Tell me if you’ve heard of this before. You get attracted to real estate because of the passive income. You learn how to analyze deals, make offers, and hooray you got the rental property that’s going to set you down the road to early retirement. However, in an attempt to boost your returns you started doing all the cleaning and maintenance yourself. It doesn’t take long before you realized uh oh, I bought myself another job. Ask me how I know 😉
For our January Snowball Meetup, I had my friend J Martin come by to how he is able to utilize real estate to quit his 9 to 5 and travel the world. J is also the organizer of SF Bay Real Estate Summit. You should go check it out if you’ve never been. I’ve been every year except for the first one and each time I’m able to form good connections or learn some nuggets that elevate my real estate investing. I can also see the friends that attend this event hustling propel their businesses.
How Do You Want to Spend Your Time?
J to me is someone who is very conscious about living his life. There are a thousand and one ways to make money in real estate and what you want to do has to be consistent with your goals and how you want to spend your time. It’s hard to be passive if you want to wholesale for example.
What J ultimately wanted was to travel the world. Just last year he’s been to Medellin, Bali, Thailand, Vietnam, etc and totaling about 20+ countries now. He was able to utilize the income from his W2 job in real estate loan processing to qualify for loans to grow his rental business until he build up to about 20+ short term rental units to free himself from the rat race. The secrete is how he builds his standard operating procedures (SOP’s) for his team of virtual assistants and remove himself from the business.
It’s not any secret. J started by going to lots of Meetups. Initially he wanted a fourplex and started buying around 2012 time frame. However, he later changed gears because the FHA loans were hard to get accepted esp w/ the long closing time associated with it. Influence by Al Williamson, he switched into short term rentals by signing standard leases with the landlord but write in sublease rights. He does all 30+ day rentals and the average for his properties are actually 57 days.
There are definitely some seasonalities that comes with short term rentals. Winters tend to have higher vacancies because people aren’t traveling for work as much and summer is almost 2x the traffic and earning because of all the interns. J signs essentially 1 year leases with options to renew with the landlord at a reasonable increase. The landlords like this because this is essentially a net-net lease, it’s like having your property manager pay you. The responsibilities of property management etc are pushed off to the short term rental operators and it’s a lot more hands off. The one thing J doesn’t lease is properties with HOA’s.
Take Yourself Out of the Business
Think about this: McDonald’s at the time of writing this article is a $163.5 billion company and it’s run by essentially high schoolers. These principles are similar to the ones mentioned in Michael Gerber’s E-Myth. You don’t need to be the one doing all the technical work. Think about the Big 4 accounting firms. They have extensive documentations so that each year they can follow the procedures from last year to complete all the lengthy tasks involved to file tax returns or audit.
If there is something you need to do more than once, you should document it in your SOP. You can even screenshot or record your desktop, literally narrate what you’re doing a la animals on Discovery Channel style, and upload to Google Drive or some kind of centralized sharing with the rest of your team.
Get feedback on your SOP’s. Ask someone else to read it and point out if there are unclear items. Put it to the test with your team and ask them to make tweaks on what is working well or not. It is also helpful to have decision trees that help your team be resource and make decisions. They should only come ask you for help as a last resort. When they do, coach them to not just present bunch of information but some thoughts behind the issue along with their recommendation.
Currently J has 3 VA’s each working about 30 hours a week. Imagine trying to do that all by yourself you’d be working 90 hours a week yourself *gasp*
If you like this, check out our monthly Meetup in San Jose by Santana Row where we get some of the most brilliant real estate investors to come share their tips and tricks. Be sure to subscribe to the blogs so you get all the notes if you can’t make it.
