How to Identify Entrepreneurial Investors from the Broke Landlords

[Seamster]

In my city if you simply go through the motions to rent out a house the laws will ensure that you go broke if you don't continue to adapt. I studied to be an investor, not a landlord. You could say I was a landlord for a while but I pushed through it. I'm now financially free through cashflow (and most landlords around here are still working hard because they never do a good job fixing up the houses or finding tenants therefore they have constant turnover and that's where they lose profit).

Anyway, I'm not in a place where I could do seminars. And even if I did I'm not sure I would want to because all of the real estate "investing" groups around here are all full of landlords and their pity party of negative stories about how bad tenants are. I don't want to associate with these people. They like to tell me what I cannot do. For example, when I have a vacant house I will take my weed wacker all the way around the block and make the sidewalk and the other yards look nice. That's what I do. But, for example, they would tell me I can't do that (they are technically right but no cop or neighbor is going to stop me for cleaning up neighborhoods and if I didn't do this type of thing, I probably would skimp on a lot of other things).

So, I wanted to first make the statement that most landlords, in my area at least, are not investors. They just created a job for themselves. Secondly, I would like to ask if anybody has a way to distinguish between which person is a landlord versus who is a forward-thinking investor focused on cash flow and financial freedom?

 

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[Seamster]

In my city if you simply go through the motions to rent out a house the laws will ensure that you go broke if you don't continue to adapt. I studied to be an investor, not a landlord. You could say I was a landlord for a while but I pushed through it. I'm now financially free through cashflow (and most landlords around here are still working hard because they never do a good job fixing up the houses or finding tenants therefore they have constant turnover and that's where they lose profit).

Anyway, I'm not in a place where I could do seminars. And even if I did I'm not sure I would want to because all of the real estate "investing" groups around here are all full of landlords and their pity party of negative stories about how bad tenants are. I don't want to associate with these people. They like to tell me what I cannot do. For example, when I have a vacant house I will take my weed wacker all the way around the block and make the sidewalk and the other yards look nice. That's what I do. But, for example, they would tell me I can't do that (they are technically right but no cop or neighbor is going to stop me for cleaning up neighborhoods and if I didn't do this type of thing, I probably would skimp on a lot of other things).

So, I wanted to first make the statement that most landlords, in my area at least, are not investors. They just created a job for themselves. Secondly, I would like to ask if anybody has a way to distinguish between which person is a landlord versus who is a forward-thinking investor focused on cash flow and financial freedom?

Man, I like the forum and posters with an entrepreneurial mindset. Unfortunately it seems that there aren't many people renting out real estate here?

 

[Kid]

Find out if they get more properties or they got 3-4 and that's enough for them.
If they sit on 3 properties for 10 years then they'll probably stick to them for another 10.

 

[Runum]

I am an REI.

To me there are many types of REI investors. Also, some of the investors are really gamblers. We saw it in 2008 and history seems to be repeating itself.

As an investor you have to establish your metrics and decide if the potential deal hits the mark or not.

I have bought many properties and still own some. All had/have cashflow or I wouldn't consider it.

The BIgger Pockets forum is more oriented toward real estate specifically.

Not sure if that answered your question.

 

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[Seamster]

Thanks for the responses. When I started I in real estate investing (I flip some and rent out some) I met many people but the negativity kept me away. I want to move up, up, UP and onward on to better things. Yes, my properties are bringing in enough for me to survive, but I'm looking to either cash out and into something bigger or else double my properties to make double the cashflow. Guys I talk to about real estate kind of want to talk about tenants, repairs, etc. I don't want to talk about that anymore.

You know, it'd be cool to know some guys who say, "I just bought my 20th house. Goal met. Now to start selling them and buy an apartment complex." I guess I don't know what I was looking for. But the fact that I'm looking for someone to give me new ideas, etc., in my situation isn't a bad thing!

(For the record, at the moment, I only have 8 houses. 4 are paid off. I'm thinking of getting a few more but then becoming a money partner for people who want to flip houses.

 

[Sauce]

Thanks for the responses. When I started I in real estate investing (I flip some and rent out some) I met many people but the negativity kept me away. I want to move up, up, UP and onward on to better things. Yes, my properties are bringing in enough for me to survive, but I'm looking to either cash out and into something bigger or else double my properties to make double the cashflow. Guys I talk to about real estate kind of want to talk about tenants, repairs, etc. I don't want to talk about that anymore.

You know, it'd be cool to know some guys who say, "I just bought my 20th house. Goal met. Now to start selling them and buy an apartment complex." I guess I don't know what I was looking for. But the fact that I'm looking for someone to give me new ideas, etc., in my situation isn't a bad thing!

(For the record, at the moment, I only have 8 houses. 4 are paid off. I'm thinking of getting a few more but then becoming a money partner for people who want to flip houses.

I get this.

I used to run and REIA, but dropped it.

Currently doing 1031's out of my SFR in to industrial.

Biggerpockets tends to be geared more toward beginners. Twitter seems to be where the bigger guys are hanging out. Good Luck.

 

[ZCP]

@SteveO

 

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[SteveO]

Hey @ZCP. I saw this post but didn't feel like this was my area of expertise.

I didn't invest in single family rentals.

Apartments and commercial properties would be a lot easier to scale though.

 

[wanttogofaster]

In my opinion, landlords are afraid of bad tenants but are usually desperate to accept any applicant to avoid a vacancy (bad tenant screening).

They are afraid of things breaking and costing a fortune to repair/replace.

They try to keep costs down, no matter what, which is fine to a certain extent, but sometimes trying to avoid expenses can cost more in the long run.

They are afraid of carrying too much debt, so they can only afford so many down payments and can only carry a certain amount of mortgages/balances, even if the properties are paying themselves.

They try to keep the workload as low as possible, which is also understandable to a certain extent. However, if they have good, well-taken care of properties, and solid tenant screening procedures, they should not have high workloads.

Finally, to each their own. If they are happy owning, let's say, 5~10 pay off properties and "retire", I don't see a problem with that.

Now, from what I've seen, entrepreneurial investors have that grow grow grow mentality.

Most are agents themselves, which could give them some advantages (mostly to avoid paying some commissions & taxes), but it is not absolutely necessary, in my opinion.

They don't mind carrying a bunch of mortgages/balances on each property as long as the tenants are paying for them.

Since they are not afraid of using leverage, they like taking money out of their properties to finance other acquisitions.

They trade up (1031) whenever it is possible.

They build teams (bankers, property managers, handymen, contractors, CPAs, etc) to take care of most of the work.

Finally, because of that grow grow grow mentality, at least the ones I've come across, like working and working all the time. They usually have their listings, their rentals, even if with a property manager, they do flips, etc, etc, they are making so much money from the different businesses that they find it hard to "retire". A guy I know has so many rentals that he just keeps accumulating cash. Once he has enough cash, he goes and buys another rental...

In other words, the difference, in my opinion, is knowing when enough is enough and be happy about it.