used
the line of credit to buy start buying rentals, which
we bought, you know, three in the same so that
kind of took up the whole line of credit from
(13:02):
the get go.
Speaker 1 (13:03):
Wow, you bought three properties as a brand new investor.
You you bought three properties in one day?
Speaker 3 (13:10):
Correct?
Speaker 1 (13:10):
Yeah, So how did that come about? Was it the
same seller for all three properties?
Speaker 2 (13:16):
So we had two sellers on that one? We had
one one was a foreclosure. So this was back in
seven eight nine time, so there was more foreclosures happening then.
But the first one was a foreclosure and then the
other two was I was calling for rent signs and
uh found the landlord who was wanting to downside some
(13:38):
of the properties, and uh so I bought, uh bought
the other ones off of them.
Speaker 1 (13:42):
Interesting, So you you were looking for landlords that like,
were you thinking maybe they have trouble renting out this
property or maybe they're a tired landlord.
Speaker 3 (13:52):
Yeah, that's kind of what I was.
Speaker 2 (13:53):
I was hoping it was one of those situations I
called a lot of for rent signs, and you I
found a lot of a lot of landlords who who
got more than they wanted. So they were either wanting
to get out of it completely, or or they were
an accidental landlord, or they just yeah, they were wanting
to downside so it was easier to manage while we
were retired.
Speaker 1 (14:13):
So how does that conversation go when you when you
call off a re rent sign.
Speaker 2 (14:20):
Well, I usually call them up and just ask them
about the Sam Colin, I saw the for rent sign,
and they usually go into their sales mode and they
usually tell you about the property and the rent and
all that stuff. And I would ask me, Hey, I
don't want to waste your time. I'm not looking to
rent it. I was just curious if you're interested in
selling it. I have rental properties too, and I'm you know,
trying to pick up some more and and they'll be
(14:44):
frank with you.
Speaker 3 (14:44):
Most of the time.
Speaker 2 (14:44):
They're they'll say, yeah, I hadn't really thought about it.
But then they you know a lot of times they
think a lot of times they'll get back here and say, yeah, yeah,
I think i'd be interested in us talk.
Speaker 1 (14:53):
So what a great idea I'm going to have to
try that. That's pretty good. Have you had any other
creative ways to find deals like that?
Speaker 3 (15:04):
Yeah?
Speaker 2 (15:04):
Like I had well, and sometimes I mean the deals
find you. Like we had one that we had a
short sale that we bought that that they were get
ready to be sold for back taxes. So we got
that one quickly. As we were renovating at the neighbors
all noticed and one of the neighbors just said, Hey,
my mom, she has this rental house that she got
that you know, she doesn't want.
Speaker 3 (15:26):
Would you be interested in buying it?
Speaker 2 (15:28):
And I was able to actually talk them into doing
a contract for deed because I was like, Hey, I
just spent all this money fixing up this current house.
Can we do a contract for deed for two years?
And yeah, they happily agreed to it, and uh, yeah,
I got that one in a contract that way.
Speaker 1 (15:45):
With a number of properties that that you have, I
mean you've got a pretty big portfolio. Have you bought
all those properties one at a time or do you
do you find like an investor ever that's selling a
several properties at once.
Speaker 2 (16:02):
Yeah, I've had I mean majority of my properties came
in package deals. So we had the landlord that I
had that had the that that I called the for
rent sign. I found another person on Craigslist. They were
selling their portfolio and they were they were in pre foreclosure,
(16:23):
so we were able to buy that one by signing
on the dotted line. There was a landlord in town
here that had hundreds of properties and I ended up
working out a deal to buy roughly forty of his
properties through directly with his banks. So we got those
and these are these are all off market deals. So
(16:44):
for the for the most part, recently, about about a
year and a half, two years ago, I bought a
package a gentleman who was in his early seventies. His
father passed away and left him a handful of rental properties,
so he couldn't find a buyer to take the whole package.
So we were able to snag those up.
Speaker 1 (17:04):
How do you how do you line up the financing
for that? So when you're buying a group of forty
rental properties, how did you finance that?
Speaker 2 (17:13):
So, uh, the way I've been doing the way I
did the forty it's a little different than I do now,
but yeah, that I since he was in a four
in foreclosure at the time. The banks did not want
to lose the properties. So I contacted the banks and
was able to negotiate deals on all the packages. Each
(17:36):
package usually had about five or six properties that we
would have with the different banks. So so yeah, we
we on some of the houses. We negotiated no money
down and they would they even gave us money for
fixing the properties up. The one, the one deal he
had which was had still my favorite deal, One of
(17:57):
my favorite deals was that he had. It was it
was his better properties, his most recent purchases. The bank
gave us a loan for zero percent for the first year,
and then one percent the following year, two percent and
so on until it hit five percent.
Speaker 3 (18:14):
So yeah, that was a that was a fun deal.
Speaker 1 (18:16):
So you didn't have to put any money in, Like
you're basically taking over the mortgage for the seller, but
the bank was also giving you money to fix up
the property.
Speaker 3 (18:26):
Correct, yep, yep.
Speaker 2 (18:27):
On roughly thirty thirty four I think of those forty Yeah,
they gave us the money to buy them and fix
them up just by signing on the dotted line.
Speaker 1 (18:37):
How did you work that out? Like did you did
you offer that to the bank or did the bank
come to you with that offer.
Speaker 2 (18:44):
So I offered, I offered to take them over and
then and we all agreed that the properties needed money
and needed needed work to be put into them. And
I'm trying to remember. I think one of the bankers
actually suggested said, well, what if we did this, because
we don't want to we don't want to be taking
this back in another year. So they had suggested it,
(19:08):
and then I think we brought it up to the
other banks and they all was like, yeah, that's a
great idea.
Speaker 3 (19:13):
They it's just loaning more money for them.
Speaker 2 (19:15):
So as long as I can follow through, it was
it was a It was a great deal for them, you.
Speaker 3 (19:19):
Know, turned to loss into a win.
Speaker 1 (19:21):
So yeah, that's good. I mean that the bank wants
you to be successful. They want to make their money
every month, so they really really set you up for success.
That that's great. Now, at some point you left your job.
How many rentals did you have when you left your job.
Speaker 3 (19:38):
I think I had in the forties. I don't remember
the exact number.
Speaker 2 (19:43):
I was in the forties, which I just because I'd
had about a dozen properties, and then I think I
was still in the process of buying these forty because
then they again they were packages, so that that I
bought those over like a twelve or fourteen month period.
So so in the process of buying those properties in
the in the forty ish unit count.
Speaker 1 (20:05):
So was that hard, like to walk away from the
steady paycheck and you know, now you're living off rental income? Like,
what was that? Was that hard to kind of make
that shift?
Speaker 2 (20:19):
It was It wasn't hard, Actually it made it just
it was exciting. It was exciting for me. My wife
might have been a little bit nervous, but but when
we sat down and talked about.
Speaker 3 (20:29):
It, like.
Speaker 2 (20:31):
The rentals we bought needed a bunch of work and
they needed rented out and I wasn't able to get
that done doing a full time day job. So it
actually made more financial sense to just quit my job
so that I could focus on the rentals and get
them going strong.
Speaker 1 (20:46):
And that goes back I think to why the consistent
cash flow is so important that you need that money
to pay your bills. I mean, you can't have a
month with no rental income coming in.
Speaker 3 (20:59):
Yeah.
Speaker 2 (20:59):
Yeah, and when you have several of them hit at
one time that aren't consistent, that that that hurts.
Speaker 3 (21:05):
That hurts a lot.
Speaker 1 (21:06):
So yeah, So then when you left your job and
you're you're going at this full time, did you find
that you were finding more deals, like just because this
was your focus every day?
Speaker 2 (21:20):
Yeah, I felt I Yeah, I guess so, I mean
I was already in it, So I guess I was
finding some more deals. But I feel like deals were
coming pretty strong as they were, just because of networking
with bankers and other real estate investors because other you know,
we we all think we're in competition, but honestly, like
there's deals wecause some guys can't do, you know. And
(21:42):
so that's that's another way of finding finding more deals.
And but b I guess the more time you have
to be doing that, then yes, the more time you can,
you can definitely find more deals.
Speaker 1 (21:52):
So now at some point you opened up a property
management company. What what made you do that?
Speaker 3 (22:00):
Yeah?
Speaker 2 (22:00):
So yeah, after going full time into being a landlord
and became president of the Landlord Association, just talk with
landlords throughout uh in during our meetings and lunches and whatnot.
I just found a lot of them were making like
the same mistakes over and over again and not not
(22:21):
exactly learning from it. And so as I dove into it,
I saw that property management was a need, like it's
something that people were looking for because people didn't realize,
especially in our market, they didn't realize that other someone
else could manage your properties for you. That everybody kind
of thought they either had to do it themselves or
they had to sell. So that that sparked an interest
(22:42):
in it, which led to led to me starting a
property management Has.
Speaker 1 (22:45):
It changed the way like managing properties for other people,
has that changed the way that you manage your own properties?
Speaker 2 (22:53):
Yeah, I mean just to an extent, because I I
from the get go wanted to even before I was
managing for other people. I established my own LLC as
a management company long before you even had the thought
of having a management company because I wanted to manage
professor professionally or I wanted a professional experience for my residents.
(23:13):
So with that, when I started managing for other people,
I've learned a lot, Like I've just learned just from
one from doing it, but learning from my investors that
I managed for, like some of them have some interesting
strategies on things, and now I've been able to duplicate
that into my own property.
Speaker 3 (23:33):
So it's been great.
Speaker 1 (23:34):
If anybody wants to reach out to Greg, whether you're
looking for a property manager in the Springfield, Illinois area,
or you want to follow up with anything we talked about.
I've got Greg's contact information on the website. You can
find it at Rental Income Podcast dot com slash episode
five thirty seven. If Greg inspired you and you're ready
(23:57):
to buy your first property or you want to add
to your portfolio, reach out to our sponsor, Chailey Ridge.
She's a nationwide lender. She has a ton of different
loan programs and she can find something that works for you.
And right now, for a limited time, she's offering a
free thirty minute strategy session to help you get a
(24:17):
game plan together to build your rental 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 the follow button and that way you'll be
notified every Tuesday when a new episode comes out. My
(24:39):
name is Dan Lane and this has been the Rental
Income Podcast
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