Click here to listen to our Podcast!
Home Shows & Notes Articles Tech & Tools Store Become an Insider FREE LOGIN

Episode 029 - You’ve Got Questions and We’ve Got Answers: Q & A (Session 1)

guests iras landlords llcs Mar 15, 2019




Please use our Affiliate Links whenever possible and help support the show.  Thank you!

Recommended Article or Blog Post Related to This Week's Podcast:

Recommended Podcast Episode that is paired with this one like a Fine Wine:

Get This Episode's Show Notes in a pdf form...


Go To Our Download Page 

Show Transcript

[00:01] Over the last two centuries, nearly 90 percent of the world's millionaires have created their wealth through real estate. Here to tell you how you can ride this wave with less risk and less capital while creating greater income, is your host, best selling author and Speaker, Michelle Russell.

[00:21] Hi, this is Michelle, the Master of Money Mindset, and you are listening to the Short Term Rental Revenue Podcast...

and in today's episode, [00:30] we're going to be answering your questions with a Q and A session. Yeah, this is the first Q and A session that we've had, but we've been getting a lot of emails, a lot of messages, a lot of questions coming from you and we've been answering them and a lot of times I get really detailed but I thought, you know what, I better read some of these on the air because if one person asks, usually there are more in the background who just haven't come out and ask those questions. So that's what we're going to be doing today. Now I'm not going to get super duper heavy into the LLCs because guess what, Kara Lita Up, my brand and attorney is going to be on next week's show and so she's going to be answering a lot of legal questions that people have about LLCs.

[01:19] Although one of the questions that I'm going to talk about an answer today has a little to do with it. We're going to let her handle all the legal stuff because she is a genius when it comes to law obviously, and Carolina is going to tell us to the difference between different types of contracts so that you know what type of contract to bring with you. Because if you have an LLC, if your company is already in an LLC and that entity is protecting it, then you have a business renting the space. So it's, it's different than a residential lease. It's now a business, so you have a corporate lease, but it's pretty simple once you get used to it and as long as you have attorneys around you and people to help you out, it's always worth the money that you pay to invest in those people and the advice that they give you.

[02:13] So, um, she teaches law at the school down in Tucson at the University of Arizona. So I'm super duper excited about that. Today's show is actually brought to you by audible. You get your free audio book download and a free 30 day trial. If you go to audible forward slash s t our revenue and there's over 180,000 titles to choose from when you go there guys. But whatever books I recommend or something. And that's how I read so many books. Like I said, I've been an audible customer since 2006 so like a long, long time and I have well over 600 I guess 650 books more than that in my library right now. And I listen to books all the time. I actually have a trip coming up and I'm traveling out to California and I drive and the majority of time I'm driving anywhere.

[03:11] I'm listening to audio books and you can too, readers are leaders, so I want you to get your audible account today. Go out there and get it today. So remember it's audible forward slash str revenue and you can get your audible books, you're free one and then your free 30 days and they have a bunch of different channels. You guys are going to love, love, love, they're audible app on your phone, you're going to love it. I also want to give a quick shout out to h c s m s d who gave us a five star review and said, fun show. I love how Michelle shares personal stories and you can feel her energy and love for what she does. Thank you. Thank you. And I love doing this show. It's a lot of fun. So if you like our show, if you're loving what you're hearing, please leave us a review or comment, leave us some questions, email us.

[04:06] That's what this whole entire episode is about. So we really want to get to you and really help you out, but we need your feedback and leave us a review. By all means, leave us a review. We had our contest and our contest winner got that free cloud cam. But don't be afraid to leave a review now. You know, don't wait for the next contest. We get everybody in there who was in there before. So leave us a review if you can. All right, so today's podcast is the Q and a. And the first one I wanted to go over, the first question I wanted to go over was actually from the person who won the cloud cam. And it was kind of cool because Jasmine, um, it wasn't because of the question. Obviously we put everybody's name on a sheet of paper and drew the names separately.

[04:53] But Jasmine's question was really kind of cool because she was asking how I talk to landlords and like, like behind their back or like in front of their face. No, I'm always, I'm always talking to nice to landlords. I am a landlord. So here's the deal. You know how to talk to a landlord when you're a landlord. There's a little book that I created, a little ebook that I let my landlord's download and I should put access for that for you guys so that you can get access to that book too. But basically that little ebook gives them all the reasons why they want to rent to me. You want to rent to me, you want me on that wall? You need me on that wall. That's pretty much how I talk to landlords because I know what they like and what they don't like because I was a landlord.

[05:41] One of the hardest things we have to do as landlords is find good tenants. It's extremely difficult to find good tenants. Even when you do screenings, you still don't know. So if I can find a business or a business person who's going to rent an apartment from me and take care of the apartment like I know I want it taken care of, then by all means I would totally go with that person. So you guys have got to remember that when you are renting properties from landlords, you are giving them something that they want and it's something that they desire and something that they're looking for. I mean, they dream of a good tenant, someone who's going to pay them on time every time. And you also have a lot more to offer them. So, uh, Jasmine's question was, what do I say? But here was my answer and I'm going to read these a little bit and elaborate on them because obviously it was my answer and I wrote it, but what I said was first, don't give them a heads up on what you do before you go to the unit.

[06:43] So you don't want to tell them, hey, yeah, um, my name's Joe and I really want to take your place and rented out to other people and like, he really don't want to do that. Guys. Why? Why don't you want to give them a heads up? Because first of all, you don't want them give them any ideas. Like maybe they should be doing their own AIRBNB, right? You want them to know that you're a professional and you want them to know that you have all these processes in place, like you have already have a cleaning crew set up. You already have your maintenance guy, you already have your marketing team. You already have a process in a system in place that is going to get the people to you. They can't duplicate it. They don't know how to duplicate it, so they don't want to know how to duplicate it, but you don't want to give them any ideas because if you go in there saying, yeah, I can take your place, rent it from you and make another 1500 bucks off at a month, then what are they going to do?

[07:48] They're going to be like, well dude, why don't I just do that? Because if somebody ever came to me and said, yeah, I can take your place and make money off of it, I would be very curious in knowing how they were going to do that and then I would just do it because if somebody could tell me how to make more money off of my property, I would do that. I would learn how to do that. But here's the deal, you, you want to be honest, but you want them to know that you are a professional. You've got all those systems and everything in place, right, and they can't duplicate it themselves. You want to make it seem as if it's going to be really complicated for them because you already have these clients under your belt. You already have these crews under your belt.

[08:32] You already have this system in place and they can't duplicate it. Remember guys, you're an investor now. So imagine if you were an investor, would you go to every property that you're buying and explained to the people that, hey, you know, if you just took this property and put this much into it and then put it on the market, you could probably resell it for this much money. You're not, your job is not to teach everybody how to invest. Your job is to make money investing. Okay? So yes, you're, you're, you want to be honest and everything, but don't give away all your secrets because this is literally how you make money. This is like those guys. Remember when the sun shades on the car windows, when everybody started putting the dark shades on the cars in Arizona, it was really kind of crazy because it became like a thing.

[09:26] Everybody started doing it and I remember talking to this guy who owned this big company and they would shade everybody's windows that will put these dark film over the windows. And he said that he went through through people so fast, he would teach people how to do it and the first thing they would do is go open their own company and he said like four or five of his employees had gone out. He had taught them so well, all his little tricks and secrets about how to apply it and how to get the materials for it, he taught them so well that they all became his competition. Do you want everybody to become your competition? No. You don't. You never give away all your tips and tricks. Never, ever, ever. Okay. I mean, I could go into a bunch of different things when it comes to investing and, and accounting and everything else, but nobody ever should know everything about what you do and that includes anybody who's in your business.

[10:26] Maybe your kids or your husband, obviously that's okay, but no one else, no one else should know every step of what you do because that's your intellectual property and that's how you make money and you don't want to create competition, so it's not being dishonest. It's just not creating more competition for yourself. Okay? Now, like I said, there is enough to go around, but if you went to every single person you want to run from and taught them how to do it, you would have no one to run from. So don't be stupid. It's like, don't, don't give it away. Don't give away the whole thing. It's like, yeah, sure. Take the cow and the milk, you know? No, this is how you're making money, so don't give it away. So when you walk into the place, they're going to have no clue. They're going to think that you're just an average renter.

[11:19] Okay? You're going to go in, you're going to check it out. You're going to make sure the location's great. You're going to make the, make sure the layout is great, and that is not funky. You're going to make sure that even if it's not the cleanest right now, that with your cleaning crew and your guys that they can go in and make this place look amazing and that's what you want to check. Location obviously is number one when you rent, location is crucial. If you're by a beach, you should be as close to the beach as you can possibly get. If you are buying an amusement park, you should be close to an amusement park or right in between the two best amusement parks, right? You location is key. Why? Think about these things. The people who are going to be renting from you are going to the city for a reason or going to your location for a reason.

[12:06] If you're on a mountain by a ski resort, you want to be close to the ski lift. Um, you want to be close to airports, you want to be close to malls and food. You want to be close to the attractions that people are. Therefore, if you're in Florida, you want to be close to beaches or you want to be close to the theme parks, your location is going to be crucial. The farther away you are from those things, the less money you'll get and the harder time you will have filling them up. Okay, so now if you are, let's say in Tempe or a college town, you want to be as close to the university or the college is, you can be. Why? Because anybody going to visit their kids, going to that university wants to be pretty close to their kids. They don't want to be 20 miles away, right?

[12:53] You want to make sure that your place is not a destination. If you can help it, okay? There are destination short term rentals. That means if you're in a city in the middle of, you know, I don't know, the middle of Oklahoma somewhere, right? You're in the middle of Oklahoma somewhere not close to anything. Why is somebody going to stay by you? Are you right off the freeway? And there's a long drive in between. I mean there's gotta be a reason why somebody going to come see you and your place can be an attraction, but the majority of people are going to stay close to something or they're going to stay in a place where the, they have amenities that make up for being a little bit farther away. So your, your things that you need to look for our location and then what? Making sure that the place can be amazing, amazing, amazing.

[13:46] Because when it's super clean, when it's really well furnished, when your pictures are awesome, when you know you've, you've, when you've really hit it, you will have that place almost always booked up. Like this month, February is our most favorite month here in Arizona because snowbirds are here, right? And like there's always stuff going on right now we are, we've got the baseball is starting knobs, so spring break or spring break, spring training is coming in. Um, so all the ball players come in, all the people come from all over the place so that they can watch all the guys practice right down in Tucson we've got the gem show. These are really, really key attraction, so we want to be close to those things. We want our short term rentals to be close to those things and as as much as we possibly can. Now that doesn't mean that something way out in Queen Creek is not going to sell.

[14:45] I mean Apache junction that that population of that town doubles in the winter time because a lot of snowbirds go there. A lot of older people are silver visitors go out to Apache junction and that doubles, but you've got to know where people are going and that's where you want to be. Okay. And you want to make sure that your place looks better than anybody else's inside and out. Okay. Especially if there's going to be any kind of outdoor living. If it's in a warm space, like a warm state like Arizona, Hawaii, Florida, you want to make sure that they, that the space outside can be enjoyed as well because people, when they come from the winter places and they come down here, they want to be outside. Believe it or not, they're like, hey, I don't have to have a snow suit on. When I go outside I can actually go outside and it's 70 degrees.

[15:39] And even when it gets dropped us cold, we can always tell the snowbirds cause they've got shorts and flip flops on and it's like 50 degrees out. We're all freezing with sweat shirts and jackets and the snowbirds are in their flip flops. And we're like, man, those people are crazy. It's cold outside. So you want to make sure that your place is one of those places. Okay, so now you walked into the place and you took a look around and it's exactly what you wanted. So you want to turn to the person who's showing you the place and let them know, say, hey, this is great. This is exactly what I'm looking for. I can see how this is going to work for me. Let me tell you a little bit about myself. My name is, you know, so I would be like, my name is Michelle Russell.

[16:24] I own a company called island B and bs and what I do is I host corporate travelers and snowbirds coming from the north in a variety of properties all around the valley. And so I'm constantly looking for other places that I can rent so that they can have these people stay for a short amount of time, usually less than 30 days. So then I explained what I do, right. You're going to explain what you do to them and you're going to let them know that you have a full time cleaning staff who will clean their place like six times a month or more. Know what your average is before you walk in there. The majority of time our places get cleaned on average more than six times a month. And you want to let them know too that you have a maintenance crew, a full time maintenance crew that will handle everything from putting the air filters in.

[17:17] Changing the air filters every month to fixing any leaky toilets or sinks and that you take care of the problems. You won't be calling them, right? You're going to take out that this tool belt, this arsenal, like you know how Batman has his all his favorite tools. You're taking out your tool belt and you're showing them all the really neat gadgets. You have your cleaning crew or your maintenance guys, the fact that you're going to be paying for their insurance on their property. Little do they know that running a business, a short term rental business out of a property is going to make their homeowner's insurance and the renter's policy no good. It's not going to work. So you're going to offer without telling them that you're going to offer to pay for their insurance and you're going to add an extra layer of insurance. You're not just going to use is $1 million policy because remember that's only a liability policy and it's only going to cover so much, so you're going to need that extra insurance.

[18:18] You can find that information on short term rental, there's a bunch of stuff you can find on there guys. Use, use, use, use those tools. Go on there. I mean we've got tons of free stuff on there so you should be on there all the time checking it out, seeing what's new and seeing the information and grabbing any freebies you can. There's a ton of free stuff on there, so right, so you're going to take out your arsenal, you're going to tell him all this stuff that you can do and basically you're going to entice them. You're going to say, look, I am going to be the best tenant you ever had. I'm going to pay you on time like no one else. You're going to get paid automatically through our bank system. You're never going to get a phone call from me unless something major has gone out.

[19:04] And that major means anything over $500 like the AC. That would be the only time I would call you. But if there's a leak, not going to call you. I'm going to fix it. If there's a toilet, you know that's running, I'm not going to call you. I'm going to fix it. I'm going to make sure that the air filters are changed, right? And your place is going to be neat and clean all the time. Professional cleaners mean what they mean. Your place is awesome. You don't have to worry about some hoarder being in there and trashing the place or it smelling like cats or dogs or feces or whatever the heck you know that not, that's not going to happen. And what else is going to happen is you're going to get a lot less wear and tear on everything. Your carpet's going to get less wear and tear.

[19:49] Your appliances are going to get less wear and tear. You want to give them that arsenal, that tool belt that you have of all the wonderful reasons why they want to rent to you. So you're going to pull all of that, right? You're going to pull all of that out of there, okay? So what you're gonna do is you're going to win these guys over. You're going to win them over with all the amazing stuff that you do, and you're also going to let them know and make it sound as if you've got this well oiled machine that they cannot duplicate. Why? Right? All the reasons I just told you at the beginning of this episode, right? You don't want them duplicating that. Your job is not to go out there and train everybody to do what you want to do. You need these guys.

[20:35] This is your bread and butter too, so don't go. Don't be given away the cow and the milk, right? Don't give the whole thing away. You want them to know what you do and understand what you, but you really want to make yourself sound like the professional that you are or that you're going to be. Okay? So even if you don't, even if this is your very first property, I don't care. You've got a well oiled machine. You've got it all set in place and they cannot possibly duplicate it. So he's going to want you, he's going to need you. He's going to understand that you are the absolute best choice. The only logical choice to go in and rent his property. Now, if this is not your first property, show that you know, here's the other landlords that I've used and have some kind of testimonials from them that said, hey, Michelle is like the best tenant ever.

[21:31] We love having her. I get testimonials from all the people I ran from and the majority of people I rent from a really good friends of mine. The first ones were, so a lot of people when they go on my website, they're like, hey, I know you know them. Yeah, because I rent from my friends. They were the first persons that I talked into doing this when I started losing my revenue. So here's the deal. If you guys haven't listened to my other episodes, I'm just going to touch on this really quickly. I'm one of those people, I'm a dollar pessimists. I believe that we're heading for another financial adjustment when it comes to real estate. So we had a crash before and we were ready for it. I was lucky enough to work with Robert Kiyosaki and I worked for Rich Dad's seminars and at the time Robert had told us, if you can't cash flow it for half the income dumped those properties.

[22:20] So we dumped all our rentals except for one with that my daughter was in, but we dumped all our rentals before the crash. It was not lucky timing guys. It's what you know. So I'm saying that another adjustment is coming. So what I started doing just recently, not too long ago, a couple of years ago, we started doing the same thing, including my own home. I said, okay, I know another adjustment is coming. I'm going to start selling everything off. But what happens when you sell things off? You sell your income, your cashflow goes down. So then I was like, well, that's a bummer, right? So I'm selling these rental properties and I no longer have the monthly rental income. That's a bummer. What can I do? Ha. Guess what I can do, I can do the same thing that other properties that are out in Florida. We've got a lot of short term rentals out there.

[23:10] And they're pulling in money. But guess what? I don't want to buy them. What do I, what am I going to do instead? I'm going to rent them. And so that's what we started doing was renting properties and still making that cashflow. So you don't have to own these properties, right? But here's a trick that we do too, is we let them know that the guests that are going to be seen there are screened and their government ids are kept on file, right? That there's no parties allowed, there's no smoking, there's no pets, that the typical state is less than a week. And they often even use the appliances or the laundry or the refrigerators, right? So basically what we let them know is that we're like a property manager without the cost. Like we've saved them money. If they were to hire somebody like us, we would be like a property manager.

[24:01] We'd be putting people in there and making money for them. But instead we're doing everything and they're getting everything. They don't have to pay us. We're paying the rent and that's all they want. And we're just as good as having a property manager. So that's what you're going to do. Make sure that when you go though, you have your checkbook ready and that you have your lease addendum there. So you want to have an addendum that says that you can sublet the apartment that clearly states what you are going to do with that apartment. And next week, I know when we talked to Carol Lita, we are making up just a little makeshift one. It's not going to be legal in every state, but it's something that you guys can look at and base your own off of a little lease addendum and that's going to be a next week's episode.

[24:52] So take a look out for that. Okay. But you'll have your lease of denim with you and you'll be able to sign on the dotted line right then. So that's what you should be looking for that. That kind of gave jasmine her answer. If there's something you want me to elaborate on, something that you want me to go more into, just email us your question and ask us and we'll get into it even in more depth for you if you need to know. But that's pretty much all we do. I mean it's, it's pretty cut and dry. It's pretty easy. We have a website that we have set up and like I said, I have a little ebook that I have that I've created for landlords and we actually market out to landlords. We are constantly looking for landlords, so it's something that we do just like Maria goes out and she has her postcards in her list looking for, um, people who are selling their homes.

[25:46] We're constantly looking for landlords, so we market to landlords. It's something that we do and you should be doing it too if you're growing your portfolio now, if you only want to plan your portfolio to build one property, it's time like one every three months or one every six months, then you definitely don't need to do that. Okay. You can do that just by looking on craigslist, just by looking on Zillow. I mean there's a ton of places where you would find, uh, an apartment for rent, right? So that's where you're going to find your landlords. It's super duper easy. It's not that hard. It's really not the people who make all these excuses. I mean, shoot, just keep making excuses because there's always going to be an excuse to not do something. Instead, if you really want to be successful and you want to do something, f the excuses, guys, just put them in a drawer somewhere and just do it.

[26:40] Stop making excuses for yourself. You, oh, people won't, I don't have any background. People won't like me. I don't have the credit history, blah, blah, blah. Keep trying. You know there's going to be somebody out there who takes a look at you, who when you arrive looking nice, dressed nicely, looking professional, and you walk in and you have a business card and you talked to them and hand, they're not even going to check your references or something when you're first doing it. I mean you get, believe me, you will look out if you are adamant about getting it done. I have a friend Gabriel Brown, he lives in Las Vegas and he owns a company called civics credit solution and Gabriel, his story is like amazing. Like if you ever sat and talk to him, you would be totally amazed at the things that he had done.

[27:29] Gabriel was at one time, homeless, homeless is an home, no home. Right, okay. He would go out, he lived in Las Vegas and was raised in Las Vegas and he would go out to businesses and knock on the door and say, hey, if I hand out your business card to people and they come in, would you give me like, you know, $5 for every person I drove to you. And the business owners were like, really? This kid? Like this kid right here, what a Weirdo. But he had seen all the people standing on the corners handing out all those, I don't know what you call them, but the cards with the naked girls on them and stuff. So it gave him an idea. So get this. He went to dentists and he went to dry cleaners. He went to all these different business guys and finally a few of them said, yeah, it can't hurt.

[28:18] I mean we've got hundreds of business cards here you go, kid have at it. So he, he literally went out there and started handing out these business cards and he was like the number one dentist in Las Vegas. He, here's the number one dentist in Las Vegas, here's the number one dry cleaner in Las Vegas. They clean your, your, your clothes better than anyone else. And he would just make stuff up. He was just a kid, but get this, he literally created a business where he had an income coming in that allowed him to rent his first office space. And with the income that he had coming in the little bit, I can't remember what it was, if it was 1600 or $600 a month, but he rented this little office space and he started doing more and more and more just just helping other businesses by promoting these other business guys.

[29:08] And he was able to create his own company. And he has now a millionaire like a millionaire, like when you go to his house, I mean, he's got beautiful cars and beautiful, a beautiful house, beautiful child. I mean, he's an amazing, amazing guy. And the thing was, if he didn't have the tenacity to go out on the street and take people and just talk to people and just do it, he would have gotten nowhere. He would've stayed homeless, broke and starving on the streets of Las Vegas. That's where he would be. But the thing is, you guys, when you don't do these things, when you make excuses, I mean, they really do stink. Excuses really do stink. You've got to get out there and just do it. Just do it. Just try it. Go talk to some landlords. And so what if they say no, you're going to have a lot of nos.

[30:03] We've had a lot of no's, but you're gonna have a lot more yeses guys. The more people you talk to, the more yeses you get. And another quick story comes from a man I love is Bert Goldman. And Burt told the story of a woman who was a realtor and she didn't want to go knocking on doors or making cold calls to people to try to find properties to sell because she was afraid. She was like, oh, it's, you know, I don't, I don't do very well. I get a lot more nos than yeses, blah, blah, blah. So Burt sat down with her and said, okay, when you do sell, when you do find a home to sell, how much of a commission do you make? And um, you know, I'm just going to say, let's say $10,000 and she was like, okay, I make $10,000 and obviously it's probably more than that, but we're just going to use easy math.

[30:50] And he said, okay. So how many people would say no every time you called them, if you picked up the phone and you made a few phone calls, how many would say no? And she say, oh, like a hundred. So a hundred people would say no. Before you got one person to sell your house, you know, that would allow you to sell their house for them. You would have to go through 99 no's and then you would get your one. Yes. And he said, well, just divide that out. Each one of those is worth 100 bucks each one of those calls. Because if you have a hundred calls, each call that you make is worth $100 because 100 times 100 we'll give you that 10,000 so if you think of every no as a negative thing, then you would never go out and do it. But when he taught her how to think of every single phone call as a hundred dollars just in like a little escrow account, but you don't get it until you get the yes.

[31:53] Then she started making phone call after phone call, after phone call, and finally got to the yes, and she got better and better and better at it. It didn't take a hundred no's to get to her one. Yes. And then she started this little self contest where you're just competing with yourself always. And she was like, okay, well now it's like every 50 calls and now it's like every 30 calls. So she made more and more and more phone calls. She got more and more just you know, self confidence when she was doing something and you will get the same thing too. But the whole deal is guys, you've got to get out there and do the work. You got to get out there and do the work. That's the only way that anything works is if you're really putting it into action. Don't let fear stop you.

[32:36] Listen to the little voices in your head. Say thank you for your opinion. I'm going to do this anyway and then go do it. Just make sure you're doing it and if you don't do it, don't beat yourself up about it. If you said, you know, okay, now Tuesday I'm going to go, and then you didn't go on Tuesday or he didn't look on Wednesday. Don't go, I'm such a loser. Oh my God, I'm such a loser. I'll never be good at anything. Don't do that. Just start again where you are. Don't wait till the next Monday, start the next day and say, okay, well I'm going tomorrow. Draw the line in the sand again. Okay? Because you really got to discipline yourself. Everything is about discipline. Your rituals that you do every day, your self talk, because it's all in your head says success is right here between those ears on your head, right?

[33:26] That's where it really is. That's where the rubber hits the road. You're going to have a lot of self doubts and until you start doing this, but once you start doing it, the more wins you have, the better you will feel about yourself. And the more you know, the better you feel about yourself, then the more wins you have. It's this wonderful, wonderful system that works out that way. All right? So you're going out and you're talking to these guys. So that was question number one. Let's go on to the next one. Okay. So this question was about how to get loans if you were buying these properties. So first off, I wanna remind you that dollar pessimist here, right? I don't, I don't think this is the best time to buy unless you're getting a really, really great deal. The majority of properties that we buy are not conventional loans.

[34:20] We don't go out there, which is probably the difference between why we do an ass corban not a c Corp and also we have a lot of trust that we have. We have a lot of different things in a lot of different entities. Let's just say we protect ourself in a lot of different ways and you get better and better at this when you're first starting out. You don't have to be complicated about anything. One LLC, we'll cover it all. When you start getting more and more properties and you've got money coming in, then you want an LLC for each of your properties. You might want an umbrella LLC that covers all your properties or that runs all your properties like a master one. You might want everything hidden in trust or you know, so that there's custodians taking care of things, but then you have everything left to different people.

[35:14] So that your name's not on everything, but you don't have to get that complicated when you first start out and it's super easy to change it later on. You just have to know the direction you're going in. So we had a lot of people, so I'm not going to just ask uh, name one name, but we had a lot of people asking us about how we get launched when we buy properties. We don't, a lot of times we don't, you can only get, we can only get so many loans nowadays anyway and the loans suck and you have to go through all these paperwork and he will have to go through, you know, this and that because we're self employed and it makes it a real pain in the, you know, what to get a conventional loan. So we don't, we send out letters just like Maria was talking about and the interview with her.

[36:00] We send out a lot of letters to people and we talked to a lot of owners and we do out of the box financing, almost everything we do is not conventional. It really isn't. So there might be a subject to, there might be a lease purchase. There might be a combination of several different things. A lot of properties that I have bought and Maria too, we get for 0% interest, 0%. So it depends on how we construct the and negotiate the terms. We usually make at least three offers, sometimes four offers on that property. And we give an owner, um, just the options of getting you know, money in different ways and we'll have a whole negotiating show. I'll have Maria back on about how to negotiate those deals. But that's the reason why we don't need a c Corp because the only reason to have a c corporation is if you wanted to make the banks, you know, you wanted it to look good for the banks so you could get a lot of money loan to you.

[37:03] You don't need that. But if you want that, you can definitely go that way. A C Corp is probably better who, um, get taxed in if you are one of those people who want to borrow a lot of money, do you want to borrow? A lot of money. I mean that's really, why do you want conventional loans? You really have to ask yourself those things if that's what you're comfortable with them by all means. But I tend to lean away from conventional loans. Do you want people to know you have a lot of money? Because once they do, they go after you and do you want people to, you know, ask you and you go, Oh yes, I have 150 properties. Great. You just put a huge target on yourself because when you have money in America, like right now, especially when you have anything in America, even if you worked hard for it guys, I came from nothing.

[37:56] Like literally my mother was divorced and I'm a single mom or I remember we were on food stamps when we were young. Even when Kevin and I first got married, there was a time when he was going through school and we had our first child and I got let go on maternity leave and I actually went on the WIC program and we were on food stamps. So we, we've been there, we've, we've came from nothing to accumulate what we have. But in America right now, people don't like you when you have something that they don't have and they want it. Why? Because they don't want to do it themselves. This is America for the love of God. That was the American dream. People didn't have a dream of going to the country and collecting welfare, cross the ocean and said, oh, here's Ellis island. My dream is to collect a big ass welfare check ins is sit on my ass.

[38:50] That was not the dream. The American dream was to come here and have your own business. Give be a business owner or an investor or whatever the hell it was to do. But it was to be a person that created something of value, right? That you could share with somebody else. And that is the American dream. And that's what we do here. So be careful now, be careful. Now you want to make sure that you know, when you're buying properties that you're doing that. And honestly, there's so many different ways. So we'll have an entire episode about how Maria does that, but if you, like I said, if he really liked conventional loans, go ahead have a c Corp, that's great. Tax Yourself to tax your LLC inside a c Corp, but for right now I don't see why you can't just do an escort but it's a flow through your taxes will be on your personal taxes.

[39:44] It's going to be harder to borrow money, but you don't have to worry about borrowing money from banks. There are a lot of different ways nowadays to get money out there and you believe me, there's more people than you know, looking to invest money in a smart place for a good percentage and we find them all the time. Maria just did another house. I mean, and I think she talked about the House that she did in Pennsylvania. She had 100,000 from investors and they were just happy to get, I think it was like 6% or something that she had to pay them back within three months or four months. She set the time. She knew how long it was going to take her to do that. But here's the deal guys. There's people like that all over the place. There's money everywhere. There are a lot of people in the United States who have money that want to invest in your business.

[40:35] You start doing well. You start proving and having a track record of all the properties that you've taken and the money that you've created on those properties, and you show those financials to somebody and you say, Hey, look, here's me. I rented this house for this much. I'm making, you know, I'm cashflowing 1500 or 2000 or more a month on this property. Here's another property I did in another property I did. You get three properties like that behind your belts and believe me, you hand that to somebody at you hand. Those financial says somebody with all that proof behind it, they're going to want to lend you money. You do not need banks to do that. You really don't. I don't trust banks. I Trust Credit Union, but I don't trust banks. Not to say that I don't have a bank account. I absolutely have bank accounts because you have to, you have to, you know, that's where you're going to have a lot of things deposited and that's where there's a lot of technology and stuff.

[41:31] But man you have a bank account can cause a lot of problems later on so you don't necessarily have to do that. Okay. Like I said, it's going to be really cool too when we have that whole, I'll have Maria back on because she's so much fun when we start talking about how we invest and to the deals that we get, you wouldn't believe the amazing deals that we've been able to negotiate on properties. So, um, and then the asset protection is going to be Carol Lido is going to show you that and that's next week. So please stay tuned for that one really quick. I wanted to add in here that the prosperity process in July, I'm pretty darn sure it's July. July is all about small businesses on my home site, which is the company that owns everything and owns all our IP. But it's all about crowdfunding.

[42:23] It's all about taking your small business and making it bigger. So go to the prosperity process and take a look. Every month we have a different theme and I know in July what's coming up is all about businesses. The free giveaway is a crowd funding thing, so there's going to be a lot of stuff about that and I'll explain to you what the crowd funding is, but watch out for that. Let's go onto the next question. So we've had a lot about avoiding taxes and not paying taxes and business structure so that they don't have to pay taxes. And I'm like guys, death and taxes, the two things you cannot avoid, we're all going to die and we all got to pay taxes. That's just all there is to it. Now here's the deal. We've had talked about this before and this is really, really great to go back into the IRA thing.

[43:15] You can use your self directed Iras to rent or purchase or or cohost short term rentals and you can run your business out of your IRA and it's probably a very good idea to create an LLC from Your Ira. For that specific purpose of your B and bs. The only thing you cannot do is stay in those bnbs yourself or have friends and family stay there. Okay? So you have to keep an arm's length. It literally has to be a business when you run it out of your IRA. But that's going to be the best way to save on taxes because if you're using a Roth Ira, any money that you put into the IRA is taxed before it goes in there. And then you can run the whole business out of there and all of that income will be tax free. Now I think I talked about the book lurk and it talks about um, and Oh, the power of zero, same, same, same author.

[44:19] Um, but when you read his books, he tells you about the power of zero, meaning the power of zero taxes. There are all kinds of insurances that you can buy, all kinds of different deals that you can buy for retirement. We were, you don't pay any taxes. That doesn't mean any taxes ever. Like you're breaking the law or anything. It just means you pay those taxes beforehand and that's the best way to pay them. Not at the end. If you want to listen to that IRA episode again, but using a self directed IRA is the best way to quote unquote avoid taxes. Avoid pain, a lot of taxes, you just have to use the IRA correctly. Okay. Now if you're going to have a property that, let's say you buy a property and bally and you want to go to bally at least once a year and just don't buy that property with your Ira, put that in a different LLC.

[45:16] Buy It with one of your personal LLCs or rent it with one of your personal LLCs so that you make sure that anything that you stay in is not a, it has nothing to do with your Ira and that's how you can avoid paying a bunch of taxes. Otherwise you can't just make sure that you're in different states. Have different laws. Look at all the different states and look at the laws. If strs, if short term rentals are, are illegal where you live, that doesn't mean that you can't have them. It just means you can't have them there. Like there's a lot of different places all over the world where you can have them. You don't have to live in Arizona to take advantage of all the amazing, you know, advantages that we have, tax advantages that we have in the state of Arizona for people who rent out properties and who have short term rentals.

[46:09] You don't have to, you don't have to be a resident here to have a business here. It's uh, it's, I mean you could do it anywhere. If you're a United States citizen, you could do it anywhere. This is the great thing about our country. Now there are places that have zero taxes. So you can go to different states like Florida and Nevada, but you have to make sure that wherever you are, you look into them. And that's why I always say too that if you're going to start buying properties and have a short term rental someplace, it probably behooves you to have a few of them. And I like to say the minimum number I like to have is three, but this is all up to you. You decide you can have just one if you want. But I like it. I like to make it worth the time of my maintenance guys.

[46:53] Am I cleaning crews and everybody I said up there because you know, just having one property with me, if I'm trying to talk, especially in a place where they don't have a lot of cleaning companies that do short term rentals. If I'm trying to talk a cleaning company into doing short term rentals and saying, yeah, you're going to love working seven days a week because they're going to have to, right? If they're doing your cleaning, it's not, it's not beneficial for them. And if they're not making a lot of money, so three properties is way more appealing to them six times a month. So you know, instead of just six cleanings and they're making a minimal amount of money, then suddenly you can give them 18 cleanings, they're going to be a lot more happy. Right? So you wanna you want to make it worth everybody's while.

[47:43] And you, I mean that's a lot of effort to go in and interview people and get the right type of people. So make sure you're doing that. You want to get the the right types of people. There's a lot of different ways that you can save on taxes. Just depends on where you are and it depends on how you set up your LLCs and depends on what you're investing with. If it's your personal money, a business account or an IRA or something that's self directed and make sure that whatever you're using that you're following the letter of the laws that, that are directed towards that like Iras. And remember you never ever stay in those or rent them out to friends and family. And that includes if they're long, longterm renters to, so let's say you buy a property that you're going to like by the university or something and you're going to put students in there.

[48:33] You can't buy it with your IRA and put your daughter in there who's going to school there? Okay. So just make sure that you're following those and just talk to your accountant, talk to your attorneys. It's really a great thing to have an attorney on your side that you can always run things by. I run, oh my gosh. When I'm, when I'm making deals and I write out the different terms and stuff, I, I, I pass it by Carolina. I pass it by my attorneys all the time because I want to make sure that I'm following the letter of the law, especially in whatever state I'm doing business. There's also how to handle guests. There were a lot of questions about how to handle the blackmailing guests. We've had this, we had, there's a lot on Facebook. We've asked this question, have you ever had a guest blackmail you for a review where they say, unless you give me my money back, I'm going to leave you the most God awful review because they changed their mind about something.

[49:27] Yeah, we've had that. I might go, yeah, we totally have. Here's the deal. When you're first starting out and you need to get those positive reviews in there, there's kind of nothing you can do. I mean just just bite the bullet and give them their money back and just, you know, and, and be very gracious when you do it and you leave a review for them always, you know, take responsibility for everything. But when it gets later on, this is the one golden rule that covers this and that makes everything so much better is only communicate with people on the forums that you're using. So for instance, if you're using Vrvo only communicate through Vrvo, if you're using airbnb, only communicate through airbnb. Don't let people call you, don't let them text you. You want all that communication on the form that you are using.

[50:20] So the reason why is if they start threatening you then, then let's say you're using airbnb. Airbnb can see the communication going on back and forth between you. If they were calling you, they couldn't hear both sides of that conversation and they couldn't trust that even if it was recorded, that that recording would be untampered. The only information they can use is what they see on their forum. So therefore you want to make sure that all the communication goes on there. There's going to be a ton of different things that you encounter. So what was really funny as I was listening to a podcast, I can't remember whose podcast it was, but they were talking about uh, renting out to somebody who wasn't exactly really like the, they like some of your guests aren't going to, how do you say nicely, they're not going to be the brightest color in the crayon box.

[51:10] Okay. So these, we had some people who one time turned on the swamp cooler air conditioner at the same time they turned on the heater and they were saying that the heater was broken, but actually it was in competition with a swamp cooler, which is like an air conditioner in the southwest. So they had basically both the air conditioner and the heater on and the air conditioner was winning and we tried to explain to them, and we could tell that they did the way they were talking, because they were talking about event being open and we said, no, if you, if, if you're looking at something that says vent, you're looking at the swamp cooler that the heater is only on the thermostat where it says on off and has a temperature gauge. So the thermostat is one thing, the vent that you're looking at, you shouldn't touch that in the wintertime.

[52:03] And so we tried to explain and they just didn't get it. It was, it was really, really difficult for them. So we call their maintenance guy and we sent our maintenance guy over there. Well, when we sent the maintenance guy over, they had, they had done something and they turned off the vent because it was blowing cold air and they said, oh no, now it's working now just the heater was working because they turned off the vent that was blowing the cold air from the air conditioning. But then so they turned the guy away and didn't let our guy come in and fix it for them. And then after that, that late that night, they did the same thing. They wanted to get more heat in there. So instead of just turning up the Thermostat, they turn the vent beck on the click the vent thing and turned the the Ac back back on.

[52:50] So it was really kind of sad because they left us this terrible review about our AC network game and we took complete and total responsibility for it. We said, we are so sorry that you didn't understand our communication and that is are bad and we will try to make it simpler next time. We did send a maintenance guy out to help you and you turned him away. But it's incredibly difficult for people who are from out of state to understand the difference between an air conditioner or a heater in a swamp cooler because we have all three in Arizona. And we took on that, we took that, you know, with a grain of salt, there's nothing you can do about some reviews and you're going to have people who just don't understand how to turn something on like an oven, how to let a pilot light.

[53:39] We had some lady who didn't know about a gas stove and she couldn't get the oven or the pilot light to work because you have to turn it and then it goes click, click, click, click and lights the pilot on a gas stove and then it lights on fire and it works. I don't, I don't know how to say that to somebody. So we tried to explain it. They couldn't get it. They kept turning it all the way and just that, you know, they were afraid they were going to die of gas. And you know, it's like, oh my gosh. Um, so sometimes there's just people who just don't understand and you don't want to say they're stupid. They just don't, they've never had that experience before. It's just something that they don't know or understand. And it's really hard to explain over the phone or over a text message.

[54:27] And so you're going to get bad reviews from people who just, you cannot communicate with that. You have a really hard time. There's absolutely nothing you can do about it. And then there's going to be the people who want to get something for free and they're out there. And yes, you do get them every so often you can avoid getting those type of people by doing a couple of different things. Don't take last minute reservations last minute. Reservations seem to always be the worst. The, they're the ones that, um, the people complain the most about, which is really kind of weird. And also reservations from people who live within the city limits of where your BNB are. So if for instance, you're renting out in Chicago and somebody else has a Chicago address and they're renting from you, well why are they renting from you if they live in Chicago and your B and B as in Chicago, why do they need your bnb?

[55:24] And that's a lot of times when people have things ripped off, it's because the people live in that area and sometimes the same state, I don't read, I don't rent out to people in the same city or even the same circumference. When you look at a map, you know, so like if somebody wants to rent out in Mesa or Tempe, one of our places, but they live, you know, out in Queen Creek, then I know there's still in that area. Why do they want to be like, why do they want to be out there? I want to know so I don't, I'll say no, I'll say no to people like that because I don't want my stuff ripped off. And a lot of times that's when it does. Then you're going to have the people who are holding those, those reviews over your head. If you're using the AIRBNB forum forum and they're, they're telling you and threatening you on there, then Airbnb, we'll take that bad review off later on.

[56:16] So just tell him, no, this is my policy. You're not abiding by my policy and I did everything I could, you know, on my end, I'm not going to give you your money back. Also remember about offering people travel insurance when they make a reservation. The reason why you want to do that is you want to have strict cancellation policies, especially if you aren't in a location that fills up far ahead of time and has a really hard time filling up your calendar really close to the date. So if you have an easy cancellation policy and somebody can just cancel it the day before, can you book that the day before? Most likely you cannot. So we have strict policies on almost all of our properties. I'm very strict. Policies is matter of fact, the ones in Florida are nonrefundable completely. We go through a totally different form, um, for those.

[57:11] But we don't offer anybody any of their money. They pay up front and once it's paid, they don't get any of that money back. I don't care if they have to cancel it, but we also give them the opportunity to buy travel insurance. So if they get sick or something has canceled that travel insurance covers them. But we let them know that our cancellation policy is strict. We do not give the money back and if they try to threaten us with something, we have it right there. We just don't. We just don't give them their money back and we have all the communication right there and if they want to leave a bad review have at it. It doesn't really matter to us because we've got the proof right there. So we'll just say, sorry we, you know, they tried to cancel late. We didn't allow them to cancel late.

[57:54] They didn't, they chose not to buy the travel insurance and therefore they paid the price. And that is sad that that did happen. But we did offer the travel insurance and we offer that every time somebody signs up, here's travel insurance. Just in case you have to cancel. And that lets them know that it puts the ball in their court and lets them know that if they want to cancel, it's up to them. If they want to protect themselves, it's completely up to them. And then another thing that we have when it comes to guests is a lot of the guests that you have, we'll ask the same questions over and over again. How do we get to the nearest restaurant? How do we get to the grocery stores? How do we turn on the heat? How do we turn off the heat? How do we like the stove?

[58:40] How do we, you know, whatever the questions that they ask are the same questions. So what you can start doing right a way when you start your bnb hosting is start cutting and pasting a bunch of stuff on one document that you can keep on the desktop of your computer. And when you click on that, it'll, you can make that and take it and copy and paste it into your guests book. So when it comes to, you know, having everything, all your house rules and everything are listed in there, you can have all the frequently asked questions and you can list them and an Faq or you can actually have them, um, you know, fit them in somewhere. The, here's how you, you know, under kitchen, here's how you light the stove under heating and cooling. Here's how you run the air conditioner and the swamp cooler and the, and the heater.

[59:34] So you can take those things and implement them into their, you're going to do that too. When you start using services like Guesty, Guesty will ask questions and you'll have that Faq there for them so that they know all your free frequently asked questions. Right? So you can say to Guesty when Guesty texts you, and it's a new question because they'll only text you if they've got a new question, one that hasn't been asked before and you get this new question and it's a good one, and you're like, Oh, you know what? Guesty do me a favor, put that on the frequently asked questions so you guys never have to call me without again and they'll just, they'll put it right on there. It's super easy. So you want to make sure that you start listing all those things. I do that also for my maid service, but right now I have like a little word document up for my cleaning crews so it has a list specifically of the things that I want them to know.

[01:00:36] The door codes on my door codes for my cleaning companies in each city are the same. We rotate them and change them out. The owner of the cleaning companies know that if they ever fire somebody or something to give me a call back and we'll change the code out every time they move in an employee in or out. We make sure that you know, on our end we are consistent in what we're asking for and any changes. I also have like a format that tells them how many days somebody has been in there and what type of clean. So if somebody has been staying in a property like a month, then I asked them to do a heavier clean and I add things to that list. If somebody is staying between, you know, one and four days, it's a different type of clean. Then five and eight days is a different type of clean and so we have different types of cleaning and different types of messages that we send the cleaning crew.

[01:01:33] We also have different types of messages that we send the guests. Anytime they stay over seven days, we give them a key code to the laundry room. So no guests are allowed to use the laundry room unless they're staying a little bit longer. You know, if they're only saying a few days, they don't get the code to the laundry room, but if they're staying anywhere of five days at or or more, then I'll give them the code to the laundry room. It's just, it's just easier and it's just something we do. We do have requests every now and then when somebody is saying two or three days, you do, you have access to the laundry room. But it's even in our guest book that says, you know, longer stays of a week or more have access to our laundry facilities. So that's just how we have less wear tear.

[01:02:19] Um, and we go through less less laundry detergent because we have tide pods in there. We tried to keep it really nice. So if somebody's staying a week, we get that back easily. So it's something we can offer them. So on this Q and a, we only have room for one more question and I'm, I'm going to put one on there about borrowing money against your home, taking out a line of credit on your home or taking money against, you know, refinancing and taking money out against your home to open up your short term rental business. Don't do that. Don't do that. The thing is when you're investing, investing in anything, there's always risks involved and you never want to put your family or your home or your personal car that gets you to and from work or any of those things ever at risk. Those things you need, you cannot, you cannot not have a place to stay, right?

[01:03:15] So just in case your new business fails, you don't want to lose your home. You don't want to lose your car, you don't want to lose any of those things. Never ever risk those things. You could take out a business loan, you can borrow money from your aunt or your uncle or your mom or your dad or somebody else. You can do a lot of different things, but you never ever risk anything that has to do with your family. Never put those things at risk. Now, women wear way more careful. Security is one of our number one needs. If you've ever read the book, his knees and her needs, you'll know women, we crave security. We're very careful investors. We like sure things. Um, although nothing is ever really a sure thing but we were going to be a lot more careful. So I see men do this a lot more often and yes you know this is, this is an easier way to make money but it's definitely not a sure thing guys.

[01:04:10] You never know what's going to happen not just with a property or how often it's going to book. But with the economy something can change or shift very quickly and you can lose money. So you never want to risk any of those personal things. It's much better. I would honestly say it would be much better to work at a Mcdonald's late at night to earn the money to have to build your business rather than you know, risk losing your home or your car or something else like that. If you want to put up your ring, you put up your ring, not your wife's. He could hoc that. There's a lot of things you can hot. You're going to hock your x box, you're not going to need that when you start your business. You're not going to need to be playing video games. Cause you're not gonna have time for video games.

[01:04:55] When you start your business, it's a lot of hours, a lot of time, and don't give in to those temptations of easy money. There's no such thing as easy money. There's always work behind it. Even when it looks easy for people, people like me or people like Maria are people like Robert Kiyosaki. It's not easy for them. It looks easy because they've been doing it a long time, so they what they're doing. But it wasn't easy. It wasn't always easy. Robert lived out of his car when he first wrote Rich Dad, poor dad. All those books were in Sharon lectors garage. And when they first started selling that book, there was no money. Those guys didn't even have a house. They didn't even have a place to stay. So you know what you think about somebody or you, how you easy, you think it was for them? It's usually never how easy it was.

[01:05:43] We fail a lot more often. So a lot of times our businesses will have one giddy up and go one another giddy up and go. Right. So it seems like it was, oh, you know this. There's never those overnight successes usually take years, you know, years, so don't put your family's assets up at risk. Okay, so that's all I can fit in here on this episode. We've actually got a couple more questions here, but if you've got a question, please email [email protected] and we'll answer your questions there or you can go to Facebook forward slash short term rental revenue and you can message us there and ask us a question and we'll put it on the next episode of our Q and a session. We'll say Q and a session number two and I also want to remind you too that listeners of the short term rental revenue podcast, audible is offering you guys a free audio book download along with a 30 day trial.

[01:06:39] If you just give them the opportunity and I'm telling you you're going to love it because I love audible and you should too. You should check them out. They've got 180,000 titles of books that you can listen to, including some of the ones I've mentioned here today, and you'll love it. Just go to audible, forward slash s t r revenue, and you can get your free trial right there in your free book. All right, well thanks guys for listening to today's podcast. I really appreciate it. Again, if you like us, subscribe and leave us a review and have a great day. God bless you. Go and grow.


50% Complete

Become an Insider!

When you subscribe to our Newsletter, we appreciate the honor.  Yeah, we know you can cancel anytime but you're still trusting us to add value to your business and we take that to heart!  We'll never sell your information & appreciate your trust!