[RWS #732] Single-Family Rentals: Retiring on a Dance Teacher Salary

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Single-Family Rentals: Retiring on a Dance Teacher Salary, Real Wealth Show Podcast Episode #732

Today’s guest is a successful dance coach, choreographer and competitor and he’s also managed to build a rental portfolio of 11 properties nationwide. Let’s find out how he did it.

Kurt Senser is a long-time member of the RealWealth. He joined in 2008 so I’ve personally known him for over a decade now! Kurt had already started building his real estate portfolio before we met, starting in 2004. And since, he saved pennies for every down payment, he spent a lot of time researching before plopping any money down. His five-year goal is to have a total of 20 residential properties. I am delighted to have Kurt Senser on today’s show to share his real estate investing story.

Podcast Transcript

Kathy Fettke: Kurt, welcome to the Real Wealth Show.

Kurt Senser: Thank you. Glad to be here.

Kathy: Yes, it’s great to have you here. We’ve known each other for a while. Let’s see, you joined RealWealth in 2008, is that right?

Kurt: That’s correct.

Kathy: Wow. How did you find us and what were you looking for?

The Real Estate Learning Curve

Kurt: Well, I was interested in real estate, so I was going to a couple of the courses. I went through that guru’s course of learning all the information because I wanted to learn. After, I came for a bunch of this, and we’re learning a lot of information, but at cost– Going to one of the sessions, there was a girl there, she said, “Well there’s this one lady, she’s got a radio show.” That’s why I took down your information and then listened to it. Then you’re talking about a counseling session. I came in there, set one up right away, when you and the other Kathy were on the counseling.

Kathy: Oh, Cathy Copeland? Yes.

Kurt: We’ve all sat down and came in there and just talking, all these things, what are your goals, what do you want to do? At that time, I just had one rental property in Arizona that I bought in 2004. I had been interested in real estate for a long time, I just never had the money to actually purchase something. At that time, I had a little bit of money, and I went to the community college before then. There was a little course on buying property out of state, and some of them talked about cash flow and depreciation. I liked Phoenix and so I went to a little tour in Phoenix, and ended up buying one for 150, 3 bedrooms, 2 bath, brand-new, in a new development.

I had that for several years and it was actually negative cash flow, like 300 negative cashflow, but I was fine with that because I just wanted a house. My first house actually, I didn’t have a house to live. I was still renting, but I bought that while renting in California. I liked real estate so much, that I want to stick with it. I knew that down the road, it’s basically where most people make their wealth because I’ve been studying and reading about it and stuff like that. That’s when I went to the seminar to learn more, and all the different strategies you can do.

Finding Great Rental Properties in 2008

That’s when I, again, like in 2008, became a member with you guys. Learning that I can learn this without having to pay all that money, and go into your workshops and stuff. That was great information. It’s also trying to find someone you can trust, because at that time there was a lot of great properties in 2008, because I saved some money, and so I was eager, so I knew that you can get good deals in the downturn, I just didn’t know it would be that many.

Then I was hesitant. I saw some good deals and I saw a lot of crap out there that was just like the Winchester Mystery House and what is this? I probably looked at so many houses, but there was some good deals. I was like, “Oh, I don’t know if there’s something wrong with this or what.” I was hesitant to purchase, although I did, after looking at probably over 100 houses. I went to Sacramento, drove all over. I went on one of your tours in Sacramento.

I looked at some nice ones, and I did end up buying in Pittsburg in 2009 after looking at so many. I actually put a bid on one, I think it was a HUD foreclosure. It was listed for 137, so we put a 125 and we got it. I ended up moving into that house, and actually since it was the first house living in, I got the $8,000 tax credit. The plan was live there for three years, to get to live there for three years. It had good bones, but it needed some updating. I think an older lady lived there. It had this burnt orange shag carpet and the yard was unkempt.

Kathy: Sounds like money to me.

Kurt: Yes, but again, it was in good shape. I just worked on it. I did a lot of it, because I’m pretty handy and I like working on houses, different things up on the side, different landscape design stuff. It’s just something that was a hobby and became part of a side business for me. I did the whole landscaping, back and front, painted the whole house. It’s funny because the house was white with a baby blue trim, and it was just kind of ugly in that sense.

The roof was, it was one of those architectural shingles, so that the roof looked good. I just painted with this color green and dark green, it was the whole look of the house. It just looked a total different house just by painting it. Then I did paint the whole inside, and did some of the plumbing, and one of the showers was just a bath– so I put the extra pipe with a shower in there.

Actually it had a big living room, too, but didn’t need it, so I turned it to a big office. Like into a four-bedroom, two bath, but living in it for three years, and after three years, moved out and rented it out. We got 1700. Five years later, I was getting 2100 rent on that one. In the meantime, while I was living there, a friend talked to me about this guy who would buy homes at the courthouse steps. I learned about them, too. They call them the good old boys.

Buying Foreclosures

They intimidate you if you go down there yourself. I went down there just to check it out and just kind of watch what they do, but I then contacted this friend, knew this one guy. He was buying a house and he would send me lists of foreclosures, and it was 50 foreclosures on there, and you kind of go through them. I looked through a few of them all over Pittsburg, and Antioch, and Brentwood and sometimes the doors were open, you’d go inside and look in there. Sometimes some of the people break the door and let you go in there, and sometimes there was trash everywhere and a bunch of clothes and stuff and everything still in there.

Some of them were nice, but at the time if I knew now, I didn’t know then, I’d be like, honestly– I was hesitant. I saw so many, until like now it’s like could say, “Oh I wish I could’ve done that again.” Then ended up buying one at the auction. We paid the guy like $5,000 for him to do the bidding, because he was connected in there. We saw one in Oakley. I think it was 137, so what we ended up paying 142. There was actually somebody still living in it. We peeked in the window before we put a bid on it, because we looked in there. It looked pretty nice. Looked good from the outside. The only thing is you don’t know what the inside is like. You don’t get to go in there.

You try to see if it’s not trash. It didn’t look like trash or anything, so we ended up getting it. Now, the next thing was how to get the tenant out of there. We talked to him, he was irritated, pissed off. We ended up learning to say, “Okay you can always do cash for keys.” We ended up offering him $500. He took that as long as he doesn’t destroy anything and move out. He did that and then when we looked inside it was actually granite countertops and it was actually pretty good shape. It just needed a little cosmetic.

With that one, I try to do just a cosmetic fix and flip, but I find out that I didn’t have the time, and that’s not the road I want to go down, fix and flip, because again, try to sell it after that, but at the time the market went up, but then it went back down. I think what I enjoy is living in it, fixing it up while I’m living in it, so I can do it at my own pace.

When I kept looking at the houses that you offered, and after going to a couple of your meetings, I could sense that you are sincere, and I felt that I can trust what you’re offering.

Building a Portfolio of Single-Family Rentals

I looked at a lot of the markets, actually, the markets that you had been going for like– it was actually four years before I actually purchased my first one, because I guess I was cautious. I think I went to probably six different cities that you were offering. I went to Birmingham, I went to Memphis, Arkansas, when you had that, Jacksonville, a few others down at Kansas City. After talking to Cincinnati a couple of times, I talk to her in session and then a year later I ended up purchasing two sight unseen. Some people might be scared to do, but at that time I was going to say, I got to do something. I had the money. I can’t just keep letting time go by.

Kathy: It took four years to jump in and then you jumped in and bought sight unseen? That’s amazing.

Kurt: Well, the thing is since then, right now I have 10 properties. In that period of time, I actually bought 14 new, I sold the Arizona one. I was debating, do I hang on to it, but I had some equity into it, and it wasn’t getting a rent. For $150,000 purchase, it was only getting 950 for rent and I’m seeing these other ones that you offered out there. If it was 120, you were getting 1,200 rent.

I wanted to take that cash and purchase a couple of them instead of having one. I ended up selling that Arizona one and buying a couple of the out-of-state ones. I think the next one that I purchased you were offering Memphis and Little Rock. It’s funny because I bought one in both, same thing, sight unseen, in both markets at the same time. Then Cleveland office– I think out of the properties that have, I think it was 9 to 10 properties, 8 were sight unseen.

Eventually, I went out there to take a look and see what street they’re on, because I’m like hoping, “I go down there, hopefully we’re down a good street because I–” I went on Google, so you can get a good idea by looking on Google map. You go down the street, turn to look at the house across the street, looking at how many cars around the street, what do the houses look like across the street. This gave me a good idea and when I did go out to look at some of them I was like, “Okay, this is good. I like this is one,” so all of them they looked fairly good.

Kathy: How do you have now?

Kurt: Right now I have 10.

Kathy: Wow.

Kurt: I feel I’m on the slow pace.

Kathy: A slow pace?

Kurt: Kind of, because I hear these other people, “I got 20 properties already,” and stuff like that. I like the slow and steady, as long as I keep getting some. I’m on kind of an edge of the rat race getting out of the rat race, to where your income surpasses your expenses, so that eventually I can do my work for fun and not do it for living expenses.

Kathy: Yes, have your basic expenses covered. I would say most people, probably 98% of the population would think that you’re on the fast track, because your 10 properties is pretty good.

Kurt: That’s true, because I was looking at some stats and I was like, I don’t know, it’s like 90%, or actually what it was, but there wasn’t that many people that had 10 properties or more. It was like five or more something, it was kind of low actually I was surprised. That made me feel good.

Having Enough Money in Reserves

Kathy: Yes, absolutely. What would you say have been the biggest lessons learned for somebody just starting out?

Kurt: Well, when starting out, probably if you have the money and you’re ready, and I guess not let that fear, because if I could have started earlier, I would have got some houses maybe at a better deal, like Cleveland and Cincinnati or something. I know at the time I got it, the prices went up a little bit, so I probably could get a little better rate for the rent. Probably the biggest thing would probably allowing enough for expenses.

I know on some of them, they say like 4%. I think for the average house probably a three, two maybe, 14 around there, give or take, square feet that average in about $100 a month. Some of my houses, no problems, and then other ones, they are the problem child, always something going wrong.

Kathy: The houses that have the problems, were those rehabbed when you bought them or were they the ones that you–?

Kurt: Yes, they were rehabbed. One of them, there’s two that I went and saw and purchased it, and that one I thought it was a good one. It’s got good bones, looks good, an uncracked driveway, it’s all looking good. They rehabbed it, but then seems like every month there’s some problem. I’m like, “What the heck?” After two years feels like it should be rehabbed again.

Kathy: What cities are those in?

Kurt: It’s a two-problem child, one of them is in Cleveland and one in Little Rock. Little Rock seems to have a lot of those problems.

Kathy: Yes, I was wondering if it would have something to do with climate. It seems like each area has something you need to be aware of and make sure you’re property managers are aware of. Like in Texas, you need to make sure that if there’s a drought, that you keep the dirt fairly moist in the summer so that the ground doesn’t dry up so much that it affects the foundation. I was going to say Little Rock and maybe Memphis, there might be a bug problem that you have to stay on top of.

Kurt: Yes. I have one house in Memphis that’s been pretty good. The tenants been there the whole time. Cincinnati has been pretty good actually. I notice that some property managers that will take on 15%, so I don’t care for that, because you got an expense already and then you have to tack on another 15%. It’s not fun especially if it’s a big expense.

Keeping Tabs on Property Managers

Kathy: Definitely have the reserves. Any other advice?

Kurt: Probably it’s like the maintenance, I would check like in property management. I notice that some of them, they’re all different. Some of them will get back to you right away, but then certain ones, like let’s say Little Rock, there always seems to be some kind of a maintenance issue. Then I had another property manager that– like the one in Memphis, I like the contract they give to the tenants because like look, you’re responsible for this or this, if you’re going to do this, we’re going to charge you to come out for it. They spell it out.

Where some of them, maybe in the contract they’re maybe too lenient, so they think they can call you for everything. I guess it’s looking at the contracts that they give to the tenants and then what they charge you for maintenance. Looking over some of that stuff to give you an idea, so it’s not like, “What this 15% for?” That’s probably the main thing. Always check your statement, because they don’t always let you know if it’s under 200 or if it’s over 200 but sometimes–

Recently, I had a problem with the property manager in a section eight, so that’s another thing, I would probably say is in one of the cities in Cleveland they had to have this PMH that they do an inspection. The city comes out and does an inspection every year. I got hit with, you got to fix the paint on the rail on one of the bedrooms. Stuff to me that seems tedious, that ended up costing me over $1,500 and then they wanted to do an inspection on the HVAC, which I had to go out to Cleveland. I had to get one myself to do it and it was 180, so probably management was going to charge  me 350.

There’s little things like that, keeping an eye on them, to know what are they charging and how good of work they’re doing on the property, because when I went out there, some of the work was shoddy, some of the maintenance people.

Kathy: How do you recommend people stay on top of the maintenance around their property?

Kurt: Well, I always check it every month because I want to know what’s going on, and if there is a charge I want to know why or what’s going on. If I keep on seeing it over and over again, I contact one of them and I just, “Okay, is it that house? Did they not rehab it well enough, or is the tenant that’s causing every little problem?” I like to go out, and if I was closers, now that I’m in Atlanta I’m a little closer, so I will drive out to him occasionally, maybe six months to do an inspection myself, but I was in California before, so it’s too hard.

Sometimes, if I was in the area, maybe I’d fly out, depending on what was going on or if I was looking for properties and then go past my existing homes. I like to check out the areas, especially if I’m going to buy, I want to see what the areas are like. Every area is a little different. I like Cleveland because the streets look clean or sometimes maybe down in Little Rock or Arkansas, depending on what streets you go down. I was in Kansas City too, that C-neighborhoods, I didn’t care for their certain areas. I’m like, “I don’t want to buy in this area.” They tend to be maybe a little more drama. What you can handle.

Kathy: Yes, the numbers don’t usually reflect the proforma in reality, on those CND properties. Not always, it’s just that there’s high crime in the area, it’s tough to keep those going well.

Kurt: I think the property manager, the group you’re dealing with. I think sometimes when they get too big, which happen with everything is they get more laxed.

I know that when I first started looking at properties and not everybody was looking to buy rental properties, back in 2009, 2010 I was scared that the teams were more giving. “Granite countertops we’re going to do this.” They’re going out of their way, but now that you have it the other way around, they can get away with not offering as much as they did back then.

If you get too busy, I don’t know I think in one area they get too busy and they got so many teams, or some of the rehabbers, and maybe a group that they started with were good, but then as you have to hire more maybe they don’t do as good work. You may want to check that out too, how good of a work they’re doing, but they’re all different.

Kathy: What’s your ultimate goal now that you have 14 properties, you have 11 now?

Kurt: I want to do two every year for the next year. Right now, the goal is 20. I would like to have maybe 25% paid for, 50% paid, then the others like 25 down to 20. In case of downturn, you know it’s going to happen how bad, it’s just how bad and what happened. I don’t want to be in a position that if some people have to move out or they don’t pay rent and be stuck.

I like to be prepared for that if I have to. I have a certain amount of cash flow. I like to get at least, averaging 300 cash or a little bit more. I would like to have 20 in the next five years total. Then, I don’t know, I may look into maybe a new place for play, learn about the other ones see what happening. I would like to do it, because I have also one of your syndications, too, I also did that one which was pretty good.

Kathy: Awesome.

Kurt: That’s the goal.

The Benefits of Passive Income

Kathy: The ultimate goal it sounds like is to have your expenses covered so that you can spend time the way you want to and what would that look like?

Kurt: Right now, I teach dance for a living, from wedding couples to swing bands also and stuff like that. I enjoy that. I still enjoy fixing up houses, living in one, fix it up, maybe go to the next one. I want that to be more for raising money where I just enjoy doing that, and that is for living but for fun. Then continue to do the property, so I can take the trips or go to this event, I hang out with family.

I just got back from China with my girlfriend, so it’s the first time I actually went out on an international trip. I would like to go to Europe, I would like to be there for a month. It’s nice to know that I’ve still got the income coming in and not worrying that being self-employed, that you stop working, you don’t get paid but the passive income, getting those multiple streams of income. That’s the goal. To have freedom to do what I want, when I want, for how long I want.

Kathy: Love it. All right. Well, hopefully, we can come and take some lessons. We should have you come to one of our events and have you teach us all how to dance in the next Christmas party.

Kurt: Yes, teach the group. For sure.

Kathy: That would be a lot of fun, and it sounds like you’re living in Atlanta now where you have a lot more access to great properties?

Kurt: Yes, definitely. I’m already planning to buy one in Atlanta. I do a little research and I have driven all around town. I want to start to buy something so I’m close to the other properties. You just continue to keep looking and then maybe find one or I can live and fix up.

Kathy: On a dancer’s salary– You go to a dance school, how are you acquiring more? Are you refinancing some of the old properties and using that money or are you saving money? What are you using for the down payment?

Kurt: Well, when I was in California, I obviously saved money, put money aside over the years, because I was working two jobs. I was head of landscape, and I had a studio at the same time. I was basically with them seven days a week. I saved a lot of money, and then I had the money to buy the first one. That’s when I bought the Pittsburgh house. We sold that one actually a year ago. Bought it for 125. Sold last year for a 435. Took some of that money to my Arizona house and then some of the money I saved.

I’ve been taking it from there and just have a little money aside so that when I do see something, that I’d take that money and purchase from there, so yes if there’s other properties for sure. I haven’t done the BURR messages, but I want to do that, buy rehab, refinance, repeat, whatever it is.

Kathy: The BURR model. Well, it looks like you’re living in the area now. I mean, it was hard to do when you lived in the San Francisco bay. Living in Atlanta, that might be a little easier to pull off.

Kurt: Yes. That’s the plan. California, back in 2009 would work, but now suddenly we’re too poor.

Kathy: No. All right, Kurt. Well, it’s been such a pleasure to have you on The Real Wealth Show sharing your tips and your goals and your wisdom. Thank you so much for sharing with us today.

Kurt: Thank you.

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