Author: Matthew Adair

  • How to Easily Evaluate a Rental Property with Real Numbers

    How to Easily Evaluate a Rental Property with Real Numbers

    For beginners, running the numbers on a potential real estate deal can seem complicated. 

    It doesn’t have to be.

    If you’ve been practicing good budgeting habits with your personal finances, this part should actually be easy. 

    The key is simple: more needs to come in than goes out.

    When you have more coming in than going out, that means you have positive cash flow.

    For lawyers and professionals acquiring rental properties to accelerate our journeys to financial freedom, we don’t need to overcomplicate things.

    What we need to know is whether a property is going to put more money in our pockets than it takes out.

    Today, we’ll look at a real example of how I quickly and easily evaluate potential deals in my primary market.

    If you haven’t already, check out my previous post on evaluating real estate deals for a detailed explanation on why I focus on the below elements.

    As a quick refresher, let’s first look at the fixed costs and speculative costs involved in evaluating rental properties.

    There are fixed costs and speculative costs involved in evaluating a rental property.

    Whenever you evaluate a rental property, there are some fixed costs and some speculative costs involved. This holds true whether you are a beginner or an experienced investor.

    It’s helpful to differentiate between the fixed costs and the speculative costs. In a lot of ways, we can control the fixed costs, but we cannot control the speculative costs.

    Fixed costs generally include reoccurring monthly bills that are relatively constant.

    The main fixed costs you’ll want to know when evaluating a rental property include:

    • Mortgage payment (Principal and Interest)
    • Taxes
    • Insurance
    • Utility Bills
    • Property Upkeep
    • Preventive Maintenance

    Speculative costs include those unpredictable, irregular costs that do not occur every month and maybe don’t even occur every year. 

    I separate the speculative costs into three main categories:

    • Vacancy Rate
    • Unexpected Repairs
    • Property Improvements

    Vacancy rate refers to the percentage of available units that are unoccupied at a particular time. When running the numbers on a prospective rental property, I recommend adding in the cost of 5% vacancy.

    When you own rental properties, things are going to break and require money to fix. If you target properties in decent condition, I recommend saving 5% of the monthly rent for unexpected maintenance. 

    If you don’t improve your property over time, you risk your unit becoming unattractive. Again, if you target decent properties to begin with, I recommend saving another 5% per month for property improvements. 

    With these costs in mind, we can now quickly and effectively run the numbers on any available property.

    Let’s take a look at a property that recently became available in my target market of Chicago.

    I regularly check available properties in my target area in Chicago.

    I have a searched saved on the Redfin app for multifamily properties within a certain price range in my target areas of Chicago.

    That makes it easy to scroll through the listings a few times every week to keep myself educated on my local market.

    I do this for a few reasons, regardless of whether I’m actively shopping for a property.

    white ceramic sink near brown wooden table indicating a nice rental property but do the numbers check out.
    Photo by Huy Nguyen on Unsplash

    First, I want to know what new properties come on the market. I’m interested to see if developers and rehabbers are still drawn to my area.

    I also check to see how much properties have sold for recently so I can stay on top of market conditions. For example, I’m curious if sellers are accepting below-asking-price offers and how long properties are staying on the market.

    I’m also looking to see if there have been any price reductions on properties that previously caught my eye.

    All of this simple research helps me move quickly when an attractive property becomes available.

    This research has also helped me develop a list of basic requirements I look for in a rental property.

    Before running the numbers, a property has to match my initial requirements.

    Before I run the numbers on any property, it has to satisfy some basic requirements. This is not an exhaustive list, but here are some of the most important factors my wife and I evaluate when considering rental properties in Chicago:

    1. Location, location, location. In Chicago, proximity to the L and social life (coffee shops, restaurants, bars, etc.) are crucial. Most of the young professionals we rent to are still in the “going out” phase of life. They want to live in fun neighborhoods so they can enjoy themselves when they’re not working. They typically stay in our apartments for 2-3 years, oftentimes before buying a place of their own and “settling down.”
    2. Taxes. Property taxes can eat away your cash flow. We have high property taxes in Chicago across the board, but taxes vary widely from neighborhood to neighborhood. I look for properties in areas that have more attractive taxes.
    3. Big bedrooms. One of the most common questions I get when I do apartment showings is, “Can I fit a king size bed in here?” People love big beds these days. This can be a challenge considering Chicago’s standard 25-foot wide lot. I look for properties with a minimum bedroom size of 10 x 10.
    4. Outdoor space. Young professionals want to have outdoor space, even if they never use it. When I was a renter, I always wanted an apartment with a balcony for my grill. It didn’t matter to me that I only used it a handful of times each year. Maybe having outdoor space made me feel more grown up?
    5. Parking. Even though Chicago is a very public transit-friendly city, people still like having cars. Because most young professionals aren’t using their cars every day, they want to keep it safe in a dedicated parking space.

    If a property becomes available that meets these requirements, I’ll then run the numbers.

    Only after confirming that a potential property meets these requirements do I actually run the numbers.

    There’s no reason to waste time on a property that may project well in a spreadsheet but will cause me nothing but headaches as a landlord.

    The other day, a new property popped up that caught my eye: 2501 N. Sacramento Ave.

    It’s a five-unit apartment building listed for $1,800,000 and located directly in my target zone.

    Here’s the listing description from Redfin:

    Fully Gut Renovated 5-unit building, a prime turnkey investment opportunity in the best Logan Square Location Possible. Double Vanities, Fully built out walk in closets, in unit W/D, tankless hot water heaters, thin shaker kitchens and full height quartz backsplashes are just a few of the features that make this building feel more like condo living. Perfectly situated just steps from the Logan Square Farmers’ Market, residents can enjoy an eclectic mix of trendy bars, restaurants, cafes, and shops right at their doorstep. Renovation done with full plans and permits, include a new roof, windows, insulation, drain tile system with sump pump, back deck, and still warrantied appliances!

    It’s not always the case, but in this instance, the pictures seemingly match the description of a beautifully renovated property. Of course, we can confirm the quality of the work when we tour the property.

    So, this property passed my initial screening. Now, I can run the numbers to see if it would be a good investment.

    By the way, I target gut-renovated properties because I have a full-time job as a lawyer and don’t have the time to dedicate to a major renovation project.

    Let’s plug in the numbers to see if this would potentially be a good investment property.

    Just because a property looks nice and is in a great location does not mean it’s a great investment. As investors, it’s our job to make sure the numbers work out so more money comes in than goes out.

    Using the cost categories above, we can pull most of the information we need directly from the listing.

    For example, Redfin (like most sites) provides a useful payment calculator where you can adjust the downpayment, interest rate, taxes, etc. for any property based on your personal situation.

    Home office vibes perfect for running the numbers on a rental property.
    Photo by Paul Calescu on Unsplash

    Here are some tips before you get started:

    • It’s a good idea to talk to your mortgage broker ahead of time to learn what mortgage rate you will likely qualify for and what downpayment you’ll need.
    • Remember, this is an initial evaluation. Before you make your final decision on a property, you’ll need to confirm these numbers with your real estate team during the due diligence period.
    • Try to be conservative with your projections. When you otherwise like a property, the temptation is real to modify the numbers so it looks better on paper.
    • You’ll notice listing agents may try to enhance a property’s value by suggesting “potential rent” or “market rent” instead of the actual rent. Don’t fall into this trap and end up with a nice-looking property that makes no money.

    OK, let’s look at the numbers on this property for educational purposes only. You are responsible for running your own numbers on any potential deal.

    2501 N Sacramento Asking Price: $1,800,000

    Monthly Rent: $13,840

    Mortgage Payment (Principal and Interest)$8,982
    Taxes$1,429
    Insurance$400
    Utility Bills$350
    Property Upkeep$200
    Preventative Maintenance$200
    Vacancy Rate (5%)$692
    Unexpected Repairs (5%)$692
    Property Improvements (5%)$692
    Total Monthly Cost$13,637

    Monthly Cash Flow (Rent – Costs): $203

    It took me less than five minutes to do this initial evaluation.

    I can see that based on these numbers, the monthly cash flow is $203. We’ll talk about what that means in a moment.

    A few notes on the above numbers:

    • For the mortgage payment, I estimated a 25% downpayment, which is common for investment property loans, and a 7% interest rate.
    • Taxes are a major cost that can make or break any deal. Make sure you are familiar with how taxes are assessed in your market. For example, in Chicago, property taxes are reassessed every three years. That means taxes go up every three years.
    • Many property listings will indicate the prior year’s taxes because they are lower. This particular listing has the prior year’s taxes, which I know are soon going to change for the worse. For now, I’ll run the numbers with the current taxes but would definitely account for higher taxes before moving forward with this deal.
    • Property insurance is a real wildcard these days. Insurance costs are going up everywhere. You’ll need to talk to a good insurance broker for an accurate estimate. I used my experience in the neighborhood with similar properties to make a reasonable estimate.

    So, what have I learned from running the numbers on this property?

    First, this is a beautiful property in a great location. If I made my decision based only on the pictures and the location, this would be a winner.

    Unfortunately, the numbers tell a different story.

    This property would not be a good investment for me. I invest for cash flow. For me, this property is way too expensive for only a couple hundred dollars of monthly cash flow.

    At a price point of $1.8 million, I would only be interested if this property had a monthly cash flow of at least $4,000 per month.

    Now, your preferences and goals may be different. Maybe you’re more focused on the other benefits of investing in real estate, like appreciation and debt pay-down. In that case, you may view this deal differently.

    So, is that it?

    Cross this property off the list and move on for good?

    Not necessarily.

    In our next post, we’ll explore ways to make this property a more attractive investment.

    We’ll take a look at how the numbers change if we can successfully negotiate the purchase price, find a better loan option, and improve the monthly rent.

    Real estate investors: let us know what you think of this property as a potential investment.

    Would you be interested in moving forward at these numbers?

  • Running the Numbers on RE Deals Should be Easy

    Running the Numbers on RE Deals Should be Easy

    For beginners, running the numbers on a potential real estate deal can seem complicated.

    It doesn’t have to be.

    If you’ve been practicing good budgeting habits with your personal finances, this part should actually be easy.

    The key is simple: more needs to come in than goes out.

    When you have more coming in than going out, that means you have positive cash flow.

    Today, we’ll discuss what information you need to forecast positive cash flow. My goal is to make this part of the process as simple as possible.

    I’ve read full books dedicated to evaluating the numbers on real estate deals. If you want to take a deep dive, I recommend Real Estate by the Numbers: A Complete Reference Guide to Deal Analysis by J. Scott and Dave Meyer.

    But, the truth is that most of us lawyers and professionals targeting rental properties as a supplemental income stream don’t need that kind of depth.

    Sure, if you’re targeting large multifamily properties or hoping to make rental property investing a full-time pursuit, you’ll absolutely want to pick up a book like Real Estate by the Numbers: A Complete Reference Guide to Deal Analysis.

    For the rest of us acquiring rental properties to accelerate our journeys to financial freedom, we don’t need to overcomplicate things.

    What we need to know is whether a property is going to put more money in our pockets than it takes out.

    In other words, we want to buy assets, not liabilities. When we’re tracking our net worth each month, we want to see that a rental property is helping.

    So, the question is: how do I know if I’m buying an asset and not a liability?

    Let’s take a look.

    There are fixed costs and speculative costs involved in evaluating a rental property.

    Whenever you evaluate a rental property, there are some fixed costs and some speculative costs involved. This holds true whether you are a beginner or an experienced investor.

    Fixed costs generally include reoccurring monthly bills that are relatively constant.

    Speculative costs include those unpredictable, irregular costs that do not occur every month and maybe not even occur every year.

    It’s helpful to differentiate between the fixed costs and the speculative costs. In a lot of ways, we can control the fixed costs, but we cannot control the speculative costs.

    Regardless, we need to account for both in our deal analysis.

    Here are examples of fixed costs when evaluating a rental property.

    The clearest example of a fixed cost is your mortgage payment. If you take out a 30-year fixed-rate loan, you’ll know exactly what your monthly mortgage payment will be for the next 360 months.

    You’re required to pay that amount each month, that’s why it’s a fixed cost. Easy enough.

    I also include insurance costs and property taxes in my fixed costs. These are fixed costs, at least for 12 months at a time, that you are required to pay each month.

    You’ll oftentimes see the acronym PITI to reflect the above basic elements of a mortgage payment:

    • Principal
    • Interest
    • Taxes
    • Insurance

    It’s safe to also include utility bills, like water, trash, and common electricity, in your fixed costs since there shouldn’t be much variation month-to-month in these expenses.

    The same goes for landscaping, snow removal, and pest control. I refer to these fixed costs as property upkeep.

    The final category of fixed costs includes preventative maintenance, like regular HVAC tune-ups.

    black computer keyboard number pad indicating how easy it is to run the numbers on real estate deals.
    Photo by Aykut Eke on Unsplash

    Yes, it’s true that the cost of insurance, taxes, utilities and other bills will go up over time. But, you usually don’t see dramatic increases in these fixed costs year over year. At least, in ordinary times. Plus, rents also go up, which offset the higher costs.

    To recap, the fixed costs you’ll want to know when evaluating a rental property include:

    • Mortgage payment (Principal and Interest)
    • Taxes
    • Insurance
    • Utility Bills
    • Property upkeep
    • Preventive maintenance

    If your goal is monthly cash flow, there’s no excuse for ignoring any of these fixed costs when evaluating a rental property.

    Here are examples of speculative costs when evaluating a rental property.

    Speculative costs are, by definition, harder to forecast. Even for experienced investors, the best we can do is guess at what these costs will be.

    I separate the speculative costs into three main categories:

    • Vacancy Rate
    • Unexpected Repairs
    • Property Improvements

    What is vacancy rate?

    Vacancy rate refers to the percentage of available units that are unoccupied at a particular time. Obviously, vacancy is bad for rental property investors because we are not collecting rent from the unoccupied units.

    To calculate your vacancy rate, simply divide the amount of weeks (or days or months, if you prefer) in a year by the amount of weeks (or days or months) your rental unit was unoccupied.

    Then, multiply that number by 100 to see your vacancy rate as a percentage.

    If you have multiple rental units, add your units together to get your total vacancy rate, like I show you below.

    Vacancy Rate = (Weeks Unoccupied / Total Weeks) x 100

    For example, I have 10 rental units in Chicago. This past spring, we had eight lease renewals and two leases end.

    We filled one of the two units without a single day of vacancy. The other unit resulted in six weeks of vacancy so we could tackle some needed repairs. More on that below.

    This means that I had 6 weeks of vacancy spread over 10 rental units. To calculate my vacancy rate, I can take 520 (10 rental units x 52 weeks in a year) and divide that by 6 weeks:

    (6 weeks of vacancy / 520 weeks) x 100 =1.154%

    Now, what do we do with this information?

    This is where the guesswork comes in. That’s because there’s no guarantee that next year I will have a vacancy rate of only 1.2%. In some years, we have 5 or 6 units to turnover. We may have 24 weeks of total vacancy instead of 6 weeks.

    The best I can do is speculate what my vacancy rate will be moving forward.

    I wish I could tell you that a 1.2% vacancy rate is a good forecast. In reality, predicting 5% vacancy is a better idea. That allows for about 3 weeks to turnover a vacant unit, reasonable estimates in decent markets.

    So, when running the numbers on a prospective rental property, be sure to add in the cost of 5% vacancy.

    As an example, if a potential property brings in $6,000/mo in rent, subtract $300/mo to account for 5% vacancy.

    What are unexpected repairs?

    Remember the leaky toilet?

    When you own rental properties, things are going to break and require money to fix.

    Predicting how much money you’ll need for these unexpected repairs depends on a variety of factors.

    If you are handy and don’t have to pay a plumber to fix the leaky toilet, you’ll save money on these kinds of repairs.

    Likewise, if you have a new construction property instead of a 100-year-old property, you’ll likely need to do less repairs.

    The bottom line is you’ll have to make educated guesses how much you’ll need to save for these kinds of repairs.

    This is actually one of the main reasons I recommend beginner investors don’t quit their day jobs. It’s a powerful advantage to have income coming in from your primary job to help cover any major, unexpected expenses.

    If you target properties in decent condition, I recommend saving 5% of the monthly rent for unexpected maintenance. With our prior example of $6,000/mo in rent, you should deduct another $300/mo for unexpected repairs.

    You shouldn’t need to use that 5% every month, so that balance should build up until you need it.

    What are property improvements?

    I mentioned above that we took 6 weeks to improve one of our vacant units. The floors were in rough shape and the apartment needed a full paint job.

    By the way, these are two relatively easy jobs that can add a lot of value to a property.

    Since we were in great shape with our other units all being occupied, the timing was right to spend a bit of money and lose out on a bit of rent.

    In the end, we spent about $5,000 and have brand new floors and a nice looking apartment. We didn’t have to spend that money, but we risk our units becoming unattractive if we don’t keep them fresh.

    white and red love print box with numbers indicating it's not too hard to run the numbers for beginner real estate deals.
    Photo by Elena Mozhvilo on Unsplash

    How should you account for this type of property upkeep?

    Again, if you target decent properties to begin with, I recommend saving another 5% per month for property improvements. That’s another $300/mo subtracted in our deal analysis based on $6,000/mo in rental income.

    Too many beginner real estate investors skip these speculative costs in their deal analysis.

    It’s tempting to ignore these speculative costs when you otherwise like a rental property. You might see monthly rents of $6,000/mo and fixed costs of $5,000 and convince yourself that this is a great deal.

    By ignoring the speculative costs, you’ve ignored the additional $900 for vacancy, unexpected repairs, and property upkeep that this property will cost you.

    Those extra costs might make this property unattractive.

    You can easily find most of the information you need to run the numbers online.

    It has never been easier to access the key numbers you need to know when evaluating a rental property.

    Sites like Redfin and Zillow typically have all the information you’ll need for your initial evaluation.

    One of the most useful features of these sites is the mortgage payment estimator. You can quickly see whether the PITI payment is going to exceed the amount of rent you can reasonably expect.

    Because of high interest rates and high property costs, most deal analysis I’m doing today ends right there.

    Of course, if the PITI payment is too high, you can play around with the asking price to see at what cost the property might be worth pursuing. Just don’t forget to take into account the other costs discussed above.

    Note: above, I specifically wrote “initial evaluation.”

    Before closing on a property, you’ll want to confirm the numbers in the property listing are accurate and not being exaggerated.

    For example, you’ll want to get verification from the seller on the actual monthly rent. As part of the due diligence process, sellers are required to turn over the current leases.

    Sometimes you’ll see listings where the rent is listed as “maximum monthly rent” or “potential rent.” That means the seller is suggesting the apartment could rent for that much, but there is no lease in place for that amount.

    I’m always skeptical of listings like this. If it was so easy to obtain the maximum monthly rent, why didn’t the seller get leases for that amount? If they did, they could surely expect a higher sales price.

    Always confer with your real estate broker on what the rents are in your market. And don’t forget, a five-star real estate broker should be able and willing to teach you how to run these numbers.

    Likewise, you’ll also want to verify with your mortgage broker exactly what your monthly payment will be based on current rates and your qualifications. The same goes for verifying what your actual insurance costs will be.

    Did you notice that I did not include a cost for property management in the above?

    If you are pursuing your first rental property or have a small portfolio, I recommend you self-manage.

    Most importantly, you need to learn how to be a landlord.

    There’s no better training than first-hand experience. If you do end up hiring a property manager someday, you need to know how to “manage the property manager.”

    There’s another good reason why beginner investors should self-manage.

    Unfortunately, it’s hard to find good property managers who are willing to work with small investors. It’s a near certainty that your property manager will not care about your property as much as you do.

    Plus, because of the cost involved, a property manager will likely suck up most of your monthly cash flow.

    While it varies by market, in major cities you can expect a property manager to charge between 8% and 10% of the monthly rent. It’s hard to cash flow with that kind of drag on your profits.

    If your portfolio grows or your circumstances change to the point where you can no longer self-manage, be sure to factor in this major cost to your deal analysis.

    Buying a rental property does not require an advanced degree in math.

    If you’ve been reluctant to buy your first rental property because of that math involved, hopefully you now see that it doesn’t have to be that complicated.

    You need to account for certain fixed costs and predict some speculative costs.

    There are countless online calculators to help with the math. You can also use a basic spreadsheet.

    Plus, your real estate team can help you with running the numbers.

    In an upcoming post, we’ll run through some examples of how I run the numbers on potential rental properties.

    Experienced real estate investors: what did I miss?

    Beginner investors: what else would you like to know about running the number?

    Let us know in the comments below.

  • Does Being Good with Money Make You a Greedy Dragon?

    Does Being Good with Money Make You a Greedy Dragon?

    Have you ever been called a “greedy dragon” before?

    I hadn’t either before this week.

    I recently posted a video on socials talking about how lawyers and professionals should not let leaky toilets prevent them from investing in rental properties.

    Apparently, this video struck a nerve with the trolls.

    I was called a “bottom dweller”, a “demon”, and my personal favorite, a “greedy dragon.”

    I like dragons. So, that last one actually felt like a compliment.

    Why does being good with money wake up the trolls?

    There’s no shortage of internet trolls out there. And, there’s nothing special about me that caught the attention of the trolls this week.

    Haters are going to hate. Trolls are going to troll.

    But, there’s an important money lesson to be learned here thanks to the trolls.

    You see, these are the types of comments you get from people with limiting money beliefs. They’ve never thought about how money can be used as a tool to build a life of purpose.

    Instead, they only think of money as a dangerous weapon to be wielded for evil purposes. They automatically think that people with money are greedy.

    The saddest part is that these people would rather exert their energy attacking people than improving their own situations. These are the type of people who are likely to always be controlled by money, instead of the other way around.

    Now, I’ll give credit to the internet trolls where credit is due. At least these trolls are not hiding their limiting money beliefs.

    That’s a good first step that many of us can benefit from.

    You don’t need to stoop to the level of internet troll to have limiting money beliefs. These kinds of attitudes towards money are way more common than you think.

    One of my main goals in starting Think and Talk Money is for all of us to confront our limiting money beliefs so we can take control of our lives.

    If your relationship with money up to this point has held you back, you’re in the right place by reading this blog.

    Another good idea is to read a good money mindset book.

    A good money mindset book with help you think of your Money Why.

    Money mindset books can help you because they explore the emotional side of money. They will force you to think about money in a way you never have before.

    The best money mindset books don’t just talk about the numbers and math of personal finance. That not only makes the books more interesting to read, it also makes them so much more practical in the real world.

    Personally, I am striving to build the best life possible for my family. To do that, I need to learn more than just the numbers.

    That means I need to be good at not only making money, but also using that money to build a life on my terms. That requires finding a balance, which can be tricky.

    To help strike that balance, I’ve studied how others have done it. Then, I can take what I learn and implement those lessons into my own life. 

    Here are my favorite money mindset books, in no particular order:

    Being on vacation with family gives you plenty of chances to think about your Money Why.

    I highly doubt the average internet troll spends much time thinking about his Money Why.

    I’ve been on vacation recently and have had a lot of reminders of my Money Why. Of course, I’ve known my Money Why since I wrote down my Tiara Goals for Financial Freedom on a beach in 2017.

    Mission Bay Resort pool representing why I want to be good with money to build experiences with my family.
    Photo by Cory Bjork on Unsplash

    My number one goal is to be with my wife and kids as much as I want. The weird part is I wrote down that goal before I was even married or had kids.

    Yes, I want to provide for my family financially. But my Money Why is more than that. I don’t want to just provide money, I want to provide time. I want to be present and share experiences.

    To accomplish that goal, I need to be good with money. 

    If I’m good with my money, I can achieve financial freedom.

    With financial freedom, I can choose how to spend my time. That means I can choose who to spend my time with.

    To the Internet trolls, these goals make you a greedy dragon.

    What do you think?

    Is traveling with three young kids a vacation or just “parenting in a new location?”

    Anyone who’s vacationed with young kids knows that it comes with all sorts of challenges. I’ve heard vacationing with young kids described before as “just parenting in a new location.”

    There’s some truth to that. Figuring out sleeping arrangements, meals, and activities to keep the kids entertained can be a headache. It’s hard not to think that it would have been easier to just stay at home.

    Between the occasional meltdown and the tears, it’s fair to wonder why go through the hassle?

    I’ve had these thoughts creep into my head recently while on vacation with my family.

    Then, I realized why us parents do it.

    It’s to see your five-year-old try over and over again before finally reaching the Little Mermaid diving toy on the bottom of the pool for the first time.

    The pure joy on her face when she popped out of the water with the toy in hand is an image I hope I never forget.

    It’s to watch your three-year-old play with grandma and grandpa and hearing, “Grandpa, close your eyes!” as he completes his next prank to earn an eruption of laughter.

    It’s observing your wife at the playground as she manages a baby in a stroller while simultaneously encouraging her daughter on the swings and helping her son as he climbs too high.

    How she does it, and keeps a smile on her face, I’ll never know.

    It’s the little moments like this that make it all worth it.

    Is being good with money a requirement for these types of memories?

    Nah. But, if being good with money gets me more of these memories, I’m all in.

    It’s important to think about your Money Why regularly.

    Saying that I want to be good with money is not the same thing as saying that I want to be rich.

    Funny enough, people who are good with money oftentimes feel rich regardless of what their net worth is.

    A nice quote I saw at an ice cream shop saying you can't buy me love but you can buy me ice cream meaning you can buy experiences with money.
    Photo by Zoshua Colah on Unsplash

    On the flip side, people who make a lot of money but are not good with money often feel like they’re struggling to get by. As CNBC explained after talking with financial psychologists:

    Whether you’re aiming to save more cash or boost your overall earnings, it’s important to ask yourself what you hope to achieve by obtaining more money, Chaffin says. Otherwise, if you don’t change your internal money beliefs, you may still feel anxious about money even if you hit millionaire status.

    The takeaway is that it is pointless to make money without stopping to think why you want that money and what you’re going to do with it. 

    If you’ve never thought about money that way before, here are three powerful reasons to get you started: 

    1. Money can give you choices.
    2. Money can give you personal power.
    3. Most importantly, money can give you time.

    Money is nothing but a tool that you can manipulate to get what you truly want out of life. The thing is, you have to actually think about what you want if you are going to use that tool effectively.

    Being good with money does not make you greedy.

    Being good with money does not make you a greedy dragon.

    Money is nothing but a tool. You can use that tool to build a life on your terms for you and your family.

    For my money, there’s no better pursuit than that.

    Do you want to be good with money?

    What kind of life are you hoping to build?

    Let us know in the comments below.

  • Being Good with Money is About Consistent Choices

    Being Good with Money is About Consistent Choices

    Having taught personal finance to law students and young lawyers since 2021, I’ve picked up on a common theme.

    At the conclusion of class, my students tend to be motivated and excited to get good with money.

    This makes sense because we spend a lot of time thinking and talking about what our ideal lives look like. Then, we learn how to use money as a tool to build those lives.

    In the weeks following class, I usually hear from several students who want to follow-up about topics we cover in class, like side hustles or investing in real estate.

    I’ll meet each student for coffee downtown and give them some feedback on their ideas. I love these money talks over coffee.

    My students’ excitement to take control of their money and their lives is contagious.

    Their excitement rubs off on me. I leave these conversations motivated to check in on my own money strategies and goals.

    When our chat is wrapping up, I always encourage my students to keep me posted on their journeys. I invite them to check-in every few months so I can help keep them accountable and to adjust any plans we’ve put in place.

    Unfortunately, less than 10% of my students ever follow-up after these initial meetings.

    After a while, I figured out what was going on.

    See, every now and then, I’ll run into one of these former students at a lawyer event or hanging around the courthouse. I’ll ask them about work and life and eventually about the money plan we talked about.

    That’s when I usually hear something like, “I’m still thinking about that side hustle. I just put it on the back burner for now. I’m going to do it someday.”

    Do you see the problem?

    As a wise man once taught me, “someday” means “no day.”

    a sign that says today is a goo day meaning that someday is no day.
    Photo by Yuliia Martsynkevych on Unsplash

    Financial freedom is about consistent, intentional choices.

    Ask anyone who has reached true financial freedom how they did it, and you’ll pick up on something right away.

    You’ll quickly realize that people who reach financial freedom got there by making consistent, intentional choices with their money.

    They came up with a plan and they stuck with it.

    They didn’t say “some day.”

    Achieving financial freedom is not about being the highest earner or the best investor.

    It’s about consistency.

    There are endless ways to make money. The same goes for investing that money.

    You can reach financial freedom as a lawyer who invests in index funds.

    Just the same, you can be a consultant who owns rental properties.

    Or, an engineer who buys laundromats.

    The point is the avenue you choose to build wealth is less important than the consistency of your choices.

    For example, if you commit yourself to investing 20% of your salary in index funds, you will be well on your way to financial freedom.

    But, if you can’t follow through on your plan for more than a few months, you’re never going to get there.

    Of course, we’ve all experienced this tendency in various areas of life. The easiest examples to think of relate to fitness and healthy eating.

    How many of us have said we’re going to commit to working out five days a week or eating vegetables every meal, only to give up after a couple months?

    It’s not that we want to give up, just that the rest of life gets in the way. We tell ourselves that we’ll return to healthy living someday, which actually means no day.

    When it comes to your money choices, don’t let the rest of life get in the way. Money is such a powerful tool when wielded properly and consistently.

    Don’t waste this powerful tool.

    To help make consistent choices, think about why money matters.

    To help you make consistent money choices, the first step is to think about a simple and powerful question: why does money matter?

    For me and many others, money is about financial independence, which translates to the power to choose.

    When we have the power to choose, we have the power to live a life that conforms to our personal values. That means we can live on purpose, not on auto-pilot.

    What does it mean to live on purpose?

    It means that we can choose to spend our working hours doing what is meaningful to us. It means we can choose to spend more time with the people who are meaningful to us.

    My favorite part during my personal finance for lawyers class is when my students share their motivations with each other. We all learn so much from these honest conversations.

    It’s why I believe talking about money is so important. We all benefit from knowing that we’re not alone in our money worries. We can be inspired by hearing what our friends want from their money and their lives.

    The more you think and talk about why you want to be good with money, the clearer your motivations will become.

    To help you get started, here are three powerful reasons why I want to be good with money:

    1. Money can give you choices.

    This may seem obvious, but when you have money, you have choices.

    You can choose where to live. You can choose who you work for or can work for yourself. On a daily level, you can choose how you eat, exercise, relax, and travel.

    This holds true whether you make $50,000 or $250,000. Of course, your options may be different. The point is that when you’ve made good money choices, you’ll at least have options.

    2. Money can give you personal power.

    This is another way to say that money gives you control of your life situation.

    If you are in a bad relationship, a bad job, or just need a change, money gives you the personal power to do something about it. When you don’t have money, you may be stuck.

    3. Money can give you time.

    When you have enough money to be truly financially independent, you have earned the freedom to do whatever you want with your time.

    As I mentioned earlier, you can spend your working hours at a job that is meaningful to you. And, you can spend more time with people who are meaningful to you.

    It’s been said many times, “time is our most precious resource.”

    When you have money, you can buy your time back.

    woman in white long sleeve shirt reading book on beach during daytime because she is financially free and bought her time back.
    Photo by Constantin Panagopoulos on Unsplash

    What would you do with financial freedom?

    Years ago, I asked myself this important question. I wrote down my answer and called it my Tiara Goals.

    If you haven’t ever actively thought about what you would do with financial freedom, now’s the time to do so. It is extremely motivating.

    Even when you feel like financial freedom is only a distant dream for you, it’s important to actively think about what you want out of life.

    I’d even suggest that the further away you feel from financial freedom, the more important it is to think about what it would mean for you.

    When you’re at your lowest point, visualizing what you would do with financial freedom is a helpful escape.

    Don’t forget to write down whatever you come up with.

    Here are my 7 Tiara Goals for Financial Freedom:

    1. Be with my wife and kids as much as I want. Dad never missed a game. Mom never missed a game. Nana never missed a game.
    2. Not be forced to commute to work on Friday or Tuesday or whatever day, if I need that day for myself.
    3. Choose how to spend my working hours (representing clients, teaching, volunteering, building a business, etc.).
    4. Continue to study and learn constantly.
    5. Take at least one big trip every year.
    6. Never turn down an exciting or smart opportunity because I can’t afford it.
    7. Work alongside people that value my contributions. 

    Keep in mind that I wrote these goals before I had kids and before I was even married. This was also years before the pandemic when working from home was a foreign concept to most of us. 

    I think it says a lot that I was thinking about these things way back then.

    Being consistent means thinking just a little bit about money every week.

    My goal is to help you think even a little bit about your money choices every week. That way, your money life remains in balance with the rest of your life, and you can continually evolve and adapt your choices as your life changes.

    I want to encourage you to think, and to talk, and to choose. If all I do is help you and your loved ones think more purposefully about your money, Think and Talk Money will be a success. 

    Maybe your goal is also financial independence, or the power to choose and to live on purpose.

    Maybe it’s something else entirely. Whatever it is, discovering your motivation is the crucial first step. 

    It’s so important that I’ll encourage you to think about that motivation every week.

    I’ve learned that money is something that we all need to think about as a regular part of our lives. Not that we should only think about money. Or that we need to obsess over money. Simply that we can’t ignore money. 

    How sad is it when we realize our hard earned money has just vanished? That at the end of each month, we have less money?

    If this sounds familiar, you’re not alone. There are a lot of smart people who need somewhere to turn learn about money. Or, maybe just a reminder to actively think about their money. 

    You don’t have to struggle with making continuous money choices alone.

    Most of us could use someone to talk to or something to read to help us learn about personal finance.

    I hope Think and Talk Money can be that place for you.

    I can’t, and won’t, tell you what to do with your money. It’s your life, after all. But, I will strive to help you think and talk with purpose about your money.

    The basic money concepts are easy enough to understand. Consistently making good choices is hard. 

    Most of us could ace a quiz that asked, “Is it a good idea to spend more money than you earn every month and plummet deeper and deeper into debt?”

    Knowing what to do is not the same as actually doing it. Remember, someday is no day.

    That’s why it helps to not be afraid to talk about money. For some reason, most of us choose to deal with money on our own. I’d like to change that.

    There’s a stigma that we shouldn’t talk about money. I’d like to change that, too.

    That way, we all have a better chance of making intentional, consistent choices with our money.

    Have you been excited about money in the past only to lose that excitement not long after?

    Have you tried talking about money with your friends and family to help you stay motivated? If not, what is holding you back?

    Let us know in the comments below.

  • Stop Fearing Toilets with a Good Handyman on Your RE Team

    Stop Fearing Toilets with a Good Handyman on Your RE Team

    “You really want to be a landlord? You don’t want to fix leaky toilets at 2 a.m.!”

    If you decide to invest in rental properties, this is one of the first comments you’ll hear from the haters.

    Mind you, these haters who are so scared of the imaginary leaky toilet are not landlords. I’ll go a step further and would wager that none of them have ever even seen a leaky toilet before.

    Instead, they probably heard a story one time and decided that being a landlord was too hard.

    The sad part is that they have shut themselves out from one of the best asset classes (and my personal favorite) for achieving financial freedom.

    The other comment you’ll regularly hear?

    “I can’t be a landlord. I’m not handy.”

    Guess what?

    I’m not very handy either. And, I have 11 rental units in two different states.

    The truth is that you do not need to be handy to be a landlord.

    In reality, you don’t need to be handy to be a landlord.

    And, you definitely don’t need to fear the 2 a.m. leaky toilet.

    Oh, this is not to say that things aren’t going to break and need attention at the most inconvenient time.

    Every landlord has those stories. I’ve certainly had my fair share.

    One example seems on point.

    A few years ago, my family and I were living in one of our rental apartments.

    One evening before leaving for vacation the next day, we were sitting around when my sister-in-law pointed at the ceiling and exclaimed, “What is that!?”

    Well, “that” was a huge, previously undiscovered, water spot in my ceiling.

    Turns out the toilet in the unit upstairs was leaking. (See, on point.)

    The water gradually spread into the wood floors of the upstairs unit and the ceiling of my unit. It also dripped all the way down the plumbing stack to the lower level carpet in the bedroom where my two little kids slept.

    What did I do about this catastrophe?

    I called my handyman and got on a plane the next morning.

    By the time we returned, the wood floors, ceiling, and carpet had all been repaired and there was no sign of damage.

    When you have a good handyman on your real estate team, you don’t have to worry about things like this.

    One of the biggest myths of being a landlord is that you need to be handy.

    Have you noticed that we’ve been talking about investing in real estate for a couple of months now and I haven’t once mentioned leaky toilets or the need to be handy?

    That’s because there are so many other parts of being a landlord that are more important than your skills with a hammer.

    To name just a few more important skills: running the numbers on potential deals, selecting good tenants, keeping good records, dealing with tenant complaints, and paying the bills on-time.

    Plus, for most of us lawyers and professionals who want to own rental properties, we have other time commitments. Even if we have the skills or enjoy doing repairs ourselves, it still makes sense to hire a professional.

    That’s why every good rental property investor has a good handyman on his team.

    Before we talk about what to look for in a handyman, let’s take a look back at the other key members of your real estate team.

    Your Spouse is the Most Important Person on Your RE Team

    The most important person on your real estate team is your spouse. Make sure you each understand the financial, time, and emotional commitments involved.

    Owning rental properties should not be a solo adventure. The entire experience is better when you have someone to share it with.

    Isn’t that true for most things in life?

    If you’re considering your first rental property, don’t fool yourself into thinking you’ll be earning passive income.

    Before you buy a rental property, I encourage you to talk to your spouse first. Make sure you both are on the same page. 

    No, you do not have to have an equal division of labor. 

    Yes, you each have to commit to the good and the bad that comes along with owning rental properties.

    If you both can make that commitment, you have the best shot at owning your properties for a long time and reaching that ultimate goal: financial freedom.

    a pile of white toilet paper indicating that being afraid of toilets as a landlord is silly.
    Photo by Colourblind Kevin on Unsplash

    Build Out Your RE Team Starting with a Five-Star Broker

    Once you and your spouse are on the same page, it’s time to start building out the rest of your real estate team.

    Start building your real estate team by finding a great broker. Your broker is like a five-star hotel concierge who can make your entire experience so much better.

    During your search for a great rental property, a good broker will:

    • Educate you about the market you’re investing in.
    • Send you properties that match your goals.
    • Tour properties with you to help identify any red flags.
    • Negotiate on your behalf to ensure you get the best possible price.
    • Connect you with other key members of your team.
    • Steer you away from making poor choices.

    But, you don’t just want a good broker. You want to work with the best brokers as a rental property investor.

    The best brokers will do all of things for you during the acquisition process. But, that’s just the beginning.

    The best brokers are in it for the long run and will help you navigate challenges as they pop up. That might mean helping with marketing and showing your property.

    More importantly, that means continuing to give you advice and tutelage as you learn to be a landlord.

    How to Evaluate a Great Mortgage Broker for your RE Team

    With a five-star real estate broker on your team, it’s time to find a great mortgage broker.

    A great mortgage broker is like a tour guide who is the local expert and knows the ins-and-outs of the neighborhood. She has an intimate knowledge of the local food scene based on years of experience. 

    She’ll show you the hidden gems and recommend what to order at each restaurant based on your personal preferences. She can educate you as to what’s in certain dishes and why you may like to try them.

    She’ll also steer you away from the tourist traps and prevent you from going to the wrong places to ensure you have the best experience possible.

    Recommendations? Education? Preventing mistakes?

    Love all those things.

    And, this is exactly what a good mortgage broker will do for you.

    A good mortgage broker will:

    • Recommend the best loan for your goals.
    • Stop you from borrowing more than you really can afford.
    • Help get your loan approved. 
    • Explain the numbers.
    • Not let you refinance until the time is right. 

    Take your time finding a good mortgage broker. It’s important to work with someone who does more than just promise the best rates and terms.

    With your spouse, a five-star real estate broker, and a great mortgage broker on your team, it’s now time to fill out the rest of the key positions.

    Be Sure to Have an Experienced Accountant on your RE Team

    I invest in real estate for the massive tax benefits. 

    In fact, the massive tax benefits are one of the four main reasons why I invest in real estate. The other three reasons are cash flow, appreciation, and debt pay-down.

    I’ve previously written about how I earn rental income and legally pay close to nothing in income tax on my rentals each year.

    How is that possible? Am I some type of tax wizard?

    Of course not.

    But, I do have a tax wizard on my real estate team. 

    OK, more accurately, I have a Certified Public Accountant (CPA) on my real estate team.

    Your accountant is so integral to your financial success that he is the next person you need to have on your real estate team.

    The federal government has long encouraged investment in real estate. People need places to live, work, and socialize. The government long ago decided to reward investors who take on the risk of providing these opportunities.

    These incentives come largely in the form of tax benefits.

    The challenge for real estate investors is to actually take advantage of all these tax incentives.

    That’s where your accountant comes in. 

    Because I work with an accountant, I don’t have to be a tax expert. I just have to know enough to have intelligent conversations and make decisions when the time comes.

    My accountant makes sure I get all the tax benefits for owning rental properties.

    man standing in front of a miter saw reflecting the next most important people on your real estate team are your accountant, lawyer, insurance advisor, and handyman or general contractor.
    Photo by Annie Gray on Unsplash

    What to look for in a good handyman.

    Here are some of the things I look for:

    1. A handyman who responds to my messages promptly.

    The last thing you want is a handyman who is flakey. When something needs fixing, you need someone who answers your call or messages you back right away.

    Most repairs are not urgent, meaning your handyman does not need to drop everything right away to tend to the issue.

    But, it’s important that you let your tenant know that you’re on it and someone will be around in short order to address the problem.

    2. A handyman who Is not too big for a small job.

    It’s much easier to find a handyman to do a full kitchen renovation than to replace just the kitchen sink. Obviously, the bigger the job, the more money to be earned.

    As a landlord, you need someone who can handle the small jobs. These come up more frequently than the bigger projects and are often necessary to keep tenants happy.

    We recently had a tenant message us that the kitchen sink was leaking. My handyman got over there the same day and fixed the leak for $80.

    This is the type of guy you need on your team.

    3. A handyman who makes a good impression with the tenants.

    Your handyman will inevitably have to interact with your tenants. You want someone who makes a good impression. That means someone who is professional, courteous, and respectful of the tenant’s space.

    It is also very helpful if your handyman can explain to the tenant what the repair involves and what to do if there are still any issues.

    4. A handyman who does not run up the bill.

    Handymen tend to charge by the hour because they don’t usually know the extent of the repair until they begin working.

    While there’s nothing wrong with charging by the hour, you can imagine how someone untrustworthy might take advantage of this billing arrangement.

    With more experience as a landlord, you will start to have the same type of repairs come up regularly. Based on that experience, you’ll know when a handyman is running up the bill on you.

    5. A handyman who comes recommended from other landlords.

    Like anything else in life, a good recommendation goes a long way. It is always a good idea to work with someone who people you trust can vouch for.

    The trust factor works both ways, too. If your handyman knows that you are reputable and come recommended, he is more likely to take your calls and go into business with you.

    6. A handyman who has worked on rental properties.

    When we first started shopping for a rental property, our real estate broker taught us about “condo quality” vs. “rental quality.”

    Condo quality is nicer, more expensive, and tends to be for people buying a home for themselves.

    Rental quality is more affordable and comes with the expectation that things will break and need to be replaced.

    When it comes to a handyman, you want some who understands the difference. It makes no sense to overpay for quality that you just don’t need in a rental unit.

    This has nothing to do with the skill of the handyman, just the wherewithal to make “rental quality” repairs in rental units.

    How many would-be rental property investors have been scared off by the imaginary leaky toilet?

    If you have been reluctant to become a landlord because of the hypothetical leaky toilet, hopefully this post has given you something to think about.

    Being a successful landlord has nothing to do with being handy.

    Don’t let your fears about potential repairs stop you from exploring this powerful asset class.

    If you’re a landlord, what is your best “leaky toilet” story?

    Was it enough to give up on being a landlord?

    Let us know in the comments below.

  • Be Sure to Have an Experienced Accountant on your RE Team

    Be Sure to Have an Experienced Accountant on your RE Team

    I invest in real estate for the massive tax benefits.

    In fact, the massive tax benefits are one of the four main reasons why I invest in real estate. The other three reasons are cash flow, appreciation, and debt pay-down.

    I’ve previously written about how I earn rental income and legally pay close to nothing in income tax on my rentals each year.

    How is that possible? Am I some type of tax wizard?

    Of course not.

    But, I do have a tax wizard on my real estate team.

    OK, more accurately, I have a Certified Public Accountant (CPA) on my real estate team.

    Your accountant is so integral to your financial success that he is the next person you need to have on your real estate team.

    Why is it so important to have an accountant on your team?

    The federal government has long encouraged investment in real estate. People need places to live, work, and socialize. The government long ago decided to reward investors who take on the risk of providing these opportunities.

    These incentives come largely in the form of tax benefits.

    The challenge for real estate investors is to actually take advantage of all these tax incentives.

    That’s where your accountant comes in.

    Because I work with an accountant, I don’t have to be a tax expert. I just have to know enough to have intelligent conversations and make decisions when the time comes.

    My accountant makes sure I get all the tax benefits for owning rental properties.

    Before talking further about accountants, let’s review the first three members that you’ll want to have on your real estate team.

    Your Spouse is the Most Important Person on Your RE Team

    The most important person on your real estate team is your spouse. Make sure you each understand the financial, time, and emotional commitments involved.

    Owning rental properties should not be a solo adventure. The entire experience is better when you have someone to share it with.

    Isn’t that true for most things in life?

    If you’re considering your first rental property, don’t fool yourself into thinking you’ll be earning passive income.

    Before you buy a rental property, I encourage you to talk to your spouse first. Make sure you both are on the same page. 

    No, you do not have to have an equal division of labor. 

    Yes, you each have to commit to the good and the bad that comes along with owning rental properties.

    If you both can make that commitment, you have the best shot at owning your properties for a long time and reaching that ultimate goal: financial freedom.

    Build Out Your RE Team Starting with a Five-Star Broker

    Once you and your spouse are on the same page, it’s time to start building out the rest of your real estate team.

    Start building your real estate team by finding a great broker. Your broker is like a five-star hotel concierge who can make your entire experience so much better.

    During your search for a great rental property, a good broker will:

    • Educate you about the market you’re investing in.
    • Send you properties that match your goals.
    • Tour properties with you to help identify any red flags.
    • Negotiate on your behalf to ensure you get the best possible price.
    • Connect you with other key members of your team.
    • Steer you away from making poor choices.

    But, you don’t just want a good broker. You want to work with the best brokers as a rental property investor.

    The best brokers will do all of things for you during the acquisition process. But, that’s just the beginning.

    The best brokers are in it for the long run and will help you navigate challenges as they pop up. That might mean helping with marketing and showing your property.

    More importantly, that means continuing to give you advice and tutelage as you learn to be a landlord.

    two businessmen having a meeting in the park reflecting the next most important people on your real estate team are your accountant, lawyer, insurance advisor, and handyman or general contractor.
    Photo by Medienstürmer on Unsplash

    How to Evaluate a Great Mortgage Broker for your RE Team

    With a five-star real estate broker on your team, it’s time to find a great mortgage broker.

    A great mortgage broker is like a tour guide who is the local expert and knows the ins-and-outs of the neighborhood. She has an intimate knowledge of the local food scene based on years of experience. 

    She’ll show you the hidden gems and recommend what to order at each restaurant based on your personal preferences. She can educate you as to what’s in certain dishes and why you may like to try them.

    She’ll also steer you away from the tourist traps and prevent you from going to the wrong places to ensure you have the best experience possible.

    Recommendations? Education? Preventing mistakes?

    Love all those things.

    And, this is exactly what a good mortgage broker will do for you.

    A good mortgage broker will:

    • Recommend the best loan for your goals.
    • Stop you from borrowing more than you really can afford.
    • Help get your loan approved. 
    • Explain the numbers.
    • Not let you refinance until the time is right. 

    Take your time finding a good mortgage broker. It’s important to work with someone who does more than just promise the best rates and terms.

    With your spouse, a five-star real estate broker, and a great mortgage broker on your team, it’s now time to fill out the rest of the key positions.

    Seek out an accountant with real estate specific experience.

    I mentioned earlier that the key way the government incentivizes real estate investors is through tax deductions. 

    To accomplish its goal, the government allows real estate investors to deduct certain rental property expenses from their income.

    When you earn rental income, you must report this income on your tax return. Rental income is treated the same as ordinary income.

    However, the major difference between rental income and W-2 income is that there are a number of completely legal ways to deduct certain expenses from your rental income.

    The key is to work with someone who has significant experience specific to rental property investing.

    The truth is there are numerous tactics and strategies that apply to real estate investors that don’t apply to all businesses.

    An accountant who may be ideal for a restaurant owner or law firm might not be a good fit for real estate investors.

    This is not a knock on accountants, either. In this day and age, professionals in all industries tend to specialize in niche areas.

    For example, I am a lawyer who specializes in helping people with mesothelioma. You wouldn’t hire me to represent you in a divorce.

    If you broke your foot, you wouldn’t go see a brain surgeon.

    You get the idea.

    When seeking out an accountant, be sure to work with one who has experience specific to real estate investing.

    How can you tell if an accountant has experience specific to real estate investing?

    When my wife and I were searching for an accountant, it became very clear to us that not all accountants work with real estate investors.

    For instance, most accountants are well-versed in common rental property expenses. These common expenses may include mortgage interest, property tax, operating expenses, depreciation, and repairs.

    We met with plenty of intelligent accountants who understood these basics.

    Brainstorming over paper representing having a good real estate accountant on your team.
    Photo by Scott Graham on Unsplash

    But, we wanted more than just basic help. We wanted help in crafting a long-term strategy for achieving financial freedom through real estate.

    When you start meeting with accountants, ask them how many real estate investors they work with. Ideally, you’ll find an accountant who works with a number of investors similar to you.

    You’ll also want to find an accountant whose style matches yours. Some accountants are more aggressive and some accountants are more conservative.

    For example, say you own a vacation condo that you rent out sometimes and use personally other times. You may get different advice from two accountants on what counts as a rental property deduction for that condo.

    It’s ultimately up to you to find an accountant that matches your style.

    Find an accountant who answers your phone calls.

    Maybe this goes without saying, but you want an accountant who answers the phone when you call. As investors, we never know when an opportunity may pop up that we need timely advice on.

    You might be surprised how many real estate investors don’t have an open line of communication with their accountants. I think it’s a mistake to only consult your accountant after you’ve gone ahead with a decision.

    As one example, a few years ago, I thought about buying an 8-unit apartment building with a number of partners. It seemed like a good way to earn some cash flow with only a small amount of my own money in the deal.

    Before I moved ahead with the deal, I called my accountant. We had a long chat about all the additional complexities involved from a tax perspective.

    He took the time to educate me so I could make a good decision. In the end, I walked away from the deal.

    If I didn’t have a good relationship with my accountant, I might have made a big mistake.

    A good accountant will help you reap the massive tax benefits of investing in real estate.

    As a real estate investor, you don’t have to be an expert in every part of the business.

    There’s no better example than when it comes to taxes.

    Find a good accountant who is willing to educate you and strategize with you. You want more than just someone to prepare your tax returns.

    When you have a good accountant on your real estate team, you’ll move that much faster towards financial freedom.

    What other traits should real estate investors look for in a good accountant?

    Let us know below.

  • How to Evaluate a Great Mortgage Broker for your RE Team

    How to Evaluate a Great Mortgage Broker for your RE Team

    Ever been on a good food tour in a foreign country?

    Stay with me.

    We recently talked about how the most important person on your real estate team is your spouse. Make sure you each understand the financial, time, and emotional commitments involved before you buy your first rental property.

    Once you and your spouse are on the same page, it’s time to start building out the rest of your real estate team.

    Start by finding a great real estate broker. Your real estate broker is like a five-star hotel concierge who can make your entire vacation so much better.

    With a real estate broker on your team, it’s now time to find a great mortgage broker.

    To continue our analogy, if your real estate broker is the hotel concierge, your mortgage broker is a trusted tour guide.

    Have you ever visited a foreign country for the first time and been excited, but a little bit nervous, about what’s in store for you? There’s so much to see and do, but you don’t speak the language and are a bit anxious to venture out on your own.

    Fortunately, you have an expert tour guide lined up to meet you at the hotel and lead you on an memorable adventure.

    Think about how the concierge and tour guide each help you in different ways.

    The concierge does not actually join you for each experience on your vacation. He helps you plan an itinerary and makes the arrangements before setting you on your way.

    He knows his role and leaves it to the specialists, like tour guides, to lead isolated parts of your trip.

    For instance, the concierge may help you book a food tour around London with an experienced tour guide. My wife and I did this years ago and had a wonderful time.

    The tour guide is the local expert who knows the ins-and-outs of the neighborhood. She has an intimate knowledge of the local food scene based on years of experience.

    She’ll show you the hidden gems and recommend what to order at each restaurant based on your personal preferences. She can educate you as to what’s in certain dishes and why you may like to try them.

    She’ll also steer you away from the tourist traps and prevent you from going to the wrong places to ensure you have the best experience possible.

    Recommendations? Education? Preventing mistakes?

    Love all those things.

    And, this is exactly what a good mortgage broker will do for you.

    Why it’s important to have a good mortgage broker on your team.

    Mortgage lending is big business. Just about every person out there needs a mortgage to buy a home or an investment property. As a result, there are a lot of banks and companies out there who want your business.

    To be sure, not all mortgages are created equal.

    And, not all brokers, banks, and lending companies are created equal.

    Your job as an investor is to find a mortgage broker who truly has your best interests in mind.

    That means working with someone who wants what’s best for you and your family, not what’s best for him and his family.

    Plus, because rental property investing is a long-term game, you want someone on your team who’s also in it for the long run.

    What should you look for in a good mortgage broker?

    During your loan process, you will be talking to your mortgage broker a lot.

    Refer back to the tour guide analogy. During the tour, you are essentially dependent on your tour guide. If you’re going to depend on someone, you probably want to like that person.

    The same goes for your broker during the mortgage process. You will be dependent on your broker to make sure your loan gets approved.

    Make sure you find someone that you mesh with.

    Here are some of the qualities you should look for in a good mortgage broker.

    People eating a meal around a table symbolizing the importance of a good mortgage broker.
    Photo by Priscilla Du Preez 🇨🇦 on Unsplash

    A good mortgage broker will:

    Recommend the best loan for your goals.

    There are numerous mortgage options out there. Selecting a mortgage is not a “one-size-fits all” kind of thing. Your broker should be well-versed in all the options and make recommendations based on your priorities. 

    Stop you from borrowing more than you really can afford.

    There’s a difference between what you might get approved for and what you can reasonably afford. A good mortgage broker will help you understand the difference.

    If you’re tempted to take out more than you should, your mortgage broker should help reign you back in.

    Help get your loan approved.

    Your mortgage broker’s primary job is to match you with a lender and loan product to meet your needs. The underwriters will have the final say in whether your loan gets approved.

    If you haven’t had the pleasure, you’ll need to provide the underwriters with documentation about your income, savings, investments, and so much more.

    While it’s ultimately not up to your broker to approve the loan, he can serve as an advocate on your behalf. He can help get the underwriters the information they need to approve your loan. Don’t underestimate the importance of this part of the job.

    Explain the numbers.

    This is especially important for rental property investors. After all, you’re buying a rental property to make money. All mortgage brokers can show you how much that property will cost every month.

    The best brokers will take it a step further and show you how much you can expect to cash flow from that property each month. Then, you can decide if it makes sense to buy a property based on the numbers. 

    Not let you refinance until the time is right.

    It’s tempting to refinance at the first moment rates drop. There are costs involved with refinancing that can oftentimes eat away at any savings from refinancing. A good mortgage broker will stop you from doing so until the moment is right.

    Be patient as you look for a great mortgage broker to work with.

    Take your time finding a good mortgage broker. It’s important to work with someone who does more than just promise the best rates and terms.

    Plus, if you shop around enough, you’ll learn that there’s not much variation in the rates from one provider to the next. Rates are mostly dependent on economic conditions outside the control of mortgage brokers and lenders.

    That’s why your mission is to stay patient and find a mortgage broker that you are comfortable with.

    When my wife and I were first getting started, we were told by a few different people that we had to work with this one particular mortgage broker. He was the best, apparently. His website was full of accolades and awards.

    We decided to give him a shot. We called his office and set up an introductory phone call for later in the week.

    At the scheduled time, he didn’t call. When we emailed him, he apologized and explained something came up with his kids.

    OK, no problem. That’s understandable. We rescheduled.

    At the rescheduled time, he again didn’t call. That was enough of that. We moved on. Maybe he really was great at his job, but he didn’t seem to care too much about us.

    We found a good broker years ago and have never looked back.

    In the end, it all worked out for the best. My wife and I met with a number of brokers before connecting with the guy we still use today. We’ve used him for all our Chicago purchases and multiple refinances.

    As a side note, I firmly believe that when you find someone good for your team, you commit to that person. Commitment leads to trust. And, trust leads to the best outcomes. This is true for anyone you work with, not just mortgage brokers.

    man holding a phone and texting reflecting what a good mortgage broker will do for you.
    Photo by NordWood Themes on Unsplash

    On top of being a mortgage broker, our guy is an experienced rental property investor. If you want to buy a rental property, I recommend you work with someone who also owns rental properties.

    At a minimum, find someone who has ample experience working with investors.

    For instance, with our first purchase in 2018, our broker recommended a conventional loan (at the time called “Home Possible”) that I had never heard of before.

    The loan allowed us to put 5% down, instead of the normal 20%, which meant we could more quickly buy our second property. This one recommendation allowed us to buy two cash-flowing rental properties within 6 months.

    This is just one example of how a good mortgage broker can help accelerate your real estate goals.

    Find a broker for your real estate team who understands your goals.

    Our broker understands exactly what we’re trying to accomplish with each purchase. I can be straight with him and he can be straight with me. It’s refreshing.

    We’ve had in-depth conversations about the numbers on every property we’ve considered. Importantly, he’s prevented us from borrowing more than we can afford. 

    And, whenever the underwriters ask for so many documents that I am about to lose my mind, he steps in to make it all better.

    Same as us, this is exactly what a good mortgage broker will do for you.

    What has your experience with mortgage brokers been like?

    What else do you look for that I didn’t mention above?

  • Build Out Your RE Team Starting with a Five-Star Broker

    Build Out Your RE Team Starting with a Five-Star Broker

    Owning rental properties should not be a solo adventure. The entire experience is better when you have someone to share it with.

    We recently talked about how the most important person on your real estate team is your spouse. Make sure you each understand the financial, time, and emotional commitments involved.

    Isn’t that true for most things in life?

    Whether it’s a project you’re working on or a vacation you’re taking, it’s better when you do it with other people.

    Owning rental properties is no different.

    If you’re considering your first rental property, don’t fool yourself into thinking you’ll be earning passive income. 

    For me, the benefits of owning rental properties significantly outweigh the downsides of being a landlord.

    It’s a tradeoff that I would happily make again and again… as long as I have good help along the way.

    That help starts with a real estate broker.

    If you find the right broker, he will guide you in building a rental property portfolio that you’re proud of.

    Let’s take a look.

    Start building your team by finding the best real estate broker.

    Start building out your team by finding a real estate broker (or real estate agent) who matches your style and understands your goals.

    Think of your real estate broker as a concierge at a five-star hotel in a foreign country.

    My wife and I went to Australia years ago. It was probably the best trip we ever took. We started in Sydney and eventually made our way up the coast to the Great Barrier Reef.

    While in Sydney, we took a couple of day trips to the Hunter Valley wine region and the Blue Mountains. We climbed Harbour Bridge and saw some animals at a zoo we had never seen before.

    We met some amazing people and had some wonderful meals.

    All of these experiences were arranged through the concierge at our hotel.

    Before we ever left Chicago, we coordinated with the hotel’s concierge. He asked us what our priorities were, sent us options to consider, answered our questions, and then made all the arrangements.

    The decisions were ultimately ours, but the concierge used his expertise and what he learned about our priorities to help us make the best decisions. Importantly, he steered us away from making poor choices.

    We would have been completely lost without his guidance.

    Just as the concierge helped us navigate Sydney, your real estate broker will help you navigate the rental property experience.

    Your broker will wear many hats in helping you find a great rental property.

    During your search for a great rental property, a good broker will:

    • Educate you about the market you’re investing in.
    • Send you properties that match your goals.
    • Tour properties with you to help identify any red flags.
    • Negotiate on your behalf to ensure you get the best possible price.
    • Connect you with other key members of your team.
    • Steer you away from making poor choices.

    These are all invaluable services that a good broker can provide.

    But, you don’t just want a good broker. You want to work with the best brokers.

    The best brokers will do all of things for you during the acquisition process. But, that’s just the beginning.

    The best brokers have one other trait in common.

    The best brokers remain a key part of your team (life?) long after the transaction has concluded.

    Getting a good rental property is just step one. Keeping the property is just as, if not more, important.

    We’ve talked about how owning rental properties is a long-term game. You want a broker on your team who’s in it for the long run to help you navigate challenges as they pop up.

    That’s why you want a broker who is willing to help you keep that property for the long run. That might mean helping with marketing and showing your property.

    More importantly, that means continuing to give you advice and tutelage as you learn to be a landlord.

    For that reason, if you are going to buy a rental property, I recommend you work with a broker who also owns rental properties.

    Ugmonk lady looking out window and talking on phone while closing a real estate deal.
    Photo by Dane Deaner on Unsplash

    I recommend you find a broker who is also an investor.

    There are different factors to consider when buying a rental property compared to buying a primary residence.

    A property could be a great home but would be a poor rental.

    When it comes to working with a broker, you want somebody on your team who has personally experienced the challenges in owning rental properties that lie ahead.

    Real estate brokers who are also investors are better equipped to teach you if tenants will love or hate a certain rental apartment.

    Here’s a very basic example to illustrate this point:

    I use the garbage disposal in my home multiple times every day. I never really thought about it before, but the garbage disposal is a wonderful invention. I’ll go as far as to say that I love my garbage disposal.

    However, in my rental properties, I refuse to install garbage disposals.

    In rental properties, garbage disposals constantly break because tenants are not always careful about what they put down the drain. Each time a garbage disposal clogs or breaks, that’s a costly repair. It’s just not worth it in a rental property.

    I first learned to avoid garbage disposals in my rental properties years ago from my broker.

    Yes, it’s a small consideration overall. You’re not going to pass up on a wonderful property because of a garbage disposal.

    But, each property you look at will have countless little elements like this that need to be considered.

    A broker who is an experienced rental property investor will have a better eye for these types of things.

    Find a real estate broker can help make a list of the most desirable features for renters in your market.

    My wife and I have worked with the same broker in Chicago for almost a decade. He’s been a mentor and a friend. He has helped us in countless ways, including putting together a list of features we look for in every rental property.

    It’s not an exhaustive list, but here are some of the most important factors we evaluate when considering rental properties in Chicago:

    1. Location, location, location. In Chicago, proximity to the L and social life (coffee shops, restaurants, bars, etc.) are crucial. Most of the young professionals we rent to are still in the “going out” phase of life. They want to live in fun neighborhoods so they can enjoy themselves when they’re not working. They typically stay in our apartments for 2-3 years, oftentimes before buying a place of their own and “settling down.”
    2. Taxes. Property taxes can eat away your cash flow. We have high property taxes in Chicago across the board, but taxes vary widely from neighborhood to neighborhood. I look for properties in areas that have more attractive taxes.
    3. Big bedrooms. One of the most common questions I get when I do apartment showings is, “Can I fit a king size bed in here?” People love big beds these days. This can be a challenge considering Chicago’s standard 25-foot wide lot. I look for properties with a minimum bedroom size of 10 x 10.
    4. Outdoor space. Young professionals want to have outdoor space, even if they never use it. When I was a renter, I always wanted an apartment with a balcony for my grill. It didn’t matter to me that I only used it a handful of times each year. Maybe having outdoor space made me feel more grown up?
    5. Parking. Even though Chicago is a very public transit-friendly city, people still like having cars. Because most young professionals aren’t using their cars every day, they want to keep it safe in a dedicated parking space.

    There are certainly other factors we consider, but these are some of the first things we look for thanks to the guidance of our real estate broker.

    Key in white door with black handle representing what is possible when you have a good real estate team.
    Photo by Jaye Haych on Unsplash

    A good real estate broker is absolutely critical if you’re investing outside your home market.

    I live in the Chicago area and own a rental property in Colorado. Everything we just talked about becomes even more important when you invest outside your home market.

    In your home market, you have the benefit of relying on your daily experiences to help select the right property.

    I rented apartments in Chicago for 15 years before I bought an apartment building. That gave me a huge advantage when looking for a good rental property.

    I didn’t have the same level of intuitive knowledge in the Colorado market.

    Even if you have personal experiences in certain out-of-state markets, your knowledge will never match that of your hometown. No matter how many times you’ve visited a place, it’s not the same as living in that place.

    That’s why having a good broker on your team becomes even more critical when you’re investing out-of-state.

    I’m happy to say that our real estate broker in Colorado is the best there is.

    And if you ever tell him I said that, I’ll deny it and say I was hacked.

    Our Colorado broker spent hours and hours educating us about the local market when we were shopping for a rental property.

    Even though my wife and I had vacationed in the area for years, we didn’t know the first thing about real estate in the area.

    Before we considered any specific units, we had numerous conversations with our broker about our goals and preferences. He helped us pinpoint locations and features that we had not previously through about.

    I still have the pages of notes I took during these conversations, which I reviewed constantly during our search.

    If you are going to shop for properties outside your home market, be sure to find a good broker first.

    The most successful rental property investors have a team of professionals working with them.

    It’s not an exaggeration to say that having the right people on your real estate team can make or break your investing experience.

    Having a good team in place, starting with your real estate broker, will help you avoid mistakes and stay motivated so you can keep your properties long-term. 

    I’ve seen too many investors sell their rental properties after a couple of years because they didn’t have the right people on their team. They end up making preventable mistakes and give up because being a landlord is too hard.

    Unfortunately, that means they give up their properties long before getting the benefits from cash flow, appreciation, debt pay-down, and tax advantages.

    If you’re going to take on the challenge of being a landlord, you might as well hold your properties long enough to reap the benefits. 

    And, you should take all the help you can get along the way, beginning with a great broker.

    You will not regret having a great broker on your team.

    My wife and I have been incredibly fortunate to work with two top-class brokers, first in Chicago and then in Colorado.

    Thinking about it now, our brokers are similar in that they have been teachers and mentors to us.

    Before you start looking for your first rental property, be sure to work with a great broker. Don’t just settle for the first broker you meet with.

    This may take some time. Years ago, my wife and I met with six different brokers in Chicago, who all came highly recommended.

    We were patient, asked a lot of questions, and went with the person who matched our style and who we felt comfortable with. The time we took during this process was well worth it.

    Like a five-star hotel concierge, our brokers have made our investing experience as smooth as possible.

    Without their guidance, I highly doubt we would have bought, and still own, five properties today.

    Have you worked with a real estate broker before?

    What should new rental property investors be on the lookout for?

    Tell us about your experience in the comments below.

  • Money Questions: How to Handle the New Student Loan Changes?

    Money Questions: How to Handle the New Student Loan Changes?

    When we last talked about student loans a few months ago, here’s what I had to say:

    Have you noticed all the attention on student loans lately?

    To say there is some confusion and uncertainty would be an understatement. 

    I don’t have any better idea than you do about what may happen in the student loan landscape.

    No matter what happens, the way I see it, you have two options,

    The first option is to do nothing, get angry, and blame everyone else.

    The second option is to take ownership, get prepared, and educate yourself about the student loan system so you’re ready for whatever comes next.

    If you’ve chosen the second option, you’re in the right place. That means you’re determined to not let outside factors you can’t control hinder your progress towards financial freedom.

    Well, we now know what comes next.

    The One Big Beautiful Bill Act, signed into law July 4, 2025, included changes to the federal student loan system.

    Since then, a number of readers have reached out for my thoughts.

    Today, we’ll cover some of the biggest changes that will impact Think and Talk Money readers, like lawyers and professionals.

    The bottom line is, regardless of how you feel about the changes, you still have two options.

    You can either do nothing, get angry, and blame everyone else.

    Or, you can take ownership, get prepared, and educate yourself.

    If you’ve chosen the second option, let’s get started.

    The basic concepts of paying off student loans has not changed.

    The two biggest changes for student loans relate to the (1) repayment options and (2) the amount that can be borrowed.

    Understanding the changes shouldn’t be too difficult:

    You now have less repayment options and can borrow less money overall from the federal government.

    We’ll talk about the specifics next.

    Before we do, always remember that paying off student loan debt is really not that different from paying off any other form of debt. 

    As significant as the changes might seem, the basic concepts of paying off student loan debt remain the same.

    If you’d like to review the basic concepts of paying off student loan debt, check out this post:

    The Time is Now: Student Loan Basics

    Also, keep in mind that the recent changes apply only to the federal loan system. There will be side effects for the private loan system, but the federal system is getting all the attention right now.

    For example, even before the new law, people commonly needed both federal and private loans because federal loan amounts were capped and college and grad school are expensive.

    Once you took out all the federal loans you were eligible for, private loans became necessary to fill whatever funding gap remained.

    This remains true today, just with a reduced cap on federal loans.

    The point is that while the student loan landscape has certainly changed, the fundamentals remain the same.

    So, while you may need to adjust your strategy, there’s no getting around that paying back student loans felt heavy before and still feels heavy today.

    And, if you’re feeling the weight of your student loans, check out my top student loan tips for lawyers and professionals:

    10 Student Loan Tips for Lawyers and Professionals

    OK, on to the changes.

    There are now only two federal loan repayment options.

    Previously, the federal government offered seven loan repayment plans. There was a standard repayment plan and six other options to help borrowers pay back their loans while still affording their other monthly expenses.

    Now, there are only two repayment options.

    Option 1: The standard repayment option.

    First, borrowers can still use a fixed-payment repayment plan known as a standard repayment plan.

    This means borrowers can pay back loans in equal monthly payments spread over a defined period.

    The previous law set the standard repayment period at 10 years. There were also graduated and extended options that reduced a borrower’s monthly payment but extended the years of required payments for up to 25 years (30 years, in some cases).

    Similarly, the new law provides for a standard repayment plan. Borrowers may choose to make fixed payments for periods ranging from 10 to 25 years, depending on the size of the loan to be paid back.

    People raising their hands in college important because of the changes to federal student loans in The Big Beautiful Bill Act.
    Photo by Edwin Andrade on Unsplash

    Option 2: The income-driven option (RAP).

    In addition to changes to the standard repayment plan, the new law made significant changes to income-driven repayment plans.

    Now, borrowers can enroll in a single income-driven repayment plan, which is known as the Repayment Assistance Plan (RAP).

    Previously, income-driven repayment options included:

    • SAVE: Saving on a Valuable Education
    • PAYE: Pay as You Earn
    • IBR: Income-Based Repayment
    • ICR: Income-Contingent Repayment

    These plans determined your monthly payment based on how much you made and your family size.

    Each option has now been replaced by RAP. One of the ideas behind RAP was to simplify the various income-driven repayment options into one combined plan.

    With RAP, borrowers will pay 1% to 10% of their monthly income for up to 30 years. After 30 years, the remaining loan balances will be forgiven.

    Notably, that’s a longer time period before loan forgiveness kicks in. Under the previous income-driven repayment plans, borrowers were off the hook after either 20 or 25 years. Now, borrowers will have to pay their loans back for 5 to 10 years longer before they are forgiven.

    In addition, monthly payments depend on Adjusted Gross Income instead of discretionary income. This means monthly payments will increase for many borrowers.

    There are new borrowing caps for some federal loans.

    As mentioned above, the new law did not introduce the idea of caps on federal loans. Rather, it reduced the maximum amount for certain loans and eliminated other loan types.

    The first change relates to Parent PLUS loans, which are loans for parents of undergraduate dependent students. The new caps for Parent PLUS loans are $20,000 per year and $65,000 total.

    The next change relates to Grad PLUS loans, which are loans for higher education degrees. Basically, Grad PLUS loans are going away.

    Instead, graduate students will have to take out Direct Unsubsidized Loans.

    The significance is that Grad PLUS loans allowed students to borrow enough to cover the full cost of attendance for graduate school, minus any other financial aid received.

    Now, professional students, like law students or medical students, may borrow $50,000 per year and $200,000 total.

    Additionally, non-professional graduate students, like teachers, may borrow $20,500 annually and $100,000 total.

    Why does all this matter?

    Anyone who has paid for college or graduate school should immediately recognize the challenge here.

    To oversimplify, college and graduate school is expensive.

    These new limits mean that most students (or parents of students) will need private student loans to help pay for higher education.

    Generally, private loans have less protections and are more expensive than federal loans. Private loans also can have tougher eligibility requirements, meaning less people may qualify for loans.

    Add it all up and paying for higher education becomes more difficult for a lot of people.

    Public service loan forgiveness remains the same, for now.

    One last point to highlight sine there’s been some confusion on whether public service loan forgiveness changed.

    So far, the answer is no.

    As of now, public service loan forgiveness remains the same. People working eligible jobs and making loan payments for 120 months can still have their loans forgiven.

    Say tuned as changes are most certainly coming. The likeliest change is going to be a reduction in the types of jobs that are eligible for loan forgiveness.

    What can you do about these changes to federal student loans?

    With these main changes to federal student loans in mind, the question is: what can you do about it?

    Fair question.

    Mid-Manhattan Library where students with federal student loans study even with the Big Beautiful Bill Act.
    Photo by Robert Bye on Unsplash

    The way I see it?

    The changes happened.

    The train has left the station.

    So, let’s spend our energy thinking about strategies.

    Look, I completely understand that anyone with loans, or soon to have loans, is feeling frustrated right now. Rightfully so.

    “Frustrated” may be the wrong word. Please feel free to insert whatever word you want into that sentence that better captures your emotions.

    I also wouldn’t blame you if you felt like yelling at the clouds for a few minutes.

    But, once the frustration is out of your system, you still have two options.

    You can either do nothing, get angry, and blame everyone else.

    Or, you can take ownership, prepare, and educate yourself.

    In today’s environment, there is no excuse for failing to educate yourself and coming up with a strategy for your personal situation.

    Countless websites focus on the student loan industry. In just the past couple of weeks, there have been hundreds of articles and blog posts written on the changes.

    If you stay mad and don’t take action, you have only yourself to blame.

    It is up to each of us to take ownership over our personal finances.

    From where I sit, the student loan changes are just one example of what we all have to deal with on our constant journeys towards financial freedom.

    Laws change. Tax breaks change. Circumstances change.

    It’s up to each of us to stay on top of the changes to continue moving towards financial freedom.

    How do we stay on top of the changes, whether it’s student loans or anything else?

    We can think and talk about money. I assure you that others feel the same way that you do right now. Talk to your people. Then, come up with a plan.

    For starters, you can make reading a blog like this one part of your regular internet routine. As a reminder, I post three times every week on important money and life topics for lawyers and professionals.

    You can also sign up for my weekly newsletter here.

    Additionally, you can also pick up a good money mindset book, like The Simple Path to Wealth or Millionaire Milestones.

    If you’re still frustrated, the biggest mindset shift is to stop hoping other people, including the government, fix your money problems for you.

    By the way, this is advice I could have used recently, as well.

    I foolishly got my hopes up with the new legislation.

    Recently, I was not immune from getting my hopes up that the government would provide a big boost for my personal finances.

    Personally, I wasn’t too concerned with the student loan changes because I paid off my loans already and my kids are still at least 13 years away from college.

    However, I followed the bill closely because of the SALT proposals.

    If you’re unfamiliar, SALT allows people who itemize their federal taxes to reduce their taxable income by the amount they pay in state and local taxes.

    As a real estate investor and mesothelioma lawyer, SALT is very relevant to my personal finances.

    I own four properties and earn W-2 income in Illinois, a high property tax state with a 4.95% state income tax. Plus, I own a property in Colorado.

    I am in the category of people who would benefit from a high SALT cap or no cap at all.

    At various points in the legislative process, there was possibly going to be no SALT cap, or a very high SALT cap, or no SALT deduction at all.

    It was constantly changing. I was hooked.

    In the end, SALT won’t have much impact for me at all. I’ll end up saving some money in taxes this year, but it could have been much more.

    Unfortunately, I made the mistake of getting my hopes up that SALT was going to be a great boon for my family.

    The lesson is that I wasted a lot of mental energy worrying about what the government might or might not do. 

    I should have used that energy to work on my blog, help my clients, or engage with my kids.

    These would have all been better uses of my time and energy.

    Take control of your money, whether it’s student loans or anything else.

    I encourage you to take control of your money decisions, whether that means learning about the student loan changes or any other parts of the legislation.

    The changes happened. More changes will come in the future.

    Now, it’s up to each of us to strategize and plan accordingly so we can stay on top of our finances.

    Were you impacted by the federal student loan changes?

    What about any other changes to the legislation?

    Let us know how you’re coping in the comments below.

  • Your Spouse is the Most Important Person on Your RE Team

    Your Spouse is the Most Important Person on Your RE Team

    If you’re considering your first rental property, don’t fool yourself into thinking you’ll be earning passive income.

    The bottom line is owning rental properties is a job. It’s not a full-time job. It’s not even a regular, part-time job. But, it is a job.

    There will be tenant issues, work orders, money spent, and tough decisions to be made like in any other business.

    For me, the benefits of owning rental properties significantly outweigh the downsides of being a landlord. It’s a tradeoff that I would happily make again and again.

    But, I wouldn’t be saying that if my wife wasn’t also fully committed.

    Before you buy a rental property, I encourage you to talk to your spouse first. Make sure you both are on the same page. 

    No, you do not have to have an equal division of labor. 

    Yes, you each have to commit to the good and the bad that comes along with owning rental properties.

    If you both can make that commitment, you have the best shot at owning your properties for a long time and reaching that ultimate goal: financial freedom.

    Before building out the rest of your real estate team, get on the same page with your spouse.

    Owning rental properties should not be a solo adventure. The entire experience is better when you have someone to share it with.

    Isn’t that true for most things in life?

    Whether it’s a project you’re working on or a vacation you’re taking, it’s better when you do it with other people.

    Owning rental properties is no different.

    In fact, the most successful rental property investors have a team of professionals working with them.

    Having a good team in place will help you avoid mistakes and stay motivated so you can keep your properties long-term.

    It’s not an exaggeration to say that having the right people on your team can make or break your investing experience.

    I’ve seen too many investors sell their rental properties after a couple of years because they didn’t have the right people on their team. They end up making preventable mistakes and give up because being a landlord is too hard.

    Unfortunately, that means they give up their properties long before getting the benefits from cash flow, appreciation, debt pay-down, and tax advantages.

    If you’re going to take on the challenge of being a landlord, you might as well hold your properties long enough to reap the benefits.

    And, you should take all the help you can get along the way.

    There is plenty to say about building out your real estate team. And soon enough, we’re going to talk about the key professionals that can help you run your rental property business successfully.

    But, that’s all for another day.

    Before we get to any of that, we need to talk about the single most important member of your team:

    Your spouse.

    The same holds true whether you have a significant other, partner, girlfriend, boyfriend, or anyone else you share your life wife.

    Don’t worry about analyzing the numbers and finding the perfect deal. The rest of your team came wait.

    Start with your spouse.

    Here’s why.

    Your spouse is the single most important person on your team.

    To be a successful rental property investor, your spouse needs to be on board.

    Even if you are going to be the one actively running the business, you won’t get very far if your spouse is not as committed as you are.

    Before anything else, the first thing you need to do is sit down with your spouse and talk about why you really want to own rental properties.

    That’s because owning rental properties is all about commitment.

    It’s a financial comment, a time commitment, and most of all, an emotional commitment.

    With these kinds of commitments involved, it’s essential that your spouse understands the full scope of what you’re both getting into as rental property investors.

    Here’s what I mean.

    Walking down a remote road near Reykjavik, Iceland indicating that investing in real estate takes a team, the most important person being your spouse or partner.
    Photo by Rod Long on Unsplash

    Owning rental properties is a financial commitment.

    This one should be obvious. Owning rental properties is a major financial commitment. It takes capital to buy properties and capital to maintain them.

    When you choose to invest your hard-earned money in rental properties, that means you’re not spending that money elsewhere.

    That might mean sacrificing retirement savings. It could also mean having less money to spend on your dream home. Or, less money to spend on vacations.

    The point is that before you make the financial commitment, your spouse needs to be on board with why you’re making these sacrifices.

    I’m fortunate that my wife and I have been on the same page with our rental properties since Day 1. Neither one of us needed any convincing once we did our homework and learned what was possible.

    Today, we both understand why we’re still doing it: owning rental properties speeds up our journey to financial freedom.

    It took some major financial sacrifices to get here, but we made those sacrifices together.

    As the most obvious example, we delayed buying our “forever home” until I was almost 40 and we already had two kids.

    Instead of buying a home in a nice neighborhood to raise our kids, we used our savings to buy rental properties. We were doing something different and it was important to be committed to our plan.

    It wasn’t easy to see our friends and family members buy beautiful homes in wonderful areas. We definitely noticed more than a few confused looks when we would have people over to our small apartments in the city.

    At times, we both wondered whether we were making a mistake.

    As it turned out, the trade-off was well worth it.

    Owning rental properties is a time commitment.

    Make no mistake about it, owning rental properties is a time commitment.

    We’ve talked about how owning rental properties means having a job. For lawyers and professionals, this means having a second job on top of a primary job. 

    Even with the best team and systems in place, there’s no getting around the fact that owning rental properties will always be a time commitment.

    What does the time commitment look like? What does this have to do with your spouse?

    Depending on your availability and skills, the time commitment will vary from one landlord to the next.

    You might be the type that heads over to the property every weekend to mow the lawn. To take it one step further, maybe you’re the type who has the skills to handle all maintenance requests yourself.

    Or, you might handle all showings and tenant issues personally.

    The truth is that in the beginning, many rental property investors do all of the above themselves.

    Rental property investors think of this time commitment as “sweat equity.”

    Sweat equity is what you contribute to your business but don’t exactly get paid for. When cash flow is tight, as it is for most beginners, we make up for it with sweat equity.

    The more jobs we take on ourselves, the less we pay out to other people.

    The tradeoff is that the more sweat equity you put into your properties, the less time you have to spend at home with your spouse.

    If your spouse is not on board with you being away from home, it’s going to be difficult to succeed as a rental property investor.

    If you have young kids, it’s even harder. When one spouse is at the rental property, the other spouse is usually alone with the kids. Anyone with kids knows which of those two jobs is harder.

    For example, there have been entire weekends that I’ve spent fixing up one apartment or another.

    By the way, if you’ve ever wanted to take a tour called “The World’s Worst Drywall Repairs,” I’ve got you covered.

    If it’s not repairs eating up your free time, it could be analyzing new properties, doing apartment showings, meeting with contractors, or basic bookkeeping.

    With all these time commitments, I’m lucky that my wife and I are on the same page when it comes to our rental property business. We split up these tasks and cover for each other when one person is busy with other responsibilities.

    Yes, you can outsource these jobs. We outsource as much as we can. But, there are certain jobs that you’ll always need to, or want to, handle yourself.

    real estate team meeting near a transparent glass indicating the importance of having the right people on your team before you buy rental properties.
    Photo by Charles Forerunner on Unsplash

    As just one example, we do all our showings ourselves.

    Finding the right tenants is the most important job in owning rental properties. If we outsourced this particular job, we could end up with tenants who could cause us major stress for the next year.

    Regardless of the recipe that works for you and your spouse, have the conversation before investing in rental properties.

    Make sure you each understand the time commitment involved.

    Owning rental properties is an emotional commitment.

    The financial commitment and the time commitment are only the beginning.

    Most of all, owning rental properties is an emotional commitment.

    Without having a spouse on the same emotional wavelength as you, it will be very hard to succeed as a rental property investor.

    When you own rental properties, there will be stressful times and you’ll want to lean on your spouse for support.

    There will also be moments to celebrate, and you’ll want to share those moments with your spouse.

    If your spouse is not on the same wavelength as you, these moments can feel very lonely. The lows can feel much lower and the highs don’t feel quite so high.

    Without someone to commiserate with and celebrate with, you’ll be more likely to give up.

    My wife and I have endless stories about our experiences as landlords that very few other people would truly appreciate. We can each list off the jerks we’ve rented to and the biggest headaches we’ve encountered.

    We once offered a lease renewal to a tenant at her same price. She responded that she would be happy to stay for another year if we simply replaced the kitchen countertops and appliances, added an additional bedroom and built out some new closets.

    Ummm, we’ll pass.

    My wife and I can laugh about these moments because we’re both emotionally committed to the journey. Living through these experiences together has helped us stay the course.

    Unfortunately, I’ve met a number of real estate investors over the years who tried to go it alone. I think that’s a mistake. Oftentimes, these investors don’t stay invested very long.

    It’s not because they bought bad properties or had bad tenants.

    The problem was they never prioritized the most important person on their real estate team.

    When challenges arose, they didn’t have a spouse to lean on.

    When you’re spouse is on board, investing in real estate is a rewarding challenge.

    It’s all about the journey, right?

    When times get tough in our real estate business, my wife and I lean on each other. When we miss out on evenings with the kids or nights out with friends, we remind each other what it’s all about.

    We remind each other that we wouldn’t be where we are today if we didn’t start buying rental properties in 2018.

    We both realize the commitments involved, whether it be our money, our time, or our emotions. If we weren’t in this together, there’s no way we could run our rental property business as well as we do.

    Before you buy a rental property, I encourage you to talk to your spouse first. Make sure you both are on the same page. 

    No, you do not have to have an equal division of labor. 

    Yes, you each have to commit to the good and the bad that comes along with owning rental properties.

    If you both can make that commitment, you have the best shot at owning your properties for a long time and reaching that ultimate goal: financial freedom.

    Did you talk to your spouse before buying rental properties?

    Do you run your rental property business with your spouse?

    What lessons have you learned along the way?