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“I Have Too Many Houses And Not Enough Cashflow – What Do I Do?”
Joe: Hey, it’s Joe Crump. Here’s another video for the blog. Question is, “I bought sixteen houses over the past year using the subject to method. The value of the houses is almost $2 million and there’s about $300,000 in equity in my portfolio. Each of them have an average of $400 a month positive cash flow and all of them are rented. It’s pretty exciting to be able to buy houses without using credit or without using any down payments and I love getting the checks in them every month.” Congratulations, by the way. That’s a great achievement, being able to put together a couple million dollars in one year is pretty impressive, to build that kind of portfolio. And quite doable. I’ve had a lot of people that have done the same thing, but I don’t mean to say that to diminish what you’ve done, that’s wonderful.
Joe: “But here’s my problem. I’m now spending so much time dealing with the tenants I don’t have time to do more deals and the income from these properties isn’t enough to support me and my family, even though I’m having some success and I’m technically a millionaire on paper. I struggle to pay all my bills and I’m working a lot of hours doing stupid things for my tenants. What would you suggest?”
Joe: Well, right off the bat, don’t deal with your tenants. Get a property manager, or get somebody to manage the properties for you. Either hire somebody and have them do it your way, or find a good property manager. In some areas, I find there just aren’t good property managers. But in a lot of areas, if you’re in a larger city, you’re going to find good property managers that’ll work in the areas that you like and make sure you get referrals, make sure they’re licensed, you know, go through the process with the. Make sure they would manage them the same way you would. And kind of count on the fact that they won’t. They won’t be as good as you, probably, they won’t be able to pay as much attention as you. But they will do it. And typically it costs you 10% of the rent in order to get a property manager. So, you know, if you’ve got $1,400 coming in on a property, it’s going to cost you $140 a month out of your rent to pay toward that to manage that for you. But it’s going to free up so much time that you’re going to get your life back. And you’re going to be able to get back to making money.
Joe: You’re going to get back to being able to do deals that actually are worthwhile that make money for the long term. I suggest when you’re starting out as a real estate investor that you don’t start by building a portfolio. If you go back to the very first video that I did in this series, I talk about the first thing you need to do is learn how to put a deal together that you can flip and bring in cash. Once you have cash coming in and you can replace your income and you can support yourself, then you can do this full time and then you can start building your portfolio. You did it backwards, I mean, there’s nothing wrong with the way you did it, you know, bough $2 million worth of property – that’s great. But, if you had built the cash flow first, you wouldn’t be having this problem now. You’d just be really happily having someone manage this stuff for you and do this other stuff for you.
Joe: So, first of all you need to get somebody managing the property for you and you need to change your focus from building your portfolio, don’t stop, but, change your focus from building your portfolio to buying properties that you’re going to flip and take five, ten, thousand dollars out of every time you flip a property. Which is very doable using the for rent method. And it’s also, it’s scalable and it’s systematizable, and you can create processes for it, you can use the Automarketer, and most of those systems are already built within the Automarketer so that you can bring leads in all the time, convert them to lease option people, have somebody who helps you find buyers, for you, you know, you talk to the sellers, maybe later you hire somebody to talk to the sellers for you, don’t do that at the beginning, just put the deals together, you know, make these chunks of money, you know, do that two, three, four or five times a month and you’ll be, you know, you do this two times a month with you know, $5,000 that brings you in $120,000 a year. That’s a, you know, a six figure income by doing two deals a month.
Joe: It’s really not that difficult. It doesn’t cost you anything to do it. It doesn’t put your credit on the line, it doesn’t’ cause you any, you know, it doesn’t cause you to put up any cash. These for rent method deals really do make a lot of sense to build your business foundation upon. And to be able to scale out, because you can work in one city, you can max out that city, you know, get the most leads going using the sequential text blast system that we have in the Automarketer. Then you can, once you get that up and running, you get your boots on the ground, and you get people that are working with your buyers, you get people that maybe are calling some of your sellers, then you can expand out into another area and say, okay, I’m going to try Kentucky, I’m going to try Atlanta, I’m going to try Idaho, you know, I’m going to try Texas, and you’re going to put these in these different places and you’re going to keep adding cities.
Joe: So instead of doing one or two deals a month, or three deals a month in one area, you’re doing one or two or three or four deals a month in two areas or three areas or four areas and you’re income starts to grow exponentially. Now, to do that you have to automate, you have to outsource, you have to get some other people working for you so that all you’re doing is paying attention and looking at what’s going on in the market.
Joe: Anyway, I hope that helps. Good luck.