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Blessing of the Day

If you bend over far enough and look sideways, even your own grass looks greener. Lasting joy comes from a perspective that allows us to choose contentment.

Roger Blankenship

Tags: real estate, real estate investing, Flipping America, Roger Blankenship, rental houses, duplexes, triplexes, quads, apartments

Twitter Tags: #realestate #realestateinvesting #realestateinvestments #realestateeducation #flippinghouses #RogerBlankenship #FlippingAmerica  

Expected Air Date: Friday 9/9/2022


Flipping America 552 Rental Questions And Annswers

Roger Blankenship
[0:00] Okay, kids. It’s time to open the mail bag and answer some of your questions.

[0:14] Music.


[0:30] Real estate. Wherever you are, whatever your situation, there is an opportunity for you and now, here’s that flipping America guy, Roger Blankenship.
Hello America thank you Kathy Curtis,
I am not asking you to feel sorry for me no not at all in fact I’m asking you to.
I get a little bit over a 1000 emails every day.
I also don’t really check my email on the weekend so it mounts up. It makes Mondays very interesting. And when we have a long weekend like Labor Day, it’s even more interesting because yeah, I don’t look at my email on Labor Day either. Anyway,
Even though I get a lot of email we make a priority to look at the questions that come from our listeners and we love and appreciate
Everyone of you so much and thank you for your questions and I urge you to keep them coming questions at flipping America. Net.
Now last time,
I did a show talking about should I rent or should I own.

[1:45] We’re turning it around,
And answering some questions about rental properties. So, this is the rental queues and A’s. We’ve got queues and we’ve got some aids. Alright.
So, without any further ado, well, let me give you a little bit further ado. If you have questions about real estate or real estate investing, send them to questions at flipping America. Net or you can call if you want.
877 55 Roger that’s (877) 557-6437 press extension one you can leave your message or question either way,
Let us know
And tell us where you’re from because we’re gonna wanna know. We promise we will answer every question that comes into the show. Honestly, not that many people call in and leave messages. Mostly what we get is emails. That’s okay. Either way you wanna do it.
We will answer your question and some of your questions and our answers will make it onto the show.
Follow us on social media at Flipping America on Twitter and Instagram and Facebook. Com slash Flipping America Media on Facebook,
Here we go.

[3:04] We will have links to an online mortgage calculator and also a home appreciation calculator,
From Houston Texas.

[3:30] Well I’m gonna give you some ideas Matt about how to handle this but one of the things I wanna say right off is I applaud you thinking this way rather than taking $400 thousand to buy a home just to live in.
Or blowing at $400 thousand on any other kind of things.
So, props to you, my young friend but here are some ideas. Rather than sync $400 thousand and I guess since you made it that amount of money, you either have a particular home in mind or maybe you just have 400 1000. That you come into.
With that money though.

[4:06] May I make a couple of suggestions rather than buy one $400 thousand home buy $400 thousand homes,
Buy a duplex or a triplex or a quad. The reason is,
You get more doors you spread out your wrist you also avoid that scenario of being 100% vacant.
If you have a single family home and a tenant in there you you are either 100% occupied or 100% vacant
Maybe even in slightly different areas to minimize the risk even further.
I I want you to really think about and talk to the people who advise you financially,
One of the beautiful things about real estate is you can use debt to finance it and you can borrow the money to buy real estate. Now, you I know you’ve got $400 thousand cash.
Stay with me here,
And started buying $100 thousand homes.

[5:32] And,
You would make a little bit of cash from each of those houses plus you would be building your net worth like crazy over the next 30 years,
You see what I mean? Now, if I don’t know, you didn’t say anything about what you do for income. So,
Buy these properties but you have the cash to buy them now and after you’ve held on to held on to them for a few months you could probably go to a private lender like one of our sponsors Bay Mt. Capital.
But after 2 years,
Even if you didn’t have a W two job. So how about that?
Lot of people would love to have this problem that you have right now. 400 1000 to spend and 19 years old. Scott from Nashville, Tennessee. Can I rent out a home that I am renting? Well, that depends on the language of the lease.

[6:43] If Delise is clear that you can do this which I doubt,
You need to notify her. Get permission from the landlord. Do you should always do that? It’s just the respectful thing and the rightful thing to do. And I think also, if you worked
The people who are in the house and I think that most leases are gonna say that. It is possible. Now,
It is possible that you can get approve this in advance because a lot of Airbnb operators do this they execute a master lease with the landlord and then they sublease it sometimes by the week sometimes by the day but,
The landlord is aware of it and has signed off on it, okay? But if when you do that, you are so responsible for the, for the monthly payment, not the people that you might,
Lease it too.
Should parents.

[7:49] Should parents charge their adult children rent.
That’s a great question.

[8:06] Avoiding the responsibilities of adulthood.
As soon as I start to make a blanket statement like that my brain jumps into exceptions of course there are exceptions but that would be for people
People who are incapacitated in some way mentally or physically but
Taking on the responsibilities of adulthood
And you’re not gonna be able to avoid it.

[8:43] So
So I would say to my own children and have said to my own children,
Well let me tell you the deal I made was my own children I I.
For as they were young adults for periods ranging from a month to 3 months and in in one case just a couple of weeks,
No big deal but when it looks like it’s gonna be a longer term thing.
My child.
As long as you have a job,
And you take the amount that you would normally pay in rent and put it into a savings or investment account and show me the proof of the deposit.

[9:52] And you know, that got a little dicey because one of my kids moved in when she was between jobs and she didn’t have that income. So, I gave her a month to get started on it.
Another one of my kids moved in and she was between jobs and this right after college and,
What we’re gonna do here,
It wasn’t necessarily easy to get through the conversations. We’re not as easy as I’d hope they would be.

[10:52] However, we got through it and all of the children are now fully responsible, fully engaged adults and doing great.
But I would not let them live their rent free consequence free because you know human nature is going to get in there and if somebody can be fed and clothed and have a place to stay,
What possible incentive would they ever have to move out.

[11:24] And maybe you don’t want them to move out. Okay, that’s that says something about you. But it it’s,
Fine. You can work that out but if you want your children to grow up, you’re gonna have to sometimes.
Sean from Pittsburgh Pennsylvania does anyone buy houses just to rent out for profit? Well, John, I don’t, it sounds like you might be new to this whole thing.

[11:49] Right now about 15% of all houses nationwide are owned by someone who only bought it just to rent it out for profit.
And Prophet is not the only reason for buying a rental house,
Is generated this way even if you don’t make a profit now your building wealth you got tax advantages,
There are a number of compelling reasons for owning real estate. Now, something else, Shawn, I I probably should point out to you. Since this seems to be a new idea for you.
Probably about half of all of the rental houses that are owned by landlords are actually owned by institutional funds like hedge funds.
But yeah, this is definitely something people do for a living into something I recommend.
Income producing property.

[12:58] Carl from Long Beach California to squatters pay rent.
Anyway, that’s the difference. Squatters do not pay rent. They’re they’re living in the properly. Usually, illegally.
In some states it’s a simple matter to call the police their trespassers and get them out but in many states are growing number of states
If they can establish that they were there.

[13:31] If or if they can get in and and get there.

[13:39] I have a situation going on right now in Detroit did I and how should I own for over a year and when I bought it there was a squatter there who refuses to leave.
And Dave and offered him some money to leave and he said nope.
So, I had to go to court and I worked away through the court system. He didn’t show up at court
To tell him he had 7 days to get out or we were gonna put him out and the guy was gone.
So my guy walked away and I arranged to have the locksmith go over there by the time the locksmith got there the guy was back,
So I went to get the rid of eviction from the court and they told me that the judgement had expired and now I’ve gotta go back through the entire court process again.

[14:29] Yeah.
Because this is ridiculous. They should they shouldn’t do this to us.
But they do which is why people like me pull out and we’re not in Detroit.

[14:48] Alright.
Real estate investing in general whatever send them to questions at Lipping America. Net we’ll answer the mall we’ll put some of them on the show.

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[15:53] And we’re doing questions from listeners today on the subject of rental properties and income producing properties. Rebecca from Roanoke, Virginia. Do landlords make a lot of money from application fees.
I think Rebecca Leonards don’t make a penny from application fees
Took to do the background check I use a national background check service,
That’s my application fee.
So, the answer to that is no. Mark from boulder, Colorado, how did property management companies make money? Listen, interesting question. They make money,
Really two ways tennit placement and.
No. Property management company that is captive to like one apartment complex. Not gonna be quite the same.
But it will be a little bit the same but property management companies like I hired a couple of property management companies to manage my single family rentals years ago,
And so I’m just gonna give you some examples from what they do.

[17:18] Sweeten the pod a little bit and I said I’m willing to give you all of the first months rant if,
When this person moves out before the lease is over in 1 year you don’t charge me any thing to replace them.

[17:34] See, I like that a little bit better. I’d rather, I’d rather give up a whole month’s worth of rent and,
So they get paid placement fees and then the next thing that they do to make money is referral on repairs.
If you have a repair request that comes in through the normal channels with the the rental property they will.
Call whoever they need to to get out there and fix it and we’ll put some sort of a fee on top of that usually around 10%
10% a lot if it’s a $5000 repair like if you’ve gotta replace a condenser unit or something but if it’s a normal repair 10% not that much.
Now I wanted other things that I did,
My manager company is because i was bringing them a volume of houses
Handyman and the like.
But you know, if you bring 20 properties, you’re gonna have a little leverage to ask something. So, I asked if they would let me.

[18:53] Make the repairs myself so when they got a repair request they just forwarded on to me and let me handle it with my crew.
Cuz I needed to keep my guys busy anyway.

[19:14] Next question let me see if I don’t know,
Okay Kathy from Louisville Kentucky says i have a house worth about 500 1000 want to rent it out what should i charge in monthly rent,
Well, Kathy, the first thing I would suggest that you do is really consider whether or not you wanna hang on to that house.
I know that.
When we think about that for a little while come on,
That we’re not gonna take with us and yeah we can have memories there but if you’re never gonna be in there you’re gonna have tenants in there.
What you can have those memories anyway okay,
So reason I’m saying this is I know a little bit about the Louisville market I think you could probably go out and buy a couple of lesser houses and and,
Do better.
Let’s just say this is what you are and what what you have, what you gonna do, and you also, in all fairness, she did not say that the house was in Louisville. She’s from Louisville. So, she may have the house and a higher.

[20:26] You know, rent area or high price area. Anyway.

[20:32] What should you charge your monthly rent? Well, generally speaking,
To one. One,
Percent of the value of the property. So, if it’s a $500 thousand house, then you wanna be somewhere in the
43 to 4400 all the way up to 52 to 5500 range that’s where you wanna be.

[21:01] Okay? Because that is just kind of how rental properties work. You know, generally speaking, we call it the one% rule.
Use the one% rule let’s say that your house 500 1000 is paid for news the one% rule and you get $5000 a month in rent so a five times 1260 $1000 a year.

[21:23] After out of that you’re gonna have a certain amount of expenses you have to pay taxes you’ve got repairs and maintenance issues that you’re about to pay,
These in a typical rental will eat up about 25% of your income and so what do we say it was 60025% of that is going to be 15 1000 so your left with $45 thousand
And so this works out to about a nine% cash on cash return and that’s fine if you end up making less than that than they’re probably,
Other things that you could do with your 500 1000 that you might make more money,
Out for less than that
Also the tax deductions you get from owning that property and we’re talking about depreciation plus deducting the expenses to the property.
The ability to build wealth through the appreciation in value.

[22:34] Hey, I’ve given you an idea what you should charge in the monthly rent but also, hopefully that you you’ll go back and listen to the first question. I think it was from Matt. He had 400 1000 I gave him some ideas. Maybe buy some different things. Maybe.
Use this money as down payment.
Terry from Milwaukee Wisconsin if I move into a house with a rent to own contract,
Will some of the monthly payment apply to my purchase price I like the way you’re thinking there Terry but the answer is it depends it depends on if that’s what it says in your contract.
And if it doesn’t say that I would suggest that you ask for it because.
You know, I have some savvy people that when I’m, you know, selling.

[23:24] Properties this way if they ask for a portion of their monthly payment to be applied to their purchase price and I’ll say yes.

[23:32] Now that that’s assuming that they fulfill their into the deal and exercise the option on the way out,
Let’s move on to Rob from Omaha Nebraska what percent of home value should rent be alright we just spent some time on that with Cathy’s question we talked about the one% rule I even ran through the numbers so
Basically one%.

[23:59] Something between. Eight and one. One and one. Two
I could pay cash for a place to live but I choose to rent a modest place and pour the excess incoming to more investments like rental properties my girlfriend broke up with me because in her words,
I’m too cheap.
Hi, ladies and gentlemen. This is not the romance line and we’re not here to resolve relationships and Richard. I hope that you understand that. But I just one question for you.
What’s your ex-girlfriend’s net worth?
Yeah, I know that’s a little bit of a smarter like response but the I think that there is a telling point there. She probably is not gonna rival your net worth. She probably wants you to spend some money on something.
Nicer to live in and so forth and,
It’s giving you a little bit of heartburn because now you’re wondering if she might be right maybe you are being too cheap you know,
It is possible to be too cheap and there’s a balancing point that we all have to find for ourselves in here.

[25:14] I have known some wealthy people who were skin flints, cheap, and just mean to be around.
I’ve also been around other people who were appropriately frugal,
And managed to do it without whining, complaining, or getting all self righteous and criticizing the decisions of others.
Those people were fine. Those are people that i am happy to call my friends. I would hope that that would be the person that you are like.
I don’t know Richard because I don’t know you. What are you like?
Are you.

[26:06] I’d had a friend one time who is so he was not frugal he was he was stingy and mean spirited,
The people now he never did anything that was dishonest,
Or illegal. He doesn’t do that. But he was so close with his nickels that if there was any advantage to be had in your dealings with him it would go to him.

[26:36] And.
There’s there’s a value to being frugal but this comes across as.

[26:51] Being so.
And we were, you know, we were partners on a couple of deals and.
You know, carpet.

[27:13] The the weight of the carpet and you know we’re talking about battling over $50 difference,
Our hottest conversation was he’s
He executed one of the sterner terms of his work contract and shorted one of the guys and one of our workers something like $500.
I really thought they should have paid the $500 and he said but I got the paperwork and says I don’t have to. Yeah, you don’t have to, man, but okay, what’s he gonna do the next time you call him up and and you need some?
None of the people that I know that was doing business with him
The people that work for him don’t wanna be there he has high turnover,
My purpose here is not to talk about all this. My purpose here is to get you Richard to look into your own life and see what kind of a person that you are.
Frugal without crossing that line.

[28:25] Okay
Here’s another thing I want you to consider before you go all the way over to her way of thinking and I I really probably don’t want you to do that. But before you go that far,
Think about long term relationships and that I think that you wrote me because you’re worried about this relationship and either you want it back or you don’t want it to happen again,
So here’s a phrase I want you to keep in mind,
Without having to make a lot of adjustments or compensations for what someone else believes or wants to do you have a better shot at a happy long term relationship
Alignment of values Richard
Hey, everybody. That music means we’re out of time for the day. I’ll keep getting back to your questions as often as I can. But here’s a thought for the day. If you’ve been over far enough and looks sideways even your own grass looks greener. Last enjoy comes from a proof.
Perspective that allows us to choose content.
You’ve been listening to flipping America real estate investing for everyone. Listen three times a week on stations across the country or on the flipping America app,
Be sure to like us on Facebook find and follow us on Twitter and Instagram and keep your eyes open.

[29:50] Music.