10 Build-To-Rent Passive Income Principles

Couple quick principles. First, we invest for the long term. We are not for everyone. If you're looking to flip a property in the next six to 12 months, we're not for you. We are building long term generational wealth rental portfolios. Also, real estate makes money in at least five different ways. Look, cash flow is important. But what I've learned over the years, and I just did a big podcast on this yesterday, I've always sacrificed a little bit of initial cash flow up front to get into a better quality area and property and look long term with it. And we also by able to own your own properties with this, are looking at the depreciation, the tax performance, the debt reductions, the ability to be able to refinance tax free off. There's five different ways and we go through this in the book of ways to make money owning your own rental property. Also, we only invest in good areas and good neighborhoods. If me, you and Jim couldn't walk down the street at 9 o' clock on a Friday night, we to say hi to one of our tenants. I don't want to go there. Not that you have to do that. We want that ability. We only go to good areas and good neighborhoods. And also I avoid fixer uppers. And that's kind of funny coming from someone who was a rehabber for so many years and did so many rehabs. But again, I hate to tell you this, but the TV shows don't always tell us the truth. It's not always as fun as they make them out to be because with older homes there can be a lot of surprises and, and also something called the three year curse. What I found is when I was rehabbing older homes from the 50s and 60s and redoing everything, it seemed after three years my maintenance and repair budgets always grow pretty high. And I own old properties, but I know that's expected now and that includes more involvement of my time and a lot of our people that we work with, they don't want to give up more time. So that's why we avoid fixer uppers now and do new construction because that is a more solid play with, with less involvement. Also let experts manage your property if you're not looking to create an extra job for yourself, one that doesn't even pay that well like property management. I've always let experts manage my property. I don't like to manage my own portfolio. I've done it before, it was not my favorite thing. So I let experts manage my properties and along with that I've gotten very clear over the last 25 years that rental properties are for cash flow, not for charity. And the reason I say this, it's in the book. When I first started out in real estate out In California almost 25 years ago, I remember the first five rental properties that I bought. Three of my five tenants paid me more stories than they did actual rent. And that put me in a very, very dangerous situation where I finally got clear that, you know, I mentioned to you guys before, I'm very involved in charities in Guatemala, Costa Rica, other areas that I truly care about. I found that if I did, if I didn't separate my rentals from my charity, I'd never be able to give to anything but my rentals. So for me, keeping managers in between me and my rentals, I don't get too emotionally attached. And I've learned that lesson that yes, I care about my tenants, I give a great place to live, but I can never confuse my rental properties as charity because I won't be able to give anywhere else. Now another thing, this is really important. There have been a lot of changes. I don't have to tell this group that over the last couple of years and there has been changes the landlord laws in different states. Some states it can take you 12, 14 months to have a tenant who's not paying leave, sometimes even longer. So I encourage you to find landlord friendly states. That's why we're in Florida. Florida is known that if a tenant doesn't pay, they have to be out in 40 days. And that is a good position to be able to be in if you're owning rental property as opposed to being in a state where it might take 14 months to get them out. That can be a major drain to your financial resource and cash. Plug into a support team, guys. Don't create another low paying job for yourself. When you come to a group like ours or other groups, if they're providing the properties, the financing, the insurance, the management, you know, don't try to recreate the wheel, plug into the system, ask questions, but don't try to redo it on your own. That kind of defeats the purpose of not wanting that extra job and only buying. At least My suggestion from a build a rent company with a profitable track record. What I believe is a track record is at least 500 individual properties have been built. We're at almost 2,500 and growing right now. And I felt after a thousand we really started to hit our stride. So I just ask you, you know, if you're going to go the build to rent, make sure they have a profitable track record and also a healthy balance sheet, and never stop learning. I don't really need to tell this group that. Obviously with White Coat Community you're constantly learning of how to invest and have this side residual that you're growing as you have your medical career. But I never stop learning. I'm always going to events and keeping abreast of what's really happening in our industry in the real estate overall.

The hosts of the White Coat Investor are not licensed accountants, attorneys, or financial advisors. This podcast is for your entertainment and information only. It should not be considered professional or personalized financial advice. You should consult the appropriate professional for specific advice relating to your situation.