How To Create Passive Income On Your Rental Properties

Hey, it's Mark Podolski, the land geek with your favorite niche real estate website, www.thelandgeek.com. and I'm really excited for today's guest, a software entrepreneur. But before we talk to our guest, I'd be remiss I didn't properly introduce my co host, the brain, the professor. You know him, you love him. Scott Todd from scotttodd.net landmodo.com if not completely automating your Craigslist and your Facebook, Facebook postings posting domination.com TheLandgeek Learn anything about anything. Investor ninjas.com Scott Todd how are you, Mark? I'm great.

How are you?

Pulse is still normal. Respiration is fine. Let's talk to our guest, shall we? Yep. Anton Ivanov, our guest. He is a US Navy veteran, a real estate investor, an entrepreneur with a portfolio of 40 rental units spread out across four states. His portfolio generates over 12,000 in monthly passive income and requires less than one hour a week to manage. Anton is the founder of DealCheck IO, the leading real estate analysis platform for quickly analyzing and comparing rental properties, flips, and commercial buildings. Deal Check is used by over 100,000 real estate investors, agents and professionals worldwide. Anton Ivanov, welcome to the Art of Passive Income podcast. How are you?

I'm doing great, guys. Thanks for inviting me.

So, Anton, let's just rewind the tape and tell us how you got started with real estate.

Sure. So I actually never wanted to invest in real estate, let's put it that way. It was never on my radar. But about years ago, I was actually serving in the US Navy, active duty. I was in Japan out there on the ship. And unfortunately my parents passed away kind of suddenly. Wasn't expected. Just, just some health issues they were going through. And they had a condo in San Diego that they lived in. And, you know, that basically got passed down to me. And here I am, early 20s, just kind of barely getting started with investing, you know, kind of reading books on personal finance. Never owned a property. And here I am with this kind of condo. Didn't have any clue what to do with it. I almost actually sold it, you know, because I was just overwhelmed. I wasn't even living in California at the time, but talked to a few kind of older folks, my mentor. So, so you, you can say, and they said, you know, why don't you just wait, you know, don't make any rash decisions, you know, keep it, find a local property manager that can kind of do all the daily work for you. Rent it out and keep up with the maintenance and just see how it goes. And then, you know, when you get out of the service or get back stateside, you can obviously, you know, sell it then and do whatever you want with it. So that's actually exactly what I did. And so I kind of became an accidental landlord, if you would, under some unfortunate circumstances. But, you know, that's just the way life goes sometimes. And, you know, a few kind of years passed. You know, I think it was another four years. I was finishing my tour out there in Japan, and all this time, you know, I was getting a little bit of passive cash flow every month. It's, you know, it's a Southern California piece of property. The cash flow isn't great at all here. So it wasn't much. But that's what really opened my eyes to how great real estate can be as a passive income source. I was living in California. I barely did anything for this property in terms of keeping it up with maintenance or finding tenants, because I had property managers do that. So I basically was just collecting my check every month, looking over my accounting statements. And although it wasn't much, that's where I kind of got the idea, hey, if we're talking about retiring early, generating passive income, real estate looks like a great stream of just, you know, how possible it is to actually build up a sizable, you know, passive income stream. You know, set it up in a way where you don't really have to do a lot to manage it and kind of scale it to the point where it can replace your, you know, your W2 job, your other income sources, and allow you to retire early.

I love it. I love it. Scott.

Todd, you know, it's. It's. It's always interesting to see the curveballs life throws at you and see, you know, like, how you became the accidental. The accidental landlord there. I mean, that could be a book, right? The accidental landlord. But, you know, I think you got to keep going. And I really. I really want to hear about what you've done with the software to kind of make landlording an easier process.

Absolutely. So, again, like you said, it was definitely not the traditional way to get started. I want to wish it on anybody, obviously, kind of your family passing away, but sometimes you just got to take what life gives you and make the best of it. And that property that I inherited really kind of opened my eyes again, like I said, to what real estate can do for you. And when I got out of the service, you know, this is kind of back in 2013, so fast forward a few years and I started just looking at my goals, what I want to do with my career, what I want to do with my investments. Real estate basically was at the top of my list in terms of, you know, kind of investment vehicles and ways to generate passive cash flow. So when I moved back to San Diego with my wife, we kind of jumped right into building our real estate portfolio from there because we quickly realized that although one property is great, it's not going to kind of amount to much income, so to speak, by itself, especially if you have a loan on it. So I meet a few folks, they say, hey, I'm gonna buy one or two rental properties and retire on that. I just didn't find that realistic. You know, I kind of realized early on that we're talking like 10, 20, 30 plus properties, you know, maybe a few hundred dollars of cash flow a month, kind of conservatively to amount to something meaningful, you know, like 10,000 plus passive income, which was our goal at the time. So we set our goal. Actually our original goal was 50 units. You know, I kind of worked backwards from the passive income we wanted. And I said, hey, if we get to 50 units, I think we'll be at a mark where we can retire. So we started by actually house hacking in San Diego. So house hacking is, if your listener is not familiar, is a pretty common strategy. It's where you buy a multi family property, usually two to four unit, allows you to take advantage of owner financing with low down payment requirements, lower interest rates, more favorable terms, and you basically live in one of the unit and rent out the other. So San Diego was kind of the perfect place to do that because prices here are so expensive and there was no way I was going to save up, you know, 100,000 plus for a down payment and. But kind of buying a duplex, which was our first property me and my wife actually bought ourselves in San Diego, kind of jump started our investment journey from there.

So Anton, how long do you need to live in the property before you can then rent out your own unit and move out? Because I can imagine that you're, you know, probably wouldn't bother you, but your wife's like, who are these neighbors?

Yeah, you know, it's a great question. And to be honest, Mark, I've never got a straight answer from anybody as far as is there a minimum term? I typically hear a number of like about one year. So we actually use the VA loan. So this is a low down payment owner financing loan available for prior or current military service members. It's very similar to an FHA loan that you can get if you're not in the military. So the number I've heard before from different kind of bankers and loan officers was if you live at the property, obviously you need to live in it. When you're first getting the loan, that's you actually sign a statement that, yes, I'm going to be living there. And then usually if you've been there for about a year and then had to move, especially because of your work or you relocated, what I've heard, and again, don't take my word for it because I'm not a loan underwriter, but that's usually a safe term. After a year, if you move out, you can usually rent the full place. And it's unlikely that the VA or FHA administration is going to come after you and say, hey, you have this loan and you're not living there. What's up? So we actually ended up living for a few years in that duplex. You're spot on that it wasn't the best area. It was kind of like a BB minus area. @ some point, my wife was just like, okay, I want to, you know, I want a better place for ourselves, you know, if you know what I mean. So, sure. It was a great way to get started, though. We went into it knowing that it's an investment property, knowing that we were going to rent both units out. We did the cash flow projections, you know, with that in mind. So it wasn't kind of like, hey, let's buy a house and then maybe later rent it out. It was a very kind of deliberate step, a very calculated step. And us living there just allowed us to take advantage of that owner financing. So great strategy. I've met a lot of folks who did it, especially in the military as well. You know, they move around so often, usually every three or five years, that you can take advantage of it by coming to an area, buying a property, they're single family or multifamily, taking advantage of that owner financing. And then when you get sent somewhere else, when you transfer, you can turn it into a rental property. And, you know, by the end of your 10 or 20 year military career, you can have a decent portfolio to supplement your pension or just provide passive.

Income. So tell us when, when was the point in time where you decided, hey, there's a problem in the market as far as analyzing these properties. Software can solve this.

Problem. Yeah, it was actually not too long after we bought the duplex and then we started looking at other properties, you know, to continue expanding our portfolio. And you know, as, you know, as probably all your listeners know, analyzing cash flow or profit from us, you know, a flip or a land sale is kind of one of the key processes. You can't, you can't go without it. You know, they say you make all your money in real estate when you buy or before you buy. So it's absolutely essential to calculate what your cash flow on the rental property, a brr or profit from a flip a land sale is going to be. So I found myself using Excel, like probably the majority of investors. You know, I kind of put together a spreadsheet. At first I wasn't really sure what I was doing, so I kind of just copied somebody's and, you know, it served its purpose for a while. But then I, you know, I was driving around a lot, especially looking at open houses. I looked for some mobile apps that you, you can maybe do it on your phone quickly while you're at the property, at least even run a crude projection to say, is this even worth my time? And back. So this was around 2014, 2015. I actually didn't find anything. I looked online. There were some tools that were okay, and myself being a software engineer, that was kind of my career that I transitioned to. I just thought, hey, why don't I put together quick little product? It was actually a mobile app at first, and honestly, it was intended more for my use, maybe share with some friends. So I put together a really quick tool where you could analyze cash flow projections for rentals and profit from sale for flips. Shared it with a few of my friends, and to my surprise, they loved it. So it was again one of those, I want to say accidental business ideas. But, you know, it wasn't like I had a business plan. I did a lot of research. It was just kind of came out of my own necessity, my own observations. But after I shared it with some folks, they loved kind of the tool, asked for more features, it just started growing from there. And kind of over the years, I met more and more investors. And once kind of the deal check became more popular, we kind of saw tremendous growth. And now we have over 100,000 users who love the software because of how quickly it makes it to analyze and compare rental properties. Flips, you know, your BRRs, your buy, rehab, rent, refinance, repeat deals, commercial, multifamily buildings, you know, and that was kind of always my goal with the company and with the software is create a tool that you can use on any device so you can use it online. Dealcheck, IO, you can download the mobile app to your Android or an iOS device. You know, it syncs all your data. So it's like I'm driving around, I put in some numbers, I run cash flow projections just to see if this house even worth my time. You know, if it is, I can come back to my computer later, the office and kind of dive deep and look at comps or you know, long term projections. And we really wanted to build a kind of one stop solution that's both very quick. So if you want a quick analysis, like back of the napkin type stuff, you can do it in probably 30 seconds or you can dive deep. And there's a lot of customization options for structuring finances and exit strategies and so forth. Kind of build a very well rounded tool to really help investors analyze properties. Because I think that's one of the most important steps. If you mess up your numbers, if you mess up your projections, whether maybe you're new and you just didn't know better, or the spreadsheet you downloaded had unfortunate mistake or you entered something wrong, it unfortunately can screw up your whole deal, as you probably.

Know. Absolutely. And we, you know, Scott and I love this kind of stuff because we're so geeky and we love these tech tools. But you're absolutely right. I mean, you know, the cliche is, and it's true, in real estate, you make your money on the buy. If you have a tool like this, you can quickly go through your deal flow. Let's say you're looking at 10 or 20 deals from a list, maybe your broker sends you, well, you just pull out your phone, you get on your computer and say, okay, these five actually look promising just based on the numbers. You don't even need to go look at the properties. Scott, Todd, what are your.

Thoughts? I think you got like, I think anything that you can do to kind of organize your thoughts around kind of the, your numbers, right? Like everybody's going to assess properties differently. I know that I would assess property differently than other investors. And so if you can look at the numbers and like you said, filter through them very quickly, you might look at 100 and only 5. Be within the parameters of what you're looking for. Time is money, man. If you have to go and run spreadsheets and everything on all these things and it takes time, well then you know you're not gonna look as many deals. And that's what it's about, about picking up all the rocks you can looking at it, saying this one could have or has some potential and Then either holding onto it or going a little bit further or saying, this one has no potential for me, I gotta toss it.

Back. Exactly. And we actually built a feature into DealCheck. So the name actually came from like checking your deals, obviously. And one of the first kind of features we built is there's a list of criteria that you can customize. So, you know, maybe Scott, you're looking for flips with a certain amount of profit, with a maximum of certain amount of cash that you have to put out of pocket your returns. So you can plug in all of those criteria into the app and it will instantly put like a little check mark or a little X next to every property, meaning, hey, does it meet my criteria? Should I look at it further? Or hey, this is not even going to come close to meeting my criteria, so I should move on. So exactly what you said, help you screen deals faster, either dive deeper or move on. But also know that every time this analysis is done is the same formulas. You know, you're not kind of copy pasting something, leaving off commas, leaving off, you know, kind of messing up your formula, so to speak. It's the same, it's consistent and. And you kind of know that it's done.

Right. No, it's great. So, Anton, I developed some software, Scott's developed some software. And one of you know, it's always like, the customer's always right, but sometimes the customer's not right. Like, one of the issues that we have with our software is we have lending software that automates note collection. Well, when you first set it up, you have to set yourself up as a lender, and sometimes our users set themselves up as a borrower. Is there anything in dealcheck IO where you would, you would just educate the user to use it a little bit better just from the beginning to sort of solve any issues up.

Front? I would probably say that the number. So deal check, when you're entering actual numbers for each property, it kind of sets some default presets for you. And they're usually pretty general. Like closing costs are estimated as just a percentage of the purchase price. Expenses are usually just estimated as a percentage of rent. So this is almost like your 50% rule type analysis. So a lot of the presets are kind of geared to analyzing deals faster, but maybe using more rougher estimates. And if you, you know, that's fine if you're kind of screening a lot of properties. My number one tip is if you're actually interested in a specific property, you found that it, hey, preliminary Looks like it meets my criteria. Go ahead and customize some of those itemized lists a little further. So instead of saying like, you know, my expenses are 35% of my rent, go in and actually enter the property taxes on that property. What you think your insurance is going to be? Maintenance, property management, landscaping, capex. So spend a little more time putting more exact numbers. You know, same for flips. You know, you could say, hey, my rehab is going to be, I don't know, 50,000. Just, just kind of ballpark it. But go in and actually itemize it, you know, interior, exterior, foundation, all of that. And it does take a little more time, but it'll give you much more accurate output for the analysis and the projections. If you spend the time to put actual numbers, you know, and later on you're not surprised when it turns out that your estimate was way off, you know, or kind of the property taxes in the area happen to be, you know, for some reason, and that development much higher than the average maybe for the city that you've been using. So kind of the more you put into each deal and this probably again comes in when you're interested in a property, piece of land, you know, a flip, a multifamily building. Spend a little more time, customize the details. You'll get much more accurate projections that.

Way. Yeah, absolutely, Scott. Todd, do you have any.

Thoughts? You know, I think it's Mark. I think it's always about kind of looking like, looking at how customers are using the software. I know that we think one way and then everybody thinks their own different way. And so I think it's really about thinking about that customer experience. It's crazy because I was listening to this thing the other day that they were talking about, like the number one job today is a user interface design expert paying six figures to sit there and to look at software and think about the entire customer experience. And like, that's a hard thing to do because you got to walk in the customer shoes constantly. And it's.

Crazy. You know, it's very true, Scott. We get a lot of requests from our users or comments that I never would have heard of. And whether that's because I use the software daily myself and built a big chunk of it, so I kind of have that bias. But we like to listen to a lot of our users feedback. Probably for the last two years, every feature or improvement we've added or 90% of them came as a direct feedback from our users. So we're very open to kind of letting our customers and power Users influence our product roadmap, help us prioritize which features they're more interested in instead of, you know, hey, we make the decision because we think this may be useful, but we're just a small group of people and you know, we have thousands of users who are actually using the software and you know, and paying for it and making decisions based on.

It. Yeah, the pricing is insane. Anton, how'd you come up with this pricing? You got free, you got seven bucks a month and 15 bucks a.

Month. We always wanted to keep it low cost and that's why we had. We always have the free tier, you know, and always will be. And we keep our prices very low by kind of keeping our business very lean. And you know, that was another reason why I didn't like a lot of the existing systems. I've seen software for analyzing deals that cost 100 plus a month or sometimes like a thousand, you know, one time payment. And I just thought that's ridiculous. You know, especially for newer investors, they maybe don't have any properties or have a small portfolio. I mean, dishing out hundreds a month just for property analysis just kind of seem, you know, a little outrageous to me. So I wanted to make a point by having that free tier for new investors to start getting into analysis and actually help them learn the process. And then as their portfolio grows, they need more advanced tools. There's a few paid options, but again, they're very, you know, kind of very low cost on purpose because it's. I didn't want this to be just for, you know, like investors like ourselves who are maybe professional and have large portfolios. I want it to be accessible basically for anybody who is interested in real estate to help them analyze.

Properties. Well, this has been great and really, really a beautifully designed app and website. As somebody that has, you know, been on the development side of software, I gotta tell you, Anton, you did a really good.

Job. Thank you, thank.

You. How. You know, just for my own knowledge, what's the back end of this code? What language are you.

Using? The. It's mostly all.

JavaScript. JavaScript.

Okay. Yeah. So our backend is actually built on.

Node. On node. Okay, great. One of my big mistakes is doing Ruby on Rails. I figured out, oh my gosh, these. It's like, you know, the developers are like, it's like learning French and paying.

For. Definitely could be. It's picking a stack for your application is always a big decision that can kind of lock you in, in the technology that's hard to maintain. So that was one of our reasons for kind of going with JavaScript on both front end and back.

End. Yeah, I should have hired you in the beginning. Mad at you Anton, for not knowing you earlier. But before we get to the tip of the week, I just want to remind everybody that today's podcast is sponsored by flight school. If you want to go up the mountain of land investing with Scott Todd as your land geek Sherpa, start developing and creating passive income. 16 weeks. Do it quickly, safely and efficiently. You owe it to yourself to learn more. Just go to landgeek.com training. Alright Anton, this has been great, but now we're at that point in the podcast. We're going to ask you for your tip of the week. A website, a resource, a book, something actionable where the art of passive income listeners can go improve their businesses, improve their lives. What have you.

Got? I'm gonna. My tip is two part. The first thing I always like to say to investors, and this is especially new investors, is don't be afraid to start small. I meet a lot of folks, you know, they read blogs, they repot, they listen to podcasts, they look at these people doing, you know, 10, 10 deals, 10 unit deals. People have 100 units of rental property. People are doing million dollar flips. And I think real estate definitely has a learning curve and there's nothing wrong with starting with just one single family property, maybe turning your personal home into a rental, you know, maybe doing that house hacking as your first deal or focusing on a small piece of land locally as a kind of a small flip. So nothing wrong with looking for smaller deals just to get your feet wet, to get that knowledge, to get that experience. You know, it's easy to get kind of blindsided or it's easy to make mistakes on your first deals. And by kind of starting small, you're less likely to, you know, kind of do that, or at least if you do make a mistake, it's not going to be as costly and kind of second part to my tip is networking and learning from other investors has been huge for me, especially at the beginning. There's tons of great podcasts, including Land Geek. I'll probably throw out bigger pockets on there.com, which everybody probably knows as one of the best networking sites for real estate investors. If you have questions, you want to go on their forums and just kind of learn from more experienced investors. You know, that's the way to go. And I know that deal check is your tip of the day mark, but I'm just gonna throw this out there if you know any of your listeners are interested in checking out the software. Like we said, we have a free plan. Our paid plans are very cost efficient. You know, just a couple cups of coffee a month. But we even have a better deal. We have a promo code specifically for you guys. It's landgeek. Very simple, just like the name of the website. So if you type in Land Geek when you purchase, one of those paid plans will give you a 25% off your subscription forever. So you'll get that full discount for as long as you're subscribed. But again, start with the free tier. Check out DealCheck IE or download the DealCheck mobile app, see if it's for you. And if you want to upgrade, type in Land Geek and we'll get you that.

Discount. Wow, that is so generous. I didn't know you were going to do that. That's a nice surprise. Thanks.

Anton. Of.

Course. Amazing. Well, Scott, Todd, what's your tip of the week? That's gonna be a tough one to.

Beat. It is a tough one to beat, but check this one out. I know that you use Acuity and for your scheduling, it gives you a dedicated webpage. People can go on there and book you, I guess. Well, guess what? I've been using website called or a service called Harmonizely. And what's cool about it, what I like about it is that one, it's free. So for anybody that's listening, you can go out there and you can get your free, free calendar integration scheduling tool. Maybe your customers want to contact you. It's really cool. But what I really like about it, Mark, is that it integrates with my Zoom. And every time someone books an appointment, it creates a special Zoom meeting link just for them. So I don't have anybody, like, trouncing in on my meetings and like, interrupting them. Everybody gets their own dedicated Zoom link. And I don't have to do anything. It's all automated. Check it.

Out. Harmonizely. Well, Anton, your software guy, what do you.

Think? I've never heard of it, but it sounds interesting. Actually, I was typing in the URL in my browser as Scott was.

Speaking. Yeah, I like.

It. Very cool. Very cool. Well, you can't beat free, but no one's gonna be able to be my tip of the week, which actually makes you money, Scott.

Todd.

Okay. Which is Dealcheck I.O. and you did hear Anton's very generous offer. When you do sign up, just use the promo code LANDGEEK and 25% off the subscription forever. Deal. Check Amazing. So, Anton Ivanov, is there anything I should have asked you that I didn't ask.

You? I think we covered a lot of it, Mark. Thanks again for having me on the show.

Guys. Thank you, Scott. Todd, are we good? We're good. Good, Mark. All right, well, I want to thank the listeners and just remind you the only way. The only way we're getting the quality of guests like an Anton Ivanov from DealCheck IO is if you do us three little favors. You got to subscribe, you got a rate, you got to review the podcast, send us a screenshot of the review. To support the Land Geek Calm, we are going to send you for free the $97 passive income launch kit course, as well as the latest course, how to double your money 30 days or less in our new whole tailing course. So please do that. We really appreciate it and got time. Let's do this. One, two, three. Let freedom.

Ring. All.

Right. Yeah. Anton, how do we say that in.

Russian? Let freedom.

Reign. Let freedom.

Ring. Let freedom ring. Maybe. Man, I just. You put me on the spot like that. I'm getting.

Nervous. You know what's funny about this is literally no one's gonna know if you're lying or.

Not. Well, I'm sure there's a few Russian listeners on the podcast, so I don't want to let freedom ring. Maybe.

Puysproslavlaets. Okay, let's say that all at the same time.

Ready? All.

Right. You know I am.

Russian. I know. By your name. I was. I was guessing.

That. Yeah, but obviously I can't speak a.

Liquid. Wait, I know. I know another way of saying it. The whole let freedom ring translation. Here's the other translation. Putin says, not.

Possible. That's a good.

One. All right, well, thanks, guys. Thanks, Anton. Thank you.

Mark. Scott, thank you, thank.