109: Creative Strategies to Increase Your Rental Property Net Income

SHOW NOTES FOR EPISODE 109 – CREATIVE STRATEGIES TO INCREASE YOUR PROPERTY NET INCOME

Al Williamson has been an active real estate investor since 2002.  He has house hacked, purchased multifamily properties and invested heavily in the inner-city with the goal of positively transforming communities, one neighborhood at a time.  In this episode, Al shares his unique approach to significantly increasing rental income yield, while marketing to key peer group niches.

What You Will Learn

• House  Hacking can made economic sense but is not ideal for a new marriage
• Creative ways to increase your rental income in tight markets
• Niche positioning and marketing to maximize rents
• How “rental arbitrage” can increase rents 5 to 10 times
• How you can help provide great housing and community for fixed income seniors and be more profitable
• How to implement an Inner-City Revitalization effort that helps communities and is profitable for landlords

About Our Guest

Al Williamson

Al Williamson is civil engineer and the author of a several real estate books, including, 40 Ways to Increase the Net Income of Your Rental Property and Building Wealth with Inner City Rentals,  but his real passion is creating surprisingly beautiful yet affordable housing.

He is well-known for publicly documenting his journey towards generating enough ancillary income to cover the 1st mortgage of his eight unit apartment building through his blog at LeadingLandlord.com, where he also shares income-generating, cost-cutting, and neighborhood revitalizing experiments.  He now finds himself focused on corporate, short-term and flexible-term housing.

Al is a husband and father of two girls and lives in Sacramento, California.

More About Al

• Al was a civil engineer who oversaw bridge construction (2005) and his wife is a nurse
• Before he got married, he met a man at a church picnic who buys duplexes and he encouraged Al to buy a duplex, live in a unit and rent out the other half
• Al was going to get married soon and thought that might be an interesting prospect for him
• Went to the library to research everything he could on being a landlord and investing in real estate
• Ended up buying a triplex and Al and his new bride moved into the smallest unit – lived there for 3 years and then moved into a house (wife was not thrilled with living in a shared property)
• His triplex quadrupled in value and went on to buy a bigger apartment building, did some flips and other this to generate additional income
• Got laid off in 2008 and many people in Sacramento were faced with financial troubles as well
• Because he had “C” and “C-“ properties, he did alright but he also sought to increase income from rentals

Creating Ancillary Sources of Income and Repositioning Rentals

• Started looking at other ways to generate income from his rentals (bike rentals, renting by the room, “payday rents” where half the rent is paid every two weeks, splitting Wi-Fi, furniture rentals)
• Through this, he became more of a “short-term” landlord (almost like a hotel), where short-term tenants needed more services because they were only there for a short time (2 out of 8 units)
• Also, added AirBNB “monthly” stays
• Started targeting traveling nurses
  • Try to generate good AirBNB reviews from target groups
• His niche approach is detailed on his blog
• Your rental income can be 5-10 times more than traditional rentals with short term rental approach – Has course on it on his website

Went Back to W2 Job

• Got job with non-profit – wanted more meaningful work
• For 3 years, worked with charter schools and community redevelopment efforts
• 2008, many teachers were losing jobs and he went back to engineering
• He is still full-time engineering but is also blogging and building his housing business

Creative Business Focus Shift

• Apartments are overprices and cap rates so slow
• From how he’s using his existing properties and rental arbitrage
• Rental arbitrage – he rents other people’s properties on a one year corporate lease and then he furnishes the properties to offer to his target audiences. Nets $1,000
• More profitable to convert conventional rental properties into:
  • Furnished rentals
  • Dormitory
  • Short-Term rentals
  • Corporate housing
  • Instead of buying more properties, make your existing rentals more profitable enterprises

Biggest Mistake

• Bought the biggest problem property in their neighborhood to upgrade it and help transform the community but it had a long learning curve
• Took him a while to become successful at it
• But once he figured it out and was successful at it, he should have bought more similar properties

His Inner-City Redevelopment & Revitalization Approach

• He wrote a book on how landlords can help inner-cities and still be profitable – “Building Wealth With Inner-City Rentals”
• It starts with one property
• You need to be on the fringe of the city’s tough and not so tough areas
• Need to work closely with local police department
• You improve your property
• Neighborhood improves
• Demand is created
• Property values go up
• Landlords are willing to invest dollars to help communities as opposed to home owners – can move quicker to make things happen
• The worse the neighborhood is, the more effective a landlord can be
• Landlords can have “superpower strength”

Biggest Success

• The positive changes that have resulted in the neighborhoods he has worked in
• Home values have gone up
• Jobs have come to the neighborhood
• New businesses
• Youth employment

Advice for Old Dawg’s Interested in Real Estate Investing

• Buy 3 bedroom, 3 bath home
• Rent it out to three different seniors (peer housing — three vets, 3 people from your church, people of the same peer group)
• A lot of seniors are hurting, especially those on social security or government assistance that might otherwise be homeless
• Provide decent housing in the community
• Can generate above traditional rental income

Future of His Business

• Holding on to his cash now, waiting for market to come down to invest again
• Clone Strategy – Wants to train others (100 people) to do what he has done in inner-city communities

Rap-It-Up

• Favorite real estate book: Millionaire Fast Lane by MJ DeMarco
• Favorite business book: How to Win Friends and Influence People  and Think and Grow Rich
• Most valuable web site for success (other than your own): BiggerPockets.com
• Favorite app: SurveyMonkey
• Favorite quote: “You can get whatever you want by helping others get what they want.” Zig Ziglar
• If you had to start all over, knowing what you know, and you only had $1,000, what would you do to launch your real estate investing business? Partner with other people to do a Rental Arbitrage business

In our conversation, we discussed special courses Al teaches:

• Airbnb for Landlords – an online course where Al teaches landlords how to double and triple their net incomes using short term rentals.
• Al’s course that gives a blueprint on how landlords can transform the neighborhood surrounding their rentals. It’s called How to Build Wealth with Inner City Rentals
• His reference book for landlords looking for creative ways to increase their cash flow. That book is called 40 Ways to Increase the Net Income of Your Rental Property

How to Reach Al

• LeadingLandlord.com
• al@leadinglandlord.com

His Books

• 40 Ways to Increase the Net Income of your Rental Property
• Building Wealth with Inner City Rentals: Success the Catalytic Landlord Way

This Episode Brought to You by HealthIQ.com

This episode is brought to you by Health IQ, a very special life insurance company that gives health conscious individuals the best life insurance rates and quotes.  Learn about what they can do for you specifically at HealthIQ.com/olddawg.

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