46) When to Remodel A Rental & How to Become a Millionaire

Real Estate Investing with House Money

House Money Weekly

In this week’s House Money Weekly segment, Lauren and Alan get together with their special guest Amanda Orson. They discuss blog 144, When should I renovate a long term rentals? New investors love to make a property their own and put their own touch on it but that's not always the best plan. Alan wrote three scenarios to tell you when you should renovate a long-term rental. The first scenario is you can't rent it as is. Even if it looks ugly to you or if it looks like you don’t want to live in it, that doesn't mean the tenant didn’t want to live in it. A tip from Alan is to try to rent the property in its current condition and if you get multiple tenants applying then you know the property is fine. Lauren believes there are some situations where there's a need for renovation because she knows she can get a good return if the countertops were granite. The second scenario is if the renovation pays for itself in three and a half years. If you put $20,000 renovation in a property and raise the rent to $476, then that's a 3-and-a-half-year payback period which is great. Every new investor wants to make the property pretty, but Alan believes that if you can have your house ugly in the street but sexy in the spreadsheet then that is how you make money. The third scenario is when you're going to sell it. This is the time the property is in its best condition and you give it a new look and you don't have to renovate everything. The two ways people lose the most money is when they bought for the wrong price and the second is by over renovating.

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Mortgage Minute: Jasmine answers the question: Why might I be denied for a mortgage?

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Real Estate Is Easy Interview

Lauren interviews Jonathan Rich. He is a real estate agent and a business owner in Atlanta, Georgia. He spent his 20s playing rock and roll music and traveling around the country when a random series of events led to flipping a house in 2007 in town Atlanta, and it didn't work out, so they call it the flip that flopped. This led to a realization that the greatest failures are the things that can lead you into real success. Lauren asks if the initial flip was a failure because of mistakes that he made in the underwriting or if it was part of the 2007 crash. Turns out, it was mostly the crash. Even though Jonathan experienced that failure, he still continues because of his natural optimism and because of his very supportive wife. Also, the process of taking that house from something that was broken and old into something that was beautiful lit a spark in him. Lauren gets Jonathan’s take on who should get their real estate license, and whether all investors should consider it. Jonathan shares that he manages his geocentric (everything within 5 miles) business by having really good professionals and teams around him. Jonathan self-managed his properties from 2014 until 2019 and he started a partnership in 2019 which has 50 units now. With that partnership it became time to start a company because he couldn’t personally manage 75 to 150 units alone. Being in the real estate industry for almost 15 years, Jonathan’s advice is you must have skill and you have to know what you're doing. Also, you must be able to make good decisions and have a great financial infrastructure to weather the dips in the market and slowdowns. Jonathan's advice to the people who want to be in real estate is to just start. Put one foot in front of the other because there's no bad time for it. Lastly, Jonathan makes real estate easy by being authentic and being himself. Alan agrees, and the thing he doesn’t want to do is cold call because it just isn’t him. Amanda plays to her own strength of data and analytics.

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Guest Host's Segment

Guest Host Amanda talks about Alan Corey's book entitled A Million Bucks by 30. Amanda read this book 5 years ago and gives Alan credit for putting her on the real estate investing path. Alan gives a refresher of some of the steps in the book to get a million bucks by 30 and shares his experience when he was saving his money to achieve his initial goal of buying a property. Amanda highlighted 2 quotes from “A Million Bucks by 30” book to ask Alan if he still believes in those pieces of advice or if he changes his mind, what he learned from it. Alan stands by one, but on another he’s changed his mind!

Alan’s Book: https://www.amazon.com/Million-Bucks-30-Overcome-Millionaire/dp/0345499727/

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