Speaker 1: Inspiring interviews with Today is Top Landlord, This is the
Speaker 1: Rental Income Podcast, and now.
Speaker 2: Damnly Greg, So what happened? You were homeless? Like you
Speaker 2: lost everything and you were homeless? To tell me what happened?
Speaker 1: Well, Yes, I was a veteran who got out of
Speaker 1: the military and really could not cope in society, and
Speaker 1: I did not know how to manage my money, so
Speaker 1: I made really bad financial decisions. So at the age
Speaker 1: of twenty five, I was sitting in a homeless shelter
Speaker 1: wondering how I got there.
Speaker 2: You eventually ended up getting your life turned around. And
Speaker 2: how many rental properties do you have today?
Speaker 1: I have thirty seven doors.
Speaker 2: On the show today, we're going to hear the inspiring
Speaker 2: story of how Greg went from having absolutely nothing to
Speaker 2: building a rental portfolio of thirty seven units. Joining us
Speaker 2: on the show today from Alabama is Greg Thompson. We'll
Speaker 2: take a quick break to bank our sponsors. We'll come
Speaker 2: right back and we'll talk to Greg. It's a lot
Speaker 2: of work to find a really good rental property, and
Speaker 2: when you actually find that property, you want to make
Speaker 2: sure you're working with a lender that can get that
Speaker 2: loan closed. The lender that I recommend is jay Ley
Speaker 2: Ridge from Ridge Lending Group. She's a nationwide lender and
Speaker 2: her specialty is helping investors finance rental properties. She has
Speaker 2: a ton of loan programs and she can find something
Speaker 2: customized to you for your situation. If you want to
Speaker 2: find out more or you're ready to get started today,
Speaker 2: just go to Ridge Lendinggroup dot com. That's our Idge
Speaker 2: Lendinggroup dot com n MLS four two zero five six.
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Speaker 2: midsouthhome Buyers dot com. Ray, let's kind of figure out
Speaker 2: what happens. So you're twenty five, you lost everything? How
Speaker 2: did you end up on the streets? How does that happen? Like?
Speaker 2: How did you become homeless?
Speaker 1: I made a lot of bad financial decisions. I had
Speaker 1: a car repossessed, all of my credit cards were in default,
Speaker 1: I owed back child support, and I had not filed
Speaker 1: federal taxes.
Speaker 2: All right, So everything just kind of piled up. Everything
Speaker 2: kind of went wrong at once, and you end up
Speaker 2: like were you living on the street or were you
Speaker 2: in a homeless shelter.
Speaker 1: I was in a homeless shelter, and from there I
Speaker 1: got an apartment in a really bad neighborhood. So the
Speaker 1: rent was not very high.
Speaker 2: Okay, all right, So then like how did you turn
Speaker 2: things around? Like I gotta imagine your credit is probably shot.
Speaker 2: I mean you you owe money to people, Like, how
Speaker 2: did you turn things around?
Speaker 1: Well? I started working two jobs seven days a week
Speaker 1: to pay back all of the money that I owed.
Speaker 2: Okay, okay, So then then, how how did you go
Speaker 2: from there to actually buying your first property?
Speaker 1: Well, through a series of jobs, I ended up overseas
Speaker 1: and it wasn't until nine years later that I bought
Speaker 1: my very first property.
Speaker 2: How did you get the money to buy that property?
Speaker 2: Was it just just saving up money over time?
Speaker 1: It was. I was a government contractor overseas and I
Speaker 1: was able to save up the money and invest it
Speaker 1: in the stock market.
Speaker 2: Okay, So now you've got some money, and tell me
Speaker 2: about this first property.
Speaker 1: I bought a three bedroom house that had a basement
Speaker 1: apartment for a teenager, and I had them at a
Speaker 1: bathroom and a kitchenette, and then I lived in the basement.
Speaker 2: Okay, so you were house haacking. You were living in
Speaker 2: the basement renting out the upstairs. Did that feel like
Speaker 2: a sacrifice? You know, It's like you're living in the basement.
Speaker 2: You could have been living upstairs and maybe renting out
Speaker 2: the basement. Did that feel like a big sack sacrifice?
Speaker 1: It did? Not feel like a sacrifice to me because
Speaker 1: I was single. I also when I lived overseas, I
Speaker 1: lived in a little one room apartment.
Speaker 2: All right, so let's talk about your portfolio today. So
Speaker 2: what does your portfolio look like?
Speaker 1: Well, mostly single family homes. They're all small multifamilies, duplexus
Speaker 1: and three units.
Speaker 2: Okay, all right, so let's take a look at your numbers. Like,
Speaker 2: so if you were to add up what you paid
Speaker 2: for the properties, like, what's the total amount that you've invested.
Speaker 1: The equity in the properties is one point three million.
Speaker 1: The value of the properties is three million, one hundred
Speaker 1: sixty two thousand, seven hundred and ninety three.
Speaker 2: Wow, so you've created a lot of a lot of
Speaker 2: equity there. How did you do that?
Speaker 1: Like?
Speaker 2: Were you buying properties and fixing them up or was
Speaker 2: that the market just appreciating?
Speaker 1: It was mostly the market appreciating. However, every time I
Speaker 1: refinanced properties from one bank to another bank, they would
Speaker 1: give me a property or two free and clear.
Speaker 2: How did that happen?
Speaker 1: As the properties appreciated, the bank would say, we only
Speaker 1: need ten of these properties to satisfy the loan, So
Speaker 1: you can have two of these properties free and clear.
Speaker 2: Wow. Wow, that's pretty crazy. So how many properties did
Speaker 2: you get free and clear by doing this?
Speaker 1: At the beginning of twenty twenty five, I had three
Speaker 1: properties free and clear, and I use those three properties
Speaker 1: to buy eleven more properties.
Speaker 2: I walked me through that. So you've got three properties
Speaker 2: free and clear, and then you you, I guess, use
Speaker 2: the EQ and those properties to buy other properties.
Speaker 1: Yes, you can use a property as collateral as a
Speaker 1: down payment on another property. And for example, one of
Speaker 1: the properties was worth forty five thousand dollars. However, I
Speaker 1: was buying a property for seventy five thousand dollars, so
Speaker 1: that free and clear property was fifty percent of the
Speaker 1: cost of the other properties, so I could use that
Speaker 1: as a down payment.
Speaker 2: Wow. Okay, so that's how you've been able to buy
Speaker 2: so many properties is just by kind of moving equity
Speaker 2: around between properties. Yes, wow, wow, that's pretty pretty awesome.
Speaker 2: Now let's talk about finding the properties that you bought.
Speaker 2: How did you find your properties?
Speaker 1: Well, my competitive advantage is my property manager. My property
Speaker 1: manager brings me deals whenever he hears about them, either
Speaker 1: properties from people where he manages the properties, or if
Speaker 1: he hears about other owners that he doesn't manage the properties.
Speaker 1: He brings me those deals.
Speaker 2: Okay, so how did you How did you work that
Speaker 2: out with him?
Speaker 1: Well? I met him through calling every property manager and
Speaker 1: asking if anyone wants to sell their properties. I was
Speaker 1: told that that was a good way to market for properties.
Speaker 2: Yeah, yeah, I mean that's that's pretty good. I mean,
Speaker 2: you figure a property manager knows a lot of other investors.
Speaker 2: There's probably always people that need to sell for whatever reason,
Speaker 2: and you know they're probably a good property if he's
Speaker 2: managing them. So, like, is that the way it worked out?
Speaker 1: Like?
Speaker 2: Were the properties all good properties? Or did you have
Speaker 2: any problem properties?
Speaker 1: Well? I did not have any problem properties because I
Speaker 1: trusted my property manager, and my property manager would tell
Speaker 1: me what repairs were needed on any given property that
Speaker 1: I bought.
Speaker 2: Like, so, you know, I understand that the property manager
Speaker 2: is bringing you deals, But with you living in the
Speaker 2: same town, would it be difficult for you to manage
Speaker 2: the properties yourself or do you just not want to
Speaker 2: get involved in that?
Speaker 3: I would never ever want to be a landlord property
Speaker 3: manager again, because renters tell you sad stories such as,
Speaker 3: if I pay you the rent in December, my child
Speaker 3: won't have Christmas, right right?
Speaker 2: Yeah, that makes sense. That that makes sense, all right.
Speaker 2: So let's get back to the numbers a little bit here.
Speaker 2: So you've created over a million dollars in equity by
Speaker 2: buying these properties. Let's take a look at your cash flow. So, like,
Speaker 2: how much rent do you bring in every month?
Speaker 1: Well, in now, because I bought eleven more properties in
Speaker 1: twenty twenty five, I bring in twenty four thousand dollars
Speaker 1: a month, okay.
Speaker 2: And how much are your mortgage payments?
Speaker 1: My mortgage payments with insurance and taxes and everything is
Speaker 1: sixteen thousand a month.
Speaker 2: Okay, so you've got like eight thousand dollars leftover. Now,
Speaker 2: what about I mean, you've got to pay your property manager, repairs,
Speaker 2: whatever else comes up. How much cash flow do you
Speaker 2: typically see in a month.
Speaker 1: Well, typically it's only one thousand dollars a month in
Speaker 1: cash flow. However, I'm expecting that to increase over.
Speaker 2: Time as rents go up, both as rents.
Speaker 1: Go up and as I refinance, especially with interest rates
Speaker 1: coming down.
Speaker 2: Yeah, so you bought eleven properties in the last year,
Speaker 2: so your your rates are a bit higher. But as
Speaker 2: those rates come down, your plan is to REFI and
Speaker 2: that'll lower your payments.
Speaker 1: Yes, And I want to tell you about the best
Speaker 1: deal that I've ever done, which was in twenty twenty five.
Speaker 1: My free and clear property was worth three hundred and
Speaker 1: fifty thousand dollars and I used that to buy six
Speaker 1: properties for five hundred thousand dollars and those six properties
Speaker 1: were worth eight hundred thousand dollars.
Speaker 2: Wow. All right, you got to walk me through that.
Speaker 2: I'm a little bit confused on this, Like, so, like, explain,
Speaker 2: explain what you did there.
Speaker 1: Well, I used one of my free and clear properties,
Speaker 1: which was a three unit, so it was worth two
Speaker 1: hundred and fifty thousand dollars. I used that as collateral
Speaker 1: to buy six properties that my property manager brought me
Speaker 1: that were sold for five hundred thousand dollars, but the
Speaker 1: appraisal was eight hundred thousand dollars. Wow.
Speaker 2: Wow, I mean, so that's a ton of equity that
Speaker 2: you created?
Speaker 1: Did it is? I made three hundred thousand dollars in
Speaker 1: one day?
Speaker 2: Wait, so, like how did you do that? Like what
Speaker 2: were you Did you just buy the properties at a
Speaker 2: really good discount or did you improve those properties?
Speaker 1: Well, the sellers of the properties were doing a ten
Speaker 1: thirty one exchange, and so they needed to sell those properties.
Speaker 1: My property manager already managed those properties. So my property
Speaker 1: manager brokeer the whole deal.
Speaker 2: Wow. So there wasn't really anything to do. And I
Speaker 2: think what's great about the property manager you're managing those properties,
Speaker 2: is like you really just signed some paperwork, Like there
Speaker 2: wasn't really anything that you needed to do, Like the
Speaker 2: tenants were already in place, like the rent was already
Speaker 2: coming in, Like it was it really just that simple
Speaker 2: that you signed some papers.
Speaker 1: Well, it wasn't that simple. The first bank that I
Speaker 1: went to denied my loan. They said that the rentals
Speaker 1: did not bring in enough income, so they wanted me
Speaker 1: to put down one hundred thousand dollars in cash in
Speaker 1: addition to my rental property. Well that was the first bank.
Speaker 1: I've never gone to a second bank. So I went
Speaker 1: to a second bank and they only wanted me to
Speaker 1: put down ten thousand dollars in addition to my rental properties.
Speaker 1: So for ten thousand dollars out of pocket, I have
Speaker 1: eight hundred thousand dollars worth of real estate.
Speaker 2: Wow. Now let's talk about the cash flow. So you know,
Speaker 2: some people might think a thousand dollars cash flow isn't enough,
Speaker 2: But it seems like that's not like the biggest thing.
Speaker 2: I mean that you're obviously doing creative deals. You've created
Speaker 2: a ton of equity, So like, do you think that
Speaker 2: cash flow is important? But you got to look at
Speaker 2: the whole picture that you've created one point three million
Speaker 2: dollars in equity in your portfolio.
Speaker 1: Yes, And I'm not living on the cash flow. I
Speaker 1: have multiple screens of income. So I have a PhD,
Speaker 1: I teach in colleges as an adjunct, and I have
Speaker 1: a federal government pension, So the rental income is not
Speaker 1: my primary source.
Speaker 2: Of venia, right, Okay, So yeah, I think that's an
Speaker 2: important thing to keep in mind that you know, you're
Speaker 2: you're playing a different game here than just cash flow,
Speaker 2: where you're creating equity. And like you said, as the
Speaker 2: rates come down, you're going to REFI that cash flow
Speaker 2: is going to go up, and then you know rents
Speaker 2: are going to go up over time. Let's talk about
Speaker 2: the neighborhoods, Like, so, what are the neighborhoods like that
Speaker 2: your rentals are in.
Speaker 1: All of my rentals are in C minus neighborhoods, However,
Speaker 1: in the future, I want to move up to be neighborhoods.
Speaker 2: And why is that? Like, have you had any have
Speaker 2: you had a lot of trouble with the sea properties?
Speaker 1: I have not. My property managers and I have not
Speaker 1: had any problems with these properties. I just want higher rents.
Speaker 2: Now, take me back to when you were first getting
Speaker 2: started in Alabama. Did you have any any trouble with
Speaker 2: some of those early properties.
Speaker 1: I did. My second property that I bought was a
Speaker 1: four unit and I have since sold that one. That
Speaker 1: one had nothing but problems. The water was everybody shared
Speaker 1: the water bill, So what I like is separate units
Speaker 1: paying their own electricity in their own water. That was
Speaker 1: a problem, and there were always people moving out. So
Speaker 1: one of the four apartments I could never ever keep rented.
Speaker 2: Well, was there a reason why people wouldn't stay?
Speaker 1: It was a Victorian building that was separated out into
Speaker 1: four apartments, and so one of the apartments was on
Speaker 1: the upstairs on the rear, and it was just very
Speaker 1: very hard to get furniture in and for people to stay.
Speaker 2: Yeah. Yeah, So was that hard to make money? Like
Speaker 2: if like, how often were people leaving?
Speaker 1: People would just disappear and if you have a low
Speaker 1: income rental, you know that sometimes people just disappear.
Speaker 2: Yeah, so they would be there, would they pay rent
Speaker 2: for a few months and then leave or were they
Speaker 2: even paying rent?
Speaker 1: Yes, they would pay rent for a few months and
Speaker 1: then they would just disappear and no one would even
Speaker 1: know they were gone.
Speaker 2: Oh my god. Yeah, that's that's the worst. So what
Speaker 2: was it hard to make money? I mean, when you
Speaker 2: think you have you have rent for a couple of months,
Speaker 2: they leave, then you know, you've maybe got to fix
Speaker 2: the property up a little bit, You've got to find
Speaker 2: someone else to move in. That person says, for a
Speaker 2: few months, the same thing happens again. Well, was it was?
Speaker 2: It just challenging to make money?
Speaker 1: It was, and it was even more challenging to sell
Speaker 1: that property.
Speaker 2: Uh yeah yeah. So did you end up losing money
Speaker 2: on it when you sold it?
Speaker 1: Well, I sold it for exactly what I paid for it,
Speaker 1: where there was no appreciation over the course of three
Speaker 1: or four years.
Speaker 2: Yeah, that's so tough. So, like, looking back on it,
Speaker 2: are there any signs that maybe you should have picked
Speaker 2: up on or stuff that you would pick up on today,
Speaker 2: like to avoid buying a property like that?
Speaker 1: Well, my philosophy in the beginning was to build a
Speaker 1: relationship with the property manager. So I bought that property
Speaker 1: from the property manager. Every other property after that has
Speaker 1: been a home run.
Speaker 2: Like it's like the property manager is doing good by you,
Speaker 2: that he's selling you good properties. Why do you think
Speaker 2: he passed that one off when he obviously knew that
Speaker 2: that property was going to be trouble. I mean, like,
Speaker 2: I doubt that they had great tenants before you bought it,
Speaker 2: and all of a sudden there was a bad tenant
Speaker 2: in that unit, Like, don't you think that was probably
Speaker 2: that turnover was probably going on for years.
Speaker 1: That is true, But I wanted to establish a relationship
Speaker 1: in this town, so I bought a bad property to
Speaker 1: establish a relationship, which turned out over the years to
Speaker 1: be very profitable.
Speaker 2: Yeah yeah, yeah, So did you end up? I know
Speaker 2: you sold it for what you paid for it, But
Speaker 2: on a monthly basis, was that property losing you money?
Speaker 1: Absolutely? It was the dog of my portfolio.
Speaker 2: Wow. Wow, at least you're done with that now. And
Speaker 2: so the other properties are all doing good. You're attracting
Speaker 2: good tenants and they're all fairly simple.
Speaker 1: Yes, And more importantly, is that they're all staying for
Speaker 1: a long time. I have about twelve Section eight rentals.
Speaker 1: If someone is on Section eight when I buy the property,
Speaker 1: then they stay. But other than that, I do not
Speaker 1: rent to Section eight. But any property that I buy
Speaker 1: that does not have have a Section eight tenant in Alabama,
Speaker 1: you do not have to rent to Section eight.
Speaker 2: So why is it?
Speaker 1: Like?
Speaker 2: Why? Like why is that that a tenant that is
Speaker 2: already there on Section eight is good? But adding a
Speaker 2: new Section eight tenant isn't good? Like, what's the difference there?
Speaker 1: The difference is the amount that you can charge for
Speaker 1: market rent. And if a Section eight tenant is already
Speaker 1: there when I buy the property, that is pretty much
Speaker 1: a permanent tenant with very low turnover.
Speaker 2: What an inspiring story to go from homeless to creating
Speaker 2: over a million dollars in equity. It really just shows
Speaker 2: you anything is possible with rental properties. I'd like to
Speaker 2: thank our sponsor jayey Ridge for making today's episode possible.
Speaker 2: If you're looking to buy a rental property, whether you're
Speaker 2: just getting started or you want to add to your portfolio,
Speaker 2: reach out to Chailey. She's a nation I lend her.
Speaker 2: She has a ton of different loan programs and she
Speaker 2: can find something that works for you. If you want
Speaker 2: to track her down, you can go to her website.
Speaker 2: It's ridgelendinggroup dot com NMLS four two zero five six.
Speaker 2: Thank you so much for checking out the podcast today.
Speaker 2: Make sure you hit that follow button. I put out
Speaker 2: a new interview every single Tuesday, and if you're following
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Speaker 2: My name is Dan Lane and this has been the
Speaker 2: Rental Income podcast.