Build wealth with your business real estate

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Join Ken and Michael Bailey as they discuss ways to use business real estate to its full advantage.

To learn more about Michael, visit his website at: https://www.impactdogcrates.com/

Transcript:

 

(00:01):
Welcome to the real estate strategies podcast. I’m Ken McElroy, and I’m here to give you creative ideas on how you can get started or continue your journey in real estate each week, we will bring you inspiring and informative conversations with successful people and their path to obtaining or investing in real estate. Enjoy the episode, everybody. It’s Ken

(00:25):
I’m here with my good buddy, Michael Bailey’s the owner of heater craft and impact crates. Hey Michael, how are you doing? So what we’re going to talk now about is, you know, how you can take a business and turn it into, you know, real estate acquisitions and kind of build wealth in other areas, you know, in more than just your business, what you’ve, what you’ve done very, very well. Michael, I’ve watched you slowly accumulate, you know, all this real estate. And so you have those assets kind of sitting over here, but before we get into that, once you give a little flavor and a little background about, you know, impact crates, cause it was really born out of the last recession we had in 2008. And as we roll into this next recession, I think a lot of people can get really depressed. They can real be real Philly bad about, you know, the loss of income, whatever that might be as an employee or employer, for example.

(01:18):
And you know, and then if, especially if you watch the news, right, right, right. So right. And so you fought hard through Oh eight. I wish I knew you then. We were good friends back then and I watched you do it. And you came up with this idea in a, in a business, a pet business that you were never in before, you know, essentially you reinvented yourself completely with the business that you had in place and your business is very different than it was in 2008, a hundred percent. I think. So the bottom line is that you know, we start out with heater craft years and years and years ago, we were in the Marine and automotive industry. So we sold to boat manufacturers like, you know like Mastercraft or sea Ray or any of those big guys. And we also sold the UTV industry in the RV industry.

(02:04):
So that’s, you know, Honda, Yamaha, but what happened in a way, it is obviously the recreational industry it’s called recreation. It, it got destroyed in that economy. People, if they’re going to cut there, if they don’t have money, they’re going to cut those areas for sure. It’ll happen again. And it’s going to happen again and it’s on its way at this point. Yeah. You said that you’re already seeing orders canceled. We’re always seeing orders canceling that business. So one thing I realized is that I needed diversifying to something that wasn’t so volatile or at least had a way more opportunity. Right? So number one, the Marine and automotive is very small. I mean, it’s, you know, what is there you know, hundred thousand boats or, or less built in a year that includes, you know, jet skis and things like that. So the market’s very, very small where the pet industry. So we got the pet industries, what we did. So we had, we had bought this company or partner with this company. We, and we we were in the gun case business and they came with a crate, right. So we got

(03:00):
This dog crate back in 2010, 11. Right.

(03:02):
So before you jumped right ahead, you know, here you are just got the heck beat out of you in Oh eight. And, but your mind is open and you’re like, how do I partner with this company while I’m not doing so well? Right. So talk a little bit about that. Cause that partnership was instrumental in where you are now.

(03:20):
I mean, we, we found an opportunity that was this company. They were wanting to get out of that business. And so we basically acquired them, you know, in so many ways and they got out of their business and we took over what they did. So

(03:33):
You have product lines and customer base, you know, that you had never,

(03:37):
That was what’s the interesting part about it is they were just, they had kind of gone through a transition where they had lost all their business. All they had was product lines. So they didn’t really have much of a customer base. And honestly the dog freight business can, wasn’t even developed to its full extent at that point.

(03:54):
So the here’s the thing, I find fascinating what you did and you got two businesses, yours and theirs, both just got hammered in Oh eight. Yup. Right. Yup. And you were like, okay, how do I, right. Yeah. They could have done that to you. Oh a hundred percent. But usually, right. So this is the point, like everybody’s getting pounded and about ready to get pounded, but you had the foresight and the vision to be able to go snap that up. And, and

(04:22):
I saw opportunity end of the day. I think that you know I’m a survivor personally. I’ve been, I was not going to give up or give in. So I think a lot of people give up too quickly. I don’t think they have to. And so I was going to fight for it. And so I saw opportunity in those that business and the dog Creek business. So we had already in place engineers and people like that that actually could develop products and make them better. So we went to work. So we, you know, we acquired the company, we got it, got it from him. And then we went to work, we started building sampling, dog crates, making them ourselves. And before you know it, we got a customer. And then before, you know, we got another customer. So again, I think it was something that we realized we could do. Cause we did it already. We made metal parts. We had metal fabrication equipment. So we started digging.

(05:11):
But here’s the thing, dog crates at the time there, most of them are cheap. Yeah. They’re plastic. They fall apart. I’ve bought a ton of these over the years, you came up with pay sickly, the rolls Royce of dog crates. And now like it was a massive market that was not served and people it’s. I mean, you lead the industry

(05:32):
Purdue now. I mean, I think we we have always, I’ve always personally seen value in quality, a good product that’ll last a long time. And I think that was just how I thought. So I wanted to build something that wasn’t a hundred dollars or $50. I wanted to build something that was between $502,000 today. And again, I don’t, it doesn’t take as many crates to get a lot of revenue if you think about it. Right. So if

(05:58):
I have to do 10 crates at a hundred dollars a piece, that’s a thousand bucks, but I’ve just so one, one to 10 ratio with a really good product and get, and get a customers that love it. It makes way more sense for me. It worked really well for me. Well, when you, okay, so I’ve had multiple dogs and multiple crates and usually there’s a lifespan on a crate. Yep. When you buy your crate, you, you know, it’s for life. It really is. I mean, that crate is incredible. I mean, you know, you know that it’s not, you’re going to have to buy something five, six years, seven years from now. Right? Exactly. I mean, our crates will last a lifetime, especially a dog’s lifetime or even more, even through a couple of generations of different dogs that you have in your family. I think that that’s what you did for the business and the industry.

(06:42):
You know, we brought them to our level of dog Creek without a doubt, without a doubt. So one of the cool parts was, you know, w we talk, I talk a lot with your son Hunter, but you know, kind of old school, new school. And we kind of did this on a video already with Hunter. If you guys have a watch that you need to watch that one because, Oh my gosh, he’s smart. And he’s very bright. I mean, and here’s the cool part, you know, obviously you’ve got the father son dynamic, you’ve got the family business dynamic, but you got a kid that’s 18 years old that you raised. And you’re like me, you know, we look at our kids, like they don’t know much. Right. I mean, that’s the truth. I think we do think that I do that. It’s not fair to them.

(07:25):
No, it’s not. I think, yeah, we do. We don’t live [inaudible] we don’t listen to our people. Exactly. I mean, I think it’s, it’s insane. I mean, I didn’t listen to my dad when I was at right. Me either. Yeah. I mean, I fought that battle and then we ended up being them. I do, but here’s the cool part. Then you let him come into the company I did at 18 and boy, what he’s done from a marketing sales. Hey, can I, what I can say about Hunter is he has been instrumental in growing our business and putting us where we are today. I can give him a lot of credit for that. I mean, I really can say that. I mean, it’s, it’s massive, right? I know business. I know. And again, it comes right down to me listening to the younger generation and, and not just we’re father, son deal, it’s listening young, Jewish generation, how they purchase, how they buy, how they think, what they do, what they’re looking for, those kinds of things. And it’s, it’s been massive. I mean, it’s, it’s been life changing for our business. It’s it’s you, your company has gone, the model has changed so dramatically, you know, you’ve gone from the old model of, you know, belly-to-belly sale to internet sales and direct. And so your margins are up and everything’s up and you kind of learned along the way. And I think a lot of businesses are stuck right here. Yeah. I think the old model of, for us was distribution the OEMs direct to the OEM’s, you know, the Costco

(08:56):
Selling to a reseller or whatever it might be. Even someone that was actually sewn on the internet, but they were, we were shipping it even for him. So we would have to, you know, build a product, everything like that. And we would, they would give us the order, we’d ship it to their customer and we’d have to give them, you know, 40% discount.

(09:13):
All they did is have the customer,

(09:15):
The customer. And we started realizing that, and this is where the younger generation came. Is that why don’t we do this ourselves? Why don’t we grow our own internet site? Right. And so again our, my theater generation let’s call it that. And again, I think it’s my son he’s been and done amazing, but that younger generation just does things differently.

(09:34):
Oh, a lot differently. I know he graduated in 2013. I think it was. Yeah. And then he came into your company and boy, what he’s done on the sales side has been incredible, but this is a real estate show. Right. So let’s talk about, okay. So we all know that the, you know, the ESBI model, the E employee self employed business investment model, we all know that you guys have locked. It, that you’ve watched the cashflow quadrant. What Michael’s done is go from S to B and now we’re going to the I, which is the investment part. So the business is now buying your real estate. Right.

(10:10):
I mean, if you think about it you gotta pay rent somewhere, right? Why not pay it to your own, your own yourself? So end of the day you pay, we pay rent to ourselves. That’s right,

(10:20):
Right. Yep. That’s right. And so, so what we’re seeing now, what, what was amazing is I’ve also watched you move from, you know, a small facility to a medium facility, and then just recently to a massive state of the art facility. That’s big, how many square feet is it?

(10:36):
About 60,000 square feet. Yeah. It’s pretty big. So, yeah.

(10:39):
Yeah. So I, you know, all paid by your business

(10:43):
A hundred percent. It’s not just paid. We make a profit,

(10:47):
Right? That’s the other thing there’s cashflow, cashflow positive.

(10:51):
You take, this is the model guys. The model is to start your business and then have that pay your rent essentially. But what we need to be doing here is you, your business is what your business. So heater craft has a business impact, craters, a business that business now leases from a building that you own, which is also an LLC or an individual purchase. So you purchase it here and then you lease it just like you would anybody else. Yep.

(11:19):
Yeah. It’s, it’s, it’s really, it’s, it’s not hard to do it truthfully. I mean, it’s really easy, honestly. And also I’ll add value to that. When a bank, or if you’re getting a loan for this building, the bank’s going to look at your business as well as your real estate. So it honestly, truthfully is easier because when you’re leasing to yourself, they know you’re not going to leave, get out of your lease. Right. So I understood that real quick in life that it’s, it’s, it’s a lot easier than you think it is. People might think it’s hard, but no, it’s actually easily.

(11:51):
You take the cash, your business is making and that’s your down payment. Then you go get a loan, you buy the building, you set it up. And then the business makes hopefully even more money. Right. And it pays itself off. So you’re, you’re paying rent to yourself. Here’s the other thing, huge tax benefits.

(12:09):
Oh, that’s right. It’s massive. Well, let’s talk about,

(12:12):
Let’s talk about, because we’ve talked about depreciation bonus depreciation, cost segregation, right? So you can accelerate the expenses in these buildings that you own and you can make even more money.

(12:24):
Yeah. It’s, it’s a, for example, this should, we’d bought the building dock in 2019, our first year depreciation or cost segregation. We did a whole whole deal on that and it will be, it, will we, again, we won’t paint taxes personally because of how we did that struggle.

(12:42):
Yeah. So the way it works, the way it works is let’s say you buy a, a, a building for 1,000,007, and the reason why well, let’s, let’s say it’s $2 million. You can depreciate that building over a period of years, it’s called an a non-operational expense and it can, it will offset your

(13:01):
Income. Right. Right. Well, yeah. Again, I think exactly. So for us, we have a holding company that has our, that we lease. Right. Right. The company releases from our holding company and again, cost segregation is a much rapid or a depreciation because there’s things that wear out faster in the building than other things. Right.

(13:22):
So what that means is Michael might have a machine in there that has a five-year life. Right. And so you can depreciate that machine for five years. Right.

(13:32):
Right. Or asphalt you know, there’s different, different years on different. Depreciations, it’s really interesting because I didn’t realize that things wear out faster than others. Right. But the steel buildings is only 39 years still, but steel part of it. But everything else around it is goes less and less and less. Yeah.

(13:48):
Yeah. So the buildings depreciate at 39 years, and then the things inside of it can be accelerated. Same with it, with a rental apartment, you know, the building itself in the park and the apartment building has 27 and a half years. But inside of it are appliances and stoves and, you know, things like that, that you can depreciate a quicker, right?

(14:08):
Again, asphalt’s one of them as like weird one, like an asphalt will ask, well, it does wear out after about 15 years, you need to start fixing it. And whatever electrical is, another

(14:17):
Electrical is another one. Yeah. And by the way, it’s not subjective. It’s not something you get to decide. The IRS has guidelines around this and the accountants tell you exactly what you can and can’t do. So it’s all perfectly legal. You do have to get a cost segregation study, which isn’t very much money, but they tell you exactly what you can and can’t do. And then you can take those amounts and offset your income.

(14:39):
Exactly. That’s actually the beauty of the beauty of is you offset your income. Right. So end of the day, I think that it’s it’s if you made a half a million dollars last year, personally, and you had a cost segregation of 30% on 2 million bucks a hundred. Yeah. You would, that’s so much money in taxes. She would say those are simple numbers,

(14:59):
But that’s the real truth. Right. So as you start to, so now there’s incentives even to do more real estate, right. Because as, as, as I’ve said before on the show here, the depreciation that we have on our apartment buildings offsets a lot of our income, if not most of the income and a lot of the properties that we own.

(15:19):
Yeah. Right. I mean, yeah, exactly. I mean,

(15:21):
So you can not pay taxes legally through depreciation. Yeah.

(15:27):
Obviously,

(15:28):
Great benefits. And there are plenty of others. Oh yeah. Right. Yeah. There are plenty of others as you own a business, you know, there are things that you can do legally,

(15:37):
Right, right. From a tax stamp. So, but bottom line, I mean, you’re a real estate, that’s your business. Our business really isn’t real estate truthfully. But what we’ve done is we’ve taken a manufacturing company where we build stuff and we’ve tried,

(15:49):
Turned it into real estate wealth. That’s right.

(15:52):
The company’s product lines, a sales pitch

(15:56):
For the lease that’s right. The rent. So let’s take a look at the buckets of assets that Michael has. He has his companies over here, which are only as good as somebody, what they’ll buy, but then you also have your real estate that pays for the company pays for that’s also over here. Right. So I’ve had friends that have actually sold their businesses. So let’s say you sold your business and I know it’s not for sale, but let’s say you did. You could actually lease it back to the people that buy it. Right.

(16:24):
Exactly. I mean, I mean, again, I don’t, I mean, I don’t tell you this and you know it, but end of the day, what, what’s better than someone else paying for your bills,

(16:33):
Right. Not me. So you sell your company, you go off and do whatever, but you still have the reoccurring revenue. So I have a friend that did this in the, you know, he had alcohol and drug rehab centers and he did a very good job and he was buying real estate and he was growing these businesses and he sold the company to a private equity group. And, but he didn’t sell any of the real estate. And so he did these longterm contracts. So the private equity group was paying him monthly. And so he could kind of figure out what he wanted to do next. Right. So he still had depreciation, he still owned the building. Right. Right. And you know, the only difference was, is he didn’t control the real estate or control the business, but he had sold that. So he cashed out in a big way. So, and this is how the rich get rich. Right. Right.

(17:23):
I mean, whatever. I mean, again, if you, if you bought a $5 million building and you, you know, it’s a, usually a 15 year loan say, and it was paid over, you know, 15 years and all of a sudden it’s paid for, by someone else. Right.

(17:37):
What else, what else can you do? And you got all the appreciation and you got the income and a lot of it’s tax free along the way. And so that’s the model guys. The model is to create a business and then have the business for the real estate. Right. Michael, it’s huge.

(17:51):
Yeah. I think it’s, it’s create a lot of family wealth for us

(17:55):
And will in the future and the legacy

(17:57):
In a legacy end of the day, is it, you know, it’ll pay for grandkids going to college and things like that, that know that we, we want to be part of it. Yeah,

(18:04):
Yeah. Right, right. Absolutely. And isn’t that what this is all about,

(18:09):
It really is about family. Right. And providing for your family and giving them opportunities.

(18:14):
I know, man. Well, I’m really proud of you and everything that you’ve done because I’ve watched you go from a massive, massive hit in Oh eight to, you know, basically reinventing yourself through a new product line to buying this state-of-the-art brand new building. And you know, and essentially just reinventing yourself in a short period of time in 10 years. Yeah.

(18:38):
No, it was one thing I would say though, even during the bad economy, one thing we were still doing, we were still, the company was still paying the rent. So that whole time we were still building wealth over that time, as bad as it was as hard as it was, we were still continuing to pay the rent we had to.

(18:54):
Right. And sometimes when you get hit on the income side, it’s nice to have that extra bucket of cash sitting there. When, you know, you have equity sitting in a building, it’s just an insurance policy that hopefully you never have to use, but it’s nice. Yeah.

(19:06):
It’s something that you can actually look back to and go, maybe that will help you save your business someday because you might have so much equity in this.

(19:13):
Yeah. Yeah. I got a buddy that owns a hundred houses in Wisconsin, you know, and you think, Oh my gosh, there’s a lot of work. And it’s true. He has a property management company that does it. I go, so Jeff, you know, what do you do for money? He goes, well, when I want something, I just sell one of the houses. You know, that’s what, that’s how he does it. That’s how he thinks. He’s like, you know, I got the renters paying them off, but you know, if I want to go do something and buy something, I just sell one of the houses. And I’m like, that’s a good strategy. You just got a hundred of them. It’s the same thing. Right,

(19:44):
Exactly. Right. So again, I think as you make money from your company, your product line, you can take that and reinvest it into real estate. I think real estate is a key to that. I think it’s all of us. It’s, it’s, it’s Stabler it’s more stable from an event,

(19:58):
Especially if you’re the tenant.

(20:00):
Exactly. I mean, yeah. I mean, exactly. I mean, it’s, it’s, it is more stable for us. That’s for sure. So cause it, it didn’t take the hit during the economy. It’s dark product line that took the hit

(20:11):
That’s right. It’s really something really. Yeah. There’s a few things, a few lessons here. One is the fact that you, you know, you reinvented yourself from 2000 and a lot of people are about ready to go through this right now. So don’t get discouraged to keep an open mind with these young guys, you know, open up your mind, a young gen X is your son really reinvented the, at least the sales and the marketing side of the business. And three figure out a way to, to, to roll all that into cash flowing real estate. Right. And, and, and be able to get this cash flow to you. Tax-Free through things like depreciation. Exactly. Right. I love it. Yeah. That’s all just

(20:48):
Blank off

(20:50):
What a great episode. I hope you learn something new from today’s guest for full show notes, check out Ken macra.com. If you enjoyed the episode, then jump on iTunes, subscribe and leave a five star review. Also, if you can check me out at Ken McElroy official on Instagram for daily real estate advice, see you next week.

5 Tips to Keep you Eviction Free

Evictions are a factor of owning rental properties that no one wants to deal with,
owners and tenants alike. There are five key ways that you can avoid having to deal
with evictions all together. Implementing things into the process in the beginning will
save you the trouble of having to file an eviction notice down the road. There are a lot of
factors that you should consider but these five points are a good place to start. You can
add on as you learn what works for you and your properties over the years.

Background Checks

Do a criminal and a background check on every single application that you
consider with no room for exceptions. The ideal tenant that you are looking for has good
credit and good rental history as well. Moreover, you also want to make a phone call to
the last place that they lived at because if there were any issues, they may have not yet
hit their credit. Some people will try to get away with claiming past evictions by
attempting to obtain a new lease before the eviction shows up on their credit report. You
can charge them an application fee in order to obtain this information before allowing
them to sign a lease for one of your properties.

Property Appearance

Maintaining your properties appearance is very important. Nice looking properties
will attract the type of tenant that you want. In order to attract the ideal tenant, you must
have the ideal place for them to rent. Take pride in the properties that you own and
maintain them. This includes updating when necessary and also fixing any issues as
they may arise over the years that you own them.

Be a Good Landlord

Also, and this may seem obvious but be a good landlord if you want to have good
tenants. If you are a good landlord, then the right tenant will rent from you for years.
Some ways to do this are to simply have someone available to answer a phone call
when needed, fix things quickly and be lenient when they may be a day late on rent if
this is not a normal occurrence for them. You want to build a positive relationship with
your tenants so that they will continue to rent from you long term.

Credit Reporting

Make sure that you understand how to handle credit reporting. You want to make
sure that your lease states that you report payments to the credit bureaus. This can be
a very positive aspect for the right tenants. You also want to make sure that you have a
lasting relationship with the company as well to handle the reportings. There is a
process to how you have to report and you should be informed on how to do so
beforehand.

Airtight Lease

The most important way to keep yourself eviction free is going to be to have an
airtight lease. This is why it is so important to make sure that your lease is created by a
professional attorney and that you personally go over the lease with your tenant so you
can know for sure that they understand the agreement that they are signing. If there is a
loophole in your lease, when it comes time to evict, you can be sure that your tenant will
find it.

Reasons A Student Fails in Business and C Students have a Better Chance

Most people are prone to commonly believe that students who do well in school,
as in they get the highest grades will be more apt to work harder but this is not usually
the case for many reasons. Surprisingly, students who have more of an average grade
history are projected to do better in the business world. There are many different
considerations that most people do not realize when it comes to seeing the differences
between these two groups of individuals. These differences include things such as work
ethic and their basic attitude structure.

The talk verses the walk

This is a huge difference that you can vividly see between these two groups of
individuals. Most students that are the top of their class are big when it comes to talking
about all of the things that they are able to do. They always believe that they are the
smartest person in the room and often because of this mentality when it comes to
business, they often fall into the habit of promising things they are not able to fully
deliver on. Students on the other end of the equation, who may have done averagely in
school understand the benefits long term of under promising and over delivering. They
know that if you are stuck in the mindset that you are the smartest person in the room
that you will put yourself in a position where you have no one to learn from and nothing
to gain.

Me Mentality

Students that got the highest grades in school were the best of the best and
rarely team players. They fought hard to individually be the best at everything that they
set their mind too including grades and sports as well. They rarely have to work with
others to figure out how to solve problems because they feel the need to rush ahead
themselves and solve it in order to acquire the praise from their parents and teachers.
Students who received average grades in their formative years knew exactly how to
work with others to even out the workload as much as they possibly could. They had a
game plan to work smarter and not harder. They did homework together, studied
together and worked in packs to get everything passed in their classes. This set of
students obviously translated better into teams when they went into the business world
than those that only worked by themselves.

Credit Vs Blame

The individuals who are still riding the high of a 4.0 GPA and the praise from
high school and even college are seldom the first ones, if ever at all, to take the blame.
They have less experience in having to answer for doing something that did not meet
the highest of standards. They are the first ones to take credit when something goes
right but the last one to stand up and take responsibility when something tends to go
wrong. Average students are more prone to know how to properly take responsibility
when something was not done correctly. They take the blame when it is warranted.

Taking the High Road

It is a key quality for a business owner or anyone working in business for that
matter to be able to take the high road. You can see a clear difference between those
who know how to do this and those that do not. One of the places that this is clearly
seen is how they respond to negative reviews. Taking the high road is knowing how to
stay in your lane and focus on your growth while ignoring any negative commentary in
the other lane.

Conclusion

It may seem easy to believe that by praising the students who do well in school
that we are doing them a favor when in reality, it is not preparing them for the real world.
You can not take a prideful path when it comes to being in the business world. You
need to know how to work as a team, take the blame when necessary and work for the
better of the entire group rather than just themselves. You can not expect to simply be
an alpha and be diligent enough to get everything done on your own. In the end, a pack
mentality will be much more of a benefit in the long run.

How to Prevent Fires as a Landlord

Being a landlord is a large responsibility and you must be prepared for everything
that can possibly come up. Still, there are some things that you simply cannot prepare
for specifically but you can work diligently to prevent them. An example of this is
knowing how to prevent fires when you are a landlord. Remember, it is important to be
prepared even for the things we never expect to come up. One of our own properties
had a fire recently. The fire was contained and no one was hurt. This is why it is
important to be prepared and know how to properly react.

Ways to Prepare

There are many things that you can do as a landlord to prepare for fires. One of
the main ways is to make sure that you are complying with local fire codes in the area in
which your property is located. There are ordinances and local fire codes that you can
read through that will help you stay legally protected while also keeping your tenants
safe. If you do not feel comfortable walking through the property on your own, you can
have a local fire inspector come do a walkthrough.

Talk to your Tenants

There are also things to discuss with your tenants when it comes to fire safety for
your property. You need to set strict house rules for all of your tenants, put them in
writing and have them verbally explained to the tenant as well. You also want to be sure
that you are constantly checking the smoke detectors in each property unit. You can
also add carbon monoxide detectors to your properties to help detect when too much
CO is detected in the home.

Plans and Rules to Establish

One of the most obvious but sometimes forgotten things to consider is to have a
fire extinguisher on each floor of the property. Fire extinguishers may not be able to take
down larger fires but can be easily used to contain small flames in controlled
environments. It is also important to have a strict, “no smoking” policy. You need to
make sure to enforce this policy in and out of the house. You also need to be sure to
follow up on any suspicious activity to show your tenants that you are serious about this
policy. Another thing you do directly for the unit itself is to establish grilling rules or ban
the use of grills all together. If you are going to allow grills, then you need to make sure
that they are being used properly. Your tenants need to know how to check propane
tanks for leaks and keep the grill a minimum of ten feet away from the unit at all times. It
should never be allowed under any circumstances to have a grill on a small patio or
under any type of overhang.

Protect in Case of Emergency

You can do everything that you need to do to prevent these scenarios and still
find yourself running into them. This is why you need to make sure that you are covered
if an incident does occur. It is important to have a clearly understood escape plan,
especially if you have a multifamily unit. You also want to be sure to review this escape
plan with your tenants so that they are sure to understand what to do and where to go in
case of a fire. You should also require your tenants to have renter’s insurance. These
policies ensure that the tenants can recover their personal items in the case of an
emergency occurring. You want to make sure that your tenants feel comfortable
reporting any issues to you that may lead to emergencies down the road. Also, when an
emergency does occur be sure to document everything that you have done to help
prevent the incident. For example, if the fire was caused by a lit cigarette and you have
a no smoking policy that has been provided to the tenant, be sure to keep those
documents.

Conclusion

As landlords, you can not expect to be ready for every single incident that may
happen. When you are on top of preventative measures you can feel rest assured that
when an emergency does occur, you and your tenant are both ready to take it on. By
clearly communicating your expectations with your tenant, executing a safety plan and
are willing to hear your tenants concerns when they arise you are creating a safe
environment that is prepared for any disaster that may occur. Stay calm, stay prepared,
stay diligent and stay documented.

Investing in Mobile Home Parks

Affordable housing is a legitimate concern in the real estate market. Not only considering when buying for yourself but also thinking of long term rental properties to own as well. Mobile home parks are a two sided coin. On one hand, they are usually fairly easy to obtain properties and most can be acquired for under fifty thousand. On the other hand, depending on the property itself, the city or town may look down on the property for poverty level or crime rates. There are ways that you can invest in mobile home parks to make sure that you are keeping a long term cash flow at hand.

Challenges

There are many challenges that one might face when looking into purchasing a property in a mobile home park. You have to be realistic about where you’re buying and the cultural climate, no matter where you are buying properties. When you are realistic about the cultural climate going into a property then you can prepare yourself for anything that might arise. There are also challenges that arise when trying to create mobile home parks to increase your rental revenue in a certain area. Most cities do not want mobile harm parks because they are within the belief that they bring higher crime rates to the area.

Benefits

There are also many benefits to look into when deciding on purchasing a pre existing or creating a mobile home park for your own benefit. You can use it to your benefit for paying off land, where tenants will pay the land fees while the value of the land will continue to go up. You can aquire a newly renovated mobile home for an average of forty-five thousand and with the ability to rent at two to three times below the market rate, you can usually acquire long term tenants somewhat faster than you can with other properties. This is a great buy for people who are new to the world of buying and renting properties. You go in with less capital than you would for most other properties and can buy multiple at a time.

Conclusion

Mobile home parks, like any other investment have both upsides and downsides. It is about finding the right property or the right land to place the mobile home on. Location has a lot to do with how things will turn out in the long run. If you choose to purchase for an area with a high crime rate then you run the risk of the city not wanting to host any mobile homes at all. You also run the risk of having issues with break ins and crimes of other sorts. On the other hand, if you use the mobile homes to assist in land buys, then you can have the tenant pay the land fees and continue to hold on to the land as the value goes up over the years.

You have to weigh out the positives and the negatives when dealing with mobile homes whether you are purchasing them as rental properties or acquiring them to put onto land that you are buying. If you can find the correct location and the best deals for both the acquisition of the mobile home and the land, they can make for a very lucrative long term deal.

Tenant Screening Tips

There are many tenant screening tips that can be beneficial to you long term in the real estate business. When looking for tenants to rent your properties, you want to be sure that they are individuals that you want to be able to form a professional relationship, often long term. You want to be able to trust many factors, that they will treat your property with respect, pay their rent on time and not cause you any unnecessary issues while they are a tenant in your property.

Key Tips

There are some tips that I can give you when interviewing with new tenants that you may not have previously thought of. One that may not come to mind for everyone is to walk the applicants back out to their car after you speak with them. If they keep an unkept vehicle, they will commonly treat your property the same way. Also, instead of asking them whether or not they have an animal, ask them how many animals that they have. This is a good way to catch them off guard because if they do have animals, they will assume that you already know about them. Do not let them try to assure you that their animal lives elsewhere, this will not be the case. The animal will live on the property that you are leasing and should be tied to the application as such.

Background Checks

Background checks are extremely important when verifying possible tenants for your properties. Always, with no exceptions, do a credit and a background check on any tenant and all adults that will be possibly occupying your properties. Do not accept anyone that has a history of being a felon to rent at any of your properties. They will normally violate your HOA and cause general problems for you and your property. You will also need to be up to date on other laws in your areas concerning things such as service dogs. Service dog laws are generally different state by state. There are only certain animals that will be considered a service animal by the state and they need to have the proper papers in order as well. You subsequently cannot charge them any kind
of additional deposit or pet rent for any service animal.

Conclusion

Understanding these initial key tips for screening possible tenants will help you long term find the best tenants and save you headaches down the road. Paying attention to the small details in the beginning is a good way to make sure that you will have the right tenants moving in in the first place and be able to move forward with a rental agreement with less issues to worry about during their lease period. This may seem like a lot of paperwork in the short term, but there will be even more paperwork in the long term if you do not take these steps from the start of the process. This is also a good reason to look into possibly hiring a solid management company for your properties to handle all of the screening for you.

4 Things that your kids need to understand about money

When it comes to our children, we try to do everything that we can to prepare them for the future that we want them to have and most often the future that they want as well. There are four things that your child needs to understand about money and financial wellness. As a parent, it is important that you take the time to go over these four things and help them plan for a solid financial foundation in the future. When you take the time to do this, you are showing your child how to manage their financial wellness at a young age.

Asset and Liabilities

The first thing that you want to go over with them is the difference between an asset and a liability. Assets will put money in their pockets while liabilities will take money out. The more assets that someone has, the better prepared they are when anything takes a hit at their financial foundation. This is a reality that the world is seeing in full color right now with the current pandemic going on. When you teach your child to maintain as many assets as they can you are teaching them the importance of being prepared for whatever it is that the future might bring.

Cashflow and capital gains

The next thing that you want to go over is the difference between cashflow and capital gains. When you invest with the ideal of capital gains, you have no actual control over whether or not things go up or down. When you invest with the purpose of maintaining and building cash flow, you have the benefit of having a long term asset in place that you can have bringing you in funds on a regular basis.

Good debt and bad debt

You also want to discuss with them the difference between good debt and bad debt. Bad debt would fall under things like credit cards, vacations or other mundane things you do not necessarily need. Good debt is found in examples such as rental properties where the tenant would pay your debt for you and grow into long term cash flow. Most good debt like the provision of housing for others can also acquire you some tax breaks as well.

Financial self education

Make sure that your children understand that they need to have their own financial education as well. Having wealth and not understanding that wealth is useless at its core. You never want them to be in a position where they have to rely on other people in order to figure out what they need to do with their own money. When they have the knowledge to know what is best to do with their money, then they can move forward to having a better financial future.

Conclusion

Making sure that your children have a solid foundation for their financial future is important. It is your responsibility to give your best shot at a solid foundation in the future. Take the time to teach your children about financial wellness and they will forever be grateful for it. They will appreciate that you took the time to prepare them for their future.