78: Quitting Your Job, Buy & Hold Investing, and Succeeding With High-End Rentals with Brie Schmidt

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This is the bigger pockets podcast show 78.

You're listening to Bigger Pockets Radio. Simplifying real estate for investors large and small. If you're here looking to learn about real estate investing without all the hype. You're in the right place. Stay tuned and be sure to join the millions of others who have benefited from biggerpockets.com your home for real estate investing online.

What's going on, everybody? This is Josh Dworkin, host to the BiggerPockets podcast here with Brandon Turner. What up, Brandon?

What up, Josh? Was that your, like, grandpa voice?

That's my rural Washington voice.

Oh, there you go. Rural Washington. Good job.

Yep, yep, yep. Yes. What's new, man? You know, just, you know, coming off of a nice July 4th weekend.

Excited about the. The recent launch of the BiggerPockets redesign, you know, finally de stressing a little bit now that that's. That's done and otherwise just, you know, living life, man. Enjoying my family, enjoying the summer and.

Doing things. Doing things, having fun.

Nice. Well, hey, on the day that this comes out, which comes out on July 10, it would have been my birthday yesterday. So happy. But we're recording this before my birthday.

But should I be wishing you a happy belated birthday even though I already got you a gift or was responsible?

You got me a gift?

Yeah. But don't you love it?

I love it. This is great.

Happy soon to be birthday or happy.

Belated soon to be belated birthday?

Yeah, there you go. Well, there you go. By the way, in case anybody didn't notice, Brandon there was mentioning his birthday because he wants you all to flood his email with happy birthday messages. So please feel free to blow up his email with emails. Thank you, thank you. But, yeah, listen, we got a big show. We got a great show today, so let's get this thing going. Today's quick tip is we are about to launch webinars on BiggerPockets. I know. We've got this free podcast that rocks. We've got all sorts of other things going on, like a blog that is amazing and the greatest forums online and all sorts of other cool stuff. Yeah, well, we're gonna add webinars to it, too. Just for fun. Why not? Right?

So check out these webinars. We'll be promoting them on Facebook, on our site, in email, so on and so forth. If you are interested, we urge you to come on and do some learning with us on the BiggerPockets webinar to be launched soon or to have already been launched.

I will put a link in the show notes to the webinar page. That way, in the future, people listening to this can click on go to the show notes page@biggerpockets.com show78 and they can see where the newest webinar is going to be. So check that out. Yeah.

Awesome. Awesome.

Which brings us to today's show, Today's guest. Today's guest is Brie Schmidt. Bri is an active, active, active member of the Biggerpockets community. She's amazing. She's always out there giving advice, being helpful to folks.

We wanted to have her on the show. Here she is. Bri is officially, as of two days ago, now a full time buy and hold investor who loves traveling and living the high life while being supported from her buy and hold investments and of course, working with her partner in crime, her spouse. She and her husband own properties throughout Chicago and Milwaukee areas and they are passionate, passionate about what a good buy and hold strategy can produce. And they built up a pretty substantial buy and hold portfolio in the past three years that they've been at this. So definitely somebody to watch and learn from with that. Since we're talking about buy and hold, Brandon, we've got our latest sponsor for the podcast and I thought we'd mention them really quickly here.

All right, well, I will take this one because this is something that I'm actually really passionate about. Our sponsor today is actually more than a sponsor. It's a company that I know and I love and that is Pay Near Me. This is a service that I use every month to collect rent and I really highly recommend it. In the past of all my tenants used to mail rent or drop it in the Dropbox and it was a major hassle every month, lost rent, et cetera. But now I use Pay Near Me every month which allows tenants to pay their rent in cash at any 711 or family dollar and I get notified immediately that they did pay and then their rent gets direct deposited into my account. So you can learn more or sign up@paynearme.com biggerpockets and our little pro benefit of the week is actually related to that. If you are a Biggerpockets Pro member, make sure you go to biggerpockets.com perks and sign up through that link and you get a $30Amazon gift card when your tenants make their first rent payment. So definitely check them out paynearme.com biggerpockets or at the biggerpockets perks page. But that is way too much chit ch. So let us get to the interview. Josh, you want to welcome her in?

All right, Ms. Bri and I can call you that because we're friends.

Yes, welcome.

Welcome to the show it's good to have you.

Yeah. Thank you for having me, Josh. And Brandon.

Well, thank you.

You could call him that because you're friends as well.

We are friends as well. Yes, we are. We are friends. Bri has been pretty active, I mean, really active on the, on the forums for a while now, and we've been trying to get her on the show now for what, like three or four months, and we finally got you.

Yes, sorry, I've been traveling a lot.

Oh, she's brushing her teeth and that kind of thing.

Well, cool. Well, we want to hear about that. And I actually want to ask you more about your traveling, but we'll do that later. But why don't we start very beginning. How did you get involved or interested in real estate investing?

Well, the real estate investment part came about 10 to 12 years after I got started with real estate. Long story short, I was a licensed assistant at 17, got my broker's license at 21, and absolutely hated it, dealing with residential buyers. So I just kept. Yeah, it was just not my thing.

Josh, you did that too, right?

We have the same story.

Yeah.

Yeah. So I went into corporate sales for about a decade and did that for the last 10 years. But I got started with real estate investing a couple years ago and my husband and I were getting married and we were looking, you know, to start a family and, you know, plan out that whole life and stuff. But if you look at like Chicago housing stock, like two to four unit properties are actually more prevalent than single family homes or condos in this market. And it's actually about $100,000 cheaper to buy a 3,000 square foot multi unit than it is to buy a 2,000 square foot single family. So we bought the three unit. Yeah, it is interesting. We bought the three unit thinking that we would eventually deconvert it to a single family at some point of our lives. Really? With no intentions of being real estate investors. We never looked at, you know, being landlords, never researched any of that and just kind of winged it the first couple of months and realized that it was a passion of ours and we've kind of grown it from there.

Well, it's cool. So you bought, you bought a triplex to live in, Correct. I mean, like you actually lived in one of the units.

Correct, we lived in one of the units and rented out two of the units.

Okay. And when you first bought it, I mean, like you talked about you wanted to maybe turn it eventually into something else. Did you, did you rent it out immediately or was it rented when you Bought it or did you just stick with one? You know, just you in there.

We rented out immediately. So we took us about seven months to find our property. It was a very long, tedious process, but we bought a rehab. So it's fully, like condo quality, brand new hardwood, stainless, granite, all that. We bought it and we had it leased up within 48 hours, and we had tenants moved in within two weeks.

Wow. And this is in. This is in downtown Chicago or where is this at?

The north side of Chicago.

North side.

Nice.

I don't know Chicago well, but yeah, that's okay.

It's a city that's outside of the forest.

Yeah, but I mean, we didn't know anything about, you know, like three times income. We didn't know any of that kind of stuff. We just, you know, found tenants. They. They seemed nice. You know, they made some money and, you know, our opinions, and we rented them, and they've been the best tenants ever.

And the numbers. Numbers were good.

Yeah, the numbers were good. So now that I know about, you know, the 2% rule and the 50% rule, we're about the 1.25% rule with this property. And then, you know, our mortgage covered. Excuse me. Our rental income covered our piti. But not expenses with us living there.

All right, so for those people who don't know, let me just explain what those things are real quick. Bre, if you don't mind, I'm just gonna jump in here and do my teacher thing. All right, first of all, you said the 50% rule for those people don't know. That 50% rule is a rule of thumb that a lot of investors around bigger pockets use. That basically says half of all your income is going to go out in expenses, not including the mortgage. So if you rent a property for a thousand a month, you could probably assume 500 is going to go out in expenses, and then you're going to pay the mortgage with the remaining 500, and whatever's less left is what you get to keep. So that's kind of a rule of thumb. It's not don't buy a property based entirely on that, but it's a rule of thumb.

But let me, Let me. Let me clarify, because you said you're going to pay the remaining in what's left of that 500, you actually may be paying the remaining in what goes above that 500.

Yeah. So if your mortgage is 600, you could probably estimate $100 negative money. Yeah. So, yeah. So it's just. It's a real quick way. And Again, don't buy a property based only on that. It's just a rule of thumb, but it helps to quickly do it. Then you mentioned the 2% rule, or some people say the 1% rule basically says it's a ratio of the monthly rent compared to how much the purchase price is. So if it rents for a thousand a month and it cost $100,000 to buy, that is 1%, it meets the 1% rule. If it rents for 2,000amonth and you can buy it for 100,000, that's 2%. So it's just another quick way to kind of guess. Like, I personally, I never buy anything under never under 1%. I have one property that's like at the 1% rule, and I lose money on it every month. It's my only property that I always lose money on, and I hate that property. But I didn't know what I was doing. It was my second property I ever bought, and I just thought, it's a good deal, I'll buy it. So anyway, and then finally you mentioned Piti, which is Pinch Prince, principal, interest, taxes and insurance. Insurance. I had to think of that one. Back to Bri. Back to Bri. I just want to make sure, you know, a lot of new people are probably going to listen to this show. So I want to make sure everyone's on the same page.

So I'm glad you did that.

Thank you. All right, back to Bri. So you bought the triplex now in Chicago. Correct me if I'm wrong, whenever I talk to people from Chicago, they always say a 3 flat instead of a trip. Why is that any idea?

I don't know. We come two flats, three flats, four flats.

All of Europe does that. Yeah, Europe does that and then Chicago does that. I never got that, but whatever. Weird.

I have to constantly go back in my, like, forum posts and, like, edit it so that everyone else can understand what I'm talking about, because I'll write three flat.

But those Chicago people, they talk funny anyway, so it's all good.

All right, well, cool, Cool.

All right.

So you mentioned, I guess, that you bought the triplex. I mean, what else do you do? I mean, maybe we just take this back. What kind of investor are you? Are you. Are you doing more buy and hold since then, or what's happened in the time since you bought that all buy and hold.

So essentially, we've all done buy and hold. We've done one like rehab and hold or fix and hold, which is our primary residence. But that's been our main Trajectory, I guess you can call it. So at this point, actually, as of next week, we'll be closing. We'll be at 27 units total, Chicago and Milwaukee. So we've been working up there for the past few months as well. And our property here, we did a rehab, a pretty extensive rehab, a $75,000 rehab on this property, and then refinanced out, cashed out in the equity. Because that's one thing we do have in Chicago is we do have equity and appreciation gains pretty quickly with some minor repairs.

Okay. And maybe you can explain that a little bit to people also, if they don't know, what's the difference between, I mean, what are you talking. When you say you have appreciation and you have cash flow or what are you talking about there?

So the way I see it, there's three types of investing. There's CD neighborhoods, which are very high cash flow markets, at which point, if you sell them in 10 years, you're selling them for what you paid for them. Then there's the kind of middle road which might be like a decent cash flow. You're just breaking even every month, but then in 10 years, you can expect to sell it for at least 3 to 4% in annual returns, interest, or, excuse me, appreciation on the property. And then you've got other properties that are almost all appreciation based. That would be negative cash flowing every month. But you're really banking on, in 10 years you could double the cost of your investment.

And what do you focus on that are those three?

We're kind of middle of the road, so we're mainly in the middle with depreciation and the moderate cash flow.

Okay, okay. Yeah. And, you know, people talk, or hear me talking a lot on the podcast about, you know, some of my rental properties produce really good cash flow. And you know, I like to brag about how, you know, awesome that is. But in reality, I'm in, I'm at the other end of that spectrum. I mean, I, I don't expect my things to appreciate very much at all. I mean, If I pay 100,000 for it, if I can't force the appreciation up by buying something crappy, then I'm going to assume it's going to sell for 100,000 ten years from now. And that's just a trade off in my, in my area.

Well, and I think that's a safe way for, especially for newer investors to go. Right. I mean, you can't, you can't really predict appreciation. So, you know, if you're going to buy a Rental, be smart. And I'm not saying you're not or anyone else who doesn't. I'm just saying, you know, in general, if you, if you only assume zero appreciation and buy these, buy and hold properties for cash flow only, then, and they do cash flow and you're good to go then, then you're probably fairly, fairly good to go for the long run.

Oh, yeah. Of course, we didn't even know about other cash flow markets. You know, we always just thought what we bought was the greatest thing in the entire world. Let's try to buy more that are just like it, you know?

Yeah, yeah.

So how did you get interested? I think I find it interested, interesting. You invest in Milwaukee. We've had a couple of guests on the show. Mehran and Don both invest in Milwaukee and J. Scott has invested in Milwaukee. So why, why Milwaukee for you? How far away is that from Chicago?

It's about an hour and a half drive.

Okay, so why did you choose that area?

Mainly because it was an hour and a half drive.

It was a market that I could get better cash flow. For every, you know, $100,000 I spend, I expect, you know, to get $2,000 in rent every month. So it's more of the 2% roll up there than it is here. And we do have those markets in Chicago, especially like on the south side. But my issue is that in Milwaukee they have got a much more friendly landlord side of the landlord tenant ordinance up there where it's more easy to evict someone if there are problems. And I could still be close enough where I can still be there if there's a problem or control a situation. That's really why.

And Illinois is a fairly landlord unfriendly state. Correct.

Chicago specifically is probably one of the most unfriendly to landlords.

What does that, what does that mean? I mean, what makes it unfriendly?

So we have a very strict, I think it's like 142 page Chicago landlord tenant ordinance, which specifies every single thing that could possibly happen between landlord and a tenant. And basically out of that whole situation, there's one thing that favors landlords and that's a tenant moving out mid lease. Everything else is to the tenant.

So whether it's like an eviction or, or security deposits, whatever it is, it's, you know, the, the, the laws are going to favor tenants is essentially what it is.

Yeah, correct. Like if I don't give a security deposit to someone within a specific amount of time, if I don't include the bank name. If I don't include the bank address, I'm liable for three times the security deposit.

Oh, ouch. So it kind of keeps you. It makes you have to be really, really, you know, dot your I's, cross your T's, or cross your I's and.

Dot your T's, which isn't, which isn't terrible. I mean, so, you know, I, I think ultimately landlords don't complain about the dotting I's and T crossing. I think they complain about laws favoring tenants in situations like, you know, somebody doesn't pay the rent and you have to wait six months before you could evict them and you're sucking it up that whole time, you know, that kind of stuff.

How long does a typical eviction take you in in Chicago? Is it really?

I've never had an eviction. Okay. I've never had a tenant pay late yet.

Wow.

So I don't know. Yeah, there you go. From what I hear, though, it could take up to six months.

Wow.

Imagine that. I mean, imagine sucking up six months worth. Worth of. Which is, you know, it's crazy. It really is that, that the folks writing these laws, you know, you ought to take some of the force, force anybody writing these laws to own property in the place where they own proper and deal with the laws that they, that they write. Because, I mean, that's, that's insane. It'll bankrupt a lot of people.

Well, you're going to love this one. Now, In Chicago, Section 8 is protected class. So we cannot refuse Section 8 tenants in Chicago.

Really?

I know Seattle's like that too. Now, not, not all Washington, but Seattle is.

So if. Explain that. If you have a property that's not, does it have to be a Section 8 type property?

Nope.

Okay, so if I own a rental, just some regular rental, and a Section 8 renter comes in and says, you know what? I want to rent this property, and they're absolutely Section 8. Then they could come in, apply. You can't deny them because they're Section 8. Now do you then have to convert the property to a Section 8 property and kind of abide by all the rules and everything at that point?

Correct. It's supposed to go through a Section 8 inspection. And yeah, you can't deny them based on section 8. You can still deny them based on.

Like income taxes on the fingers, you know, like the teardrop on next to their eyes.

The normal legal ways to, you know, pass on a tenant.

Yes.

Would be the same. As long as that's your Policy across the board. So as long as all my properties have the same policy with income requirements and credit requirements, then it's not considered discrimination.

Gotcha.

So. So do you manage your own properties then, or are you all of them?

All of them here in Chicago.

Okay.

But you have a property manager for Milwaukee, correct?

We will.

Okay. Okay, cool. So that's cool. You said you had 27, right?

Correct. There'll be eight units in Chicago and then 19 in Milwaukee.

Wow.

Wow.

And how long.

How.

I don't know if we asked you this earlier, but how long did it take to build all these up? When did you start with this process?

August will be three years.

Wow, that's.

That's pretty impressive in three years. Wow.

Yeah, that's great. That's great. So. So you mentioned that you've never had an eviction. You never even had a late payment. I want to know how did. I mean, how is that even possible? I mean, I get late payments every. I mean, at least once a month from somebody. I mean, I have a few more in 27, but still, how does that work for you?

Mainly it comes down to, you know, obviously tenant screening and then streamlining processes and making it easier for us to do.

Okay, well, what kind of stuff do you do for that?

A couple of things we do, you know, automated rent payments, having it direct deposit to our bank every month. You know, we have a form that the tenants fill out for maintenance requests. It's automated. Between me and my husband, we've got a team in place that handles all that stuff if we're ever out of town.

Cool, cool.

You know, anything that'll improve the process is obviously going to be great. You had mentioned, Bri, that you have maintenance forms and maintenance requests and stuff that you guys handle. Is that through a service or did you guys just build your own form on your site or how do you guys do that?

We just built it all our own because my husband and I, up until a couple days ago, both worked full time. We both traveled for work. So it was also very important. If anything ever happened to one of our tenants or something went wrong, we are both available to take care of it. So we have request form through our email that comes to us, it comes to both of us. And then we also have a 24 hour handyman service that we keep on retainer.

Okay.

So even if we travel out of the country, we authorize them to do any sort of service. They guarantee their work. We've had a great relationship with them and they do anything that we can't handle ourselves.

Is that up to a certain amount or is that just kind of unlimited?

Yeah, I think we authorize up to like $1,000 per unit.

Okay.

And then there's certain things like they can't come in, obviously, and repaint the house.

Yeah.

It has to be like, repairs type work. We've never had to use them on vacation, but it's great to have that backup.

Yeah.

Do you use them for other, like when you're not on vacation as well, or do you guys like, how do you manage your maintenance stuff?

So if it's anything that we can do, which we're. I call us the YouTube landlords. We learn, we YouTube it, and if we can figure it out, we can figure it out.

I like that.

But yeah, because we bought our properties out here in Chicago. The ones that we manage were all bought from rehabbers. They're all condo quality. So they all have like, new H vac, new appliances, new flooring. So we don't get very many repair requests. When we do, though, we go out and see it. If we can figure it out, we fix it. Usually it's something small. If not, we call them anything electrical or plumbing, they do because that's just way beyond our capabilities.

And that's actually like a company. I mean, is that. That's what they do? That. That's their business model?

No. No.

Okay.

Business model.

So it's not like. That is a cool business model. I wish there was more companies like that.

We've. We've been using them like this business model for a few years now. They're actually all over the country. They're a franchise business. But we like that they have a licensed plumber, they have a licensed electrician, they have a licensed general contractor. So if I have a plumbing issue, I call, they give me the plumbing guy. If it's electrical, I call, they give me the electrical guy. So they have a whole team in place that's licensed, bonded, and insured. And then different guys come out for different projects depending on their expertise.

And what's the name of the company?

Handyman Matters.

Handyman Matters.

Cool.

Yeah. There. I think they're all over the country, but they're phenomenal. We've had amazing, amazing stuff with them.

Cool. That's. That's really cool. Yeah, I mean, I struggle. That is my biggest struggle in all of landlord and is dealing with maintenance stuff. I mean, it's getting better now. We've. We kind of got some guys, but we cycle through so many maintenance people. And again, Josh will make Fun of me. It's because I'm in a rural area.

But, you know, I don't think you're alone, man.

Yeah, I think people even in big areas struggle with that.

Hey, listen, I've got, you know, I've been through a few in the past year and a half and you know, both of them, the one, well, two of the ones I was working with were. I mean, they're fantastic. Really, really great. But I think fundamentally people who end up being handyman tend to end up being flaky. I don't know why, but like there's always some kind of flakiness that kind of comes in and they're great for six months and then they're gone, disappeared. Something happened and that's the end of it. So, you know, I guess that's, that's, that's one of the costs of doing business in the investing game, isn't it?

Yeah.

Well, so you've been doing buy and hold. You've got the local and then you've got the properties at a distance. An hour and a half isn't terrible. Do you see any downside to that hour and a half distance or is that pretty, pretty decent for you?

Well, considering I have not driven a car in about seven years because I live in the city of Chicago, so I take public transportation everywhere. So it's been an adjustment. I don't like car rides for more than like 10 minutes. And we've been up there like every weekend since February and I'll be up there more often. But we. The distance isn't really an issue. It's more of an issue of. I know J. Scott talked about this too, finding reliable people up there. It's been really, really hard having to communicate long distance, establish a whole new network up there. You know, I needed bankers, insurance guys, agents, inspectors. And trying to establish that in a new market from a distance has been what's hard.

Gotcha. Yeah, gotcha.

I can see that. I mean, that's hard to do it when I'm. When I'm local. Yeah, locally that's hard. So, yeah, trying to do it in a new market, especially when you don't live, you know, real close, is tough. But you mentioned that up until last week, you and your husband both worked. Does that mean you quit your job or. He quit his job?

I quit my job two days ago.

Congratulations.

Thank you.

So you're full time now. Real estate investor.

So did you quit your job because of real estate?

Yeah. So that's what's been funny about this whole situation. You know, three years ago, we didn't even consider ourselves real estate investors. It was a hobby, is what we kind of thought of it as a side business that we did. And I always try to make sure that my real estate business, my tenants, never interfere with my day job. And then ever since, really, I found bigger pockets. It really exploited my passion in real estate investing and really accelerated a lot of things where now, especially this Milwaukee deal, I found that my day job was getting in the way of my real estate investing. And it got to the point where I needed something, how to give. And I thought that my passion was more better put to use in real estate investing.

That's awesome. That's awesome. I have a new tagline for bigger pockets. It's going to be Bigger Pockets Pissing off employers since 2004.

That's that. Tweet that.

Yeah, there you go. I know we've had, I don't know, probably a dozen guests on the podcast who have either just quit, I mean, like, quit their job recently or after the podcast. Quit their job. And I know a few of them. I know one person even got fired after being on the podcast. But.

Yeah, it pushed them to go full time. I don't know. I'm not going to say who it was because I don't know if they want me to. But, yeah, their employer heard them on the podcast and they fired them and then that pushed them to go full time. And, yeah, they're now full time. So anyway, yeah, we, you know, oops. So let us. Let's talk about that for a little bit, maybe.

Yeah.

Yeah. I think you just scared off half of our guests.

No, I don't know. Some. Some employers just have a problem with. With that whole idea. But anyway, so quitting your job, what can you. What can you tell people? I mean, like, when should a person quit their job? Do you think? What's the right.

For us? It was the right time where our cash flow from our properties covered my income and then some. So it put us in a place financially where I wasn't. We weren't going to be, you know, struggling to make our mortgage payment every month because I wasn't working. That was really the point for us. And it took us three years, so it's not like it happened overnight.

But that was really it for us.

Gotcha. Gotcha now. That's cool. So let's talk about what you guys are doing. You invest with your husband. How are you guys divvying up the roles? What does he do? What do you Do. Do you guys have specific roles or is it just kind of a jumbled mess and whoever does it, does it.

We definitely have specific roles. So when it comes to the front end of the process, the buying, the acquiring, all that, that's definitely my role. So he gets involved. He comes with me to showings. He also comes with me to inspections and he comes with me to closing. But finding the property, finding the deal, dealing with the banks, the insurance, all that is kind of me. I will say though, he's never had any sort of experience with real estate, but we saw so many properties when we first started looking that he now has a really good eye for it. So what's been great about it is whenever we've gone into a property, we'll walk out within five minutes and both of us will either say yes or no. So we've never had a disagreement about which property to buy or which direction to go. We're usually on the same page with that. When it comes to, like the day to day stuff, I handle all of the ton of communication. I lease out all of our units, I handle all the rent payments, all that stuff. And then he does mainly the manual labor. Like, you know, I can't.

So sexist the way you guys set up. Yeah, it's messed up.

But I just fixed my first faucet the other day and was so excited. But like, he's much better at that kind of stuff than I am. And so usually, like, he has to be there to do it.

That's all we're good for.

We can throw rocks around and stuff.

Yeah. Yep. So now how does one. First of all. And maybe I missed it. Is he still working or is he. He's got a full time job.

He has a full time job. So until we can cover both of our incomes.

Yeah.

But we might be doing some flip projects.

Okay.

Which is what we're kind of investigating right now. And that is definitely more of his area of expertise. And if so, then he might be the one that leaves too, and starts managing those.

That's because he throws rocks around. Yeah, yeah.

He's actually a geologist. He does throw out.

Really? That's funny.

Awesome. That's hysterical. Well, so how. How does one balance.

The relationship, the personal relationship with the work relationship? We got a lot of folks listening.

Couples, men, women, whatever it is. And I think it's a situation where it can be hard sometimes when you're trying to get through and run this budding investing business. How do you guys get through it? Does it ever cause strife and if so, have any tips for how people could potentially avoid those situations?

Well, yeah, I mean, there's always going to be issues, especially like I remember when we were first, our first property, we self managed when we lived there and we'd also shovel the snow. So there's nothing like getting in disagreement at six o' clock in the morning in your front lawn when you're shoveling snow.

Well, were you both shoveling it or.

Yeah, we were both shoveling.

Oh, okay, good, good. Because my wife makes me. She will. She won't even touch a shovel.

Yeah, we will. Typically, whatever. You have to get up early and do it before. We've got rules in Chicago about that too.

That's right, that's right. Yep, yep. Okay.

So we balance a lot of it by, you know, luckily we're able to communicate very well and we've got a lot of the same ideals. So we tend to err on the side of, give our tenants what they want and make them happy. So when it comes to like, financial decisions, you know, we had a tenant that she had a manual defrost in her freezer and we had to go over there and scrape the defroster and we both walked out. We're like, we need to buy our new refrigerator. And most people would think that's insane, but we're like, you know, she needs to be happy. She's one of our best tenants. So a lot of those things we both agree on and it makes it a lot easier. There's obviously times where it's, you know, not so hunky dory and really we have to just kind of step away sometimes. We'll just say, you know, let's talk about tomorrow. We need to get back to our relationship and leave the business. It can be fine for a couple of hours and then we'll just discuss it again in the morning.

I think that's a good policy.

I know my wife and I have a really hard time with that is separating the real estate business from our personal life. Right. We go out to dinner and that's all we talk about is real estate. Like we have to tell ourselves we're not going to talk about real estate for the next two hours. Period.

Yeah.

Then we sit there in silence. It's like, well, what'd you do today?

You know, you were next to me.

Yeah. So it's a. Yeah, it's a, it's a battle. I mean, like, it isn't. I love, I love working with my wife. I mean, I think we complement each other really. Well, but it's not. It's not always easy, but it can be done. And I know people ask me that question a lot, actually, of how my wife and I work together. So one of these days I'll write a blog post on that or something, but I don't know.

Well, I think, at least for us, the main thing to me is that, you know, even before we started all this, we sat down and we're like, what are our goals in life? Like, what are the two to three things that are most important to us for our life? And we came down to them, and a lot of them have been able to at least be halfway achieved with real estate investing. So whenever things get, you know, murky or whatever, there's, you know, words are said. We always think back to why are we doing this? You know, why are we both working and then having a side job? Why are we exhausting ourselves driving to Milwaukee every weekend? It's because we want these things in our life and that's our goal. And that goal has not changed, and we need to both work towards that goal.

Yeah, I think that's great. I think that's great. And I think that's key, you know, but for any kind of partnership, not just if it's your spouse. Right. I think if you're going to be working with somebody in the business, you have to have similar ideals. You guys have to upfront, be on page and on point. And if you're not, then maybe you guys shouldn't be doing it. Of course, because you know that's going to lead to problems. And the 59% divorce thing, that happens. So whatever it is.

Well, I hear that from time to time people say, like, my spouse does not want to invest in real estate, but I want to. How do I. How do I do it without them wanting to? And I'm like, you don't like it. It sucks. And you might not get the cool benefits you get out of investing in real estate, but what's more important?

Wife.

Yeah. Staying married. I mean.

Yeah. I mean, but even, like, my husband has no, like, passion for real estate. It's really not his thing. He likes to go look at the properties and you'll be involved them on. But really I got him. I'm the one who got him excited with it by watching, like, TV shows about real estate.

Yeah.

So exactly how we did.

Yeah. Like, Income Property was one of his favorite shows. And that's what really got him involved into it. And it's like, okay, let's do this.

You Know, well, you know what you could do? You can actually, if you cut a deal with him and let him dig big holes around all the houses so he could look at the rocks, maybe he'll get more excited.

He's great on vacations. When we go see volcanoes, though, he knows more than the guides. It's hilarious.

That's awesome. That's awesome.

That's cool. Well, really quick, guys, this is show 78 of the BiggerPockets podcast, and you can check out the show notes@biggerpockets.com show78. And of course, if you have questions for Bri, feel free to ask.

On the show notes. There you go.

Let's dig a little deeper into how you guys are doing what you're doing. How are you guys funding your deals?

So it all kind of snowballed again from three years ago. We really sat down and saved, so paid off all of our debt, and we got enough money for an FHA down payment. So our properties in Chicago are in, like, the 3 to $400,000 range. So at that point, that's all we could ever afford. From there, we covered our mortgage with our piti, or excuse me, our rental income, covered our mortgage, and we were able to essentially live for free. And we just kept sticking to our budget. And our budget at that point was about half of our income. So we were banking a few thousand dollars every month, plus what we were saving in rent money at that point and really just came from there.

That's something that I call house hacking. I wrote a post a while ago called, like, how to hack your housing. Right? It's that whole concept to find a small multifamily, rent out all the units, but the one you live in and live for free so you can save your money and invest in real estate with that money you save. So you perfectly did that. That was great.

And we've been on the same budget for about four years now.

Nice, nice. So even as your income grows and more cash flow comes in, you stay on the same budget. Maybe you just save even more. Kind of a snowball effect, but you get to go bigger and bigger. That's cool.

So it took us about a year and a half to buy our second. We then had that cash flow plus what we were saving, and then it just kind of snowballed from there.

Nice, nice, nice. And I think that's where the average guy versus, say, an investor. The average investor probably differ. Right? The average investor thinks with that mindset, hey, how do I snowball and build more property? Which Builds more passive wealth or passive active. It's active. If.

That'S a whole nother debate. Yeah, but.

Let'S take that money and put it into more property versus somebody who says, oh, well, I'm making more money. Let me now buy a better car or whatever it is. Yeah, I think that's smart. And I think if more people understood how to do that and had the restraints to do that, we'd have less people in financial problems here in this country.

Yeah.

And I mean, to me, that all goes back to the. Again, the goals. Our goal has always been we wanted to be retired by 40. Like that is our end all be all goal. So when it comes down to, you know, I can go buy a $500 pair of shoes, every time I ask myself, is it worth not retiring at 40? And the answer is usually no. And that really helps us keep on that budget month to month.

Yeah, that's awesome. That's awesome. Do you have any more, you know, tips for people, you know, on budgeting, saving money and all that, since you saved a lot of money?

Oh, I'm a budget crazy person. I've got Excels. Like, oh my gosh, you can email me and I can send you my Excels, but I'm totally serious. It's obsessive compulsive.

Nice.

Are you one of those people who goes to the grocery store and does that, like that coupon hacking stuff where you're like fighting people because you. I might be now in toilet paper.

Rolls, you know, working like 60 hours a week and doing real estate. Grocery shopping has never been like a luxury of mine. Usually it's just running in, but I might now that I have time on my hands. But we started with a website called mint.com. i don't know if you guys ever used it before. So we went with mint.com. we each loaded. We had separate accounts that point and we loaded up our past three months. Finances, credit cards, bank statements, everything like that. And it showed us where we are spending. And I think at the time we were spending like $800 a month on eating out. So that was a big life hack, bank account hack, whatever you want to call it. It was like, we need to start, you know, cutting that down and let's, let's see if we can do it to $200 a month and let's see if we can do it to $100 a month. And so it was really gradual for a few months looking at things, looking at our cable, our Internet, how we spend our money and Seeing where we can cut and where we, we want to keep our money.

That's cool. That's great. Yeah, I know, I know that. I think the kind of the beginning of budgeting is just understanding where you are and that's where mint is so helpful. I know my wife and I mentioned this on an earlier show, but my wife and I, I don't know, four or five years ago we sat down and we actually did that same thing. I don't think we use mint. I don't know if they were around then, but we sat down and I mapped out on, on Excel document where everything we were spending, every category and what we were doing. And like, I found out we were like spending like $1,000 a month more than we made. I mean, like, and I was wondering why we were like struggling so bad back then. Like, and that's why we were spending money on stuff we never would have thought of. And so as soon as we knew that, we instantly cut that thousand dollars out and all of a sudden we were fine. And we were at that point then paycheck to paycheck at least, which is better than going in the hole every month. And. Yeah, so budgeting just starts with understanding what you're spending.

Yep, yep.

And if only you could, you know, cut out that Starbucks brand and you'd be hella rich.

We budget.

One of the things we cut out.

We budget 200amonth. That's my one vice in this world. I don't smoke, I don't drink. I drink a Starbucks drink every. Well, I used to drink one every day. Now I'm like once a week. But yeah, you know, we have a budget in our like Excel document and It's a Starbucks $200. And people think I'm crazy for that. But nothing makes me happier on Earth. I mean, I don't play video games.

This is true, people. This is true.

Nothing makes me happier than a 175 degree peppermint hot chocolate with no mocha drizzle. It is perfection. I love that.

And by the way, if anyone ever goes to Starbucks with Brandon and, and the, the mocha peppermint is not 179 degrees. He gets angry and gets pissy at the people behind the counter. It's really funny to watch.

I didn't know. But here, let me tell you why I do extra hot. I used to say extra hot, but that's like a peppermint hot chocolate's made for kids, right? So I'm a big 28 year old kid and so but they make it like 100, like 40 degrees or something. So I'm like, I told them extra hot. So they make it like 141 and I'm like no, I need it hot because otherwise I'll drink the whole thing in 10 seconds. And then I'm sad. So I just kept going higher, higher until 175 is the point that doesn't burn my like inside of my mouth. But I still have to take five minutes to drink the drink.

Do you actually tell them to make it to 170?

I say the words 175. I do every time. And they, I don't say it anymore because they know my drink. I just walk in and they give it to me. But like I would tell them 175 and they, I mean they don't actually put a temperature gauge but at least it gives them an idea. So anyway, yeah, people think I'm a major like snob, whatever.

I wonder why they would think that.

Yeah, I love my 175 degree peppermint hot chocolate. Anyway, moving back to Brie. Moving on. Moving on back to Brie.

So budgeting.

Budgeting, yeah, let's talk a little, a little bit more about that. I don't know. So any other tips for us?

You got to stick to it. I mean like you said, like awareness is one of the first things. Being aware of where your money is going, where you can cut is one thing. You also got to stick to it. So every month, you know, I do a check. Mint is great for that too. You set a budget on Mint and it tells you if you're over or under. So you're able to make adjustments if you are skewing one way or the other. I mean really just sticking to it. Like I said, it's been four years we've stuck to this budget and it's been able to save us enough money where we can grow.

That's great.

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That's really, really, really great. All right, so let's get back to your experiences. Looking back three years, you've acquired a lot of units. You guys are rocking it. You quit your job, told your boss to shove it.

What would you do differently? If anything?

What would I do differently? I would have found BiggerPockets sooner. Yeah, that's what I'm talking about because that BiggerPockets again, I'm really active on the forums. Obsessed you might want to call it. I'm on there like every single day reading stuff and I've learned more on the forums than any book I've ever read. And it's also really, really opened my eyes to other markets and other ways of investing. Because up Until I found BiggerPockets, the only thing I knew was Chicago two to three unit properties, conventional financing and then you just buy and hold. I had no idea about all this different creative stuff wholesaling I didn't know about different markets that are better cash flow. It's really just opened my eyes and my investing. What's the word plan, I guess you could say.

Yeah, that's awesome. You know, it's awesome.

If I could just encourage people. I mean, again, we try not to plug ourselves too much, but honestly, like people, if. If you're listening to this and you're not active on the forums, like, we're not asking you to sign up for a pro membership or, I mean, you know, that's great, but seriously, just jump in. It's a free account. Get active, Just ask questions, answer them and just learn. I mean, like, I'm the same way as you, Bre. I learned so much stuff once I started getting active on the forums, more than any book.

So, yeah, and even if you don't have questions, read. I probably spend my first hour of every day now is spent like reading the forums, seeing what's going on. There's a lot of things that I don't know that it's now been teaching me about just by reading.

That's great. That's great. Cool. Well, how are you finding your deals? Are you guys doing MLS properties? Are you doing any direct mail?

What are you doing generally, mls. So almost everything we found has been mls. Just because we. Because we both worked, we didn't want to deal with rehabbed properties. We didn't have the time or the bandwidth to handle that kind of stuff. We wanted rent ready, preferably, you know, completely rented out. So everything we found has been on the mls. Except for Milwaukee. Milwaukee was one deal was on the mls. It was great. It's a duplex front, coach house back, great condition, great rental numbers, Totally loved it. We were walking out and we asked the agent who's also the property manager, who we then found out was also the owner, you know, do you have any more? And he was like, well, my. My in laws have about 80 properties in the area. Like, would they be willing to sell any? I was like, I don't know. I'll ask him. So that is what came of that is they found more properties off market and then we got them.

That, by the way, is a fantastic tip. And you know, what are we on 78 shows so far? I don't think we've heard anyone else say that. And so I would press upon folks to do exactly what you did, which is when you buy property from somebody, it's a simple question, do you have any other property that you might be interested in selling? Or do you have any friends who have any properties that they might be interested in selling? It's literally, it's a breath and suddenly you've Got more deals in the flow. Right.

And it's completely snowballed. He actually wanted to partner with us on doing some flips. The families invited us to vacation with them for Christmas. It's become this really big thing now. I think I see it being a very long term partnership with them in Milwaukee on some things that we're going to be doing up there.

So you got best buddies from asking a simple question?

Yeah.

That's awesome. That's cool.

For folks who are. You've been doing the buy and hold and you're thinking about transitioning to flipping.

I'm going to come back to landlording stuff in a minute. But I'm just curious, you're in the middle of this right now. What types of things are you thinking about and worrying about and concerned about as a experienced landlord? But newbie flipper, what are the things?

Oh my gosh, it's a whole new ballgame because we've never really, we've done like a rehab of our own personal residence, but we've never done a flip project. And really what's been, I've been reading on the forums, I got Jay Scott's book about estimating rehab costs, which is going to be a huge help for me moving forward. But really what's helped me not be so insane about it is the partnerships that I potentially have. So we've got some in Milwaukee. We're also looking at doing some in northwest Indiana and then Southside Chicago. And it's really through partners that I met mainly through networking off of bp.

Gotcha.

Very cool, Very cool. Well, let's kind of go back onto the landlording topic a little bit. You know, you, Bree, you said you haven't had a, even a late payment. So obviously you're, I think you're, you must be a good landlord or extremely lucky. But either way, let's talk about some of the specifics about how you are a landlord. We talked about, you know, a little bit already. But what about tenant screening? You mentioned that earlier that a lot of it comes down to tenant screening and finding the right one. So what does your tenant screening process look like?

So the, you know, the requirements that we have three times income, which we do have now, and credit score. But what I find also, and we also, one of the things that makes us a little bit different is we allow pets. We actually encourage pets in our buildings. So yeah, because we have pets. So when we first rented out our building, we have two medium and large sized dogs and we didn't want people to be scared of dogs. So both of our tenants had dogs and then all our tenants now have dogs.

So we even have 120 pound Mastiff in our building. But that also creates a niche market where not everybody allows pets. So it's very easy for us to rent out to people because everybody who has a dog wants one of our places.

Yeah, interesting.

Yeah, no, that makes sense. Well, as a dog owner I get it. That said as a landlord I get not wanting to rent to folks with dogs. So what are your policies?

When I was renting to folks with dogs we had size restrictions and things and we'd have to prescreen the dogs and that kind of stuff. Do you have any kind of covenants, restrictions, anything like that, deposits that you require?

We do require an additional deposit but we do full month security deposits. So also understand that our units are generally top of the market or at least in the higher end of the market. So we're talking like you know, 13, $1400 a month for a two bedroom. So with one month security deposit and then the pet fee, we're talking $2,000 a month, I'm sorry, $3,000 just to even secure the apartment. So usually we're pretty comfortable with. They can throw down $3,000 to get the apartment that they are going to take care of the apartment.

Yeah, I gotcha. So you don't have like, you know, there's no size restrictions. Obviously you have mastiffs in there. You know, do you. Go ahead.

That mastiff one though, it was a funny story. They came down to meet us to even see the apartment. They brought the dog. It's a two hour drive for us to meet the dog and we actually rented them to them because they had a dog. That was actually a factor for us because our thought process was they seem nice, they've got good job, good credit and no one in their right mind is gonna give someone an apartment with 120 pound mastiff.

They'll never leave.

They will stay. Yeah, they'll stay as long as like.

You know, that's a really good point.

So we chose them over a non dog owner because of the dog.

Interesting. Yeah, yeah, I never, you know, never really thought about it from that perspective.

You know we don't, we don't allow dogs in, in our like our apartment complex or like even small multifamily. But in the individual houses we are usually a little bit more lenient. Like we'll charge them a usually 3 or $400 pet fee but. And we've never actually had a problem with A dog, per se. We've had more problems with cats, I think, because cats are great.

I was gonna say that.

So that's been more of an issue. But the only problem we've had with dogs is hair, like, on all the baseboards and stuff like that. Like, when they move out. I mean, do you do anything with that? Have you had tenants move out with dogs? Do they leave it a mess? Do you. I mean, I don't know.

Well, this kind of goes back to, you know, what you do and don't do as landlords as far as your time. And that was one of my first lessons I learned, is that it is so much more worth my time to hire someone to come clean our units than it is for me to even attempt to do them. That's one thing I hire out, hands down. So it depends on the tenant. We had a tenant move out this year. They were moving out of state, and she knew that she didn't have time to clean. She had a newborn baby and just said, you know, pay for the cleaners, take it out of our deposit, schedule it and just handle it for me. But generally, we have them either clean themselves or we take it out of their security deposit.

Gotcha. And are you cattist? Because, you know, Brandon's doggist and you're.

I'm a dog person.

Yeah.

Yeah. I like dogs and cats.

Whatever.

I don't like cats, so I don't either.

So do you allow cats in your buildings or. No?

We do. We think. I think we've only got one cat.

Okay.

We've got seven dogs and one cat.

Gotcha.

What I've always found with pets is that clean people have clean pets and dirty people have dirty pets.

That's true.

It doesn't really matter what. And so I don't know. I tend to think if I. If I'm comfortable enough with a person to rent to them as a person, then I'm gonna be comfortable enough with their pet. Unless. The only reason, like I said, I don't do it in multifamily is because if I let you know, John and 804B get a dog, then Sally in 804C is gonna get one as well. And I don't know that one. And I don't know, then it becomes a problem.

So how do you know that somebody's a clean person? I mean, is there a way that you, as a landlord, for those people listening who don't have experience, can screen out for somebody who's kind of a hot mess?

I'll let you take that one.

I mean, I mean, the answer for me is partially in the car. You could look in the car and see if the car's disgusting. But.

Yeah, though, I will.

Anything above and beyond that.

My best friends who are very clean, financially responsible people have the dirtiest car when it comes to McDonald's wrappers. It's insane. But no, mainly I look at just overall the financial and then how they present themselves. You know, to me, somebody who is financially responsible, we specifically look at the past three years of their credit report, line item by line item. And if they're paying their bills and they're financially responsible, then I feel that they'll be responsible tenants and responsible people.

Gotcha.

I think it does come down to how they present themselves a lot of times too. Like you can just tell. I mean, I don't know, maybe it just comes in time, but I can just tell when I see somebody whether they're generally going to be a clean person. I mean, there's obviously reasons that I could be wrong, but usually no, if they're, you know, shirt has mustard stains all over it and like, you know, it's one size too small. I don't know, you just kind of get those hints. So.

Interesting.

Yeah, yeah. It's like pets are expensive. Like they're not, you know, not cheap to take a dog to the vet and make sure it's fed. Therefore, I think, you know, if you didn't want to be a responsible financial part, like a financial, responsible person, you wouldn't have a pet.

Oh, that's not true.

Well, that's not, not true.

No, that's not, that's not true at all.

What are you talking about?

There are plenty of financially. No, I know, no, I listen, they cost a fortune, but there's plenty of people who, you know, are financially irresponsible. Take buying pets, treating them like crap, not feeding them or, you know, that is true. You're right, you know, so I'm not gonna argue with you, but you know, I'm gonna argue with you here.

We, we have a lot of, in our town, just a lot of low income people who have dogs and they chain them up outside a lot of times or they let them run around the house and they, they cause a lot of problems. But again, you can usually spot those people just. Well, how do you spot through screen? I think it's just through screening. Like if a person has a good credit report, I'm gonna, I mean like it's all a big picture, right? I mean like if they have A good credit report and they have a good job. They probably have a clean house. Probably. If they have a clean house and have a clean credit report, they probably have a good job. It all kind of goes together in a way.

But it's an art, not a science, right?

Yeah, I mean, yeah, it's very much so.

I mean, I think screening tenants is something that is probably the outside of purchasing the property. This is for buy and hold at a good price. It's probably the single most important thing you could possibly do with your property. Right. Of course, Is get the right folks. And you know what's unfortunate is there's no A, B and C of how.

There's no way to get it perfect. Even if you know everything, you're still going to find ways to mess up. Brandon wrote a guide. It's the ultimate guide to screening tenants. Is really, really good. It doesn't cover every single thing because there's no way we could possibly cover every single thing. But we'll link to it in the show notes@biggerpockets.com show78. And that's the ultimate guide to screening tenants. I definitely recomm.

You can also.

You can check that out.

We do have a short link to that. It's biggerpockets.com tenant screening.

So there you go.

Yeah, check it out. Cool. I want. What about advertising for tenants? I mean, let's go back from screening. How do you even find them in the first place? What are you doing?

We use a site called Postlets.

Okay. Okay.

So it syndicates to Zillow, Trulia, all that. Typically. I actually just got yelled at today by my managing broker. I'm a. I have a license here in Illinois. I'm in the process of getting it in Wisconsin, Indiana. But I lunch with my broker today and I was talking to him about how we just rented out one of our units and we advertised on Sunday, we showed it on Monday. We do open house showings and we got it rented. And he's like, it's too low. You're renting it for too low. Which might be an indicator that maybe we are renting it for too low. If I can rent them out in 24 hours.

Yeah, yeah, that's not a bad point. Yeah, that's not a bad point. So are you gonna experiment? Are you guys gonna try raising the rent on the next one?

Well, we're stuck for a year.

No, I mean the next unit. Is this on a multi or a single?

Multi. But we have all of our units up June 1, which was somewhat of a mistake. We just went through three. Three sets of new tenants, all moved in June 1st in two different buildings. And so we had showings all at the same time, screening all at the same time, moving, you know, that whole mess.

That's an interesting strategy, though. I've never heard anybody say that, but if you schedule all of your tenants to have the same date, then you only really have one crazy month every year instead of having to spread. I've never heard anybody do that.

Yeah, but that's. That's a crazy month, though.

That is a crazy month.

Yeah. Especially because we were both still working and we were both traveling a lot that month too. So it was. There was definitely a point where I was like, this is the stupidest thing we've ever done.

It definitely crossed our minds multiple times during the month. But the reality is we're done. We don't, you know, we don't have to think about any new tenants coming in till next maybe.

Yeah, yeah, yeah.

Until you acquire more properties, of course.

Yeah, yeah. But those will be managed in Milwaukee, where we have a private property manager up there.

Why. Why don't you have one locally?

Because our properties are within like 10 minutes of us. Again, they're. We bought them rehabbed. So I think last year, one property, we got maybe one repair call.

Yeah.

The entire year out of all three units. And the other property, me, maybe got two or three repair calls from all three units. So it's not enough where we have to have someone manage them. And it's a lot easier for us to collect rent. We were doing it online or pay near me. You know, it's easier to have those sort of automation systems in place.

Yeah.

Do you mind me asking what your typical, like, cash flow per unit would be on some of these ones in Chicago? Just that you bought nicer properties and usually you see those have less cash flow. What kind of things are you looking at?

That's nosy, man.

I know.

So the average cash flow, if I divide it by three, I think we're looking at about four to five hundred dollars a month per unit.

Wow.

And is that including capex and pretty much everything.

That was our cash flow per unit last year after everything we spent, Expenses, utilities, mortgage payments, all that.

Wow, that's awesome.

That's pretty good.

We're talking $300,000 houses.

Yeah.

So it's $100,000 a unit. Not, you know, so we don't have that many of the, you know, expensive units here.

Gotcha.

Yeah, it makes sense.

Okay, cool. That's not bad though.

Yeah, yeah.

No, that's awesome.

Was why Milwaukee was an interesting area for us to look into because they do have. They have a lot higher cash flow per what you spend up there. The price points are $65,000 for a duplex.

Yeah.

So it will be interesting. We've seen the actuals on the numbers up there. We should be cash flowing pretty good. But it'll be interesting to see what the actual numbers come out to in the next couple months because those cheaper.

Properties tend to have their older houses. They have a lot more maintenance, they have a lot more capex. They have a lot of things that can go wrong and you get lower quality tenants who wreck things and. Yeah, it's a trade off. I mean, it's definitely a trade off.

Yeah.

I think our newest building we've ever bought was built in 1911.

Wow.

Yeah, no kidding. Well, I think the Milwaukee Chamber of Commerce is going to give me an award at some point because of all the landlords we're sending to help renovate that. That city from the show.

But it's not really. It's a weird market though. It's not. There's not many people that deal with investors up there. I literally have eight agents that work for me up there and it's been a struggle to even get one deal done with eight agents.

Yeah, I think we heard the same thing from Jay Scott. It was really, really. The infrastructure for investors is. Is somewhat challenging is my understanding. Well, listen, it's fascinating.

What's the end game? You guys want to retire by 40? What does that look like you're at, what is it, 28 units? Wherever you are, do you have a specific pace that you're aiming for or a total number of units you want? What's the goal there?

Well, we'd like to be at 25,000 month rental income.

Okay.

That's kind of our goal where we could take, you know, the foot off the gas a little bit more. But now that I'll be, you know, doing investing full time, like I said, I'm getting licensed in three different states. I'll be brokering my own deals as well as potentially working with other investors. We're kind of looking at flips right now too. But all that will really come back to any income that we make from either brokering deals or doing flips. We'll go back into buying and hold. For my husband and I, I don't think I'm not comfortable partnering the joint venture on buy and holds. You know, it's Just a. Like you said, it has to be the right partner with the right mentality, and we just don't see it yet.

Yeah, gotcha, gotcha. Really quick. You mentioned the agency side of things. I'm curious, before we move on to the next section here, do you think that it is in the interest of real estate investors to get their real estate license?

Yeah, I think it is.

Why?

I think it teaches you a lot about just the market in general. Like, that's really why. If I had never been an agent 10 years ago, I probably would have never even considered real estate investing. And all that came from, you know, I loved looking at the numbers and I loved, you know, staring at different, you know, appreciations of different markets and what the rentals were. I would just sit there for hours by myself and just play with the numbers. And that really helped me get a better understanding of my market as well as develop an intuition about my market, which I think is the number one thing somebody can do in real estate. Yeah, don't listen to others. Listen to what you think your gut tells you.

That's a great point. And you really only get that from feet on the ground. And I think you can get it as an investor by literally, you know, knowing every house in your farm. And as an agent, really the same thing, going every open house and seeing what's available, what's for sale. So you could start learning it.

Exactly.

Yeah. That's great.

Cool, cool. Well, hey, why don't we, why don't we move on? It's time for the fire round.

All right. These questions come straight out of the BiggerPockets forum. So, number one, what would you suggest for a newbie to do about calming their nerves when putting in their first property under contract?

Xanax?

You just got to be confident in yourself. You really do. And that again, comes from learning your market. You really have to just trust your gut instinct and know that whatever you do, it will work out. And if it doesn't work out, have an exit strategy, have a plan in place.

Gotcha, gotcha.

Would you do a two year lease with a tenant? And if so, do you think that it would be worth some kind of a dollar reduction in monthly rent? Say the actual question that was asked was a $200 deduction in monthly rent if somebody were to sign a two year lease and lock in.

I would do a two year lease. I wouldn't. Depends on the rent. You know, if it's a $600 unit and you're asking for $200 off, you're insane.

Oh, sure.

If it's like a $3,000 unit and you want $200 off, if it's a good tenant, maybe it just really depends on the rent to, like, the ratio. If it's $2 off a $600 unit, then there's no way. If it's $200 off a $3,000 unit, then yeah, if it's a good tenant, that might be a good case. The issue then is, you know, you have to be really, really strong about your tenant screening and be really, really sure that you want that person in there for two years if you're going to make that sort of commitment.

Gotcha.

Gotcha. Cool. All right, here's a question that I'm actually really interested to hear what you say because this is something we're changing in our business. Do you have a no smoking policy in your rentals?

Yes, I do. I have a no smoking policy in my rentals. If I catch. If I smell smoke in the units, it's a thousand dollar fine. And then we only allow outdoor smoking. So we will allow on the exterior of the property. And for every butt I find that I have to pick up, it's a $50 charge.

That's awesome.

Cool idea.

It's pretty. Yeah, it's pretty intense. We only have one smoker in the entire of all of our tenants, and so it's never really been an issue. Once I did find some butts and I told her about it and said, I'll let you slide this time, but ever since I haven't had any problems.

I like that idea. I never heard of anybody doing the charge per butt having to pick up because we have some tenants that smoke out their window. They sit in their window and smoke all day, and then it just. They litter the ground with cigarette butts and they maybe go pick them up once in a while, but it's really bad. But one thing my wife and I are going to do now, I was going to test out and see how it works, is we're going to actually make a no smoking policy, period. Like, we don't rent to smokers in general, which. And I'm going to get myself into huge trouble by saying this from smokers who listen to the show. But generally speaking, my theory is this. In my area, those who smoke will be lower quality tenants than those who do not. I'm not saying all people who smoke are bad, but in general speaking, I'm gonna try that out and I think I'll get better because every. Every tenant that I'VE ever evicted. Well, it's only been two. They've smoked heavily. Every tenant I've had a problem with has smoked. So again, it's, it's not 100% correlation, but I think there is something there. And so a couple property managers I know told me that that's what they do now flat out, they do not rent to smokers. And I might test it out just to see.

I think it's a good policy. You know, the smokers are already hate me. I'm staunchly anti smoking. And you know, I mean, I have a. You can't even smoke on the property. Like, you know, if you're on the lawn, you're not smoking because I think it's disrespectful to people who don't want to breathe it in. You know, I walk, you go to the mall, you walk outside the door, they're smoking. 10ft away from the entrance of the mall. My kids have to walk through cigarette smoke. What is that? I mean, I, I think that's awful. Yeah, I think if you're gonna smoke, go, go smoke in the woods or something. Go smoke out somebody.

Yeah. And I think the other side of it is too is that tenants, like, tenants, at least the ones that I know that when we say you can't smoke inside, I mean that's always been a policy of ours. You can't smoke inside. Yet still when they vacate their house always like reeks of smoke because they're either smoking inside or they just, it's on their clothes. And either way, yeah, cleanup is expensive.

And you gotta, you gotta repaint, you gotta do all sorts of odor killing stuff to get that stench out. And it's not easy. It's. Well, it's easy, but it's not, not cheap to do.

Yeah.

So anyway, that's a test we're gonna run. So we'll see.

Hear about it.

Yeah, yeah, maybe I'll write a post about it.

I might get thousands of hate, thousands of hate mails from smokers.

Well, my fear is going to be actually in that, is that I'm not gonna get any tenants. Tenants like what? I have low income tenants. Like I think over half of our county smokes. I think I've read that one time. So like, am I gonna just shoot myself in the foot? Maybe, but we'll see.

Or you might be the bastion of glory for the non smokers.

I was thinking that too.

Non smoker saying, wow, the Turners have the best stench free units in the county.

Like if I Write that in the ad in the newspaper, Craigslist, no smoker is allowed or something like that. It might give me. That might be. Actually be a benefit to. To people like. Oh, good. I. Yeah. So who knows? I don't know.

Split test it, Brandon.

I will. I'll split test that thing.

That's awesome. All right, Bri, how do you tend. How do you handle tenants that are medical marijuana patients? And do you let them smoke in the unit? You. You, of course. Oh, no. You live up in, In Chicago.

You guys have medical marijuana issues?

No, it's only in Washington or here. Okay. California.

You don't have that in California?

In a few places.

I, I mean, if it was allowed here, I think I would actually probably have to, just because we've got so many laws about that kind of stuff. It would be maybe a disability or something like that where there'd be a rule in place for landlords. With our 147 page landlord, you know, guide. I'm sure they would spell it out.

That has been a big issue. I mean, like, we've had a lot of conversations about that, like at landlord meetups in. In Washington and Colorado. I'm sure, you know, it's there too.

Is.

What do you do with. Is it a disability? Right. Because they. Medical marijuana means they have a disability. So by prohibiting medical marijuana, you are prohibiting a disability, which is illegal, so you can't do that.

Yeah.

However, what I've heard. I'm not giving legal advice here, but what I've heard is you can't make it. You can't disallow medical marijuana, but you can disallow the smoking of it because that, like, you can't disallow the consumption of it, but you can the. You know, so. So anyway, again, that's just what I've heard and I don't think.

Define it.

Yet, but places like Washington and Colorado.

It'S so prevalent and most people aren't even smoking it anyway. Now they're eating it in brownies and cookies and lollipops and stuff like that.

The problem is extended beyond the landlord, though. As a business person, you now have to implement these things into your business policies. And it's something that we struggle with. Hey, it's legal to smoke pot. It's like drinking.

Okay, so if it's okay to do that, is it okay for my employees to go get stoned the night before work and come into work the day after having gotten high? Well, our policy is, no, you can't do that. But, you know, well, and I know.

You can still test out, like, even though it's legal in Colorado, Colorado employers can still test and deny based on smoking marijuana because. Not a protected class.

Right.

It's just.

Yeah.

Freedom. So, I mean, you could do it for alcohol, too. If you drink alcohol, I won't hire you. It's.

Well, sure.

So, yeah. Interesting. Yeah. It'll be interesting to see kind of how the courts define these rules in the coming years. And I mean, I expect within 10 years, every state will be the same as Washington, Colorado, but. But I don't know. It'll be interesting.

It's a work in progress. Yeah, for sure.

All right, cool. Well, hey, that's pretty much. I mean, all the questions we got for you, except for the world famous. Famous for these questions we ask everyone on every show. So let's hear what you have to say about them. Number one, what is your favorite real estate book?

I think it's the Millionaire Real Estate Investor by Gary Keller.

Okay.

Speaks a lot to the mentality of investors, the psychology behind it.

Cool.

Yeah, that was a good book.

How about business books? Do you have any favorites in that category?

One I'm actually reading right now. It's actually another Gary Keller book called the One thing about how you just succeed in business and life using boiling everything down to the one thing that's important. What's important that day, and then do it. What's important the next month, then do it.

That's in my Amazon wish list right now. I'm going to buy that one of these days. I just have too many to work through right now that I. But, yeah, it's on my list.

Me too.

All right, what about hobbies, Bri, what do you and your husband do for fun besides real estate?

Well, up until two days ago, real estate was my hobby, but besides that, it's travel. We love international travel. We went to Thailand, Costa Rica, like, Spain, France, Italy, Croatia. And spending time in those cultures is what really is our hobby.

Nice. What's been your favorite place to travel to so far?

They're all very different. I think, though our favorite has been Thailand so far. We got to spend a lot of time in, like, rural.

Rural.

If I'm saying that right, Brandon.

Sounds like rural Thailand, away from, like, the touristy stuff and really spending time with, like, the people. And even though they didn't speak English and we didn't speak Thai, like, you made it work. And it was just a great experience.

That's great. That's good. I had my honeymoon there in Thailand.

Really?

Yeah.

Yeah.

Yeah, I like it there. Nice. That's great.

You guys done? Can I ask the last question? Is that all right. Make me feel jealous. All right.

That's my line, by the way. Yeah.

Yeah. All right. What do you believe sets apart successful real estate investors from those who either give up, fail, or maybe never get started?

Well, speaking from a buy and hold investor, I think the number one thing is, you know, just persistence. You know, I talked to a guy the other day who told me he wants to quit his job in three months. I was like, that's awesome. Took me four years. So, you know, you have to be persistent, and it takes time and you're not gonna, you know, do it overnight. And that's really what, to me, by being a buy hold investor is.

Yeah.

And we slow and steady wins the race.

And we certainly don't encourage people to quit their jobs in three months or.

Don'T do it until you're ready, guys. Seriously, Like, I mean, I think. I think it's. It's so tempting to say, oh, I love real estate. I'm starting to make money with it. I'm going to quit. And, you know, I think it's just better to be somewhat safer.

And you're more conscious than me. I'm more like. I mean, I'm not giving advice here, but I'm more of the, you know, don't be stupid, but, you know, take some risks. And especially if you're young or if you don't have a huge.

I'm almost 40, man. You know, things change.

Yeah. And that's exactly it. Right. Because I don't have kids, I don't have a lot. So I could risk a little bit more. Where you've got a family and you've got, you know, you can't risk as much. So it's all comes down to who you are and what you're at.

Absolutely, absolutely.

But if you're in the buy and hold arena, like, having a W2 income stable, W2 income, like, there's no way we would have ever been able to grow to where we are right now without having both. Having a W2 income, that made the process so much easier for us.

Well, and that's. That's my biggest point on it as well. It's, you know, that income helps you with a lot of different things. It helps you survive. It helps you, you know, so if you're hating your job and suck it up and you've been doing it for a while and now you're into real estate, suck it up a Little bit longer. Keep a hold of that W2 while you can.

Yeah, and set goals, too. You have to set goals and then stick to them.

That's awesome. All right, Brie, well, where do people find out more information about you or where they find you online? How can they get in touch?

Probably daily on BiggerPockets, in the forums.

Nice.

I'm there almost every single day. And, you know, my profile in Bigger pockets.

Nice.

Twitter.

You just got Twitter.

I just got Twitter.

I followed you on Twitter. Yeah. What do you know what your Twitter handle?

Yeah, what is your Twitter handle?

Just Chicago, Bri.

Chicago Bri.

I'm not too sure how to use it yet. I've just been, like, retweeting a lot of stuff and, like, whatever, but I'm sure in the next few months, I'll get it down.

It's. It's kind of. It's hard. I think a lot of people don't get it.

It's like a giant room of people talking to each other. You just got to lock up and join their conversations. That's how Joshua. To me, and that's kind of. It makes sense, but there's. To me, there's a lot of promotion now. It's kind of irritating how much I don't know. Everybody's automated everything with Twitter, including myself. Like. Like, there's like, 12 people actually on Twitter, and everything else is just if this, then that or whatever.

I just followed you, Bri.

Thank you.

Nice.

Yeah. Yeah. Awesome. Yeah.

Cool.

Good stuff. Well, listen, we appreciate having you on the show. Thank you so much for all your activity and you being a big bp fan, user, whatever it is.

All right, Bree, thanks so much. We appreciate having you on the show. Take it easy.

Thank you.

All right, guys, that was Brie schmidt on the BiggerPockets podcast, Show 78. You can check out the show notes@biggerpockets.com Show 78. If you've got any questions for Bree. Definitely, definitely. Jump on there and jump in. Jump in. Otherwise, big thanks to our sponsor, Pay Near Me. We really do appreciate them helping support the show. If you want to check them out, you can do that@paynearme.com finally, thanks so much for listening, and hopefully, if you're a listener, you're also somebody who is active on BiggerPockets. We certainly encourage you to participate on the forums and to read and engage those people. As you probably can tell by now, we get most of our podcast guests from our active users on BiggerPockets. And one of the things that these guys all have in common is they all talk about how important it is to participate on BiggerPockets, how much value they derive from it. So we certainly encourage you to do so. Set up a free account today if you haven't already@biggerpockets.com otherwise definitely check us out on Facebook, Twitter, G, LinkedIn, Pinterest, and all the other major social networks. We're there, we're sharing, we're participating, and hopefully we will see you there. That's pretty much all I got for you this week. Thanks again. I'm Josh Dworkin, your host, signing off.

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