The ins and outs of owning rentals

On Instagram I recently did a few Before & After photos of one of our rentals then put the question out there about doing a post on the adventure of being landlords. (You can see the photos and answers to the questions here, in my profile under Rental Property in the Highlights)

Mostly people are interested in the nuts and bolts, the numbers, of it. It’s hard to say everything in stories so here’s a bit more.

First! Hi 🙂 I am not a financial advisor. I am not a licensed real estate agent. I am not your guru. There is no quick fix, get rich quick solution. There’s hard work and a lot of it. What I might be saying here is likely the culmination of years of saving and planning. We have made major mistakes in the Real Estate world and we’ve also used Real Estate to get out of tough situations. We own one single family rental and a duplex, all three units are occupied with 12 mo+ leases as of now.

You can interchange “Real Estate” with any form of savings or investing you do … and you should. Real Estate is not the answer for everyone, and essentially it’s just a different way to plan for the future, make passive income or save your money.

A few years ago I did a post on Budgeting and this past winter we did a No-Spend month (NO-vember) in which I talk a bit about money, budgets and finances. We screamed our DEBT FREE scream on Dave Ramsey’s radio show in 2012 and before that were die-hard Financial Peace University evangelists.

Since the budgeting post in 2016 we have paid off our mortgage, Aaron sold one of his businesses, we bought and sold another home (We were going to renovate and live there but the numbers dictated that instead we fix it up and sell. We lost money on that deal) and started buying rental properties.


How? How does one buy a rental property?

Why? Why real estate?

And, inevitably, what do you do when …

I mentioned this is my Stories, but none of the properties we’ve bought for rentals have been listed with the MLS, yet. Years ago we started telling our neighbors that if they were ever interested in selling their homes, we would be interested in buying them. A handful of our neighbors have come to us since then (five, actually) and out of those five – we’ve purchased one.

We are always looking, as well, but good deals happen between handshakes and off-market properties. Patience is the biggest asset to buying rentals. And having your ducks in order for the transactional side of things helps as well.

If you need to borrow money to purchase a home you should start the process with a bank now. Even if you don’t find something for months, maybe even years. Having the relationship with a bank will be your secret weapon to making deals happen and knowing what you can afford; what the bank is wiling to loan you – and where the rates are – are all very important factors when figuring out if a property will cash-flow.

Ways to afford the down payment:

You have the cash on hand, easy.

You have equity in your primary residence, get access to it. (HELOC or Home Equity Line Of Credit)

You have investors who trust you. We’ve never had investors or worked with other property managers (yet, who knows what we’ll do in the future) so I can’t speak to this, but I know of plenty of people who use investment from outside sources to build their portfolio. Speak to someone you know or trust who works like this, people who are already doing what you want to be doing are the best source of knowledge. Ask.

And then, you wait. We work with a Realtor we love and trust. I did, at one time, have my real estate license, and even knowing what I did (or do) … I still always want to work with a Realtor. Until recently – all real estate transactions have been super emotional for me. I get attached. Which is the worst thing you can do when it comes to rentals. You’re not buying into a home or story – you’re buying into your future. Having a Realtor between me and the transaction is the best safeguard I’ve ever implemented. It’s a ton of work, and some people can do all of that and are comfortable with the legal task of buying properties from owners or without representation. To you, I say, well done. That’s amazing. I’m just not interested in the added stress or detail work.

Why? Why real estate?

If we haven’t met or maybe this is the first time you’re reading anything I’ve written you will likely not know how obsessed I am with real estate. Homes, really. But commercial buildings? Vacant land? Multi-family units? I’ll take any of it. All of it. Every damn day. I. Love. Real estate. Period.

I am comfortable with real estate, our area, and the market. I know it well, I’ve been in it for almost 20 years. I understand location and value and fixer uppers.

I know nothing about the stock market. However, I know a thing or two about real estate. So … this is why. This is where I’m comfortable with risk.

And, inevitably, what do you do when …

… you buy a property that needs work?

Hopefully we’re already aware of what we’re getting into before we sign anything. When we do a walk-through we make mental notes about the big three: structure and systems (roof, furnace, settling), cosmetics (paint & flooring), and the plumb-houses (kitchens and bathrooms). Prices are always changing, but we feel comfortable enough with those items and have done enough renovations and projects to outline a small understanding of what might be needed. We just add that number to the down payment cost so we know what our investment will look like.

… you’re trying to get tenants?

Our first rental was vacant for a couple months while we did the work needed to meet the codes of our city, get inspections and obtain the rental certificate before we could advertise it was for rent. We bought the home as a 2 bedroom and, because of code, were only able to offer it for rent as a one bedroom, with a max of 2 person occupancy. This was a big disappointment. But, we changed our strategy for advertising and had to answer a TON of inquiries that always ended in “I’m looking for a place for me and my kids or me and 2 brothers, etc etc thanks anyway.”

We put a sign in the yard with one of our phone numbers on it that says “For Rent”, we put an ad on craigslist as well as Facebook Marketplace and we use as our property management software – so when we input things on that end, it pulls the information to larger sites like or and even zillow.

You answer a ton of questions. Just keep track of who you’re talking to, who makes appointments (and you need to remind them), who shows up, who applies, etc etc. It’s definitely a full-time job for a few weeks to get it occupied.

Know your answers – and if you’re unsure – be honest. The best thing you can do is say “I’ll have to check into that, when can I get back to you with an answer?”

Are you willing to work with Section 8? What are your benchmarks for applicants? (minimum credit score, income to debt ratio, background check, job history, references)

Phew. We made it! There’s still so much we’re learning about this. I will link to some helpful resources we’ve been using at the end of this post, but my biggest piece of advice would be to talk to someone (buy them a drink or ask them over for dinner) who is already doing what you want to be doing. Conversation within relationship is invaluable to learning new things, getting help or advice, and moving towards what you want.

In general, I’m not a fan of the way Real Estate Investors talk. Not everything is AWESOME, MAN! and not everyone is SUPER BLESSED TO BE ALIVE! Those are amazing attitudes, but they’re working too hard for me to believe them. If you get excited solely based on the millions you’re being promised, look elsewhere. This ship is not setting sail with a destination of Reality. You’re going for a wild ride, high on emotional value. Do you want to be a millionaire? Cool. That can be a goal you have and there’s nothing wrong with that. But WHY? Why do you need a million dollars? Or any amount?

Our reason for owning rental properties has everything to do with wanting to retire someday and knowing that, as entrepreneurs, we will need to either save a large amount of money or create passive income for our future. I’m not interested in owning 45 rentals. I think maybe 5-8 will be more than enough. But we’ll see what happens in the future, like I said, we’re new to this venture and still (always) learning.

Resources, books, podcasts:

Rich Dad, Poor Dad

Cashflow Quadrant

The Book on Managing Rental Properties

Bigger Pockets Podcast


Use your resources – the people you know already doing the things you want to be doing.

Ask your city officials a lot of questions about the rules for rentals. They have so much information to share and to offer. Listen.

And last but not least, you guys, use google. But, for real. Google leases, move in check lists, ROI calculators, how to rent a house, how to buy a house, how to change a light fixture, DIY backsplash and more.

Leave a Reply

Your email address will not be published. Required fields are marked *