Today’s post comes in two parts. I will share some exciting personal updates and make my case for why I feel every real estate investor should take up an online writing habit.

(Today’s issue takes ~3 minutes to read)

One of my favorite real estate YouTube channels is the Financial F.I.R.E Fighter YouTube channel by Marc Oshiro.

Marc is an agent, a firefighter, and a fellow real estate investor (some might call him a Hybrid Real Estate Professional). He does several interviews per week with real estate investors of all types.

Marc and I first met in late May, where he did a full-length interview on what it means to be a Hybrid Real Estate Professional.

We hit it off and stayed in touch, and I was honored he asked me to come back on the show for two more short interviews.

Here are the high-level topics:

1. How real estate helped enable my family’s cross-country move this summer

2. The power of writing online for real estate investors

Both interviews are 15 minutes or less.

(PS: If you missed the original interview, I distilled all the highlights with time stamps here)

Interview #1 (13 min): Big Updates + Cross-Country Moves

The first interview covered some colossal updates in my family’s life.

Here’s what we covered:

• The huge moves (literally & figuratively) my wife and I are making this year

  • #1: We moved to Houston, TX this month

  • #2: We’re expecting twins in December!

• How we repositioned our rental portfolio to enable our move

• How we utilized the capital gains exclusion on a primary residence to save $27k in taxes!

• The benefits of remote/flexible work for W2

• How our rental income played into our decision

• Would we have moved if my W2 job prevented me from transferring?

• Will my content creation slow down? (Hint: No!)

Interview #2 (15 min): 5 Reasons Why I Suggest Real Estate Investors Write Online

Here’s the original Tweet that caught Marc’s attention:

https://twitter.com/AaronAmeen/status/1680687105448595458

He asked me to spend a few minutes expanding on these ideas and making a case for why every real estate investor should write online.

Here’s what we covered:

• How did I get into writing online?

• The benefits of consistent writing for real estate investors

• Why I broke from the pack & chose writing online (instead of videos)

• How taking notes and writing down ideas solidifies the value of consuming content

• Why you should tell your story, even if you feel like you don’t have enough experience to be of value to others

• How writing improves your speaking & presentation skills

• Which app do I prefer, Twitter (X) or Threads?

Key takeaways

It’s been a busy few months with some major changes for my family & me, but the takeaways are starting to crystalize:

• All major decisions come with risks & tradeoffs. Don’t fight that. Accept it.

• There isn’t always a “right” choice. Once you’ve thought things through, you have to trust your gut.

• When faced with significant one-time expenses, re-positioning your real estate portfolio is MUCH more complicated than selling stocks or other liquid investments. This is a downside of real estate investing worth acknowledging.

• Writing and sharing my experience throughout the summer helped me think through my decisions and kept me grounded in the moment.

• There’s never a bad time to learn income-producing, high-value skills such as writing and public speaking.

Thanks for taking a few minutes to spend some time with me today.

I hope you have a great week ahead!

-Aaron

PS: Have you considered starting a daily writing habit? You won’t regret it. Reply to this email, and I’ll send you my playbook on how to get started without overthinking.

This week, I will share how my experience playing drums for the last 24 years prepared me for my journey into real estate investing.

(Expect this issue to take about ~4 minutes to read)

Growing up, I was obsessed with playing the drums.

In fact, you would have been hard-pressed to pry the drumsticks out of my hand.

Ask my friends…nowhere was off limits.

Here’s 20-year-old Aaron drumming at the beach!

Or 22-year-old Aaron drumming while riding a bike! (Warning: Not recommended.)

Suffice it to say, drums were (and in many ways still are) a huge part of my identity.

While drumming and real estate investing might seem worlds apart, they share the same basic principles:

• Practice

• Adaptability

• Consistency

• Improvisation

• Collaboration

• Knowledge

• Resilience

And by studying the art of drums for 24 years, I learned a few key lessons that set me up for success as a real estate investor.

Here are 6 key takeaways from 24 years as a drummer:

1. It's All About Practice:

   At the height of my drumming days, I practiced 4-6 hours daily.

   For most people, doing the same thing over and over again feels monotonous and boring.

   The ability to push past that feeling & drill into the fundamentals separates the hobbyist from professionals.

   When you become so immersed in something that it feels conversational, you are ready to progress to the next level.

   

   As a real estate investor, you need to put in the reps and learn the language.

   • Analyze at least 1 deal every day

   • Find dedicated time to study real estate concepts

   • Network & engage with other real estate investors online or in-person

   Do this for longer than your average person, and you’ll naturally accel.

2. Learn To Read The Room:

   A good drummer knows how to read the room and adjust the rhythm accordingly.

   Playing full volume during a ballad would be tactless and probably lose you your gig.

   But a drummer who can lead & play off of the dynamics of their bandmates will win over the room.

   

   In real estate, this concept plays out in negotiations.

   Every transaction has two sides. The more you work to understand your counterpart’s motivations and build an offer supporting both sides’ needs, the more likely you are to succeed.

   Being able to identify and adapt is key.

3. Get Comfortable Improvising:

   Every now and then, a drummer might miss a beat. It's not about the miss but how they recover that truly counts.

   Dropping a stick in the middle of a song is only as disruptive as you let it be…Always bring backups & let the show go on!

   

   Real estate is no different. You might have a tenant leave unexpectedly or have an unforeseen maintenance issue.

   Never let your cash reserves dip too low, and make sure you have teams in place to handle whatever may come up.

   Learning to handle these hiccups with grace and effectiveness is a vital skill.

4. Collaboration and Teamwork:

   As part of a band, a drummer needs to work in harmony with other band members.

   The power of a band comes from synchronization. This requires listening to your bandmates and locking into the same tempo.

   While every band has a leader, they cannot do everything alone.

   

   Real estate investing isn't a solo act, either.

   You'll need to collaborate with agents, contractors, property managers, and perhaps even other investors to ensure your success.

5. Be The Backbone of Your Team:

   The drummer sets the tempo and holds the rhythm together for the band. This requires coordination, poise & precision.

   The band relies on you to keep the beat, otherwise, the song will come undone at the seems.

   

   Running a real estate portfolio can be equally complex and dynamic. You may be running multiple projects, offers, or transactions at once.

   It’s your job as an investor to stay organized, delegate effectively, and communicate with your team.

   Learn to lead and never drop the beat.

6. Know Your Gear Inside & Out:

   Each drum has to be tuned and maintained to get the best sound possible. This requires knowledge & a good ear.

   

   The same applies to your real estate investments.

   Your properties will all be different and require individual attention. Maintenance, refinishing, rehabbing, etc.

   Take the time to learn your instruments.

And so…

By applying these drumming lessons to your real estate investments, you can make more sound investment decisions (pun intended!) #DadJoke…

There are parallels all around you.

What’s a component of one of YOUR hybrid identities that you can apply to your real estate investing career?

Reply and let me know. I’d love to hear from you.

See you next week.

-Aaron

PS: Suffering from analysis paralysis? Book a free 45-minute strategy call with me, and let’s see what we can do to get you unstuck.

Today, I am trying something different. I recently completed a month-long introspective exercise to develop personal principles for my life, family & business.

I highly recommend this exercise if you want to understand yourself better & create a more intentional foundation for your behaviors.

Let’s get into it.

(Today’s issue takes ~6 minutes to read)

Why do we do the things we do? 

This question should have a simple answer, but as with anything in life, we humans can’t keep it simple. 

But I wanted an answer, darn it! 

To answer this question for myself, I spent the month of May working through Principles: Your Guided Journal (Create Your Own Principles to Get the Work and Life You Want) by Ray Dalio.

This exercise helped me in many ways, which I’ll share below.

But first…

What are Principles?

By Dalio’s definition, Principles are ways of dealing with reality to get what you want out of life.

There are two main reasons to create your own personal principles:

• Carefully defining principles based on your experience allows you to believe in them deeply

• Align with your principles so what you say and what you do are virtually identical

The benefits of writing your principles down:

1. You will think more deeply about them

2. You will think in a more principled way

• Look down at yourself through a more objective lens

• See cause/effect relationship

• See important patterns you’ve never seen before

3. You will communicate better so others will understand you, and you will understand them better.

Goals of the Principles Guided Journal

1. Convert experiences into reflections about how reality works & principles for dealing with your realities well to get what you want out of life.

2. Write down principles so they can be referred to when analogous situations occur.

3. Learn & practice principled thinking.

This clarity allows me to be a better father, husband, hybrid professional, and real estate investor.

Without further adieu, here are my personal principles.

Principle #1:

Taking the long view is absolutely critical to let compounding work its magic.

Prioritize long-term success over instant gratification.

By allowing time for compounding, small efforts and investments can grow exponentially, leading to substantial results.

As James Clear stressed in his bestselling book Atomic Habits, a 1% improvement every day adds up to 37.78% over 1 year:

This holds true in many areas, such as investing, relationships & health.

But beware…compounding can also move in the other direction. Bad habits can lead to the deterioration of health, wealth & relationships.

Principle #2:

Willpower can work to get you through most situations in the short-term, but you’ll never be able to achieve long-term success without a strong why.

A compelling “why” is the fuel that keeps the engine of ambition running during tough times and drives consistent progress.

It’s the key to endurance and perseverance in any personal, professional, or financial pursuit.

Dig deeper with an exercise like The 5 Whys to pinpoint your true motivation.

Principle #3:

Focus on today. Dwelling on the past or fixating on the future distracts you from the moment that matters most: right now.

Embrace present-mindedness. The past serves as lessons, the future holds promise, but the present is where life unfolds.

By focusing on today, you can make the most out of your immediate circumstances, whether it’s engaging fully with your family or driving progress in your career and investment ventures.

This does NOT mean you can’t plan ahead or set goals.

But in practicality, it’s best to determine what actions you can take TODAY to make progress. After all, your actions are the only thing within your control.

Principle #4:

Let go of resentments. They will live rent-free in your head for as long as you let them. Find a way to forgive others & forgive yourself, or else inner peace will elude you.

There is no bigger drain on your mental health than a well-formed & long-held resentment.

Resentments cloud your mind and hinder personal growth, as they claim unearned space in your psyche.

This principle reinforces the need for mental decluttering and emotional release, promoting an open, serene mind essential for sustained success and happiness.

Principle #5:

Be Brave. Ask Questions. Curiosity & growth are directly correlated.

Engage with others by forming & asking great questions.

Don’t fear asking questions; they’re tools for understanding, connection, and collaborative progress.

Think of your favorite podcast hosts. Here are a few of mine:

• Tim Ferriss (author of The 4-Hour Work Week & host of The Tim Ferriss Podcast)

• David Greene (host of BiggerPockets Podcast)

• Brian Luebben (host of The Action Academy Podcast)

• Khe Hy (host of Rad Friends Podcast)

• Clint Murphy (host of The Growth Guide Podcast)

One thing any great host has in common is the ability to ask great questions.

By doing so, they create engaging conversations and pull out the best stories & information from their guests.

Asking great questions is a superpower.

Principle #6:

Ego is the most destructive drug out there. Humility is the antidote. Be on the lookout any time you see your ego having an outsized impact on your behavior.

Every major problem I've created for myself in my life was a result of an unchecked ego.

Nobody is immune to their own ego. Self-awareness is the first step.

Focus on self-awareness through consistent introspection to mitigate ego-driven actions and promote humble, balanced behaviors.

• Acknowledge your mistakes

• Apologize when you do something hurtful

• Be willing to consider someone else’s viewpoint

• Recognize when you’re inflating your self-importance

We are all prone to thinking too highly of ourselves. Watch out for that!

Principle #7:

Altruism is the way. Actively seek opportunities to give back without seeking benefit in return.

One of my favorite movies ever is Pay It Forward. This movie is an excellent representation of the power of altruism.

In it, the main character (played by Haley Joel Osment) comes up with an idea for a school project where each person does one nice thing for 3 people.

The only thing they were allowed to do in return was pay it forward to 3 additional people.

This spiderweb of generosity goes on to become a nationwide movement.

Remember, the act of giving itself should be the reward, not the anticipation of reciprocation.

Principle #8:

Focus on doing the things that make you feel alive. You’ll know what those activities are without a shadow of a doubt when you do them.

Pursue a life of vitality by engaging in activities that truly awaken your spirit.

I have never regretted spending time doing any of the following:

• Date nights with my wife

• Getting a full night’s sleep

• Writing down my thoughts

• Taking my daughter to the park

• Working on building our family business

• Exercising and putting in time on my health

• Having long conversations with an old friend

These are all things that make me feel alive and connected.

By prioritizing these activities, you align with your authentic self and lead a life that resonates with your innermost values and passions.

Principle #9:

If you’re asking yourself whether you’re prioritizing your family enough, you probably aren’t.

Your intuition often reveals the truth about your priorities.

If there’s a nagging question about whether you’re giving adequate time and energy to your family, it’s likely a sign that you need to reassess.

This is particularly hard if you’re driven and ambitious (which I’m guessing you are if you’re reading this).

I know I could make a lot more progress on building my business if I spent 4 more hours per day working on it.

But I’m not willing to take that time away from my family…

So instead of being bitter about that, I accept it and understand that the reward of being a present father & husband is far greater than the sacrifice.

Principle #10:

Stop trying to control outcomes. You can only control your actions.

Recognize that outcomes result from numerous factors, many beyond your grasp.

Concentrate on what you can directly influence:

• Your choices

• Your behaviors

• Your attitudes

You’re fooling yourself (and wasting a lot of energy in the process) if you think you can actually control the world around you.

Whether you’re religious or not, the Serenity Prayer says it best:

Preserve that energy and redirect it towards being your best self in the ways you can control.

Principle #11:

Constantly assess if the way you spend your time is aligned with your values. You’ll know if it’s not.

Question yourself often about how you spend your time.

• Are you burning the midnight oil when you could be spending time with your kids?

• Are you neglecting your physical health to hit an arbitrary deadline you set for yourself?

Urgency is often an illusion we create for ourselves.

Be careful giving into it at the expense of things that are truly important like your health & family.

Conclusion

Creating foundational Principles is only the first step in living a principled life.

As with anything, they can change as you evolve through your experiences and circumstances.

My goal with stating these publicly is to hold myself accountable when my actions don’t align with these values.

If I consistently fail to live up to these, then I will ask two questions:

1. Are these truly my principles?

2. What needs to change for my actions to be consistent with my principles?

But I’ll never find that alignment if I don’t try it out…

One thing I know for sure…living a principled life will lead to better health, happiness, and success in all areas.

Do you consider developing personal principles to be important? Reply and let me know, I’d love to hear from you.

See you next week.

-Aaron

PS: Are you ready to take action in building your business, but unsure where to go next? Book a FREE 45-minute strategy call here to discuss your unique situation and create an action plan.

Welcome back, Hybrids!

Today, I’ll break down the three stages of the real estate investing journey: The Startup Stage, The Growth Stage, and The Optimization Stage.

Be sure to have a notepad at the ready to jot down some essential points.

(Today’s issue takes ~5 minutes to read)

Embarking on the journey to become a hybrid real estate investor is much like nurturing a plant.

Your journey starts with a seed. Over time you take care of it until it becomes a fully grown plant.

But even after the plant springs to life, you still have to spend time nurturing it. If you stop watering it, it will wilt and eventually die.

A real estate portfolio follows the same arc.

Every real estate investor fits into one of the following 3 stages:

1. The Startup Stage

2. The Growth Stage

3. The Optimization Stage

Each stage requires different levels of knowledge, time, commitment, and skills.

Before we go further, I want to be very clear about one thing.

At the beginning of any journey (investing, career, building a family), you need to put in work to build your knowledge & skills.

You can’t skip ahead without facing the consequences down the road.

Trust me…I’ve learned a few lessons the hard way from trying to move too fast.

With that said, here’s an overview of each stage:

The Startup Stage (0-1 Units)

This is your foundation-building stage.

Here, your mission is to learn the ropes of the real estate investment landscape, understand the market dynamics, and make your first real estate investment.

This stage will also take the most significant investment of your time upfront.

Key elements to consider in this stage:

• Set Clear Goals & Pick a Strategy: To get a strong start, you first need to truly understand why you want to invest in real estate in the first place.

  • What type of real estate do you plan to invest in?

  • What is your ultimate goal with real estate investing? (Cash flow? Appreciation? Replacing your primary income?) Answer these questions FIRST!

    • Related Readings:

      • The 5 Whys: An Exercise To Align Your Goals With Your Intentions

      • Invest Like a Pro: A 4-Step Guide for Hybrid Professionals Entering Real Estate

• Educate Yourself: Equip yourself with some baseline knowledge about real estate investing.

  • Newsletters, podcasts, books, YouTube…there’s so much information at our fingertips. Indulge your curiosity and explore, especially at the beginning!

  • Related Reading: 5 Books to Get You Started in Real Estate in 2023

• Pick a Market: One of the biggest barriers people face when starting to invest is not knowing how to pick a market. Should you invest where you live or look into remote investing? Spend some time researching the answer to this question.

  • Related Reading:

    • 3 Perks of Owning Rental Properties in a Place You Visit Frequently

    • 6 Factors to Consider When Picking a Market For Your Rental Properties

      • Download my Market Analysis Tracker and fill it out as you go.

• Start Building Your Team: The most successful real estate investors have a team of experts surrounding them. Agents, property managers, lenders, lawyers, CPAs.

  • Related Reading: The Key Players You Need To Build Your Real Estate Investing Dream Team

  • Download my free Ultimate Interview Template Pack to help you thoroughly vet your team members.

• Understand Your Finances: Conduct a thorough examination of your personal finances and make sure you’re in a position to invest.

  • Related Reading: 4-Step Process To Build a Personal Balance Sheet in 15 Minutes or Less

• Learn to Analyze Deals: Define your investment criteria and start analyzing deals! I aim for 10 deals per week when I’m actively buying.

  • Related Reading:

    • My Favorite FREE Software to Analyze a Property in 5 Minutes or Less

    • Rule #1: NEVER Invest In a Property With Negative Cash Flow

• Buying Your First Property: All the hard work you put in above is paying off. But don’t suffer from analysis paralysis. Half of the game is just getting started…

  • Related Reading: Buying A House Is An Irreversible Decision: Or Is It?

After establishing yourself in Startup Mode, you enter…

The Growth Stage (1+ Units)

Congratulations. Getting from 0 to 1 is a monumental accomplishment!

Your seeds are starting to come to life. But this is only the beginning.

Now that you have some experience and a solid base, it's time to scale up.

Key elements to consider in this stage:

• Invest With Intention: Don’t add units to your portfolio just to have more units. Build out a buy-box so you can target the right type of properties.

  • Are you looking for a specific cash flow target?

  • Are you investing in a specific neighborhood that has bright long-term prospects?

  • My favorite recent question: “What’s the fewest number of units I need to add to my portfolio to reach my goals?”

  • Knowing what you’re aiming for is critical to ensure you buy the right properties.

• Understand Leverage: Learn to use leverage to your advantage. Mortgages can be a powerful tool to increase your investment capacity. As with any debt tool, be cautious and only invest in what you can understand.

  • Related Reading: How a $50k Down Payment On Our Primary Home Turned Into 3 Rentals & $350k In ROI

• Networking: Connect with other real estate professionals. They can provide valuable insights, partnerships, and potential deals.

  • Utilize your local Real Estate Investors Association (REIA) to find other investors & professionals in your area.

  • Consider creating a profile and engaging on the BiggerPockets forums to build connections & knowledge.

• Property Management: As your portfolio grows, managing your properties could become a full-time job. Consider hiring a property management company to free up your time.

  • Related Reading:

    • How I Saved $25k In Property Management Fees Over 3 Years

    • The Distance Dilemna: How to Evaluate Whether to Hire a Property Manager for Your Long-Distance Investments

Finally, you arrive at…

The Optimization Stage (Any Time You Want)

Optimization can (and should) occur at any point during your investing journey.

This is when you focus on enhancing your operations' profitability and efficiency.

Think of it as pruning your plant to keep it healthy and stimulate the right type of growth.

The activities I outline below can help fortify your portfolio for the long run, even if you’re not actively buying more properties.

Key elements to consider in this stage:

• Lifestyle Design: Building a profitable portfolio is only helpful if it enables you to live the life you want to live. Don’t let your investing take over your life!

  • Related Reading: How To Build a Durable System To Balance Your Job & Real Estate Investing in 2023

• Automate & Delegate: Many repeatable tasks can be templatized and automated through software or delegated to someone like a virtual assistant.

  • Related Reading:

    • 5 Tasks You Can Delegate To a Virtual Assistant To Save Time As a Real Estate Investor

    • The All-In-One Rental Portfolio Management Tool That Saved Me 20+ Hours This Tax Season

• Tackle Maintenance & Upgrades: Regular property maintenance and timely upgrades can increase your rental rates and property values. It also keeps your tenants happy, which helps retain them long-term.

  • The flip side of this: Deferred maintenance can cause problems that cost 10x as much to fix. Don’t delay on repairs!

  • Related Reading: Believe It Or Not, Landlords Are NOT Inherently Evil!

• Raise Rent to Match The Market: Raising rent isn’t fun, but it’s necessary to maintain a durable, long-term portfolio.

  • Related Reading: The Art of Raising Rent on Your Rental Properties

• Tax Optimization: Consult with a tax advisor to ensure you're taking advantage of all possible tax benefits related to real estate investing.

  • The tax benefits of real estate are otherworldly.

    • Depreciation, writing off expenses, tax-deferred cash flow, etc

  • You could be leaving thousands (or tens of thousands) of dollars on the table by not consulting a seasoned real estate tax professional.

• Debt Management: As your empire grows, so will your debts. Have a debt management strategy in place to keep interest payments in check & prevent yourself from becoming over-leveraged.

  • Does it make sense to pay off one of your mortgages?

  • Can you refinance or restructure any of your current loans to more favorable terms?

• Estate Planning: Your real estate empire is your legacy. Make sure it's well protected and planned for future generations.

  • Utilize trusts, LLCs, umbrella insurance, and other risk mitigation tools to ensure you protect your assets.

If this sounds like a lot of work, that’s because it is!

But the energy to maintain a portfolio is far less than it takes to start one up.

If you put in the work at the beginning and build a scalable system, you’ll be setting yourself up for long-term success.

Key takeaways

Building a real estate empire goes through three distinct stages:

1. The Startup Stage, where you lay the foundations;

2. The Growth Stage, where you expand and diversify your portfolio; and

3. The Optimization Stage, where you work on maximizing returns and making your portfolio more efficient.

Each stage requires careful planning and unique strategies.

By walking this path, you, too, can build a successful hybrid real estate portfolio, providing you financial security without sacrificing the quality time you wish to spend with your family.

Remember these stages as you embark on your real estate investment journey.

See you next week,

-Aaron

PS: No matter where you’re at right now on your journey, there are tools available to help you move toward your goals.

Book a FREE 45-minute strategy call here to discuss your unique situation and create an action plan. I’m here to help.

In this week's issue, I'm going to tell you the story of how we turned $50k down payment on our first house into 3 rentals & $350k in ROI.

Here we go!

(Today’s issue takes ~4 minutes to read)

Well, it’s official. We sold our first house!

Not only was this our first home sale, but it was also the first home my wife and I ever bought back in October 2017.

Neither of us could have predicted that this would launch us into a new chapter as full-fledged real estate investors!

One House - Four Types of Value

I’m going to break down how we got 4 separate uses out of this single house:

1. Primary Residence

2. Cash-out Re-Finance (to fund 2 more rental properties)

3. Rental Property

4. Sale

Here is a photo of the home, in all its glory.

How it started

In many ways, 2017 was a simpler time for us:

• We were both 27 years old

• Working full-time demanding jobs

• Living in Las Vegas

• With no kids (yet)

We bought this home as a primary residence and had no idea then that we’d be getting into rental real estate.

Here are the specs on the house:

• 4BR/2BA

• 2100 sq foot house

• Built in 1944 (completely remodeled in 2017)

• $250k Purchase Price

• 20% ($50k) Down Payment

• 30-year fixed, 4% interest rate

• The monthly payment (principal, interest, tax & insurance) was $932...

Coming from Seattle, this blew our minds! This same house would probably be $750k and have no yard…

(Beware of the comparison trap, by the way. That’s how you end up overpaying.)

Now that you know where we were coming from, here are the 4 ways we got value out of this house:

1. We lived there happily for 3 years (2017-2020)

This was our first home, both literally and figuratively.

We celebrated many occasions here:

• We adopted our dog Arnold in this house

• We hosted our whole family for Thanksgiving (paying forward a long-standing tradition)

• We even got married in the backyard…(that’s a whole other story #Vegas). See below for proof.

At $932/month, we were living comfortably and building a life together in this home.

Now in late 2019, we saw another opportunity:

2. We used a cash-out refinance to help fund 2 rental properties

In November 2019 I received an email from our agent that changed our life forever.

He had two houses being packaged and sold together with 5-year leases paying above-market rent. These were home run deals!

In short, we needed a way to fund the deals.

Enter the cash-out refinance!

In the 3 years from 2017-2020, we built up an additional $50k in equity in our primary home.

Using a cash-out refinance, we were able to pull that money out and re-invest it in these two rental properties.

(Important to note: The ReFi increased our monthly payment from $932 to $1,300. This was an acceptable cost to us since we were able to more than make up for it with rental revenue).

To date, these two houses have generated over $72,000 in NET cash flow while appreciating over $230k in value.

Click here for the full deal breakdown of those two properties.

If you’re keeping score, this house already had:

• Given us an amazing place to live

• Funded two home-run rental properties

But why stop there? When circumstances (*cough* COVID! *cough*) forced us to leave Vegas, we decided…

3. Instead of selling when we moved, we turned it into a rental property

If it weren’t for the pandemic (which uprooted my career in the Concerts Industry), we might still live in this house.

But alas, COVID had different ideas, and we relocated back to Seattle in 2020.

Now usually, when someone moves, they sell their primary home and use the proceeds to buy a home in their new city.

As I mentioned before, Seattle real estate prices are ludicrous!

If we wanted to find a suitable home we could grow into and raise a family in, we’d have to sell all 4 of our rental properties to fund it!

Sorry, but that’s just not worth it…

So we decided to rent a home in Seattle and turn our Vegas home into a rental, and boy, are we glad we did!

We rented the house for 3 years, collecting over $65k in rent and paying down $14k in principal.

Now, in a perfect world, we would have held onto this property forever.

Alas, as I wrote about before, the biggest downside to real estate investing is Illiquidity.

You can have $10 million in real estate equity, but if you don’t have enough cash to fund your day-to-day life, it does you no good.

This leads us to the final use case…

4. After 3 years of renting & 6 years of ownership, we sold the house for a $110k gain.

We have been diligent about planning our lives in a way that works for our growing family.

But even still, sometimes life throws you curveballs.

We’re expecting twin boys later this year, so we decided to sell this house to free up some cash.

Luckily, there is a beautiful tax loophole where you can exclude up to $500k in capital gains tax when you sell a home that you’ve lived in for 2 out of the last 5 years.

(Long-term capital gains tax is 15% of the profit in our tax bracket)

We moved out of this house on September 12th, 2020 and we sold it this week (July 17th, 2023).

In other words, we slid in right before the deadline to make our entire cap gains tax-free.

(See below for a real picture of the IRS trying to tag us with capital gains tax before we reached home base before the deadline.)

Here’s the final tally:

Purchase: $250k on October 5th, 2017

Sale: $365k on July 13th, 2023

Initial Investment: $50k

Capital Gains: $110k (tax free!)

Total Rent Collected: $68k

Total Net Cash Flow (after expenses): $10k

I can live with that…

Key takeaways

This story was long & winding, but there are a few key points I want to drive home for you.

• A single property purchased as a primary residence can serve many purposes

• While my main goal has always been to buy and hold, life doesn’t always play out how you project it on a spreadsheet.

• It’s ok to take profits and free up cash from your home equity, especially when you need it for another important priority in your life (like having kids)

One thing I know for sure…if we never bought the first property, we’d be in a very different place in our lives right now.

So remember, the first step is the hardest. But in the end, it’s worth it…

Happy investing.

-Aaron

In this week's issue, I'm going to tell you about an unusual lesson I learned from my Jazz Studies Professor back when I was just a freshman drum student in college.

That lesson? "Avoid The Zipless F*ck"

Yes, you read that correctly, and no, it's not as explicit as you might think.

Before I dive in, let me assure you - this week’s newsletter is completely safe for work, despite the risqué phrasing.

Let’s jump in👇

(Today’s issue takes ~5 minutes to read)

Ok…what is the “Zipless F*ck?”

The Zipless F*ck - A concept that found its way into popular culture thanks to Erica Jong's 1973 novel, Fear of Flying. It's about a sexual encounter between strangers that’s spontaneous and free from strings or emotional entanglements.

But don’t worry, this article isn’t about sex.

Credit: Erica Jong, Fear of Flying, 1973

I will tell you how this concept, as I learned it from my professor, has everything to do with your journey as a hybrid real estate investor.

So how did the “Zipless F*ck” & music education mix?

Credit to my Jazz Studies Professor, Keith Brown, for weaving this concept into one of our private drum lessons.

I was 17 and a freshman drum student at the time, eager to elevate my drumming skills to unrealistic levels. Jazz was a genre I had virtually no experience playing, but I was impatient to be the best at it.

My professor, noticing my hasty approach, likened my aspiration to a "Zipless F*ck."

He told me, "Aaron, your goals aren't a one-night stand. They're more like a marriage. You need to court them, nurture them, and build them up over time. This journey is not a quick fling. It's a long, enduring commitment."

I had been rushing so much that I had been trying to skip the fundamentals. And we all know no matter what we’re pursuing in life, we need a solid foundation to succeed long-term.

While patience has never come easily to me, this wisdom has stayed with me since then.

What does this have to do with real estate investing?

Like mastering the art of playing jazz music, real estate investing is not a skill you can conjure up overnight.

You can't rush into investing without understanding the market, the risks, the potential gains, and a myriad of other factors.

Here are 4 ways to cultivate patience in your investing journey:

1/ Build the skill of delayed gratification:

It's tempting to want immediate results from your investments.

But remember, real estate investing requires a vision for the future.

When I was an impatient drum student, I had to stop rushing things and put in the work. I practiced upwards of 7 hours a day!

Translated to real estate investing, I analyze at least 10 deals per week if I want to get a pulse on a local market. (You can analyze deals in 5-minutes or less with DealCheck. Learn how here.)

Only by absorbing the information on a regular cadence over a long period of time can you truly understand what works in a market.

So don’t forget to put in the reps. The experience you gain will make you a better investor in the long run.

2/ Foster a mindset of continuous learning:

The real estate market is constantly changing.

Make it a point to continually educate yourself about the fundamentals of real estate investing & keep a pulse on your local market conditions.

• Reading industry reports

  • Check out my new favorite daily real estate market trends email - ZeroFlux

• Watching YouTube videos

  • Try Dion Talk Financial Freedom or Financial F.I.R.E Fighter

• Engaging with fellow investors

  • BiggerPockets Forums is a good FREE starting point

• Attending seminars and webinars

  • In Person: BP Con (I don’t recommend this unless you’re really committed. It’s pricey, but there are networking opportunities galore)

  • Online: BiggerPockets has several FREE webinars to get you started

Level up your knowledge & network to level up your returns.

3/ Accept that juggling a job, family, and investing requires careful time management

As a hybrid investor, you must respect that your time is divided.

Given all the areas of your life competing for your attention, you need discipline & structure. I highly recommend setting aside “Sacred Hours” to work on your real estate goals.

Sacred Hours ensure you have time to make progress on your goals without compromising your ability to be present for your career & family.

You won’t see results overnight, but you WILL over a longer time horizon.

Click here to view the Ideal Week Template, including a blueprint of how I set up my week. I encourage you to make a copy and build your own ideal week!

Make it a point to continually educate yourself about the fundamentals of real estate.

4/ Understand that real estate investing is a marathon, not a sprint:

Patience in real estate investing is akin to understanding that wealth builds gradually.

Take this illustration of a simple rental property over time.

Assumptions:

• $250k purchase price w/ 25% down payment

• 4.5% interest rate, 30-year fixed loan

• Expenses ~25% of rental income (increases 2% per year)

• 10% of rent budgeted for vacancy on top of that

• Year 1 rent at $2,400/month (increases 2% per year)

Here’s how that looks:

After 10 years your net cash flow increased by 50% while your equity position almost tripled ($62,500 to $185,811)!

The further you get into your loan, the faster your principal paydown is.

Now THAT is powerful.

Conclusion

The key takeaway here is that success in real estate investing doesn't come from the "Zipless F*ck" approach.

It's not a quick fling but a long-term commitment that requires patience, understanding, and care.

Remember, slow and steady wins the race.

See you next week.

-Aaron

PS: Ready to jump-start your real estate investing journey? Book a FREE 45-minute strategy call here to discuss your unique situation and create an action plan.

Today, we’ll dive into four critical focus areas to to set yourself up for long-term success in real estate as a busy hybrid professional.

(Today’s issue takes ~3 minutes to read)

Investing in real estate can seem overwhelming on the surface.

Especially as a hybrid professional with a busy life.

You’re already juggling:

• Your job

• Your health

• Your family

• Your hobbies

• Your finances

• Your household & never-ending chores

Heck, I’d say doing dishes, cleaning & laundry for a 3-person household with a young kid is a part-time job by itself!

And now you’re considering adding real estate investing to the mix?!

Wowza!

[Insert your critic’s name here]: “How are you going to handle all that without getting overwhelmed?”

Hush, critic!

Luckily, there is a solution!

With the right preparation, the journey can be smooth and rewarding.

Here are 4 specific things to focus on:

#1: Establish Clear Goals Before You Start Investing

Before you dive headfirst into real estate, it’s important to outline your goals. Be specific!

And no, “I want to invest in real estate to make money” is not a specific goal…

Investing goals fall into two common categories:

• Financial (like generating a certain amount of passive income or building a specific net worth)

• Lifestyle (like achieving more time freedom),

• Or a mix of both.

Figure out what you’re aiming for.

Examples of specific goals:

• “I want to generate enough cash flow from rentals to cover my monthly living expenses.”

• “I want to own enough rental properties and pay off the mortgages by the time I’m 65 so I can live off the cash flow in retirement.”

• "I plan to buy 1-2 rental properties as a side project, but don’t intend to scale beyond that.”

Notice how that last one might be better for busy professionals who can’t dedicate large pockets of time to scale a real estate portfolio.

The point is if you don’t define what you’re aiming for, you can’t create a sensible plan to get there.

Read my past article on The 5 Whys: An Exercise To Align Your Goals With Your Intentions.

Additional Resources:

• SMART Goals: https://www.mindtools.com/pages/article/smart-goals.htm

#2: Measure & Understand Your Baseline Personal Financial Situation

A clear understanding of your current financial situation is crucial to avoid critical mistakes.

If you miscalculate your starting point, you could do serious damage to your personal finances!

Take stock of the following:

• What’s your credit score?

• How much debt do you currently have?

• How much cash do you have available to invest?

• Are you taking in more money every month than you’re paying out? (If no, then I suggest you address this before investing in real estate)

Once you’ve measured your baseline financial situation, you can start to answer these follow-up questions:

• What market(s) can you afford to invest in?

• How long will it take you to save up for a down payment?

• What kind of cash flow do you need from each rental property to justify the investment?

Lay all the cards out on the table so you can get a clear picture.

I outlined a 4-step process to build a personal balance sheet in 15 minutes or less in a previous article.

Additional Resources:

• ChooseFI Podcast: Episode 374 - Tools to Simplify Budgeting & Tracking Finances

#3: Do Research & Due Diligence To Build Your Real Estate Dream Team

Real estate investing is seldom a one-person show. You'll need a team.

Here are the common team members:

• Real estate agent

• Property Manager

• Lender/Mortgage Broker

• Contractor/handyman

• Attorney

• CPA

With a solid team in place, you’ll be able to maintain your portfolio without compromising your other responsibilities in life (work, family, health, etc).

Start researching and networking to find the right professionals who understand your goals.

For a deeper dive on building a team, I recently launched an Ultimate Interview Template Pack to Build Your Real Estate Investing Team.

You can also read my past article here.

Additional Resources:

• BiggerPockets Forums: https://www.biggerpockets.com/forums

• REIA (look up local group): https://nationalreia.org/

#4: Pick One Real Estate Investing Strategy & Commit To It

There are numerous strategies for real estate investing:

• Fix & flip

• Wholesaling

• Syndications

• Long term (aka “buy & hold”)

• Short-term rentals(AirBNB, VRBO)

• Real Estate Investment Trusts (REITs)

• Medium-term rentals(Furnished Finder)

(There are more, but you get the point)

I strongly encourage you NOT to try and take on multiple strategies, especially at the beginning.

The skills it takes to flip houses are an order of magnitude different (and more time-consuming) than running a single-family long-term rental.

Do NOT assume that knowledge from one strategy will translate perfectly to another.

• Research these strategies

• Weigh their pros and cons

• Choose the one that fits best with your goals and current situation.

(Credit: Coach Carson)

Resources:

• BiggerPockets Real Estate Investing Guides: https://www.biggerpockets.com/guides

• Roofstock: https://learn.roofstock.com/blog/types-of-real-estate-investors

TL;DR:

Real estate investing doesn’t have to be overwhelming.

Take these 4 steps to plan your investing journey and start on the right foot:

1. Set clear goals

2. Understand your finances

3. Assemble your team

4. Choose your strategy

With these steps, you’re well on your way to becoming a successful real estate investor.

Until next time,

-Aaron

PS: Ready to jump-start your real estate investing journey? Book a FREE 45-minute strategy call here to discuss your unique situation and create an action plan.

This week, I’ll break down a 3-step process for defining your own hybrid professional identity.

Remember, it’s the combination of your identities that makes you unique. Embrace it!

Here we go. 👇

(Today’s issue takes ~2 minutes to read)

As a hybrid professional, you will often wear many hats throughout the day.

For example…I’m not just a real estate investor or a newsletter writer.

I claim all the following identities:

• Father

• Writer

• Husband

• Drummer

• Entrepreneur

• Business Manager

• Real estate investor

• Ex-Concert Promoter

Each of these identities has its own values, skills, and perspectives, and they all intersect in ways that influence my approach to work, investing, and life.

This is what we’ll refer to as a "Hybrid Professional Identity”

Related Reading: So What Exactly Is A “Hybrid Professional?”

The real beauty of being a hybrid professional is that the mix of identities is unique to each person. My blend won't be the same as yours, and that's something to be celebrated!

So, what's your hybrid identity?

Defining Your Hybrid Identity

To better understand your hybrid professional identity, take the following simple steps:

Step 1: Start by listing out the various roles and identities you embody in your day-to-day life.

I suggest breaking this into two lists (I’ll use my identity as an example):

“Personal” Roles such as:

• Father

• Husband

• Drummer

“Professional” Roles:

• Writer

• Entrepreneur

• Business Manager

• Real estate investor

• Ex-Concert Promoter

Both role types play an important part, but acknowledging which category they fall into is important.

Credit: More Than My Title - Dr. Sarabeth Berk

Step 2: Consider how each of these roles influences your approach to work and investing.

EX:

• Does being a parent make you more risk-averse, leading you to seek out safer investment opportunities?

• Does your experience as a business manager give you a knack for spotting properties with strong potential?

There’s something to learn from every identity you possess, and once you ask these questions you’ll start to pick up the patterns & identify intersections.

Step 3: Consider how you can leverage the intersection of these identities to your advantage.

The real estate market is crowded, and having a unique perspective can provide you with an edge that others lack.

The reason I included “Ex-Concert Promoter” in my professional identities is that I consistently find parallels to what I do now from my 10 years in the music industry.

EX:

• P&L management

• Budgeting & forecasting

• Operations & event management

• Invoicing & accounts receivable

• Managing different personality types (and egos)

Your past experience is equally important to consider when doing this exercise.

There are things I learned from bagging groceries at Albertsons when I was 16 that I still incorporate into my life today.

Don’t leave anything off the table.

Your Hybrid Identity at Work

Embracing your hybrid professional identity can lead to new opportunities and innovations.

More examples from my situation:

• As a drummer, I've learned the value of consistency and practice.

  • I used to practice drums 7+ hours per day, which taught me how to “put in the time” to build a skill slowly but steadily.

  • This applies to real estate activities such as deal analysis, which requires patience & consistency.

• As a father, I'm motivated to create a secure future for my family.

  • This drives my real estate strategies towards long-term, stable returns.

  • A parent’s mindset also instills risk mitigation & downside protection mentality.

• As a Business Manager, I focus on strategic planning & execution.

  • Taking a holistic view of my real estate business allows me to see the big picture.

  • My knowledge of how to operate an effective daily rhythm of business allows me to execute my overall strategy.

There are opportunities everywhere if you take the time to look for them.

Leveraging the Uniqueness

The combination of these identities gives me a unique perspective that others might not have.

And the same applies to you!

By acknowledging and valuing each part of your hybrid identity, you can:

• Enhance your approach to investing

• Make decisions that align with your diverse skills, experiences, and values.

Remember, each aspect of your hybrid identity can provide you with unique insights, resources, and perspectives.

And when you integrate these identities together, you create an approach to work and investing that's distinctively you.

Closing Thoughts

Our identities are not siloed. They blend, they mesh, and they overlap. This is what makes us complex and unique as individuals and as investors.

It’s time we recognize and leverage our hybrid professional identities.

You never know, it might be the secret weapon that helps you spot your next big opportunity, or helps you make a tough decision.

So I'll ask again, what's your hybrid professional identity?

Share your thoughts, experiences, or questions about today's issue by replying to this email or leaving a comment on Substack.

I look forward to reading your responses!

See you next week.

-Aaron

In today’s newsletter, I will unpack the important lessons you can bring from team projects in your day job into your real estate investing journey.

(Today’s issue takes ~3 minutes to read)

Have you ever been part of a team project that went spectacularly well?

Or maybe you’ve been part of one that completely missed the mark?

Whichever the case, there's no doubt that these experiences, whether victorious or disastrous, can provide invaluable insights applicable to real estate investing.

Today, let’s delve into the world of team dynamics and see how we can apply these lessons to our real estate investing journey.

#1: The Power of Defined Roles in Real Estate Investment

In every successful team project, roles and responsibilities must be clearly defined.

• Who's the project manager?

• Who's in charge of quality control?

• Who's responsible for ensuring deadlines are met?

In real estate investing, the answer is YOU until & unless you build out a team.

With that said, your real estate investing team should have clear roles.

You need to know who's doing what - from the realtor who sources the deals to the property manager who handles the day-to-day running of the property.

Example: Sarah, a first-time investor, decided to build a real estate team for her rental property business.

She hired:

• A real estate agent to find properties

• An attorney to handle legal matters

• An accountant for financials

• And a property manager for day-to-day operations.

Clear roles reduce the potential for overlap or conflict, enhancing efficiency and effectiveness.

Related Reading: The Key Players You Need To Build Your Real Estate Investing Dream Team

#2: Keys to Successful Communication in Real Estate

How many times have you been part of a team where communication was poor? The results weren't pretty, were they?

Good communication is critical to:

• Prevent misunderstandings

• Ensure everyone is on the same page

• Promote cooperation and synergy

This principle applies directly to real estate investing.

It’s crucial to maintain open and clear lines of communication with everyone on your team: your agent, property manager, lender, and even tenants.

One best practice you can adopt to improve communication with your team is a monthly check-in.

Example: We own & operate 4 rental properties in Las Vegas. We primarily self-manage these properties, but we also have a go-to person for on-the-ground support.

(Related Reading: How I Saved $25k In Property Management Fees over 3 Years )

We check in with him once a month to go over the following:

• Update each other on open tasks

• Re-align on any expected timelines for completing tasks

• Share any relevant intel from tenant interactions or recent events

• Raise any concerns or upcoming deadlines to be aware of (leases ending, deferred maintenance concerns, late rents, etc)

This open communication helps preempt problems, clarifies expectations, and keeps everyone on the same page.

#3: Conflict Management & Resolution

Conflict is inevitable in team projects, as people with different ideas and perspectives come together.

But conflict doesn't have to be detrimental. If managed well, it can lead to improved ideas and strengthened relationships.

Real estate investing will sometimes pit you against difficult situations.

For instance, you may disagree with your property manager about maintenance costs or with a tenant about late rent.

How you handle these conflicts can significantly impact your investment's success.

Emphasize the following:

• Empathy

• Active listening

• Finding mutually beneficial solutions.

Example: When Tom's property manager and tenant had a disagreement over a delayed maintenance issue, tensions ran high. Instead of taking sides, Tom arranged a meeting with both parties.

He listened to both sides, facilitated a dialogue, and helped them reach a compromise.

His effective conflict management turned a potentially damaging situation into an opportunity for improved relationships and procedures.

#4: Celebrate Wins, Both Big & Small

In team projects, celebrating wins, however small, can boost morale and motivate the team to strive for more success.

Don’t forget to celebrate your wins in real estate investing, too!

• Got your first rental property? Celebrate!

• Successfully refinanced a mortgage? Celebrate!

• Manage to evict a problematic tenant? Definitely celebrate!

These milestones, however big or small, contribute to your overall investing journey.

Example: Lisa had a difficult time securing her third investment property, but with persistence, she finally closed the deal. To commemorate this accomplishment, she threw a small party with her investment team.

This celebration not only boosted everyone's morale but also strengthened their sense of teamwork. The experience motivated them to work harder on their future ventures.

Key takeaways

1. Clear roles and responsibilities are crucial: Ensure each team member knows their role and how they contribute to your real estate investing goals.

2. Communication is key: Open, regular, and clear communication with all stakeholders will help prevent misunderstandings and promote cooperation.

3. Conflict is not always bad: When managed correctly, conflicts can lead to improved outcomes and strengthened relationships.

4. Celebrate every win: No matter how big or small, every win is a step forward in your real estate investing journey. Celebrate it!

Final thoughts

Real estate investing is not a solitary pursuit.

It's a team project, and like any other, it requires effective communication, clear roles, conflict management, and celebration of wins.

Invest in learning about team dynamics, delegation, and project management, and you’ll set yourself up for scalable, long-term success.

What has been your biggest teamwork challenge in real estate investing, and how did you overcome it?

Reply to this email or drop your answer in the comments and let me know.

Until next week.

-Aaron

In this essay, I will explain the power of setting up "Sacred Hours" and how doing so can supercharge your productivity as a hybrid real estate professional.

(Today’s issue takes ~3 minutes to read)

Do you suffer from an inability to focus?

Well, that makes sense!

As a hybrid professional, you are, by definition, managing multiple things at once.

This could easily lead to a chaotic schedule and anxiety around all the constant context-switching you do.

You may often ask, “What should I be working on right now?” whenever you sit in front of your computer.

While unstructured time has plenty of benefits, it’s hard to move the needle on your long-term goals without dedicated & explicit focus time.

So where do you even start?

The First Step: Set & Protect Your “Sacred Hours”

Ok, Aaron…what are “Sacred Hours”?

I’m glad you asked.

“Sacred Hours” are non-negotiable time blocks that you set aside to focus on your top priorities.

Once you set your sacred hours, you commit to protecting them at all costs.

In a perfect world, you time this to align with when you’re most naturally energetic and least likely to be bothered.

Credit & Inspiration: Dickie Bush (read his Twitter thread for more context)

Protecting chunks of time to work on specific tasks (aka “Time Blocking”) is not new or novel.

But it isn't easy…and requires practice.

For me, the only truly non-negotiable blocks include the following:

• Writing (6-7am)

• Work “on my business” (7-8am)

• Family time & putting my daughter to bed (5-8pm)

(Note that my “9-5” still fits perfectly in the middle of my day, and I do not consider it a non-negotiable time block. I’m lucky to have an outcome-driven job.)

Learning to set and protect these precious hours will:

• Lead to accelerated growth in your real estate portfolio

• Unlock higher productivity and efficiency for your side-hustle

• Prevent you from compromising your full-time job or your family.

Let's explore some examples of how this simple practice can benefit you.

#1: Establish focus.

Sacred hours matter because they provide an unbroken span of focus on your most important tasks.

We bought 3 rental properties in 2022. You could say we were in an “active buying” phase. To make good buying decisions, we had to analyze hundreds of deals.

To achieve this volume of deal analysis, I dedicated 30 minutes per day strictly to deal analysis. Using my favorite FREE deal analysis software, I analyzed 6 deals every morning (5-minutes per deal).

That’s 30 deals per week & ~120 deals per month!

Now imagine trying to evaluate this many properties without setting aside dedicated time.

The distractions and interruptions would lead to a shallow analysis & lower volume.

By setting aside sacred hours, we dove deep into the evaluation, uncovering insights that would've been missed otherwise.

This focused approach could differentiate between a mediocre and a standout investment.

#2: Maintain work-life balance.

Sacred hours are not only about work; they are about your life outside of work, too.

Let’s be honest. You can always find an “excuse” to spend more time at work or on your side hustle.

But what the heck is the point if you are ignoring your friends & family along the way?

Setting sacred hours for family time creates a space to fully immerse yourself without guilt or stress about work.

Save for a few exceptions for travel or overnights with the grandparents, I’ve put my daughter to bed every night for the first 19 months of her life.

Now THAT is a streak I’m proud of!

This intentional balance contributes to a happier and more fulfilling life, which is essential for long-term success.

#3: Boost your productivity.

Sacred hours allow you to leverage your peak energy periods for maximum productivity.

Imagine two scenarios:

1. You handle your most complex real estate calculations late at night after a tiring workday

OR

2. You tackle them during your sacred hours when your energy and concentration are at their peak.

The latter scenario will likely lead to more accurate calculations, quicker decision-making, and a more successful investment overall.

#4: Ensure consistency.

Sacred hours ensure you are consistently dedicating time to your investment tasks.

Without them, your work on the real estate side might become sporadic, leading to missed opportunities.

By implementing sacred hours, you’ll ensure you’re consistently working on your portfolio, steadily building it one property at a time.

This will lead to a more robust and profitable portfolio in the long run.

#5: Avoid burnout.

By setting boundaries through sacred hours, you avoid the risk of burnout.

Work and personal life can blur without such boundaries, leading to constant stress.

However, with clear time blocks, you know when to switch off, rest, and recharge. This sustainable approach leads to better mental health and productivity over time.

Final thoughts

By implementing “sacred hours,” you can elevate your productivity, improve your work-life balance, and lead to consistent and sustainable success in your hybrid real estate investment journey.

Start small by picking one task you’d like to do every day and commit to 15 minutes.

Try it for 2 weeks and I guarantee you’ll see results. Let me know how it goes. I’d love to hear from you.

Have a great week.

-Aaron

In today’s newsletter, I will share the story of how a single email from our realtor led to an opportunity that generated $72,000 in NET cash flow & over $230k in property value appreciation.

(Today’s issue takes ~4 minutes to read)

You often hear fairy tale stories of how one well-timed investment can change your life forever.

And it’s true…One well-timed bet can provide outsized returns that make up for a lifetime of mediocre (or even harmful) decisions.

But it’s also no secret that sometimes opportunity strikes when you’re least expecting it.

Today, I’ll share how an email I wasn’t expecting completely changed my life and poured jet fuel into my real estate investing journey.

How it started

Before we dive in, here’s some context…

In November 2019, we were ~4 months into our real estate investing journey.

Our first rental property was off to the races with wonderful tenants (a lovely family with intentions to stay put for years).

Financially, we had made a trade-off:

• The rent checks were clearing, and we were netting ~$300 between the rent & the mortgage.

  • (NOTE: this is not the same as true net cash flow. You should always run a proper cash flow analysis and budget for expenses/Capex but that’s another story)

• We had depleted most of our accessible savings on the down payment for the first rental property.

Our knowledge of real estate was at a novice level, AT BEST.

But we had one thing going for us…we were in the game!

And we had a secret weapon…our agent.

An investor-friendly agent can change the game.

I spoke in a recent interview about how we lucked out big time with our first realtor in Las Vegas.

When searching on Zillow, we “spun the wheel” and were randomly assigned to an agent. This is akin to gambling, especially if you don’t know how to vet an agent.

(Related: Check out my FREE pack of interview templates for building your real estate investing dream team.)

I would not advise this method for any real estate investors, as it takes a specific skillset & base of knowledge for an agent to work well with investors.

But alas, our bet paid off. Our agent was willing to help educate us, and his connections were deep.

So back to the magical email…

Date: November 11th, 2019

Subject: “Just came across my desk”

Once I saw this email come through, I knew we needed to look into it.

To summarize:

• 2 houses bundled together with significant cash flow from day 1

• Both were 3 years into a 5-year lease paying above-market rents

• Leases contained an option to renew for another 5-year term at the end

• Annual rent increases were built into the contracts, indexed for inflation

Now THAT is a deal worth fighting for.

We had to get creative to pull it off

As I mentioned above, we were low on liquid savings.

Most lenders require 25% down payments on investment properties, and that was simply out of reach for us.

We came up with a bold plan:

• We sold off about 85% of our stocks to fund 15% down payments for the deals.

• Then, we refinanced our primary residence, borrowing against the house's equity. This allowed us to pay down the mortgages to 80% of the property values, eliminating the need for private mortgage insurance (PMI). The money from the refinance also helped us refill our stock portfolio

The cash-out ReFi added $400 to our monthly payment on our primary home, but we gained $800 in net cash flow from the two rentals.

If this math is making you dizzy, don’t worry. It was very disorienting to me too.

Bottom line: We were tapping into the equity in one property to purchase two more, with the net monthly cash flow improving by $400.

After all that, it almost fell through…

The sellers in this transaction were motivated, and one of their main terms was that we close within 4 weeks.

We had been working with Chase, and everything was on track up until 5 days before the scheduled close.

I got a call from our loan officer, and he said their legal team had deemed these houses to be illegally operating a “group home” business within Nevada.

After a few expensive calls with our lawyer (who had 30+ years of real estate experience in Nevada), we confirmed that the houses were operating legally, and issued a letter to Chase to appeal their verdict.

Alas, Chase wouldn’t close the loan, and our closing date passed with no loan.

Technically, the purchase contract was void at that point, but our agent again came to the rescue.

He brought in his preferred lender, who expedited our rather complex file and committed to closing our deal within 3 weeks (over Christmas & New Years, no less)…

The sellers begrudgingly agreed to the new deadline, and we ultimately closed on the houses.

To date, these two houses have generated over $72,000 in NET cash flow while appreciating over $230k in value.

Key takeaways

So why did I spend 5 minutes dragging you through this roller coaster?

Because I think there are several lessons that any investor can take away from this story:

1. An investor-friendly agent can completely change the game for your future

Without our agent’s judgment, connections, and resourcefulness, this deal would never have been an option.

Do your due diligence and find an agent who understands what you’re looking for and can help guide you toward the right deals.

2. We had to take a considerable risk to gain a big reward

We essentially sold all of our liquid assets to buy these houses and were banking on a cash-out refinance to replenish our funds.

This was incredibly risky, and if the ReFi didn’t go through, we would have had essentially no reserve or emergency funds.

I do not recommend this approach, but I share this to show you how large of a risk it took to get this deal done.

3. Big box lenders aren’t in the relationships business

The experience with Chase pulling out of our deal 5 days before closing taught me that you won’t get white-glove service from a big-box lender.

Remember, big box lenders are playing a volume game; frankly, they don’t care if you return.

We’ve worked with local mortgage brokers or credit unions for our loans ever since.

4. Don’t give up without a fight

Some deals are worth fighting for. We spent over $1,000 in legal fees for 2 phone calls and a letter to try and convince Chase to close the deal.

They didn’t care, but that didn’t stop us. We salvaged the deal by pivoting to a different lender, which paid off big time.

Final thoughts

Long-term real estate investing is about taking calculated risks and pursuing compelling opportunities.

It won’t always be easy.

Your patience and resolve will be tested.

You won’t win every deal.

But if you keep trying and give it your best effort, you’ll have your own home run story to tell before long…I look forward to hearing about it.

See you next week.

-Aaron

In today’s newsletter, I will share key takeaways from my 50-minute YouTube interview with Marc Oshiro (aka the Financial F.I.R.E Fighter).

You can catch the full interview here. If you prefer to read it, I also cleaned up a transcript, which you can find here.

(Today’s issue takes ~2 minutes to read)

This past week I had the privilege of sitting down for a 50-minute interview with Marc Oshiro, a.k.a. The Financial F.I.R.E Fighter.

For those who don’t know Marc, he is a firefighter based out of Hawaii who is also a real estate agent & long-distance real estate investor.

You might even call him a Hybrid Real Estate Professional :)

You can learn more about Marc and catch some of his other interviews on his YouTube channel.

We covered a lot of ground, including (but not limited to) the following:

• What it means to be a “Hybrid Professional” (Related Reading)

• How I got started in real estate investing

• The role family played in my real estate investing journey

• The challenges of long-distance investing (including a horror story for good measure)

We had a lot of fun filming, as you can clearly see in this unflattering screenshot!

You can catch the full video here.

Here are the time stamps & links if a specific section catches your interest:

Introduction:

1:25: The definition of a Hybrid Professional?

3:26: How I got into real estate.

My Family’s Impact on My Real Estate Investing Journey

9:15: How my parents’ experience investing through the 2008 recession affected my own investing journey.

12:48: What it meant to me to have support from my family when I started investing.

How I Balance W2 & Real Estate

15:06: “What is the breakdown of my time spent between my W2 job and real estate?”

18:32: “What is the vision or goal for my newsletter?”

21:32: Why I’m not focused on quitting my job & how I view my W2 job as one of my biggest assets.

Long-Distance Real Estate Investing

26:01: How our first long-distance real estate investment almost made us quit.

34:01: Have I ever thought about self-managing from long-distance?

Recommendations

38:15: What books or podcasts would I recommend to new investors?

Long-Term Goals

42:00: What is my end goal?

44:25: Am I sticking with buy-and-hold single family or would I consider other asset classes?

You can find the full transcript of our conversation here.

I hope you enjoy it!

See you next week.

-Aaron

In today’s newsletter, I will share the counterpoint to last week’s newsletter (How I Saved $25k In Property Managements Fees over 3-Years by Self-Managing) by explaining why we chose to hire a full-stop Property Manager for our 3 rentals in Iowa.

Today’s issue takes ~5 minutes to read)

Last week I shared a breakdown of the system we use to self-manage our 4 rental properties in Las Vegas from 1,200 miles away.

This system saved us $25k in Property Management fees over 3 years!

We maintain this self-management system while I work a demanding full-time job & balance the responsibilities of raising an 18-month-old.

But self-management isn’t always the best answer, especially as you start to scale into new markets.

How do you know when to hire & a full-stop manager vs. self-manage?

Understanding how to make such a huge decision is crucial if you're a real estate investor who balances a full-time job.

The Basic Question: To Self-Manage or To Hire a Property Manager

You have two choices for each rental property you own:

• Manage it yourself and handle all rental processes,

• Hire a third-party professional, such as a property management company, to take care of it for you.

There’s no right or wrong answer, as you’ll need to take a deep look at your individual situation to understand what will work best for you.

What Does Property Management Entail?

Regardless of which path you choose (Self-Managing vs. Property Manager), here are the bases you’ll need to cover:

• Collecting rent

• Marketing listings

• Bookkeeping & accounting

• Drafting lease documents & renewals

• Collecting applications & screening tenants

• Keeping track of market rents & adjusting accordingly

• Manage tenant communications & maintenance requests

• Understanding the local eviction process & being prepared to use it (without breaking the law)

If this sounds like a lot, that’s because it is.

It’s easy to self-manage properties when everything is going well, but what about when it’s not?

This leads me to…

When To Hire A Full-Stop Property Manager

Knowing when and how to leverage property management can make a massive difference in your stress levels, profitability, and overall success.

The benefits could be huge:

• More time for you to spend on your family, career, health, or other hobbies

• Better returns due to knowledge of market conditions & proactive maintenance

• Less hassle dealing with tenant issues such as rent collection & move-in/move-out

Think of your PM as an insurance policy against your biggest blind spots.

Ask yourself the following questions:

• Do you have the time (and knowledge) to deal with a lengthy eviction process?

• Do you trust your ability to get the correct value for your rental property & keep pace with market rents?

• Do you have a trusted network of contacts on the ground if you had to “deal with” something urgently, or would you have to travel and handle it yourself?

  • Related: Do you even have the skills to handle it yourself?

Suppose the answer is no to any (or all) of these questions, especially in a long-distance investing scenario in a new market.

A property manager is likely a good investment for you.

Here’s an example of how we made this decision when investing in Iowa:

These were our circumstances when we started investing in Iowa:

• My wife was 8 months pregnant with our first child.

• I had just been promoted to a new, more demanding job.

• We had never been to the area in Iowa that we were planning to invest in.

• We already owned & self-managed 5 properties (4 of which were over 1,000 miles away).

• We had no contacts on the ground for repairs, maintenance, or any other services (beyond our real estate agent we found on Zillow).

Cross-reference that with the list of questions I asked above; the choice seemed clear.

With that said, not all property managers are created equal, and there are a LOT of bad apples out there. Take it from someone who learned the hard way…

A Cautionary Tale - Never Trust, Always Verify

My wife and I bought our first fully remote, sight-unseen rental property in Davenport, Iowa, in January 2022.

We found & vetted a property management company through an online community I belonged to and ran them through multiple phone interviews based on a thorough list of questions.

Everything in the interview checked out, and we were eager to close the deal, so we went with the first PM company we interviewed.

Long story short:

• Our contact there was not the decision-maker (contrary to what he told us)

• They didn’t visit the property for weeks after closing, despite promising us they would complete maintenance flagged on our inspection report.

• Our property was left vacant with no heat in the middle of the Iowa winter for 8 weeks…

Let’s just say it didn’t work out with that PM…

(Read the full story and key takeaways in ~3 minutes here: 3 Hard Lessons I Learned From Firing My Property Manager)

Why am I telling you this horrible story?

Because I want you to be more thorough than we were when vetting your potential property manager(s).

I don’t want you to go through what we went through.

None of the benefits mentioned in the previous section apply if you hire a terrible PM.

So How Do I Find A Good Property Manager?

This is the hardest part. Here are several ways to go about finding a good PM:

1. Referrals

Referrals are by far the best method for qualifying PMs.

These referrals could come from:

• Current investors (the ideal type of referral)

• Investor-friendly agents or brokers

• Real estate attorneys

• Contractors

At this point, I won’t consider a PM unless I have connected with at least 2 of their current investors. They would know better than anyone else what working with them is like.

If you don’t know any of these folks within a given market, I suggest meeting some through online communities such as the BiggerPockets forums. You’d be surprised how much people are willing to share their stories & contacts, especially with new investors.

(NOTE: There is a lot of “noise” on BP, so proceed with caution. You should NEVER take someone’s word without verifying with additional vetting)

This leads to…

2. Online research

Whether or not you have a referral, you’ll also want to dig into your standard online research.

• Google property management companies in your area

• Cross-reference reviews on Yelp, Facebook & Google Reviews

• Search through a site like All Property Management, which matches owners with vetted property managers.

• Go to the Better Business Bureau's website for ratings and customer reviews. It will tell you if a company has been the subject of complaints. You’ll want to find companies with a rating of B or higher.

3. Check for licenses & certifications

Many states require property managers to be licensed brokers or hold specific certifications to operate legally.

Research any state or city-specific requirements and check the public records for licenses.

The following certifications are “nice to have” but not 100% necessary:

• NARPM, which is the National Association of Residential Property Managers. This is aimed at single-family homes and small residential sites.

• RMP is the Residential Management Professional designation indicating that they have finished their initial training and verification process.

• MPM is the Master Property Manager, implying that they have more experience.

• CRMC (Certified Residential Management Company) indicates a Preferred Residential Management Company.

4. Conduct your interview

Now it’s time to get on a call. I suggest you make this a video call if possible. You can learn a lot about someone by observing their body language.

My average discovery call interview length for a PM is ~45 minutes, and I run them through a thorough list of questions about their qualifications & background.

You can find my full PM interview template as part of my FREE Ulitmate Interview Template Pack to Build Your Real Estate Investing Team.

Remember, you’re hiring someone directly responsible for caring for one of your most valuable tangible assets.

Don’t cut corners & make a note of any areas you get pushback on your questions.

5. Check with references (Do NOT skip this step!)

Speak with a handful of the property manager's current clients who own property similar to yours.

For a deep dive into how to do this effectively, I recommend reading this Twitter thread from Helpful Landlord (@helpfullandlord)

https://twitter.com/heIpfullandlord/status/1616077272540225537?s=20

Conclusion

Hiring a Property Manager is one of your most important decisions as a real estate investor.

By thoroughly examining your personal situation and asking thoughtful questions about your capacity to deal with management, you’ll be able to determine if hiring a PM is the right choice for you.

If you decide to hire a PM, don’t cut corners on your vetting & interview process.

Download my FREE Ulitmate Interview Template Pack to Build Your Real Estate Investing Team to get a thorough list of questions to ask your PM (and the rest of your team).

As always, reply back to me with any questions. I’d love to hear from you.

See you next week.

-Aaron

In today’s newsletter, I will share the system I’ve used to self-manage 4 (out of our 8) rental properties from 1,200 miles away. This decision saved us $25k in Property Management fees over 3 years!

(Today’s issue takes ~3 minutes to read)

As a hybrid real estate investor juggling a full-time job with managing a portfolio of rental properties, having an efficient and effective property management system is crucial.

This is especially true when you invest in multiple long-distance markets like my wife & I do.

We own 4 properties in Las Vegas, which we have self-managed since moving away from Las Vegas to Washington State almost 3 years ago.

The choice to self-manage was difficult, but we built a system to ensure our bases were covered.

Today I will give you a peek behind the curtain at our self-management system.

Let’s dive in.

The decision to self-manage (rather than hiring a PM)

First, consider some general deciding factors when choosing whether to self-manage or hire a property manager.

Pros of self-managing rental properties:

• Cost savings by eliminating property management fees (we have saved over $25k in PM fees over 3 years!)

• Full control and direct involvement in property operations.

• Flexibility to make decisions and adjustments promptly.

• Potential for stronger relationships with tenants, leading to better communication and tenant retention.

• Increased knowledge and understanding of property management processes.

Cons of self-managing rental properties:

• Time-consuming and demanding, especially for owners with multiple properties.

• Limited expertise in legal and regulatory requirements, leading to potential compliance issues.

• Handling tenant conflicts and difficult situations can be challenging and stressful.

• Lack of a dedicated support system for emergencies and maintenance requests.

• Limited access to a network of professionals (e.g., contractors, real estate agents) for specialized tasks.

These pros/cons would hold true in any situation; however, a few other factors played into our decision.

Other unique factors

Everyone’s situation is different. Here’s some additional context that guided our decision:

• These were our first 4 rental properties, so we had a greater capacity to deal with self-managing.

• We wanted a system with multiple lines of defense and as much streamlining as possible.

• We lived in Las Vegas for 5 years and had a good understanding of the local market.

• We had several trusted contacts in the area who could help us in dire circumstances.

• We moved from Las Vegas to Washington in September 2020, with COVID restrictions still in effect in many places and a lot of upheaval in our personal lives.

  • Put another way, we had things going on in our lives other than managing rental properties.

With all that said, let’s jump into our system.

Our current system for self-managing 4 rental properties from 1,200 miles away

Here’s a breakdown of our system as it exists today:

Tasks we manage directly:

• Rent collection

  • Automated through Apartments.com Rental Manager.

  • The days of receiving paper rent checks by mail are LONG gone. Automating rent helps both sides feel more secure and even prevents late fees for tenants.

• Tenant applications & screening

  • Apartments.com also has an online tenant screening platform.

  • Reviewing applications & calling references yourself will give you peace of mind that you have the right tenants in your property.

• Tenant communication & repair coordination

  • Up to this point, we handle this via phone, text & email.

  • This personal connection ensures tenants have a white-glove experience. For example, we send holiday gifts every year with personalized cards.

• Bookkeeping

  • We leverage Stessa for day-to-day bookkeeping & reporting (see related reading).

  • Until November, we did this ourselves, but now we outsource this task to our VA (see below).

• Lease & contract management

  • Our VA or I draft & review all contracting, depending on the complexity.

  • We utilized a local law firm to review our lease template. There are also free resources to download state-specific lease templates.

  • All signatures are handled remotely via DocuSign.

Tasks we outsource (as needed):

• Handyman

  • We paid a monthly retainer to an old colleague of mine with whom we have extensive experience working together. He acts as our “first line of defense.”

  • He knows all 4 houses, provides a familiar face to the tenants, and helps us troubleshoot minor issues without involving (expensive) specialists.

• Lawyer

  • A relationship with a local law firm can help prepare you for evictions or other tenant-related issues.

  • You do NOT want to learn the hard way that you accidentally broke the law.

• Virtual Assistant

  • We hired a VA firm (see related reading) last November to help handle the repeatable administrative tasks from the list above.

  • Fractional VA services make it easy & affordable to outsource specific time-consuming tasks. We use Accelstone and couldn’t be happier.

Each component of that system required research and time to set up. But once everything was in place, this has been a well-oiled machine for us.

Important Note: This system is constantly evolving!

As with anything, there will always be opportunities to improve this system, especially as we scale.

• New tools

• Changing life circumstances

• Large-scale projects or rehabs

• Taking on additional properties (which reduces bandwidth to self-manage)

The cost-benefit will change as you scale your portfolio.

This system worked well for us when we had 4 properties, but now that we have 8, we’re considering adding new support layers (such as Hemlane’s Essential hybrid property management solution).

Bottom line: Stay nimble and ready to adapt as your life & investments progress.

Conclusion

The system I mentioned above has worked wonders for us over the last 3 years and even saved us over $25k in property management fees.

By choosing to self-manage, we built a baseline knowledge of property management & tenant relationships, which has served us well as we expanded into more properties & new markets.

With that said, there is NO one-size-fits-all solution for property management, and every investor’s situation will have unique variables.

You will likely even have different property management systems within your portfolio.

To prove this point, I will spend next week’s newsletter explaining why we chose NOT to self-manage our 3 rental properties in Iowa.

I hope you found this breakdown useful.

See you next week!

-Aaron

PS: If you have questions about this system, hit “Reply” and let me know. I’d love to hear from you.

In today’s newsletter, I will share what I consider to be the biggest downside of real estate investing, along with my recommendation on how to deal with it.

(Today’s issue takes ~3 minutes to read)

I saw a great question floating around on Twitter a while back from Tyler (@JumpInRE):

"Question for those with $1,000,000 net worth or more...What was the biggest sacrifice you made in building your wealth?"

Here were some of the answers people gave for their “biggest sacrifice”:

• "Relationships with friends & family" (yikes!)

• "Living below my means"

• "Expensive vacations & holidays"

All valid answers.

But as a real estate investor, you'll face another dilemma when building wealth…

Real estate investments are inherently illiquid!

What does it mean to be illiquid?

"Illiquidity" refers to the challenge of rapidly converting an asset into cash.

For example, after a quick glance at my portfolio, I confirmed what I already suspected. 90% of my net worth at the time of this writing is in home equity.

This imbalance could be a very bad thing but it doesn’t have to be.

Here are several ways in which illiquidity impacts you as a real estate investor:

• Accessing the capital in your properties can be time-consuming and may involve additional costs, such as agent fees and closing costs.

• Illiquidity can impact your ability to respond to emergencies.

• Lack of access to cash can cause you to miss other investment opportunities in the future.

But don’t fear, there are several strategies that can help you avoid these outcomes.

4 Ways To Offset Liquidity Risk

There’s no way to avoid liquidity risk altogether, but there are four primary ways to defend yourself.

#1: Diversification & Cash Reserves

Diversify your investment portfolio with more liquid assets:

• Stocks

• Bonds

• Cash reserves - recommend 3 months of fixed monthly expenses per property

• Health Savings Account (HSA )- a tax-free way to pay medical expenses - do NOT use your HSA for anything other than medical expenses or you’ll face a tax penalty

Cash is always the safest place to hold reserves. High-interest savings accounts are paying an average of ~4% APY at the time of this writing.

Take a look at your portfolio balance by building a personal balance sheet.

Related Reading: 4-Step Process to Build a Personal Balance Sheet in 15 Minutes or Less

#2: Strategic Financing Options

To overcome the challenge of illiquidity, savvy investors utilize various financing options:

• Home equity lines of credit (HELOCs)

• Cash-out refinancing

• 401k loan

• Low-interest credit card

None of these are ideal, but they can provide access to capital without the need to sell a property at a steep discount.

This helps you maintain your investments while addressing financial needs or opportunities.

Related Reading: Best Ways To Tap Your Home Equity (Forbes)

#3: Understand Your Monthly Cash Flow Needs

Emergencies aren’t the only time you’ll need cash.

Perform proper cash flow analysis on every property you buy to make sure you account for ALL monthly expenses:

• Maintenance & Repairs

• Property Management

• CapEx

• Insurance

• Taxes

• Utilities

• Lawn Care

• HOA fees

This applies to your primary home too, not just your rentals. Make sure your cash coming in is greater than your cash going out.

Remember, you can be a multi-millionaire on paper, but the equity in your home(s) won't pay your bills.

Related Reading: RULE #1: NEVER Invest In a Property With Negative Cash Flow

#4: Take a Long-Term Approach to Wealth Building

Embrace the idea that real estate investing is a long-term play, and focus on building a solid foundation that will support your financial goals over time.

• Don’t try to squeeze a high return from every penny in your bank account. Doing so will lead to unnecessary risk-taking.

• If having 3-months of cash reserve prevents you from making a desperate decision to sell at an inopportune time, your ROI on that cash will be enormous.

• By carefully planning your investments and maintaining a long-term perspective, you can minimize the impact of illiquidity on your wealth-building journey.

Related Reading: 18 Wealth Lessons from “The Psychology of Money” by Morgan Housel

Final Thoughts

Illiquidity is part of the price of admission when investing in real estate, and that’s fine!

Be aware of this upfront, keep your eyes open, and deploy the strategies listed above to stay afloat while you watch your wealth build in the background.

It’s quite a magical thing.

See you next week.

-Aaron

In today’s newsletter, I will make the case for why landlords should raise their rents every year.

Plus, I’ll give you two effective strategies to handle those conversations with your tenants without causing drama.

Don’t worry. It’s not as bad as it sounds.

(Today’s issue takes ~4 minutes to read)

As a landlord, you may find yourself in a position where you need to raise rent on your rental properties.

In fact, I highly recommend you make small, incremental increases every year to keep pace with inflation.

While this can be a difficult decision, it's important to approach it strategically to ensure success for both you and your tenants.

Before we get to the strategies, here are 3 things you need to know:

1. Know the fair market rent of your property/unit

Research the rental market in your area. Look at comparable properties and see what they are charging for rent.

• If you increase your rent too much, you may lose tenants to more affordable options.

• On the other hand, if you're not charging enough, you're leaving money on the table.

2. Communicate with your tenants

Let your tenants know your plans in advance and provide reasoning behind the increase.

This can help in multiple ways:

• Alleviate any confusion or frustration.

• Gives an opportunity to negotiate with long-term tenants who have been paying on time and taking good care of the property.

3. Follow local laws and regulations

Each state and city has different rules about how much and how often landlords can raise rent. Make sure you know and follow these regulations to avoid legal issues.

Examples:

• St. Paul, MN, has a strict 3% cap on annual rent increases, including when tenants move out!

• The states I invest in (Washington, Nevada, Iowa) do not have rent control.

Of course, you can avoid steep rent increases by raising them incrementally every year to keep pace with inflation.

Either way, you’ll want to know what’s possible.

Resources:

• NAA - Rent Control Policy

Now for the fun stuff!

Two Effective Strategies For Raising Rent

#1. Use “The Binder” Strategy To Get Tenant Buy-In

In the popular YouTube channel Dion Talk Financial Freedom, Dion breaks down an approach called “The Binder” where the renter helps set their own rent.

Here’s how it works:

1) Create a binder with an overview of the property

This includes what you paid for it (public information), photos of the property, and a map of similar rental properties in the area.

2) One page for each nearby rental comp

Include photos to validate that the properties you're including are, in fact, comparable. List the rent amount prominently at the top of the page.

Use Rentometer to pull the average rent comps for your property:

3) Ask the tenants what they think is fair

"Based on this information, what do you think is a fair rent for this property?"

More often than not, the number they throw out will be higher than what you were originally planning on.

Resources:

• Rentometer - Easiest site to pull rental comps & averages

• Dealcheck.io - Build a page for your property and use RentCast rental comps (NOTE: You only need the free version to do this)

#2. Use “The 3 Options” Price Anchoring Strategy

Here’s a breakdown of my favorite script (typically sent 90 days out):

“Due to naturally increasing expenses, it is necessary to gradually increase rent over time. Therefore, a slight bump in your monthly rental rate will take place soon. However, we would like your input on where to go from here.”

Then give them 3 options:

• Sign a new one-year lease at $__ per month (3% increase). This is an increase of $__ per month.

• Sign a new six-month lease at $__ per month (5% increase). This is an increase of $__ per month.

• Sign a month-to-month lease agreement at $__ per month (8% increase). This is an increase of $__ per month.

By doing this, they’ll see that the best option for them is to commit to a 12-month extension with a lower increase. Win-win.

Try the script. Send the template below to your tenants 90 days out and watch it work!

Resources:

• Download this Lease Renewal Decision Form and fill it out for your property.

Success Stories

Natalie, one of my readers, had been having the same problem (below market rents for too long without raising the rent):

So she took my advice and had “the talk” with her tenants:

Not only did she successfully increase the rent, but she even worked with the tenant to complete a home improvement project.

Another friend from my weekly mastermind had a similar experience. He had “the talk” and gained $1,080 in additional annual income!

Conclusion

Raising rent is one of the less fun parts of being a landlord, but it’s a bad decision to stay flat on your rents-long term.

Use strategies like “The Binder” or the “The 3 Options” to keep rents rising at an appropriate rate while keeping the tenants happy.

I wish you the best of luck. See you next week.

-Aaron

PS: What do you think about raising rent every year? Do you agree or disagree? Reply and let me know.

In today’s newsletter, I will break down the key members of your real estate investing dream team, why you need them, and how to interview them.

As a bonus, you can download my newly released FREE Ultimate Interview Template Pack To Build Your Real Estate Investing Team.

(Today’s issue takes ~4 minutes to read)

As a real estate investor, it's easy to get caught up in the excitement of finding and closing deals.

But it's essential to remember that building a team is just as important as finding the right properties.

From understanding local market conditions to managing your property, there are many decisions to make as a real estate investor, and each one can significantly impact your ROI.

That's why you need the right team on the ground.

Why You Need A Team

You're picking up new advantages with every team member you add to your team:

1. Access to Expertise: Building a team gives you access to expertise beyond your own. By having professionals in place, you can leverage their knowledge and experience to help you make more informed decisions.

2. Time Efficiency: Trying to do everything yourself is a recipe for burnout. With a team in place, you can delegate tasks and free up your time to focus on higher-level tasks, such as deal analysis and networking.

3. Mitigating Risk: Having professionals on your team can help mitigate risk by identifying potential issues early on and providing guidance on how to address them.

Each of these benefits provides additional leverage for you, both with time & money.

Who Should Be On Your Team

I like to segment my team into two groups. Your “Core 4” and “Other Key Players.”

The “Core 4”

The “Core 4” are the go-to team members you’ll regularly interact with.

1. Real Estate Agent:

A good agent can help you find deals and negotiate contracts. They can also provide valuable insights into market trends and conditions.

Read More: 5 Reasons to Hire an Investor Friendly Agent

Where to find an investor-friendly agent:

• BiggerPockets Agent Finder - (Disclaimer: Do NOT skip your due diligence just because an agent is in this database. Screen thoroughly & carefully)

• Real Estate Investment Association (REIA)

2. Property Manager:

Arguably the most important team member (especially if you are long-distance), a property manager can handle tenant screening, rent collection, property maintenance, and so much more.

Read More: 10 Benefits of Hiring a Professional Rental Property Manager

Where to Find a PM:

• Ask your investor-friendly agent for multiple referrals. (Hint: If they don’t have any suggestions, they’re not an investor-friendly agent)

• National Association of Residential Property Managers (NARPM)

3. Accountant/CPA:

The tax advantages of real estate investing are unrivaled.

But without professional help, you will miss out on key tax breaks and run a high risk of falling out of compliance with IRS guidelines. You need a CPA…

Be careful, though. The average rate for a CPA these days is ~$300/hour.

NOTE: You will want to highly prioritize someone with knowledge of the local laws (at least at the state level) that your rentals are located in. Tax laws vary significantly by state.

Read More: Why You Definitely Need a Real Estate Accountant

Where to Find a CPA:

• Referrals

• Online search (look at ratings, customer experiences, and relevance to real estate)

4. Lender:

Unless you’re buying all cash, having access to a preferred lender who knows how to navigate your situation is crucial.

Make sure you shop rates from multiple lenders!

Read More: How to Vet & Find Investor-Friendly Lenders

Where to Find a Lender:

• Referral from agent (oftentimes they will have a preferred lender)

• Local bank or credit union

You’ll want to invest time & energy into vetting these team members. These are long-term relationships.

Other Key Players:

This category includes people you (hopefully) won’t need to consult often, but you want to have identified in case you need them.

1. Real Estate Attorney:

An attorney can review contracts and legal documents, advise you on compliance issues, and represent you in legal disputes.

Do NOT rely on advice from an out-of-state attorney when it comes to investing in new markets. Legal and regulatory concerns vary dramatically depending on which municipality you’re in. Go local!

An experienced real estate attorney can run you ~$400/hour, so make sure you prepare specific questions before engaging with one. They will bill you by the minute.

Read More: What Is A Real Estate Attorney - For Investors

Where to Find a Real Estate Attorney:

• Referrals (many agents and/or PMs will have a preferred contact)

• Online search (look at ratings, customer experiences, and relevance to real estate)

2. Insurance Agent:

Rental property insurance is easy to find; however, a specialized insurance agent can help you ensure you have the right coverage for your unique situation. Find an agent who has experience working directly with investors!

Read More: Why Real Estate Investors Need a Good Insurance Agent

Where to Find an Insurance Agent:

• Your lender’s in-house insurance broker

• National Real Estate Insurance Group (NREIG)

3. Contractor:

A contractor can help you assess the condition of a property and estimate renovation costs. They can also manage the construction process if you decide to rehab a property.

Read More: Importance of Hiring Contractors in Real Estate Investing

Where to Find a Contractor:

• Referrals (highly preferred. Testimonials are key when it comes to ensuring quality)

• Angie’s List/NextDoor/Yelp (all have built in ratings & recommendation engines)

How to Interview Your (Prospective) Team Members

Knowing who should be on your team is half the battle.

But building a rock-solid team doesn't happen by accident. You have to ask the right questions.

Remember, you’re picking someone to assist you with acquiring, managing, repairing, or otherwise protecting a high-value asset!

Skipping steps or cutting corners during the interview process can cost you tens of thousands of dollars!

I’ve learned a few tough lessons from hiring the wrong team members (see related reading: 3 Hard Lessons I Learned From Firing My Property Manager).

To spare you from going through similar turmoil, I put together a package of templates with detailed interview questions for each team member.

You can download the templates for FREE in either Notion or Google Drive, whichever you prefer.

Direct Links:

Hybrid RE Pro - The Ultimate Real Estate Investing Starter Pack - Notion

Hybrid RE Pro - The Ultimate Real Estate Investing Starter Pack - Google Drive

You’ll sleep better at night knowing you did your due diligence and put your assets in good hands.

See you next week.

-Aaron

PS: If you find these templates helpful, I’d deeply appreciate it if you’re willing to leave me a review on Gumroad.

In today’s newsletter, I will explain how hiring a Virtual Assistant & delegating tasks across 5 categories can save time and allow you to scale your real estate business effectively.

This issue is dedicated to our two VAs, Bianca & Kate, who have become integral parts of our team.

(Today’s issue takes ~4 minutes to read)

Over a 9-month period in 2022, my wife & I acquired our 6th, 7th, & 8th rental properties.

Until that point, I had been managing all the day-to-day operations myself.

But the more properties we acquired, the more "administrative maintenance" we had to keep up with.

It can easily become a part-time administrative job, which is not what I was looking for when I started investing in real estate.

But there is a solution that can unlock extra time for you and help you achieve your real estate investment goals:

You Can Hire a Virtual Assistant!

A virtual assistant is a contracted employee who offers administrative services to clients from a remote location, usually a home office.

They are also magic genies who give you the gift of time.

Some disclaimers & considerations you should think through before hiring a VA:

• Privacy: Do not share any sensitive data you’re uncomfortable with. If that data is required to do your tasks, you should know that going in.

• Compensation: Average rates in 2023 range from $5-10/hr. I’ve heard of many happy people who hire $5/hr VAs; however, I’m wary of big warehouse-style employers who cut corners on working conditions to achieve those rates.

• Management: If you hire an employee, you should be prepared to manage them, provide feedback, and delegate effectively. If you don’t have experience with these skills, you may waste more time than you save.

Related Reading: 9 Pitfalls When Hiring Your Virtual Assistant & How To Avoid These

Where Can You Find a VA?

These days, hundreds of companies provide VA services, and you should spend time researching & interviewing companies/managers to find the right fit.

I work with Accelstone for my VA services and couldn’t be happier with my experience. Here are some reasons I recommend Accelstone:

• Advisory management & delegation support. Their founder, MJ, is readily available to talk through workflows, help deliver feedback, and offer technical solutions that save time on both sides.

• No minimum hours requirement. Use them as much or as little as you’d like depending on your business needs. Even though they’re paid hourly, the team won’t hesitate to propose process improvements that save you time & money.

• They work US business hours. Many VA firms based in SE Asia work during US overnight hours. Accelstone works based on 9am-5pm EST business hours.

• Tools & tech stack. Accelstone has access to paid subscriptions that are a helpful tech stack.

• They offer the first 4 hours of billable work free! Set up a discovery call with MJ and uncover your administrative pain points. Then try out one of your workflows free of charge to see if it’s a fit before you commit.

Our VAs are highly skilled, communicative, and driven to solve any problems I throw at them. I can’t overstate how much of an unlock it’s been to have them on our team.

You can find more details here if you’d like to work with Accelstone. Mention my name, and you’ll get a permanent 10% discount.

Other common sites to look for or solicit VA services are Upwork, Fiverr, and Support Shepherd.

How can a VA help you as a Real Estate investor?

Here are five categories of tasks our VAs took on that changed the game for us:

#1: Research & Analysis

Whether at the market, neighborhood, property, or tenant level, building out a real estate business requires an enormous amount of research & due diligence.

Examples:

• Researching a list of high-rated vendors in each of our markets

• Pricing out materials for a repair/rehab

• Running high-level deal analysis on new prospective properties

#2: Administrative Tasks 

These are the low-hanging fruit. Think of all the administrative things you spend time on that don’t move you closer to your long-term goals.

Examples:

• Tracking projects & driving accountability for key deadlines

• Keeping your calendar organized & up to date

• Manage file storage system (Dropbox, Google Drive, etc)

#3: Marketing & Advertising

It takes a lot of time to manage listings & market your vacant properties. This is a perfect category for delegation.

Examples:

• Draft & prepare listings when properties become available to rent

• Post listings across several mediums (Facebook, Craigslists, Zillow, etc)

• Coordinate and arrange for photos & create other marketing assets

#4: Property Management

Again, look for tasks that take time but don’t involve complex decision-making.

Examples:

• Schedule repairs & coordinate timing with tenants

• Drafting & sending lease documents

• Prepare move-out & turnover process when leases end

#5: Bookkeeping & Financial Reporting

This was one of my biggest time sinks and the easiest to procrastinate on. Teaching our VAs to use Stessa saved us from a major headache during tax season.

Examples:

• File all receipts for rental expenses

• Categorize all expenses in your bookkeeping app (I use Stessa)

• Run monthly reports to show portfolio performance

Hiring a VA changed the game for us. I hope it can for you too.

Remember, a VA is a human, just like you are. Their ability to help you meet your needs highly depends on you giving good instructions.

If you’re overwhelmed or don’t know where to start, book a call with MJ at Accelstone, and he’ll talk through your unique situation. I’m certainly glad I did.

See you next week.

-Aaron

Other Related Resources:

How to Delegate: The Sweaty Startup Podcast w/ Nick Huber

How to Effectively Manage Your Virtual Assistant

How to Share Confidential Info With Your Assistants Like A Pro

In today’s newsletter, I will share the tool I used to save 20+ hours this tax season, along with a quick overview on how it works.

(Today’s issue takes ~4 minutes to read)

Rental real estate is the most tax-advantaged income stream in existence.

But managing a rental portfolio comes with a massive headache come tax time.

My wife and I have acquired 8 rental properties in the last 5 years. Each year our taxes have grown more and more complex.

On average, I spent 3 hours a month + 20 additional hours at tax time on bookkeeping & tax prep alone. That's BEFORE I sent anything to our CPA.

Here are some highlights of my original not-so-brilliant bookkeeping system:

• Saving paper receipts in a folder and not looking at them until tax time.

• Taking wild guesses on how to categorize expenses and saving them in Excel (only for my CPA to clean them up later for $300/hour)

What I needed was a tool to centralize everything and view my portfolio in one place.

Introducing Stessa: A Reporting Solution for Landlords

Stessa (aka '“Assets” spelled backward) is a FREE tool that functions similarly to the ever-popular QuickBooks.

The difference is, Stessa is explicitly built for landlords.

All the categories are specific to real estate, and the user interface is brilliantly simple.

A Powerful Endorsement…

To further validate Stessa's usefulness, here's a testimonial from an experienced real estate investor (who also happens to be my Mother).

She has 20+ years of real estate investing experience, and here’s what she had to say about Stessa:

“From our campsite in Tucson, not far from the Mexican border, we are wrapping up the work we need to do for tax prep, including tidying up and exporting our Stessa transactions, and I can’t help but reflect on how much better life is with Stessa vs. Quickbooks. Andy and I both work in Stessa on a regular basis and keep it up to date way, way better than in the past because it’s so much easier to use and we can make updates from any device. So. Much. Better. Many thanks to you for bringing it to our attention.”

Wow…thats’ quite an endorsement. Plus, helping your Mom save time & enjoy her life is just a good thing to do, right?

Right!

Here are a few ways you can save yourself (or your Mom) time using Stessa:

Step 1: Build your portfolio to track Profit & Loss Statements (P&L) for each of your houses in real-time

Plug in your property info, and Stessa will give you an all-up view of your portfolio’s performance.

View your income, occupancy rates, debt service, cash flow & more, all with a straightforward dashboard view.

Step 2: Automate expense tracking & rental income

Why enter expenses manually when you can automate them?

Stessa links right to your bank account & credit card.

You can code expenses to the appropriate category, and Stessa will automatically learn that rule for future expenses.

Bookkeeping does not move the needle on your financial goals, so don’t spend any more time on it than is absolutely necessary.

Step 3: Export tax-ready reports to send to your CPA

When tax time comes, all you have to do is hit export & you'll have everything you need in hand. Your properties have already been tracked & coded correctly.

Click the button, and you (or your CPA) will have everything they need to file.

For extensive demo & tutorial videos, click here.

The features listed above are specific to accounting, but Stessa also has functionality for:

• Rent Collection

• Cash Management

• Rental Applications

• Document Storage

For a full list of services, you can click here to learn more.

NOTE: I am not paid by Stessa or affiliated with them in any way. I am simply a happy user looking to share a tool that has saved me a tremendous amount of time.

I hope you find Stessa as valuable as I have.

See you next week.

-Aaron

This week on The Hybrid Real Estate Professional, I’ll give you 6 key factors to consider when selecting a market to invest in real estate.

You can also download my Market Analysis Cheat Sheet and use it to follow along with your own market.

(Today’s issue takes ~3 minutes to read)

Choosing the right market for your rental property is one of the most important decisions you'll make as a real estate investor.

But with so many factors to consider, where do you even start?

In a past issue, I shared one of my favorite ways to pick a market. But what if you want to start from scratch?

If you’re like me, starting with a blank map is overwhelming…so let’s boil it down and give you a good framework for your search.

For this issue, let’s set aside macro factors such as interest rates (which we can’t control) and look solely at the characteristics of the location itself.

From economic and environmental factors to buyer and local trends, I’ll provide you with the key resources to help you make a smart investment.

Here are 6 essential factors to look for, along with 2 resources to dig deeper:

Download my Market Analysis Tracker here & fill it out as you go.

1. Market Trends

This includes local trends like:

• Population growth

• Job growth

• Overall economic growth

Markets with a growing population and a strong economy typically have a higher demand for rental properties, making it easier to find tenants and generate steady rental income.

Resources:

• Zillow Research: https://www.zillow.com/research/

  • Zillow provides a variety of research reports on real estate markets across the United States, including trends in home values, rental rates, and housing inventory. You can find these reports at

• U.S. Census Bureau: https://www.census.gov/

  • The U.S. Census Bureau provides data on population growth and other national, state, and local demographic trends.

2. Economic Conditions

This includes factors such as:

• Unemployment rates

• Median income

• Cost of living.

A market with a low unemployment rate and a high median income is likelier to have a stable rental market, as tenants will have the financial means to pay rent consistently.

Resources:

• Bureau of Labor Statistics: https://www.bls.gov/

  • The BLS provides data on unemployment rates, median income, and other national, state, and local economic indicators.

• U.S. News & World Report: https://realestate.usnews.com/places

  • Provides rankings and analysis of the best places to live in the United States based on factors such as job market, affordability, and quality of life.

3. Rental Demand

Look for markets with a high demand for rental properties, as this can help ensure a steady stream of rental income.

This includes areas with a high number of renters and areas with a low vacancy rate.

• Rentometer: https://www.rentometer.com/

  • Provides rental market data and analysis for thousands of cities and neighborhoods across the United States, including information on average rent prices and vacancy rates.

• Zillow Rental Manager: https://www.zillow.com/rental-manager/market-trends/

  • Put in your city or zip code to see high-level trends such as median rent price, market temperature, and change in rent over time.

4. Property Availability

Supply/Demand dynamics for real estate can significantly impact affordability.

Look for markets with ample properties available for purchase, as this can help you find the right investment property that meets your needs and budget.

Resources:

• Local Real Estate Agents:

  • Local real estate agents can provide valuable insights into the number of properties currently for sale or rent and the demand for rental properties in the area. You can find a local real estate agent through websites such as Zillow or Realtor.com.

• Zillow: https://www.zillow.com/

  • Filter by location, price, and other criteria. Save your search so you can quickly look based on your own criteria. A bonus with Zillow is the ability to see both sales & rental listings.

5. Government Regulations

Look for markets with landlord-friendly regulations, such as laws that make it easier to evict tenants who fail to pay rent or cause damage to the property.

Conversely, markets with tenant-friendly regulations can make it more difficult to manage rental properties and generate consistent rental income.

Resources:

• National Association of Realtors: https://www.nar.realtor/law-and-ethics

  • NAR provides information and resources on real estate laws and regulations at the national and state level.

• Apartments.com: https://www.apartments.com/rental-manager/resources

  • Provides resources and tools for landlords, including information on local landlord-tenant laws and regulations.

6. Location

Look for markets located in desirable areas, such as those with good schools, shopping centers, and public transportation.

Properties in high-crime areas or areas with limited amenities may be more difficult to rent out and generate less rental income.

• Walk Score: https://www.walkscore.com/

  • Walk Score is a website that rates the walkability of neighborhoods and cities based on access to public transportation, grocery stores, and other amenities.

• Trulia Neighborhoods: https://www.trulia.com/neighborhoods/

  • Trulia Neighborhoods provides maps and data on specific neighborhoods and cities, allowing you to assess the day-to-day life in an area.

TL;DR:

Look for markets with strong economic conditions, high rental demand, ample property availability, landlord-friendly regulations, stable rental demand, and desirable locations.

By carefully considering these factors, you can find the right market for your rental real estate investment and maximize your chances of success.

See you next week.

-Aaron

PS: As always, I welcome hearing from my readers. If you’d like to chat about leveraging any of these tools in your search, I’m one “Reply” away.