509: A Common Sense Approach to Investing in Low and Middle Income Rentals

April 12, 2021bmanasseroUncategorizedNo comments

SHOW NOTES FOR EPISODE 509: A COMMON SENSE APPROACH TO INVESTING IN LOW AND MIDDLE INCOME RENTALS

A single mom, with no money and no credit, shows how, despite overwhelming odds, you can still create a real estate legacy by just using a little common sense. In today’s podcast, 71 year old author, realtor, property manager and real estate investor Barbara Getty details the secret of how she lives financially independent and debt-free from low to medium income rentals.

What You Will Learn

Why real estate is the best way to create wealth when you have very little money and no credit
How you can generate consistent regular income from homes most investors won’t touch
Why she prefers to self-manage all of her properties
Secret tips on how you can attract and keep great tenants
How Barbara Getty was able to pay-off all of her investment properties
Why she became a Realtor and property manager
How she protects her investments and personal wealth without forming LLCs

About Our Guest

Barbara Getty

Barb graduated Purdue and married soon after. Her family settled in Indianapolis in 1980. Tragedy struck in 1992, when her son was killed in a car accident and divorce followed soon thereafter. She bought a small fixer-upper home needing repairs, and following the fix-up, she and her daughters moved in. Pleased with that first project, Barb then purchased her first duplex (with little money, no credit and no experience), hoping she had the wherewithal to be a landlord. Over time, she eventually grew her portfolio to 29 units — a mix of single and multi-family, low and middle-income rentals, which she manages personally.

In 2010, she wrote and published The Landlord Chronicles: Investing in Low and Middle Income Rentals, which offers common sense advice to both new and seasoned investors.

Barbara has been interviewed by CNBC.com and the article also appeared in USA Today. She’s also been quoted in Personal Real Estate Investor magazine, and has been interviewed by renown investor Jason Hartman. Barb has also added consulting and speaking engagements to her business. In 2012, she got a realtor certification and now has her own brokerage firm. Although she hasn’t had an easy road, Barb is financially and emotionally invested in her work. Armed with a positive attitude and a strong sense of humor, Barb Getty is making a difference in her tenants’ lives, the neighborhood and the city as well.

More About Barbara

Barb was a stay-at-home mom but also earned money on the side as a freelance artist
When her son Todd died in a car accident, he was 17
Her girls were 16 and 14 – they adored their big brother
When the marriage failed 8 months after he son died, it was devastating for the entire family
She needed to figure out what she was going to do to make money and survive
She knew she couldn’t survive selling her art
She had English and French certifications for teaching but they had expired and she didn’t have time to go back to school to get them current
She had bought a 3 bedroom 2 bath house about a third the size of their family home
- It was “kinda of a dump” but they moved into it anyway and still live there today
- And she fixed it up
Her friends told her she had a knack for fixing up houses and said she should buy a rental property

Becoming a Real Estate Investor

Starting reading all the books she could
Started networking
She had no credit
Started looking at places in Indianapolis where she could find a cheap house
Found a duplex for $19,000
She didn’t qualify for a loan so she took money she got from the divorce to buy
But it also needed major work so she, her girls and some hired help helped get the place rentable (repairs cost about $8,000)
She then rented it out
She soon saw that she had the personality for real estate investing and rental property management
- She likes people
- She likes to help people
After 15 months, she thought to sell the place and buy another one
- She put it on the market and it sold in 3 days for twice what she paid for it
She took the money from the sale and bought two more little duplex “dumps”
- They required a lot of work to get them rentable
- She found these two “non-contractor” handy men that showed her how to do a lot of the work
  - She learned how to install window and door trims, baseboards, how to use a power miter saw, nail gun
- She got the duplexes up and running and started renting them out

Getting Tenants

She ran advertisements for the rentals in a free local newspaper
And started renting by the week
- She provide the stove and refrigerator, no furniture
She’s a trusting person by nature so she believed every story
- “Barb my car broke down so I’ll have the rent next week.”
  - The next week never came
Not everyone was playing
She thought, “I have to pay my bills, the taxes and insurance… I need to do something about the unpaying tenants.”
- She changed her attitude and told her tenants, “If you can get caught-up in two weeks, we’d love to have you stay. If not, you are either going to have to move out or I’m going to file for eviction.”
  - Evictions in Indy are prey quick – 2 1/2 weeks
  - This helped a lot
She became better at managing her tenants
- Her other work’s prices were going up
- She found a good local handyman who is still with her today
  - He’s trustworthy
  - Has master keys to all the properties
  - She can go on vacation and if something goes wrong, he can go over and take care of it
She wanted to self-manage because she didn’t want to pay someone else for what she could do – she still self-manages 25 years later

Expanding Her Portfolio and becoming Debt-Free

She bought her first three properties with cash
Got her first credit card
Established credit for herself
Eventually was able to qualify for a mortgage loan
She bought he first property with a mortgage loan
- Fixed the property up and sold it
She then got a home equity loan against her own home
- She used the equity line to buy homes, fix them up, and then get mortgage loans on the homes
- She did this a number of times
Her end-goal was to eventually pay-off all of the mortgages and her home equity line
- She reached that goal a few years ago
- Barbara is totally debt-free
At her top, she had 29 units

Expanding Her Job Description

She wrote her book and a guy from California who read the book flew out to meet her and asked her to help him buy properties in Indy
- She helped him purchase properties
- She also became his property manager
- So, she was now managing 15 houses and her own 29 units
In 2012, Barbara also got her Realtor license to be his realtor
She was now a “one-stop shop” for the guy from California
Doing a lot more than she wanted to at that point
Sold the property management business 3 years ago
Sold some of her properties
Currently has 18-20 units – that is manageable for her
She’s 71 years old but see herself stopping any time soon

Writing Her Book

In 2010, she decided to write a book that really tells it like it is
That book is The Landlord Chronicles: Investing in Low and Middle Income Rentals
She learned so much from all the mistakes she made, she wanted others to benefit from the knowledge she gained
- Mistakes or “mis-steps” are OK
- That’s how you learn and improve
The other real estate books out there didn’t really tell her everything
She was an English and French major and figured she could write a book
Barbara started writing a little bit every night
- Started putting it together – A to Z
  - Finding neighborhoods
    - She wanted all her properties to be within a 5 mile proximity of each other
  - Financing the property
    - Home equity lines
    - Private lending
  - Finding and keeping tenants (a big part of the book)
    - How to get them in
    - How to get them out

How to Find and Retain Great Tenants

The more she improved her properties, the higher level of tenant she would get
When you buy a rental fix it up but don’t go overboard
Fix it up so it does well compared to your competitors
- When you have tenant repairs and maintenance, fix it right the first time
- It will prevent you from coming back in the future
- And it attracts better tenants
She went from weekly rents to bi-weekly and now most of her places are monthly
Some places are also yearly
She has some tenants that have been there for 7 plus years
Repairs
- Get them done quickly and well the first time
She advertises her vacancies on Zillow
- The tenant pays for the application fee
- Zillow does the screening and issues you a report
She also schedules all her showings in a 2-hour time period and tries to get as many people there as she can
- She likes to meet them personally
- Wants to see how they take care of their car
- Are their kids well taken care of
- How they care for their kids and cars is an indication of how they will take care of your place
- Having a lot of people at the showing has other benefits:
  - Creates a competitive atmosphere
  - One tenant stayed behind and offered a higher rent to the place
  - Motivates applicants to move fast to get the place

Other Criteria and Operational Approaches

Pet policy
- Allowing pets brings in better tenants
- With her single family homes, she charges $300 no-refundable pet fee plus $25 per month
- For duplex thru fourplexes, she doesn’t allow pets
Smoking
- She allows but asks that they do so outside
She doesn’t have her homes in an LLC
- She has a $2 million liability insurance policy but she’s never had to use it

Bad Neighborhoods

When she first started, she couldn’t afford to buy in a “B or B- class” neighborhood
She bought in Haughville, which is just west of downtown
- Some streets are questionable
- Some are better
- You just have to go with your gut
- She knew it was going to get better
- Sure enough, 4 years ago, it started turning for the better
  - Major rehabs being done
  - Clean-ups
  - New roofs and windows
  - Today, the are she bought (and stayed) in is a C+/B-

Biggest Mistake

Being way too soft-hearted
She has a big heart for people and it’s hard for her to tell people that they just can’t stay in one of her properties
But she also now realizes it’s a business and it’s how she survives
She eventually came to the realization that she would go under if she didn’t change
She still makes judgement errors and lets people stay too long
But it’s much better now
People have left the state and come back and found her because they liked renting from her
Se also gets lots of referrals to her tenants’ relatives

Biggest Success(es)

Regularly making improvements on her properties when she could
Got rid of all carpets and replaced with LVP (luxury vinyl plank flooring)
- Much easier on clean-out side
- Reduces turn-over expenses
New cabinets and countertops
Improve bathrooms – put in tile baths
- Got rid of fiberglass, plastic

Advice for Old Dawgs Looking at Real Estate Investing to Help Them in Their Retirement Years

Compared to other forms of investment, the passive income, write-offs and tax breaks you get are fantastic
Join REI or local landlord networking group
Can be a great supplement to your savings and future income plan
She receives Social Security but now she has all this other income
It’s a smart way to diversify your investment portfolio
Even if you have just one or two investment properties, it’s worth it
It’s a tangible asset that always increases in value
Pay them off as soon as you can so that it’s all income
Just do it!

Current Business

No future books planned
Just maintaining her
She writes a blog called “The Landlord Chronicles – A Common Sense Approach to Rental Properties”
- Features: Products, Tips, Techniques
- She hasn’t written lately because she has been busy with her Realtor business
Still active Realtor

Rap-It-Up

Favorite real estate book and business book: The Landlord Chronicles: Investing in Low and Middle Income Rentals
Most valuable web site for success (other than your own)
Favorite app: Mile I.Q. (tracks all your drives), Rent-O-Meter
Favorite quote: “Stay in the day.”
If you lost everything – all your assets – and had to start all over, knowing what you already know, and you only had $1,000, what would you do to launch your real estate investing business? I would start by networking. I would try to find private lenders. I would start with rental properties.

How to Reach Barbara

Email: bpmbarb@gmail.com
Where to buy her book: The Landlord Chronicles: Investing in Low and Middle Income Rentals

IF YOU LIKED THIS PODCAST, we would love if you would go to iTunes, Stitcher, GooglePlay, iHeartRADIO and Spotify and Subscribe, Rate & Review our podcast. This will greatly help in sharing this podcast with others seeking to learn real estate investing as a means to achieve a successful retirement.

Check out our other podcasts at olddawgsreinetwork.com.

Get a FREE copy of our 3-Minute Rental Property Analyzer at olddawgsreinetwork.com.

Additional Episode Sponsor: Meno Studio – menostudio777@gmail.com

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