Over the years, a slew of reality TV shows that glamorize the real estate industry have popped up on networks like HGTV and Netflix. But just how realistic are they?
To find out, we evaluated eight popular shows that may appeal to investors. While most are focused on redesign efforts and fail to consider the practical aspects of investing, a few offer realistic tips and relatable challenges that make them worth watching.
Flip or Flop
Flip or Flop ended in 2022 after airing for 10 seasons on HGTV. The series follows formerly married real estate agents Christina Hall and Tarek El Moussa, who began flipping houses in Orange County, California, after the 2008 real estate crash. They typically make all-cash offers on foreclosures, which they renovate and sell for a profit.
The 70% rule of house flipping is a guideline house flippers use to ensure sufficient profits—it says you shouldn’t spend more than 70% of the home’s expected after-repair value, less any repair costs, on a distressed home. But Tarek and Christina tended to take bigger risks when choosing a property, which is likely to make things interesting.
For example, an episode in the final season, “Red Hot Flip,” shows the duo making a $500,000 offer on a home they hope to sell for $700,000, with quoted repair costs of $120,000. They note that low inventory in 2022 leaves them with few choices.
Several obstacles come up, including necessary repiping, which pushes their repair costs to $140,000. But they manage to get a $856,500 offer on the house because of the hot market, leaving them with $187,025 in profit after closing costs. That’s a 27.9% return on investment (ROI), which is just slightly below the average of 27.5% for home flips completed in the second quarter of 2023, according to Attom Data.
Most house flippers who aren’t also reality TV celebrities might turn away from a project with such slim profit margins, rather than hoping to get lucky with an offer above asking.
Stay Here
Stay Here was only around for one season in 2018 on Netflix, but it’s one of the few highly rated reality TV shows that showcases the optimization of vacation homes for added revenue potential. Designer Genevieve Gorder joins real estate expert Peter Lorimer to help property owners across the country boost their occupancy and average daily rates.
While the show offers some research-backed tips for increasing the cash flow on a short-term rental property, it’s mostly focused on the design aspect. The show doesn’t provide the budget for renovations or ROI.
In the episode “Austin Pool Pad,” a rare pool property in the desirable South Congress neighborhood suffers from old furniture, a sad-looking outdoor space, and a wasted bedroom used as an office. The team converts the office to a bedroom, adds a game room, creates a “social media moment” in the pool area with an eye-catching mural, and updates the listing description with a title to highlight the selling points. They also set up a partnership with a local pitmaster to provide private brisket-smoking classes to guests using the new smoker.
Ultimately, the new listing aims to capture $400 per night—but the episode ends there. Without a before-and-after comparison of monthly revenue for the vacation home, it’s tough to know if the extensive renovations and design updates paid off.
Selling Sunset
Emmy-nominated Selling Sunset is one of the most popular real estate reality TV shows, and it’s not because the show realistically depicts the homebuying process, at least not in most parts of the country. Instead, the Netflix show focuses on relationship drama at The Oppenheim Group, a cutthroat Los Angeles brokerage where the real estate agents carry $10,000 handbags and sell luxurious mansions to affluent homebuyers.
The episodes sometimes include real estate market insights, but they’re often quick and oversimplified, leaving plenty of room for viewers to focus on the attractive real estate agents and the intimate details of their personal lives, from pregnancy test results to backstabbing behavior to new agent gossip.
Investors looking to learn something should avoid this unrealistic reality show. On the other hand, anyone with an appetite for interpersonal drama in wealthy social circles should probably binge all seven seasons.
Buy My House
The Netflix series Buy My House premiered in 2022 and is one of the more investor-focused real estate shows. Homeowners are given the chance to pitch their homes to four expert real estate investors: Redfin CEO Glenn Kelman, football player Brandon Copeland, Corcoran CEO Pamela Liebman, and commercial real estate agent and business owner Danisha Danielle Wrighster. The show offers insight into the investors’ thought processes as they evaluate a variety of investment properties with the intent of making an all-cash, commission-free offer.
Buy My House includes properties at a range of price points from rental markets across the country, including some under-the-radar markets alongside tourist hubs. For example, in one episode, Glenn Kelman offers $170,000 for a starter home in the Detroit area with strong rental metrics, which is $5,000 above asking. But when a couple pitches a house near Disney World for close to $1 million, all four investors pass, pointing out that the price is too high, given the expected revenue.
Newbie investors can definitely pick up some tips from this show, from the nuances of how to run comps to the value of a unique property.
Vacation House Rules
This HGTV show premiered in 2020 and follows real estate and renovation expert Scott McGillivray as he updates vacation homes to optimize their revenue potential. Vacation House Rules mostly focuses on the renovation and design process in detail, which isn’t always practical from a business perspective.
For example, in the season 4 episode “Cottage on a Cliff,” Scott works on a friend’s cliffside cabin that is so distressed that it may be a money pit. The team essentially rebuilds the entire house, with no mention of the cost. While it’s fun to watch the transformation, it probably wouldn’t be feasible for investors who don’t have the budget of a TV show.
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Property Brothers
In Property Brothers, which ran for a whopping 14 seasons, twin brothers Jonathan and Drew Scott assist homebuyers with finding a fixer-upper, making an offer, and renovating the property according to their budget and needs. Unlike some other renovation shows, Property Brothers details the cost of planned updates and unexpected necessary repairs, along with the timeline, and the brothers are cognizant of the family’s budget.
For example, in the episode “Island Getaway,” the brothers discover a termite problem in the house. Due to the added expense, the brothers need to find ways to cut corners in order to remain within the family’s $650,000 budget. Investors who have rehabbed homes will relate to the challenge of staying within budget in the face of obstacles that pop up.
The Deed
This CNBC reality series began in 2017 and ran for two seasons. The Deed follows real estate developer Sidney Torres as he steps in to help other developers get their projects back on track.
For example, in an episode titled “Don’t Fall in Love with Your Flip,” Torres encourages a friend to look at his flip from a business perspective, abandon some of the high-end details, and sell the home for a profit to pay off his debt and potentially buy other cash-flowing properties.
To do this, Torres structures a deal with a penalty clause to discourage his friend from keeping the home. He offers $200,000 to complete the home in 120 days in exchange for 15% of the net profit from the sale. The penalty clause entitles him to the same profit, plus interest, should his friend decide to hold on to the home.
Investors who are new to house flipping may gain valuable insights from this show in addition to entertainment value. For example, Torres redirects his friend to choose aesthetic elements that will appeal to buyers instead of himself. He points out that time is money and stresses the importance of having a plan and sticking to a budget.
Beachfront Bargain Hunt
With hundreds of episodes over the course of 30 seasons, Beachfront Bargain Hunt is one of the most popular shows on HGTV. It follows homebuyers seeking budget-friendly homes in beach markets across the country. Waterfront homes tend to earn more revenue, so finding a budget home on the water can be a good investment. The show stays true to homeowners’ budgets and provides estimated rental income for buyers hoping to offset their mortgage payments.
But there are challenges and risks to owning a beachfront home, which the show fails to caution against. For example, beachfront homes tend to have higher insurance costs and may even be difficult to insure. Higher maintenance and repair costs can also impact homeowners’ budgets. Though it’s not the most realistic, it can be fun to watch homebuyers compare potential beachfront properties in different markets.
The Bottom Line
Most real estate reality TV shows have nothing to do with reality. But a few may be instructive, or at least interesting, to people with careers in real estate. Overall, we found Buy My House and The Deed to be among the most engaging and provide the most practical applications for real estate investors.
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By David Pickron
If you’ve ever purchased a gift for someone, you’re familiar with those three dreaded words you must be on the lookout for: “batteries not included.”
Most of us have experienced that moment on a holiday morning or birthday when the excitement of receiving something new is dashed as the recipient realizes that without power, they just have an empty box and a lifeless gift.
Knowing what is and is not included in any transaction is critical to achieving the end goal of both parties; this is especially true for housing providers.
I recently had a potential tenant who was going through some life challenges ask me if there was any way that I could include a washer and dryer as part of the rental.
Questions like these set off all sorts of alarms in my head. I’ve been at this for more than 20 years and situations like this have rarely ended well for me… but I reluctantly gave in and provided the washer and dryer at move-in.
Here’s why I entered into this agreement reluctantly: If they own the equipment and it breaks, they never call, but if I own the equipment and it breaks, I am the first call and end up playing repairman. Ideally, I avoid these situations, but under certain circumstances I do go that way and when I do, I always do these two key things that will also help to protect your investment.
No. 1 – Establish Your Ground Rules
When it comes to rental property, the number of items a tenant may ask for is unlimited.
In your business, determine in advance what and what will not even be a possibility to include with the property. When it comes to appliances, those that are attached to the property are usually included. I’m talking about items like a dishwasher or oven.
You might include a refrigerator if it is the built-in variety. Usually not included is anything related to laundry, microwaves, BBQ grills, etc. And speaking of grills, if you decide to provide one, make sure you establish that you are not responsible for providing fuel.
I’ve taken the brunt of an angry phone call from a tenant whose dinner party plans were destroyed when the propane ran out halfway through cooking their meal. Same goes for things like yard equipment if you decide to leave a lawn mower for the tenant who wants to maintain the yard. Each of these items present different challenges that require different rules, and it is best to lay out those rules in your lease.
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No. 2 – Put it in the lease
The lease is your first (and best) line of defense when it comes to items you have included in your property. I would recommend always using language that references the following categories:
- Ownership: Clearly state who owns the equipment that is included in the lease. This ensures that if something “walks” off at the end of the lease period, all parties know whom it legally belongs to.
- Responsibility: If something breaks, it is critical to know who bears the financial and physical responsibility for its repair. For example, if I were to include laundry units in the property, I include language like, “If the laundry units become non-functional, you are responsible for all repair costs. If you do not want to cover those costs, the units will be removed from the property and you will be responsible for procuring your own units. If, when the lease is terminated, the units are in place and non-functioning, all repair costs will be covered by your security deposit.” Clear and concise, the tenant knows exactly what to expect and you can look back on this if these situations arise.
- Terms of Use: The final piece of protection is having them understand the terms by which you are providing any item in the property. This might include a term similar to this, “As the housing provider I am not responsible for any damages to your personal items created by using the laundry units provided.” Or this fun one, “Use of the provided BBQ grill is at your own risk and expense. Housing provider is not responsible for providing fuel for grill and/or for any damage or loss of food associated with use of the grill.” It sounds like overkill, but I’ve seen and heard it all.
Being in this industry is a gift.
I can’t think of another place that would allow me to the opportunity for challenge and growth as much as being a housing provider.
Knowing if and what to include in a lease is paramount to finding success; but without fail, the satisfaction that comes from helping others is definitely “included” in every transaction.
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The promise of financial returns, stability, and the thrill of ownership often fuels real estate investment decisions. While various real estate options exist, few capture the essence of smart investing as aptly as multi-family properties. Multi-family properties offer a unique blend of convenience, profitability, and scalability. Let’s delve deeper into why you should make it a priority to invest in multifamily real estate.
The Allure of Multifamily Properties
Understanding the multifaceted benefits of these investments can pave the way for a secure financial future.
1. Strong Reasons for Investing in Multifamily Properties
Steady Cash Flow: One of the most attractive pros of multifamily real estate investing is the consistent rental income from multiple units. This predictability can significantly ease financial planning and provide a sense of security for investors.
Easier Property Management: Managing one building with several units is convenient and cost-effective. It’s often easier and more efficient than handling multiple single-family homes spread across different locations. Additionally, centralizing operations can lead to better oversight and management.
Economic Efficiency: Multifamily properties spread out the risk, ensuring you’re not reliant on a single income source. If a few units are vacant, the rental income from occupied units can offset potential losses. This buffer can prove invaluable, especially in fluctuating market conditions.
2. Understanding the Value: How Are Multifamily Properties Valued?
Multifamily properties are typically valued based on their income-producing potential. Factors like rental income, location, condition, and local real estate market conditions play a vital role. Furthermore, recognizing the property’s specific amenities and unique selling points can adjust its valuation. This deeper understanding is pivotal not just for purchase decisions but also when gauging how often real estate doubles in value. Remember, it’s not just about current value but potential future worth and the property’s growth trajectory.
3. The Buying Power: How Many Properties Can You Buy at Once?
While there’s technically no limit, the intelligent approach emphasizes quality over quantity. Don’t merely chase numbers; search for properties that offer immediate returns and long-term growth potential regarding appreciation and rental income. Moreover, consider the ease of management, potential demand in the area, and the sustainability of these investments. The key lies in balancing ambition with practicality.
4. Long-Term Benefits of Multifamily Investments
Investing in multifamily properties transcends the allure of immediate profit. It’s a journey of building lasting wealth and creating a legacy. When approached with foresight, it can provide benefits that ripple through time.
Appreciation Over Time: Real estate, especially multifamily properties, often see steady appreciation over the years. Beyond the tangible metrics, this appreciation signifies a neighborhood’s growth, enhanced amenities, and socio-economic development. As these factors converge, they promise increased rental income and raise the overall property value should you opt to sell in the future.
Tax Advantages: The realm of multifamily real estate offers a plethora of tax incentives. Depreciation stands out, allowing you to offset a portion of your rental income. Add to that the mortgage interest deductions and other tax breaks, and you’ve got a recipe for significantly reducing your taxable income, thus amplifying your overall returns on investment.
Equity Buildup: As you pay the property mortgage, you simultaneously build equity. This can be leveraged for future investments or cushion in financial downturns.
Scalability: Starting with one multifamily property can set the stage for further real estate acquisitions, enabling a more rapid portfolio expansion than single-family units.
5. Mitigating Risks in Multifamily Real Estate
Every investment comes with risks, and multifamily properties are no exception. However, there are effective strategies to mitigate these.
Diversification: By its very nature, a multifamily property is diversified. If one or two units become vacant, others remain occupied, ensuring a steady income stream.
Research & Education: Continuously educate yourself about the latest market trends and dynamics. Knowledge is a potent tool against potential pitfalls.
Professional Networking: Building relationships with real estate professionals, from agents to property managers, can provide invaluable insights and early warnings about market shifts.
Insurance: Ensure your property is adequately insured. This can protect your investment against unforeseen damages and liabilities.
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The Process Demystified: How to Buy a Multifamily Property
Investing in multifamily properties is undeniably a strategic move. Understanding the process of buying a multifamily property is essential to navigate this landscape. Every step requires attention to detail and a commitment to due diligence.
Market Research: Begin by identifying where to buy multi-unit properties. Prioritize emerging markets characterized by job growth, infrastructural development, population growth, and potential for rent increases. Economic and social indicators can significantly influence an area’s real estate prospects.
Financial Assessment: Determine your budget by evaluating your financial health. Factor in potential mortgage rates, property taxes, insurance, and the necessary down payment. An exhaustive financial review can safeguard against unforeseen expenses.
Property Search: Use platforms focusing on multifamily investments or collaborate with a seasoned real estate agent familiar with multifamily properties. An expert’s insight can sometimes unearth opportunities you might overlook.
Due Diligence: Once you’ve pinpointed a property, dive into a thorough inspection. Understand its occupancy rates, maintenance history, and potential repair costs, and scrutinize its financial statements. Being meticulous at this stage can prevent potential pitfalls.
Secure Financing: Approach traditional banks, credit unions, or private lenders. With the dynamic landscape of real estate financing, options are aplenty. A well-prepared business plan and a clear strategy can significantly improve your loan approval chances.
Closing the Deal: Ensure all legalities, like title checks and property liens, are in order before finalizing. Close the deal when you’re convinced of the property’s merit and all checks are satisfactory. Remember, it’s a marathon, not a sprint.
Widening Your Perspective: Beyond Single Units
The charm of investing in real estate doesn’t lie just in the bricks and mortar but in the strategy you employ. By focusing on multifamily properties, you adopt a strategy for consistent income, scalable growth, and mitigated risks.
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Listen On:
This episode is all about rent control and how it affects landlords. Where we get and understand the premise behind rent control, the issues that landlords must deal with while navigating the laws around rent control can be problematic.
There are several states with cities that already have rent control ordinances, and two states with statewide rent control. Not to mention more cities and states considering adding laws or ordinances regarding rent control on the horizon.
For landlords, rent control makes it difficult to keep up with maintenance and repairs. And for tenants, rent control is only helpful if they stay in the same rental for years on end. Because once they move, they’re paying market rates to landlords who are working to recoup lost income from their previous tenant.
Bottom line, rent control has been found that it’s not all cracked up as it appears to be.
Want to know what you should be prepared for in case it comes to the town of your rental property? Lots of good stuff in there for ALL landlords, regardless of whether your rental is in a rent-controlled area or not.
Check out this week’s podcast where we are discussing what it is, who it benefits, the challenges landlords face, and how to work around them.
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Renters are increasingly ditching their families and roommates to live alone, according to a report from RentCafe.
The number of solo renters increased 6.7% between 2016 and 2021, reaching 16.7 million people. Because of the pandemic and social distancing, there was a peak in 2020, reaching a record 17.7 million. Living alone is now the most popular living arrangement.
While the number of lone renters grew, renters with roommates became less common. After a 6.3 million peak in 2019, that number sat at 5.8 million in 2021. The number of people renting with family followed a similar path, dropping from 71.3 million in 2016 to 68.1 million in 2021.
Among the metros RentCafe analyzed, the city with the largest increase of lone renters between 2016 and 2021 was Salt Lake City, which saw a 24.9% boost. The report said cost of living and healthcare were key factors in the area’s migration.
These factors were also present for the next three cities on the list, all in Texas: McAllen and San Antonio, where the share of solo renters grew 24.2% and 21.7%, respectively, and Austin, where the demographic grew 23.9%. Dallas also made it into the top 10. Texas’ affordable housing crisis is leading more people to be long-term renters, a position many across the nation are in.
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While apartment construction reached a 40-year high in the third quarter, renters are still experiencing skyrocketing rents. Earlier this month, the Supreme Court declined to hear a case on rent control in New York City that could have affected rent control laws nationwide and made a pathway for rent-stabilized housing. In July, the Biden administration called on landlords to eliminate surprise fees for tenants. As a result, a number of states passed legislation on the matter.
Baby boomers and millennials make up the largest proportion of people living alone, representing a cumulative 61% of solo renters. RentCafe reported that because of accessible shopping and services, as well as smart home tech, aging in place is becoming increasingly feasible.
Income is also a factor. Baby boomers need an income of about $50K to be a solo renter, which is $16K more than what an average renter would need to afford rent. Millennials represent 29.5% of Americans renting alone, and solo renters in this generation earn $56K on average, $22K above the average renter’s income.
These two groups are followed by Generation X, who make up 21.3% of solo renters; the Silent Generation, representing 12.8%; and Gen Z, with 3.9%, or 640,000 people.
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Aly J. Yale
Cash-out refinancing is pretty common in real estate investing. An investor will cash in on the equity they have on an existing property and then use those funds toward a down payment on their next property. Rinse and repeat.
That complicated process may soon be unnecessary thanks to a new fintech company.
Downpayments, a Miami-based financial tech startup, has come up with a way for investors to tap their existing property equity to buy new properties—no refinancing required. Here’s how it works and what investors need to know about it.
How the Program Works
Downpayments essentially gives investors a loan, which they can use toward their down payment. There are two options:
- An interest-free loan of up to 10% of your next investment’s purchase price
- A 20% down payment at a “competitive” interest rate (currently 7%)
In both cases, the loan must be paid off within four years of closing.
The program can benefit investors with a number of goals. As the company explains on its website:
Depending on your circumstances, this may mean different things; it might mean preserving your savings or avoiding having to go through a cash-out refinance in order to access the capital, which often means breaking a low fixed-interest rate. It might also mean you can buy your next investment property sooner, or without an equity partner, so you can control your own destiny and have the freedom to grow your property portfolio on your own terms.
Downpayments.com
Of course, nothing comes for free. While using Downpayments won’t require you to refinance your loans, you will need to put your property up as collateral. You’ll also need to use Downpayments’ brokerage services as you shop for your next investment.
As your registered in-house brokerage, Downpayments will curate your listings, provide on-demand showings, comparable sales, and guide you to the closing table.
Downpayments.com
Essentially, you won’t pay Downpayments directly, but it will get a commission from your eventual property purchase (just as any real estate agent would).
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Is Downpayments Right for Your Portfolio?
Right now, Downpayments is only available to investors purchasing properties in Florida, but the company says it’s expanding to other states later this year. (No word on what those states will be, though.)
Still, even if the program’s available in your area, think carefully before proceeding. While it’s billed as an alternative to cash-out refinancing, Downpayments doesn’t help you avoid financing altogether. In fact, it just adds another loan to your mix—meaning extra monthly payments to balance and an even further leveraged property.
If you do use it, make sure you’re on a good budgeting system and are prepared to make your payments—on time, every time. As with any loan against your property, there’s a risk of foreclosure if you’re unable to make your payments.
You’ll also want to consider the brokerage requirements, especially if you have an agent you typically use when vetting new investments. Using Downpayments could mean forgoing that agent’s guidance or, potentially worse, doubling down on commissions if you decide to use both services.
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By Justin Gesso
Whether you’re taking your first steps or fine-tuning your strategy, understanding the fundamental language of real estate is paramount. In this post, I’ll cover the top 5 real estate investment terms that are essential for every investor’s toolkit. From cash flow to leverage, these terms form the bedrock of successful investing. I think it is also important to know the right meaning for these terms and many people stretch the meanings or completely change them!
So, let’s dive in and equip ourselves with the knowledge that will shape our journey towards financial prosperity.
1. Cash Flow – The Foundation of Financial Success
Let’s start with a term close to every investor’s heart – cash flow. Beyond the straightforward inflow and outflow of funds, it serves as the cornerstone of financial success in real estate. It is one of the primary metrics I use to make purchase decisions. I also look at how good the deal is and how much value I can add.
Many people will tell you that cash flow is simply the rent minus the mortgage and insurance. However, if you want to know the true cash flow you will need to know all of your expenses. Here is an example of what true cash flow looks like:
- Rent: $2,000
- Mortgage: $1,100
- Taxes: $200
- Insurance: $200
- Hoa: $50
- Vacancies: $100
- Maintenance: $200
- Property management: $180
One investor might tell you the cash flow is $500 a month but they are leaving out many of the expenses the property will incur over time. The true cash flow would be -$30!
2. Cap Rate – A Metric for Strategic Decision-Making
Cap rate, a metric mostly used on commercial properties and multifamily housing gives an idea of what the property will make without financing and what the property is worth based on the NOI or net operating income. The basic formula is:
net income / price = cap rateThe Cap Rate formula may seem simple enough, but it can be manipulated very easily. Investors may not include all the expenses in the NOI, or they may use projected income instead of actual income. Never take these numbers as absolute without digging into them.
3. ROI – Evaluating Investment Performance
Return on Investment (ROI) serves as the scorecard for your property’s performance. As a pair to cash flow, ROI helps you determine what the property will make based on many factors like loan pay down, appreciation, and value add. Cash flow looks at what the property makes on a monthly basis and ROI looks at the big picture.
ROI is not easy to figure because some years may have a huge increase in value thanks to adding tenants or making repairs while other years may have much more modest returns. You would figure ROI on an annual basis and may want to separate out first-year ROI from the later years’ ROI because of those jumps in value.
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4. Leverage – Maximizing Potential While Mitigating Risks
Leverage is the prime weapon of real estate investors if you are looking to scale quickly. With leverage, you only invest a fraction of the total purchase price, which can cause your returns to be significantly higher than investing in something like stocks. To achieve leverage, you use financing. Financing is one of the most important aspects of investing in real estate. You can make more money with loans than by paying cash.
On this site, I talk about the many different, creative ways you can finance real estate investments.
5. Equity – The Silent Wealth Builder
Equity, an often-underestimated force in wealth accumulation, goes beyond property values, embodying true ownership.
equity = current market value - amount financedEquity can be built slowly through market appreciation and loan pay down. You can also build equity by adding value and getting great deals on properties. I prefer to use both! Many people may say equity does not matter because it is not cash in hand, but it can become cash in hand by using a cash-out refinance, or selling. You can even use a 1031 exchange to sell and not pay taxes on the profit.
Thanks to leverage and equity, my net worth has skyrocketed to over $10 million just from real estate.
Even better, you can use equity and leverage together to purchase additional properties and scale up your business using the BRRRR method.
Conclusion
This primer serves as a solid foundation for fundamental real estate investment terms. As you navigate real estate, I invite you to explore the extensive resources on InvestFourMore, where a wealth of data-driven insights and strategies await.
Feel free to engage with the community, sharing your experiences or seeking guidance. Here’s to your continued success in the world of real estate investment – stay informed, stay strategic, and keep building your path to financial prosperity!
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Listen On:
Working on real estate investments is challenging enough but what if you are operating a business of owning and managing rental properties with your spouse or life partner?
This episode covers so much from tips on what not to do and tips on how to do this work better.
And let’s face it, much of this information is common sense and many of us already know it…but we may not be doing it.
We polled our favorite husband and wife real estate investment teams and got their take and best advice on what it takes to work with your significant other and they did not disappoint!
So, whether you are already married and investing with your spouse or you hope to do so one day, this is a great episode to listen to.
LINKS
👉 Basic Tax Strategies, Episode 45
👉 Advanced Tax Strategies, Episode 46
👉 Link to our Place your ideal tenant course waitlist
👉 Amanda Han Forbes Article: 5 Real Estate Investing Tips for Married Couples
👉 Amanda Han Book: Advanced Tax Strategies
👉 Connect on Instagram with the REI couples who contributed to this episode:
Casey Franchini, Brick by Brick Wealth
Aheli & Gabriel, The Hungry Investors
Danielle Dickens, Fit to Invest_Dani
Anam & Amir, The Hash’s Invest
Herb Honore, Honore Empire
Erik & Gelerie Stenbakken, Winning with REI
Kier & Todd Vogt, Real Estate Kier
Kamohai & Tristen Kalama, Hawaii Real Estate Investors
Amanda Han & Matt McFarland, Amanda Han_CPA
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By Brigitt Earley
If you’re lucky enough to have a garbage disposal, you know how much easier it makes dinner prep and post-mealtime cleanup. But before you toss everything down the drain and turn on the switch, you should know about a few things that can wreak havoc on the handy appliance.
“While garbage disposals are an everyday convenience for people to quickly and easily dispose of food waste, many homeowners abuse their drains by tossing in several household items that are damaging, like grease and celery stalks, which leads to unwanted buildup in your home’s drain lines,” says Doyle James, president of Mr. Rooter Plumbing, a Neighborly company. These mistakes aren’t just small ones, either—they can potentially affect your home’s entire plumbing system, making repairs extremely costly, says James. Highboy LA House Tour
So you don’t make this mistake, we asked plumbers to share the biggest offenders—and why they’re so harmful.
Bones
Some things are just too hard for the disposal blades to handle, says James. And it should come as no surprise that this includes things like turkey or chicken bones. These items not only dull blades, but can spin and spin without ever getting broken down, eventually getting stuck in your system.
Fruit pits
The same goes for large fruit pits. While a few citrus seeds are no problem, don’t expect your disposal to handle bulkier ones from fruit like plums or peaches.
Eggshells
“There’s a longstanding rumor that egg shells are good for disposals because they sharpen the blades,” says James. “But this rumor is false.” In reality, the membrane layers of egg shells can wrap around the shredder ring, potentially damaging the disposal, not to mention the sand-like consistency of egg shells can cause pipes to clog.
Fibrous foods
James says these types of food are some of the biggest offenders, since they seem innocent enough. But even though fibrous foods—like celery, corn husks, carrots, onion skins, potato peels, asparagus, and artichokes—seem soft, they tend to wrap around the disposal blades, potentially damaging the motor.
Oatmeal, rice and other absorbent foods
Starchy foods like pasta, rice, and even oatmeal can expand in your pipes and contribute to clogs, says Mark Dawson, chief operating officer at Benjamin Franklin Plumbing. They also wreak havoc on the blades of your disposal, since they can develop into a paste that slows down the blades, he explains.
Coffee grounds
While not a problem for the garbage disposal itself, coffee grounds may accumulate inside the pipe and lead to clogging. Toss these in the trash—or better yet, use them to fertilize garden beds.
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Large amounts of fat, oil, or grease
Never pour frying oil, excess bacon grease, or other fats into the garbage disposal. These can solidify and accumulate, potentially coating blades, clogging your drain, and causing and odors, says Dawson. Instead, use a jar to collect them, then dispose of them in the trash once cool and solidified.
Paint
Paint—both water-based and latex—is not only bad for the environment, but it can also cause buildup over time, says Dawson. While a quick rinse of your paint brush isn’t likely to harm your plumbing system, never pour any paint directly down the drain. Instead, you can dispose of unused paint by letting it harden before tossing it in the trash.
Other non-food items
As a general rule of thumb, never put anything you wouldn’t eat down the drain, says Dawson. This includes twist ties, rubber bands, string, cigarette butts, bottle caps, and plant clippings. These items don’t break down in the disposal, which ultimately leads to clogs farther down in your system, he explains.
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Professional tenants are a landlord’s worst nightmare, the ones you read about in the newspaper. These individuals are notorious for cheating the system and using loopholes, leaving landlords with lost rental income, a damaged property, and a huge headache. They will complain about the smallest of messes and become the largest hassles.
In order to get away with such actions, professional tenants have created some pretty elaborate strategies. Here are the top 5 tactics from professional tenants. If you find your tenant is doing any of the below, then you may have a professional tenant.
Tactic #1: Paying partial rent
Often times, professional tenants will pay only a portion of the rent each month. When a landlord has accepted partial rent one month, then State laws will not allow an eviction for that month. This provides the tenant with more time in the property with overdue rent, and most often, they’ll continue to delay each month. Before the landlord realizes it, the tenant is close to lease expiration with an exorbitant number of past due payments. Don’t accept partial payments and require full amounts on exact dates to avoid these schemes. If a tenant is late, be prepared to start the eviction process right away. Also, never accept partial rent.
Tactic #2: Paying rent before the late fee
Professional tenants understand a landlord is more likely to take legal action for $1,000 of past due rent than for a $50 late fee. These tenants will pay rent before the late fee, claiming the late fee will be paid soon. Guess what? By accepting the rent before the late fee, the landlord is most likely never going to receive the late fee. The landlord becomes emotionally drained as a debt collector and just writes off the late fee.
The lease contract is written to align incentives between the tenant and landlord. A late fee is listed in the contract to set the precedent that rent should not be paid past a certain date. Tenants should not take advantage of the payment terms in the contract. By waiving this fee, a landlord signals that the legally binding contract is “flexible,” and it provides professional tenants with the signal that they may be able to bend other terms in the contract. Don’t become drained emotionally and only accept rent after outstanding late fees are paid.
Tactic #3: Paying in cash
Cash is impossible to track, making it the preferred medium for professional tenant payments. These professional tenants will lie about making cash payments or even go as far as faking rent receipts. As a landlord, avoid taking cash payments that foster these types of actions. When a landlord is in the courtroom, they want to show a track record of traceable payments followed by no payments. Keep in mind that in some states, landlords are not allowed to refuse cash. If a tenant insist on paying cash, you must create and BOTH sign a receipt at the time the cash is accepted.
Tactic #4: Asking for time
Some tenants will approach their landlord and plead for more time to pay rent. This tactic is usually accompanied by a heart-tugging story of the hardships they are currently battling that prevents them from paying. Unfortunately, it is difficult for a landlord to know the legitimacy of these stories and a tough decision must be made. Allowing for a longer payment period will only make things worse. While it might be emotionally difficult to draw a line, a landlord is not a bank that provides loans. When a tenant is late on rent, they should go to their friends, family, bank, or another source for a personal loan. The relationship between tenants and landlords should be strictly professional and real estate related. If a tenant still cannot pay the rent when it is past due, then the next step is an eviction notice. A landlord may want to consider suggesting to the tenant that if they are late on rent, then they will release the tenant from their lease so the tenant can find a more affordable unit. It may be easier for a landlord in the long run to let a tenant who can’t afford rent to leave then to constantly chase the tenant for rent.
Tactic #5: Claiming the rental is uninhabitable
Professional tenants may try to claim the rental is uninhabitable as a scheme to not pay rent. Typically, their process is submitting a maintenance request and claiming it was never addressed. They will withhold rent or break the lease and reference the clause on maintenance and habitability of the property. Every maintenance request should be tracked in a system, providing evidence that the request has been acknowledged and updates have been provided in a timely manner. This type of documentation will save a landlord in the courtroom. While landlords have no power over the judge, maintaining records and photos of your properties can protect yourself from these situations.
When a tenant makes a claim that the property is unfit to live in, landlords must refile with proof of a habitable environment. Tenants will then proceed to trash the property in an attempt to justify their claim. Keeping a running log of property conditions and pictures help prove your case. And, do not forget that tenant damage, beyond normal wear and tear, can be charged back to the tenant. If they are intentionally causing damage to create an “uninhabitable claim,” documentation will help to bring justice in the case.
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How to spot professional tenants
Professional tenants are just as good at hiding their identity as they are at evading rent, and thus spotting a professional tenant can be difficult. There are some warning signs however that can help you avoid renting to professional tenants. Be on the lookout for tenants with an eviction history, run ins with the law, or troubles with previous landlords. In addition, professional tenants will ask if the property is “professionally managed” during the initial inquiries as a way to find inexperienced landlords.
How to avoid a professional tenant
Screening is a critical aspect for a property management company that helps prevent renting to professional tenants. While there are various third-party methods for screening tenants, screening tenants yourself is the only guarantee. Items such as reference checks can be faked and false information easily provided. Here are a few simple steps to take for screening tenants:
- Have tenants provide a copy of official ID (like driver’s license), if they refuse, they are likely hiding something
- Verify employment history to ensure ability to pay
- Perform comprehensive screening, from credit to eviction history
- Call past landlords and any references listed to assure legitimacy
- Keep a record of your property conditions and tenant interactions
For all reference checking, it’s crucial that you know the sources are legitimate and not fake. Some helpful tips to easily authorize a source:
- If you are contacting an employer, call their main office line listed on a website (not a cell phone). If this is not available, ask them to send you an email from their company email to provide simple proof they still work there.
- If you are calling past landlords, ask questions such as “can you confirm how much the tenant is paying in rent?” It will help confirm that they actually own the property and are not a friend.
- Keep in mind, current landlords may be incentivized to get the tenant to move out (because they can’t pay rent, are causing troubles, etc.) and are thus more likely to persuade you the applicant is a good potential tenant. Prior landlords (from two to three years ago) may be more truthful since they are not currently in a lease with the tenant.
- Don’t forget to reference check ALL adults who will be living in the unit, not just the main contact.
- Even though this process may seem arduous and excessive, remember that a bad tenant can result in 10x more work and therefore it’s worth the upfront work to avoid all of this.
We hope you have found this article helpful to avoid the world’s worst tenants. If you are interested in setting up a more professional appearance to tenants, then try Hemlane for free.
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