Posted on: May 18, 2021
WIP 690 | Rental Property

 

How do you know when it is time to take somebody’s chips off the table and put them into your rental portfolio? Learn the answer to that question and the strategies for rental properties in this episode. Jared Vidales joins Brent Daniels in this episode to bring light to the question at hand. Jared is a residential real estate operator and developer from Scottsdale, Arizona, who has a noted track record of doing flips and rentals. Here, Jared talks about when to take somebody’s chips on the table into your rental portfolio and how to build and grow it. Along that line, he will share the necessity of having an asset management strategy to ensure income flow while expanding your rental portfolio, increasing your rental from one to 60 or more. Listen to this episode to learn from Jared’s brilliant ideas and advice.

Wholesaling Quicktip – How To Know When To Buy Your First Rental Property With Jared Vidales

How do you know when it is time to take somebody’s chips off the table and put them into your rental portfolio? You will learn the answer to that question and more in this episode. Jared Vidales joins Brent in this episode to bring light to the question at hand.

Episode Transcription

How do you know when it’s the right time to start taking some of these chips off the table and putting it into your rental pool?

It is case-by-case. I was talking to one of my mentees. He’s wholesaling and making a bunch of cash. The first thing I told him is, “Once you have enough breathing room when it comes to marketing, your overhead and your team, then start taking some of those chips off the table.” It may not seem sexy at first because like I bought one rental property that spits off a couple of grand a year in cashflow after all your debt service. Don’t buy the highest cashflowing property because typically, that’s a D-class or war zone type property. Put it into a nice, stable property that continues to grow.

What do you think is a nice buffer? Is it 90 days or 6 months’ worth of expenses when you start taking?

If you’re brand new, you could close a couple of big deals. All of a sudden, you could have six months’ worth of expenses, but you’re still brand new and inexperienced and easily bring that thing back to zero. I would quantify it with money, maybe it’s 6 to 8 months, but I would also quantify it with experience as well. Maybe it’s 1.5 or 2 years. Once you’ve worked out the kinks in your businesses, you understand your cashflows within your wholesaling business, you’re able to cashflow, predict and say like, “I ripped the $300,000 deal.” It comes down to experience, cash in a bank, when you can start putting together your asset strategy or rental strategy and say, “This is what I want to go after.”

WIP 690 | Rental Property

Rental Property: Once you have enough breathing room, take some chips off. Don’t buy the highest cash flowing property because typically, that’s a D class or warzone type property. Put it into a nice stable property that continues to grow.

 

I love that you’re talking about years of experience, not necessarily the amount because that’s so huge. Being able to make sure that you have something sustainable in your money machine is critical. It’s critical to be able to take that money that you’re making, and get out of your 9:00 to 5:00 job, pay off your consumer debts, feel more free to be able to go out there and push it. When a lot of people start out, they’ve got jobs. They’re working and doing all these things. They want to transition into this full-time, but you’ve got to make enough to be able to do that. Here’s my thing. I have a wholesaling business. I only own a couple of rentals and I have the coaching business. I feel like between the wholesaling and the coaching, it’s a lot. When you add in a rental portfolio business, that’s another business.

The misconception about rentals is people think it’s passive, and it is, but you have to be on top of those assets or your operational expenses will crush your cashflow. You have to have an asset management strategy. You can’t say, “I’m going to buy a rental, rent it out and wait for a check to come.”

How do you know? When you say operational costs, what do you mean?

Starting off, you’re going to manage it in-house. You have to provide good customer service to your residences. If you don’t, all of a sudden, vacancy. A vacancy will crush any rental portfolio. That’s the one variable that will crush it because when somebody moves out, $500 to $800 to turn it, carpet, paint and put the next tenant in. All of a sudden, your one year of cashflow is gone. You have to provide good customer service and a good quality product to your tenants. You can’t buy an REO and put a tenant in there because you’re going to attract one. A bad demographic of a tenant who doesn’t care and they’re going to destroy your property. Until you’ve wrapped your head around those two things, then you’re ready to start owning a property.

How do you go from 1 rental to 60?

It’s extremely difficult.

I want people to know. You see people on TikTok or Instagram talking about how they have these huge portfolios of properties. They own 100, 200 or 1,500 doors. That’s a full business with a full staff to be able to handle that. You can build that, but you have to be able to understand that’s another whole business.

You have to be on top of your assets, or your operational expenses will crush your cash flow.

I have the luxury of being back in the REO and foreclosure days, and you see people who snatched up 1,000 properties. I started buying and holding months ago. I was constrained to what the market had to offer, especially here in Phoenix. It’s difficult. It all starts with buying that asset well below market value. Once you have that asset below market value, you have way more exit strategies. My thing is when we go into a property knowing that it’s going to be a rental, we’re renovating that whole thing. It comes down to a quality product and customer service. It may seem like a lot of money upfront, but if you ever look at it from a long-term perspective, that thing will pay back way more in dividends because of your good tenant and product. They’re happy to be there. They’re never going to leave. You’re not going to have some bum living in your home.

If you’re interested in joining the most proactive group in real estate investing, it is the TTP program. Go to WholesalingInc.com/TTP. I will personally mentor you. You get my cell phone. We text and call. It’s crazy, it’s bananas, but it’s the truth because I want you to be as successful as possible. I want to work with you and I love you. If you’re interested in that, check it out, scroll down and keep scrolling. The little scroll thing is tiny because there are many testimonials. Nobody has more testimonials. If it feels good in your gut, sign up for a call. Until next time, you’re the best, TTP.

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About Brent Bowers

Brent Bowers, is an investor and coach with a focus on buying and selling vacant land. As an Army Officer with over 8 years of service, Brent was spending a great deal of time away from his family, and he knew he needed to make some changes in order to be more present with his wife and children. In a short period of time, Brent was able to expand his business, hire a team, and (most importantly) spend quality time with his family while still working hard and helping others. While Brent invests in many different types of real estate, his favorite investment strategy deals with buying and selling vacant land, and he enjoys sharing his expertise in this area with his coaching clients. Brent chooses to live his life based on Bob Burg’s quote, “Your influence is determined by how abundantly you place other people’s interests first.” He is passionate about helping other people find success in real estate investing, particularly in land investments.

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