Maximize Your Investment: Must-Know Tips for Homeowners

Transcription

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Jesse: I was having lunch with someone today, and they said that their rate is 2.5%, and they're looking to sell the house right now.

Pete: There's no way.

Jesse: It's like, well, man, if he can keep that.

Pete: Yes.

Jesse: Right. At least explore the option. Maybe they decide, Hey, I don't want to do this, but at least you have the numbers in front of you. Then you can make an educated decision. Hey, I can rent this thing out. And a lot of people have mortgage payments of $1,200 to $1,500 a month, and they've owned the house for a long time. Hey, I paid $1,800 a month, now $2,000.

Pete: What's up? Thank you so much for joining this podcast, really appreciate it. So, in today's episode, we have a really, really special guest, Jesse Eberle. He owns Real Property Management, and if you are an investor or want to buy real estate and get into the real estate game, you definitely don't want to miss this episode. Jesse has over 125 doors, and he manages 1200 of them with his real property management company. So, you definitely don't want to miss this episode. If you're a renter, you'd also want to watch this episode because there are some really, really good nuggets on how you can house hack and buy your first property. Thank you so much guys, and we'll see you guys in the episode. All right, Jesse, how are you doing?

Jesse: I'm doing great.

Pete: Good. Thank you so much for coming in.

Jesse: Yeah. Thanks for having me.

Pete: Yeah. And we were introduced a while ago through a buddy Tyler Clipper, I think introduced us a while ago.

Jesse: Yep.

Pete: And I also got to know you a little bit more through our business networking group.

Jesse: Yep.

Pete: Yeah. And so I'm going to go ahead and introduce you to the audience and with who you are and what you do, and I think that'll be helpful. So we have Jesse Eberle. He's the president of Real Property Management, and you can find him at rpmredding.com. Jesse, let's see. Sorry. Jesse has been a business owner and real estate investor for over 20 years, buying his first investment property at age 22. Reading the book, Rich Dad Poor Dad. It's a very good book.

Jesse: Yep.

Pete: I love that book. When he was 19 was a significant inspiration. He has a passion for all things business and real estate and enjoys helping others achieve their own goals through owning real estate. He is married and a father of four wonderful kids. Oh, that's cool. I didn't, I didn't know that. That's awesome. Four kids. Nice. Okay. Cool. Career highlights. So this is very impressive. He currently manages over 1200 doors. So, that's a big, that's a big task. It's big lots going on there.

Jesse: It is.

Pete: And I think something else that's important to note about, Jesse, for all of you investors out there that do have investment properties, he is an investor himself. So Jesse owns over 125 doors personally, and so he knows the game of investing in real estate. So super, super awesome. And I'm really excited to dive into a lot of the knowledge that you have with real estate. Current projects that he's working on, he's currently managing a full range of residential properties from entry level apartments to half million dollar homes. This allows us to serve a wide range of residents and to be there when they are ready to upgrade their home as their family grows and needs change. Being a seasoned real estate investor makes Jesse unique in the property management business, not all managers personally owned residential property.

Jesse: True. Yep.

Pete: Cool. So, some of personal passions and interest Jesse loves to travel with, him and his wife and four kids. I have a part-time airport that helps with that.

Jesse: Yeah, yeah. Its a little side job.

Pete: Oh, okay.

Jesse: That I do. I work at the Red Airport.

Pete: Oh, that's awesome.

Jesse: And it basically allows for free flights, all across the country and world.

Pete: I've heard about that Yeah. What a genius way to hack the travel.

Jesse: It is, it's like the ultimate travel hack.

Pete: That is amazing. Yeah. That's cool.

Jesse: So I've been doing that for a little over five years now. I've worked there.

Pete: That is a genius hack. We'll have to talk about that a little bit. All right. He enjoys mountain biking, hiking in our beautiful community. He loves reading and have read over 200 books in real estate. Wow. That's cool. Real estate business and finance. Topics of interest, he gets excited when tenants and his properties are able to get into their first home, so that's pretty cool. I like creative methods for helping people get into their first home and also become real estate investors at the same time, such as house hacking. So that's super. And I think we have a couple topics maybe. That we're going to talk about that. So. Awesome. Jesse, thank you so much, for coming on.

Jesse: Yeah, yeah.

Pete: Yeah. So I did have some questions and some topics that I wanted to dive into and talk to. And so we just did the introduction. So how long, so in your bio, you said you started at real estate, at what age did you buy your first home?

Jesse: Yeah, so it was 22. Was my first, my first purchase. And I actually looked yesterday as I couldn't remember the numbers exactly. And yeah, I paid $172,000.

Pete: Wow.

Jesse: For that first house. It was up in Washington where I was, where I was born, where I'm from, and I checked, and now it's, it's appraised or has a value of around $700,000.

Pete: Holy smokes.

Jesse: Which is pretty incredible. We sold it I guess it was maybe a year and a half after buying it and rehabbing it for $270,000 after spending 60 fixing it up and took that other 40 grand profit and rolled into the next house.

Pete: Wow.

Jesse: But I'm primarily a buy and hold investor, so looking back, boy, that would've been great to hold onto that thing. But., we all live and learn.

Pete: Totally. Totally. There's been properties that I wish I would've kept, obviously. So yeah, I totally get that. And so when did you move to Redding?

Jesse: It's been eight years now.

Pete: So you moved to Redding eight years ago?

Jesse: Yeah.

Pete: Wow. So you bought your first home when you were 22.

Jesse: Mm-hmm.

Pete: And then that got you going, you bought the next house.

Jesse: Correct.

Pete: And then what really changed your mode. You read the book, but how did you end up with so many properties?

Jesse: Yeah. So yeah. The book Rich Dad, Poor Dad, was a huge motivator for me and probably put into words what I was thinking or feeling.

Pete: Yeah.

Jesse: Going, hey, this is exactly what I want to do. And I had believed that it was out there. I just didn't know, or maybe my parents didn't quite teach me business or they weren't into business. So I learned on my own and of course this is before the internet. And now all of a sudden, here's this book that talks about building businesses and investing in real estate. And I said, that's what I'm going to do. I'm going to build businesses and invest in real estate. And I started a cleaning business, during high school. Wow. Doing residential and commercial cleaning and did that for a couple years and then just rolled into new things. And yeah, so I started off with one property and then a triplex that almost sank me. But really, with real estate, you can just keep, you keep pushing and generally over time, it's a winning game.

Pete: Turns into.

Jesse: Yeah, yeah., one house at a time and one property, and then you start building up and you get some experience and pretty soon it's not so scary anymore.

Pete: Yeah. At what point did you feel like, okay, this is awesome? Or at what points? 'cause you mentioned the triplex, so like I had back quite a few years ago where I was like, I'm never buying a home again. This is ridiculous. And so at what point were you like, okay, yeah, I'm going to go full on many properties?

Jesse: Well, So up in Washington I remember meeting an investor. I bought a house from him, and he had 40 houses, which I thought was like, how is this possible? How can someone own 40 Houses. I didn't think it was real. Looking back, I wish I would've spent more time with that guy. But I was primarily, focused on building my business at the time not focused primarily on real estate. But when I moved down to writing, I realized like, I really do love real estate, and if I could do it full time, then that'd be the best job ever. So I've been a pretty hands-on investor for most of my career. Rehabbing places and fixing things up, which I love the, on the before and after about that. But one of my first deals here, I remember standing in the front yard, like crying because I was over budget. I had no money left. Oh. I literally was just, it was miserable.

Pete: Here in Redding?

Jesse: Yeah. And it was my first properties. I had still didn't have a whole lot of like full gut remodel experiences. And I had to sell what little stock I had in a 401k just to finish the project.

Pete: Wow. That's crazy. So you got to the point where you're like, okay, I'm over budget on this house. I gotta figure something out. You had some money left over in the 401k, like I'm just going to use this to get you there.

Jesse: Yeah. And it was like $12,000. It wasn't. But that's how I was just I was broke, I was out of money. I didn't have a network of investors. Right I didn't really know what to do. And yeah, that's been, I guess probably about seven years ago, and just from there you go onto the next one, you'd learn more and every time you do one you learn more and more.

Pete: You learn More and more. Wow. Wow. What a, what a crazy, so that was like 2016-ish. So you ended up, so I got a lot to cover, so I'm just going to hit start hitting them. Sure. You know? Okay. So the second question here, obviously being in the market, being an investor and owning a property management company. What are your thoughts right now on the local Redding real estate market?

Jesse: I'm optimistic for Redding as a whole, right. As a city, yeah. As a community. I'm very much pro Redding, and I think it's a little secret spot here in Northern California. So obviously with the fact that we have high interest rates, well, that's relative, right. But relatively higher interest rates than what we're used to. And high prices, things are just stagnant in real estate right now and makes it hard to find deals. But all in all, I'm optimistic on the property buying here, and So.

Pete: Yeah, I agree with that. I'm definitely optimistic. I think we do have an amazing gem here. I love being here and raising my family here. The. In Shasta County is actually with the higher interest rates and, with the higher values of homes here, not a lot of people understand this, but Shasta County is the most affordable place to live in California.

Jesse: Yeah.

Pete: , California is expensive place to be. So like that's based on average income and also average sales price. So, gotcha. So you're definitely optimistic and, and I am too. So, looking from the angle of a renter what are you seeing for rents right now in Redding? Like are they increasing, decreasing? Where are rents at? I know, like the last, like during COVID rents just like skyrocketed. And, are rents going down at all? What are your thoughts right now with rents?

Jesse: Yeah. So, well, you had asked from the perspective of a, from a renter's perspective, yeah. They're going to feel like rents are going up. Because more than likely they haven't moved in the last couple years.

Pete: Oh, interesting point.

Jesse: Right So.

Pete: It makes sense.

Jesse: They may be paying, say, 750 right now in a place that they've been in for a while.

Pete: And the rent hasn't been increased.

Jesse: Correct. Or maybe it's just a little bit Right., so maybe it hasn't kept pace. Maybe it's not professionally managed and it's not being, the rents have not been increased like they should be each year to keep pace with the market. So when someone goes to move to them, they go, man, rents are so much higher. So yes, they are compared to a few years ago. However, from an investor perspective, let's say rents are relatively flat right now. Right. Like they're flat. For this year, from last year. Right. Say, through the last 12 months, so in some cases we're actually lowering the rent on some apartments to get them rented.

Pete: Got it. From the previous tenant. From the previous tenant. They're lowering the rate.

Jesse: Correct.

Pete: Which is a very interesting. What you just said is very. I did not know this, and the reason why I'm excited. I'm excited for the renters number one, 'cause that's going to help with housing affordability. But what I'm also excited about potentially is that part of the high inflation that we've seen come out every single month, they call it the CPI report and the PCE report, that they look at the inflation. Right?

Jesse: Yeah.

Pete: Well, a big part of the inflation number is rents. Is owner occupant or, is owner. They call owner equivalent rent. And that number, it's been taking a while for that number to come down. So if you're lowering from the previous year, that means it's just a matter of time when the Feds can start lowering interest rates. With inflation coming down. So just a side note there.

Jesse: That's true. And I feel like our, I mean, our market as you know. Is relatively isolated. Like we didn't have the huge runs or the big crashes compared to some of the major markets. So I was just reading recently, some cities in Florida, for example, are having substantial rent decreases because they had so much building.

Pete: Oh, wow.

Jesse: So our building is relatively minimal.

Pete: Wow.

Jesse: By comparison and pretty restrictive. Here in California, other states such as Texas and Florida, where it is easier to build a lot of money went into building the new housing, new apartments. So those cities are seeing a bigger drop compared to us. Got it. So ours is pretty minimal. And on the apartment side for dropping, single family homes are staying strong and in some cases growing because those would be buyers can now no longer afford the house, maybe say based on the current interest rate. So.

Pete: But they can rent that same house for lower.

Jesse: Correct.

Pete: That makes sense.

Jesse: Correct. So it's a little bit different in the apartment market versus the single family home market.

Pete: Okay. Cool. That was super awesome. Looking. Okay, so now looking at the angle of an investor I think you touched on this a little bit. But, your thoughts on long term, real estate investing, specifically Redding and Shasta, before we cover this question, I do have a question. I think it's important to talk about for investors or potential investors that want to buy real estate. What is California's law on the max rent that you can increase? Like how does that all work?

Jesse: Yeah, so it's a, there is a, basically a rent control.

Pete: Rent control?

Jesse: Right. Correct. So it's a CPI, but I'm sure I remember the last. So, basically the max is around 9%. It's based on CPI. So, around 9% per year, is what.

Pete: You can increase.

Jesse: Correct.

Pete: The rent from, correct. 9%. Oh, wow. That's not bad.

Jesse: Yeah. So it's very reasonable.

Pete: Okay. Okay. Got it. Okay. So the question, here is, from an angle of an investor, what are your thoughts on long-term real estate investment, specifically Redding, Shasta County, what do you see as challenges for investors right now? I think you touched on this a little bit. With, higher rates and home value, so harder to find deals. What do you see as opportunities right now in, as for an investor in this market?

Jesse: Yeah. So as. Well, I guess a couple things come to mind. One is I love the softening, I guess of the, restrictions for ADUs. So the fact that someone could, can buy a house and add an additional unit or an ADU as an accessory dwelling unit. And we, and the laws in California have changed so that it's less restrictive to put that second unit on. So I think that if we can figure out a cost effective way to get those built and put in, I think that's a great opportunity. Also if you have a, say a detached garage, so the structure is already existing. That's actually something I'm working on one right now. It has an existing garage and I'm working on getting that ADU permitted through the city.

Pete: And you can do that for an un-attached garage?

Jesse: Both.

Pete: Really.

Jesse: Attached or detached.

Pete: Really?

Jesse: Yep.

Pete: Interesting. Yeah, so it's just like a little studio Yep. For like a two car garage.

Jesse: Yeah. Heck, you can do it. One, you can do anything.

Pete: One car, I'm like thinking I got a property with a one car garage, I could turn that into a cool little studio.

Jesse: So I've actually been thinking, okay, how could I have all these different houses and several of them would work well for an ADU or there's extra space on the lot. So, there are some Local companies actually that are building prefab homes. So that's an option.

Pete: Yep, yep. I've seen that.

Jesse: And it's still tricky trying to finance ADUs right now. But again, that's a big opportunity I feel for investors. Also, I think there's opportunities in some property owners, or let's say if you own a 12 plex for example, it's possible that those owners may not be able to, refinance when their notes are coming due.

Pete: Right. 'Cause the notes come in due. So they have to, cash flow and with the new Correct. Current rate.

Jesse: So there could be opportunities there. I mean, certainly nationally, I think there's opportunities. It's hard to say if there is going to be stuff like that locally.

Pete: That makes sense.

Jesse: But there's always deals out there, but it is tricky 'cause there's a lot of money chasing these deals. So.

Pete: Okay. The. I love the ADU, opportunity. That's a pretty big one. I have, some friends that are building, what do you think an ADU little one bedroom or even this two car garage Studio. What do you think that would rent for all dialed set up?

Jesse: Oh, a minimum of $1000 for sure.

Pete: Really?

Jesse: Yeah. If not, I mean, I'm seeing them at, even at 1250.

Pete: Wow.

Jesse: When they're done at real nice.

Pete: Yeah.

Jesse: So by, so for sure, if you have an attached garage, that's going to be by far your least expensive conversion. Right. To get that into.

Pete: 'cause you already have the structure.

Jesse: Correct. The structure's already there. You don't have to bill anything new and pour a new slab and.

Pete: Yeah. That makes sense. Wow. Okay, cool. Let's see. This is a good question. What advice or tips do you have for current investors that own rental properties that currently do not have a property manager? What problems do you solve for these investors?

Jesse: Yeah, I would say time is probably the biggest one. And I can speak to it personally because I've self-managed a lot of my stuff for a long time.

Jesse: And if you look at the return on your time, it's probably relatively low when you're working on, say, a rental property versus what you could be making in your primary job or business. So I think it's an easy trap, and again, one that I was in for a long time, to where you just want to do it all because maybe you can or you have the ability, but really it may not be your highest and best use. So for, let's say, between 8% and 10% of the rent, you'd pay a professional manager and they're going to be watching the property for you, collecting the rents, dealing with any legal issues if there are any, if evictions come up.

Pete: Which is huge.

Jesse: That stuff, yeah.

Pete: I mean, that stuff is like, that's thousands of dollars.

Jesse: Yeah, we try to avoid, obviously we try to avoid that. That's the worst case scenario. But that's something that we can work with, with an owner to go through that process. Obviously, we handle all the accounting, the bookkeeping. We can pay the insurance, pay the mortgage, pay property taxes.

Pete: And I didn't know that, actually. I mean, I didn't realize that with property managers. It's like, I don't get a check and I have to pay the mortgage and all of that. It's almost like you are managing that property and they get a report every month of what the income and expenses were, and a check every month.

Jesse: Exactly. Full breakdown of everything that was done that month. And then, if you have large expenses coming up, like let's say there's a new roof, right? Oftentimes we can start, we'll withhold funds.

Pete: To cover the expense.

Jesse: On behalf of the owner. Yeah, hey, so here's your account that we're building up for you.

Pete: That's cool.

Jesse: Because we know these CapEx, expenses are coming up.

Pete: If you know you have like a heating and air or something like a roof, then you can start planning for that in the rents and taking some of that.

Jesse: Correct.

Pete: And applying that towards that expenditure when it comes to.

Jesse: Exactly.

Pete: Yeah, I love that. And then.

Jesse: Yeah, so it really does help. I mean, professional management, again, having someone basically managing the property and you can focus on your primary job as if you're a doctor or you work at a professional business office, whatever it is.

Pete: Yeah, so what I heard you say there is, let's say, for example, myself, and I'm in the mortgage business and I'm spending a couple hours, two, three hours a month, let's say, on paying the mortgage and looking at my statement and maybe I have to go fix a toilet or maybe I have to make a call to a plumber or something like this, right? And those hours that I spent on that, I might have saved 8% of the rent.

Pete: Let's say that's 100, 200 bucks a month. I might have saved that. Or how much per hour am I in my profession?

Jesse: Correct.

Pete: So any investors out there, you should really know what your hourly rate is inside your business, right?

Jesse: Yeah, so really, I mean, it could be viewed as a low, I mean, it's a high value position, That we do provide doing management.

Jesse: But a lot of those tasks may be a low dollar task, right? And it's like, well, does it make sense for you to go out and mow the lawn or can you hire someone for 25 bucks an hour to go do it?

Pete: Totally, yeah.

Jesse: And then there's always the phone calls and that was, I guess, the hardest part for me as an investor is like, you're on vacation or you're on a trip somewhere, you're out with your kids and then someone calls, hey, the air conditioning broke.

Pete: That call, yeah.

Jesse: Or this is happening and we care about our tenants, we care about our residents and we want to solve the problem that maybe you're in the middle of something and you go, oh, I can't believe this. So yeah, that's where management comes in.

Pete: That's awesome.

Jesse: And we handle all those calls for you.

Pete: That's cool, that's super awesome. Most homeowners that currently own a home and are thinking of maybe buying a new home and renting their home, what are some tips? So like this is a person that's, let's say your family and you've been wanting to buy another property or somehow get into owning multiple properties, renting it out, right? And so one strategy is going to buy a new home and then turning their home into a rental. So the question here is that, what are some tips that you could give to those types of families that are wanting to maybe buy, like I get calls a lot and say, hey, Pete, we want to buy this investment property. What they don't realize is that it takes 20% to put down on that property if they want to buy it just as an investment property.

Pete: So how I've gotten all my properties is I've actually bought as a primary residence. I did this like for four or five years straight. My daughter was really upset at me 'cause we were constantly moving, but it was just me and my daughter.

Pete: So it was like something that we could do. So like being single, I bought a home as a primary. I lived there for a year. I'd save up 5% for the next home and I buy that next home with putting 5% down 'cause that's the minimum down payment. And then I turned the home I left in into a rental. And so.

Jesse: I think it's a great strategy. I think that would definitely be one that I suggest probably most often for people is even if you already own a home, it's more than likely not your forever home. Even if it is, I'll still push people. Well, you could get a nicer one in 10 years if you invest in real estate.

Pete: Right, yeah, exactly, yeah.

Jesse: But yeah, I think that's a great first step for people and really it's as easy as reaching out to a property manager and say, hey, what would this rent for? Or they could even look online if they want, they can go online and look.

Pete: Yeah.

Jesse: But it is nice to talk to a professional and say here's what the value of this would be here's what you can expect and If I understand correctly some of that rent could be credited on their income towards.

Pete: Absolutely.

Jesse: Towards a future loan.

Pete: It's exactly right. So on when they when they depart their residence and turn that into a rental. Let's say they're, this customer's making 6,000 a month. Or 7,000 a month. Well that income's not enough to cover both mortgages. So you can't, that income, there's not enough income to cover both mortgages. Well, you can turn that home, you're moving out of into, we can use that rental income, 75% of it. So, and then we can apply that to the new purchase and give that as income.

Jesse: Yeah. So that's a great, that's a great start. And also at this Where a lot of people, I can't remember the exact statistics, but is it something like 60% have loans, in effect four and under or something? I mean, it's a lot of.

Pete: Yes. Correct. A lot of, yeah. Most majority have an interest rate of 4% or lower. Is that what you're saying?

Jesse: Yeah. Correct.

Pete: Yes. Yes.

Jesse: Yeah. So to not lose out on that, yeah. I mean, I just heard, I was having lunch with someone today and they said that, someone that the rate's 2.5% and they're looking to sell the house right now.

Pete: There's No way.

Jesse: It's like, well man, if he can keep that At least explore the option. Maybe they decide, Hey, I don't want to do this. But, at least if you have the numbers in front of you Then you can make an educated decision On Hey, I can rent this thing out And a lot of people have, 1,200 to $1,500 a month mortgage payments. That they've owned the house for a long time and hey, the things going to rent for 1800 a month now or 2000. And now you're making some some actual profit on it. Not just breaking even, but you're making profit on it that can roll into the next house. So I did that. One of the houses that that that we purchased actually was a three, had three houses on one lot.

Pete: Oh wow.

Jesse: And it was a struggle. It was a two bedroom, two bath house. That all six of us lived in.

Pete: Really?

Jesse: All the kids were In one room.

Pete: That's grinding right there. That is grinding.

Jesse: And it was a fake, that, none of the houses were livable when we purchased the property.

Pete: Really?

Jesse: Yeah. So all of them had to be redone. And a year and a half later, I believe it was, they were all fixed up and that the money, the profit from those three properties, went and, completely covered the mortgage on the next house.

Pete: On the next house. That's amazing. Incredible. I'm glad you shared that because some of the fears with families doing this, moving from their house, going to a new primary and renting it. Even if they do have a lower rate, they have all these, they have fears. And I understand that. Some of these fears are fear of home being destroyed., having a tenant destroy their home that they just lived in. I mean, I have that fear personally with my homes because I, it was my home and I just put a lot of care into the home and I kept it up Nice. Fear rents won't get paid is a big fear. And fear the home will be vacant. What happens if it's vacant that I don't have that rent? So these are like, I would say top three questions. So any.

Jesse: Yeah, so there's certainly, I guess the first you do have to, make that or at least work towards making that mental shift Of okay, this is no longer my home. This is now an investment that I own. Which I can understand is tough, right? 'cause you have memories with your family in there. You've put money and maybe sweat and tears into fixing a place up. So you do have to shift a little bit in terms of, hey, this is no longer my home. This is an investment. And that being said, let's do our best at finding a great tenant who wants it to become their home.

Pete: I love that, yeah.

Jesse: Now as well. Alright. So in the management business that is a huge part of what we do is, is screening tenants, it's super important. You can't just say, Hey, I've got a high credit score and I can get in. It's like, Nope. That doesn't get you. We go through criteria. We do, background checks and credit reference. I mean, all the stuff you go through. And so that is big. And, if someone doesn't want to do it on their own, which, can be a little bit daunting, again, I've done that myself a lot and I've also now of course have a staff that that helps.

Pete: Helps, yeah.

Jesse: , that does that. But it is a big responsibility. But it's probably one of the most important things we do is.

Pete: Screen screening.

Jesse: Correct.

Pete: Screening and picking the right ones. So that.

Jesse: It's selection.

Pete: That would obviously help. I mean, with the first two, I mean Yeah, you really picking the right one. And I tend to agree with that because, as a bank we're screening, we're doing the same process. We want to make sure they're responsible. We want to make sure that they're, have the ability to pay. There's two things ability and stability.

Jesse: Correct.

Pete: So ability in the future and stability in the past. So same process I'm sure For renting.

Jesse: Exactly. It's like, let's, we do look at people's past and say, what is the likelihood That they're going to be Successful and responsible Adults now in the future.

Pete: Yeah. That's cute.

Jesse: And yeah. So we do a look at that and, we also do, we do drivebys of the properties as well, just to make sure how are things being kept up on the Outside.

Pete: Oh, that's cool. That's super awesome.

Jesse: And then every six months we do interior inspections where we actually go inside the house or the apartment.

Pete: That's good.

Jesse: And do checks.

Pete: I didn't know that you could do that. Where you can actually, every six months you're going in and check the property.

Jesse: Correct. And that'll tell you a lot. I mean, generally people will clean up and they'll be on their best Behavior.

Pete: Oh, for sure.

Jesse: But You can get a good idea Of just how things are being taken care of, and if there's maintenance issues, then we want to know about it. We wanted to get those things taken care of quickly and not let that drag out.

Pete: And there's standard issues. I mean, a home, maintenance, you have your maintenance that you as a owner you Do. So, so that, process, is good because you're going by looking at the property.

Jesse: Correct. And then either like with management, either we can do that. We have some owners that want to handle their own stuff and hey, I'll work with vendors. I'll do that. But for the most part, we handle all that for.

Pete: That's cool.

Jesse: Yeah. For our owners as well.

Pete: Okay, Cool. And then, the fear of vacancy. Any comments on that? Fear of vacancy?

Jesse: Yeah. So again, it comes, well, I guess a few thoughts. One is, is the home as for rent being, marketed well. Right. So if you only post it on Facebook marketplace, then you're only going to get a small percentage of the people who are searching for a home. And so when we put it out, we put it out to roughly 40 in different websites That basically cover.

Pete: The whole thing.

Jesse: Right. Everything.

Pete: If someone's looking to rent a home, you guys, they'll find your properties portion.

Jesse: Correct. Correct. So that's a big part of it is making sure, and then, are there factors in the home? Let's say we get a bunch of people who, see it online and they want to go check it out. But they get there and, maybe it's not an as good a shape or there's a funny smell, So it's things like that that, we'll work with an owner, say, Hey, here's the things that.

Pete: I see.

Jesse: Some people are complaining about much like selling a home. You want to make it presentable. And you want it to, look desirable. And we do the same thing. We're renting a place out. Right. We want to make sure it has fresh paint and it smells good and it's clean and Yeah.

Pete: If it was easy, everyone would do it.

Jesse: True. That's true.

Pete: But it is super, super powerful. I explain it whenever I have a client that's wanting to buy another property., you have obviously rents are going up so you can get a raise every year on your rents. If rents are continually increasing and, they have over time. And so you can get a raise. And so not only, I explained it like this, not only are you getting the positive cash flow, whatever that is. But you also, a lot of people don't understand this or don't realize you get the amortization. And the amortization paying down that loan. So you're gaining the equity in the amortization, you're getting that positive cash flow and you're getting market appreciation over time. And so yeah, you will have some maintenance and some things that you want to do, but obviously what you're saying, if it's easy, everybody would do it. So.

Jesse: Yeah. And real estate really is a long-term game. I mean, people have to remember, that I think, real estate has become, really popular and I guess really trendy the last few years Especially with, internet and social media. And while in a lot of ways it's Good.

Pete: Airbnb.

Jesse: Correct. Yeah, Yeah. In a lot of ways it's, and I mean, that is great 'cause it's introducing more people to it and more people are getting the opportunity to invest in it, because I think it's the best investment out there. Long term for, for individuals. But, it really isn't a short term gain. It can be, but especially now, it's harder and harder. I remember one of my first properties that I bought as strictly as an investment, 20% down single family home. When prices were not cheap, it was at the peak of a, of one of the cycles. And I put all this money into it and was making maybe a hundred bucks a month. And then.

Pete: Wow. With 20% down.

Jesse: Yeah.

Pete: That sounds like right now.

Jesse: Right. And, the water heater went out. And, I think it was $1,500 for the water heater. And I'm like, that's over a year of cash flow. And I remember my wife going, this isn't a very good deal, like, why do we want real estate again. It's like, trust me, trust me, it'll, this'll be fine. Right. So again, fast forward 10 years and you go, oh, this was a pretty good investment. But year one, two, and three Is is tough. And I think that's how people need to have a longer term view.

Pete: 3, 4, 5, 6 years.

Jesse: Of real estate. Yeah. Right. Even 10, 20 years where you think about, wow, what if I had, 10 houses, that was my initial goal. If I had 10 houses paid off. What would that be?

Pete: Snowball.

Jesse: Right.

Pete: Huge snowball.

Jesse: Yep.

Pete: It just starts compounding and compounding and compounding.

Jesse: Correct.

Pete: Yeah.

Jesse: Yeah.

Pete: Yeah. Wow.

Jesse: Yeah. So keep a long term perspective. For sure people who are getting started now, maybe they have one or two properties and some months they're feeling they're getting buried. Right. Financially they're going, man, this is just not working out. It's like, tough it out. Get through it. And, time tends to heal pretty well in real estate.

Pete: Yeah. That's good. I'm going to steal that line. Time tends to heal in real estate and other things too.

Jesse: Yep. Very true.

Pete: Okay. Cool. Well that. Let's see. Do you have any tips, for new investors that want to start investing in real estate? If you were starting out today and you don't own any properties, what would be your first move? Where would you start? Any house hack or what would you do today if you don't and didn't own any other property, any properties?

Jesse: Yeah, I would. So depending on where you're at in a family perspective. Right. Are you married or single? Do you have kids?

Pete: Let's say you're married and have kids.

Jesse: Yeah. That's a little trickier. So I would find say a two unit property. So maybe a house with a in-law unit. Right. Or a house with an ADU or something that we can. And I would find a way to, let see, have that first purchase, have an income component as well.

Pete: Nice.

Jesse: So again, that two unit property, we actually just did it with my son recently. Together we purchased a two unit property. And again, basically the.

Pete: That's awesome.

Jesse: He's living in one unit and in the running outta the second unit.

Pete: Yeah. I love that you're teaching your kids.

Jesse: Yeah. I love it. I actually love teaching this stuff to people. I'm passionate about it. And I think that when I was in my 20s, like I didn't. There was no one to teach me about this stuff. And again, this wasn't part of my. In my circle. And now I realize, man, real estate is so powerful and this is learning all the little nuances, but getting into a house hack opportunity for someone sorting off, or if maybe someone is single again, you maybe they get into one house, maybe it's a three bedroom house and they can rent out the other two bedrooms. For example.

Pete: Yeah. That's cool. That's how I did my first house. This is in. Sorry. 2002 is when I bought my first house. Pretty close to when you bought your house. I was 22, I think you said you were 22.

Jesse: 22.

Pete: Yeah. So, the same thing. And my payment was like 48-47% of my monthly income. I was making 2,500 a month, and my payment was like 1200. And so I was scared and. But I went. I'm a little bit of a risk taker just in general. But like, I went for it. And the crazy thing is that it got easier and easier and easier as time went on. Like what you're saying, like my income continued to end go up every year so that he pay me, got easier and easier and easier. Also, I rented out the other two rooms, so then I was only paying like. I was at 500 a month each person, so it's $200. So it turned out, oh my gosh, this is amazing.

Jesse: Yeah.

Pete: This is really good. This is like, I'm going to do this again. You know?

Jesse: Right. And, and, and I think you said a good thing there. Like it was expensive and scary then. And then people will say, oh, that was easy to buy houses. You guys bought houses way back then? No. When it was 170. Well, I think I was making $11 an hour, at the time. And to me it was a big stretch. It was still expensive.

Pete: Yeah.

Jesse: But another thing that was important to me all the way along is to live below my means and to not buy more house than I can afford.

Pete: Yeah, that's good.

Jesse: And I specifically remember, some friends, we were I think were maybe making the same amount of money at the time, and they purchased a house that was literally twice as much as ours was.

Pete: Wow.

Jesse: I remember thinking, can you guys afford that?

Pete: Yeah.

Jesse: And the answer was yes they could. However, it was maxing them out.

Pete: Yeah. So no extras.

Jesse: Correct.

Pete: Yeah. Hardly any Extra.

Jesse: And even when we first moved here to Redding and bought a place here, it's like when we buy a house, that house, will become a rental, so we're not going to buy some fancy place. It's like, no, I want it to be a house that makes sense as a rental. All right. So it's making this.

Pete: So that's a good one.

Jesse: Yeah.

Pete: So you're saying first time buyer or just a family wanting to buy their first house. Don't look at this as a be all end all.

Jesse: Correct.

Pete: Yeah. Look at this as, okay, we want to find a good home, good rental property.

Jesse: Yeah.

Pete: It's a good price that we can turn around and rent, let's say in a year or two.

Jesse: Yeah. As if you're totally maxed out, then it's hard to make a move later in life. Right. So if you can make these smart decisions, every step of the way. And not get yourself over leveraged or, have too high of car payments, whatever, all those little things Right. That obviously you deal with a lot as a lender. It just gives you more options. It gives you more flexibility. And if you start off well, then you can build solely over time.

Pete: Yeah. That's awesome. I love that. So many amazing, really, really good nuggets there. I was going to say something else. I think we covered a lot. So any final last recommendations, suggestions? I think, a lot of listeners, I send this out to my clients people looking to buy. So a lot of them will see this, so any last final thoughts? Any.

Jesse: Yeah. I would say that, if you're. Well, there's a saying, right? You don't wait to buy real estate. You buy real estate and wait.

Pete: And that is awesome.

Jesse: And it is a scary time right now because things do feel expensive.

Pete: Yeah.

Jesse: But I do remember actually that was a good. A great story. My first apartment that I lived in. I knew I wanted to be a real estate investor.

Pete: Yeah.

Jesse: And I remember I talked to the owners of the apartment. I said, I want to buy this apartment. And I think I was, I guess 19 or something.

Pete: Wow.

Jesse: And they probably thought, who is this kid?

Pete: Yeah, yeah, yeah.

Jesse: I wanted to buy, he can't buy this apartment, but I might. And of course I had no idea. I just knew I wanted to buy real estate and hey, why not this apartment building? Even though I'm a tenant, a tenant living there. And they actually were dissuading me from getting into real estate. So they were in their, probably their late seventies at the time. And they said, oh, Jesse, it's too expensive. It's too expensive.

Pete: What year is this? Sorry I'm dating you right now.

Jesse: Yeah, no, no. So this, I guess like 24 years ago.

Pete: Okay. So like 2000.

Jesse: Yeah. That's about right. 2000.

Pete: So they were saying, Hey, it's too hard right now. Real estate's too hard.

Jesse: Yeah. They said, Jesse, we bought houses and they were, $15,000. That's how we bought our rentals. And then scaled up at 1031 exchanged into this apartment building. And I thought, no I didn't accept that answer. I thought I don't believe you. Even though they were credible people. Right. I mean, here they had this apartment, they owned it free and clear. They're making great money now. But they felt it was just too expensive. And man, thank goodness I didn't listen to their advice.

Pete: Wow.

Jesse: Because, so I think the same thing. The same thing now, right?

Pete: Yes.

Jesse: It seems scary. Maybe it's expensive. We believe long term that rates will drop again. So if you can buy, get a place now and refinance in a year or so. But it's going to be tricky because if you wait, the property will likely be more expensive.

Pete: More.

Jesse: Because one's rates drop more buyers enter the market. And then that increases demand.

Pete: Right.

Jesse: So I love, I've had several of my tenants, they, Hey Jesse, we're moving out. They give notice and Oh, where are you going? Or what's going on? Oh, we're buying a place. We're buying a house.

Pete: Nice.

Jesse: That makes me so happy.

Pete: Yeah.

Jesse: Even though I don't like to lose a great tenant, I'm excited for them to, Hey, that's the whole point. Right. It's meant to be a transitional place. Right. Don't rent forever. If you can help it, get it a homeownership. Buy a place and then eventually you can become a landlord. And even if you only end up with one or two houses for retirement, that'll be a game changer.

Pete: Yeah. I love that. Along with what you were just saying. I remember what I was going to say. So, a lot of people are really having a hard time 'cause of the affordability, right?

Jesse: Yeah.

Pete: And it's like, it's too expensive and they haven't seen this as expensive. Well, according to the average income and according to the average sales price, it's actually been worse. Like the affordability has been worse than it is today. Like, there's point, if you look on a graph based on our average income and our average sales price. It has been worse. Like back in '80s and then also recently in the mid 2000, 2003, 2004, 2005, right in there, it was actually worse affordability than what it is today according to our average income and average sales price. Right.

Jesse: Yeah.

Pete: And what I want to say to that is that it, there's ebbs and flows with the market, like what you're saying. And so you don't wait to buy real estate. You buy real estate and wait.

Jesse: Exactly.

Pete: I love that quote. I'm going to steal that one too.

Jesse: Yeah.

Pete: Yeah. Cool. Well, Jesse, this has been awesome, man. Thank you so much.

Jesse: Yeah. Thanks for having me. It's a pleasure. And I love talking to real estate. And I'll do it anytime, anywhere.

Pete: Yeah, yeah. We'll definitely have you come back and come back and share more.

Jesse: It sounds great.

Pete: Your thoughts. So if anyone wants to get ahold of you, how do they get ahold of you? What do they do?

Jesse: Yeah, so they could check us out on our website, which is rpmredding.com.

Pete: Okay.

Jesse: And if they Google us, they'll find our company also, you can look up Jesse Eberle either online on, like on Facebook or Instagram.

Pete: Yep.

Jesse: You can find me personally as well.

Pete: Okay. And if they want have a property, they want to have you start renting or property manage for them, just call the office.

Jesse: Correct.

Pete: Book an appointment.

Jesse: Yep. Absolutely.

Pete: Okay Cool. Awesome. Well, thank you Jesse. Really appreciate it.

Jesse: Yeah, thank you Peter. Appreciate it.

Pete: See you.