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SHOW NOTES FOR EPISODE 685: JUST GO FOR IT!
Real estate investing does not have to be complicated! In today’s podcast, real estate investor and full-time employee James Ledbetter shares how he was able to build up an impressive real estate portfolio while still continuing to work full-time.
What You Will Learn
- Real estate isn’t rocket science – but it is the perfect vehicle for the average person to become wealthy
- How you can organically grow your real estate portfolio while working full-time
- What a “Business Rental” is and how you can convert a residential house into one
- How frugal living can accelerate your real estate wealth development
- Why “Business Rental” tenants are better than residential tenants
- How to get rid of difficult tenants without having to go through an eviction
- Why it can make sense to cash out a retirement account early, even with the penalty
About Our Guest
James Ledbetter
Texas born & breed. Regular guy who works a regular full-time job as a banking compliance officer. Has been a real estate investor for a while. Grateful to be happily married AND blessed to be a dad of 2 teenage girls. Real estate investor & landlord (10 single-family rental houses) (1 ‘business’ rental house) (1 additional ‘business’ rental house in-the-works).
More About James
- Talking real estate with like-minded individuals who, either stumbled into real estate or made a conscious decision to own residential rental properties is something he enjoys
- Real estate investing is a vehicle that can help you reach several different goals and they don’t have to be the same for everyone
- Four words, according to James, that describe his real estate investing journey:
- Unsophisticated
- Untraditional
- Unconventional
- Unorthodox
- He says that because, as he has gone through this journey, tried to educate himself and learn from others, using the Internet, etc., he’s realized that real estate investors can come from many different molds
- He says he’s a square peg for a round hole
- Even though he’s enjoyed some successes in real estate, it’s not because he’s…
- Very analytical
- Sophisticated
- Or has followed the recipe of other successful investors
- He’s encouraged that there is more than one route to success in real estate
His First Property Purchase
- As he got older, he realized he had to grow up and move out of his parents’ house
- There was a house right down the street from his parents’ house, in Round Rock, Texas
- He called the listing agent and said, “can you tell me how to make an offer, get a mortgage, etc…?”
- It seemed cheap enough
- He didn’t know anything about buying a house…
- how to get a mortgage
- But he wasn’t afraid to ask the questions to learn
- He got referred to a loan officer by the agent
- He got approved for the loan
- The seller accepted his offer
- As a single guy, in his late 20s, he purchased his first house in the 1990’s:
- Approx. 850 sq. ft. house
- Built in the 1930’s
- Located only 3 doors down from the house he grew up in
- Lived there as a bachelor for a few years
- He still owns the house today!
- Years later, he found his soulmate, got married, and decided to purchase another house for him and his wife in a nearby town without selling his first house
- James and his wife moved into their house a few miles away and kept his first house as a rental
- AND THUS BEGAN HIS RENTAL HOUSE/LANDLORD STORY.
- He rented the house to regular residential renters for a number of years
- But, as the area the house is located in became more “commercial,” he sought out a real estate agent that worked with businesses and told him about the house
- Across the street was a funeral home
- Down the street was a dentist
- The agent started bringing by various potential business tenants
- There were advantages of having a business in the home as opposed to a residential tenant
- They stay longer, as they are trying to establish and build their business for the long term
- The commercial real estate company he contracted helped him deal with the contracts and other complex items related to the lease and tenants
- Tenants contact that company first
- The tenant pays the utilities
- Rent is paid through ACH – always on-time
- The lease is a multi-year lease
- The real estate company negotiated the multi-year lease with the tenant where the rent increases every year
- Soon, a business tenant asked him if he could rent the house for his business
- He was a financial planner working with Edward Jones financial company
- The house turned into his first “Business Rental”
- The tenant has remained there for a number of years
Growing His Portfolio
- Even though he has a full-time job, he still continues to seek more properties
- He also still manages his own properties himself
- His W-2 income/salary helps him get loans
- They live a very frugal lifestyle
- When he has savings up to $20-30K, he’ll ask his wife if she minds if he starts shopping for a rental property
- Then, he knows how much he has available for a down payment
- He has heard that you are limited to 10 homes from most lenders but it hasn’t been an issue for him
- He has been known to call every bank in a key region (Central Texas, Northern Texas or San Antonio) and ask if they would lend to him and has never had a problem
- He currently has 10 single-family rental houses, 1 ‘business’ rental house and 1 additional ‘business’ rental house in the works
Biggest Mistakes
- Allowing bad tenants to rent
- He recently had to get rid of some horrible tenants at one of his properties
- And, unfortunately, they are at one of his rental properties that is 4.5 hours away in San Antonio, TX
- The long distance makes it more difficult
- The good thing is that, since he started investing in real estate, he has never had to evict a tenant
- He has had plenty of difficult/horrible tenants over the years but, fortunately, he has worked it out for them to leave without having to go through an eviction
- Eviction is…
- Costly
- Wastes a lot of time
- He has developed the skill to get rid of a problem tenant without having to go through the eviction process by…
- Using the art of negotiation
- Being savvy and smart
- He then tries to “dust himself off” and try to find a better tenant
- Eviction is…
Biggest Successes
- Keeping his full-time job while managing the properties
- Keeping additional cash flow rental income coming in monthly
- Living frugally
- Paying off mortgages earlier
- James had the good fortune of being able to paid off the mortgages on 4 properties
Advice for Old Dawgs Looking at Real Estate Investing to Help Them in Their Retirement Years
- Consider liquidating an IRA or ROTH account. He did, and didn’t regret it.
- James took $50K out of an employee 401-K
- Paid the tax penalty
- Used it to invest in more real estate rather than investments he doesn’t understand
- IF you are a penny pincher like him, educate yourself for ‘free’ by using countless resources you can source online. No need to pay for expensive ‘guidance’
- You don’t have to get complicated or be real smart with your real estate investing. It’s easier than you think!
Current Real Estate Investing Business
- He is currently in a “holding pattern” right now regarding his investing
- He doesn’t see a need to add to his portfolio at this time
- He is enjoying the process of paying off or paying down his mortgages and eventually owning his properties free and clear
- He has also established lines of credit on properties he has paid-off… just in case
How to Reach James
- Phone: 512-797-4708
- Email: emailledbetter@gmail.com
- James says: “Call me! I love talking about real estate investing, and would relish the opportunity to help! No strings attached and of course FREE!”
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