Episode Transcript
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Speaker 1 (00:01):
Inspiring interviews with Today is Top Landlords, this is the
Rental Income Podcast, and now.
Speaker 2 (00:08):
Damnly, Larry, you've been on the podcast a bunch of
times over the years, and you reached out to me
last week and wanted to come back on this show
and talk about something.
Speaker 1 (00:18):
What is it that you want to talk about today.
Speaker 3 (00:20):
Well, I've been in this business for forty years, buying, renovating, leasing,
managing and selling single family and small multi family properties
forty years, and it's time for me to I'm kind
of almost into my second chapter. And when I got started,
(00:41):
somebody was nice enough to reach out to me and say,
you're doing this all wrong.
Speaker 4 (00:46):
Here's what you need to do, and took.
Speaker 3 (00:48):
Me by the hand and then helped me buy my
first house and kind of got me going.
Speaker 4 (00:53):
And it's led to a forty year career.
Speaker 3 (00:57):
So it's time for me to turn the page and
start giving back and hopefully guiding new investors into the
world of real estate investing.
Speaker 2 (01:07):
Larry's been investing in rental properties for a long time.
He's made a lot of money, He's done a lot
of things right, but he's also made a lot of mistakes.
And on the show today, We're going to walk through
some of the things to make sure you do and
some of the things that you shouldn't do when you're
investing in rental properties. Joining us on the podcast today
from Kansas City is Larry Meyer. We'll take a quick
(01:29):
break to thank our sponsors. We'll come right back and
we'll talk to Larry. It's a lot of work to
find a really good rental property, and when you actually
find that property, you want to make sure you're working
with a lender that can get that loan closed. The
lender that I recommend is jay Lee Ridge from Ridge
Lending Group. She's a nationwide lender and her specialty is
(01:49):
helping investors finance rental properties. She has a ton of
loan programs and she can find something customized to you
for your situation. If you want to find out more
or you're ready to get started today, just go to
Ridge Lendinggroup dot com. That's our Idge Lendinggroup dot com
n MLS four two zero five six. Investing in rental
(02:11):
properties can be complicated, but.
Speaker 1 (02:13):
It doesn't have to be.
Speaker 2 (02:15):
My friends at Midsouth home Buyers sell completely rehab turnkey
properties in both Memphis and Little Rock and They've been
doing it for twenty three years. All their properties come
totally rehab They put on a new roof, new kitchen,
new bath, new plumbing, new electric, Everything is brand new.
They also have a tenant that's moved in before you close,
(02:37):
so you get cash flow on day one. Midsouth home
Buyers also continues to manage the property for you after closing.
It couldn't be easier. Everything is one hundred percent done
for you. All their properties also come with a couple
of guarantees. They have a one year total maintenance warranty
and a lifetime occupancy guarantee. Personally, I just closed on
(03:00):
my fifth property with mid South home Buyers and I
couldn't be happier. If you want to talk to a
happy customer, reach out to me. I'm happy to answer
any questions, or you can check them out at midsouthhome
Buyers dot com. Larry, for anyone that maybe hasn't heard
you on the podcast before, can you give us the
real quick cliff notes version of your story.
Speaker 3 (03:23):
Well, again, I've been in those business for forty years,
kind of all phases, and I was kind of at
the stage where it's time to turn the page and
find a beach or something and talking to my son's dad. Yes,
you know, I like the going to the well in
(03:45):
the olden days, going to the mailbox and there's all
these rent checks there. Can we build up a real
estate portfolio and then you can give it all to me?
Speaker 4 (03:53):
Right, okay, sure, that's what dads are for. So we.
Speaker 3 (03:58):
Started back out and building a rental portfolio. He's gotten involved,
uh in the business.
Speaker 4 (04:03):
He likes it and uh, he's he's excited.
Speaker 3 (04:08):
We've got a couple of properties, an apartment building, and
now we're we're looking for more and more and more proper.
Speaker 2 (04:15):
And so you had sold everything that you were you
were ready to retire and and now you're you're back
into it.
Speaker 4 (04:23):
That's correct. We sold. I sold everything.
Speaker 3 (04:26):
I have a lot of investors from all over the
country that I was dealing with and basically reached out
and said, uh, I'm done.
Speaker 4 (04:33):
Uh and uh uh.
Speaker 3 (04:35):
And then after I sold everything, Uh, that's when my
son popped up and said, gosh, dad, so you know
we're worried.
Speaker 1 (04:41):
Before I sold these right right right?
Speaker 4 (04:44):
So here we are. So we're starting kind of starting
over again, which is fun.
Speaker 1 (04:47):
So tell us about your portfolio. Today.
Speaker 2 (04:49):
I know the last time you were on we talked
about a building that you bought that had burned down.
You guys fixed it up and rented it out. What
else have you guys bought.
Speaker 4 (05:00):
Well, we've kind of found our niche.
Speaker 3 (05:02):
As you may know, the real estate investing world is
kind of crowded right now. Everybody wants to be a hostaler.
Everybody wants to you know, there's lots of TV shows.
So I like to find the low hanging fruit and
fire damaged properties. It's pretty low hang most of its
stuff's on the ground. It's not even low hanging. So
(05:26):
a guy has a rental house, it burns down, tenant, whatever,
battle electric, They get their insurance money and they decide
I don't want anything to do with this anymore, and
you know, they reach out. I'm kind of the fire
damage guy here in Kansas City, and they call me.
Speaker 4 (05:42):
We work a deal, and we're off and running.
Speaker 3 (05:44):
So I bought we bought an eight unit apartment building
that it had some nasty fire.
Speaker 4 (05:51):
And it was empty.
Speaker 3 (05:52):
So I actually bought the note on that and then
foreclosed on the owner because he disappeared, and we fixed
it up and now it's a beautiful eight unit building,
fully rented all section eight. And then we've got several
houses that we've got going on right now. One we're
in the middle of right now that my son is,
(06:13):
you know, meeting some contractors down to start on the electric.
Speaker 4 (06:17):
Wow.
Speaker 2 (06:18):
I mean that's an incredible niche. So you're looking for
houses that have either burned down or have fire damage.
Most investors are afraid of that, but you're able to
get them really cheap, right and obviously.
Speaker 3 (06:33):
You know, some are too far gone and deserve to
need to be torn down because they're dangerous. But a
lot of them it might be a grease fire in
the kitchen, so you know it was you know, so there's.
Speaker 4 (06:45):
An asterisk next to everything.
Speaker 3 (06:47):
It all depends on the condition and how much work
it is. But the scary part is everything is black
and that's just from the smoke damage. And the fire
department will come in and they'll knock holes in the roof,
they'll break all the windows to to air out everything.
But when you really get into it, it's just, you know,
tear everything down to the studs.
Speaker 4 (07:07):
Right move forward.
Speaker 2 (07:08):
Yeah, I mean it does seem scary. I think I
might be scared of a fire damaged house. But you know,
if you know what you're doing, it's it's probably not
much different than doing a rehab it.
Speaker 4 (07:20):
Is and you know there's a little extra added issues.
Speaker 3 (07:24):
We we always have a structural engineer come in to
inspect the property and then he'll draw up his plans
on what needs to be replaced.
Speaker 4 (07:33):
Uh, And you know.
Speaker 3 (07:33):
He'll tell us right off, you guys are nuts. Don't
even mess with this one. Or he'll say, yeah, this,
you know, fix this, do this, do this. I get
my plans, you turn them into the city. Everything has
to be permitted. They look at fire damaged houses a little,
you know, a lot closer, and they should just to
make sure everything is safe and secure, which I have
no problem with, and then you fix it up.
Speaker 2 (07:55):
Now, the general consensus among investors is you're better off
to stay away from rough areas. That you're going to
have a tough time or a tougher time in those areas,
but you have made your career working in those areas. Like,
tell us what the area is like that you invest in.
Speaker 3 (08:18):
Well, I'm in the central core of Kansas City, Missouri,
also known as the inner city, the hood. You know,
but it's the central core of Kansas City, close to downtown,
and I started out there because I had no money
and houses were cheap forty years ago, so that's where
I started. And I've Kansas City really doesn't have a
(08:41):
bad part of town. There are bad streets, there are
bad parts of streets, but there really isn't any bad
you know, district that you need to just stay away from.
We just don't have those here, So you know, just
from being you know, you need to pick your area,
pick your niche, and once you know where to go
and you know where, I have no trouble selling houses
(09:05):
and at the first time home buyers, we get a
lot of those now.
Speaker 4 (09:08):
And I have no trouble renting anything.
Speaker 3 (09:10):
So it's you know, you could probably count on your
thumbs the problems I've had down there, being in the
wrong place at the wrong time. Most of the time,
it's just going to work and regular folks and you
go home.
Speaker 2 (09:23):
All right, Well, let's talk about some of the big
lessons that you've learned over the years. And one thing
that you mentioned at the beginning is that when you
were getting started, you were doing things wrong, and you
had a mentor that that helped you out like what
were you doing and how did the mentor help you?
Speaker 4 (09:41):
Well?
Speaker 3 (09:41):
I had my brother and I. This is right after college.
My brother asked me if I wanted to buy a
Mexican restaurant together, So, having nothing else going on, I said, sure,
why not? I don't even like Mexican food. But we
bought the restaurant and every Tuesday there was a guy
that would come in and he had paint all over him,
(10:04):
and you know, being the you know I you know,
you talked to all the customers and I said, boy,
you're you know, it's taking you up forever to paint
this house, or you're just a real sloppy painter, just
being a you know, smart alec and he's And I said,
but we the restaurant needs a code of paint. Can
you give me a bit? He goes, no, I'm a
real estate investor. And he told me that he buys
houses in the Central Court of Kansas City, Missouri. He
(10:26):
fixes them up, and he rents them out through the
Section eight low income housing program. I said, gosh, that
sounds like a lot more fun than working in, you know,
than owning and working in this restaurant. Will you teach
me so I he said, show up at this address tomorrow.
You're going to help renovate the house with me for free,
(10:47):
and then I will teach you everything you need to
know about fixing a house up, making it ready for
section eight, he says, And then I'll take you and
show you, you know, and we'll go get your first
house for you. And he kind of got me on,
started me out on the path. And the next thing
I know, I bought, you know, just another house down
the street from his five thousand dollars house. I fixed
it up myself, painted it and just got it ready.
(11:09):
And the next thing I know, I had a Section
eight ten and in there for eight hundred dollars a month.
And it's like, wow, how many more of theaset can
I do? So it was off and running from there.
Speaker 1 (11:19):
That's really great.
Speaker 2 (11:20):
And you know, that's the thing is like you can
figure things out on your own, but it's such a shortcut.
If you have a mentor like that that can guide you,
like someone that's been successful, that can show you what
works and what doesn't work. It really just saves you
a ton of time.
Speaker 3 (11:38):
It does, and time and money. There was a lot
of dollars spent on attorneys because I got in a
lot of trouble. My houses were always nice and neat,
and they were always rented, so I had other owners
come to me and say, gosh, can you manage my property?
Which I did, and then I got to see some
desist notice from the real estate telling me.
Speaker 4 (12:00):
That I had to be a licensed real estate broker.
Who knew?
Speaker 3 (12:04):
So I got my broker's license, But it's you know,
nobody told me and and you know, or when you're
wiring a breaker box, don't touch this.
Speaker 4 (12:15):
You're not going to be very happy with what happens
to you. And I did, and so a lot of trial,
a lot of air, a lot of mistakes.
Speaker 3 (12:23):
So yeah, someone teaching me along the way, my life
would have been a lot of Yeah.
Speaker 2 (12:27):
All right, Well, let's walk through some of the lessons.
You sent me over, some lessons that you learned, and
I think this is interesting to talk through here. So
the first thing is, don't invest just anywhere. Pick an
area to invest in and become an expert in that area.
Speaker 1 (12:45):
Can you tell us more about that?
Speaker 3 (12:48):
Right when I was managing property, I would have guys
call me and they'd say, can you take over my portfolio.
Speaker 4 (12:54):
I've got six houses and one would be way up
north near.
Speaker 3 (12:57):
The airport way out south. Yeah, I said, I'm gonna
spend half my time driving. I said, this doesn't make
who told you to do this? So what I like
to do is I you you, you find your niche
mine is urban core houses, and and be better at
it than anybody else. So I found my area and
(13:17):
and then within there, I had a certain area that
I really liked, my sweet spot. So I knew every block,
I knew, you know.
Speaker 4 (13:25):
The pastors at the churches.
Speaker 3 (13:27):
I knew, uh, you know where the you know who
to stay away from, who not to rent to. I
could look at a house and say, oh, yeah, just
from standing on the corner, well that's a three bedroom,
bath and a half. It's eleven hundred square feet. And
here's how much it costs to uh, you know, to
to fix them back up again, because I've done so
many of them.
Speaker 4 (13:45):
So it just makes sure you've got a.
Speaker 3 (13:49):
Database that you can build, and it just makes things
a lot easier. You know what you can rent them for,
you know how long it's going to take to rent,
and a lot of times you'll get uh, you've got
a renter and she and I say, ma'am, we're we've
got a house that we're working on on the next
block over. Oh my gosh, my sister would love to
be a you know, or my mom would like to
(14:10):
be on the next block.
Speaker 4 (14:11):
You can take care of the kids and away you go.
So you're a FROW network will build everything.
Speaker 2 (14:17):
That's really smart and that saves you a lot of
time too. I mean, when you see a deal, you
can move on it right away, like you're not having
to do research. You know, Okay, this is what I
can pay for this property. And you know that that
probably helps you lock up more deals.
Speaker 4 (14:34):
Well it does. And a lot of times we'll put
a sign, uh you know what.
Speaker 3 (14:38):
Because the first thing we do is we you know,
we clean the yard up and uh you know, and
get the outside painted, put the new roof on it.
Once we've got that to where it's actually looking nice,
we'll put a rent sign out in front.
Speaker 4 (14:50):
And you'd be surprised.
Speaker 3 (14:51):
I mean, by the time we're finished, I've got a
line of people wanting to move in, just because you
know they're right there, and and you know, and and
you know, families want to stay together.
Speaker 4 (15:02):
So yeah, it just it just makes it. It's just
a lot easier to take care of.
Speaker 2 (15:05):
Now, there's a couple of myths that that people believe
that you either need to be rich or have a
lot of luck, or be fearless when buying rentals. And
you said, that's just not true.
Speaker 3 (15:18):
Well it's not. Again, here's another asterisk. It is not true.
But you know, you need to know what you're doing.
You can't just walk in. You know I did, and
I paid dearly for it in the beginning. But you
kind of have to have a game plan. You kind
of have to know what you're getting into and and
(15:39):
and and here are the things that can happen, and
if they do, here's how you know you take care
of them.
Speaker 4 (15:45):
So, yeah, you do you need money.
Speaker 3 (15:48):
I got a five thousand dollars cash advance on a
master card, which was my entire credit line when I
first started out. And you know, as you go along,
you learn how to do seller finance. Uh you know,
when you don't have any money to buy something, so
you know, you you you learn along the way that
there's a lot of ways to uh uh, you.
Speaker 4 (16:09):
Know, to get to the end of the story.
Speaker 1 (16:10):
That you want, right and all right.
Speaker 2 (16:12):
So the next one here is buying rentals is not
going to get you rich overnight.
Speaker 4 (16:19):
Now.
Speaker 3 (16:21):
It's a it's it's a it's it's a slow process. Uh,
if you're and that's the one thing I had to
teach my son because he's from that generation of instant gratification.
And I see he goes, well, gosh, Dad, after anything's done,
you know, we're only making five or six hundred dollars
a month on this house. Net I said, Yeah, I says,
but when we have thirty of them, now you're you're
(16:42):
ready to get excited, right, So he's it is not
a get rich quick thing. You know, go flip houses
if you want chunks, you know, or or go wholesale.
But in the rental world, it's it's a slow build.
But when you get and and but if you keep
going and you and you're you're careful and educated on
(17:02):
what you're doing, you wake up one day and you've
got fifty houses that are cash flowing like crazy, you're
paying off mortgages.
Speaker 4 (17:10):
Life is good. Yeah.
Speaker 2 (17:12):
The first time that I talked to your son, he
seemed like he was really really fascinated by flips that
he wanted to rentals, but he really liked the quick
money idea of a flip. Is he still thinking that
way or is he kind of come around to your
(17:32):
way of thinking.
Speaker 3 (17:34):
No. I and the eight unit building that we have
again runted through Section eight. We get twelve hundred dollars
a month for each apartment and they come from one
Section eight agency. So I showed him, I said, Jordan,
here is the here's my ach debit for this month.
Speaker 4 (17:53):
Wow.
Speaker 3 (17:54):
So you know, I said, those are rentals, I said,
and we're going to get that every month as long
as we own the building. The building still has equity
of twice what we have in it, I said. So
the equity is not going anywhere, right, I said. Then
after I'm gone, you and your sister can fight over
it and keep it solid, do whatever you want with it.
Speaker 4 (18:14):
I said, But this is the way you build wealth.
Speaker 2 (18:17):
Right right, totally, totally all right. So the next thing
here is start with education, not emotion.
Speaker 4 (18:25):
Buying a house that you're going to live in is
all emotion.
Speaker 3 (18:28):
Oh, I love the view. It's close to mom BLAOK.
Rental houses, It's just it's numbers and it either works
or it doesn't. Can't get emotional about it, and you
have to do your homework up front, know the area
that you're going into, and do your numbers. You're leasing
(18:50):
screen screen screen, make sure that you're putting in the
right person. Getting them in is a lot easier than
getting them out if you have to. So, yeah, education
is king know what you're doing before you do it.
Speaker 2 (19:03):
And then going along with that is understanding how to
analyze a deal. And and this can be hard because
a lot of analyzing a deal is you're making some assumptions.
I mean, you know your fixed costs, you know what
your mortgage is going to be, the taxes and insurance,
but for vacancies and repairs, you know, you're just kind
(19:26):
of guessing. How how would you tell someone to analyze
a deal today?
Speaker 3 (19:35):
You know, starting out, you're going to want a couple
of pretty safe deals. Where the roof is you know,
not going to be an issue for some time. Your
electric has already been updated, your plumbing has already been updated,
and really it's just paint and paper and you're going
to pay a little more for it. But there are
certain things, the big ticket items you know you're you're
(19:55):
probably not going to have to deal with and because
you're starting out, if you got a couple of houses,
yeah you could get stuck. So you need to have
a reserve or access to cash or credit card. That's
just kind of sitting there until you can build that
up because you're gonna be self managing, you know, because
(20:16):
you put in a management company. You know, then now
you're you're making that much less money every month. So yeah,
you got to be real careful. The first couple of houses,
you really got to be careful. You're going to get
You're not gonna be happy with what happens.
Speaker 2 (20:29):
So would you say that the most dangerous time being
an investor is when you're starting out when you have
one or two properties. But as you have more rentals,
it becomes less risky because you have more more cash
flow every month. There's just more margin in your portfolio.
Speaker 3 (20:50):
Right, and and then and then for each for each
house that you buy, the process becomes a little easier
because what I suggest everyone is, you know, to start
out is start out with rentals and go through the
entire process.
Speaker 4 (21:06):
By one house and go through the entire process.
Speaker 3 (21:09):
Fix it up, get a tenant in there, get your
payment however you're getting paid, get that set up and
then manage it for a while. And then once you
realize that yeah, this is not bad, I think I
can do this, then go look for another one. But
you have to go through the process first, so you
(21:30):
know what's going to happen to you, and you can
screen screenship. Some days you're going to have to evict
somebody that's a whole other world so or you're going
to have those calls at two in the morning, or
you're going to have domestic disturbances that can happen anywhere.
Speaker 4 (21:45):
So you need to know.
Speaker 3 (21:47):
Before you get too many of these, is this really
the business you want to be And if you've got one,
you can unload it and you know, get your money
back and you move on. But so I just wanted
a time learn the process, move on.
Speaker 2 (21:59):
The next you have on here I think is very
important is you talk about how important it is to
to build a network, to build a team to help
you out, Like, who are some people that that you
should make sure you have included in your network.
Speaker 3 (22:17):
Well, I always tell you know, before you even get started,
you need to find a real estate attorney that can
set up your your buying entity, whether it's an LLC
or however you're doing it.
Speaker 4 (22:33):
And then you need to.
Speaker 3 (22:36):
Find a bookkeeper or an accountant that knows real estate.
So you have your system set up so and now
you're ready. Then once you get in, then you know
a real estate broker that works the area of town
that you're in, that knows that for buying and selling. Yeah,
you management companies. You know, if you've got a small
(22:58):
one or two houses, you know, if are you going
to pay them to go collect the rent? No, you
do Section eight. They send it to your account directly,
so you know, but you need to have a couple
of handy andies, guys that know plumbing, guys that know uh,
you know, can clean out and paint, just kind of
a kind of a laundry list of of uh of
(23:21):
tradesmen that you know that can help you out. Or
if you want to do the work yourself, which is
that's how I started out. I don't have any money, uh,
and you learn real quick what it takes to you know,
to paint a house.
Speaker 4 (23:32):
And to you know that kind of stuff. So, yeah,
you need a team because.
Speaker 3 (23:38):
You're going to be overwhelmed if you try to do
everything yourself and you have to go on YouTube before
you you know, a problem comes up and you're on
YouTube trying to figure out. It's got to be a
video on how I do this somewhere. That's not a
good world to be.
Speaker 2 (23:52):
In, right, Yeah, I would add a mortgage person too,
like having a good lender.
Speaker 3 (23:58):
Oh yeah, there's a insurance a mortgage person. Uh, you
know the whole process, you know, think through what you
have to do to buy it, to fix it up
to I mean the whole process, and then all the
other people that help you along the way to do that.
Go to home depot, look at how much things cost, uh,
you know, find out and go to lows.
Speaker 4 (24:19):
And and you know where where where you're going to
get your materials from? How long does it takes to
get checked out?
Speaker 3 (24:24):
So you know, there's a whole world of things to
prepare you for before you buy your first house, all.
Speaker 2 (24:30):
Right, And then the last thing you have on here
is that you don't need to go huge. I mean,
you don't need a huge portfolio. You can start slow,
but the most important part is just to stay consistent
over time.
Speaker 3 (24:45):
Right, and you need to figure out you know, I mean,
you buy one house, don't quit your day job. You know,
you need to figure out is this a side hustle
for me? And and you know, maybe I only own
ten houses and it's ten houses enough.
Speaker 4 (25:01):
Yeah.
Speaker 3 (25:01):
Lots of people that you know that have five to
ten houses and that's all they want.
Speaker 4 (25:05):
They don't want to be any bigger. Uh.
Speaker 3 (25:07):
And then there are some guys that, you know, gosh,
I'm never gonna stop. I'm just gonna keep buying these
things because this is what I want my full time.
Speaker 4 (25:15):
Job to be.
Speaker 3 (25:15):
So you kind of have to figure you know, how
old are you? Uh, you know what you're you know,
who do you have? Make sure that your spouse, if
you're married, make sure she's on board with you, because
if she doesn't like the rental world, you're not gonna
be very happy either. So a lot of things to
consider age and all that.
Speaker 2 (25:35):
If anybody wants to talk more about anything we've talked about,
Larry would love to connect with you. He loves talking
real estate, he loves helping investors, and if you want
to talk to him, I've got his contact information on
the website. You can find it at Rental Income podcast
dot com. Slash episode five twenty five. I'd like to
(25:56):
thank Jay Lee Ridge from Ridge Lending Group for response
today's episode. If you're looking to buy a rental property,
whether you're just getting started or you want to add
to your portfolio, reach out to Chailey. She's got a
ton of different loan programs and she can find something
that'll work for you. You can track her down at Ridgelendinggroup
(26:18):
dot com NMLS four two zero five six. Thank you
so much for checking out the podcast today. Make sure
you hit that follow button. I put out a new
episode every single Tuesday, and if you're following the show,
you'll get notified when the next episode comes out. My
name is Dan Lane and this has been the Rental
(26:40):
Income podcast