Table Of Contents
This podcast has been transcribed using AI, please excuse spelling, grammatical, and other errors.
Thomas Castelli 0:00
You're listening to the real estate CPA podcast, your source for all things real estate, accounting
Brandon Hall 0:05
and tax. Here we reveal our secrets that can save you 1000s in taxes, streamline your accounting process and help grow your business. Stay tuned to hear insightful interviews with industry experts, successful real estate investors and current clients on what strategies they use to grow their business, and how they steer clear of Uncle Sam.
Thomas Castelli 0:30
Hi, everybody. Thanks for tuning in to this episode of The Real Estate CPA Podcast. Today we're gonna discuss whether or not landlords are extortionists. Sometimes landlords do get a bad rap for various reasons. But today we're going to demystify this myth. Is this true and kind of just discussed? are landlords really taking advantage of people? Or are they providing a valuable service to people in the marketplace?
Brandon Hall 0:55
Everybody listening is probably floored right now. They're like, Oh, my God, wait, this is a tax podcast. It is it is. But you know what, recently, especially coming out of the pandemic, we've seen a lot of just stories, write ups news articles about how landlords is just these awful, awful human beings. I'm a landlord. Tom is a quasi landlord. And in you know, hurts my feelings. So I did some reflection, right. And I'm like, gosh, am I extorting my tenants? And I don't think that I am. And so we're going to talk about that today. And I hope that I hope that we're not going to get political here. We just want to talk about what it looks like to be a landlord. And I hope that this is helpful for people who think that landlords are extortionists, you know, I think one issue that we currently have in our country is that everybody is attaching their identity to something, right. And so when that something is challenged, they feel like personally hurt or attacked, like, look at like Republicans versus Democrats. Why can't they agree on anything? It's because you attach your identity to being a Republican, you attach your identity to being a Democrat. And when something is said that the party doesn't agree with regardless of whether or not you agree, you are personally attacked, you're feeling personally attacked. And and I hope that, you know, you can go into this episode just kind of thinking a little bit more objective, right? I want to want you to detach from the identity of being a landlord or detached from the identity of being a renter and thinking that landlords are extortionist. Because if you can't detach from that identity, then you're not going to be able to assess objectively whether or not your thoughts and opinions are accurate. So we're going to talk a little bit about what it looks like to be a landlord. And we're going to talk about the argument of a cost more to rent than own and there's something inherently wrong with that. And and we're going to go over a lot of things. And I hope that this is helpful for all parties to kind of think about, I hope that landlords, I hope that it helps you kind of talk with your friends and family about the same subject. And for renters, I hope that it helps you understand what it's like to be on the other side. So first, let's talk about the economics of being a landlord. Tom, talk to you about being a landlord, what are we looking at when we're a landlord talking about the rental income and all the expenses? How do we even acquire a property? Yeah, so
Thomas Castelli 3:22
you know, when you're, when you're a landlord, the first thing you got to do is you got to have the capital below, put a down payment traditionally on a property to be able to acquire it in the first place. So that's usually depending on what market you're in is a relatively significant amount of money to be able to put a downpayment. So that's first things first, you got to have the capital to transact, you also got to find out what markets are going to be, you know, investable market. So you got to put in the work to identify the markets, build the team to be able to acquire that property. So that's real estate agents, you also have to perhaps have property managers and contractors and so you got to put together a team of people and lenders, you got to be qualified lenders, well, you can't just banks aren't just going to lend anybody I know, we'll get into a little bit more later. But these are all the things that you know, put together to become a landlord. It's not just something that is it's just you walk into, you have to have the capitalist start to transact, then once you buy the property, okay, now you are responsible for the property, you own it. So that means you're responsible for paying the taxes, the utilities, the insurance, and any major repairs, maintenance, capital improvements that come along with the property, you're now on the hook for that. And if you're gonna go ahead, you're gonna rent it out to somebody, you're going to have rental income, but it's you're going to have all the expenses that come with it that I just mentioned. And that's a risk you're taking, you're taking the risk that hopefully the rental income that you're generating is going to be able to cover all of your costs, including the expenses and the mortgage payments, and still give you enough cash flow to hopefully make a profit. And oh, by the way, guess what, if the boiler breaks, your profit might go out the window because you have to put an expensive improvement into the property and that's your responsibilities landlord
Brandon Hall 4:58
Altru But I want to kind of throw it out there at the very beginning of this podcast that throw all the all the people who think that landlords are extortionists want to throw you a bone. Landlords want to make money, right? I'm not getting into being a landlord, because I'm not going to make money, I'm going to make cash flow, I'm going to get cash flow for my monthly rental income. And I'm also going to see appreciation in the asset, and I'm going to pay the loan down as we go. So I'm in this game to make money. And that's not a bad thing that makes perfect sense. If I've got $100,000, I have to choose where to put that $100,000. So that I can earn a return on investment. So I can put it into real estate and I can become a landlord, I can invest in Tesla, and I can watch that stock appreciate, and then I can cash out, right, I can grow it that way. I can let it sit in the bank account and earn one and a half percent interest. But I'm not gonna just sit it in cash, and just let it sit there forever. I'm not going to do that I want to earn some sort of return on my investment. So landlords are definitely in this game to make money. And I just want to clear the air right there. Everybody. I always laugh when I see landlords on like Facebook or bigger pockets or something like that. They're talking about this this topic, like well, it's so expensive to be a landlord and, man, I don't Oh, no, I gotta pay all this stuff and blah, blah, Dude, you are in this game to make money. Don't hide that fact. That's exactly why you're investing in rental properties to make money to cash flow on a monthly basis. Don't give me the crap that Oh, it's so expensive. It is expensive. Don't get me wrong, but you're definitely in this game to make money. Nobody's you know, running a business for charity unless you're literally a charity. So so you're just put that out there because I see a lot of junk from both sides. Like oh, you know, it's it makes so much money and then they see the landlord's Well, it's so expensive. Yeah, but come on. I mean, yeah, you turn a cash flow, otherwise you wouldn't be making the investment.
Thomas Castelli 7:03
Yeah, I mean, it's like that for everything in America, right? We're in the free market. We're a capitalistic society. And, you know, it's whether you're a landlord or you're in business, you're in business to make money. And when you're a landlord, you're in business, basically. So I don't see the why that that should be shocking to anybody that that landlord to try to make money. I mean, it's, it's, it's America,
Brandon Hall 7:23
it's America. And it's not, it is shocking. And it's always surprising that it's shocking, because that's why I'm investing in it, right? Because if I lost money, if my $100,000 erodes over time, in value, due to inflation due to inflation, or, or just because I'm like, you know, running this at an at a loss, I'm not gonna be a landlord for long, right? Or I'm not gonna be in business for all imagine if all these businesses were running at losses, because we wanted to decrease our prices to appease the masses. I mean, it's just, it just doesn't work. Guys, it doesn't work.
Thomas Castelli 7:56
It's almost hard not to get political on this. But we'll I'll bite my tongue.
Brandon Hall 8:01
By very tongue, we don't want to get political on this, we're just talking about what does it look like to be a landlord. So So you got your rental income, you've got your expenses, you've got your mortgage payment, right. And typically, you're going to cash flow after all of your expenses after the mortgage payment. So you get a little bit of cash flow. And that cash flow might be 10%, of whatever you invested in the property is typically like a number that we see, at least in today's market. So if I buy a $200,000 property, I might have to put 20% down, I'll put $40,000 down. And as Tom mentioned, you got to come up with $40,000. Right. So landlords have figured out how to come up with the $40,000 Unless they're doing some, you know, some special type of financing or they're, you know, they're able to figure out how to get 0% down there are landlords out there that do that. But the vast majority of landlords least that we work with, and me personally, you put 20% down, so I'm putting $40,000 down to this $200,000 property. And so you know, if you're on this landlord or extortionist side first, you got to think how did they come up with $40,000? Right, that can take a long time. Because that's, that's on top of everything else that you've got that's on top of the landlord's own rent that they might be paying or mortgage that they might be paying their car payments or consumer debt, whatever else they have, they've got an additional $40,000 that they worked hard enough to accrue. So they go and buy this $200,000 property. The banks like them, they finance them in the cash flow might be 10% of the downpayment annually, so they're gonna make $4,000 a year in cash flow, you know, that's what 370 bucks a month or something in cash flow, so I can rent it for 1600 all my expenses plus my mortgage payment might be 1300 or 1250 a month, I clear 353 75 something around that every single month. So pretty good, pretty good. On top of that, the mortgage payment is also covered by my rental income. So I get to in part of the mortgage payment is interest in principle Right. And so the principal portion of the mortgage payment, it basically goes into my pocket, it's just a pocket that I can't access today. So it just reduces the amount of the loan that I have. So on this $200,000 property, I put $40,000 down, I get a loan of $160,000 from the bank, that's so my $160,000 loan plus my $40,000 downpayment. That's how I'm able to acquire $200,000 property, the bank extends me, credit of $160,000 allows me to go and acquire that property. After the end of that first year, that loan might be reduced, like $158,000. Okay, so now I've made $4,000 in cash flow, but because I've made 12 months of mortgage payments, now my loan because of all those principal payments that were involved in that mortgage, now my loan is only $158,000. Right? Now I'm now I've created an additional $2,000 of wealth. So now I'm up $6,000. And then on top of that, there's some appreciation as well. Now real estate doesn't appreciate super fast, but like in the past couple years it has. So you know, if I bought this at the beginning of 2020, I might have appreciated in value 10%. Now I've got a $220,000 property, even though I bought it for 200. Now I've created an additional $20,000 of well, so it can be pretty good. Values can also go down though, right. And that's what I was talking about in the real estate industry right now, values go down. Now my $200,000 property is $180,000. of value. Now I've lost $20,000. So I made $6,000 In between cash flow and mortgage payments, but I lost $20,000. On top of that it's now negative 14k. So there is real risk to being a landlord, you might be locked into a property for a really long time. But as long as you're cash flowing, that's what landlords are aiming for. Right? As long as I'm cash flowing, I can sit it out, I can wait out any sort of dip in valuation, because even though my property is now worth 180k, I'm not going to go sell it today, I'm still cash flowing $6,000 or so a year between cash flow and mortgage payments. And I could do that for 10 years until values recover. Maybe the value is after 10 years or back up to 210k. So I've made $6,000 a year, plus $10,000 In appreciation over 10 years. So that's kind of what it looks like to be a landlord.
Thomas Castelli 12:20
Now sometimes landlords get a bad rap because there's a few bad apples in every bunch and it's those those are the bad apples of landlords you see come out in the news, the people who do have unsanitary places to live and their buildings are falling apart. In other words, these are the slum lords. So these landlords who are slum lords, they deserve to be in eternal purgatory, because they're doing everybody a disservice. Not only are they doing their tenants a disservice by keeping unsanitary conditions for them to live in. They're also giving landlords a bad rap because they're the ones who ended up in the news. But you know what their 8 million landlords in the in the US and not all of them are bed. Most of them feel like they have the obligation to provide clean and sanitary living conditions for their tenants so that their tenants will stay for a long time and they have less tenant turnover. Plus, like we've been saying they put down a substantial amount of money into this property in the form of a down payment. And they also are on the hook to a bank for in the example we're giving you $160,000 That they're ultimately responsible for paying on right so they don't want to have the acid deteriorate. And that's why there's so many landlords out there that will be good landlords and will upkeep the condition of their property not only for the tenants, but for their own sake. So just not all landlords are going to get a bad rap. There's a small bad apples in the bunch, and most are going to do the right thing.
Brandon Hall 13:40
Yeah, I think that the the media kind of overblown, the bad landlord story. I mean, they definitely do because like I said, there's 8 million landlords. And every month we hear about the awful landlord in New York City who never keeps up with his building. Cool. That's one out of 8 million in every month, we're gonna hear about 10 more of them. So every year we hear about 120 bad landlords, they're still 8 million landlords, though. We're talking about like, like, a half percent here that we're talking that that are bad. And you know, at our CPA firm, we work with 700 or so landlords, I would say we have maybe two that are bad, that just really don't care. I mean, it's really the minority folks, like a lot of landlords care about their property and they care about their tenants to like they have empathy. And especially like, like people that run businesses like myself, the tenant experience is something that that I want to make sure is good, because I want my tenants to stay as long as possible. I don't want to turn them over every 12 months. I don't want to turn them over every six months. I want them to pay on time, and I want them to stay for many, many years. Why? Because turning over a unit is expensive. Not only do I lose rent It might be it might take me, you know, four weeks to turn a unit over, maybe I've got to do some rehab maintenance to it, I also lose the rental income for that month, I really don't want to do that. If I'm using a property management company and they place the new tenant, they typically take the first month rent as their fees, that's two months of rent that I lose. So I want a tenant to stay as long as possible. And the way to do that. And the way to get somebody to stay and make their experience positive, is to keep up with the property right, you don't let it deteriorate, you also respond timely to their maintenance requests or their complaints or whatever it is, and you fix things. That's the responsibility of being a good landlord. So there are certainly bad landlords out there. But I my argument is that there are also 8 million landlords, I would bet you, I'd be willing to bet you a lot of money. The vast majority of those landlords are good landlords, they're good people. They're just looking for a way to place their money, make a return on investment. And they understand that in order to get that return on investment, they have to provide a good experience for their tenants.
Thomas Castelli 16:04
Yeah, and you know, some of our clients also take a step further outside of just simply providing a clean and safe place to live, they'll go ahead and create enforce their communities among their tenants. And now we see this a lot more in the multifamily space where you have an actual apartment complex, where there's people in closer proximity, they'll go ahead and foster a feeling of community and bring people together. So they're not just simply providing a safe place to live. But there's some landlords are actually going above and beyond and providing a community for people to be a part of. And that's something that's often overlooked, just because of all the bad landlords who do make it to the news. And the reason that happens is because bad news sells we all know that it's easier to grab your attention with a bad headline, oh, this, this slumlord is doing XYZ, then oh, look at this person who provided a great community a little lift that those stories don't sell as well. And again, we're an American capitalistic society. And those companies do want to sell their newspapers. And
Brandon Hall 16:59
yeah, if you're rolling your eyes like, well, those stories don't sell as well, no, think about it. Think about all the businesses that you've gone to, that you've bought from restaurants that you've bought from all your DoorDash experiences. If you stayed in Airbnb, like all all these experiences, right, you are more likely to write a negative review than you are a positive review. Because when you have a negative experience, you want the rest of the world to know to help you like you have this innate. It's just part of human nature, you want to warn your tribe, your human tribe, have this negative experience. And so when you go in and you look at these reviews, it's so true, like people are more likely to leave a negative review than they are a positive review. But people are also more likely to respond to the sensational headlines than they are the boring Hey, Tom is a great landlord, that story is not going to sell. It's just not it's just not interesting, right? But the Hey, Joe Schmo over here, let his property deteriorate to the point that there's a cockroach infestation, and this woman has a child that that story is going to sell that story is going to take off, and it should right you know, that landlord should be held accountable. But the point is, is that that's the minority of landlords, most landlords want their tenants to have a safe environment and want their tenants to have a positive experience. So one of the arguments that I that I've heard is it costs more to rent than it does to own. And that is inherently wrong. And and I disagree with this. And we're talking about why. So first, does it really cost more to rent than it does to own? I think that if you were to do any sort of empirical analysis, you would actually realize that it costs less to rent over a certain time period, it does cost less to rent than to own. Now, it's not going to cost like like, if I'm a landlord, and I'm renting my property out, well, I'm making money. And that's like, that's different. But if we're talking about buying a primary residence, versus renting that primary residence, I think it actually costs less to rent than it does to own that property, even if the monthly rental payment is higher than the monthly mortgage payment. Why? Because you have to put down that downpayment. And that downpayment is going to be I mean, you can do the FHA three and a half percent, but now you're going to have PMI which is going to increase your monthly mortgage by 15 to 20%. That payment is going to go way up with that PMI and you're gonna pay that for a really long time and that's just basically an additional interest fee. Think about it like that it doesn't help you. So it's just an additional expense. Any sort of maintenance that you have to do you're responsible for you've got to it's that's on top of your monthly mortgage payment is an extra kind of break. See, I remember looking at a study and I wish that I had it in front of me so that I can share it all with you and so you would know that I'm not bIessing you but there's a break even point around five years where the cost of renting does become more expensive than the cost of ownership. And that's because when you own the property, you make those monthly mortgage payments, you're increasing your wealth by paying down the debt. So that's kind of where the breakeven point is and how how you save money being an owner versus a renter. But again, you have to come up with that downpayment. So where are you getting the money? How long is it going to take you to save for that? And that's a lot of people just kind of gloss over that. They say, well, it's $1,600 to rent this place, or it's $1,200 a month for the mortgage. Yeah, but But that's after you put $100,000 down? Yeah,
Thomas Castelli 20:40
here's an example a real world example. So before we did this podcast, I pulled up bankrate.com, I think it was and did a mortgage calculation, if you bought a $300,000 house, right, you're gonna have to put down a $60,000 downpayment, assuming you put 20% down and the monthly mortgage payments would be I think that included tax as well are going to be 1300 $330. So if you divide that monthly payment $1,330, by the $60,000, downpayment, you get 45, basically 45 months, so you would have saved 45 months of rent, if you want to look at that way to be able to acquire this property. So while the monthly payment might look a little bit low on paper, you had to basically put 45 months of rent, if you will, down in order to acquire the property. And I feel like people don't take that into account, they just look at the monthly payment and say, Well, 1330 is less than 1600. And it's just cheaper. And they also forget to take into account when you own the property. When you're renting, and the boiler breaks on your property, you're not as the tenant going out and buying a new boiler, no, you're calling your landlord are their property management company and saying the boiler broke and then guess who has to pay for it, the landlord has to pay for the boiler. And when you own your own home, you then have to pay for the boiler. So if you have to take into account when you own the home, there's there's an expense that you have to pay, but as the landlord, you're paying them on behalf of your tenant. So as a tenant, you're actually not paying all these costs,
Brandon Hall 22:10
right? In those monthly payments. Again, I really wish I remembered that study, I remember looking at it, it's like back in 2015. Wait, wait a long time ago, but it's about a five five year breakeven point. So if you own a property longer than five years, you will save more money than renting. Or it'll be less costly than renting around that five year break even point. But Tom's right, those additional repairs are not something that people take into account. And again, people always forget about that downpayment. And the question just becomes how are you going to save enough money for the downpayment, a lot of people forget about that fact, they can't even get into the ownership pool, because they don't have that downpayment, or they go three and a half percent down and their payments become instead of $1,300 a month. Now it's like 1750 a month, because you've got a higher loan amount, which increases your monthly payment. But you also have PMI, which is going to increase your monthly payment. So you have to take that into account too. But let's get back to the this argument that it costs more to rent than it does to own. And that's inherently wrong. And and here's why I think that that's that's a bad argument to make. Because there's two main factors at play. The first factor is risk. The second factor is supply and demand. So the first factor, risk banks are going to lend you hundreds of 1000s of dollars over a 15 to 30 year period. If you're buying a home, and that is risky, they have to perform a risk analysis. What is your likelihood of default, there's a lot of factors that go into play, your credit score goes into play, your earnings go into play your job, and your career path goes into play, right? If you're an accountant, accountants have pretty stable career paths. So you're going to be less risky for a bank than somebody that is waiting tables or maybe in sales, right? So something like that. So all of that gets factored in, in this makes sense. And we'll talk about why this makes sense in a second. But all of that gets factored in. Banks are in the business of lending, because people always say, Well, you know, the bank can always foreclose on the property if I don't make my mortgage payments. So it's not risky for the bank. But you got to remember, banks are in the business of lending money. They're not in the business of acquiring property and selling that property. And when you're not in the business of something, but you're forced to do it, right. So a bank is not in the business of acquiring property and selling property, but they're forced to do it. When you don't make your mortgage payments. When you're not in that business. You're not building systems around that business. You're not being efficient, you're not you're enhancing the efficiency of that Business, which means that you're not going to make a lot of money running that business. Banks make a lot of money by lending. They're not going to make a lot of money by foreclosing on your property, and then selling it at auction or selling it to investors who want it for pennies on the dollar, they're probably going to lose money. Because there's legal fees involved. People don't factor that in, there's legal fees involved. And that property could sit on the banks books, meaning that the bank forecloses they own the property. Now, it's on the banks books, that property can sit there for years, until somebody picks it up, or until it's finally sold at auction or something like that. So it's expensive for banks to foreclose on properties. And banks don't really want to foreclose on the property because they know it's expensive. And most banks will work with you, if you're missing your payments to get back on track, because they don't want to foreclose, they want to be in the business of lending. But banks have to do this risk analysis up front, because they're handing you a check. You know, in this in this $300,000 example that Tom just mentioned, you got a $60,000 downpayment, well, if you only have $60,000, you're not purchasing a $300,000. Home, where does the remaining 240k come from? That remaining 240k comes from a bank willing to bet on you and your ability to repay that 240k over a 15 to 30 year period. That's what's going on there. So the bank has to do that risk analysis, they have to look at Tom and ask the question, Does this person have the ability to repay this $240,000 over 15 to 30 years, what is the risk that they will not. And if it's too risky for the bank, and they're not going to extend you that credit, they're not going to lend you that $260,000, you haven't done enough to prove that you have the ability to pay it back. And that could be because you have a bad credit score, it could be because you have a lot of consumer debt, it could be because you are not earning enough money to justify the purchase that you're trying to make. It could be because you don't have a large enough downpayment. There's a lot of factors that go into that risk analysis. And if the bank says we're not going to extend any sort of loan to you, then you join the renter pool, right? You have to join the renter pool because you have to have somewhere to live. And if a banks not willing to lend to you, and you don't have the cash to buy a $300,000 home, maybe you've got 50,000 bucks, but not 300,000 bucks in the bank is not going to lend you the remaining 250 to go acquire it. Well, now you have to rent that's the only other option. And is this fair? Is it fair that banks can say no, and push you into the renter pool? Absolutely. It's fair, it's a business. Right?
Thomas Castelli 27:54
Yeah, I mean, if you think about it like this, they're lending you a significant amount of money, and they need to be able to rely that you're going to pay them back. And if you made poor financial decisions leading up to this point, you might have bad credit, and they might not be willing to take that risk on you. And that's not their fault, you made poor financial decisions. That's your fault. That's why you have the lowest credit score, which might be a reason they don't extend a loan to you, you might not also have a solid stream of income. And that's not their fault, either. If they can't rely on you to pay it back, then why are they going to lend to you, I just don't see how it's, it's just common sense. It comes into if I'm loaning you money, I've loaned people money before, right? I want to know that they have a stream of income to pay me back, and that their credit worthy, they're not going to skirt me on the money. I haven't ran a credit score. But the point is, the bank is just using common sense. We want to make sure that you have a prior history of paying your debts, we also want to make sure that you have a current stream of income that's going to be able to allow you to afford paying the debt so that they don't have to foreclose on the property go through an entire process like that. So is it fair? Yeah, it's fair, it is absolutely fair, it is absolutely fair.
Brandon Hall 28:57
Yeah. I mean, you're you're trying to convince somebody to write you a big check. And you're trying to show your resume of good financial habits. And if if somebody doesn't believe that you have good financial habits, they're not gonna write you a check. Think about your family members, or your friends. Everybody has a family member or friend that doesn't have great financial habits. Would you go and loan that person? $100,000? If you had it, it probably not. I mean, you know, at first, you probably shouldn't lend money to friends. But regardless, that's the whole point. Like, if you know that they have bad financial habits, you're not going to go and cut them a big check, because you know, that you're probably not going to get paid back. That's risk. That's what the bank is analyzing. And if they say no, we're not going to do that, then you have to go into the renter pool. And so then you have to look at the landlord, right, is the landlord willing to take the risk? Well, it's much less risky for me as a landlord to let you occupy the home that I own right relative to a bank, extending you this big credit so that you can go are extending this big loan They can go and buy property, the risk for a landlord is way less, because I can evict, right, if you miss your payment, I can just evict you and I can get somebody else in there that's going to pay on time. So it's much less risky, even though that's an expensive process, as we mentioned, and I don't want to do that, I can do that. So my risk is reduced. Now, if you're in like a state, like California, in New York City, the risk is actually a lot higher for landlords. And that's another reason. I mean, aside from supply and demand, because of that additional risk, that's why the monthly prices are a lot higher, because it's a lot harder to evict tenants in those states, but in a lot of other states, landlord friendly states, I can evict the risk is a lot lower for me as a result. So I'm willing to let you stay in my property. And that's just a little bit about risk between the bank and the landlord.
Thomas Castelli 30:51
And the landlord will generally carry lower risk of being in and you got to look at to in times of crisis, what happens and we seen this when the pandemic right, landlords actually had to take on a significant amount more risk, because of all the eviction moratoriums. And you know, some tenants didn't end up paying, and you know, who had to foot the bill, the landlord's had to foot the bill to the bank, or if the landlord's went to some kind of forbearance, then the bank had to take the risk. So the bottom line here is that it comes down to risk. And if you're going to be a good, you have a good financial profile, good financial risk profile, you're going to be able to receive, you're gonna be able to receive loans from the bank and buy your own property. If you can't, then you're going to have to get in the renter pool. And the bottom line is, for the most part, it's a lot less risky for landlords let you occupy the property like Brennan said, than it is for the bank to lend you substantial amount of money, and it has to risk you not paying it. Because when they have to foreclose on the property, it's really expensive for them to do it. They're not landlords, they don't have you know, they have this property sitting on their books, they have to foreclose, well, they they're not going to go and renovate it, right? They can't go and renovate that property necessarily. So they might have to sell it at a discount if the property is not that market condition, or they just have to hold it and they're incurring holding costs. That's a big risk to them. So no, you know, they want to make sure that your credit worthy
Brandon Hall 32:08
100%. So so let's go back to that argument again. So what we're talking about right now is, it costs more to rent than to own. And that's inherently wrong. Now, we just talked about risk, right? If the bank is unwilling to take the risk, and extend you the loan, then you're forced into the renter pool. Now, we also said that it's way less risky for a landlord to extend you occupancy than it is for the bank to extend you a loan. So why then would the rent be higher than the mortgage payment, and that simply comes down to supply versus demand. So when you don't qualify for a loan, and you have to go into that renter pool, there's 32.6% of all Americans that are renting those based on a Tom pulses that
Thomas Castelli 32:52
was that? It was, I think it was policy genius, they were they pulled that stat, and they did a survey from the US based on the US Census.
Brandon Hall 32:59
Okay, so 32.6% of all Americans. So you join this pool with 32.6% of all Americans who are renting. And what that means is that there's a supply demand factor that's at play. And this is different per state, per city, per locality, even within cities, their supply and demand factors as well. Now landlords know this, right? They try to acquire properties in areas that have high demand, because that means that they get to increase their prices. So the landlord is going to price their unit where they feel like it will get rented. But some landlords are better at this than others. So what does that mean? Well, some landlords underprice their units because they're nervous to, you know, increase their prices. They just want somebody to occupy the rent or the rental unit, right. But other landlords will try to find that maximum price. And is that fair? Yes. Because they created $100,000 downpayment, they acquired the property, and they're trying to receive a return on their investment. It's a business. So they're going to price their property as high as they possibly can. But it's totally fair, because somebody will rent it at that price, right? Somebody is going to rent it at that price. If they don't, then what happens? What happens if somebody doesn't rent it at that high price? Yeah, they
Thomas Castelli 34:19
have to lower their rent. Yeah, they lower
Brandon Hall 34:21
the price. It's a free market, right? If no buddy is renting at my $1,800 price, then I'm going to drop my price to 1750. And I'm going to see if anybody will rent there. If nobody's renting there, then I'm going to drop it to 1700. So I can't just go and say, Oh, it's an $1,800 price. And you got to pay $1,800 This is this is a contract, right? You don't have to sign the contract. You can go find another place to live. And if you say I'm out, I'm not doing this and then nobody else wants to rent it for 1800 Then I have to drop the price. Otherwise, I'm just eating my costs on a monthly basis. Right. So it's supply and demand. If I have a property in a really good location, I can charge a higher price. If I have a property with nice amenities, I can charge a higher price. If I have a property that's been recently, rehabbed and remodeled, and it's modern, I can charge a higher price. And on the tenant side, now a lot of people go, Well, this is totally unfair, because I could buy that property for $1,200. Or I could rent it for $1,600. And that is unfair. And that's not true. Nobody's forcing you to rent that specific property, you can go to a different location that's a little bit less desirable. And you can rent for 1000 bucks. And people go, Oh, that's not true. But that is true. I have property in Hickory, North Carolina, okay, tertiary market, middle of nowhere in North Carolina, I have a three unit property in Hickory, North Carolina, close to downtown Hickory, North Carolina, and downtown Hickory, North Carolina has nothing to brag about. But just go with me here, I rent my three unit property, I rent each unit out for $600 a unit. Now, a few blocks closer to downtown, there is a brand new apartment complex that rents for 1200 to $1,500 a month. Now, a tenant coming into Hickory, North Carolina to work can look at that property and say, Wow, that's beautiful, and it's in a perfect location. And it's 1200 $1,500 a month, oh, that's way too expensive. Then they come in, they find my unit. And they go not as great of a location, not as updated. But it's $600 a month. So I'm going to do that instead. Or they can just say no, I'm going to I'm going to hit the 12 115 $100 a month rental and I want to live there, that's where I want to be. But if you choose to live there, you can't turn around and complain that the rents are too high. Or that it's it's more expensive than the mortgage, you had the choice. Now I know a lot of people listening are like, Well, I'm in California, or I'm in New York City, and I don't have the choice. But you do you always have a choice. We have clients in California, that commute two hours each way and so that they can have lower housing costs. Now, that's something that you give up, right? If you want to live in San Francisco, you are going to pay a premium to live in San Francisco, because you don't have to do the commute. But if you live outside of San Francisco, and you have to do the commute, the premium goes down, because now you have to do the commute, right, the housing prices go down. So the location matters, but you have the choice. It's a business at the end of the day, that's what you have to understand it's supply and demand. If I think that I can get $1,800, then I'm going to price at $1,800. In if somebody rents it from me that somebody decided it was worth $1,800 to rent it. And if I can't rent it for $1,800, then I have to reduce the price. I can't just let it sit there. Because now I'm eating my costs every single month. So it's a supply and demand factor. And that's it's totally fair. That's it that's the free market at work. Nobody's forcing you, I'm not holding a gun to your head and forcing you to come rent my unit, you have willingly entered into a contractual agreement to rent the property from me, I did not force you to do that you could have rented anywhere. It's hard to overcharge
Thomas Castelli 38:14
when when there has to be someone on the other end of the transaction willing to pay for and if they're not, then you have to lower your price. So I just don't see the argument of landlords being extortionists really realistic in most markets because of that reason, like you have to you have to go with the market. And if the markets not willing to pay for what you're putting out, then then you have to reduce your prices.
Brandon Hall 38:35
Right? You have to. And again, this is this is fair, it's fair because a bank has to make a choice on whether or not they're going to lend to you. Right? If you don't have enough capital, if you don't have a great financial standing, then the bank's gonna say no, I'm not going to lend to you this now you're forced into the renter pool and you're you're subject to those supply demand factors. And there's supply demand factors on the acquisition side, like if you're you're trying to buy a primary home, there's the same supply and demand factors there. Why is it fair that I'm going to just go and sell my home for $600,000? When I bought it for $500,000.03 years ago? Why is that fair? Well, it's fair because somebody is willing to pay $600,000. Same thing works for landlords, I'm going to price my rentals where I think somebody is going to buy it, and that's going to be higher than the mortgage payment, because I'm trying to make money, right? And you can't get the mortgage payment, you can't get in to that market, because you don't have the downpayment to get into that market. So you've got to figure out how do I save the capital to get that down payment and that that is an entirely different discussion where you can get extremely political and and talk about the income disparities and the wealth disparities and in different things like that, which we're not going to get into, and we might be doing this podcast a disservice by not getting into that, but I just, we're just trying to point out the fact that you have to have that downpayment. If you don't have that downpayment or you don't have a good financial standing, you're not going to have access to the acquisition piece to the homeownership piece. So you're going to be forced to that renter pool. And now you're subject to the supply demand factors of location amenities modernise, and what landlords are trying to price their units
Thomas Castelli 40:13
at. Yeah, you know, there's another, there's another point to be made here that there's some people out there who are who are worried that rental rates have kind of skyrocketed over the last year and a half since 2020, the entire pandemic. And is that fair? And the bottom line is yes, because it is, again, supply and demand. And what you're seeing is, rental rates aren't really increasing in all markets, there are certain markets that are increasing more rapidly than others. Because you have an inflow of population, you have an inflow of migration, the net migration is positive, and more people wanting to rent the same supply. So right, there's a fixed supply of properties. And there's now more renters coming into that market. And because there's a fixed supply, those renters are effectively bidding up those rental prices, because of the supply and demand factors. So what you're seeing is you're seeing the rent increase in a lot of the southeast markets or southwest markets, because people are moving from California, people are moving from New York, Connecticut, New Jersey, down to states like Florida, or North Carolina, South Carolina, all these Atlanta all these places, and that you're seeing these rental rates be pushed up in those markets, because people are trying to escape the highly tax markets, where there's an overall higher cost of living, like states like New York. So
Brandon Hall 41:29
yeah, and I have read some articles where people are like, Oh, I've been staying in this rental unit, and I was paying, you know, 1000 bucks, and the landlord just turned around and jacked my rent up to $1,300. Now I have to move and that's not fair. And again, it is fair, it's totally fair. In the arguments like Well, there was nothing that changed, right, there's no additional amenities, the rental unit hasn't been rehab, you know, it's a safe place to live. But it's, they're just jacking the rent up, there's nothing has changed, they're just jacking the rent up. But something has changed. Right? What has changed, there's more people coming into the area, there's more demand in the landlord knows that somebody might be willing to pay $1,300, that's going to increase the landlord's cash flow by $300 a month. And a landlord is going to do that because again, a landlord is profit motivated, they want to make money on the investment that they've made. And so if you're paying 1000 bucks a month, and all of a sudden, your rents get jacked up, and you're now facing the real possibility of having to move or pay this higher rental rate, and you think it's unfair, that's the wrong way to think about it, you got to look at it objectively, more people are coming to the area, the landlord thus feels like they can increase it to $1,300. Or maybe, maybe more people are not coming to the area, maybe more jobs have not been created. Right. So the landlord increases the rent to $1,300 a month, you can't afford it, you move out. And then it turns out, nobody can afford it to the landlord sits there with a vacant unit until they decide to lower the price so that somebody can afford it. So maybe they lower it to 1250. And now somebody rents it, or maybe they lower it to 1200. And now somebody rents it, just because the landlord's jacking the rents up again doesn't mean that you have to pay, you can move out, you can go live anywhere. And it's a it's a pain to move, I get it, but you can move out it, this is a free country, you are not forced into any of these agreements, and you're not forced to stay there. You might be forced to go to a different location based on your budget. But that's the reality of supply and demand. And that's the reality of business. If the landlord decides to increase price, you have to make a decision, do I pay the increased price do I move out. And if nobody else can afford that increased price, then the landlord is going to be stuck holding the bag. But if the landlord confident that at least one person will rent, then the landlord wins, and the one person wins, because they've just created a mutual agreement. Everybody's happy. Right? So we have to think about like that. You can't it can't just be this. It's not fair. It's not fair. It is fair. It's business. It's supply and demand.
Thomas Castelli 44:11
Yeah. And if it was so unfair, you wouldn't see you wouldn't see, you know, 32% of the nation being renters. You just wouldn't see it if it was really truly, quote unquote, unfair, because no, no one would pay rental prices and landlords want to make money and they wouldn't go and become landlords. And I just, it's hard to say that it's unfair when you know, when there's 32% of the nation paying for this service. Like if the service was that bad, then no one would pay for it to be a bad product.
Brandon Hall 44:37
Right, right. Now, you know, I know that the income disparities I do actually want to touch on that just a little bit. But before we do before we do I want to give you an example that might help help kind of hit this home right? Imagine you're running a lemonade stand. I ran a lemonade stand back on the Do you ever run a lemonade stand when you're a kid?
Thomas Castelli 44:58
I've not ran or eliminated But I've had garage sales. I've done similar things. garage sales.
Brandon Hall 45:03
Okay. Okay. Well, let's talk about a lemonade stand, right? Because it's one product, you got lemonade. And you've got these little cups. You're selling for a buck each lemonade stands us probably 25 cents, but inflation, you know, all that stuff. So a buck each for all these cups of lemonade. You get like one or two people showing up, right? So you sell $2 worth of limited. Like, man, why is nobody showing up? I'm going to decrease my price to 50 cents. Okay, and then you you blast it out on social media, Hey, I've decreased the price of my lemonade to 50 cents a cup. Now all of a sudden, you got 1015 20 people showing up right? You get a rush of people, because now they're like, Hey, I wasn't willing to pay $1. But I am willing to pay 50 cents. That's cool. I'll come by your lemonade for 50 cents. So you got a whole bunch of people lining up to come to your limit your premium lemonade stand your premium lemonade. So you're pouring all these cups, right? You're pouring, pouring, pouring? Like, yeah, making money got the 50 cents going, Whoo, this is great. But then you realize I'm getting low on lemonade. So my supply is decreasing rapidly. I'm getting low on lemonade. But I look at the line. And I go, Oh crap, there's still 20 people in line. But I don't have 20 cups left of lemonade. I only have 10 cups of lemonade left. So now I have a choice, right? I can continue to sell it for 50 cents. And the 10 people just won't get lemonade, or I can increase the price to 75 cents. And the 10 people that say I really wanted to pay 50 cents, that's not fair, I don't want to pay 75 cents. Well, they just opt out, they decide not to pay. So they leave. But you're still left with the 10 people in line, and you still got 10 cups left, you still left those 10 people in line who are willing to pay 75 cents. So now you're making a little bit more money on the last bit of your lemonade. The same thing works with real estate. It's the same supply and demand factors. If people are lining up at the door to rent a unit, we're going to keep ticking the price up until there's only a couple people left willing to rent that unit. Because I only need one person to rent it. I don't need 15 people to rent it. I'm only rented to one person. So I'm going to keep ticking that price up to figure out where that one person's maximum is. And that's just business. That's the way that it works. Every business is like that. Every single business is like that. If you think that that's like mind blowing or unfair look at Apple, what have they done with their iPhones over time? You can buy an iPhone way back in the day for like 300 bucks. Now they're $1,200 What have they done, they just keep ticking up the price. Right? They know that some people are going to defect and leave and go buy a different type of phone. But it doesn't matter. Because now they have less people paying a higher price, which increases their margin at the end of the day. That's how business works. It's interesting how it works. Without getting too deep into that, but that that that's that's life. Every business is like that literally every business is like that. Yeah, unless you're a charity.
Thomas Castelli 48:13
And look, landlords are not charity. So they're basically lords and
Brandon Hall 48:17
not most landlords. There are there are some landlord charities out there. But most landlords are not charities. So kind of along these lines, though, you know, there is an income disparity, there's a wealth disparity in America right now. There are people that have absolutely crushed it during the pandemic, and there are people that have absolutely suffered during the pandemic. And in the the people that have suffered have been displaced because those rent prices are going up. Because the people that are crushing it can afford it. And in that is something that I think needs to be solved. I don't know how you solve that. But I don't think that you can also pin it on landlords as their responsibility to solve it.
Thomas Castelli 48:54
Yeah, it's definitely landlords, it's probably a systematic issue having to do with education and, and all that type of stuff. But it's You can't blame landlords for that for sure.
Brandon Hall 49:02
Yeah. And I mean, truly, I wish that there was no such thing as poverty, I wish that every single person could live an amazing, safe, financially secure life, and that would be great. But it's not the landlord's responsibility to solve that. The landlord's responsibility is to himself and his family, or herself and her family in to create financial freedom and financial security for himself or herself. And to do that, again, you're putting that price as high as you can go as high as the person's willing to pay for it. Just simple business.
Thomas Castelli 49:35
So the good news is to if you do want to become a landlord, it's really never been easier. And it's never been easier over the last handful of years. It's not just right now I mean, look, the information that you need to become a landlord the education you need is out there now in the form of books, podcasts, YouTube University, as some people call it, call it all these sources can teach you how to do it. So in other words, what you need to do to actually become a landlord that information is easily accessible. In addition, if you do need help coaching, all that is also more easily accessible in today's marketplace. So the resources you need to get started are there. And now you also have other things, other resources that make it easy to your communities, on platforms like Facebook and bigger pockets that make it easy to network with the key team members, you will need to become a landlord. And that includes agents and wholesalers, these are people going to help you acquire properties, right? Then they have property managers and lenders, all these people can be accessed and you can network with these people via these communities. So it's no longer back in the day where you have to pull out a Rolodex start calling people to network and go to events and all this crazy stuff, you could do this all generally from the comfort of your own home. Now also on the acquisition front, it's never been easier to vet markets or properties either. Think about it if all the information on markets are out there. In fact, there are groups of people already did a majority of this research for you. And you can either access it for free, or you can pay a nominal amount of money to receive professional research reports telling you which markets are performing better than others, right? And then, okay, you want to go buy a property, you find the agent because you network them through the internet. And then you can actually go and see that property on Google Maps. I mean, when in history, have you been able to go I can view a rental property in Cal I live in New York, go view a rental property in California, although I'd never buy in California, I'm just saying it's all the way across the country? Very easily. I just dropped my little yellow guy on the map, right in the Street View. And I could see that property, I could see that neighborhood neighborhood. Is that neighborhood? Does it look really rundown, is that an area that I would not want to invest in? All that can be easily ascertained? Oh yeah. And by the way, if you're working with an agent, they can actually walk the property go through and then send you a video of the property or do it live via FaceTime or zoom, whatever. All these things make it easier. And it just never been easier to do this. It's never been easier to put together and assemble the team of people you need, and then go out and actually execute the tasks required to acquire property and then manage it.
Brandon Hall 52:08
It's also never been easier to get the downpayment. It's never been easier to run a side business. Look, I get it, man, you're at work, you know, you're working 5060 hours a week, you're slogging away, or you're working 3040 hours a week, or you're working 20 hours a week because you're a server in a restaurant, they've cut all your hours. Look, the reality is, is that we all have the same 24 hours in the day. How does one person go online and create a big digital business where another person sits around and complains? I just it's very difficult for me to feel sorry for somebody that complains, but they have an iPhone, they have an Instagram account, they have a Facebook account, they have a tick tock account, that's all you need. That's literally all you need. I mean, like, like, like, I look at my wife, right. And she does a great job with our kids. stay at home mom. Okay, so she definitely has a little bit of a different lifestyle than somebody who has to go to work and then come home and take care of their kids. I totally 1,000% understand. But she started pressing flowers. And she started taking pictures of those flowers and posting them on Instagram. Okay, and then she created a business called Bonnie's blooms. And now she's pressing people's flowers with like doing five to 10 of these a week. And she's charging $500 per instance. And she's doing five to 10 of these a week. Okay, now, this took her multiple years to build, it took a long time to build, but that's where she's at now. And when you look at that, you realize pressing flowers, that's not something that you think about as being able to make money at, right. It's just not, it's just doesn't even like cross your path. But she was just passionate about pressing flowers, she started taking pictures of it, tell him telling the world that she's doing it. And in the world comes back to where it says okay, hey, there's some people out here that will pay you to do this for them. Because they don't have time. They're emotionally attached their flowers, and they want to preserve them. And they don't know how to do it. So they're willing to pay somebody to do it. But point is, is that you can figure out ways to create online digital businesses that help you increase your cash flow, even while you're working. Even while you're taking care of your kids. It's going to be a slog. No doubt about it. I remember when I started this business, I was literally working 80 to 100 hour weeks, every single week. I did that for about a period of two years. Christmases. I worked Thanksgivings I worked every single day. I did not take a vacation. Tom was part of that too. He took your first vacation this year.
Thomas Castelli 54:52
Yeah, I took a week to Florida before that, you know less Christmas I was on and I had to get kicked off because they are
Brandon Hall 54:59
admin kick them off, go home, removing your access. But that's what it takes folks, like we all have the same time in the day. So why do some people figure it out? Well, some people are just willing to slog it away. And that's not I don't want to beautify hustle culture by any means. I mean, it's it's unhealthy for sure. That I mean, that was not a fun period of my life. But now we're at a point where we can kind of sit back and reap the rewards, we can have a little more structure, and a little more strategy to scaling this business out. And if you're willing to put in the time and the effort and the energy, if you're willing to put down Netflix, if you're willing to pick up a book, if you're willing to figure out how to monetize your Instagram, following your tick tock following. If you're willing to talk about something that you're passionate about, people are going to come back to you and pay you for it. And so, you know, it's never been easier to be a landlord. As Tom mentioned, it's never been easier to find property, it's never been easier to assemble a team. But it's also never been easier to save that downpayment up. And if you're sitting there like, Ah, you just BS like, I can't know. I'm way too much. You just you've got big blockers going on, because you can lockers, yeah, it's just you got you got these big mental blockers, they're just holding you back. Because you know, you can 1,000% Make more money than you ever have than anybody ever has, in today's digital age. All you need is an iPhone and an Instagram account.
Thomas Castelli 56:26
I think you'd even be even easier than that. If you have a skill set that people are willing to pay for, you can go on a website like Fiverr, you go on a website like Upwork. And you can go ahead and put yourself out there. And that's a marketplace where people will come to you. There's already people on that marketplace, all you have to do is put yourself out there, literally put yourself out there. And you can start making money based off a skill set that you already have. And you could do that on the side. And like Brian said, Will you have to put in some more hours? Yes. But you know what, that's what you may need to save up that money to get that down payment to buy your primary residence or buy your first investment property. And it cannot be easier than that. It cannot be easier than that. And again,
Brandon Hall 57:05
I think there's a lot of like influencers out there that glorify hustle culture, right? Oh, hustle, hustle, hustles life, dude, hustles not life, all right, but there is a means to an end. And you might have to hustle hard for multiple years to get something off the ground, that can then pay you dividends back later, right? And can can help increase that additional cash flow. So that you can save that money. If you really have a big goal. And you really want to achieve that goal, then what's stopping you you're stopping you, your own limiting beliefs are stopping you, everybody has the same 24 hours a day, man, you just got to figure out how to best utilize yours to be most effective to meet your goals.
Thomas Castelli 57:46
Yeah, at the risk of running a self help episode here, look, you know, some people get stuck in their ways, man, they get stuck in their comfort zone, they get stuck in their habits, the routines, they continually go on over and over and over again, I feel like I experienced this personally during COVID, I got stuck in a routine and I had that myself out of it. And sometimes that routine, you have to say you know what I need to add something to my routine, I need to remove some of these bad habits. Maybe it's watching Netflix, or watching too much YouTube videos, whatever the case is, and replace that that time that you're spending with spending some time doing some consulting side work, right, that's going to help you increase your income to be able to do these things. And that takes energy. And it's uncomfortable for people to do that. But sometimes that's what you have to make. That's the sacrifices you have to make, or frankly the sacrifices other people willing to make to get ahead. So, you know, in this age, you're really standing in your own way, if you're not getting out there and putting yourself out there to make more money.
Brandon Hall 58:40
And there's really no excuse. I mean, you can come up with all the excuses, but I just I just don't believe in the excuses. You know, I mean, what one that I've heard a lot is, I don't have time because I've got kids. But again, like my wife is a perfect example of this. I'm gonna keep singing her praises she she watched our kids 24/7. And it's a huge job. If you've ever had kids, you know how crazy of a job that is. And if you've ever like, you know, I mean, if you have kids, you know, you go to work, then you come home and you you basically go to work again, because it just never stops, right? It's just just constant. So what am my wife do? Well, she was like, hey, I really want to build this business. I want to grow this business. But I don't have time. And I said you have time, you've got to think about the solutions, right? So what's the problem? Well, the problem is I've got kids, now I've got to spend every waking moment with them. Okay, so when do you have time? Well, I've got time at 8pm. Once the kids are down, that's one solution. Another solution is to hire a babysitter throughout the week to take the kids off your hands. Well, how much does the babysitter cost? Well, you factor that in, okay, if I if I hire a babysitter, and it cost me $600 A week, next month behind maybe it's like $400 a week, but you know, costs are somewhere in there. 600 Let's call it $600 A week. Well, what does that mean? If you're running the business right now I've got an expense that I've got to be able to cover So the question is, if I hire this babysitter for $600 a week, does that give me enough time to make $1,200 a week, because then it's a positive decision, right? And it makes sense. And now you've created time, you've delegated some of your life. Now, if you're not willing to hire a babysitter, because you want to spend every single waking moment with your kid, dude, that's your decision. But you're not going to have that additional cash flow. And so then you can't go and complain that life is unfair, that the landlord's charging you this increase rent or that you can, you can't complain, you've made that decision actively, right? You have to think about all the different things, there's always a solution to your problems, you got it, you got to be able to think about your problem and identify solutions to get where you really want to be. It's really as simple as that. So let's, let's wrap this up. And for all of you loyal listeners out there. Thank you very much for sticking with us on this one. I hope it was entertaining episode. And I hope that it kind of gives you a limited perspective on either side of the coin, whether you're a landlord or you're a renter. And I know this wasn't a tax episode, we'll get back to tax on the next episode. And, you know, I just don't want to see people on Facebook, I don't want to see landlords on Facebook saying, oh, yeah, it's so expensive to be landlord, stop, stop the BS, man, let's just talk straight, right? We're in this to make money. That's what being a landlord about. We're in this to make money. And as long as you are being an ethical landlord, somebody that provides a solid place for somebody to live, you want your tenants to have a good experience, cool. There's nothing wrong with that there's nothing wrong with making money as being a landlord. The people that try to tear you down, are people that do not understand the economics of being a landlord. They don't understand the supply and demand. They don't understand the risk factors that banks are looking at. They're just looking for somebody to blame for their own decisions. And that's not on you to solve. So stop trying to solve it. Just be honest, yeah, I'm in this, I'm in this make money, man. That's why I'm being a landlord. Well, I wouldn't go and invest 200k in various properties to make $0. It makes literally zero sense. So we're in this make money, don't hide from that fact. It's not a shameful thing. It's a great thing. And the people that are gonna complain about it, you can't change. You can't change their perspective. They have to change their perspective on their own. They have to listen to podcasts like this, and maybe get a little bit curious and start doing their own research. And hopefully, they realize, hey, most landlords are not bad people. We're out. We want to create great experiences for our tenants, we really do because I want my kids to stay long term I don't want to turn over. But that's not going to stop me from increasing rents. If I feel like I can get a higher price. This is a business. Simple as that. Thanks for listening to today's show. If you enjoyed the show, please find us on iTunes and leave us a review. You can also email us at contact at the real estate cpa.com with any feedback or topic suggestions, we are always taking on new clients and with the new tax laws in play. You really don't want to navigate this alone. Let us help you save money on taxes with your accounting and CFO needs. To become a client navigate to our client page at the real estate CPA calm and fill out a webform with as much detail about your situation as possible. Thanks so much for listening. Have a great rest of your week.
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